Bank of Hawaii Corporation 2003 Financial Results
HONOLULU--(BUSINESS WIRE)--Jan. 26, 2004--Bank of Hawaii Corporation (NYSE:BOH)
- 2003 Diluted Earnings Per Share Increase to $2.21, Up 30% From 2002
- 2003 Net Income $135.2 Million, Up 12% From 2002
- Board of Directors Declares Dividend of $0.30 Per Share
Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share for 2003 of $2.21, up $0.51 or 30.0 percent from diluted earnings per share of $1.70 in 2002. Net income for the year was $135.2 million, up $14.0 million or 11.6 percent from $121.2 million in the previous year. The return on average assets in 2003 was 1.44 percent, up from 1.22 percent in 2002. The return on average equity for the year was 15.02 percent, up from 10.24 percent in 2002.
"Our positive financial results for 2003 reflect the hard work and focus of our employees, and I'm proud of their accomplishments," said Michael E. O'Neill, Chairman and CEO. "Last year marked the final phase of our ambitious three-year strategic plan which began in 2001, and I'm pleased to report that we have exceeded all of our key goals. Entering 2004, Hawaii's economy continues its strong pace, and we believe our company is ready to build on its successes. We look forward to continuing the momentum as we prepare to execute our next three-year plan that will guide us through 2006."
Diluted earnings per share for the fourth quarter of 2003 were $0.66, up $0.22 or 50.0 percent from $0.44 per diluted share for the same period last year. Net income in the fourth quarter was $38.7 million, up 33.8 percent from net income of $28.9 million in the fourth quarter last year. The return on average assets for the fourth quarter of 2003 was 1.66 percent, up from 1.53 percent in the previous quarter and up from 1.20 percent in the fourth quarter of 2002. The return on average equity was 18.59 percent during the quarter, up from 16.69 percent in the third quarter of 2003 and up significantly from 10.72 percent in the same quarter last year.
Financial Highlights
Net interest income for the fourth quarter of 2003 was $93.4 million, up $2.3 million from net interest income of $91.1 million in the third quarter of 2003 and up $3.2 million from $90.2 million in the same quarter last year. The increase in net interest income from the previous quarter was largely due to higher yields on investment securities. The increase in net interest income from the fourth quarter of 2002 was primarily due to lower interest rates on deposits and a decline in short-term borrowings. An analysis of the change in net interest income is included in Table 6.
The net interest margin was 4.35 percent for the fourth quarter of 2003, a 20 basis point increase from 4.15 percent in the previous quarter and a 30 basis point increase from 4.05 percent in the fourth quarter of 2002. The net interest margin for the full year of 2003 was 4.23 percent, a 24 basis point increase from 3.99 percent in 2002.
The Company did not recognize a provision for loan and lease losses during the fourth quarter of 2003 and has not recorded a provision for the last six quarters. The allowance for loan and lease losses was reduced $3.6 million from September 30, 2003, which equaled the amount of net charge-offs for the fourth quarter.
Non-interest income was $49.4 million for the quarter, a decrease of $4.4 million or 8.1 percent compared to non-interest income of $53.8 million in the third quarter of 2003. The decrease was primarily due to reduced gains on sales of mortgage loans and lower commercial loan prepayment penalties during the fourth quarter. Non-interest income was down $0.9 million or 1.8 percent from non-interest income of $50.4 million in the fourth quarter of 2002 largely due to a decline in gains on sales of mortgage loans.
Non-interest expense was $83.4 million in the fourth quarter of 2003, down $5.5 million or 6.2 percent from $88.9 million in the previous quarter and down $13.3 million or 13.8 percent from $96.7 million in the same quarter last year. Non-interest expense for the third quarter of 2003 and the fourth quarter of 2002 included $4.4 million and $7.1 million, respectively, in systems replacement costs. The fourth quarter of 2002 also included $0.4 million in net restructuring costs. Excluding these costs, non-interest expense was down $1.1 million compared to the third quarter of 2003. The decrease was primarily due to a gain on the sale of foreclosed property in the fourth quarter and the third quarter donation to the Bank of Hawaii Charitable Foundation, partially offset by increased salaries and benefits related to employee incentives. An analysis of salary and benefit expenses is included in Table 7. Excluding systems replacement and net restructuring costs, non-interest expense decreased $5.9 million or 6.6 percent from the same quarter last year largely due to cost savings associated with the systems replacement project.
The efficiency ratio for the full year of 2003 was 63.4 percent. Excluding systems replacement and net restructuring costs, the efficiency ratio for 2003 was 59.5 percent, a significant improvement compared to 62.1 percent in the previous year. The efficiency ratio for the fourth quarter of 2003 was 58.4 percent compared to 63.5 percent, excluding systems replacement and net restructuring costs, in the fourth quarter last year.
The Company's business segments are defined as Retail Banking, Commercial Banking, Investment Services Group, and Treasury and Other Corporate. Results are determined based on the Company's internal financial management reporting process and organizational structure. Previously reported results have been reclassified to conform to current methodologies. Business segment performance details are summarized in Tables 11a and 11b.
Asset Quality
Bank of Hawaii Corporation's strong credit quality continued to improve during the fourth quarter of 2003. Non-performing assets were $31.7 million at the end of the quarter, a decrease of $8.4 million, or 20.9 percent compared to non-performing assets of $40.1 million at the end of the previous quarter. Contributing to the improvement in non-performing assets was the fourth quarter 2003 sale of a $3.7 million foreclosed property. Non-performing assets declined $22.7 million, or 41.7 percent compared to $54.4 million at the end of the fourth quarter last year. At December 31, 2003 the ratio of non-performing assets to total loans and foreclosed real estate was 0.55 percent compared with 0.72 percent at September 30, 2003 and 1.01 percent at December 31, 2002.
Non-accrual loans were $27.3 million at December 31, 2003, a reduction of $4.1 million, or 13.1 percent, from $31.4 million at September 30, 2003 and down $17.7 million, or 39.3 percent, from $45.0 million at December 31, 2002. Non-accrual loans as a percentage of total loans were 0.47 percent at December 31, 2003, down from 0.56 percent at the end of the previous quarter and down from 0.84 percent at the end of the comparable quarter last year.
Net charge-offs during the fourth quarter of 2003 were $3.6 million, or 0.26 percent (annualized) of total average loans, down from $5.3 million, or 0.38 percent (annualized) of total average loans in the third quarter of 2003. Net charge-offs in the fourth quarter of 2003 were comprised of $6.9 million in charge-offs partially offset by recoveries of $3.3 million. Net charge-offs during the fourth quarter of 2002 were $11.6 million, or 0.88 percent (annualized) of total average loans. Net charge-offs for the full year of 2003 were $13.8 million, or 0.25 percent of total average loans, a decrease of 50.2 percent from net charge-offs of $27.7 million, or 0.51 percent of total average loans in 2002.
The allowance for loan and lease losses was $129.1 million at December 31, 2003. The ratio of the allowance for loan and lease losses to total loans was 2.24 percent at December 31, 2003 down from 2.38 percent at September 30, 2003 and down from 2.67 percent at December 31, 2002.
Concentrations of credit exposure to selected components of the portfolio are summarized in Table 8.
Other Financial Highlights
Total assets were $9.5 billion at December 31, 2003, up from total assets of $9.4 billion at September 30, 2003 and essentially flat compared with total assets of $9.5 billion at December 31, 2002. Total loans were $5.8 billion at December 31, 2003, up from total loans of $5.6 billion at September 30, 2003 and up from total loans of $5.4 billion at December 31, 2002. Total deposits at December 31, 2003 were $7.3 billion, up $231 million from September 30, 2003 and up $413 million from December 31, 2002. The increase in deposits was primarily due to continued growth in demand and savings deposits.
During the fourth quarter of 2003, Bank of Hawaii Corporation repurchased 1.6 million shares of common stock at a total cost of $64.2 million under the share repurchase program. The average cost per share was $40.27 during the quarter. From the beginning of the share repurchase program in July 2001 through December 31, 2003, the Company had repurchased a total of 29.8 million shares and returned a total of $855.0 million to the shareholders at an average cost of $28.68 per share. Through January 23, 2004, the Company repurchased an additional 0.3 million shares of common stock at a cost of $42.79 per share. Remaining buyback authority was $133.2 million at January 23, 2004.
The Company's capital and liquidity remain strong. At December 31, 2003 the Tier 1 leverage ratio was 8.43 percent compared to 8.52 percent at September 30, 2003 and 10.34 percent at December 31, 2002.
The Company's Board of Directors has declared a quarterly cash dividend of $0.30 per share on the Company's outstanding shares. The dividend will be payable on March 12, 2004 to shareholders of record at the close of business on March 1, 2004.
Economic Update
During the fourth quarter of 2003, Hawaii's economy continued to outperform the national average. Hawaii's 4.0 percent fourth quarter unemployment rate, employment growth rate of 4.5 percent (persons), and job growth rate of 2.0 percent (payrolls) ranked among the top five states nationwide. Travel volumes continued to grow at 3-4 percent overall during the fourth quarter, recovering from SARS effects in the second quarter of 2003. Tourism is expected to reach record volumes for domestic travelers during 2003, and an all-time high for overall visitor days (arrivals times stay length) for the year. International travel prospects were enhanced during the fourth quarter by the strengthening yen against the US dollar. Home sales reached record high volumes with record high prices during the quarter. Construction spending, up 40 percent over the last four years, headed into the fourth quarter of 2003 running ahead of prior year volumes 4-5 percent. For more economic information, visit the Company's web site http://www.boh.com/econ/.
Business and Earnings Outlook -- Plan for 2004 to 2006
In 2001, the Company announced a three-year plan designed to refocus on maximizing shareholder value over time, which continues to be our governing objective. That plan was successfully completed in 2003. The new three-year plan for 2004-2006 continues to build on the winning strategy of that plan. There are five key elements of the new plan: 1) accelerate revenue growth in island markets; 2) better integrate our business segments; 3) develop our management teams; 4) improve efficiency; and 5) maintain a discipline of dependable risk and capital management. Bank of Hawaii Corporation currently estimates that its net income for 2004 should be approximately $157 million. Based on current conditions, the Company does not expect to record a provision for loan and lease losses in 2004. However, the actual amount of the provision for loan and lease losses depends on determinations of credit risk that are made near the end of each quarter. Earnings per share and return on equity projections continue to be dependent upon the terms and timing of share repurchases. A summary of the Company's financial targets for 2004-2006 are included in Table 13.
Conference Call Information
The Company will review its 2003 financial results and discuss the new 2004-2006 plan today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern Time). The presentation will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation's web site, www.boh.com. The conference call number is 800-299-7635 in the United States or 617-786-2901 for international callers. No confirmation code is required to access the call. A replay will be available for one week beginning at 10:00 a.m. Hawaii Time (3:00 p.m. Eastern Time) on Monday, January 26, 2004 by calling 888-286-8010 in the United States or 617-801-6888 for international callers and entering the number 54443887 when prompted. A replay of the presentation will also be available via the Investor Relations link of the Company's web site.
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.
This news release contains forward-looking statements concerning, among other things, the economic environment in our service area, the expected level of loan loss provisioning, anticipated savings of our systems replacement project, the effect of our new three-year plan, and anticipated dividends, revenues and expenses during 2004 and beyond. We believe the assumptions underlying our forward-looking statements are reasonable. However, any of the assumptions could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons, including, but not limited to: 1) unanticipated changes in business and economic conditions, the competitive environment, fiscal and monetary policies, or legislation in Hawaii and the other markets we serve; 2) changes in our credit quality or risk profile which may increase or decrease the required level of allowance for loan and lease losses; 3) changes in market interest rates that may affect our credit markets and ability to maintain our net interest margin; 4) changes to the amount and timing of our proposed equity repurchases; 5) inability to achieve expected benefits of our business process changes due to adverse changes in implementation processes or costs, operational savings, or timing; 6) real or threatened acts of war or terrorist activity affecting business conditions; and 7) adverse weather and other natural conditions impacting our and our customers' operations. We do not undertake any obligation to update forward-looking statements to reflect later events or circumstances.
Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited) Table 1
----------------------------------------------------------------------
(dollars in thousands except per
share amounts)
Three Months Ended Year Ended
Earnings Highlights and December 31, December 31,
Performance Ratios 2003 2002 (1) 2003 2002 (1)
---------------------------- -----------------------------------------
Net Income $38,673 $28,908 $135,195 $121,180
Basic Earnings Per Share 0.70 0.45 2.32 1.75
Diluted Earnings Per Share 0.66 0.44 2.21 1.70
Cash Dividends 16,770 12,193 50,589 50,635
Return on Average Assets 1.66% 1.20% 1.44% 1.22%
Return on Average Equity 18.59% 10.72% 15.02% 10.24%
Net Interest Margin 4.35% 4.05% 4.23% 3.99%
Efficiency Ratio 58.41% 68.80% 63.38% 64.94%
Efficiency Ratio excluding
ITSRP and Restructuring
Costs 58.41% 63.51% 59.51% 62.13%
----------------------------------------------------------------------
Statement of Condition Highlights and December 31,
Performance Ratios 2003 2002
------------------------------------- ----------------------
Total Assets $9,461,647 $9,516,418
Net Loans 5,628,095 5,216,151
Total Deposits 7,332,779 6,920,161
Total Shareholders' Equity 793,132 1,015,759
Book Value Per Common Share $14.44 $16.12
Allowance / Loans and Leases
Outstanding 2.24% 2.67%
Average Equity / Average
Assets 9.60% 11.88%
Employees (FTE) 2,702 2,891
Branches and offices 89 93
Market Price Per Share of Common
Stock for the Quarter Ended:
Closing $42.20 $30.39
High $42.99 $31.05
Low $33.69 $25.40
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
----------------------------------------------------------------------
Three Months Ended Year Ended
(dollars in thousands December 31, December 31,
except per share amounts) 2003 2002 (1) 2003 2002 (1)
----------------------------------------------------------------------
Interest Income
Interest and Fees on
Loans and Leases $80,351 $85,945 $334,793 $366,366
Income on Investment
Securities - Held to
Maturity 7,183 3,122 18,956 16,774
Income on Investment
Securities - Available
for Sale 19,032 24,088 77,793 104,261
Deposits 1,169 3,578 4,816 20,020
Funds Sold 85 834 1,919 3,503
Other 1,007 1,312 4,244 5,614
----------------------------------------------------------------------
Total Interest Income 108,827 118,879 442,521 516,538
Interest Expense
Deposits 9,433 17,657 47,473 84,348
Security Repurchase
Agreements 1,359 4,585 7,939 30,173
Funds Purchased 249 255 944 1,030
Short-Term Borrowings 17 217 92 1,489
Long-Term Debt 4,417 5,947 20,131 29,267
----------------------------------------------------------------------
Total Interest Expense 15,475 28,661 76,579 146,307
----------------------------------------------------------------------
Net Interest Income 93,352 90,218 365,942 370,231
Provision for Loan and
Lease Losses - - - 11,616
----------------------------------------------------------------------
Net Interest Income After
Provision for Loan and
Lease Losses 93,352 90,218 365,942 358,615
Non-Interest Income
Trust and Asset
Management 12,759 13,085 50,996 55,733
Mortgage Banking 3,324 4,398 15,556 18,866
Service Charges on
Deposit Accounts 9,442 8,326 35,938 32,617
Fees, Exchange, and
Other Service Charges 13,725 12,963 56,221 51,594
Investment Securities
Gains (Losses) (20) 612 1,789 615
Insurance 3,597 3,099 13,680 10,938
Other 6,610 7,872 24,540 27,972
----------------------------------------------------------------------
Total Non-Interest Income 49,437 50,355 198,720 198,335
Non-Interest Expense
Salaries and Benefits 46,409 44,734 186,280 186,563
Net Occupancy Expense 9,933 10,638 38,980 39,149
Net Equipment Expense 7,395 11,077 33,652 41,253
Restructuring and Other
Related Costs - 385 - 2,364
Information Technology
Systems Replacement
Project - 7,052 21,871 13,628
Other 19,667 22,827 77,092 86,292
----------------------------------------------------------------------
Total Non-Interest Expense 83,404 96,713 357,875 369,249
----------------------------------------------------------------------
Income Before Income Taxes 59,385 43,860 206,787 187,701
Provision for Income Taxes 20,712 14,952 71,592 66,521
----------------------------------------------------------------------
Net Income $38,673 $28,908 $135,195 $121,180
======================================================================
Basic Earnings Per Share $0.70 $0.45 $2.32 $1.75
Diluted Earnings Per Share $0.66 $0.44 $2.21 $1.70
Dividends Declared Per
Share $0.30 $0.00 $0.87 $0.73
Basic Weighted Average
Shares 55,374,874 64,154,477 58,338,566 69,385,745
Diluted Weighted Average
Shares 58,570,941 66,378,208 61,085,567 71,447,333
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition (Unaudited) Table 3
----------------------------------------------------------------------
December 31, December 31,
(dollars in thousands) 2003 2002
----------------------------------------------------------------------
Assets
Interest-Bearing Deposits $154,735 $549,978
Investment Securities - Held to Maturity
(Market Value of $720,699 and $236,016) 727,233 229,720
Investment Securities - Available for Sale 1,991,116 2,287,201
Funds Sold - 195,000
Loans Held for Sale 9,211 40,118
Loans 5,757,175 5,359,004
Allowance for Loan and Lease Losses (129,080) (142,853)
----------------------------------------------------------------------
Net Loans 5,628,095 5,216,151
----------------------------------------------------------------------
Total Earning Assets 8,510,390 8,518,168
Cash and Non-Interest Bearing Deposits 363,495 374,352
Premises and Equipment 160,005 176,969
Customers' Acceptance Liability 1,707 2,680
Accrued Interest Receivable 32,672 36,722
Foreclosed Real Estate 4,377 9,434
Mortgage Servicing Rights 22,178 28,820
Goodwill 36,216 36,216
Other Assets 330,607 333,057
----------------------------------------------------------------------
Total Assets $9,461,647 $9,516,418
======================================================================
Liabilities
Deposits
Non-Interest Bearing Demand $1,933,928 $1,719,633
Interest Bearing Demand 1,356,330 1,171,832
Savings 2,833,379 2,535,219
Time 1,209,142 1,493,477
----------------------------------------------------------------------
Total Deposits 7,332,779 6,920,161
Securities Sold Under Agreements to
Repurchase 472,757 735,621
Funds Purchased 109,090 64,467
Short-Term Borrowings 12,690 33,420
Current Maturities of Long-Term Debt 96,505 114,781
Banker's Acceptances Outstanding 1,707 2,680
Retirement Benefits Payable 61,841 61,385
Accrued Interest Payable 7,483 13,731
Taxes Payable 207,101 196,813
Other Liabilities 138,999 82,596
Long-Term Debt 227,563 275,004
----------------------------------------------------------------------
Total Liabilities 8,668,515 8,500,659
Shareholders' Equity
Common Stock ($.01 par value); authorized
500,000,000 shares;
issued / outstanding: December 2003 -
81,647,729 / 54,928,480,
December 2002 - 81,294,730 / 63,015,442 807 806
Capital Surplus 391,701 372,192
Accumulated Other Comprehensive Income (Loss) (5,711) 11,659
Retained Earnings 1,199,077 1,115,910
Deferred Stock Grants (8,309) (1,424)
Treasury Stock, at Cost (Shares: December
2003 - 26,719,249, December 2002 -
18,279,288) (784,433) (483,384)
----------------------------------------------------------------------
Total Shareholders' Equity 793,132 1,015,759
----------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $9,461,647 $9,516,418
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited) Table 4
----------------------------------------------------------------------
Accum.
Other
Compre-
hensive
Common Capital Income
(dollars in thousands) Total Stock Surplus (Loss)
----------------------------------------------------------------------
Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659
Comprehensive Income:
Net Income 135,195 - - -
Other Comprehensive Income, Net
of Tax:
Change in Unrealized Gains
and Losses on Investment
Securities (16,434) - - (16,434)
Pension Liability
Adjustment (936) - - (936)
Total Comprehensive Income
Common Stock Issued:
38,928 Retirement Savings Plan 1,370 - 526 -
1,213,303 Stock Option Plan 28,712 - 5,380 -
94,511 Dividend Reinvestment Plan 3,292 - 1,237 -
8,482 Directors' Restricted
Shares and Deferred
Compensation Plan 48 1 286 -
328,200 Employees' Restricted
Shares 6,693 - 12,080 -
Treasury Stock Purchased (9,762,079
shares) (329,978) - - -
Cash Dividends Paid (50,589) - - -
----------------------------------------------------------------------
Balance at December 31, 2003 $793,132 $807 $391,701 $(5,711)
======================================================================
Balance at December 31, 2001 $1,247,012 $806 $367,672 $22,761
Comprehensive Income:
Net Income 121,180 - - -
Other Comprehensive Income, Net
of Tax:
Change in Unrealized Gains
and Losses on Investment
Securities 4,237 - - 4,237
Foreign Currency
Translation Adjustment (582) - - (582)
Pension Liability
Adjustment (14,757) - - (14,757)
Total Comprehensive Income
Common Stock Issued:
43,449 Profit Sharing Plan 1,240 - 288 -
1,581,876 Stock Option Plan 32,279 - 5,352 -
101,796 Dividend Reinvestment Plan 2,893 - 656 -
4,792 Directors' Restricted
Shares and Deferred
Compensation Plan 20 - 141 -
(81,600)Employees' Restricted
Shares 5,089 - (1,917) -
Treasury Stock Purchased
(11,838,800 shares) (332,217) - - -
Cash Dividends Paid (50,635) - - -
----------------------------------------------------------------------
Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659
======================================================================
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31, 2002 $1,115,910 $(1,424) $(483,384)
Comprehensive Income:
Net Income 135,195 - - $135,195
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities - - - (16,434)
Pension Liability
Adjustment - - - (936)
---------
Total Comprehensive Income $117,825
=========
Common Stock Issued:
38,928 Retirement Savings
Plan - - 844
1,213,303 Stock Option Plan (1,439) (1,498) 26,269
94,511 Dividend Reinvestment
Plan - - 2,055
8,482 Directors' Restricted
Shares and Deferred
Compensation Plan - - (239)
328,200 Employees' Restricted
Shares - (5,387) -
Treasury Stock Purchased
(9,762,079 shares) - - (329,978)
Cash Dividends Paid (50,589) - -
-------------------------------------------------------------
Balance at December 31, 2003 $1,199,077 $(8,309) $(784,433)
=============================================================
Balance at December 31, 2001 $1,055,424 $(7,637) $(192,014)
Comprehensive Income:
Net Income 121,180 - - $121,180
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities - - - 4,237
Foreign Currency
Translation
Adjustment - - - (582)
Pension Liability
Adjustment - - - (14,757)
---------
Total Comprehensive Income $110,078
=========
Common Stock Issued:
43,449 Profit Sharing Plan - - 952
1,581,876 Stock Option Plan (10,057) (793) 37,777
101,796 Dividend Reinvestment
Plan (2) - 2,239
4,792 Directors' Restricted
Shares and Deferred
Compensation Plan - - (121)
(81,600)Employees' Restricted
Shares - 7,006 -
Treasury Stock Purchased
(11,838,800 shares) - - (332,217)
Cash Dividends Paid (50,635) - -
-------------------------------------------------------------
Balance at December 31, 2002 $1,115,910 $(1,424) $(483,384)
=============================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable
Equivalent Basis (Unaudited) Table 5a
----------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 2003 September 30, 2003
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $218.6 $1.2 2.12% $224.7 $1.2 2.08%
Funds Sold 34.3 0.1 0.99 102.4 0.3 0.97
Investment Securities
Held to Maturity 742.1 7.2 3.89 675.1 6.4 3.82
Available for Sale 1,898.6 19.0 4.01 2,090.6 16.5 3.15
Loans Held for Sale 13.9 0.2 6.21 52.2 0.7 5.45
Loans and Lease
Financing
Commercial and
Industrial 858.2 10.6 4.90 862.8 10.8 4.95
Construction 99.2 1.1 4.30 87.8 0.9 4.26
Commercial Mortgage 627.4 8.9 5.62 670.6 9.4 5.56
Residential Mortgage 2,336.3 34.5 5.90 2,298.8 36.2 6.30
Installment 598.1 13.4 8.89 558.6 12.8 9.09
Home Equity 453.0 5.6 4.89 448.1 5.6 4.99
Purchased Home Equity 104.7 0.6 2.24 132.6 0.7 2.20
Lease Financing 494.0 5.5 4.44 487.2 5.6 4.52
----------------------------------------------------------------------
Total Loans and Lease
Financing 5,570.9 80.2 5.73 5,546.5 82.0 5.89
Other 76.8 1.0 5.20 76.1 1.0 5.38
----------------------------------------------------------------------
Total Earning Assets 8,555.2 108.9 5.07 8,767.6 108.1 4.91
Cash and Non-Interest
Bearing Deposits 323.5 333.2
Other Assets 379.1 399.2
-------- --------
Total Assets $9,257.8 $9,500.0
======== ========
Interest Bearing
Liabilities
Interest Bearing
Deposits
Demand $1,293.8 $0.5 0.16% $1,245.8 $0.5 0.15%
Savings 2,786.6 3.2 0.46 2,754.6 3.4 0.49
Time 1,227.9 5.7 1.83 1,285.7 6.4 1.97
----------------------------------------------------------------------
Total Interest Bearing
Deposits 5,308.3 9.4 0.71 5,286.1 10.3 0.77
Short-Term Borrowings 608.0 1.7 1.06 827.8 2.3 1.08
Long-Term Debt 324.2 4.4 5.41 325.7 4.4 5.40
----------------------------------------------------------------------
Total Interest Bearing
Liabilities 6,240.5 15.5 0.98 6,439.6 17.0 1.04
----------------------------------------------------------------------
Net Interest Income $93.4 $91.1
====== ======
Interest Rate Spread 4.09% 3.87%
Net Interest Margin 4.35% 4.15%
Non-Interest Bearing
Demand Deposits 1,836.4 1,844.4
Other Liabilities 355.7 344.1
Shareholders' Equity 825.2 871.9
-------- --------
Total Liabilities and
Shareholders' Equity $9,257.8 $9,500.0
======== ========
Three Months Ended
December 31, 2002 (1)
Average Income/ Yield/
(dollars in millions) Balance Expense Rate
---------------------------------------------------------------------
Earning Assets
Interest Bearing Deposits $796.6 $3.6 1.78%
Funds Sold 234.5 0.8 1.42
Investment Securities
Held to Maturity 253.8 3.2 4.98
Available for Sale 2,273.3 24.1 4.24
Loans Held for Sale 38.9 0.6 5.88
Loans and Lease Financing
Commercial and Industrial 881.7 11.3 5.07
Construction 131.5 1.8 5.30
Commercial Mortgage 610.5 9.9 6.40
Residential Mortgage 2,212.7 38.5 6.97
Installment 443.3 11.7 10.53
Home Equity 422.1 5.8 5.50
Purchased Home Equity 10.1 - -
Lease Financing 498.5 6.3 5.03
---------------------------------------------------------------------
Total Loans and Lease Financing 5,210.4 85.3 6.52
Other 78.7 1.3 6.62
---------------------------------------------------------------------
Total Earning Assets 8,886.2 118.9 5.33
Cash and Non-Interest Bearing Deposits 305.2
Other Assets 363.4
--------
Total Assets $9,554.8
========
Interest Bearing Liabilities
Interest Bearing Deposits
Demand $1,105.1 $1.1 0.39%
Savings 2,468.2 6.4 1.03
Time 1,538.2 10.2 2.63
---------------------------------------------------------------------
Total Interest Bearing Deposits 5,111.5 17.7 1.37
Short-Term Borrowings 1,053.5 5.1 1.90
Long-Term Debt 389.9 5.9 6.05
---------------------------------------------------------------------
Total Interest Bearing Liabilities 6,554.9 28.7 1.73
---------------------------------------------------------------------
Net Interest Income $90.2
======
Interest Rate Spread 3.60%
Net Interest Margin 4.05%
Non-Interest Bearing Demand Deposits 1,601.0
Other Liabilities 329.3
Shareholders' Equity 1,069.6
--------
Total Liabilities and Shareholders'
Equity $9,554.8
========
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest
Rates - Taxable Equivalent Basis (Unaudited) Table 5b
----------------------------------------------------------------------
Year Ended Year Ended
December 31, 2003 December 31, 2002 (1)
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $227.3 $4.8 2.12% $1,100.0 $20.0 1.82%
Funds Sold 162.9 1.9 1.18 213.8 3.5 1.64
Investment Securities
Held to Maturity 488.0 19.1 3.92 311.7 17.0 5.47
Available for Sale 2,142.4 77.8 3.63 2,028.9 104.3 5.14
Loans Held for Sale 39.5 2.2 5.48 120.2 8.0 6.65
Loans and Lease
Financing
Commercial and
Industrial 860.3 41.9 4.87 1,024.1 52.0 5.08
Construction 96.3 4.4 4.56 151.5 8.3 5.45
Commercial Mortgage 644.8 37.4 5.81 598.7 40.0 6.68
Residential Mortgage 2,295.0 145.6 6.34 2,334.4 164.3 7.04
Installment 548.8 52.6 9.59 408.3 45.1 11.05
Home Equity 444.6 22.5 5.05 393.4 22.9 5.81
Purchased Home Equity 144.7 5.9 4.10 2.5 - -
Lease Financing 489.9 22.3 4.55 498.4 25.8 5.17
----------------------------------------------------------------------
Total Loans and Lease
Financing 5,524.4 332.6 6.02 5,411.3 358.4 6.62
Other 75.7 4.3 5.61 91.5 5.6 6.14
----------------------------------------------------------------------
Total Earning Assets 8,660.2 442.7 5.11 9,277.4 516.8 5.57
Cash and Non-Interest
Bearing Deposits 328.4 313.2
Other Assets 388.9 370.6
-------- --------
Total Assets $9,377.5 $9,961.2
======== ========
Interest Bearing
Liabilities
Interest Bearing
Deposits
Demand $1,215.7 $2.5 0.20% $1,014.7 $4.3 0.42%
Savings 2,723.9 15.7 0.58 2,263.4 29.4 1.30
Time 1,352.3 29.3 2.17 1,765.5 50.6 2.87
----------------------------------------------------------------------
Total Interest Bearing
Deposits 5,291.9 47.5 0.90 5,043.6 84.3 1.67
Short-Term Borrowings 724.2 9.0 1.24 1,390.2 32.7 2.35
Long-Term Debt 352.7 20.1 5.71 471.3 29.3 6.21
----------------------------------------------------------------------
Total Interest Bearing
Liabilities 6,368.8 76.6 1.20 6,905.1 146.3 2.12
----------------------------------------------------------------------
Net Interest Income $366.1 $370.5
====== ======
Interest Rate Spread 3.91% 3.45%
Net Interest Margin 4.23% 3.99%
Non-Interest Bearing
Demand Deposits 1,753.9 1,556.3
Other Liabilities 354.7 316.3
Shareholders' Equity 900.1 1,183.5
-------- --------
Total Liabilities and
Shareholders' Equity $9,377.5 $9,961.2
======== ========
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income -
Tax Equivalent Basis (Unaudited) Table 6
---------------------------------------------------------------------
Year Ended December 31, 2003
Compared to 2002 (2)
(dollars in millions) Volume(1) Rate(1) Total
---------------------------------------------------------------------
Change in Interest Income:
Interest Bearing Deposits $(18.0) $2.8 $(15.2)
Funds Sold (0.7) (0.9) (1.6)
Investment Securities
Held to Maturity 7.8 (5.7) 2.1
Available for Sale 5.6 (32.1) (26.5)
Loans Held for Sale (4.6) (1.2) (5.8)
Loans and Lease Financing
Commercial and Industrial (8.0) (2.1) (10.1)
Construction (2.7) (1.2) (3.9)
Commercial Mortgage 2.8 (5.4) (2.6)
Residential Mortgage (2.7) (16.0) (18.7)
Installment 14.0 (6.5) 7.5
Home Equity 2.8 (3.2) (0.4)
Purchased Home Equity 0.1 5.8 5.9
Lease Financing (0.4) (3.1) (3.5)
---------------------------------------------------------------------
Total Loans and Lease Financing 5.9 (31.7) (25.8)
Other (0.9) (0.4) (1.3)
---------------------------------------------------------------------
Total Change in Interest Income (4.9) (69.2) (74.1)
---------------------------------------------------------------------
Change in Interest Expense:
Interest Bearing Deposits
Demand 0.7 (2.5) (1.8)
Savings 5.1 (18.8) (13.7)
Time (10.4) (10.9) (21.3)
---------------------------------------------------------------------
Total Interest Bearing Deposits (4.6) (32.2) (36.8)
Short-Term Borrowings (11.9) (11.8) (23.7)
Long-Term Debt (6.9) (2.3) (9.2)
---------------------------------------------------------------------
Total Change in Interest Expense (23.4) (46.3) (69.7)
---------------------------------------------------------------------
Change in Net Interest Income $18.5 $(22.9) $(4.4)
=====================================================================
(1) The changes for each category of interest income and expense are
divided between the portion of changes attributable to the
variance in volume or rate for that category.
(2) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits (Unaudited) Table 7
---------------------------------------------------------------------
Three Months Ended Year Ended
December 31, December 31,
(dollars in thousands) 2003 2002 2003 2002
---------------------------------------------------------------------
Salaries $27,972 $30,300 $114,376 $123,601
Incentive Compensation 5,130 3,333 15,747 12,871
Stock Based Compensation 5,128 1,330 9,215 4,553
Commission Expense 1,833 2,809 10,797 9,113
Retirement and Other Benefits 882 2,115 14,353 14,134
Payroll Taxes 2,009 2,159 10,454 10,894
Medical, Dental, and Life
Insurance 1,981 1,998 7,371 8,008
Separation Expense 1,474 690 3,967 3,389
---------------------------------------------------------------------
Total Salaries and Benefits $46,409 $44,734 $186,280 $186,563
=====================================================================
Bank of Hawaii Corporation and Subsidiaries
Loan Portfolio Balances (Unaudited) Table 8
----------------------------------------------------------------------
December September June March December
31, 30, 30, 31, 31,
(dollars in millions) 2003 2003 2003 2003 2002
----------------------------------------------------------------------
Domestic
Commercial
Commercial and
Industrial $816.2 $843.9 $808.5 $824.9 $875.0
Commercial
Mortgage 639.4 629.2 689.7 691.7 591.1
Construction 101.3 92.3 83.6 86.7 127.5
Lease Financing 435.8 426.9 416.9 430.4 427.3
----------------------------------------------------------------------
Total Commercial 1,992.7 1,992.3 1,998.7 2,033.7 2,020.9
Consumer
Residential
Mortgage 2,320.5 2,329.4 2,222.0 2,305.3 2,131.4
Home Equity 467.0 446.0 450.3 439.1 428.2
Purchased Home
Equity 212.5 109.8 145.6 170.9 185.8
Other Consumer 658.8 582.9 554.8 518.5 493.3
Lease Financing 35.3 35.3 34.0 33.8 34.5
----------------------------------------------------------------------
Total Consumer 3,694.1 3,503.4 3,406.7 3,467.6 3,273.2
----------------------------------------------------------------------
Total Domestic 5,686.8 5,495.7 5,405.4 5,501.3 5,294.1
----------------------------------------------------------------------
Foreign 70.4 74.7 66.5 64.1 64.9
----------------------------------------------------------------------
Total Loans $5,757.2 $5,570.4 $5,471.9 $5,565.4 $5,359.0
======================================================================
Selected Concentrations of Credit Exposure (Unaudited)
----------------------------------------------------------------------
Sep. 30, Dec. 31,
December 31, 2003 2003 2002
Unused Total Total Total
(dollars in Outstanding Commitments Exposure Exposure Exposure
millions)
----------------------------------------------------------------------
Air Transportation
Regional Passenger
Carriers $44.0 $12.5 $56.5 $57.6 $57.3
United States Based
Passenger Carriers 40.0 - 40.0 39.9 39.6
International Based
Passenger Carriers 31.5 - 31.5 31.7 32.1
Cargo Carriers 14.4 - 14.4 14.4 15.0
----------------------------------------------------------------------
Total Air
Transportation $129.9 $12.5 $142.4 $143.6 $144.0
======================================================================
Guam
Hotel $17.7 $- $17.7 $17.8 $44.4
Other Commercial 135.4 48.8 184.2 183.1 166.0
Consumer 282.5 6.3 288.8 277.5 257.4
----------------------------------------------------------------------
Total Guam $435.6 $55.1 $490.7 $478.4 $467.8
======================================================================
Syndicated Exposure $244.5 $623.4 $867.9 $873.5 $1,002.1
======================================================================
Exposure includes loans, leveraged leases and operating leases.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past
Due 90 Days or More (Unaudited) Table 9
----------------------------------------------------------------------
December September June March December
31, 30, 30, 31, 31,
(dollars in millions) 2003 2003 2003 2003 2002
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans
Commercial
Commercial and
Industrial $6.0 $7.8 $8.8 $2.4 $5.9
Commercial Mortgage 9.3 11.0 11.2 17.9 20.3
Construction - - - - 0.5
Lease Financing 2.2 2.4 2.5 3.2 4.1
----------------------------------------------------------------------
Total Commercial 17.5 21.2 22.5 23.5 30.8
Consumer
Residential Mortgage 9.3 9.7 10.2 11.5 13.9
Home Equity 0.5 0.5 - 0.1 0.3
----------------------------------------------------------------------
Total Consumer 9.8 10.2 10.2 11.6 14.2
----------------------------------------------------------------------
Total Non-Accrual Loans 27.3 31.4 32.7 35.1 45.0
----------------------------------------------------------------------
Foreclosed Real Estate 4.4 8.7 9.3 9.1 9.4
----------------------------------------------------------------------
Total Non-Performing
Assets $31.7 $40.1 $42.0 $44.2 $54.4
======================================================================
Accruing Loans Past Due
90 Days or More
Commercial
Commercial and
Industrial $0.7 $0.7 $0.5 $- $0.2
Commercial Mortgage - - - 0.4 0.3
Lease Financing 0.1 - - - -
----------------------------------------------------------------------
Total Commercial 0.8 0.7 0.5 0.4 0.5
Consumer
Residential Mortgage 1.4 2.0 1.8 1.6 0.6
Home Equity - - 0.1 - -
Purchased Home Equity - 0.1 0.1 - -
Other Consumer 1.3 1.1 0.4 2.3 0.7
----------------------------------------------------------------------
Total Consumer 2.7 3.2 2.4 3.9 1.3
----------------------------------------------------------------------
Total Accruing and Past
Due $3.5 $3.9 $2.9 $4.3 $1.8
======================================================================
Total Loans $5,757.2 $5,570.4 $5,471.9 $5,565.4 $5,359.0
======================================================================
Ratio of Non-Accrual
Loans to Total Loans 0.47% 0.56% 0.60% 0.63% 0.84%
----------------------------------------------------------------------
Ratio of Non-Performing
Assets to Total Loans
and Foreclosed
Real Estate 0.55% 0.72% 0.77% 0.79% 1.01%
----------------------------------------------------------------------
Ratio of Non-Performing Assets
and Accruing Loans
Past Due 90 Days or More
to Total Loans 0.61% 0.79% 0.82% 0.87% 1.05%
----------------------------------------------------------------------
Quarter to Quarter Changes
in Non-Performing Assets
Balance at Beginning of
Quarter $40.1 $42.0 $44.2 $54.4 $63.3
Additions 2.3 3.2 11.6 4.8 12.0
Reductions
Payments and Sales of
Loans (3.4) (1.8) (4.3) (5.6) (6.9)
Return to Accrual (0.8) (1.5) (7.5) (5.6) (1.9)
Sales of Foreclosed
Assets (4.4) (1.0) (0.7) (1.1) (9.4)
Charge-offs/Write-
downs (2.1) (0.8) (1.3) (2.7) (2.7)
----------------------------------------------------------------------
Total Reductions (10.7) (5.1) (13.8) (15.0) (20.9)
----------------------------------------------------------------------
Balance at End of
Quarter $31.7 $40.1 $42.0 $44.2 $54.4
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Allowance for Loan and Lease
Losses (Unaudited) Table 10
----------------------------------------------------------------------
Three Months Ended
December September December Year Ended
31, 30, 31, December 31,
(dollars in millions) 2003 2003 2002 2003 2002
----------------------------------------------------------------------
Balance at Beginning of
Period $132.7 $138.0 $154.5 $142.9 $159.0
Loans Charged-Off
Commercial
Commercial and
Industrial (2.0) (1.1) (2.0) (5.3) (13.0)
Commercial Mortgage - (0.2) - (0.6) (2.9)
Construction - - - (0.5) (0.5)
Lease Financing - - (9.6) (0.3) (9.9)
Consumer
Residential Mortgage (0.5) (0.1) (0.4) (1.9) (3.5)
Home Equity (0.3) - (0.1) (0.4) (0.2)
Purchased Home Equity (0.1) (0.1) - (0.2) -
Other Consumer (3.9) (6.8) (2.8) (17.4) (12.5)
Lease Financing (0.1) - (0.1) (0.3) (0.3)
----------------------------------------------------------------------
Total Charge-Offs (6.9) (8.3) (15.0) (26.9) (42.8)
Recoveries on Loans
Previously Charged-Off
Commercial
Commercial and
Industrial 0.9 0.6 1.4 3.9 4.7
Commercial Mortgage - - 0.1 0.1 2.1
Construction - - 0.2 1.0 0.2
Lease Financing 0.1 - - 0.1 -
Consumer
Residential Mortgage 0.1 0.5 0.3 1.0 1.1
Home Equity - - - 0.1 0.1
Other Consumer 2.0 1.5 1.3 6.2 6.1
Lease Financing - - 0.1 0.1 0.1
Foreign 0.1 0.4 - 0.6 0.7
----------------------------------------------------------------------
Total Recoveries 3.3 3.0 3.4 13.1 15.1
----------------------------------------------------------------------
Net Loan Charge-Offs (3.6) (5.3) (11.6) (13.8) (27.7)
Provision for Loan and
Lease Losses - - - - 11.6
----------------------------------------------------------------------
Balance at End of Period $129.1 $132.7 $142.9 $129.1 $142.9
======================================================================
Average Loans
Outstanding $5,570.9 $5,546.5 $5,210.4 $5,524.4 $5,411.3
======================================================================
Ratio of Net Charge-Offs
to Average Loans
Outstanding
(annualized) 0.26% 0.38% 0.88% 0.25% 0.51%
Ratio of Allowance to
Loans and Leases
Outstanding 2.24% 2.38% 2.67% 2.24% 2.67%
Totals may not add due to rounding.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial
Information (Unaudited) Table 11a
----------------------------------------------------------------------
Investment Treasury
(dollars in Retail Commercial Services and Other Consolidated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Three Months
Ended December
31, 2003
Net Interest
Income $49,617 $33,505 $3,215 $7,015 $93,352
Provision for
Loan and Lease
Losses (2,288) (1,694) - 3,982 -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 47,329 31,811 3,215 10,997 93,352
Non-Interest
Income 21,051 10,654 15,203 2,529 49,437
----------------------------------------------------------------------
68,380 42,465 18,418 13,526 142,789
Non-Interest
Expense (41,334) (20,410) (16,415) (5,245) (83,404)
----------------------------------------------------------------------
Income Before
Income Taxes 27,046 22,055 2,003 8,281 59,385
Provision for
Income Taxes (10,007) (8,032) (741) (1,932) (20,712)
----------------------------------------------------------------------
Allocated Net
Income 17,039 14,023 1,262 6,349 38,673
----------------------------------------------------------------------
Allowance
Funding Value (130) (806) (8) 944 -
GAAP Provision 2,288 1,694 - (3,982) -
Economic
Provision (3,309) (2,870) (107) (3) (6,289)
Tax Effect of
Adjustments 444 746 46 1,091 2,327
----------------------------------------------------------------------
Income Before
Capital Charge 16,332 12,787 1,193 4,399 34,711
Capital Charge (5,481) (5,292) (1,529) (10,394) (22,696)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $10,851 $7,495 $(336) $(5,995) $12,015
======================================================================
RAROC (ROE for
the Company) 33% 26% 8% 21% 19%
======================================================================
Total Assets at
December 31,
2003 $3,665,571 $2,295,422 $130,206 $3,370,448 $9,461,647
======================================================================
Three Months
Ended December
31, 2002 (1)
Net Interest
Income $49,998 $35,557 $3,623 $1,040 $90,218
Provision for
Loan and Lease
Losses (848) (10,841) - 11,689 -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 49,150 24,716 3,623 12,729 90,218
Non-Interest
Income 21,486 8,815 15,850 4,204 50,355
----------------------------------------------------------------------
70,636 33,531 19,473 16,933 140,573
Restructuring
and Other
Related Costs - - - (385) (385)
Information
Technology
Systems
Replacement
Project (782) - - (6,270) (7,052)
Non-Interest
Expense (43,625) (27,373) (16,068) (2,210) (89,276)
----------------------------------------------------------------------
Income Before
Income Taxes 26,229 6,158 3,405 8,068 43,860
Provision for
Income Taxes (9,705) (1,294) (1,260) (2,693) (14,952)
----------------------------------------------------------------------
Allocated Net
Income 16,524 4,864 2,145 5,375 28,908
----------------------------------------------------------------------
Allowance
Funding Value (163) (1,380) (9) 1,552 -
GAAP Provision 848 10,841 - (11,689) -
Economic
Provision (3,218) (3,135) (127) (9) (6,489)
Tax Effect of
Adjustments 937 (2,341) 50 3,755 2,401
----------------------------------------------------------------------
Income (Loss)
Before Capital
Charge 14,928 8,849 2,059 (1,016) 24,820
Capital Charge (5,338) (5,890) (1,513) (16,669) (29,410)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $9,590 $2,959 $546 $(17,685) $(4,590)
======================================================================
RAROC (ROE for
the Company) 30% 16% 15% (4)% 11%
======================================================================
Total Assets at
December 31,
2002 $3,293,761 $2,242,035 $134,954 $3,845,668 $9,516,418
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial
Information (Unaudited) Table 11b
----------------------------------------------------------------------
Investment Treasury
(dollars in Retail Commercial Services and Other Consolidated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Year Ended
December 31,
2003
Net Interest
Income $206,135 $136,486 $12,879 $10,442 $365,942
Provision for
Loan and Lease
Losses (6,909) (8,415) 5 15,319 -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 199,226 128,071 12,884 25,761 365,942
Non-Interest
Income 85,380 39,162 61,598 12,580 198,720
----------------------------------------------------------------------
284,606 167,233 74,482 38,341 564,662
Information
Technology
Systems
Replacement
Project (986) (23) (333) (20,529) (21,871)
Non-Interest
Expense (168,369) (88,647) (64,019) (14,969) (336,004)
----------------------------------------------------------------------
Income Before
Income Taxes 115,251 78,563 10,130 2,843 206,787
Provision for
Income Taxes (42,643) (28,592) (3,748) 3,391 (71,592)
----------------------------------------------------------------------
Allocated Net
Income 72,608 49,971 6,382 6,234 135,195
----------------------------------------------------------------------
Allowance
Funding Value (595) (3,987) (32) 4,614 -
GAAP Provision 6,909 8,415 (5) (15,319) -
Economic
Provision (11,932) (12,095) (457) (25) (24,509)
Tax Effect of
Adjustments 2,093 2,848 186 3,941 9,068
----------------------------------------------------------------------
Income (Loss)
Before Capital
Charge 69,083 45,152 6,074 (555) 119,754
Capital Charge (21,980) (21,606) (6,051) (49,404) (99,041)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $47,103 $23,546 $23 $(49,959) $20,713
======================================================================
RAROC (ROE for
the Company) 35% 23% 11% 0% 15%
======================================================================
Total Assets at
December 31,
2003 $3,665,571 $2,295,422 $130,206 $3,370,448 $9,461,647
======================================================================
Year Ended
December 31,
2002 (1)
Net Interest
Income $203,304 $143,937 $13,263 $9,727 $370,231
Provision for
Loan and Lease
Losses (4,061) (24,902) (75) 17,422 (11,616)
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 199,243 119,035 13,188 27,149 358,615
Non-Interest
Income 83,870 34,497 67,691 12,277 198,335
----------------------------------------------------------------------
283,113 153,532 80,879 39,426 556,950
Restructuring
and Other
Related Costs - - - (2,364) (2,364)
Information
Technology
Systems
Replacement
Project (1,369) - - (12,259) (13,628)
Non-Interest
Expense (177,079) (100,977) (65,898) (9,303) (353,257)
----------------------------------------------------------------------
Income Before
Income Taxes 104,665 52,555 14,981 15,500 187,701
Provision for
Income Taxes (38,725) (18,221) (5,543) (4,032) (66,521)
----------------------------------------------------------------------
Allocated Net
Income 65,940 34,334 9,438 11,468 121,180
======================================================================
Allowance
Funding Value (835) (6,035) (28) 6,898 -
GAAP Provision 4,061 24,902 75 (17,422) 11,616
Economic
Provision (11,754) (14,383) (499) (17) (26,653)
Tax Effect of
Adjustments 3,155 (1,659) 167 3,901 5,564
----------------------------------------------------------------------
Income Before
Capital Charge 60,567 37,159 9,153 4,828 111,707
Capital Charge (21,125) 24,229 (6,110) (78,777) (130,241)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $39,442 $12,930 $3,043 $(73,949) $(18,534)
======================================================================
RAROC (ROE for
the Company) 32% 17% 16% 6% 10%
======================================================================
Total Assets at
December 31,
2002 $3,293,761 $2,242,035 $134,954 $3,845,668 $9,516,418
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data
(Unaudited) Table 12
----------------------------------------------------------------------
Three Months Ended (1)
(dollars in thousands except Dec. 31, Sept. 30, June 30, March 31,
per share amounts) 2003 2003 2003 2003
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans
and Leases $80,351 $82,715 $85,954 $85,773
Income on Investment
Securities - Held to
Maturity 7,183 6,407 3,083 2,283
Income on Investment
Securities - Available for
Sale 19,032 16,483 19,815 22,463
Deposits 1,169 1,179 1,161 1,307
Funds Sold 85 248 822 764
Other 1,007 1,032 1,016 1,189
----------------------------------------------------------------------
Total Interest Income 108,827 108,064 111,851 113,779
Interest Expense
Deposits 9,433 10,284 13,309 14,447
Security Repurchase
Agreements 1,359 1,947 2,391 2,242
Funds Purchased 249 271 219 205
Short-Term Borrowings 17 26 25 24
Long-Term Debt 4,417 4,431 5,422 5,861
----------------------------------------------------------------------
Total Interest Expense 15,475 16,959 21,366 22,779
----------------------------------------------------------------------
Net Interest Income 93,352 91,105 90,485 91,000
Provision for Loan and Lease
Losses - - - -
----------------------------------------------------------------------
Net Interest Income After
Provision for Loan and Lease
Losses 93,352 91,105 90,485 91,000
Non-Interest Income
Trust and Asset Management 12,759 12,511 12,545 13,181
Mortgage Banking 3,324 5,888 6,061 283
Service Charges on Deposit
Accounts 9,442 8,901 8,645 8,950
Fees, Exchange, and Other
Service Charges 13,725 16,034 13,473 12,989
Investment Securities Gains
(Losses) (20) 639 587 583
Insurance 3,597 3,988 3,015 3,080
Other 6,610 5,830 6,413 5,687
----------------------------------------------------------------------
Total Non-Interest Income 49,437 53,791 50,739 44,753
Non-Interest Expense
Salaries and Benefits 46,409 45,731 47,711 46,429
Net Occupancy Expense 9,933 9,806 9,628 9,613
Net Equipment Expense 7,395 7,301 9,208 9,748
Restructuring and Other
Related Costs - - - -
Information Technology
Systems Replacement
Project - 4,349 10,105 7,417
Other 19,667 21,690 18,742 16,993
----------------------------------------------------------------------
Total Non-Interest Expense 83,404 88,877 95,394 90,200
----------------------------------------------------------------------
Income Before Income Taxes 59,385 56,019 45,830 45,553
Provision for Income Taxes 20,712 19,332 15,796 15,752
----------------------------------------------------------------------
Net Income $38,673 $36,687 $30,034 $29,801
======================================================================
Basic Earnings Per Share $0.70 $0.64 $0.50 $0.49
Diluted Earnings Per Share $0.66 $0.61 $0.48 $0.47
Balance Sheet Totals
Total Assets 9,461,647 9,370,755 9,550,934 9,410,210
Net Loans 5,628,095 5,437,730 5,333,896 5,425,343
Total Deposits 7,332,779 7,102,116 7,140,849 6,987,331
Total Shareholders' Equity 793,132 823,760 913,010 952,007
Performance Ratios
Return on Average Assets 1.66% 1.53% 1.27% 1.31%
Return on Average Equity 18.59% 16.69% 12.93% 12.42%
Efficiency Ratio 58.41% 61.34% 67.55% 66.44%
Efficiency Ratio excluding
ITSRP and Restructuring Costs 58.41% 58.34% 60.39% 60.98%
Three Months Ended (1)
(dollars in thousands except Dec. 31, Sept. 30, June 30, March 31,
per share amounts) 2002 2002 2002 2002
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans
and Leases $85,945 $89,335 $92,441 $98,645
Income on Investment
Securities - Held to
Maturity 3,122 3,963 4,544 5,145
Income on Investment
Securities - Available
for Sale 24,088 26,175 26,805 27,193
Deposits 3,578 5,384 6,011 5,047
Funds Sold 834 914 752 1,003
Other 1,312 1,575 1,395 1,332
----------------------------------------------------------------------
Total Interest Income 118,879 127,346 131,948 138,365
Interest Expense
Deposits 17,657 20,547 22,166 23,978
Security Repurchase
Agreements 4,585 7,039 8,256 10,293
Funds Purchased 255 299 245 231
Short-Term Borrowings 217 334 289 649
Long-Term Debt 5,947 6,946 8,055 8,319
----------------------------------------------------------------------
Total Interest Expense 28,661 35,165 39,011 43,470
----------------------------------------------------------------------
Net Interest Income 90,218 92,181 92,937 94,895
Provision for Loan and Lease
Losses - - 3,324 8,292
----------------------------------------------------------------------
Net Interest Income After
Provision for Loan and Lease
Losses 90,218 92,181 89,613 86,603
Non-Interest Income
Trust and Asset Management 13,085 13,655 14,175 14,818
Mortgage Banking 4,398 3,669 2,842 7,957
Service Charges on Deposit
Accounts 8,326 7,925 7,956 8,410
Fees, Exchange, and Other
Service Charges 12,963 13,114 13,065 12,452
Investment Securities
Gains (Losses) 612 - 3 -
Insurance 3,099 2,677 2,563 2,599
Other 7,872 5,997 7,314 6,789
----------------------------------------------------------------------
Total Non-Interest Income 50,355 47,037 47,918 53,025
Non-Interest Expense
Salaries and Benefits 44,734 45,371 47,275 49,183
Net Occupancy Expense 10,638 9,597 9,321 9,593
Net Equipment Expense 11,077 10,058 9,997 10,121
Restructuring and Other
Related Costs 385 - - 1,979
Information Technology
Systems Replacement
Project 7,052 6,576 - -
Other 22,827 20,141 22,777 20,547
----------------------------------------------------------------------
Total Non-Interest Expense 96,713 91,743 89,370 91,423
----------------------------------------------------------------------
Income Before Income Taxes 43,860 47,475 48,161 48,205
Provision for Income Taxes 14,952 17,275 17,145 17,149
----------------------------------------------------------------------
Net Income $28,908 $30,200 $31,016 $31,056
======================================================================
Basic Earnings Per Share $0.45 $0.44 $0.43 $0.42
Diluted Earnings Per Share $0.44 $0.43 $0.42 $0.41
Balance Sheet Totals
Total Assets 9,516,418 9,702,700 9,824,065 10,245,021
Net Loans 5,216,151 5,104,857 5,250,216 5,442,601
Total Deposits 6,920,161 6,627,673 6,455,981 6,543,781
Total Shareholders' Equity 1,015,759 1,100,706 1,191,072 1,265,907
Performance Ratios
Return on Average Assets 1.20% 1.22% 1.23% 1.21%
Return on Average Equity 10.72% 10.40% 9.94% 9.97%
Efficiency Ratio 68.80% 65.90% 63.45% 61.81%
Efficiency Ratio excluding
ITSRP and Restructuring
Costs 63.51% 61.18% 63.45% 60.47%
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
2004-2006 Plan (Unaudited) Table 13
---------------------------------------------------------------------
(dollars in millions, except per share Year Ended
amounts) 2003 2004 2006
---------------------------------------------------------------------
Anticipated Financial Results
--------------------------------------------
Operating Income $229 $243 $301
Information Technology Systems Replacement
Project 22 - -
Provision for Loan and Lease Losses - - 26
Provision for Income Taxes 72 86 97
---------------------------------------------------------------------
Net Income $135 $157 $178
=====================================================================
Average Assets $9,378 $9,941 $10,763
Shareholders' Equity $793 $733 $733
Economic Performance:
--------------------------------------------
NIACC $21 $51 $92
RAROC 21% 23% 27%
Performance Ratios:
--------------------------------------------
Diluted Earnings Per Share $2.21 $2.76 $3.39
Return on Average Assets 1.44% 1.58% 1.65%
Return on Average Equity 15% 20% 24%
Net Interest Margin 4.23% 4.10% 4.12%
Efficiency Ratio excluding ITSRP 59.5% 58.0% 53.0%
Leverage Capital Ratio 8.4% 7.4% 7.0%
Tier 1 Capital Ratio (1) 12.6% 11.4% 10.9%
The 2004 and 2006 information presented above represents anticipated
financial results. Achievement of these results is subject to a number
of assumptions, risks, and uncertainties, including those described on
page 5 of this release and those set forth from time to time in the
Company's reports filed with the Securities and Exchange Commission.
Actual results could differ materially from these anticipated
financial results.
(1) Preliminary for 2003.
CONTACT: Bank of Hawaii Corporation
Stafford Kiguchi, 808-537-8580 (Media)
877-849-5423 (pager)
skiguchi@boh.com
Cindy Wyrick, 808-537-8430 (Investors/Analysts)
cwyrick@boh.com
SOURCE: Bank of Hawaii Corporation