State of Hawai i General Obligation Bonds of 2018 $775,000,000* - PowerPoint PPT Presentation

State of Hawai ‘ i General Obligation Bonds of 2018 $775,000,000* Investor Presentation January 23, 2018 *Preliminary, subject to change

Disclaimer This electronic Investor Presentation you are about to view is provided as of January 23, 2018 for a proposed offering by the State of Hawai ‘ i (the “State”) of its General Obligation Bonds of 2018 (“the Bonds”). If you are viewing this presentation after January 23, 2018, there may have been events that occurred subsequent to such date that would have a material adverse effect on the financial information that is presented herein, and neither the State, nor Bank of America Merrill Lynch as Representative of the Underwriters, has undertaken any obligation to update this electronic presentation. All market prices, financial presentation prices, data and other information provided herein are not warranted as to completeness or accuracy and are subject to change without notice. This Investor Presentation is provided for your information and convenience only. Any investment decisions regarding the Bonds should only be made after a careful review of the complete Preliminary Official Statement. By accessing this presentation, you agree not to duplicate, copy, download, screen capture, electronically store or record this Investor Presentation, nor to produce, publish or distribute this Investor Presentation in any form whatsoever. This Investor Presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument, including the Bonds, or to adopt any investment strategy. Any offer or solicitation with respect to the Bonds will be made solely by means of the Preliminary Official Statement and Official Statement, which describe the actual terms of such Bonds. In no event shall the Underwriters or the State be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein. Neither the State nor the Underwriters make any representations as to the legal, tax, credit or accounting treatment of any transactions mentioned herein, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates. You should consult with your own advisors as to such matters and the consequences of the purchase and ownership of the Bonds. Nothing in these materials constitutes a commitment by the State, Underwriters or any of their affiliates to enter into any transaction. No assurance can be given that any transaction mentioned herein could in fact be executed. Past performance is not indicative of future returns, which will vary. Transactions involving the Bonds may not be suitable for all investors. You should consult with your own advisors as to the suitability of the Bonds for your particular circumstances. Clients should contact their salesperson at, and execute transactions through, an entity of the Underwriters or other syndicate member entity qualified in their home jurisdiction unless governing law permits otherwise. 1

Transaction Summary Issuer: State of Hawai ‘ i Offering: General Obligation Bonds of 2018 $775,000,000*, consisting of the Series FT, FU and FV Bonds Estimated Par Amount: All Fixed Rate Serial Bonds* Series FT ($647,920,000): January 1, 2022-2038 Financing Structure: Series FU ($50,000,000): January 1, 2019-2021 Series FV ($77,080,000): March 1, 2018 Series FT: Federal and State Tax-Exempt Tax Status: Series FU & FV: Federally Taxable and State Tax-Exempt Security: Full Faith and Credit of the State of Hawai ‘ i Call Provisions: To Be Determined S&P: AA+ (Stable) Moody’s: Aa1 (Stable) Fitch: AA (Positive) Ratings: Use of Proceeds: New money bonds Senior Manager: Bank of America Merrill Lynch Co-Senior Managers: Goldman Sachs & Co. LLC, Morgan Stanley Co-Managers: Barclays Capital, Citigroup Global Markets Inc. Retail Order Period: January 29, 2018* Pricing: Institutional Order Period: January 30, 2018* Closing: February 14, 2018* * Preliminary, subject to change 2

Developments Since Last Bond Sale General Obligation Bonds of 2018 General Obligation Bonds of 2017 (January 2018) (May 2017) Unemployment Rate 2.7% (Feb.) 1.7% (Dec.) Economy Visitor Arrivals +3.3% (Feb.) +4.7% (July) & +4.9% (through Nov.) Visitor Expenditures +9.0% (Feb.) +8.9% (July) & +6.6% (through Nov.) ERS Investment Returns -0.78% (FY2016) +13.90% (FY2017) Actuarial Value of Assets ~$15 billion (FY2016) ~$16 billion (FY2017) Pension Pension Funded Ratio 54.7% (FY2016) 54.9% (FY2017) & OPEB Increased Contributions Legislation Proposed Act 17 Effective on July 1, 2017 Maui Hospital Resolution Legislation Proposed Act 18 Effective on July 1, 2017 OPEB Fund Balance $481 million (FY2016) $880 million (FY2017) EBRF Balance $100.9 million (FY2016) $311.3 million (FY2017) Reserves HHRF Balance $186.9 million (FY2016) $182.2 million (FY2017) FY 2017 2.5% Projected 2.0% Actual Council on FY 2018 4.0% Projected 4.5% Projected Revenues FY 2019 4.0% Projected 4.3% Projected Projections FY 2020 to FY 2024 4.5% Projected each year 4.0% Projected each year 3

Vibrant and Diversified Economy Hawai’i had the lowest state unemployment rate in Diversified Hawai‘i Employment Base  December of 1.7% 1 First Ten Months of CY 2017  Hawai‘i’s labor force, employment and job count reached record levels in 2016 and has remained Manufacturing Information at record levels for 2017 Private Other Services Trade, Education Transportation & Wage and salary job count grew 1.4% in 2016 and  Financial 4% 2% 1% Utilities Activities is projected to grow 1.0% in 2017 2% 17% Natural Resources, 4% Mining, The State's economy continues to diversify (see  Construction 5% chart to the right) with growth in Private Health Local Care and Professional and Business Services Government 3% Tourism now accounts for only 17% of State ― 17% GDP, compared to 33% in 1988 State 10% Leisure & Government Hospitality Government jobs have consistently represented  20% – 22% of jobs since 1990 10%  Hawai‘i military payroll jobs have remained Private Health 12% consistent over the past 15 years despite changes Care 2% Professional & in federal administrations 10% Business Federal Civilian Services Non-DOD Federal military incl. DOD civilians (1) Not seasonally adjusted 4 Source: State of Hawai‘i, Department of Labor and Industrial Relations, U.S. Bureau of Economic Analysis (Military Jobs).

Labor Market Update Median Household Income (CY 2008 to 2016) $90,000 $80,513 $77,273 $80,000 $74,634 $74,511 $73,388 $73,486 $71,404 $70,951 $69,592 $68,537 $67,744 $68,020 $67,214 $66,146 $66,259 $70,000 $64,098 $63,030 $61,821 $57,617 $60,000 $53,657 $55,775 $52,029 $52,250 $51,371 $50,221 $50,502 $50,046 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Honolulu State of Hawai‘i United States Historical Unemployment Rates (CY 2008 to Present) Current (1) United States 3.9% 12% Hawai‘i 1.7% Honolulu 1.7% 10% 8% 6% 4% 2% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Honolulu State of Hawai'i United States 5 Source: U.S. Census Bureau , Bureau of Labor Statistics. (1) Not seasonally adjusted, as of December 2017

Tourism and Economic Outlook  Visitor arrivals and expenditures continue to be Visitor Arrivals (mm) (1) strong, with both increasing in 2017 9.8 35% 9.7 9.6 9.3 10.0 8.9 8.7 8.3 8.2 — For the first 11 months of 2017, visitor 8.0 8.0 7.3 arrivals were up 4.9% and expenditures 6.0 were up 6.6% 4.0  In terms of major market areas, in the first 2.0 three quarters of 2017, arrivals from the U.S. West, U.S. East and Japan were up 4.4%, 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 5.7% and 6.7%, respectively from the same Calendar Year period of the previous year  The statewide hotel occupancy rate averaged Visitor Expenditures ($mm) (1) 81.3% in the third quarter of 2017, 0.8% higher than the same period in 2016 55% $14,365 $14,521 $14,973 $15,111 $15,911 $16,979 $17,639 $18,272 $18,921 $20,000  Hawaii’s economy is expected to continue on $15,000 its expansion path with growth projected $12,180 through 2020 $10,000 $5,000 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Calendar Year Source: DBEDT, Smith Travel Research, Hospitality Advisors LLC. (1) 2017- 2020 data is projected. 6