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Bank of Hawaii Corporation Third Quarter 2015 Financial Results

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HONOLULU--(BUSINESS WIRE)--

Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.79 for the third quarter of 2015, down from $0.95 in the second quarter of 2015 and $0.95 in the third quarter of 2014. Net income for the third quarter of 2015 was $34.3 million, down from net income of $41.2 million in the previous quarter and $41.8 million in the same quarter last year. The decrease was primarily due to the previously announced impairment charges totaling $6.5 million, net of tax, related to the decision to dispose of all of its remaining aircraft leases. Table 3b summarizes the components of the impairment charges.

"Bank of Hawaii's operating results were strong in the third quarter of 2015, excluding the one-time impact of the aircraft impairment charges," said Peter S. Ho, Chairman, President and CEO. "Loan balances grew 3.5 percent from the previous quarter and average deposits grew 1.1 percent. Asset quality continued to be strong during the quarter and our core expenses were well controlled."

The return on average assets for the third quarter of 2015 was 0.89 percent, down from 1.10 percent in the previous quarter and 1.15 percent in the same quarter last year. The return on average equity for the third quarter of 2015 was 12.45 percent, down from 15.33 percent for the second quarter of 2015 and 15.57 percent in the third quarter of 2014. The efficiency ratio for the third quarter of 2015 was 65.12 percent compared with 58.16 percent in the previous quarter and 57.74 percent in the same quarter last year. Adjusted for the lease impairment charges, the return on average assets for the third quarter of 2015 was 1.06 percent, the return on average equity was 14.80 percent, and the efficiency ratio was 58.0 percent.

For the nine-month period ended September 30, 2015, net income was $117.9 million, a decrease from net income of $121.9 million for the same period last year. Diluted earnings per share were $2.71 for the nine-month period in 2015 compared with diluted earnings per share of $2.75 for the same period in 2014. The 2015 year-to-date return on average assets was 1.05 percent compared with 1.15 percent for the same period in 2014. The 2015 year-to-date return on average equity was 14.62 percent compared with 15.53 percent for the nine months ended September 30, 2014. The efficiency ratio for the nine-month period ended September 30, 2015 was 60.47 percent compared with 58.88 percent for the same period last year. Adjusted for the lease impairment charges, the return on average assets for the nine-month period ended September 30, 2015 was 1.10 percent, the return on average equity was 15.42 percent, and the efficiency ratio was 58.15 percent.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the third quarter of 2015 was $100.9 million, up slightly from net interest income of $100.8 million in the second quarter of 2015 and up from net interest income of $98.3 million in the third quarter of 2014. Net interest income for the nine-month period in 2015 was $301.4 million compared with net interest income of $291.6 million for the same period in 2014. 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 third quarter of 2015, a 4 basis point decrease from the net interest margin of 2.81 percent in the second quarter of 2015, and an 8 basis point decrease from the net interest margin of 2.85 percent in the third quarter of 2014. The net interest margin for the first nine months of 2015 was 2.79 percent compared with 2.86 percent for the same nine-month period last year.

The Company did not record a provision for credit losses during the nine-month period ended September 30, 2015. The first nine months of 2014 included a negative provision for credit losses of $4.9 million. The negative provision reflected continued strength of the credit risk profile, several large commercial loan recoveries, as well as a reduction of $2.7 million in the specific reserve related to one commercial client during the third quarter of 2014.

Noninterest income was $43.2 million in the third quarter of 2015, down from $45.9 million in the second quarter of 2015 and down from $45.0 million in the third quarter of 2014. Noninterest income in the third quarter of 2015 included a $1.0 million estimated loss on the pending sale of an aircraft lease. See Table 3b. Noninterest income in the third quarter of 2014 included a net gain of $1.9 million resulting from the sale of 23,000 Visa Class B shares. There were no sales of Visa Class B shares in the second or third quarters of 2015. Noninterest income for the nine-months ended September 30, 2015 was $141.5 million compared with noninterest income of $134.2 million for the same period in 2014. The increase was primarily due to the timing of Visa Class B shares sales and an increase in mortgage banking income.

Noninterest expense was $91.9 million in the third quarter of 2015, up from $83.6 million in the previous quarter and up from $81.0 million in the same quarter last year. The increase was primarily due to a $9.5 million impairment of the residual values on aircraft in which the leases have expired. See Table 3b. Noninterest expense for the nine-months ended September 30, 2015 was $262.4 million, compared with noninterest expense of $245.7 million for the same period in 2014. The increase was primarily due to the impairment charges, higher separation expense, an increase in compensation related to higher business activity, and an increase in amortization expense related to our solar energy partnership investments. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The effective tax rate for the third quarter of 2015 was 30.37 percent compared with 31.56 percent in the previous quarter and 32.59 percent during the same quarter last year. Taxes for the third quarter of 2015 included a benefit of $4.0 million related to the aircraft impairment charges. See Table 3b. The effective tax rate for the nine-month period ended September 30, 2015 was 31.28 percent compared to 30.93 percent for 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 overall asset quality remained strong during the third quarter of 2015. Total non-performing assets were $29.5 million at September 30, 2015, flat with non-performing assets of $29.5 million at June 30, 2015 and down from non-performing assets of $33.3 million at September 30, 2014. As a percentage of total loans and leases and foreclosed real estate, non-performing assets were 0.38 percent at September 30, 2015, down from 0.40 percent at June 30, 2015 and 0.50 percent at September 30, 2014.

Accruing loans and leases past due 90 days or more were $8.1 million at September 30, 2015, down from $9.7 million at June 30, 2015 and $9.1 million at September 30, 2014. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $49.5 million at September 30, 2015 compared with $48.3 million at June 30, 2015 and $45.2 million at September 30, 2014. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loans and leases charged off during the third quarter of 2015 were $2.0 million or 0.10 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $4.4 million during the quarter were partially offset by recoveries of $2.4 million. Net charge-offs during the second quarter of 2015 were $1.5 million or 0.08 percent annualized of total average loans and leases outstanding and were comprised of $3.5 million in charge-offs partially offset by recoveries of $2.0 million. Net charge-offs during the third quarter of 2014 were $0.8 million or 0.05 percent annualized of total average loans and leases outstanding and were comprised of $3.7 million in charge-offs partially offset by recoveries of $2.9 million. Net charge-offs in the nine-month period ended September 30, 2015 were $4.7 million, or 0.09 percent annualized of total average loans and leases outstanding compared with net charge-offs of $0.2 million, or 0.00 percent annualized of total average loans and leases outstanding for the same period in 2014.

The allowance for loan and lease losses was reduced to $104.0 million at September 30, 2015. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.35 percent at September 30, 2015, a decrease of 8 basis points from the previous quarter and commensurate with continued improvements in credit quality and the Hawaii economy. The reserve for unfunded commitments at September 30, 2015 was $6.1 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 $15.16 billion at September 30, 2015, down slightly from total assets of $15.25 billion at June 30, 2015 and up from $14.51 billion at September 30, 2014. Average total assets were $15.22 billion during the third quarter of 2015, up from $15.04 billion during the previous quarter and $14.37 billion during the same quarter last year.

The investment securities portfolio was $6.40 billion at September 30, 2015, down from $6.47 billion at June 30, 2015 and $6.78 billion at September 30, 2014. The portfolio remains largely comprised of securities issued by U.S. government agencies and included $4.12 billion in securities held to maturity and $2.28 billion in securities available for sale at September 30, 2015.

Total loans and leases increased to $7.69 billion at September 30, 2015, up from $7.43 billion at June 30, 2015 and $6.61 billion at September 30, 2014. Average total loans and leases were $7.55 billion during the third quarter of 2015, up from $7.30 billion during the second quarter of 2015 and $6.49 billion during the same quarter last year. The commercial loan portfolio increased to $3.12 billion at the end of the quarter, up from commercial loans of $3.04 billion at the end of the previous quarter, and up from $2.73 billion at the end of the same quarter last year. Total consumer loans increased to $4.57 billion at the end of the third quarter of 2015, up from $4.39 billion at the end of the second quarter of 2015, and up from $3.88 billion at the end of the third quarter of 2014. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $12.94 billion at September 30, 2015, down from $13.09 billion at June 30, 2015, and up from $12.36 billion at September 30, 2014. Average total deposits were $13.01 billion during the third quarter of 2015, up from $12.86 billion during the previous quarter and $12.20 billion during the same quarter last year.

During the third quarter of 2015, the Company repurchased 226.0 thousand shares of common stock at a total cost of $14.5 million under its share repurchase program. The average cost was $64.25 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through September 30, 2015, the Company has repurchased 52.6 million shares and returned $2.0 billion to shareholders at an average cost of $37.24 per share. Remaining buyback authority under the share repurchase program was $36.9 million at September 30, 2015. From October 1 through October 23, 2015, the Company repurchased an additional 63.0 thousand shares of common stock at an average cost of $64.47 per share.

Total shareholders' equity was $1.10 billion at September 30, 2015, compared with $1.08 billion at June 30, 2015, and $1.06 billion at September 30, 2014. The Tier 1 Capital Ratio was 14.11 percent at the end of the third quarter of 2015 compared with 14.47 percent at the end of the second quarter of 2015 and 15.32 percent at the end of the same quarter last year. The Tier 1 leverage ratio at September 30, 2015 was 7.18 percent compared with 7.21 percent at June 30, 2015 and 7.19 percent at September 30, 2014.

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 December 14, 2015 to shareholders of record at the close of business on November 30, 2015.

Hawaii Economy

General economic conditions in Hawaii continued to remain positive during the third quarter of 2015 due to an active construction industry, stable tourism, low unemployment, and a strong real estate market. For the first eight months of 2015, total visitor spending increased 3.1 percent and total visitor arrivals increased 4.1 percent compared to the same period in 2014. The statewide seasonally-adjusted unemployment rate was 3.4 percent in September 2015 compared to 5.1 percent nationally. For the first nine months of 2015, the volume of single-family home sales on Oahu increased 4.9 percent and the volume of condominium sales on Oahu increased 5.1 percent compared with the same period in 2014. The median price of single-family homes on Oahu increased 4.0 percent and the median price of condominiums on Oahu increased 1.4 percent for the first nine months of 2015 compared to the same nine-month period in 2014. As of September 30, 2015, months of inventory of single-family homes and condominiums on Oahu remained low at 3.2 months and 3.5 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its third quarter 2015 financial results today at 2:00 p.m. Eastern Time (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. 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, October 26, 2015. The replay number is 1 (855) 859-2056 in the United States and 1 (404) 537-3406 from international locations. In addition to the toll-free numbers listed above, participants can also call 1 (800) 585-8367 to access the replay. Enter the pass code 56039793 when prompted. A replay will also 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, 2014, 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   Nine Months Ended
September 30,   June 30,   September 30, September 30,
(dollars in thousands, except per share amounts)     2015   2015   2014     2015       2014

For the Period:

       
Operating Results
Net Interest Income $ 97,891 $ 97,782 $ 95,379 $ 292,443 $ 283,024
Provision for Credit Losses - - (2,665 ) - (4,864 )
Total Noninterest Income 43,221 45,925 44,950 141,453 134,199
Total Noninterest Expense 91,888 83,574 81,030 262,377 245,659
Net Income 34,276 41,154 41,769 117,872 121,851
Basic Earnings Per Share 0.79 0.95 0.95 2.72 2.77
Diluted Earnings Per Share 0.79 0.95 0.95 2.71 2.75
Dividends Declared Per Share 0.45 0.45 0.45 1.35 1.35
 
Performance Ratios
Return on Average Assets 0.89 % 1.10 % 1.15 % 1.05 % 1.15 %
Return on Average Shareholders' Equity 12.45 15.33 15.57 14.62 15.53
Efficiency Ratio 1 65.12 58.16 57.74 60.47 58.88
Net Interest Margin 2 2.77 2.81 2.85 2.79 2.86
Dividend Payout Ratio 3 56.96 47.37 47.37 49.63 48.74
Average Shareholders' Equity to Average Assets 7.18 7.16 7.41 7.15 7.38
 
Average Balances
Average Loans and Leases $ 7,545,985 $ 7,300,506 $ 6,488,780 $ 7,301,656 $ 6,290,548
Average Assets 15,220,660 15,038,500 14,372,375 15,069,405 14,221,143
Average Deposits 13,008,890 12,863,274 12,200,654 12,887,019 12,016,485
Average Shareholders' Equity 1,092,592 1,076,467 1,064,589 1,077,828 1,048,924
 
Per Share of Common Stock
Book Value $ 25.34 $ 24.88 $ 24.04 $ 25.34 $ 24.04
Tangible Book Value 24.61 24.15 23.32 24.61 23.32
Market Value
Closing 63.49 66.68 56.81 63.49 56.81
High 69.00 68.10 60.75 69.00 61.73
Low 58.53 58.70 55.55 53.90 53.45
 
September 30, June 30, December 31, September 30,
              2015       2015     2014       2014

As of Period End:

Balance Sheet Totals
Loans and Leases $ 7,689,772 $ 7,428,438 $ 6,897,589 $ 6,606,350
Total Assets 15,164,123 15,248,043 14,787,208 14,510,166
Total Deposits 12,936,962 13,090,695 12,633,089 12,361,441
Other Debt 270,801 170,816 173,912 173,926
Total Shareholders' Equity 1,098,354 1,082,939 1,055,086 1,057,413
 
Asset Quality
Non-Performing Assets $ 29,545 $ 29,450 $ 30,082 $ 33,307
Allowance for Loan and Lease Losses 104,038 106,006 108,688 110,362
Allowance to Loans and Leases Outstanding 1.35 % 1.43 % 1.58 % 1.67 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 4 14.11 % 14.47 % n/a n/a
Tier 1 Capital Ratio 4 14.11 14.47 14.69 % 15.32 %
Total Capital Ratio 4 15.37 15.72 15.94 16.57
Tier 1 Leverage Ratio 4 7.18 7.21 7.13 7.19
Total Shareholders' Equity to Total Assets 7.24 7.10 7.14 7.29
Tangible Common Equity to Tangible Assets 5 7.05 6.91 6.94 7.09
Tangible Common Equity to Risk-Weighted Assets 4, 5 13.78 14.03 14.46 15.23
 
Non-Financial Data
Full-Time Equivalent Employees 2,154 2,166 2,161 2,170
Branches 72 71 74 74
ATMs 455 455 459 459
 
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 Capital ratios as of September 30, 2015 and June 30, 2015 calculated under Basel III rules, which became effective January 1, 2015.

5 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
      September 30,     June 30,     December 31,   September 30,
(dollars in thousands)     2015     2015     2014     2014
Total Shareholders' Equity $ 1,098,354 $ 1,082,939 $ 1,055,086 $ 1,057,413

Less: Goodwill

      31,517         31,517         31,517         31,517  
Tangible Common Equity     $ 1,066,837       $ 1,051,422       $ 1,023,569       $ 1,025,896  
 
Total Assets $ 15,164,123 $ 15,248,043 $ 14,787,208 $ 14,510,166

Less: Goodwill

      31,517         31,517         31,517         31,517  
Tangible Assets     $ 15,132,606       $ 15,216,526       $ 14,755,691       $ 14,478,649  
 

Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements 1

$ 7,740,028 $ 7,495,744 $ 7,077,035 $ 6,737,853
 
Total Shareholders' Equity to Total Assets 7.24 % 7.10 % 7.14 % 7.29 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.05 % 6.91 % 6.94 % 7.09 %
 
Tier 1 Capital Ratio 1 14.11 % 14.47 % 14.69 % 15.32 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 1 13.78 % 14.03 % 14.46 % 15.23 %
 
1 Risk-weighted assets and capital ratios calculated under Basel III rules, which became effective January 1, 2015.
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income Table 3a
    Three Months Ended   Nine Months Ended
September 30,   June 30,   September 30, September 30,
(dollars in thousands, except per share amounts)     2015   2015   2014     2015   2014  
Interest Income  
Interest and Fees on Loans and Leases $ 75,874 $ 73,565 $ 68,089 $ 220,400 $ 197,433
Income on Investment Securities
Available-for-Sale 10,192 10,273 10,286 30,663 31,743
Held-to-Maturity 20,689 22,832 26,067 67,928 80,894
Deposits 2 2 3 7 7
Funds Sold 291 268 176 818 481
Other       312     310     302       924     906  
Total Interest Income       107,360     107,250     104,923       320,740     311,464  
Interest Expense
Deposits 2,410 2,405 2,391 7,183 7,142
Securities Sold Under Agreements to Repurchase 6,307 6,440 6,523 19,118 19,385
Funds Purchased 3 3 3 9 10
Other Debt       749     620     627       1,987     1,903  
Total Interest Expense       9,469     9,468     9,544       28,297     28,440  
Net Interest Income 97,891 97,782 95,379 292,443 283,024
Provision for Credit Losses       -     -     (2,665 )     -     (4,864 )
Net Interest Income After Provision for Credit Losses       97,891     97,782     98,044       292,443     287,888  
Noninterest Income
Trust and Asset Management 11,907 12,355 11,716 36,442 35,573
Mortgage Banking 3,291 3,469 1,646 8,453 5,455
Service Charges on Deposit Accounts 8,669 8,203 9,095 25,409 26,611
Fees, Exchange, and Other Service Charges 13,340 13,352 13,390 39,589 39,699
Investment Securities Gains, Net 24 86 1,858 10,341 6,097
Annuity and Insurance 1,721 1,885 2,348 5,650 6,401
Bank-Owned Life Insurance 1,609 2,088 1,644 5,431 4,765
Other       2,660     4,487     3,253       10,138     9,598  
Total Noninterest Income       43,221     45,925     44,950       141,453     134,199  
Noninterest Expense
Salaries and Benefits 46,576 47,610 45,530 143,966 137,508
Net Occupancy 7,403 8,605 9,334 25,341 28,005
Net Equipment 4,804 4,826 4,473 14,918 13,745
Data Processing 3,920 3,673 3,665 11,366 11,156
Professional Fees 2,258 2,265 1,835 6,857 6,708
FDIC Insurance 2,139 2,068 1,750 6,347 5,881
Other       24,788     14,527     14,443       53,582     42,656  
Total Noninterest Expense       91,888     83,574     81,030       262,377     245,659  
Income Before Provision for Income Taxes 49,224 60,133 61,964 171,519 176,428
Provision for Income Taxes       14,948     18,979     20,195       53,647     54,577  
Net Income     $ 34,276   $ 41,154   $ 41,769     $ 117,872   $ 121,851  
Basic Earnings Per Share $ 0.79 $ 0.95 $ 0.95 $ 2.72 $ 2.77
Diluted Earnings Per Share $ 0.79 $ 0.95 $ 0.95 $ 2.71 $ 2.75
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 1.35 $ 1.35
Basic Weighted Average Shares 43,181,233 43,305,813 43,859,396 43,290,137 44,034,047
Diluted Weighted Average Shares       43,427,730     43,518,349     44,088,553       43,514,898     44,250,033  
 
Bank of Hawaii Corporation and Subsidiaries
Aircraft Impairment     Table 3b
    Three Months Ended
September 30,
(dollars in thousands)     2015
Noninterest Income
Estimated Loss on Pending Sale of Aircraft Lease $ (1,019 )
Noninterest Expense
Estimated Impairment of Residual Value on Aircraft in which Leases have Matured       9,453  
Loss Before Income Tax Benefit (10,472 )
Income Tax Benefit       3,999  
Impact on Net Income     $ (6,473 )
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income Table 4
    Three Months Ended Nine Months Ended
September 30,   June 30,   September 30, September 30,
(dollars in thousands)     2015   2015   2014   2015   2014
Net Income $ 34,276 $ 41,154 $ 41,769 $ 117,872   $ 121,851
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities 7,051 (7,610 ) 403 4,735 15,291
Defined Benefit Plans       219     220       157       659     469
Total Other Comprehensive Income (Loss)       7,270     (7,390 )     560       5,394     15,760
Comprehensive Income     $ 41,546   $ 33,764     $ 42,329     $ 123,266   $ 137,611
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition Table 5
    September 30,   June 30,   December 31,   September 30,
(dollars in thousands)     2015     2015     2014     2014  
Assets
Interest-Bearing Deposits in Other Banks $ 3,609 $ 3,420 $ 2,873 $ 3,883
Funds Sold 274,873 602,598 360,577 377,303
Investment Securities
Available-for-Sale 2,279,722 2,275,361 2,289,190 2,220,913
Held-to-Maturity (Fair Value of $4,181,613; $4,240,732; $4,504,495; and $4,576,396) 4,121,768 4,199,121 4,466,679 4,557,614
Loans Held for Sale 3,222 18,483 5,136 2,382
Loans and Leases 7,689,772 7,428,438 6,897,589 6,606,350
Allowance for Loan and Lease Losses       (104,038 )     (106,006 )     (108,688 )     (110,362 )
Net Loans and Leases       7,585,734       7,322,432       6,788,901       6,495,988  
Total Earning Assets       14,268,928       14,421,415       13,913,356       13,658,083  
Cash and Due from Banks 208,601 150,874 172,126 172,386
Premises and Equipment, Net 108,987 108,439 109,854 107,560
Accrued Interest Receivable 47,512 44,475 44,654 46,641
Foreclosed Real Estate 1,392 1,989 2,311 3,562
Mortgage Servicing Rights 23,301 23,426 24,695 25,559
Goodwill 31,517 31,517 31,517 31,517
Bank-Owned Life Insurance 266,568 265,133 262,807 261,862
Other Assets       207,317       200,775       225,888       202,996  
Total Assets     $ 15,164,123     $ 15,248,043     $ 14,787,208     $ 14,510,166  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,102,713 $ 4,156,847 $ 3,832,943 $ 3,824,544
Interest-Bearing Demand 2,631,542 2,699,517 2,559,570 2,369,434
Savings 5,016,462 5,044,711 4,806,575 4,738,364
Time       1,186,245       1,189,620       1,434,001       1,429,099  
Total Deposits       12,936,962       13,090,695       12,633,089       12,361,441  
Funds Purchased 8,459 8,459 8,459 8,459
Securities Sold Under Agreements to Repurchase 632,138 672,310 688,601 700,203
Other Debt 270,801 170,816 173,912 173,926
Retirement Benefits Payable 54,978 55,181 55,477 35,152
Accrued Interest Payable 5,869 5,254 5,148 6,086
Taxes Payable and Deferred Taxes 25,294 26,244 27,777 42,468
Other Liabilities       131,268       136,145       139,659       125,018  
Total Liabilities       14,065,769       14,165,104       13,732,122       13,452,753  

Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: September 30, 2015 - 57,749,071 / 43,342,940; June 30, 2015 - 57,745,324 / 43,535,020; December 31, 2014 - 57,634,755 / 43,724,208; and September 30, 2014 - 57,633,855 / 43,993,729)

575 575 574 573
Capital Surplus 539,112 536,782 531,932 529,530
Accumulated Other Comprehensive Loss (21,292 ) (28,562 ) (26,686 ) (16,063 )
Retained Earnings 1,293,416 1,278,672 1,234,801 1,213,339

Treasury Stock, at Cost (Shares: September 30, 2015 - 14,406,131; June 30, 2015 - 14,210,304; December 31, 2014 - 13,910,547; and September 30, 2014 - 13,640,126)

      (713,457 )     (704,528 )     (685,535 )     (669,966 )
Total Shareholders' Equity       1,098,354       1,082,939       1,055,086       1,057,413  
Total Liabilities and Shareholders' Equity     $ 15,164,123     $ 15,248,043     $ 14,787,208     $ 14,510,166  
 
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, 2014 43,724,208 $ 574 $ 531,932 $ (26,686 ) $ 1,234,801 $ (685,535 ) $ 1,055,086
Net Income - - - - 117,872 - 117,872
Other Comprehensive Income - - - 5,394 - - 5,394
Share-Based Compensation - - 5,698 - - - 5,698
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 246,851 1 1,482 - (376 ) 11,011 12,118
Common Stock Repurchased (628,119 ) - - - - (38,933 ) (38,933 )
Cash Dividends Declared ($1.35 per share)     -       -     -     -       (58,881 )     -       (58,881 )
Balance as of September 30, 2015     43,342,940     $ 575   $ 539,112   $ (21,292 )   $ 1,293,416     $ (713,457 )   $ 1,098,354  
 
Balance as of December 31, 2013 44,490,385 $ 572 $ 522,505 $ (31,823 ) $ 1,151,754 $ (631,032 ) $ 1,011,976
Net Income - - - - 121,851 - 121,851
Other Comprehensive Income - - - 15,760 - - 15,760
Share-Based Compensation - - 5,831 - - - 5,831
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 314,579 1 1,194 - (318 ) 7,976 8,853
Common Stock Repurchased (811,235 ) - - - - (46,910 ) (46,910 )
Cash Dividends Declared ($1.35 per share)     -       -     -     -       (59,948 )     -       (59,948 )
Balance as of September 30, 2014     43,993,729     $ 573   $ 529,530   $ (16,063 )   $ 1,213,339     $ (669,966 )   $ 1,057,413  
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis Table 7a
    Three Months Ended     Three Months Ended     Three Months Ended
September 30, 2015 June 30, 2015 September 30, 2014
Average   Income/   Yield/ Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)     Balance   Expense   Rate       Balance   Expense   Rate       Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.4 $ - 0.22 % $ 3.5 $ - 0.17 % $ 4.1 $ - 0.24 %
Funds Sold 508.2 0.3 0.22 473.5 0.3 0.22 326.2 0.2 0.21
Investment Securities
Available-for-Sale
Taxable 1,524.4 6.5 1.69 1,558.6 6.5 1.68 1,508.0 6.6 1.75
Non-Taxable 719.4 5.8 3.19 725.8 5.8 3.17 704.0 5.7 3.22
Held-to-Maturity
Taxable 3,953.3 19.1 1.93 4,006.4 21.3 2.12 4,390.2 24.4 2.23
Non-Taxable       247.3     2.4   3.93         248.2     2.4   3.93         250.9     2.5   3.95  
Total Investment Securities       6,444.4     33.8   2.09         6,539.0     36.0   2.20         6,853.1     39.2   2.29  
Loans Held for Sale 13.4 0.1 3.82 11.1 0.1 3.66 2.0 - 4.03
Loans and Leases 1
Commercial and Industrial 1,166.7 9.3 3.15 1,156.3 9.1 3.16 980.8 8.9 3.61
Commercial Mortgage 1,568.2 15.0 3.79 1,499.7 14.4 3.85 1,350.6 13.3 3.89
Construction 124.5 1.5 4.93 126.0 1.5 4.85 126.2 1.3 4.20
Commercial Lease Financing 216.2 1.9 3.50 225.1 2.0 3.47 235.1 2.0 3.33
Residential Mortgage 2,832.4 28.8 4.07 2,736.2 28.3 4.14 2,396.7 25.3 4.22
Home Equity 961.3 8.6 3.58 906.8 8.1 3.60 823.3 8.1 3.92
Automobile 359.2 4.7 5.18 344.4 4.5 5.20 296.6 4.0 5.29
Other 2       317.5     6.1   7.60         306.0     5.7   7.51         279.5     5.2   7.45  
Total Loans and Leases       7,546.0     75.9   4.00         7,300.5     73.6   4.04         6,488.8     68.1   4.18  
Other       37.5     0.3   3.33         51.6     0.3   2.40         71.4     0.3   1.69  
Total Earning Assets 3       14,552.9     110.4   3.02         14,379.2     110.3   3.07         13,745.6     107.8   3.13  
Cash and Due from Banks 131.6 125.8 152.4
Other Assets   536.2     533.5     474.4  
Total Assets $ 15,220.7   $ 15,038.5   $ 14,372.4  
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,622.4 0.2 0.03 $ 2,611.9 0.2 0.03 $ 2,417.4 0.2 0.03
Savings 5,067.8 1.1 0.09 5,023.5 1.1 0.09 4,591.4 1.0 0.09
Time       1,201.3     1.1   0.36         1,256.6     1.1   0.35         1,440.1     1.2   0.34  
Total Interest-Bearing Deposits       8,891.5     2.4   0.11         8,892.0     2.4   0.11         8,448.9     2.4   0.11  
Short-Term Borrowings 8.5 - 0.14 8.5 - 0.14 9.3 - 0.14
Securities Sold Under Agreements to Repurchase 643.3 6.3 3.84 672.2 6.5 3.79 715.6 6.5 3.57
Other Debt       223.2     0.8   1.34         173.9     0.6   1.43         173.8     0.6   1.44  
Total Interest-Bearing Liabilities       9,766.5     9.5   0.38         9,746.6     9.5   0.39         9,347.6     9.5   0.40  
Net Interest Income $ 100.9   $ 100.8   $ 98.3  
Interest Rate Spread 2.64 % 2.68 % 2.73 %
Net Interest Margin 2.77 % 2.81 % 2.85 %
Noninterest-Bearing Demand Deposits 4,117.4 3,971.3 3,751.8
Other Liabilities 244.2 244.1 208.4
Shareholders' Equity   1,092.6     1,076.5     1,064.6  
Total Liabilities and Shareholders' Equity $ 15,220.7   $ 15,038.5   $ 14,372.4  
 
1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $3,035,000, $3,008,000 and $2,873,000 for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014, respectively.

 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7b
    Nine Months Ended  

Nine Months Ended

September 30, 2015 September 30, 2014
Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)     Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.3 $ - 0.27 % $ 4.6 $ - 0.20 %
Funds Sold 488.8 0.8 0.22 301.9 0.5 0.21
Investment Securities
Available-for-Sale
Taxable 1,547.8 19.5 1.68 1,527.2 20.7 1.81
Non-Taxable 722.8 17.2 3.18 694.4 16.9 3.24
Held-to-Maturity
Taxable 4,032.8 63.2 2.09 4,465.2 76.0 2.27
Non-Taxable       248.2     7.3   3.93       251.7     7.5   3.96  
Total Investment Securities       6,551.6     107.2   2.18       6,938.5     121.1   2.33  
Loans Held for Sale 9.2 0.3 3.72 3.3 0.1 4.43
Loans and Leases 1
Commercial and Industrial 1,151.3 27.2 3.16 951.8 24.8 3.48
Commercial Mortgage 1,506.3 43.0 3.82 1,301.3 38.6 3.97
Construction 118.2 4.2 4.75 109.0 3.6 4.35
Commercial Lease Financing 222.4 5.8 3.46 240.6 5.1 2.81
Residential Mortgage 2,734.0 84.6 4.13 2,336.1 75.1 4.29
Home Equity 915.8 24.9 3.63 803.8 23.7 3.94
Automobile 345.1 13.5 5.21 280.3 11.2 5.33
Other 2       308.6     17.3   7.49       267.6     15.3   7.66  
Total Loans and Leases       7,301.7     220.5   4.03       6,290.5     197.4   4.19  
Other       51.6     0.9   2.39       74.1     0.9   1.63  
Total Earning Assets 3       14,406.2     329.7   3.05       13,612.9     320.0   3.14  
Cash and Due from Banks 131.3 144.5
Other Assets   531.9     463.7  
Total Assets $ 15,069.4   $ 14,221.1  
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,604.0 0.6 0.03 $ 2,367.8 0.5 0.03
Savings 5,011.2 3.3 0.09 4,549.4 2.9 0.09
Time       1,278.1     3.3   0.35       1,440.1     3.7   0.35  
Total Interest-Bearing Deposits       8,893.3     7.2   0.11       8,357.3     7.1   0.11  
Short-Term Borrowings 8.5 - 0.14 9.5 - 0.14
Securities Sold Under Agreements to Repurchase 664.4 19.1 3.79 766.4 19.4 3.34
Other Debt       190.5     2.0   1.39       174.6     1.9   1.45  
Total Interest-Bearing Liabilities       9,756.7     28.3   0.38       9,307.8     28.4   0.40  
Net Interest Income $ 301.4   $ 291.6  
Interest Rate Spread 2.67 % 2.74 %
Net Interest Margin 2.79 % 2.86 %
Noninterest-Bearing Demand Deposits 3,993.7 3,659.2
Other Liabilities 241.2 205.2
Shareholders' Equity   1,077.8     1,048.9  
Total Liabilities and Shareholders' Equity $ 15,069.4   $ 14,221.1  
 
1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $8,921,000 and $8,571,000 for the nine months ended September 30, 2015 and September 30, 2014, respectively.

 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8a
    Three Months Ended September 30, 2015
Compared to June 30, 2015  
(dollars in millions)     Volume 1   Rate 1   Total  
Change in Interest Income:    
Investment Securities
Available-for-Sale
Taxable $ (0.1 ) $ 0.1 $ -
Non-Taxable (0.1 ) 0.1 -
Held-to-Maturity
Taxable       (0.3 )     (1.9 )     (2.2 )
Total Investment Securities       (0.5 )     (1.7 )     (2.2 )
Loans and Leases
Commercial and Industrial 0.2 - 0.2
Commercial Mortgage 0.8 (0.2 ) 0.6
Commercial Lease Financing (0.1 ) - (0.1 )
Residential Mortgage 1.0 (0.5 ) 0.5
Home Equity 0.5 - 0.5
Automobile 0.2 - 0.2
Other 2       0.3       0.1       0.4  
Total Loans and Leases       2.9       (0.6 )     2.3  
Other       (0.1 )     0.1       -  
Total Change in Interest Income       2.3       (2.2 )     0.1  
 
Change in Interest Expense:
Securities Sold Under Agreements to Repurchase (0.3 ) 0.1 (0.2 )
Other Debt       0.2       -       0.2  
Total Change in Interest Expense       (0.1 )     0.1       -  
 
Change in Net Interest Income     $ 2.4     $ (2.3 )   $ 0.1  
 
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 8b
    Three Months Ended September 30, 2015
Compared to September 30, 2014
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ 0.1 $ - $ 0.1
Investment Securities
Available-for-Sale
Taxable 0.1 (0.2 ) (0.1 )
Non-Taxable 0.1 - 0.1
Held-to-Maturity
Taxable (2.3 ) (3.0 ) (5.3 )
Non-Taxable       -       (0.1 )     (0.1 )
Total Investment Securities       (2.1 )     (3.3 )     (5.4 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 1.6 (1.2 ) 0.4
Commercial Mortgage 2.1 (0.4 ) 1.7
Construction - 0.2 0.2
Commercial Lease Financing (0.2 ) 0.1 (0.1 )
Residential Mortgage 4.4 (0.9 ) 3.5
Home Equity 1.2 (0.7 ) 0.5
Automobile 0.8 (0.1 ) 0.7
Other 2       0.8       0.1       0.9  
Total Loans and Leases       10.7       (2.9 )     7.8  
Other       (0.2 )     0.2       -  
Total Change in Interest Income       8.6       (6.0 )     2.6  
 
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 - 0.1
Time       (0.2 )     0.1       (0.1 )
Total Interest-Bearing Deposits       (0.1 )     0.1       -  
Securities Sold Under Agreements to Repurchase (0.7 ) 0.5 (0.2 )
Other Debt       0.2       -       0.2  
Total Change in Interest Expense       (0.6 )     0.6       -  
 
Change in Net Interest Income     $ 9.2     $ (6.6 )   $ 2.6  
 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8c
    Nine Months Ended September 30, 2015
Compared to September 30, 2014
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ 0.3 $ - $ 0.3
Investment Securities
Available-for-Sale
Taxable 0.3 (1.5 ) (1.2 )
Non-Taxable 0.7 (0.4 ) 0.3
Held-to-Maturity
Taxable (7.0 ) (5.8 ) (12.8 )
Non-Taxable       (0.1 )     (0.1 )     (0.2 )
Total Investment Securities       (6.1 )     (7.8 )     (13.9 )
Loans Held for Sale 0.2 - 0.2
Loans and Leases
Commercial and Industrial 4.9 (2.5 ) 2.4
Commercial Mortgage 5.9 (1.5 ) 4.4
Construction 0.3 0.3 0.6
Commercial Lease Financing (0.4 ) 1.1 0.7
Residential Mortgage 12.4 (2.9 ) 9.5
Home Equity 3.1 (1.9 ) 1.2
Automobile 2.5 (0.2 ) 2.3
Other 2       2.3       (0.3 )     2.0  
Total Loans and Leases       31.0       (7.9 )     23.1  
Other       (0.3 )     0.3       -  
Total Change in Interest Income       25.1       (15.4 )     9.7  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Savings 0.3 0.1 0.4
Time       (0.4 )     -       (0.4 )
Total Interest-Bearing Deposits       -       0.1       0.1  
Securities Sold Under Agreements to Repurchase (2.8 ) 2.5 (0.3 )
Other Debt       0.2       (0.1 )     0.1  
Total Change in Interest Expense       (2.6 )     2.5       (0.1 )
 
Change in Net Interest Income     $ 27.7     $ (17.9 )   $ 9.8  
 
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits Table 9
    Three Months Ended     Nine Months Ended
September 30,   June 30,   September 30, September 30,
(dollars in thousands)     2015   2015   2014     2015   2014
Salaries $ 28,905 $ 28,214 $ 28,990 $ 85,033   $ 85,448
Incentive Compensation 4,223 4,959 4,242 13,696 12,832
Share-Based Compensation 2,616 2,751 2,226 7,712 6,466
Commission Expense 1,639 1,927 1,283 5,158 3,448
Retirement and Other Benefits 4,064 4,117 4,056 12,912 12,853
Payroll Taxes 2,200 2,278 2,162 8,063 7,909
Medical, Dental, and Life Insurance 2,870 2,449 2,557 8,503 7,902
Separation Expense       59     915     14       2,889     650
Total Salaries and Benefits     $ 46,576   $ 47,610   $ 45,530     $ 143,966   $ 137,508
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances Table 10
  September 30,   June 30,   March 31,   December 31,   September 30,
(dollars in thousands)   2015   2015   2015   2014   2014
Commercial
Commercial and Industrial $ 1,169,817 $ 1,173,259 $ 1,141,408 $ 1,055,243 $ 991,157
Commercial Mortgage 1,622,119 1,528,685 1,477,902 1,437,513 1,373,289
Construction 129,254 118,714 111,381 109,183 132,097
Lease Financing     202,055     222,113     224,419     226,189     232,381
Total Commercial     3,123,245     3,042,771     2,955,110     2,828,128     2,728,924
Consumer
Residential Mortgage 2,875,605 2,787,847 2,699,434 2,571,090 2,444,989
Home Equity 993,817 931,191 884,742 866,688 838,206
Automobile 367,640 352,128 339,686 323,848 306,003
Other 1     329,465     314,501     299,656     307,835     288,228
Total Consumer     4,566,527     4,385,667     4,223,518     4,069,461     3,877,426
Total Loans and Leases   $ 7,689,772   $ 7,428,438   $ 7,178,628   $ 6,897,589   $ 6,606,350
 
 
Deposits                    
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands)   2015   2015   2015   2014   2014
Consumer $ 6,254,862 $ 6,221,691 $ 6,220,391 $ 6,092,929 $ 5,972,435
Commercial 5,397,857 5,524,153 5,444,814 5,163,352 5,070,080
Public and Other     1,284,243     1,344,851     1,314,411     1,376,808     1,318,926
Total Deposits   $ 12,936,962   $ 13,090,695   $ 12,979,616   $ 12,633,089   $ 12,361,441
 

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

 
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More   Table 11
    September 30,   June 30,   March 31,   December 31,   September 30,
(dollars in thousands)     2015     2015     2015     2014     2014  
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 8,532 $ 8,299 $ 8,641 $ 9,088 $ 8,952
Commercial Mortgage       1,058       716       732       745       1,366  
Total Commercial       9,590       9,015       9,373       9,833       10,318  
Consumer
Residential Mortgage 14,749 14,918 14,344 14,841 16,756
Home Equity       3,814       3,528       2,965       3,097       2,671  
Total Consumer       18,563       18,446       17,309       17,938       19,427  
Total Non-Accrual Loans and Leases       28,153       27,461       26,682       27,771       29,745  
Foreclosed Real Estate       1,392       1,989       2,095       2,311       3,562  
Total Non-Performing Assets     $ 29,545     $ 29,450     $ 28,777     $ 30,082     $ 33,307  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial     $ -     $ 750     $ -     $ 2     $ 14  
Total Commercial       -       750       -       2       14  
Consumer
Residential Mortgage 5,060 4,789 3,914 4,506 4,819
Home Equity 1,396 2,395 2,425 2,596 2,816
Automobile 631 323 537 616 612
Other 1       1,058       1,395       1,078       941       842  
Total Consumer       8,145       8,902       7,954       8,659       9,089  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 8,145     $ 9,652     $ 7,954     $ 8,661     $ 9,103  

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

    $ 49,506     $ 48,339     $ 46,639     $ 45,474     $ 45,169  
Total Loans and Leases     $ 7,689,772     $ 7,428,438     $ 7,178,628     $ 6,897,589     $ 6,606,350  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.37 %     0.37 %     0.37 %     0.40 %     0.45 %
 

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

      0.38 %     0.40 %     0.40 %     0.44 %     0.50 %
 

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

      0.31 %     0.32 %     0.34 %     0.38 %     0.42 %
 

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

      0.44 %     0.45 %     0.44 %     0.47 %     0.56 %
 

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

      0.49 %     0.53 %     0.51 %     0.56 %     0.64 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 29,450 $ 28,777 $ 30,082 $ 33,307 $ 34,389
Additions 4,427 1,909 621 1,885 2,565
Reductions
Payments (1,191 ) (1,020 ) (1,427 ) (1,822 ) (2,381 )
Return to Accrual Status (1,748 ) - (187 ) (1,291 ) (704 )
Sales of Foreclosed Real Estate (1,300 ) (83 ) (37 ) (1,480 ) (449 )
Charge-offs/Write-downs       (93 )     (133 )     (275 )     (517 )     (113 )
Total Reductions       (4,332 )     (1,236 )     (1,926 )     (5,110 )     (3,647 )
Balance at End of Quarter     $ 29,545     $ 29,450     $ 28,777     $ 30,082     $ 33,307  
 
1 Comprised of other revolving credit, installment, and lease financing.
 
Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses Table 12
    Three Months Ended   Nine Months Ended
September 30,   June 30,   September 30, September 30,
(dollars in thousands)     2015   2015   2014   2015   2014
Balance at Beginning of Period $ 111,893 $ 113,348 $ 119,725 $ 114,575   $ 121,521
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (160 ) (255 ) (229 ) (650 ) (1,797 )
Lease Financing - - - - (66 )
Consumer
Residential Mortgage - (54 ) (22 ) (613 ) (674 )
Home Equity (634 ) (211 ) (475 ) (1,061 ) (1,379 )
Automobile (1,476 ) (1,237 ) (957 ) (4,141 ) (2,585 )
Other 1       (2,123 )     (1,739 )     (1,978 )     (5,512 )     (5,195 )
Total Loans and Leases Charged-Off       (4,393 )     (3,496 )     (3,661 )     (11,977 )     (11,696 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 426 456 1,177 1,528 4,229
Commercial Mortgage 15 14 14 43 43
Construction 8 8 8 24 21
Lease Financing 55 8 3 131 6
Consumer
Residential Mortgage 282 96 299 720 2,906
Home Equity 693 566 531 2,140 1,433
Automobile 508 396 322 1,398 1,110
Other 1       438       497       496       1,343       1,720  
Total Recoveries on Loans and Leases Previously Charged-Off       2,425       2,041       2,850       7,327       11,468  
Net Loans and Leases Charged-Off (1,968 ) (1,455 ) (811 ) (4,650 ) (228 )
Provision for Credit Losses - - (2,665 ) - (4,864 )
Provision for Unfunded Commitments       185       -       -       185       (180 )
Balance at End of Period 2     $ 110,110     $ 111,893     $ 116,249     $ 110,110     $ 116,249  
 
Components
Allowance for Loan and Lease Losses $ 104,038 $ 106,006 $ 110,362 $ 104,038 $ 110,362
Reserve for Unfunded Commitments       6,072       5,887       5,887       6,072       5,887  
Total Reserve for Credit Losses     $ 110,110     $ 111,893     $ 116,249     $ 110,110     $ 116,249  
 
Average Loans and Leases Outstanding     $ 7,545,985     $ 7,300,506     $ 6,488,780     $ 7,301,656     $ 6,290,548  
 
Ratio of Net Loans and Leases Charged-Off to
Average Loans and Leases Outstanding (annualized) 0.10 % 0.08 % 0.05 % 0.09 % 0.00 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.35 % 1.43 % 1.67 % 1.35 % 1.67 %
 
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 September 30, 2015
Net Interest Income $ 51,732 $ 37,133 $ 4,517 $ 4,509 $ 97,891
Provision for Credit Losses       2,209       (226 )     (20 )     (1,963 )     -  
Net Interest Income After Provision for Credit Losses 49,523 37,359 4,537 6,472 97,891
Noninterest Income 21,206 4,777 14,363 2,875 43,221
Noninterest Expense       (49,963 )     (25,482 )     (14,031 )     (2,412 )     (91,888 )
Income Before Provision for Income Taxes 20,766 16,654 4,869 6,935 49,224
Provision for Income Taxes       (7,352 )     (5,586 )     (1,802 )     (208 )     (14,948 )
Net Income     $ 13,414     $ 11,068     $ 3,067     $ 6,727     $ 34,276  
Total Assets as of September 30, 2015     $ 4,578,333     $ 3,102,549     $ 232,641     $ 7,250,600     $ 15,164,123  
 
 
Three Months Ended September 30, 2014 1
Net Interest Income $ 45,432 $ 31,780 $ 3,864 $ 14,303 $ 95,379
Provision for Credit Losses       1,853       (834 )     (9 )     (3,675 )     (2,665 )
Net Interest Income After Provision for Credit Losses 43,579 32,614 3,873 17,978 98,044
Noninterest Income 20,132 5,818 14,467 4,533 44,950
Noninterest Expense       (48,569 )     (16,410 )     (13,616 )     (2,435 )     (81,030 )
Income Before Provision for Income Taxes 15,142 22,022 4,724 20,076 61,964
Provision for Income Taxes       (5,498 )     (7,599 )     (1,751 )     (5,347 )     (20,195 )
Net Income     $ 9,644     $ 14,423     $ 2,973     $ 14,729     $ 41,769  
Total Assets as of September 30, 2014 1     $ 3,896,841     $ 2,680,761     $ 192,739     $ 7,739,825     $ 14,510,166  
 

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
Nine Months Ended September 30, 2015
Net Interest Income $ 150,631 $ 107,292 $ 13,153 $ 21,367 $ 292,443
Provision for Credit Losses       5,660       (956 )     (36 )     (4,668 )     -  
Net Interest Income After Provision for Credit Losses 144,971 108,248 13,189 26,035 292,443
Noninterest Income 61,123 16,125 44,770 19,435 141,453
Noninterest Expense       (149,461 )     (59,786 )     (43,193 )     (9,937 )     (262,377 )
Income Before Provision for Income Taxes 56,633 64,587 14,766 35,533 171,519
Provision for Income Taxes       (20,097 )     (22,449 )     (5,463 )     (5,638 )     (53,647 )
Net Income     $ 36,536     $ 42,138     $ 9,303     $ 29,895     $ 117,872  
Total Assets as of September 30, 2015     $ 4,578,333     $ 3,102,549     $ 232,641     $ 7,250,600     $ 15,164,123  
 
 
Nine Months Ended September 30, 2014 1
Net Interest Income $ 130,971 $ 86,934 $ 11,098 $ 54,021 $ 283,024
Provision for Credit Losses       2,895       (2,164 )     (303 )     (5,292 )     (4,864 )
Net Interest Income After Provision for Credit Losses 128,076 89,098 11,401 59,313 287,888
Noninterest Income 59,473 17,617 43,228 13,881 134,199
Noninterest Expense       (146,581 )     (49,834 )     (41,379 )     (7,865 )     (245,659 )
Income Before Provision for Income Taxes 40,968 56,881 13,250 65,329 176,428
Provision for Income Taxes       (15,248 )     (19,343 )     (4,912 )     (15,074 )     (54,577 )
Net Income     $ 25,720     $ 37,538     $ 8,338     $ 50,255     $ 121,851  
Total Assets as of September 30, 2014 1     $ 3,896,841     $ 2,680,761     $ 192,739     $ 7,739,825     $ 14,510,166  
 

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
September 30,   June 30,   March 31,   December 31,   September 30,
(dollars in thousands, except per share amounts)     2015       2015       2015       2014       2014
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 75,874 $ 73,565 $ 70,961 $ 69,974 $ 68,089
Income on Investment Securities
Available-for-Sale 10,192 10,273 10,198 10,732 10,286
Held-to-Maturity 20,689 22,832 24,407 24,966 26,067
Deposits 2 2 3 2 3
Funds Sold 291 268 259 192 176
Other     312       310       302       303       302
Total Interest Income     107,360       107,250       106,130       106,169       104,923
Interest Expense
Deposits 2,410 2,405 2,368 2,392 2,391
Securities Sold Under Agreements to Repurchase 6,307 6,440 6,371 6,520 6,523
Funds Purchased 3 3 3 3 3
Other Debt     749       620       618       622       627
Total Interest Expense     9,469       9,468       9,360       9,537       9,544
Net Interest Income 97,891 97,782 96,770 96,632 95,379
Provision for Credit Losses     -       -       -       -       (2,665)
Net Interest Income After Provision for Credit Losses     97,891       97,782       96,770       96,632       98,044
Noninterest Income
Trust and Asset Management 11,907 12,355 12,180 12,225 11,716
Mortgage Banking 3,291 3,469 1,693 2,116 1,646
Service Charges on Deposit Accounts 8,669 8,203 8,537 9,058 9,095
Fees, Exchange, and Other Service Charges 13,340 13,352 12,897 13,702 13,390
Investment Securities Gains, Net 24 86 10,231 1,966 1,858
Annuity and Insurance 1,721 1,885 2,044 1,664 2,348
Bank-Owned Life Insurance 1,609 2,088 1,734 1,874 1,644
Other     2,660       4,487       2,991       3,213       3,253
Total Noninterest Income     43,221       45,925       52,307       45,818       44,950
Noninterest Expense
Salaries and Benefits 46,576 47,610 49,780 45,520 45,530
Net Occupancy 7,403 8,605 9,333 9,291 9,334
Net Equipment 4,804 4,826 5,288 4,734 4,473
Data Processing 3,920 3,673 3,773 3,823 3,665
Professional Fees 2,258 2,265 2,334 3,086 1,835
FDIC Insurance 2,139 2,068 2,140 2,055 1,750
Other     24,788       14,527       14,267       12,731       14,443
Total Noninterest Expense     91,888       83,574       86,915       81,240       81,030
Income Before Provision for Income Taxes 49,224 60,133 62,162 61,210 61,964
Provision for Income Taxes     14,948       18,979       19,720       20,019       20,195
Net Income   $ 34,276     $ 41,154     $ 42,442     $ 41,191     $ 41,769
 
Basic Earnings Per Share $ 0.79 $ 0.95 $ 0.98 $ 0.95 $ 0.95
Diluted Earnings Per Share $ 0.79 $ 0.95 $ 0.97 $ 0.94 $ 0.95
 
Balance Sheet Totals
Loans and Leases $ 7,689,772 $ 7,428,438 $ 7,178,628 $ 6,897,589 $ 6,606,350
Total Assets 15,164,123 15,248,043 15,139,179 14,787,208 14,510,166
Total Deposits 12,936,962 13,090,695 12,979,616 12,633,089 12,361,441
Total Shareholders' Equity 1,098,354 1,082,939 1,075,251 1,055,086 1,057,413
 
Performance Ratios
Return on Average Assets 0.89 % 1.10 % 1.15 % 1.12 % 1.15 %
Return on Average Shareholders' Equity 12.45 15.33 16.18 15.39 15.57
Efficiency Ratio 1 65.12 58.16 58.30 57.03 57.74
Net Interest Margin 2 2.77 2.81 2.81 2.84 2.85
 
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

  Eight Months Ended     Year Ended
($ in millions; jobs in thousands)   August 31, 2015       December 31, 2014     December 31, 2013  
Hawaii Economic Trends          
State General Fund Revenues 1 $ 3,965.0 9.5 % $ 5,535.7 1.6 % $ 5,450.6 3.7 %
General Excise and Use Tax Revenue 1 $ 2,113.8 5.6 % $ 2,979.8 2.5 % $ 2,907.6 2.2 %
Jobs 2 649.3 643.7 629.9
                                       
September 30, December 31,
(spot rates)                     2015     2014       2013  
Unemployment 3
Statewide, seasonally adjusted 3.4 % 4.0 % 4.7 %
 
Oahu 3.4 3.5 3.8
Island of Hawaii 4.3 4.7 5.9
Maui 3.8 3.8 4.7
Kauai 4.2 4.3 5.2
                                       
September 30, December 31,
(percentage change, except months of inventory)               2015     2014     2013       2012  
Housing Trends (Single Family Oahu) 4
Median Home Price 4.0 % 3.8 % 4.8 % 7.8 %
Home Sales Volume (units) 4.9 % (0.8 ) % 4.6 % 6.5 %
Months of Inventory 3.2 2.6 2.7 2.5
                                       
Monthly Visitor Arrivals, Percentage Change
(in thousands)               Not Seasonally Adjusted     from Previous Year  
Tourism 5
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 765.3 6.2
November 30, 2014 637.7 2.2
October 31, 2014 659.8 3.0
September 30, 2014 622.2 4.1
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
December 31, 2013 720.8 (1.8 )
November 30, 2013 624.1 (4.2 )
October 31, 2013 640.3 (0.1 )
September 30, 2013 597.7 0.5
August 31, 2013 748.8 2.5
July 31, 2013 758.0 4.6
June 30, 2013 716.6 5.5
May 31, 2013 637.5 2.4
April 30, 2013 667.0 3.1
March 31, 2013 769.1 7.6
February 28, 2013 675.5 7.8
January 31, 2013 681.9 5.9
 
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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