Bank of Hawaii Corporation Q1 2026 Earnings Call Transcript

Bank of Hawaii Corporation (NYSE: BOH) Q1 2026 Earnings Call dated Apr. 20, 2026

Presentation

Operator

Good day and thank you for standing by. Welcome to the Bank of Hawaii Corporation First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Chang Park, Executive Vice President, Investor Relations. Please go ahead.

Chang Park — Executive Vice President, Investor Relations

Good morning and good afternoon. Thank you for joining us today for our first quarter 2026 earnings conference call. Joining me today is our President and CEO, Jim Polk; CFO, Brad Satenberg; and Chief Risk Officer, Brad Shairson.

Before we get started, I want to remind you that today’s conference call will contain some forward-looking statements, and while we be believe our assumptions are reasonable, the actual results may differ materially from those projected. During the call today, we’ll be referencing a slide presentation as well as the earnings release. Both of these are available on our website boh.com under the Investor Relations link.

And now I would like to turn the call over to Jim.

James C. Polk — President and Chief Executive Officer

Thanks, Chang. Good morning and good afternoon, everyone. Thank you for joining us today. Before I get into the quarter, as this is my first earnings call as CEO, I want to say a few words about my predecessor, Peter Ho. Peter built something truly special here. A franchise defined by discipline, consistency, and a genuine commitment to the people of our island communities. With 16 years as CEO, he left this institution much stronger in every way that matters. I’m grateful for his confidence in me, and I’m honored to carry this forward.

Now on to the quarter. Bank of Hawaii delivered another solid set of results to open 2026. Net Interest Income and our net interest margin expanded for the eighth consecutive quarter, driven by continued fixed asset repricing and a meaningful decline in total deposit costs. NIM increased 13 basis points as our fixed asset repricing engine continues to perform as expected. During the quarter, we remixed $643 million in fixed-rate loans and investments from a roll-off yield of approximately 4% to a roll-on yield of 5.6%, continuing to lift the overall yield on earning assets.

We remain on track toward our stated goal of approaching 2.9% NIM by the end of the year, and we feel good about that trajectory even against an uncertain rate backdrop. Deposit trends continue to be encouraging as our average cost of total deposits declined 17 basis points, achieving a beta of 36%. Normalizing for non-recurring expenses and non-interest income, our EPS came in at $1.39, reflecting the steady underlying earnings power of the franchise. We maintained strong capital and excellent credit quality while continuing to build on our leading deposit market share position here in Hawaii.

The strategic formula has not changed. Bank of Hawaii operates in one of the most distinctive banking markets in the country, concentrated and relationship-driven, where four locally headquartered banks hold more than 90% of FDIC-reported deposits. In that environment, brand and trust are our structural advantages. They allow us to price deposits attractively, manage funding costs actively and generate superior risk-adjusted returns across cycles.

Turning to our home market, Hawaii’s economy entered 2026 on solid footing, near record low unemployment, strong visitor spending, and an active construction pipeline anchored by significant military and public infrastructure investment. That said, we are watching the environment carefully. Tensions in the Middle East, rising energy costs, and the potential for sustained inflation are headwinds that could affect consumer confidence and travel demand as the year progresses. Our credit portfolio continues to reflect the underwriting discipline this bank has maintained through many cycles.

I want to briefly address the recent Kona low storm in Hawaii and Typhoon Sinlaku in the West Pacific. First and foremost, Bank of Hawaii remains focused on supporting our employees, customers, and communities impacted by these events. We are in the early stages of assessing the potential impact of Typhoon Sinlaku, and it will take several weeks to gain clearer insight. Brad Shairson will cover the potential impact of the Kona low storm as well as our overall credit profile in more detail shortly.

I also want to highlight the progress we are making in wealth management, an area I expect will become an increasingly important part of the franchise’s story. Through Bankoh Advisors and our partnership with Cetera, we continue to expand investment capabilities for our retail and private banking clients. Simultaneously, we are deepening coordination between our commercial and private banking teams around our high-net-worth client relationships.

Importantly, we recently opened the Center for Family Business and Entrepreneurs, where we provide dedicated planning resources to Hawaii’s family-owned businesses, encompassing financial and estate planning, succession planning, business valuation, and M&A advisory capabilities. For many of these families, whose wealth is largely concentrated in their company, these are among the most consequential decisions they will face. It is a capability uniquely suited to Bank of Hawaii’s depth of relationships and trusted role in this market.

I’ll close with this. We remain focused on the strategy, the culture, and the values that have made Bank of Hawaii successful. I fully intend to carry forward the intensity of execution, the continued investment in our people and technology, and an unwavering commitment to the island communities that have trusted this institution for 128 years. I’m proud to be in this role, and I look forward to the work ahead.

With that, I’ll turn the call over to Brad Shairson to discuss credit, after which Brad Satenberg will walk through the financials in detail. We’ll then be pleased to take your questions.

Bradley Shairson — Vice Chair and Chief Risk Officer

Thanks, Jim. I’ll begin with an overview of our credit portfolio and conclude with asset quality metrics, and as you will see, our performance remains strong, consistent with prior quarters. Turning to our lending philosophy, the Bank of Hawaii is dedicated to serving our local communities, lending primarily within our core markets, where our expertise allows us to make informed and disciplined credit decisions. Our portfolio is built on long tendered relationships with approximately 60% of both our commercial and consumer clients having been with the bank for more than 10 years.

Geographically, our loan book is concentrated in markets we know well. Approximately 93% of loans are based in Hawaii, with 4% in the Western Pacific and just 3% on the mainland, primarily supporting existing clients who operate both locally and on the mainland. Our loan portfolio remains well balanced between consumer and commercial exposure. Consumer loans represent 56% of total loans or approximately $8 billion. Within the consumer portfolio, 86% consists of residential, mortgage, and home equity loans with a weighted average LTV of 48% and weighted average FICO score of 798. The remaining 14% of consumer loans are comprised of auto and personal lending. Credit quality in these segments also remains strong with average FICO scores of 729 for auto loans and 760 for personal loans.

Turning to commercial lending, the portfolio totals $6.2 billion, representing 44% of total loans. 73% is secured by real estate with a weighted average LTV of 55%. This reflects our ongoing emphasis on collateral protection. CRE remains the largest component of the commercial book, totaling $4.3 billion or 31% of total loans. And in Oahu, the state’s largest CRE market, a combination of consistently low vacancy rates and flat inventory levels continues to support a stable real estate market. Across industrial, office, retail, and multi-family property types, vacancy rates remain below or close to their 10-year averages.

Total office space on Oahu has declined by approximately 10% over the past decade, driven primarily by conversions to multifamily residential and lodging. This structural reduction in supply combined with the return to office trend has brought vacancy rates closer to long-term averages and well below national levels. Our CRE portfolio remains well diversified with no single property type exceeding 9% of total loans. Conservative underwriting practices continue to be applied consistently with weighted-average LTVs below 60% across all CRE categories.

In addition, diversification within each segment remains strong, supported by modest average loan sizes. Scheduled maturities are also well balanced with more than 60% of CRE loans maturing in 2030 or later, reducing any near-term refinancing risk. Looking at the distribution of LTVs, there isn’t much tail risk in our CRE portfolio. Less than 3% of CRE loans have greater than 80% LTV. C&I accounts for 11% of total loans totaling $1.6 billion. This portfolio is diversified across industries characterized by modest average loan sizes, and there is very little leveraged lending.

Turning to asset quality, credit metrics continue to perform exceptionally well. Net charge-offs totaled $1.1 million or just 3 basis points annualized, down 9 basis points from linked quarter and 10 basis points lower year-over-year. 3 basis points is abnormally low. This was driven by a small net recovery in commercial as well as a slight decline in consumer net charge-offs. Non-performing assets declined to 9 basis points, down 1 basis point from linked quarter and 3 basis points year-over-year.

Delinquencies increased to 40 basis points, up 4 basis points from linked quarter and up 10 basis points year-over-year, and criticized loans remained flat to the linked quarter at 2.12% of total loans, that’s up 4 basis points year-over-year. Notably, 84% of criticized assets are real estate secured with a weighted average LTV of 53%. And as an update on the allowance for credit losses on loans and leases, the ACL ended the quarter at $147 million, up $200,000 from linked quarter. The ratio of our ACL to outstandings remained flat at 1.04%. This ACL coverage does include a $3.2 million qualitative overlay, specifically related to the recent Kona low storm. This overlay accounts for the potential impact of flood damage to approximately 15 to 20 properties in our portfolio, net of anticipated insurance recoveries.

We are monitoring these exposures closely but can already see that the potential loss would not deviate greatly from the amount we have reserved. And in light of recent industry discussions around private credit, I want to provide clear assurance that we don’t lend to private credit funds or providers. Our exposure to non-bank financial intermediaries is negligible, totaling about $80 million or 0.6% of total loans. With the vast majority of this tied to diversified publicly traded equity REITs.

This concludes my remarks. I will now turn the call over to Brad Satenberg for a discussion of our financial performance.

Bradley S. Satenberg — Vice Chair and Chief Financial Officer

Thanks, Brad. For the quarter we reported net income of $57.4 million and a diluted EPS of $1.30, decreases of $3.5 million and $0.09 per share as compared to the linked quarter. These declines were primarily the result of elevated non-interest expense as compared to the fourth quarter. Q1 included the annual bump in seasonal payroll taxes and benefits as well as a non-recurring compensation-related charge incurred in connection with the accelerated vesting of restricted stock awards under the retirement provision of the Company’s share-based compensation plan.

As it relates to NII and NIM, we continue to see a positive expanding trend in both. This is the second quarter in a row that we achieved a double-digit increase in NIM with a 13 basis point pickup this quarter and an aggregate 28 basis points over the past six months, and despite two fewer days this quarter, NII grew by $5.6 million. Consistent with the previous quarter, NII and NIM benefited from the combination of our fixed asset repricing, the continued repricing of our deposits following the Fed rate cuts as well as the deposit mix shift, which was a positive $94 million this quarter.

Compared to the linked quarter, average non-interest-bearing deposits are up by $84 million. During the quarter, the yield on our interest-earning assets declined by 4 basis points as the effect of the rate cuts at the end of last year were fully recognized during the current quarter. This impact was partially offset by our fixed asset repricing, which contributed $2.6 million to our NII. Our cost of interest-bearing liabilities improved by 21 basis points during the quarter as our deposits continued to reprice down following the rate cuts.

The cost of deposits declined to 1.26%, representing a 17 basis point reduction as compared to the linked quarter. The spot rate on our deposits was 1.25% at the end of Q1, and as Jim mentioned in his comments, our deposit beta improved at 36%, which exceeds our prior target of 35%. While I still anticipate that we will see some modest improvements in our cost of deposits going forward, any material changes will likely be contingent upon future Fed rate adjustments. At the moment, we are currently forecasting no rate cuts in 2026.

Contributing to our declining deposit costs was the continued repricing of our CD book. During the quarter the average cost of CDs declined by 29 basis points to 2.89%, and at the end of the quarter the spot rate — the spot CD rate was 2.8%. Over 50% of our CDs will mature within the next three months at an average rate of 2.91%. The majority of these CDs are expected to renew at rates ranging from 2% in a quarter to 3%. During the quarter, we terminated $400 million of our active swaps, and we finished the quarter with an active pay fixed receipt float portfolio of $1.2 billion at a weighted average fixed rate of 3.3% and an average life of 1.5 years.

$900 million of these swaps are hedging our loan portfolio, while $300 million are hedging our securities. In addition, we have $400 million of forward starting swaps with a weighted average fixed rate of 3.1% and an average life of 2.4 years. $200 million of these forward swaps became active at the beginning of April, while the remaining $200 million will become effective during the third quarter. We finished the quarter with a fixed to float ratio of 59%, which keeps us well-positioned for any changes in the rate environment.

Non-interest income was $41.3 million during the quarter compared to $44.3 million during the linked quarter. This quarter includes a $200,000 charge related to a Visa B conversion ratio change, while the fourth quarter included a similar Visa B charge of $770,000 as well as a $1.3 million net gain in connection with the combined impact from our merchant services portfolio sale and an AFS securities repositioning during the quarter. Adjusting for these normalizing items, non-interest income was down $2.3 million. This decline was primarily caused by lower loan and deposit fee income as well as a dip in earnings within our wealth management division due to less-than-favorable market conditions.

My expectation is that the second quarter non-interest income will be approximately $42 million. Non-interest expense was $116.1 million compared to $109.5 million during the linked quarter. The first quarter tends to be the highest-expense quarter of the year, and as discussed earlier, this quarter included a seasonal payroll tax and benefit charge of $2.8 million and a non-recurring charge related to the accelerated investing of restricted stock awards of $3.5 million.

In addition, the quarter also contained an unrelated severance charge of $750,000. The linked quarter had a $1.4 million reduction in our FDIC special assessment and a non-recurring $1.1 million donation for our Bank of Hawaii Foundation. Compared to my previous forecast, reported normalized non-interest expense was lower than expected, mainly due to a reduction in our quarterly FDIC insurance assessment. Going forward, I expect that this assessment will be approximately $3.2 million or $0.5 million less per quarter than our recent run rate.

As a result, I’m lowering my forecasted range for annual growth and overhead expenses to between 2.5% and 3% or 0.5% lower than my previous forecast. Second quarter normalized non-interest expense is expected to be approximately $112 million. As a reminder, the second quarter expense will include the annual merit increases of approximately $1.2 million per quarter. During the quarter, we also recorded a provision for credit losses of $1.8 million, resulting in an unchanged coverage ratio of 1.04%.

Further, we reported a provision for taxes of $17.1 million during the quarter, resulting in an effective tax rate of 22.9%. Our capital ratios remained above the well-capitalized regulatory thresholds during the quarter with Tier 1 capital and total risk-based capital of 14.4% and 15.4%, respectively. And consistent with the linked quarter, we paid dividends of $28 million on our common stock and $5.3 million on — $5.3 million on our preferreds. During the quarter, we repurchased approximately $15 million of common shares at an average price of $77 per share.

I am currently planning to repurchase an additional $15 million to $20 million of stock during the second quarter. And at the end of the first quarter, $106 million remained available under our current repurchase plan. Finally, our board declared a dividend of $0.70 per common share that will be paid during the second quarter. Now, I’ll turn the call back over to Jim.

James C. Polk — President and Chief Executive Officer

Thanks, Brad. We’d now be happy to answer any questions that you may have.

Question & Answers

Operator

Thank you. [Operator Instructions] Again, our first question comes from the line of Jeff Rulis with D.A. Davidson. Jeff, your line is now open.

Jeff Rulis

Thanks. Good morning. Maybe just on that last expense mentioned. Just want to catch that real quick. The expense guide, does that include the stock expense and severance? I mean, are you carving that out for this or is that included in the full-year growth expectation?

Bradley S. Satenberg — Vice Chair and Chief Financial Officer

That’s inclusive of that. So we’re saying $112 million all inclusive, every expense that we’re aware of today.

Jeff Rulis

Got it. Okay, thanks. And then I guess on the — maybe just a broader growth question. It looks like the consumer book is — has been either growth or more moderate runoff. I guess looking forward, that’s kind of been the area that maybe hasn’t been adding to net production. Are you any closer with comfort there of that sort of flattening out that maybe you look at your full year growth numbers, possibly some upside to kind of the low single digit guide or still waiting to see more confidence before inching that up?

James C. Polk — President and Chief Executive Officer

Yeah. Hey, Jeff, this is Jim. You know, the way I look at it is resi’s been coming along okay. We’ve had a — it was a good quarter for resi in Q4, it was a decent quarter in Q1, just given that it was all purchase activity. And we see some continued strength in the resi side going forward. I think our challenge has really been on the home equity line and the indirect books. So, we’ve got a number of different initiatives we’re pursuing in both of those in an attempt to kind of stabilize those books.

I think the reality is, and you hit it on the head in the last part of your comment, I think we need a little bit more certainty in the oil environment. A little bit of rate relief would be helpful. Not sure we’ll get that. So in the meantime, you know, with respect to home equity line, we’ve got a number of different direct mailing activities that we’re doing, looking at some special programs to try and retain some of the balances that are coming off of state fixed rates. And then in the indirect space, we’ve implemented digital contracting and we’re trying to speed up funding timeframes. So we’re hoping that those can, you know, sort of give us a little boost on that side. But I think until we get better clarity in the overall environment, we’re still from a loan perspective, still in that low-single-digit growth outlook.

Jeff Rulis

Thanks, Jim. And if I could squeeze just one last one on the capital side, I appreciate the guide on the buyback for the second quarter. It seems like pretty steady activity. I guess as earnings continues to ramp here, and the dividend payout I guess could potentially dip below 50%. Is there just revisiting the dividend side and your conversations with the board? Is that something you look at in terms of the overall — might want to inch that up as you’ve kind of broken out on earnings over the last few quarters?

Bradley S. Satenberg — Vice Chair and Chief Financial Officer

It’s certainly something that we talk about, but it’s not something that we’re considering at the moment. I think we’re comfortable with where our dividend is today anything that we’re returning back to shareholders beyond that probably would come through the buyback.

Jeff Rulis

Fair enough. Thank you,

Bradley S. Satenberg — Vice Chair and Chief Financial Officer

Thanks, Jeff.

Operator

Our next question comes from the line of Andrew Terrell with Stephens. Your line is now open.

Andrew Terrell — Analyst, Stephens

Hey, good morning.

James C. Polk — President and Chief Executive Officer

Good morning. How are you Andrew?

Andrew Terrell — Analyst, Stephens

Good. How are you guys?

Bradley S. Satenberg — Vice Chair and Chief Financial Officer

Good.

Andrew Terrell — Analyst, Stephens

I wanted to ask on the — thank you for the CD color, the time deposit color you gave, I think you said 2.80% on the spot cost in the period. Do you have the comparable figure for either total deposit costs or interest-bearing deposit costs? And then I wanted to get a sense on it. Sounds like there’s still a pretty decent opportunity to reprice some of the time deposit portfolio over the balance of the year. I was hoping you could just talk to the competitive landscape for deposits you’re seeing in the market right now?

Bradley S. Satenberg — Vice Chair and Chief Financial Officer

Yeah, I mean our total deposit cost is 2.89% for the quarter. The spot rate again as you mentioned was 2.8%. You know, the competitive landscape is it’s, you know, it’s reasonable and it’s rational, and we still think there’s an opportunity to continue to reprice our CD books. So, you know, the majority of our CDs are in our 3-month portfolio or portion of our portfolio, and we think the majority of that will continue to roll off and reprice into and renew into new 3 month CD’ and probably again at rates between 2.25% to 3% depending on which CD they go into. But I still think there’s an opportunity there and I think we’ll continue to see benefits from that CD repricing.

Andrew Terrell — Analyst, Stephens

Yeah. Okay. And I was hoping just to ask on the wealth management, maybe just refresh us on kind of where you’re at in terms of efforts there and is it something we should expect? I know you gave the fee income guide kind of for the second quarter. Just how should we think about growth potential in the wealth business and then overall fees throughout the year?

James C. Polk — President and Chief Executive Officer

Yeah, I think there’s two components to it, right. The early one that we’ll begin to see some benefit from is really coming from the Bankoh Advisors side, our former broker dealer. As you may recall, we spent most of the fourth quarter repapering that business. So, activity was pretty low. January, we came out of that and we began to see some early positive results in February and March. So, I think we can continue to see that rise as we work through the end of the year.

On the broader wealth management effort, that’s really a longer-term sort of effort for us, right. We’re spending alot of time building out the infrastructure and the capability set. Really introducing the concept of business planning and family dynamics planning, succession planning to our client base and spending a lot of time internally just educating folks and bringing people together to. To build momentum. We’ve clearly seen great activity around that. We’ve got a lot of growth in the valuations pipeline and some M&A activity I think that we’ll see earlier returns on. But the bigger effort, you know, you’re probably not going to see meaningful results until we get into 2027, would be my look.

Andrew Terrell — Analyst, Stephens

Great. Okay. Thank you for taking the questions.

James C. Polk — President and Chief Executive Officer

Yeah. Thank you.

Operator

Our next question comes from the line of Kelly Motta with KBW. Your line is now open.

Kelly Motta — Analyst, KBW

Hi, good morning. Thanks for the question. Maybe I would. I would like to circle back to the question of capital. Clearly, you guys are incrementally repurchasing shares and have given color around that. Just wondering if you guys have looked at the proposed capital changes and given, your higher percentage of resi. If you guys have done any sensitivity around that and how that, if relevant, would change potentially your capital outlook? Thank you.

James C. Polk — President and Chief Executive Officer

Maybe I’ll start and then Brad can clean up. I think we’re comfortable with the way we’re looking — to Brad’s earlier comment, the way we’re looking at dividends, the way we’re looking at stock buybacks. We have started to look at the potential impacts of the proposed regulatory changes. We have such a weighting towards risk-weighted assets already. There’ll be some favorable movements in it, but I still think it’s early and I think we’re really still trying to assess how that would change our posture on what we do with our capital.

Bradley S. Satenberg — Vice Chair and Chief Financial Officer

I would just add to that. I mean, obviously it’s just proposal right now, it’s not final. But we have done some early assessments of the impact and it will be positive for us. I mean, I anticipate that our regulatory capital ratios will see a 50 basis point to 100 basis point improvement based on the way the current proposal is structured.

Kelly Motta — Analyst, KBW

That’s really helpful. I appreciate the color. I would like to also circle back to the question of margin. You guys reiterated that 2.90% outlook to exit the year. You had a fantastic first quarter for NIM expansion. And I’m just wondering, as you look ahead, clearly there’s a lot of variables here in terms of the margin, but it seems like the asset repricing story continues. Wondering if you could provide any commentary or color as to how you guys are thinking about the normalized margin as well as the Cadence from here would seem to imply somewhat of a slowing versus 1Q. So, how we should be thinking about the inputs here? Thank you.

James C. Polk — President and Chief Executive Officer

Yeah, so again, maybe I’ll start and then Brad can clean up whatever. You know, the fixed asset repricing, I think we’ve shared this before. It basically adds about 5 basis points a quarter or 20 basis points a year. So as we close out, you know, this year at, you know, it’s heading towards that 2.90% number. We can see — if the question is really around terminal NIM, we can see that in the 3.25% to 3.50% range based on no rate cuts and just kind of the current outlook that we have. There’s upside to that, if we do see rate cuts, but we feel confident that that fixed asset pricing engine is pretty mechanical at that 20 basis points a year given a 10-year sort of in the 4.25% range.

Kelly Motta — Analyst, KBW

That’s really helpful. Color. Thank you so much. And I’ll step back.

James C. Polk — President and Chief Executive Officer

Thanks, Kelly.

Operator

Our next question comes from the line of Jared Shaw with Barclays. Your line is now open.

James C. Polk — President and Chief Executive Officer

Good morning, Jared.

Operator

Jared, your line is open. Please check your mute button.

Jared Shaw — Analyst, Barclays

Sorry about that. Thanks for taking the question. I guess maybe just looking at some of the tourism trends, are you seeing any impact on the outlook there? Just given the sort of the pace of tech layoffs and some of the layoffs that we’re seeing on the West Coast, or is it still sort of marching steadily forward?

James C. Polk — President and Chief Executive Officer

Yeah, I think it’s probably too early to tell. I mean, the reality is, we started off the year on really strong footings. Visitor counts were relatively flat, but spending was strong relative to previous years, really driven by west and east coast travelers. I think we’re going to really need to see a little more data coming out. March will probably be a little messy just because we have the Kona low storm. So I’m not sure that will be a clear print. But what we’ve become more and more aware of is that the market is really sort of being driven by that K-shaped sort of consumer and that top-end consumer, which is why we continue to see the spend increase.

So I think we’re optimistic that that trend will continue through the year. But as we all know, there’s lots of noise out there. So, we continue to monitor sort of the length of the conflict on Iran, what that ultimately means for energy prices, how that translates into airfares and its ultimate impact on tourism. So I think for right now, I think the outlook would be stable and then we’ll get a Better sense as some of those other items become more clear.

Jared Shaw — Analyst, Barclays

Okay, thanks. And then on the expense side, I guess sort of two parts. One, when we look at that growth guide for the year, is there any assumption that there’s some build out on the wealth management side in that number and if not, is that something that longer term we think we should be building in? And I guess the second part, how are you looking at AI investments? And is there an opportunity on the tech side at all to maybe make some investments in the near term that could generate some positive operating leverage going forward?

James C. Polk — President and Chief Executive Officer

Yeah. So maybe to the first question, I think the guidance is reasonable guidance based on our current outlook in the wealth management space. As we get further out, you can probably begin to think about greater growth on the fee side. I think previously we sort of talked about wealth management being in the $60 million annual fee range and the potential to get into double-digit growth on that particular line item — that particular fee item. So that’s kind of how I look at that. The AI side, we’ve spent a lot of time building out our governance, excuse me, and our risk management practices.

We have a number of different AI cases that we’re working on right now to implement. Some related to the wealth management and the discovery process opportunities within the call center and a number of others. Really, with the goal of getting right to your point, how do we create more operating leverage in the organization by creating efficiencies across the company? Still a little early to read on that one, but that’s our focus and we’re big believers that it has the opportunity to have a meaningful impact on the expense side.

Jared Shaw — Analyst, Barclays

Thank you.

Operator

Our next question comes from the line of Matthew Clark with Piper Sandler. Your line is now open.

Matthew Clark — Analyst, Piper Sandler

Good morning, everyone. Wanted to circle back to the loan growth commentary. I think in the prior quarter there was some optimism around approaching, you know, mid-single-digit loan growth as we march through the year, if not achieve mid-single-digit loan growth for the year, but wanted to double check whether or not that low-single-digit growth expectation was just for the consumer book or was that for the overall portfolio?

James C. Polk — President and Chief Executive Officer

It was for the overall portfolio. I think that guidance was given before, you know, we started the situation in Iran, which created a lot of greater uncertainty. I think we’re really comfortable in that low- to mid-single-digit number. I think we’re going to need a little more certainty in the environment before we can get comfortable guiding up to the mid-single-digit place space. Excuse me.

Matthew Clark — Analyst, Piper Sandler

Okay, and then how about the loan pipeline coming out of the quarter relative to year-end?

James C. Polk — President and Chief Executive Officer

You know the loan pipe has — on both the consumer — at least the resi side and on the commercial side have remained strong. They’re solid. I think we saw the benefits of that on the commercial side in Q1 and I was reasonably pleased in a purchase only environment or without any projects in Q1 thatrResi did what it did. We have some projects that will be closing out in Q2 which will aid on the resi side. And commercial, I doubt we’ll be able to repeat the strong quarter that we had in Q1, but I’m still optimistic that we’ll see see growth to keep us in line with the guide that we shared.

Matthew Clark — Analyst, Piper Sandler

Okay, and then on the deposit side, your NIB on average was up in the quarter-end period NIB and overall deposits down about 4% annualized. In the last year’s first quarter, you showed some good growth, but then the year prior you saw kind of a similar decline. So just wanted to get a sense for the anything unusual in the quarter. Would you chalk it up to seasonality or was there something else going on that we should think about?

James C. Polk — President and Chief Executive Officer

Yeah, there’s probably a couple things in Q1. Well, maybe I’ll back up a bit. We had a really strong deposit quarter in Q3 or, excuse me, Q4 and a really strong deposit quarter in Q1. If you just go back and look at where we were relative to say [Indecipherable] on both the average and the spot, particularly on the NIB, we’re still up like 5%. So we feel pretty good where we’re at, even at the close of the quarter. There was a couple things within Q1 that occurred to bring the deposits down. One was, we opted out of some high-cost public monies that just we didn’t see the need to pay for that and we let that run off and that was a pretty meaningful number.

And then we had some escrow monies related to some projects that closed out during the quarter that brought NIBD down. We still feel good about where we’re at. I think just noting how strong Q4 and Q1 have been, we’re probably looking at more flat as we get into Q2 on both the top end. And we’ve talked about the past low single digits, excuse me, low yield deposits, NIBD. So I think overall we feel good. I think Q2 is typically a seasonally low period for us. So, we think given how we’ve grown, if we can maintain so a flat top line and a flat NIBD, it’ll be a good quarter for us.

Matthew Clark — Analyst, Piper Sandler

Okay, great. Thank you.

Operator

Thank you. We have a follow-up question from the line of Andrew Terrell with Stephens. Your line is now open.

Andrew Terrell — Analyst, Stephens

Hey, thank you for the follow up. I just wanted to go back to the commentary on the margin. You talked about structural, kind of longer term, 3.25% to 3.50% on the margin. Can you just remind us, is that kind of in the current rate environment, do you feel like rate cuts would help on that? And can you provide just a better sense of time frame to get back to that level?

James C. Polk — President and Chief Executive Officer

So, if we’re at roughly say 2.90%at the end of this year and we’re growing on the fixed asset, repricing at 20 basis points per year, that would put us sort of in that zone. At the end of 2028, we get some rate cuts, as you’ve been able to see in both Q4 and Q1. If we get rate cuts, we’re really able to capitalize on. So that would accelerate the timeframe around that. Does that help?

Andrew Terrell — Analyst, Stephens

Great. Very helpful. Yeah. No, that’s great. I appreciate it. Thank you.

James C. Polk — President and Chief Executive Officer

Cool.

Operator

Thank you. This concludes the question and answer session. I would now like to hand the call back over to Chang Park for closing remarks.

Chang Park — Executive Vice President, Investor Relations

Thank you everyone for joining us today and your continued interest in Bank of Hawaii. As always, please feel free to reach out to me if you have any additional questions. Thank you.

Operator

[Operator Closing Remarks].