Market Overview

Bank of Hawaii Corporation Second Quarter 2016 Financial Results

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HONOLULU--(BUSINESS WIRE)--

Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $1.03 for the second quarter of 2016, down from diluted earnings per share of $1.16 in the previous quarter and up from diluted earnings per share of $0.95 in the same quarter last year. Net income for the second quarter of 2016 was $44.2 million compared with net income of $50.2 million in the first quarter of 2016 and net income of $41.2 million in the second quarter of 2015. Income for the first quarter of 2016 included sales of $11.2 million in Visa Class B shares. There were no sales of Visa shares during the second quarter of 2016 or the second quarter of 2015.

Loan and lease balances increased to $8.3 billion at June 30, 2016, up 3.3 percent from March 31, 2016 and up 12.2 percent compared with June 30, 2015. Deposits grew 1.1 percent during the quarter, as balances increased to $13.6 billion at June 30, 2016 compared with $13.5 billion at March 31, 2016 and $13.1 billion at June 30, 2015.

"Bank of Hawaii Corporation continued to perform well during the second quarter of 2016," said Peter Ho, Chairman, President and CEO. "Loan balances continued to grow, our margin was stable and asset quality remains strong. We continued to make progress on our many initiatives and completed the installation of 116 smart ATM machines during the quarter. By the end of the second quarter consumer deposit transactions from these new ATMs and our mobile application have increased to approximately 30% of consumer deposit transactions enabling our branch staff to spend more time serving our customers."

The return on average assets for the second quarter of 2016 was 1.14 percent, down from 1.30 percent in the previous quarter and up from 1.10 percent in the same quarter last year. The return on average equity for the second quarter of 2016 was 15.56 percent, down from 17.88 percent for the first quarter of 2016 and up from 15.33 percent in the second quarter of 2015. The efficiency ratio for the second quarter of 2016 was 57.35 percent compared with 54.88 percent in the previous quarter and 58.16 percent in the same quarter last year.

For the six-month period ended June 30, 2016, net income was $94.5 million, an increase of $10.9 million from net income of $83.6 million during the same period last year. Diluted earnings per share were $2.19 for the first half of 2016, up from $1.92 for the first half of 2015. The return on average assets for the six-month period ended June 30, 2016 was 1.22 percent compared with 1.12 percent for the same six months in 2015. The year-to-date return on average equity was 16.71 percent, up from 15.75 percent for the six months ended June 30, 2015. The efficiency ratio for the first half of 2016 improved to 56.08 percent compared with 58.23 percent in the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2016 was $106.5 million, an increase of $0.5 million compared with net interest income of $106.0 million in the first quarter of 2016 and an increase of $5.7 million compared with net interest income of $100.8 million in the second quarter of 2015. Net interest income in the second quarter of 2016 included interest recoveries of $1.0 million. The first quarter of 2016 included interest recoveries of $1.3 million. Net interest income for the first half of 2016 was $212.6 million, an increase of $12.2 million compared with net interest income of $200.4 million for the first half of 2015. Analyses of the changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin was 2.85 percent for the second quarter of 2016, down from 2.86 percent in the previous quarter and a 4 basis point increase from the net interest margin of 2.81 percent in the second quarter of 2015. The net interest margin for the first six months of 2016 was 2.86 percent compared with 2.81 percent for the same six-month period last year.

Results for the second quarter of 2016 included a provision for credit losses of $1.0 million due to the continued strong growth of loans and leases partially offset by improved credit metrics. Results for the first quarter of 2016 included a negative provision for credit losses of $2.0 million largely due to the full recovery of loans previously charged off. There was no provision for credit losses during the second quarter of 2015.

Noninterest income was $46.5 million in the second quarter of 2016, a decrease of $9.7 million compared with noninterest income of $56.2 million in the first quarter of 2016 and an increase of $0.6 million compared with noninterest income of $45.9 million in the second quarter of 2015. Noninterest income in the second quarter of 2016 included a service fee of $1.2 million resulting from the sale of trust real estate. Mortgage banking income increased to $4.1 million in the second quarter of 2016 due to higher loan production and increased sales of conforming loans. The increase in gains on loan sales was partially offset by a $2.6 million valuation impairment to our mortgage servicing rights primarily due to the recent decline in interest rates. Noninterest income in the first quarter of 2016 included a net gain of $11.2 million resulting from the sale of Visa Class B shares and net gains of $1.9 million related to sales of previously leased assets. Noninterest income in the second quarter of 2015 included a fee of $0.5 million related to the transition of services provided to some institutional 401k plans. Noninterest income for the first half of 2016 was $102.7 million, an increase of $4.5 million compared with noninterest income of $98.2 million for the first half of 2015.

Noninterest expense was $86.1 million in the second quarter of 2016, down $1.3 million compared with noninterest expense of $87.4 million in the first quarter of 2016 and up $2.5 million compared with noninterest expense of $83.6 million in the second quarter last year. Noninterest expense in the second quarter of 2016 included higher incentive compensation compared with the second quarter last year due to continued strong business growth, an increase of $1.0 million in medical costs from the previous quarter and separation expense of $0.4 million. Second quarter expenses were partially offset by a net gain of $1.3 million from the sale of bank-owned real estate property. Noninterest expense in the first quarter of 2016 included seasonal payroll-related expenses, higher incentive compensation compared with the previous year, and an increase of $0.5 million to the provision for unfunded commitments. First quarter expenses were partially offset by a net gain of $1.5 million from the sale of a real estate property. Noninterest expense in the second quarter of 2015 included separation expense of $0.9 million. An analysis of noninterest expenses related to salaries and benefits is included in Table 9. Noninterest expense for the first half of 2016 was $173.5 million, an increase of $3.0 million compared with noninterest expense of $170.5 million for the first half of 2015.

The effective tax rate for the second quarter of 2016 was 29.77 percent compared with 32.01 percent in the previous quarter and 31.56 percent in the same quarter last year. The lower effective tax rate in second quarter of 2016 was primarily due to the release of state tax reserves due to the lapse in the statute of limitations related to prior tax years. The effective tax rate for the first half of 2016 was 30.98 percent compared with 31.64 percent during the same period last year.

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 asset quality remained strong during the second quarter of 2016. Total non-performing assets declined to $16.3 million at June 30, 2016, down $5.7 million from non-performing assets of $22.0 million at March 31, 2016 and down $13.2 million from non-performing assets of $29.5 million at June 30, 2015. As a percentage of total loans and leases, including foreclosed real estate, non-performing assets were 0.20 percent at the end of the second quarter of 2016, down from 0.27 percent at the end of the first quarter of 2016, and down from 0.40 percent at the end of the second quarter last year.

Accruing loans and leases past due 90 days or more were $8.8 million at June 30, 2016, up from $7.9 million at March 31, 2016 and down from $9.7 million at June 30, 2015. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $52.2 million at June 30, 2016, up from $50.7 million at March 31, 2016 and $48.3 million at June 30, 2015. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loan and lease charge-offs during the second quarter of 2016 were $1.7 million or 0.09 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $3.7 million were partially offset by recoveries of $2.0 million. The Company recorded a net recovery of loans and leases previously charged off of $3.8 million during the first quarter of 2016 as charge-offs of $4.9 million were more than offset by recoveries of $8.7 million. Net charge-offs in the second quarter of 2015 were $1.5 million and comprised of $3.5 million in charge-offs and recoveries of $2.0 million. Net recoveries in the first half of 2016 were $2.1 million compared with net charge-offs of $2.7 million, or 0.08 percent annualized of total average loans and leases outstanding for the first half of 2015.

The allowance for loan and lease losses was reduced to $103.9 million at June 30, 2016. The ratio of the allowance for loan and lease losses to total loans and leases was 1.25 percent at June 30, 2016, a decrease of 5 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, 2016 was unchanged at $6.6 million. Details of loan and lease charge-offs, recoveries, and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $15.86 billion at June 30, 2016, up from $15.65 billion at March 31, 2016 and $15.25 billion at June 30, 2015. Average total assets increased to $15.64 billion during the second quarter of 2016, up from $15.54 billion during the previous quarter and $15.04 billion during the same quarter last year.

The investment securities portfolio was $6.10 billion at June 30, 2016, down from $6.21 billion at March 31, 2016 and $6.47 billion at June 30, 2015 as loan growth continues to outpace deposit growth. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $3.80 billion in securities held to maturity and $2.30 billion in securities available for sale at June 30, 2016.

Total loans and leases were $8.33 billion at June 30, 2016, up from $8.07 billion at March 31, 2016 and up from $7.43 billion at June 30, 2015. Average total loans and leases were $8.21 billion during the second quarter of 2016, up from $7.94 billion during the first quarter of 2016, and up from $7.30 billion during the same quarter last year.

The commercial loan portfolio was $3.31 billion at the end of the second quarter of 2016, an increase of 1.5 percent from commercial loans of $3.26 billion at the end of the first quarter of 2016, and up 8.6 percent from commercial loans of $3.04 billion at the end of the same quarter last year. The consumer loan portfolio was $5.03 billion at the end of the second quarter of 2016, an increase of 4.5 percent from consumer loans of $4.81 billion at the end of the first quarter of 2016 and up 14.6 percent from $4.39 billion at the end of the same quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits increased to $13.64 billion at June 30, 2016 compared with $13.49 billion at March 31, 2016 and $13.09 billion at June 30, 2015. Average total deposits were $13.45 billion during the second quarter of 2016, up from $13.33 billion during the previous quarter and $12.86 billion during the same quarter last year.

Consumer deposits were $6.62 billion at June 30, 2016, up from $6.57 billion at March 31, 2016 and up from $6.22 billion at June 30, 2015. Commercial deposits were $5.70 billion at June 30, 2016, up from $5.68 billion at March 31, 2016 and up from $5.52 billion at June 30, 2015. Other deposits, including public funds, were $1.33 billion at June 30, 2016, up from $1.24 billion at March 31, 2016 and down slightly from $1.34 billion at June 30, 2015. Deposit balances are summarized in Tables 7 and 10.

During the second quarter of 2016, the Company repurchased 213.0 thousand shares of common stock at a total cost of $14.6 million under its share repurchase program. The average cost was $68.71 per share repurchased. From the beginning of the share repurchase program initiated during July of 2001 through June 30, 2016, the Company has repurchased 53.3 million shares and returned over $2.0 billion to shareholders at an average cost of $37.62 per share. From July 1 through July 22, 2016, the Company repurchased an additional 60.0 thousand shares of common stock at an average cost of $68.65 per share. Remaining buyback authority under the share repurchase program was $85.6 million at July 22, 2016.

Total shareholders' equity was $1.16 billion at June 30, 2016, up from $1.14 billion at March 31, 2016 and up from $1.08 billion at June 30, 2015. At June 30, 2016, the Tier 1 Capital Ratio was 13.66 percent compared with 13.85 percent at March 31, 2016 and 14.47 percent at June 30, 2015. The Tier 1 leverage ratio at June 30, 2016 was 7.29 percent compared with 7.25 percent at March 31, 2016 and 7.21 percent at June 30, 2015.

The Company's Board of Directors declared a quarterly cash dividend of $0.48 per share on the Company's outstanding shares. The dividend will be payable on September 15, 2016 to shareholders of record at the close of business on August 31, 2016.

Hawaii Economy

Economic conditions in Hawaii continue to remain positive during the second quarter of 2016 due to an active construction industry, stable tourism, low unemployment, and a strong real estate market. For the first five months of 2016, total visitor spending increased 1.0 percent and total arrivals increased 3.1 percent compared to the same period in 2015. The statewide seasonally-adjusted unemployment rate in Hawaii was 3.3 percent in June 2016 compared to 4.9 percent nationally. For the first six months of 2016, the volume of single-family home sales on Oahu increased 7.8 percent compared with the same period in 2015. The volume of condominium sales on Oahu increased 10.7 percent compared with the same period in 2015. During the first half of 2016 the median sales price of single-family homes on Oahu was 6.1 percent higher and the median sales price of a condominium was 7.4 percent higher compared with 2015. As of June 30, 2016, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 3.0 months and 3.1 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its second quarter 2016 financial results today at 2:00 p.m. Eastern Time (8:00 a.m. Hawaii Time). The call will be accessible via teleconference and via the investor relations link of Bank of Hawaii Corporation's website, www.boh.com. The toll-free number is 1 (877) 783-7534 in the United States and 1 (530) 379-4714 for international callers. Use the pass code "Bank of Hawaii" to access the call. A replay will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, July 25, 2016. The replay number is 1 (855) 859-2056 in the United States and 1 (404) 537-3406 from international locations. Enter the pass code 40106598 when prompted. Participants can also dial 1 (800) 585-8367 to access the replay. In addition, a replay will be available on the Company's website, www.boh.com.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain "forward-looking statements", such as forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation's Annual Report on Form 10-K for the year ended December 31, 2015, 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 1
    Three Months Ended   Six Months Ended
June 30,     March 31,   June 30, June 30,
(dollars in thousands, except per share amounts)     2016       2016     2015       2016     2015

For the Period:

 
Operating Results
Net Interest Income $ 103,550 $ 103,024 $ 97,782 $ 206,574 $ 194,552
Provision for Credit Losses 1,000 (2,000 ) - (1,000 ) -
Total Noninterest Income 46,519 56,207 45,925 102,726 98,232
Total Noninterest Expense 86,071 87,386 83,574 173,457 170,489
Net Income 44,245 50,210 41,154 94,455 83,596
Basic Earnings Per Share 1.04 1.17 0.95 2.21 1.93
Diluted Earnings Per Share 1.03 1.16 0.95 2.19 1.92
Dividends Declared Per Share 0.48 0.45 0.45 0.93 0.90
 
Performance Ratios
Return on Average Assets 1.14 % 1.30 % 1.10 % 1.22 % 1.12 %
Return on Average Shareholders' Equity 15.56 17.88 15.33 16.71 15.75
Efficiency Ratio 1 57.35 54.88 58.16 56.08 58.23
Net Interest Margin 2 2.85 2.86 2.81 2.86 2.81
Dividend Payout Ratio 3 46.15 38.46 47.37 42.08 46.63
Average Shareholders' Equity to Average Assets 7.31 7.27 7.16 7.29 7.14
 
Average Balances
Average Loans and Leases $ 8,205,104 $ 7,940,097 $ 7,300,506 $ 8,072,600 $ 7,177,467
Average Assets 15,639,596 15,537,073 15,038,500 15,588,335 14,992,524
Average Deposits 13,453,953 13,334,550 12,863,274 13,394,251 12,825,074
Average Shareholders' Equity 1,143,884 1,129,561 1,076,467 1,136,722 1,070,324
 
Per Share of Common Stock
Book Value $ 26.96 $ 26.43 $ 24.88 $ 26.96 $ 24.88
Tangible Book Value 26.23 25.70 24.15 26.23 24.15
Market Value
Closing 68.80 68.28 66.68 68.80 66.68
High 72.77 69.37 68.10 72.77 68.10
Low 64.96 54.55 58.70 54.55 53.90
 
June 30, March 31, December 31, June 30,
              2016     2016       2015     2015

As of Period End:

Balance Sheet Totals
Loans and Leases $ 8,331,469 $ 8,065,610 $ 7,878,985 $ 7,428,438
Total Assets 15,860,901 15,654,695 15,455,016 15,248,043
Total Deposits 13,643,807 13,488,892 13,251,103 13,090,695
Other Debt 267,970 220,771 245,786 170,816
Total Shareholders' Equity 1,157,219 1,138,753 1,116,260 1,082,939
 
Asset Quality
Non-Performing Assets $ 16,280 $ 22,015 $ 28,801 $ 29,450
Allowance for Loan and Lease Losses 103,932 104,677 102,880 106,006
Allowance to Loans and Leases Outstanding 1.25 % 1.30 % 1.31 % 1.43 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 13.66 % 13.85 % 13.97 % 14.47 %
Tier 1 Capital Ratio 13.66 13.85 13.97 14.47
Total Capital Ratio 14.91 15.10 15.22 15.72
Tier 1 Leverage Ratio 7.29 7.25 7.26 7.21
Total Shareholders' Equity to Total Assets 7.30 7.27 7.22 7.10
Tangible Common Equity to Tangible Assets 4 7.11 7.09 7.03 6.91
Tangible Common Equity to Risk-Weighted Assets 4 13.49 13.62 13.62 14.03
 
Non-Financial Data
Full-Time Equivalent Employees 2,136 2,139 2,164 2,166
Branches 70 70 70 71
ATMs 451 452 456 455

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."

 
               

Bank of Hawaii Corporation and Subsidiaries

Reconciliation of Non-GAAP Financial Measures Table 2
    June 30, March 31, December 31, June 30,
(dollars in thousands)       2016     2016     2015     2015
 
Total Shareholders' Equity $ 1,157,219 $ 1,138,753 $ 1,116,260 $ 1,082,939

Less: Goodwill

        31,517         31,517         31,517         31,517  
Tangible Common Equity       $ 1,125,702       $ 1,107,236       $ 1,084,743       $ 1,051,422  
 
Total Assets $ 15,860,901 $ 15,654,695 $ 15,455,016 $ 15,248,043

Less: Goodwill

        31,517         31,517         31,517         31,517  
Tangible Assets       $ 15,829,384       $ 15,623,178       $ 15,423,499       $ 15,216,526  
 

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

$ 8,341,990 $ 8,130,093 $ 7,962,484 $ 7,495,744
 
Total Shareholders' Equity to Total Assets 7.30 % 7.27 % 7.22 % 7.10 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.11 % 7.09 % 7.03 % 6.91 %
 
Tier 1 Capital Ratio 13.66 % 13.85 % 13.97 % 14.47 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 13.49 % 13.62 % 13.62 % 14.03 %
 
 
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)       2016   2016   2015     2016   2015
Interest Income  
Interest and Fees on Loans and Leases $ 82,323 $ 80,895 $ 73,565 $ 163,218 $ 144,526
Income on Investment Securities
Available-for-Sale 10,521 10,814 10,273 21,335 20,471
Held-to-Maturity 20,168 20,391 22,832 40,559 47,239
Deposits 2 4 2 6 5
Funds Sold 618 753 268 1,371 527
Other         153       212       310       365       612
Total Interest Income         113,785       113,069       107,250       226,854       213,380
Interest Expense
Deposits 3,081 2,886 2,405 5,967 4,773
Securities Sold Under Agreements to Repurchase 6,134 6,153 6,440 12,287 12,811
Funds Purchased 3 3 3 6 6
Other Debt         1,017       1,003       620       2,020       1,238
Total Interest Expense         10,235       10,045       9,468       20,280       18,828
Net Interest Income 103,550 103,024 97,782 206,574 194,552
Provision for Credit Losses         1,000       (2,000 )     -       (1,000 )     -
Net Interest Income After Provision for Credit Losses         102,550       105,024       97,782       207,574       194,552
Noninterest Income
Trust and Asset Management 12,707 11,256 12,355 23,963 24,535
Mortgage Banking 4,088 3,189 3,469 7,277 5,162
Service Charges on Deposit Accounts 8,150 8,443 8,203 16,593 16,740
Fees, Exchange, and Other Service Charges 13,978 13,444 13,352 27,422 26,249
Investment Securities Gains (Losses), Net (312 ) 11,180 86 10,868 10,317
Annuity and Insurance 2,006 1,901 1,885 3,907 3,929
Bank-Owned Life Insurance 1,551 1,548 2,088 3,099 3,822
Other         4,351       5,246       4,487       9,597       7,478
Total Noninterest Income         46,519       56,207       45,925       102,726       98,232
Noninterest Expense
Salaries and Benefits 50,289 50,514 47,610 100,803 97,390
Net Occupancy 7,158 7,003 8,605 14,161 17,938
Net Equipment 5,065 5,409 4,826 10,474 10,114
Data Processing 3,972 3,951 3,673 7,923 7,446
Professional Fees 2,047 2,639 2,265 4,686 4,599
FDIC Insurance 2,144 2,352 2,068 4,496 4,208
Other         15,396       15,518       14,527       30,914       28,794
Total Noninterest Expense         86,071       87,386       83,574       173,457       170,489
Income Before Provision for Income Taxes 62,998 73,845 60,133 136,843 122,295
Provision for Income Taxes         18,753       23,635       18,979       42,388       38,699
Net Income       $ 44,245     $ 50,210     $ 41,154     $ 94,455     $ 83,596
Basic Earnings Per Share $ 1.04 $ 1.17 $ 0.95 $ 2.21 $ 1.93
Diluted Earnings Per Share $ 1.03 $ 1.16 $ 0.95 $ 2.19 $ 1.92
Dividends Declared Per Share $ 0.48 $ 0.45 $ 0.45 $ 0.93 $ 0.90
Basic Weighted Average Shares 42,729,731 42,920,794 43,305,813 42,825,369 43,345,667
Diluted Weighted Average Shares         42,942,960       43,126,526       43,518,349       43,033,199       43,558,664
 
               
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income Table 4
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands)       2016   2016   2015       2016   2015
Net Income $ 44,245 $ 50,210 $ 41,154 $ 94,455 $ 83,596
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities 5,157 8,694 (7,610 ) 13,851 (2,316 )
Defined Benefit Plans         141     141     220         282     440  
Total Other Comprehensive Income (Loss)         5,298     8,835     (7,390 )       14,133     (1,876 )
Comprehensive Income       $ 49,543   $ 59,045   $ 33,764       $ 108,588   $ 81,720  
 
       
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition Table 5
June 30, March 31,   December 31,   June 30,
(dollars in thousands)       2016     2016     2015     2015
Assets
Interest-Bearing Deposits in Other Banks $ 3,819 $ 4,453 $ 4,130 $ 3,420
Funds Sold 615,395 626,206 592,892 602,598
Investment Securities
Available-for-Sale 2,299,638 2,293,751 2,256,818 2,275,361
Held-to-Maturity (Fair Value of $3,890,220; $3,981,830; $4,006,412; and $4,240,732) 3,798,200 3,911,703 3,982,736 4,199,121
Loans Held for Sale 105,824 16,854 4,808 18,483
Loans and Leases 8,331,469 8,065,610 7,878,985 7,428,438
Allowance for Loan and Lease Losses         (103,932 )     (104,677 )     (102,880 )     (106,006 )
Net Loans and Leases         8,227,537       7,960,933       7,776,105       7,322,432  
Total Earning Assets         15,050,413       14,813,900       14,617,489       14,421,415  
Cash and Due from Banks 133,836 164,012 158,699 150,874
Premises and Equipment, Net 109,832 111,086 111,199 108,439
Accrued Interest Receivable 45,709 47,504 44,719 44,475
Foreclosed Real Estate 1,728 1,728 824 1,989
Mortgage Servicing Rights 19,631 22,663 23,002 23,426
Goodwill 31,517 31,517 31,517 31,517
Bank-Owned Life Insurance 271,274 269,723 268,175 265,133
Other Assets         196,961       192,562       199,392       200,775  
Total Assets       $ 15,860,901     $ 15,654,695     $ 15,455,016     $ 15,248,043  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,383,496 $ 4,329,321 $ 4,286,331 $ 4,156,847
Interest-Bearing Demand 2,838,744 2,759,357 2,761,930 2,699,517
Savings 5,165,808 5,172,206 5,025,191 5,044,711
Time         1,255,759       1,228,008       1,177,651       1,189,620  
Total Deposits         13,643,807       13,488,892       13,251,103       13,090,695  
Funds Purchased 7,333 7,333 7,333 8,459
Short-Term Borrowings - 408 - -
Securities Sold Under Agreements to Repurchase 586,785 586,785 628,857 672,310
Other Debt 267,970 220,771 245,786 170,816
Retirement Benefits Payable 47,438 47,408 47,374 55,181
Accrued Interest Payable 5,532 5,661 5,032 5,254
Taxes Payable and Deferred Taxes 20,979 43,134 17,737 26,244
Other Liabilities         123,838       115,550       135,534       136,145  
Total Liabilities         14,703,682       14,515,942       14,338,756       14,165,104  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2016 - 57,856,419 / 42,916,163; March 31, 2016 - 57,849,536 / 43,080,503; December 31, 2015 - 57,749,071 / 43,282,153; and June 30, 2015 - 57,745,324 / 43,535,020)

576 576 575 575
Capital Surplus 546,928 544,267 542,041 536,782
Accumulated Other Comprehensive Loss (9,424 ) (14,722 ) (23,557 ) (28,562 )
Retained Earnings 1,370,308 1,347,374 1,316,260 1,278,672

Treasury Stock, at Cost (Shares: June 30, 2016 - 14,940,256; March 31, 2016 - 14,769,033; December 31, 2015 - 14,466,918; and June 30, 2015 - 14,210,304)

        (751,169 )     (738,742 )     (719,059 )     (704,528 )

Total Shareholders' Equity

        1,157,219       1,138,753       1,116,260       1,082,939  
Total Liabilities and Shareholders' Equity       $ 15,860,901     $ 15,654,695     $ 15,455,016     $ 15,248,043  
 
 
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, 2015 43,282,153 $ 575 $ 542,041 $ (23,557 ) $ 1,316,260 $ (719,059 ) $ 1,116,260
Net Income - - - - 94,455 - 94,455
Other Comprehensive Income - - - 14,133 - - 14,133
Share-Based Compensation - - 3,314 - - - 3,314
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 201,445 1 1,573 - (277 ) 4,900 6,197
Common Stock Repurchased (567,435 ) - - - - (37,010 ) (37,010 )
Cash Dividends Declared ($0.93 per share)       -       -     -     -       (40,130 )     -       (40,130 )
Balance as of June 30, 2016       42,916,163     $ 576   $ 546,928   $ (9,424 )   $ 1,370,308     $ (751,169 )   $ 1,157,219  
 
Balance as of December 31, 2014 43,724,208 $ 574 $ 531,932 $ (26,686 ) $ 1,234,801 $ (685,535 ) $ 1,055,086
Net Income - - - - 83,596 - 83,596
Other Comprehensive Loss - - - (1,876 ) - - (1,876 )
Share-Based Compensation - - 3,731 - - - 3,731
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 213,289 1 1,119 - (408 ) 5,394 6,106
Common Stock Repurchased (402,477 ) - - - - (24,387 ) (24,387 )
Cash Dividends Declared ($0.90 per share)       -       -     -     -       (39,317 )     -       (39,317 )
Balance as of June 30, 2015       43,535,020     $ 575   $ 536,782   $ (28,562 )   $ 1,278,672     $ (704,528 )   $ 1,082,939  
 
     
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, 2016 March 31, 2016 June 30, 2015
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 $ 4.0 $ - 0.17 % $ 4.4 $ - 0.41 % $ 3.5 $ - 0.17 %
Funds Sold 526.8 0.6 0.46 647.7 0.8 0.46 473.5 0.3 0.22
Investment Securities
Available-for-Sale
Taxable 1,619.7 6.9 1.72 1,588.5 7.2 1.80 1,558.6 6.5 1.68
Non-Taxable 691.8 5.5 3.17 715.0 5.6 3.15 725.8 5.8 3.17
Held-to-Maturity
Taxable 3,639.5 18.6 2.05 3,679.6 18.8 2.05 4,006.4 21.3 2.12
Non-Taxable         244.6     2.4   3.91         245.5     2.4   3.91         248.2     2.4   3.93
Total Investment Securities         6,195.6     33.4   2.16         6,228.6     34.0   2.19         6,539.0     36.0   2.20
Loans Held for Sale 19.9 0.2 3.64 12.2 0.1 3.89 11.1 0.1 3.66
Loans and Leases 1
Commercial and Industrial 1,176.0 9.8 3.36 1,127.4 10.8 3.84 1,156.3 9.1 3.16
Commercial Mortgage 1,686.7 16.4 3.91 1,689.2 15.7 3.74 1,499.7 14.4 3.85
Construction 210.8 2.3 4.44 170.0 2.0 4.63 126.0 1.5 4.85
Commercial Lease Financing 196.4 1.2 2.36 198.9 1.3 2.69 225.1 2.0 3.47
Residential Mortgage 3,005.4 30.1 4.01 2,918.5 29.6 4.05 2,736.2 28.3 4.14
Home Equity 1,170.9 10.5 3.61 1,103.5 10.1 3.69 906.8 8.1 3.60
Automobile 405.9 5.2 5.18 388.6 5.0 5.19 344.4 4.5 5.20
Other 2         353.0     6.9   7.78         344.0     6.5   7.64         306.0     5.7   7.51
Total Loans and Leases         8,205.1     82.4   4.03         7,940.1     81.0   4.09         7,300.5     73.6   4.04
Other         38.1     0.1   1.61         38.4     0.2   2.21         51.6     0.3   2.40
Total Earning Assets 3         14,989.5     116.7   3.12         14,871.4     116.1   3.13         14,379.2     110.3   3.07
Cash and Due from Banks 120.4 131.0 125.8
Other Assets   529.7   534.7   533.5
Total Assets $ 15,639.6 $ 15,537.1 $ 15,038.5
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,738.1 0.3 0.04 $ 2,761.6 0.3 0.04 $ 2,611.9 0.2 0.03
Savings 5,184.8 1.1 0.09 5,137.6 1.1 0.09 5,023.5 1.1 0.09
Time         1,214.8     1.7   0.57         1,208.4     1.5   0.50         1,256.6     1.1   0.35
Total Interest-Bearing Deposits         9,137.7     3.1   0.14         9,107.6     2.9   0.13         8,892.0     2.4   0.11
Short-Term Borrowings 7.3 - 0.15 7.8 - 0.14 8.5 - 0.14
Securities Sold Under Agreements to Repurchase 586.8 6.1 4.14 602.9 6.2 4.04 672.2 6.5 3.79
Other Debt         226.8     1.0   1.80         232.3     1.0   1.73         173.9     0.6   1.43
Total Interest-Bearing Liabilities         9,958.6     10.2   0.41         9,950.6     10.1   0.40         9,746.6     9.5   0.39
Net Interest Income $ 106.5 $ 106.0 $ 100.8
Interest Rate Spread 2.71 % 2.73 % 2.68 %
Net Interest Margin 2.85 % 2.86 % 2.81 %
Noninterest-Bearing Demand Deposits 4,316.3 4,227.0 3,971.3
Other Liabilities 220.8 229.9 244.1
Shareholders' Equity   1,143.9   1,129.6   1,076.5
Total Liabilities and Shareholders' Equity $ 15,639.6 $ 15,537.1 $ 15,038.5

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 $2,977,000, $3,013,000 and $3,008,000 for the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, 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, 2016 June 30, 2015
Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)       Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 4.2 $ - 0.30 % $ 3.2 $ - 0.30 %
Funds Sold 587.3 1.4 0.46 478.9 0.5 0.22
Investment Securities
Available-for-Sale
Taxable 1,604.1 14.1 1.76 1,559.7 13.0 1.67
Non-Taxable 703.4 11.1 3.16 724.6 11.5 3.17
Held-to-Maturity
Taxable 3,659.5 37.5 2.05 4,073.2 44.0 2.17
Non-Taxable         245.1     4.8   3.91       248.7     4.9   3.94
Total Investment Securities         6,212.1     67.5   2.17       6,606.2     73.4   2.23
Loans Held for Sale 16.0 0.3 3.74 7.1 0.1 3.65
Loans and Leases 1
Commercial and Industrial 1,151.7 20.6 3.59 1,143.5 18.0 3.17
Commercial Mortgage 1,687.9 32.1 3.82 1,474.8 28.1 3.84
Construction 190.4 4.3 4.53 115.0 2.6 4.64
Commercial Lease Financing 197.7 2.5 2.53 225.5 3.9 3.44
Residential Mortgage 2,962.0 59.6 4.03 2,684.0 55.8 4.16
Home Equity 1,137.2 20.6 3.65 892.7 16.2 3.66
Automobile 397.2 10.2 5.19 338.0 8.8 5.23
Other 2         348.5     13.4   7.71       304.0     11.2   7.43
Total Loans and Leases         8,072.6     163.3   4.06       7,177.5     144.6   4.05
Other         38.2     0.4   1.91       58.8     0.6   2.08
Total Earning Assets 3         14,930.4     232.9   3.13       14,331.7     219.2   3.07
Cash and Due from Banks 125.7 131.1
Other Assets   532.2   529.7
Total Assets $ 15,588.3 $ 14,992.5
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,749.9 0.5 0.04 $ 2,594.6 0.4 0.03
Savings 5,161.2 2.3 0.09 4,982.5 2.2 0.09
Time         1,211.6     3.2   0.53       1,317.1     2.2   0.34
Total Interest-Bearing Deposits         9,122.7     6.0   0.13       8,894.2     4.8   0.11
Short-Term Borrowings 7.5 - 0.15 8.4 - 0.14
Securities Sold Under Agreements to Repurchase 594.9 12.3 4.09 675.2 12.8 3.77
Other Debt         229.5     2.0   1.77       173.9     1.2   1.43
Total Interest-Bearing Liabilities         9,954.6     20.3   0.41       9,751.7     18.8   0.39
Net Interest Income $ 212.6 $ 200.4
Interest Rate Spread 2.72 % 2.68 %
Net Interest Margin 2.86 % 2.81 %
Noninterest-Bearing Demand Deposits 4,271.6 3,930.9
Other Liabilities 225.4 239.6

Shareholders' Equity

  1,136.7   1,070.3
Total Liabilities and Shareholders' Equity $ 15,588.3 $ 14,992.5

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 $5,990,000 and $5,886,000 for the six months ended June 30, 2016 and June 30, 2015, respectively.

 
       
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8a
Three Months Ended June 30, 2016
Compared to March 31, 2016
(dollars in millions)       Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ (0.2 ) $ - $ (0.2 )
Investment Securities
Available-for-Sale
Taxable 0.1 (0.4 ) (0.3 )
Non-Taxable (0.2 ) 0.1 (0.1 )
Held-to-Maturity
Taxable         (0.2 )     -       (0.2 )
Total Investment Securities         (0.3 )     (0.3 )     (0.6 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 0.4 (1.4 ) (1.0 )
Commercial Mortgage - 0.7 0.7
Construction 0.4 (0.1 ) 0.3
Commercial Lease Financing - (0.1 ) (0.1 )
Residential Mortgage 0.9 (0.4 ) 0.5
Home Equity 0.6 (0.2 ) 0.4
Automobile 0.2 - 0.2
Other 2         0.3       0.1       0.4  
Total Loans and Leases         2.8       (1.4 )     1.4  
Other         -       (0.1 )     (0.1 )
Total Change in Interest Income         2.4       (1.8 )     0.6  
 
Change in Interest Expense:
Interest-Bearing Deposits
Time         -       0.2       0.2  
Total Interest-Bearing Deposits         -       0.2       0.2  
Securities Sold Under Agreements to Repurchase         (0.2 )     0.1       (0.1 )
Total Change in Interest Expense         (0.2 )     0.3       0.1  
 
Change in Net Interest Income       $ 2.6     $ (2.1 )   $ 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 June 30, 2016
Compared to June 30, 2015
(dollars in millions)       Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ - $ 0.3 $ 0.3
Investment Securities
Available-for-Sale
Taxable 0.2 0.2 0.4
Non-Taxable (0.3 ) - (0.3 )
Held-to-Maturity
Taxable         (1.9 )     (0.8 )     (2.7 )
Total Investment Securities         (2.0 )     (0.6 )     (2.6 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 0.1 0.6 0.7
Commercial Mortgage 1.8 0.2 2.0
Construction 0.9 (0.1 ) 0.8
Commercial Lease Financing (0.2 ) (0.6 ) (0.8 )
Residential Mortgage 2.7 (0.9 ) 1.8
Home Equity 2.4 - 2.4
Automobile 0.7 - 0.7
Other 2         1.0       0.2       1.2  
Total Loans and Leases         9.4       (0.6 )     8.8  
Other         (0.1 )     (0.1 )     (0.2 )
Total Change in Interest Income         7.4       (1.0 )     6.4  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Time         -       0.6       0.6  
Total Interest-Bearing Deposits         -       0.7       0.7  
Securities Sold Under Agreements to Repurchase (0.9 ) 0.5 (0.4 )
Other Debt         0.2       0.2       0.4  
Total Change in Interest Expense         (0.7 )     1.4       0.7  
 
Change in Net Interest Income       $ 8.1     $ (2.4 )   $ 5.7  

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, 2016
Compared to June 30, 2015
(dollars in millions)       Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ 0.2 $ 0.7 $ 0.9
Investment Securities
Available-for-Sale
Taxable 0.4 0.7 1.1
Non-Taxable (0.3 ) (0.1 ) (0.4 )
Held-to-Maturity
Taxable (4.3 ) (2.2 ) (6.5 )
Non-Taxable         (0.1 )     -       (0.1 )
Total Investment Securities         (4.3 )     (1.6 )     (5.9 )
Loans Held for Sale 0.2 - 0.2
Loans and Leases
Commercial and Industrial 0.1 2.5 2.6
Commercial Mortgage 4.1 (0.1 ) 4.0
Construction 1.8 (0.1 ) 1.7
Commercial Lease Financing (0.4 ) (1.0 ) (1.4 )
Residential Mortgage 5.6 (1.8 ) 3.8
Home Equity 4.4 - 4.4
Automobile 1.5 (0.1 ) 1.4
Other 2         1.7       0.5       2.2  
Total Loans and Leases         18.8       (0.1 )     18.7  
Other         (0.2 )     -       (0.2 )
Total Change in Interest Income         14.7       (1.0 )     13.7  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Savings 0.1 - 0.1
Time         (0.2 )     1.2       1.0  
Total Interest-Bearing Deposits         (0.1 )     1.3       1.2  
Securities Sold Under Agreements to Repurchase (1.5 ) 1.0 (0.5 )
Other Debt         0.4       0.4       0.8  
Total Change in Interest Expense         (1.2 )     2.7       1.5  
 
Change in Net Interest Income       $ 15.9     $ (3.7 )   $ 12.2  

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
Salaries and Benefits Table 9
      Three Months Ended       Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands)       2016   2016   2015       2016   2015
Salaries $ 28,797 $ 29,141 $ 28,214 $ 57,938   $ 56,128
Incentive Compensation 5,917 5,965 4,959 11,882 9,473
Share-Based Compensation 2,746 2,310 2,751 5,056 5,096
Commission Expense 2,151 1,357 1,927 3,508 3,519
Retirement and Other Benefits 4,092 4,954 4,117 9,046 8,848
Payroll Taxes 2,288 3,577 2,278 5,865 5,863
Medical, Dental, and Life Insurance 3,872 2,892 2,449 6,764 5,633
Separation Expense         426     318     915         744     2,830
Total Salaries and Benefits       $ 50,289   $ 50,514   $ 47,610       $ 100,803   $ 97,390
 
     
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)       2016   2016   2015   2015   2015
Commercial
Commercial and Industrial $ 1,174,879 $ 1,180,341 $ 1,115,168 $ 1,169,817 $ 1,173,259
Commercial Mortgage 1,712,271 1,687,199 1,677,147 1,622,119 1,528,685
Construction 226,062 192,909 156,660 129,254 118,714
Lease Financing       192,630   195,804   204,877   202,055   222,113
Total Commercial       3,305,842   3,256,253   3,153,852   3,123,245   3,042,771
Consumer
Residential Mortgage 3,032,981 2,929,388 2,925,605 2,875,605 2,787,847
Home Equity 1,213,154 1,131,796 1,069,400 993,817 931,191
Automobile 417,017 399,825 381,735 367,640 352,128
Other 1       362,475   348,348   348,393   329,465   314,501
Total Consumer       5,025,627   4,809,357   4,725,133   4,566,527   4,385,667
Total Loans and Leases       $ 8,331,469   $ 8,065,610   $ 7,878,985   $ 7,689,772   $ 7,428,438
 
 
Deposits                        
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)       2016   2016   2015   2015   2015
Consumer $ 6,618,164 $ 6,568,651 $ 6,445,510 $ 6,254,862 $ 6,221,691
Commercial 5,697,490 5,678,987 5,502,739 5,397,857 5,524,153
Public and Other       1,328,153   1,241,254   1,302,854   1,284,243   1,344,851
Total Deposits       $ 13,643,807   $ 13,488,892   $ 13,251,103   $ 12,936,962   $ 13,090,695
 

1 Comprised of other revolving credit, installment, and lease financing.

 
 
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11
      June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands)       2016     2016     2015     2015     2015
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 269 $ 666 $ 5,829 $ 8,532 $ 8,299
Commercial Mortgage         1,194       3,401       3,469       1,058       716  
Total Commercial         1,463       4,067       9,298       9,590       9,015  
Consumer
Residential Mortgage 9,979 13,719 14,598 14,749 14,918
Home Equity         3,110       2,501       4,081       3,814       3,528  
Total Consumer         13,089       16,220       18,679       18,563       18,446  
Total Non-Accrual Loans and Leases         14,552       20,287       27,977       28,153       27,461  
Foreclosed Real Estate         1,728       1,728       824       1,392       1,989  
Total Non-Performing Assets       $ 16,280     $ 22,015     $ 28,801     $ 29,545     $ 29,450  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial       $ -     $ -     $ -     $ -     $ 750  
Total Commercial         -       -       -       -       750  
Consumer
Residential Mortgage 5,640 4,219 4,453 5,060 4,789
Home Equity 1,128 2,096 1,710 1,396 2,395
Automobile 464 524 315 631 323
Other 1         1,518       1,099       1,096       1,058       1,395  
Total Consumer         8,750       7,938       7,574       8,145       8,902  
Total Accruing Loans and Leases Past Due 90 Days or More       $ 8,750     $ 7,938     $ 7,574     $ 8,145     $ 9,652  

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

      $ 52,173     $ 50,707     $ 49,430     $ 49,506     $ 48,339  
Total Loans and Leases       $ 8,331,469     $ 8,065,610     $ 7,878,985     $ 7,689,772     $ 7,428,438  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases         0.17 %     0.25 %     0.36 %     0.37 %     0.37 %
 

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

        0.20 %     0.27 %     0.37 %     0.38 %     0.40 %
 

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

        0.04 %     0.12 %     0.29 %     0.31 %     0.32 %
 

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

        0.29 %     0.37 %     0.41 %     0.44 %     0.45 %
 

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

 

        0.30 %     0.37 %     0.46 %     0.49 %     0.53 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 22,015 $ 28,801 $ 29,545 $ 29,450 $ 28,777
Additions 1,300 4,002 2,353 4,427 1,909
Reductions
Payments (3,401 ) (6,012 ) (2,473 ) (1,191 ) (1,020 )
Return to Accrual Status (3,560 ) (4,272 ) (24 ) (1,748 ) -
Sales of Foreclosed Real Estate - (248 ) (458 ) (1,300 ) (83 )
Charge-offs/Write-downs         (74 )     (256 )     (142 )     (93 )     (133 )
Total Reductions         (7,035 )     (10,788 )     (3,097 )     (4,332 )     (1,236 )
Balance at End of Quarter       $ 16,280     $ 22,015     $ 28,801     $ 29,545     $ 29,450  

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)       2016   2016   2015     2016   2015
Balance at Beginning of Period $ 111,249 $ 108,952 $ 113,348 $ 108,952   $ 114,575
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (204 ) (257 ) (255 ) (461 ) (490 )
Consumer
Residential Mortgage (79 ) (205 ) (54 ) (284 ) (613 )
Home Equity 17 (643 ) (211 ) (626 ) (427 )
Automobile (1,372 ) (1,560 ) (1,237 ) (2,932 ) (2,665 )
Other 1         (2,117 )     (2,222 )     (1,739 )       (4,339 )     (3,389 )
Total Loans and Leases Charged-Off         (3,755 )     (4,887 )     (3,496 )       (8,642 )     (7,584 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 403 6,867 456 7,270 1,102
Commercial Mortgage 14 14 14 28 28
Construction - 23 8 23 16
Lease Financing 1 1 8 2 76
Consumer
Residential Mortgage 279 201 96 480 438
Home Equity 322 513 566 835 1,447
Automobile 541 592 396 1,133 890
Other 1         450       473       497         923       905  
Total Recoveries on Loans and Leases Previously Charged-Off         2,010       8,684       2,041         10,694       4,902  
Net Loans and Leases Recovered (Charged-Off) (1,745 ) 3,797 (1,455 ) 2,052 (2,682 )
Provision for Credit Losses 1,000 (2,000 ) - (1,000 ) -
Provision for Unfunded Commitments         -       500       -         500       -  
Balance at End of Period 2       $ 110,504     $ 111,249     $ 111,893       $ 110,504     $ 111,893  
 
Components
Allowance for Loan and Lease Losses $ 103,932 $ 104,677 $ 106,006 $ 103,932 $ 106,006
Reserve for Unfunded Commitments         6,572       6,572       5,887         6,572       5,887  
Total Reserve for Credit Losses       $ 110,504     $ 111,249     $ 111,893       $ 110,504     $ 111,893  
 
Average Loans and Leases Outstanding       $ 8,205,104     $ 7,940,097     $ 7,300,506       $ 8,072,600     $ 7,177,467  
 

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

0.09 % -0.19 % 0.08 % -0.05 % 0.08 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.25 % 1.30 % 1.43 % 1.25 % 1.43 %

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, 2016
Net Interest Income $ 60,041 $ 38,151 $ 6,037 $ (679 ) $ 103,550
Provision for Credit Losses         2,006       (258 )     (5 )     (743 )     1,000  
Net Interest Income After Provision for Credit Losses 58,035 38,409 6,042 64 102,550
Noninterest Income 21,771 6,438 15,946 2,364 46,519
Noninterest Expense         (50,758 )     (17,762 )     (14,780 )     (2,771 )     (86,071 )
Income Before Provision for Income Taxes 29,048 27,085 7,208 (343 ) 62,998
Provision for Income Taxes         (10,402 )     (9,608 )     (2,667 )     3,924       (18,753 )
Net Income       $ 18,646     $ 17,477     $ 4,541     $ 3,581     $ 44,245  
Total Assets as of June 30, 2016       $ 5,076,204     $ 3,239,572     $ 282,143     $ 7,262,982     $ 15,860,901  
 
 
Three Months Ended June 30, 2015 1
Net Interest Income $ 50,550 $ 35,886 $ 4,335 $ 7,011 $ 97,782
Provision for Credit Losses         1,727       (266 )     (8 )     (1,453 )     -  
Net Interest Income After Provision for Credit Losses 48,823 36,152 4,343 8,464 97,782
Noninterest Income 20,809 5,892 15,680 3,544 45,925
Noninterest Expense         (49,158 )     (16,720 )     (14,572 )     (3,124 )     (83,574 )
Income Before Provision for Income Taxes 20,474 25,324 5,451 8,884 60,133
Provision for Income Taxes         (7,219 )     (8,958 )     (2,017 )     (785 )     (18,979 )
Net Income       $ 13,255     $ 16,366     $ 3,434     $ 8,099     $ 41,154  
Total Assets as of June 30, 2015 1       $ 4,404,619     $ 2,985,351     $ 204,253     $ 7,653,820     $ 15,248,043  

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, 2016
Net Interest Income $ 118,051 $ 76,499 $ 12,489 $ (465 ) $ 206,574
Provision for Credit Losses         4,841       (6,884 )     (11 )     1,054       (1,000 )
Net Interest Income After Provision for Credit Losses 113,210 83,383 12,500 (1,519 ) 207,574
Noninterest Income 42,578 14,038 29,970 16,140 102,726
Noninterest Expense         (103,499 )     (35,030 )     (30,207 )     (4,721 )     (173,457 )
Income Before Provision for Income Taxes 52,289 62,391 12,263 9,900 136,843
Provision for Income Taxes         (18,629 )     (22,264 )     (4,537 )     3,042       (42,388 )
Net Income       $ 33,660     $ 40,127     $ 7,726     $ 12,942     $ 94,455  
Total Assets as of June 30, 2016       $ 5,076,204     $ 3,239,572     $ 282,143     $ 7,262,982     $ 15,860,901  
 
 
Six Months Ended June 30, 2015 1
Net Interest Income $ 98,899 $ 70,160 $ 8,636 $ 16,857 $ 194,552
Provision for Credit Losses         3,450       (731 )     (17 )     (2,702 )     -  
Net Interest Income After Provision for Credit Losses 95,449 70,891 8,653 19,559 194,552
Noninterest Income 39,917 11,544 30,407 16,364 98,232
Noninterest Expense         (99,498 )     (34,607 )     (29,161 )     (7,223 )     (170,489 )
Income Before Provision for Income Taxes 35,868 47,828 9,899 28,700 122,295
Provision for Income Taxes         (12,745 )     (16,824 )     (3,662 )     (5,468 )     (38,699 )
Net Income       $ 23,123     $ 31,004     $ 6,237     $ 23,232     $ 83,596  
Total Assets as of June 30, 2015 1       $ 4,404,619     $ 2,985,351     $ 204,253     $ 7,653,820     $ 15,248,043  

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)       2016     2016     2015     2015     2015
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 82,323 $ 80,895 $ 78,122 $ 75,874 $ 73,565
Income on Investment Securities
Available-for-Sale 10,521 10,814 10,829 10,192 10,273
Held-to-Maturity 20,168 20,391 21,722 20,689 22,832
Deposits 2 4 1 2 2
Funds Sold 618 753 315 291 268
Other         153         212         381         312       310
Total Interest Income         113,785         113,069         111,370         107,360       107,250
Interest Expense
Deposits 3,081 2,886 2,443 2,410 2,405
Securities Sold Under Agreements to Repurchase 6,134 6,153 6,246 6,307 6,440
Funds Purchased 3 3 3 3 3
Other Debt         1,017         1,003         1,034         749       620
Total Interest Expense         10,235         10,045         9,726         9,469       9,468
Net Interest Income 103,550 103,024 101,644 97,891 97,782
Provision for Credit Losses         1,000         (2,000 )       1,000         -       -
Net Interest Income After Provision for Credit Losses         102,550         105,024         100,644         97,891       97,782
Noninterest Income
Trust and Asset Management 12,707 11,256 11,243 11,907 12,355
Mortgage Banking 4,088 3,189 3,130 3,291 3,469
Service Charges on Deposit Accounts 8,150 8,443 8,663 8,669 8,203
Fees, Exchange, and Other Service Charges 13,978 13,444 13,764 13,340 13,352
Investment Securities Gains (Losses), Net (312 ) 11,180 (181 ) 24 86
Annuity and Insurance 2,006 1,901 2,014 1,721 1,885
Bank-Owned Life Insurance 1,551 1,548 1,608 1,609 2,088
Other         4,351         5,246         4,525         2,660       4,487
Total Noninterest Income         46,519         56,207         44,766         43,221       45,925
Noninterest Expense
Salaries and Benefits 50,289 50,514 47,997 46,576 47,610
Net Occupancy 7,158 7,003 4,876 7,403 8,605
Net Equipment 5,065 5,409 5,244 4,804 4,826
Data Processing 3,972 3,951 5,106 3,920 3,673
Professional Fees 2,047 2,639 2,803 2,258 2,265
FDIC Insurance 2,144 2,352 2,322 2,139 2,068
Other         15,396         15,518         17,379         24,788       14,527
Total Noninterest Expense         86,071         87,386         85,727         91,888       83,574
Income Before Provision for Income Taxes 62,998 73,845 59,683 49,224 60,133
Provision for Income Taxes         18,753         23,635         16,851         14,948       18,979
Net Income       $ 44,245       $ 50,210       $ 42,832       $ 34,276     $ 41,154
 
Basic Earnings Per Share $ 1.04 $ 1.17 $ 1.00 $ 0.79 $ 0.95
Diluted Earnings Per Share $ 1.03 $ 1.16 $ 0.99 $ 0.79 $ 0.95
 
Balance Sheet Totals
Loans and Leases $ 8,331,469 $ 8,065,610 $ 7,878,985 $ 7,689,772 $ 7,428,438
Total Assets 15,860,901 15,654,695 15,455,016 15,164,123 15,248,043
Total Deposits 13,643,807 13,488,892 13,251,103 12,936,962 13,090,695
Total Shareholders' Equity 1,157,219 1,138,753 1,116,260 1,098,354 1,082,939
 
Performance Ratios
Return on Average Assets 1.14

%

 

1.30

%

 

1.11

%

 

0.89 % 1.10 %
Return on Average Shareholders' Equity 15.56 17.88 15.41 12.45 15.33
Efficiency Ratio 1 57.35 54.88 58.55 65.12 58.16
Net Interest Margin 2 2.85 2.86 2.85 2.77 2.81

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, 2016       December 31, 2015       December 31, 2014
Hawaii Economic Trends            
State General Fund Revenues 1 $ 2,601.0 4.4 % $ 5,998.6 8.4 % $ 5,535.7 1.6 %
General Excise and Use Tax Revenue 1 $ 1,351.1 3.3 % $ 3,141.5 5.4 % $ 2,979.8 2.5 %
Jobs 2 665.8 658.8 643.7
                                               
June 30, December 31,
(spot rates)                             2016       2015     2014
Unemployment 3
Statewide, seasonally adjusted 3.3 % 3.2 % 4.0 %
 
Oahu 3.6 2.7 3.5
Island of Hawaii 5.0 3.7 4.7
Maui 3.9 3.1 3.8
Kauai 4.0 3.5 4.3
                                               
June 30, December 31,
(percentage change, except months of inventory)   2016       2015       2014     2013
Housing Trends (Single Family Oahu) 4
Median Home Price 6.1 % 3.7 % 3.8 % 4.8 %
Home Sales Volume (units) 7.8 % 5.2 % (0.8 ) % 4.6 %
Months of Inventory 3.0 2.6 2.6 2.7
                                               
Monthly Visitor Arrivals, Percentage Change
(in thousands)                     Not Seasonally Adjusted   from Previous Year  
Tourism 5
 
May 31, 2016 718.9 1.3
April 30, 2016 700.6 3.4
March 31, 2016 786.3 0.8
February 29, 2016 688.8 4.1
January 31, 2016 721.0 6.2
December 31, 2015 794.2 3.7
November 30, 2015 661.4 3.7
October 31, 2015 692.9 4.8
September 30, 2015 652.6 4.7
August 31, 2015 755.9 2.9
July 31, 2015 816.3 5.6
June 30, 2015 767.9 6.0
May 31, 2015 709.7 9.3
April 30, 2015 677.8 2.3
March 31, 2015 780.1 7.0
February 28, 2015 661.7 2.3
January 31, 2015 678.9 (0.6 )
December 31, 2014 766.0 6.3
November 30, 2014 638.0 2.2
October 31, 2014 661.0 3.2
September 30, 2014 623.1 4.2
August 31, 2014 734.7 (1.9 )
July 31, 2014 772.8 2.0
June 30, 2014 724.5 1.1
May 31, 2014 649.1 1.8
April 30, 2014 662.6 (0.7 )
March 31, 2014 728.8 (5.2 )
February 28, 2014 646.8 (4.3 )
January 31, 2014 682.6 0.1

1

 

Source: Hawaii Department of Business, Economic Development & Tourism

2

Source: U. S. Bureau of Labor

3

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

4

Source: Honolulu Board of REALTORS

5

Source: Hawaii Tourism Authority

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

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

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