Bank of Hawaii Corporation Second Quarter 2003 Financial Results
Bank of Hawaii Corporation Second Quarter 2003 Financial Results
July 28, 2003
HONOLULU--(BUSINESS WIRE)--July 28, 2003--Bank of Hawaii Corporation (NYSE:BOH)
- Diluted Earnings Per Share Increases to $0.48
- Net Income Increases to $30.0 Million for the Quarter
- Board of Directors Declares Dividend of $0.19 Per Share
- Company Successfully Completes Systems Conversion
Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.48 for the second quarter of 2003, up 2.1 percent from diluted earnings per share of $0.47 in the first quarter of 2003 and up 14.3 percent from $0.42 in the second quarter last year. Net income for the second quarter was $30.0 million, up from $29.8 million in the previous quarter and down from $31.0 million in the same quarter last year. Net income in the second quarter of 2003 included charges of $10.1 million related to the information technology systems replacement project compared to charges of $7.4 million in the first quarter of 2003.
The return on average assets for the second quarter of 2003 was 1.27 percent, down from 1.31 percent in the first quarter of 2003 and up from 1.23 percent in the second quarter of 2002. The return on average equity was 12.93 percent in the second quarter, up 4.1 percent from 12.42 percent in the previous quarter and up 30.1 percent from 9.94 percent in the same quarter last year.
"I am encouraged by the Company's ongoing improvement that is reflected in our second quarter financial results," said Michael E. O'Neill, Chairman, CEO and President. "Our systems conversion was completed earlier this month on time and on budget. Considering the scope and magnitude of this project, we are pleased that it was accomplished without major disruption to customer service. We continue to look forward to the benefits the new system will provide our customers and shareholders."
For six months ended June 30, 2003, net income was $59.8 million, down from net income of $62.1 million for the same period last year largely due to $17.5 million in systems replacement costs. Diluted earnings per share were $0.95 for the first half of 2003, an increase of 14.5 percent from $0.83 per share for the first half of 2002. The year-to-date return on average assets was 1.29 percent, up from 1.22 percent for the same six months in 2002. The year-to-date return on average equity was 12.67 percent, a significant improvement from 9.96 percent for the six months ended June 30, 2002.
Financial Highlights
Net interest income for the second quarter of 2003 on a fully taxable equivalent basis was $90.5 million, down $0.5 million from the first quarter of 2003 and down $2.5 million from net interest income of $93.0 million in the second quarter of 2002. The decrease in net interest income was primarily due to reductions in interest rates. An analysis of the change in net interest income is included in Table 6.
The net interest margin was 4.12 percent for the second quarter of 2003, a 17 basis point decrease from 4.29 percent in the previous quarter and a 15 basis point increase from 3.97 percent in the same quarter last year. The decrease in the net interest margin compared with the previous quarter was largely due to strategic de-leveraging of the balance sheet.
The Company did not recognize a provision for loan and lease losses during the quarter or the previous quarter. The allowance for loan and lease losses was reduced $2.1 million from March 31, 2003, which equaled the amount of net charge-offs for the quarter. Provision for loan and lease losses of $3.3 million in the second quarter of 2002 equaled net charge-offs for that quarter.
Non-interest income was $50.7 million for the quarter, an increase of $6.0 million or 13.4 percent compared to non-interest income of $44.8 million in the first quarter of 2003. The improvement was largely due to increased mortgage banking income, as the Company returned to selling the majority of its mortgage loan production in the second quarter. Non-interest income was up $2.8 million, or 5.9 percent from non-interest income of $47.9 million in the second quarter of 2002.
Non-interest expense was $95.4 million in the second quarter of 2003, including the previously mentioned $10.1 million in system replacement costs. Non-interest expense for the first quarter of 2003 included $7.4 million in system replacement costs as previously discussed. Excluding these items, non-interest expense was $85.3 million in the second quarter of 2003, an increase of $2.5 million, or 3.0 percent, compared to the previous quarter and a decrease of $4.1 million, or 4.6 percent, from the same quarter last year. The increase from the previous quarter was largely due to increased salary expense resulting from vesting of restricted stock, severance accruals and seasonal pay increases.
The efficiency ratio was 67.6 percent for the second quarter of 2003. Excluding systems replacement costs, the efficiency ratio was 60.4 percent in the second quarter, compared to 61.0 percent in the previous quarter and 63.5 percent in the same quarter last year. For the six months ending June 30, 2003, the efficiency ratio, excluding systems replacement and net restructuring costs was 60.7 percent compared to 61.9 percent in the comparable period last year.
The Company's business segments are defined as Retail Banking, Commercial Banking, Investment Services Group, and Treasury and Other Corporate. Business segment results are determined based on the Company's internal financial management reporting process and organizational structure. Business segment performance details are summarized in Tables 11 and 11a.
Asset Quality
Bank of Hawaii Corporation's credit quality continued to improve in the second quarter of 2003 as measured by reductions in non-performing assets and internal classifications, and a continued positive trend in the level of net charge-offs. Non-performing assets were $42.0 million at the end of the quarter, a decrease of $2.2 million, or 5.0 percent, from non-performing assets of $44.2 million at the end of the previous quarter. Improvements in non-performing assets were largely the result of loans returned to accrual or paid-off. These reductions were partially offset by the downgrade of a $7.6 million credit to a local company in Hawaii. Non-performing assets declined $36.8 million, or 46.7 percent compared to $78.8 million at the end of the same quarter last year. At June 30, 2003 the ratio of non-performing assets to total loans plus foreclosed assets and non-performing loans held for sale was 0.77 percent compared with 0.79 percent at March 31, 2003 and 1.45 percent at June 30, 2002.
Non-accrual loans were $32.7 million at June 30, 2003, a reduction of $2.4 million, or 6.8 percent, from $35.1 million at March 31, 2003 and down $28.9 million, or 46.9 percent, from $61.6 million at June 30, 2002. Non-accrual loans as a percentage of total loans were 0.60 percent at June 30, 2003, down from 0.63 percent at the end of the previous quarter and down significantly from 1.14 percent at the end of the comparable quarter last year.
Net charge-offs for the second quarter of 2003 were $2.1 million, or 0.15 percent (annualized) of total average loans, a decrease from $2.8 million, or 0.21 percent (annualized) of total average loans in the first quarter of 2003. Net charge-offs during the second quarter of 2002 were $3.3 million, or 0.24 percent (annualized) of total average loans. Net charge-offs during the second quarter of 2003 were comprised of $5.7 million in charge-offs partially offset by recoveries of $3.6 million. Net charge-offs for the first half of 2003 were $4.9 million, or 0.18 percent (annualized) of total average loans, a decrease from $11.6 million, or 0.42 percent (annualized) of total average loans in the comparable period last year.
The allowance for loan and lease losses was $138.0 million at June 30, 2003. The ratio of the allowance for loan and lease losses to total loans was 2.52 percent at June 30, 2003 unchanged from March 31, 2003 and down from 2.94 percent at June 30, 2002.
Concentrations of credit exposure to selected components of the portfolio are summarized in Table 7.
Other Financial Highlights
Total assets were $9.6 billion at June 30, 2003, up from $9.5 billion at December 31, 2002 and down from $9.8 billion at June 30, 2002. The increase from December 31, 2002 was largely due to growth in loans offset by reductions in non-earning assets. Compared to the previous year, total assets decreased $273 million due to reductions in short-term investments as excess liquidity was utilized for share repurchases and debt reduction that offset loan growth.
Total assets increased $141 million compared to March 31, 2003 largely due to growth in investment securities that offset a net decrease in loans. Commercial loans declined slightly from the previous quarter as managed reductions in syndicated lending and lease financing offset growth in Hawaii commercial lending. The decrease in consumer loans was largely the result of reductions in residential mortgages as the Company returned to selling new loan originations in the secondary market during the second quarter of 2003. Loan portfolio balances are summarized in Table 7.
Total deposits at June 30, 2003 were $7.1 billion, up $221 million from December 31, 2002 and up $685 million from June 30, 2002 as growth in demand and savings deposits continued to offset managed decreases in time and foreign deposits.
During the second quarter of 2003, Bank of Hawaii Corporation repurchased 2.2 million shares of common stock at a total cost of $73.0 million under the share repurchase program. The average cost per share was $33.70 during the quarter. From the beginning of the program through June 30, 2003, the Company had repurchased a total of 25.2 million shares and returned a total of $687.2 million to the shareholders at an average cost of $27.31 per share. Through July 25, 2003, the Company repurchased an additional 0.24 million shares of common stock at a cost of $34.15 per share. Remaining buyback authority was $104.7 million at July 25, 2003.
The Company's capital and liquidity remains exceptionally strong. At June 30, 2003 the Tier 1 leverage ratio was 9.29 percent compared to 10.03 percent at March 31, 2003 and 12.11 percent at June 30, 2002.
The Company's Board of Directors declared a quarterly cash dividend of $0.19 per share on the Company's outstanding shares. The dividend will be payable on September 15, 2003 to shareholders of record at the close of business on August 22, 2003. The Company's dividend level is currently under review and it is anticipated that an increase will be announced in the third quarter earnings release.
Information Technology Systems Replacement Project
Bank of Hawaii Corporation signed a seven-year outsourcing agreement with Metavante Corporation in July of 2002 to serve as the Company's primary technology systems provider. The conversion to Metavante was completed on July 7, 2003. The Company has been successfully operating on the Metavante platform since the conversion. This lower cost platform is expected to provide annual cost savings of over $17 million compared to second quarter 2002 technology expense levels. In connection with this project, the Company estimates that it will recognize transition charges of approximately $35 million over the five-quarter conversion period that ends during the third quarter of 2003. During the second quarter of 2003, $10.1 million in costs were incurred, bringing the total project-to-date cost to $31.1 million. The remaining system conversion cost of approximately $4.4 million is expected to be recognized in the third quarter of 2003. Additional details on this project may be found in Table 10.
Economic Outlook
Economic expansion continued in Hawaii during the second quarter of 2003. Hawaii personal income during the first quarter of 2003 increased 5.5 percent from the prior year period in nominal terms. Adjusted for inflation, Hawaii real personal income grew at a 3.5 percent compound annual rate during the eight quarters ended in the first quarter of 2003, a pace that is expected to continue through 2003. Hawaii seasonally-adjusted unemployment rose from 3.0 percent in February 2003 to 4.1 percent in June 2003, the same unemployment rate as one year earlier in June 2002. A resurgence of payroll employment growth after the Iraq conflict suggested that unemployment rates had only temporarily increased. Domestic travel -- comprising more than 80 percent of passenger volumes -- rose 4.8 percent during the second quarter of 2003 from the same quarter last year. International travel to Hawaii fell to 30.8 percent below second quarter 2002 volumes. The resulting 3.8 percent decline in overall passenger volumes during the second quarter of 2003 from same quarter last year was reversed in July 2003 as Asian arrivals increased. For more economic information, visit the Company's web site http://www.boh.com/econ/.
Earnings Outlook
The Company continues to believe that its previously published earnings guidance of $131 million in net income for the full year of 2003 remains realistic. Based on current conditions, the Company does not expect to record a provision for loan and lease losses in 2003. However, the actual amount of the provision for loan and lease losses depends on determinations of credit risk that are made near the end of each quarter. Earnings per share and return on equity projections continue to be dependent upon the terms and timing of share repurchases.
Conference Call Information
The Company will review its second quarter 2003 financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The presentation will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation's web site, www.boh.com. The conference call number is (800) 915-4836 in the United States or (973) 317-5319 for international callers. No confirmation code is required to access the call. A replay will be available for one week beginning at 10:00 a.m. Hawaii Time (4:00 p.m. Eastern Time) on Monday, July 28, 2003 by calling (800) 428-6051 in the United States or (973) 709-2089 for international callers and entering the number 273139 when prompted. A replay of the presentation will also be available via the Investor Relations link of the Company's web site.
Bank of Hawaii Corporation is a regional financial services company serving businesses, consumers and governments in Hawaii, American Samoa and the West Pacific. The Company's principal subsidiary, Bank of Hawaii, was founded in 1897 and is the largest independent financial institution in Hawaii. For more information about Bank of Hawaii Corporation, see the Company's web site, www.boh.com.
This news release contains forward-looking statements concerning, among other things, the likelihood of an increase in dividend, the expected level of loan loss provisioning, anticipated costs and annual savings of our technology systems replacement project, and anticipated revenues and expenses in 2003 and beyond. We believe the assumptions underlying our forward-looking statements are reasonable. However, any of the assumptions could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons, including, but not limited to: 1) unanticipated changes in business and economic conditions, the competitive environment, fiscal and monetary policies, or legislation in Hawaii and the other markets we serve; 2) changes in our credit quality or risk profile which may increase or decrease the required level of allowance for loan and lease losses; 3) changes in market interest rates that may deteriorate our credit markets and ability to maintain our net interest margin; 4) changes to the amount and timing of our proposed equity repurchases; 5) inability to achieve expected benefits of our technology outsourcing project and other business process changes due to adverse changes in implementation processes or costs, operational savings, or timing; 6) actions by the United States military and real or threatened terrorist activity affecting business conditions; and 7) adverse weather and other natural conditions impacting our and our customers' operations. We do not undertake any obligation to update any forward-looking statements to reflect later events or circumstances.
Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited) Table 1
----------------------------------------------------------------------
(dollars in thousands except Three Months Six Months
per share amounts) Ended Ended
Earnings Highlights and June 30, June 30,
Performance Ratios 2003 2002(1) 2003 2002(1)
------------------------------ ---------------------------------------
Net Income $30,034 $31,016 $59,835 $62,072
Basic Earnings Per Share 0.50 0.43 0.99 0.85
Diluted Earnings Per Share 0.48 0.42 0.95 0.83
Cash Dividends 11,370 13,068 22,932 26,245
Return on Average Assets 1.27% 1.23% 1.29% 1.22%
Return on Average Equity 12.93% 9.94% 12.67% 9.96%
Net Interest Margin 4.12% 3.97% 4.20% 3.95%
Efficiency Ratio 67.55% 63.45% 67.01% 62.61%
Efficiency Ratio excluding
ITSRP and Restructuring Costs 60.39% 63.45% 60.68% 61.92%
----------------------------------------------------------------------
Statement of Condition Highlights and June 30,
Performance Ratios 2003 2002 (1)
--------------------------------------- ----------------------
Total Assets $9,550,934 $9,824,065
Net Loans 5,333,896 5,250,216
Total Deposits 7,140,849 6,455,981
Total Shareholders' Equity 913,010 1,191,072
Book Value Per Common Share $15.50 $17.05
Allowance / Loans Outstanding 2.52% 2.94%
Average Equity / Average
Assets 10.16% 12.27%
Employees (FTE) 2,879 2,983
Branches and offices 91 97
Market Price Per Share of Common Stock
for the Quarter Ended:
Closing $33.15 $28.00
High $35.90 $29.86
Low $30.75 $25.45
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
----------------------------------------------------------------------
Three Months Ended Six Months Ended
(dollars in thousands June 30, June 30,
except per share amounts) 2003 2002 (1) 2003 2002 (1)
----------------------------------------------------------------------
Interest Income
Interest and Fees on
Loans and Leases $85,954 $92,441 $171,727 $191,086
Income on Investment
Securities - Held to
Maturity 3,083 4,544 5,366 9,689
Income on Investment
Securities - Available
for Sale 19,815 26,805 42,278 53,998
Deposits 1,161 6,011 2,468 11,058
Funds Sold and Security
Resale Agreements 822 752 1,586 1,755
Other 1,016 1,395 2,205 2,727
----------------------------------------------------------------------
Total Interest Income 111,851 131,948 225,630 270,313
Interest Expense
Deposits 13,309 22,166 27,756 46,144
Security Repurchase
Agreements 2,391 8,256 4,633 18,549
Funds Purchased 219 245 424 476
Short-Term Borrowings 25 289 49 938
Long-Term Debt 5,422 8,055 11,283 16,374
----------------------------------------------------------------------
Total Interest Expense 21,366 39,011 44,145 82,481
----------------------------------------------------------------------
Net Interest Income 90,485 92,937 181,485 187,832
Provision for Loan and
Lease Losses - 3,324 - 11,616
----------------------------------------------------------------------
Net Interest Income After
Provision for Loan and
Lease Losses 90,485 89,613 181,485 176,216
Non-Interest Income
Trust and Asset
Management 12,545 14,175 25,726 28,993
Mortgage Banking 6,061 2,842 6,344 10,799
Service Charges on
Deposit Accounts 8,645 7,956 17,595 16,366
Fees, Exchange, and
Other Service Charges 13,473 13,065 26,462 25,517
Investment Securities
Gains 587 3 1,170 3
Insurance 2,991 2,563 5,973 5,162
Other 6,437 7,314 12,222 14,103
----------------------------------------------------------------------
Total Non-Interest Income 50,739 47,918 95,492 100,943
Non-Interest Expense
Salaries 39,232 37,884 75,691 77,071
Pensions and Other
Employee Benefits 8,479 9,391 18,449 19,387
Net Occupancy Expense 9,628 9,321 19,241 18,914
Net Equipment Expense 9,208 9,997 18,956 20,118
Restructuring and Other
Related Costs - - - 1,979
Information Technology
Systems Replacement
Project 10,105 - 17,522 -
Other 18,742 22,777 35,735 43,324
----------------------------------------------------------------------
Total Non-Interest Expense 95,394 89,370 185,594 180,793
----------------------------------------------------------------------
Income Before Income Taxes 45,830 48,161 91,383 96,366
Provision for Income Taxes 15,796 17,145 31,548 34,294
----------------------------------------------------------------------
Net Income $30,034 $31,016 $59,835 $62,072
======================================================================
Basic Earnings Per Share $0.50 $0.43 $0.99 $0.85
Diluted Earnings Per Share $0.48 $0.42 $0.95 $0.83
Dividends Per Share $0.19 $0.18 $0.38 $0.36
Basic Weighted Average
Shares 59,566,970 72,299,850 60,425,943 72,803,414
Diluted Weighted Average
Shares 62,301,337 74,486,987 62,907,697 74,815,508
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition
(Unaudited) Table 3
----------------------------------------------------------------------
June 30, December 31, June 30,
(dollars in thousands) 2003 2002 2002 (1)
----------------------------------------------------------------------
Assets
Interest-Bearing Deposits $307,552 $549,978 $1,346,014
Investment Securities - Held to
Maturity
(Market Value of $555,878,
$236,016 and $323,722,
respectively) 548,719 229,720 312,467
Investment Securities - Available
for Sale 2,140,607 2,287,201 1,806,384
Funds Sold 250,000 195,000 125,000
Loans Held for Sale 71,892 40,118 48,416
Loans 5,471,870 5,359,004 5,409,195
Allowance for Loan and Lease
Losses (137,974) (142,853) (158,979)
----------------------------------------------------------------------
Net Loans 5,333,896 5,216,151 5,250,216
----------------------------------------------------------------------
Total Earning Assets 8,652,666 8,518,168 8,888,497
Cash and Non-Interest Bearing
Deposits 297,868 374,352 304,595
Premises and Equipment 165,542 176,969 188,128
Customers' Acceptance Liability 1,371 2,680 1,657
Accrued Interest Receivable 35,849 36,722 38,425
Foreclosed Real Estate 9,285 9,434 17,223
Mortgage Servicing Rights 24,841 28,820 30,244
Goodwill 36,216 36,216 36,216
Other Assets 327,296 333,057 319,080
----------------------------------------------------------------------
Total Assets $9,550,934 $9,516,418 $9,824,065
======================================================================
Liabilities
Domestic Deposits
Non-Interest Bearing Demand $1,843,750 $1,719,633 $1,466,092
Interest Bearing Demand 1,157,801 1,169,128 986,546
Savings 2,754,607 2,535,219 2,292,395
Time 1,352,413 1,461,780 1,652,805
Foreign Deposits
Time Due to Banks - 1,130 16,777
Other Savings and Time 32,278 33,271 41,366
----------------------------------------------------------------------
Total Deposits 7,140,849 6,920,161 6,455,981
Securities Sold Under Agreements to
Repurchase 699,256 735,621 1,257,808
Funds Purchased 90,200 64,467 60,243
Current Maturities of Long-Term
Debt 14,000 114,781 173,259
Short-Term Borrowings 22,424 33,420 16,935
Banker's Acceptances Outstanding 1,371 2,680 1,657
Retirement Benefits Payable 62,678 61,385 37,642
Accrued Interest Payable 9,755 13,731 23,427
Taxes Payable 196,868 196,813 181,826
Other Liabilities 81,988 82,596 80,158
Long-Term Debt 318,535 275,004 344,057
----------------------------------------------------------------------
Total Liabilities 8,637,924 8,500,659 8,632,993
Shareholders' Equity
Common Stock ($.01 par value);
authorized 500,000,000 shares;
issued / outstanding: June 2003 -
81,588,394 / 58,896,230;
December 2002 - 81,294,730 /
63,015,442; June 2002 -
81,329,346 / 69,856,075 807 806 806
Capital Surplus 386,565 372,192 370,947
Accumulated Other Comprehensive
Income 12,412 11,659 29,931
Retained Earnings 1,151,623 1,115,910 1,082,421
Deferred Stock Grants (8,168) (1,424) (4,182)
Treasury Stock, at Cost (Shares:
June 2003 - 22,692,164; December
2002 - 18,279,288; June 2002 -
11,473,271) (630,229) (483,384) (288,851)
----------------------------------------------------------------------
Total Shareholders' Equity 913,010 1,015,759 1,191,072
----------------------------------------------------------------------
Total Liabilities and Shareholders'
Equity $9,550,934 $9,516,418 $9,824,065
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
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 Income
----------------------------------------------------------------------
Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659
Comprehensive Income:
Net Income 59,835 - - -
Other Comprehensive Income, Net of Tax:
Unrealized Gain on
Investment Securities 753 - - 753
Total Comprehensive Income
Common Stock Issued:
18,147 Retirement Savings Plan 585 - 184 -
635,660 Stock Option Plan 16,215 - 3,660 -
45,518 Dividend Reinvestment Plan 1,463 - 459 -
6,777 Directors' Restricted Shares and
Deferred Compensation
Plan 140 1 224 -
Employees' Restricted
286,700 Shares 3,382 - 9,846 -
Treasury Stock Purchased (5,107,779
shares) (162,190) - - -
Cash Dividends Paid (22,932) - - -
----------------------------------------------------------------------
Balance at June 30, 2003 $913,010 $807 $386,565 $12,412
======================================================================
Balance at December 31, 2001 $1,247,012 $806 $367,672 $22,761
Comprehensive Income:
Net Income 62,072 - - -
Other Comprehensive Income, Net of Tax:
Unrealized Gain on
Investment Securities 7,547 - - 7,547
Foreign Currency
Translation Adjustment (377) - - (377)
Total Comprehensive Income
Common Stock Issued:
22,894 Retirement Savings Plan 632 - 119 -
1,222,308 Stock Option Plan 25,142 - 3,727 -
53,227 Dividend Reinvestment Plan 1,464 - 264 -
3,605
Directors' Restricted
Shares and Deferred
Compensation Plan 50 - 103 -
Employees' Restricted
(51,500) Shares 2,469 - (938) -
Treasury Stock Purchased (4,610,800
shares) (128,694) - - -
Cash Dividends Paid (26,245) - - -
----------------------------------------------------------------------
Balance at June 30, 2002 $1,191,072 $806 $370,947 $29,931
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited) Table 4
----------------------------------------------------------------------
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31, 2002 $1,115,910 $(1,424)$(483,384)
Comprehensive Income:
Net Income 59,835 - - $59,835
Other Comprehensive Income, Net of
Tax:
Unrealized Gain on
Investment Securities - - - 753
--------
Total Comprehensive Income $60,588
========
Common Stock Issued:
18,147 Retirement Savings Plan - - 401
635,660 Stock Option Plan (1,190) (280) 14,025
Dividend Reinvestment
45,518 Plan - - 1,004
6,777 Directors' Restricted Shares and
Deferred Compensation
Plan - - (85)
Employees' Restricted
286,700 Shares - (6,464) -
Treasury Stock Purchased
(5,107,779 shares) - - (162,190)
Cash Dividends Paid (22,932) - -
--------------------------------------------------------------
Balance at June 30, 2003 $1,151,623 $(8,168)$(630,229)
==============================================================
Balance at December 31, 2001 $1,055,424 $(7,637)$(192,014)
Comprehensive Income:
Net Income 62,072 - - $62,072
Other Comprehensive Income, Net of
Tax:
Unrealized Gain on
Investment Securities - - - 7,547
Foreign Currency
Translation Adjustment - - - (377)
--------
Total Comprehensive Income $69,242
========
Common Stock Issued:
22,894 Retirement Savings Plan - - 513
1,222,308 Stock Option Plan (8,828) 48 30,195
Dividend Reinvestment
53,227 Plan (2) - 1,202
3,605
Directors' Restricted
Shares and Deferred
Compensation Plan - - (53)
Employees' Restricted
(51,500) Shares - 3,407 -
Treasury Stock Purchased
(4,610,800 shares) - - (128,694)
Cash Dividends Paid (26,245) - -
--------------------------------------------------------------
Balance at June 30, 2002 $1,082,421 $(4,182)$(288,851)
==============================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable Equivalent
Basis (Unaudited) Table 5
----------------------------------------------------------------------
Three Months Ended Three Months Ended
June 30, 2003 March 31, 2003
Average Income/Yield/ Average Income/Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $212.4 $1.2 2.19% $253.8 $1.3 2.09%
Funds Sold 267.3 0.9 1.23 250.5 0.8 1.22
Investment Securities
- Held to Maturity 324.8 3.1 3.85 202.0 2.3 4.61
- Available for Sale 2,316.9 19.8 3.42 2,268.1 22.5 3.96
Loans Held for Sale 81.6 1.1 5.43 10.1 0.1 5.16
Net Loans and Lease
Financing
Domestic
- Commercial and
Industrial 819.8 10.0 4.87 871.7 10.5 4.87
- Construction 83.0 0.9 4.50 115.4 1.4 5.08
- Commercial Mortgage 682.5 10.1 5.93 597.8 9.0 6.14
- Residential Mortgage 2,295.1 37.3 6.50 2,249.0 37.7 6.70
- Installment 535.6 13.6 10.18 501.9 12.8 10.36
- Home Equity 442.7 5.6 5.06 434.5 5.7 5.28
- Purchased Home
Equity 162.3 2.0 4.96 180.2 2.6 5.78
- Lease Financing 482.6 5.3 4.42 495.6 5.9 4.81
----------------------------------------------------------------------
Total Domestic Loans 5,503.6 84.8 6.17 5,446.1 85.6 6.33
Foreign 14.8 - - 14.7 - -
----------------------------------------------------------------------
Total Loans 5,518.4 84.8 6.16 5,460.8 85.6 6.32
Other 75.3 1.0 5.41 74.6 1.2 6.47
----------------------------------------------------------------------
Total Earning Assets 8,796.7 111.9 5.09 8,519.9 113.8 5.38
Cash and Non-interest
Bearing Deposits 325.6 331.6
Other Assets 385.9 391.5
--------- ---------
Total Assets $9,508.2 $9,243.0
========= =========
Interest Bearing
Liabilities
Interest Bearing
Deposits
Domestic Deposits
- Demand $1,164.8 0.7 0.25 $1,149.2 0.7 0.26
- Savings 2,744.1 4.5 0.65 2,608.2 4.6 0.71
- Time 1,401.4 8.1 2.31 1,443.3 9.1 2.55
----------------------------------------------------------------------
Total Domestic Deposits 5,310.3 13.3 1.00 5,200.7 14.4 1.12
Foreign Deposits
- Time Due to Banks - - - 1.0 - -
- Other Time and
Savings 30.3 0.1 0.91 30.5 0.1 1.23
----------------------------------------------------------------------
Total Foreign Deposits 30.3 0.1 0.91 31.5 0.1 1.11
----------------------------------------------------------------------
Total Interest Bearing
Deposits 5,340.6 13.4 1.00 5,232.2 14.5 1.12
Short-Term Borrowings 810.2 2.6 1.30 649.8 2.5 1.54
Long-Term Debt 371.5 5.4 5.85 390.4 5.8 6.09
----------------------------------------------------------------------
Total Interest Bearing
Liabilities 6,522.3 21.4 1.31 6,272.4 22.8 1.47
----------------------------------------------------------------------
Net Interest Income $90.5 $91.0
======= =======
Interest Rate Spread 3.78% 3.91%
Net Interest Margin 4.12% 4.29%
Non-Interest Bearing
Demand Deposits
(Domestic) 1,695.3 1,636.8
Other Liabilities 358.7 360.7
Shareholders' Equity 931.9 973.1
--------- ---------
Total Liabilities and
Shareholders' Equity $9,508.2 $9,243.0
========= =========
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Consolidated Average Balances and Interest Rates - Taxable Equivalent
Basis (Unaudited) Table 5
----------------------------------------------------------------------
Three Months Ended (1) Six Months Ended
June 30, 2002 June 30, 2003
Average Income/Yield/ Average Income/Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $1,310.0 $6.0 1.84% $233.0 $2.5 2.14%
Funds Sold 173.3 0.8 1.74 259.0 1.6 1.22
Investment Securities
- Held to Maturity 328.6 4.7 5.63 263.7 5.4 4.14
- Available for Sale 1,890.3 26.8 5.67 2,292.6 42.3 3.69
Loans Held for Sale 65.2 1.1 6.88 46.0 1.2 5.38
Net Loans and Lease
Financing
Domestic
- Commercial and
Industrial 1,061.1 13.4 5.07 845.6 20.4 4.87
- Construction 157.5 2.2 5.72 99.1 2.4 4.83
- Commercial Mortgage 587.5 9.9 6.73 640.5 19.2 6.03
- Residential Mortgage 2,399.0 42.5 7.08 2,272.1 75.0 6.60
- Installment 392.0 11.0 11.23 518.8 26.4 10.27
- Home Equity 391.1 5.7 5.90 438.6 11.2 5.17
- Purchased Home
Equity - - - 171.2 4.6 5.39
- Lease Financing 502.2 6.6 5.25 489.1 11.2 4.62
----------------------------------------------- ----------------------
Total Domestic Loans 5,490.4 91.3 6.66 5,475.0 170.4 6.25
Foreign 14.1 - - 14.8 0.1 1.39
----------------------------------------------- ----------------------
Total Loans 5,504.5 91.3 6.65 5,489.8 170.5 6.24
Other 99.2 1.3 5.64 74.9 2.2 5.93
----------------------------------------------- ----------------------
Total Earning Assets 9,371.1 132.0 5.64 8,659.0 225.7 5.23
Cash and Non-interest
Bearing Deposits 343.6 328.6
Other Assets 365.3 388.7
---------- ---------
Total Assets $10,080.0 $9,376.3
========== =========
Interest Bearing
Liabilities
Interest Bearing
Deposits
Domestic Deposits
- Demand $965.1 1.1 0.45 $1,157.0 1.5 0.25
- Savings 2,173.5 7.8 1.44 2,676.5 9.0 0.68
- Time 1,732.0 12.9 2.98 1,422.2 17.1 2.43
----------------------------------------------- ----------------------
Total Domestic Deposits 4,870.6 21.8 1.79 5,255.7 27.6 1.06
Foreign Deposits
- Time Due to Banks 37.3 0.1 1.47 0.5 - -
- Other Time and
Savings 59.1 0.3 1.67 30.4 0.1 1.07
----------------------------------------------- ----------------------
Total Foreign Deposits 96.4 0.4 1.59 30.9 0.1 1.01
----------------------------------------------- ----------------------
Total Interest Bearing
Deposits 4,967.0 22.2 1.79 5,286.6 27.7 1.06
Short-Term Borrowings 1,475.9 8.8 2.39 730.5 5.1 1.41
Long-Term Debt 507.1 8.0 6.37 380.9 11.3 5.97
----------------------------------------------- ----------------------
Total Interest Bearing
Liabilities 6,950.0 39.0 2.25 6,398.0 44.1 1.39
----------------------------------------------- ----------------------
Net Interest Income $93.0 $181.6
======= =======
Interest Rate Spread 3.39% 3.84%
Net Interest Margin 3.97% 4.20%
Non-Interest Bearing
Demand Deposits
(Domestic) 1,566.7 1,666.2
Other Liabilities 312.3 359.7
Shareholders' Equity 1,251.0 952.4
---------- ---------
Total Liabilities and
Shareholders' Equity $10,080.0 $9,376.3
========== =========
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable Equivalent
Basis (Unaudited) Table 6
----------------------------------------------------------------------
Three Months Ended June 30, 2003
Compared to March 31, 2003
(dollars in millions) Volume (1) Rate (1) Time (1) Total
----------------------------------------------------------------------
Change in Interest Income:
Interest Bearing Deposits $(0.2) $0.1 $- $(0.1)
Funds Sold 0.1 - - 0.1
Investment Securities
Held to Maturity 1.2 (0.4) - 0.8
Available for Sale 0.4 (3.1) - (2.7)
Loans Held for Sale 1.0 - - 1.0
Net Loans and Lease Financing
(Domestic)
Commercial and Industrial (0.6) - 0.1 (0.5)
Construction (0.3) (0.2) - (0.5)
Commercial Mortgage 1.3 (0.3) 0.1 1.1
Residential Mortgage 0.7 (1.1) - (0.4)
Installment 0.8 (0.2) 0.2 0.8
Home Equity 0.1 (0.2) - (0.1)
Purchased Home Equity (0.2) (0.4) - (0.6)
Lease Financing (0.2) (0.5) 0.1 (0.6)
----------------------------------------------------------------------
Total Loans 1.6 (2.9) 0.5 (0.8)
Other - (0.2) - (0.2)
----------------------------------------------------------------------
Total Change in Interest
Income 4.1 (6.5) 0.5 (1.9)
----------------------------------------------------------------------
Change in Interest Expense:
Interest Bearing Deposits
(Domestic)
Savings 0.2 (0.4) 0.1 (0.1)
Time (0.2) (0.9) 0.1 (1.0)
----------------------------------------------------------------------
Total Interest Bearing
Deposits - (1.3) 0.2 (1.1)
Short-Term Borrowings 0.5 (0.4) - 0.1
Long-Term Debt (0.3) (0.2) 0.1 (0.4)
----------------------------------------------------------------------
Total Change in Interest
Expense 0.2 (1.9) 0.3 (1.4)
----------------------------------------------------------------------
Change in Net Interest Income $3.9 $(4.6) $0.2 $(0.5)
======================================================================
(1) The changes for each category of interest income and expense are
allocated between the portion of changes attributable to the variance
in volume, rate or time for that category.
Bank of Hawaii Corporation and Subsidiaries
Loan Portfolio Balances (Unaudited) Table 7
----------------------------------------------------------------------
(dollars in June 30, March 31, Dec. 31, June 30,
millions) 2003 2003 2002 2002 (1)
----------------------------------------------------------------------
Domestic
Commercial
Commercial and
Industrial $808.5 $824.9 $875.0 $993.4
Commercial
Mortgage 689.7 691.7 591.1 562.5
Construction 83.6 86.7 127.5 148.6
Lease
Financing 416.9 430.4 427.3 432.7
----------------------------------------------------------------------
Total Commercial 1,998.7 2,033.7 2,020.9 2,137.2
Consumer
Residential
Mortgage 2,222.0 2,305.3 2,131.4 2,361.2
Home Equity 450.3 439.1 428.2 404.2
Purchased Home
Equity 145.6 170.9 185.8 -
Other Consumer 554.8 518.5 493.3 403.2
Lease
Financing 34.0 33.8 34.5 37.3
----------------------------------------------------------------------
Total Consumer 3,406.7 3,467.6 3,273.2 3,205.9
----------------------------------------------------------------------
Total Domestic 5,405.4 5,501.3 5,294.1 5,343.1
----------------------------------------------------------------------
Foreign 66.5 64.1 64.9 66.1
----------------------------------------------------------------------
Total Loans $5,471.9 $5,565.4 $5,359.0 $5,409.2
======================================================================
Selected Concentrations of Credit Exposure (Unaudited)
----------------------------------------------------------------------
June 30, Dec. 31, June 30,
2003 2002 2002
Unused Total Total Total
(dollars in Outstanding Commitments Exposure Exposure Exposure
millions)
----------------------------------------------------------------------
Air Transportation
Regional
Passenger
Carriers $45.8 $11.7 $57.5 $57.3 $58.0
United States
Based Passenger
Carriers 39.8 - 39.8 39.6 49.0
International
Based Passenger
Carriers 31.8 - 31.8 32.1 32.0
Cargo Carriers 14.7 - 14.7 15.0 15.0
----------------------------------------------------------------------
Total Air
Transportation $132.1 $11.7 $143.8 $144.0 $154.0
======================================================================
Guam
Hotel (2) $42.8 $- $42.8 $44.4 $43.0
Other Commercial 148.3 35.5 183.8 166.0 230.2
Consumer 259.0 6.8 265.8 257.4 283.3
----------------------------------------------------------------------
Total Guam $450.1 $42.3 $492.4 $467.8 $556.5
======================================================================
Syndicated
Exposure $278.3 $606.8 $885.1 $1,002.1 $1,096.2
======================================================================
Exposure includes loans, leveraged leases and operating leases.
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
(2) A $25.0 million payment-in-full was received in mid-July reducing
Hotel exposure to $17.8 million.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past
Due 90 Days or More (Unaudited) Table 8
----------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
(dollars in millions) 2003 2003 2002 2002(1) 2002(1)
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans
Commercial
Commercial and
Industrial $8.8 $2.4 $5.9 $6.4 $14.4
Commercial Mortgage 11.2 17.9 20.3 18.1 25.3
Construction - - 0.5 0.9 0.7
Lease Financing 2.5 3.2 4.1 5.7 6.9
----------------------------------------------------------------------
Total Commercial 22.5 23.5 30.8 31.1 47.3
Consumer
Residential Mortgage 10.2 11.5 13.9 14.3 14.2
Home Equity - 0.1 0.3 0.2 0.1
Other Consumer - - - 0.1 -
----------------------------------------------------------------------
Total Consumer 10.2 11.6 14.2 14.6 14.3
----------------------------------------------------------------------
Total Non-Accrual Loans 32.7 35.1 45.0 45.7 61.6
----------------------------------------------------------------------
Foreclosed Real Estate 9.3 9.1 9.4 17.6 17.2
----------------------------------------------------------------------
Total Non-Performing
Assets $42.0 $44.2 $54.4 $63.3 $78.8
======================================================================
Accruing Loans Past Due
90 Days or More
Commercial
Commercial and
Industrial $0.5 $- $0.2 $- $-
Commercial Mortgage - 0.4 0.3 - -
----------------------------------------------------------------------
Total Commercial 0.5 0.4 0.5 - -
Consumer
Residential Mortgage 1.8 1.6 0.6 1.4 0.9
Home Equity 0.1 - - - -
Purchased Home Equity 0.1 - - - -
Other Consumer 0.4 2.3 0.7 0.3 0.5
Lease Financing - - - - 0.1
----------------------------------------------------------------------
Total Consumer 2.4 3.9 1.3 1.7 1.5
----------------------------------------------------------------------
Total Accruing and Past
Due $2.9 $4.3 $1.8 $1.7 $1.5
======================================================================
Total Loans $5,471.9 $5,565.4 $5,359.0 $5,259.3 $5,409.2
======================================================================
Ratio of Non-Accrual
Loans to Total Loans 0.60% 0.63% 0.84% 0.87% 1.14%
----------------------------------------------------------------------
Ratio of Non-Performing Assets to
Total Loans, Foreclosed
Real Estate and Non-
Performing Loans Held
for Sale 0.77% 0.79% 1.01% 1.20% 1.45%
----------------------------------------------------------------------
Ratio of Non-Performing Assets and
Accruing Loans
Past Due 90 Days or More
to Total Loans 0.82% 0.87% 1.05% 1.24% 1.48%
----------------------------------------------------------------------
Quarter to Quarter Changes in Non-
Performing Assets
Balance at Beginning of
Quarter $44.2 $54.4 $63.3 $78.8 $90.7
Additions 11.6 4.8 12.0 7.0 20.5
Reductions
Payments and Sales of
Loans (4.3) (5.6) (6.9) (8.5) (20.6)
Return to Accrual (7.5) (5.6) (1.9) (9.1) (6.2)
Sales of Foreclosed
Assets (0.7) (1.1) (9.4) (1.4) (3.5)
Charge-offs (1.3) (2.7) (2.7) (3.5) (2.1)
----------------------------------------------------------------------
Total Reductions (13.8) (15.0) (20.9) (22.5) (32.4)
----------------------------------------------------------------------
Balance at End of Quarter $42.0 $44.2 $54.4 $63.3 $78.8
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Allowance for Loan and Lease Losses (Unaudited) Table 9
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in millions) 2003 2003 2002 (1) 2003 2002 (1)
----------------------------------------------------------------------
Balance at Beginning of
Period $140.0 $142.9 $159.0 $142.9 $159.0
Loans Charged-Off
Commercial
Commercial and
Industrial (0.6) (1.6) (2.8) (2.2) (10.1)
Commercial Mortgage (0.4) - (0.4) (0.4) (0.4)
Construction - (0.5) - (0.5) (0.5)
Lease Financing (0.3) - (0.1) (0.3) (0.1)
Consumer
Residential Mortgage (0.7) (0.7) (1.0) (1.4) (2.4)
Home Equity - (0.1) (0.1) (0.1) (0.2)
Other Consumer (3.6) (3.1) (3.0) (6.7) (6.7)
Lease Financing - (0.1) (0.1) (0.1) (0.2)
----------------------------------------------------------------------
Total Charge-Offs (5.7) (6.1) (7.5) (11.7) (20.6)
Recoveries on Loans
Previously Charged-Off
Commercial
Commercial and
Industrial 1.8 0.6 2.1 2.4 2.8
Commercial Mortgage 0.1 - 0.1 0.1 1.9
Construction 0.1 0.9 - 1.0 -
Consumer
Residential Mortgage 0.3 0.2 0.4 0.5 0.7
Home Equity - 0.1 - 0.1 0.1
Other Consumer 1.3 1.3 1.5 2.6 3.3
Lease Financing - 0.1 - 0.1 -
Foreign - 0.1 0.1 0.1 0.2
----------------------------------------------------------------------
Total Recoveries 3.6 3.3 4.2 6.9 9.0
----------------------------------------------------------------------
Net Loan Charge-Offs (2.1) (2.8) (3.3) (4.9) (11.6)
Provision for Loan and
Lease Losses - - 3.3 - 11.6
----------------------------------------------------------------------
Balance at End of Period $138.0 $140.0 $159.0 $138.0 $159.0
======================================================================
Average Loans
Outstanding $5,518.4 $5,460.8 $5,504.5 $5,489.8 $5,544.7
======================================================================
Ratio of Net Charge-Offs
to Average Loans
Outstanding
(annualized) 0.15% 0.21% 0.24% 0.18% 0.42%
Ratio of Allowance to
Loans Outstanding 2.52% 2.52% 2.94% 2.52% 2.94%
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Totals may not add due to rounding.
Bank of Hawaii Corporation and Subsidiaries
Information Technology Systems Replacement Project
(Unaudited) Table 10
----------------------------------------------------------------------
Employee Other
(dollars in Professional Termination Accelerated Associated
millions) Fees Benefits Depreciation Costs (1) Total
------------- ------------ ----------- ------------ ---------- -------
Costs Incurred:
Three Months
Ended:
September
30, 2002 $1.9 $1.0 $3.2 $0.5 $6.6
December
31, 2002 3.2 0.2 2.2 1.4 7.0
------------- ------------ ----------- ------------ ---------- -------
Year Ended
December 31,
2002 5.1 1.2 5.4 1.9 13.6
Three Months
Ended:
March 31,
2003 3.5 0.4 2.0 1.5 7.4
June 30,
2003 2.9 2.6 1.8 2.8 10.1
------------- ------------ ----------- ------------ ---------- -------
Six Months
Ended June
30, 2003 6.4 3.0 3.8 4.3 17.5
------------- ------------ ----------- ------------ ---------- -------
Total Costs
Incurred $11.5 $4.2 $9.2 $6.2 $31.1
============= ============ =========== ============ ========== =======
Total
Expected
Project
Costs $12.6 $5.3 $9.2 $8.4 $35.5
============= ============ =========== ============ ========== =======
(1) Includes contract termination, equipment, excise tax and other
costs.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information (Unaudited) Table 11
----------------------------------------------------------------------
Investment Treasury Consoli-
(dollars in Retail Commercial Services and Other dated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Three Months
Ended June 30,
2003
Net Interest
Income $57,375 $36,382 $3,332 $(6,604) $90,485
Provision for
Loan and Lease
Losses (1,321) (1,022) - 2,343 -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 56,054 35,360 3,332 (4,261) 90,485
Non-Interest
Income 23,899 7,944 15,428 3,468 50,739
----------------------------------------------------------------------
79,953 43,304 18,760 (793) 141,224
Information
Technology
Systems
Replacement
Project (368) - (90) (9,647) (10,105)
Non-Interest
Expense (42,126) (23,205) (15,937) (4,021) (85,289)
----------------------------------------------------------------------
Income Before
Income Taxes 37,459 20,099 2,733 (14,461) 45,830
Provision for
Income Taxes (13,860) (7,319) (1,011) 6,394 (15,796)
----------------------------------------------------------------------
Allocated Net
Income (Loss) 23,599 12,780 1,722 (8,067) 30,034
----------------------------------------------------------------------
Allowance
Funding Value (161) (1,100) (7) 1,268 -
GAAP Provision 1,321 1,022 - (2,343) -
Economic
Provision (2,901) (3,027) (112) (5) (6,045)
Tax Effect of
Adjustments 644 1,149 44 400 2,237
----------------------------------------------------------------------
Income Before
Capital Charge 22,502 10,824 1,647 (8,747) 26,226
Capital Charge (5,494) (5,350) (1,512) (13,275) (25,631)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $17,008 $5,474 $135 $(22,022) $595
======================================================================
RAROC (ROE for
the Company) 45% 22% 12% (7)% 13%
======================================================================
Total Assets at
June 30, 2003 $3,482,754 $2,207,816 $127,894 $3,732,470 $9,550,934
======================================================================
Three Months
Ended June 30,
2002
Net Interest
Income $48,996 $34,705 $3,140 $6,096 $92,937
Provision for
Loan and Lease
Losses (549) (3,096) - 321 (3,324)
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 48,447 31,609 3,140 6,417 89,613
Non-Interest
Income 18,435 8,752 17,376 3,355 47,918
----------------------------------------------------------------------
66,882 40,361 20,516 9,772 137,531
Non-Interest
Expense (44,512) (24,372) (18,059) (2,427) (89,370)
----------------------------------------------------------------------
Income Before
Income Taxes 22,370 15,989 2,457 7,345 48,161
Provision for
Income Taxes (8,277) (5,834) (909) (2,125) (17,145)
----------------------------------------------------------------------
Allocated Net
Income 14,093 10,155 1,548 5,220 31,016
----------------------------------------------------------------------
Allowance
Funding Value (204) (1,597) (4) 1,805 -
GAAP Provision 549 3,096 - (321) 3,324
Economic
Provision (2,905) (3,667) (124) - (6,696)
Tax Effect of
Adjustments 947 802 47 (548) 1,248
----------------------------------------------------------------------
Income Before
Capital Charge 12,480 8,789 1,467 6,156 28,892
Capital Charge (5,248) (6,044) (1,620) (21,490) (34,402)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $7,232 $2,745 $(153) $(15,334) $(5,510)
======================================================================
RAROC (ROE for
the Company) 26% 16% 10% 28% 10%
======================================================================
Total Assets at
June 30, 2002 $3,217,645 $2,392,041 $115,119 $4,099,260 $9,824,065
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information Table 11a
(Unaudited)
----------------------------------------------------------------------
Investment Treasury
(dollars in Retail Commercial Services and Other Consolidated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Six Months
Ended June 30,
2003
Net Interest
Income $112,359 $72,769 $7,302 $(10,945) $181,485
Provision for
Loan and Lease
Losses (2,169) (3,173) - 5,342 -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 110,190 69,596 7,302 (5,603) 181,485
Non-Interest
Income 41,285 16,359 31,107 6,741 95,492
----------------------------------------------------------------------
151,475 85,955 38,409 1,138 276,977
Information
Technology
Systems
Replacement
Project (950) (23) (334) (16,215) (17,522)
Non-Interest
Expense (82,795) (45,924) (31,841) (7,512) (168,072)
----------------------------------------------------------------------
Income Before
Income Taxes 67,730 40,008 6,234 (22,589) 91,383
Provision for
Income Taxes (25,060) (14,589) (2,307) 10,408 (31,548)
----------------------------------------------------------------------
Allocated Net
Income (Loss) 42,670 25,419 3,927 (12,181) 59,835
----------------------------------------------------------------------
Allowance
Funding Value (313) (2,241) (17) 2,571 -
GAAP Provision 2,169 3,173 - (5,342) -
Economic
Provision (5,609) (6,086) (244) (10) (11,949)
Tax Effect of
Adjustments 1,389 1,907 97 1,028 4,421
----------------------------------------------------------------------
Income Before
Capital Charge 40,306 22,172 3,763 (13,934) 52,307
Capital Charge (10,886) (10,728) (3,030) (27,739) (52,383)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $29,420 $11,444 $733 $(41,673) $(76)
======================================================================
RAROC (ROE for
the Company) 41% 23% 14% (5)% 13%
======================================================================
Total Assets at
June 30, 2003 $3,482,754 $2,207,816 $127,894 $3,732,470 $9,550,934
======================================================================
Six Months
Ended June 30,
2002
Net Interest
Income $98,552 $70,335 $6,140 $12,805 $187,832
Provision for
Loan and Lease
Losses (2,491) (9,606) - 481 (11,616)
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 96,061 60,729 6,140 13,286 176,216
Non-Interest
Income 42,487 17,373 35,200 5,883 100,943
----------------------------------------------------------------------
138,548 78,102 41,340 19,169 277,159
Restructuring
and Other
Related Costs - - - (1,979) (1,979)
Non-Interest
Expense (90,826) (49,327) (34,119) (4,542) (178,814)
----------------------------------------------------------------------
Income Before
Income Taxes 47,722 28,775 7,221 12,648 96,366
Provision for
Income Taxes (17,657) (10,489) (2,672) (3,476) (34,294)
----------------------------------------------------------------------
Allocated Net
Income 30,065 18,286 4,549 9,172 62,072
----------------------------------------------------------------------
Allowance
Funding Value (471) (3,149) (11) 3,631 -
GAAP Provision 2,491 9,606 - (481) 11,616
Economic
Provision (5,409) (7,905) (251) (3) (13,568)
Tax Effect of
Adjustments 1,254 536 97 (1,165) 722
----------------------------------------------------------------------
Income Before
Capital Charge 27,930 17,374 4,384 11,154 60,842
Capital Charge (10,571) (12,603) (3,121) (42,856) (69,151)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $17,359 $4,771 $1,263 $(31,702) $(8,309)
======================================================================
RAROC (ROE for
the Company) 29% 15% 16% 26% 10%
======================================================================
Total Assets at
June 30, 2002 $3,217,645 $2,392,041 $115,119 $4,099,260 $9,824,065
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data Table 12
(Unaudited)
----------------------------------------------------------------------
Three Months Ended (1)
(dollars in thousands except per share June 30, March 31, Dec. 31,
amounts) 2003 2003 2002
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $85,954 $85,773 $85,945
Income on Investment Securities -
Held to Maturity 3,083 2,283 3,122
Income on Investment Securities -
Available for Sale 19,815 22,463 24,088
Deposits 1,161 1,307 3,578
Funds Sold and Security Resale
Agreements 822 764 834
Other 1,016 1,189 1,312
----------------------------------------------------------------------
Total Interest Income 111,851 113,779 118,879
Interest Expense
Deposits 13,309 14,447 17,657
Security Repurchase Agreements 2,391 2,242 4,585
Funds Purchased 219 205 255
Short-Term Borrowings 25 24 217
Long-Term Debt 5,422 5,861 5,947
----------------------------------------------------------------------
Total Interest Expense 21,366 22,779 28,661
----------------------------------------------------------------------
Net Interest Income 90,485 91,000 90,218
Provision for Loan and Lease Losses - - -
----------------------------------------------------------------------
Net Interest Income After Provision for
Loan and Lease Losses 90,485 91,000 90,218
Non-Interest Income
Trust and Asset Management 12,545 13,181 13,085
Mortgage Banking 6,061 283 4,398
Service Charges on Deposit Accounts 8,645 8,950 8,326
Fees, Exchange, and Other Service
Charges 13,473 12,989 12,963
Investment Securities Gains 587 583 612
Insurance 2,991 2,982 3,099
Other 6,437 5,785 7,872
----------------------------------------------------------------------
Total Non-Interest Income 50,739 44,753 50,355
Non-Interest Expense
Salaries 39,232 36,459 38,462
Pensions and Other Employee Benefits 8,479 9,970 6,272
Net Occupancy Expense 9,628 9,613 10,638
Net Equipment Expense 9,208 9,748 11,077
Restructuring and Other Related Costs - - 385
Information Technology Systems
Replacement Project 10,105 7,417 7,052
Other 18,742 16,993 22,827
----------------------------------------------------------------------
Total Non-Interest Expense 95,394 90,200 96,713
----------------------------------------------------------------------
Income Before Income Taxes 45,830 45,553 43,860
Provision for Income Taxes 15,796 15,752 14,952
----------------------------------------------------------------------
Net Income $30,034 $29,801 $28,908
======================================================================
Basic Earnings Per Share $0.50 $0.49 $0.45
Diluted Earnings Per Share $0.48 $0.47 $0.44
Balance Sheet Totals
Total Assets 9,550,934 9,410,210 9,516,418
Net Loans 5,333,896 5,425,343 5,216,151
Total Deposits 7,140,849 6,987,331 6,920,161
Total Shareholders' Equity 913,010 952,007 1,015,759
Performance Ratios
Return on Average Assets 1.27% 1.31% 1.20%
Return on Average Equity 12.93% 12.42% 10.72%
Efficiency Ratio 67.55% 66.44% 68.80%
Efficiency Ratio excluding ITSRP and
Restructuring Costs 60.39% 60.98% 63.51%
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data Table 12
(Unaudited)
----------------------------------------------------------------------
Three Months Ended (1)
(dollars in thousands except per September 30, June 30, March 31,
share amounts) 2002 2002 2002
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and
Leases $89,335 $92,441 $98,645
Income on Investment Securities
- Held to Maturity 3,963 4,544 5,145
Income on Investment Securities
- Available for Sale 26,175 26,805 27,193
Deposits 5,384 6,011 5,047
Funds Sold and Security Resale
Agreements 914 752 1,003
Other 1,575 1,395 1,332
----------------------------------------------------------------------
Total Interest Income 127,346 131,948 138,365
Interest Expense
Deposits 20,547 22,166 23,978
Security Repurchase Agreements 7,039 8,256 10,293
Funds Purchased 299 245 231
Short-Term Borrowings 334 289 649
Long-Term Debt 6,946 8,055 8,319
----------------------------------------------------------------------
Total Interest Expense 35,165 39,011 43,470
----------------------------------------------------------------------
Net Interest Income 92,181 92,937 94,895
Provision for Loan and Lease
Losses - 3,324 8,292
----------------------------------------------------------------------
Net Interest Income After
Provision for Loan and Lease
Losses 92,181 89,613 86,603
Non-Interest Income
Trust and Asset Management 13,655 14,175 14,818
Mortgage Banking 3,669 2,842 7,957
Service Charges on Deposit
Accounts 7,925 7,956 8,410
Fees, Exchange, and Other
Service Charges 13,114 13,065 12,452
Investment Securities Gains - 3 -
Insurance 2,677 2,563 2,599
Other 5,997 7,314 6,789
----------------------------------------------------------------------
Total Non-Interest Income 47,037 47,918 53,025
Non-Interest Expense
Salaries 37,994 37,884 39,187
Pensions and Other Employee
Benefits 7,377 9,391 9,996
Net Occupancy Expense 9,597 9,321 9,593
Net Equipment Expense 10,058 9,997 10,121
Restructuring and Other Related
Costs - - 1,979
Information Technology Systems
Replacement Project 6,576 - -
Other 20,141 22,777 20,547
----------------------------------------------------------------------
Total Non-Interest Expense 91,743 89,370 91,423
----------------------------------------------------------------------
Income Before Income Taxes 47,475 48,161 48,205
Provision for Income Taxes 17,275 17,145 17,149
----------------------------------------------------------------------
Net Income $30,200 $31,016 $31,056
======================================================================
Basic Earnings Per Share $0.44 $0.43 $0.42
Diluted Earnings Per Share $0.43 $0.42 $0.41
Balance Sheet Totals
Total Assets 9,702,700 9,824,065 10,245,021
Net Loans 5,104,857 5,250,216 5,442,601
Total Deposits 6,627,673 6,455,981 6,543,781
Total Shareholders' Equity 1,100,706 1,191,072 1,265,907
Performance Ratios
Return on Average Assets 1.22% 1.23% 1.21%
Return on Average Equity 10.40% 9.94% 9.97%
Efficiency Ratio 65.90% 63.45% 61.81%
Efficiency Ratio excluding ITSRP
and Restructuring Costs 61.18% 63.45% 60.47%
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited) Table 1
----------------------------------------------------------------------
(dollars in thousands except Three Months Six Months
per share amounts) Ended Ended
Earnings Highlights and June 30, June 30,
Performance Ratios 2003 2002(1) 2003 2002(1)
------------------------------ ---------------------------------------
Net Income $30,034 $31,016 $59,835 $62,072
Basic Earnings Per Share 0.50 0.43 0.99 0.85
Diluted Earnings Per Share 0.48 0.42 0.95 0.83
Cash Dividends 11,370 13,068 22,932 26,245
Return on Average Assets 1.27% 1.23% 1.29% 1.22%
Return on Average Equity 12.93% 9.94% 12.67% 9.96%
Net Interest Margin 4.12% 3.97% 4.20% 3.95%
Efficiency Ratio 67.55% 63.45% 67.01% 62.61%
Efficiency Ratio excluding
ITSRP and Restructuring Costs 60.39% 63.45% 60.68% 61.92%
----------------------------------------------------------------------
Statement of Condition Highlights and June 30,
Performance Ratios 2003 2002 (1)
--------------------------------------- ----------------------
Total Assets $9,550,934 $9,824,065
Net Loans 5,333,896 5,250,216
Total Deposits 7,140,849 6,455,981
Total Shareholders' Equity 913,010 1,191,072
Book Value Per Common Share $15.50 $17.05
Allowance / Loans Outstanding 2.52% 2.94%
Average Equity / Average
Assets 10.16% 12.27%
Employees (FTE) 2,879 2,983
Branches and offices 91 97
Market Price Per Share of Common Stock
for the Quarter Ended:
Closing $33.15 $28.00
High $35.90 $29.86
Low $30.75 $25.45
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
----------------------------------------------------------------------
Three Months Ended Six Months Ended
(dollars in thousands June 30, June 30,
except per share amounts) 2003 2002 (1) 2003 2002 (1)
----------------------------------------------------------------------
Interest Income
Interest and Fees on
Loans and Leases $85,954 $92,441 $171,727 $191,086
Income on Investment
Securities - Held to
Maturity 3,083 4,544 5,366 9,689
Income on Investment
Securities - Available
for Sale 19,815 26,805 42,278 53,998
Deposits 1,161 6,011 2,468 11,058
Funds Sold and Security
Resale Agreements 822 752 1,586 1,755
Other 1,016 1,395 2,205 2,727
----------------------------------------------------------------------
Total Interest Income 111,851 131,948 225,630 270,313
Interest Expense
Deposits 13,309 22,166 27,756 46,144
Security Repurchase
Agreements 2,391 8,256 4,633 18,549
Funds Purchased 219 245 424 476
Short-Term Borrowings 25 289 49 938
Long-Term Debt 5,422 8,055 11,283 16,374
----------------------------------------------------------------------
Total Interest Expense 21,366 39,011 44,145 82,481
----------------------------------------------------------------------
Net Interest Income 90,485 92,937 181,485 187,832
Provision for Loan and
Lease Losses - 3,324 - 11,616
----------------------------------------------------------------------
Net Interest Income After
Provision for Loan and
Lease Losses 90,485 89,613 181,485 176,216
Non-Interest Income
Trust and Asset
Management 12,545 14,175 25,726 28,993
Mortgage Banking 6,061 2,842 6,344 10,799
Service Charges on
Deposit Accounts 8,645 7,956 17,595 16,366
Fees, Exchange, and
Other Service Charges 13,473 13,065 26,462 25,517
Investment Securities
Gains 587 3 1,170 3
Insurance 2,991 2,563 5,973 5,162
Other 6,437 7,314 12,222 14,103
----------------------------------------------------------------------
Total Non-Interest Income 50,739 47,918 95,492 100,943
Non-Interest Expense
Salaries 39,232 37,884 75,691 77,071
Pensions and Other
Employee Benefits 8,479 9,391 18,449 19,387
Net Occupancy Expense 9,628 9,321 19,241 18,914
Net Equipment Expense 9,208 9,997 18,956 20,118
Restructuring and Other
Related Costs - - - 1,979
Information Technology
Systems Replacement
Project 10,105 - 17,522 -
Other 18,742 22,777 35,735 43,324
----------------------------------------------------------------------
Total Non-Interest Expense 95,394 89,370 185,594 180,793
----------------------------------------------------------------------
Income Before Income Taxes 45,830 48,161 91,383 96,366
Provision for Income Taxes 15,796 17,145 31,548 34,294
----------------------------------------------------------------------
Net Income $30,034 $31,016 $59,835 $62,072
======================================================================
Basic Earnings Per Share $0.50 $0.43 $0.99 $0.85
Diluted Earnings Per Share $0.48 $0.42 $0.95 $0.83
Dividends Per Share $0.19 $0.18 $0.38 $0.36
Basic Weighted Average
Shares 59,566,970 72,299,850 60,425,943 72,803,414
Diluted Weighted Average
Shares 62,301,337 74,486,987 62,907,697 74,815,508
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition
(Unaudited) Table 3
----------------------------------------------------------------------
June 30, December 31, June 30,
(dollars in thousands) 2003 2002 2002 (1)
----------------------------------------------------------------------
Assets
Interest-Bearing Deposits $307,552 $549,978 $1,346,014
Investment Securities - Held to
Maturity
(Market Value of $555,878,
$236,016 and $323,722,
respectively) 548,719 229,720 312,467
Investment Securities - Available
for Sale 2,140,607 2,287,201 1,806,384
Funds Sold 250,000 195,000 125,000
Loans Held for Sale 71,892 40,118 48,416
Loans 5,471,870 5,359,004 5,409,195
Allowance for Loan and Lease
Losses (137,974) (142,853) (158,979)
----------------------------------------------------------------------
Net Loans 5,333,896 5,216,151 5,250,216
----------------------------------------------------------------------
Total Earning Assets 8,652,666 8,518,168 8,888,497
Cash and Non-Interest Bearing
Deposits 297,868 374,352 304,595
Premises and Equipment 165,542 176,969 188,128
Customers' Acceptance Liability 1,371 2,680 1,657
Accrued Interest Receivable 35,849 36,722 38,425
Foreclosed Real Estate 9,285 9,434 17,223
Mortgage Servicing Rights 24,841 28,820 30,244
Goodwill 36,216 36,216 36,216
Other Assets 327,296 333,057 319,080
----------------------------------------------------------------------
Total Assets $9,550,934 $9,516,418 $9,824,065
======================================================================
Liabilities
Domestic Deposits
Non-Interest Bearing Demand $1,843,750 $1,719,633 $1,466,092
Interest Bearing Demand 1,157,801 1,169,128 986,546
Savings 2,754,607 2,535,219 2,292,395
Time 1,352,413 1,461,780 1,652,805
Foreign Deposits
Time Due to Banks - 1,130 16,777
Other Savings and Time 32,278 33,271 41,366
----------------------------------------------------------------------
Total Deposits 7,140,849 6,920,161 6,455,981
Securities Sold Under Agreements to
Repurchase 699,256 735,621 1,257,808
Funds Purchased 90,200 64,467 60,243
Current Maturities of Long-Term
Debt 14,000 114,781 173,259
Short-Term Borrowings 22,424 33,420 16,935
Banker's Acceptances Outstanding 1,371 2,680 1,657
Retirement Benefits Payable 62,678 61,385 37,642
Accrued Interest Payable 9,755 13,731 23,427
Taxes Payable 196,868 196,813 181,826
Other Liabilities 81,988 82,596 80,158
Long-Term Debt 318,535 275,004 344,057
----------------------------------------------------------------------
Total Liabilities 8,637,924 8,500,659 8,632,993
Shareholders' Equity
Common Stock ($.01 par value);
authorized 500,000,000 shares;
issued / outstanding: June 2003 -
81,588,394 / 58,896,230;
December 2002 - 81,294,730 /
63,015,442; June 2002 -
81,329,346 / 69,856,075 807 806 806
Capital Surplus 386,565 372,192 370,947
Accumulated Other Comprehensive
Income 12,412 11,659 29,931
Retained Earnings 1,151,623 1,115,910 1,082,421
Deferred Stock Grants (8,168) (1,424) (4,182)
Treasury Stock, at Cost (Shares:
June 2003 - 22,692,164; December
2002 - 18,279,288; June 2002 -
11,473,271) (630,229) (483,384) (288,851)
----------------------------------------------------------------------
Total Shareholders' Equity 913,010 1,015,759 1,191,072
----------------------------------------------------------------------
Total Liabilities and Shareholders'
Equity $9,550,934 $9,516,418 $9,824,065
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
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 Income
----------------------------------------------------------------------
Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659
Comprehensive Income:
Net Income 59,835 - - -
Other Comprehensive Income, Net of Tax:
Unrealized Gain on
Investment Securities 753 - - 753
Total Comprehensive Income
Common Stock Issued:
18,147 Retirement Savings Plan 585 - 184 -
635,660 Stock Option Plan 16,215 - 3,660 -
45,518 Dividend Reinvestment Plan 1,463 - 459 -
6,777 Directors' Restricted Shares and
Deferred Compensation
Plan 140 1 224 -
Employees' Restricted
286,700 Shares 3,382 - 9,846 -
Treasury Stock Purchased (5,107,779
shares) (162,190) - - -
Cash Dividends Paid (22,932) - - -
----------------------------------------------------------------------
Balance at June 30, 2003 $913,010 $807 $386,565 $12,412
======================================================================
Balance at December 31, 2001 $1,247,012 $806 $367,672 $22,761
Comprehensive Income:
Net Income 62,072 - - -
Other Comprehensive Income, Net of Tax:
Unrealized Gain on
Investment Securities 7,547 - - 7,547
Foreign Currency
Translation Adjustment (377) - - (377)
Total Comprehensive Income
Common Stock Issued:
22,894 Retirement Savings Plan 632 - 119 -
1,222,308 Stock Option Plan 25,142 - 3,727 -
53,227 Dividend Reinvestment Plan 1,464 - 264 -
3,605
Directors' Restricted
Shares and Deferred
Compensation Plan 50 - 103 -
Employees' Restricted
(51,500) Shares 2,469 - (938) -
Treasury Stock Purchased (4,610,800
shares) (128,694) - - -
Cash Dividends Paid (26,245) - - -
----------------------------------------------------------------------
Balance at June 30, 2002 $1,191,072 $806 $370,947 $29,931
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited) Table 4
----------------------------------------------------------------------
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31, 2002 $1,115,910 $(1,424)$(483,384)
Comprehensive Income:
Net Income 59,835 - - $59,835
Other Comprehensive Income, Net of
Tax:
Unrealized Gain on
Investment Securities - - - 753
--------
Total Comprehensive Income $60,588
========
Common Stock Issued:
18,147 Retirement Savings Plan - - 401
635,660 Stock Option Plan (1,190) (280) 14,025
Dividend Reinvestment
45,518 Plan - - 1,004
6,777 Directors' Restricted Shares and
Deferred Compensation
Plan - - (85)
Employees' Restricted
286,700 Shares - (6,464) -
Treasury Stock Purchased
(5,107,779 shares) - - (162,190)
Cash Dividends Paid (22,932) - -
--------------------------------------------------------------
Balance at June 30, 2003 $1,151,623 $(8,168)$(630,229)
==============================================================
Balance at December 31, 2001 $1,055,424 $(7,637)$(192,014)
Comprehensive Income:
Net Income 62,072 - - $62,072
Other Comprehensive Income, Net of
Tax:
Unrealized Gain on
Investment Securities - - - 7,547
Foreign Currency
Translation Adjustment - - - (377)
--------
Total Comprehensive Income $69,242
========
Common Stock Issued:
22,894 Retirement Savings Plan - - 513
1,222,308 Stock Option Plan (8,828) 48 30,195
Dividend Reinvestment
53,227 Plan (2) - 1,202
3,605
Directors' Restricted
Shares and Deferred
Compensation Plan - - (53)
Employees' Restricted
(51,500) Shares - 3,407 -
Treasury Stock Purchased
(4,610,800 shares) - - (128,694)
Cash Dividends Paid (26,245) - -
--------------------------------------------------------------
Balance at June 30, 2002 $1,082,421 $(4,182)$(288,851)
==============================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable Equivalent
Basis (Unaudited) Table 5
----------------------------------------------------------------------
Three Months Ended Three Months Ended
June 30, 2003 March 31, 2003
Average Income/Yield/ Average Income/Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $212.4 $1.2 2.19% $253.8 $1.3 2.09%
Funds Sold 267.3 0.9 1.23 250.5 0.8 1.22
Investment Securities
- Held to Maturity 324.8 3.1 3.85 202.0 2.3 4.61
- Available for Sale 2,316.9 19.8 3.42 2,268.1 22.5 3.96
Loans Held for Sale 81.6 1.1 5.43 10.1 0.1 5.16
Net Loans and Lease
Financing
Domestic
- Commercial and
Industrial 819.8 10.0 4.87 871.7 10.5 4.87
- Construction 83.0 0.9 4.50 115.4 1.4 5.08
- Commercial Mortgage 682.5 10.1 5.93 597.8 9.0 6.14
- Residential Mortgage 2,295.1 37.3 6.50 2,249.0 37.7 6.70
- Installment 535.6 13.6 10.18 501.9 12.8 10.36
- Home Equity 442.7 5.6 5.06 434.5 5.7 5.28
- Purchased Home
Equity 162.3 2.0 4.96 180.2 2.6 5.78
- Lease Financing 482.6 5.3 4.42 495.6 5.9 4.81
----------------------------------------------------------------------
Total Domestic Loans 5,503.6 84.8 6.17 5,446.1 85.6 6.33
Foreign 14.8 - - 14.7 - -
----------------------------------------------------------------------
Total Loans 5,518.4 84.8 6.16 5,460.8 85.6 6.32
Other 75.3 1.0 5.41 74.6 1.2 6.47
----------------------------------------------------------------------
Total Earning Assets 8,796.7 111.9 5.09 8,519.9 113.8 5.38
Cash and Non-interest
Bearing Deposits 325.6 331.6
Other Assets 385.9 391.5
--------- ---------
Total Assets $9,508.2 $9,243.0
========= =========
Interest Bearing
Liabilities
Interest Bearing
Deposits
Domestic Deposits
- Demand $1,164.8 0.7 0.25 $1,149.2 0.7 0.26
- Savings 2,744.1 4.5 0.65 2,608.2 4.6 0.71
- Time 1,401.4 8.1 2.31 1,443.3 9.1 2.55
----------------------------------------------------------------------
Total Domestic Deposits 5,310.3 13.3 1.00 5,200.7 14.4 1.12
Foreign Deposits
- Time Due to Banks - - - 1.0 - -
- Other Time and
Savings 30.3 0.1 0.91 30.5 0.1 1.23
----------------------------------------------------------------------
Total Foreign Deposits 30.3 0.1 0.91 31.5 0.1 1.11
----------------------------------------------------------------------
Total Interest Bearing
Deposits 5,340.6 13.4 1.00 5,232.2 14.5 1.12
Short-Term Borrowings 810.2 2.6 1.30 649.8 2.5 1.54
Long-Term Debt 371.5 5.4 5.85 390.4 5.8 6.09
----------------------------------------------------------------------
Total Interest Bearing
Liabilities 6,522.3 21.4 1.31 6,272.4 22.8 1.47
----------------------------------------------------------------------
Net Interest Income $90.5 $91.0
======= =======
Interest Rate Spread 3.78% 3.91%
Net Interest Margin 4.12% 4.29%
Non-Interest Bearing
Demand Deposits
(Domestic) 1,695.3 1,636.8
Other Liabilities 358.7 360.7
Shareholders' Equity 931.9 973.1
--------- ---------
Total Liabilities and
Shareholders' Equity $9,508.2 $9,243.0
========= =========
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Consolidated Average Balances and Interest Rates - Taxable Equivalent
Basis (Unaudited) Table 5
----------------------------------------------------------------------
Three Months Ended (1) Six Months Ended
June 30, 2002 June 30, 2003
Average Income/Yield/ Average Income/Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $1,310.0 $6.0 1.84% $233.0 $2.5 2.14%
Funds Sold 173.3 0.8 1.74 259.0 1.6 1.22
Investment Securities
- Held to Maturity 328.6 4.7 5.63 263.7 5.4 4.14
- Available for Sale 1,890.3 26.8 5.67 2,292.6 42.3 3.69
Loans Held for Sale 65.2 1.1 6.88 46.0 1.2 5.38
Net Loans and Lease
Financing
Domestic
- Commercial and
Industrial 1,061.1 13.4 5.07 845.6 20.4 4.87
- Construction 157.5 2.2 5.72 99.1 2.4 4.83
- Commercial Mortgage 587.5 9.9 6.73 640.5 19.2 6.03
- Residential Mortgage 2,399.0 42.5 7.08 2,272.1 75.0 6.60
- Installment 392.0 11.0 11.23 518.8 26.4 10.27
- Home Equity 391.1 5.7 5.90 438.6 11.2 5.17
- Purchased Home
Equity - - - 171.2 4.6 5.39
- Lease Financing 502.2 6.6 5.25 489.1 11.2 4.62
----------------------------------------------- ----------------------
Total Domestic Loans 5,490.4 91.3 6.66 5,475.0 170.4 6.25
Foreign 14.1 - - 14.8 0.1 1.39
----------------------------------------------- ----------------------
Total Loans 5,504.5 91.3 6.65 5,489.8 170.5 6.24
Other 99.2 1.3 5.64 74.9 2.2 5.93
----------------------------------------------- ----------------------
Total Earning Assets 9,371.1 132.0 5.64 8,659.0 225.7 5.23
Cash and Non-interest
Bearing Deposits 343.6 328.6
Other Assets 365.3 388.7
---------- ---------
Total Assets $10,080.0 $9,376.3
========== =========
Interest Bearing
Liabilities
Interest Bearing
Deposits
Domestic Deposits
- Demand $965.1 1.1 0.45 $1,157.0 1.5 0.25
- Savings 2,173.5 7.8 1.44 2,676.5 9.0 0.68
- Time 1,732.0 12.9 2.98 1,422.2 17.1 2.43
----------------------------------------------- ----------------------
Total Domestic Deposits 4,870.6 21.8 1.79 5,255.7 27.6 1.06
Foreign Deposits
- Time Due to Banks 37.3 0.1 1.47 0.5 - -
- Other Time and
Savings 59.1 0.3 1.67 30.4 0.1 1.07
----------------------------------------------- ----------------------
Total Foreign Deposits 96.4 0.4 1.59 30.9 0.1 1.01
----------------------------------------------- ----------------------
Total Interest Bearing
Deposits 4,967.0 22.2 1.79 5,286.6 27.7 1.06
Short-Term Borrowings 1,475.9 8.8 2.39 730.5 5.1 1.41
Long-Term Debt 507.1 8.0 6.37 380.9 11.3 5.97
----------------------------------------------- ----------------------
Total Interest Bearing
Liabilities 6,950.0 39.0 2.25 6,398.0 44.1 1.39
----------------------------------------------- ----------------------
Net Interest Income $93.0 $181.6
======= =======
Interest Rate Spread 3.39% 3.84%
Net Interest Margin 3.97% 4.20%
Non-Interest Bearing
Demand Deposits
(Domestic) 1,566.7 1,666.2
Other Liabilities 312.3 359.7
Shareholders' Equity 1,251.0 952.4
---------- ---------
Total Liabilities and
Shareholders' Equity $10,080.0 $9,376.3
========== =========
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable Equivalent
Basis (Unaudited) Table 6
----------------------------------------------------------------------
Three Months Ended June 30, 2003
Compared to March 31, 2003
(dollars in millions) Volume (1) Rate (1) Time (1) Total
----------------------------------------------------------------------
Change in Interest Income:
Interest Bearing Deposits $(0.2) $0.1 $- $(0.1)
Funds Sold 0.1 - - 0.1
Investment Securities
Held to Maturity 1.2 (0.4) - 0.8
Available for Sale 0.4 (3.1) - (2.7)
Loans Held for Sale 1.0 - - 1.0
Net Loans and Lease Financing
(Domestic)
Commercial and Industrial (0.6) - 0.1 (0.5)
Construction (0.3) (0.2) - (0.5)
Commercial Mortgage 1.3 (0.3) 0.1 1.1
Residential Mortgage 0.7 (1.1) - (0.4)
Installment 0.8 (0.2) 0.2 0.8
Home Equity 0.1 (0.2) - (0.1)
Purchased Home Equity (0.2) (0.4) - (0.6)
Lease Financing (0.2) (0.5) 0.1 (0.6)
----------------------------------------------------------------------
Total Loans 1.6 (2.9) 0.5 (0.8)
Other - (0.2) - (0.2)
----------------------------------------------------------------------
Total Change in Interest
Income 4.1 (6.5) 0.5 (1.9)
----------------------------------------------------------------------
Change in Interest Expense:
Interest Bearing Deposits
(Domestic)
Savings 0.2 (0.4) 0.1 (0.1)
Time (0.2) (0.9) 0.1 (1.0)
----------------------------------------------------------------------
Total Interest Bearing
Deposits - (1.3) 0.2 (1.1)
Short-Term Borrowings 0.5 (0.4) - 0.1
Long-Term Debt (0.3) (0.2) 0.1 (0.4)
----------------------------------------------------------------------
Total Change in Interest
Expense 0.2 (1.9) 0.3 (1.4)
----------------------------------------------------------------------
Change in Net Interest Income $3.9 $(4.6) $0.2 $(0.5)
======================================================================
(1) The changes for each category of interest income and expense are
allocated between the portion of changes attributable to the variance
in volume, rate or time for that category.
Bank of Hawaii Corporation and Subsidiaries
Loan Portfolio Balances (Unaudited) Table 7
----------------------------------------------------------------------
(dollars in June 30, March 31, Dec. 31, June 30,
millions) 2003 2003 2002 2002 (1)
----------------------------------------------------------------------
Domestic
Commercial
Commercial and
Industrial $808.5 $824.9 $875.0 $993.4
Commercial
Mortgage 689.7 691.7 591.1 562.5
Construction 83.6 86.7 127.5 148.6
Lease
Financing 416.9 430.4 427.3 432.7
----------------------------------------------------------------------
Total Commercial 1,998.7 2,033.7 2,020.9 2,137.2
Consumer
Residential
Mortgage 2,222.0 2,305.3 2,131.4 2,361.2
Home Equity 450.3 439.1 428.2 404.2
Purchased Home
Equity 145.6 170.9 185.8 -
Other Consumer 554.8 518.5 493.3 403.2
Lease
Financing 34.0 33.8 34.5 37.3
----------------------------------------------------------------------
Total Consumer 3,406.7 3,467.6 3,273.2 3,205.9
----------------------------------------------------------------------
Total Domestic 5,405.4 5,501.3 5,294.1 5,343.1
----------------------------------------------------------------------
Foreign 66.5 64.1 64.9 66.1
----------------------------------------------------------------------
Total Loans $5,471.9 $5,565.4 $5,359.0 $5,409.2
======================================================================
Selected Concentrations of Credit Exposure (Unaudited)
----------------------------------------------------------------------
June 30, Dec. 31, June 30,
2003 2002 2002
Unused Total Total Total
(dollars in Outstanding Commitments Exposure Exposure Exposure
millions)
----------------------------------------------------------------------
Air Transportation
Regional
Passenger
Carriers $45.8 $11.7 $57.5 $57.3 $58.0
United States
Based Passenger
Carriers 39.8 - 39.8 39.6 49.0
International
Based Passenger
Carriers 31.8 - 31.8 32.1 32.0
Cargo Carriers 14.7 - 14.7 15.0 15.0
----------------------------------------------------------------------
Total Air
Transportation $132.1 $11.7 $143.8 $144.0 $154.0
======================================================================
Guam
Hotel (2) $42.8 $- $42.8 $44.4 $43.0
Other Commercial 148.3 35.5 183.8 166.0 230.2
Consumer 259.0 6.8 265.8 257.4 283.3
----------------------------------------------------------------------
Total Guam $450.1 $42.3 $492.4 $467.8 $556.5
======================================================================
Syndicated
Exposure $278.3 $606.8 $885.1 $1,002.1 $1,096.2
======================================================================
Exposure includes loans, leveraged leases and operating leases.
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
(2) A $25.0 million payment-in-full was received in mid-July reducing
Hotel exposure to $17.8 million.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past
Due 90 Days or More (Unaudited) Table 8
----------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
(dollars in millions) 2003 2003 2002 2002(1) 2002(1)
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans
Commercial
Commercial and
Industrial $8.8 $2.4 $5.9 $6.4 $14.4
Commercial Mortgage 11.2 17.9 20.3 18.1 25.3
Construction - - 0.5 0.9 0.7
Lease Financing 2.5 3.2 4.1 5.7 6.9
----------------------------------------------------------------------
Total Commercial 22.5 23.5 30.8 31.1 47.3
Consumer
Residential Mortgage 10.2 11.5 13.9 14.3 14.2
Home Equity - 0.1 0.3 0.2 0.1
Other Consumer - - - 0.1 -
----------------------------------------------------------------------
Total Consumer 10.2 11.6 14.2 14.6 14.3
----------------------------------------------------------------------
Total Non-Accrual Loans 32.7 35.1 45.0 45.7 61.6
----------------------------------------------------------------------
Foreclosed Real Estate 9.3 9.1 9.4 17.6 17.2
----------------------------------------------------------------------
Total Non-Performing
Assets $42.0 $44.2 $54.4 $63.3 $78.8
======================================================================
Accruing Loans Past Due
90 Days or More
Commercial
Commercial and
Industrial $0.5 $- $0.2 $- $-
Commercial Mortgage - 0.4 0.3 - -
----------------------------------------------------------------------
Total Commercial 0.5 0.4 0.5 - -
Consumer
Residential Mortgage 1.8 1.6 0.6 1.4 0.9
Home Equity 0.1 - - - -
Purchased Home Equity 0.1 - - - -
Other Consumer 0.4 2.3 0.7 0.3 0.5
Lease Financing - - - - 0.1
----------------------------------------------------------------------
Total Consumer 2.4 3.9 1.3 1.7 1.5
----------------------------------------------------------------------
Total Accruing and Past
Due $2.9 $4.3 $1.8 $1.7 $1.5
======================================================================
Total Loans $5,471.9 $5,565.4 $5,359.0 $5,259.3 $5,409.2
======================================================================
Ratio of Non-Accrual
Loans to Total Loans 0.60% 0.63% 0.84% 0.87% 1.14%
----------------------------------------------------------------------
Ratio of Non-Performing Assets to
Total Loans, Foreclosed
Real Estate and Non-
Performing Loans Held
for Sale 0.77% 0.79% 1.01% 1.20% 1.45%
----------------------------------------------------------------------
Ratio of Non-Performing Assets and
Accruing Loans
Past Due 90 Days or More
to Total Loans 0.82% 0.87% 1.05% 1.24% 1.48%
----------------------------------------------------------------------
Quarter to Quarter Changes in Non-
Performing Assets
Balance at Beginning of
Quarter $44.2 $54.4 $63.3 $78.8 $90.7
Additions 11.6 4.8 12.0 7.0 20.5
Reductions
Payments and Sales of
Loans (4.3) (5.6) (6.9) (8.5) (20.6)
Return to Accrual (7.5) (5.6) (1.9) (9.1) (6.2)
Sales of Foreclosed
Assets (0.7) (1.1) (9.4) (1.4) (3.5)
Charge-offs (1.3) (2.7) (2.7) (3.5) (2.1)
----------------------------------------------------------------------
Total Reductions (13.8) (15.0) (20.9) (22.5) (32.4)
----------------------------------------------------------------------
Balance at End of Quarter $42.0 $44.2 $54.4 $63.3 $78.8
======================================================================
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Allowance for Loan and Lease Losses (Unaudited) Table 9
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in millions) 2003 2003 2002 (1) 2003 2002 (1)
----------------------------------------------------------------------
Balance at Beginning of
Period $140.0 $142.9 $159.0 $142.9 $159.0
Loans Charged-Off
Commercial
Commercial and
Industrial (0.6) (1.6) (2.8) (2.2) (10.1)
Commercial Mortgage (0.4) - (0.4) (0.4) (0.4)
Construction - (0.5) - (0.5) (0.5)
Lease Financing (0.3) - (0.1) (0.3) (0.1)
Consumer
Residential Mortgage (0.7) (0.7) (1.0) (1.4) (2.4)
Home Equity - (0.1) (0.1) (0.1) (0.2)
Other Consumer (3.6) (3.1) (3.0) (6.7) (6.7)
Lease Financing - (0.1) (0.1) (0.1) (0.2)
----------------------------------------------------------------------
Total Charge-Offs (5.7) (6.1) (7.5) (11.7) (20.6)
Recoveries on Loans
Previously Charged-Off
Commercial
Commercial and
Industrial 1.8 0.6 2.1 2.4 2.8
Commercial Mortgage 0.1 - 0.1 0.1 1.9
Construction 0.1 0.9 - 1.0 -
Consumer
Residential Mortgage 0.3 0.2 0.4 0.5 0.7
Home Equity - 0.1 - 0.1 0.1
Other Consumer 1.3 1.3 1.5 2.6 3.3
Lease Financing - 0.1 - 0.1 -
Foreign - 0.1 0.1 0.1 0.2
----------------------------------------------------------------------
Total Recoveries 3.6 3.3 4.2 6.9 9.0
----------------------------------------------------------------------
Net Loan Charge-Offs (2.1) (2.8) (3.3) (4.9) (11.6)
Provision for Loan and
Lease Losses - - 3.3 - 11.6
----------------------------------------------------------------------
Balance at End of Period $138.0 $140.0 $159.0 $138.0 $159.0
======================================================================
Average Loans
Outstanding $5,518.4 $5,460.8 $5,504.5 $5,489.8 $5,544.7
======================================================================
Ratio of Net Charge-Offs
to Average Loans
Outstanding
(annualized) 0.15% 0.21% 0.24% 0.18% 0.42%
Ratio of Allowance to
Loans Outstanding 2.52% 2.52% 2.94% 2.52% 2.94%
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Totals may not add due to rounding.
Bank of Hawaii Corporation and Subsidiaries
Information Technology Systems Replacement Project
(Unaudited) Table 10
----------------------------------------------------------------------
Employee Other
(dollars in Professional Termination Accelerated Associated
millions) Fees Benefits Depreciation Costs (1) Total
------------- ------------ ----------- ------------ ---------- -------
Costs Incurred:
Three Months
Ended:
September
30, 2002 $1.9 $1.0 $3.2 $0.5 $6.6
December
31, 2002 3.2 0.2 2.2 1.4 7.0
------------- ------------ ----------- ------------ ---------- -------
Year Ended
December 31,
2002 5.1 1.2 5.4 1.9 13.6
Three Months
Ended:
March 31,
2003 3.5 0.4 2.0 1.5 7.4
June 30,
2003 2.9 2.6 1.8 2.8 10.1
------------- ------------ ----------- ------------ ---------- -------
Six Months
Ended June
30, 2003 6.4 3.0 3.8 4.3 17.5
------------- ------------ ----------- ------------ ---------- -------
Total Costs
Incurred $11.5 $4.2 $9.2 $6.2 $31.1
============= ============ =========== ============ ========== =======
Total
Expected
Project
Costs $12.6 $5.3 $9.2 $8.4 $35.5
============= ============ =========== ============ ========== =======
(1) Includes contract termination, equipment, excise tax and other
costs.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information (Unaudited) Table 11
----------------------------------------------------------------------
Investment Treasury Consoli-
(dollars in Retail Commercial Services and Other dated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Three Months
Ended June 30,
2003
Net Interest
Income $57,375 $36,382 $3,332 $(6,604) $90,485
Provision for
Loan and Lease
Losses (1,321) (1,022) - 2,343 -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 56,054 35,360 3,332 (4,261) 90,485
Non-Interest
Income 23,899 7,944 15,428 3,468 50,739
----------------------------------------------------------------------
79,953 43,304 18,760 (793) 141,224
Information
Technology
Systems
Replacement
Project (368) - (90) (9,647) (10,105)
Non-Interest
Expense (42,126) (23,205) (15,937) (4,021) (85,289)
----------------------------------------------------------------------
Income Before
Income Taxes 37,459 20,099 2,733 (14,461) 45,830
Provision for
Income Taxes (13,860) (7,319) (1,011) 6,394 (15,796)
----------------------------------------------------------------------
Allocated Net
Income (Loss) 23,599 12,780 1,722 (8,067) 30,034
----------------------------------------------------------------------
Allowance
Funding Value (161) (1,100) (7) 1,268 -
GAAP Provision 1,321 1,022 - (2,343) -
Economic
Provision (2,901) (3,027) (112) (5) (6,045)
Tax Effect of
Adjustments 644 1,149 44 400 2,237
----------------------------------------------------------------------
Income Before
Capital Charge 22,502 10,824 1,647 (8,747) 26,226
Capital Charge (5,494) (5,350) (1,512) (13,275) (25,631)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $17,008 $5,474 $135 $(22,022) $595
======================================================================
RAROC (ROE for
the Company) 45% 22% 12% (7)% 13%
======================================================================
Total Assets at
June 30, 2003 $3,482,754 $2,207,816 $127,894 $3,732,470 $9,550,934
======================================================================
Three Months
Ended June 30,
2002
Net Interest
Income $48,996 $34,705 $3,140 $6,096 $92,937
Provision for
Loan and Lease
Losses (549) (3,096) - 321 (3,324)
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 48,447 31,609 3,140 6,417 89,613
Non-Interest
Income 18,435 8,752 17,376 3,355 47,918
----------------------------------------------------------------------
66,882 40,361 20,516 9,772 137,531
Non-Interest
Expense (44,512) (24,372) (18,059) (2,427) (89,370)
----------------------------------------------------------------------
Income Before
Income Taxes 22,370 15,989 2,457 7,345 48,161
Provision for
Income Taxes (8,277) (5,834) (909) (2,125) (17,145)
----------------------------------------------------------------------
Allocated Net
Income 14,093 10,155 1,548 5,220 31,016
----------------------------------------------------------------------
Allowance
Funding Value (204) (1,597) (4) 1,805 -
GAAP Provision 549 3,096 - (321) 3,324
Economic
Provision (2,905) (3,667) (124) - (6,696)
Tax Effect of
Adjustments 947 802 47 (548) 1,248
----------------------------------------------------------------------
Income Before
Capital Charge 12,480 8,789 1,467 6,156 28,892
Capital Charge (5,248) (6,044) (1,620) (21,490) (34,402)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $7,232 $2,745 $(153) $(15,334) $(5,510)
======================================================================
RAROC (ROE for
the Company) 26% 16% 10% 28% 10%
======================================================================
Total Assets at
June 30, 2002 $3,217,645 $2,392,041 $115,119 $4,099,260 $9,824,065
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information Table 11a
(Unaudited)
----------------------------------------------------------------------
Investment Treasury
(dollars in Retail Commercial Services and Other Consolidated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Six Months
Ended June 30,
2003
Net Interest
Income $112,359 $72,769 $7,302 $(10,945) $181,485
Provision for
Loan and Lease
Losses (2,169) (3,173) - 5,342 -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 110,190 69,596 7,302 (5,603) 181,485
Non-Interest
Income 41,285 16,359 31,107 6,741 95,492
----------------------------------------------------------------------
151,475 85,955 38,409 1,138 276,977
Information
Technology
Systems
Replacement
Project (950) (23) (334) (16,215) (17,522)
Non-Interest
Expense (82,795) (45,924) (31,841) (7,512) (168,072)
----------------------------------------------------------------------
Income Before
Income Taxes 67,730 40,008 6,234 (22,589) 91,383
Provision for
Income Taxes (25,060) (14,589) (2,307) 10,408 (31,548)
----------------------------------------------------------------------
Allocated Net
Income (Loss) 42,670 25,419 3,927 (12,181) 59,835
----------------------------------------------------------------------
Allowance
Funding Value (313) (2,241) (17) 2,571 -
GAAP Provision 2,169 3,173 - (5,342) -
Economic
Provision (5,609) (6,086) (244) (10) (11,949)
Tax Effect of
Adjustments 1,389 1,907 97 1,028 4,421
----------------------------------------------------------------------
Income Before
Capital Charge 40,306 22,172 3,763 (13,934) 52,307
Capital Charge (10,886) (10,728) (3,030) (27,739) (52,383)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $29,420 $11,444 $733 $(41,673) $(76)
======================================================================
RAROC (ROE for
the Company) 41% 23% 14% (5)% 13%
======================================================================
Total Assets at
June 30, 2003 $3,482,754 $2,207,816 $127,894 $3,732,470 $9,550,934
======================================================================
Six Months
Ended June 30,
2002
Net Interest
Income $98,552 $70,335 $6,140 $12,805 $187,832
Provision for
Loan and Lease
Losses (2,491) (9,606) - 481 (11,616)
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 96,061 60,729 6,140 13,286 176,216
Non-Interest
Income 42,487 17,373 35,200 5,883 100,943
----------------------------------------------------------------------
138,548 78,102 41,340 19,169 277,159
Restructuring
and Other
Related Costs - - - (1,979) (1,979)
Non-Interest
Expense (90,826) (49,327) (34,119) (4,542) (178,814)
----------------------------------------------------------------------
Income Before
Income Taxes 47,722 28,775 7,221 12,648 96,366
Provision for
Income Taxes (17,657) (10,489) (2,672) (3,476) (34,294)
----------------------------------------------------------------------
Allocated Net
Income 30,065 18,286 4,549 9,172 62,072
----------------------------------------------------------------------
Allowance
Funding Value (471) (3,149) (11) 3,631 -
GAAP Provision 2,491 9,606 - (481) 11,616
Economic
Provision (5,409) (7,905) (251) (3) (13,568)
Tax Effect of
Adjustments 1,254 536 97 (1,165) 722
----------------------------------------------------------------------
Income Before
Capital Charge 27,930 17,374 4,384 11,154 60,842
Capital Charge (10,571) (12,603) (3,121) (42,856) (69,151)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $17,359 $4,771 $1,263 $(31,702) $(8,309)
======================================================================
RAROC (ROE for
the Company) 29% 15% 16% 26% 10%
======================================================================
Total Assets at
June 30, 2002 $3,217,645 $2,392,041 $115,119 $4,099,260 $9,824,065
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data Table 12
(Unaudited)
----------------------------------------------------------------------
Three Months Ended (1)
(dollars in thousands except per share June 30, March 31, Dec. 31,
amounts) 2003 2003 2002
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $85,954 $85,773 $85,945
Income on Investment Securities -
Held to Maturity 3,083 2,283 3,122
Income on Investment Securities -
Available for Sale 19,815 22,463 24,088
Deposits 1,161 1,307 3,578
Funds Sold and Security Resale
Agreements 822 764 834
Other 1,016 1,189 1,312
----------------------------------------------------------------------
Total Interest Income 111,851 113,779 118,879
Interest Expense
Deposits 13,309 14,447 17,657
Security Repurchase Agreements 2,391 2,242 4,585
Funds Purchased 219 205 255
Short-Term Borrowings 25 24 217
Long-Term Debt 5,422 5,861 5,947
----------------------------------------------------------------------
Total Interest Expense 21,366 22,779 28,661
----------------------------------------------------------------------
Net Interest Income 90,485 91,000 90,218
Provision for Loan and Lease Losses - - -
----------------------------------------------------------------------
Net Interest Income After Provision for
Loan and Lease Losses 90,485 91,000 90,218
Non-Interest Income
Trust and Asset Management 12,545 13,181 13,085
Mortgage Banking 6,061 283 4,398
Service Charges on Deposit Accounts 8,645 8,950 8,326
Fees, Exchange, and Other Service
Charges 13,473 12,989 12,963
Investment Securities Gains 587 583 612
Insurance 2,991 2,982 3,099
Other 6,437 5,785 7,872
----------------------------------------------------------------------
Total Non-Interest Income 50,739 44,753 50,355
Non-Interest Expense
Salaries 39,232 36,459 38,462
Pensions and Other Employee Benefits 8,479 9,970 6,272
Net Occupancy Expense 9,628 9,613 10,638
Net Equipment Expense 9,208 9,748 11,077
Restructuring and Other Related Costs - - 385
Information Technology Systems
Replacement Project 10,105 7,417 7,052
Other 18,742 16,993 22,827
----------------------------------------------------------------------
Total Non-Interest Expense 95,394 90,200 96,713
----------------------------------------------------------------------
Income Before Income Taxes 45,830 45,553 43,860
Provision for Income Taxes 15,796 15,752 14,952
----------------------------------------------------------------------
Net Income $30,034 $29,801 $28,908
======================================================================
Basic Earnings Per Share $0.50 $0.49 $0.45
Diluted Earnings Per Share $0.48 $0.47 $0.44
Balance Sheet Totals
Total Assets 9,550,934 9,410,210 9,516,418
Net Loans 5,333,896 5,425,343 5,216,151
Total Deposits 7,140,849 6,987,331 6,920,161
Total Shareholders' Equity 913,010 952,007 1,015,759
Performance Ratios
Return on Average Assets 1.27% 1.31% 1.20%
Return on Average Equity 12.93% 12.42% 10.72%
Efficiency Ratio 67.55% 66.44% 68.80%
Efficiency Ratio excluding ITSRP and
Restructuring Costs 60.39% 60.98% 63.51%
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data Table 12
(Unaudited)
----------------------------------------------------------------------
Three Months Ended (1)
(dollars in thousands except per September 30, June 30, March 31,
share amounts) 2002 2002 2002
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and
Leases $89,335 $92,441 $98,645
Income on Investment Securities
- Held to Maturity 3,963 4,544 5,145
Income on Investment Securities
- Available for Sale 26,175 26,805 27,193
Deposits 5,384 6,011 5,047
Funds Sold and Security Resale
Agreements 914 752 1,003
Other 1,575 1,395 1,332
----------------------------------------------------------------------
Total Interest Income 127,346 131,948 138,365
Interest Expense
Deposits 20,547 22,166 23,978
Security Repurchase Agreements 7,039 8,256 10,293
Funds Purchased 299 245 231
Short-Term Borrowings 334 289 649
Long-Term Debt 6,946 8,055 8,319
----------------------------------------------------------------------
Total Interest Expense 35,165 39,011 43,470
----------------------------------------------------------------------
Net Interest Income 92,181 92,937 94,895
Provision for Loan and Lease
Losses - 3,324 8,292
----------------------------------------------------------------------
Net Interest Income After
Provision for Loan and Lease
Losses 92,181 89,613 86,603
Non-Interest Income
Trust and Asset Management 13,655 14,175 14,818
Mortgage Banking 3,669 2,842 7,957
Service Charges on Deposit
Accounts 7,925 7,956 8,410
Fees, Exchange, and Other
Service Charges 13,114 13,065 12,452
Investment Securities Gains - 3 -
Insurance 2,677 2,563 2,599
Other 5,997 7,314 6,789
----------------------------------------------------------------------
Total Non-Interest Income 47,037 47,918 53,025
Non-Interest Expense
Salaries 37,994 37,884 39,187
Pensions and Other Employee
Benefits 7,377 9,391 9,996
Net Occupancy Expense 9,597 9,321 9,593
Net Equipment Expense 10,058 9,997 10,121
Restructuring and Other Related
Costs - - 1,979
Information Technology Systems
Replacement Project 6,576 - -
Other 20,141 22,777 20,547
----------------------------------------------------------------------
Total Non-Interest Expense 91,743 89,370 91,423
----------------------------------------------------------------------
Income Before Income Taxes 47,475 48,161 48,205
Provision for Income Taxes 17,275 17,145 17,149
----------------------------------------------------------------------
Net Income $30,200 $31,016 $31,056
======================================================================
Basic Earnings Per Share $0.44 $0.43 $0.42
Diluted Earnings Per Share $0.43 $0.42 $0.41
Balance Sheet Totals
Total Assets 9,702,700 9,824,065 10,245,021
Net Loans 5,104,857 5,250,216 5,442,601
Total Deposits 6,627,673 6,455,981 6,543,781
Total Shareholders' Equity 1,100,706 1,191,072 1,265,907
Performance Ratios
Return on Average Assets 1.22% 1.23% 1.21%
Return on Average Equity 10.40% 9.94% 9.97%
Efficiency Ratio 65.90% 63.45% 61.81%
Efficiency Ratio excluding ITSRP
and Restructuring Costs 61.18% 63.45% 60.47%
(1) Certain 2002 information has been reclassified to conform to 2003
presentation.
-->
CONTACT: Bank of Hawaii Corporation
Stafford Kiguchi, 808/537-8580 (Media)
pager: 877/849-5423
skiguchi@boh.com Cindy Wyrick, 808/537-8430 (Investor/Analyst)
cwyrick@boh.com
SOURCE: Bank of Hawaii Corporation