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And now, I’d like to turn the call over to Peter Ho.Peter Ho Thanks, Cindy. Good morning and aloha everyone. We appreciate you joining us today. Bank of Hawaii achieved solid results for the third quarter. Our balance sheet remained strong with high levels of capital and liquidity and adequate reserves. Revenues continued to be challenged by lower interest rates at the net interest income line and by changes due to regulatory rulings at the non-interest income line. Our expenses though remained well-controlled and our asset quality remains a strength for the organization. Return on assets for the quarter was just a touch ahead of 1.3% and return on equity was 16.8%. Now I’d like to turn the mic over to Kent at this point to give you some insight into our financial performance and then I’ll ask Mary to provide color on our credit quality. Kent? Kent Lucien Thank you, Peter. Good morning. Net income for the third quarter was $43.3 million or $0.92 per share compared to $35.1 million or $0.74 per share in the second quarter and $44.1 million or $0.91 per share in the third quarter of 2010. Included in the second quarter was a $9 million legal settlement related to overdraft claims. There were no gains from the sale of securities in our investment portfolio in the third or second quarter of 2011 compared to $7.9 million in the third quarter of 2010. Our return on assets in the third quarter was 1.31% and return on equity was 16.8%. Year-to-date net income was $120.8 million or $2.54 per share compared to $143.4 million or $2.96 per share in 2010. We had realized $6.1 million in securities gains this year compared to $42.8 million last year. Year-to-date our return on assets is 1.24% and return on equity is 15.8%.
Our net interest margin in the third quarter was 3.09% compared to 3.16% in the second quarter and 3.27% in the third quarter of 2010. Year-to-date, the net interest margin is 3.16% compared to 3.50% last year. The lower margin is due in large part to the lower interest rate environment.The credit provision in the third quarter was $2.2 million compared to $3.6 million in the second quarter and $13.4 million in the third quarter of 2010. The credit provisions of the third quarter included net charge-offs of $3.7 million and a $1.6 million decrease to the allowance. The credit provision for the second quarter included net charge-offs of $6 million and a $2.4 million decrease to the allowance and the credit provision equaled net charge-offs for the third quarter of 2010. Our allowance for loan and lease losses at the end of the third quarter was $143.4 million or 2.7% of outstanding loan and leases. Non-performing assets were $37.8 million at the end of the third quarter, up $3.6 million from the second quarter and down $7.4 million from the end of the third quarter of 2010. Included in non-performing loans are $23.8 million in residential mortgage loans as of September 30. Non-interest income for the third quarter was $50.9 million compared to $49.5 million in the second quarter and $63.1 million in the third quarter of 2010. Mortgage banking produced $5.5 million of income in Q3 versus $2.7 million in Q2. This is due mainly to higher refinance activity. The decrease compared to last year is primarily due to realized gain in the securities portfolio of $7.9 million in the third quarter of 2010. Looking ahead, we will see lower debit-interchange revenue due to the Durbin Amendment and we estimate that this will be approximately a $4 million reduction in Q4 compared to Q3. Read the rest of this transcript for free on seekingalpha.com