Bank Of Hawaii Corporation Second Quarter 2013 Financial Results

Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.85 for the second quarter of 2013, up from $0.81 in the previous quarter, and down from $0.90 in the same quarter last year. Net income for the second quarter of 2013 was $37.8 million, an increase of $1.8 million or 5.0 percent compared with net income of $36.0 million in the first quarter of 2013, and down $3.0 million or 7.3 percent from net income of $40.7 million in the second quarter of 2012.

“Bank of Hawaii Corporation continued its trend of solid performance in the second quarter of 2013,” said Peter Ho, Chairman, President and CEO. “Overall loan balances grew 3% from the same quarter last year as strong commercial, indirect automobile and certain other consumer loan growth was partially offset by refinance sensitive loan categories namely residential mortgage and home equity loans. The organization continues to attract quality deposits with consumer and commercial deposit balances up 4% in the quarter from last year. Asset quality continued its trend of improvement in the quarter with lower levels of non-performing assets and a lower ratio of net charge offs to loans. Expenses remained controlled. The recent trend in higher interest rates should positively impact our operating earnings over time through improved net interest margin. We would note, however, that nearer term, we will likely see a meaningful slowing in our mortgage banking business as the refinance market potentially slows and the purchase market remains impacted by exceptionally tight housing inventory.”

The return on average assets for the second quarter of 2013 was 1.12 percent, up from 1.08 percent in the previous quarter, and down from 1.19 percent during the same quarter last year. The return on average equity for the second quarter of 2013 was 14.64 percent compared with 14.10 percent for the first quarter of 2013 and 16.19 percent in the second quarter of 2012.

For the six-month period ended June 30, 2013, net income was $73.7 million, down from net income of $84.6 million for the same period last year. Diluted earnings per share were $1.65 for the first half of 2013, down from diluted earnings per share of $1.85 for the first half of 2012. The year-to-date return on average assets was 1.10 percent, down from 1.24 percent for the same six months in 2012. The year-to-date return on average equity was 14.37 percent, down from 16.73 percent for the six months ended June 30, 2012.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2013 was $89.8 million, down $1.2 million from net interest income of $91.0 million in the first quarter of 2013 and down $8.1 million from net interest income of $97.9 million in the second quarter of 2012. Net interest income for the first half of 2013 was $180.8 million compared with net interest income of $197.9 million for the first half of 2012. Analyses of the changes in net interest income are included in Tables 8a, 8b, and 8c.

The net interest margin was 2.77 percent for the second quarter of 2013, a 5 basis point decrease from the net interest margin of 2.82 percent in the first quarter of 2013 and a 21 basis point decrease from the net interest margin of 2.98 percent in the second quarter of 2012. The net interest margin for the first six months of 2013 was 2.80 percent compared with 3.02 percent for the same six-month period last year. The decrease in the net interest margin was primarily due to increased levels of liquidity and lower yields on loans and investment securities.

The Company did not record a provision for credit losses during the first or second quarters of 2013. Net loans and leases charged-off were $2.3 million in the second quarter of 2013 and $2.0 million in the first quarter of 2013. The provision for credit losses during the second quarter of 2012 was $0.6 million, or $3.2 million less than net charge-offs.

Noninterest income was $48.0 million in the second quarter of 2013, an increase of $0.3 million compared with noninterest income of $47.8 million in the first quarter of 2013, and an increase of $1.2 million compared with noninterest income of $46.8 million in the second quarter of 2012. Noninterest income included mortgage banking revenue of $5.8 million in the second quarter of 2013 compared with $6.4 million in the previous quarter and $7.6 million in the same quarter last year. Noninterest income for the first half of 2013 was $95.8 million, an increase of $0.9 million compared with noninterest income of $94.9 million for the first half of 2012.

Noninterest expense was $81.2 million in the second quarter of 2013, down $3.2 million compared with $84.4 million in the first quarter of 2013, and up $0.4 million compared with $80.7 million in the second quarter last year. Noninterest expense in the first quarter of 2013 included seasonal payroll-related expenses of approximately $3.0 million and separation expense of $1.5 million. Separation expenses were $0.9 million in the second quarter of 2013 and $0.4 million in the same quarter last year. An analysis of noninterest expenses related to salaries and benefits is included in Table 9. Noninterest expense for the first half of 2013 was $165.6 million, a decrease of $0.4 million compared with noninterest expense of $166.0 million for the first half of 2012.

The efficiency ratio for the second quarter of 2013 was 59.96 percent, down from 61.90 percent in the previous quarter and up from 56.77 percent in the same quarter last year. The efficiency ratio for the first half of 2013 was 60.93 percent compared with 57.57 percent in the same period last year.

The effective tax rate for the second quarter of 2013 was 30.33 percent compared with 30.74 percent in the previous quarter and 33.04 percent during the same quarter last year. The lower effective tax rates during 2013 are due to the release of tax reserves and low-income housing and other tax credits.

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

Asset Quality

The Company’s overall asset quality remained strong during the second quarter of 2013. Total non-performing assets were $36.4 million at June 30, 2013, down from $38.4 million at March 31, 2013 and down from $41.5 million at June 30, 2012. Non-performing assets remain above historical levels due to the lengthy judicial foreclosure process for residential mortgage loans. As a percentage of total loans and leases and foreclosed real estate, non-performing assets were 0.62 percent at June 30, 2013, down from 0.66 percent at March 31, 2013 and down from 0.73 percent at June 30, 2012.

Accruing loans and leases past due 90 days or more were $10.6 million at June 30, 2013, down from $11.7 million at March 31, 2013 and up from $7.2 million at June 30, 2012. The increase in consumer delinquencies compared with the prior year was largely due to residential mortgage loans and home equity loans, primarily on neighbor island properties. Restructured loans and leases not included in non-accrual loans or accruing loans that are past due 90 days or more were $39.2 million at June 30, 2013 and primarily comprised of residential mortgage loans with lowered monthly payments to accommodate the borrowers’ financial needs for a period of time. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loans and leases charged off during the second quarter of 2013 were $2.3 million or 0.16 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $4.7 million during the quarter were partially offset by recoveries of $2.4 million. Net charge-offs during the first quarter of 2013 were $2.0 million, or 0.14 percent annualized of total average loans and leases outstanding, and were comprised of $5.3 million in charge-offs partially offset by recoveries of $3.3 million. Net charge-offs in the second quarter of 2012 were $3.8 million or 0.27 percent annualized of total average loans and leases outstanding, and were comprised of $5.9 million in charge-offs partially offset by recoveries of $2.1 million. Net charge-offs in the first half of 2013 were $4.3 million, or 0.15 percent annualized of total average loans and leases outstanding compared with net charge-offs of $7.1 million, or 0.26 percent annualized of total average loans and leases outstanding for the first half of 2012.

The allowance for loan and lease losses was reduced to $124.6 million at June 30, 2013. The ratio of the allowance for loan and lease losses to total loans and leases was 2.13 percent at June 30, 2013, a decrease of 6 basis points from the previous quarter and commensurate with improvements in credit quality and the Hawaii economy. The reserve for unfunded commitments at June 30, 2013 was $5.9 million, an increase of $0.5 million or 9% from the balance at March 31, 2013 and June 30, 2012. The increase in the reserve for unfunded commitments was primarily due to growth in commercial commitments. 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 $13.73 billion at June 30, 2013, up from total assets of $13.53 billion at March 31, 2013 and down from total assets of $13.92 billion at June 30, 2012. Average total assets were $13.57 billion during the second quarter of 2013, up from $13.56 billion during the previous quarter and down from $13.75 billion during the same quarter last year.

The total investment securities portfolio totaled $6.84 billion at June 30, 2013, down from $6.89 billion at March 31, 2013 and $7.07 billion at June 30, 2012. The portfolio remains largely comprised of securities issued by U.S. government agencies.

Total loans and leases were $5.86 billion at June 30, 2013, up from $5.78 billion at March 31, 2013 and $5.67 billion at June 30, 2012. The commercial loan portfolio was $2.40 billion at the end of the second quarter of 2013, up from commercial loans of $2.33 billion at the end of the first quarter of 2013 and $2.12 billion at the end of the same quarter last year. Consumer loans were $3.46 billion at the end of the second quarter of 2013, up slightly from the end of the first quarter of 2013, and down from $3.55 billion at the end of the second quarter of 2012 due to a decline in the residential mortgage and home equity loan portfolios that offset growth in other consumer lending. Average total loans and leases were $5.78 billion during the second quarter of 2013, down from $5.80 billion during the first quarter of 2013 and up from average total loans and leases of $5.64 billion during the same quarter last year. Loan and lease portfolio balances, including the higher risk loans and leases outstanding, are summarized in Table 10.

Total deposits were $11.45 billion at June 30, 2013, up from $11.25 billion at March 31, 2013 due to growth in nearly all deposit categories. Total deposits were down from $11.55 billion at June 30, 2012 primarily due to a reduction in public deposits. Average total deposits were $11.24 billion in the second quarter of 2013, down from average deposits of $11.29 billion during the previous quarter, and up from average deposits of $10.62 billion during the same quarter last year.

During the second quarter of 2013, the Company repurchased 304.6 thousand shares of common stock at a total cost of $15.0 million under its share repurchase program. The average cost was $49.22 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through June 30, 2013, the Company has repurchased 50.7 million shares and returned over $1.8 billion to shareholders at an average cost of $36.44 per share. Remaining buyback authority under the share repurchase program was $47.9 million at June 30, 2013. From July 1 through July 19, 2013, the Company has repurchased an additional 70.0 thousand shares of common stock at an average cost of $53.51 per share.

Total shareholders’ equity was $0.99 billion at June 30, 2013, compared with $1.03 billion at March 31, 2013 and $1.0 billion at June 30, 2012. The ratio of tangible common equity to risk-weighted assets was 15.65 percent at the end of the second quarter of 2013, compared with 17.04 percent at the end of the first quarter of 2013, and 17.57 percent at the end of the same quarter last year. The Tier 1 leverage ratio at June 30, 2013 was 6.95 percent, up from 6.90 percent at March 31, 2013 and 6.57 percent at June 30, 2012.

The Company’s Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s outstanding shares. The dividend will be payable on September 16, 2013 to shareholders of record at the close of business on August 30, 2013.

Hawaii Economy

Hawaii's economy continued to improve during the second quarter of 2013 led by tourism, the State's largest industry. For the first five months of 2013, total visitor arrivals increased by 5.7% and visitor spending increased by 5.1% compared to the same period in 2012. The statewide seasonally-adjusted unemployment rate was 4.6% in June 2013, compared to 5.1 percent at year-end and 7.6% nationally. For the first six months of 2013, the volume of single-family home sales on Oahu was 11.6% higher compared to the same period in 2012 and the volume of condominium sales on Oahu was 18.8% higher compared to the same period in 2012. As of June 30, 2013 Oahu single-family home inventory was 2.7 months compared to 3.9 months at June 30, 2012. Oahu condominium inventory was 2.7 months at June 30, 2013 compared to 4.2 months last year. Oahu median single-family home prices increased 9.2 percent in June compared to last year and 0.8 percent year-to-date. Oahu median condominium home prices increased 11.1 percent in June compared to last year and 6.8 percent year-to-date. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its second quarter 2013 financial results today at 8:00 a.m. Hawaii Time. The conference call will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation’s web site, www.boh.com. Conference call participants located in the United States should dial (866) 788-0542. International participants should dial (857) 350-1680. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning Monday, July 22, 2013 by calling (888) 286-8010 in the United States or (617) 801-6888 internationally and entering the pass code number 45894681 when prompted. A replay will also be available via the Investor Relations link on the Company’s web site.

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, 2012, which was filed with the U.S. Securities and Exchange Commission. We have not committed to update forward-looking statements to reflect later events or circumstances.

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

 
Bank of Hawaii Corporation and Subsidiaries
Financial Highlights     Table 1a
  Three Months Ended   Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands, except per share amounts)   2013     2013     2012     2013     2012

For the Period:
 
Operating Results
Net Interest Income $ 87,340 $ 88,560 $ 95,381 $ 175,900 $ 193,329
Provision for Credit Losses - - 628 - 979
Total Noninterest Income 48,041 47,778 46,848 95,819 94,930
Total Noninterest Expense 81,181 84,387 80,747 165,568 165,954
Net Income 37,763 35,980 40,747 73,743 84,557
Basic Earnings Per Share 0.85 0.81 0.90 1.66 1.86
Diluted Earnings Per Share 0.85 0.81 0.90 1.65 1.85
Dividends Declared Per Share 0.45 0.45 0.45 0.90 0.90
 
Performance Ratios
Return on Average Assets 1.12 % 1.08 % 1.19 % 1.10 % 1.24

%
Return on Average Shareholders' Equity 14.64 14.10 16.19 14.37 16.73
Efficiency Ratio 1 59.96 61.90 56.77 60.93 57.57
Net Interest Margin 2 2.77 2.82 2.98 2.80 3.02
Dividend Payout Ratio 3 52.94 55.56 50.00 54.22 48.39
Average Shareholders' Equity to Average Assets 7.62 7.63 7.36 7.63 7.41
 
Average Balances
Average Loans and Leases $ 5,781,898 $ 5,803,503 $ 5,641,588 $ 5,792,641 $ 5,602,473
Average Assets 13,572,329 13,557,358 13,750,488 13,564,885 13,715,859
Average Deposits 11,244,600 11,287,485 10,622,420 11,265,924 10,526,317
Average Shareholders' Equity 1,034,366 1,034,843 1,012,182 1,034,603 1,016,425
 
Per Share of Common Stock
Book Value $ 22.09 $ 22.87 $ 22.18 $ 22.09 $ 22.18
Market Value
Closing 50.32 50.81 45.95 50.32 45.95
High 52.17 50.91 49.99 52.17 49.99
Low 46.04 44.88 44.02 44.88 44.02
 
June 30, March 31, December 31, June 30,
          2013     2013     2012     2012

As of Period End:
Balance Sheet Totals
Loans and Leases $ 5,859,152 $ 5,782,969 $ 5,854,521 $ 5,671,483
Total Assets 13,733,418 13,525,667 13,728,372 13,915,626
Total Deposits 11,449,198 11,251,860 11,529,482 11,547,993
Long-Term Debt 174,727 177,427 128,055 28,075
Total Shareholders' Equity 986,368 1,026,104 1,021,665 1,003,825
 
Asset Quality
Allowance for Loan and Lease Losses $ 124,575 $ 126,878 $ 128,857 $ 132,443
Non-Performing Assets 36,431 38,374 37,083 41,494
 
Financial Ratios
Allowance to Loans and Leases Outstanding 2.13 % 2.19 % 2.20 % 2.34

%
Tier 1 Capital Ratio 15.53 16.12 16.13 16.41
Total Capital Ratio 16.79 17.38 17.39 17.67
Tier 1 Leverage Ratio 6.95 6.90 6.83 6.57
Total Shareholders' Equity to Total Assets 7.18 7.59 7.44 7.21
Tangible Common Equity to Tangible Assets 4 6.97 7.37 7.23 7.00
Tangible Common Equity to Risk-Weighted Assets 4 15.65 17.04 17.24 17.57
 
Non-Financial Data
Full-Time Equivalent Employees 2,227 2,269 2,276 2,312
Branches and Offices 75 75 76 77
ATMs 486 489 494 494
 
 
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 1b "Reconciliation of Non-GAAP Financial Measures."
 
 
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures     Table 1b
    June 30,     March 31,     December 31,     June 30,
(dollars in thousands)     2013     2013     2012     2012
 
Total Shareholders' Equity $ 986,368 $ 1,026,104 $ 1,021,665 $ 1,003,825

Less: Goodwill
31,517 31,517 31,517 31,517

 Intangible Assets
      8         21         33         58  
Tangible Common Equity     $ 954,843       $ 994,566       $ 990,115       $ 972,250  
 
Total Assets $ 13,733,418 $ 13,525,667 $ 13,728,372 $ 13,915,626

Less: Goodwill
31,517 31,517 31,517 31,517

 Intangible Assets
      8         21         33         58  
Tangible Assets     $ 13,701,893       $ 13,494,129       $ 13,696,822       $ 13,884,051  
 

Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements
$ 6,099,770 $ 5,836,354 $ 5,744,722 $ 5,532,285
 
Total Shareholders' Equity to Total Assets 7.18 % 7.59 % 7.44 % 7.21 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.97 % 7.37 % 7.23 % 7.00 %
 
Tier 1 Capital Ratio 15.53 % 16.12 % 16.13 % 16.41 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 15.65 % 17.04 % 17.24 % 17.57 %
 
                   
Bank of Hawaii Corporation and Subsidiaries
Net Significant Income Items     Table 2
Three Months Ended

   Six Months Ended   
June 30, March 31, June 30, June 30,
(dollars in thousands)     2013     2013     2012     2013     2012
Net Gains on Disposal of Leased Equipment $ - $ - $ - $ - $ 2,473
Decrease in Allowance for Loan and Lease Losses 2,303 1,979 3,163 4,282 6,163
Separation Expense (864 ) (1,475 ) (405 ) (2,339 ) (822 )
PC Refresh       -         -         -         -         (1,163 )
Significant Income Items Before the Provision for Income Taxes       1,439         504         2,758         1,943         6,651  
Income Taxes Impact Related to Lease Transactions - - - - (2,733 )
Release of Tax Reserve (1,090 ) - - (1,090 ) -
Income Tax Impact       504         176         965         680         1,112  
Net Significant Income Items     $ 2,025       $ 328       $ 1,793       $ 2,353       $ 8,272  
 
 
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)     2013     2013     2012     2013     2012
Interest Income    
Interest and Fees on Loans and Leases $ 62,729 $ 62,820 $ 63,910 $ 125,549 $ 128,601
Income on Investment Securities
Available-for-Sale 15,073 15,851 16,988 30,924 34,701
Held-to-Maturity 19,189 19,854 25,054 39,043 51,467
Deposits 1 3 1 4 3
Funds Sold 74 59 119 133 248
Other       285       284       281       569       561  
Total Interest Income       97,351       98,871       106,353       196,222       215,581  
Interest Expense
Deposits 2,579 2,646 3,219 5,225 6,692
Securities Sold Under Agreements to Repurchase 6,751 7,005 7,250 13,756 14,554
Funds Purchased 10 22 5 32 10
Long-Term Debt       671       638       498       1,309       996  
Total Interest Expense       10,011       10,311       10,972       20,322       22,252  
Net Interest Income 87,340 88,560 95,381 175,900 193,329
Provision for Credit Losses       -       -       628       -       979  
Net Interest Income After Provision for Credit Losses       87,340       88,560       94,753       175,900       192,350  
Noninterest Income
Trust and Asset Management 12,089 11,886 11,195 23,975 22,113
Mortgage Banking 5,820 6,411 7,581 12,231 12,631
Service Charges on Deposit Accounts 9,112 9,301 9,225 18,413 18,816
Fees, Exchange, and Other Service Charges 13,133 11,934 12,326 25,067 24,725
Investment Securities Losses, Net - - - - (90 )
Insurance 2,393 2,325 2,399 4,718 4,677
Bank-Owned Life Insurance 1,335 1,297 1,739 2,632 3,220
Other       4,159       4,624       2,383       8,783       8,838  
Total Noninterest Income       48,041       47,778       46,848       95,819       94,930  
Noninterest Expense
Salaries and Benefits 45,341 48,675 44,037 94,016 91,061
Net Occupancy 9,661 9,635 10,058 19,296 20,574
Net Equipment 4,380 4,577 4,669 8,957 10,495
Data Processing 3,050 3,266 3,160 6,316 6,747
Professional Fees 2,391 2,226 2,386 4,617 4,518
FDIC Insurance 1,949 1,949 2,088 3,898 4,159
Other       14,409       14,059       14,349       28,468       28,400  
Total Noninterest Expense       81,181       84,387       80,747       165,568       165,954  
Income Before Provision for Income Taxes 54,200 51,951 60,854 106,151 121,326
Provision for Income Taxes       16,437       15,971       20,107       32,408       36,769  
Net Income     $ 37,763     $ 35,980     $ 40,747     $ 73,743     $ 84,557  
Basic Earnings Per Share $ 0.85 $ 0.81 $ 0.90 $ 1.66 $ 1.86
Diluted Earnings Per Share $ 0.85 $ 0.81 $ 0.90 $ 1.65 $ 1.85
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 0.90 $ 0.90
Basic Weighted Average Shares 44,493,069 44,545,092 45,221,293 44,518,629 45,465,910
Diluted Weighted Average Shares       44,608,497       44,686,632       45,347,368       44,644,348       45,610,489  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)     Table 4
    Three Months Ended    

  Six Months Ended  
June 30,     March 31,     June 30, June 30,
(dollars in thousands)     2013     2013     2012     2013     2012
Net Income $ 37,763 $ 35,980 $ 40,747 $ 73,743     $ 84,557
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities (46,572 ) (9,641 ) 3,387 (56,213 ) (3,067 )
Defined Benefit Plans       201         78         153       279         306  
Total Other Comprehensive Income (Loss)       (46,371 )       (9,563 )       3,540       (55,934 )       (2,761 )
Comprehensive Income (Loss)     $ (8,608 )     $ 26,417       $ 44,287     $ 17,809       $ 81,796  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition     Table 5
    June 30,     March 31,     December 31,     June 30,
(dollars in thousands)     2013     2013     2012     2012
Assets
Interest-Bearing Deposits $ 4,635 $ 4,840 $ 3,393 $ 3,057
Funds Sold 329,922 130,734 185,682 499,338
Investment Securities
Available-for-Sale 2,815,408 3,290,850 3,367,557 3,339,472
Held to Maturity (Fair Value of $4,036,197; $3,679,208; $3,687,676; and $3,828,954) 4,027,829 3,597,810 3,595,065 3,729,665
Loans Held for Sale 25,880 24,015 21,374 14,223
Loans and Leases 5,859,152 5,782,969 5,854,521 5,671,483
Allowance for Loan and Lease Losses       (124,575 )       (126,878 )       (128,857 )       (132,443 )
Net Loans and Leases       5,734,577         5,656,091         5,725,664         5,539,040  
Total Earning Assets       12,938,251         12,704,340         12,898,735         13,124,795  
Cash and Noninterest-Bearing Deposits 136,386 147,796 163,786 131,845
Premises and Equipment 105,752 104,844 105,005 107,421
Customers' Acceptances 114 152 173 176
Accrued Interest Receivable 43,375 46,183 43,077 45,044
Foreclosed Real Estate 3,256 3,318 3,887 2,569
Mortgage Servicing Rights 27,631 26,540 25,240 23,254
Goodwill 31,517 31,517 31,517 31,517
Other Assets       447,136         460,977         456,952         449,005  
Total Assets     $ 13,733,418       $ 13,525,667       $ 13,728,372       $ 13,915,626  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 3,396,835 $ 3,336,406 $ 3,367,185 $ 3,105,798
Interest-Bearing Demand 2,269,196 2,127,550 2,163,473 2,063,070
Savings 4,433,042 4,451,143 4,399,316 4,435,894
Time       1,350,125         1,336,761         1,599,508         1,943,231  
Total Deposits       11,449,198         11,251,860         11,529,482         11,547,993  
Funds Purchased 9,983 66,296 11,296 13,756
Securities Sold Under Agreements to Repurchase 866,237 748,718 758,947 1,065,653
Long-Term Debt 174,727 177,427 128,055 28,075
Banker's Acceptances 114 152 173 176
Retirement Benefits Payable 47,318 47,423 47,658 41,812
Accrued Interest Payable 4,399 5,772 4,776 5,114
Taxes Payable and Deferred Taxes 48,947 93,906 88,014 86,095
Other Liabilities       146,127         108,009         138,306         123,127  
Total Liabilities       12,747,050         12,499,563         12,706,707         12,911,801  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2013 - 57,488,745 / 44,644,596; March 31, 2013 - 57,465,782 / 44,861,335; December 31, 2012 - 57,319,352 / 44,754,835; and June 30, 2012 - 57,301,892 / 45,248,277)
572 572 571 571
Capital Surplus 518,804 517,327 515,619 511,729
Accumulated Other Comprehensive Income (Loss) (26,726 ) 19,645 29,208 32,502
Retained Earnings 1,115,594 1,098,674 1,084,477 1,044,588

Treasury Stock, at Cost (Shares: June 30, 2013 - 12,844,149; March 31, 2013 - 12,604,447; December 31, 2012 - 12,564,517; and June 30, 2012 - 12,053,615)
      (621,876 )       (610,114 )       (608,210 )       (585,565 )
Total Shareholders' Equity       986,368         1,026,104         1,021,665         1,003,825  
Total Liabilities and Shareholders' Equity     $ 13,733,418       $ 13,525,667       $ 13,728,372       $ 13,915,626  
 
 
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, 2012 44,754,835 $ 571 $ 515,619 $ 29,208 $ 1,084,477 $ (608,210 ) $ 1,021,665
Net Income - - - - 73,743 - 73,743
Other Comprehensive Loss - - - (55,934 ) - - (55,934 )
Share-Based Compensation - - 2,732 - - - 2,732
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 379,870 1 453 - (2,235 ) 10,294 8,513
Common Stock Repurchased (490,109 ) - - - - (23,960 ) (23,960 )
Cash Dividends Paid ($0.90 per share)     -         -       -       -         (40,391 )       -         (40,391 )
Balance as of June 30, 2013     44,644,596       $ 572     $ 518,804     $ (26,726 )     $ 1,115,594       $ (621,876 )     $ 986,368  
 
Balance as of December 31, 2011 45,947,116 $ 571 $ 507,558 $ 35,263 $ 1,003,938 $ (544,663 ) $ 1,002,667
Net Income - - - - 84,557 - 84,557
Other Comprehensive Loss - - - (2,761 ) - - (2,761 )
Share-Based Compensation - - 3,723 - - - 3,723
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 400,094 - 448 - (2,758 ) 10,684 8,374
Common Stock Repurchased (1,098,933 ) - - - - (51,586 ) (51,586 )
Cash Dividends Paid ($0.90 per share)     -         -       -       -         (41,149 )       -         (41,149 )
Balance as of June 30, 2012     45,248,277       $ 571     $ 511,729     $ 32,502       $ 1,044,588       $ (585,565 )     $ 1,003,825  
 
 
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, 2013 March 31, 2013 June 30, 2012
Average   Income/   Yield/ Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)   Balance   Expense   Rate       Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 4.5 $ - 0.06 % $ 4.0 $ - 0.32 % $ 3.0 $ - 0.12 %
Funds Sold 168.3 0.1 0.18 156.4 0.1 0.15 237.8 0.1 0.20
Investment Securities
Available-for-Sale 3,212.2 17.4 2.17 3,322.1 18.2 2.19 3,410.4 19.4 2.27
Held-to-Maturity 3,714.3 19.2 2.07 3,578.1 19.8 2.22 3,788.9 25.1 2.65
Loans Held for Sale 22.9 0.2 3.87 18.3 0.2 3.94 12.1 0.1 4.22
Loans and Leases 1
Commercial and Industrial 855.5 7.8 3.65 822.9 7.6 3.75 786.3 7.7 3.93
Commercial Mortgage 1,114.8 11.3 4.08 1,093.4 11.1 4.10 953.5 10.4 4.40
Construction 107.5 1.2 4.61 115.5 1.4 5.04 99.7 1.3 5.07
Commercial Lease Financing 265.2 1.6 2.36 272.7 1.6 2.41 284.5 1.7 2.36
Residential Mortgage 2,252.1 25.5 4.53 2,311.6 25.9 4.49 2,371.7 27.9 4.71
Home Equity 752.9 7.8 4.15 767.9 7.9 4.16 772.3 8.4 4.36
Automobile 225.0 3.1 5.51 214.1 3.0 5.61 193.7 2.9 6.03
Other 2     208.9     4.3   8.22         205.4     4.2   8.33         179.9     3.6   8.12
Total Loans and Leases     5,781.9     62.6   4.34         5,803.5     62.7   4.36         5,641.6     63.9   4.54
Other     78.6     0.3   1.45         79.1     0.3   1.44         80.0     0.3   1.41
Total Earning Assets 3     12,982.7     99.8   3.08         12,961.5     101.3   3.14         13,173.8     108.9   3.31
Cash and Noninterest-Bearing Deposits 136.8 141.9 131.7
Other Assets   452.8   454.0   445.0
Total Assets $ 13,572.3 $ 13,557.4 $ 13,750.5
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,106.0 0.2 0.03 $ 2,060.7 0.1 0.03 $ 1,906.1 0.1 0.03
Savings 4,451.1 1.0 0.09 4,408.4 1.0 0.09 4,444.5 1.1 0.10
Time     1,381.4     1.4   0.42         1,512.9     1.5   0.41         1,253.9     2.0   0.63
Total Interest-Bearing Deposits     7,938.5     2.6   0.13         7,982.0     2.6   0.13         7,604.5     3.2   0.17
Short-Term Borrowings 29.4 - 0.12 58.1 - 0.15 15.0 - 0.14
Securities Sold Under Agreements to Repurchase 800.1 6.7 3.34 756.1 7.0 3.71 1,808.5 7.3 1.59
Long-Term Debt     177.3     0.7   1.52         157.1     0.7   1.63         30.6     0.5   6.51
Total Interest-Bearing Liabilities     8,945.3     10.0   0.44         8,953.3     10.3   0.46         9,458.6     11.0   0.46
Net Interest Income $ 89.8 $ 91.0 $ 97.9
Interest Rate Spread 2.64 % 2.68 % 2.85 %
Net Interest Margin 2.77 % 2.82 % 2.98 %
Noninterest-Bearing Demand Deposits 3,306.1 3,305.5 3,017.9
Other Liabilities 286.5 263.8 261.8
Shareholders' Equity   1,034.4   1,034.8   1,012.2
Total Liabilities and Shareholders' Equity $ 13,572.3 $ 13,557.4 $ 13,750.5
 
 

1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $2,490,000, $2,411,000 and $2,481,000 for the three months ended June 30, 2013, March 31, 2013, and June 30, 2012, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7b
  Six Months Ended Six Months Ended
June 30, 2013 June 30, 2012
Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)   Balance   Expense   Rate   Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 4.2 $ - 0.18 % $ 3.1 $ - 0.19 %
Funds Sold 162.4 0.1 0.16 250.1 0.2 0.20
Investment Securities
Available-for-Sale 3,266.9 35.6 2.18 3,431.0 39.0 2.28
Held-to-Maturity 3,646.6 39.1 2.14 3,763.1 51.5 2.74
Loans Held for Sale 20.6 0.4 3.90 12.0 0.3 4.22
Loans and Leases 1
Commercial and Industrial 839.3 15.4 3.70 796.1 15.8 3.98
Commercial Mortgage 1,104.1 22.4 4.09 947.6 21.0 4.45
Construction 111.5 2.7 4.83 101.6 2.6 5.21
Commercial Lease Financing 268.9 3.2 2.38 289.4 3.4 2.35
Residential Mortgage 2,281.7 51.5 4.51 2,318.0 55.7 4.80
Home Equity 760.4 15.7 4.15 775.6 16.9 4.39
Automobile 219.5 6.0 5.56 193.4 5.9 6.12
Other 2     207.2     8.5   8.28     180.8     7.3   8.10
Total Loans and Leases     5,792.6     125.4   4.35     5,602.5     128.6   4.60
Other     78.8     0.5   1.44     80.0     0.6   1.40
Total Earning Assets 3     12,972.1     201.1   3.11     13,141.8     220.2   3.36
Cash and Noninterest-Bearing Deposits 139.4 134.5
Other Assets   453.4   439.6
Total Assets $ 13,564.9 $ 13,715.9
 
Interest-Bearing Liabilities
Interest-Bearing Deposits

Demand
$ 2,083.4 0.3 0.03 $ 1,886.6 0.2 0.03
Savings 4,429.9 1.9 0.09 4,441.8 2.4 0.11
Time     1,446.8     3.0   0.42     1,257.0     4.1   0.64
Total Interest-Bearing Deposits     7,960.1     5.2   0.13     7,585.4     6.7   0.18
Short-Term Borrowings 43.7 - 0.14 15.3 - 0.13
Securities Sold Under Agreements to Repurchase 778.2 13.8 3.52 1,862.3 14.6 1.55
Long-Term Debt     167.3     1.3   1.57     30.7     1.0   6.50
Total Interest-Bearing Liabilities     8,949.3     20.3   0.45     9,493.7     22.3   0.47
Net Interest Income $ 180.8 $ 197.9
Interest Rate Spread 2.66 % 2.89 %
Net Interest Margin 2.80 % 3.02 %
Noninterest-Bearing Demand Deposits 3,305.8 2,940.9
Other Liabilities 275.2 264.9
Shareholders' Equity   1,034.6   1,016.4
Total Liabilities and Shareholders' Equity $ 13,564.9 $ 13,715.9
 
 

1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $4,901,000 and $4,551,000 for the six months ended June 30, 2013 and 2012, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
  Three Months Ended June 30, 2013
Compared to March 31, 2013
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:    
Investment Securities
Available-for-Sale $ (0.6 ) $ (0.2 ) $ (0.8 )
Held-to-Maturity 0.8 (1.4 ) (0.6 )
Loans and Leases
Commercial and Industrial 0.4 (0.2 ) 0.2
Commercial Mortgage 0.3 (0.1 ) 0.2
Construction (0.1 ) (0.1 ) (0.2 )
Residential Mortgage (0.7 ) 0.3 (0.4 )
Home Equity (0.1 ) - (0.1 )
Automobile 0.2 (0.1 ) 0.1
Other 2     0.1       -       0.1  
Total Loans and Leases     0.1       (0.2 )     (0.1 )
Total Change in Interest Income     0.3       (1.8 )     (1.5 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Time     (0.1 )     -       (0.1 )
Total Interest-Bearing Deposits     (0.1 )     0.1       -  
Securities Sold Under Agreements to Repurchase 0.4 (0.7 ) (0.3 )
Long-Term Debt     0.1       (0.1 )     -  
Total Change in Interest Expense     0.4       (0.7 )     (0.3 )
 
Change in Net Interest Income   $ (0.1 )   $ (1.1 )   $ (1.2 )
 
 

1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8b
  Three Months Ended June 30, 2013
Compared to June 30, 2012
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:    
Investment Securities
Available-for-Sale $ (1.1 ) $ (0.9 ) $ (2.0 )
Held-to-Maturity (0.5 ) (5.4 ) (5.9 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 0.7 (0.6 ) 0.1
Commercial Mortgage 1.7 (0.8 ) 0.9
Construction - (0.1 ) (0.1 )
Commercial Lease Financing (0.1 ) - (0.1 )
Residential Mortgage (1.4 ) (1.0 ) (2.4 )
Home Equity (0.2 ) (0.4 ) (0.6 )
Automobile 0.5 (0.3 ) 0.2
Other 2     0.6       0.1       0.7  
Total Loans and Leases     1.8       (3.1 )     (1.3 )
Total Change in Interest Income     0.3       (9.4 )     (9.1 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Savings - (0.1 ) (0.1 )
Time     0.2       (0.8 )     (0.6 )
Total Interest-Bearing Deposits     0.2       (0.8 )     (0.6 )
Securities Sold Under Agreements to Repurchase (5.5 ) 4.9 (0.6 )
Long-Term Debt     0.8       (0.6 )     0.2  
Total Change in Interest Expense     (4.5 )     3.5       (1.0 )
 
Change in Net Interest Income   $ 4.8     $ (12.9 )   $ (8.1 )
 
 

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, 2013
Compared to June 30, 2012
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ (0.1 ) $ - $ (0.1 )
Investment Securities
Available-for-Sale (1.8 ) (1.6 ) (3.4 )
Held-to-Maturity (1.5 ) (10.9 ) (12.4 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 0.8 (1.2 ) (0.4 )
Commercial Mortgage 3.2 (1.8 ) 1.4
Construction 0.3 (0.2 ) 0.1
Commercial Lease Financing (0.3 ) 0.1 (0.2 )
Residential Mortgage (0.9 ) (3.3 ) (4.2 )
Home Equity (0.3 ) (0.9 ) (1.2 )
Automobile 0.7 (0.6 ) 0.1
Other 2     1.1       0.1       1.2  
Total Loans and Leases     4.6       (7.8 )     (3.2 )
Other     (0.1 )     -       (0.1 )
Total Change in Interest Income     1.2       (20.3 )     (19.1 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Savings - (0.5 ) (0.5 )
Time     0.5       (1.6 )     (1.1 )
Total Interest-Bearing Deposits     0.5       (2.0 )     (1.5 )
Securities Sold Under Agreements to Repurchase (11.8 ) 11.0 (0.8 )
Long-Term Debt     1.5       (1.2 )     0.3  
Total Change in Interest Expense     (9.8 )     7.8       (2.0 )
 
Change in Net Interest Income   $ 11.0     $ (28.1 )   $ (17.1 )
 
 

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)     2013     2013     2012     2013     2012
Salaries $ 28,690 $ 29,078 $ 27,831 $ 57,768     $ 56,518
Incentive Compensation 3,861 3,784 4,132 7,645 8,186
Share-Based Compensation 1,305 1,136 1,758 2,441 3,443
Commission Expense 1,983 1,781 1,754 3,764 3,290
Retirement and Other Benefits 3,594 4,368 3,481 7,962 7,871
Payroll Taxes 2,576 4,240 2,437 6,816 6,255
Medical, Dental, and Life Insurance 2,468 2,813 2,239 5,281 4,676
Separation Expense       864       1,475       405       2,339       822
Total Salaries and Benefits     $ 45,341     $ 48,675     $ 44,037     $ 94,016     $ 91,061
 
 
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)   2013   2013   2012   2012   2012
Commercial
Commercial and Industrial $ 875,702 $ 834,801 $ 829,512 $ 808,621 $ 781,688
Commercial Mortgage 1,160,977 1,104,718 1,097,425 1,039,556 961,984
Construction 107,016 117,797 113,987 101,818 97,668
Lease Financing     257,067     269,107     274,969     277,328     281,020
Total Commercial     2,400,762     2,326,423     2,315,893     2,227,323     2,122,360
Consumer
Residential Mortgage 2,252,117 2,275,209 2,349,916 2,392,871 2,401,331
Home Equity 751,790 757,877 770,376 770,284 766,839
Automobile 233,475 220,362 209,832 200,788 194,339
Other 1     221,008     203,098     208,504     191,038     186,614
Total Consumer     3,458,390     3,456,546     3,538,628     3,554,981     3,549,123
Total Loans and Leases   $ 5,859,152   $ 5,782,969   $ 5,854,521   $ 5,782,304   $ 5,671,483
 
 
Higher Risk Loans and Leases Outstanding                    
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)   2013   2013   2012   2012   2012
Residential Land Loans 2 $ 13,708 $ 13,996 $ 14,984 $ 16,513 $ 16,703
Home Equity Loans 3 13,578 20,786 19,914 19,774 22,029
Air Transportation 4     26,436     27,115     27,782     27,765     27,633
Total Higher Risk Loans   $ 53,722   $ 61,897   $ 62,680   $ 64,052   $ 66,365
 
1 Comprised of other revolving credit, installment, and lease financing.

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

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

4 We consider all of our air transportation leases to be of higher risk due to the weak financial profile of the industry.
 
 
Deposits                    
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)   2013   2013   2012   2012   2012
Consumer $ 5,626,515 $ 5,607,862 $ 5,537,624 $ 5,369,724 $ 5,360,325
Commercial 4,537,120 4,505,835 4,576,410 4,394,745 4,403,095
Public and Other     1,285,563     1,138,163     1,415,448     1,456,078     1,784,573
Total Deposits   $ 11,449,198   $ 11,251,860   $ 11,529,482   $ 11,220,547   $ 11,547,993
 
 
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)     2013     2013     2012     2012     2012
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 4,909 $ 5,033 $ 5,534 $ 5,635 $ 5,778
Commercial Mortgage 2,772 2,910 3,030 2,671 2,737
Construction - - 833 953 1,182
Lease Financing       16         -         -         -         -  
Total Commercial       7,697         7,943         9,397         9,259         9,697  
Consumer
Residential Mortgage 22,876 24,700 21,725 25,456 26,803
Home Equity       2,602         2,413         2,074         2,502         2,425  
Total Consumer       25,478         27,113         23,799         27,958         29,228  
Total Non-Accrual Loans and Leases       33,175         35,056         33,196         37,217         38,925  
Foreclosed Real Estate       3,256         3,318         3,887         3,067         2,569  
Total Non-Performing Assets     $ 36,431       $ 38,374       $ 37,083       $ 40,284       $ 41,494  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial     $ -       $ 230       $ 27       $ -       $ 1  
Total Commercial       -         230         27         -         1  
Consumer
Residential Mortgage 6,876 5,967 6,908 3,988 4,229
Home Equity 2,768 4,538 2,701 2,755 2,445
Automobile 95 241 186 154 98
Other 1       855         676         587         578         395  
Total Consumer       10,594         11,422         10,382         7,475         7,167  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 10,594       $ 11,652       $ 10,409       $ 7,475       $ 7,168  

Restructured Loans on Accrual Status and Not Past Due 90 Days or More
    $ 39,154       $ 30,065       $ 31,844       $ 31,426       $ 31,124  
Total Loans and Leases     $ 5,859,152       $ 5,782,969       $ 5,854,521       $ 5,782,304       $ 5,671,483  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.57 %       0.61 %       0.57 %       0.64 %       0.69 %
 

Ratio of Non-Performing Assets to Total Loans and Leases, and Foreclosed Real Estate
      0.62 %       0.66 %       0.63 %       0.70 %       0.73 %
 

Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases, and Commercial Foreclosed Real Estate
      0.37 %       0.39 %       0.45 %       0.46 %       0.51 %
 

Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate
      0.80 %       0.85 %       0.75 %       0.84 %       0.87 %
 

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
      0.80 %       0.86 %       0.81 %       0.83 %       0.86 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 38,374 $ 37,083 $ 40,284 $ 41,494 $ 41,406
Additions 2,647 7,304 3,837 2,878 7,574
Reductions
Payments (1,306 ) (2,630 ) (3,994 ) (2,408 ) (2,942 )
Return to Accrual Status (1,978 ) (1,132 ) (728 ) (1,083 ) (2,085 )
Sales of Foreclosed Real Estate (1,257 ) (1,910 ) (1,354 ) (424 ) (2,247 )
Charge-offs/Write-downs       (49 )       (341 )       (962 )       (173 )       (212 )
Total Reductions       (4,590 )       (6,013 )       (7,038 )       (4,088 )       (7,486 )
Balance at End of Quarter     $ 36,431       $ 38,374       $ 37,083       $ 40,284       $ 41,494  
 
 

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)   2013   2013   2012   2013   2012
Balance at Beginning of Period $ 132,297 $ 134,276 $ 141,025 $ 134,276   $ 144,025
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (266 ) (382 ) (1,078 ) (648 ) (2,509 )
Construction - - - - (330 )
Consumer
Residential Mortgage (188 ) (1,235 ) (1,369 ) (1,423 ) (2,949 )
Home Equity (2,016 ) (1,377 ) (1,657 ) (3,393 ) (4,098 )
Automobile (429 ) (575 ) (438 ) (1,004 ) (964 )
Other 1     (1,805 )     (1,730 )     (1,394 )     (3,535 )     (2,845 )
Total Loans and Leases Charged-Off     (4,704 )     (5,299 )     (5,936 )     (10,003 )     (13,695 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 437 438 524 875 2,457
Commercial Mortgage 14 10 10 24 34
Construction 8 338 - 346 -
Lease Financing 11 11 11 22 83
Consumer
Residential Mortgage 634 788 376 1,422 1,042
Home Equity 335 748 165 1,083 735
Automobile 456 461 482 917 1,020
Other 1     506       526       577       1,032       1,182  
Total Recoveries on Loans and Leases Previously Charged-Off     2,401       3,320       2,145       5,721       6,553  
Net Loans and Leases Charged-Off (2,303 ) (1,979 ) (3,791 ) (4,282 ) (7,142 )
Provision for Credit Losses - - 628 - 979
Provision for Unfunded Commitments     500       -       -       500       -  
Balance at End of Period 2   $ 130,494     $ 132,297     $ 137,862     $ 130,494     $ 137,862  
 
Components
Allowance for Loan and Lease Losses $ 124,575 $ 126,878 $ 132,443 $ 124,575 $ 132,443
Reserve for Unfunded Commitments     5,919       5,419       5,419       5,919       5,419  
Total Reserve for Credit Losses   $ 130,494     $ 132,297     $ 137,862     $ 130,494     $ 137,862  
 
Average Loans and Leases Outstanding   $ 5,781,898     $ 5,803,503     $ 5,641,588     $ 5,792,641     $ 5,602,473  
 

 

Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding (annualized)
0.16 % 0.14 % 0.27 % 0.15 % 0.26 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 2.13 % 2.19 % 2.34 % 2.13 % 2.34 %
 
1 Comprised of other revolving credit, installment, and lease financing.
2 Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.
 
 
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information     Table 13a
    Retail     Commercial     Investment     Treasury     Consolidated
(dollars in thousands)     Banking     Banking     Services     and Other     Total
Three Months Ended June 30, 2013
Net Interest Income $ 35,725 $ 28,554 $ 2,594 $ 20,467 $ 87,340
Provision for Credit Losses       1,857         472         (12 )       (2,317 )       -  
Net Interest Income After Provision for Credit Losses 33,868 28,082 2,606 22,784 87,340
Noninterest Income 20,871 9,117 15,288 2,765 48,041
Noninterest Expense       (43,540 )       (22,011 )       (13,135 )       (2,495 )       (81,181 )
Income Before Income Taxes 11,199 15,188 4,759 23,054 54,200
Provision for Income Taxes       (4,144 )       (5,177 )       (1,761 )       (5,355 )       (16,437 )
Net Income       7,055         10,011         2,998         17,699         37,763  
Total Assets as of June 30, 2013     $ 3,283,634       $ 2,567,461       $ 188,871       $ 7,693,452       $ 13,733,418  
 
 
Three Months Ended June 30, 2012 1
Net Interest Income $ 39,118 $ 30,817 $ 3,150 $ 22,296 $ 95,381
Provision for Credit Losses       3,334         157         301         (3,164 )       628  
Net Interest Income After Provision for Credit Losses 35,784 30,660 2,849 25,460 94,753
Noninterest Income 22,376 8,552 14,071 1,849 46,848
Noninterest Expense       (44,164 )       (21,577 )       (13,415 )       (1,591 )       (80,747 )
Income Before Income Taxes 13,996 17,635 3,505 25,718 60,854
Provision for Income Taxes       (5,178 )       (6,042 )       (1,297 )       (7,590 )       (20,107 )
Net Income       8,818         11,593         2,208         18,128         40,747  
Total Assets as of June 30, 2012 1     $ 3,344,319       $ 2,289,255       $ 189,008       $ 8,093,044       $ 13,915,626  
 
 
1 Certain prior period information has been reclassified to conform to current presentation.
 
                   
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information     Table 13b
Retail Commercial Investment Treasury Consolidated
(dollars in thousands)     Banking     Banking     Services     and Other     Total
Six Months Ended June 30, 2013
Net Interest Income $ 71,634 $ 58,426 $ 5,365 $ 40,475 $ 175,900
Provision for Credit Losses       4,035         301         (33 )       (4,303 )       -  
Net Interest Income After Provision for Credit Losses 67,599 58,125 5,398 44,778 175,900
Noninterest Income 41,355 18,517 30,098 5,849 95,819
Noninterest Expense       (87,994 )       (44,895 )       (27,270 )       (5,409 )       (165,568 )
Income Before Income Taxes 20,960 31,747 8,226 45,218 106,151
Provision for Income Taxes       (7,755 )       (10,849 )       (3,044 )       (10,760 )       (32,408 )
Net Income       13,205         20,898         5,182         34,458         73,743  
Total Assets as of June 30, 2013     $ 3,283,634       $ 2,567,461       $ 188,871       $ 7,693,452       $ 13,733,418  
 
 
Six Months Ended June 30, 2012 1
Net Interest Income $ 79,303 $ 62,259 $ 6,483 $ 45,284 $ 193,329
Provision for Credit Losses       7,364         (511 )       289         (6,163 )       979  
Net Interest Income After Provision for Credit Losses 71,939 62,770 6,194 51,447 192,350
Noninterest Income 41,916 20,129 27,741 5,144 94,930
Noninterest Expense       (88,776 )       (45,099 )       (28,177 )       (3,902 )       (165,954 )
Income Before Income Taxes 25,079 37,800 5,758 52,689 121,326
Provision for Income Taxes       (9,279 )       (9,063 )       (2,130 )       (16,297 )       (36,769 )
Net Income       15,800         28,737         3,628         36,392         84,557  
Total Assets as of June 30, 2012 1     $ 3,344,319       $ 2,289,255       $ 189,008       $ 8,093,044       $ 13,915,626  
 
 
1 Certain prior period information has been reclassified to conform to current presentation.
 
 
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data   Table 14
    Three Months Ended
June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands, except per share amounts)     2013     2013     2012     2012     2012
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 62,729 $ 62,820 $ 64,627 $ 64,668 $ 63,910
Income on Investment Securities
Available-for-Sale 15,073 15,851 15,349 15,922 16,988
Held-to-Maturity 19,189 19,854 20,253 23,232 25,054
Deposits 1 3 3 3 1
Funds Sold 74 59 180 105 119
Other       285       284       283       283       281
Total Interest Income       97,351       98,871       100,695       104,213       106,353
Interest Expense
Deposits 2,579 2,646 2,753 2,931 3,219
Securities Sold Under Agreements to Repurchase 6,751 7,005 7,158 7,185 7,250
Funds Purchased 10 22 4 7 5
Long-Term Debt       671       638       470       458       498
Total Interest Expense       10,011       10,311       10,385       10,581       10,972
Net Interest Income 87,340 88,560 90,310 93,632 95,381
Provision for Credit Losses       -       -       -       -       628
Net Interest Income After Provision for Credit Losses       87,340       88,560       90,310       93,632       94,753
Noninterest Income
Trust and Asset Management 12,089 11,886 12,066 11,050 11,195
Mortgage Banking 5,820 6,411 11,268 11,745 7,581
Service Charges on Deposit Accounts 9,112 9,301 9,459 9,346 9,225
Fees, Exchange, and Other Service Charges 13,133 11,934 12,333 11,907 12,326
Investment Securities Gains, Net - - - 13 -
Insurance 2,393 2,325 2,550 2,326 2,399
Bank-Owned Life Insurance 1,335 1,297 1,557 2,028 1,739
Other       4,159       4,624       3,749       3,959       2,383
Total Noninterest Income       48,041       47,778       52,982       52,374       46,848
Noninterest Expense
Salaries and Benefits 45,341 48,675 46,116 47,231 44,037
Net Occupancy 9,661 9,635 11,867 10,524 10,058
Net Equipment 4,380 4,577 4,705 4,523 4,669
Data Processing 3,050 3,266 3,058 3,397 3,160
Professional Fees 2,391 2,226 2,611 2,494 2,386
FDIC Insurance 1,949 1,949 1,892 1,822 2,088
Other       14,409       14,059       13,207       14,887       14,349
Total Noninterest Expense       81,181       84,387       83,456       84,878       80,747
Income Before Provision for Income Taxes 54,200 51,951 59,836 61,128 60,854
Provision for Income Taxes       16,437       15,971       19,549       19,896       20,107
Net Income     $ 37,763     $ 35,980     $ 40,287     $ 41,232     $ 40,747
 
Basic Earnings Per Share $ 0.85 $ 0.81 $ 0.90 $ 0.92 $ 0.90
Diluted Earnings Per Share $ 0.85 $ 0.81 $ 0.90 $ 0.92 $ 0.90
 
Balance Sheet Totals
Loans and Leases $ 5,859,152 $ 5,782,969 $ 5,854,521 $ 5,782,304 $ 5,671,483
Total Assets 13,733,418 13,525,667 13,728,372 13,382,425 13,915,626
Total Deposits 11,449,198 11,251,860 11,529,482 11,220,547 11,547,993
Total Shareholders' Equity 986,368 1,026,104 1,021,665 1,024,562 1,003,825
 
Performance Ratios
Return on Average Assets 1.12 % 1.08 % 1.19 % 1.22 % 1.19 %
Return on Average Shareholders' Equity 14.64 14.10 15.47 16.02 16.19
Efficiency Ratio 1 59.96 61.90 58.24 58.13 56.77
Net Interest Margin 2 2.77 2.82 2.87 2.98 2.98
 
 
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
 
 
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends Table 15
    Five Months Ended     Year Ended
($ in millions; jobs in thousands)     May 31, 2013     December 31, 2012     December 31, 2011
Hawaii Economic Trends                
State General Fund Revenues 1 $ 2,364.1 7.7 % $ 5,259.1 12.8 % $ 4,662.5 8.1 %
General Excise and Use Tax Revenue 1 $ 1,282.8 7.7 % $ 2,844.7 9.9 % $ 2,588.5 8.8 %
Jobs 2 615.8 619.3 614.2
                                                 
June 30, March 31, December 31,
(spot rates)           2013     2013     2012     2011     2010
Unemployment 3
Statewide, seasonally adjusted 4.6 % 5.1 % 5.2 % 6.2 % 6.3 %
 
Oahu 4.7 4.6 4.3 5.4 4.8
Island of Hawaii 7.5 7.6 6.9 8.9 8.6
Maui 5.4 5.7 5.2 7.1 7.4
Kauai 5.9 6.4 6.0 7.8 7.8
                                                 
June 30, March 31, December 31,
(percentage change, except months of inventory)           2013     2013     2012     2011     2010
Housing Trends (Single Family Oahu) 4
Median Home Price 0.8 % (2.7 ) % 7.8 % (3.0 ) % 3.1 %
Home Sales Volume (units) 11.6 % 6.9 % 6.5 % (2.7 ) % 13.4 %
Months of Inventory 2.7 2.4 2.5 4.8 6.0
                                                 
Monthly Visitor Arrivals, Percentage Change
(in thousands)                   Seasonally Adjusted     from Previous Month
Tourism 5
 
May 31, 2013 678.3 2.4 %
April 30, 2013 662.1 (5.4 )
March 31, 2013 699.9 4.1
February 28, 2013 672.5 (0.2 )
January 31, 2013 673.5 (0.4 )
December 30, 2012 676.0 (2.6 )
November 30, 2012 693.7 5.5
October 31, 2012 657.4 0.6
September 30, 2012 653.2 (0.4 )
August 31, 2012 656.1 3.1
July 31, 2012 636.4 (2.7 )
June 30, 2012 653.9 0.7
May 30, 2012 649.3 1.5
April 30, 2012 639.5 (2.0 )
March 31, 2012 652.4 3.4
February 29, 2012 631.2 (1.1 )
January 31, 2012 638.2 1.6
December 31, 2011 628.3 2.0
November 30, 2011 616.3 0.9
October 31, 2011 610.8 (1.7 )
September 30, 2011 621.6 5.5
August 31, 2011 589.1 0.4
July 31, 2011 586.8 1.3
June 30, 2011 579.3 0.5
May 31, 2011 576.6 (1.5 )
 
 

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

2 Source: U. S. Bureau of Labor, preliminary figure

3 Source: Hawaii Department of Labor and Industrial Relations

4 Source: Honolulu Board of REALTORS

5 Source: University of Hawaii Economic Research Organization

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

Copyright Business Wire 2010

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