Bank of Hawaii Corporation Second Quarter 2018 Financial Results

  • Diluted Earnings Per Share $1.30
  • Net Income $54.7 Million
  • Board of Directors Approves Dividend of $0.60 Per Share

HONOLULU--()--Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $1.30 for the second quarter of 2018, up from diluted earnings per share of $1.28 in the previous quarter, and up from diluted earnings per share of $1.05 in the same quarter last year. Net income for the second quarter of 2018 was $54.7 million compared with net income of $54.0 million in the first quarter of 2018 and net income of $44.7 million in the second quarter of 2017.

Loan and lease balances increased to $10.1 billion at June 30, 2018, up 1.4 percent from March 31, 2018, and up 7.1 percent compared with June 30, 2017. Total deposits were $14.9 billion at the end of the second quarter, down slightly from March 31, 2018 due to the planned decline in public time deposits. Total deposits were up 1.1 percent compared with June 30, 2017.

“Bank of Hawaii Corporation continued to perform well during the second quarter of 2018,” said Peter Ho, Chairman, President and CEO. “Loans continued to grow, our margin expanded, asset quality remains strong, and we maintained our disciplined approach to risk and capital management.”

The return on average assets for the second quarter of 2018 was 1.30 percent, up from 1.29 percent in the previous quarter and 1.09 percent in the same quarter last year. The return on average equity for the second quarter of 2018 was 17.68 percent down slightly from 17.74 percent for the first quarter of 2018 and up from 14.87 percent for the second quarter of 2017. The efficiency ratio for the second quarter of 2018 was 56.12 percent compared with 57.91 percent in the previous quarter and 55.99 percent in the same quarter last year.

For the six-month period ended June 30, 2018, net income was $108.8 million, an increase of $13.0 million from net income of $95.8 million during the same period last year. Diluted earnings per share were $2.57 for the first half of 2018, an increase from diluted earnings per share of $2.24 for the first half of 2017. The return on average assets for the six-month period ended June 30, 2018 was 1.29 percent compared with 1.17 percent for the same six months in 2017. The year-to-date return on average equity was 17.71 percent for the first half of 2018 compared with 16.22 percent for the six-month period ended June 30, 2017. The efficiency ratio for the first half of 2018 was 57.01 percent compared with 54.67 percent in the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2018 was $121.8 million, an increase of $1.5 million compared with net interest income of $120.3 million in the first quarter of 2018 and an increase of $6.5 million compared with net interest income of $115.3 million in the second quarter of 2017. Net interest income for the first half of 2018 was $242.1 million, an increase of $13.8 million compared with net interest income of $228.3 million for the first half of 2017. Analyses of the changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin was 3.04 percent for the second quarter of 2018, up 4 basis points from the net interest margin of 3.00 percent in the previous quarter and a 12 basis point increase from the net interest margin of 2.92 percent in the second quarter of 2017. The net interest margin for the first six months of 2018 was 3.02 percent compared with 2.90 percent for the same six-month period last year.

Results for the second quarter of 2018 included a provision for credit losses of $3.5 million compared with a provision for credit losses of $4.1 million in the previous quarter and a provision for credit losses of $4.3 million in the same quarter last year. The provision for credit losses during the first half of 2018 was $7.6 million compared with $8.7 million during the same period in 2017.

Noninterest income was $41.3 million in the second quarter of 2018, a decrease of $2.7 million compared with noninterest income of $44.0 million in the first quarter of 2018 and a decrease of $3.9 million compared with noninterest income of $45.2 million in the second quarter of 2017. Noninterest income during the second quarter of 2018 included a negative adjustment of $1.0 million related to a change in the Visa Class B conversion ratio. Noninterest income in the first quarter of 2018 included $2.8 million resulting from a low-income housing investment sale and distribution. There were no significant items in noninterest income during the second quarter of 2017. The decrease compared with the second quarter last year was primarily due to lower mortgage banking income and a decline in service charges. Noninterest income for the first half of 2018 was $85.3 million, a decrease of $15.9 million compared with noninterest income of $101.2 million for the first half of 2017. Noninterest income in the first half of 2017 included a gain of $12.5 million resulting from the sale of 90,000 Visa Class B shares.

Noninterest expense was $90.8 million in the second quarter of 2018, a decrease of $3.6 million compared with noninterest expense of $94.4 million in the first quarter of 2018 and an increase of $2.6 million compared with noninterest expense of $88.2 million in the second quarter last year. There were no significant items in noninterest expense during the second quarter of 2018 or the second quarter of 2017. Noninterest expense in the first quarter of 2018 included seasonal payroll expenses of approximately $2.5 million, a legal reserve of $2.0 million, and severance expenses of $1.0 million. Noninterest expense for the first half of 2018 was $185.2 million, an increase of $8.4 million compared with $176.8 million for the first half of 2017. Adjusted for the legal reserve and severance, the increase is largely related to salaries and benefits, including minimum wage increases. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The effective tax rate for the second quarter of 2018 was 18.94 percent compared with 16.19 percent in the previous quarter and 31.37 percent in the same quarter last year. The lower effective tax rate in the first and second quarters of 2018 was primarily due to the reduction in the federal corporate tax rate from 35 percent to 21 percent as a result of the Tax Cuts and Jobs Act. The tax rate during the first quarter of 2018 was also favorably impacted by a $2.0 million adjustment to the Company’s low-income housing investments. The effective tax rate for the first half of 2018 was 17.60 percent compared with 30.50 percent during the same period last year.

The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services and Private Banking, and Treasury & Other. Their 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 asset quality continued to remain solid during the second quarter of 2018. Total non-performing assets were $15.2 million at June 30, 2018, down from non-performing assets of $15.7 million at March 31, 2018 and down from non-performing assets of $16.4 million at June 30, 2017. As a percentage of total loans and leases, including foreclosed real estate, non-performing assets were 0.15 percent at the end of the second quarter of 2018, down from 0.16 percent at the end of the first quarter of 2018 and down from 0.17 percent at the end of the second quarter last year.

Accruing loans and leases past due 90 days or more were $13.3 million at June 30, 2018, up from $8.2 million at March 31, 2018 and $7.0 million at June 30, 2017. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $50.2 million at June 30, 2018, down from $56.7 million at March 31, 2018 and down from $53.2 million at June 30, 2017. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loan and lease charge-offs during the second quarter of 2018 were $3.3 million or 0.13 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $5.7 million during the quarter were partially offset by recoveries of $2.4 million. Net charge-offs during the first quarter of 2018 were $3.5 million or 0.15 percent annualized of total average loans and leases outstanding and comprised of $6.0 million in charge-offs and recoveries of $2.5 million. Net charge-offs during the second quarter of 2017 were $3.0 million or 0.13 percent annualized of total average loans and leases outstanding and comprised of $5.5 million in charge-offs and recoveries of $2.5 million. Net charge-offs during the first half of 2018 were $6.8 million or 0.14 percent annualized of total average loans and leases outstanding compared with net charge-offs of $6.6 million or 0.15 percent annualized of total average loans and leases outstanding for the first half of 2017.

The allowance for loan and lease losses increased to $108.2 million at June 30, 2018 compared with $107.9 million at March 31, 2018 and $106.4 million at June 30, 2017. The ratio of the allowance for loan and lease losses to total loans and leases was 1.08 percent at June 30, 2018, a decrease of 1 basis point from the previous quarter and 5 basis points from the second quarter last year. The allowance for loan and lease losses at June 30, 2018 is commensurate with the Company’s strong asset quality and the Hawaii economy. The reserve for unfunded commitments of $6.8 million at June 30, 2018 was unchanged from March 31, 2018 and June 30, 2017. 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 $17.12 billion at June 30, 2018, down slightly from total assets of $17.14 billion at March 31, 2018 and up from total assets of $16.98 billion at June 30, 2017. Average total assets were $16.92 billion during the second quarter of 2018 compared with $16.96 billion during the previous quarter and $16.50 billion during the same quarter last year.

The investment securities portfolio was $5.69 billion at June 30, 2018, down from $5.97 billion at March 31, 2018 and $6.10 billion at June 30, 2017. The portfolio remains largely comprised of securities issued by U.S. government agencies and included $3.60 billion in securities held to maturity and $2.09 billion in securities available for sale at June 30, 2018.

Total loans and leases were $10.05 billion at June 30, 2018, up from total loans and leases of $9.92 billion at March 31, 2018, and up from total loans and leases of $9.39 billion at June 30, 2017. Average total loans and leases increased to $9.96 billion during the second quarter of 2018 from $9.80 billion during the previous quarter and $9.22 billion during the same quarter last year.

The commercial loan portfolio was $3.82 billion at June 30, 2018, up from $3.79 billion at March 31, 2018, and up from $3.70 billion at June 30, 2017. The consumer loan portfolio increased to $6.24 billion at June 30, 2018 compared with $6.12 billion at March 31, 2018 and $5.68 billion at June 30, 2017. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $14.94 billion at June 30, 2018, down from total deposits of $14.96 billion at March 31, 2018 and up from total deposits of $14.78 billion at June 30, 2017. Average total deposits were $14.71 billion during the second quarter of 2018, down slightly from $14.72 billion during the previous quarter and up from total deposits of $14.25 billion during the same quarter last year.

Consumer deposits of $7.67 billion at June 30, 2018 were up slightly from March 31, 2018 and up from $7.28 billion at June 30, 2017. Commercial deposits of $5.92 billion at June 30, 2018 also reflected a small increase from commercial deposits of $5.90 billion at March 31, 2018 and June 30, 2017. Other deposits, including public funds, were $1.35 billion at June 30, 2018, down from $1.39 billion at March 31, 2018 and $1.60 billion at June 30, 2017 largely due to the decline in public time deposits. Deposit balances are summarized in Tables 7a, 7b, and 10.

During the second quarter of 2018, the Company repurchased 292.0 thousand shares of common stock at a total cost of $24.8 million under its share repurchase program. The average cost was $84.93 per share repurchased. From the beginning of the share repurchase program initiated during July of 2001 through June 30, 2018, the Company has repurchased 54.6 million shares and returned over $2.1 billion to shareholders at an average cost of $38.68 per share. Remaining buyback authority under the share repurchase program was $81.3 million at June 30, 2018. From July 2 through July 20, 2018, the Company repurchased an additional 68.0 thousand shares of common stock at an average cost of $84.55 per share.

Total shareholders’ equity increased to $1.25 billion at June 30, 2018 compared with $1.24 billion at March 31, 2018 and $1.21 billion at June 30, 2017. The Tier 1 Capital Ratio at June 30, 2018 was 13.27 percent compared with 13.37 percent at March 31, 2018 and 13.34 percent at June 30, 2017. The Tier 1 leverage ratio at June 30, 2018 was 7.53 percent compared with 7.46 percent at March 31, 2018 and 7.37 percent at June 30, 2017.

The Company’s Board of Directors declared a quarterly cash dividend of $0.60 per share on the Company’s outstanding shares. The dividend will be payable on September 17, 2018 to shareholders of record at the close of business on August 31, 2018.

Hawaii Economy

Economic conditions in Hawaii continue to remain positive due to growing tourism, healthy construction activity, record low unemployment, and a strong real estate market. The statewide seasonally-adjusted unemployment rate in Hawaii continues to remain among the lowest in the United States at 2.1 percent in June 2018 compared to 4.0 percent nationally. For the first five months of 2018, total visitor spending increased 10.9 percent and visitor arrivals increased 8.4 percent compared to the same period in 2017. For the first five months of 2018, all four of Hawaii’s largest visitor markets, U.S. West, U.S. East, Japan, and Canada, have reported strong growth compared with the first five months of 2017. For the first six months of 2018, the volume of single-family home sales on Oahu decreased 1.6 percent while the median sales price increased 3.9 percent compared with the same period in 2017. The volume of condominium sales during the first half of 2018 on Oahu increased 1.3 percent and the median sales price was 6.5 percent higher compared with 2017. As of June 30, 2018, months of inventory of single-family homes and condominiums on Oahu remained low at 2.7 months and 3.0 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its second quarter 2018 financial results today at 2:00 p.m. Eastern Time (8:00 a.m. Hawaii Time). The call will be accessible via teleconference and via the investor relations link of Bank of Hawaii Corporation's website, www.boh.com. The toll-free number is 1 (844) 543-5235 in the United States and Canada and 1 (703) 318-2209 for other international callers. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, July 23, 2018. The replay number is 1 (855) 859-2056 in the United States and Canada and 1 (404) 537-3406 from other international locations. Enter the pass code 2584747 when prompted. Participants can also dial 1 (800) 585-8367 to access the replay. In addition, a replay will be available 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, 2017, 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. 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 1
    Three Months Ended   Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands, except per share amounts)     2018     2018     2017     2018     2017

For the Period:

 
Operating Results
Net Interest Income $ 120,496 $ 118,956 $ 112,279 $ 239,452 $ 222,151
Provision for Credit Losses 3,500 4,125 4,250 7,625 8,650
Total Noninterest Income 41,298 44,035 45,236 85,333 101,152
Total Noninterest Expense 90,791 94,384 88,189 185,175 176,757
Net Income 54,718 54,040 44,662 108,758 95,838
Basic Earnings Per Share 1.31 1.29 1.05 2.59 2.26
Diluted Earnings Per Share 1.30 1.28 1.05 2.57 2.24
Dividends Declared Per Share 0.60 0.52 0.50 1.12 1.00
 
Performance Ratios
Return on Average Assets 1.30 % 1.29 % 1.09 % 1.29 % 1.17 %
Return on Average Shareholders' Equity 17.68 17.74 14.87 17.71 16.22
Efficiency Ratio 1 56.12 57.91 55.99 57.01 54.67
Net Interest Margin 2 3.04 3.00 2.92 3.02 2.90
Dividend Payout Ratio 3 45.80 40.31 47.62 43.24 44.25
Average Shareholders' Equity to Average Assets 7.34 7.29 7.30 7.31 7.23
 
Average Balances
Average Loans and Leases $ 9,962,860 $ 9,803,753 $ 9,217,779 $ 9,883,746 $ 9,119,610
Average Assets 16,921,820 16,957,430 16,495,925 16,939,527 16,465,435
Average Deposits 14,709,299 14,720,266 14,253,149 14,714,752 14,236,112
Average Shareholders' Equity 1,241,672 1,235,550 1,204,837 1,238,628 1,191,157
 
Per Share of Common Stock
Book Value $ 29.65 $ 29.33 $ 28.45 $ 29.65 $ 28.45
Tangible Book Value 28.90 28.59 27.72 28.90 27.72
Market Value
Closing 83.42 83.10 82.97 83.42 82.97
High 88.92 89.09 84.99 89.09 90.80
Low 80.20 78.40 75.92 78.40 75.92
 
June 30, March 31, December 31, June 30,
              2018       2018       2017       2017

As of Period End:

Balance Sheet Totals
Loans and Leases $ 10,053,323 $ 9,916,628 $ 9,796,947 $ 9,387,613
Total Assets 17,124,162 17,136,030 17,089,052 16,981,292
Total Deposits 14,943,358 14,957,133 14,883,968 14,784,649
Other Debt 235,681 235,699 260,716 267,904
Total Shareholders' Equity 1,247,717 1,241,193 1,231,868 1,213,757
 
Asset Quality
Non-Performing Assets $ 15,157 $ 15,736 $ 16,120 $ 16,368
Allowance for Loan and Lease Losses 108,188 107,938 107,346 106,353
Allowance to Loans and Leases Outstanding 1.08 % 1.09 % 1.10 % 1.13 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 13.27 % 13.37 % 13.24 % 13.34 %
Tier 1 Capital Ratio 13.27 13.37 13.24 13.34
Total Capital Ratio 14.47 14.58 14.46 14.58
Tier 1 Leverage Ratio 7.53 7.46 7.26 7.37
Total Shareholders' Equity to Total Assets 7.29 7.24 7.21 7.15
Tangible Common Equity to Tangible Assets 4 7.12 7.07 7.04 6.97
Tangible Common Equity to Risk-Weighted Assets 4 12.68 12.80 12.84 13.01
 
Non-Financial Data
Full-Time Equivalent Employees 2,173 2,138 2,132 2,142
Branches 69 69 69 69
ATMs 385 377 387 388
 

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

Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 2 “Reconciliation of Non-GAAP Financial Measures."

Note: Total Capital Ratio as of March 31, 2018 was revised from 14.59%.
 
         
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures       Table 2
June 30, March 31, December 31, June 30,
(dollars in thousands)       2018     2018     2017     2017
 
Total Shareholders' Equity $ 1,247,717 $ 1,241,193 $ 1,231,868 $ 1,213,757

Less: Goodwill

      31,517     31,517     31,517     31,517
Tangible Common Equity     $ 1,216,200   $ 1,209,676   $ 1,200,351   $ 1,182,240
 
Total Assets $ 17,124,162 $ 17,136,030 $ 17,089,052 $ 16,981,292
Less: Goodwill       31,517     31,517     31,517     31,517
Tangible Assets     $ 17,092,645   $ 17,104,513   $ 17,057,535   $ 16,949,775
 

 

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

$ 9,593,242 $ 9,452,847 $ 9,348,296 $ 9,087,057
 
Total Shareholders' Equity to Total Assets 7.29% 7.24% 7.21% 7.15%
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.12% 7.07% 7.04% 6.97%
 
Tier 1 Capital Ratio 13.27% 13.37% 13.24% 13.34%
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 12.68% 12.80% 12.84% 13.01%
 
Note: Risk-Weighted Assets as of March 31, 2018 was revised from $9,451,647.
 
       
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)     2018   2018   2017   2018   2017
Interest Income
Interest and Fees on Loans and Leases $ 101,311 $ 97,634 $ 90,909 $ 198,945 $ 178,846
Income on Investment Securities
Available-for-Sale 12,380 12,141 11,835 24,521 22,919
Held-to-Maturity 20,711 21,296 19,918 42,007 39,624
Deposits (4 ) 18 2 14 7
Funds Sold 846 757 696 1,603 1,586
Other       341       300       208       641       438
Total Interest Income       135,585       132,146       123,568       267,731       243,420
Interest Expense
Deposits 9,459 7,581 4,998 17,040 8,689
Securities Sold Under Agreements to Repurchase 4,617 4,564 5,079 9,181 10,264
Funds Purchased 83 53 39 136 42
Short-Term Borrowings 13 16 64 29 64
Other Debt       917       976       1,109       1,893       2,210
Total Interest Expense       15,089       13,190       11,289       28,279       21,269
Net Interest Income 120,496 118,956 112,279 239,452 222,151
Provision for Credit Losses       3,500       4,125       4,250       7,625       8,650
Net Interest Income After Provision for Credit Losses       116,996       114,831       108,029       231,827       213,501
Noninterest Income
Trust and Asset Management 11,356 11,181 11,796 22,537 23,275
Mortgage Banking 2,179 2,145 3,819 4,324 7,119
Service Charges on Deposit Accounts 6,865 7,129 8,009 13,994 16,334
Fees, Exchange, and Other Service Charges 14,400 14,333 13,965 28,733 27,297
Investment Securities Gains (Losses), Net (1,702 ) (666 ) (520 ) (2,368 ) 11,613
Annuity and Insurance 1,847 1,206 2,161 3,053 4,156
Bank-Owned Life Insurance 1,796 1,842 1,550 3,638 3,047
Other       4,557       6,865       4,456       11,422       8,311
Total Noninterest Income       41,298       44,035       45,236       85,333       101,152
Noninterest Expense
Salaries and Benefits 52,148 54,422 49,676 106,570 100,841
Net Occupancy 8,588 8,534 8,131 17,122 16,299
Net Equipment 5,845 5,527 5,706 11,372 11,207
Data Processing 4,563 3,891 3,881 8,454 7,291
Professional Fees 2,546 2,773 2,592 5,319 5,371
FDIC Insurance 2,182 2,157 2,097 4,339 4,306
Other       14,919       17,080       16,106       31,999       31,442
Total Noninterest Expense       90,791       94,384       88,189       185,175       176,757
Income Before Provision for Income Taxes 67,503 64,482 65,076 131,985 137,896
Provision for Income Taxes       12,785       10,442       20,414       23,227       42,058
Net Income     $ 54,718     $ 54,040     $ 44,662     $ 108,758     $ 95,838
Basic Earnings Per Share $ 1.31 $ 1.29 $ 1.05 $ 2.59 $ 2.26
Diluted Earnings Per Share $ 1.30 $ 1.28 $ 1.05 $ 2.57 $ 2.24
Dividends Declared Per Share $ 0.60 $ 0.52 $ 0.50 $ 1.12 $ 1.00
Basic Weighted Average Shares 41,884,221 42,038,573 42,353,976 41,960,743 42,379,730
Diluted Weighted Average Shares       42,152,200       42,358,425       42,658,885       42,252,900       42,704,010
 
Note: Certain prior period information has been reclassified to conform to current presentation.
 
             
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income     Table 4
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands)     2018   2018   2017     2018   2017
Net Income $ 54,718 $ 54,040 $ 44,662 $ 108,758 $ 95,838
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities (2,974 ) (9,121 ) 3,106 (12,095 ) 8,000
Defined Benefit Plans       216       216       147       432       293
Other Comprehensive Income (Loss)       (2,758 )     (8,905 )     3,253       (11,663 )     8,293
Comprehensive Income     $ 51,960     $ 45,135     $ 47,915     $ 97,095     $ 104,131
 
         
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition   Table 5
June 30, March 31, December 31, June 30,
(dollars in thousands)       2018     2018     2017     2017
Assets
Interest-Bearing Deposits in Other Banks $ 3,524 $ 2,589 $ 3,421 $ 3,913
Funds Sold 361,933 387,766 181,413 742,221
Investment Securities
Available-for-Sale 2,092,870 2,184,187 2,232,979 2,316,728
Held-to-Maturity (Fair Value of $3,500,497; $3,711,149; $3,894,121; and $3,785,641) 3,595,891 3,789,092 3,928,170 3,782,702
Loans Held for Sale 16,025 23,548 19,231 20,354
Loans and Leases 10,053,323 9,916,628 9,796,947 9,387,613
Allowance for Loan and Lease Losses       (108,188 )     (107,938 )     (107,346 )     (106,353 )
Net Loans and Leases       9,945,135       9,808,690       9,689,601       9,281,260  
Total Earning Assets       16,015,378       16,195,872       16,054,815       16,147,178  
Cash and Due from Banks 312,303 174,871 263,017 128,093
Premises and Equipment, Net 142,791 137,201 130,926 119,569
Accrued Interest Receivable 50,594 52,941 50,485 46,595
Foreclosed Real Estate 2,926 2,768 1,040 1,991
Mortgage Servicing Rights 24,583 24,493 24,622 24,471
Goodwill 31,517 31,517 31,517 31,517
Bank-Owned Life Insurance 281,018 280,537 280,034 277,235
Other Assets       263,052       235,830       252,596       204,643  
Total Assets     $ 17,124,162     $ 17,136,030     $ 17,089,052     $ 16,981,292  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,729,203 $ 4,759,777 $ 4,724,300 $ 4,706,962
Interest-Bearing Demand 3,111,069 3,028,373 3,082,563 3,029,549
Savings 5,389,763 5,397,291 5,389,013 5,364,191
Time       1,713,323       1,771,692       1,688,092       1,683,947  
Total Deposits       14,943,358       14,957,133       14,883,968       14,784,649  
Short-Term Borrowings 330 - - -
Securities Sold Under Agreements to Repurchase 504,193 505,293 505,293 505,292
Other Debt 235,681 235,699 260,716 267,904
Retirement Benefits Payable 36,730 37,046 37,312 48,346
Accrued Interest Payable 7,395 8,229 6,946 5,105
Taxes Payable and Deferred Taxes 15,136 29,557 24,009 31,444
Other Liabilities       133,622       121,880       138,940       124,795  
Total Liabilities       15,876,445       15,894,837       15,857,184       15,767,535  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2018 - 58,070,285 / 42,084,066; March 31, 2018 - 58,051,646 / 42,314,414; December 31, 2017 - 57,959,074 / 42,401,443; and June 30, 2017 - 57,972,647 / 42,655,954)

577 577 576 576
Capital Surplus 566,436 563,598 561,161 556,409
Accumulated Other Comprehensive Loss (53,855 ) (51,097 ) (34,715 ) (25,613 )
Retained Earnings 1,581,168 1,551,900 1,512,218 1,468,328

Treasury Stock, at Cost (Shares: June 30, 2018 - 15,986,219; March 31, 2018 - 15,737,232; December 31, 2017 - 15,557,631; and June 30, 2017 - 15,316,693)

(846,609 ) (823,785 ) (807,372 ) (785,943 )
Total Shareholders' Equity       1,247,717       1,241,193       1,231,868       1,213,757  
Total Liabilities and Shareholders' Equity     $ 17,124,162     $ 17,136,030     $ 17,089,052     $ 16,981,292  
 
               
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, 2017 42,401,443 $ 576 $ 561,161 $ (34,715 ) $ 1,512,218 $ (807,372 ) $ 1,231,868
Net Income - - - - 108,758 - 108,758
Other Comprehensive Loss - - - (11,663 ) - - (11,663 )

Reclassification of the Income Tax Effects of the Tax Cuts and Jobs Act from AOCI

- - - (7,477 ) 7,477 - -
Share-Based Compensation - - 4,055 - - - 4,055

Common Stock Issued under Purchase and Equity Compensation Plans

179,644 1 1,220 - 166 2,992 4,379
Common Stock Repurchased (497,021 ) - - - - (42,229 ) (42,229 )
Cash Dividends Declared ($1.12 per share)     -       -     -     -       (47,451 )     -       (47,451 )
Balance as of June 30, 2018     42,084,066     $ 577   $ 566,436   $ (53,855 )   $ 1,581,168     $ (846,609 )   $ 1,247,717  
 
Balance as of December 31, 2016 42,635,978 $ 576 $ 551,628 $ (33,906 ) $ 1,415,440 $ (772,201 ) $ 1,161,537
Net Income - - - - 95,838 - 95,838
Other Comprehensive Income - - - 8,293 - - 8,293
Share-Based Compensation - - 3,726 - - - 3,726

Common Stock Issued under Purchase and Equity Compensation Plans

275,605 - 1,055 - (162 ) 7,545 8,438
Common Stock Repurchased (255,629 ) - - - - (21,287 ) (21,287 )
Cash Dividends Declared ($1.00 per share)     -       -     -     -       (42,788 )     -       (42,788 )
Balance as of June 30, 2017     42,655,954     $ 576   $ 556,409   $ (25,613 )   $ 1,468,328     $ (785,943 )   $ 1,213,757  
 
 
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, 2018 March 31, 2018 June 30, 2017
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 in Other Banks $ 2.9 $ - (0.52) % $ 3.0 $ - 2.34 % $ 3.6 $ - 0.29 %
Funds Sold 185.2 0.8 1.81 204.7 0.8 1.48 353.5 0.7 0.78
Investment Securities
Available-for-Sale
Taxable 1,564.5 9.2 2.35 1,595.1 8.9 2.23 1,683.4 8.4 1.98
Non-Taxable 583.6 4.0 2.78 604.7 4.1 2.74 658.9 5.4 3.26
Held-to-Maturity
Taxable 3,471.7 19.2 2.22 3,631.2 19.8 2.18 3,596.1 18.4 2.05
Non-Taxable       237.1     1.9   3.17       238.0     1.9   3.18       240.9     2.3   3.88
Total Investment Securities       5,856.9     34.3   2.35       6,069.0     34.7   2.29       6,179.3     34.5   2.23
Loans Held for Sale 14.8 0.2 4.44 14.1 0.1 3.76 23.8 0.2 4.04
Loans and Leases 1
Commercial and Industrial 1,307.6 12.8 3.92 1,280.9 11.8 3.73 1,251.2 10.9 3.51
Commercial Mortgage 2,123.5 21.9 4.13 2,096.4 20.6 3.99 1,946.3 18.4 3.80
Construction 183.4 2.2 4.82 189.4 2.1 4.45 240.0 2.8 4.70
Commercial Lease Financing 179.4 1.0 2.24 179.6 1.0 2.21 208.0 1.2 2.27
Residential Mortgage 3,526.9 33.6 3.81 3,478.2 33.3 3.83 3,272.7 31.1 3.80
Home Equity 1,612.7 15.1 3.76 1,595.4 14.6 3.70 1,445.8 13.1 3.62
Automobile 573.6 5.7 3.97 541.5 5.6 4.19 474.1 5.9 4.97
Other 2       455.8     8.9   7.86       442.4     8.6   7.91       379.7     7.6   8.06
Total Loans and Leases       9,962.9     101.2   4.07       9,803.8     97.6   4.02       9,217.8     91.0   3.96
Other       39.8     0.4   3.43       40.7     0.3   2.95       41.0     0.2   2.03
Total Earning Assets 3       16,062.5     136.9   3.41       16,135.3     133.5   3.33       15,819.0     126.6   3.21
Cash and Due from Banks 251.0 228.6 120.8
Other Assets   608.3   593.5   556.1
Total Assets $ 16,921.8 $ 16,957.4 $ 16,495.9
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,969.8 1.2 0.16 $ 2,978.1 0.8 0.10 $ 2,862.7 0.5 0.07
Savings 5,392.2 3.1 0.23 5,366.3 2.1 0.16 5,376.9 1.6 0.12
Time       1,705.7     5.2   1.21       1,713.5     4.7   1.11       1,480.5     2.9   0.78
Total Interest-Bearing Deposits       10,067.7     9.5   0.38       10,057.9     7.6   0.31       9,720.1     5.0   0.21
Short-Term Borrowings 21.0 0.1 1.80 19.1 0.1 1.45 36.5 0.1 1.10
Securities Sold Under Agreements to Repurchase 505.1 4.6 3.62 505.3 4.5 3.61 505.3 5.1 3.98
Other Debt       235.7     0.9   1.56       257.1     1.0   1.54       267.9     1.1   1.66
Total Interest-Bearing Liabilities       10,829.5     15.1   0.56       10,839.4     13.2   0.49       10,529.8     11.3   0.43
Net Interest Income $ 121.8 $ 120.3 $ 115.3
Interest Rate Spread 2.85 % 2.84 % 2.78 %
Net Interest Margin 3.04 % 3.00 % 2.92 %
Noninterest-Bearing Demand Deposits 4,641.6 4,662.4 4,533.0
Other Liabilities 209.0 220.0 228.3
Shareholders' Equity   1,241.7   1,235.6   1,204.8
Total Liabilities and Shareholders' Equity $ 16,921.8 $ 16,957.4 $ 16,495.9
 

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 21% for 2018 and 35% for 2017, of $1,298,000 for the three months ended June 30, 2018, $1,344,000 for the three months ended March 31, 2018, and $3,054,000 for the three months ended June 30, 2017.
 
             
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7b
Six Months Ended Six Months Ended
June 30, 2018 June 30, 2017
Average Income/

  Yield/

Average Income/

  Yield/

(dollars in millions)     Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 2.9 $ - 0.94 % $ 3.5 $ - 0.42 %
Funds Sold 194.9 1.6 1.64 448.3 1.6 0.70
Investment Securities
Available-for-Sale
Taxable 1,579.7 18.0 2.29 1,654.6 15.9 1.93
Non-Taxable 594.1 8.2 2.76 659.8 10.7 3.26
Held-to-Maturity
Taxable 3,551.0 39.0 2.20 3,592.9 36.6 2.04
Non-Taxable       237.6     3.8   3.17       241.4     4.7   3.88
Total Investment Securities       5,962.4     69.0   2.32       6,148.7     67.9   2.21
Loans Held for Sale 14.5 0.3 4.11 27.1 0.6 4.01
Loans and Leases 1
Commercial and Industrial 1,294.3 24.6 3.83 1,257.4 21.5 3.44
Commercial Mortgage 2,110.0 42.4 4.06 1,914.1 35.9 3.78
Construction 186.4 4.3 4.63 249.5 5.7 4.62
Commercial Lease Financing 179.5 2.0 2.22 208.3 2.3 2.22
Residential Mortgage 3,502.6 66.9 3.82 3,237.4 62.0 3.83
Home Equity 1,604.1 29.7 3.73 1,406.8 25.0 3.59
Automobile 557.7 11.3 4.08 467.9 11.6 5.01
Other 2       449.1     17.6   7.88       378.2     15.0   7.98
Total Loans and Leases       9,883.7     198.8   4.04       9,119.6     179.0   3.95
Other       40.3     0.7   3.19       40.5     0.4   2.16
Total Earning Assets 3       16,098.7     270.4   3.37       15,787.7     249.5   3.17
Cash and Due from Banks 239.9 126.5
Other Assets   600.9   551.2
Total Assets $ 16,939.5 $ 16,465.4
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,974.0 1.9 0.13 $ 2,864.6 0.8 0.06
Savings 5,379.3 5.3 0.20 5,391.4 2.9 0.11
Time       1,709.6     9.8   1.16       1,397.5     5.0   0.72
Total Interest-Bearing Deposits       10,062.9     17.0   0.34       9,653.5     8.7   0.18
Short-Term Borrowings 20.0 0.2 1.64 23.1 0.1 0.91
Securities Sold Under Agreements to Repurchase 505.2 9.2 3.61 508.8 10.2 4.01
Other Debt       246.3     1.9   1.55       267.9     2.2   1.66
Total Interest-Bearing Liabilities       10,834.4     28.3   0.52       10,453.3     21.2   0.41
Net Interest Income $ 242.1 $ 228.3
Interest Rate Spread 2.85 % 2.76 %
Net Interest Margin 3.02 % 2.90 %
Noninterest-Bearing Demand Deposits 4,651.9 4,582.6
Other Liabilities 214.6 238.3
Shareholders' Equity   1,238.6   1,191.2
Total Liabilities and Shareholders' Equity $ 16,939.5 $ 16,465.4
 

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 21% for 2018 and 35% for 2017, of $2,642,000 for the six months ended June 30, 2018 and $6,115,000 for the six months ended June 30, 2017.

 

       
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
Three Months Ended June 30, 2018
Compared to March 31, 2018
(dollars in millions)     Volume 1  

  Rate 1

 

 Total

Change in Interest Income:
Funds Sold $ (0.1 ) $ 0.1 $ -
Investment Securities
Available-for-Sale
Taxable (0.2 ) 0.5 0.3
Non-Taxable (0.1 ) - (0.1 )
Held-to-Maturity
Taxable       (0.9 )     0.3       (0.6 )
Total Investment Securities       (1.2 )     0.8       (0.4 )
Loans Held for Sale - 0.1 0.1
Loans and Leases
Commercial and Industrial 0.3 0.7 1.0
Commercial Mortgage 0.3 1.0 1.3
Construction (0.1 ) 0.2 0.1
Residential Mortgage 0.5 (0.2 ) 0.3
Home Equity 0.2 0.3 0.5
Automobile 0.4 (0.3 ) 0.1
Other 2       0.3       -       0.3  
Total Loans and Leases       1.9       1.7       3.6  
Other       -       0.1       0.1  
Total Change in Interest Income       0.6       2.8       3.4  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.4 0.4
Savings - 1.0 1.0
Time       -       0.5       0.5  
Total Interest-Bearing Deposits       -       1.9       1.9  
Securities Sold Under Agreements to Repurchase - 0.1 0.1
Other Debt       (0.1 )     -       (0.1 )
Total Change in Interest Expense       (0.1 )     2.0       1.9  
 
Change in Net Interest Income     $ 0.7     $ 0.8     $ 1.5  
 

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 8b
Three Months Ended June 30, 2018
Compared to June 30, 2017
(dollars in millions)     Volume 1  

  Rate 1

 

 Total

Change in Interest Income:
Funds Sold $ (0.5 ) $ 0.6 $ 0.1
Investment Securities
Available-for-Sale
Taxable (0.6 ) 1.4 0.8
Non-Taxable (0.6 ) (0.8 ) (1.4 )
Held-to-Maturity
Taxable (0.7 ) 1.5 0.8
Non-Taxable       -       (0.4 )     (0.4 )
Total Investment Securities       (1.9 )     1.7       (0.2 )
Loans Held for Sale (0.1 ) 0.1 -
Loans and Leases
Commercial and Industrial 0.6 1.3 1.9
Commercial Mortgage 1.8 1.7 3.5
Construction (0.7 ) 0.1 (0.6 )
Commercial Lease Financing (0.2 ) - (0.2 )
Residential Mortgage 2.4 0.1 2.5
Home Equity 1.5 0.5 2.0
Automobile 1.1 (1.3 ) (0.2 )
Other 2       1.5       (0.2 )     1.3  
Total Loans and Leases       8.0       2.2       10.2  
Other       -       0.2       0.2  
Total Change in Interest Income       5.5       4.8       10.3  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.7 0.7
Savings - 1.5 1.5
Time       0.5       1.8       2.3  
Total Interest-Bearing Deposits       0.5       4.0       4.5  
Short-Term Borrowings (0.1 ) 0.1 -
Securities Sold Under Agreements to Repurchase - (0.5 ) (0.5 )
Other Debt       (0.1 )     (0.1 )     (0.2 )
Total Change in Interest Expense       0.3       3.5       3.8  
 
Change in Net Interest Income     $ 5.2     $ 1.3     $ 6.5  
 

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, 2018
Compared to June 30, 2017
(dollars in millions)     Volume 1  

  Rate 1

 

 Total

Change in Interest Income:
Funds Sold $ (1.3 ) $ 1.3 $ -
Investment Securities
Available-for-Sale
Taxable (0.8 ) 2.9 2.1
Non-Taxable (1.0 ) (1.5 ) (2.5 )
Held-to-Maturity
Taxable (0.4 ) 2.8 2.4
Non-Taxable       (0.1 )     (0.8 )     (0.9 )
Total Investment Securities       (2.3 )     3.4       1.1  
Loans Held for Sale (0.3 ) - (0.3 )
Loans and Leases
Commercial and Industrial 0.6 2.5 3.1
Commercial Mortgage 3.8 2.7 6.5
Construction (1.4 ) - (1.4 )
Commercial Lease Financing (0.3 ) - (0.3 )
Residential Mortgage 5.0 (0.1 ) 4.9
Home Equity 3.6 1.1 4.7
Automobile 2.0 (2.3 ) (0.3 )
Other 2       2.8       (0.2 )     2.6  
Total Loans and Leases       16.1       3.7       19.8  
Other       -       0.3       0.3  
Total Change in Interest Income       12.2       8.7       20.9  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 1.1 1.1
Savings - 2.4 2.4
Time       1.3       3.5       4.8  
Total Interest-Bearing Deposits       1.3       7.0       8.3  
Short-Term Borrowings - 0.1 0.1
Securities Sold Under Agreements to Repurchase (0.1 ) (0.9 ) (1.0 )
Other Debt       (0.2 )     (0.1 )     (0.3 )
Total Change in Interest Expense       1.0       6.1       7.1  
 
Change in Net Interest Income     $ 11.2     $ 2.6     $ 13.8  
 

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
Salaries and Benefits   Table 9
    Three Months Ended     Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands)     2018   2018   2017     2018   2017
Salaries $ 33,269 $ 32,704 $ 30,553 $ 65,973   $ 59,978
Incentive Compensation 4,416 5,178 5,125 9,594 10,899
Share-Based Compensation 2,423 2,081 2,879 4,504 5,182
Commission Expense 1,272 954 1,791 2,226 3,627
Retirement and Other Benefits 4,178 4,841 3,722 9,019 8,326
Payroll Taxes 2,568 4,172 2,427 6,740 6,371
Medical, Dental, and Life Insurance 3,820 3,461 3,136 7,281 6,415
Separation Expense       202     1,031     43       1,233     43
Total Salaries and Benefits     $ 52,148   $ 54,422   $ 49,676     $ 106,570   $ 100,841
 
Note: Certain prior period information has been reclassified to conform to current presentation.
 
           
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)     2018   2018   2017   2017   2017
Commercial
Commercial and Industrial $ 1,282,967 $ 1,329,096 $ 1,279,347 $ 1,252,238 $ 1,241,953
Commercial Mortgage 2,169,357 2,097,339 2,103,967 2,050,998 2,009,886
Construction 185,350 186,530 202,253 232,487 248,030
Lease Financing       178,598     179,771     180,931     204,240     205,043
Total Commercial       3,816,272     3,792,736     3,766,498     3,739,963     3,704,912
Consumer
Residential Mortgage 3,548,444 3,505,239 3,466,773 3,366,634 3,317,179
Home Equity 1,622,314 1,601,698 1,585,455 1,528,353 1,473,123
Automobile 592,705 558,468 528,474 506,102 484,092
Other 1       473,588     458,487     449,747     432,904     408,307
Total Consumer       6,237,051     6,123,892     6,030,449     5,833,993     5,682,701
Total Loans and Leases     $ 10,053,323   $ 9,916,628   $ 9,796,947   $ 9,573,956   $ 9,387,613
 
 
Deposits                      
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)       2018     2018     2017     2017     2017
Consumer $ 7,672,435 $ 7,665,926 $ 7,478,228 $ 7,303,546 $ 7,278,536
Commercial 5,921,414 5,897,194 5,973,763 6,091,800 5,903,639
Public and Other       1,349,509     1,394,013     1,431,977     1,652,814     1,602,474
Total Deposits     $ 14,943,358   $ 14,957,133   $ 14,883,968   $ 15,048,160   $ 14,784,649
 
1 Comprised of other revolving credit, installment, and lease financing.
 
           
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)       2018     2018     2017     2017     2017
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 917 $ 986 $ 448 $ 901 $ 175
Commercial Mortgage       659       1,367       1,398       1,425       1,460  
Total Commercial       1,576       2,353       1,846       2,326       1,635  
Consumer
Residential Mortgage 6,722 6,725 9,243 9,188 9,337
Home Equity       3,933       3,890       3,991       4,128       3,405  
Total Consumer       10,655       10,615       13,234       13,316       12,742  
Total Non-Accrual Loans and Leases       12,231       12,968       15,080       15,642       14,377  
Foreclosed Real Estate       2,926       2,768       1,040       1,393       1,991  
Total Non-Performing Assets     $ 15,157     $ 15,736     $ 16,120     $ 17,035     $ 16,368  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial $ 2 $ - $ - $ 5 $ -
Commercial Mortgage       5,680       -       -       -       -  
Total Commercial       5,682       -       -       5       -  
Consumer
Residential Mortgage $ 2,281 $ 2,927 $ 2,703 $ 2,933 $ 2,269
Home Equity 3,016 3,013 1,624 1,392 2,343
Automobile 674 333 886 806 539
Other 1       1,660       1,895       1,934       1,528       1,859  
Total Consumer       7,631       8,168       7,147       6,659       7,010  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 13,313     $ 8,168     $ 7,147     $ 6,664     $ 7,010  

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

    $ 50,212     $ 56,743     $ 55,672     $ 55,038     $ 53,158  
Total Loans and Leases     $ 10,053,323     $ 9,916,628     $ 9,796,947     $ 9,573,956     $ 9,387,613  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.12 %     0.13 %     0.15 %     0.16 %     0.15 %
 

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

      0.15 %     0.16 %     0.16 %     0.18 %     0.17 %
 

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

      0.04 %     0.06 %     0.05 %     0.06 %     0.04 %
 

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

      0.22 %     0.22 %     0.24 %     0.25 %     0.26 %
 

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

      0.28 %     0.24 %     0.24 %     0.25 %     0.25 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 15,736 $ 16,120 $ 17,035 $ 16,368 $ 19,003
Additions 1,949 2,332 2,109 2,212 1,572
Reductions
Payments (1,847 ) (1,251 ) (368 ) (199 ) (497 )
Return to Accrual Status (126 ) (1,270 ) (1,779 ) (305 ) (1,370 )
Sales of Foreclosed Real Estate (421 ) - (353 ) (951 ) (1,883 )
Charge-offs/Write-downs       (134 )     (195 )     (524 )     (90 )     (457 )
Total Reductions       (2,528 )     (2,716 )     (3,024 )     (1,545 )     (4,207 )
Balance at End of Quarter     $ 15,157     $ 15,736     $ 16,120     $ 17,035     $ 16,368  
 
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)     2018   2018   2017   2018   2017
Balance at Beginning of Period $ 114,760 $ 114,168 $ 111,636 $ 114,168 $ 110,845
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (485 ) (206 ) (124 ) (691 ) (298 )
Consumer
Residential Mortgage (3 ) (97 ) (506 ) (100 ) (689 )
Home Equity (44 ) (91 ) (282 ) (135 ) (645 )
Automobile (1,515 ) (2,254 ) (1,512 ) (3,769 ) (3,802 )
Other 1       (3,614 )     (3,340 )     (3,063 )     (6,954 )     (5,757 )
Total Loans and Leases Charged-Off       (5,661 )     (5,988 )     (5,487 )     (11,649 )     (11,191 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 366 328 265 694 601
Lease Financing - - 1 - 1
Consumer
Residential Mortgage 214 220 264 434 368
Home Equity 451 625 838 1,076 1,346
Automobile 738 599 607 1,337 1,227
Other 1       642       683       551       1,325       1,078  
Total Recoveries on Loans and Leases Previously Charged-Off       2,411       2,455       2,526       4,866       4,621  
Net Loans and Leases Charged-Off (3,250 ) (3,533 ) (2,961 ) (6,783 ) (6,570 )
Provision for Credit Losses 3,500 4,125 4,250 7,625 8,650
Provision for Unfunded Commitments       -       -       250       -       250  
Balance at End of Period 2     $ 115,010     $ 114,760     $ 113,175     $ 115,010     $ 113,175  
 
Components
Allowance for Loan and Lease Losses $ 108,188 $ 107,938 $ 106,353 $ 108,188 $ 106,353
Reserve for Unfunded Commitments       6,822       6,822       6,822       6,822       6,822  
Total Reserve for Credit Losses     $ 115,010     $ 114,760     $ 113,175     $ 115,010     $ 113,175  
 
Average Loans and Leases Outstanding     $ 9,962,860     $ 9,803,753     $ 9,217,779     $ 9,883,746     $ 9,119,610  
 

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

0.13 % 0.15 % 0.13 % 0.14 % 0.15 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.08 % 1.09 % 1.13 % 1.08 % 1.13 %
 

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
Investment
Services and
Retail Commercial Private Treasury Consolidated
(dollars in thousands)     Banking   Banking   Banking   and Other   Total
Three Months Ended June 30, 2018
Net Interest Income $ 65,683 $ 44,010 $ 10,526 $ 277 $ 120,496
Provision for Credit Losses       3,445       (194 )     -       249       3,500  
Net Interest Income After Provision for Credit Losses 62,238 44,204 10,526 28 116,996
Noninterest Income 19,598 5,512 14,745 1,443 41,298
Noninterest Expense       (51,939 )     (19,858 )     (16,400 )     (2,594 )     (90,791 )
Income Before Provision for Income Taxes 29,897 29,858 8,871 (1,123 ) 67,503
Provision for Income Taxes       (7,473 )     (6,740 )     (2,338 )     3,766       (12,785 )
Net Income     $ 22,424     $ 23,118     $ 6,533     $ 2,643     $ 54,718  
Total Assets as of June 30, 2018     $ 6,142,457     $ 3,799,535     $ 342,464     $ 6,839,706     $ 17,124,162  
 
 
Three Months Ended June 30, 2017
Net Interest Income $ 66,348 $ 41,737 $ 6,714 $ (2,520 ) $ 112,279
Provision for Credit Losses       3,099       (132 )     (6 )     1,289       4,250  
Net Interest Income After Provision for Credit Losses 63,249 41,869 6,720 (3,809 ) 108,029
Noninterest Income 21,920 5,876 15,247 2,193 45,236
Noninterest Expense       (52,018 )     (18,407 )     (15,295 )     (2,469 )     (88,189 )
Income Before Provision for Income Taxes 33,151 29,338 6,672 (4,085 ) 65,076
Provision for Income Taxes       (11,741 )     (10,325 )     (2,469 )     4,121       (20,414 )
Net Income     $ 21,410     $ 19,013     $ 4,203     $ 36     $ 44,662  
Total Assets as of June 30, 2017     $ 5,626,767     $ 3,658,867     $ 307,529     $ 7,388,129     $ 16,981,292  
 
           
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13b
Investment
Services and
Retail Commercial Private Treasury Consolidated
(dollars in thousands)     Banking   Banking   Banking   and Other   Total
Six Months Ended June 30, 2018
Net Interest Income $ 130,080 $ 86,908 $ 20,413 $ 2,051 $ 239,452
Provision for Credit Losses       7,188       (345 )     (60 )     842       7,625  
Net Interest Income After Provision for Credit Losses 122,892 87,253 20,473 1,209 231,827
Noninterest Income 38,851 11,154 28,415 6,913 85,333
Noninterest Expense       (106,538 )     (40,190 )     (32,607 )     (5,840 )     (185,175 )
Income Before Provision for Income Taxes 55,205 58,217 16,281 2,282 131,985
Provision for Income Taxes       (13,764 )     (13,564 )     (4,292 )     8,393       (23,227 )
Net Income     $ 41,441     $ 44,653     $ 11,989     $ 10,675     $ 108,758  
Total Assets as of June 30, 2018     $ 6,142,457     $ 3,799,535     $ 342,464     $ 6,839,706     $ 17,124,162  
 
 
Six Months Ended June 30, 2017
Net Interest Income $ 131,505 $ 83,668 $ 13,364 $ (6,386 ) $ 222,151
Provision for Credit Losses       6,900       (320 )     (11 )     2,081       8,650  
Net Interest Income After Provision for Credit Losses 124,605 83,988 13,375 (8,467 ) 213,501
Noninterest Income 42,845 11,314 29,796 17,197 101,152
Noninterest Expense       (104,278 )     (36,762 )     (30,766 )     (4,951 )     (176,757 )
Income Before Provision for Income Taxes 63,172 58,540 12,405 3,779 137,896
Provision for Income Taxes       (22,415 )     (20,581 )     (4,590 )     5,528       (42,058 )
Net Income     $ 40,757     $ 37,959     $ 7,815     $ 9,307     $ 95,838  
Total Assets as of June 30, 2017     $ 5,626,767     $ 3,658,867     $ 307,529     $ 7,388,129     $ 16,981,292  
 
           
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)       2018       2018       2017       2017       2017
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 101,311 $ 97,634 $ 96,974 $ 94,621 $ 90,909
Income on Investment Securities
Available-for-Sale 12,380 12,141 11,866 11,987 11,835
Held-to-Maturity 20,711 21,296 21,782 20,334 19,918
Deposits (4) 18 3 5 2
Funds Sold 846 757 717 1,579 696
Other       341       300       271       235       208
Total Interest Income       135,585       132,146       131,613       128,761       123,568
Interest Expense
Deposits 9,459 7,581 6,980 6,663 4,998
Securities Sold Under Agreements to Repurchase 4,617 4,564 4,664 4,664 5,079
Funds Purchased 83 53 81 - 39
Short-Term Borrowings 13 16 - - 64
Other Debt       917       976       1,118       1,117       1,109
Total Interest Expense       15,089       13,190       12,843       12,444       11,289
Net Interest Income 120,496 118,956 118,770 116,317 112,279
Provision for Credit Losses       3,500       4,125       4,250       4,000       4,250
Net Interest Income After Provision for Credit Losses       116,996       114,831       114,520       112,317       108,029
Noninterest Income
Trust and Asset Management 11,356 11,181 11,105 11,050 11,796
Mortgage Banking 2,179 2,145 2,593 3,237 3,819
Service Charges on Deposit Accounts 6,865 7,129 8,053 8,188 8,009
Fees, Exchange, and Other Service Charges 14,400 14,333 13,784 13,764 13,965
Investment Securities Gains (Losses), Net

(1,702

)

(666

)

(617

)

(566

)

(520

)

Annuity and Insurance 1,847 1,206 1,273 1,429 2,161
Bank-Owned Life Insurance 1,796 1,842 1,609 1,861 1,550
Other       4,557       6,865       4,055       3,447       4,456
Total Noninterest Income       41,298       44,035       41,855       42,410       45,236
Noninterest Expense
Salaries and Benefits 52,148 54,422 51,698 51,190 49,676
Net Occupancy 8,588 8,534 8,510 7,727 8,131
Net Equipment 5,845 5,527 5,454 5,417 5,706
Data Processing 4,563 3,891 4,310 3,882 3,881
Professional Fees 2,546 2,773 3,266 3,044 2,592
FDIC Insurance 2,182 2,157 2,253 2,107 2,097
Other       14,919       17,080       16,845       15,231       16,106
Total Noninterest Expense       90,791       94,384       92,336       88,598       88,189
Income Before Provision for Income Taxes 67,503 64,482 64,039 66,129 65,076
Provision for Income Taxes       12,785       10,442       21,086       20,248       20,414
Net Income     $ 54,718     $ 54,040     $ 42,953     $ 45,881     $ 44,662
 
Basic Earnings Per Share $ 1.31 $ 1.29 $ 1.02 $ 1.09 $ 1.05
Diluted Earnings Per Share $ 1.30 $ 1.28 $ 1.01 $ 1.08 $ 1.05
 
Balance Sheet Totals
Loans and Leases $ 10,053,323 $ 9,916,628 $ 9,796,947 $ 9,573,956 $ 9,387,613
Total Assets 17,124,162 17,136,030 17,089,052 17,268,302 16,981,292
Total Deposits 14,943,358 14,957,133 14,883,968 15,048,160 14,784,649
Total Shareholders' Equity 1,247,717 1,241,193 1,231,868 1,227,893 1,213,757
 
Performance Ratios
Return on Average Assets 1.30

%

1.29 % 1.00 % 1.07 % 1.09 %
Return on Average Shareholders' Equity 17.68 17.74 13.85 14.89 14.87
Efficiency Ratio 1 56.12 57.91 57.49 55.82 55.99
Net Interest Margin 2 3.04 3.00 2.98 2.92 2.92
 

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.

Note: Certain prior period information has been reclassified to conform to current presentation.
 
         
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends     Table 15
    Five Months Ended Year Ended
($ in millions; jobs in thousands)     May 31, 2018     December 31, 2017     December 31, 2016  
Hawaii Economic Trends
State General Fund Revenues 1 $ 3,003.1

  12.1

% $ 6,485.5 4.3 % $ 6,215.4 3.6 %

General Excise and Use Tax Revenue 1

$ 1,432.5 3.5 % $ 3,349.8 4.5 % $ 3,205.7 2.0 %
Jobs 2 672.8 668.2 669.4
                                     
June 30, December 31,  
(spot rates)                     2018     2017  

 2016 

 
Unemployment 3
Statewide, seasonally adjusted 2.1 % 2.1 % 2.9 %
 
Oahu 2.6 1.7 2.4
Island of Hawaii 3.4 2.0 3.1
Maui 2.7 1.8 2.7
Kauai 2.9 1.7 2.8
                                     
June 30, December 31,  
(percentage change, except months of inventory)     2018     2017     2016   2015  
Housing Trends (Single Family Oahu) 4
Median Home Price 3.9 % 2.7 % 5.0 % 3.7 %
Home Sales Volume (units) (1.6) % 6.3 % 6.5 % 5.2 %
Months of Inventory 2.7 2.1 2.5 2.6
                                     
Monthly Visitor Arrivals, Percentage Change
(in thousands)               Not Seasonally Adjusted  

  from Previous Year  

 
Tourism 5
 
May 31, 2018 804.1 7.0
April 30, 2018 803.0 6.6
March 31, 2018 903.6 12.5
February 28, 2018 778.6 10.3
January 31, 2018 796.5 5.4
December 31, 2017 880.4 6.3
November 30, 2017 748.3 7.3
October 31, 2017 737.0 2.8
September 30, 2017 701.8 5.1
August 31, 2017 818.6 4.8
July 31, 2017 891.9 6.8
June 30, 2017 835.9 4.5
May 31, 2017 751.2 4.5
April 30, 2017 753.0 7.5
March 31, 2017 802.8 2.1
February 28, 2017 706.1 2.5
January 31, 2017 756.0 4.9
December 31, 2016 828.2 3.6
November 30, 2016 697.1 4.7
October 31, 2016 717.0 4.3
September 30, 2016 667.6 3.1
August 31, 2016 780.7 3.1
July 31, 2016 835.4 2.1
June 30, 2016 800.3 4.2
May 31, 2016 718.9 1.3
April 30, 2016 700.6 3.4
March 31, 2016 786.3 0.8
February 29, 2016 688.8 4.1
January 31, 2016 721.0 6.2
 

1

 

Source: Hawaii Department of Business, Economic Development & Tourism

2

Source: U. S. Bureau of Labor Statistics

3

Source: Hawaii Department of Labor and Industrial Relations, County jobs data not seasonally adjusted.

4

Source: Honolulu Board of REALTORS

5

Source: Hawaii Tourism Authority

Contacts

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

Contacts

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