Bank of Hawaii Corporation Second Quarter 2014 Financial Results

  • Diluted Earnings Per Share $0.94
  • Net Income $41.5 Million
  • Board of Directors Increases Repurchase Authorization by $100.0 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 $0.94 for the second quarter of 2014, up from $0.87 in the previous quarter and $0.85 in the same quarter last year. Net income for the second quarter of 2014 was $41.5 million, an increase of $2.9 million or 7.5 percent compared with net income of $38.6 million in the first quarter of 2014, and up $3.7 million or 9.9 percent from net income of $37.8 million in the second quarter of 2013.

Loan and lease balances increased to $6.4 billion at June 30, 2014, up 3.5 percent from March 31, 2014 and 9.7 percent compared with June 30, 2013. Deposit growth remained strong during the quarter, as balances increased to $12.7 billion at June 30, 2014, up 5.2 percent from March 31, 2014 and 10.7 percent from June 30, 2013.

“Bank of Hawaii Corporation continued to perform well during the second quarter of 2014,” said Peter Ho, Chairman, President, and CEO. “Loan balances grew and we continue to increase customer deposits. Our margin was relatively stable at 2.86 percent, asset quality continued its strong trend, and expenses remain well controlled.”

The return on average assets for the second quarter of 2014 was 1.17 percent, up from 1.12 percent in the previous quarter and during the same quarter last year. The return on average equity for the second quarter of 2014 was 15.87 percent, an increase from 15.15 percent for the first quarter of 2014 and 14.64 percent in the second quarter of 2013.

For the six-month period ended June 30, 2014, net income was $80.1 million, an increase from net income of $73.7 million during the same period last year. Diluted earnings per share were $1.81 for the first half of 2014, up from diluted earnings per share of $1.65 for the first half of 2013. The year-to-date return on average assets for the six-month period ended June 30, 2014 was 1.14 percent, up from 1.10 percent for the same six months in 2013. The year-to-date return on average equity was 15.51 percent, up from 14.37 percent for the six months ended June 30, 2013.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2014 was $97.3 million, up $1.2 million from net interest income of $96.1 million in the first quarter of 2014 and up $7.5 million from net interest income of $89.8 million in the second quarter of 2013. Net interest income for the first half of 2014 was $193.3 million, an increase of $12.5 million compared with net interest income of $180.8 million for the first half of 2013. Analyses of the changes in net interest income are included in Tables 8a, 8b, and 8c.

The net interest margin was 2.86 percent for the second quarter of 2014, down 1 basis point from the net interest margin of 2.87 percent in the first quarter of 2014 and a 9 basis point increase from the net interest margin of 2.77 percent in the second quarter of 2013. The net interest margin for the first six months of 2014 was 2.87 percent compared with 2.80 percent for the same six-month period last year.

Due to strong credit recoveries during the quarter and continued stability of asset quality, we recorded a negative provision for credit losses of $2.2 million during the second quarter of 2014. The Company did not record a provision for credit losses during the first quarter of 2014 or the first or second quarters of 2013.

Noninterest income was $44.5 million in the second quarter of 2014, a decrease of $0.3 million compared with noninterest income of $44.8 million in the first quarter of 2014, and a decrease of $3.6 million compared with noninterest income of $48.0 million in the second quarter of 2013. Noninterest income in the second quarter of 2014 included a gain of $2.0 million resulting from the sale of 23,500 Visa Class B shares (9,884 Class A equivalents). The Company also contributed 5,700 Visa Class B shares to the Bank of Hawaii Foundation. Noninterest income in the first quarter of 2014 included a gain of $2.0 million resulting from the sale of 22,000 Visa Class B shares (9,253 Class A equivalents). The contributions had no impact on noninterest expense; however, the contributions did favorably impact the effective tax rate for the first and second quarters of 2014. As of June 30, 2014, the Company has 452,914 Visa Class B shares remaining (190,496 Class A equivalents). Mortgage banking revenue was $1.8 million in the second quarter of 2014 compared with $2.0 million in the previous quarter and $5.8 million in the same quarter last year. Noninterest income for the first half of 2014 was $89.2 million, a decrease of $6.6 million compared with noninterest income of $95.8 million for the first half of 2013. The decrease was primarily due to a reduction of $8.4 million in mortgage banking income which was partially offset by gains of $4.0 million on the sale of 45,500 Visa Class B shares.

Noninterest expense was $81.1 million in the second quarter of 2014, down $2.5 million compared with $83.5 million in the first quarter of 2014, and down $0.1 million compared with $81.2 million in the second quarter last year. First quarter expenses include seasonal payroll-related expenses resulting from annual payments from the Company’s incentive compensation plans and higher payroll taxes. An analysis of noninterest expenses related to salaries and benefits is included in Table 9. Noninterest expense for the first half of 2014 was $164.6 million, a decrease of $1.0 million compared with noninterest expense of $165.6 million for the first half of 2013.

The efficiency ratio for the second quarter of 2014 was 58.38 percent, an improvement from 60.54 percent in the previous quarter and 59.96 percent in the same quarter last year. The efficiency ratio for the first half of 2014 was 59.46 percent down from 60.93 percent in the same period last year.

The effective tax rate for the second quarter of 2014 was 30.86 percent compared with 29.13 percent in the previous quarter and 30.33 percent during the same quarter last year. The lower effective tax rate in the first quarter of 2014 was primarily due to a $1.2 million credit for the release of reserves due to a settlement with the State of Hawaii related to prior year tax issues.

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 remained strong during the second quarter of 2014. Total non-performing assets were $34.4 million at June 30, 2014, down from $37.0 million at March 31, 2014, and down from $36.4 million at June 30, 2013. Non-performing assets remain above historical levels due to the lengthy judicial foreclosure process for residential mortgage loans. As a percentage of total loans and leases and foreclosed real estate, non-performing assets were 0.53 percent at June 30, 2014, down from 0.60 percent at March 31, 2014 and down from 0.62 percent at June 30, 2013.

Accruing loans and leases past due 90 days or more were $9.7 million at June 30, 2014, down slightly from March 31, 2014 and down from $10.6 million at June 30, 2013. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $43.6 million at June 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.

The Company recorded a net recovery of loans and leases previously charged off of $1.9 million during the second quarter of 2014. Loan and lease charge-offs of $4.0 million during the quarter were more than offset by recoveries of $5.9 million. Net charge-offs during the first quarter of 2014 were $1.3 million, or 0.09 percent annualized of total average loans and leases outstanding, and were comprised of $4.0 million in charge-offs partially offset by recoveries of $2.7 million. Net charge-offs in the second quarter of 2013 were $2.3 million or 0.16 percent annualized of total average loans and leases outstanding, and were comprised of $4.7 million in charge-offs partially offset by recoveries of $2.4 million. Net recoveries in the first half of 2014 were $0.6 million compared with net charge-offs of $4.3 million, or 0.15 percent annualized of total average loans and leases outstanding for the first half of 2013.

The allowance for loan and lease losses was reduced to $113.8 million at June 30, 2014. The ratio of the allowance for loan and lease losses to total loans and leases was 1.77 percent at June 30, 2014, a decrease of 7 basis points from the previous quarter and commensurate with improvements in credit quality and the Hawaii economy. The reserve for unfunded commitments at June 30, 2013 was relatively 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 $14.84 billion at June 30, 2014, up from total assets of $14.26 billion at March 31, 2014 and $13.73 billion at June 30, 2013. Average total assets were $14.25 billion during the second quarter of 2014, up from $14.03 billion during the previous quarter and $13.57 billion during the same quarter last year.

The investment securities portfolio was $6.91 billion at June 30, 2014, down from $6.97 billion at March 31, 2014, and up from $6.84 billion at June 30, 2013. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $4.70 billion in securities held to maturity and $2.21 billion in securities available for sale at June 30, 2014.

Total loans and leases increased to $6.43 billion at June 30, 2014, up from $6.21 billion at March 31, 2014 and $5.86 billion at June 30, 2013. Average total loans and leases were $6.27 billion during the second quarter of 2014, up from $6.10 billion during the first quarter of 2014 and $5.78 billion during the same quarter last year. Commercial loan growth was strong across all major categories during the second quarter of 2014. The total commercial loan portfolio was $2.69 billion at the end of the quarter, up from commercial loans of $2.57 billion at the end of the previous quarter and up from $2.40 billion at the end of the same quarter last year. Total consumer loans increased to $3.73 billion at the end of the second quarter of 2014, up from $3.64 billion at the end of the first quarter of 2014, and up from consumer loans of $3.46 billion at the end of the second 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 $12.67 billion at June 30, 2014, up from $12.04 billion at March 31, 2014 and $11.45 billion at June 30, 2013. The increase from the previous quarter was largely due to strong growth in short-term public and commercial deposits. Average total deposits were $12.03 billion in the second quarter of 2014, up from $11.81 billion during the previous quarter and $11.24 billion during the same quarter last year.

During the second quarter of 2014, the Company repurchased 220.3 thousand shares of common stock at a total cost of $12.49 million under its share repurchase program. The average cost was $56.70 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through June 30, 2014, the Company has repurchased 51.4 million shares and returned $1.89 billion to shareholders at an average cost of $36.72 per share.

The Company’s Board of Directors increased the authorization under the share repurchase program by an additional $100.0 million. This authorization, combined with previously announced authorizations of $1.90 billion, brings the total repurchase authority to $2.0 billion. From July 1 through July 25, 2014, the Company repurchased an additional 43.0 thousand shares of common stock at an average cost of $57.45 per share. Remaining buyback authority under the share repurchase program was $106.5 million at July 25, 2014.

Total shareholders’ equity was $1.05 billion at June 30, 2014, compared with $1.03 billion at March 31, 2014, and $1.0 billion at June 30, 2013. The ratio of tangible common equity to risk-weighted assets was 15.54 percent at the end of the second quarter of 2014, compared with 15.69 percent at the end of the first quarter of 2014 and 15.87 percent at the end of the same quarter last year. The Tier 1 leverage ratio at June 30, 2014 was 7.20 percent, down from 7.22 percent at March 31, 2014 and 7.29 percent at June 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 September 15, 2014 to shareholders of record at the close of business on August 29, 2014.

Hawaii Economy

General economic conditions in Hawaii continued to remain positive during the second quarter of 2014 due to an expanding construction industry, stable tourism, low unemployment, and a strong real estate market. For the first five months of 2014, total visitor spending increased 3.0 percent although total arrivals declined 0.5 percent compared to the same period in 2013. The statewide seasonally-adjusted unemployment rate was at 4.4 percent in June 2014 compared to 6.1 percent nationally. For the first six months of 2014, the volume of single-family home sales on Oahu increased 1.6 percent compared with the same period in 2013. The volume of condominium sales on Oahu increased 1.3 percent compared with the same period in 2013. The median price of single-family home sales and condominiums on Oahu was 7.1 percent higher for the first six months of 2014 compared to the same period in 2013. As of June 30, 2014, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 2.8 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 second 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, July 28, 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 37638750# 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 Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts)     2014       2014     2013     2014       2013

For the Period:

Operating Results
Net Interest Income $ 94,412 $ 93,233 $ 87,340 $ 187,645 $ 175,900
Provision for Credit Losses (2,199 ) - - (2,199 ) -
Total Noninterest Income 44,481 44,768 48,041 89,249 95,819
Total Noninterest Expense 81,082 83,547 81,181 164,629 165,568
Net Income 41,490 38,592 37,763 80,082 73,743
Basic Earnings Per Share 0.94 0.87 0.85 1.81 1.66
Diluted Earnings Per Share 0.94 0.87 0.85 1.81 1.65
Dividends Declared Per Share 0.45 0.45 0.45 0.90 0.90
 
Performance Ratios
Return on Average Assets 1.17 % 1.12 % 1.12 % 1.14 % 1.10 %
Return on Average Shareholders' Equity 15.87 15.15 14.64 15.51 14.37
Efficiency Ratio 1 58.38 60.54 59.96 59.46 60.93
Net Interest Margin 2 2.86 2.87 2.77 2.87 2.80
Dividend Payout Ratio 3 47.87 51.72 52.94 49.72 54.22
Average Shareholders' Equity to Average Assets 7.36 7.36 7.62 7.36 7.63
 
Average Balances
Average Loans and Leases $ 6,274,595 $ 6,104,041 $ 5,781,898 $ 6,189,789 $ 5,792,641
Average Assets 14,253,384 14,033,949 13,572,329 14,144,273 13,564,885
Average Deposits 12,030,010 11,814,548 11,244,600 11,922,874 11,265,924
Average Shareholders' Equity 1,048,429 1,033,413 1,034,366 1,040,962 1,034,603
 
Per Share of Common Stock
Book Value $ 23.72 $ 23.14 $ 22.09 $ 23.72 $ 22.09
Tangible Book Value 23.01 22.43 21.39 23.01 21.39
Market Value
Closing 58.69 60.61 50.32 58.69 50.32
High 61.73 61.36 52.17 61.73 52.17
Low 53.45 54.16 46.04 53.45 44.88
 
June 30, March 31, December 31, June 30,
            2014     2014     2013       2013

As of Period End:

Balance Sheet Totals
Loans and Leases $ 6,426,353 $ 6,209,857 $ 6,095,387 $ 5,859,152
Total Assets 14,844,505 14,263,118 14,084,280 13,733,418
Total Deposits 12,670,034 12,044,473 11,914,656 11,449,198
Long-Term Debt 173,671 174,695 174,706 174,727
Total Shareholders' Equity 1,050,801 1,028,904 1,011,976 986,368
 
Asset Quality
Allowance for Loan and Lease Losses $ 113,838 $ 114,126 $ 115,454 $ 124,575
Non-Performing Assets 34,389 37,048 39,650 36,431
 
Financial Ratios
Allowance to Loans and Leases Outstanding 1.77 % 1.84 % 1.89 % 2.13 %
Tier 1 Capital Ratio 4 15.66 15.96 16.05 16.40
Total Capital Ratio 4 16.91 17.22 17.31 17.66
Tier 1 Leverage Ratio 4 7.20 7.22 7.24 7.29
Total Shareholders' Equity to Total Assets 7.08 7.21 7.19 7.18
Tangible Common Equity to Tangible Assets 5 6.88 7.01 6.98 6.97
Tangible Common Equity to Risk-Weighted Assets 4, 5 15.54 15.69 15.67 15.87
 
Non-Financial Data
Full-Time Equivalent Employees 2,194 2,181 2,196 2,227
Branches 74 74 74 75
ATMs 457 458 466 486
 
 
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 for prior periods 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
      June 30,     March 31,     December 31,     June 30,
(dollars in thousands)     2014       2014       2013       2013  
 
Total Shareholders' Equity $ 1,050,801 $ 1,028,904 $ 1,011,976 $ 986,368
Less: Goodwill 31,517 31,517 31,517 31,517
  Intangible Assets       -         -         -         8  
Tangible Common Equity     $ 1,019,284       $ 997,387       $ 980,459       $ 954,843  
 
Total Assets $ 14,844,505 $ 14,263,118 $ 14,084,280 $ 13,733,418
Less: Goodwill 31,517 31,517 31,517 31,517
 

Intangible Assets

      -         -         -         8  
Tangible Assets     $ 14,812,988       $ 14,231,601       $ 14,052,763       $ 13,701,893  
 

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

$ 6,559,897 $ 6,357,428 $ 6,258,178 $ 6,015,261
 
Total Shareholders' Equity to Total Assets 7.08 % 7.21 % 7.19 % 7.18 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.88 % 7.01 % 6.98 % 6.97 %
 
Tier 1 Capital Ratio 1 15.66 % 15.96 % 16.05 % 16.40 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 1 15.54 % 15.69 % 15.67 % 15.87 %
 
 
1 Risk-weighted assets and financial ratios for prior periods were revised to conform to the current period calculation.
 
 
Bank of Hawaii Corporation and Subsidiaries
Net Significant Items Table 2
    Three Months Ended       Six Months Ended  
June 30,   March 31,   June 30, June 30,
(dollars in thousands)     2014     2014     2013       2014     2013  
Investment Securities Gains, Net $ 2,079 $ 2,160 $ - $ 4,239   $ -
Decrease in Allowance for Loan and Lease Losses 288 1,328 2,303 1,616 4,282
Separation Expense (87 ) (549 ) (864 ) (636 ) (2,339 )
Operating Losses       -       (730 )     -         (730 )     -  
Significant Items Before the Provision (Benefit) for Income Taxes       2,280       2,209       1,439         4,489       1,943  
Release of Tax Reserve - (1,249 ) (1,090 ) (1,249 ) (1,090 )
Income Tax Impact       894       866       504         1,760       680  
Net Significant Items     $ 1,386     $ 2,592     $ 2,025       $ 3,978     $ 2,353  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income Table 3
    Three Months Ended     Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands, except per share amounts)     2014     2014   2013     2014     2013
Interest Income
Interest and Fees on Loans and Leases $ 65,818 $ 63,526 $ 62,729 $ 129,344 $ 125,549
Income on Investment Securities
Available-for-Sale 10,697 10,760 15,073 21,457 30,924
Held-to-Maturity 26,938 27,889 19,189 54,827 39,043
Deposits 1 3 1 4 4
Funds Sold 168 137 74 305 133
Other       302       302     285       604       569
Total Interest Income       103,924       102,617     97,351       206,541       196,222
Interest Expense
Deposits 2,393 2,358 2,579 4,751 5,225
Securities Sold Under Agreements to Repurchase 6,465 6,397 6,751 12,862 13,756
Funds Purchased 4 3 10 7 32
Long-Term Debt       650       626     671       1,276       1,309
Total Interest Expense       9,512       9,384     10,011       18,896       20,322
Net Interest Income 94,412 93,233 87,340 187,645 175,900
Provision for Credit Losses       (2,199 )     -     -       (2,199 )     -
Net Interest Income After Provision for Credit Losses       96,611       93,233     87,340       189,844       175,900
Noninterest Income
Trust and Asset Management 12,005 11,852 12,089 23,857 23,975
Mortgage Banking 1,804 2,005 5,820 3,809 12,231
Service Charges on Deposit Accounts 8,638 8,878 9,112 17,516 18,413
Fees, Exchange, and Other Service Charges 13,370 12,939 13,133 26,309 25,067
Investment Securities Gains, Net 2,079 2,160 - 4,239 -
Insurance 1,930 2,123 2,393 4,053 4,718
Bank-Owned Life Insurance 1,519 1,602 1,335 3,121 2,632
Other       3,136       3,209     4,159       6,345       8,783
Total Noninterest Income       44,481       44,768     48,041       89,249       95,819
Noninterest Expense
Salaries and Benefits 45,081 46,897 45,341 91,978 94,016
Net Occupancy 9,254 9,417 9,661 18,671 19,296
Net Equipment 4,669 4,603 4,380 9,272 8,957
Data Processing 3,842 3,649 3,050 7,491 6,316
Professional Fees 2,613 2,260 2,391 4,873 4,617
FDIC Insurance 2,055 2,076 1,949 4,131 3,898
Other       13,568       14,645     14,409       28,213       28,468
Total Noninterest Expense       81,082       83,547     81,181       164,629       165,568
Income Before Provision for Income Taxes 60,010 54,454 54,200 114,464 106,151
Provision for Income Taxes       18,520       15,862     16,437       34,382       32,408
Net Income     $ 41,490     $ 38,592   $ 37,763     $ 80,082     $ 73,743
Basic Earnings Per Share $ 0.94 $ 0.87 $ 0.85 $ 1.81 $ 1.66
Diluted Earnings Per Share $ 0.94 $ 0.87 $ 0.85 $ 1.81 $ 1.65
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 0.90 $ 0.90
Basic Weighted Average Shares 44,053,899 44,193,267 44,493,069 44,123,030 44,518,629
Diluted Weighted Average Shares       44,246,431       44,420,349     44,608,497       44,332,838       44,644,348
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss) Table 4
    Three Months Ended     Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands)     2014   2014   2013       2014   2013  
Net Income $ 41,490 $ 38,592 $ 37,763 $ 80,082   $ 73,743
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities 8,617 6,271 (46,572 ) 14,888 (56,213 )
Defined Benefit Plans       156     156     201         312     279  
Total Other Comprehensive Income (Loss) 8,773 6,427 (46,371 ) 15,200 (55,934 )
                                       
Comprehensive Income (Loss)     $ 50,263   $ 45,019   $ (8,608 )     $ 95,282   $ 17,809  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition Table 5
    June 30,   March 31,   December 31, June 30,
(dollars in thousands)     2014     2014     2013     2013  
Assets
Interest-Bearing Deposits $ 4,552 $ 4,085 $ 3,617 $ 4,635
Funds Sold 796,275 382,154 271,414 329,922
Investment Securities
Available-for-Sale 2,209,763 2,188,064 2,243,697 2,815,408
Held-to-Maturity (Fair Value of $4,743,012; $4,774,032; $4,697,587; and $4,036,197) 4,704,551 4,777,494 4,744,519 4,027,829
Loans Held for Sale 3,678 2,437 6,435 25,880
Loans and Leases 6,426,353 6,209,857 6,095,387 5,859,152
Allowance for Loan and Lease Losses       (113,838 )     (114,126 )     (115,454 )     (124,575 )
Net Loans and Leases       6,312,515       6,095,731       5,979,933       5,734,577  
Total Earning Assets       14,031,334       13,449,965       13,249,615       12,938,251  
Cash and Noninterest-Bearing Deposits 141,950 159,079 188,715 136,386
Premises and Equipment 108,116 107,323 108,636 105,752
Accrued Interest Receivable 44,311 46,431 43,930 43,375
Foreclosed Real Estate 3,944 3,450 3,205 3,256
Mortgage Servicing Rights 26,397 27,378 28,123 27,631
Goodwill 31,517 31,517 31,517 31,517
Other Assets       456,936       437,975       430,539       447,250  
Total Assets     $ 14,844,505     $ 14,263,118     $ 14,084,280     $ 13,733,418  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,070,334 $ 3,679,410 $ 3,681,128 $ 3,396,835
Interest-Bearing Demand 2,566,240 2,378,414 2,355,608 2,269,196
Savings 4,525,593 4,515,026 4,560,150 4,433,042
Time       1,507,867       1,471,623       1,317,770       1,350,125  
Total Deposits       12,670,034       12,044,473       11,914,656       11,449,198  
Funds Purchased 8,467 9,982 9,982 9,983
Short-Term Borrowings - 375 - -
Securities Sold Under Agreements to Repurchase 745,626 797,213 770,049 866,237
Long-Term Debt 173,671 174,695 174,706 174,727
Retirement Benefits Payable 35,017 35,111 34,965 47,318
Accrued Interest Payable 5,099 5,743 4,871 4,399
Taxes Payable and Deferred Taxes 42,131 45,811 34,907 48,947
Other Liabilities       113,659       120,811       128,168       146,241  
Total Liabilities       13,793,704       13,234,214       13,072,304       12,747,050  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2014 - 57,631,552 / 44,297,228; March 31, 2014 - 57,620,212 / 44,467,593; December 31, 2013 - 57,480,846 / 44,490,385; and June 30, 2013 - 57,488,745 / 44,644,596)

573 573 572 572
Capital Surplus 527,284 524,912 522,505 518,804
Accumulated Other Comprehensive Loss (16,623 ) (25,396 ) (31,823 ) (26,726 )
Retained Earnings 1,191,512 1,170,068 1,151,754 1,115,594

Treasury Stock, at Cost (Shares: June 30, 2014 - 13,334,324; March 31, 2014 - 13,152,619; December 31, 2013 - 12,990,461; and June 30, 2013 - 12,844,149)

(651,945 ) (641,253 ) (631,032 ) (621,876 )
Total Shareholders' Equity       1,050,801       1,028,904       1,011,976       986,368  
Total Liabilities and Shareholders' Equity     $ 14,844,505     $ 14,263,118     $ 14,084,280     $ 13,733,418  
 
 
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 - - - - 80,082 - 80,082
Other Comprehensive Income - - - 15,200 - - 15,200
Share-Based Compensation - - 3,820 - - - 3,820

Common Stock Issued under Purchase and Equity Compensation Plans and Related Tax Benefits

274,621 1 959 - (279 ) 6,074 6,755
Common Stock Repurchased (467,778 ) - - - - (26,987 ) (26,987 )
Cash Dividends Paid ($0.90 per share)     -         -       -       -         (40,045 )       -         (40,045 )
Balance as of June 30, 2014     44,297,228       $ 573     $ 527,284     $ (16,623 )     $ 1,191,512       $ (651,945 )     $ 1,050,801  
 
Balance as of December 31, 2012 44,754,835 $ 571 $ 515,619 $ 29,208 $ 1,084,477 $ (608,210 ) $ 1,021,665
Net Income - - - - 73,743 - 73,743
Other Comprehensive Loss - - - (55,934 ) - - (55,934 )
Share-Based Compensation - - 2,732 - - - 2,732

Common Stock Issued under Purchase and Equity

Compensation Plans and Related Tax Benefits

379,870 1 453 - (2,235 ) 10,294 8,513
Common Stock Repurchased (490,109 ) - - - - (23,960 ) (23,960 )
Cash Dividends Paid ($0.90 per share)     -         -       -       -         (40,391 )       -         (40,391 )
Balance as of June 30, 2013     44,644,596       $ 572     $ 518,804     $ (26,726 )     $ 1,115,594       $ (621,876 )     $ 986,368  
 
 
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
June 30, 2014 March 31, 2014 June 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 $ 4.0 $ - 0.12 % $ 5.7 $ - 0.23 % $ 4.5 $ - 0.06 %
Funds Sold 308.3 0.2 0.22 270.5 0.1 0.20 168.3 0.1 0.18
Investment Securities
Available-for-Sale 2,226.7 12.7 2.28 2,226.4 12.7 2.29 3,212.2 17.4 2.17
Held-to-Maturity 4,756.8 27.8 2.34 4,754.2 28.8 2.42 3,714.3 19.2 2.07
Loans Held for Sale 3.6 - 4.33 4.2 0.1 4.68 22.9 0.2 3.87
Loans and Leases 1
Commercial and Industrial 950.2 8.1 3.42 923.8 7.8 3.41 855.5 7.8 3.65
Commercial Mortgage 1,302.2 12.7 3.91 1,250.0 12.7 4.12 1,114.8 11.3 4.08
Construction 103.2 1.2 4.48 97.3 1.1 4.43 107.5 1.2 4.61
Commercial Lease Financing 241.2 1.7 2.80 245.8 1.4 2.33 265.2 1.6 2.36
Residential Mortgage 2,323.5 25.4 4.38 2,286.9 24.4 4.27 2,252.1 25.5 4.53
Home Equity 805.9 7.9 3.93 781.8 7.6 3.97 752.9 7.8 4.15
Automobile 280.6 3.7 5.33 263.3 3.5 5.39 225.0 3.1 5.51
Other 2       267.8     5.1   7.65       255.1     5.0   7.90       208.9     4.3   8.22
Total Loans and Leases       6,274.6     65.8   4.20       6,104.0     63.5   4.19       5,781.9     62.6   4.34
Other       74.1     0.3   1.63       76.8     0.3   1.57       78.6     0.3   1.45
Total Earning Assets 3       13,648.1     106.8   3.13       13,441.8     105.5   3.16       12,982.7     99.8   3.08
Cash and Noninterest-Bearing Deposits 138.3 142.5 136.8
Other Assets   467.0   449.6   452.8
Total Assets $ 14,253.4 $ 14,033.9 $ 13,572.3
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,359.2 0.2 0.03 $ 2,325.8 0.2 0.03 $ 2,106.0 0.2 0.03
Savings 4,540.3 1.0 0.09 4,515.6 1.0 0.09 4,451.1 1.0 0.09
Time       1,506.5     1.2   0.33       1,373.1     1.2   0.37       1,381.4     1.4   0.42
Total Interest-Bearing Deposits       8,406.0     2.4   0.11       8,214.5     2.4   0.12       7,938.5     2.6   0.13
Short-Term Borrowings 9.3 - 0.14 10.0 - 0.14 29.4 - 0.12
Securities Sold Under Agreements to Repurchase 789.9 6.5 3.24 794.4 6.4 3.22 800.1 6.7 3.34
Long-Term Debt       175.3     0.6   1.49       174.7     0.6   1.44       177.3     0.7   1.52
Total Interest-Bearing Liabilities       9,380.5     9.5   0.40       9,193.6     9.4   0.41       8,945.3     10.0   0.44
Net Interest Income $ 97.3 $ 96.1 $ 89.8
Interest Rate Spread 2.73 % 2.75 % 2.64 %
Net Interest Margin 2.86 % 2.87 % 2.77 %
Noninterest-Bearing Demand Deposits 3,624.0 3,600.0 3,306.1
Other Liabilities 200.5 206.9 286.5
Shareholders' Equity   1,048.4   1,033.4   1,034.4
Total Liabilities and Shareholders' Equity $ 14,253.4 $ 14,033.9 $ 13,572.3
 
 

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 $2,874,000, $2,824,000, and $2,490,000 for the three months ended June 30, 2014, March 31, 2014, and June 30, 2013, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis Table 7b
    Six Months Ended   Six Months Ended
June 30, 2014 June 30, 2013
Average   Income/   Yield/ Average Income/   Yield/
(dollars in millions)     Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 4.8 $ - 0.18 % $ 4.2 $ - 0.18 %
Funds Sold 289.5 0.3 0.21 162.4 0.1 0.16
Investment Securities
Available-for-Sale 2,226.5 25.4 2.28 3,266.9 35.6 2.18
Held-to-Maturity 4,755.5 56.5 2.38 3,646.6 39.1 2.14
Loans Held for Sale 3.9 0.1 4.52 20.6 0.4 3.90
Loans and Leases 1
Commercial and Industrial 937.1 15.9 3.42 839.3 15.4 3.70
Commercial Mortgage 1,276.2 25.4 4.01 1,104.1 22.4 4.09
Construction 100.3 2.2 4.45 111.5 2.7 4.83
Commercial Lease Financing 243.5 3.1 2.56 268.9 3.2 2.38
Residential Mortgage 2,305.3 49.8 4.32 2,281.7 51.5 4.51
Home Equity 793.9 15.6 3.95 760.4 15.7 4.15
Automobile 272.0 7.2 5.36 219.5 6.0 5.56
Other 2       261.5     10.1   7.77       207.2     8.5   8.28
Total Loans and Leases       6,189.8     129.3   4.20       5,792.6     125.4   4.35
Other       75.5     0.6   1.60       78.8     0.5   1.44
Total Earning Assets 3       13,545.5     212.2   3.14       12,972.1     201.1   3.11
Cash and Noninterest-Bearing Deposits 140.4 139.4
Other Assets   458.4   453.4
Total Assets $ 14,144.3 $ 13,564.9
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,342.6 0.4 0.03 $ 2,083.4 0.3 0.03
Savings 4,528.0 1.9 0.09 4,429.9 1.9 0.09
Time       1,440.2     2.5   0.35       1,446.8     3.0   0.42
Total Interest-Bearing Deposits       8,310.8     4.8   0.12       7,960.1     5.2   0.13
Short-Term Borrowings 9.6 - 0.14 43.7 - 0.14
Securities Sold Under Agreements to Repurchase 792.2 12.8 3.23 778.2 13.8 3.52
Long-Term Debt       175.0     1.3   1.46       167.3     1.3   1.57
Total Interest-Bearing Liabilities       9,287.6     18.9   0.41       8,949.3     20.3   0.45
Net Interest Income $ 193.3 $ 180.8
Interest Rate Spread 2.73 % 2.66 %
Net Interest Margin 2.87 % 2.80 %
Noninterest-Bearing Demand Deposits 3,612.1 3,305.8
Other Liabilities 203.6 275.2
Shareholders' Equity   1,041.0       1,034.6
Total Liabilities and Shareholders' Equity $ 14,144.3     $ 13,564.9
 
 

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 $5,698,000 and $4,901,000 for the six months ended June 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 June 30, 2014
Compared to March 31, 2014
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ 0.1 $ - $ 0.1
Investment Securities
Held-to-Maturity - (1.0 ) (1.0 )
Loans Held for Sale (0.1 ) - (0.1 )
Loans and Leases
Commercial and Industrial 0.3 - 0.3
Commercial Mortgage 0.6 (0.6 ) -
Construction 0.1 - 0.1
Commercial Lease Financing - 0.3 0.3
Residential Mortgage 0.4 0.6 1.0
Home Equity 0.4 (0.1 ) 0.3
Automobile 0.2 - 0.2
Other 2       0.2       (0.1 )     0.1  
Total Loans and Leases       2.2       0.1       2.3  
Total Change in Interest Income       2.2       (0.9 )     1.3  
 
Change in Interest Expense:
Interest-Bearing Deposits
Time       0.1       (0.1 )     -  
Total Interest-Bearing Deposits       0.1       (0.1 )     -  
Securities Sold Under Agreements to Repurchase       -       0.1       0.1  
Total Change in Interest Expense       0.1       -       0.1  
 
Change in Net Interest Income     $ 2.1     $ (0.9 )   $ 1.2  
 
 

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 June 30, 2014
Compared to June 30, 2013
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ 0.1 $ - $ 0.1
Investment Securities
Available-for-Sale (5.6 ) 0.9 (4.7 )
Held-to-Maturity 5.9 2.7 8.6
Loans Held for Sale (0.2 ) - (0.2 )
Loans and Leases
Commercial and Industrial 0.8 (0.5 ) 0.3
Commercial Mortgage 1.9 (0.5 ) 1.4
Commercial Lease Financing (0.2 ) 0.3 0.1
Residential Mortgage 0.8 (0.9 ) (0.1 )
Home Equity 0.5 (0.4 ) 0.1
Automobile 0.7 (0.1 ) 0.6
Other 2       1.1       (0.3 )     0.8  
Total Loans and Leases       5.6       (2.4 )     3.2  
Total Change in Interest Income       5.8       1.2       7.0  
 
Change in Interest Expense:
Interest-Bearing Deposits
Time       0.1       (0.3 )     (0.2 )
Total Interest-Bearing Deposits       0.1       (0.3 )     (0.2 )
Securities Sold Under Agreements to Repurchase - (0.2 ) (0.2 )
Long-Term Debt       (0.1 )     -       (0.1 )
Total Change in Interest Expense       -       (0.5 )     (0.5 )
 
Change in Net Interest Income     $ 5.8     $ 1.7     $ 7.5  
 
 

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
    Six Months Ended June 30, 2014
Compared to June 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 (11.8 ) 1.6 (10.2 )
Held-to-Maturity 12.8 4.6 17.4
Loans Held for Sale (0.4 ) 0.1 (0.3 )
Loans and Leases
Commercial and Industrial 1.7 (1.2 ) 0.5
Commercial Mortgage 3.4 (0.4 ) 3.0
Construction (0.2 ) (0.3 ) (0.5 )
Commercial Lease Financing (0.3 ) 0.2 (0.1 )
Residential Mortgage 0.5 (2.2 ) (1.7 )
Home Equity 0.7 (0.8 ) (0.1 )
Automobile 1.4 (0.2 ) 1.2
Other 2       2.1       (0.5 )     1.6  
Total Loans and Leases       9.3       (5.4 )     3.9  
Other       -       0.1       0.1  
Total Change in Interest Income       10.0       1.1       11.1  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Savings 0.1 (0.1 ) -
Time       (0.1 )     (0.4 )     (0.5 )
Total Interest-Bearing Deposits       0.1       (0.5 )     (0.4 )
Securities Sold Under Agreements to Repurchase 0.1 (1.1 ) (1.0 )
Long-Term Debt       0.1       (0.1 )     -  
Total Change in Interest Expense       0.3       (1.7 )     (1.4 )
 
Change in Net Interest Income     $ 9.7     $ 2.8     $ 12.5  
 
 

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     Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands)     2014   2014   2013     2014   2013
Salaries $ 28,544 $ 27,914 $ 28,690 $ 56,458   $ 57,768
Incentive Compensation 4,359 4,231 3,861 8,590 7,645
Share-Based Compensation 2,271 1,969 1,305 4,240 2,441
Commission Expense 1,106 1,059 1,983 2,165 3,764
Retirement and Other Benefits 3,811 4,986 3,594 8,797 7,962
Payroll Taxes 2,179 3,568 2,576 5,747 6,816
Medical, Dental, and Life Insurance 2,724 2,621 2,468 5,345 5,281
Separation Expense       87     549     864       636     2,339
Total Salaries and Benefits     $ 45,081   $ 46,897   $ 45,341     $ 91,978   $ 94,016
 
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances Table 10
      June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands)     2014   2014   2013   2013   2013
Commercial
Commercial and Industrial $ 988,940 $ 955,599 $ 911,367 $ 895,040 $ 875,702
Commercial Mortgage 1,345,549 1,284,181 1,247,510 1,203,670 1,160,977
Construction 121,434 91,452 107,349 124,230 107,016
Lease Financing       237,585     240,931     262,207     255,550     257,067
Total Commercial       2,693,508     2,572,163     2,528,433     2,478,490     2,400,762
Consumer
Residential Mortgage 2,355,085 2,305,153 2,282,894 2,282,305 2,252,117
Home Equity 811,180 797,341 773,385 765,841 751,790
Automobile 287,794 273,553 255,986 246,704 233,475
Other 1       278,786     261,647     254,689     233,302     221,008
Total Consumer       3,732,845     3,637,694     3,566,954     3,528,152     3,458,390
Total Loans and Leases     $ 6,426,353   $ 6,209,857   $ 6,095,387   $ 6,006,642   $ 5,859,152
 
 
Higher Risk Loans and Leases Outstanding
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)     2014   2014   2013   2013   2013
Residential Land Loans 2 $ 10,016 $ 11,086 $ 11,922 $ 13,635 $ 13,708
Home Equity Loans 3 11,307 11,846 12,594 12,588 13,578
Air Transportation Leases 4       24,917     24,969     26,152     26,492     26,436
Total Higher Risk Loans and Leases     $ 46,240   $ 47,901   $ 50,668   $ 52,715   $ 53,722
 
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
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)     2014   2014   2013   2013   2013
Consumer $ 5,938,123 $ 5,960,485 $ 5,829,352 $ 5,707,125 $ 5,626,515
Commercial 5,207,026 4,742,308 4,814,076 4,680,370 4,537,120
Public and Other       1,524,885     1,341,680     1,271,228     1,220,639     1,285,563
Total Deposits     $ 12,670,034   $ 12,044,473   $ 11,914,656   $ 11,608,134   $ 11,449,198
 
 
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11
    June 30,   March 31,   December 31,   September 30, June 30,
(dollars in thousands)     2014     2014     2013     2013     2013  
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 10,437 $ 11,239 $ 11,929 $ 5,295 $ 4,909
Commercial Mortgage 1,403 1,421 2,512 2,355 2,772
Lease Financing       -       -       -       -       16  
Total Commercial       11,840       12,660       14,441       7,650       7,697  
Consumer
Residential Mortgage 15,818 19,003 20,264 20,637 22,876
Home Equity       2,787       1,935       1,740       2,509       2,602  
Total Consumer       18,605       20,938       22,004       23,146       25,478  
Total Non-Accrual Loans and Leases       30,445       33,598       36,445       30,796       33,175  
Foreclosed Real Estate       3,944       3,450       3,205       3,036       3,256  
Total Non-Performing Assets     $ 34,389     $ 37,048     $ 39,650     $ 33,832     $ 36,431  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial     $ -     $ 150     $ 1,173     $ 8     $ -  
Total Commercial       -       150       1,173       8       -  
Consumer
Residential Mortgage 6,082 5,729 4,564 7,460 6,876
Home Equity 2,505 2,845 3,009 2,896 2,768
Automobile 236 346 322 193 95
Other 1       844       644       790       841       855  
Total Consumer       9,667       9,564       8,685       11,390       10,594  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 9,667     $ 9,714     $ 9,858     $ 11,398     $ 10,594  

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

    $ 43,625     $ 44,473     $ 51,123     $ 39,845     $ 39,154  
Total Loans and Leases     $ 6,426,353     $ 6,209,857     $ 6,095,387     $ 6,006,642     $ 5,859,152  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.47 %     0.54 %     0.60 %     0.51 %     0.57 %
 

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

      0.53 %     0.60 %     0.65 %     0.56 %     0.62 %
 

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

      0.48 %     0.53 %     0.61 %     0.35 %     0.37 %
 

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

      0.57 %     0.64 %     0.68 %     0.71 %     0.80 %
 

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

      0.69 %     0.75 %     0.81 %     0.75 %     0.80 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 37,048 $ 39,650 $ 33,832 $ 36,431 $ 38,374
Additions 2,798 2,491 13,040 3,395 2,647
Reductions
Payments (2,753 ) (1,855 ) (932 ) (2,954 ) (1,306 )
Return to Accrual Status (904 ) (1,864 ) (2,308 ) (1,166 ) (1,978 )
Sales of Foreclosed Real Estate (1,782 ) (737 ) (1,431 ) (1,498 ) (1,257 )
Charge-offs/Write-downs       (18 )     (637 )     (2,551 )     (376 )     (49 )
Total Reductions       (5,457 )     (5,093 )     (7,222 )     (5,994 )     (4,590 )
Balance at End of Quarter     $ 34,389     $ 37,048     $ 39,650     $ 33,832     $ 36,431  
 
 

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       Six Months Ended  
June 30,   March 31,   June 30, June 30,
(dollars in thousands)     2014     2014     2013       2014     2013  
Balance at Beginning of Period $ 120,136 $ 121,521 $ 132,297 $ 121,521   $ 134,276
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (749 ) (819 ) (266 ) (1,568 ) (648 )
Lease Financing (66 ) - - (66 ) -
Consumer
Residential Mortgage (323 ) (329 ) (188 ) (652 ) (1,423 )
Home Equity (553 ) (351 ) (2,016 ) (904 ) (3,393 )
Automobile (711 ) (917 ) (429 ) (1,628 ) (1,004 )
Other 1       (1,595 )     (1,622 )     (1,805 )       (3,217 )     (3,535 )
Total Loans and Leases Charged-Off       (3,997 )     (4,038 )     (4,704 )       (8,035 )     (10,003 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 2,132 920 437 3,052 875
Commercial Mortgage 15 14 14 29 24
Construction 8 5 8 13 346
Lease Financing 1 2 11 3 22
Consumer
Residential Mortgage 2,335 272 634 2,607 1,422
Home Equity 351 551 335 902 1,083
Automobile 343 445 456 788 917
Other 1       723       501       506         1,224       1,032  
Total Recoveries on Loans and Leases Previously Charged-Off       5,908       2,710       2,401         8,618       5,721  
Net Loans and Leases Recovered (Charged-Off) 1,911 (1,328 ) (2,303 ) 583 (4,282 )
Provision for Credit Losses (2,199 ) - - (2,199 ) -
Provision for Unfunded Commitments       (123 )     (57 )     500         (180 )     500  
Balance at End of Period 2     $ 119,725     $ 120,136     $ 130,494       $ 119,725     $ 130,494  
 
Components
Allowance for Loan and Lease Losses $ 113,838 $ 114,126 $ 124,575 $ 113,838 $ 124,575
Reserve for Unfunded Commitments       5,887       6,010       5,919         5,887       5,919  
Total Reserve for Credit Losses     $ 119,725     $ 120,136     $ 130,494       $ 119,725     $ 130,494  
 
Average Loans and Leases Outstanding     $ 6,274,595     $ 6,104,041     $ 5,781,898       $ 6,189,789     $ 5,792,641  
 

Ratio of Net Loans and Leases Charged-Off (Recovered) to Average Loans and Leases Outstanding (annualized)

-0.12 % 0.09 % 0.16 % -0.02 % 0.15 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.77 % 1.84 % 2.13 % 1.77 % 2.13 %
 
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 June 30, 2014
Net Interest Income $ 45,345 $ 28,012 $ 2,638 $ 18,417 $ 94,412
Provision for Credit Losses     (414 )     (1,269 )     (226 )     (290 )     (2,199 )
Net Interest Income After Provision for Credit Losses 45,759 29,281 2,864 18,707 96,611
Noninterest Income 20,133 5,443 14,404 4,501 44,481
Noninterest Expense     (49,028 )     (16,258 )     (13,165 )     (2,631 )     (81,082 )
Income Before Provision for Income Taxes 16,864 18,466 4,103 20,577 60,010
Provision for Income Taxes     (6,193 )     (6,389 )     (1,518 )     (4,420 )     (18,520 )
Net Income     10,671       12,077       2,585       16,157       41,490  
Total Assets as of June 30, 2014   $ 3,798,785     $ 2,595,573     $ 194,220     $ 8,255,927     $ 14,844,505  
 
 
Three Months Ended June 30, 2013 1
Net Interest Income $ 40,334 $ 23,874 $ 2,594 $ 20,538 $ 87,340
Provision for Credit Losses     2,534       (205 )     (12 )     (2,317 )     -  
Net Interest Income After Provision for Credit Losses 37,800 24,079 2,606 22,855 87,340
Noninterest Income 22,977 7,011 15,288 2,765 48,041
Noninterest Expense     (49,831 )     (15,698 )     (13,181 )     (2,471 )     (81,181 )
Income Before Provision for Income Taxes 10,946 15,392 4,713 23,149 54,200
Provision for Income Taxes     (4,050 )     (5,268 )     (1,744 )     (5,375 )     (16,437 )
Net Income     6,896       10,124       2,969       17,774       37,763  
Total Assets as of June 30, 2013 1   $ 3,567,718     $ 2,275,763     $ 188,871     $ 7,701,066     $ 13,733,418  
 
 

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
Six Months Ended June 30, 2014
Net Interest Income $ 87,913 $ 54,783 $ 5,219 $ 39,730 $ 187,645
Provision for Credit Losses     1,042       (1,329 )     (294 )     (1,618 )     (2,199 )
Net Interest Income After Provision for Credit Losses 86,871 56,112 5,513 41,348 189,844
Noninterest Income 39,625 11,531 28,747 9,346 89,249
Noninterest Expense     (98,774 )     (33,025 )     (27,400 )     (5,430 )     (164,629 )
Income Before Provision for Income Taxes 27,722 34,618 6,860 45,264 114,464
Provision for Income Taxes     (10,210 )     (11,903 )     (2,538 )     (9,731 )     (34,382 )
Net Income     17,512       22,715       4,322       35,533       80,082  
Total Assets as of June 30, 2014   $ 3,798,785     $ 2,595,573     $ 194,220     $ 8,255,927     $ 14,844,505  
 
 
Six Months Ended June 30, 2013 1
Net Interest Income $ 81,039 $ 48,856 $ 5,365 $ 40,640 $ 175,900
Provision for Credit Losses     5,146       (810 )     (34 )     (4,302 )     -  
Net Interest Income After Provision for Credit Losses 75,893 49,666 5,399 44,942 175,900
Noninterest Income 45,901 13,971 30,098 5,849 95,819
Noninterest Expense     (100,689 )     (32,210 )     (27,364 )     (5,305 )     (165,568 )
Income Before Provision for Income Taxes 21,105 31,427 8,133 45,486 106,151
Provision for Income Taxes     (7,809 )     (10,746 )     (3,009 )     (10,844 )     (32,408 )
Net Income     13,296       20,681       5,124       34,642       73,743  
Total Assets as of June 30, 2013 1   $ 3,567,718     $ 2,275,763     $ 188,871     $ 7,701,066     $ 13,733,418  
 
 

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
June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands, except per share amounts)     2014       2014     2013     2013     2013
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 65,818 $ 63,526 $ 63,809 $ 63,918 $ 62,729
Income on Investment Securities
Available-for-Sale 10,697 10,760 10,608 12,038 15,073
Held-to-Maturity 26,938 27,889 26,882 24,137 19,189
Deposits 1 3 3 3 1
Funds Sold 168 137 105 177 74
Other       302         302       302       301       285
Total Interest Income       103,924         102,617       101,709       100,574       97,351
Interest Expense
Deposits 2,393 2,358 2,418 2,500 2,579
Securities Sold Under Agreements to Repurchase 6,465 6,397 6,530 6,551 6,751
Funds Purchased 4 3 8 4 10
Short-Term Borrowings - - 2 - -
Long-Term Debt       650         626       631       632       671
Total Interest Expense       9,512         9,384       9,589       9,687       10,011
Net Interest Income 94,412 93,233 92,120 90,887 87,340
Provision for Credit Losses       (2,199 )       -       -       -       -
Net Interest Income After Provision for Credit Losses       96,611         93,233       92,120       90,887       87,340
Noninterest Income
Trust and Asset Management 12,005 11,852 12,240 11,717 12,089
Mortgage Banking 1,804 2,005 2,823 4,132 5,820
Service Charges on Deposit Accounts 8,638 8,878 9,326 9,385 9,112
Fees, Exchange, and Other Service Charges 13,370 12,939 12,670 12,732 13,133
Investment Securities Gains, Net 2,079 2,160 - - -
Insurance 1,930 2,123 2,295 2,177 2,393
Bank-Owned Life Insurance 1,519 1,602 1,895 1,365 1,335
Other       3,136         3,209       4,029       3,618       4,159
Total Noninterest Income       44,481         44,768       45,278       45,126       48,041
Noninterest Expense
Salaries and Benefits 45,081 46,897 43,643 46,552 45,341
Net Occupancy 9,254 9,417 9,602 9,847 9,661
Net Equipment 4,669 4,603 4,837 4,572 4,380
Data Processing 3,842 3,649 3,827 3,697 3,050
Professional Fees 2,613 2,260 2,669 2,119 2,391
FDIC Insurance 2,055 2,076 1,954 1,913 1,949
Other       13,568         14,645       15,892       14,277       14,409
Total Noninterest Expense       81,082         83,547       82,424       82,977       81,181
Income Before Provision for Income Taxes 60,010 54,454 54,974 53,036 54,200
Provision for Income Taxes       18,520         15,862       15,919       15,332       16,437
Net Income     $ 41,490       $ 38,592     $ 39,055     $ 37,704     $ 37,763
 
Basic Earnings Per Share $ 0.94 $ 0.87 $ 0.88 $ 0.85 $ 0.85
Diluted Earnings Per Share $ 0.94 $ 0.87 $ 0.88 $ 0.85 $ 0.85
 
Balance Sheet Totals
Loans and Leases $ 6,426,353 $ 6,209,857 $ 6,095,387 $ 6,006,642 $ 5,859,152
Total Assets 14,844,505 14,263,118 14,084,280 13,848,871 13,733,418
Total Deposits 12,670,034 12,044,473 11,914,656 11,608,134 11,449,198
Total Shareholders' Equity 1,050,801 1,028,904 1,011,976 992,686 986,368
 
Performance Ratios
Return on Average Assets 1.17 % 1.12 % 1.12 % 1.09 % 1.12 %
Return on Average Shareholders' Equity 15.87 15.15 15.36 15.02 14.64
Efficiency Ratio 1 58.38 60.54 59.99 61.01 59.96
Net Interest Margin 2 2.86 2.87 2.85 2.83 2.77
 
 
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
    Five Months Ended   Year Ended  
($ in millions; jobs in thousands)     May 31, 2014     December 31, 2013     December 31, 2012  
Hawaii Economic Trends        
State General Fund Revenues 1 $ 2,340.8 (1.0 ) % $ 5,451.3 3.7 % $ 5,259.1 12.8 %
General Excise and Use Tax Revenue 1 $ 1,281.6 (0.1 ) % $ 2,907.6 2.2 % $ 2,844.7 9.9 %
Jobs 2 632.5 623.1 619.3
                                     
June 30, December 31,  
(spot rates)                     2014     2013   2012  
Unemployment 3
Statewide, seasonally adjusted 4.4 % 4.7 % 5.1 %
 
Oahu 4.5 3.8 4.2
Island of Hawaii 6.6 5.9 6.9
Maui 5.1 4.7 5.2
Kauai 5.4 5.2 6.1
                                     
June 30, December 31,  
(percentage change, except months of inventory)                 2014     2013   2012  
Housing Trends (Single Family Oahu) 4
Median Home Price 7.1 % 4.8 % 7.8 %
Home Sales Volume (units) (0.2 ) % 4.6 % 6.5 %
Months of Inventory 2.8 2.7 2.5
                                     
Monthly Visitor Arrivals, Percentage Change
(in thousands)               Not Seasonally Adjusted   from Previous Year  
Tourism 5
 
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 748.8 2.5
July 31, 2013 758.0 4.6
June 30, 2013 716.6 5.5
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

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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