Bank of Hawaii Corporation Third Quarter 2014 Financial Results

  • Diluted Earnings Per Share $0.95
  • Net Income $41.8 Million
  • Board of Directors Declares Dividend of $0.45 Per Share

HONOLULU--()--Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.95 for the third quarter of 2014, up from $0.94 in the second quarter of 2014, and up from $0.85 in the third quarter of 2013. Net income for the third quarter of 2014 was $41.8 million, an increase from net income of $41.5 million in the previous quarter and $37.7 million in the same quarter last year.

“Bank of Hawaii Corporation continued to perform well during the third quarter of 2014,” said Peter Ho, Chairman, President, and CEO. “Loan balances grew 2.8 percent from the previous quarter and average deposits grew 1.4 percent. Our margin remained relatively stable as loan growth partially offset the lower interest rate environment. Asset quality continued to be strong during the quarter and our expenses were well controlled.”

The return on average assets for the third quarter of 2014 was 1.15 percent, down slightly from 1.17 percent in the previous quarter and up from 1.09 percent in the same quarter last year. The return on average equity for the third quarter of 2014 was 15.57 percent, down from 15.87 percent for the second quarter of 2014 and up from 15.02 percent in the third quarter of 2013.

For the nine-month period ended September 30, 2014, net income was $121.9 million, an increase from net income of $111.4 million for the same period last year. Diluted earnings per share were $2.75 for the nine-month period in 2014 compared with diluted earnings per share of $2.50 for the same period in 2013. The 2014 year-to-date return on average assets was 1.15 percent compared with 1.09 percent for the same period in 2013. The 2014 year-to-date return on average equity was 15.53 percent compared with 14.59 percent for the nine months ended September 30, 2013.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the third quarter of 2014 was $98.3 million, up $1.0 million from net interest income of $97.3 million in the second quarter of 2014 and up $4.8 million from net interest income of $93.5 million in the third quarter of 2013. Net interest income for the nine-month period in 2014 was $291.6 million compared with net interest income of $274.3 million for the same period in 2013. Analyses of the changes in net interest income are included in Tables 8a, 8b, and 8c.

The net interest margin was 2.85 percent for the third quarter of 2014, a 1 basis point decrease from the net interest margin of 2.86 percent in the second quarter of 2014, and a 2 basis point increase from the net interest margin of 2.83 percent in the third quarter of 2013. The net interest margin for the first nine months of 2014 was 2.86 percent compared with 2.81 percent for the same nine-month period last year.

The Company recorded a negative provision for credit losses of $2.7 million in the third quarter of 2014 compared with a negative provision of $2.2 million in the second quarter of 2014 and no provision recorded in the third quarter of 2013. The negative provision for credit losses for the third quarter of 2014 was primarily due to a reduction in the specific reserve related to one commercial client. The first nine months of 2014 included a negative provision for credit losses of $4.9 million compared to no provision for the first nine months of 2013. The negative provision for the first nine months of 2014 reflects the continued strength of our credit risk profile, several large commercial loan recoveries, as well as the reduction in the specific reserve related to one commercial client as noted above.

Noninterest income was $45.0 million in the third quarter of 2014, an increase of $0.5 million compared with $44.5 million in the second quarter of 2014, and a decrease of $0.1 million compared with $45.1 million in the third quarter of 2013. Noninterest income in the third quarter of 2014 included a net gain of $1.9 million resulting from the sale of 23,000 Visa Class B shares (9,478 Class A equivalents). Noninterest income in the second quarter of 2014 included a gain of $2.0 million from the sale of 23,500 Visa Class B shares. The Company also contributed 5,700 Visa Class B shares (2,349 Class A equivalents) to the Bank of Hawaii Foundation during the third quarter of 2014. The contribution of Visa shares to the Bank of Hawaii Foundation has no impact on noninterest expense; however, the contributions favorably impact the effective tax rate. As of September 30, 2014, the Company has 424,214 Visa Class B shares remaining (174,819 Class A equivalents). Noninterest income for the nine-months ended September 30, 2014 was $134.2 million, a decrease of $6.7 million compared with noninterest income of $140.9 million for the same period in 2013. The decrease was primarily due to a reduction of $10.9 million in mortgage banking income which was partially offset by net gains of $5.8 million on the sales of Visa Class B shares during the period.

Noninterest expense was $81.0 million in the third quarter of 2014, essentially flat with the previous quarter, and down $2.0 million compared with $83.0 million in the same quarter last year. Noninterest expense for the nine-months ended September 30, 2014 was $245.7 million, a decrease of $2.8 million compared with noninterest expense of $248.5 million for the same period in 2013. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The efficiency ratio for the third quarter of 2014 was 57.74 percent, down from 58.38 percent in the previous quarter and 61.01 percent in the same quarter last year. The efficiency ratio for the nine-month period ended September 30, 2014 was 58.88 percent, an improvement from the efficiency ratio of 60.96 percent for the same period last year.

The effective tax rate for the third quarter of 2014 was 32.59 percent compared with 30.86 percent in the previous quarter and 28.91 percent during the same quarter last year. The effective tax rate for the nine-month period ended September 30, 2014 was 30.93 percent compared to 29.99 percent for the same period last year. The lower effective tax rates during 2013 were due to the release of tax reserves and low-income housing and other tax credits.

The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services, and Treasury & Other. Results are determined based on the Company’s internal financial management reporting process and organizational structure. Selected financial information for the business segments is included in Tables 13a and 13b.

Asset Quality

The Company’s overall asset quality continued to remain strong during the third quarter of 2014. Total non-performing assets declined to $33.3 million at September 30, 2014, down from non-performing assets of $34.4 million at June 30, 2014 and $33.8 million at September 30, 2013. As a percentage of total loans and leases and foreclosed real estate, non-performing assets declined to 0.50 percent at September 30, 2014, down from 0.53 percent at June 30, 2014 and 0.56 percent at September 30, 2013.

Accruing loans and leases past due 90 days or more were $9.1 million at September 30, 2014, down from $9.7 million at June 30, 2014 and $11.4 million at September 30, 2013. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $45.2 million at September 30, 2014 and primarily comprised of residential mortgage loans with lowered monthly payments to accommodate our borrowers’ financial needs for a period of time. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loans and leases charged off during the third quarter of 2014 were $0.8 million or 0.05 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $3.7 million during the quarter were partially offset by recoveries of $2.9 million. The Company recorded a net recovery of loans and leases previously charged off of $1.9 million during the second quarter of 2014 as loan and lease charge-offs of $4.0 million were more than offset by recoveries of $5.9 million. Net charge-offs during the third quarter of 2013 were $0.9 million or 0.06 percent annualized of total average loans and leases outstanding, and were comprised of $4.7 million in charge-offs partially offset by recoveries of $3.8 million. Net charge-offs in the nine-month period ended September 30, 2014 were $0.2 million, or 0.00 percent annualized of total average loans and leases outstanding compared with net charge-offs of $5.2 million, or 0.12 percent annualized of total average loans and leases outstanding for the same period in 2013.

The allowance for loan and lease losses was reduced to $110.4 million at September 30, 2014. The ratio of the allowance for loan and lease losses to total loans and leases was 1.67 percent at September 30, 2014, a decrease of 10 basis points from the previous quarter commensurate with continued improvements in credit quality and the Hawaii economy. The reserve for unfunded commitments at September 30, 2014 was unchanged at $5.9 million. Details of loan and lease charge-offs, recoveries, and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $14.51 billion at September 30, 2014, down from total assets of $14.84 billion at June 30, 2014 and up from $13.85 billion at September 30, 2013. Average total assets were $14.37 billion during the third quarter of 2014, up from $14.25 billion during the previous quarter and $13.77 billion during the same quarter last year.

The investment securities portfolio was $6.78 billion at September 30, 2014, down from $6.91 billion at June 30, 2014 and $6.91 billion at September 30, 2013. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $4.56 billion in securities held to maturity and $2.22 billion in securities available for sale at September 30, 2014.

Total loans and leases increased to $6.61 billion at September 30, 2014, up from $6.43 billion at June 30, 2014 and $6.01 billion at September 30, 2013. Average total loans and leases were $6.49 billion during the third quarter of 2014, up from $6.27 billion during the second quarter of 2014 and $5.89 billion during the same quarter last year. The commercial loan portfolio increased to $2.73 billion at the end of the quarter, up from commercial loans of $2.69 billion at the end of the previous quarter, and up from $2.48 billion at the end of the same quarter last year. Total consumer loans increased to $3.88 billion at the end of the third quarter of 2014, up from $3.73 billion at the end of the second quarter of 2014, and up from $3.53 billion at the end of the third quarter of 2013 in all loan categories. Loan and lease portfolio balances, including the higher risk loans and leases outstanding, are summarized in Table 10.

Total deposits were $12.36 billion at September 30, 2014, down from $12.67 billion at June 30, 2014, and up from $11.61 billion at September 30, 2013. The decrease from the previous quarter was largely due to strong growth in short-term public and commercial deposits at the end of the second quarter. Average total deposits were $12.20 billion during the third quarter of 2014, up from $12.03 billion during the previous quarter and $11.48 billion during the same quarter last year.

During the third quarter of 2014, the Company repurchased 340.9 thousand shares of common stock at a total cost of $19.8 million under its share repurchase program. The average cost was $58.00 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through September 30, 2014, the Company has repurchased 51.7 million shares and returned over $1.9 billion to shareholders at an average cost of $36.86 per share. Remaining buyback authority under the share repurchase program was $89.2 million at September 30, 2014. From October 1 through October 24, 2014, the Company repurchased an additional 144.0 thousand shares of common stock at an average cost of $55.58 per share.

Total shareholders’ equity was $1.06 billion at September 30, 2014, compared with $1.05 billion at June 30, 2014, and $1.0 billion at September 30, 2013. The ratio of tangible common equity to risk-weighted assets was 15.23 percent at the end of the third quarter of 2014, compared with 15.54 percent at the end of the second quarter of 2014 and 15.62 percent at the end of the same quarter last year. The Tier 1 leverage ratio at September 30, 2014 was 7.19 percent, down from 7.20 percent at June 30, 2014 and up from 7.16 percent at September 30, 2013.

The Company’s Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s outstanding shares. The dividend will be payable on December 12, 2014 to shareholders of record at the close of business on November 28, 2014.

Hawaii Economy

General economic conditions in Hawaii continued to remain positive during the third quarter of 2014 due to an expanding construction industry, stable tourism, low unemployment, and a strong real estate market. For the first eight months of 2014, total visitor spending increased 2.1% while total visitor arrivals remained relatively unchanged compared to the same period in 2013. The statewide seasonally adjusted unemployment rate was 4.2 percent in September 2014 compared to 5.9 percent nationally. For the first nine months of 2014, the volume of single-family home sales on Oahu increased 1.6 percent, while the volume of condominium sales on Oahu decreased 0.4 percent compared with the same period in 2013. The median price of single-family homes on Oahu increased 4.6 percent, while the median price of condominiums on Oahu increased 5.4 percent for the first nine months of 2014 compared to the same nine-month period in 2013. As of September 30, 2014, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 2.9 months and 3.3 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its third quarter 2014 financial results today at 6:00 p.m. Eastern Time (12:00 p.m. Hawaii Time). The conference call will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation’s web site, www.boh.com. Conference call participants located in the United States or Canada should dial 1 (800) 708-4540. Other international conference call participants should dial 1 (847) 619-6397. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning on Monday, October 27, 2014 by dialing 1 (888) 843-7419 in the United States or Canada and 1 (630) 652-3042 from other international locations. Enter the pass code number 38213055# when prompted. A replay of the conference call will also be available via the Investor Relations link on the Company’s website, www.boh.com.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain "forward-looking statements,” such as forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation's Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the U.S. Securities and Exchange Commission. We have not committed to update forward-looking statements to reflect later events or circumstances.

Bank of Hawaii Corporation is a regional financial services company serving businesses, consumers, and governments in Hawaii, American Samoa, and the West Pacific. The Company’s principal subsidiary, Bank of Hawaii, was founded in 1897 and is the largest independent financial institution in Hawaii. For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com.

           
Bank of Hawaii Corporation and Subsidiaries
Financial Highlights                             Table 1a
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands, except per share amounts)     2014     2014     2013     2014     2013

For the Period:

Operating Results
Net Interest Income $ 95,379 $ 94,412 $ 90,887 $ 283,024 $ 266,787
Provision for Credit Losses (2,665 ) (2,199 ) - (4,864 ) -
Total Noninterest Income 44,950 44,481 45,126 134,199 140,945
Total Noninterest Expense 81,030 81,082 82,977 245,659 248,545
Net Income 41,769 41,490 37,704 121,851 111,447
Basic Earnings Per Share 0.95 0.94 0.85 2.77 2.51
Diluted Earnings Per Share 0.95 0.94 0.85 2.75 2.50
Dividends Declared Per Share 0.45 0.45 0.45 1.35 1.35
 
Performance Ratios
Return on Average Assets 1.15 % 1.17 % 1.09 % 1.15 % 1.09 %
Return on Average Shareholders' Equity 15.57 15.87 15.02 15.53 14.59
Efficiency Ratio 1 57.74 58.38 61.01 58.88 60.96
Net Interest Margin 2 2.85 2.86 2.83 2.86 2.81
Dividend Payout Ratio 3 47.37 47.87 52.94 48.74 53.78
Average Shareholders' Equity to Average Assets 7.41 7.36 7.23 7.38 7.49
 
Average Balances
Average Loans and Leases $ 6,488,780 $ 6,274,595 $ 5,892,888 $ 6,290,548 $ 5,826,424
Average Assets 14,372,375 14,253,384 13,769,699 14,221,143 13,633,907
Average Deposits 12,200,654 12,030,010 11,479,185 12,016,485 11,337,792
Average Shareholders' Equity 1,064,589 1,048,429 995,661 1,048,924 1,021,480
 
Per Share of Common Stock
Book Value $ 24.04 $ 23.72 $ 22.29 $ 24.04 $ 22.29
Tangible Book Value 23.32 23.01 21.58 23.32 21.58
Market Value
Closing 56.81 58.69 54.45 56.81 54.45
High 60.75 61.73 57.13 61.73 57.13
Low 55.55 53.45 50.50 53.45 44.88
 
September 30, June 30, December 31, September 30,
              2014       2014       2013       2013

As of Period End:

Balance Sheet Totals
Loans and Leases $ 6,606,350 $ 6,426,353 $ 6,095,387 $ 6,006,642
Total Assets 14,510,166 14,844,505 14,084,280 13,848,871
Total Deposits 12,361,441 12,670,034 11,914,656 11,608,134
Long-Term Debt 173,926 173,671 174,706 174,717
Total Shareholders' Equity 1,057,413 1,050,801 1,011,976 992,686
 
Asset Quality
Allowance for Loan and Lease Losses $ 110,362 $ 113,838 $ 115,454 $ 123,680
Non-Performing Assets 33,307 34,389 39,650 33,832
 
Financial Ratios
Allowance to Loans and Leases Outstanding 1.67 % 1.77 % 1.89 % 2.06 %
Tier 1 Capital Ratio 4 15.32 15.66 16.05 16.04
Total Capital Ratio 4 16.57 16.91 17.31 17.30
Tier 1 Leverage Ratio 4 7.19 7.20 7.24 7.16
Total Shareholders' Equity to Total Assets 7.29 7.08 7.19 7.17
Tangible Common Equity to Tangible Assets 5 7.09 6.88 6.98 6.96
Tangible Common Equity to Risk-Weighted Assets 4, 5 15.23 15.54 15.67 15.62
 
Non-Financial Data
Full-Time Equivalent Employees 2,170 2,194 2,196 2,205
Branches 74 74 74 74
ATMs 459 457 466 468
 
 

1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).

2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.

3 Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share.

4 Financial ratios as of December 31, 2013 and September 30, 2013 were revised to conform to the current period calculation.

5 Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 1b “Reconciliation of Non-GAAP Financial Measures."

 
             
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures                                 Table 1b
  September 30, June 30, December 31, September 30,
(dollars in thousands)   2014     2014     2013     2013
Total Shareholders' Equity $ 1,057,413 $ 1,050,801 $ 1,011,976 $ 992,686

Less: Goodwill

    31,517         31,517         31,517         31,517  
Tangible Common Equity   $ 1,025,896       $ 1,019,284       $ 980,459       $ 961,169  
 
Total Assets $ 14,510,166 $ 14,844,505 $ 14,084,280 $ 13,848,871

Less: Goodwill

    31,517         31,517         31,517         31,517  
Tangible Assets   $ 14,478,649       $ 14,812,988       $ 14,052,763       $ 13,817,354  
 

Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements 1

$ 6,737,853 $ 6,559,897 $ 6,258,178 $ 6,153,642
 
Total Shareholders' Equity to Total Assets 7.29 % 7.08 % 7.19 % 7.17 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.09 % 6.88 % 6.98 % 6.96 %
 
Tier 1 Capital Ratio 1 15.32 % 15.66 % 16.05 % 16.04 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 1 15.23 % 15.54 % 15.67 % 15.62 %
 

 

1 Risk-weighted assets and financial ratios as of December 31, 2013 and September 30, 2013 were revised to conform to the current period calculation.

 
           
Bank of Hawaii Corporation and Subsidiaries
Net Significant Items         Table 2
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands)   2014   2014   2013     2014   2013
Investment Securities Gains, Net $ 1,858 $ 2,079 $ - $ 6,097 $ -
Decrease in Allowance for Loan and Lease Losses 3,476 288 896 5,092 5,178
Separation Expense (14 ) (87 ) (1,753 ) (650 ) (4,092 )
Operating Losses     -       -       -         (730 )     -  
Significant Items Before the Provision (Benefit) for Income Taxes     5,320       2,280       (857 )       9,809       1,086  
Release of Tax Reserve - - (1,267 ) (1,249 ) (2,357 )
Income Tax Impact     2,085       894       (300 )       3,845       380  
Net Significant Items   $ 3,235     $ 1,386     $ 710       $ 7,213     $ 3,063  
 
       
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income         Table 3
    Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands, except per share amounts)     2014   2014   2013   2014   2013
Interest Income
Interest and Fees on Loans and Leases $ 68,089 $ 65,818 $ 63,918 $ 197,433 $ 189,467
Income on Investment Securities
Available-for-Sale 10,286 10,697 12,038 31,743 42,962
Held-to-Maturity 26,067 26,938 24,137 80,894 63,180
Deposits 3 1 3 7 7
Funds Sold 176 168 177 481 310
Other       302       302       301       906       870
Total Interest Income       104,923       103,924       100,574       311,464       296,796
Interest Expense
Deposits 2,391 2,393 2,500 7,142 7,725
Securities Sold Under Agreements to Repurchase 6,523 6,465 6,551 19,385 20,307
Funds Purchased 3 4 4 10 36
Long-Term Debt       627       650       632       1,903       1,941
Total Interest Expense       9,544       9,512       9,687       28,440       30,009
Net Interest Income 95,379 94,412 90,887 283,024 266,787
Provision for Credit Losses       (2,665 )     (2,199 )     -       (4,864 )     -
Net Interest Income After Provision for Credit Losses       98,044       96,611       90,887       287,888       266,787
Noninterest Income
Trust and Asset Management 11,716 12,005 11,717 35,573 35,692
Mortgage Banking 1,646 1,804 4,132 5,455 16,363
Service Charges on Deposit Accounts 9,095 8,638 9,385 26,611 27,798
Fees, Exchange, and Other Service Charges 13,390 13,370 12,732 39,699 37,799
Investment Securities Gains, Net 1,858 2,079 - 6,097 -
Insurance 2,348 1,930 2,177 6,401 6,895
Bank-Owned Life Insurance 1,644 1,519 1,365 4,765 3,997
Other       3,253       3,136       3,618       9,598       12,401
Total Noninterest Income       44,950       44,481       45,126       134,199       140,945
Noninterest Expense
Salaries and Benefits 45,530 45,081 46,552 137,508 140,568
Net Occupancy 9,334 9,254 9,847 28,005 29,143
Net Equipment 4,473 4,669 4,572 13,745 13,529
Data Processing 3,665 3,842 3,697 11,156 10,013
Professional Fees 1,835 2,613 2,119 6,708 6,736
FDIC Insurance 1,750 2,055 1,913 5,881 5,811
Other       14,443       13,568       14,277       42,656       42,745
Total Noninterest Expense       81,030       81,082       82,977       245,659       248,545
Income Before Provision for Income Taxes 61,964 60,010 53,036 176,428 159,187
Provision for Income Taxes       20,195       18,520       15,332       54,577       47,740
Net Income     $ 41,769     $ 41,490     $ 37,704     $ 121,851     $ 111,447
Basic Earnings Per Share $ 0.95 $ 0.94 $ 0.85 $ 2.77 $ 2.51
Diluted Earnings Per Share $ 0.95 $ 0.94 $ 0.85 $ 2.75 $ 2.50
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 1.35 $ 1.35
Basic Weighted Average Shares 43,859,396 44,053,899 44,267,356 44,034,047 44,433,967
Diluted Weighted Average Shares       44,088,553       44,246,431       44,479,472       44,250,033       44,588,777
 
           
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income   Table 4
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands)     2014   2014   2013     2014   2013
Net Income $ 41,769 $ 41,490 $ 37,704 $ 121,851 $ 111,447
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities 403 8,617 (6,986 ) 15,291 (63,199 )
Defined Benefit Plans       157     156     202         469     481  
Total Other Comprehensive Income (Loss)       560     8,773     (6,784 )       15,760     (62,718 )
Comprehensive Income     $ 42,329   $ 50,263   $ 30,920       $ 137,611   $ 48,729  
 
         
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition     Table 5
September 30, June 30, December 31, September 30,
(dollars in thousands)     2014     2014     2013     2013
Assets
Interest-Bearing Deposits $ 3,883 $ 4,552 $ 3,617 $ 3,048
Funds Sold 377,303 796,275 271,414 254,940
Investment Securities
Available-for-Sale 2,220,913 2,209,763 2,243,697 2,277,136
Held-to-Maturity (Fair Value of $4,576,396; $4,743,012; $4,697,587; and $4,621,491) 4,557,614 4,704,551 4,744,519 4,633,399
Loans Held for Sale 2,382 3,678 6,435 18,795
Loans and Leases 6,606,350 6,426,353 6,095,387 6,006,642
Allowance for Loan and Lease Losses       (110,362 )     (113,838 )     (115,454 )     (123,680 )
Net Loans and Leases       6,495,988       6,312,515       5,979,933       5,882,962  
Total Earning Assets       13,658,083       14,031,334       13,249,615       13,070,280  
Cash and Noninterest-Bearing Deposits 172,386 141,950 188,715 131,228
Premises and Equipment 107,560 108,116 108,636 105,181
Accrued Interest Receivable 46,641 44,311 43,930 46,047
Foreclosed Real Estate 3,562 3,944 3,205 3,036
Mortgage Servicing Rights 25,559 26,397 28,123 28,015
Goodwill 31,517 31,517 31,517 31,517
Other Assets       464,858       456,936       430,539       433,567  
Total Assets     $ 14,510,166     $ 14,844,505     $ 14,084,280     $ 13,848,871  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 3,824,544 $ 4,070,334 $ 3,681,128 $ 3,524,638
Interest-Bearing Demand 2,369,434 2,566,240 2,355,608 2,320,452
Savings 4,738,364 4,525,593 4,560,150 4,503,963
Time       1,429,099       1,507,867       1,317,770       1,259,081  
Total Deposits       12,361,441       12,670,034       11,914,656       11,608,134  
Funds Purchased 8,459 8,467 9,982 9,983
Securities Sold Under Agreements to Repurchase 700,203 745,626 770,049 847,239
Long-Term Debt 173,926 173,671 174,706 174,717
Retirement Benefits Payable 35,152 35,017 34,965 47,338
Accrued Interest Payable 6,086 5,099 4,871 6,040
Taxes Payable and Deferred Taxes 42,468 42,131 34,907 40,364
Other Liabilities       125,018       113,659       128,168       122,370  
Total Liabilities       13,452,753       13,793,704       13,072,304       12,856,185  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: September 30, 2014 - 57,633,855 / 43,993,729; June 30, 2014 - 57,631,552 / 44,297,228; December 31, 2013 - 57,480,846 / 44,490,385; and September 30, 2013 - 57,487,855 / 44,539,247)

573 573 572 572
Capital Surplus 529,530 527,284 522,505 520,510
Accumulated Other Comprehensive Loss (16,063 ) (16,623 ) (31,823 ) (33,510 )
Retained Earnings 1,213,339 1,191,512 1,151,754 1,132,996

Treasury Stock, at Cost (Shares: September 30, 2014 - 13,640,126; June 30, 2014 - 13,334,324; December 31, 2013 - 12,990,461; and September 30, 2013 - 12,948,608)

      (669,966 )     (651,945 )     (631,032 )     (627,882 )
Total Shareholders' Equity       1,057,413       1,050,801       1,011,976       992,686  
Total Liabilities and Shareholders' Equity     $ 14,510,166     $ 14,844,505     $ 14,084,280     $ 13,848,871  
 
           
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity   Table 6
    Accum.
Other
Compre-
hensive
Common Shares Common Capital Income Retained Treasury
(dollars in thousands)     Outstanding   Stock   Surplus   (Loss)   Earnings   Stock   Total
Balance as of December 31, 2013 44,490,385 $ 572 $ 522,505 $ (31,823 ) $ 1,151,754 $ (631,032 ) $ 1,011,976
Net Income - - - - 121,851 - 121,851
Other Comprehensive Income - - - 15,760 - - 15,760
Share-Based Compensation - - 5,831 - - - 5,831
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 314,579 1 1,194 - (318 ) 7,976 8,853
Common Stock Repurchased (811,235 ) - - - - (46,910 ) (46,910 )
Cash Dividends Declared ($1.35 per share)     -       -     -     -       (59,948 )     -       (59,948 )
Balance as of September 30, 2014     43,993,729     $ 573   $ 529,530   $ (16,063 )   $ 1,213,339     $ (669,966 )   $ 1,057,413  
 
Balance as of December 31, 2012 44,754,835 $ 571 $ 515,619 $ 29,208 $ 1,084,477 $ (608,210 ) $ 1,021,665
Net Income - - - - 111,447 - 111,447
Other Comprehensive Loss - - - (62,718 ) - - (62,718 )
Share-Based Compensation - - 4,226 - - - 4,226
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 444,951 1 665 - (2,458 ) 13,521 11,729
Common Stock Repurchased (660,539 ) - - - - (33,193 ) (33,193 )
Cash Dividends Declared ($1.35 per share)     -       -     -     -       (60,470 )     -       (60,470 )
Balance as of September 30, 2013     44,539,247     $ 572   $ 520,510   $ (33,510 )   $ 1,132,996     $ (627,882 )   $ 992,686  
 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7a
    Three Months Ended   Three Months Ended   Three Months Ended
September 30, 2014 June 30, 2014 September 30, 2013
Average   Income/   Yield/ Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)     Balance   Expense   Rate     Balance   Expense   Rate   Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 4.1 $ - 0.24 % $ 4.0 $ - 0.12 % $ 4.3 $ - 0.30 %
Funds Sold 326.2 0.2 0.21 308.3 0.2 0.22 335.3 0.2 0.21
Investment Securities
Available-for-Sale 2,212.0 12.3 2.22 2,226.7 12.7 2.28 2,495.9 13.7 2.18
Held-to-Maturity 4,641.1 26.9 2.32 4,756.8 27.8 2.34 4,385.5 25.0 2.28
Loans Held for Sale 2.0 - 4.03 3.6 - 4.33 16.7 0.2 4.42
Loans and Leases 1
Commercial and Industrial 980.8 8.9 3.61 950.2 8.1 3.42 877.3 7.7 3.49
Commercial Mortgage 1,350.6 13.3 3.89 1,302.2 12.7 3.91 1,164.9 12.1 4.12
Construction 126.2 1.3 4.20 103.2 1.2 4.48 120.1 1.4 4.71
Commercial Lease Financing 235.1 2.0 3.33 241.2 1.7 2.80 253.0 1.5 2.32
Residential Mortgage 2,396.7 25.3 4.22 2,323.5 25.4 4.38 2,255.9 25.3 4.49
Home Equity 823.3 8.1 3.92 805.9 7.9 3.93 757.6 7.9 4.13
Automobile 296.6 4.0 5.29 280.6 3.7 5.33 240.6 3.3 5.43
Other 2       279.5     5.2   7.45       267.8     5.1   7.65       223.5     4.6   8.23
Total Loans and Leases       6,488.8     68.1   4.18       6,274.6     65.8   4.20       5,892.9     63.8   4.31
Other       71.4     0.3   1.69       74.1     0.3   1.63       78.1     0.3   1.54
Total Earning Assets 3       13,745.6     107.8   3.13       13,648.1     106.8   3.13       13,208.7     103.2   3.11
Cash and Noninterest-Bearing Deposits 152.4 138.3 140.3
Other Assets   474.4   467.0   420.7
Total Assets $ 14,372.4 $ 14,253.4 $ 13,769.7
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,417.4 0.2 0.03 $ 2,359.2 0.2 0.03 $ 2,147.8 0.1 0.03
Savings 4,591.4 1.0 0.09 4,540.3 1.0 0.09 4,485.3 1.0 0.09
Time       1,440.1     1.2   0.34       1,506.5     1.2   0.33       1,401.5     1.4   0.38
Total Interest-Bearing Deposits       8,448.9     2.4   0.11       8,406.0     2.4   0.11       8,034.6     2.5   0.12
Short-Term Borrowings 9.3 - 0.14 9.3 - 0.14 11.7 - 0.14
Securities Sold Under Agreements to Repurchase 715.6 6.5 3.57 789.9 6.5 3.24 847.2 6.6 3.03
Long-Term Debt       173.8     0.6   1.44       175.3     0.6   1.49       174.7     0.6   1.44
Total Interest-Bearing Liabilities       9,347.6     9.5   0.40       9,380.5     9.5   0.40       9,068.2     9.7   0.42
Net Interest Income $ 98.3 $ 97.3 $ 93.5
Interest Rate Spread 2.73 % 2.73 % 2.69 %
Net Interest Margin 2.85 % 2.86 % 2.83 %
Noninterest-Bearing Demand Deposits 3,751.8 3,624.0 3,444.6
Other Liabilities 208.4 200.5 261.2
Shareholders' Equity   1,064.6   1,048.4   995.7
Total Liabilities and Shareholders' Equity $ 14,372.4 $ 14,253.4 $ 13,769.7
 
 

1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $2,873,000, $2,874,000 and $2,597,000 for the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis     Table 7b
  Nine Months Ended   Nine Months Ended
September 30, 2014 September 30, 2013
Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)   Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 4.6 $ - 0.20 % $ 4.2 $ - 0.22 %
Funds Sold 301.9 0.5 0.21 220.7 0.3 0.19
Investment Securities
Available-for-Sale 2,221.6 37.6 2.26 3,007.0 49.2 2.18
Held-to-Maturity 4,716.9 83.5 2.36 3,895.6 64.1 2.19
Loans Held for Sale 3.3 0.1 4.43 19.3 0.6 4.05
Loans and Leases 1
Commercial and Industrial 951.8 24.8 3.48 852.1 23.1 3.62
Commercial Mortgage 1,301.3 38.6 3.97 1,124.6 34.5 4.10
Construction 109.0 3.6 4.35 114.4 4.1 4.79
Commercial Lease Financing 240.6 5.1 2.81 263.6 4.7 2.36
Residential Mortgage 2,336.1 75.1 4.29 2,273.0 76.8 4.51
Home Equity 803.8 23.7 3.94 759.4 23.6 4.14
Automobile 280.3 11.2 5.33 226.6 9.3 5.51
Other 2     267.6     15.3   7.66       212.7     13.1   8.26
Total Loans and Leases     6,290.5     197.4   4.19       5,826.4     189.2   4.34
Other     74.1     0.9   1.63       78.6     0.9   1.48
Total Earning Assets 3     13,612.9     320.0   3.14       13,051.8     304.3   3.11
Cash and Noninterest-Bearing Deposits 144.5 139.7
Other Assets   463.7   442.4
Total Assets $ 14,221.1 $ 13,633.9
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,367.8 0.5 0.03 $ 2,105.1 0.4 0.03
Savings 4,549.4 2.9 0.09 4,448.5 3.0 0.09
Time     1,440.1     3.7   0.35       1,431.6     4.3   0.41
Total Interest-Bearing Deposits     8,357.3     7.1   0.11       7,985.2     7.7   0.13
Short-Term Borrowings 9.5 - 0.14 32.9 - 0.14
Securities Sold Under Agreements to Repurchase 766.4 19.4 3.34 801.5 20.3 3.34
Long-Term Debt     174.6     1.9   1.45       169.7     2.0   1.53
Total Interest-Bearing Liabilities     9,307.8     28.4   0.40       8,989.3     30.0   0.44
Net Interest Income $ 291.6 $ 274.3
Interest Rate Spread 2.74 % 2.67 %
Net Interest Margin 2.86 % 2.81 %
Noninterest-Bearing Demand Deposits 3,659.2 3,352.6
Other Liabilities 205.2 270.5
Shareholders' Equity   1,048.9   1,021.5
Total Liabilities and Shareholders' Equity $ 14,221.1 $ 13,633.9
 
 

1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $8,571,000 and $7,498,000 for the nine months ended September 30, 2014 and 2013, respectively.

 
     
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
Three Months Ended September 30, 2014
Compared to June 30, 2014
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:
Investment Securities
Available-for-Sale $ (0.1 ) $ (0.3 ) $ (0.4 )
Held-to-Maturity (0.7 ) (0.2 ) (0.9 )
Loans and Leases
Commercial and Industrial 0.3 0.5 0.8
Commercial Mortgage 0.6 - 0.6
Construction 0.2 (0.1 ) 0.1
Commercial Lease Financing - 0.3 0.3
Residential Mortgage 0.8 (0.9 ) (0.1 )
Home Equity 0.2 - 0.2
Automobile 0.3 - 0.3
Other 2     0.3       (0.2 )     0.1  
Total Loans and Leases     2.7       (0.4 )     2.3  
Total Change in Interest Income     1.9       (0.9 )     1.0  
 
Change in Interest Expense:
Securities Sold Under Agreements to Repurchase     (0.7 )     0.7       -  
Total Change in Interest Expense     (0.7 )     0.7       -  
 
Change in Net Interest Income   $ 2.6     $ (1.6 )   $ 1.0  
 
 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8b
    Three Months Ended September 30, 2014
Compared to September 30, 2013
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Investment Securities
Available-for-Sale $ (1.6 ) $ 0.2 $ (1.4 )
Held-to-Maturity 1.5 0.4 1.9
Loans Held for Sale (0.2 ) - (0.2 )
Loans and Leases
Commercial and Industrial 0.9 0.3 1.2
Commercial Mortgage 1.9 (0.7 ) 1.2
Construction 0.1 (0.2 ) (0.1 )
Commercial Lease Financing (0.1 ) 0.6 0.5
Residential Mortgage 1.5 (1.5 ) -
Home Equity 0.6 (0.4 ) 0.2
Automobile 0.8 (0.1 ) 0.7
Other 2       1.1       (0.5 )     0.6  
Total Loans and Leases       6.8       (2.5 )     4.3  
Total Change in Interest Income       6.5       (1.9 )     4.6  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Time       -       (0.2 )     (0.2 )
Total Interest-Bearing Deposits       0.1       (0.2 )     (0.1 )
Securities Sold Under Agreements to Repurchase       (1.1 )     1.0       (0.1 )
Total Change in Interest Expense       (1.0 )     0.8       (0.2 )
 
Change in Net Interest Income     $ 7.5     $ (2.7 )   $ 4.8  
 
 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8c
    Nine Months Ended September 30, 2014
Compared to September 30, 2013
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ 0.1 $ 0.1 $ 0.2
Investment Securities
Available-for-Sale (13.3 ) 1.7 (11.6 )
Held-to-Maturity 14.3 5.1 19.4
Loans Held for Sale (0.5 ) - (0.5 )
Loans and Leases
Commercial and Industrial 2.6 (0.9 ) 1.7
Commercial Mortgage 5.3 (1.2 ) 4.1
Construction (0.2 ) (0.3 ) (0.5 )
Commercial Lease Financing (0.4 ) 0.8 0.4
Residential Mortgage 2.1 (3.8 ) (1.7 )
Home Equity 1.3 (1.2 ) 0.1
Automobile 2.2 (0.3 ) 1.9
Other 2       3.2       (1.0 )     2.2  
Total Loans and Leases       16.1       (7.9 )     8.2  
Other       (0.1 )     0.1       -  
Total Change in Interest Income       16.6       (0.9 )     15.7  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Savings - (0.1 ) (0.1 )
Time       -       (0.6 )     (0.6 )
Total Interest-Bearing Deposits       0.1       (0.7 )     (0.6 )
Securities Sold Under Agreements to Repurchase (0.9 ) - (0.9 )
Long-Term Debt       0.1       (0.2 )     (0.1 )
Total Change in Interest Expense       (0.7 )     (0.9 )     (1.6 )
 
Change in Net Interest Income     $ 17.3     $ -     $ 17.3  
 
 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
       
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits   Table 9
    Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands)     2014   2014   2013     2014   2013
Salaries $ 28,990 $ 28,544 $ 28,985 $ 85,448 $ 86,753
Incentive Compensation 4,242 4,359 4,242 12,832 11,887
Share-Based Compensation 2,226 2,271 1,333 6,466 3,774
Commission Expense 1,283 1,106 1,888 3,448 5,652
Retirement and Other Benefits 4,056 3,811 4,144 12,853 12,106
Payroll Taxes 2,162 2,179 2,335 7,909 9,151
Medical, Dental, and Life Insurance 2,557 2,724 1,872 7,902 7,153
Separation Expense       14     87     1,753       650     4,092
Total Salaries and Benefits     $ 45,530   $ 45,081   $ 46,552     $ 137,508   $ 140,568
 
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances   Table 10
      September 30,   June 30,   March 31,   December 31,   September 30,
(dollars in thousands)       2014   2014   2014   2013   2013
Commercial
Commercial and Industrial $ 991,157 $ 988,940 $ 955,599 $ 911,367 $ 895,040
Commercial Mortgage 1,373,289 1,345,549 1,284,181 1,247,510 1,203,670
Construction 132,097 121,434 91,452 107,349 124,230
Lease Financing         232,381     237,585     240,931     262,207     255,550
Total Commercial         2,728,924     2,693,508     2,572,163     2,528,433     2,478,490
Consumer
Residential Mortgage 2,444,989 2,355,085 2,305,153 2,282,894 2,282,305
Home Equity 838,206 811,180 797,341 773,385 765,841
Automobile 306,003 287,794 273,553 255,986 246,704
Other 1         288,228     278,786     261,647     254,689     233,302
Total Consumer         3,877,426     3,732,845     3,637,694     3,566,954     3,528,152
Total Loans and Leases       $ 6,606,350   $ 6,426,353   $ 6,209,857   $ 6,095,387   $ 6,006,642
 
 
Higher Risk Loans and Leases Outstanding
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands)       2014   2014   2014   2013   2013
Residential Land Loans 2 $ 9,117 $ 10,016 $ 11,086 $ 11,922 $ 13,635
Home Equity Loans 3 9,914 11,307 11,846 12,594 12,588
Air Transportation Leases 4         21,668     24,917     24,969     26,152     26,492
Total Higher Risk Loans and Leases       $ 40,699   $ 46,240   $ 47,901   $ 50,668   $ 52,715
 
1 Comprised of other revolving credit, installment, and lease financing.

2 We consider all of our residential land loans, which are consumer loans secured by unimproved lots, to be of higher risk due to the volatility in the value of the underlying collateral.

3 Higher risk home equity loans are defined as those loans originated in 2005 or later, with current monitoring credit scores below 600, and with original loan-to-value ratios greater than 70%.

4 We consider all of our air transportation leases to be of higher risk due to the weak financial profile of the industry.

 
 
Deposits
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands)       2014   2014   2014   2013   2013
Consumer $ 5,972,435 $ 5,938,123 $ 5,960,485 $ 5,829,352 $ 5,707,125
Commercial 5,070,080 5,207,026 4,742,308 4,814,076 4,680,370
Public and Other         1,318,926     1,524,885     1,341,680     1,271,228     1,220,639
Total Deposits       $ 12,361,441   $ 12,670,034   $ 12,044,473   $ 11,914,656   $ 11,608,134
 
           
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More     Table 11
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands)     2014   2014   2014   2013   2013
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 8,952 $ 10,437 $ 11,239 $ 11,929 $ 5,295
Commercial Mortgage       1,366       1,403       1,421       2,512       2,355  
Total Commercial       10,318       11,840       12,660       14,441       7,650  
Consumer
Residential Mortgage 16,756 15,818 19,003 20,264 20,637
Home Equity       2,671       2,787       1,935       1,740       2,509  
Total Consumer       19,427       18,605       20,938       22,004       23,146  
Total Non-Accrual Loans and Leases       29,745       30,445       33,598       36,445       30,796  
Foreclosed Real Estate       3,562       3,944       3,450       3,205       3,036  
Total Non-Performing Assets     $ 33,307     $ 34,389     $ 37,048     $ 39,650     $ 33,832  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial     $ 14     $ -     $ 150     $ 1,173     $ 8  
Total Commercial       14       -       150       1,173       8  
Consumer
Residential Mortgage 4,819 6,082 5,729 4,564 7,460
Home Equity 2,816 2,505 2,845 3,009 2,896
Automobile 612 236 346 322 193
Other 1       842       844       644       790       841  
Total Consumer       9,089       9,667       9,564       8,685       11,390  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 9,103     $ 9,667     $ 9,714     $ 9,858     $ 11,398  

Restructured Loans on Accrual Status and Not Past Due 90 Days or More

$ 45,169 $ 43,625 $ 44,473 $ 51,123 $ 39,845
Total Loans and Leases     $ 6,606,350     $ 6,426,353     $ 6,209,857     $ 6,095,387     $ 6,006,642  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.45 %     0.47 %     0.54 %     0.60 %     0.51 %
 

Ratio of Non-Performing Assets to Total Loans and Leases and Foreclosed Real Estate

      0.50 %     0.53 %     0.60 %     0.65 %     0.56 %
 

Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases and Commercial Foreclosed Real Estate

      0.42 %     0.48 %     0.53 %     0.61 %     0.35 %
 

Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate

      0.56 %     0.57 %     0.64 %     0.68 %     0.71 %
 
Ratio of Non-Performing Assets and Accruing Loans and Leases

Past Due 90 Days or More to Total Loans and Leases and Foreclosed Real Estate

      0.64 %     0.69 %     0.75 %     0.81 %     0.75 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 34,389 $ 37,048 $ 39,650 $ 33,832 $ 36,431
Additions 2,565 2,798 2,491 13,040 3,395
Reductions
Payments (2,381 ) (2,753 ) (1,855 ) (932 ) (2,954 )
Return to Accrual Status (704 ) (904 ) (1,864 ) (2,308 ) (1,166 )
Sales of Foreclosed Real Estate (449 ) (1,782 ) (737 ) (1,431 ) (1,498 )
Charge-offs/Write-downs       (113 )     (18 )     (637 )     (2,551 )     (376 )
Total Reductions       (3,647 )     (5,457 )     (5,093 )     (7,222 )     (5,994 )
Balance at End of Quarter     $ 33,307     $ 34,389     $ 37,048     $ 39,650     $ 33,832  
 
 
1 Comprised of other revolving credit, installment, and lease financing.
 
             
Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses       Table 12
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands)     2014   2014   2013     2014   2013
Balance at Beginning of Period $ 119,725 $ 120,136 $ 130,494 $ 121,521 $ 134,276
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (229 ) (749 ) (607 ) (1,797 ) (1,255 )
Lease Financing - (66 ) (16 ) (66 ) (16 )
Consumer
Residential Mortgage (22 ) (323 ) (405 ) (674 ) (1,828 )
Home Equity (475 ) (553 ) (1,106 ) (1,379 ) (4,499 )
Automobile (957 ) (711 ) (457 ) (2,585 ) (1,461 )
Other 1       (1,978 )     (1,595 )     (2,083 )       (5,195 )     (5,618 )
Total Loans and Leases Charged-Off       (3,661 )     (3,997 )     (4,674 )       (11,696 )     (14,677 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 1,177 2,132 498 4,229 1,373
Commercial Mortgage 14 15 519 43 543
Construction 8 8 11 21 357
Lease Financing 3 1 11 6 33
Consumer
Residential Mortgage 299 2,335 1,290 2,906 2,712
Home Equity 531 351 614 1,433 1,697
Automobile 322 343 348 1,110 1,265
Other 1       496       723       488         1,720       1,520  
Total Recoveries on Loans and Leases Previously Charged-Off       2,850       5,908       3,779         11,468       9,500  
Net Loans and Leases Recovered (Charged-Off) (811 ) 1,911 (895 ) (228 ) (5,177 )
Provision for Credit Losses (2,665 ) (2,199 ) - (4,864 ) -
Provision for Unfunded Commitments       -       (123 )     148         (180 )     648  
Balance at End of Period 2     $ 116,249     $ 119,725     $ 129,747       $ 116,249     $ 129,747  
 
Components
Allowance for Loan and Lease Losses $ 110,362 $ 113,838 $ 123,680 $ 110,362 $ 123,680
Reserve for Unfunded Commitments       5,887       5,887       6,067         5,887       6,067  
Total Reserve for Credit Losses     $ 116,249     $ 119,725     $ 129,747       $ 116,249     $ 129,747  
 
Average Loans and Leases Outstanding     $ 6,488,780     $ 6,274,595     $ 5,892,888       $ 6,290,548     $ 5,826,424  
 
Ratio of Net Loans and Leases Charged-Off (Recovered) to
Average Loans and Leases Outstanding (annualized) 0.05 % -0.12 % 0.06 % 0.00 % 0.12 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.67 % 1.77 % 2.06 % 1.67 % 2.06 %
 
 
1 Comprised of other revolving credit, installment, and lease financing.
2 Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.
 
 
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13a
    Retail   Commercial   Investment   Treasury   Consolidated
(dollars in thousands)     Banking   Banking   Services   and Other   Total
Three Months Ended September 30, 2014
Net Interest Income $ 46,863 $ 31,533 $ 2,676 $ 14,307 $ 95,379
Provision for Credit Losses       1,853       (834 )     (9 )     (3,675 )     (2,665 )
Net Interest Income After Provision for Credit Losses 45,010 32,367 2,685 17,982 98,044
Noninterest Income 20,265 5,692 14,459 4,534 44,950
Noninterest Expense       (48,963 )     (16,190 )     (13,443 )     (2,434 )     (81,030 )
Income Before Provision for Income Taxes 16,312 21,869 3,701 20,082 61,964
Provision for Income Taxes       (5,807 )     (7,669 )     (1,370 )     (5,349 )     (20,195 )
Net Income     $ 10,505     $ 14,200     $ 2,331     $ 14,733     $ 41,769  
Total Assets as of September 30, 2014     $ 3,936,206     $ 2,640,763     $ 192,739     $ 7,740,458     $ 14,510,166  
 
 
Three Months Ended September 30, 2013 1
Net Interest Income $ 41,404 $ 25,119 $ 2,574 $ 21,790 $ 90,887
Provision for Credit Losses       1,629       (691 )     (19 )     (919 )     -  
Net Interest Income After Provision for Credit Losses 39,775 25,810 2,593 22,709 90,887
Noninterest Income 21,785 6,411 14,348 2,582 45,126
Noninterest Expense       (50,150 )     (15,746 )     (13,590 )     (3,491 )     (82,977 )
Income Before Provision for Income Taxes 11,410 16,475 3,351 21,800 53,036
Provision for Income Taxes       (4,222 )     (5,666 )     (1,240 )     (4,204 )     (15,332 )
Net Income     $ 7,188     $ 10,809     $ 2,111     $ 17,596     $ 37,704  
Total Assets as of September 30, 2013     $ 3,611,412     $ 2,356,723     $ 199,556     $ 7,681,180     $ 13,848,871  
 
 

1 Certain prior period information has been reclassified to conform to current presentation.

 
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13b
    Retail   Commercial   Investment   Treasury   Consolidated
(dollars in thousands)     Banking   Banking   Services   and Other   Total
Nine Months Ended September 30, 2014
Net Interest Income $ 134,776 $ 86,316 $ 7,895 $ 54,037 $ 283,024
Provision for Credit Losses       2,895       (2,164 )     (303 )     (5,292 )     (4,864 )
Net Interest Income After Provision for Credit Losses 131,881 88,480 8,198 59,329 287,888
Noninterest Income 59,890 17,223 43,206 13,880 134,199
Noninterest Expense       (147,737 )     (49,215 )     (40,842 )     (7,865 )     (245,659 )
Income Before Provision for Income Taxes 44,034 56,488 10,562 65,344 176,428
Provision for Income Taxes       (16,017 )     (19,572 )     (3,908 )     (15,080 )     (54,577 )
Net Income     $ 28,017     $ 36,916     $ 6,654     $ 50,264     $ 121,851  
Total Assets as of September 30, 2014     $ 3,936,206     $ 2,640,763     $ 192,739     $ 7,740,458     $ 14,510,166  
 
 
Nine Months Ended September 30, 2013 1
Net Interest Income $ 122,442 $ 73,975 $ 7,938 $ 62,432 $ 266,787
Provision for Credit Losses       6,775       (1,501 )     (52 )     (5,222 )     -  
Net Interest Income After Provision for Credit Losses 115,667 75,476 7,990 67,654 266,787
Noninterest Income 67,686 20,382 44,446 8,431 140,945
Noninterest Expense       (150,838 )     (47,957 )     (40,954 )     (8,796 )     (248,545 )
Income Before Provision for Income Taxes 32,515 47,901 11,482 67,289 159,187
Provision for Income Taxes       (12,030 )     (16,413 )     (4,248 )     (15,049 )     (47,740 )
Net Income     $ 20,485     $ 31,488     $ 7,234     $ 52,240     $ 111,447  
Total Assets as of September 30, 2013     $ 3,611,412     $ 2,356,723     $ 199,556     $ 7,681,180     $ 13,848,871  
 
 

1 Certain prior period information has been reclassified to conform to current presentation.

 
           
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data           Table 14
    Three Months Ended
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands, except per share amounts)     2014   2014     2014   2013   2013
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 68,089 $ 65,818 $ 63,526 $ 63,809 $ 63,918
Income on Investment Securities
Available-for-Sale 10,286 10,697 10,760 10,608 12,038
Held-to-Maturity 26,067 26,938 27,889 26,882 24,137
Deposits 3 1 3 3 3
Funds Sold 176 168 137 105 177
Other       302         302         302         302         301  
Total Interest Income       104,923         103,924         102,617         101,709         100,574  
Interest Expense
Deposits 2,391 2,393 2,358 2,418 2,500
Securities Sold Under Agreements to Repurchase 6,523 6,465 6,397 6,530 6,551
Funds Purchased 3 4 3 8 4
Short-Term Borrowings - - - 2 -
Long-Term Debt       627         650         626         631         632  
Total Interest Expense       9,544         9,512         9,384         9,589         9,687  
Net Interest Income 95,379 94,412 93,233 92,120 90,887
Provision for Credit Losses       (2,665 )       (2,199 )       -         -         -  
Net Interest Income After Provision for Credit Losses       98,044         96,611         93,233         92,120         90,887  
Noninterest Income
Trust and Asset Management 11,716 12,005 11,852 12,240 11,717
Mortgage Banking 1,646 1,804 2,005 2,823 4,132
Service Charges on Deposit Accounts 9,095 8,638 8,878 9,326 9,385
Fees, Exchange, and Other Service Charges 13,390 13,370 12,939 12,670 12,732
Investment Securities Gains, Net 1,858 2,079 2,160 - -
Insurance 2,348 1,930 2,123 2,295 2,177
Bank-Owned Life Insurance 1,644 1,519 1,602 1,895 1,365
Other       3,253         3,136         3,209         4,029         3,618  
Total Noninterest Income       44,950         44,481         44,768         45,278         45,126  
Noninterest Expense
Salaries and Benefits 45,530 45,081 46,897 43,643 46,552
Net Occupancy 9,334 9,254 9,417 9,602 9,847
Net Equipment 4,473 4,669 4,603 4,837 4,572
Data Processing 3,665 3,842 3,649 3,827 3,697
Professional Fees 1,835 2,613 2,260 2,669 2,119
FDIC Insurance 1,750 2,055 2,076 1,954 1,913
Other       14,443         13,568         14,645         15,892         14,277  
Total Noninterest Expense       81,030         81,082         83,547         82,424         82,977  
Income Before Provision for Income Taxes 61,964 60,010 54,454 54,974 53,036
Provision for Income Taxes       20,195         18,520         15,862         15,919         15,332  
Net Income     $ 41,769       $ 41,490       $ 38,592       $ 39,055       $ 37,704  
 
Basic Earnings Per Share $ 0.95 $ 0.94 $ 0.87 $ 0.88 $ 0.85
Diluted Earnings Per Share $ 0.95 $ 0.94 $ 0.87 $ 0.88 $ 0.85
 
Balance Sheet Totals
Loans and Leases $ 6,606,350 $ 6,426,353 $ 6,209,857 $ 6,095,387 $ 6,006,642
Total Assets 14,510,166 14,844,505 14,263,118 14,084,280 13,848,871
Total Deposits 12,361,441 12,670,034 12,044,473 11,914,656 11,608,134
Total Shareholders' Equity 1,057,413 1,050,801 1,028,904 1,011,976 992,686
 
Performance Ratios
Return on Average Assets 1.15 % 1.17 % 1.12 % 1.12 % 1.09 %
Return on Average Shareholders' Equity 15.57 15.87 15.15 15.36 15.02
Efficiency Ratio 1 57.74 58.38 60.54 59.99 61.01
Net Interest Margin 2 2.85 2.86 2.87 2.85 2.83
 
 
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
 
       
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends   Table 15
    Eight Months Ended Year Ended
($ in millions; jobs in thousands)     August 31, 2014       December 31, 2013       December 31, 2012
Hawaii Economic Trends  
State General Fund Revenues 1 $ 3,618.8 (0.9 ) % $ 5,451.3 3.7 % $ 5,259.1 12.8 %
General Excise and Use Tax Revenue 1 $ 2,002.3 0.5 % $ 2,907.6 2.2 % $ 2,844.7 9.9 %
Jobs 2 634.1 623.1 619.3
                                       
September 30, December 31,
(spot rates)                     2014     2013   2012
Unemployment 3
Statewide, seasonally adjusted 4.2 % 4.7 % 5.1 %
 
Oahu 4.0 3.8 4.2
Island of Hawaii 5.4 5.9 6.9
Maui 4.3 4.7 5.2
Kauai 4.8 5.2 6.1
                                         
August 31, December 31,
(percentage change, except months of inventory)           2014     2013   2012
Housing Trends (Single Family Oahu) 4
Median Home Price 4.6 % 4.8 % 7.8 %
Home Sales Volume (units) 1.6 % 4.6 % 6.5 %
Months of Inventory 2.9 2.7 2.5
                                         
Monthly Visitor Arrivals, Percentage Change
(in thousands)                 Not Seasonally Adjusted     from Previous Year
Tourism 5
August 31, 2014 730.7 (1.3 )
July 31, 2014 772.1 2.5
June 30, 2014 725.1 1.9
May 31, 2014 649.1 1.8
April 30, 2014 662.6 (0.7 )
March 31, 2014 728.8 (5.2 )
February 28, 2014 646.8 (4.3 )
January 31, 2014 682.6 0.1
December 31, 2013 722.4 (1.9 )
November 30, 2013 620.1 (5.5 )
October 31, 2013 636.2 (1.6 )
September 30, 2013 594.2 (1.0 )
August 31, 2013 740.6 2.1
July 31, 2013 753.3 4.6
June 30, 2013 711.3 5.0
May 31, 2013 637.5 2.4
April 30, 2013 667.0 3.1
March 31, 2013 769.1 7.6
February 28, 2013 675.5 7.8
January 31, 2013 681.9 5.9
December 31, 2012 733.7 6.3
November 30, 2012 651.2 14.5
October 31, 2012 640.7 8.6
September 30, 2012 595.0 6.1
August 31, 2012 725.6 11.0
July 31, 2012 720.4 7.8
June 30, 2012 677.2 11.5
May 31, 2012 622.9 12.5
 
 

1 Source: Hawaii Department of Business, Economic Development & Tourism

2 Source: U. S. Bureau of Labor

3 Source: Hawaii Department of Labor and Industrial Relations

4 Source: Honolulu Board of REALTORS

5 Source: Hawaii Tourism Authority

Note: Certain prior period seasonally adjusted information has been revised.

Contacts

Bank of Hawaii Corporation
Media Inquiries
Stafford Kiguchi, 808-694-8580
Mobile: 808-265-6367
Stafford.Kiguchi@boh.com
Investor/Analyst Inquiries
Cindy Wyrick, 808-694-8430
Cindy.Wyrick@boh.com

Contacts

Bank of Hawaii Corporation
Media Inquiries
Stafford Kiguchi, 808-694-8580
Mobile: 808-265-6367
Stafford.Kiguchi@boh.com
Investor/Analyst Inquiries
Cindy Wyrick, 808-694-8430
Cindy.Wyrick@boh.com