v3.26.1
Reportable Operating Segments
6 Months Ended
Jun. 30, 2026
Reportable Operating Segments  
Reportable Operating Segments

16. Reportable Operating Segments

The Company’s reportable segments are based on the manner in which management organizes the business for making operating decisions and assessing performance. These segments reflect how discrete financial information is currently evaluated by the chief operating decision maker and how performance is assessed and resources are allocated. The Company’s internal management process measures the performance of these business segments. This process, which is not necessarily comparable with similar information for any other financial institution, uses various techniques to assign balance sheet and income statement amounts to the business segments, including allocations of income, expense, the provision for credit losses and capital. This process is dynamic and requires certain allocations based on judgment and other subjective factors. Unlike financial accounting, there is no comprehensive authoritative guidance for management accounting that is equivalent to GAAP.

During the quarter ended December 31, 2025, the Company realigned its internal organizational and management reporting structure. As a result of this change, the Company reduced its reportable operating segments from three to two. The Company’s reportable segments are now Retail Banking and Commercial Banking. Activities previously reported within the Treasury and Other segment are now included in Corporate/Other, as Treasury exists to support the Company’s operating segments. The change in reportable segments reflects how the Company’s chief operating decision maker currently evaluates performance and allocates resources. In addition, during the third quarter of 2025, the Company made changes to the internal measurement of segment operating profits for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to align loan and deposit balances within the business segment that directly manages them. Specifically, certain loan and deposit balances previously included as part of the Retail Banking and Commercial Banking segments were reclassified among the segments and what is now Corporate/Other. The reallocation of select loan and deposit balances affected net interest income, net interest income after provision for credit losses, provision for income taxes, net income and segment earning assets. The Company has reported its selected financial information using the new loan and deposit balance alignments and using two reportable operating segments for the three and six months ended June 30, 2026. The Company has recast the selected financial information for the three and six months ended June 30, 2025 in order to conform with the current presentation.

The net interest income of the business segments reflects the results of a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics and reflects the allocation of net interest income related to the Company’s overall asset and liability management activities on a proportionate basis. The basis for the allocation of net interest income is a function of the Company’s assumptions that are subject to change based on changes in current interest rates and market conditions. Funds transfer pricing also serves to transfer interest rate risk to Corporate/Other.

The Company allocates the provision for credit losses from Corporate/Other (which includes activity within the Company’s support units) to the Retail Banking and Commercial Banking business segments. These allocations are based on direct costs incurred by the Retail Banking and Commercial Banking business segments.

Noninterest income and expense includes allocations from support units to the business segments. These allocations are based on actual usage where practicably calculated or by management’s estimate of such usage. Income tax expense is allocated to each business segment as well as Corporate/Other based on the consolidated effective income tax rate for the period shown.

Business Segments

Retail Banking

Retail Banking offers a broad range of financial products and services to consumers and small businesses. Loan and lease products offered include residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans and small business loans and leases. Deposit products offered include checking, savings, and time deposit accounts. Retail Banking also offers wealth management services. Products and services from Retail Banking are delivered to customers through 49 banking locations throughout the State of Hawaii, Guam and Saipan.

Commercial Banking

Commercial Banking offers products that include corporate banking related products, commercial real estate loans, commercial lease financing, secured and unsecured lines of credit, automobile loans and auto dealer financing, business deposit products and credit cards. Commercial lending and deposit products are offered primarily to middle-market and large companies locally, nationally and internationally.

Corporate/Other

Corporate/Other includes activity within the support units of the Company and not associated with a segment. One such area is Treasury, which includes activities surrounding the management of interest-bearing deposits, investment securities, federal funds sold and purchased, government deposits, short- and long-term borrowings and bank-owned properties (and these assets’ and liabilities’ related interest income and expense). The primary sources of noninterest income are from bank-owned life insurance, net gains from the sale of investment securities, foreign exchange income related to customer driven cross-border wires for business and personal reasons and management of bank-owned properties. The net residual effect of the transfer pricing of assets and liabilities is included in Corporate/Other, along with the elimination of intercompany transactions.

Other organizational units within Corporate/Other (such as Technology, Operations, Credit and Risk Management, Human Resources, Finance, Administration, Marketing and Corporate and Regulatory Administration) provide a wide range of support to the Company’s reportable segments. Expenses incurred by these support units are charged to the business segments through an internal cost allocation process.

The following tables present selected business segment and Corporate/Other financial information for the periods indicated.

Three Months Ended

Six Months Ended

June 30, 2026

June 30, 2026

Retail

Commercial

Corporate/

Consolidated

Retail

Commercial

Corporate/

Consolidated

(dollars in thousands)

  ​

Banking

  ​

Banking

  ​

Other

  ​

Total

  ​

Banking

  ​

Banking

  ​

Other

  ​

Total

Interest income

$

84,849

$

106,085

$

41,433

$

232,367

$

168,862

$

208,511

$

84,692

$

462,065

Intersegment interest allocations (1)

(62,800)

(74,868)

137,668

(125,401)

(147,026)

272,427

Total interest income

22,049

31,217

179,101

232,367

43,461

61,485

357,119

462,065

Interest expense

(44,032)

(14,402)

(2,940)

(61,374)

(88,239)

(29,421)

(5,882)

(123,542)

Intersegment interest allocations (1)

154,780

28,287

(183,067)

307,695

57,005

(364,700)

Total interest expense

110,748

13,885

(186,007)

(61,374)

219,456

27,584

(370,582)

(123,542)

Net interest income (expense)

132,797

45,102

(6,906)

170,993

262,917

89,069

(13,463)

338,523

Provision for credit losses

(1,236)

(1,639)

(2,725)

(5,600)

(3,706)

(4,919)

(1,975)

(10,600)

Net interest income (expense) after provision for credit losses

131,561

43,463

(9,631)

165,393

259,211

84,150

(15,438)

327,923

Noninterest income

29,111

21,453

9,717

60,281

57,250

40,057

15,793

113,100

Salaries and employee benefits

(26,261)

(4,894)

(31,221)

(62,376)

(52,783)

(9,905)

(63,778)

(126,466)

Contracted services and professional fees

(2,858)

(4,162)

(11,382)

(18,402)

(5,529)

(8,181)

(18,656)

(32,366)

Occupancy

(8,268)

(523)

889

(7,902)

(16,250)

(1,009)

1,541

(15,718)

Equipment

(1,407)

(498)

(12,658)

(14,563)

(2,852)

(974)

(25,518)

(29,344)

Card rewards program

(8,403)

(8,403)

(16,807)

(16,807)

Other segment items (2)

(32,615)

(655)

14,471

(18,799)

(70,565)

(2,536)

35,472

(37,629)

Noninterest expense

(71,409)

(19,135)

(39,901)

(130,445)

(147,979)

(39,412)

(70,939)

(258,330)

Income (loss) before (provision) benefit for income taxes

89,263

45,781

(39,815)

95,229

168,482

84,795

(70,584)

182,693

(Provision) benefit for income taxes

(21,021)

(8,957)

8,124

(21,854)

(40,165)

(16,590)

15,221

(41,534)

Net income (loss)

$

68,242

$

36,824

$

(31,691)

$

73,375

$

128,317

$

68,205

$

(55,363)

$

141,159

Other Segment Disclosures:

Depreciation and amortization (3)

$

1,509

$

38

$

3,850

$

5,397

$

3,039

$

84

$

7,899

$

11,022

Segment earning assets(4)

7,123,319

7,457,073

6,274,112

20,854,504

7,123,319

7,457,073

6,274,112

20,854,504

Three Months Ended

Six Months Ended

June 30, 2025

June 30, 2025

Retail

Commercial

Corporate/

Consolidated

Retail

Commercial

Corporate/

Consolidated

(dollars in thousands)

  ​

Banking

  ​

Banking

  ​

Other

  ​

Total

  ​

Banking

  ​

Banking

  ​

Other

  ​

Total

Interest income

$

81,298

$

111,751

$

43,690

$

236,739

$

162,350

$

222,381

$

87,158

$

471,889

Intersegment interest allocations (1)

(61,245)

(83,068)

144,313

(121,449)

(163,003)

284,452

Total interest income

20,053

28,683

188,003

236,739

40,901

59,378

371,610

471,889

Interest expense

(50,628)

(16,913)

(5,615)

(73,156)

(102,881)

(33,326)

(11,573)

(147,780)

Intersegment interest allocations (1)

157,622

30,858

(188,480)

315,483

62,514

(377,997)

Total interest expense

106,994

13,945

(194,095)

(73,156)

212,602

29,188

(389,570)

(147,780)

Net interest income (expense)

127,047

42,628

(6,092)

163,583

253,503

88,566

(17,960)

324,109

Provision for credit losses

(2,111)

(2,389)

(4,500)

(6,802)

(7,698)

(500)

(15,000)

Net interest income (expense) after provision for credit losses

124,936

40,239

(6,092)

159,083

246,701

80,868

(18,460)

309,109

Noninterest income

27,754

19,039

7,165

53,958

54,405

36,794

13,236

104,435

Salaries and employee benefits

(25,743)

(4,964)

(28,794)

(59,501)

(50,355)

(9,755)

(59,495)

(119,605)

Contracted services and professional fees

(2,919)

(4,338)

(8,740)

(15,997)

(5,972)

(8,208)

(16,656)

(30,836)

Occupancy

(7,414)

(478)

(42)

(7,934)

(14,709)

(973)

(352)

(16,034)

Equipment

(1,450)

(472)

(12,115)

(14,037)

(2,845)

(921)

(24,142)

(27,908)

Card rewards program

(8,406)

(8,406)

(16,325)

(16,325)

Other segment items (2)

(34,850)

(1,360)

17,146

(19,064)

(71,620)

(3,607)

37,436

(37,791)

Noninterest expense

(72,376)

(20,018)

(32,545)

(124,939)

(145,501)

(39,789)

(63,209)

(248,499)

Income (loss) before (provision) benefit for income taxes

80,314

39,260

(31,472)

88,102

155,605

77,873

(68,433)

165,045

(Provision) benefit for income taxes

(14,890)

(6,193)

6,228

(14,855)

(32,750)

(14,060)

14,260

(32,550)

Net income (loss)

$

65,424

$

33,067

$

(25,244)

$

73,247

$

122,855

$

63,813

$

(54,173)

$

132,495

Other Segment Disclosures:

Depreciation and amortization (3)

$

992

$

68

$

4,670

$

5,730

$

2,041

$

136

$

9,082

$

11,259

Segment earning assets(4)

7,081,942

7,278,709

6,676,290

21,036,941

7,081,942

7,278,709

6,676,290

21,036,941

(1)Intersegment interest allocations are the result of funds transfer-pricing methodologies that are utilized to allocate a cost for the funding of assets and a credit for the collection of deposits from Corporate/Other to the business segment assets and liabilities.
(2)Other segment items included in segment net income includes advertising and marketing, regulatory assessment and fees, allocations and transfer pricing on non-earning assets, liabilities and equity, and other miscellaneous and administrative fees. Amounts included in the Corporate/Other column are not related to the segments but include the effect of certain expense allocations or transfer pricing to the segments.
(3)The amounts of depreciation and amortization disclosed by the reportable segments and Corporate/Other are included within equipment, occupancy, other segment items, and noninterest income.
(4)Segment earning assets only apply to the Retail Banking and Commercial Banking segments. The Corporate/Other column includes earning assets not associated with a segment (such as investment securities, interest-bearing deposits and federal funds).