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FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
21. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Disclosures about Fair Value of Financial Instruments

Fair value estimates, methods and assumptions are set forth below for our financial instruments.

Short-Term Financial Instruments

The carrying values of short-term financial instruments are deemed to approximate fair values. Such instruments are considered readily convertible to cash and include cash and due from financial institutions, interest-bearing deposits in other financial institutions, accrued interest receivable, the majority of FHLB advances and other short-term borrowings, and accrued interest payable.

Investment Securities

The fair value of investment securities is based on market price quotations received from third-party pricing services. The third-party pricing services utilize pricing models supported with timely market data information. Where quoted market prices are not available, fair values are based on quoted market prices of comparable securities.

Loans

Fair values of loans are estimated based on discounted cash flows of portfolios of loans with similar financial characteristics including the type of loan, interest terms and repayment history. Fair values are calculated by discounting scheduled cash flows through estimated maturities using estimated market discount rates. Estimated market discount rates are reflective of credit and interest rate risks inherent in the Company’s various loan types and are derived from available market information, as well as specific borrower information. The weighted-average discount rate used in the valuation of loans was 7.07% and 6.86% as of December 31, 2024 and 2023, respectively. In accordance with ASU 2016-01, the fair value of loans are based on the notion of exit price as of December 31, 2024 and 2023.

Loans Held for Sale

The fair value of loans classified as held for sale are generally based upon quoted prices for similar assets in active markets, acceptance of firm offer letters with agreed upon purchase prices, discounted cash flow models that take into account market observable assumptions, or independent appraisals of the underlying collateral securing the loans. The fair values of Hawaii and U.S. Mainland construction and commercial real estate loans, if any, are reported net of applicable selling costs on the Company's consolidated balance sheets.

Deposit Liabilities

The fair values of deposits with no stated maturity, such as noninterest-bearing demand deposits and interest-bearing demand and savings accounts, are equal to the amount payable on demand. The fair value of time deposits is estimated using discounted cash flow analyses. The fair value of time deposits is estimated by discounting future cash flows using rates currently offered for FHLB advances of similar remaining maturities. The weighted-average discount rate used in the valuation of time deposits was 4.50% and 5.48% as of December 31, 2024 and 2023, respectively.

Long-Term Debt

The fair value of our long-term debt is estimated by discounting scheduled cash flows over the contractual borrowing period at the estimated market rate for similar borrowing arrangements. The weighted-average discount rate used in the valuation of long-term debt was 6.68% and 6.83% as of December 31, 2024 and 2023, respectively.

Derivatives

The fair values of derivative financial instruments are based upon current market values, if available. If there are no relevant comparables, fair values are based on pricing models using current assumptions for interest rate swaps and options.
Off-Balance Sheet Financial Instruments

The fair values of off-balance sheet financial instruments are estimated based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties, current settlement values or quoted market prices of comparable instruments.

Limitations

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of future business and the value of assets and liabilities that are not considered financial instruments. For example, significant assets and liabilities that are not considered financial assets or liabilities include deferred tax assets and liabilities and premises and equipment.

Fair Value Measurement Using
(Dollars in thousands)Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2024     
Financial assets:     
Cash and due from financial institutions$77,774 $77,774 $77,774 $— $— 
Interest-bearing deposits in other financial institutions303,167 303,167 303,167 — — 
Investment securities1,334,588 1,244,339 59,498 1,177,994 6,847 
Loans held for sale5,662 5,662 — 5,662 — 
Loans5,332,852 4,916,765 — — 4,916,765 
Accrued interest receivable23,378 23,378 462 4,607 18,309 
Financial liabilities:
Deposits:
Noninterest-bearing deposits1,888,937 1,888,937 1,888,937 — — 
Interest-bearing demand and savings deposits3,667,889 3,667,889 3,667,889 — — 
Time deposits1,087,185 1,079,275 — — 1,079,275 
Long-term debt156,345 153,760 — — 153,760 
Accrued interest payable10,051 10,051 113 — 9,938 
Fair Value Measurement Using
(Dollars in thousands)Notional
Amount		Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2024     
Off-balance sheet financial instruments:
Commitments to extend credit$1,219,537 $— $1,167 $— $1,167 $— 
Standby letters of credit and financial guarantees written2,702 — 41 — 41 — 
Derivatives:
Back-to-back swap agreements:
Assets50,202 3,840 3,840 — — 3,840 
Liabilities(50,202)(3,840)(3,840)— — (3,840)
Interest rate lock commitments469 (4)(4)— (4)— 
Forward sale commitments4,909 46 46 — 46 — 
Risk participation agreements35,183 — — — — — 
Interest rate swap agreements115,545 8,382 8,382 — 8,382 — 

Fair Value Measurement Using
(Dollars in thousands)Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2023     
Financial assets:     
Cash and due from financial institutions$116,181 $116,181 $116,181 $— $— 
Interest-bearing deposits in other financial institutions406,256 406,256 406,256 — — 
Investment securities1,279,548 1,212,388 — 1,205,238 7,150 
Loans held for sale1,778 1,778 — 1,778 — 
Loans5,438,982 5,089,292 — — 5,089,292 
Accrued interest receivable21,511 21,511 342 4,043 17,126 
Financial liabilities:     
Deposits:     
Noninterest-bearing deposits1,913,379 1,913,379 1,913,379 — — 
Interest-bearing demand and savings deposits3,538,922 3,538,922 3,538,922 — — 
Time deposits1,395,291 1,385,473 — — 1,385,473 
Long-term debt156,102 153,073 — — 153,073 
Accrued interest payable18,948 18,948 85 — 18,863 
Fair Value Measurement Using
(Dollars in thousands)Notional
Amount		Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2023
Off-balance sheet financial instruments:   
Commitments to extend credit$1,275,331 $— $1,210 $— $1,210 $— 
Standby letters of credit and financial guarantees written3,301 — 50 — 50 — 
Derivatives:
Back-to-back swap agreements:
Assets51,059 3,547 3,547 — — 3,547 
Liabilities(51,059)(3,547)(3,547)— — (3,547)
Interest rate lock commitments1,807 (34)(34)— (34)— 
Risk participation agreements36,022 — — — — — 
Interest rate swap agreements115,545 6,440 6,440 — — 6,440 

Fair Value Measurements

Financial assets and liabilities are grouped at fair value into three levels based on the markets in which the financial assets and liabilities are traded and the reliability of the assumptions used to determine fair value as follows:

•Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities traded in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

•Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of discounted cash flow models and similar techniques that require the use of significant judgment or estimation.

Fair values are based on the price that the Company would expect to receive if an asset were sold or pay to transfer a liability in an orderly transaction between market participants at the measurement date. When developing fair value measurements, the use of observable inputs are maximized and the use of unobservable inputs are minimized.

Fair value measurements are used to record adjustments to certain financial assets and liabilities and to determine fair value disclosures. Available-for-sale investment securities and derivatives are recorded at fair value on a recurring basis. From time to time, the Company may be required to record other financial assets at fair value on a nonrecurring basis such as loans held for sale, collateral dependent loans and mortgage servicing rights. These nonrecurring fair value adjustments typically involve application of the lower of cost or fair value accounting or write-downs of individual assets.

During the year ended December 31, 2024, the Company transferred an interest rate swap from Level 3 to Level 2 of the fair value hierarchy. The transfer was due to a change in the methodology used. There were no other transfers of financial assets and liabilities into and out of Level 3 of the fair value hierarchy during the year ended December 31, 2024.
The following tables below present the fair value of assets and liabilities measured on a recurring basis:

Fair Value at Reporting Date Using
(Dollars in thousands)Fair
Value		Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2024    
Available-for-sale investment securities:    
Debt securities:    
States and political subdivisions$116,833 $— $110,668 $6,165 
Corporate securities— — — — 
U.S. Treasury obligations and direct obligations of U.S Government agencies81,200 59,498 21,702 — 
Collateralized loan obligations31,140 31,140 — 
Mortgage-backed securities:
Residential - U.S. Government-sponsored enterprises414,471 — 414,471 — 
Residential - Non-government agencies16,926 — 16,244 682 
Commercial - U.S. Government-sponsored enterprises67,161 — 67,161 — 
Commercial - Non-government agencies9,927 — 9,927 — 
Total investment securities737,658 59,498 671,313 6,847 
Derivatives:
Interest rate lock commitments(4)— (4)— 
Forward sale commitments46 — 46 — 
Interest rate swap agreements8,382 — 8,382 — 
Total derivatives8,424 — 8,424 — 
Total$746,082 $59,498 $679,737 $6,847 
Fair Value at Reporting Date Using
(Dollars in thousands)Fair
Value		Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2023    
Available-for-sale investment securities:    
Debt securities:    
States and political subdivisions$126,635 $— $120,199 $6,436 
Corporate securities31,414 — 31,414 — 
U.S. Treasury obligations and direct obligations of U.S Government agencies26,197 — 26,197 — 
Mortgage-backed securities:    
Residential - U.S. Government-sponsored enterprises378,386 — 378,386 — 
Residential - Non-government agencies18,708 — 17,994 714 
Commercial - U.S. Government-sponsored enterprises50,914 — 50,914 — 
Commercial - Non-government agencies14,956 — 14,956 — 
Total investment securities647,210 — 640,060 7,150 
Derivatives:
Interest rate lock commitments(34)— (34)— 
Interest rate swap agreements6,440 — — 6,440 
Total derivatives6,406 — (34)6,440 
Total$653,616 $— $640,026 $13,590 

The following table presents changes in Level 3 financial assets and liabilities measured at fair value on a recurring basis for the
periods presented:

 Available-For-Sale Debt Securities:
(Dollars in thousands)States and Political SubdivisionsResidential - Non-Government AgenciesTotal
Balance as of December 31, 2022$6,584 $684 $7,268 
Principal payments received(232)(23)(255)
Unrealized net gain included in other comprehensive income84 53 137 
Balance as of December 31, 20236,436 714 7,150 
Principal payments received(241)(24)(265)
Unrealized net (loss) gain included in other comprehensive income(30)(8)(38)
Balance as of December 31, 2024$6,165 $682 $6,847 

Based on a discounted cash flow model that calculates the present value of estimated future principal and interest payments, the estimated aggregate fair value of Level 3 financial assets and liabilities measured at fair value on a recurring basis was $6.8 million and $7.2 million as of December 31, 2024 and 2023, respectively.

Within the state and political subdivisions available-for-sale debt securities category, the Company holds two mortgage revenue bonds issued by the City and County of Honolulu with an aggregate fair value of $6.2 million and $6.4 million at December 31, 2024 and 2023, respectively. Within the residential non-government agency available-for-sale debt securities category, the Company holds two mortgage backed bonds issued by Habitat for Humanity with an aggregate fair value of $0.7 million and $0.7 million at December 31, 2024 and 2023, respectively. The Company estimates the aggregate fair value of these available-for-sale investment securities by using a discounted cash flow model to calculate the present value of estimated future principal and interest payments.
The weighted-average discount rate was used as the significant unobservable input in the fair value measurement of the Company’s available-for-sale debt securities. As of December 31, 2024 and 2023, the weighted-average discount rate utilized was 6.22% and 6.12%, respectively, which was derived by incorporating a credit spread over the FHLB Fixed-Rate Advance curve. Significant increases (decreases) in the weighted-average discount rate could result in a significantly lower (higher) fair value measurement.

There were no financial assets or liabilities measured on a nonrecurring basis as of December 31, 2024 and 2023.