Bank of Hawaii Corporation Third Quarter 2019 Financial Results

  • Diluted Earnings Per Share $1.29
  • Net Income $52.1 Million
  • Board of Directors Declares Dividend of $0.67 Per Share

HONOLULU--()--Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $1.29 for the third quarter of 2019, down from $1.40 in the second quarter of 2019 and $1.36 in the third quarter of 2018. Net income for the third quarter of 2019 was $52.1 million compared with net income of $56.9 million in the previous quarter and $56.9 million in the same quarter last year. Net income in the third quarter of 2019 included the previously announced increase in the legal reserve of $6.0 million related to the tentative settlement of a class action lawsuit regarding the Company’s overdraft practices.

Loan and lease balances increased to $10.9 billion at September 30, 2019, up 1.1 percent from June 30, 2019 and up 6.4 percent compared with September 30, 2018. Deposits were $15.3 billion at the end of the third quarter of 2019, down 1.0 percent from the previous quarter primarily due to a seasonal decline in public deposits and up 3.4 percent compared with the third quarter last year.

"We were pleased with Bank of Hawaii’s overall financial results during the third quarter of 2019," said Peter S. Ho, Chairman, President, and CEO. “Loan balances continue to grow, deposits were in line with our expectations, total revenue increased, asset quality remains strong, and our core expenses were well controlled.”

The return on average assets for the third quarter of 2019 was 1.17 percent compared with 1.31 percent in the previous quarter and 1.33 percent in the same quarter last year. The return on average equity for the third quarter of 2019 was 16.02 percent compared with 17.97 percent for the second quarter of 2019 and 18.06 percent in the third quarter of 2018. The efficiency ratio for the third quarter of 2019 was 58.55 percent compared with 54.69 percent in the previous quarter and 55.07 percent in the same quarter last year.

For the nine-month period ended September 30, 2019, net income was $167.8 million, an increase of $2.1 million from net income of $165.7 million for the same period last year. Diluted earnings per share were $4.11 for the nine-month period in 2019 compared with diluted earnings per share of $3.93 for the same period in 2018. The 2019 year-to-date return on average assets was 1.29 percent compared with 1.31 percent for the same period in 2018. The 2019 year-to-date return on average equity was 17.58 percent compared with 17.83 percent for the nine months ended September 30, 2018. The efficiency ratio for the nine-month period ended September 30, 2019 was 56.16 percent compared with 56.36 percent for the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the third quarter of 2019 was $125.2 million, an increase of $0.5 million from net interest income of $124.7 million in the second quarter of 2019 and an increase of $1.0 million from net interest income of $124.2 million in the third quarter of last year. Net interest income for the nine-month period in 2019 was $375.7 million, an increase of $9.4 million from net interest income of $366.3 million for the same period in 2018. Analyses of the changes in net interest income are included in Tables 8a, 8b, and 8c.

The net interest margin was 3.01 percent for the third quarter of 2019, a decrease of 3 basis points from the net interest margin of 3.04 percent in the second quarter of 2019 and a 6 basis point decrease from the net interest margin of 3.07 percent in the third quarter of 2018. The net interest margin for the first nine months of 2019 was 3.05 percent, an increase of 1 basis point compared with 3.04 percent for the same nine-month period last year.

Results for the third quarter of 2019 included a provision for credit losses of $4.3 million compared with a provision for credit losses of $4.0 million in the previous quarter and $3.8 million in the same quarter last year. The provision for credit losses during the first nine months of 2019 was $11.3 million compared with $11.4 million during the same period in 2018.

Noninterest income was $46.5 million in the third quarter of 2019, up $1.0 million from noninterest income of $45.5 million in the second quarter of 2019 and up $5.0 million from $41.5 million in the same quarter last year. Noninterest income during the third quarter of 2019 included a negative adjustment of $0.5 million related to a change in the Visa Class B conversion ratio. There were no significant items in noninterest income during the second quarter of 2019 or the third quarter of 2018. The increase in noninterest income compared to the third quarter of 2018 was largely due to an increase in mortgage banking income and customer derivative activity. Noninterest income for the nine-months ended September 30, 2019 was $135.6 million, an increase of $8.8 million compared with noninterest income of $126.8 million for the same period in 2018.

Noninterest expense was $100.3 million in the third quarter of 2019, up $7.6 million from noninterest expense of $92.7 million in the previous quarter and up $9.8 million from $90.5 million in the same quarter last year. Noninterest expense during the third quarter of 2019 included the previously mentioned $6.0 million increase in the legal reserve. There were no significant items in noninterest expense during the second quarter of 2019 or the third quarter of 2018. Noninterest expense for the nine-months ended September 30, 2019 was $286.1 million compared with noninterest expense of $275.7 million for the same period in 2018. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The effective tax rate for the third quarter of 2019 was 22.08 percent compared with 21.84 percent in the previous quarter and 18.75 percent during the same quarter last year. The effective tax rate for the nine-month period ended September 30, 2019 was 20.89 percent compared with 18.00 percent for the same period last year.

The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services and Private Banking, and Treasury and 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 third quarter of 2019. Total non-performing assets were $21.6 million at September 30, 2019, down from $21.8 million at June 30, 2019 and up from $13.8 million at September 30, 2018. As a percentage of total loans and leases and foreclosed real estate, non-performing assets were 0.20 percent at September 30, 2019, unchanged from June 30, 2019 and up from 0.13 percent at September 30, 2018.

Accruing loans and leases past due 90 days or more were $6.1 million at September 30, 2019 compared with $6.4 million at June 30, 2019 and $8.1 million at September 30, 2018. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $46.2 million at September 30, 2019, down from $48.6 million at June 30, 2019 and $49.5 million at September 30, 2018. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loans and leases charged off during the third quarter of 2019 were $3.0 million or 0.11 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $5.8 million during the quarter were partially offset by recoveries of $2.8 million. Net charge-offs during the second quarter of 2019 were $2.4 million or 0.09 percent annualized of total average loans and leases outstanding and were comprised of $5.1 million in charge-offs partially offset by recoveries of $2.8 million. Net charge-offs during the third quarter of 2018 were $3.3 million or 0.13 percent annualized of total average loans and leases outstanding and were comprised of $6.0 million in charge-offs partially offset by recoveries of $2.7 million. Net charge-offs in the nine-month period ended September 30, 2019 were $9.0 million, or 0.11 percent annualized of total average loans and leases outstanding compared with net charge-offs of $10.1 million, or 0.14 percent annualized of total average loans and leases outstanding for the same period in 2018.

The allowance for loan and lease losses was $108.9 million at September 30, 2019 compared with $107.7 million at June 30, 2019 and $108.7 million at September 30, 2018. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.00 percent at September 30, 2019, unchanged from the previous quarter and down 6 basis points from the end of the same quarter last year. The reserve for unfunded commitments at September 30, 2019 of $6.8 million was unchanged from June 30, 2019 and September 30, 2018. 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 $17.7 billion at September 30, 2019, down $16.7 million from June 30, 2019 and up $680.4 million from total assets of $17.0 billion at September 30, 2018. Average total assets were $17.6 billion during the third quarter of 2019 compared with $17.5 billion during the previous quarter and $17.0 billion during the same quarter last year.

The investment securities portfolio was $5.5 billion at September 30, 2019, a decrease of $68.3 million from total securities of $5.6 billion at June 30, 2019 and a decrease of $172.9 million from total securities of $5.7 billion at September 30, 2018. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $2.9 billion in securities held to maturity and $2.6 billion in securities available for sale at September 30, 2019.

Total loans and leases were $10.9 billion at September 30, 2019, an increase of $122.2 million from total loans and leases of $10.8 billion at June 30, 2019 and up $650.2 million from total loans and leases of $10.2 billion at September 30, 2018. Average total loans and leases were $10.8 billion during the third quarter of 2019 compared with $10.6 billion during the previous quarter and $10.1 billion during the same quarter last year. The commercial loan portfolio increased to $4.2 billion at the end of the third quarter of 2019, up $54.4 million from $4.1 billion at the end of the previous quarter and up $256.4 million from $3.9 billion at the end of the third quarter last year. Total consumer loans increased to $6.7 billion at the end of the third quarter of 2019, up $67.8 million from $6.7 billion at the end of the previous quarter and up $393.8 million from $6.3 billion at the end of the third quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $15.3 billion at September 30, 2019, a decrease of $148.1 million from total deposits of $15.5 billion at June 30, 2019 and an increase of $497.4 million from total deposits of $14.8 billion at September 30, 2018. Average total deposits were $15.3 billion during the third quarter of 2019 compared with $15.2 billion during the previous quarter and $14.8 billion during the same quarter last year. Consumer deposits were $7.9 billion at the end of the third quarter of 2019, up $13.2 million from $7.9 billion at the end of the previous quarter and up $265.9 million from $7.6 billion at the end of the same quarter last year. Commercial deposits were $6.2 billion at the end of the third quarter of 2019, down $25.5 million from $6.2 billion at the end of the previous quarter and up $186.1 million from $6.0 billion at the end of the same quarter last year. Other deposits, including public funds, were $1.3 billion at September 30, 2019, down $135.7 million from $1.4 billion at June 30, 2019 and up $45.3 million from $1.2 billion at September 30, 2018. Deposit balances are summarized in Tables 7 and 10.

During the third quarter of 2019, the Company repurchased 0.4 million shares of common stock at a total cost of $29.9 million under its share repurchase program. The average cost was $83.07 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through September 30, 2019, the Company has repurchased 56.6 million shares and returned $2.3 billion to shareholders at an average cost of $40.09 per share. Remaining buyback authority under the share repurchase program was $57.0 million at September 30, 2019. From October 1 through October 25, 2019 the Company repurchased an additional 92.0 thousand shares of common stock at an average cost of $84.46 per share.

Total shareholders’ equity was $1.29 billion at September 30, 2019, up slightly from $1.29 billion at June 30, 2019 and up from $1.25 billion at September 30, 2018. The Tier 1 Capital Ratio was 12.33 percent at September 30, 2019 compared with 12.46 percent at June 30, 2019 and 13.20 percent at September 30, 2018. The Tier 1 leverage ratio at September 30, 2019 was 7.32 percent compared with 7.36 percent at June 30, 2019 and 7.55 percent at September 30, 2018.

The Company’s Board of Directors declared a quarterly cash dividend of $0.67 per share on the Company’s outstanding shares. The dividend will be payable on December 13, 2019 to shareholders of record at the close of business on November 29, 2019.

Hawaii Economy

General economic conditions in Hawaii remained positive during the third quarter of 2019 although recent trends indicate a more modest growth rate for the State going forward. The statewide seasonally-adjusted unemployment rate continues to remain low at 2.7 percent in September 2019 compared to 3.5 percent nationally. Total visitor arrivals increased 5.2 percent in the first eight months of 2019 compared to the same eight-month period in 2018 supported by strong growth in air seat capacity. Total visitor spending decreased 0.5 percent for the eight-month period in 2019 compared with the same eight-month period in 2018. The real estate market remains active with strong growth in single-family home sales during the third quarter of 2019. For the first nine months of 2019, the median sales price of a single-family home on Oahu decreased 0.5 percent and the median price of a condominium on Oahu decreased 1.0 percent compared with the same period in 2018. The volume of single-family home sales on Oahu increased 0.8 percent and the volume of condominium sales on Oahu decreased 6.7 percent for the first nine months of 2019 compared to the same nine-month period in 2018. As of September 30, 2019, months of inventory of single-family homes and condominiums on Oahu were 3.5 months and 3.9 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

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, October 28, 2019. 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 conference ID 2768225 when prompted. 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, 2018, 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 an independent regional financial services company serving businesses, consumers, and governments in Hawaii 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 Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

September 30,

(dollars in thousands, except per share amounts)

2019

 

2019

 

2018

 

2019

 

2018

For the Period:
Operating Results
Net Interest Income

$

124,896

$

124,097

$

122,927

$

373,830

$

362,379

Provision for Credit Losses

 

4,250

 

4,000

 

3,800

 

11,250

 

11,425

Total Noninterest Income

 

46,507

 

45,450

 

41,482

 

135,636

 

126,815

Total Noninterest Expense

 

100,349

 

92,725

 

90,538

 

286,131

 

275,713

Net Income

 

52,052

 

56,919

 

56,933

 

167,770

 

165,691

Basic Earnings Per Share

 

1.30

 

1.40

 

1.37

 

4.14

 

3.96

Diluted Earnings Per Share

 

1.29

 

1.40

 

1.36

 

4.11

 

3.93

Dividends Declared Per Share

 

0.65

 

0.65

 

0.60

 

1.92

 

1.72

 
Performance Ratios
Return on Average Assets

 

1.17

%

 

1.31

%

 

1.33

%

 

1.29

%

 

1.31

%

Return on Average Shareholders' Equity

 

16.02

 

17.97

 

18.06

 

17.58

 

17.83

Efficiency Ratio 1

 

58.55

 

54.69

 

55.07

 

56.16

 

56.36

Net Interest Margin 2

 

3.01

 

3.04

 

3.07

 

3.05

 

3.04

Dividend Payout Ratio 3

 

50.00

 

46.43

 

43.80

 

46.38

 

43.43

Average Shareholders' Equity to Average Assets

 

7.32

 

7.27

 

7.35

 

7.31

 

7.32

 
Average Balances
Average Loans and Leases

$

10,770,720

$

10,631,558

$

10,081,886

$

10,624,311

$

9,950,518

Average Assets

 

17,605,394

 

17,480,651

 

17,015,340

 

17,442,054

 

16,965,075

Average Deposits

 

15,330,691

 

15,162,782

 

14,820,480

 

15,156,275

 

14,750,382

Average Shareholders' Equity

 

1,289,417

 

1,270,162

 

1,250,500

 

1,275,753

 

1,242,629

 
Per Share of Common Stock
Book Value

$

32.00

$

31.61

$

29.98

$

32.00

$

29.98

Tangible Book Value

 

31.22

 

30.83

 

29.22

 

31.22

 

29.22

Market Value
Closing

 

85.93

 

82.91

 

78.91

 

85.93

 

78.91

High

 

88.20

 

84.53

 

86.53

 

88.20

 

89.09

Low

 

79.13

 

75.24

 

78.30

 

66.54

 

78.30

 
September 30, June 30, December 31, September 30,

2019

2019

2018

2018

As of Period End:
Balance Sheet Totals
Loans and Leases

$

10,881,298

$

10,759,129

$

10,448,774

$

10,231,062

Total Assets

 

17,672,140

 

17,688,845

 

17,143,974

 

16,991,734

Total Deposits

 

15,340,752

 

15,488,821

 

15,027,242

 

14,843,335

Other Debt

 

110,585

 

110,605

 

135,643

 

185,662

Total Shareholders' Equity

 

1,291,490

 

1,285,948

 

1,268,200

 

1,253,327

 
Asset Quality
Non-Performing Assets

$

21,645

$

21,782

$

12,930

$

13,798

Allowance for Loan and Lease Losses

 

108,936

 

107,672

 

106,693

 

108,690

Allowance to Loans and Leases Outstanding

 

1.00

%

 

1.00

%

 

1.02

%

 

1.06

%

 
Capital Ratios
Common Equity Tier 1 Capital Ratio

 

12.33

%

 

12.46

%

 

13.07

%

 

13.20

%

Tier 1 Capital Ratio

 

12.33

 

12.46

 

13.07

 

13.20

Total Capital Ratio

 

13.44

 

13.57

 

14.21

 

14.38

Tier 1 Leverage Ratio

 

7.32

 

7.36

 

7.60

 

7.55

Total Shareholders' Equity to Total Assets

 

7.31

 

7.27

 

7.40

 

7.38

Tangible Common Equity to Tangible Assets 4

 

7.14

 

7.10

 

7.23

 

7.20

Tangible Common Equity to Risk-Weighted Assets 4

 

12.10

 

12.17

 

12.52

 

12.56

 
Non-Financial Data
Full-Time Equivalent Employees

 

2,124

 

2,152

 

2,122

 

2,143

Branches

 

67

 

68

 

69

 

69

ATMs

 

379

 

383

 

382

 

382

 
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: Common Equity Tier 1 and Tier 1 Capital Ratios were revised from 13.19% and Tangible Common Equity to Risk-Weighted Assets was revised from 12.55% as of September 30, 2018.
 
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures Table 2
September 30, June 30, December 31, September 30,
(dollars in thousands)

2019

2019

2018

2018

 
Total Shareholders' Equity

$

1,291,490

 

$

1,285,948

 

$

1,268,200

 

$

1,253,327

 

Less: Goodwill

 

31,517

 

 

31,517

 

 

31,517

 

 

31,517

 

Tangible Common Equity

$

1,259,973

 

$

1,254,431

 

$

1,236,683

 

$

1,221,810

 

 
Total Assets

$

17,672,140

 

$

17,688,845

 

$

17,143,974

 

$

16,991,734

 

Less: Goodwill

 

31,517

 

 

31,517

 

 

31,517

 

 

31,517

 

Tangible Assets

$

17,640,623

 

$

17,657,328

 

$

17,112,457

 

$

16,960,217

 

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

$

10,416,560

 

$

10,309,085

 

$

9,878,904

 

$

9,731,082

 

 
Total Shareholders' Equity to Total Assets

 

7.31

%

 

7.27

%

 

7.40

%

 

7.38

%

Tangible Common Equity to Tangible Assets (Non-GAAP)

 

7.14

%

 

7.10

%

 

7.23

%

 

7.20

%

 
Tier 1 Capital Ratio

 

12.33

%

 

12.46

%

 

13.07

%

 

13.20

%

Tangible Common Equity to Risk-Weighted Assets (Non-GAAP)

 

12.10

%

 

12.17

%

 

12.52

%

 

12.56

%

 
Note: Risk-Weighted Assets was revised from $9,732,618, Tier 1 Capital Ratio was revised from 13.19%, and Tangible Common Equity to Risk-Weighted Assets was revised from 12.55% as of September 30, 2018.
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income Table 3

Three Months Ended

 

 

Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

 

September 30,

(dollars in thousands, except per share amounts)

2019

 

2019

 

2018

 

 

2019

 

2018

Interest Income
Interest and Fees on Loans and Leases

$

110,877

 

$

110,401

 

$

104,248

 

$

329,789

 

$

303,193

 

Income on Investment Securities
Available-for-Sale

 

17,512

 

 

15,072

 

 

12,588

 

 

46,016

 

 

37,109

 

Held-to-Maturity

 

18,796

 

 

22,149

 

 

20,821

 

 

62,866

 

 

62,828

 

Deposits

 

9

 

 

9

 

 

10

 

 

33

 

 

24

 

Funds Sold

 

656

 

 

730

 

 

1,393

 

 

2,830

 

 

2,996

 

Other

 

233

 

 

210

 

 

364

 

 

762

 

 

1,005

 

Total Interest Income

 

148,083

 

 

148,571

 

 

139,424

 

 

442,296

 

 

407,155

 

Interest Expense
Deposits

 

18,055

 

 

18,628

 

 

10,931

 

 

51,967

 

 

27,971

 

Securities Sold Under Agreements to Repurchase

 

4,257

 

 

4,623

 

 

4,667

 

 

13,451

 

 

13,848

 

Funds Purchased

 

146

 

 

512

 

 

33

 

 

815

 

 

169

 

Short-Term Borrowings

 

1

 

 

1

 

 

28

 

 

38

 

 

57

 

Other Debt

 

728

 

 

710

 

 

838

 

 

2,195

 

 

2,731

 

Total Interest Expense

 

23,187

 

 

24,474

 

 

16,497

 

 

68,466

 

 

44,776

 

Net Interest Income

 

124,896

 

 

124,097

 

 

122,927

 

 

373,830

 

 

362,379

 

Provision for Credit Losses

 

4,250

 

 

4,000

 

 

3,800

 

 

11,250

 

 

11,425

 

Net Interest Income After Provision for Credit Losses

 

120,646

 

 

120,097

 

 

119,127

 

 

362,580

 

 

350,954

 

Noninterest Income
Trust and Asset Management

 

10,930

 

 

11,385

 

 

10,782

 

 

33,076

 

 

33,319

 

Mortgage Banking

 

4,864

 

 

3,336

 

 

1,965

 

 

10,487

 

 

6,289

 

Service Charges on Deposit Accounts

 

7,592

 

 

7,283

 

 

7,255

 

 

22,239

 

 

21,249

 

Fees, Exchange, and Other Service Charges

 

14,900

 

 

14,252

 

 

14,173

 

 

43,360

 

 

42,906

 

Investment Securities Gains (Losses), Net

 

(1,469

)

 

(776

)

 

(729

)

 

(3,080

)

 

(3,097

)

Annuity and Insurance

 

1,278

 

 

1,806

 

 

1,360

 

 

5,662

 

 

4,413

 

Bank-Owned Life Insurance

 

1,647

 

 

1,779

 

 

1,620

 

 

5,136

 

 

5,258

 

Other

 

6,765

 

 

6,385

 

 

5,056

 

 

18,756

 

 

16,478

 

Total Noninterest Income

 

46,507

 

 

45,450

 

 

41,482

 

 

135,636

 

 

126,815

 

Noninterest Expense
Salaries and Benefits

 

54,345

 

 

53,511

 

 

51,782

 

 

164,442

 

 

158,352

 

Net Occupancy

 

8,803

 

 

8,579

 

 

8,702

 

 

24,976

 

 

25,824

 

Net Equipment

 

7,637

 

 

6,895

 

 

6,116

 

 

21,365

 

 

17,488

 

Data Processing

 

4,676

 

 

4,727

 

 

4,241

 

 

13,929

 

 

12,695

 

Professional Fees

 

2,184

 

 

2,177

 

 

2,206

 

 

6,814

 

 

7,525

 

FDIC Insurance

 

1,257

 

 

1,290

 

 

2,057

 

 

3,816

 

 

6,396

 

Other

 

21,447

 

 

15,546

 

 

15,434

 

 

50,789

 

 

47,433

 

Total Noninterest Expense

 

100,349

 

 

92,725

 

 

90,538

 

 

286,131

 

 

275,713

 

Income Before Provision for Income Taxes

 

66,804

 

 

72,822

 

 

70,071

 

 

212,085

 

 

202,056

 

Provision for Income Taxes

 

14,752

 

 

15,903

 

 

13,138

 

 

44,315

 

 

36,365

 

Net Income

$

52,052

 

$

56,919

 

$

56,933

 

$

167,770

 

$

165,691

 

Basic Earnings Per Share

$

1.30

 

$

1.40

 

$

1.37

 

$

4.14

 

$

3.96

 

Diluted Earnings Per Share

$

1.29

 

$

1.40

 

$

1.36

 

$

4.11

 

$

3.93

 

Dividends Declared Per Share

$

0.65

 

$

0.65

 

$

0.60

 

$

1.92

 

$

1.72

 

Basic Weighted Average Shares

 

40,190,508

 

 

40,541,594

 

 

41,620,776

 

 

40,554,036

 

 

41,846,080

 

Diluted Weighted Average Shares

 

40,450,742

 

 

40,769,767

 

 

41,899,401

 

 

40,806,295

 

 

42,133,776

 

 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income Table 4
Three Months Ended Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

 

September 30,

(dollars in thousands)

2019

 

2019

 

2018

 

 

2019

 

2018

Net Income

$

52,052

$

56,919

$

56,933

 

$

167,770

$

165,691

 

Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities

 

5,405

 

16,209

 

(5,599

)

 

28,533

 

(17,694

)

Defined Benefit Plans

 

245

 

245

 

216

 

 

736

 

648

 

Other Comprehensive Income (Loss)

 

5,650

 

16,454

 

(5,383

)

 

29,269

 

(17,046

)

 
Comprehensive Income

$

57,702

$

73,373

$

51,550

 

$

197,039

$

148,645

 

 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition Table 5
September 30, June 30, December 31, September 30,
(dollars in thousands)

2019

2019

2018

2018

Assets
Interest-Bearing Deposits in Other Banks

$

2,946

 

$

3,859

 

$

3,028

 

$

3,725

 

Funds Sold

 

108,446

 

 

204,340

 

 

198,860

 

 

104,199

 

Investment Securities
Available-for-Sale

 

2,594,394

 

 

2,649,949

 

 

2,007,942

 

 

2,049,687

 

Held-to-Maturity (Fair Value of $2,972,273; $2,973,229; $3,413,994; and $3,549,235)

 

2,946,910

 

 

2,959,611

 

 

3,482,092

 

 

3,664,487

 

Loans Held for Sale

 

36,720

 

 

22,706

 

 

10,987

 

 

18,063

 

Loans and Leases

 

10,881,298

 

 

10,759,129

 

 

10,448,774

 

 

10,231,062

 

Allowance for Loan and Lease Losses

 

(108,936

)

 

(107,672

)

 

(106,693

)

 

(108,690

)

Net Loans and Leases

 

10,772,362

 

 

10,651,457

 

 

10,342,081

 

 

10,122,372

 

Total Earning Assets

 

16,461,778

 

 

16,491,922

 

 

16,044,990

 

 

15,962,533

 

Cash and Due from Banks

 

259,492

 

 

282,164

 

 

324,081

 

 

227,049

 

Premises and Equipment, Net

 

179,453

 

 

169,671

 

 

151,837

 

 

142,928

 

Operating Lease Right-of-Use Assets

 

101,005

 

 

103,336

 

 

-

 

 

-

 

Accrued Interest Receivable

 

47,897

 

 

49,726

 

 

51,230

 

 

54,839

 

Foreclosed Real Estate

 

2,939

 

 

2,737

 

 

1,356

 

 

1,909

 

Mortgage Servicing Rights

 

24,408

 

 

24,233

 

 

24,310

 

 

24,463

 

Goodwill

 

31,517

 

 

31,517

 

 

31,517

 

 

31,517

 

Bank-Owned Life Insurance

 

286,936

 

 

285,295

 

 

283,771

 

 

282,637

 

Other Assets

 

276,715

 

 

248,244

 

 

230,882

 

 

263,859

 

Total Assets

$

17,672,140

 

$

17,688,845

 

$

17,143,974

 

$

16,991,734

 

 
Liabilities
Deposits
Noninterest-Bearing Demand

$

4,392,706

 

$

4,528,251

 

$

4,739,596

 

$

4,678,981

 

Interest-Bearing Demand

 

3,000,865

 

 

3,033,066

 

 

3,002,925

 

 

2,975,069

 

Savings

 

6,141,098

 

 

6,004,528

 

 

5,539,199

 

 

5,444,053

 

Time

 

1,806,083

 

 

1,922,976

 

 

1,745,522

 

 

1,745,232

 

Total Deposits

 

15,340,752

 

 

15,488,821

 

 

15,027,242

 

 

14,843,335

 

Short-Term Borrowings

 

-

 

 

-

 

 

199

 

 

629

 

Securities Sold Under Agreements to Repurchase

 

604,299

 

 

504,299

 

 

504,296

 

 

504,293

 

Other Debt

 

110,585

 

 

110,605

 

 

135,643

 

 

185,662

 

Operating Lease Liabilities

 

108,264

 

 

110,483

 

 

-

 

 

-

 

Retirement Benefits Payable

 

39,682

 

 

40,047

 

 

40,494

 

 

36,288

 

Accrued Interest Payable

 

8,435

 

 

9,454

 

 

8,253

 

 

7,689

 

Taxes Payable and Deferred Taxes

 

21,089

 

 

21,337

 

 

19,736

 

 

15,549

 

Other Liabilities

 

147,544

 

 

117,851

 

 

139,911

 

 

144,962

 

Total Liabilities

 

16,380,650

 

 

16,402,897

 

 

15,875,774

 

 

15,738,407

 

Shareholders' Equity
Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: September 30, 2019 - 58,176,305 / 40,359,259; June 30, 2019 - 58,175,367 / 40,687,719; December 31, 2018 - 58,063,689 / 41,499,898; and September 30, 2018 - 58,070,578 / 41,809,551)

 

579

 

 

579

 

 

577

 

 

577

 

Capital Surplus

 

580,200

 

 

577,346

 

 

571,704

 

 

569,223

 

Accumulated Other Comprehensive Loss

 

(21,774

)

 

(27,424

)

 

(51,043

)

 

(59,238

)

Retained Earnings

 

1,730,437

 

 

1,704,993

 

 

1,641,314

 

 

1,612,998

 

Treasury Stock, at Cost (Shares: September 30, 2019 - 17,817,046; June 30, 2019 - 17,487,648; December 31, 2018 - 16,563,791; and September 30, 2018 - 16,261,027)

 

(997,952

)

 

(969,546

)

 

(894,352

)

 

(870,233

)

Total Shareholders' Equity

 

1,291,490

 

 

1,285,948

 

 

1,268,200

 

 

1,253,327

 

Total Liabilities and Shareholders' Equity

$

17,672,140

 

$

17,688,845

 

$

17,143,974

 

$

16,991,734

 

 
 
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, 2018

41,499,898

 

$

577

$

571,704

$

(51,043

)

$

1,641,314

 

$

(894,352

)

$

1,268,200

 

Net Income

-

 

 

-

 

-

 

-

 

 

167,770

 

 

-

 

 

167,770

 

Other Comprehensive Income

-

 

 

-

 

-

 

29,269

 

 

-

 

 

-

 

 

29,269

 

Share-Based Compensation

-

 

 

-

 

6,662

 

-

 

 

-

 

 

-

 

 

6,662

 

Common Stock Issued under Purchase and Equity
Compensation Plans

200,984

 

 

2

 

1,834

 

-

 

 

(109

)

 

4,275

 

 

6,002

 

Common Stock Repurchased

(1,341,623

)

 

-

 

-

 

-

 

 

-

 

 

(107,875

)

 

(107,875

)

Cash Dividends Declared ($1.92 per share)

-

 

 

-

 

-

 

-

 

 

(78,538

)

 

-

 

 

(78,538

)

Balance as of September 30, 2019

40,359,259

 

$

579

$

580,200

$

(21,774

)

$

1,730,437

 

$

(997,952

)

$

1,291,490

 

 
Balance as of December 31, 2017

42,401,443

 

$

576

$

561,161

$

(34,715

)

$

1,512,218

 

$

(807,372

)

$

1,231,868

 

Net Income

-

 

 

-

 

-

 

-

 

 

165,691

 

 

-

 

 

165,691

 

Other Comprehensive Loss

-

 

 

-

 

-

 

(17,046

)

 

-

 

 

-

 

 

(17,046

)

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

-

 

 

-

 

-

 

(7,477

)

 

7,477

 

 

-

 

 

-

 

Share-Based Compensation

-

 

 

-

 

6,208

 

-

 

 

-

 

 

-

 

 

6,208

 

Common Stock Issued under Purchase and Equity
Compensation Plans

203,289

 

 

1

 

1,854

 

-

 

 

251

 

 

4,127

 

 

6,233

 

Common Stock Repurchased

(795,181

)

 

-

 

-

 

-

 

 

-

 

 

(66,988

)

 

(66,988

)

Cash Dividends Declared ($1.72 per share)

-

 

 

-

 

-

 

-

 

 

(72,639

)

 

-

 

 

(72,639

)

Balance as of September 30, 2018

41,809,551

 

$

577

$

569,223

$

(59,238

)

$

1,612,998

 

$

(870,233

)

$

1,253,327

 

 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis Table 7a
Three Months Ended Three Months Ended Three Months Ended
September 30, 2019 June 30, 2019 September 30, 2018
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

$

3.1

$

-

1.19

%

$

2.9

$

-

1.25

%

$

3.6

$

-

1.09

%

Funds Sold

 

121.1

 

0.7

2.12

 

123.6

 

0.8

2.34

 

281.9

 

1.4

1.93

Investment Securities
Available-for-Sale
Taxable

 

2,647.9

 

17.1

2.59

 

2,004.3

 

14.3

2.87

 

1,512.1

 

9.5

2.51

Non-Taxable

 

42.6

 

0.5

4.45

 

86.8

 

0.9

4.15

 

567.5

 

3.9

2.75

Held-to-Maturity
Taxable

 

2,873.7

 

18.5

2.57

 

3,358.0

 

21.0

2.50

 

3,413.7

 

19.3

2.26

Non-Taxable

 

65.2

 

0.4

2.72

 

193.0

 

1.5

3.08

 

236.1

 

1.9

3.16

Total Investment Securities

 

5,629.4

 

36.5

2.59

 

5,642.1

 

37.7

2.68

 

5,729.4

 

34.6

2.41

Loans Held for Sale

 

24.3

 

0.2

3.94

 

18.7

 

0.2

4.05

 

14.9

 

0.2

4.45

Loans and Leases 1
Commercial and Industrial

 

1,383.8

 

14.4

4.14

 

1,385.7

 

14.9

4.31

 

1,279.4

 

13.0

4.04

Commercial Mortgage

 

2,423.7

 

26.2

4.28

 

2,386.3

 

25.9

4.35

 

2,180.5

 

23.0

4.19

Construction

 

126.0

 

1.6

5.10

 

125.3

 

1.7

5.51

 

187.0

 

2.2

4.65

Commercial Lease Financing

 

161.8

 

1.0

2.57

 

159.9

 

1.0

2.49

 

175.0

 

1.0

2.30

Residential Mortgage

 

3,809.6

 

36.5

3.83

 

3,730.4

 

36.0

3.87

 

3,563.5

 

34.0

3.82

Home Equity

 

1,689.2

 

16.1

3.79

 

1,694.9

 

16.2

3.83

 

1,622.4

 

15.7

3.83

Automobile

 

707.0

 

6.4

3.59

 

688.5

 

6.2

3.62

 

606.3

 

5.9

3.84

Other 2

 

469.6

 

8.5

7.16

 

460.6

 

8.4

7.33

 

467.8

 

9.3

7.90

Total Loans and Leases

 

10,770.7

 

110.7

4.09

 

10,631.6

 

110.3

4.16

 

10,081.9

 

104.1

4.11

Other

 

35.0

 

0.3

2.66

 

35.0

 

0.2

2.40

 

38.9

 

0.4

3.74

Total Earning Assets 3

 

16,583.6

 

148.4

3.56

 

16,453.9

 

149.2

3.63

 

16,150.6

 

140.7

3.47

Cash and Due from Banks

 

231.5

 

241.6

 

252.1

Other Assets

 

790.3

 

785.2

 

612.6

Total Assets

$

17,605.4

$

17,480.7

$

17,015.3

 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand

$

2,950.2

 

1.1

0.15

$

2,902.5

 

1.4

0.19

$

2,999.5

 

1.3

0.17

Savings

 

6,122.0

 

8.8

0.57

 

6,002.0

 

8.9

0.60

 

5,482.4

 

3.8

0.28

Time

 

1,851.0

 

8.2

1.75

 

1,866.6

 

8.3

1.79

 

1,683.0

 

5.8

1.37

Total Interest-Bearing Deposits

 

10,923.2

 

18.1

0.66

 

10,771.1

 

18.6

0.69

 

10,164.9

 

10.9

0.43

Short-Term Borrowings

 

27.1

 

0.1

2.13

 

82.3

 

0.5

2.46

 

11.6

 

0.1

2.06

Securities Sold Under Agreements to Repurchase

 

513.8

 

4.3

3.24

 

504.3

 

4.7

3.63

 

504.3

 

4.7

3.62

Other Debt

 

110.6

 

0.7

2.62

 

110.6

 

0.7

2.57

 

208.5

 

0.8

1.60

Total Interest-Bearing Liabilities

 

11,574.7

 

23.2

0.79

 

11,468.3

 

24.5

0.85

 

10,889.3

 

16.5

0.60

Net Interest Income

$

125.2

$

124.7

$

124.2

Interest Rate Spread

2.77

%

2.78

%

2.87

%

Net Interest Margin

3.01

%

3.04

%

3.07

%

Noninterest-Bearing Demand Deposits

 

4,407.5

 

4,391.7

 

4,655.6

Other Liabilities

 

333.8

 

350.5

 

219.9

Shareholders' Equity

 

1,289.4

 

1,270.2

 

1,250.5

Total Liabilities and Shareholders' Equity

$

17,605.4

$

17,480.7

$

17,015.3

 
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 21%, of $296,000, $601,000, and $1,265,000 for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, respectively.
 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis Table 7b
Nine Months Ended Nine Months Ended
September 30, 2019 September 30, 2018
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks

$

3.0

$

-

1.49

%

$

3.2

$

-

0.99

%

Funds Sold

 

161.7

 

2.8

2.31

 

224.3

 

3.0

1.76

Investment Securities
Available-for-Sale
Taxable

 

2,086.5

 

43.0

2.75

 

1,556.9

 

27.6

2.36

Non-Taxable

 

135.3

 

3.8

3.73

 

585.1

 

12.1

2.76

Held-to-Maturity
Taxable

 

3,199.9

 

59.9

2.50

 

3,504.8

 

58.4

2.22

Non-Taxable

 

163.5

 

3.8

3.08

 

237.0

 

5.6

3.17

Total Investment Securities

 

5,585.2

 

110.5

2.64

 

5,883.8

 

103.7

2.35

Loans Held for Sale

 

18.5

 

0.6

4.06

 

14.6

 

0.5

4.23

Loans and Leases 1
Commercial and Industrial

 

1,375.9

 

44.6

4.33

 

1,289.3

 

37.6

3.90

Commercial Mortgage

 

2,373.9

 

76.9

4.33

 

2,133.8

 

65.5

4.10

Construction

 

133.8

 

5.2

5.22

 

186.6

 

6.5

4.64

Commercial Lease Financing

 

160.9

 

3.0

2.45

 

178.0

 

3.0

2.25

Residential Mortgage

 

3,740.5

 

108.0

3.85

 

3,523.1

 

100.9

3.82

Home Equity

 

1,691.4

 

48.4

3.83

 

1,610.2

 

45.4

3.77

Automobile

 

688.0

 

18.6

3.62

 

574.1

 

17.1

3.99

Other 2

 

459.9

 

24.8

7.21

 

455.4

 

26.9

7.89

Total Loans and Leases

 

10,624.3

 

329.5

4.14

 

9,950.5

 

302.9

4.07

Other

 

35.2

 

0.8

2.89

 

39.8

 

1.0

3.37

Total Earning Assets 3

 

16,427.9

 

444.2

3.61

 

16,116.2

 

411.1

3.41

Cash and Due from Banks

 

237.9

 

244.0

Other Assets

 

776.3

 

604.9

Total Assets

$

17,442.1

$

16,965.1

 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand

$

2,930.9

 

4.0

0.18

$

2,982.5

 

3.2

0.15

Savings

 

5,962.9

 

24.4

0.55

 

5,414.1

 

9.1

0.22

Time

 

1,807.6

 

23.6

1.75

 

1,700.6

 

15.7

1.23

Total Interest-Bearing Deposits

 

10,701.4

 

52.0

0.65

 

10,097.2

 

28.0

0.37

Short-Term Borrowings

 

46.8

 

0.9

2.40

 

17.2

 

0.2

1.73

Securities Sold Under Agreements to Repurchase

 

507.5

 

13.4

3.50

 

504.9

 

13.9

3.62

Other Debt

 

113.7

 

2.2

2.58

 

233.6

 

2.7

1.56

Total Interest-Bearing Liabilities

 

11,369.4

 

68.5

0.80

 

10,852.9

 

44.8

0.55

Net Interest Income

$

375.7

$

366.3

Interest Rate Spread

2.81

%

2.86

%

Net Interest Margin

3.05

%

3.04

%

Noninterest-Bearing Demand Deposits

 

4,454.9

 

4,653.2

Other Liabilities

 

342.0

 

216.4

Shareholders' Equity

 

1,275.8

 

1,242.6

Total Liabilities and Shareholders' Equity

$

17,442.1

$

16,965.1

 
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%, of $1,878,000 and $3,907,000 for the nine months ended September 30, 2019 and September 30, 2018, respectively.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8a

Three Months Ended September 30, 2019

Compared to June 30, 2019

(dollars in millions)

Volume 1

 

Rate 1

 

Total

Change in Interest Income:
Funds Sold

$

-

 

$

(0.1

)

$

(0.1

)

Investment Securities
Available-for-Sale
Taxable

 

4.3

 

 

(1.5

)

 

2.8

 

Non-Taxable

 

(0.5

)

 

0.1

 

 

(0.4

)

Held-to-Maturity
Taxable

 

(3.0

)

 

0.5

 

 

(2.5

)

Non-Taxable

 

(0.9

)

 

(0.2

)

 

(1.1

)

Total Investment Securities

 

(0.1

)

 

(1.1

)

 

(1.2

)

Loans and Leases
Commercial and Industrial

 

(0.1

)

 

(0.4

)

 

(0.5

)

Commercial Mortgage

 

0.6

 

 

(0.3

)

 

0.3

 

Construction

 

-

 

 

(0.1

)

 

(0.1

)

Residential Mortgage

 

0.8

 

 

(0.3

)

 

0.5

 

Home Equity

 

-

 

 

(0.1

)

 

(0.1

)

Automobile

 

0.2

 

 

-

 

 

0.2

 

Other 2

 

0.2

 

 

(0.1

)

 

0.1

 

Total Loans and Leases

 

1.7

 

 

(1.3

)

 

0.4

 

Other

 

-

 

 

0.1

 

 

0.1

 

Total Change in Interest Income

 

1.6

 

 

(2.4

)

 

(0.8

)

 
Change in Interest Expense:
Interest-Bearing Deposits
Demand

 

-

 

 

(0.3

)

 

(0.3

)

Savings

 

0.2

 

 

(0.3

)

 

(0.1

)

Time

 

-

 

 

(0.1

)

 

(0.1

)

Total Interest-Bearing Deposits

 

0.2

 

 

(0.7

)

 

(0.5

)

Short-Term Borrowings

 

(0.3

)

 

(0.1

)

 

(0.4

)

Securities Sold Under Agreements to Repurchase

 

0.1

 

 

(0.5

)

 

(0.4

)

Total Change in Interest Expense

 

-

 

 

(1.3

)

 

(1.3

)

 
Change in Net Interest Income

$

1.6

 

$

(1.1

)

$

0.5

 

 
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 September 30, 2019

Compared to September 30, 2018

(dollars in millions)

Volume 1

 

Rate 1

 

Total

Change in Interest Income:
Funds Sold

$

(0.9

)

$

0.2

 

$

(0.7

)

Investment Securities
Available-for-Sale
Taxable

 

7.3

 

 

0.3

 

 

7.6

 

Non-Taxable

 

(4.9

)

 

1.5

 

 

(3.4

)

Held-to-Maturity
Taxable

 

(3.2

)

 

2.4

 

 

(0.8

)

Non-Taxable

 

(1.3

)

 

(0.2

)

 

(1.5

)

Total Investment Securities

 

(2.1

)

 

4.0

 

 

1.9

 

Loans Held for Sale

 

0.1

 

 

(0.1

)

 

-

 

Loans and Leases
Commercial and Industrial

 

1.1

 

 

0.3

 

 

1.4

 

Commercial Mortgage

 

2.6

 

 

0.6

 

 

3.2

 

Construction

 

(0.8

)

 

0.2

 

 

(0.6

)

Commercial Lease Financing

 

(0.1

)

 

0.1

 

 

-

 

Residential Mortgage

 

2.4

 

 

0.1

 

 

2.5

 

Home Equity

 

0.6

 

 

(0.2

)

 

0.4

 

Automobile

 

0.9

 

 

(0.4

)

 

0.5

 

Other 2

 

0.1

 

 

(0.9

)

 

(0.8

)

Total Loans and Leases

 

6.8

 

 

(0.2

)

 

6.6

 

Other

 

-

 

 

(0.1

)

 

(0.1

)

Total Change in Interest Income

 

3.9

 

 

3.8

 

 

7.7

 

 
Change in Interest Expense:
Interest-Bearing Deposits
Demand

 

-

 

 

(0.2

)

 

(0.2

)

Savings

 

0.5

 

 

4.5

 

 

5.0

 

Time

 

0.6

 

 

1.8

 

 

2.4

 

Total Interest-Bearing Deposits

 

1.1

 

 

6.1

 

 

7.2

 

Securities Sold Under Agreements to Repurchase

 

0.1

 

 

(0.5

)

 

(0.4

)

Other Debt

 

(0.5

)

 

0.4

 

 

(0.1

)

Total Change in Interest Expense

 

0.7

 

 

6.0

 

 

6.7

 

 
Change in Net Interest Income

$

3.2

 

$

(2.2

)

$

1.0

 

 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8c
Nine Months Ended September 30, 2019
Compared to September 30, 2018
(dollars in millions) Volume 1 Rate 1 Total
Change in Interest Income:
Funds Sold

$

(1.0

)

$

0.8

 

$

(0.2

)

Investment Securities
Available-for-Sale
Taxable

 

10.4

 

 

5.0

 

 

15.4

 

Non-Taxable

 

(11.5

)

 

3.2

 

 

(8.3

)

Held-to-Maturity
Taxable

 

(5.3

)

 

6.8

 

 

1.5

 

Non-Taxable

 

(1.7

)

 

(0.1

)

 

(1.8

)

Total Investment Securities

 

(8.1

)

 

14.9

 

 

6.8

 

Loans Held for Sale

 

0.1

 

 

-

 

 

0.1

 

Loans and Leases
Commercial and Industrial

 

2.6

 

 

4.4

 

 

7.0

 

Commercial Mortgage

 

7.6

 

 

3.8

 

 

11.4

 

Construction

 

(2.0

)

 

0.7

 

 

(1.3

)

Commercial Lease Financing

 

(0.3

)

 

0.3

 

 

-

 

Residential Mortgage

 

6.3

 

 

0.8

 

 

7.1

 

Home Equity

 

2.3

 

 

0.7

 

 

3.0

 

Automobile

 

3.2

 

 

(1.7

)

 

1.5

 

Other 2

 

0.3

 

 

(2.4

)

 

(2.1

)

Total Loans and Leases

 

20.0

 

 

6.6

 

 

26.6

 

Other

 

(0.1

)

 

(0.1

)

 

(0.2

)

Total Change in Interest Income

 

10.9

 

 

22.2

 

 

33.1

 

 
Change in Interest Expense:
Interest-Bearing Deposits
Demand

 

-

 

 

0.8

 

 

0.8

 

Savings

 

1.0

 

 

14.3

 

 

15.3

 

Time

 

1.0

 

 

6.9

 

 

7.9

 

Total Interest-Bearing Deposits

 

2.0

 

 

22.0

 

 

24.0

 

Short-Term Borrowings

 

0.5

 

 

0.2

 

 

0.7

 

Securities Sold Under Agreements to Repurchase

 

0.1

 

 

(0.6

)

 

(0.5

)

Other Debt

 

(1.8

)

 

1.3

 

 

(0.5

)

Total Change in Interest Expense

 

0.8

 

 

22.9

 

 

23.7

 

 
Change in Net Interest Income

$

10.1

 

$

(0.7

)

$

9.4

 

 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits Table 9
Three Months Ended Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

 

September 30,

(dollars in thousands)

2019

 

2019

 

2018

 

 

2019

 

2018

Salaries

$

33,458

$

32,834

$

33,308

 

$

98,772

$

99,281

Incentive Compensation

 

5,681

 

5,464

 

5,378

 

 

17,049

 

14,972

Share-Based Compensation

 

2,025

 

1,994

 

2,153

 

 

7,098

 

6,657

Commission Expense

 

1,760

 

1,704

 

1,034

 

 

4,394

 

3,260

Retirement and Other Benefits

 

4,185

 

4,580

 

3,925

 

 

13,872

 

12,944

Payroll Taxes

 

2,519

 

2,643

 

2,372

 

 

9,409

 

9,112

Medical, Dental, and Life Insurance

 

3,908

 

3,926

 

3,616

 

 

12,299

 

10,897

Separation Expense

 

809

 

366

 

(4

)

 

1,549

 

1,229

Total Salaries and Benefits

$

54,345

$

53,511

$

51,782

 

$

164,442

$

158,352

 
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances Table 10
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands)

 

2019

 

2019

 

2019

 

2018

 

2018

Commercial
Commercial and Industrial

$

1,361,011

$

1,408,729

$

1,331,345

$

1,331,149

$

1,314,609

Commercial Mortgage

 

2,477,296

 

2,411,289

 

2,381,213

 

2,302,356

 

2,237,020

Construction

 

154,754

 

119,228

 

132,775

 

170,061

 

176,447

Lease Financing

 

163,672

 

163,070

 

154,919

 

176,226

 

172,232

Total Commercial

 

4,156,733

 

4,102,316

 

4,000,252

 

3,979,792

 

3,900,308

Consumer
Residential Mortgage

 

3,846,511

 

3,785,006

 

3,702,553

 

3,673,796

 

3,596,627

Home Equity

 

1,681,951

 

1,694,577

 

1,698,666

 

1,681,442

 

1,625,208

Automobile

 

713,424

 

703,523

 

676,730

 

658,133

 

625,086

Other 1

 

482,679

 

473,707

 

470,408

 

455,611

 

483,833

Total Consumer

 

6,724,565

 

6,656,813

 

6,548,357

 

6,468,982

 

6,330,754

Total Loans and Leases

$

10,881,298

$

10,759,129

$

10,548,609

$

10,448,774

$

10,231,062

 
 
Deposits
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands)

 

2019

 

2019

 

2019

 

2018

 

2018

Consumer

$

7,893,454

$

7,880,284

$

7,944,793

$

7,726,731

$

7,627,527

Commercial

 

6,153,492

 

6,178,984

 

6,162,042

 

6,098,186

 

5,967,343

Public and Other

 

1,293,806

 

1,429,553

 

1,160,475

 

1,202,325

 

1,248,465

Total Deposits

$

15,340,752

$

15,488,821

$

15,267,310

$

15,027,242

$

14,843,335

 
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
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands)

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial

$

573

 

$

552

 

$

393

 

$

542

 

$

1,205

 

Commercial Mortgage

 

11,088

 

 

11,310

 

 

5,911

 

 

2,040

 

 

652

 

Total Commercial

 

11,661

 

 

11,862

 

 

6,304

 

 

2,582

 

 

1,857

 

Consumer
Residential Mortgage

 

4,258

 

 

4,697

 

 

5,599

 

 

5,321

 

 

6,359

 

Home Equity

 

2,787

 

 

2,486

 

 

2,797

 

 

3,671

 

 

3,673

 

Total Consumer

 

7,045

 

 

7,183

 

 

8,396

 

 

8,992

 

 

10,032

 

Total Non-Accrual Loans and Leases

 

18,706

 

 

19,045

 

 

14,700

 

 

11,574

 

 

11,889

 

Foreclosed Real Estate

 

2,939

 

 

2,737

 

 

3,225

 

 

1,356

 

 

1,909

 

Total Non-Performing Assets

$

21,645

 

$

21,782

 

$

17,925

 

$

12,930

 

$

13,798

 

 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial

$

81

 

$

-

 

$

66

 

$

10

 

$

-

 

Total Commercial

 

81

 

 

-

 

 

66

 

 

10

 

 

-

 

Consumer
Residential Mortgage

 

2,032

 

 

1,859

 

 

903

 

 

2,446

 

 

2,426

 

Home Equity

 

2,320

 

 

2,981

 

 

3,381

 

 

2,684

 

 

3,112

 

Automobile

 

582

 

 

607

 

 

734

 

 

513

 

 

829

 

Other 1

 

1,076

 

 

963

 

 

1,033

 

 

914

 

 

1,727

 

Total Consumer

 

6,010

 

 

6,410

 

 

6,051

 

 

6,557

 

 

8,094

 

Total Accruing Loans and Leases Past Due 90 Days or More

$

6,091

 

$

6,410

 

$

6,117

 

$

6,567

 

$

8,094

 

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

$

46,178

 

$

48,563

 

$

48,571

 

$

48,731

 

$

49,462

 

Total Loans and Leases

$

10,881,298

 

$

10,759,129

 

$

10,548,609

 

$

10,448,774

 

$

10,231,062

 

 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases

 

0.17

%

 

0.18

%

 

0.14

%

 

0.11

%

 

0.12

%

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

 

0.20

%

 

0.20

%

 

0.17

%

 

0.12

%

 

0.13

%

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

 

0.28

%

 

0.29

%

 

0.16

%

 

0.06

%

 

0.05

%

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

 

0.15

%

 

0.15

%

 

0.18

%

 

0.16

%

 

0.19

%

 
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

 

0.25

%

 

0.26

%

 

0.23

%

 

0.19

%

 

0.21

%

 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter

$

21,782

 

$

17,925

 

$

12,930

 

$

13,798

 

$

15,157

 

Additions

 

1,035

 

 

6,186

 

 

8,217

 

 

4,509

 

 

2,030

 

Reductions
Payments

 

(984

)

 

(441

)

 

(989

)

 

(3,759

)

 

(415

)

Return to Accrual Status

 

-

 

 

(1,344

)

 

(316

)

 

(605

)

 

(1,420

)

Sales of Foreclosed Real Estate

 

-

 

 

(374

)

 

-

 

 

(653

)

 

(1,301

)

Charge-offs/Write-downs

 

(188

)

 

(170

)

 

(1,917

)

 

(360

)

 

(253

)

Total Reductions

 

(1,172

)

 

(2,329

)

 

(3,222

)

 

(5,377

)

 

(3,389

)

Balance at End of Quarter

$

21,645

 

$

21,782

 

$

17,925

 

$

12,930

 

$

13,798

 

 
1 Comprised of other revolving credit, installment, and lease financing.
 
Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses Table 12
Three Months Ended Nine Months Ended

September 30,

 

June 30,

 

September 30,

 

 

September 30,

(dollars in thousands)

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

 

2019

 

 

 

2018

 

Balance at Beginning of Period

$

114,494

 

$

112,845

 

$

115,010

 

$

113,515

 

 

114,168

 

Loans and Leases Charged-Off
Commercial
Commercial and Industrial

 

(239

)

 

(206

)

 

(449

)

 

(815

)

 

(1,140

)

Commercial Mortgage

 

-

 

 

-

 

 

-

 

 

(1,616

)

 

-

 

Consumer
Residential Mortgage

 

(7

)

 

(51

)

 

-

 

 

(62

)

 

(100

)

Home Equity

 

(215

)

 

(145

)

 

(124

)

 

(655

)

 

(259

)

Automobile

 

(1,696

)

 

(1,691

)

 

(2,114

)

 

(5,140

)

 

(5,883

)

Other 1

 

(3,598

)

 

(3,036

)

 

(3,340

)

 

(9,424

)

 

(10,294

)

Total Loans and Leases Charged-Off

 

(5,755

)

 

(5,129

)

 

(6,027

)

 

(17,712

)

 

(17,676

)

Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial

 

318

 

 

401

 

 

542

 

 

1,220

 

 

1,236

 

Consumer
Residential Mortgage

 

649

 

 

95

 

 

261

 

 

1,228

 

 

695

 

Home Equity

 

428

 

 

746

 

 

558

 

 

1,762

 

 

1,634

 

Automobile

 

660

 

 

908

 

 

616

 

 

2,449

 

 

1,953

 

Other 1

 

714

 

 

628

 

 

752

 

 

2,046

 

 

2,077

 

Total Recoveries on Loans and Leases Previously Charged-Off

 

2,769

 

 

2,778

 

 

2,729

 

 

8,705

 

 

7,595

 

Net Loans and Leases Charged-Off

 

(2,986

)

 

(2,351

)

 

(3,298

)

 

(9,007

)

 

(10,081

)

Provision for Credit Losses

 

4,250

 

 

4,000

 

 

3,800

 

 

11,250

 

 

11,425

 

Provision for Unfunded Commitments

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Balance at End of Period 2

$

115,758

 

$

114,494

 

$

115,512

 

$

115,758

 

$

115,512

 

 
Components
Allowance for Loan and Lease Losses

$

108,936

 

$

107,672

 

$

108,690

 

$

108,936

 

 

108,690

 

Reserve for Unfunded Commitments

 

6,822

 

 

6,822

 

 

6,822

 

 

6,822

 

 

6,822

 

Total Reserve for Credit Losses

$

115,758

 

$

114,494

 

$

115,512

 

$

115,758

 

$

115,512

 

 
Average Loans and Leases Outstanding

$

10,770,720

 

$

10,631,558

 

$

10,081,886

 

$

10,624,311

 

$

9,950,518

 

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

 

0.11

%

 

0.09

%

 

0.13

%

 

0.11

%

 

0.14

%

Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding

 

1.00

%

 

1.00

%

 

1.06

%

 

1.00

%

 

1.06

%

 
1 Comprised of other revolving credit, installment, and lease financing.
2 Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.
 
 
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information Table 13a
Investment
Services and
Retail Commercial Private Treasury Consolidated
(dollars in thousands) Banking Banking Banking and Other Total
Three Months Ended September 30, 2019
Net Interest Income

$

66,648

 

$

46,791

 

$

9,641

 

$

1,816

 

$

124,896

 

Provision for Credit Losses

 

3,084

 

 

(130

)

 

32

 

 

1,264

 

 

4,250

 

Net Interest Income After Provision for Credit Losses

 

63,564

 

 

46,921

 

 

9,609

 

 

552

 

 

120,646

 

Noninterest Income

 

22,964

 

 

8,739

 

 

13,663

 

 

1,141

 

 

46,507

 

Noninterest Expense

 

(59,358

)

 

(21,330

)

 

(15,840

)

 

(3,821

)

 

(100,349

)

Income Before Provision for Income Taxes

 

27,170

 

 

34,330

 

 

7,432

 

 

(2,128

)

 

66,804

 

Provision for Income Taxes

 

(6,547

)

 

(8,560

)

 

(1,959

)

 

2,314

 

 

(14,752

)

Net Income

$

20,623

 

$

25,770

 

$

5,473

 

$

186

 

$

52,052

 

Total Assets as of September 30, 2019

$

6,668,902

 

$

4,145,717

 

$

324,388

 

$

6,533,133

 

$

17,672,140

 

 
 
Three Months Ended September 30, 2018
Net Interest Income

$

66,927

 

$

46,240

 

$

10,574

 

$

(814

)

$

122,927

 

Provision for Credit Losses

 

3,229

 

 

69

 

 

-

 

 

502

 

 

3,800

 

Net Interest Income After Provision for Credit Losses

 

63,698

 

 

46,171

 

 

10,574

 

 

(1,316

)

 

119,127

 

Noninterest Income

 

19,814

 

 

6,241

 

 

13,526

 

 

1,901

 

 

41,482

 

Noninterest Expense

 

(51,806

)

 

(20,242

)

 

(15,657

)

 

(2,833

)

 

(90,538

)

Income Before Provision for Income Taxes

 

31,706

 

 

32,170

 

 

8,443

 

 

(2,248

)

 

70,071

 

Provision for Income Taxes

 

(7,943

)

 

(7,218

)

 

(2,226

)

 

4,249

 

 

(13,138

)

Net Income

$

23,763

 

$

24,952

 

$

6,217

 

$

2,001

 

$

56,933

 

Total Assets as of September 30, 2018

$

6,246,126

 

$

3,873,454

 

$

340,793

 

$

6,531,361

 

$

16,991,734

 

 
 
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
Nine Months Ended September 30, 2019
Net Interest Income

$

200,019

 

$

139,784

 

$

29,685

 

$

4,342

 

$

373,830

 

Provision for Credit Losses

 

7,852

 

 

1,141

 

 

14

 

 

2,243

 

 

11,250

 

Net Interest Income After Provision for Credit Losses

 

192,167

 

 

138,643

 

 

29,671

 

 

2,099

 

 

362,580

 

Noninterest Income

 

65,305

 

 

22,738

 

 

41,767

 

 

5,826

 

 

135,636

 

Noninterest Expense

 

(163,968

)

 

(63,545

)

 

(49,200

)

 

(9,418

)

 

(286,131

)

Income Before Provision for Income Taxes

 

93,504

 

 

97,836

 

 

22,238

 

 

(1,493

)

 

212,085

 

Provision for Income Taxes

 

(22,883

)

 

(22,507

)

 

(5,862

)

 

6,937

 

 

(44,315

)

Net Income

$

70,621

 

$

75,329

 

$

16,376

 

$

5,444

 

$

167,770

 

Total Assets as of September 30, 2019

$

6,668,902

 

$

4,145,717

 

$

324,388

 

$

6,533,133

 

$

17,672,140

 

 
 
Nine Months Ended September 30, 2018
Net Interest Income

$

197,007

 

$

133,148

 

$

30,987

 

$

1,237

 

$

362,379

 

Provision for Credit Losses

 

10,417

 

 

(276

)

 

(60

)

 

1,344

 

 

11,425

 

Net Interest Income After Provision for Credit Losses

 

186,590

 

 

133,424

 

 

31,047

 

 

(107

)

 

350,954

 

Noninterest Income

 

58,665

 

 

17,395

 

 

41,941

 

 

8,814

 

 

126,815

 

Noninterest Expense

 

(158,344

)

 

(60,432

)

 

(48,264

)

 

(8,673

)

 

(275,713

)

Income Before Provision for Income Taxes

 

86,911

 

 

90,387

 

 

24,724

 

 

34

 

 

202,056

 

Provision for Income Taxes

 

(21,707

)

 

(20,782

)

 

(6,518

)

 

12,642

 

 

(36,365

)

Net Income

$

65,204

 

$

69,605

 

$

18,206

 

$

12,676

 

$

165,691

 

Total Assets as of September 30, 2018

$

6,246,126

 

$

3,873,454

 

$

340,793

 

$

6,531,361

 

$

16,991,734

 

 
 
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data Table 14
Three Months Ended
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands, except per share amounts)

2019

2019

2019

2018

2018

Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases

$

110,877

 

$

110,401

 

$

108,511

 

$

107,404

 

$

104,248

 

Income on Investment Securities
Available-for-Sale

 

17,512

 

 

15,072

 

 

13,432

 

 

13,043

 

 

12,588

 

Held-to-Maturity

 

18,796

 

 

22,149

 

 

21,921

 

 

21,482

 

 

20,821

 

Deposits

 

9

 

 

9

 

 

15

 

 

10

 

 

10

 

Funds Sold

 

656

 

 

730

 

 

1,444

 

 

727

 

 

1,393

 

Other

 

233

 

 

210

 

 

319

 

 

352

 

 

364

 

Total Interest Income

 

148,083

 

 

148,571

 

 

145,642

 

 

143,018

 

 

139,424

 

Interest Expense
Deposits

 

18,055

 

 

18,628

 

 

15,284

 

 

13,172

 

 

10,931

 

Securities Sold Under Agreements to Repurchase

 

4,257

 

 

4,623

 

 

4,571

 

 

4,671

 

 

4,667

 

Funds Purchased

 

146

 

 

512

 

 

157

 

 

440

 

 

33

 

Short-Term Borrowings

 

1

 

 

1

 

 

36

 

 

88

 

 

28

 

Other Debt

 

728

 

 

710

 

 

757

 

 

674

 

 

838

 

Total Interest Expense

 

23,187

 

 

24,474

 

 

20,805

 

 

19,045

 

 

16,497

 

Net Interest Income

 

124,896

 

 

124,097

 

 

124,837

 

 

123,973

 

 

122,927

 

Provision for Credit Losses

 

4,250

 

 

4,000

 

 

3,000

 

 

2,000

 

 

3,800

 

Net Interest Income After Provision for Credit Losses

 

120,646

 

 

120,097

 

 

121,837

 

 

121,973

 

 

119,127

 

Noninterest Income
Trust and Asset Management

 

10,930

 

 

11,385

 

 

10,761

 

 

10,558

 

 

10,782

 

Mortgage Banking

 

4,864

 

 

3,336

 

 

2,287

 

 

2,148

 

 

1,965

 

Service Charges on Deposit Accounts

 

7,592

 

 

7,283

 

 

7,364

 

 

7,562

 

 

7,255

 

Fees, Exchange, and Other Service Charges

 

14,900

 

 

14,252

 

 

14,208

 

 

14,576

 

 

14,173

 

Investment Securities Gains (Losses), Net

 

(1,469

)

 

(776

)

 

(835

)

 

(841

)

 

(729

)

Annuity and Insurance

 

1,278

 

 

1,806

 

 

2,578

 

 

1,409

 

 

1,360

 

Bank-Owned Life Insurance

 

1,647

 

 

1,779

 

 

1,710

 

 

1,941

 

 

1,620

 

Other

 

6,765

 

 

6,385

 

 

5,606

 

 

4,755

 

 

5,056

 

Total Noninterest Income

 

46,507

 

 

45,450

 

 

43,679

 

 

42,108

 

 

41,482

 

Noninterest Expense
Salaries and Benefits