Market Overview

Bank of Hawaii Corporation 2016 Financial Results

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HONOLULU--(BUSINESS WIRE)--

Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $4.23 for the full year of 2016, up 14.3 percent from diluted earnings per share of $3.70 in 2015. Net income for the year was $181.5 million, up $20.8 million or 12.9 percent from net income of $160.7 million in the previous year. The return on average assets for the full year of 2016 was 1.15 percent compared with 1.06 percent in 2015. The return on average equity for the full year of 2016 was 15.79 percent compared with 14.82 percent in 2015.

The Company's Board of Directors declared a quarterly cash dividend of $0.50 per share on the Company's outstanding shares, an increase of $0.02 per share from the $0.48 per share dividend declared in the prior quarter. The dividend will be payable on March 14, 2017 to shareholders of record at the close of business on February 28, 2017.

"Bank of Hawaii finished 2016 with solid financial performance," said Peter Ho, Chairman, President and CEO. "During the year our loan balances continued to grow and reached $8.9 billion at December 31, 2016. Deposit growth also remained strong during the year, increasing to a record level of $14.3 billion at December 31, 2016. Our net interest margin remained stable due to the positive remixing of our balance sheet and our asset quality, capital and liquidity all remain strong."

Diluted earnings per share were $1.02 for the fourth quarter of 2016, unchanged from $1.02 in the third quarter of 2016 and up from $0.99 in the fourth quarter of 2015. Net income for the fourth quarter of 2016 was $43.5 million, up slightly from the previous quarter and up from $42.8 million in the same quarter last year. The return on average assets for the fourth quarter of 2016 was 1.07 percent, compared with 1.09 percent in the third quarter of 2016 and 1.11 percent in the fourth quarter last year. The return on average equity for the fourth quarter of 2016 was 14.90 percent compared with 14.89 percent in the third quarter of 2016 and 15.41 percent in the fourth quarter last year.

Financial Highlights

Net interest income, on a taxable-equivalent basis, for the full year of 2016 was $429.6 million, an increase of $23.6 million from net interest income of $406.0 million in 2015. Net interest income, on a taxable-equivalent basis, for the fourth quarter of 2016 was $110.1 million, an increase of $3.2 million compared with $106.9 million in the third quarter of 2016 and up $5.4 million compared with $104.7 million in the fourth quarter last year. Analyses of changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin for the full year of 2016 was 2.83 percent, an increase of 2 basis points from the net interest margin of 2.81 percent in 2015. The net interest margin was 2.83 percent in the fourth quarter of 2016, an increase of 3 basis points from the third quarter of 2016 and a decrease of 2 basis points from the fourth quarter last year.

The provision for credit losses for the full year of 2016 was $4.8 million compared with a provision for credit losses of $1.0 million in 2015. The increase was due to the significant growth in loans and leases during the year which was partially offset by continued strong credit metrics. Results for the fourth quarter of 2016 included a provision for credit losses of $3.3 million compared with $2.5 million in the previous quarter and $1.0 million in the same quarter last year.

Noninterest income for the full year of 2016 was $197.3 million compared with noninterest income of $186.2 million in 2015. The increase was primarily the result of higher mortgage banking income and increased gains on the sales of leased assets. Mortgage banking income totaled $19.9 million in 2016 compared with $11.6 million in 2015. Net gains on sales of leased assets were $2.3 million in 2016 compared with a net loss of $0.6 million in 2015. Noninterest income was $46.5 million in the fourth quarter of 2016 compared with $48.1 million in the third quarter of 2016 and $44.8 million in the fourth quarter of 2015.

Noninterest expense for the full year of 2016 was $350.6 million compared with noninterest expense of $348.1 million in 2015. Noninterest expense in 2016 included net gains of $3.7 million on the disposition of real estate and severance expenses of $0.9 million. Noninterest expense in 2015 included an impairment charge of $9.5 million, $3.3 million in severance and $1.6 million for the rollout of chip-enabled debit cards partially offset by net gains of $5.9 million on the disposition of real estate. Adjusted for these items, the increase from the previous year was primarily driven by higher compensation related to business growth and stock price performance and expenses related to strategic initiatives. Noninterest expense was $89.6 million in the fourth quarter of 2016 compared with $87.5 million in the third quarter of 2016 and $85.7 million in the fourth quarter of 2015. Noninterest expense in the fourth quarter of 2016 included expenses of $1.3 million in compensation related to the increase in the stock price during the quarter partially offset by a net gain of $1.0 million on the sale of a branch building. There were no significant noninterest expenses in the third quarter of 2016. Noninterest expense in the fourth quarter of 2015 included net gains of $3.9 million related to the disposal of two branch buildings partially offset by expenses of $1.3 million for the roll-out of chip-enabled debit cards and severance expenses of $0.5 million. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The efficiency ratio for the full year of 2016 was 57.01 percent compared with 59.99 percent during the full year of 2015. The efficiency ratio for the fourth quarter of 2016 was 58.33 percent compared with 57.58 percent in the previous quarter and 58.55 percent in the same quarter last year.

The effective tax rate for the full year of 2016 was 30.10 percent compared with 30.49 percent for the full year of 2015. The effective tax rate for the fourth quarter of 2016 was 28.38 percent compared with 29.84 percent in the previous quarter and 28.23 percent in the same quarter 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 continued to remain strong during the fourth quarter of 2016. Total non-performing assets were $19.8 million at December 31, 2016 compared with $18.7 million at September 30, 2016 and $28.8 million at December 31, 2015. Non-performing assets as a percentage of total loans and leases and foreclosed real estate were 0.22 percent at December 31, 2016 compared with 0.21 percent at September 30, 2016 and 0.37 percent at December 31, 2015.

Accruing loans and leases past due 90 days or more were $7.1 million at December 31, 2016 compared with $5.6 million at September 30, 2016 and $7.6 million at December 31, 2015. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $52.2 million at December 31, 2016 compared with $52.1 million at September 30, 2016 and $49.4 million at December 31, 2015. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net charge-offs for the full year of 2016 were $3.4 million or 0.04 percent of total average loans and leases compared with net charge-offs of $6.8 million or 0.09 percent of total average loans and leases in 2015. Net charge-offs during the fourth quarter of 2016 were $3.0 million or 0.14 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $5.0 million partially offset by recoveries of $1.9 million. Net charge-offs during the third quarter of 2016 were $2.4 million or 0.11 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $4.9 million and recoveries of $2.5 million. Net charge-offs during the fourth quarter of 2015 were $2.2 million or 0.11 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $4.5 million and recoveries of $2.3 million.

The allowance for loan and lease losses was $104.3 million at December 31, 2016, up from $104.0 million at September 30, 2016 and $102.9 million at December 31, 2015. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.17 percent at December 31, 2016, a decrease of 3 basis points from September 30, 2016 and down 14 basis points from December 31, 2015. The decrease in the ratio of the allowance for loan and lease losses to total loans and leases outstanding is due to the strong loan growth and is commensurate with the Company's strong asset quality and the Hawaii economy. The total reserve for unfunded commitments at December 31, 2016 was unchanged from the prior quarter and remained 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 increased to $16.5 billion at December 31, 2016, up from $16.0 billion at September 30, 2016 and $15.5 billion at December 31, 2015. Average total assets were $16.2 billion during the fourth quarter of 2016, up from $15.9 billion during the third quarter of 2016 and $15.3 billion during the fourth quarter of 2015.

The investment portfolio was $6.0 billion at December 31, 2016, down slightly from September 30, 2016 and down from $6.2 billion at December 31, 2015. The investment portfolio remains largely comprised of securities issued by U. S. government agencies and includes $3.8 billion in securities held to maturity and $2.2 billion in securities available for sale.

Total loans and leases increased to $8.9 billion at December 31, 2016, up 2.9 percent from $8.7 billion at September 30, 2016 and up 13.6 percent from $7.9 billion at December 31, 2015. The commercial portfolio increased to $3.6 billion at the end of the fourth quarter of 2016, up 3.7 percent from $3.5 billion at the end of the third quarter of 2016 and up 14.7 percent from $3.2 billion at the end of the fourth quarter last year. Consumer loans increased to $5.3 billion at December 31, 2016, up 2.5 percent from $5.2 billion at the end of the third quarter of 2016 and up 12.8 percent from $4.7 billion at the end of the fourth quarter last year. Average total loans and leases were $8.8 billion during the fourth quarter of 2016, up from $8.5 billion during the previous quarter and $7.8 billion during the same quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits increased to $14.3 billion at December 31, 2016, up 3.7 percent from $13.8 billion at September 30, 2016 and up 8.1 percent from $13.3 billion at December 31, 2015. Commercial deposits increased to $6.1 billion at the end of the fourth quarter of 2016, up 6.2 percent from $5.8 billion at the end of the third quarter of 2016 and up 11.0 percent from $5.5 billion at the end of the fourth quarter last year. Consumer deposits increased to $7.0 billion at December 31, 2016, up 3.2 percent from $6.8 billion at the end of the third quarter of 2016 and up 8.6 percent from $6.4 billion at the end of the fourth quarter last year. Other deposits declined slightly to $1.2 billion at December 31, 2016 compared with $1.3 billion at September 30, 2016 and $1.3 billion at December 31, 2015 due to a reduction in public funds. Average total deposits were $14.0 billion in the fourth quarter of 2016, up from $13.7 in the previous quarter and up from $13.0 billion during the same quarter last year. Deposit balances are summarized in Tables 7a, 7b, and 10.

During the fourth quarter of 2016, the Company repurchased 134.0 thousand shares of common stock at a total cost of $10.4 million under its share repurchase program. The average cost was $77.83 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through December 31, 2016, the Company has repurchased 53.6 million shares and returned over $2.0 billion to shareholders at an average cost of $37.84 per share. Remaining buyback authority under the share repurchase program was $65.0 million at December 31, 2016. From January 3 through January 20, 2017 the Company repurchased an additional 19.5 thousand shares of common stock at an average cost of $88.24 per share repurchased.

Total shareholders' equity was $1.16 billion at December 31, 2016, down slightly from September 30, 2016 and up from $1.12 billion at December 31, 2015. The Tier 1 Capital Ratio was 13.24 percent at December 31, 2016 compared with 13.40 percent at September 30, 2016 and 13.97 percent at December 31, 2015. The Tier 1 Leverage Ratio at December 31, 2016 was 7.21 percent compared with 7.25 percent at September 30, 2016 and 7.26 percent at December 31, 2015.

Hawaii Economy

General economic conditions in Hawaii remained healthy during 2016, led by a strong tourism industry, relatively low unemployment, rising real estate prices, and an active construction industry. For the first eleven months of 2016 total visitor arrivals increased by 3.0 percent and visitor spending increased by 4.1 percent compared to the same period in 2015. The statewide seasonally-adjusted unemployment rate remains low and declined to 2.9 percent in December 2016 compared to 4.7 percent nationally. Real estate prices on Oahu continue to reach new records.

The volume of single-family home sales on Oahu during the year increased 6.5 percent and the volume of condominium sales on Oahu increased 8.4 percent compared with 2015. The median price of single-family homes on Oahu increased 5.0 percent and the median price of condominiums on Oahu increased 8.3 percent compared with sales during 2015. As of December 31, 2016, months of inventory of single-family homes and condominiums on Oahu declined to 2.5 months and 2.6 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its 2016 financial results today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern 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, January 23, 2017. The replay number is 1 (855) 859-2056 in the United States and 1 (404) 537-3406 from international locations. Enter the pass code 47958760 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 do not promise 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     Year Ended
December 31,     September 30,     December 31, December 31,
(dollars in thousands, except per share amounts)     2016       2016       2015       2016       2015

For the Period:

   
Operating Results
Net Interest Income $ 107,093 $ 103,912 $ 101,644 $ 417,579 $ 394,087
Provision for Credit Losses 3,250 2,500 1,000 4,750 1,000
Total Noninterest Income 46,503 48,114 44,766 197,343 186,219
Total Noninterest Expense 89,589 87,532 85,727 350,578 348,104
Net Income 43,513 43,493 42,832 181,461 160,704
Basic Earnings Per Share 1.03 1.02 1.00 4.26 3.72
Diluted Earnings Per Share 1.02 1.02 0.99 4.23 3.70
Dividends Declared Per Share 0.48 0.48 0.45 1.89 1.80
 
Performance Ratios
Return on Average Assets 1.07 % 1.09 % 1.11 % 1.15 % 1.06 %
Return on Average Shareholders' Equity 14.90 14.89 15.41 15.79 14.82
Efficiency Ratio 1 58.33 57.58 58.55 57.01 59.99
Net Interest Margin 2 2.83 2.80 2.85 2.83 2.81
Dividend Payout Ratio 3 46.60 47.06 45.00 44.37 48.39
Average Shareholders' Equity to Average Assets 7.17 7.30 7.19 7.26 7.16
 
Average Balances
Average Loans and Leases $ 8,813,755 $ 8,483,588 $ 7,785,346 $ 8,362,210 $ 7,423,572
Average Assets 16,212,940 15,906,760 15,335,574 15,825,381 15,136,494
Average Deposits 13,997,318 13,687,186 13,038,637 13,619,476 12,925,235
Average Shareholders' Equity 1,161,967 1,161,655 1,102,548 1,149,335 1,084,059
 
Per Share of Common Stock
Book Value $ 27.24 $ 27.24 $ 25.79 $ 27.24 $ 25.79
Tangible Book Value 26.50 26.50 25.06 26.50 25.06
Market Value
Closing 88.69 72.62 62.90 88.69 62.90
High 89.72 73.44 70.07 89.72 70.07
Low 71.73 65.19 60.55 54.55 53.90
 
December 31, September 30, December 31,
                      2016       2016       2015

As of Period End:

Balance Sheet Totals
Loans and Leases $ 8,949,785 $ 8,694,097 $ 7,878,985
Total Assets 16,492,367 16,014,643 15,455,016
Total Deposits 14,320,240 13,808,365 13,251,103
Other Debt 267,938 267,954 245,786
Total Shareholders' Equity 1,161,537 1,163,859 1,116,260
 
Asset Quality
Non-Performing Assets $ 19,761 $ 18,672 $ 28,801
Allowance for Loan and Lease Losses 104,273 104,033 102,880
Allowance to Loans and Leases Outstanding 1.17 % 1.20 % 1.31 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 13.24 % 13.40 % 13.97 %
Tier 1 Capital Ratio 13.24 13.40 13.97
Total Capital Ratio 14.49 14.65 15.22
Tier 1 Leverage Ratio 7.21 7.25 7.26
Total Shareholders' Equity to Total Assets 7.04 7.27 7.22
Tangible Common Equity to Tangible Assets 4 6.86 7.08 7.03
Tangible Common Equity to Risk-Weighted Assets 4 12.81 13.18 13.62
 
Non-Financial Data
Full-Time Equivalent Employees 2,122 2,125 2,164
Branches 69 70 70
ATMs 449 450 456
 

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
    December 31,     September 30,     December 31,
(dollars in thousands)     2016     2016     2015
 
Total Shareholders' Equity $ 1,161,537 $ 1,163,859 $ 1,116,260

Less: Goodwill

      31,517         31,517         31,517  
Tangible Common Equity     $ 1,130,020       $ 1,132,342       $ 1,084,743  
 
Total Assets $ 16,492,367 $ 16,014,643 $ 15,455,016

Less: Goodwill

      31,517         31,517         31,517  
Tangible Assets     $ 16,460,850       $ 15,983,126       $ 15,423,499  
 

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

$ 8,823,485 $ 8,591,440 $ 7,962,484
 
Total Shareholders' Equity to Total Assets 7.04 % 7.27 % 7.22 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.86 % 7.08 % 7.03 %
 
Tier 1 Capital Ratio 13.24 % 13.40 % 13.97 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 12.81 % 13.18 % 13.62 %
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income     Table 3
    Three Months Ended       Year Ended
December 31,     September 30,     December 31, December 31,
(dollars in thousands, except per share amounts)     2016     2016     2015       2016     2015
Interest Income    
Interest and Fees on Loans and Leases $ 86,532 $ 83,489 $ 78,122 $ 333,239 $ 298,522
Income on Investment Securities
Available-for-Sale 10,244 10,313 10,829 41,892 41,492
Held-to-Maturity 19,213 19,315 21,722 79,087 89,650
Deposits 2 1 1 9 8
Funds Sold 795 695 315 2,861 1,133
Other       281         166         381           812       1,305
Total Interest Income       117,067         113,979         111,370           457,900       432,110
Interest Expense
Deposits 3,448 3,232 2,443 12,647 9,626
Securities Sold Under Agreements to Repurchase 5,406 5,713 6,246 23,406 25,364
Funds Purchased 3 3 3 12 12
Other Debt       1,117         1,119         1,034           4,256       3,021
Total Interest Expense       9,974         10,067         9,726           40,321       38,023
Net Interest Income 107,093 103,912 101,644 417,579 394,087
Provision for Credit Losses       3,250         2,500         1,000           4,750       1,000
Net Interest Income After Provision for Credit Losses       103,843         101,412         100,644           412,829       393,087
Noninterest Income
Trust and Asset Management 11,232 11,008 11,243 46,203 47,685
Mortgage Banking 6,256 6,362 3,130 19,895 11,583
Service Charges on Deposit Accounts 8,537 8,524 8,663 33,654 34,072
Fees, Exchange, and Other Service Charges 13,731 14,023 13,764 55,176 53,353
Investment Securities Gains (Losses), Net (337 ) (328 ) (181 ) 10,203 10,160
Annuity and Insurance 1,457 1,653 2,014 7,017 7,664
Bank-Owned Life Insurance 1,551 1,911 1,608 6,561 7,039
Other       4,076         4,961         4,525           18,634       14,663
Total Noninterest Income       46,503         48,114         44,766           197,343       186,219
Noninterest Expense
Salaries and Benefits 50,622 49,725 47,997 201,150 191,963
Net Occupancy 7,581 8,510 4,876 30,252 30,217
Net Equipment 5,191 4,913 5,244 20,578 20,162
Data Processing 3,665 3,620 5,106 15,208 16,472
Professional Fees 2,990 2,396 2,803 10,072 9,660
FDIC Insurance 2,015 2,104 2,322 8,615 8,669
Other       17,525         16,264         17,379           64,703       70,961
Total Noninterest Expense       89,589         87,532         85,727           350,578       348,104
Income Before Provision for Income Taxes 60,757 61,994 59,683 259,594 231,202
Provision for Income Taxes       17,244         18,501         16,851           78,133       70,498
Net Income     $ 43,513       $ 43,493       $ 42,832         $ 181,461     $ 160,704
Basic Earnings Per Share $ 1.03 $ 1.02 $ 1.00 $ 4.26 $ 3.72
Diluted Earnings Per Share $ 1.02 $ 1.02 $ 0.99 $ 4.23 $ 3.70
Dividends Declared Per Share $ 0.48 $ 0.48 $ 0.45 $ 1.89 $ 1.80
Basic Weighted Average Shares 42,386,480 42,543,122 43,003,191 42,644,100 43,217,818
Diluted Weighted Average Shares       42,672,470         42,778,346         43,275,377           42,879,783       43,454,877
 
                     
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income     Table 4
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands)     2016     2016     2015       2016     2015
Net Income $ 43,513 $ 43,493 $ 42,832 $ 181,461 $ 160,704
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities (18,641 ) (5,528 ) (6,860 ) (10,318 ) (2,125 )
Defined Benefit Plans       (453 )       140         4,595           (31 )       5,254  
Total Other Comprehensive Income (Loss)       (19,094 )       (5,388 )       (2,265 )         (10,349 )       3,129  
Comprehensive Income     $ 24,419       $ 38,105       $ 40,567         $ 171,112       $ 163,833  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition     Table 5
    December 31,     September 30,     December 31,
(dollars in thousands)     2016     2016     2015
Assets
Interest-Bearing Deposits in Other Banks $ 3,187 $ 4,181 $ 4,130
Funds Sold 707,343 506,604 592,892
Investment Securities
Available-for-Sale 2,186,041 2,213,482 2,256,818
Held-to-Maturity (Fair Value of $3,827,527; $3,893,542; and $4,006,412) 3,832,997 3,815,915 3,982,736
Loans Held for Sale 62,499 68,066 4,808
Loans and Leases 8,949,785 8,694,097 7,878,985
Allowance for Loan and Lease Losses       (104,273 )       (104,033 )       (102,880 )
Net Loans and Leases       8,845,512         8,590,064         7,776,105  
Total Earning Assets       15,637,579         15,198,312         14,617,489  
Cash and Due from Banks 169,077 127,326 158,699
Premises and Equipment, Net 113,505 110,288 111,199
Accrued Interest Receivable 46,444 46,925 44,719
Foreclosed Real Estate 1,686 1,747 824
Mortgage Servicing Rights 23,663 20,991 23,002
Goodwill 31,517 31,517 31,517
Bank-Owned Life Insurance 274,188 272,637 268,175
Other Assets       194,708         204,900         199,392  
Total Assets     $ 16,492,367       $ 16,014,643       $ 15,455,016  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,772,727 $ 4,437,963 $ 4,286,331
Interest-Bearing Demand 2,934,107 2,777,095 2,761,930
Savings 5,395,699 5,306,880 5,025,191
Time       1,217,707         1,286,427         1,177,651  
Total Deposits       14,320,240         13,808,365         13,251,103  
Funds Purchased 9,616 9,616 7,333
Securities Sold Under Agreements to Repurchase 523,378 551,683 628,857
Other Debt 267,938 267,954 245,786
Retirement Benefits Payable 48,451 47,522 47,374
Accrued Interest Payable 5,334 6,115 5,032
Taxes Payable and Deferred Taxes 21,674 24,922 17,737
Other Liabilities       134,199         134,607         135,534  
Total Liabilities       15,330,830         14,850,784         14,338,756  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: December 31, 2016 - 57,856,672 / 42,635,978; September 30, 2016 - 57,854,843 / 42,733,513; and December 31, 2015 - 57,749,071 / 43,282,153)

576 576 575
Capital Surplus 551,628 549,064 542,041
Accumulated Other Comprehensive Loss (33,906 ) (14,812 ) (23,557 )
Retained Earnings 1,415,440 1,393,231 1,316,260

Treasury Stock, at Cost (Shares: December 31, 2016 - 15,220,694; September 30, 2016 - 15,121,330; and December 31, 2015 - 14,466,918)

      (772,201 )       (764,200 )       (719,059 )
Total Shareholders' Equity       1,161,537         1,163,859         1,116,260  
Total Liabilities and Shareholders' Equity     $ 16,492,367       $ 16,014,643       $ 15,455,016  
 
 
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 - - - - 160,704 - 160,704
Other Comprehensive Income - - - 3,129 - - 3,129
Share-Based Compensation - - 7,689 - - - 7,689
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 401,904 1 2,420 - (878 ) 19,457 21,000
Common Stock Repurchased (843,959 ) - - - - (52,981 ) (52,981 )
Cash Dividends Declared ($1.80 per share)     -         -       -       -         (78,367 )       -         (78,367 )
Balance as of December 31, 2015     43,282,153       $ 575     $ 542,041     $ (23,557 )     $ 1,316,260       $ (719,059 )     $ 1,116,260  
Net Income - - - - 181,461 - 181,461
Other Comprehensive Loss - - - (10,349 ) - - (10,349 )
Share-Based Compensation - - 6,786 - - - 6,786
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 259,985 1 2,801 - (1,124 ) 8,665 10,343
Common Stock Repurchased (906,160 ) - - - - (61,807 ) (61,807 )
Cash Dividends Declared ($1.89 per share)     -         -       -       -         (81,157 )       -         (81,157 )
Balance as of December 31, 2016     42,635,978       $ 576     $ 551,628     $ (33,906 )     $ 1,415,440       $ (772,201 )     $ 1,161,537  
 
 
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
December 31, 2016 September 30, 2016 December 31, 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 $ - 0.10 % $ 4.1 $ - 0.19 % $ 3.8 $ - 0.10 %
Funds Sold 622.8 0.8 0.50 585.9 0.7 0.46 466.3 0.3 0.26
Investment Securities
Available-for-Sale
Taxable 1,533.8 6.7 1.76 1,574.9 6.8 1.72 1,573.3 7.1 1.81
Non-Taxable 668.7 5.4 3.21 687.1 5.4 3.16 718.5 5.7 3.18
Held-to-Maturity
Taxable 3,579.1 17.7 1.97 3,563.8 17.8 1.99 3,827.9 20.2 2.10
Non-Taxable       242.7       2.4     3.89         243.7       2.4     3.90         246.6       2.4     3.92
Total Investment Securities       6,024.3       32.2     2.13         6,069.5       32.4     2.13         6,366.3       35.4     2.22
Loans Held for Sale 39.1 0.3 3.61 57.7 0.5 3.52 7.1 0.1 4.26
Loans and Leases 1
Commercial and Industrial 1,223.6 10.0 3.25 1,192.0 9.8 3.26 1,155.2 9.4 3.22
Commercial Mortgage 1,833.8 17.0 3.68 1,730.2 15.4 3.55 1,653.9 15.5 3.71
Construction 276.0 3.0 4.36 239.4 2.6 4.38 140.9 1.7 4.90
Commercial Lease Financing 204.0 1.1 2.17 195.1 1.2 2.38 204.2 1.8 3.46
Residential Mortgage 3,139.4 30.6 3.90 3,082.9 30.4 3.94 2,895.3 29.2 4.04
Home Equity 1,317.1 11.7 3.54 1,254.4 11.3 3.59 1,027.4 9.3 3.61
Automobile 446.0 5.8 5.14 426.2 5.5 5.15 373.7 4.9 5.19
Other 2       373.9       7.3     7.76         363.4       7.0     7.69         334.7       6.4     7.57
Total Loans and Leases       8,813.8       86.5     3.91         8,483.6       83.2     3.91         7,785.3       78.2     4.00
Other       40.1       0.3     2.80         39.9       0.1     1.66         41.1       0.4     3.71
Total Earning Assets 3       15,544.1       120.1     3.08         15,240.7       116.9     3.06         14,669.9       114.4     3.11
Cash and Due from Banks 131.5 133.2 126.2
Other Assets   537.3   532.9   539.5
Total Assets $ 16,212.9 $ 15,906.8 $ 15,335.6
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,760.5 0.3 0.04 $ 2,770.2 0.2 0.03 $ 2,653.2 0.2 0.03
Savings 5,339.5 1.2 0.09 5,208.3 1.1 0.09 5,028.8 1.1 0.09
Time       1,322.7       2.0     0.60         1,272.6       1.9     0.59         1,178.2       1.1     0.38
Total Interest-Bearing Deposits       9,422.7       3.5     0.15         9,251.1       3.2     0.14         8,860.2       2.4     0.11
Short-Term Borrowings 9.6 - 0.15 8.7 - 0.13 8.1 - 0.14
Securities Sold Under Agreements to Repurchase 533.7 5.4 3.96 556.5 5.7 4.02 630.5 6.3 3.88
Other Debt       267.9       1.1     1.66         268.0       1.1     1.66         306.4       1.0     1.34
Total Interest-Bearing Liabilities       10,233.9       10.0     0.38         10,084.3       10.0     0.39         9,805.2       9.7     0.39
Net Interest Income $ 110.1 $ 106.9 $ 104.7
Interest Rate Spread 2.70 % 2.67 % 2.72 %
Net Interest Margin 2.83 % 2.80 % 2.85 %
Noninterest-Bearing Demand Deposits 4,574.6 4,436.1 4,178.4
Other Liabilities 242.4 224.7 249.5
Shareholders' Equity   1,162.0   1,161.7   1,102.5
Total Liabilities and Shareholders' Equity $ 16,212.9 $ 15,906.8 $ 15,335.6
 

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 $3,034,000, $2,967,000 and $3,016,000 for the three months ended December 31, 2016, September 30, 2016, and December 31, 2015, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis     Table 7b
    Year Ended     Year Ended
December 31, 2016 December 31, 2015
Average     Income/     Yield/ Average     Income/     Yield/
(dollars in millions)     Balance     Expense     Rate       Balance     Expense     Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 4.1 $ - 0.22 % $ 3.4 $ - 0.22 %
Funds Sold 595.9 2.8 0.48 483.1 1.1 0.23
Investment Securities
Available-for-Sale
Taxable 1,579.1 27.7 1.75 1,554.2 26.6 1.71
Non-Taxable 690.6 21.9 3.17 721.7 22.9 3.18
Held-to-Maturity
Taxable 3,615.2 72.9 2.02 3,981.2 83.3 2.09
Non-Taxable       244.1       9.5     3.90         247.8       9.8     3.93
Total Investment Securities       6,129.0       132.0     2.15         6,504.9       142.6     2.19
Loans Held for Sale 32.3 1.2 3.59 8.7 0.3 3.83
Loans and Leases 1
Commercial and Industrial 1,179.9 40.3 3.42 1,152.3 36.6 3.18
Commercial Mortgage 1,735.2 64.5 3.72 1,543.5 58.5 3.79
Construction 224.2 10.0 4.43 123.9 5.9 4.79
Commercial Lease Financing 198.6 4.8 2.40 217.8 7.5 3.46
Residential Mortgage 3,037.0 120.6 3.97 2,774.7 113.9 4.10
Home Equity 1,211.9 43.7 3.61 944.0 34.2 3.63
Automobile 416.8 21.5 5.16 352.3 18.4 5.21
Other 2       358.6       27.7     7.72         315.1       23.7     7.51
Total Loans and Leases       8,362.2       333.1     3.98         7,423.6       298.7     4.02
Other       39.2       0.8     2.07         49.0       1.3     2.67
Total Earning Assets 3       15,162.7       469.9     3.10         14,472.7       444.0     3.07
Cash and Due from Banks 129.0 130.0
Other Assets   533.7   533.8
Total Assets $ 15,825.4 $ 15,136.5
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,757.6 0.9 0.03 $ 2,616.4 0.8 0.03
Savings 5,217.9 4.6 0.09 5,015.6 4.4 0.09
Time       1,254.9       7.1     0.57         1,252.9       4.4     0.35
Total Interest-Bearing Deposits       9,230.4       12.6     0.14         8,884.9       9.6     0.11
Short-Term Borrowings 8.4 - 0.15 8.4 - 0.15
Securities Sold Under Agreements to Repurchase 569.8 23.4 4.11 655.9 25.4 3.87
Other Debt       248.8       4.3     1.71         219.7       3.0     1.37
Total Interest-Bearing Liabilities       10,057.4       40.3     0.40         9,768.9       38.0     0.39
Net Interest Income $ 429.6 $ 406.0
Interest Rate Spread 2.70 % 2.68 %
Net Interest Margin 2.83 % 2.81 %
Noninterest-Bearing Demand Deposits 4,389.1 4,040.3
Other Liabilities 229.6 243.2
Shareholders' Equity   1,149.3   1,084.1
Total Liabilities and Shareholders' Equity $ 15,825.4 $ 15,136.5
 

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 $11,991,000 and $11,937,000 for the year ended December 31, 2016 and December 31, 2015, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8a
    Three Months Ended December 31, 2016
Compared to September 30, 2016
(dollars in millions)     Volume 1     Rate 1     Total
Change in Interest Income:        
Funds Sold $ - $ 0.1 $ 0.1
Investment Securities
Available-for-Sale
Taxable (0.2 ) 0.1 (0.1 )
Non-Taxable (0.1 ) 0.1 -
Held-to-Maturity
Taxable       0.1         (0.2 )       (0.1 )
Total Investment Securities       (0.2 )       -         (0.2 )
Loans Held for Sale (0.2 ) - (0.2 )
Loans and Leases
Commercial and Industrial 0.2 - 0.2
Commercial Mortgage 1.0 0.6 1.6
Construction 0.4 - 0.4
Commercial Lease Financing - (0.1 ) (0.1 )
Residential Mortgage 0.5 (0.3 ) 0.2
Home Equity 0.6 (0.2 ) 0.4
Automobile 0.3 - 0.3
Other 2       0.2         0.1         0.3  
Total Loans and Leases       3.2         0.1         3.3  
Other       0.1         0.1         0.2  
Total Change in Interest Income       2.9         0.3         3.2  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Savings 0.1 - 0.1
Time       0.1         -         0.1  
Total Interest-Bearing Deposits       0.2         0.1         0.3  
Securities Sold Under Agreements to Repurchase       (0.2 )       (0.1 )       (0.3 )
Total Change in Interest Expense       -         -         -  
 
Change in Net Interest Income     $ 2.9       $ 0.3       $ 3.2  
 

1

 

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

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

 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8b
    Three Months Ended December 31, 2016
Compared to December 31, 2015
(dollars in millions)     Volume 1     Rate 1     Total
Change in Interest Income:        
Funds Sold $ 0.1 $ 0.4 $ 0.5
Investment Securities
Available-for-Sale
Taxable (0.2 ) (0.2 ) (0.4 )
Non-Taxable (0.4 ) 0.1 (0.3 )
Held-to-Maturity
Taxable       (1.3 )       (1.2 )       (2.5 )
Total Investment Securities       (1.9 )       (1.3 )       (3.2 )
Loans Held for Sale 0.3 (0.1 ) 0.2
Loans and Leases
Commercial and Industrial 0.5 0.1 0.6
Commercial Mortgage 1.6 (0.1 ) 1.5
Construction 1.5 (0.2 ) 1.3
Commercial Lease Financing - (0.7 ) (0.7 )
Residential Mortgage 2.4 (1.0 ) 1.4
Home Equity 2.6 (0.2 ) 2.4
Automobile 1.0 (0.1 ) 0.9
Other 2       0.7         0.2         0.9  
Total Loans and Leases       10.3         (2.0 )       8.3  
Other       -         (0.1 )       (0.1 )
Total Change in Interest Income       8.8         (3.1 )       5.7  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Savings 0.1 - 0.1
Time       0.2         0.7         0.9  
Total Interest-Bearing Deposits       0.3         0.8         1.1  
Securities Sold Under Agreements to Repurchase (1.0 ) 0.1 (0.9 )
Other Debt       (0.1 )       0.2         0.1  
Total Change in Interest Expense       (0.8 )       1.1         0.3  
 
Change in Net Interest Income     $ 9.6       $ (4.2 )     $ 5.4  
 

1

 

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

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

 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8c
    Year Ended December 31, 2016
Compared to December 31, 2015
(dollars in millions)     Volume 1     Rate 1     Total
Change in Interest Income:        
Funds Sold $ 0.3 $ 1.4 $ 1.7
Investment Securities
Available-for-Sale
Taxable 0.4 0.7 1.1
Non-Taxable (1.0 ) - (1.0 )
Held-to-Maturity
Taxable (7.4 ) (3.0 ) (10.4 )
Non-Taxable       (0.2 )       (0.1 )       (0.3 )
Total Investment Securities       (8.2 )       (2.4 )       (10.6 )
Loans Held for Sale 0.9 - 0.9
Loans and Leases
Commercial and Industrial 0.9 2.8 3.7
Commercial Mortgage 7.1 (1.1 ) 6.0
Construction 4.6 (0.5 ) 4.1
Commercial Lease Financing (0.6 ) (2.1 ) (2.7 )
Residential Mortgage 10.5 (3.8 ) 6.7
Home Equity 9.7 (0.2 ) 9.5
Automobile 3.3 (0.2 ) 3.1
Other 2       3.3         0.7         4.0  
Total Loans and Leases       38.8         (4.4 )       34.4  
Other       (0.2 )       (0.3 )       (0.5 )
Total Change in Interest Income       31.6         (5.7 )       25.9  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.1 0.1
Savings 0.2 - 0.2
Time       -         2.7         2.7  
Total Interest-Bearing Deposits       0.2         2.8         3.0  
Securities Sold Under Agreements to Repurchase (3.5 ) 1.5 (2.0 )
Other Debt       0.5         0.8         1.3  
Total Change in Interest Expense       (2.8 )       5.1         2.3  
 
Change in Net Interest Income     $ 34.4       $ (10.8 )     $ 23.6  
 

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
Salaries and Benefits     Table 9
    Three Months Ended       Year Ended
December 31,     September 30,     December 31, December 31,
(dollars in thousands)     2016     2016     2015       2016     2015
Salaries $ 29,382 $ 29,401 $ 29,356 $ 116,721     $ 114,389
Incentive Compensation 5,784 5,743 4,971 23,409 18,667
Share-Based Compensation 4,126 2,968 2,678 12,150 10,390
Commission Expense 1,955 2,051 1,375 7,514 6,533
Retirement and Other Benefits 4,350 3,866 4,056 17,262 16,968
Payroll Taxes 2,044 2,224 2,032 10,133 10,095
Medical, Dental, and Life Insurance 2,908 3,366 3,077 13,038 11,580
Separation Expense       73       106       452         923       3,341
Total Salaries and Benefits     $ 50,622     $ 49,725     $ 47,997       $ 201,150     $ 191,963
 
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances     Table 10
    December 31,     September 30,     June 30,     March 31,     December 31,
(dollars in thousands)     2016     2016     2016     2016     2015
Commercial
Commercial and Industrial $ 1,249,791 $ 1,217,849 $ 1,174,879 $ 1,180,341 $ 1,115,168
Commercial Mortgage 1,889,551 1,807,190 1,712,271 1,687,199 1,677,147
Construction 270,018 263,079 226,062 192,909 156,660
Lease Financing       208,332       201,436       192,630       195,804       204,877
Total Commercial       3,617,692       3,489,554       3,305,842       3,256,253       3,153,852
Consumer
Residential Mortgage 3,163,073 3,098,936 3,032,981 2,929,388 2,925,605
Home Equity 1,334,163 1,295,993 1,213,154 1,131,796 1,069,400
Automobile 454,333 437,659 417,017 399,825 381,735
Other 1       380,524       371,955       362,475       348,348       348,393
Total Consumer       5,332,093       5,204,543       5,025,627       4,809,357       4,725,133
Total Loans and Leases     $ 8,949,785     $ 8,694,097     $ 8,331,469     $ 8,065,610     $ 7,878,985
 
 
Deposits                              
December 31, September 30, June 30, March 31, December 31,
(dollars in thousands)     2016     2016     2016     2016     2015
Consumer $ 6,997,482 $ 6,781,371 $ 6,618,164 $ 6,568,651 $ 6,445,510
Commercial 6,110,189 5,751,184 5,697,490 5,678,987 5,502,739
Public and Other       1,212,569       1,275,810       1,328,153       1,241,254       1,302,854
Total Deposits     $ 14,320,240     $ 13,808,365     $ 13,643,807     $ 13,488,892     $ 13,251,103
 

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
    December 31,     September 30,     June 30,     March 31,     December 31,
(dollars in thousands)     2016     2016     2016     2016     2015
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 151 $ 201 $ 269 $ 666 $ 5,829
Commercial Mortgage       997         1,023         1,194         3,401         3,469  
Total Commercial       1,148         1,224         1,463         4,067         9,298  
Consumer
Residential Mortgage 13,780 12,735 9,979 13,719 14,598
Home Equity       3,147         2,966         3,110         2,501         4,081  
Total Consumer       16,927         15,701         13,089         16,220         18,679  
Total Non-Accrual Loans and Leases       18,075         16,925         14,552         20,287         27,977  
Foreclosed Real Estate       1,686         1,747         1,728         1,728         824  
Total Non-Performing Assets     $ 19,761       $ 18,672       $ 16,280       $ 22,015       $ 28,801  
 
Accruing Loans and Leases Past Due 90 Days or More
Consumer
Residential Mortgage $ 3,127 $ 2,583 $ 5,640 $ 4,219 $ 4,453
Home Equity 1,457 1,210 1,128 2,096 1,710
Automobile 894 578 464 524 315
Other 1       1,592         1,273         1,518         1,099         1,096  
Total Consumer       7,070         5,644         8,750         7,938         7,574  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 7,070       $ 5,644       $ 8,750       $ 7,938       $ 7,574  
Restructured Loans on Accrual Status
and Not Past Due 90 Days or More     $ 52,208       $ 52,095       $ 52,173       $ 50,707       $ 49,430  
Total Loans and Leases     $ 8,949,785       $ 8,694,097       $ 8,331,469       $ 8,065,610       $ 7,878,985  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.20 %       0.19 %       0.17 %       0.25 %       0.36 %
 

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

      0.22 %       0.21 %       0.20 %       0.27 %       0.37 %
 

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

      0.03 %       0.04 %       0.04 %       0.12 %       0.29 %
 

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

      0.35 %       0.34 %       0.29 %       0.37 %       0.41 %
 

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 %       0.28 %       0.30 %       0.37 %       0.46 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 18,672 $ 16,280 $ 22,015 $ 28,801 $ 29,545
Additions 2,142 3,730 1,300 4,002 2,353
Reductions
Payments (252 ) (501 ) (3,401 ) (6,012 ) (2,473 )
Return to Accrual Status (653 ) (701 ) (3,560 ) (4,272 ) (24 )
Sales of Foreclosed Real Estate (61 ) - - (248 ) (458 )
Charge-offs/Write-downs       (87 )       (136 )       (74 )       (256 )       (142 )
Total Reductions       (1,053 )       (1,338 )       (7,035 )       (10,788 )       (3,097 )
Balance at End of Quarter     $ 19,761       $ 18,672       $ 16,280       $ 22,015       $ 28,801  
 

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       Year Ended
December 31,     September 30,     December 31, December 31,
(dollars in thousands)     2016     2016     2015       2016     2015
Balance at Beginning of Period $ 110,605 $ 110,504 $ 110,110 $ 108,952     $ 114,575
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (195 ) (209 ) (304 ) (865 ) (954 )
Consumer
Residential Mortgage (335 ) (104 ) - (723 ) (613 )
Home Equity (256 ) (222 ) (269 ) (1,104 ) (1,330 )
Automobile (1,720 ) (1,703 ) (1,719 ) (6,355 ) (5,860 )
Other 1       (2,445 )       (2,678 )       (2,170 )         (9,462 )       (7,682 )
Total Loans and Leases Charged-Off       (4,951 )       (4,916 )       (4,462 )         (18,509 )       (16,439 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 506 282 420 8,058 1,948
Commercial Mortgage 11 14 18 53 61
Construction - - 8 23 32
Lease Financing 1 - 1 3 132
Consumer
Residential Mortgage 154 517 577 1,151 1,297
Home Equity 323 618 349 1,776 2,489
Automobile 459 615 519 2,207 1,917
Other 1       487         471         412           1,881         1,755  
Total Recoveries on Loans and Leases Previously Charged-Off       1,941         2,517         2,304           15,152         9,631  
Net Loans and Leases Charged-Off (3,010 ) (2,399 ) (2,158 ) (3,357 ) (6,808 )
Provision for Credit Losses 3,250 2,500 1,000 4,750 1,000
Provision for Unfunded Commitments       -         -         -           500         185  
Balance at End of Period 2     $ 110,845       $ 110,605       $ 108,952         $ 110,845       $ 108,952  
 
Components
Allowance for Loan and Lease Losses $ 104,273 $ 104,033 $ 102,880 $ 104,273 $ 102,880
Reserve for Unfunded Commitments       6,572         6,572         6,072           6,572         6,072  
Total Reserve for Credit Losses     $ 110,845       $ 110,605       $ 108,952         $ 110,845       $ 108,952  
 
Average Loans and Leases Outstanding     $ 8,813,755       $ 8,483,588       $ 7,785,346         $ 8,362,210       $ 7,423,572  
 
Ratio of Net Loans and Leases Charged-Off to
Average Loans and Leases Outstanding (annualized) 0.14 % 0.11 % 0.11 % 0.04 % 0.09 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.17 % 1.20 % 1.31 % 1.17 % 1.31 %
 

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 December 31, 2016
Net Interest Income $ 63,169 $ 40,968 $ 6,196 $ (3,240 ) $ 107,093
Provision for Credit Losses       3,285         (270 )       (5 )       240         3,250  
Net Interest Income After Provision for Credit Losses 59,884 41,238 6,201 (3,480 ) 103,843
Noninterest Income 24,460 5,952 13,764 2,327 46,503
Noninterest Expense       (52,998 )       (17,926 )       (14,996 )       (3,669 )       (89,589 )
Income Before Provision for Income Taxes 31,346 29,264 4,969 (4,822 ) 60,757
Provision for Income Taxes       (11,109 )       (10,330 )       (1,839 )       6,034         (17,244 )
Net Income     $ 20,237       $ 18,934       $ 3,130       $ 1,212       $ 43,513  
Total Assets as of December 31, 2016     $ 5,342,078       $ 3,565,912       $ 280,410       $ 7,303,967       $ 16,492,367  
 
 
Three Months Ended December 31, 2015 1
Net Interest Income $ 51,628 $ 36,652 $ 5,341 $ 8,023 $ 101,644
Provision for Credit Losses       2,373         (209 )       (7 )       (1,157 )       1,000  
Net Interest Income After Provision for Credit Losses 49,255 36,861 5,348 9,180 100,644
Noninterest Income 21,268 5,774 14,065 3,659 44,766
Noninterest Expense       (50,111 )       (17,261 )       (14,659 )       (3,696 )       (85,727 )
Income Before Provision for Income Taxes 20,412 25,374 4,754 9,143 59,683
Provision for Income Taxes       (7,233 )       (8,985 )       (1,759 )       1,126         (16,851 )
Net Income     $ 13,179       $ 16,389       $ 2,995       $ 10,269       $ 42,832  
Total Assets as of December 31, 2015 1     $ 4,680,888       $ 3,099,175       $ 274,469       $ 7,400,484       $ 15,455,016  
 

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
Year Ended December 31, 2016
Net Interest Income $ 242,967 $ 156,080 $ 24,714 $ (6,182 ) $ 417,579
Provision for Credit Losses       10,700         (7,322 )       (23 )       1,395         4,750  
Net Interest Income After Provision for Credit Losses 232,267 163,402 24,737 (7,577 ) 412,829
Noninterest Income 91,824 26,967 57,396 21,156 197,343
Noninterest Expense       (208,389 )       (70,405 )       (59,782 )       (12,002 )       (350,578 )
Income Before Provision for Income Taxes 115,702 119,964 22,351 1,577 259,594
Provision for Income Taxes       (41,067 )       (42,667 )       (8,270 )       13,871         (78,133 )
Net Income     $ 74,635       $ 77,297       $ 14,081       $ 15,448       $ 181,461  
Total Assets as of December 31, 2016     $ 5,342,078       $ 3,565,912       $ 280,410       $ 7,303,967       $ 16,492,367  
 
 
Year Ended December 31, 2015 1
Net Interest Income $ 202,259 $ 143,944 $ 18,494 $ 29,390 $ 394,087
Provision for Credit Losses       8,033         (1,165 )       (43 )       (5,825 )       1,000  
Net Interest Income After Provision for Credit Losses 194,226 145,109 18,537 35,215 393,087
Noninterest Income 82,391 22,191 58,835 22,802 186,219
Noninterest Expense       (199,572 )       (77,500 )       (57,852 )       (13,180 )       (348,104 )
Income Before Provision for Income Taxes 77,045 89,800 19,520 44,837 231,202
Provision for Income Taxes       (27,330 )       (31,375 )       (7,222 )       (4,571 )       (70,498 )
Net Income     $ 49,715       $ 58,425       $ 12,298       $ 40,266       $ 160,704  
Total Assets as of December 31, 2015 1     $ 4,680,888       $ 3,099,175       $ 274,469       $ 7,400,484       $ 15,455,016  
 

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
December 31,     September 30,     June 30,     March 31,     December 31,
(dollars in thousands, except per share amounts)     2016       2016       2016       2016       2015
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 86,532 $ 83,489 $ 82,323 $ 80,895 $ 78,122
Income on Investment Securities
Available-for-Sale 10,244 10,313 10,521 10,814 10,829
Held-to-Maturity 19,213 19,315 20,168 20,391 21,722
Deposits 2 1 2 4 1
Funds Sold 795 695 618 753 315
Other       281           166           153           212           381  
Total Interest Income       117,067           113,979           113,785           113,069           111,370  
Interest Expense
Deposits 3,448 3,232 3,081 2,886 2,443
Securities Sold Under Agreements to Repurchase 5,406 5,713 6,134 6,153 6,246
Funds Purchased 3 3 3 3 3
Other Debt       1,117           1,119           1,017           1,003           1,034  
Total Interest Expense       9,974           10,067           10,235           10,045           9,726  
Net Interest Income 107,093 103,912 103,550 103,024 101,644
Provision for Credit Losses       3,250           2,500           1,000           (2,000 )         1,000  
Net Interest Income After Provision for Credit Losses       103,843           101,412           102,550           105,024           100,644  
Noninterest Income
Trust and Asset Management 11,232 11,008 12,707 11,256 11,243
Mortgage Banking 6,256 6,362 4,088 3,189 3,130
Service Charges on Deposit Accounts 8,537 8,524 8,150 8,443 8,663
Fees, Exchange, and Other Service Charges 13,731 14,023 13,978 13,444 13,764
Investment Securities Gains (Losses), Net (337 ) (328 ) (312 ) 11,180 (181 )
Annuity and Insurance 1,457 1,653 2,006 1,901 2,014
Bank-Owned Life Insurance 1,551 1,911 1,551 1,548 1,608
Other       4,076           4,961           4,351           5,246           4,525  
Total Noninterest Income       46,503           48,114           46,519           56,207           44,766  
Noninterest Expense
Salaries and Benefits 50,622 49,725 50,289 50,514 47,997
Net Occupancy 7,581 8,510 7,158 7,003 4,876
Net Equipment 5,191 4,913 5,065 5,409 5,244
Data Processing 3,665 3,620 3,972 3,951 5,106
Professional Fees 2,990 2,396 2,047 2,639 2,803
FDIC Insurance 2,015 2,104 2,144 2,352 2,322
Other       17,525           16,264           15,396           15,518           17,379  
Total Noninterest Expense       89,589           87,532           86,071           87,386           85,727  
Income Before Provision for Income Taxes 60,757 61,994 62,998 73,845 59,683
Provision for Income Taxes       17,244           18,501           18,753           23,635           16,851  
Net Income     $ 43,513         $ 43,493         $ 44,245         $ 50,210         $ 42,832  
 
Basic Earnings Per Share $ 1.03 $ 1.02 $ 1.04 $ 1.17 $ 1.00
Diluted Earnings Per Share $ 1.02 $ 1.02 $ 1.03 $ 1.16 $ 0.99
 
Balance Sheet Totals
Loans and Leases $ 8,949,785 $ 8,694,097 $ 8,331,469 $ 8,065,610 $ 7,878,985
Total Assets 16,492,367 16,014,643 15,860,901 15,654,695 15,455,016
Total Deposits 14,320,240 13,808,365 13,643,807 13,488,892 13,251,103
Total Shareholders' Equity 1,161,537 1,163,859 1,157,219 1,138,753 1,116,260
 
Performance Ratios
Return on Average Assets 1.07 % 1.09 % 1.14 % 1.30 % 1.11 %
Return on Average Shareholders' Equity 14.90 14.89 15.56 17.88 15.41
Efficiency Ratio 1 58.33 57.58 57.35 54.88 58.55
Net Interest Margin 2 2.83 2.80 2.85 2.86 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
    Eleven Months Ended     Year Ended
($ in millions; jobs in thousands)     November 30, 2016       December 31, 2015     December 31, 2014
Hawaii Economic Trends            

State General Fund Revenues 1

$ 5,706.4 3.8 % $ 5,998.6 8.4 % $ 5,535.7 1.6 %

General Excise and Use Tax Revenue 1

$ 2,960.6 2.6 % $ 3,141.5 5.4 % $ 2,979.8 2.5 %
Jobs 2 676.2 658.8 643.7
                                                     
December 31, December 31,
(spot rates)                             2016       2015     2014  
Unemployment 3
Statewide, seasonally adjusted 2.9 % 3.2 % 4.0 %
 
Oahu 2.4 2.7 3.5
Island of Hawaii 3.1 3.7 4.7
Maui 2.7 3.1 3.8
Kauai 2.8 3.5 4.3
                                                     
December 31,
(percentage change, except months of inventory)                     2016     2015       2014     2013  
Housing Trends (Single Family Oahu) 4
Median Home Price 5.0 % 3.7 % 3.8 % 4.8 %
Home Sales Volume (units) 6.5 % 5.2 % (0.8 ) % 4.6 %
Months of Inventory 2.5 2.6 2.6 2.7
                                                     
Monthly Visitor Arrivals, Percentage Change
(in thousands)                     Not Seasonally Adjusted       from Previous Year  
Tourism 5
November 30, 2016 696.9 4.7
October 31, 2016 717.5 4.3
September 30, 2016 666.6 3.0
August 31, 2016 780.7 3.1
July 31, 2016 835.4 2.1
June 30, 2016 800.3 4.2
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 665.9 4.4
October 31, 2015 687.7 4.0
September 30, 2015 647.2 3.9
August 31, 2015 757.5 3.1
July 31, 2015 818.5 5.9
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
or
Investor/Analyst Inquiries
Cindy Wyrick, 808-694-8430
Cindy.Wyrick@boh.com

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