Bank of Hawaii Corporation 2006 Financial Results
Click here for a printable version of the Fourth Quarter 2006 Financial Results.
- Diluted Earnings Per Share Increases to $3.52
- Board of Directors Declares Dividend of $0.41 Per Share
- Company Releases Future Business Plan
HONOLULU--(BUSINESS WIRE)--Jan. 22, 2007--Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share for 2006 of $3.52 up $0.11 from diluted earnings per share of $3.41 in 2005. Net income for the year was $180.4 million, down $1.2 million from net income of $181.6 million in the previous year. The return on average assets in 2006 was 1.76 percent, down from 1.81 percent in 2005. The return on average equity for the year was 25.90 percent, up from 24.83 percent in 2005.
Diluted earnings per share for the fourth quarter of 2006 was $1.01, up $0.15 or 17.4 percent from $0.86 per diluted share for the same quarter last year and up $0.09 or 9.8 percent from the previous quarter. Net income in the fourth quarter of 2006 was $50.9 million, up $6.1 million or 13.7 percent from net income of $44.8 million in the fourth quarter last year and up $4.0 million or 8.5 percent from net income of $46.9 million in the third quarter of 2006. The return on average assets for the fourth quarter of 2006 was 1.94 percent, up from 1.76 percent in the fourth quarter of 2005 and up from 1.81 percent in the previous quarter. The return on average equity was 28.56 percent during the fourth quarter of 2006, up from 25.19 percent in the same quarter last year and up from 27.09 percent in the third quarter of 2006.
"Bank of Hawaii Corporation had good financial performance during the fourth quarter of 2006," said Allan R. Landon, Chairman and CEO. "Loan growth and asset quality continued to be strong, our net interest margin held up rather well in spite of the challenging interest rate environment. During 2006, we increased the number of our deposit accounts, and balances were up at year-end. These results represent the completion of our 2004 - 2006 Strategic Plan. We are pleased that Bank of Hawaii met its key goals. As we enter 2007 and begin to execute our next plan, the Hawaii economy appears strong and we believe our company is well positioned to continue building on its many successes."
Financial Highlights
Net interest income, on a taxable equivalent basis, for the fourth quarter of 2006 was $100.4 million, down $3.2 million from net interest income of $103.6 million in the fourth quarter of 2005 and down $0.1 million from net interest income of $100.5 million in the third quarter of 2006. Net interest income, on a taxable equivalent basis, for the full year of 2006 was $403.3 million, down $4.2 million from $407.5 million in 2005. Analyses of changes in net interest income for the full year are included in Table 6.
The net interest margin was 4.15 percent for the fourth quarter of 2006, a 28 basis point decrease from 4.43 percent in the fourth quarter of 2005 and a 5 basis point decrease from 4.20 percent in the third quarter of 2006. The net interest margin for the full year of 2006 was 4.25 percent, a 13 basis point decrease from 4.38 percent in 2005. The decrease was primarily due to the effect of the inverted yield curve in the second half of 2006 and shifts in the funding mix.
Results for the fourth quarter of 2006 included a provision for credit losses of $3.1 million compared to $1.6 million in the fourth quarter of 2005 and $2.8 million in the third quarter of 2006. The provision for credit losses for the full year of 2006 was $10.8 million compared to $4.6 million in 2005.
Noninterest income was $53.5 million for the fourth quarter of 2006, an increase of $2.7 million or 5.3 percent compared to noninterest income of $50.8 million in the fourth quarter of 2005 and down $3.4 million or 5.9 percent compared to noninterest income of $56.9 million in the third quarter of 2006. The decrease compared to the previous quarter was largely due to a seasonal reduction in insurance commissions. Noninterest income for the full year of 2006 was $216.2 million, up $6.9 million or 3.3 percent from noninterest income of $209.3 million in 2005.
Noninterest expense was $81.6 million in the fourth quarter of 2006, down $1.6 million or 1.9 percent from noninterest expense of $83.2 million in the same quarter last year and up $1.8 million or 2.2 percent from $79.8 million in the previous quarter. Results for the fourth quarter of 2006 included contributions of $1.5 million to the Bank of Hawaii Charitable Foundation. Fourth quarter noninterest expense also includes an accrual of $1.5 million for bonuses to some employees not participating in other incentive programs due to the successful completion of the 2004 - 2006 Strategic Plan. An analysis of salary and benefit expenses is included in Table 7. Noninterest expense for the full year of 2006 was $321.0 million, down $6.7 million or 2.0 percent from noninterest expense of $327.6 million in 2005.
The efficiency ratio for the fourth quarter of 2006 was 53.08 percent, down from 53.92 percent in the same quarter last year and up from 50.75 percent in the previous quarter. The efficiency ratio for the full year of 2006 was 51.87 percent, an improvement from 53.15 percent during the full year of 2005.
The effective tax rate for the fourth quarter of 2006 was 26.19 percent compared to 35.57 percent during the same quarter last year and 37.14 percent in the previous quarter. The lower rate in the fourth quarter of 2006 was primarily due to accrual adjustments for tax matters that were resolved in the fourth quarter. The effective tax rate for the full year of 2006 was 37.17 percent compared to 36.11 percent during 2005. The increase from prior year was due to the second quarter 2006 tax charge related to a change in tax legislation.
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. Selected financial information for the business segments is included in Tables 11a and 11b.
Asset Quality
Asset quality remained strong throughout 2006. Non-performing assets were $6.4 million at the end of the fourth quarter of 2006, down $0.1 million, compared to $6.5 million at the end of the same quarter last year and up $1.0 million, compared to $5.4 million at the end of the previous quarter. The ratio of non-performing assets to total loans, foreclosed real estate, and other investments at December 31, 2006 was 0.10 percent, down from 0.11 percent at December 31, 2005 and up from 0.08 percent at September 30, 2006.
Non-accrual loans and leases were $5.9 million at December 31, 2006, up $0.1 million from $5.8 million at December 31, 2005 and up $1.0 million from $5.0 million at September 30, 2006. Non-accrual loans and leases as a percentage of total loans and leases at December 31, 2006 were 0.09 percent, unchanged from December 31, 2005 and up slightly from 0.08 percent at September 30, 2006. Additional information on non-performing assets is included in Table 9.
Net charge-offs during the fourth quarter of 2006 were $3.1 million or 0.19 percent annualized of total average loans and leases compared to $1.6 million or 0.10 percent annualized of total average loans and leases in the fourth quarter last year and $2.8 million or 0.17 percent annualized of total average loans and leases in the previous quarter. Net charge-offs for the full year of 2006 were $10.8 million, or 0.17 percent of total average loans, a decrease of $11.3 million, or 51.1 percent from net charge-offs of $22.0 million, or 0.36 percent of total average loans in 2005. Net charge-offs in 2005 included a $10.0 million write-off of a fully reserved aircraft lease.
The allowance for loan and lease losses was $91.0 million at December 31, 2006, down $0.1 million from $91.1 million at December 31, 2005 and up $0.2 million from $90.8 million at September 30, 2006. The ratio of the allowance for loan and lease losses to total loans was 1.37 percent at December 31, 2006, down from 1.48 percent at December 31, 2005 and down from 1.40 percent at September 30, 2006. The reserve for unfunded commitments at December 31, 2006 was $5.2 million, up from $5.1 million at December 31, 2005 and down from $5.4 million at September 30, 2006. Details of charge-offs, recoveries and the components of the total reserve for credit losses are summarized in Table 10.
Loan and lease portfolio balances, including credit exposure to the air transportation industry are summarized in Table 8.
Other Financial Highlights
Total assets were $10.57 billion at December 31, 2006, up $385 million from $10.19 billion at December 31, 2005 and up $201 million from $10.37 billion at September 30, 2006. Total loans and leases were $6.62 billion at December 31, 2006, up $455 million from $6.17 billion at December 31, 2005 and up $134 million from $6.49 billion at September 30, 2006.
Total commercial loans were $2.46 billion at December 31, 2006, up $362 million from $2.10 billion at December 31, 2005 and up $105 million from $2.36 billion at September 30, 2006. Total consumer loans were $4.16 billion at December 31, 2006, up $93 million from $4.07 billion at December 31, 2005 and up $29 million from $4.13 billion at September 30, 2006.
Total deposits at December 31, 2006 were $8.02 billion, up $116 million from $7.91 billion at December 31, 2005 and up $336 million from $7.69 billion at September 30, 2006. Average total deposits were $7.72 billion during the fourth quarter of 2006, down $74 million from the fourth quarter last year and down $10 million from $7.73 billion during the previous quarter.
During the fourth quarter of 2006, the Company repurchased 337.5 thousand shares of common stock at a total cost of $17.1 million under its share repurchase program. The average cost was $50.71 per share repurchased. From the beginning of the share repurchase program in July 2001 through December 31, 2006, the Company repurchased a total of 42.5 million shares and returned nearly $1.5 billion to shareholders at an average cost of $34.35 per share. From January 1, 2006 through January 19, 2007, the Company repurchased an additional 75.0 thousand shares of common stock at an average cost of $53.17 per share. Remaining buyback authority under the share repurchase program was $87.4 million at January 19, 2007.
At December 31, 2006 the Tier 1 leverage ratio was 7.13 percent compared to 7.14 percent at December 31, 2005 and 6.90 percent at September 30, 2006.
The Company's Board of Directors has declared a quarterly cash dividend of $0.41 per share on the Company's outstanding shares. The dividend will be payable on March 14, 2007 to shareholders of record at the close of business on February 28, 2007.
Economic Update
At the end of 2006, the Hawaii economy was generally in strong condition. Inflation moderated in the second half of 2006 due to lower energy prices and stable home prices. Looking forward to 2007, most economic indicators will show modest improvements as capacity constraints affecting tourism and the workforce will limit economic growth. Personal income growth should improve slightly, although inflation is expected to exceed national levels. Housing prices are expected to remain stable as new home building slows. Commercial real estate demand is expected to remain strong.
Business Outlook
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. A new three-year plan for 2004 - 2006 was announced in 2004 which continued to build on the winning strategy of the previous plan. The key elements were to accelerate revenue growth, better integrate business segments, develop the management team, improve efficiency, and maintain a discipline of dependable risk and capital management. The 2004 - 2006 Plan was successfully completed in 2006.
The Company's Plan for 2007 and beyond builds on the themes that were prominent in the 2004 - 2006 Plan. The 2007+ Plan emphasizes growth in revenues, integration of service delivery and business units, development of people, enhancement of the Bank of Hawaii brand, and discipline in managing risk and financial performance. The 2007+ Plan does not contemplate expansion beyond the Company's current footprint.
"Given the solid performance of Bank of Hawaii in the last two years, we anticipate that our shareholders expect a plan that emphasizes consistency," said Mr. Landon. "Our 2007+ Plan was prepared by a team of fifteen of the Company's best leaders. Our planning team evaluated a full range of strategic alternatives and developed a solid plan."
The 2007+ Plan is based on moderate growth in revenue and consistent positive operating leverage. The 2007+ Plan is based on forecasts of a "flat" yield curve continuing well into 2007. Anticipated operating results include an annual return on assets above 1.7 percent, a return on equity above 25 percent, and an efficiency ratio approaching 50 percent, based on a stable economy and a return to a more traditional interest rate environment. The 2007+ Plan contemplates some increase in loan losses. The Company does not expect to provide specific earnings expectations in the future. The 2007+ Plan will be reevaluated periodically and updated as market events dictate.
Conference Call Information
The Company will review its 2006 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 web site, www.boh.com. The conference call number for participants in the United States is 866-713-8307. International participants should call 617-597-5307. No passcode is required. A replay of the conference call will be available for one week beginning Monday, January 22, 2007 by calling 888-286-8010 in the United States or 617-801-6888 internationally and entering the number 46131311 when prompted. A replay will also be available via the Investor Relations link of the Company's web site.
Forward-Looking Statements
This news release contains, and other statements made by the Company in connection with this earnings release may contain, forward-looking statements concerning, among other things, the Company's business outlook, the economic and business environment in our service areas and elsewhere, credit quality and other financial and business matters in future periods. Our forward-looking statements are based on numerous assumptions, any of which 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) general economic conditions are less favorable than expected; 2) competitive pressure among financial services and products; 3) the impact of legislation and the regulatory environment; 4) fiscal and monetary policies of the markets in which the Company serves; 5) changes in accounting standards; 6) changes in tax laws or regulations or the interpretation of such laws and regulations; 7) changes in the Company's credit quality or risk profile that may increase or decrease the required level of reserve for credit losses; 8) changes in market interest rates that may affect the Company's credit markets and ability to maintain its net interest margin; 9) unpredictable costs and other consequences of legal or regulatory matters; 10) changes to the amount and timing of proposed equity repurchases; and 11) geopolitical risk, military or terrorist activity, natural disaster, adverse weather, public health and other conditions impacting the Company and its customers' operations.
For further discussion of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements, please refer to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2005, and subsequent periodic and current reports, filed with the U.S. Securities and Exchange Commission. Words such as "believes," "anticipates," "expects," "intends," "targeted" and similar expressions are intended to identify forward-looking statements but are not exclusive means of identifying such statements. The Company does not undertake an obligation 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
Highlights (Unaudited) Table 1
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Three Months Ended
--------------------------------------
December 31, September 30,December 31,
(dollars in thousands, except
per share amounts) 2006 2006 (1, 2) 2005 (1)
----------------------------------------------------------------------
For the Period:
Interest Income $ 149,540 $ 146,960 $ 132,945
Net Interest Income 100,205 100,350 103,456
Net Income 50,913 46,920 44,781
Basic Earnings Per Share 1.03 0.94 0.88
Diluted Earnings Per Share 1.01 0.92 0.86
Dividends Declared Per Share 0.41 0.37 0.37
Net Income to Average Total
Assets (ROA) 1.94 % 1.81 % 1.76 %
Net Income to Average
Shareholders' Equity (ROE) 28.56 27.09 25.19
Net Interest Margin (3) 4.15 4.20 4.43
Operating Leverage (prior year)
Efficiency Ratio (4) 53.08 50.75 53.92
Average Assets $10,391,402 $10,309,314 $10,079,483
Average Loans and Leases 6,501,868 6,470,883 6,153,802
Average Deposits 7,721,584 7,731,993 7,795,381
Average Shareholders' Equity 707,149 687,172 705,428
Average Shareholders' Equity to
Average Assets 6.81 % 6.67 % 7.00 %
Market Price Per Share of
Common Stock:
Closing$ 53.95 $ 48.16 $ 51.54
High 54.59 50.75 53.19
Low 47.54 47.00 47.21
Year Ended
-------------------------
December 31,
(dollars in thousands, except per share
amounts) 2006 2005 (1)
---------------------------------------------------------------------
For the Period:
Interest Income $ 572,672 $ 506,442
Net Interest Income 402,613 407,113
Net Income 180,359 181,561
Basic Earnings Per Share 3.59 3.50
Diluted Earnings Per Share 3.52 3.41
Dividends Declared Per Share 1.52 1.36
Net Income to Average Total Assets (ROA) 1.76 % 1.81 %
Net Income to Average Shareholders' Equity
(ROE) 25.90 24.83
Net Interest Margin (3) 4.25 4.38
Operating Leverage (prior year) 3.13 10.54
Efficiency Ratio (4) 51.87 53.15
Average Assets $10,241,442 $10,023,750
Average Loans and Leases 6,369,200 6,104,356
Average Deposits 7,731,051 7,766,516
Average Shareholders' Equity 696,299 731,077
Average Shareholders' Equity to Average
Assets 6.80 % 7.29 %
Market Price Per Share of Common Stock:
Closing $ 53.95 $ 51.54
High 55.15 54.44
Low 47.00 43.82
December 31, September 30,December 31,
2006 2006 (1) 2005 (1)
---------------------------------------------------------------------
At Period End:
Net Loans and Leases $ 6,532,169 $ 6,398,262 $6,077,446
Total Assets 10,571,815 10,371,215 10,187,038
Deposits 8,023,394 7,687,123 7,907,468
Long-Term Debt 260,288 265,268 242,703
Shareholders' Equity 719,420 683,472 693,352
Ratio of Allowance for Loan
and Lease Losses to Loans
and Leases Outstanding 1.37 % 1.40 % 1.48 %
Dividend Payout Ratio (5) 42.11 43.02 38.86
Leverage Capital Ratio 7.13 6.90 7.14
Book Value Per Common
Share $ 14.45 $ 13.72 $ 13.52
Full-Time Equivalent
Employees 2,586 2,589 2,585
Branches and Offices 86 86 85
(1 )Certain prior period information has been reclassified to conform
to current presentation.
(2 )Third quarter 2006 basic and diluted EPS was corrected from $0.95
and $0.93, respectively.
(3) The net interest margin is defined as net interest income, on a
fully-taxable equivalent basis, as a percentage of average earning
assets.
(4) The efficiency ratio is defined as noninterest expense divided by
total revenue (net interest income and noninterest income).
(5) Dividend payout ratio is defined as dividends declared per share
divided by basic earnings per share.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
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Three Months Ended
December September December
31, 30, 31,
(dollars in thousands, except per
share amounts) 2006 2006(1) 2005
----------------------------------------------------------------------
Interest Income
Interest and Fees on Loans and
Leases $ 111,649 $ 110,065 $ 97,697
Income on Investment Securities -
Available-for-Sale 32,807 31,949 29,820
Income on Investment Securities -
Held-to-Maturity 4,282 4,558 4,899
Deposits 63 50 103
Funds Sold 406 66 154
Other 333 272 272
----------------------------------------------------------------------
Total Interest Income 149,540 146,960 132,945
----------------------------------------------------------------------
Interest Expense
Deposits 30,924 28,464 17,479
Securities Sold Under Agreements
to Repurchase 12,538 11,959 6,504
Funds Purchased 1,689 2,270 1,730
Short-Term Borrowings 106 82 61
Long-Term Debt 4,078 3,835 3,715
----------------------------------------------------------------------
Total Interest Expense 49,335 46,610 29,489
----------------------------------------------------------------------
Net Interest Income 100,205 100,350 103,456
Provision for Credit Losses 3,143 2,785 1,588
----------------------------------------------------------------------
Net Interest Income After Provision
for Credit Losses 97,062 97,565 101,868
----------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 14,949 14,406 14,098
Mortgage Banking 2,612 2,394 2,597
Service Charges on Deposit
Accounts 11,206 10,723 10,151
Fees, Exchange, and Other Service
Charges 15,775 16,266 15,147
Investment Securities Gains
(Losses), Net 153 19 (4)
Insurance 3,965 6,713 4,201
Other 4,856 6,366 4,619
----------------------------------------------------------------------
Total Noninterest Income 53,516 56,887 50,809
----------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 42,727 43,133 43,319
Net Occupancy 9,959 9,998 9,643
Net Equipment 5,012 5,285 5,358
Professional Fees 1,189 2,638 4,057
Other 22,710 18,751 20,802
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Total Noninterest Expense 81,597 79,805 83,179
----------------------------------------------------------------------
Income Before Provision for Income
Taxes 68,981 74,647 69,498
Provision for Income Taxes 18,068 27,727 24,717
----------------------------------------------------------------------
Net Income $ 50,913 $ 46,920 $ 44,781
======================================================================
Basic Earnings Per Share $1.03 $0.94 $0.88
Diluted Earnings Per Share $1.01 $0.92 $0.86
Dividends Declared Per Share $0.41 $0.37 $0.37
Basic Weighted Average Shares 49,493,213 49,960,617 50,743,172
Diluted Weighted Average Shares 50,378,519 50,879,937 52,042,845
======================================================================
Year Ended
December 31,
(dollars in thousands, except per share amounts) 2006 2005
----------------------------------------------------------------------
Interest Income
Interest and Fees on Loans and Leases $ 425,473 $ 368,664
Income on Investment Securities - Available-
for-Sale 126,817 113,608
Income on Investment Securities - Held-to-
Maturity 18,255 21,360
Deposits 211 219
Funds Sold 767 1,329
Other 1,149 1,262
----------------------------------------------------------------------
Total Interest Income 572,672 506,442
----------------------------------------------------------------------
Interest Expense
Deposits 103,677 58,426
Securities Sold Under Agreements to
Repurchase 42,189 21,187
Funds Purchased 8,504 4,515
Short-Term Borrowings 318 188
Long-Term Debt 15,371 15,013
----------------------------------------------------------------------
Total Interest Expense 170,059 99,329
----------------------------------------------------------------------
Net Interest Income 402,613 407,113
Provision for Credit Losses 10,758 4,588
----------------------------------------------------------------------
Net Interest Income After Provision for Credit
Losses 391,855 402,525
----------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 58,740 56,830
Mortgage Banking 10,562 10,399
Service Charges on Deposit Accounts 41,756 39,945
Fees, Exchange, and Other Service Charges 62,441 59,588
Investment Securities Gains (Losses), Net 172 341
Insurance 20,388 19,643
Other 22,117 22,568
----------------------------------------------------------------------
Total Noninterest Income 216,176 209,314
----------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 176,457 176,310
Net Occupancy 38,976 38,273
Net Equipment 20,127 21,541
Professional Fees 6,854 15,702
Other 78,548 75,816
----------------------------------------------------------------------
Total Noninterest Expense 320,962 327,642
----------------------------------------------------------------------
Income Before Provision for Income Taxes 287,069 284,197
Provision for Income Taxes 106,710 102,636
----------------------------------------------------------------------
Net Income $ 180,359 $ 181,561
======================================================================
Basic Earnings Per Share $3.59 $3.50
Diluted Earnings Per Share $3.52 $3.41
Dividends Declared Per Share $1.52 $1.36
Basic Weighted Average Shares 50,176,685 51,848,765
Diluted Weighted Average Shares 51,178,943 53,310,816
======================================================================
(1)Third quarter 2006 basic and diluted EPS was corrected from $0.95
and $0.93, respectively. In addition, basic and diluted weighted
average shares was corrected from 49,586,947 and 50,506,267,
respectively.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition (Unaudited) Table 3
----------------------------------------------------------------------
December 31, September 30, December 31,
(dollars in thousands) 2006 2006 2005
----------------------------------------------------------------------
Assets
Interest-Bearing Deposits $ 4,990 $ 5,238 $ 4,893
Funds Sold 50,000 - -
Investment Securities -
Available-for-Sale
Held in Portfolio 1,846,742 1,973,719 2,333,417
Pledged as Collateral 751,135 678,914 204,798
Investment Securities - Held-
to-Maturity
(Fair Value of $360,719;
$385,891; and $442,989) 371,344 397,520 454,240
Loans Held for Sale 11,942 15,336 17,915
Loans and Leases 6,623,167 6,489,057 6,168,536
Allowance for Loan and Lease
Losses (90,998) (90,795) (91,090)
----------------------------------------------------------------------
Net Loans and Leases 6,532,169 6,398,262 6,077,446
----------------------------------------------------------------------
Total Earning Assets 9,568,322 9,468,989 9,092,709
----------------------------------------------------------------------
Cash and Noninterest-Bearing
Deposits 398,342 283,621 493,825
Premises and Equipment 125,925 127,521 133,913
Customers' Acceptances 1,230 673 1,056
Accrued Interest Receivable 49,284 49,339 43,033
Foreclosed Real Estate 407 409 358
Mortgage Servicing Rights 19,437 18,995 18,010
Goodwill 34,959 34,959 34,959
Other Assets 373,909 386,709 369,175
----------------------------------------------------------------------
Total Assets $ 10,571,815 $ 10,371,215 $ 10,187,038
======================================================================
Liabilities
Deposits
Noninterest-Bearing Demand $ 1,993,794 $ 1,879,644 $ 2,134,916
Interest-Bearing Demand 1,642,375 1,608,774 1,678,454
Savings 2,690,846 2,596,940 2,819,258
Time 1,696,379 1,601,765 1,274,840
----------------------------------------------------------------------
Total Deposits 8,023,394 7,687,123 7,907,468
----------------------------------------------------------------------
Funds Purchased 60,140 160,600 268,110
Short-Term Borrowings 11,058 11,290 9,447
Securities Sold Under
Agreements to Repurchase 1,047,824 1,099,260 609,380
Long-Term Debt 260,288 265,268 242,703
Banker's Acceptances 1,230 673 1,056
Retirement Benefits Payable 48,309 72,651 71,116
Accrued Interest Payable 22,718 18,659 10,910
Taxes Payable and Deferred
Taxes 277,202 280,611 269,094
Other Liabilities 100,232 91,608 104,402
----------------------------------------------------------------------
Total Liabilities 9,852,395 9,687,743 9,493,686
----------------------------------------------------------------------
Shareholders' Equity
Common Stock ($.01 par value);
authorized 500,000,000 shares;
issued / outstanding: December
2006 - 56,848,609 /
49,777,654; September 2006 -
56,848,799 / 49,809,709; and
December 2005 - 56,827,483 /
51,276,286 566 566 565
Capital Surplus 475,178 471,908 473,338
Accumulated Other Comprehensive
Loss (39,084) (49,422) (47,818)
Retained Earnings 630,660 605,976 546,591
Deferred Stock Grants - - (11,080)
Treasury Stock, at Cost
(Shares: December 2006 -
7,070,955; September 2006 -
7,039,090; and December 2005 -
5,551,197) (347,900) (345,556) (268,244)
----------------------------------------------------------------------
Total Shareholders' Equity 719,420 683,472 693,352
----------------------------------------------------------------------
Total Liabilities and
Shareholders' Equity $ 10,571,815 $ 10,371,215 $ 10,187,038
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited) Table 4
----------------------------------------------------------------------
Accum.
Other
Compre-
Common Capital hensive
(dollars in thousands) Total Stock Surplus Loss
----------------------------------------------------------------------
Balance at December 31, 2005 $ 693,352 $ 565 $473,338 $(47,818)
Comprehensive Income:
Net Income 180,359 - - -
Other Comprehensive Income, Net of
Tax:
Change in Unrealized Gains and
Losses on Investment Securities
- Available-for-Sale (196) - - (196)
Change in Minimum Pension
Liability Adjustments 1,972 - - 1,972
Total Comprehensive Income
Adjustment to Initially Apply FASB
Statement No. 158, Net of Tax 6,958 - - 6,958
Common Stock Issued under Share-
Based Compensation
Plans and Related Tax Benefits
(1,044,951 shares) 43,449 1 1,840 -
Common Stock Repurchased (2,540,130
shares) (129,727) - - -
Cash Dividends Paid (76,747) - - -
----------------------------------------------------------------------
Balance at December 31, 2006 $ 719,420 $ 566 $475,178 $(39,084)
======================================================================
Balance at December 31, 2004 $ 814,834 $ 813 $450,998 $(12,917)
Comprehensive Income:
Net Income 181,561 - - -
Other Comprehensive Income, Net of
Tax:
Change in Unrealized Gains and
Losses on Investment Securities
- Available-for-Sale (32,547) - - (32,547)
Change in Minimum Pension
Liability Adjustments (2,354) - - (2,354)
Total Comprehensive Income
Common Stock Issued under Share-
Based Compensation
Plans and Related Tax Benefits
(1,430,416 shares) 50,067 2 22,090 -
Common Stock Repurchased (5,111,281
shares) (247,376) - - -
Retirement of Treasury Stock Shares
(25,000,000 shares) - (250) 250 -
Cash Dividends Paid (70,833) - - -
----------------------------------------------------------------------
Balance at December 31, 2005 $ 693,352 $ 565 $473,338 $(47,818)
======================================================================
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31, 2005 $ 546,591 $(11,080)$ (268,244)
Comprehensive Income:
Net Income 180,359 - - $180,359
Other Comprehensive Income,
Net of Tax:
Change in Unrealized Gains
and Losses on Investment
Securities - Available-
for-Sale - - - (196)
Change in Minimum Pension
Liability Adjustments - - - 1,972
---------
Total Comprehensive Income $182,135
=========
Adjustment to Initially Apply
FASB Statement No. 158, Net
of Tax - - -
Common Stock Issued under
Share-Based Compensation
Plans and Related Tax
Benefits (1,044,951 shares) (19,543) 11,080 50,071
Common Stock Repurchased
(2,540,130 shares) - - (129,727)
Cash Dividends Paid (76,747) - -
-------------------------------------------------------------
Balance at December 31, 2006 $ 630,660 $ - $ (347,900)
=============================================================
Balance at December 31, 2004 $1,282,425 $ (8,433)$ (898,052)
Comprehensive Income:
Net Income 181,561 - - $181,561
Other Comprehensive Income,
Net of Tax:
Change in Unrealized Gains
and Losses on Investment
Securities - Available-
for-Sale - - - (32,547)
Change in Minimum Pension
Liability Adjustments - - - (2,354)
---------
Total Comprehensive Income $146,660
=========
Common Stock Issued under
Share-Based Compensation
Plans and Related Tax
Benefits (1,430,416 shares) (4,138) (2,647) 34,760
Common Stock Repurchased
(5,111,281 shares) - - (247,376)
Retirement of Treasury Stock
Shares (25,000,000 shares) (842,424) - 842,424
Cash Dividends Paid (70,833) - -
-------------------------------------------------------------
Balance at December 31, 2005 $ 546,591 $(11,080)$ (268,244)
=============================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable
Equivalent Basis (Unaudited) Table 5a
----------------------------------------------------------------------
Three Months Ended
December 31, 2006
Average Income/ Yield/
(dollars in millions) Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest-Bearing Deposits $5.7 $0.1 4.42 %
Funds Sold 30.5 0.4 5.28
Investment Securities
Available-for-Sale 2,657.8 33.0 4.96
Held-to-Maturity 384.7 4.3 4.45
Loans Held for Sale 10.0 0.2 6.79
Loans and Leases (2)
Commercial and Industrial 1,025.8 19.6 7.59
Construction 236.4 4.9 8.24
Commercial Mortgage 608.9 10.7 6.97
Residential Mortgage 2,474.6 37.6 6.08
Other Revolving Credit and Installment 697.3 16.1 9.18
Home Equity 943.8 18.2 7.66
Lease Financing 515.1 4.3 3.31
----------------------------------------------------------------------
Total Loans and Leases 6,501.9 111.4 6.82
----------------------------------------------------------------------
Other 79.4 0.3 1.68
----------------------------------------------------------------------
Total Earning Assets (3) 9,670.0 149.7 6.17
----------------------------------------------------------------------
Cash and Noninterest-Bearing Deposits 272.9
Other Assets 448.5
-----------
Total Assets $10,391.4
===========
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $1,577.6 4.2 1.06
Savings 2,626.4 11.1 1.68
Time 1,650.0 15.6 3.74
----------------------------------------------------------------------
Total Interest-Bearing Deposits 5,854.0 30.9 2.10
----------------------------------------------------------------------
Short-Term Borrowings 135.0 1.8 5.28
Securities Sold Under Agreements to
Repurchase 1,091.6 12.5 4.52
Long-Term Debt 264.7 4.1 6.15
----------------------------------------------------------------------
Total Interest-Bearing Liabilities 7,345.3 49.3 2.66
----------------------------------------------------------------------
Net Interest Income $100.4
=========
Interest Rate Spread 3.51 %
Net Interest Margin 4.15 %
Noninterest-Bearing Demand Deposits 1,867.6
Other Liabilities 471.4
Shareholders' Equity 707.1
-----------
Total Liabilities and Shareholders'
Equity $10,391.4
===========
Three Months Ended Three Months Ended
September 30, 2006 (1) December 31, 2005 (1)
Average Income/ Yield/ Average Income/ Yield/
(dollars in Balance Expense Rate Balance Expense Rate
millions)
---------------------------------------------------------------------
Earning Assets
Interest-Bearing
Deposits $4.9 $0.1 4.12 % $11.2 $0.1 3.64 %
Funds Sold 5.1 0.1 5.16 15.1 0.1 4.05
Investment
Securities
Available-for-Sale 2,583.0 32.1 4.97 2,573.2 30.0 4.65
Held-to-Maturity 413.3 4.5 4.41 469.9 4.9 4.17
Loans Held for Sale 8.1 0.1 6.45 36.4 0.2 1.99
Loans and Leases (2)
Commercial and
Industrial 1,024.3 19.3 7.46 944.1 16.0 6.74
Construction 232.2 4.9 8.30 161.3 2.9 7.22
Commercial Mortgage 614.0 10.5 6.77 565.7 9.0 6.33
Residential
Mortgage 2,454.6 36.8 6.01 2,369.6 34.5 5.82
Other Revolving
Credit and
Installment 705.6 16.4 9.21 738.8 16.2 8.70
Home Equity 937.2 17.9 7.59 880.8 14.5 6.53
Lease Financing 503.0 4.1 3.27 493.5 4.4 3.53
---------------------------------------------------------------------
Total Loans and
Leases 6,470.9 109.9 6.76 6,153.8 97.5 6.31
---------------------------------------------------------------------
Other 79.4 0.3 1.37 79.4 0.3 1.37
---------------------------------------------------------------------
Total Earning Assets
(3) 9,564.7 147.1 6.13 9,339.0 133.1 5.68
---------------------------------------------------------------------
Cash and
Noninterest-Bearing
Deposits 296.5 314.7
Other Assets 448.1 425.8
---------- ----------
Total Assets $10,309.3 $10,079.5
========== ==========
Interest-Bearing
Liabilities
Interest-Bearing
Deposits
Demand $1,618.9 4.1 1.01 $1,650.9 3.1 0.75
Savings 2,641.4 10.6 1.59 2,882.4 6.1 0.83
Time 1,542.7 13.8 3.53 1,273.6 8.3 2.59
---------------------------------------------------------------------
Total Interest-
Bearing Deposits 5,803.0 28.5 1.95 5,806.9 17.5 1.19
---------------------------------------------------------------------
Short-Term
Borrowings 179.1 2.4 5.21 178.1 1.8 3.99
Securities Sold
Under Agreements to
Repurchase 1,005.8 11.9 4.69 710.5 6.5 3.62
Long-Term Debt 248.7 3.8 6.16 242.7 3.7 6.11
---------------------------------------------------------------------
Total Interest-
Bearing Liabilities 7,236.6 46.6 2.55 6,938.2 29.5 1.69
---------------------------------------------------------------------
Net Interest Income $100.5 $103.6
======== =======
Interest Rate
Spread 3.58 % 3.99 %
Net Interest Margin 4.20 % 4.43 %
Noninterest-Bearing
Demand Deposits 1,929.0 1,988.5
Other Liabilities 456.5 447.4
Shareholders' Equity 687.2 705.4
---------- ----------
Total Liabilities
and Shareholders'
Equity $10,309.3 $10,079.5
========== ==========
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) 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.
(3) Interest income includes a taxable-equivalent basis adjustment
based upon a statutory tax rate of 35%.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates -
Taxable Equivalent Basis (Unaudited) Table 5b
----------------------------------------------------------------------
Year Ended Year Ended
December 31, 2006 December 31, 2005 (1)
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest-Bearing
Deposits $ 5.4 $ 0.2 3.92 %$ 7.1 $ 0.2 3.07 %
Funds Sold 15.2 0.8 5.06 39.3 1.3 3.38
Investment Securities
Available-for-Sale 2,598.8 127.5 4.91 2,545.6 114.0 4.48
Held-to-Maturity 417.6 18.3 4.37 523.7 21.4 4.08
Loans Held for Sale 9.7 0.6 6.38 20.4 0.8 4.03
Loans and Leases (2)
Commercial and
Industrial 987.8 72.7 7.36 953.8 59.8 6.27
Construction 197.3 16.2 8.19 138.6 8.8 6.35
Commercial Mortgage 598.5 40.3 6.73 582.6 34.8 5.97
Residential Mortgage 2,450.4 146.3 5.97 2,346.8 133.6 5.70
Other Revolving
Credit and
Installment 711.6 64.7 9.09 740.4 62.7 8.46
Home Equity 922.2 68.4 7.42 844.2 49.8 5.91
Lease Financing 501.4 16.3 3.25 498.0 18.3 3.67
---------------------------------------------------------------------
Total Loans and Leases 6,369.2 424.9 6.67 6,104.4 367.8 6.03
---------------------------------------------------------------------
Other 79.4 1.1 1.45 69.8 1.3 1.81
---------------------------------------------------------------------
Total Earning Assets
(3) 9,495.3 573.4 6.04 9,310.3 506.8 5.44
---------------------------------------------------------------------
Cash and Noninterest-
Bearing Deposits 301.2 313.0
Other Assets 444.9 400.4
---------- ----------
Total Assets $10,241.4 $10,023.7
========== ==========
Interest-Bearing
Liabilities
Interest-Bearing
Deposits
Demand $ 1,615.5 15.6 0.96 $ 1,667.0 10.1 0.60
Savings 2,680.3 38.3 1.43 2,928.6 20.5 0.70
Time 1,484.8 49.8 3.35 1,197.8 27.8 2.32
---------------------------------------------------------------------
Total Interest-Bearing
Deposits 5,780.6 103.7 1.79 5,793.4 58.4 1.01
---------------------------------------------------------------------
Short-Term Borrowings 177.7 8.8 4.97 144.5 4.7 3.25
Securities Sold Under
Agreements to
Repurchase 932.4 42.2 4.52 699.0 21.2 3.03
Long-Term Debt 249.8 15.4 6.15 244.2 15.0 6.15
---------------------------------------------------------------------
Total Interest-Bearing
Liabilities 7,140.5 170.1 2.38 6,881.1 99.3 1.44
---------------------------------------------------------------------
Net Interest Income $403.3 $407.5
======= =======
Interest Rate Spread 3.66 % 4.00 %
Net Interest Margin 4.25 % 4.38 %
Noninterest-Bearing
Demand Deposits 1,950.4 1,973.1
Other Liabilities 454.2 438.4
Shareholders' Equity 696.3 731.1
---------- ----------
Total Liabilities and
Shareholders' Equity $10,241.4 $10,023.7
========== ==========
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) 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.
(3) Interest income includes a taxable-equivalent basis adjustment
based upon a statutory tax rate of 35%.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable
Equivalent Basis (Unaudited) Table 6
----------------------------------------------------------------------
Year Ended December 31, 2006
compared to December 31, 2005
(dollars in millions) Volume (1) Rate (1) Total
----------------------------------------------------------------------
Change in Interest Income:
Funds Sold $ (1.0) $ 0.5 $ (0.5)
Investment Securities
Available-for-Sale 2.4 11.1 13.5
Held-to-Maturity (4.5) 1.4 (3.1)
Loans Held for Sale (0.5) 0.3 (0.2)
Loans and Leases
Commercial and Industrial 2.2 10.7 12.9
Construction 4.4 3.0 7.4
Commercial Mortgage 0.9 4.6 5.5
Residential Mortgage 6.1 6.6 12.7
Other Revolving Credit and
Installment (2.5) 4.5 2.0
Home Equity 4.9 13.7 18.6
Lease Financing 0.1 (2.1) (2.0)
----------------------------------------------------------------------
Total Loans and Leases 16.1 41.0 57.1
----------------------------------------------------------------------
Other 0.1 (0.3) (0.2)
----------------------------------------------------------------------
Total Change in Interest Income 12.6 54.0 66.6
----------------------------------------------------------------------
Change in Interest Expense:
Interest-Bearing Deposits
Demand (0.3) 5.8 5.5
Savings (1.9) 19.7 17.8
Time 7.7 14.3 22.0
----------------------------------------------------------------------
Total Interest-Bearing Deposits 5.5 39.8 45.3
----------------------------------------------------------------------
Short-Term Borrowings 1.2 2.9 4.1
Securities Sold Under Agreements to
Repurchase 8.5 12.5 21.0
Long-Term Debt 0.4 - 0.4
----------------------------------------------------------------------
Total Change in Interest Expense 15.6 55.2 70.8
----------------------------------------------------------------------
Change in Net Interest Income $ (3.0) $ (1.2)$ (4.2)
======================================================================
(1) The changes for each category of interest income and expense are
allocated between the portion of changes attributable to the variance
in volume or rate for that category.
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits (Unaudited) Table 7
----------------------------------------------------------------------
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
(dollars in
thousands) 2006 2006 2005 2006 2005
----------------------------------------------------------------------
Salaries $ 27,923 $ 27,829 $ 27,765 $110,203 $108,286
Incentive
Compensation 5,288 3,697 4,067 17,150 16,145
Share-Based
Compensation 999 1,211 720 5,322 6,118
Commission
Expense 1,692 1,721 1,715 7,168 8,112
Retirement
and Other
Benefits 2,690 4,454 4,245 17,212 17,962
Payroll Taxes 1,992 2,117 1,999 9,791 9,748
Medical,
Dental, and
Life
Insurance 1,934 1,620 2,168 7,900 8,027
Separation
Expense 209 484 640 1,711 1,912
----------------------------------------------------------------------
Total
Salaries and
Benefits $ 42,727 $ 43,133 $ 43,319 $176,457 $176,310
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances (Unaudited) Table 8
----------------------------------------------------------------------
December 31, September 30, June 30,
(dollars in thousands) 2006 2006 2006 (1)
----------------------------------------------------------------------
Commercial
Commercial and Industrial $ 1,093,392 $ 994,531 $ 1,008,618
Commercial Mortgage 611,334 635,552 619,839
Construction 249,263 238,995 212,490
Lease Financing 508,997 489,183 475,549
----------------------------------------------------------------------
Total Commercial 2,462,986 2,358,261 2,316,496
----------------------------------------------------------------------
Consumer
Residential Mortgage 2,493,110 2,464,240 2,457,867
Home Equity 944,873 942,743 929,386
Other Revolving Credit and
Installment 700,896 701,759 714,617
Lease Financing 21,302 22,054 23,259
----------------------------------------------------------------------
Total Consumer 4,160,181 4,130,796 4,125,129
----------------------------------------------------------------------
Total Loans and Leases $ 6,623,167 $6,489,057 $ 6,441,625
======================================================================
March 31, December 31,
(dollars in thousands) 2006 (1) 2005 (1)
----------------------------------------------------------------------
Commercial
Commercial and Industrial $ 957,893 $ 918,842
Commercial Mortgage 591,770 558,346
Construction 154,737 153,682
Lease Financing 467,688 470,155
----------------------------------------------------------------------
Total Commercial 2,172,088 2,101,025
----------------------------------------------------------------------
Consumer
Residential Mortgage 2,428,733 2,417,523
Home Equity 901,459 888,075
Other Revolving Credit and Installment 719,553 736,364
Lease Financing 24,292 25,549
----------------------------------------------------------------------
Total Consumer 4,074,037 4,067,511
----------------------------------------------------------------------
Total Loans and Leases $ 6,246,125 $6,168,536
======================================================================
Air Transportation Credit Exposure (2) (Unaudited)
----------------------------------------------------------------------
December 31, Sept. 30, Dec. 31,
2006 2006 2005
-------------------------------- ---------- ---------
Unused Total Total Total
(dollars in Outstanding Commitments Exposure Exposure Exposure
thousands)
------------------------------------------------------------ ---------
Passenger
Carriers Based
In the United
States $ 68,035 $ - $ 68,035 $ 68,045 $ 68,829
Passenger
Carriers Based
Outside the
United States 19,406 - 19,406 19,475 20,678
Cargo Carriers 13,240 - 13,240 13,240 13,240
------------------------------------------------------------ ---------
Total Air
Transportation
Credit Exposure $ 100,681 $ - $100,681 $100,760 $102,747
============================================================ =========
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) Exposure includes loans, leveraged leases and operating leases.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans and
Leases Past Due 90 Days or More (Unaudited) Table 9
----------------------------------------------------------------------
December 31, September 30,
(dollars in thousands) 2006 2006
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 769 $ 400
Commercial Mortgage 40 44
Lease Financing 31 -
----------------------------------------------------------------------
Total Commercial 840 444
----------------------------------------------------------------------
Consumer
Residential Mortgage 4,914 4,253
Home Equity 164 254
----------------------------------------------------------------------
Total Consumer 5,078 4,507
----------------------------------------------------------------------
Total Non-Accrual Loans and Leases 5,918 4,951
----------------------------------------------------------------------
Foreclosed Real Estate 407 409
Other Investments 82 82
----------------------------------------------------------------------
Total Non-Performing Assets $ 6,407 $ 5,442
======================================================================
Accruing Loans and Leases Past Due 90 Days
or More
Residential Mortgage $ 519 $ 882
Home Equity 331 62
Other Revolving Credit and Installment 1,954 2,044
Lease Financing 10 -
----------------------------------------------------------------------
Total Accruing Loans and Leases Past Due 90
Days or More $ 2,814 $ 2,988
======================================================================
Total Loans and Leases $ 6,623,167 $ 6,489,057
======================================================================
Ratio of Non-Accrual Loans and Leases to
Total Loans and Leases 0.09% 0.08%
----------------------------------------------------------------------
Ratio of Non-Performing Assets to Total
Loans and Leases, Foreclosed Real Estate,
and Other Investments 0.10% 0.08%
----------------------------------------------------------------------
Ratio of Non-Performing Assets and Accruing
Loans and Leases Past Due 90 Days or More
to Total Loans and Leases 0.14% 0.13%
----------------------------------------------------------------------
Quarter to Quarter Changes in Non-Performing
Assets
Balance at Beginning of Quarter $ 5,442 $ 5,377
Additions 2,427 1,507
Reductions
Payments (255) (848)
Return to Accrual (897) (382)
Sales of Foreclosed Assets (112) (20)
Charge-offs/Write-downs (198) (192)
----------------------------------------------------------------------
Total Reductions (1,462) (1,442)
----------------------------------------------------------------------
Balance at End of Quarter $ 6,407 $ 5,442
======================================================================
June 30, March 31, December 31,
(dollars in thousands) 2006 2006 2005 (1)
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 227 $ 236 $ 212
Commercial Mortgage 48 52 58
Lease Financing - - -
----------------------------------------------------------------------
Total Commercial 275 288 270
----------------------------------------------------------------------
Consumer
Residential Mortgage 4,628 4,922 5,439
Home Equity 204 38 111
----------------------------------------------------------------------
Total Consumer 4,832 4,960 5,550
----------------------------------------------------------------------
Total Non-Accrual Loans and Leases 5,107 5,248 5,820
----------------------------------------------------------------------
Foreclosed Real Estate 188 358 358
Other Investments 82 300 300
----------------------------------------------------------------------
Total Non-Performing Assets $ 5,377 $ 5,906 $ 6,478
======================================================================
Accruing Loans and Leases Past Due
90 Days or More
Residential Mortgage $ 1,157 $ 464 $ 1,132
Home Equity 86 85 185
Other Revolving Credit and
Installment 1,561 1,390 1,504
Lease Financing - 18 29
----------------------------------------------------------------------
Total Accruing Loans and Leases
Past Due 90 Days or More $ 2,804 $ 1,957 $ 2,850
======================================================================
Total Loans and Leases $6,441,625 $6,246,125 $ 6,168,536
======================================================================
Ratio of Non-Accrual Loans and
Leases to Total Loans and Leases 0.08% 0.08% 0.09%
----------------------------------------------------------------------
Ratio of Non-Performing Assets to
Total Loans and Leases, Foreclosed
Real Estate, and Other Investments 0.08% 0.09% 0.11%
----------------------------------------------------------------------
Ratio of Non-Performing Assets and
Accruing Loans and Leases Past Due
90 Days or More to Total Loans and
Leases 0.13% 0.13% 0.15%
----------------------------------------------------------------------
Quarter to Quarter Changes in Non-
Performing Assets
Balance at Beginning of Quarter $ 5,906 $ 6,478 $ 8,250
Additions 1,509 907 1,191
Reductions
Payments (1,347) (445) (2,345)
Return to Accrual (260) (985) (231)
Sales of Foreclosed Assets (99) - (122)
Charge-offs/Write-downs (332) (49) (265)
----------------------------------------------------------------------
Total Reductions (2,038) (1,479) (2,963)
----------------------------------------------------------------------
Balance at End of Quarter $ 5,377 $ 5,906 $ 6,478
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Reserve for Credit Losses (Unaudited) Table 10
----------------------------------------------------------------------
Three Months Ended
December 31, September 30, December 31,
(dollars in thousands) 2006 2006 (1) 2005 (1)
----------------------------------------------------------------------
Balance at Beginning of Period $ 96,167 $ 96,167 $ 96,167
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (720) (593) (732)
Lease Financing - - -
Consumer
Residential Mortgage (93) - (134)
Home Equity (195) (211) (236)
Other Revolving Credit and
Installment (4,756) (3,982) (5,651)
Lease Financing (30) (18) (35)
----------------------------------------------------------------------
Total Loans and Leases Charged-
Off (5,794) (4,804) (6,788)
----------------------------------------------------------------------
Recoveries on Loans and Leases
Previously Charged-Off
Commercial
Commercial and Industrial 1,445 325 470
Commercial Mortgage - 84 3,006
Lease Financing 2 1 26
Consumer
Residential Mortgage - 223 156
Home Equity 1 120 97
Other Revolving Credit and
Installment 1,191 1,250 1,440
Lease Financing 12 16 5
----------------------------------------------------------------------
Total Recoveries on Loans and
Leases Previously Charged-Off 2,651 2,019 5,200
----------------------------------------------------------------------
Net Loan and Lease Charge-Offs (3,143) (2,785) (1,588)
Provision for Credit Losses 3,143 2,785 1,588
----------------------------------------------------------------------
Balance at End of Period (2) $ 96,167 $ 96,167 $ 96,167
======================================================================
Components
Allowance for Loan and Lease
Losses $ 90,998 $ 90,795 $ 91,090
Reserve for Unfunded
Commitments 5,169 5,372 5,077
----------------------------------------------------------------------
Total Reserve for Credit Losses $ 96,167 $ 96,167 $ 96,167
======================================================================
Average Loans and Leases
Outstanding $ 6,501,868 $ 6,470,883 $6,153,802
======================================================================
Ratio of Net Loan and Lease
Charge-Offs to
Average Loans and Leases
Outstanding (annualized) 0.19% 0.17% 0.10%
Ratio of Allowance for Loans
and Lease Losses to
Loans and Leases Outstanding 1.37% 1.40% 1.48%
Year Ended
December 31,
(dollars in thousands) 2006 2005 (1)
----------------------------------------------------------------------
Balance at Beginning of Period $ 96,167 $ 113,596
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (2,373) (2,507)
Lease Financing - (10,049)
Consumer
Residential Mortgage (132) (646)
Home Equity (633) (959)
Other Revolving Credit and Installment (17,459) (19,268)
Lease Financing (60) (104)
----------------------------------------------------------------------
Total Loans and Leases Charged-Off (20,657) (33,533)
----------------------------------------------------------------------
Recoveries on Loans and Leases Previously
Charged-Off
Commercial
Commercial and Industrial 3,509 1,751
Commercial Mortgage 509 3,246
Lease Financing 3 189
Consumer
Residential Mortgage 464 641
Home Equity 309 411
Other Revolving Credit and Installment 5,062 5,215
Lease Financing 43 63
----------------------------------------------------------------------
Total Recoveries on Loans and Leases Previously
Charged-Off 9,899 11,516
----------------------------------------------------------------------
Net Loan and Lease Charge-Offs (10,758) (22,017)
Provision for Credit Losses 10,758 4,588
----------------------------------------------------------------------
Balance at End of Period (2) $ 96,167 $ 96,167
======================================================================
Components
Allowance for Loan and Lease Losses $ 90,998 $ 91,090
Reserve for Unfunded Commitments 5,169 5,077
----------------------------------------------------------------------
Total Reserve for Credit Losses $ 96,167 $ 96,167
======================================================================
Average Loans and Leases Outstanding $6,369,200 $6,104,356
======================================================================
Ratio of Net Loan and Lease Charge-Offs to
Average Loans and Leases Outstanding
(annualized) 0.17% 0.36%
Ratio of Allowance for Loans and Lease Losses to
Loans and Leases Outstanding 1.37% 1.48%
(1) Certain prior period information has been reclassified to conform
to current presentation.
(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 Segment Selected Financial Information
(Unaudited) Table 11a
----------------------------------------------------------------------
Investment Treasury
Retail Commercial Services and Other Consolidated
(dollars in Banking Banking Group Corporate Total
thousands)
----------------------------------------------------------------------
Three Months
Ended December
31, 2006
Net Interest
Income $ 59,652 $ 34,839 $ 4,428 $ 1,286 $ 100,205
Provision for
Credit Losses 3,525 747 (1,000) (129) 3,143
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 56,127 34,092 5,428 1,415 97,062
Noninterest
Income 26,144 7,178 17,763 2,431 53,516
Noninterest
Expense (43,853) (19,733) (16,265) (1,746) (81,597)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 38,418 21,537 6,926 2,100 68,981
Provision for
Income Taxes (14,215) (7,960) (2,563) 6,670 (18,068)
----------------------------------------------------------------------
Allocated Net
Income 24,203 13,577 4,363 8,770 50,913
----------------------------------------------------------------------
Allowance
Funding Value (202) (686) (9) 897 -
Provision for
Credit Losses 3,525 747 (1,000) (129) 3,143
Economic
Provision (3,125) (2,190) (100) - (5,415)
Tax Effect of
Adjustments (73) 788 410 (284) 841
----------------------------------------------------------------------
Income Before
Capital Charge 24,328 12,236 3,664 9,254 49,482
Capital Charge (5,486) (3,982) (1,564) (8,416) (19,448)
----------------------------------------------------------------------
Net Income
After Capital
Charge (NIACC)$ 18,842 $ 8,254 $ 2,100 $ 838 $ 30,034
======================================================================
RAROC (ROE for
the Company) 48% 34% 26% 23% 29%
======================================================================
Total Assets at
December 31,
2006 $3,972,124 $2,795,509 $ 213,506 $3,590,676 $10,571,815
======================================================================
Three Months
Ended December
31, 2005 (1)
Net Interest
Income $ 57,495 $ 35,018 $ 4,621 $ 6,322 $ 103,456
Provision for
Credit Losses 4,189 (2,274) - (327) 1,588
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 53,306 37,292 4,621 6,649 101,868
Noninterest
Income 23,943 7,793 16,738 2,335 50,809
Noninterest
Expense (43,416) (19,801) (17,522) (2,440) (83,179)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 33,833 25,284 3,837 6,544 69,498
Provision for
Income Taxes (12,518) (9,358) (1,419) (1,422) (24,717)
----------------------------------------------------------------------
Allocated Net
Income 21,315 15,926 2,418 5,122 44,781
----------------------------------------------------------------------
Allowance
Funding Value (180) (544) (6) 730 -
Provision for
Credit Losses 4,189 (2,274) - (327) 1,588
Economic
Provision (3,243) (2,463) (108) (1) (5,815)
Tax Effect of
Adjustments (283) 1,954 42 (149) 1,564
----------------------------------------------------------------------
Income Before
Capital Charge 21,798 12,599 2,346 5,375 42,118
Capital Charge (5,511) (4,546) (1,668) (7,675) (19,400)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 16,287 $ 8,053 $ 678 $ (2,300)$ 22,718
======================================================================
RAROC (ROE for
the Company) 43% 30% 15% 19% 25%
======================================================================
Total Assets at
December 31,
2005 $3,890,877 $2,443,235 $ 228,903 $3,624,023 $10,187,038
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information
(Unaudited) Table 11b
----------------------------------------------------------------------
Investment Treasury
Retail Commercial Services and Other Consolidated
(dollars in Banking Banking Group Corporate Total
thousands)
----------------------------------------------------------------------
Year Ended
December 31,
2006
Net Interest
Income $ 235,440 $ 135,564 $ 17,603 $ 14,006 $ 402,613
Provision for
Credit Losses 10,491 1,965 (1) (1,697) 10,758
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 224,949 133,599 17,604 15,703 391,855
Noninterest
Income 100,294 35,421 70,413 10,048 216,176
Noninterest
Expense (170,705) (78,625) (65,151) (6,481) (320,962)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 154,538 90,395 22,866 19,270 287,069
Provision for
Income Taxes (57,179) (42,222) (8,452) 1,143 (106,710)
----------------------------------------------------------------------
Allocated Net
Income 97,359 48,173 14,414 20,413 180,359
----------------------------------------------------------------------
Allowance
Funding Value (792) (2,496) (34) 3,322 -
Provision for
Credit Losses 10,491 1,965 (1) (1,697) 10,758
Economic
Provision (12,466) (8,818) (386) (1) (21,671)
Tax Effect of
Adjustments 1,024 3,459 156 (601) 4,038
----------------------------------------------------------------------
Income Before
Capital Charge 95,616 42,283 14,149 21,436 173,484
Capital Charge (21,742) (16,264) (6,291) (32,309) (76,606)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 73,874 $ 26,019 $ 7,858 $ (10,873)$ 96,878
======================================================================
RAROC (ROE for
the Company) 48% 29% 25% 15% 26%
======================================================================
Total Assets at
December 31,
2006 $3,972,124 $2,795,509 $ 213,506 $3,590,676 $10,571,815
======================================================================
Year Ended
December 31,
2005 (1)
Net Interest
Income $ 220,579 $ 137,323 $ 17,782 $ 31,429 $ 407,113
Provision for
Credit Losses 14,151 8,942 (1) (18,504) 4,588
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 206,428 128,381 17,783 49,933 402,525
Noninterest
Income 94,684 37,078 68,231 9,321 209,314
Noninterest
Expense (170,232) (78,258) (70,582) (8,570) (327,642)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 130,880 87,201 15,432 50,684 284,197
Provision for
Income Taxes (48,426) (32,307) (5,710) (16,193) (102,636)
----------------------------------------------------------------------
Allocated Net
Income 82,454 54,894 9,722 34,491 181,561
----------------------------------------------------------------------
Allowance
Funding Value (688) (2,332) (23) 3,043 -
Provision for
Credit Losses 14,151 8,942 (1) (18,504) 4,588
Economic
Provision (13,547) (9,757) (412) (4) (23,720)
Tax Effect of
Adjustments 31 1,167 159 5,722 7,079
----------------------------------------------------------------------
Income Before
Capital Charge 82,401 52,914 9,445 24,748 169,508
Capital Charge (21,717) (17,989) (6,628) (34,112) (80,446)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 60,684 $ 34,925 $ 2,817 $ (9,364)$ 89,062
======================================================================
RAROC (ROE for
the Company) 42% 32% 16% 17% 25%
======================================================================
Total Assets at
December 31,
2005 $3,890,877 $2,443,235 $ 228,903 $3,624,023 $10,187,038
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data
(Unaudited) Table 12
---------------------------------------------------------------------
Three Months Ended
December 31, September 30, June 30,
(dollars in thousands, except
per share amounts) 2006 2006 (1) 2006 (1)
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans
and Leases $ 111,649 $ 110,065 $ 104,388
Income on Investment
Securities - Available-
for-Sale 32,807 31,949 31,226
Income on Investment
Securities - Held-to-
Maturity 4,282 4,558 4,658
Deposits 63 50 55
Funds Sold 406 66 170
Other 333 272 272
----------------------------------------------------------------------
Total Interest Income 149,540 146,960 140,769
----------------------------------------------------------------------
Interest Expense
Deposits 30,924 28,464 24,656
Securities Sold Under
Agreements to Repurchase 12,538 11,959 9,802
Funds Purchased 1,689 2,270 2,652
Short-Term Borrowings 106 82 73
Long-Term Debt 4,078 3,835 3,730
----------------------------------------------------------------------
Total Interest Expense 49,335 46,610 40,913
----------------------------------------------------------------------
Net Interest Income 100,205 100,350 99,856
Provision for Credit Losses 3,143 2,785 2,069
----------------------------------------------------------------------
Net Interest Income After
Provision for Credit Losses 97,062 97,565 97,787
----------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 14,949 14,406 14,537
Mortgage Banking 2,612 2,394 2,569
Service Charges on Deposit
Accounts 11,206 10,723 9,695
Fees, Exchange, and Other
Service Charges 15,775 16,266 15,633
Investment Securities
Gains (Losses), Net 153 19 -
Insurance 3,965 6,713 4,691
Other 4,856 6,366 6,076
----------------------------------------------------------------------
Total Noninterest Income 53,516 56,887 53,201
----------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 42,727 43,133 44,811
Net Occupancy 9,959 9,998 9,376
Net Equipment 5,012 5,285 4,802
Professional Fees 1,189 2,638 2,589
Other 22,710 18,751 17,164
----------------------------------------------------------------------
Total Noninterest Expense 81,597 79,805 78,742
----------------------------------------------------------------------
Income Before Provision for
Income Taxes 68,981 74,647 72,246
Provision for Income Taxes 18,068 27,727 35,070
----------------------------------------------------------------------
Net Income $ 50,913 $ 46,920 $ 37,176
======================================================================
Basic Earnings Per Share $ 1.03 $ 0.94 $ 0.74
Diluted Earnings Per Share $ 1.01 $ 0.92 $ 0.72
Balance Sheet Totals
Total Assets $10,571,815 $ 10,371,215 $10,325,190
Net Loans and Leases 6,532,169 6,398,262 6,350,590
Total Deposits 8,023,394 7,687,123 7,766,033
Total Shareholders' Equity 719,420 683,472 666,728
Performance Ratios
Net Income to Average Total
Assets (ROA) 1.94 % 1.81 % 1.47 %
Net Income to Average
Shareholders' Equity (ROE) 28.56 27.09 21.70
Net Interest Margin (3) 4.15 4.20 4.25
Efficiency Ratio (4) 53.08 50.75 51.45
Three Months Ended
March 31, December 31,
(dollars in thousands, except per share
amounts) 2006 2005 (2)
---------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 99,371 $ 97,697
Income on Investment Securities -
Available-for-Sale 30,835 29,820
Income on Investment Securities - Held-
to-Maturity 4,757 4,899
Deposits 43 103
Funds Sold 125 154
Other 272 272
---------------------------------------------------------------------
Total Interest Income 135,403 132,945
---------------------------------------------------------------------
Interest Expense
Deposits 19,633 17,479
Securities Sold Under Agreements to
Repurchase 7,890 6,504
Funds Purchased 1,893 1,730
Short-Term Borrowings 57 61
Long-Term Debt 3,728 3,715
---------------------------------------------------------------------
Total Interest Expense 33,201 29,489
---------------------------------------------------------------------
Net Interest Income 102,202 103,456
Provision for Credit Losses 2,761 1,588
---------------------------------------------------------------------
Net Interest Income After Provision for
Credit Losses 99,441 101,868
---------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 14,848 14,098
Mortgage Banking 2,987 2,597
Service Charges on Deposit Accounts 10,132 10,151
Fees, Exchange, and Other Service
Charges 14,767 15,147
Investment Securities Gains (Losses),
Net - (4)
Insurance 5,019 4,201
Other 4,819 4,619
---------------------------------------------------------------------
Total Noninterest Income 52,572 50,809
---------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 45,786 43,319
Net Occupancy 9,643 9,643
Net Equipment 5,028 5,358
Professional Fees 438 4,057
Other 19,923 20,802
---------------------------------------------------------------------
Total Noninterest Expense 80,818 83,179
---------------------------------------------------------------------
Income Before Provision for Income Taxes 71,195 69,498
Provision for Income Taxes 25,845 24,717
---------------------------------------------------------------------
Net Income $ 45,350 $ 44,781
=====================================================================
Basic Earnings Per Share $ 0.89 $ 0.88
Diluted Earnings Per Share $ 0.87 $ 0.86
Balance Sheet Totals
Total Assets $10,528,049 $10,187,038
Net Loans and Leases 6,155,061 6,077,446
Total Deposits 8,147,101 7,907,468
Total Shareholders' Equity 681,078 693,352
Performance Ratios
Net Income to Average Total Assets (ROA) 1.82 % 1.76 %
Net Income to Average Shareholders' Equity
(ROE) 26.13 25.19
Net Interest Margin (3) 4.41 4.43
Efficiency Ratio (4) 52.22 53.92
(1)Third quarter 2006 basic and diluted EPS was corrected from $0.95
and $0.93, respectively, and second quarter 2006 diluted EPS was
corrected from $0.73.
(2)Certain prior period information has been reclassified to conform
to current presentation.
(3) The net interest margin is defined as net interest income, on a
fully-taxable equivalent basis, as a percentage of average earning
assets.
(4) The efficiency ratio is defined as noninterest expense divided by
total revenue (net interest income and noninterest income).
CONTACT: Bank of Hawaii Corporation
Stafford Kiguchi, 808-537-8580 (Media)
Mobile: 808-265-6367
skiguchi@boh.com
Cindy Wyrick, 808-537-8430 (Investors/Analysts)
cwyrick@boh.com
SOURCE: Bank of Hawaii Corporation