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Bank of Hawaii Corporation Second Quarter 2017 Financial Results
  • Diluted Earnings Per Share $1.05
  • Net Income $44.7 Million
  • Board of Directors Increases Dividend to $0.52 Per Share

HONOLULU--(BUSINESS WIRE)--Jul. 24, 2017-- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $1.05 for the second quarter of 2017, down from diluted earnings per share of $1.20 in the previous quarter and up from diluted earnings per share of $1.03 in the same quarter last year. Net income for the second quarter of 2017 was $44.7 million compared with net income of $51.2 million in the first quarter of 2017 and net income of $44.2 million in the second quarter of 2016. Income for the first quarter of 2017 included sales of $12.5 million in Visa Class B shares. There were no sales of Visa shares during the second quarter of 2017 or the second quarter of 2016.

Loan and lease balances increased to $9.4 billion at June 30, 2017, up 3.0 percent from March 31, 2017 and up 12.7 percent compared with June 30, 2016. Deposits grew 2.1 percent during the second quarter as balances increased to $14.8 billion at June 30, 2017 compared with $14.5 billion at March 31, 2017 and $13.6 billion at June 30, 2016.

“Bank of Hawaii Corporation continued to perform well during the second quarter of 2017,” said Peter Ho, Chairman, President and CEO. “Our loans and deposits continued to grow, our margin improved, expenses were well controlled, and our asset quality remains strong. We are also pleased to increase the dividend to our shareholders for the third time in the past eighteen months.”

The return on average assets for the second quarter of 2017 was 1.09 percent, down from 1.26 percent in the previous quarter and 1.14 percent in the same quarter last year. The return on average equity for the second quarter of 2017 was 14.87 percent, down from 17.63 percent for the first quarter of 2017 and 15.56 percent in the second quarter of 2016. The efficiency ratio for the second quarter of 2017 was 55.99 percent compared with 53.42 percent in the previous quarter and 57.35 percent in the same quarter last year.

For the six-month period ended June 30, 2017, net income was $95.8 million, an increase of $1.4 million from net income of $94.5 million during the same period last year. Diluted earnings per share were $2.24 for the first half of 2017, an increase from diluted earnings per share of $2.19 for the first half of 2016. The return on average assets for the six-month period ended June 30, 2017 was 1.17 percent compared with 1.22 percent for the same six months in 2016. The year-to-date return on average equity was 16.22 percent for the first half of 2017 compared with 16.71 percent for the six month period ended June 30, 2016. The efficiency ratio for the first half of 2017 improved to 54.67 percent compared with 56.08 percent in the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2017 was $115.3 million, an increase of $2.4 million compared with net interest income of $112.9 million in the first quarter of 2017 and an increase of $8.8 million compared with net interest income of $106.5 million in the second quarter of 2016. Net interest income for the first half of 2017 was $228.3 million, an increase of $15.7 million compared with net interest income of $212.6 million for the first half of 2016. Analyses of the changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin was 2.92 percent for the second quarter of 2017, up 3 basis points from the net interest margin of 2.89 percent in the previous quarter and a 7 basis point increase from the net interest margin of 2.85 percent in the second quarter of 2016. The net interest margin for the first six months of 2017 was 2.90 percent compared with 2.86 percent for the same six-month period last year.

Results for the second quarter of 2017 included a provision for credit losses of $4.3 million compared with a provision for credit losses of $4.4 million in the previous quarter and a provision for credit losses of $1.0 million in the same quarter last year. The provision for credit losses during the first half of 2017 was $8.7 million compared with a negative provision of $1.0 million during the same period in 2016. Provision expense for the first half of 2016 reflects a recovery of $6.6 million related to one commercial client in Guam.

Noninterest income was $45.2 million in the second quarter of 2017, a decrease of $10.7 million compared with noninterest income of $55.9 million in the first quarter of 2017 and a decrease of $1.3 million compared with noninterest income of $46.5 million in the second quarter of 2016. There were no significant items in noninterest income during the second quarter of 2017. Noninterest income in the first quarter of 2017 included the previously mentioned gain of $12.5 million resulting from the sale of 90,000 Visa Class B shares. Noninterest income in the second quarter of 2016 included a service fee of $1.2 million resulting from the sale of trust real estate. Noninterest income for the first half of 2017 was $101.2 million, a decrease of $1.5 million compared with noninterest income of $102.7 million for the first half of 2016.

Noninterest expense was $88.2 million in the second quarter of 2017, a decrease of $0.4 million compared with noninterest expense of $88.6 million in the first quarter of 2017 and an increase of $2.1 million compared with noninterest expense of $86.1 million in the second quarter last year. There were no significant items in noninterest expense during the second quarter of 2017. Noninterest expense in the first quarter of 2017 included seasonal payroll expenses of approximately $2.5 million. Noninterest expense in the second quarter of 2016 included a net gain of $1.3 million from the sale of bank-owned real estate property. An analysis of noninterest expenses related to salaries and benefits is included in Table 9. Noninterest expense for the first half of 2017 was $176.8 million, an increase of $3.3 million compared with noninterest expense of $173.5 million for the first half of 2016.

The effective tax rate for the second quarter of 2017 was 31.37 percent compared with 29.72 percent in the previous quarter and 29.77 percent in the same quarter last year. The lower effective tax rate for the first quarter of 2017 was due to the adoption of an accounting change related to the exercise of stock options and the vesting of restricted stock. The lower effective tax rate in second quarter of 2016 was primarily due to the release of state tax reserves. The effective tax rate for the first half of 2017 was 30.50 percent compared with 30.98 percent during the same period last year.

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

Asset Quality

The Company’s asset quality continued to remain solid during the second quarter of 2017. Total non-performing assets were $16.4 million at June 30, 2017, down $2.6 million from non-performing assets of $19.0 million at March 31, 2017 and up $0.1 million from non-performing assets of $16.3 million at June 30, 2016. As a percentage of total loans and leases, including foreclosed real estate, non-performing assets were 0.17 percent at the end of the second quarter of 2017, down from 0.21 percent at the end of the first quarter of 2017 and down from 0.20 percent at the end of the second quarter last year.

Accruing loans and leases past due 90 days or more were $7.0 million at June 30, 2017, up from $5.9 million at March 31, 2017 and down from $8.8 million at June 30, 2016. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $53.2 million at June 30, 2017, an increase from $53.0 million at March 31, 2017 and $52.2 million at June 30, 2016. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loan and lease charge-offs during the second quarter of 2017 were $3.0 million or 0.13 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $5.5 million during the quarter were partially offset by recoveries of $2.5 million. Net charge-offs during the first quarter of 2017 were $3.6 million or 0.16 percent annualized of total average loans and leases outstanding and comprised of $5.7 million in charge-offs and recoveries of $2.1 million. Net charge-offs during the second quarter of 2016 were $1.7 million or 0.09 percent annualized of total average loans and leases outstanding and comprised of $3.7 million in charge-offs and recoveries of $2.0 million. Net charge-offs during the first half of 2017 were $6.6 million or 0.15 percent annualized of total average loans and leases outstanding compared with net recoveries of $2.1 million for the first half of 2016. Results for the first half of 2016 include the previously mentioned recovery related to one commercial client in Guam.

The allowance for loan and lease losses increased to $106.4 million at June 30, 2017 compared with $105.1 million at March 31, 2017 and $103.9 million at June 30, 2016. The ratio of the allowance for loan and lease losses to total loans and leases was 1.13 percent at June 30, 2017, a decrease of 2 basis points from the previous quarter and 12 basis points from the second quarter last year. The allowance for loan and lease losses at June 30, 2017 is commensurate with the Company’s asset quality and the Hawaii economy. As a result of continued strong growth in Hawaii commercial lending, the reserve for unfunded commitments was increased to $6.8 million at June 30, 2017 compared with the reserve for unfunded commitments of $6.6 million at March 31, 2017 and June 30, 2016. Details of loan and lease charge-offs, recoveries and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $17.0 billion at June 30, 2017, up from total assets of $16.7 billion at March 31, 2017 and up from total assets of $15.9 billion at June 30, 2016. Average total assets increased to $16.5 billion during the second quarter of 2017, up from $16.4 billion during the previous quarter and $15.6 billion during the same quarter last year.

The investment securities portfolio was $6.1 billion at June 30, 2017, down from $6.2 billion at March 31, 2017 and up from $6.0 billion at June 30, 2016. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $3.8 billion in securities held to maturity and $2.3 billion in securities available for sale at June 30, 2017.

Total loans and leases were $9.4 billion at June 30, 2017, up from total loans and leases of $9.1 billion at March 31, 2017 and up from total loans and leases of $8.3 billion at June 30, 2016. Average total loans and leases increased to $9.2 billion during the second quarter of 2017, up from $9.0 billion during the previous quarter and $8.2 billion during the same quarter last year.

The commercial loan portfolio was $3.7 billion at June 30, 2017, up from $3.6 billion at March 31, 2017 and $3.3 billion at June 30, 2016. The consumer loan portfolio was $5.7 billion at June 30, 2017, up from $5.5 billion at March 31, 2017 and $5.0 billion at June 30, 2016. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $14.8 billion at June 30, 2017, up from total deposits of $14.5 billion at March 31, 2017 and up from total deposits of $13.6 billion at June 30, 2016. Average total deposits increased to $14.3 billion during the second quarter of 2017, up from $14.2 billion during the previous quarter and $13.5 billion during the same quarter last year.

Consumer deposits were $7.3 billion at June 30, 2017, up from $7.2 billion at March 31, 2017 and $6.6 billion at June 30, 2016. Commercial deposits were $5.9 billion at June 30, 2017, down from $6.1 billion at March 31, 2017 and up from $5.7 billion at June 30, 2016. Other deposits, including public funds, were $1.6 billion at June 30, 2017, up from $1.2 billion at March 31, 2017 and $1.3 billion at June 30, 2016. Deposit balances are summarized in Tables 7 and 10.

During the second quarter of 2017, the Company repurchased 123.1 thousand shares of common stock at a total cost of $9.9 million under its share repurchase program. The average cost was $80.28 per share repurchased. From the beginning of the share repurchase program initiated during July of 2001 through June 30, 2017, the Company has repurchased 53.9 million shares and returned over $2.0 billion to shareholders at an average cost of $38.04 per share. Remaining buyback authority under the share repurchase program was $45.5 million at June 30, 2017. From July 3 through July 21, 2017, the Company repurchased an additional 42.0 thousand shares of common stock at an average cost of $82.52 per share.

Total shareholders’ equity increased to $1.2 billion at June 30, 2017. At June 30, 2017, the Tier 1 Capital Ratio was 13.34 percent compared with 13.41 percent at March 31, 2017 and 13.66 percent at June 30, 2016. The Tier 1 leverage ratio at June 30, 2017 was 7.37 percent compared with 7.29 percent at March 31, 2017 and June 30, 2016.

The Company’s Board of Directors declared a quarterly cash dividend of $0.52 per share on the Company’s outstanding shares. The dividend will be payable on September 15, 2017 to shareholders of record at the close of business on August 31, 2017.

Hawaii Economy

Economic conditions in Hawaii continue to remain positive due to the active construction industry, growing tourism and a strong real estate market. The statewide seasonally-adjusted unemployment rate in Hawaii remains among the lowest in the United States at 2.7 percent in June 2017 compared to 4.4 percent nationally. For the first five months of 2017, total visitor spending increased 9.8 percent and visitor arrivals increased 4.2 percent compared to the same period in 2016. Year-to-date, all four of Hawaii’s largest visitor markets, U. S. West, U. S. East, Japan, and Canada, have reported strong growth compared with the first five months of 2016. For the first six months of 2017, the volume of single-family home sales on Oahu increased 4.4 percent compared with the same period in 2016. The volume of condominium sales on Oahu increased 6.0 percent compared with the same period in 2016. During the first half of 2017 the median sales price of single-family homes on Oahu was 3.2 percent higher and the median sales price of a condominium was 3.6 percent higher compared with 2016. As of June 30, 2017, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 2.7 months and 2.8 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its second quarter 2017 financial results today at 2:00 p.m. Eastern Time (8:00 a.m. Hawaii Time). The call will be accessible via teleconference and via the investor relations link of Bank of Hawaii Corporation's website, www.boh.com. The toll-free number is 1 (844) 543-5235 in the United States and 1 (703) 318-2209 for international callers. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, July 24, 2017. The replay number is 1 (855) 859-2056 in the United States and 1 (404) 537-3406 from international locations. Enter the pass code 47737328 when prompted. Participants can also dial 1 (800) 585-8367 to access the replay. In addition, a replay will be available on the Company's website, www.boh.com.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain "forward-looking statements", such as forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation's Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the U.S. Securities and Exchange Commission. We have not committed to update forward-looking statements to reflect later events or circumstances.

Bank of Hawaii Corporation is a regional financial services company serving businesses, consumers, and governments in Hawaii, American Samoa, and the West Pacific. The Company’s principal subsidiary, Bank of Hawaii, was founded in 1897. For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com.

 
Bank of Hawaii Corporation and Subsidiaries
Financial Highlights   Table 1
    Three Months Ended     Six Months Ended
June 30,     March 31,     June 30, June 30,
(dollars in thousands, except per share amounts)     2017       2017       2016       2017       2016

For the Period:

   
Operating Results
Net Interest Income $ 112,279 $ 109,872 $ 103,550 $ 222,151 $ 206,574
Provision for Credit Losses 4,250 4,400 1,000 8,650 (1,000 )
Total Noninterest Income 45,236 55,916 46,519 101,152 102,726
Total Noninterest Expense 88,189 88,568 86,071 176,757 173,457
Net Income 44,662 51,176 44,245 95,838 94,455
Basic Earnings Per Share 1.05 1.21 1.04 2.26 2.21
Diluted Earnings Per Share 1.05 1.20 1.03 2.24 2.19
Dividends Declared Per Share 0.50 0.50 0.48 1.00 0.93
 
Performance Ratios
Return on Average Assets 1.09 % 1.26 % 1.14 % 1.17 % 1.22 %
Return on Average Shareholders' Equity 14.87 17.63 15.56 16.22 16.71
Efficiency Ratio 1 55.99 53.42 57.35 54.67 56.08
Net Interest Margin 2 2.92 2.89 2.85 2.90 2.86
Dividend Payout Ratio 3 47.62 41.32 46.15 44.25 42.08
Average Shareholders' Equity to Average Assets 7.30 7.16 7.31 7.23 7.29
 
Average Balances
Average Loans and Leases $ 9,217,779 $ 9,020,351 $ 8,205,104 $ 9,119,610 $ 8,072,600
Average Assets 16,495,925 16,434,606 15,639,596 16,465,435 15,588,335
Average Deposits 14,253,149 14,218,886 13,453,953 14,236,112 13,394,251
Average Shareholders' Equity 1,204,837 1,177,326 1,143,884 1,191,157 1,136,722
 
Per Share of Common Stock
Book Value $ 28.45 $ 27.92 $ 26.96 $ 28.45 $ 26.96
Tangible Book Value 27.72 27.18 26.23 27.72 26.23
Market Value
Closing 82.97 82.36 68.80 82.97 68.80
High 84.99 90.80 72.77 90.80 72.77
Low 75.92 77.03 64.96 75.92 54.55
 
June 30, March 31, December 31, June 30,
                2017       2017       2016       2016  

As of Period End:

Balance Sheet Totals
Loans and Leases $ 9,387,613 $ 9,113,809 $ 8,949,785 $ 8,331,469
Total Assets 16,981,292 16,664,215 16,492,367 15,860,901
Total Deposits 14,784,649 14,476,533 14,320,240 13,643,807
Other Debt 267,904 267,921 267,938 267,970
Total Shareholders' Equity 1,213,757 1,193,137 1,161,537 1,157,219
 
Asset Quality
Non-Performing Assets $ 16,368 $ 19,003 $ 19,761 $ 16,280
Allowance for Loan and Lease Losses 106,353 105,064 104,273 103,932
Allowance to Loans and Leases Outstanding 1.13 % 1.15 % 1.17 % 1.25 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 13.34 % 13.41 % 13.24 % 13.66 %
Tier 1 Capital Ratio 13.34 13.41 13.24 13.66
Total Capital Ratio 14.58 14.66 14.49 14.91
Tier 1 Leverage Ratio 7.37 7.29 7.21 7.29
Total Shareholders' Equity to Total Assets 7.15 7.16 7.04 7.30
Tangible Common Equity to Tangible Assets 4 6.97 6.98 6.86 7.11
Tangible Common Equity to Risk-Weighted Assets 4 13.01 13.04 12.81 13.49
 
Non-Financial Data
Full-Time Equivalent Employees 2,142 2,115 2,122 2,136
Branches 69 69 69 70
ATMs 388 441 449 451
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).
2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
3 Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share.
4 Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 2 “Reconciliation of Non-GAAP Financial Measures."
 
 
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures   Table 2
    June 30, March 31, December 31, June 30,
(dollars in thousands)     2017   2017   2016   2016
 
Total Shareholders' Equity $ 1,213,757 $ 1,193,137 $ 1,161,537 $ 1,157,219

Less: Goodwill

      31,517     31,517     31,517     31,517
Tangible Common Equity     $ 1,182,240   $ 1,161,620   $ 1,130,020   $ 1,125,702
 
Total Assets $ 16,981,292 $ 16,664,215 $ 16,492,367 $ 15,860,901

Less: Goodwill

      31,517     31,517     31,517     31,517
Tangible Assets     $ 16,949,775   $ 16,632,698   $ 16,460,850   $ 15,829,384
 

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

$ 9,087,057 $ 8,908,024 $ 8,823,485 $ 8,343,158
 
Total Shareholders' Equity to Total Assets 7.15 % 7.16 % 7.04 % 7.30 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.97 % 6.98 % 6.86 % 7.11 %
 
Tier 1 Capital Ratio 13.34 % 13.41 % 13.24 % 13.66 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 13.01 % 13.04 % 12.81 % 13.49 %
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income     Table 3
    Three Months Ended       Six Months Ended
June 30,   March 31,     June 30, June 30,
(dollars in thousands, except per share amounts)     2017     2017     2016       2017     2016
Interest Income    
Interest and Fees on Loans and Leases $ 90,909 $ 87,937 $ 82,323 $ 178,846 $ 163,218
Income on Investment Securities
Available-for-Sale 11,835 11,084 10,521 22,919 21,335
Held-to-Maturity 19,918 19,706 20,168 39,624 40,559
Deposits 2 5 2 7 6
Funds Sold 696 890 618 1,586 1,371
Other       208       230       153         438       365  
Total Interest Income       123,568       119,852       113,785         243,420       226,854  
Interest Expense
Deposits 4,998 3,691 3,081 8,689 5,967
Securities Sold Under Agreements to Repurchase 5,079 5,185 6,134 10,264 12,287
Funds Purchased 39 3 3 42 6
Short-Term Borrowings 64 - - 64 -
Other Debt       1,109       1,101       1,017         2,210       2,020  
Total Interest Expense       11,289       9,980       10,235         21,269       20,280  
Net Interest Income 112,279 109,872 103,550 222,151 206,574
Provision for Credit Losses       4,250       4,400       1,000         8,650       (1,000 )
Net Interest Income After Provision for Credit Losses       108,029       105,472       102,550         213,501       207,574  
Noninterest Income
Trust and Asset Management 11,796 11,479 12,707 23,275 23,963
Mortgage Banking 3,819 3,300 4,088 7,119 7,277
Service Charges on Deposit Accounts 8,009 8,325 8,150 16,334 16,593
Fees, Exchange, and Other Service Charges 13,965 13,332 13,978 27,297 27,422
Investment Securities Gains (Losses), Net (520 ) 12,133 (312 ) 11,613 10,868
Annuity and Insurance 2,161 1,995 2,006 4,156 3,907
Bank-Owned Life Insurance 1,550 1,497 1,551 3,047 3,099
Other       4,456       3,855       4,351         8,311       9,597  
Total Noninterest Income       45,236       55,916       46,519         101,152       102,726  
Noninterest Expense
Salaries and Benefits 50,113 51,602 50,289 101,715 100,803
Net Occupancy 8,131 8,168 7,158 16,299 14,161
Net Equipment 5,706 5,501 5,065 11,207 10,474
Data Processing 3,881 3,410 3,972 7,291 7,923
Professional Fees 2,592 2,779 2,047 5,371 4,686
FDIC Insurance 2,097 2,209 2,144 4,306 4,496
Other       15,669       14,899       15,396         30,568       30,914  
Total Noninterest Expense       88,189       88,568       86,071         176,757       173,457  
Income Before Provision for Income Taxes 65,076 72,820 62,998 137,896 136,843
Provision for Income Taxes       20,414       21,644       18,753         42,058       42,388  
Net Income     $ 44,662     $ 51,176     $ 44,245       $ 95,838     $ 94,455  
Basic Earnings Per Share $ 1.05 $ 1.21 $ 1.04 $ 2.26 $ 2.21
Diluted Earnings Per Share $ 1.05 $ 1.20 $ 1.03 $ 2.24 $ 2.19
Dividends Declared Per Share $ 0.50 $ 0.50 $ 0.48 $ 1.00 $ 0.93
Basic Weighted Average Shares 42,353,976 42,406,006 42,729,731 42,379,730 42,825,369
Diluted Weighted Average Shares       42,658,885       42,749,866       42,942,960         42,704,010       43,033,199  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income   Table 4
    Three Months Ended   Six Months Ended
June 30,   March 31,   June 30,   June 30,
(dollars in thousands)     2017   2017   2016     2017   2016
Net Income $ 44,662 $ 51,176 $ 44,245 $ 95,838   $ 94,455
Other Comprehensive Income, Net of Tax:
Net Unrealized Gains on Investment Securities 3,106 4,894 5,157 8,000 13,851
Defined Benefit Plans       147     146     141       293     282
Total Other Comprehensive Income       3,253     5,040     5,298       8,293     14,133
Comprehensive Income     $ 47,915   $ 56,216   $ 49,543     $ 104,131   $ 108,588
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition   Table 5  
    June 30,   March 31,   December 31,   June 30,
(dollars in thousands)     2017     2017     2016     2016  
Assets
Interest-Bearing Deposits in Other Banks $ 3,913 $ 3,486 $ 3,187 $ 3,819
Funds Sold 742,221 620,065 707,343 615,395
Investment Securities
Available-for-Sale 2,316,728 2,341,570 2,186,041 2,299,638
Held-to-Maturity (Fair Value of $3,785,641; $3,848,609; $3,827,527; and $3,890,220) 3,782,702 3,848,088 3,832,997 3,798,200
Loans Held for Sale 20,354 20,899 62,499 105,824
Loans and Leases 9,387,613 9,113,809 8,949,785 8,331,469
Allowance for Loan and Lease Losses       (106,353 )     (105,064 )     (104,273 )     (103,932 )
Net Loans and Leases       9,281,260       9,008,745       8,845,512       8,227,537  
Total Earning Assets       16,147,178       15,842,853       15,637,579       15,050,413  
Cash and Due from Banks 128,093 119,972 169,077 133,836
Premises and Equipment, Net 119,569 114,865 113,505 109,832
Accrued Interest Receivable 46,595 48,654 46,444 45,709
Foreclosed Real Estate 1,991 2,529 1,686 1,728
Mortgage Servicing Rights 24,471 24,291 23,663 19,631
Goodwill 31,517 31,517 31,517 31,517
Bank-Owned Life Insurance 277,235 275,685 274,188 271,274
Other Assets       204,643       203,849       194,708       196,961  
Total Assets     $ 16,981,292     $ 16,664,215     $ 16,492,367     $ 15,860,901  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,706,962 $ 4,593,783 $ 4,772,727 $ 4,383,496
Interest-Bearing Demand 3,029,549 2,886,573 2,934,107 2,838,744
Savings 5,364,191 5,596,080 5,395,699 5,165,808
Time       1,683,947       1,400,097       1,217,707       1,255,759  
Total Deposits       14,784,649       14,476,533       14,320,240       13,643,807  
Funds Purchased - 4,616 9,616 7,333
Securities Sold Under Agreements to Repurchase 505,292 505,292 523,378 586,785
Other Debt 267,904 267,921 267,938 267,970
Retirement Benefits Payable 48,346 48,436 48,451 47,438
Accrued Interest Payable 5,105 6,410 5,334 5,532
Taxes Payable and Deferred Taxes 31,444 42,046 21,674 20,979
Other Liabilities       124,795       119,824       134,199       123,838  
Total Liabilities       15,767,535       15,471,078       15,330,830       14,703,682  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2017 - 57,972,647 / 42,655,954; March 31, 2017 - 57,962,462 / 42,736,032; December 31, 2016 - 57,856,672 / 42,635,978; and June 30, 2016 - 57,856,419 / 42,916,163)

576 576 576 576
Capital Surplus 556,409 553,898 551,628 546,928
Accumulated Other Comprehensive Loss (25,613 ) (28,866 ) (33,906 ) (9,424 )
Retained Earnings 1,468,328 1,444,495 1,415,440 1,370,308

Treasury Stock, at Cost (Shares: June 30, 2017 - 15,316,693; March 31, 2017 - 15,226,430; December 31, 2016 - 15,220,694; and June 30, 2016 - 14,940,256)

(785,943 ) (776,966 ) (772,201 ) (751,169 )
Total Shareholders' Equity       1,213,757       1,193,137       1,161,537       1,157,219  
Total Liabilities and Shareholders' Equity     $ 16,981,292     $ 16,664,215     $ 16,492,367     $ 15,860,901  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity   Table 6
          Accum.      
Other
Compre-
hensive
Common Shares Common Capital Income Retained Treasury
(dollars in thousands)     Outstanding   Stock   Surplus   (Loss)   Earnings   Stock   Total
Balance as of December 31, 2016 42,635,978 $ 576 $ 551,628 $ (33,906 ) $ 1,415,440 $ (772,201 ) $ 1,161,537
Net Income - - - - 95,838 - 95,838
Other Comprehensive Income - - - 8,293 - - 8,293
Share-Based Compensation - - 3,726 - - - 3,726
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 275,605 - 1,055 - (162 ) 7,545 8,438
Common Stock Repurchased (255,629 ) - - - - (21,287 ) (21,287 )
Cash Dividends Declared ($1.00 per share)     -       -     -     -       (42,788 )     -       (42,788 )
Balance as of June 30, 2017     42,655,954     $ 576   $ 556,409   $ (25,613 )   $ 1,468,328     $ (785,943 )   $ 1,213,757  
 
Balance as of December 31, 2015 43,282,153 $ 575 $ 542,041 $ (23,557 ) $ 1,316,260 $ (719,059 ) $ 1,116,260
Net Income - - - - 94,455 - 94,455
Other Comprehensive Income - - - 14,133 - - 14,133
Share-Based Compensation - - 3,314 - - - 3,314
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 201,445 1 1,573 - (277 ) 4,900 6,197
Common Stock Repurchased (567,435 ) - - - - (37,010 ) (37,010 )
Cash Dividends Declared ($0.93 per share)     -       -     -     -       (40,130 )     -       (40,130 )
Balance as of June 30, 2016     42,916,163     $ 576   $ 546,928   $ (9,424 )   $ 1,370,308     $ (751,169 )   $ 1,157,219  
 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7a  
    Three Months Ended     Three Months Ended     Three Months Ended
June 30, 2017 March 31, 2017 June 30, 2016
Average   Income/   Yield/ Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)     Balance   Expense   Rate       Balance   Expense   Rate       Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.6 $ - 0.29 % $ 3.3 $ - 0.57 % $ 4.0 $ - 0.17 %
Funds Sold 353.5 0.7 0.78 544.1 0.9 0.65 526.8 0.6 0.46
Investment Securities
Available-for-Sale
Taxable 1,683.4 8.4 1.98 1,625.4 7.5 1.87 1,619.7 6.9 1.72
Non-Taxable 658.9 5.4 3.26 660.7 5.4 3.26 691.8 5.5 3.17
Held-to-Maturity
Taxable 3,596.1 18.4 2.05 3,589.8 18.2 2.03 3,639.5 18.6 2.05
Non-Taxable       240.9     2.3   3.88         241.8     2.4   3.89         244.6     2.4   3.91
Total Investment Securities       6,179.3     34.5   2.23         6,117.7     33.5   2.19         6,195.6     33.4   2.16
Loans Held for Sale 23.8 0.2 4.04 30.4 0.3 3.99 19.9 0.2 3.64
Loans and Leases 1
Commercial and Industrial 1,251.2 10.9 3.51 1,263.7 10.5 3.38 1,176.0 9.8 3.36
Commercial Mortgage 1,946.3 18.4 3.80 1,881.5 17.5 3.76 1,686.7 16.4 3.91
Construction 240.0 2.8 4.70 259.1 2.9 4.54 210.8 2.3 4.44
Commercial Lease Financing 208.0 1.2 2.27 208.7 1.1 2.18 196.4 1.2 2.36
Residential Mortgage 3,272.7 31.1 3.80 3,201.7 30.9 3.86 3,005.4 30.1 4.01
Home Equity 1,445.8 13.1 3.62 1,367.4 12.0 3.56 1,170.9 10.5 3.61
Automobile 474.1 5.9 4.97 461.7 5.8 5.04 405.9 5.2 5.18
Other 2       379.7     7.6   8.06         376.6     7.3   7.89         353.0     6.9   7.78
Total Loans and Leases       9,217.8     91.0   3.96         9,020.4     88.0   3.94         8,205.1     82.4   4.03
Other       41.0     0.2   2.03         40.1     0.2   2.30         38.1     0.1   1.61
Total Earning Assets 3       15,819.0     126.6   3.21         15,756.0     122.9   3.14         14,989.5     116.7   3.12
Cash and Due from Banks 120.8 132.2 120.4
Other Assets   556.1   546.4   529.7
Total Assets $ 16,495.9 $ 16,434.6 $ 15,639.6
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,862.7 0.5 0.07 $ 2,866.4 0.3 0.04 $ 2,738.1 0.3 0.04
Savings 5,376.9 1.6 0.12 5,406.2 1.3 0.09 5,184.8 1.1 0.09
Time       1,480.5     2.9   0.78         1,313.7     2.1   0.65         1,214.8     1.7   0.57
Total Interest-Bearing Deposits       9,720.1     5.0   0.21         9,586.3     3.7   0.16         9,137.7     3.1   0.14
Short-Term Borrowings 36.5 0.1 1.10 9.5 - 0.15 7.3 - 0.15
Securities Sold Under Agreements to Repurchase 505.3 5.1 3.98 512.2 5.2 4.05 586.8 6.1 4.14
Other Debt       267.9     1.1   1.66         267.9     1.1   1.66         226.8     1.0   1.80
Total Interest-Bearing Liabilities       10,529.8     11.3   0.43         10,375.9     10.0   0.39         9,958.6     10.2   0.41
Net Interest Income $ 115.3 $ 112.9 $ 106.5
Interest Rate Spread 2.78 % 2.75 % 2.71 %
Net Interest Margin 2.92 % 2.89 % 2.85 %
Noninterest-Bearing Demand Deposits 4,533.0 4,632.6 4,316.3
Other Liabilities 228.3 248.8 220.8
Shareholders' Equity   1,204.8   1,177.3   1,143.9
Total Liabilities and Shareholders' Equity $ 16,495.9 $ 16,434.6 $ 15,639.6

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

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

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $3,054,000, $3,061,000 and $2,977,000 for the three months ended June 30, 2017, March 31, 2017, and June 30, 2016, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7b
    Six Months Ended   Six Months Ended
June 30, 2017 June 30, 2016
Average   Income/   Yield/ Average   Income/   Yield/
(dollars in millions)     Balance   Expense   Rate       Balance   Expense   Rate  
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.5 $ - 0.42 % $ 4.2 $ - 0.30 %
Funds Sold 448.3 1.6 0.70 587.3 1.4 0.46
Investment Securities
Available-for-Sale
Taxable 1,654.6 15.9 1.93 1,604.1 14.1 1.76
Non-Taxable 659.8 10.7 3.26 703.4 11.1 3.16
Held-to-Maturity
Taxable 3,592.9 36.6 2.04 3,659.5 37.5 2.05
Non-Taxable       241.4     4.7   3.88         245.1     4.8   3.91  
Total Investment Securities       6,148.7     67.9   2.21         6,212.1     67.5   2.17  
Loans Held for Sale 27.1 0.6 4.01 16.0 0.3 3.74
Loans and Leases 1
Commercial and Industrial 1,257.4 21.5 3.44 1,151.7 20.6 3.59
Commercial Mortgage 1,914.1 35.9 3.78 1,687.9 32.1 3.82
Construction 249.5 5.7 4.62 190.4 4.3 4.53
Commercial Lease Financing 208.3 2.3 2.22 197.7 2.5 2.53
Residential Mortgage 3,237.4 62.0 3.83 2,962.0 59.6 4.03
Home Equity 1,406.8 25.0 3.59 1,137.2 20.6 3.65
Automobile 467.9 11.6 5.01 397.2 10.2 5.19
Other 2       378.2     15.0   7.98         348.5     13.4   7.71  
Total Loans and Leases       9,119.6     179.0   3.95         8,072.6     163.3   4.06  
Other       40.5     0.4   2.16         38.2     0.4   1.91  
Total Earning Assets 3       15,787.7     249.5   3.17         14,930.4     232.9   3.13  
Cash and Due from Banks 126.5 125.7
Other Assets   551.2   532.2
Total Assets $ 16,465.4 $ 15,588.3
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,864.6 0.8 0.06 $ 2,749.9 0.5 0.04
Savings 5,391.4 2.9 0.11 5,161.2 2.3 0.09
Time       1,397.5     5.0   0.72         1,211.6     3.2   0.53  
Total Interest-Bearing Deposits       9,653.5     8.7   0.18         9,122.7     6.0   0.13  
Short-Term Borrowings 23.1 0.1 0.91 7.5 - 0.15
Securities Sold Under Agreements to Repurchase 508.8 10.2 4.01 594.9 12.3 4.09
Other Debt       267.9     2.2   1.66         229.5     2.0   1.77  
Total Interest-Bearing Liabilities       10,453.3     21.2   0.41         9,954.6     20.3   0.41  
Net Interest Income $ 228.3 $ 212.6
Interest Rate Spread 2.76 % 2.72 %
Net Interest Margin 2.90 % 2.86 %
Noninterest-Bearing Demand Deposits 4,582.6 4,271.6
Other Liabilities 238.3 225.4
Shareholders' Equity   1,191.2   1,136.7
Total Liabilities and Shareholders' Equity $ 16,465.4 $ 15,588.3
1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $6,115,000 and $5,990,000 for the six months ended June 30, 2017 and June 30, 2016, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
    Three Months Ended June 30, 2017
Compared to March 31, 2017
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ (0.3 ) $ 0.1 $ (0.2 )
Investment Securities
Available-for-Sale
Taxable 0.4 0.5 0.9
Held-to-Maturity
Taxable - 0.2 0.2
Non-Taxable       (0.1 )     -       (0.1 )
Total Investment Securities       0.3       0.7       1.0  
Loans Held for Sale (0.1 ) - (0.1 )
Loans and Leases
Commercial and Industrial (0.1 ) 0.5 0.4
Commercial Mortgage 0.7 0.2 0.9
Construction (0.2 ) 0.1 (0.1 )
Commercial Lease Financing - 0.1 0.1
Residential Mortgage 0.7 (0.5 ) 0.2
Home Equity 0.8 0.3 1.1
Automobile 0.2 (0.1 ) 0.1
Other 2       0.1       0.2       0.3  
Total Loans and Leases       2.2       0.8       3.0  
Total Change in Interest Income       2.1       1.6       3.7  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.2 0.2
Savings - 0.3 0.3
Time       0.3       0.5       0.8  
Total Interest-Bearing Deposits       0.3       1.0       1.3  
Short-Term Borrowings - 0.1 0.1
Securities Sold Under Agreements to Repurchase       -       (0.1 )     (0.1 )
Total Change in Interest Expense       0.3       1.0       1.3  
 
Change in Net Interest Income     $ 1.8     $ 0.6     $ 2.4  
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8b
    Three Months Ended June 30, 2017
Compared to June 30, 2016
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ (0.2 ) $ 0.3 $ 0.1
Investment Securities
Available-for-Sale
Taxable 0.4 1.1 1.5
Non-Taxable (0.3 ) 0.2 (0.1 )
Held-to-Maturity
Taxable (0.2 ) - (0.2 )
Non-Taxable       (0.1 )     -       (0.1 )
Total Investment Securities       (0.2 )     1.3       1.1  
Loans and Leases
Commercial and Industrial 0.6 0.5 1.1
Commercial Mortgage 2.5 (0.5 ) 2.0
Construction 0.4 0.1 0.5
Commercial Lease Financing 0.1 (0.1 ) -
Residential Mortgage 2.6 (1.6 ) 1.0
Home Equity 2.5 0.1 2.6
Automobile 0.9 (0.2 ) 0.7
Other 2       0.4       0.3       0.7  
Total Loans and Leases       10.0       (1.4 )     8.6  
Other       -       0.1       0.1  
Total Change in Interest Income       9.6       0.3       9.9  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.2 0.2
Savings - 0.5 0.5
Time       0.4       0.8       1.2  
Total Interest-Bearing Deposits       0.4       1.5       1.9  
Short-Term Borrowings - 0.1 0.1
Securities Sold Under Agreements to Repurchase (0.8 ) (0.2 ) (1.0 )
Other Debt       0.2       (0.1 )     0.1  
Total Change in Interest Expense       (0.2 )     1.3       1.1  
 
Change in Net Interest Income     $ 9.8     $ (1.0 )   $ 8.8  
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8c  
    Six Months Ended June 30, 2017
Compared to June 30, 2016  
(dollars in millions)     Volume 1     Rate 1     Total  
Change in Interest Income:    
Funds Sold $ (0.4 ) $ 0.6 $ 0.2
Investment Securities
Available-for-Sale
Taxable 0.4 1.4 1.8
Non-Taxable (0.7 ) 0.3 (0.4 )
Held-to-Maturity
Taxable (0.7 ) (0.2 ) (0.9 )
Non-Taxable       (0.1 )     -       (0.1 )
Total Investment Securities       (1.1 )     1.5       0.4  
Loans Held for Sale 0.3 - 0.3
Loans and Leases
Commercial and Industrial 1.8 (0.9 ) 0.9
Commercial Mortgage 4.2 (0.4 ) 3.8
Construction 1.3 0.1 1.4
Commercial Lease Financing 0.1 (0.3 ) (0.2 )
Residential Mortgage 5.5 (3.1 ) 2.4
Home Equity 4.7 (0.3 ) 4.4
Automobile 1.7 (0.3 ) 1.4
Other 2       1.1       0.5       1.6  
Total Loans and Leases       20.4       (4.7 )     15.7  
Other       -       -       -  
Total Change in Interest Income       19.2       (2.6 )     16.6  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.3 0.3
Savings 0.1 0.5 0.6
Time       0.6       1.2       1.8  
Total Interest-Bearing Deposits       0.7       2.0       2.7  
Short-Term Borrowings - 0.1 0.1
Securities Sold Under Agreements to Repurchase (1.9 ) (0.2 ) (2.1 )
Other Debt       0.3       (0.1 )     0.2  
Total Change in Interest Expense       (0.9 )     1.8       0.9  
 
Change in Net Interest Income     $ 20.1     $ (4.4 )   $ 15.7  
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
             
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits   Table 9
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands)     2017   2017   2016     2017   2016
Salaries $ 30,553 $ 29,425 $ 28,797 $ 59,978 $ 57,938
Incentive Compensation 5,125 5,774 5,917 10,899 11,882
Share-Based Compensation 2,879 2,303 2,746 5,182 5,056
Commission Expense 1,791 1,836 2,151 3,627 3,508
Retirement and Other Benefits 4,159 5,041 4,092 9,200 9,046
Payroll Taxes 2,427 3,944 2,288 6,371 5,865
Medical, Dental, and Life Insurance 3,136 3,279 3,872 6,415 6,764
Separation Expense       43     -     426       43     744
Total Salaries and Benefits     $ 50,113   $ 51,602   $ 50,289     $ 101,715   $ 100,803
 
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances   Table 10
    June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands)     2017   2017   2016   2016   2016
Commercial
Commercial and Industrial $ 1,241,953 $ 1,250,006 $ 1,249,791 $ 1,217,849 $ 1,174,879
Commercial Mortgage 2,009,886 1,909,064 1,889,551 1,807,190 1,712,271
Construction 248,030 262,660 270,018 263,079 226,062
Lease Financing       205,043     208,765     208,332     201,436     192,630
Total Commercial       3,704,912     3,630,495     3,617,692     3,489,554     3,305,842
Consumer
Residential Mortgage 3,317,179 3,224,206 3,163,073 3,098,936 3,032,981
Home Equity 1,473,123 1,411,489 1,334,163 1,295,993 1,213,154
Automobile 484,092 468,078 454,333 437,659 417,017
Other 1       408,307     379,541     380,524     371,955     362,475
Total Consumer       5,682,701     5,483,314     5,332,093     5,204,543     5,025,627
Total Loans and Leases     $ 9,387,613   $ 9,113,809   $ 8,949,785   $ 8,694,097   $ 8,331,469
 
 
Deposits
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)     2017   2017   2016   2016   2016
Consumer $ 7,278,536 $ 7,196,781 $ 6,997,482 $ 6,781,371 $ 6,618,164
Commercial 5,903,639 6,051,721 6,110,189 5,751,184 5,697,490
Public and Other       1,602,474     1,228,031     1,212,569     1,275,810     1,328,153
Total Deposits     $ 14,784,649   $ 14,476,533   $ 14,320,240   $ 13,808,365   $ 13,643,807

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

 
 
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More     Table 11
    June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands)     2017     2017     2016     2016     2016
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 175 $ 228 $ 151 $ 201 $ 269
Commercial Mortgage       1,460       973       997       1,023       1,194  
Total Commercial       1,635       1,201       1,148       1,224       1,463  
Consumer
Residential Mortgage 9,337 11,756 13,780 12,735 9,979
Home Equity       3,405       3,517       3,147       2,966       3,110  
Total Consumer       12,742       15,273       16,927       15,701       13,089  
Total Non-Accrual Loans and Leases       14,377       16,474       18,075       16,925       14,552  
Foreclosed Real Estate       1,991       2,529       1,686       1,747       1,728  
Total Non-Performing Assets     $ 16,368     $ 19,003     $ 19,761     $ 18,672     $ 16,280  
 
Accruing Loans and Leases Past Due 90 Days or More
Consumer
Residential Mortgage $ 2,269 $ 2,313 $ 3,127 $ 2,583 $ 5,640
Home Equity 2,343 1,133 1,457 1,210 1,128
Automobile 539 673 894 578 464
Other 1       1,859       1,738       1,592       1,273       1,518  
Total Consumer       7,010       5,857       7,070       5,644       8,750  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 7,010     $ 5,857     $ 7,070     $ 5,644     $ 8,750  

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

    $ 53,158     $ 52,965     $ 52,208     $ 52,095     $ 52,173  
Total Loans and Leases     $ 9,387,613     $ 9,113,809     $ 8,949,785     $ 8,694,097     $ 8,331,469  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.15 %     0.18 %     0.20 %     0.19 %     0.17 %
 

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

      0.17 %     0.21 %     0.22 %     0.21 %     0.20 %
 

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

      0.04 %     0.03 %     0.03 %     0.04 %     0.04 %
 

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

      0.26 %     0.32 %     0.35 %     0.34 %     0.29 %
 

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

      0.25 %     0.27 %     0.30 %     0.28 %     0.30 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 19,003 $ 19,761 $ 18,672 $ 16,280 $ 22,015
Additions 1,572 1,221 2,142 3,730 1,300
Reductions
Payments (497 ) (1,017 ) (252 ) (501 ) (3,401 )
Return to Accrual Status (1,370 ) (645 ) (653 ) (701 ) (3,560 )
Sales of Foreclosed Real Estate (1,883 ) - (61 ) - -
Charge-offs/Write-downs       (457 )     (317 )     (87 )     (136 )     (74 )
Total Reductions       (4,207 )     (1,979 )     (1,053 )     (1,338 )     (7,035 )
Balance at End of Quarter     $ 16,368     $ 19,003     $ 19,761     $ 18,672     $ 16,280  

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

 
 
Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses   Table 12
    Three Months Ended     Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands)     2017   2017   2016     2017   2016
Balance at Beginning of Period $ 111,636 $ 110,845 $ 111,249 $ 110,845   108,952
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (124 ) (174 ) (204 ) (298 ) (461 )
Consumer
Residential Mortgage (506 ) (183 ) (79 ) (689 ) (284 )
Home Equity (282 ) (363 ) 17 (645 ) (626 )
Automobile (1,512 ) (2,290 ) (1,372 ) (3,802 ) (2,932 )
Other 1       (3,063 )     (2,694 )     (2,117 )       (5,757 )     (4,339 )
Total Loans and Leases Charged-Off       (5,487 )     (5,704 )     (3,755 )       (11,191 )     (8,642 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 265 336 $ 403 601 7,270
Commercial Mortgage - - 14 - 28
Construction - - - - 23
Lease Financing 1 - 1 1 2
Consumer
Residential Mortgage 264 104 279 368 480
Home Equity 838 508 322 1,346 835
Automobile 607 620 541 1,227 1,133
Other 1       551       527       450         1,078       923  
Total Recoveries on Loans and Leases Previously Charged-Off       2,526       2,095       2,010         4,621       10,694  
Net Loans and Leases Recovered (Charged-Off) (2,961 ) (3,609 ) (1,745 ) (6,570 ) 2,052
Provision for Credit Losses 4,250 4,400 1,000 8,650 (1,000 )
Provision for Unfunded Commitments       250       -       -         250       500  
Balance at End of Period 2     $ 113,175     $ 111,636     $ 110,504       $ 113,175     $ 110,504  
 
Components
Allowance for Loan and Lease Losses $ 106,353 $ 105,064 103,932 $ 106,353 103,932
Reserve for Unfunded Commitments       6,822       6,572       6,572         6,822       6,572  
Total Reserve for Credit Losses     $ 113,175     $ 111,636     $ 110,504       $ 113,175     $ 110,504  
 
Average Loans and Leases Outstanding     $ 9,217,779     $ 9,020,351     $ 8,205,104       $ 9,119,610     $ 8,072,600  
 

 

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

0.13 % 0.16 % 0.09 % 0.15 % -0.05 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.13 % 1.15 % 1.25 % 1.13 % 1.25 %
1 Comprised of other revolving credit, installment, and lease financing.

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

 
 
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13a
    Retail   Commercial   Investment   Treasury   Consolidated
(dollars in thousands)     Banking   Banking   Services   and Other   Total
Three Months Ended June 30, 2017
Net Interest Income $ 66,348 $ 41,737 $ 6,714 $ (2,520 ) $ 112,279
Provision for Credit Losses       3,099       (132 )     (6 )     1,289       4,250  
Net Interest Income After Provision for Credit Losses 63,249 41,869 6,720 (3,809 ) 108,029
Noninterest Income 21,920 5,876 15,247 2,193 45,236
Noninterest Expense       (52,018 )     (18,407 )     (15,295 )     (2,469 )     (88,189 )
Income Before Provision for Income Taxes 33,151 29,338 6,672 (4,085 ) 65,076
Provision for Income Taxes       (11,741 )     (10,325 )     (2,469 )     4,121       (20,414 )
Net Income     $ 21,410     $ 19,013     $ 4,203     $ 36     $ 44,662  
Total Assets as of June 30, 2017     $ 5,626,767     $ 3,658,867     $ 307,529     $ 7,388,129     $ 16,981,292  
 
 

Three Months Ended June 30, 2016 1

Net Interest Income $ 60,041 $ 38,151 $ 6,037 $ (679 ) $ 103,550
Provision for Credit Losses       2,006       (258 )     (5 )     (743 )     1,000  
Net Interest Income After Provision for Credit Losses 58,035 38,409 6,042 64 102,550
Noninterest Income 21,771 6,438 15,946 2,364 46,519
Noninterest Expense       (50,758 )     (17,762 )     (14,780 )     (2,771 )     (86,071 )
Income Before Provision for Income Taxes 29,048 27,085 7,208 (343 ) 62,998
Provision for Income Taxes       (10,402 )     (9,608 )     (2,667 )     3,924       (18,753 )
Net Income     $ 18,646     $ 17,477     $ 4,541     $ 3,581     $ 44,245  
Total Assets as of June 30, 2016 1     $ 5,076,204     $ 3,239,572     $ 282,143     $ 7,262,982     $ 15,860,901  
1 Certain prior period information has been reclassified to conform to current presentation.
 
 
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13b
    Retail   Commercial   Investment   Treasury   Consolidated
(dollars in thousands)     Banking   Banking   Services   and Other   Total
Six Months Ended June 30, 2017
Net Interest Income $ 131,505 $ 83,668 $ 13,364 $ (6,386 ) $ 222,151
Provision for Credit Losses       6,900       (320 )     (11 )     2,081       8,650  
Net Interest Income After Provision for Credit Losses 124,605 83,988 13,375 (8,467 ) 213,501
Noninterest Income 42,845 11,314 29,796 17,197 101,152
Noninterest Expense       (104,278 )     (36,762 )     (30,766 )     (4,951 )     (176,757 )
Income Before Provision for Income Taxes 63,172 58,540 12,405 3,779 137,896
Provision for Income Taxes       (22,415 )     (20,581 )     (4,590 )     5,528       (42,058 )
Net Income     $ 40,757     $ 37,959     $ 7,815     $ 9,307     $ 95,838  
Total Assets as of June 30, 2017     $ 5,626,767     $ 3,658,867     $ 307,529     $ 7,388,129     $ 16,981,292  
 
 
Six Months Ended June 30, 2016 1
Net Interest Income $ 118,051 $ 76,499 $ 12,489 $ (465 ) $ 206,574
Provision for Credit Losses       4,842       (6,883 )     (11 )     1,052       (1,000 )
Net Interest Income After Provision for Credit Losses 113,209 83,382 12,500 (1,517 ) 207,574
Noninterest Income 42,577 14,038 29,971 16,140 102,726
Noninterest Expense       (103,498 )     (35,029 )     (30,207 )     (4,723 )     (173,457 )
Income Before Provision for Income Taxes 52,288 62,391 12,264 9,900 136,843
Provision for Income Taxes       (18,629 )     (22,264 )     (4,537 )     3,042       (42,388 )
Net Income     $ 33,659     $ 40,127     $ 7,727     $ 12,942     $ 94,455  
Total Assets as of June 30, 2016 1     $ 5,076,204     $ 3,239,572     $ 282,143     $ 7,262,982     $ 15,860,901  

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

 
           
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data Table 14
Three Months Ended
June 30, March 31, December 31, September 30,   June 30,
(dollars in thousands, except per share amounts)     2017       2017       2016       2016     2016
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 90,909 $ 87,937 $ 86,532 $ 83,489 $ 82,323
Income on Investment Securities
Available-for-Sale 11,835 11,084 10,244 10,313 10,521
Held-to-Maturity 19,918 19,706 19,213 19,315 20,168
Deposits 2 5 2 1 2
Funds Sold 696 890 795 695 618
Other       208         230         281         166         153  
Total Interest Income       123,568         119,852         117,067         113,979         113,785  
Interest Expense
Deposits 4,998 3,691 3,448 3,232 3,081

Securities Sold Under Agreements to Repurchase

5,079 5,185 5,406 5,713 6,134
Funds Purchased 39 3 3 3 3
Short-Term Borrowings 64 - - - -
Other Debt       1,109         1,101         1,117         1,119         1,017  
Total Interest Expense       11,289         9,980         9,974         10,067         10,235  
Net Interest Income 112,279 109,872 107,093 103,912 103,550
Provision for Credit Losses       4,250         4,400         3,250         2,500         1,000  
Net Interest Income After Provision for Credit Losses       108,029         105,472         103,843         101,412         102,550  
Noninterest Income
Trust and Asset Management 11,796 11,479 11,232 11,008 12,707
Mortgage Banking 3,819 3,300 6,256 6,362 4,088
Service Charges on Deposit Accounts 8,009 8,325 8,537 8,524 8,150
Fees, Exchange, and Other Service Charges 13,965 13,332 13,731 14,023 13,978
Investment Securities Gains (Losses), Net (520 ) 12,133 (337 ) (328 ) (312 )
Annuity and Insurance 2,161 1,995 1,457 1,653 2,006
Bank-Owned Life Insurance 1,550 1,497 1,551 1,911 1,551
Other       4,456         3,855         4,076         4,961         4,351  
Total Noninterest Income       45,236         55,916         46,503         48,114         46,519  
Noninterest Expense
Salaries and Benefits 50,113 51,602 50,622 49,725 50,289
Net Occupancy 8,131 8,168 7,581 8,510 7,158
Net Equipment 5,706 5,501 5,191 4,913 5,065
Data Processing 3,881 3,410 3,665 3,620 3,972
Professional Fees 2,592 2,779 2,990 2,396 2,047
FDIC Insurance 2,097 2,209 2,015 2,104 2,144
Other       15,669         14,899         17,525         16,264         15,396  
Total Noninterest Expense       88,189         88,568         89,589         87,532         86,071  
Income Before Provision for Income Taxes 65,076 72,820 60,757 61,994 62,998
Provision for Income Taxes       20,414         21,644         17,244         18,501         18,753  
Net Income     $ 44,662       $ 51,176       $ 43,513       $ 43,493       $ 44,245  
 
Basic Earnings Per Share $ 1.05 $ 1.21 $ 1.03 $ 1.02 $ 1.04
Diluted Earnings Per Share $ 1.05 $ 1.20 $ 1.02 $ 1.02 $ 1.03
 
Balance Sheet Totals
Loans and Leases $ 9,387,613 $ 9,113,809 $ 8,949,785 $ 8,694,097 $ 8,331,469
Total Assets 16,981,292 16,664,215 16,492,367 16,014,643 15,860,901
Total Deposits 14,784,649 14,476,533 14,320,240 13,808,365 13,643,807
Total Shareholders' Equity 1,213,757 1,193,137 1,161,537 1,163,859 1,157,219
 

Performance Ratios

Return on Average Assets 1.09 % 1.26 % 1.07 % 1.09 % 1.14 %
Return on Average Shareholders' Equity 14.87 17.63 14.90 14.89 15.56
Efficiency Ratio 1 55.99 53.42 58.33 57.58 57.35
Net Interest Margin 2 2.92 2.89 2.83 2.80 2.85
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
 
 
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends   Table 15
    Five Months Ended   Year Ended
($ in millions; jobs in thousands)     May 31, 2017   December 31, 2016   December 31, 2015
Hawaii Economic Trends                    
State General Fund Revenues 1 $ 2,673.5 2.8 % $ 6,215.4 3.6 % $ 5,998.6 8.4 %
General Excise and Use Tax Revenue 1 $ 1,384.2 2.4 % $ 3,205.7 2.0 % $ 3,141.5 5.4 %
Jobs 2 673.1 671.7 658.8
                                                         
June 30, December 31,
(spot rates)                                 2017   2016   2015
Unemployment 3
Statewide, seasonally adjusted 2.7 % 2.9 % 3.2 %
 
Oahu 3.1 2.4 2.7
Island of Hawaii 4.0 3.1 3.7
Maui 3.4 2.7 3.1
Kauai 3.2 2.8 3.5
                                                         
June 30, December 31,
(percentage change, except months of inventory)                       2017   2016   2015   2014
Housing Trends (Single Family Oahu) 4
Median Home Price 3.2 % 5.0 % 3.7 % 3.8 %
Home Sales Volume (units) 4.4 % 6.5 % 5.2 % (0.8 ) %
Months of Inventory 2.7 2.5 2.6 2.6
                                                         
Monthly Visitor Arrivals, Percentage Change
(in thousands)                       Not Seasonally Adjusted       from Previous Year    
Tourism 5
 
May 31, 2017 751.2 4.5
April 30, 2017 753.0 7.5
March 31, 2017 802.8 2.1
February 28, 2017 700.4 1.7
January 31, 2017 756.3 4.9
December 31, 2016 828.5 3.6
November 30, 2016 696.9 4.7
October 31, 2016 717.5 4.3
September 30, 2016 666.6 3.0
August 31, 2016 780.7 3.1
July 31, 2016 835.4 2.1
June 30, 2016 800.3 4.2
May 31, 2016 718.9 1.3
April 30, 2016 700.6 3.4
March 31, 2016 786.3 0.8
February 29, 2016 688.8 4.1
January 31, 2016 721.0 6.2
December 31, 2015 799.5 4.4
November 30, 2015 665.9 4.4
October 31, 2015 687.7 4.0
September 30, 2015 647.2 3.9
August 31, 2015 757.5 3.1
July 31, 2015 818.5 5.9
June 30, 2015 767.9 6.0
May 31, 2015 709.7 9.3
April 30, 2015 677.8 2.3
March 31, 2015 780.1 7.0
February 28, 2015 661.7 2.3
January 31, 2015 678.9 (0.6 )
1 Source: Hawaii Department of Business, Economic Development & Tourism
2 Source: U. S. Bureau of Labor
3 Source: Hawaii Department of Labor and Industrial Relations, County jobs data not seasonally adjusted.
4 Source: Honolulu Board of REALTORS
5 Source: Hawaii Tourism Authority
Note: Certain prior period seasonally adjusted information has been revised.

Source: Bank of Hawaii Corporation

Bank of Hawaii Corporation
Media Inquiries
Stafford Kiguchi, 808-694-8580
Mobile: 808-265-6367
Stafford.Kiguchi@boh.com
or
Investor/Analyst Inquiries
Cindy Wyrick, 808-694-8430
Cindy.Wyrick@boh.com