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Bank of Hawaii Corporation 2018 Financial Results
Supporting Materials:
  • 2018 Earnings $5.23 Per Diluted Share
  • 2018 Net Income $219.6 Million
  • Diluted Earnings Per Share $1.30 for the Fourth Quarter of 2018
  • Net Income $53.9 Million for the Fourth Quarter of 2018
  • Board of Directors Declares Dividend of $0.62 Per Share
  • Board of Directors Authorizes Increase in Share Repurchase of $130.0 Million

HONOLULU--(BUSINESS WIRE)--Jan. 28, 2019-- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $5.23 for the full year of 2018, up 20.8 percent from diluted earnings per share of $4.33 in 2017. Net income for the year was $219.6 million, up $34.9 million or 18.9 percent from net income of $184.7 million in the previous year. The return on average assets for the full year of 2018 increased to 1.29 percent compared with 1.10 percent in 2017. The return on average equity for the full year of 2018 increased to 17.63 percent compared with 15.27 percent in 2017.

“Bank of Hawaii finished 2018 with solid financial performance,” said Peter Ho, Chairman, President, and CEO. “During the year our loan and deposit balances continued to grow and our net interest margin expanded. Our asset quality, capital and liquidity all remained strong. During the fourth quarter we completed the sale of our MyBankoh Rewards Credit Card portfolio in order to focus on our co-branded Hawaiian Airlines Bank of Hawaii World Elite Mastercard program.”

Diluted earnings per share were $1.30 for the fourth quarter of 2018, down from $1.36 in the third quarter of 2018 and up from $1.01 in the fourth quarter of 2017. Net income for the fourth quarter of 2018 was $53.9 million, down from $56.9 million in the previous quarter and up from $43.0 million in the same quarter last year. The return on average assets for the fourth quarter of 2018 was 1.26 percent, compared with 1.33 percent in the third quarter of 2018 and 1.00 percent in the fourth quarter last year. The return on average equity for the fourth quarter of 2018 was 17.05 percent compared with 18.06 percent in the third quarter of 2018 and 13.85 percent in the fourth quarter last year.

Financial Highlights

Net interest income, on a taxable-equivalent basis, was $491.5 million for the full year of 2018, an increase of $22.4 million from net interest income of $469.1 million in 2017. Net interest income, on a taxable-equivalent basis, for the fourth quarter of 2018 was $125.2 million, an increase of $1.0 million compared with net interest income of $124.2 million in the third quarter of 2018 and up $3.6 million compared with net interest income of $121.6 million in the fourth quarter last year. Analyses of changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin for the full year of 2018 was 3.05 percent, an increase of 12 basis points from the net interest margin of 2.93 percent in 2017. The net interest margin was 3.10 percent in the fourth quarter of 2018, an increase of 3 basis points from the third quarter of 2018 and 12 basis points from the fourth quarter last year. The sale of the credit card portfolio in the fourth quarter of 2018 resulted in a decrease of 2 basis points in the fourth quarter net interest margin.

The provision for credit losses for the full year of 2018 was $13.4 million compared with a provision for credit losses of $16.9 million in 2017. Results for the fourth quarter of 2018 included a provision for credit losses of $2.0 million compared with $3.8 million in the previous quarter and $4.3 million in the same quarter last year.

Noninterest income for the full year of 2018 was $168.9 million compared with noninterest income of $185.4 million in 2017. Results for 2017 included a gain of $12.5 million on the sale of Visa Class B shares compared with a charge of $1.0 million for the adjustment to the conversions ratio in 2018 and $0.9 million in higher fees related to the Visa Class B shares sold. Excluding the Visa sale, the decrease from the previous year was primarily due to a decline in mortgage banking income and service charges on deposits that were partially offset by a gain resulting from a low-income housing investment sale and distribution. Noninterest income was $42.1 million in the fourth quarter of 2018 compared with noninterest income of $41.5 million in the third quarter of 2018 and noninterest income of $41.9 million in the fourth quarter of 2017.

Noninterest expense for the full year of 2018 was $371.6 million compared with noninterest expense of $357.7 million in 2017. Noninterest expense was $95.9 million in the fourth quarter of 2018 and included $4.1 million in one-time significant items related to employee separation, a medical expense, an operational loss, and legal expenses. Noninterest expense was $90.5 million in the third quarter of 2018. There were no significant items in noninterest expense during the third quarter of 2018. Noninterest expense was $92.3 million in the fourth quarter of 2017 and included one-time employee bonuses totaling $2.2 million, including payroll taxes. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The efficiency ratio for the full year of 2018 was 56.71 percent compared with 55.66 percent in 2017. The efficiency ratio for the fourth quarter of 2018 was 57.75 percent compared with 55.07 percent in the previous quarter and 57.49 percent in the same quarter last year.

The effective tax rate for the full year of 2018 was 18.73 percent. The effective tax rate for the full year of 2017 was 31.11 percent, which included a one-time adjustment in the fourth quarter of $3.6 million related to the Tax Cuts and Jobs Act. Excluding this expense, the effective tax rate for the full year of 2017 was 29.78 percent. The lower effective tax rate in 2018 was primarily due to the reduction in the federal corporate tax rate as a result of the tax reform bill. The effective tax rate for the fourth quarter of 2018 was 20.92 percent compared with 18.75 percent in the previous quarter and 32.93 percent during the same quarter last year.

The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services and Private Banking, and Treasury & Other. Results are determined based on the Company’s internal financial management reporting process and organizational structure. Selected financial information for the business segments is included in Tables 13a and 13b.

Asset Quality

The Company’s overall asset quality continued to remain strong during the fourth quarter of 2018. Total non-performing assets were $12.9 million at December 31, 2018 compared with $13.8 million at September 30, 2018 and $16.1 million at December 31, 2017. Non-performing assets as a percentage of total loans and leases and foreclosed real estate were 0.12 percent at December 31, 2018 compared with 0.13 percent at September 30, 2018 and 0.16 percent at December 31, 2017.

Accruing loans and leases past due 90 days or more were $6.6 million at December 31, 2018 compared with $8.1 million at September 30, 2018 and $7.1 million at December 31, 2017. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more declined to $48.7 million at December 31, 2018 compared with $49.5 million at September 30, 2018 and $55.7 million at December 31, 2017. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net charge-offs for the full year of 2018 were $14.1 million or 0.14 percent of total average loans and leases compared with net charge-offs of $13.8 million or 0.15 percent of total average loans and leases in 2017. Net charge-offs during the fourth quarter of 2018 were $4.0 million or 0.15 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $6.9 million partially offset by recoveries of $2.9 million. Net charge-offs during the third quarter of 2018 were $3.3 million or 0.13 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $6.0 million and recoveries of $2.7 million. Net charge-offs during the fourth quarter of 2017 were $3.8 million or 0.15 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $5.8 million and recoveries of $2.1 million.

The allowance for loan and lease losses was $106.7 million at December 31, 2018, a decrease from $108.7 million at September 30, 2018 and $107.3 million at December 31, 2017. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.02 percent at December 31, 2018, a decrease of 4 basis points from September 30, 2018 and 8 basis points from December 31, 2017. The reduction in the provision for the allowance for loan and lease losses compared with the net charge-offs during the fourth quarter of 2018 was largely due to the release of credit loss reserves related to the credit card portfolio. The total reserve for unfunded commitments of $6.8 million at December 31, 2018 was unchanged from the prior quarter and the same quarter last year. Details of loan and lease charge-offs, recoveries, and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $17.1 billion at December 31, 2018, an increase of $152.2 million from total assets of $17.0 billion at September 30, 2018 and an increase of $54.9 million from total assets of $17.1 billion at December 31, 2017. Average total assets were $17.0 billion during the fourth quarter of 2018, a decrease of $26.8 million compared with average total assets of $17.0 billion during the previous quarter and a decrease of $96.0 million compared with average total assets of $17.1 billion during the same quarter last year.

The investment securities portfolio was $5.5 billion at December 31, 2018, a decrease of $224.1 million from total securities of $5.7 billion at September 30, 2018 and a decrease of $671.1 million from total securities of $6.2 billion at December 31, 2017. The investment securities portfolio remains largely comprised of securities issued by U.S. government agencies and included $3.5 billion in securities held to maturity and $2.0 billion in securities available for sale at December 31, 2018.

Total loans and leases increased to $10.4 billion at December 31, 2018, an increase of $217.7 million or 2.1 percent from total loans and leases of $10.2 billion at September 30, 2018 and up $651.8 million or 6.7 percent from total loans and leases of $9.8 billion at December 31, 2017. The commercial portfolio increased to $4.0 billion at the end of the fourth quarter of 2018, up $79.5 million or 2.0 percent from commercial loans of $3.9 billion at the end of the third quarter of 2018 and up $213.3 million or 5.7 percent from commercial loans of $3.8 billion at the end of the fourth quarter last year. Consumer loans grew to $6.5 billion at December 31, 2018, up $138.2 million or 2.2 percent from consumer loans of $6.3 billion at the end of the third quarter of 2018 and up $438.5 million or 7.3 percent from consumer loans of $6.0 billion at the end of the fourth quarter last year. The previously mentioned sale of the credit card portfolio during the fourth quarter of 2018 reduced the consumer loan portfolio by $51.6 million in outstanding balances. Average total loans and leases were $10.3 billion during the fourth quarter of 2018, an increase of 2.4 percent from average loans and leases of $10.1 billion during the previous quarter and up 6.5 percent from average loans and leases of $9.7 billion during the same quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $15.0 billion at December 31, 2018, up $183.9 million or 1.2 percent from total deposits of $14.8 billion at September 30, 2018 and up $143.3 million or 1.0 percent from total deposits of $14.9 billion at December 31, 2017. Consumer deposits increased to $7.7 billion at December 31, 2018, up $99.2 million or 1.3 percent from consumer deposits of $7.6 billion at the end of the third quarter of 2018 and up $248.5 million or 3.3 percent from $7.5 billion at the end of the fourth quarter last year. Commercial deposits increased to $6.1 billion at the end of the fourth quarter of 2018, up $130.8 million or 2.2 percent from $6.0 billion at the end of the third quarter of 2018 and up $124.4 million or 2.1 percent from $6.0 billion at the end of the fourth quarter last year. Other deposits, including public funds, were $1.2 billion at December 31, 2018, down slightly from $1.2 billion at September 30, 2018 and down from $1.4 billion at December 31, 2017 largely due to the strategic decision to continue the reduction of public time deposits. Average total deposits were $14.8 billion during the fourth quarter of 2018, a decrease of $41.0 million compared with average total deposits of $14.8 billion during the previous quarter and a decrease of $33.7 million compared with average total deposits of $14.8 billion during the same quarter last year. Deposit balances are summarized in Tables 7a, 7b, and 10.

During the fourth quarter of 2018, the Company repurchased 325.4 thousand shares of common stock at a total cost of $24.9 million under its share repurchase program. The average cost was $76.63 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through December 31, 2018, the Company has repurchased 55.3 million shares and returned nearly $2.2 billion to shareholders at an average cost of $39.14 per share. From January 2 through January 25, 2019 the Company repurchased an additional 178.0 thousand shares of common stock at an average cost of $72.68 per share repurchased. The Company’s Board of Directors increased the authorization under the share repurchase program by an additional $130.0 million. Remaining buyback authority under the share repurchase program was $148.8 million at January 25, 2019.

Total shareholders’ equity was $1.27 billion at December 31, 2018, up from $1.25 billion at September 30, 2018, and up from $1.23 billion at December 31, 2017. The Tier 1 Capital Ratio was 13.07 percent at December 31, 2018 compared with 13.20 percent at September 30, 2018 and 13.24 percent at December 31, 2017. The Tier 1 Leverage Ratio at December 31, 2018 was 7.60 percent compared with 7.55 percent at September 30, 2018 and 7.26 percent at December 31, 2017.

The Company’s Board of Directors declared a quarterly cash dividend of $0.62 per share on the Company’s outstanding shares. The dividend will be payable on March 14, 2019 to shareholders of record at the close of business on February 28, 2019.

Hawaii Economy

General economic conditions in Hawaii remained healthy during 2018, led by record-high visitors, low unemployment, rising real estate prices, and an active construction industry. For the first eleven months of 2018 total visitor arrivals increased 6.1 percent and visitor spending increased 8.0 percent compared to the same period in 2017. The statewide seasonally-adjusted unemployment rate remains low at 2.5 percent in December 2018 compared with 3.9 percent nationally.

Real estate prices on Oahu remained strong during 2018. The volume of single-family home and condominium sales on Oahu decreased compared with 2017, with single-family home sales down 7.7 percent and condominium sales down 2.5 percent. The median sales prices continued to increase during the year, with the median sales price of a single-family home in 2018 up 4.6 percent and the median sales price of a condominium up 3.7 percent compared with 2017. As of December 31, 2018, months of inventory of single-family homes and condominiums on Oahu were 2.8 months and 2.9 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its 2018 financial results today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern Time). The call will be accessible via teleconference and via the investor relations link of Bank of Hawaii Corporation’s website, www.boh.com. The toll-free number is 1 (844) 543-5235 in the United States and Canada and 1 (703) 318-2209 for other international callers. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, January 28, 2019. The replay number is 1 (855) 859-2056 in the United States and Canada and 1 (404) 537-3406 from other international locations. Enter the pass code 6070839 when prompted. In addition, a replay will be available on the Company’s website, www.boh.com.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain “forward-looking statements”, such as forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the U.S. Securities and Exchange Commission. We do not promise to update forward-looking statements to reflect later events or circumstances

Bank of Hawaii Corporation is an independent 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.For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com.

                             
Bank of Hawaii Corporation and Subsidiaries
Financial Highlights                           Table 1  
    Three Months Ended     Year Ended  
    December 31,     September 30,     December 31,     December 31,  

(dollars in thousands, except per share amounts)

  2018     2018     2017     2018     2017  

For the Period:

                             
Operating Results                              
Net Interest Income   $ 123,973     $ 122,927     $ 118,770     $ 486,352     $ 457,238  
Provision for Credit Losses     2,000       3,800       4,250       13,425       16,900  
Total Noninterest Income     42,108       41,482       41,855       168,923       185,417  
Total Noninterest Expense     95,911       90,538       92,336       371,624       357,691  
Net Income     53,911       56,933       42,953       219,602       184,672  
Basic Earnings Per Share     1.30       1.37       1.02       5.26       4.37  
Diluted Earnings Per Share     1.30       1.36       1.01       5.23       4.33  
Dividends Declared Per Share     0.62       0.60       0.52       2.34       2.04  
                               
Performance Ratios                              
Return on Average Assets     1.26 %     1.33 %     1.00 %     1.29

%

    1.10 %
Return on Average Shareholders' Equity     17.05       18.06       13.85       17.63       15.27  
Efficiency Ratio 1     57.75       55.07       57.49       56.71       55.66  
Net Interest Margin 2     3.10       3.07       2.98       3.05       2.93  
Dividend Payout Ratio 3     47.69       43.80       50.98       44.49       46.68  
Average Shareholders' Equity to Average Assets     7.39       7.35       7.20       7.34       7.22  
                               
Average Balances                              
Average Loans and Leases   $ 10,320,051     $ 10,081,886     $ 9,688,710     $ 10,043,661     $ 9,346,828  
Average Assets     16,988,550       17,015,340       17,084,596       16,970,992       16,749,230  
Average Deposits     14,779,511       14,820,480       14,813,218       14,757,724       14,505,423  
Average Shareholders' Equity     1,254,704       1,250,500       1,230,564       1,245,672       1,209,087  
                               
Per Share of Common Stock                              
Book Value   $ 30.56     $ 29.98     $ 29.05     $ 30.56     $ 29.05  
Tangible Book Value     29.80       29.22       28.31       29.80       28.31  
Market Value                              
Closing     67.32       78.91       85.70       67.32       85.70  
High     82.80       86.53       88.38       89.09       90.80  
Low     63.64       78.30       77.71       63.64       74.72  
                               
                December 31,     September 30,     December 31,  
                2018     2018     2017  

As of Period End:

                             

Balance Sheet Totals

                             
Loans and Leases               $ 10,448,774     $ 10,231,062     $ 9,796,947  
Total Assets                 17,143,974       16,991,734       17,089,052  
Total Deposits                 15,027,242       14,843,335       14,883,968  
Other Debt                 135,643       185,662       260,716  
Total Shareholders' Equity                 1,268,200       1,253,327       1,231,868  
                               
Asset Quality                              
Non-Performing Assets               $ 12,930     $ 13,798     $ 16,120  
Allowance for Loan and Lease Losses                 106,693       108,690       107,346  
Allowance to Loans and Leases Outstanding               1.02 %     1.06 %     1.10 %
                               
Capital Ratios                              
Common Equity Tier 1 Capital Ratio                 13.07 %     13.20 %     13.24 %
Tier 1 Capital Ratio                 13.07       13.20       13.24  
Total Capital Ratio                 14.21       14.38       14.46  
Tier 1 Leverage Ratio                 7.60       7.55       7.26  
Total Shareholders' Equity to Total Assets                 7.40       7.38       7.21  
Tangible Common Equity to Tangible Assets 4               7.23       7.20       7.04  
Tangible Common Equity to Risk-Weighted Assets 4               12.52       12.56       12.84  
                               
Non-Financial Data                              
Full-Time Equivalent Employees                 2,122       2,143       2,132  
Branches                 69       69       69  
ATMs                 382       382       387  
                                     

1

 

Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).

2

 

Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.

3

 

Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share.

4

 

Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 2 "Reconciliation of Non-GAAP Financial Measures."

Note: Common Equity Tier 1 and Tier 1 Capital Ratios were revised from 13.19% and Tangible Common Equity to Risk-Weighted Assets were revised from 12.55% as of September 30, 2018.

     
             
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures           Table 2
        December 31,   September 30,   December 31,
(dollars in thousands)   2018   2018   2017
                 
Total Shareholders' Equity   $ 1,268,200     $ 1,253,327     $ 1,231,868  

Less: Goodwill

    31,517       31,517       31,517  
Tangible Common Equity   $ 1,236,683     $ 1,221,810     $ 1,200,351  
                 
Total Assets   $ 17,143,974     $ 16,991,734     $ 17,089,052  

Less: Goodwill

    31,517       31,517       31,517  
Tangible Assets   $ 17,112,457     $ 16,960,217     $ 17,057,535  
                 

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

  $ 9,878,904     $ 9,731,082     $ 9,348,296  
                 
Total Shareholders' Equity to Total Assets     7.40 %     7.38 %     7.21 %
Tangible Common Equity to Tangible Assets (Non-GAAP)     7.23 %     7.20 %     7.04 %
                 
Tier 1 Capital Ratio     13.07 %     13.20 %     13.24 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP)     12.52 %     12.56 %     12.84 %
             

Note: Risk-Weighted Assets was revised from $9,732,618, Tier 1 Capital Ratio was revised from 13.19%, and Tangible Common Equity to Risk-Weighted Assets was revised from 12.55% as of September 30, 2018.

 
                     
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income                   Table 3
    Three Months Ended   Year Ended
    December 31,   September 30,   December 31,   December 31,
(dollars in thousands, except per share amounts)   2018   2018   2017   2018   2017
Interest Income                    
Interest and Fees on Loans and Leases   $ 107,404     $ 104,248     $ 96,974     $ 410,597     $ 370,441
Income on Investment Securities                    
Available-for-Sale     13,043       12,588       11,866       50,152       46,772
Held-to-Maturity     21,482       20,821       21,782       84,310       81,740
Deposits     10       10       3       34       15
Funds Sold     727       1,393       717       3,723       3,882
Other     352       364       271       1,357       944
Total Interest Income     143,018       139,424       131,613       550,173       503,794
Interest Expense                    
Deposits     13,172       10,931       6,980       41,143       22,332
Securities Sold Under Agreements to Repurchase     4,671       4,667       4,664       18,519       19,592
Funds Purchased     440       33       81       609       123
Short-Term Borrowings     88       28       -       145       64
Other Debt     674       838       1,118       3,405       4,445
Total Interest Expense     19,045       16,497       12,843       63,821       46,556
Net Interest Income     123,973       122,927       118,770       486,352       457,238
Provision for Credit Losses     2,000       3,800       4,250       13,425       16,900
Net Interest Income After Provision for Credit Losses     121,973       119,127       114,520       472,927       440,338
Noninterest Income                    
Trust and Asset Management     10,558       10,782       11,105       43,877       45,430
Mortgage Banking     2,148       1,965       2,593       8,437       12,949
Service Charges on Deposit Accounts     7,562       7,255       8,053       28,811       32,575
Fees, Exchange, and Other Service Charges     14,576       14,173       13,784       57,482       54,845
Investment Securities Gains (Losses), Net     (841 )     (729 )     (617

)

    (3,938 )     10,430
Annuity and Insurance     1,409       1,360       1,273       5,822       6,858
Bank-Owned Life Insurance     1,941       1,620       1,609       7,199       6,517
Other     4,755       5,056       4,055       21,233       15,813
Total Noninterest Income     42,108       41,482       41,855       168,923       185,417
Noninterest Expense                    
Salaries and Benefits     54,856       51,782       51,698       213,208       203,729
Net Occupancy     8,918       8,702       8,510       34,742       32,536
Net Equipment     6,364       6,116       5,454       23,852       22,078
Data Processing     5,151       4,241       4,310       17,846       15,483
Professional Fees     2,467       2,206       3,266       9,992       11,681
FDIC Insurance     1,336       2,057       2,253       7,732       8,666
Other     16,819       15,434       16,845       64,252       63,518
Total Noninterest Expense     95,911       90,538       92,336       371,624       357,691
Income Before Provision for Income Taxes     68,170       70,071       64,039       270,226       268,064
Provision for Income Taxes     14,259       13,138       21,086       50,624       83,392
Net Income   $ 53,911     $ 56,933     $ 42,953     $ 219,602     $ 184,672
Basic Earnings Per Share   $ 1.30     $ 1.37     $ 1.02     $ 5.26     $ 4.37
Diluted Earnings Per Share   $ 1.30     $ 1.36     $ 1.01     $ 5.23     $ 4.33
Dividends Declared Per Share   $ 0.62     $ 0.60     $ 0.52     $ 2.34     $ 2.04
Basic Weighted Average Shares     41,325,456       41,620,776       42,116,452       41,714,770       42,280,931
Diluted Weighted Average Shares     41,601,649       41,899,401       42,450,191       41,999,399       42,607,057
                     

Note: Certain prior period information has been reclassified to conform to current presentation.

 
                     
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income               Table 4
      Three Months Ended   Year Ended
      December 31,   September 30,   December 31,   December 31,
(dollars in thousands)   2018   2018   2017   2018   2017
Net Income   $ 53,911     $ 56,933     $ 42,953     $ 219,602     $ 184,672  
Other Comprehensive Income (Loss), Net of Tax:                    
Net Unrealized Gains (Losses) on Investment Securities     11,169       (5,599 )     (10,430 )     (6,525 )     (1,986 )
Defined Benefit Plans     (2,974 )     216       738       (2,326 )     1,177  
Other Comprehensive Income (Loss)     8,195       (5,383 )     (9,692 )     (8,851 )     (809 )
Comprehensive Income   $ 62,106     $ 51,550     $ 33,261     $ 210,751     $ 183,863  
                     
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition           Table 5
    December 31,   September 30,   December 31,
(dollars in thousands)   2018   2018   2017
Assets            
Interest-Bearing Deposits in Other Banks   $ 3,028     $ 3,725     $ 3,421  
Funds Sold     198,860       104,199       181,413  
Investment Securities            
Available-for-Sale     2,007,942       2,049,687       2,232,979  
Held-to-Maturity (Fair Value of $3,413,994; $3,549,235; and $3,894,121)     3,482,092       3,664,487       3,928,170  
Loans Held for Sale     10,987       18,063       19,231  
Loans and Leases     10,448,774       10,231,062       9,796,947  
Allowance for Loan and Lease Losses     (106,693 )     (108,690 )     (107,346 )
Net Loans and Leases     10,342,081       10,122,372       9,689,601  
Total Earning Assets     16,044,990       15,962,533       16,054,815  
Cash and Due from Banks     324,081       227,049       263,017  
Premises and Equipment, Net     151,837       142,928       130,926  
Accrued Interest Receivable     51,230       54,839       50,485  
Foreclosed Real Estate     1,356       1,909       1,040  
Mortgage Servicing Rights     24,310       24,463       24,622  
Goodwill     31,517       31,517       31,517  
Bank-Owned Life Insurance     283,771       282,637       280,034  
Other Assets     230,882       263,859       252,596  
Total Assets   $ 17,143,974     $ 16,991,734     $ 17,089,052  
             
Liabilities            
Deposits            
Noninterest-Bearing Demand   $ 4,739,596     $ 4,678,981     $ 4,724,300  
Interest-Bearing Demand     3,002,925       2,975,069       3,082,563  
Savings     5,539,199       5,444,053       5,389,013  
Time     1,745,522       1,745,232       1,688,092  
Total Deposits     15,027,242       14,843,335       14,883,968  
Short-Term Borrowings     199       629       -  
Securities Sold Under Agreements to Repurchase     504,296       504,293       505,293  
Other Debt     135,643       185,662       260,716  
Retirement Benefits Payable     40,494       36,288       37,312  
Accrued Interest Payable     8,253       7,689       6,946  
Taxes Payable and Deferred Taxes     19,736       15,549       24,009  
Other Liabilities     139,911       144,962       138,940  
Total Liabilities     15,875,774       15,738,407       15,857,184  
Shareholders' Equity            

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: December 31, 2018 - 58,063,689 / 41,499,898; September 30, 2018 - 58,070,578 / 41,809,551; and December 31, 2017 - 57,959,074 / 42,401,443)

    577       577       576  
Capital Surplus     571,704       569,223       561,161  
Accumulated Other Comprehensive Loss     (51,043 )     (59,238 )     (34,715 )
Retained Earnings     1,641,314       1,612,998       1,512,218  

Treasury Stock, at Cost (Shares: December 31, 2018 - 16,563,791; September 30, 2018 - 16,261,027; and December 31, 2017 - 15,557,631)

    (894,352 )     (870,233 )     (807,372 )
Total Shareholders' Equity     1,268,200       1,253,327       1,231,868  
Total Liabilities and Shareholders' Equity   $ 17,143,974     $ 16,991,734     $ 17,089,052  
                         
                         
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity               Table 6
                Accum.            
                Other            
                Compre-            
                hensive            
    Common Shares   Common   Capital   Income   Retained   Treasury    
(dollars in thousands)   Outstanding   Stock   Surplus   (Loss)   Earnings   Stock   Total
Balance as of December 31, 2016   42,635,978     $ 576   $ 551,628   $ (33,906 )   $ 1,415,440     $ (772,201 )   $ 1,161,537  
Net Income   -       -     -     -       184,672       -       184,672  
Other Comprehensive Loss   -       -     -     (809 )     -       -       (809 )
Share-Based Compensation   -       -     7,369     -       -       -       7,369  

Common Stock Issued under Purchase and Equity Compensation Plans and Related Tax Benefits

  337,091       -     2,164     -       (828 )     11,905       13,241  
Common Stock Repurchased   (571,626 )     -     -     -       -       (47,076 )     (47,076 )
Cash Dividends Declared ($2.04 per share)   -       -     -     -       (87,066 )     -       (87,066 )
Balance as of December 31, 2017   42,401,443     $ 576   $ 561,161   $ (34,715 )   $ 1,512,218     $ (807,372 )   $ 1,231,868  
                             
Net Income   -       -     -     -       219,602       -       219,602  
Other Comprehensive Loss   -       -     -     (8,851 )     -       -       (8,851 )

Reclassification of the Income Tax Effects of the Tax Cuts and Jobs Act from AOCI

  -       -     -     (7,477 )     7,477       -       -  
Share-Based Compensation   -       -     8,146     -       -       -       8,146  

Common Stock Issued under Purchase and Equity Compensation Plans and Related Tax Benefits

  219,210       1     2,397     -       513       5,008       7,919  
Common Stock Repurchased   (1,120,755 )     -     -     -       -       (91,988 )     (91,988 )
Cash Dividends Declared ($2.34 per share)   -       -     -     -       (98,496 )     -       (98,496 )
Balance as of December 31, 2018   41,499,898     $ 577   $ 571,704   $ (51,043 )   $ 1,641,314     $ (894,352 )   $ 1,268,200  
                             
                                       
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis             Table 7a  
      Three Months Ended     Three Months Ended     Three Months Ended  
      December 31, 2018     September 30, 2018     December 31, 2017  
      Average   Income/   Yield/     Average   Income/   Yield/     Average   Income/   Yield/  
(dollars in millions)   Balance   Expense   Rate     Balance   Expense   Rate     Balance   Expense   Rate  
Earning Assets                                          
Interest-Bearing Deposits in Other Banks   $ 3.3   $ -   1.21

%

 

$

3.6   $ -   1.09 %   $ 3.2   $ -   0.46 %
Funds Sold     128.2     0.7   2.22       281.9     1.4   1.93       221.0     0.7   1.27  
Investment Securities                                          
Available-for-Sale                                          

Taxable

    1,480.5     10.0   2.70       1,512.1     9.5   2.51       1,669.7     8.5   2.05  
Non-Taxable     556.4     3.8   2.77       567.5     3.9   2.75       619.0     5.1   3.29  
Held-to-Maturity                                          
Taxable     3,360.5     20.0   2.38       3,413.7     19.3   2.26       3,775.6     20.3   2.15  
Non-Taxable     235.1     1.9   3.16       236.1     1.9   3.16       239.0     2.3   3.87  
Total Investment Securities     5,632.5     35.7   2.53       5,729.4     34.6   2.41       6,303.3     36.2   2.30  
Loans Held for Sale     12.1     0.2   4.63       14.9     0.2   4.45       15.9     0.2   4.02  
Loans and Leases 1                                          
Commercial and Industrial     1,351.1     14.3   4.21       1,279.4     13.0   4.04       1,284.5     11.7   3.62  
Commercial Mortgage     2,256.0     24.2   4.25       2,180.5     23.0   4.19       2,063.2     20.2   3.89  
Construction     179.8     2.2   4.79       187.0     2.2   4.65       213.8     2.6   4.78  
Commercial Lease Financing     173.2     1.0   2.42       175.0     1.0   2.30       202.6     1.3   2.56  
Residential Mortgage     3,615.8     35.1   3.88       3,563.5     34.0   3.82       3,420.0     32.6   3.81  
Home Equity     1,652.4     15.7   3.78       1,622.4     15.7   3.83       1,552.4     14.3   3.65  
Automobile     641.8     6.0   3.73       606.3     5.9   3.84       516.3     5.8   4.43  
Other 2     450.0     8.8   7.72       467.8     9.3   7.90       435.9     8.5   7.80  
Total Loans and Leases     10,320.1     107.3   4.14       10,081.9     104.1   4.11       9,688.7     97.0   3.98  
Other     36.8     0.4   3.82       38.9     0.4   3.74       40.6     0.3   2.67  
Total Earning Assets 3     16,133.0     144.3   3.56       16,150.6     140.7   3.47       16,272.7     134.4   3.29  
Cash and Due from Banks     234.3               252.1               229.5          
Other Assets     621.3               612.6               582.4          
Total Assets   $ 16,988.6             $ 17,015.3             $ 17,084.6          
                                             
Interest-Bearing Liabilities                                          
Interest-Bearing Deposits                                          
Demand   $ 2,888.3     1.5   0.20     $ 2,999.5     1.3   0.17     $ 2,877.7     0.5   0.06  
Savings     5,494.5     4.5   0.32       5,482.4     3.8   0.28       5,396.9     1.9   0.14  
Time     1,800.7     7.2   1.59       1,683.0     5.8   1.37       1,767.9     4.6   1.03  
Total Interest-Bearing Deposits     10,183.5     13.2   0.51       10,164.9     10.9   0.43       10,042.5     7.0   0.28  
Short-Term Borrowings     89.6     0.5   2.31       11.6     0.1   2.06       25.0     0.1   1.27  
Securities Sold Under Agreements to Repurchase     504.3     4.7   3.62       504.3     4.7   3.62       505.3     4.6   3.61  
Other Debt     145.2     0.7   1.85       208.5     0.8   1.60       267.6     1.1   1.66  
Total Interest-Bearing Liabilities     10,922.6     19.1   0.69       10,889.3     16.5   0.60       10,840.4     12.8   0.47  
Net Interest Income       $ 125.2             $ 124.2             $ 121.6      
Interest Rate Spread           2.87 %         2.87 %         2.82 %
Net Interest Margin           3.10 %         3.07 %         2.98 %
Noninterest-Bearing Demand Deposits     4,596.0               4,655.6               4,770.7          
Other Liabilities     215.3               219.9               242.9          
Shareholders' Equity     1,254.7               1,250.5               1,230.6          

Total Liabilities and Shareholders' Equity

  $ 16,988.6             $ 17,015.3             $ 17,084.6          
                                           

1

 

Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

2

 

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

3

 

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% for 2018 and 35% for 2017, of $1,263,000 for the three months ended December 31, 2018, $1,265,000 for the three months ended September 30, 2018, and $2,808,000 for the three months ended December 31, 2017.

     
                             
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis                 Table 7b  
      Year Ended     Year Ended  
      December 31, 2018     December 31, 2017  
      Average   Income/   Yield/     Average   Income/   Yield/  
(dollars in millions)   Balance   Expense   Rate     Balance   Expense   Rate  
Earning Assets                            
Interest-Bearing Deposits in Other Banks   $ 3.2   $ -   1.05 %   $ 3.4   $ -   0.45 %
Funds Sold     200.0     3.7   1.86       423.0     3.9   0.92  
Investment Securities                            
Available-for-Sale                            
Taxable     1,537.7     37.6   2.44       1,659.3     33.1   2.00  
Non-Taxable     577.9     15.9   2.76       643.7     21.0   3.27  
Held-to-Maturity                            
Taxable     3,468.4     78.4   2.26       3,648.6     75.7   2.07  
Non-Taxable     236.5     7.5   3.17       240.4     9.3   3.88  
Total Investment Securities     5,820.5     139.4   2.39       6,192.0     139.1   2.25  
Loans Held for Sale     14.0     0.6   4.31       22.6     0.9   3.99  
Loans and Leases 1                            
Commercial and Industrial     1,304.8     51.9   3.98       1,262.8     44.5   3.52  
Commercial Mortgage     2,164.6     89.7   4.14       1,977.1     75.7   3.83  
Construction     184.9     8.6   4.68       238.4     11.2   4.69  
Commercial Lease Financing     176.8     4.1   2.29       205.9     4.8   2.32  
Residential Mortgage     3,546.5     136.0   3.84       3,307.6     126.4   3.82  
Home Equity     1,620.8     61.1   3.77       1,467.7     53.2   3.62  
Automobile     591.2     23.2   3.92       486.5     23.2   4.78  
Other 2     454.1     35.6   7.85       400.8     31.8   7.93  
Total Loans and Leases     10,043.7     410.2   4.08       9,346.8     370.8   3.97  
Other     39.0     1.4   3.48       40.5     0.9   2.33  
Total Earning Assets 3     16,120.4     555.3   3.44       16,028.3     515.6   3.22  
Cash and Due from Banks     241.6               158.7          
Other Assets     609.0               562.2          
Total Assets   $ 16,971.0             $ 16,749.2          
                               
Interest-Bearing Liabilities                            
Interest-Bearing Deposits                            
Demand   $ 2,958.8     4.7   0.16     $ 2,871.7     1.7   0.06  
Savings     5,434.3     13.6   0.25       5,388.5     6.7   0.12  
Time     1,725.9     22.8   1.32       1,589.4     13.9   0.88  
Total Interest-Bearing Deposits     10,119.0     41.1   0.41       9,849.6     22.3   0.23  
Short-Term Borrowings     35.5     0.8   2.13       17.7     0.2   1.05  
Securities Sold Under Agreements to Repurchase     504.7     18.5   3.67       507.0     19.6   3.86  
Other Debt     211.3     3.4   1.61       267.9     4.4   1.66  
Total Interest-Bearing Liabilities     10,870.5     63.8   0.59       10,642.2     46.5   0.44  
Net Interest Income       $ 491.5             $ 469.1      
Interest Rate Spread           2.85 %           2.78 %
Net Interest Margin           3.05 %           2.93 %
Noninterest-Bearing Demand Deposits     4,638.7               4,655.8          
Other Liabilities     216.1               242.1          
Shareholders' Equity     1,245.7               1,209.1          
Total Liabilities and Shareholders' Equity   $ 16,971.0             $ 16,749.2          
                                 

1

 

Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

2

 

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

3

 

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% for 2018 and 35% for 2017, of $5,170,000 for the year ended December 31, 2018 and $11,843,000 for the year ended December 31, 2017.

   

 

             
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis           Table 8a
    Three Months Ended December 31, 2018
    Compared to September 30, 2018
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:            
Funds Sold   $ (0.9 )   $ 0.2     $ (0.7 )
Investment Securities            
Available-for-Sale            
Taxable     (0.2 )     0.7       0.5  
Non-Taxable     (0.1 )     -       (0.1 )
Held-to-Maturity            
Taxable     (0.3 )     1.0       0.7  
Total Investment Securities     (0.6 )     1.7       1.1  
Loans and Leases            
Commercial and Industrial     0.8       0.5       1.3  
Commercial Mortgage     0.8       0.4       1.2  
Construction     (0.1 )     0.1       -  
Residential Mortgage     0.5       0.6       1.1  
Home Equity     0.2       (0.2 )     -  
Automobile     0.3       (0.2 )     0.1  
Other 2     (0.3 )     (0.2 )     (0.5 )
Total Loans and Leases     2.2       1.0       3.2  
Total Change in Interest Income     0.7       2.9       3.6  
             
Change in Interest Expense:            
Interest-Bearing Deposits            
Demand     -       0.2       0.2  
Savings     -       0.7       0.7  
Time     0.4       1.0       1.4  
Total Interest-Bearing Deposits     0.4       1.9       2.3  
Short-Term Borrowings     0.4       -       0.4  
Other Debt     (0.2 )     0.1       (0.1 )
Total Change in Interest Expense     0.6       2.0       2.6  
             
Change in Net Interest Income   $ 0.1     $ 0.9     $ 1.0  
             

1

 

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

2

 

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

 
       
             
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis           Table 8b
    Three Months Ended December 31, 2018
    Compared to December 31, 2017
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:            
Funds Sold   $ (0.4

)

  $ 0.4     $ -  
Investment Securities            
Available-for-Sale            
Taxable     (1.0 )     2.5       1.5  
Non-Taxable     (0.5 )     (0.8 )     (1.3 )
Held-to-Maturity            
Taxable     (2.4 )     2.1       (0.3 )
Non-Taxable     -       (0.4 )     (0.4 )
Total Investment Securities     (3.9 )     3.4       (0.5 )
Loans and Leases            
Commercial and Industrial     0.6       2.0       2.6  
Commercial Mortgage     2.0       2.0       4.0  
Construction     (0.4 )     -       (0.4 )
Commercial Lease Financing     (0.2 )     (0.1 )     (0.3 )
Residential Mortgage     1.9       0.6       2.5  
Home Equity     0.9       0.5       1.4  
Automobile     1.2       (1.0 )     0.2  
Other 2     0.4       (0.1 )     0.3  
Total Loans and Leases     6.4       3.9       10.3  
Other     (0.1 )     0.2       0.1  
Total Change in Interest Income     2.0       7.9       9.9  
             
Change in Interest Expense:            
Interest-Bearing Deposits            
Demand     -       1.0       1.0  
Savings     -       2.6       2.6  
Time     0.1       2.5       2.6  
Total Interest-Bearing Deposits     0.1       6.1       6.2  
Short-Term Borrowings     0.3       0.1       0.4  
Securities Sold Under Agreements to Repurchase     -       0.1       0.1  
Other Debt     (0.5 )     0.1       (0.4 )
Total Change in Interest Expense     (0.1 )     6.4       6.3  
             
Change in Net Interest Income   $ 2.1     $ 1.5     $ 3.6  
                         

1

 

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

2

 

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

     
             
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis           Table 8c
    Year Ended December 31, 2018
    Compared to December 31, 2017
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:            
Funds Sold   $ (2.8 )   $ 2.6     $ (0.2 )
Investment Securities            
Available-for-Sale            
Taxable     (2.5 )     7.0       4.5  
Non-Taxable     (2.0 )     (3.1 )     (5.1 )
Held-to-Maturity            
Taxable     (3.9 )     6.6       2.7  
Non-Taxable     (0.1 )     (1.7 )     (1.8 )
Total Investment Securities     (8.5 )     8.8       0.3  
Loans Held for Sale     (0.4 )     0.1       (0.3 )
Loans and Leases            
Commercial and Industrial     1.5       5.9       7.4  
Commercial Mortgage     7.6       6.4       14.0  
Construction     (2.5 )     (0.1 )     (2.6 )
Commercial Lease Financing     (0.7 )     -       (0.7 )
Residential Mortgage     9.1       0.5       9.6  
Home Equity     5.7       2.2       7.9  
Automobile     4.5       (4.5 )     -  
Other 2     4.1       (0.3 )     3.8  
Total Loans and Leases     29.3       10.1       39.4  
Other     0.1       0.4       0.5  
Total Change in Interest Income     17.7       22.0       39.7  
             
Change in Interest Expense:            
Interest-Bearing Deposits            
Demand     0.1       2.9       3.0  
Savings     0.1       6.8       6.9  
Time     1.3       7.6       8.9  
Total Interest-Bearing Deposits     1.5       17.3       18.8  
Short-Term Borrowings     0.3       0.3       0.6  
Securities Sold Under Agreements to Repurchase     (0.1 )     (1.0 )     (1.1 )
Other Debt     (0.9 )     (0.1 )     (1.0 )
Total Change in Interest Expense     0.8       16.5       17.3  
             
             
Change in Net Interest Income   $ 16.9     $ 5.5     $ 22.4  

1

 

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

2

 

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

     
                     
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits                   Table 9
    Three Months Ended   Year Ended
    December 31,   September 30,   December 31,   December 31,
(dollars in thousands)   2018   2018   2017   2018   2017
Salaries   $ 33,603   $ 33,308     $ 31,132   $ 132,884   $ 122,334
Incentive Compensation     5,715     5,378       7,078     20,687     22,834
Share-Based Compensation     1,417     2,153       3,040     8,074     10,184
Commission Expense     1,158     1,034       1,427     4,418     6,493
Retirement and Other Benefits     4,369     3,925       4,178     17,313     16,347
Payroll Taxes     2,277     2,372       2,301     11,389     11,025
Medical, Dental, and Life Insurance     5,237     3,616       2,503     16,134     12,362
Separation Expense     1,080     (4 )     39     2,309     2,150
Total Salaries and Benefits   $ 54,856   $ 51,782     $ 51,698   $ 213,208   $ 203,729
                     
Note: Certain prior period information has been reclassified to conform to current presentation.
 
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances                   Table 10
      December 31,   September 30,   June 30,   March 31,   December 31,
(dollars in thousands)   2018   2018   2018   2018   2017
Commercial                    
Commercial and Industrial   $ 1,331,149   $ 1,314,609   $ 1,282,967   $ 1,329,096   $ 1,279,347
Commercial Mortgage     2,302,356     2,237,020     2,169,357     2,097,339     2,103,967
Construction     170,061     176,447     185,350     186,530     202,253
Lease Financing     176,226     172,232     178,598     179,771     180,931
Total Commercial     3,979,792     3,900,308     3,816,272     3,792,736     3,766,498
Consumer                    
Residential Mortgage     3,673,796     3,596,627     3,548,444     3,505,239     3,466,773
Home Equity     1,681,442     1,625,208     1,622,314     1,601,698     1,585,455
Automobile     658,133     625,086     592,705     558,468     528,474
Other 1     455,611     483,833     473,588     458,487     449,747
Total Consumer     6,468,982     6,330,754     6,237,051     6,123,892     6,030,449
Total Loans and Leases   $ 10,448,774   $ 10,231,062   $ 10,053,323   $ 9,916,628   $ 9,796,947
                       
                       
Deposits                    
      December 31,   September 30,   June 30,   March 31,   December 31,
(dollars in thousands)   2018   2018   2018   2018   2017
Consumer   $ 7,726,731   $ 7,627,527   $ 7,672,435   $ 7,665,926   $ 7,478,228
Commercial     6,098,186     5,967,343     5,921,414     5,897,194     5,973,763
Public and Other     1,202,325     1,248,465     1,349,509     1,394,013     1,431,977
Total Deposits   $ 15,027,242   $ 14,843,335   $ 14,943,358   $ 14,957,133   $ 14,883,968
                               

1

 

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

     
                     
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More   Table 11
        December 31,   September 30,   June 30,   March 31,   December 31,
(dollars in thousands)   2018   2018   2018   2018   2017
Non-Performing Assets                    
Non-Accrual Loans and Leases                    
Commercial                    
Commercial and Industrial   $ 542     $ 1,205     $ 917     $ 986     $ 448  
Commercial Mortgage     2,040       652       659       1,367       1,398  
Total Commercial     2,582       1,857       1,576       2,353       1,846  
Consumer                    
Residential Mortgage     5,321       6,359       6,722       6,725       9,243  
Home Equity     3,671       3,673       3,933       3,890       3,991  
Total Consumer     8,992       10,032       10,655       10,615       13,234  
Total Non-Accrual Loans and Leases     11,574       11,889       12,231       12,968       15,080  
Foreclosed Real Estate     1,356       1,909       2,926       2,768       1,040  
Total Non-Performing Assets   $ 12,930     $ 13,798     $ 15,157     $ 15,736     $ 16,120  
                         
Accruing Loans and Leases Past Due 90 Days or More                  
Commercial                    
Commercial and Industrial   $ 10     $ -     $ 2     $ -     $ -  
Commercial Mortgage     -       -       5,680       -       -  
Total Commercial     10       -       5,682       -       -  
Consumer                    
Residential Mortgage   $ 2,446     $ 2,426     $ 2,281     $ 2,927     $ 2,703  
Home Equity     2,684       3,112       3,016       3,013       1,624  
Automobile     513       829       674       333       886  
Other 1     914       1,727       1,660       1,895       1,934  
Total Consumer     6,557       8,094       7,631       8,168       7,147  
Total Accruing Loans and Leases Past Due 90 Days or More   $ 6,567     $ 8,094     $ 13,313     $ 8,168     $ 7,147  

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

  $ 48,731     $ 49,462     $ 50,212     $ 56,743     $ 55,672  
Total Loans and Leases   $ 10,448,774     $ 10,231,062     $ 10,053,323     $ 9,916,628     $ 9,796,947  
                         
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases     0.11 %     0.12 %     0.12 %     0.13 %     0.15 %
                         

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

    0.12 %     0.13 %     0.15 %     0.16 %     0.16 %
                         

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

    0.06 %     0.05 %     0.04 %     0.06 %     0.05 %
                         

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

    0.16 %     0.19 %     0.22 %     0.22 %     0.24 %
                         

Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases and Foreclosed Real Estate

    0.19 %     0.21 %     0.28 %     0.24 %     0.24 %
                         
Quarter to Quarter Changes in Non-Performing Assets                  
Balance at Beginning of Quarter   $ 13,798     $ 15,157     $ 15,736     $ 16,120     $ 17,035  
Additions     4,509       2,030       1,949       2,332       2,109  
Reductions                    
Payments     (3,759 )     (415 )     (1,847 )     (1,251 )     (368 )
Return to Accrual Status     (605 )     (1,420 )     (126 )     (1,270 )     (1,779 )
Sales of Foreclosed Real Estate     (653 )     (1,301 )     (421 )     -       (353 )
Charge-offs/Write-downs     (360 )     (253 )     (134 )     (195 )     (524 )
Total Reductions     (5,377 )     (3,389 )     (2,528 )     (2,716 )     (3,024 )
Balance at End of Quarter   $ 12,930     $ 13,798     $ 15,157     $ 15,736     $ 16,120  
                     

1

 

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

     
                     
Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses                   Table 12
        Three Months Ended   Year Ended
        December 31,   September 30,   December 31,   December 31,
(dollars in thousands)   2018   2018   2017   2018   2017
Balance at Beginning of Period   $ 115,512     $ 115,010     $ 113,703    

$

114,168    

$

110,845  
Loans and Leases Charged-Off                    
Commercial                    
Commercial and Industrial     (365 )     (449 )     (499 )     (1,505 )     (1,408 )
Consumer                    
Residential Mortgage     (1 )     -       (4

)

 

  (101 )     (729 )
Home Equity     (406 )     (124 )     (221 )     (665 )     (995 )
Automobile     (2,335 )     (2,114 )     (2,014 )     (8,218 )     (7,737 )
Other 1     (3,781 )     (3,340 )     (3,108 )     (14,075 )     (12,386 )
Total Loans and Leases Charged-Off     (6,888 )     (6,027 )     (5,846 )     (24,564 )     (23,255 )
Recoveries on Loans and Leases Previously Charged-Off                    
Commercial                    
Commercial and Industrial     803       542       284       2,039       1,482  
Lease Financing     -       -       1       -       3  
Consumer                    
Residential Mortgage     112       261       182       807       639  
Home Equity     367       558       498       2,001       2,681  
Automobile     949       616       576       2,902       2,495  
Other 1     660       752       520       2,737       2,128  
Total Recoveries on Loans and Leases Previously Charged-Off     2,891       2,729       2,061       10,486       9,428  
Net Loans and Leases Charged-Off     (3,997 )     (3,298 )     (3,785 )     (14,078 )     (13,827 )
Provision for Credit Losses     2,000       3,800       4,250       13,425       16,900  
Provision for Unfunded Commitments     -       -       -       -       250  
Balance at End of Period 2   $ 113,515     $ 115,512     $ 114,168     $ 113,515     $ 114,168  
                         
Components                    
Allowance for Loan and Lease Losses   $ 106,693     $ 108,690     $ 107,346     $ 106,693     $ 107,346  
Reserve for Unfunded Commitments     6,822       6,822       6,822       6,822       6,822  
Total Reserve for Credit Losses   $ 113,515     $ 115,512     $ 114,168     $ 113,515     $ 114,168  
                         
Average Loans and Leases Outstanding   $ 10,320,051     $ 10,081,886     $ 9,688,710     $ 10,043,661     $ 9,346,828  
                         

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

    0.15 %     0.13 %     0.15 %     0.14 %     0.15 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding     1.02 %     1.06 %     1.10 %     1.02 %     1.10 %
                     

1

 

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

2

 

Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.

     
                     
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information               Table 13a
            Investment        
            Services and      
    Retail   Commercial   Private   Treasury   Consolidated
(dollars in thousands)   Banking   Banking   Banking   and Other   Total
Three Months Ended December 31, 2018                    
Net Interest Income   $ 67,452     $ 46,429     $ 10,235     $ (143 )   $ 123,973  
Provision for Credit Losses     4,481       (484 )     (1 )     (1,996 )     2,000  
Net Interest Income After Provision for Credit Losses     62,971       46,913       10,236       1,853       121,973  
Noninterest Income     20,339       6,338       13,397       2,034       42,108  
Noninterest Expense     (53,417 )     (20,912 )     (17,583 )     (3,999 )     (95,911 )
Income Before Provision for Income Taxes     29,893       32,339       6,050       (112 )     68,170  
Provision for Income Taxes     (7,465 )     (7,714 )     (1,595 )     2,515       (14,259 )
Net Income   $ 22,428     $ 24,625     $ 4,455     $ 2,403     $ 53,911  
Total Assets as of December 31, 2018   $ 6,365,263     $ 3,958,523     $ 349,832     $ 6,470,356     $ 17,143,974  
                     
                     
Three Months Ended December 31, 2017                    
Net Interest Income   $ 65,408     $ 43,932     $ 9,008     $ 422     $ 118,770  
Provision for Credit Losses     3,595       195       (5 )     465       4,250  
Net Interest Income After Provision for Credit Losses     61,813       43,737       9,013       (43 )     114,520  
Noninterest Income     20,910       5,219       13,716       2,010       41,855  
Noninterest Expense     (54,021 )     (19,726 )     (15,982 )     (2,607 )     (92,336 )
Income Before Provision for Income Taxes     28,702       29,230       6,747       (640 )     64,039  
Provision for Income Taxes     (10,222 )     (10,325 )     (2,496 )     1,957       (21,086 )
Net Income   $ 18,480     $ 18,905     $ 4,251     $ 1,317     $ 42,953  
Total Assets as of December 31, 2017   $ 5,936,568     $ 3,742,991     $ 336,455     $ 7,073,038     $ 17,089,052  
                     
                     
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information               Table 13b
            Investment        
            Services and      
    Retail   Commercial   Private   Treasury   Consolidated
(dollars in thousands)   Banking   Banking   Banking   and Other   Total
Year Ended December 31, 2018                    
Net Interest Income   $ 264,459     $ 179,577     $ 41,222     $ 1,094     $ 486,352  
Provision for Credit Losses     14,898       (760 )     (61 )     (652 )     13,425  
Net Interest Income After Provision for Credit Losses     249,561       180,337       41,283       1,746       472,927  
Noninterest Income     79,004       23,733       55,338       10,848       168,923  
Noninterest Expense     (211,761 )     (81,344 )     (65,847 )     (12,672 )     (371,624 )
Income Before Provision for Income Taxes     116,804       122,726       30,774       (78 )     270,226  
Provision for Income Taxes     (29,172 )     (28,496 )     (8,113 )     15,157       (50,624 )
Net Income   $ 87,632     $ 94,230     $ 22,661     $ 15,079     $ 219,602  
Total Assets as of December 31, 2018   $ 6,365,263     $ 3,958,523     $ 349,832     $ 6,470,356     $ 17,143,974  
                     
                     
Year Ended December 31, 2017                    
Net Interest Income   $ 264,041     $ 171,038     $ 29,693     $ (7,534 )   $ 457,238  
Provision for Credit Losses     14,008       (160 )     (21 )     3,073       16,900  
Net Interest Income After Provision for Credit Losses     250,033       171,198       29,714       (10,607 )     440,338  
Noninterest Income     85,042       21,670       57,105       21,600       185,417  
Noninterest Expense     (209,807 )     (74,209 )     (61,674 )     (12,001 )     (357,691 )
Income Before Provision for Income Taxes     125,268       118,659       25,145       (1,008 )     268,064  
Provision for Income Taxes     (44,545 )     (41,797 )     (9,303 )     12,253       (83,392 )
Net Income   $ 80,723     $ 76,862     $ 15,842     $ 11,245     $ 184,672  
Total Assets as of December 31, 2017   $ 5,936,568     $ 3,742,991     $ 336,455     $ 7,073,038     $ 17,089,052  
                     
       
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data   Table 14  
    Three Months Ended  
    December 31,   September 30,   June 30,   March 31,   December 31,  
(dollars in thousands, except per share amounts)   2018   2018   2018   2018   2017  
Quarterly Operating Results                      
Interest Income                      
Interest and Fees on Loans and Leases   $ 107,404     $ 104,248     $ 101,311     $ 97,634     $ 96,974    
Income on Investment Securities                      
Available-for-Sale     13,043       12,588       12,380       12,141       11,866    
Held-to-Maturity     21,482       20,821       20,711       21,296       21,782    
Deposits     10       10       (4 )     18       3    
Funds Sold     727       1,393       846       757       717    
Other     352       364       341       300       271    
Total Interest Income     143,018       139,424       135,585       132,146       131,613    
Interest Expense                      
Deposits     13,172       10,931       9,459       7,581       6,980    
Securities Sold Under Agreements to Repurchase     4,671       4,667       4,617       4,564       4,664    
Funds Purchased     440       33       83       53       81    
Short-Term Borrowings     88       28       13       16       -    
Other Debt     674       838       917       976       1,118    
Total Interest Expense     19,045       16,497       15,089       13,190       12,843    
Net Interest Income     123,973       122,927       120,496       118,956       118,770    
Provision for Credit Losses     2,000       3,800       3,500       4,125       4,250    
Net Interest Income After Provision for Credit Losses     121,973       119,127       116,996       114,831       114,520    
Noninterest Income                      
Trust and Asset Management     10,558       10,782       11,356       11,181       11,105    
Mortgage Banking     2,148       1,965       2,179       2,145       2,593    
Service Charges on Deposit Accounts     7,562       7,255       6,865       7,129       8,053    
Fees, Exchange, and Other Service Charges     14,576       14,173       14,400       14,333       13,784    
Investment Securities Gains (Losses), Net     (841 )     (729 )     (1,702 )     (666 )     (617 )  
Annuity and Insurance     1,409       1,360       1,847       1,206       1,273    
Bank-Owned Life Insurance     1,941       1,620       1,796       1,842       1,609    
Other     4,755       5,056       4,557       6,865       4,055    
Total Noninterest Income     42,108       41,482       41,298       44,035       41,855    
Noninterest Expense                      
Salaries and Benefits     54,856       51,782       52,148       54,422       51,698    
Net Occupancy     8,918       8,702       8,588       8,534       8,510    
Net Equipment     6,364       6,116       5,845       5,527       5,454    
Data Processing     5,151       4,241       4,563       3,891       4,310    
Professional Fees     2,467       2,206       2,546       2,773       3,266    
FDIC Insurance     1,336       2,057       2,182       2,157       2,253    
Other     16,819       15,434       14,919       17,080       16,845    
Total Noninterest Expense     95,911       90,538       90,791       94,384       92,336    
Income Before Provision for Income Taxes     68,170       70,071       67,503       64,482       64,039    
Provision for Income Taxes     14,259       13,138       12,785       10,442       21,086    
Net Income   $ 53,911     $ 56,933     $ 54,718     $ 54,040     $ 42,953    
                       
Basic Earnings Per Share   $ 1.30     $ 1.37     $ 1.31     $ 1.29     $ 1.02    
Diluted Earnings Per Share   $ 1.30     $ 1.36     $ 1.30     $ 1.28     $ 1.01    
                       
Balance Sheet Totals                      
Loans and Leases   $ 10,448,774     $ 10,231,062     $ 10,053,323     $ 9,916,628     $ 9,796,947    
Total Assets     17,143,974       16,991,734       17,124,162       17,136,030       17,089,052    
Total Deposits     15,027,242       14,843,335       14,943,358       14,957,133       14,883,968    
Total Shareholders' Equity     1,268,200       1,253,327       1,247,717       1,241,193       1,231,868    
                       
Performance Ratios                      
Return on Average Assets     1.26   %   1.33   %   1.30   %   1.29   %   1.00   %
Return on Average Shareholders' Equity     17.05       18.06       17.68       17.74       13.85    
Efficiency Ratio 1     57.75       55.07       56.12       57.91       57.49    
Net Interest Margin 2     3.10       3.07       3.04       3.00       2.98    
                                           

1

 

Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).

2

 

Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.

Note: Certain prior period information has been reclassified to conform to current presentation.
     
                                 
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends                                 Table 15
    Eleven Months Ended     Year Ended
($ in millions; jobs in thousands)   November 30, 2018     December 31, 2017     December 31, 2016
Hawaii Economic Trends                                  
State General Fund Revenues 1   $ 6,362.7   7.3 %   $ 6,485.0       4.3 %   $ 6,215.4     3.6 %
General Excise and Use Tax Revenue 1   $ 3,146.1   2.5 %   $ 3,349.8       4.5 %   $ 3,205.7     2.0 %
Jobs 2     668.8           668.2               669.4        
                                   
                    December 31,
(spot rates)                   2018     2017   2016
Unemployment 3                                  
Statewide, seasonally adjusted                   2.5 %     2.1 %   2.9 %
                                   
Oahu                   2.2       1.7     2.4  
Island of Hawaii                   2.9       2.0     3.1  
Maui                   2.3       1.8     2.7  
Kauai                   2.3       1.7     2.8  
                                   
              December 31,
(percentage change, except months of inventory)       2018     2017     2016     2015  
Housing Trends (Single Family Oahu) 4                                  
Median Home Price               4.6   %   2.7 %     5.0 %   3.7 %
Home Sales Volume (units)               (7.7 ) %   6.3 %     6.5 %   5.2 %
Months of Inventory               2.8       2.1       2.5     2.6  
                                   
              Monthly Visitor Arrivals,     Percentage Change
(in thousands)             Not Seasonally Adjusted     from Previous Year
Tourism 5                                  
                                   
November 30, 2018                   782.0           4.3  
October 31, 2018                   770.4           4.4  
September 30, 2018                   724.9           3.5  
August 31, 2018                   845.1           3.2  
July 31, 2018                   939.4           5.3  
June 30, 2018                   897.1           7.3  
May 31, 2018                   804.1           7.0  
April 30, 2018                   803.0           6.6  
March 31, 2018                   903.6           12.5  
February 28, 2018                   778.6

 

        10.3  
January 31, 2018                   796.5           5.4  
December 31, 2017                   880.4           6.3  
November 30, 2017                   749.5           7.5  
October 31, 2017                   737.6           2.9  
September 30, 2017                   700.5           4.9  
August 31, 2017                   818.6           4.8  
July 31, 2017                   891.9           6.8  
June 30, 2017                   835.9           4.5  
May 31, 2017                   751.2           4.5  
April 30, 2017                   753.0           7.5  
March 31, 2017                   802.8           2.1  
February 28, 2017                   706.1           2.5  
January 31, 2017                   756.0           4.9  
                                   

1

 

Source: Hawaii Department of Business, Economic Development & Tourism

2

 

Source: U. S. Bureau of Labor Statistics

3

 

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

4

 

Source: Honolulu Board of REALTORS

5

 

Source: Hawaii Tourism Authority

 

Source: Bank of Hawaii Corporation

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