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Bank of Hawaii Corporation Second Quarter 2018 Financial Results
Supporting Materials:
  • Diluted Earnings Per Share $1.30
  • Net Income $54.7 Million
  • Board of Directors Approves Dividend of $0.60 Per Share

HONOLULU--(BUSINESS WIRE)--Jul. 23, 2018-- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $1.30 for the second quarter of 2018, up from diluted earnings per share of $1.28 in the previous quarter, and up from diluted earnings per share of $1.05 in the same quarter last year. Net income for the second quarter of 2018 was $54.7 million compared with net income of $54.0 million in the first quarter of 2018 and net income of $44.7 million in the second quarter of 2017.

Loan and lease balances increased to $10.1 billion at June 30, 2018, up 1.4 percent from March 31, 2018, and up 7.1 percent compared with June 30, 2017. Total deposits were $14.9 billion at the end of the second quarter, down slightly from March 31, 2018 due to the planned decline in public time deposits. Total deposits were up 1.1 percent compared with June 30, 2017.

“Bank of Hawaii Corporation continued to perform well during the second quarter of 2018,” said Peter Ho, Chairman, President and CEO. “Loans continued to grow, our margin expanded, asset quality remains strong, and we maintained our disciplined approach to risk and capital management.”

The return on average assets for the second quarter of 2018 was 1.30 percent, up from 1.29 percent in the previous quarter and 1.09 percent in the same quarter last year. The return on average equity for the second quarter of 2018 was 17.68 percent down slightly from 17.74 percent for the first quarter of 2018 and up from 14.87 percent for the second quarter of 2017. The efficiency ratio for the second quarter of 2018 was 56.12 percent compared with 57.91 percent in the previous quarter and 55.99 percent in the same quarter last year.

For the six-month period ended June 30, 2018, net income was $108.8 million, an increase of $13.0 million from net income of $95.8 million during the same period last year. Diluted earnings per share were $2.57 for the first half of 2018, an increase from diluted earnings per share of $2.24 for the first half of 2017. The return on average assets for the six-month period ended June 30, 2018 was 1.29 percent compared with 1.17 percent for the same six months in 2017. The year-to-date return on average equity was 17.71 percent for the first half of 2018 compared with 16.22 percent for the six-month period ended June 30, 2017. The efficiency ratio for the first half of 2018 was 57.01 percent compared with 54.67 percent in the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2018 was $121.8 million, an increase of $1.5 million compared with net interest income of $120.3 million in the first quarter of 2018 and an increase of $6.5 million compared with net interest income of $115.3 million in the second quarter of 2017. Net interest income for the first half of 2018 was $242.1 million, an increase of $13.8 million compared with net interest income of $228.3 million for the first half of 2017. Analyses of the changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin was 3.04 percent for the second quarter of 2018, up 4 basis points from the net interest margin of 3.00 percent in the previous quarter and a 12 basis point increase from the net interest margin of 2.92 percent in the second quarter of 2017. The net interest margin for the first six months of 2018 was 3.02 percent compared with 2.90 percent for the same six-month period last year.

Results for the second quarter of 2018 included a provision for credit losses of $3.5 million compared with a provision for credit losses of $4.1 million in the previous quarter and a provision for credit losses of $4.3 million in the same quarter last year. The provision for credit losses during the first half of 2018 was $7.6 million compared with $8.7 million during the same period in 2017.

Noninterest income was $41.3 million in the second quarter of 2018, a decrease of $2.7 million compared with noninterest income of $44.0 million in the first quarter of 2018 and a decrease of $3.9 million compared with noninterest income of $45.2 million in the second quarter of 2017. Noninterest income during the second quarter of 2018 included a negative adjustment of $1.0 million related to a change in the Visa Class B conversion ratio. Noninterest income in the first quarter of 2018 included $2.8 million resulting from a low-income housing investment sale and distribution. There were no significant items in noninterest income during the second quarter of 2017. The decrease compared with the second quarter last year was primarily due to lower mortgage banking income and a decline in service charges. Noninterest income for the first half of 2018 was $85.3 million, a decrease of $15.9 million compared with noninterest income of $101.2 million for the first half of 2017. Noninterest income in the first half of 2017 included a gain of $12.5 million resulting from the sale of 90,000 Visa Class B shares.

Noninterest expense was $90.8 million in the second quarter of 2018, a decrease of $3.6 million compared with noninterest expense of $94.4 million in the first quarter of 2018 and an increase of $2.6 million compared with noninterest expense of $88.2 million in the second quarter last year. There were no significant items in noninterest expense during the second quarter of 2018 or the second quarter of 2017. Noninterest expense in the first quarter of 2018 included seasonal payroll expenses of approximately $2.5 million, a legal reserve of $2.0 million, and severance expenses of $1.0 million. Noninterest expense for the first half of 2018 was $185.2 million, an increase of $8.4 million compared with $176.8 million for the first half of 2017. Adjusted for the legal reserve and severance, the increase is largely related to salaries and benefits, including minimum wage increases. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The effective tax rate for the second quarter of 2018 was 18.94 percent compared with 16.19 percent in the previous quarter and 31.37 percent in the same quarter last year. The lower effective tax rate in the first and second quarters of 2018 was primarily due to the reduction in the federal corporate tax rate from 35 percent to 21 percent as a result of the Tax Cuts and Jobs Act. The tax rate during the first quarter of 2018 was also favorably impacted by a $2.0 million adjustment to the Company’s low-income housing investments. The effective tax rate for the first half of 2018 was 17.60 percent compared with 30.50 percent during the same period last year.

The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services and Private Banking, 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 2018. Total non-performing assets were $15.2 million at June 30, 2018, down from non-performing assets of $15.7 million at March 31, 2018 and down from non-performing assets of $16.4 million at June 30, 2017. As a percentage of total loans and leases, including foreclosed real estate, non-performing assets were 0.15 percent at the end of the second quarter of 2018, down from 0.16 percent at the end of the first quarter of 2018 and down from 0.17 percent at the end of the second quarter last year.

Accruing loans and leases past due 90 days or more were $13.3 million at June 30, 2018, up from $8.2 million at March 31, 2018 and $7.0 million at June 30, 2017. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $50.2 million at June 30, 2018, down from $56.7 million at March 31, 2018 and down from $53.2 million at June 30, 2017. 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 2018 were $3.3 million or 0.13 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $5.7 million during the quarter were partially offset by recoveries of $2.4 million. Net charge-offs during the first quarter of 2018 were $3.5 million or 0.15 percent annualized of total average loans and leases outstanding and comprised of $6.0 million in charge-offs and recoveries of $2.5 million. Net charge-offs during the second quarter of 2017 were $3.0 million or 0.13 percent annualized of total average loans and leases outstanding and comprised of $5.5 million in charge-offs and recoveries of $2.5 million. Net charge-offs during the first half of 2018 were $6.8 million or 0.14 percent annualized of total average loans and leases outstanding compared with net charge-offs of $6.6 million or 0.15 percent annualized of total average loans and leases outstanding for the first half of 2017.

The allowance for loan and lease losses increased to $108.2 million at June 30, 2018 compared with $107.9 million at March 31, 2018 and $106.4 million at June 30, 2017. The ratio of the allowance for loan and lease losses to total loans and leases was 1.08 percent at June 30, 2018, a decrease of 1 basis point from the previous quarter and 5 basis points from the second quarter last year. The allowance for loan and lease losses at June 30, 2018 is commensurate with the Company’s strong asset quality and the Hawaii economy. The reserve for unfunded commitments of $6.8 million at June 30, 2018 was unchanged from March 31, 2018 and June 30, 2017. 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 $17.12 billion at June 30, 2018, down slightly from total assets of $17.14 billion at March 31, 2018 and up from total assets of $16.98 billion at June 30, 2017. Average total assets were $16.92 billion during the second quarter of 2018 compared with $16.96 billion during the previous quarter and $16.50 billion during the same quarter last year.

The investment securities portfolio was $5.69 billion at June 30, 2018, down from $5.97 billion at March 31, 2018 and $6.10 billion at June 30, 2017. The portfolio remains largely comprised of securities issued by U.S. government agencies and included $3.60 billion in securities held to maturity and $2.09 billion in securities available for sale at June 30, 2018.

Total loans and leases were $10.05 billion at June 30, 2018, up from total loans and leases of $9.92 billion at March 31, 2018, and up from total loans and leases of $9.39 billion at June 30, 2017. Average total loans and leases increased to $9.96 billion during the second quarter of 2018 from $9.80 billion during the previous quarter and $9.22 billion during the same quarter last year.

The commercial loan portfolio was $3.82 billion at June 30, 2018, up from $3.79 billion at March 31, 2018, and up from $3.70 billion at June 30, 2017. The consumer loan portfolio increased to $6.24 billion at June 30, 2018 compared with $6.12 billion at March 31, 2018 and $5.68 billion at June 30, 2017. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $14.94 billion at June 30, 2018, down from total deposits of $14.96 billion at March 31, 2018 and up from total deposits of $14.78 billion at June 30, 2017. Average total deposits were $14.71 billion during the second quarter of 2018, down slightly from $14.72 billion during the previous quarter and up from total deposits of $14.25 billion during the same quarter last year.

Consumer deposits of $7.67 billion at June 30, 2018 were up slightly from March 31, 2018 and up from $7.28 billion at June 30, 2017. Commercial deposits of $5.92 billion at June 30, 2018 also reflected a small increase from commercial deposits of $5.90 billion at March 31, 2018 and June 30, 2017. Other deposits, including public funds, were $1.35 billion at June 30, 2018, down from $1.39 billion at March 31, 2018 and $1.60 billion at June 30, 2017 largely due to the decline in public time deposits. Deposit balances are summarized in Tables 7a, 7b, and 10.

During the second quarter of 2018, the Company repurchased 292.0 thousand shares of common stock at a total cost of $24.8 million under its share repurchase program. The average cost was $84.93 per share repurchased. From the beginning of the share repurchase program initiated during July of 2001 through June 30, 2018, the Company has repurchased 54.6 million shares and returned over $2.1 billion to shareholders at an average cost of $38.68 per share. Remaining buyback authority under the share repurchase program was $81.3 million at June 30, 2018. From July 2 through July 20, 2018, the Company repurchased an additional 68.0 thousand shares of common stock at an average cost of $84.55 per share.

Total shareholders’ equity increased to $1.25 billion at June 30, 2018 compared with $1.24 billion at March 31, 2018 and $1.21 billion at June 30, 2017. The Tier 1 Capital Ratio at June 30, 2018 was 13.27 percent compared with 13.37 percent at March 31, 2018 and 13.34 percent at June 30, 2017. The Tier 1 leverage ratio at June 30, 2018 was 7.53 percent compared with 7.46 percent at March 31, 2018 and 7.37 percent at June 30, 2017.

The Company’s Board of Directors declared a quarterly cash dividend of $0.60 per share on the Company’s outstanding shares. The dividend will be payable on September 17, 2018 to shareholders of record at the close of business on August 31, 2018.

Hawaii Economy

Economic conditions in Hawaii continue to remain positive due to growing tourism, healthy construction activity, record low unemployment, and a strong real estate market. The statewide seasonally-adjusted unemployment rate in Hawaii continues to remain among the lowest in the United States at 2.1 percent in June 2018 compared to 4.0 percent nationally. For the first five months of 2018, total visitor spending increased 10.9 percent and visitor arrivals increased 8.4 percent compared to the same period in 2017. For the first five months of 2018, 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 2017. For the first six months of 2018, the volume of single-family home sales on Oahu decreased 1.6 percent while the median sales price increased 3.9 percent compared with the same period in 2017. The volume of condominium sales during the first half of 2018 on Oahu increased 1.3 percent and the median sales price was 6.5 percent higher compared with 2017. As of June 30, 2018, months of inventory of single-family homes and condominiums on Oahu remained low at 2.7 months and 3.0 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its second quarter 2018 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 Canada and 1 (703) 318-2209 for other international callers. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, July 23, 2018. The replay number is 1 (855) 859-2056 in the United States and Canada and 1 (404) 537-3406 from other international locations. Enter the pass code 2584747 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, 2017, 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)     2018     2018     2017     2018     2017  

For the Period:

                               
Operating Results                                
Net Interest Income     $ 120,496     $ 118,956     $ 112,279     $ 239,452     $ 222,151  
Provision for Credit Losses       3,500       4,125       4,250       7,625       8,650  
Total Noninterest Income       41,298       44,035       45,236       85,333       101,152  
Total Noninterest Expense       90,791       94,384       88,189       185,175       176,757  
Net Income       54,718       54,040       44,662       108,758       95,838  
Basic Earnings Per Share       1.31       1.29       1.05       2.59       2.26  
Diluted Earnings Per Share       1.30       1.28       1.05       2.57       2.24  
Dividends Declared Per Share       0.60       0.52       0.50       1.12       1.00  
                                 
Performance Ratios                                
Return on Average Assets       1.30 %     1.29 %     1.09 %     1.29 %     1.17 %
Return on Average Shareholders' Equity       17.68       17.74       14.87       17.71       16.22  
Efficiency Ratio 1       56.12       57.91       55.99       57.01       54.67  
Net Interest Margin 2       3.04       3.00       2.92       3.02       2.90  
Dividend Payout Ratio 3       45.80       40.31       47.62       43.24       44.25  
Average Shareholders' Equity to Average Assets       7.34       7.29       7.30       7.31       7.23  
                                 
Average Balances                                
Average Loans and Leases     $ 9,962,860     $ 9,803,753     $ 9,217,779     $ 9,883,746     $ 9,119,610  
Average Assets       16,921,820       16,957,430       16,495,925       16,939,527       16,465,435  
Average Deposits       14,709,299       14,720,266       14,253,149       14,714,752       14,236,112  
Average Shareholders' Equity       1,241,672       1,235,550       1,204,837       1,238,628       1,191,157  
                                 
Per Share of Common Stock                                
Book Value     $ 29.65     $ 29.33     $ 28.45     $ 29.65     $ 28.45  
Tangible Book Value       28.90       28.59       27.72       28.90       27.72  
Market Value                                
Closing       83.42       83.10       82.97       83.42       82.97  
High       88.92       89.09       84.99       89.09       90.80  
Low       80.20       78.40       75.92       78.40       75.92  
                                 
            June 30,     March 31,     December 31,     June 30,  
              2018       2018       2017       2017  

As of Period End:

                               
Balance Sheet Totals                                
Loans and Leases           $ 10,053,323     $ 9,916,628     $ 9,796,947     $ 9,387,613  
Total Assets             17,124,162       17,136,030       17,089,052       16,981,292  
Total Deposits             14,943,358       14,957,133       14,883,968       14,784,649  
Other Debt             235,681       235,699       260,716       267,904  
Total Shareholders' Equity             1,247,717       1,241,193       1,231,868       1,213,757  
                                 
Asset Quality                                
Non-Performing Assets           $ 15,157     $ 15,736     $ 16,120     $ 16,368  
Allowance for Loan and Lease Losses             108,188       107,938       107,346       106,353  
Allowance to Loans and Leases Outstanding       1.08 %     1.09 %     1.10 %     1.13 %
                                 
Capital Ratios                                
Common Equity Tier 1 Capital Ratio             13.27 %     13.37 %     13.24 %     13.34 %
Tier 1 Capital Ratio             13.27       13.37       13.24       13.34  
Total Capital Ratio             14.47       14.58       14.46       14.58  
Tier 1 Leverage Ratio             7.53       7.46       7.26       7.37  
Total Shareholders' Equity to Total Assets       7.29       7.24       7.21       7.15  
Tangible Common Equity to Tangible Assets 4       7.12       7.07       7.04       6.97  
Tangible Common Equity to Risk-Weighted Assets 4       12.68       12.80       12.84       13.01  
                                 
Non-Financial Data                                
Full-Time Equivalent Employees             2,173       2,138       2,132       2,142  
Branches             69       69       69       69  
ATMs             385       377       387       388  
     

1

 

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

2

 

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

3

 

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

4

 

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

Note: Total Capital Ratio as of March 31, 2018 was revised from 14.59%.
 
                   
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)       2018     2018     2017     2017
                   
Total Shareholders' Equity     $ 1,247,717   $ 1,241,193   $ 1,231,868   $ 1,213,757

Less: Goodwill

      31,517     31,517     31,517     31,517
Tangible Common Equity     $ 1,216,200   $ 1,209,676   $ 1,200,351   $ 1,182,240
                   
Total Assets     $ 17,124,162   $ 17,136,030   $ 17,089,052   $ 16,981,292
Less: Goodwill       31,517     31,517     31,517     31,517
Tangible Assets     $ 17,092,645   $ 17,104,513   $ 17,057,535   $ 16,949,775
                   

 

                 

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

    $ 9,593,242   $ 9,452,847   $ 9,348,296   $ 9,087,057
                   
Total Shareholders' Equity to Total Assets       7.29%     7.24%     7.21%     7.15%
Tangible Common Equity to Tangible Assets (Non-GAAP)       7.12%     7.07%     7.04%     6.97%
                   
Tier 1 Capital Ratio       13.27%     13.37%     13.24%     13.34%
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP)       12.68%     12.80%     12.84%     13.01%
                   
Note: Risk-Weighted Assets as of March 31, 2018 was revised from $9,451,647.
         
                 
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)     2018   2018   2017   2018   2017
Interest Income                      
Interest and Fees on Loans and Leases     $ 101,311     $ 97,634     $ 90,909     $ 198,945     $ 178,846
Income on Investment Securities                      
Available-for-Sale       12,380       12,141       11,835       24,521       22,919
Held-to-Maturity       20,711       21,296       19,918       42,007       39,624
Deposits       (4 )     18       2       14       7
Funds Sold       846       757       696       1,603       1,586
Other       341       300       208       641       438
Total Interest Income       135,585       132,146       123,568       267,731       243,420
Interest Expense                      
Deposits       9,459       7,581       4,998       17,040       8,689
Securities Sold Under Agreements to Repurchase       4,617       4,564       5,079       9,181       10,264
Funds Purchased       83       53       39       136       42
Short-Term Borrowings       13       16       64       29       64
Other Debt       917       976       1,109       1,893       2,210
Total Interest Expense       15,089       13,190       11,289       28,279       21,269
Net Interest Income       120,496       118,956       112,279       239,452       222,151
Provision for Credit Losses       3,500       4,125       4,250       7,625       8,650
Net Interest Income After Provision for Credit Losses       116,996       114,831       108,029       231,827       213,501
Noninterest Income                      
Trust and Asset Management       11,356       11,181       11,796       22,537       23,275
Mortgage Banking       2,179       2,145       3,819       4,324       7,119
Service Charges on Deposit Accounts       6,865       7,129       8,009       13,994       16,334
Fees, Exchange, and Other Service Charges       14,400       14,333       13,965       28,733       27,297
Investment Securities Gains (Losses), Net       (1,702 )     (666 )     (520 )     (2,368 )     11,613
Annuity and Insurance       1,847       1,206       2,161       3,053       4,156
Bank-Owned Life Insurance       1,796       1,842       1,550       3,638       3,047
Other       4,557       6,865       4,456       11,422       8,311
Total Noninterest Income       41,298       44,035       45,236       85,333       101,152
Noninterest Expense                      
Salaries and Benefits       52,148       54,422       49,676       106,570       100,841
Net Occupancy       8,588       8,534       8,131       17,122       16,299
Net Equipment       5,845       5,527       5,706       11,372       11,207
Data Processing       4,563       3,891       3,881       8,454       7,291
Professional Fees       2,546       2,773       2,592       5,319       5,371
FDIC Insurance       2,182       2,157       2,097       4,339       4,306
Other       14,919       17,080       16,106       31,999       31,442
Total Noninterest Expense       90,791       94,384       88,189       185,175       176,757
Income Before Provision for Income Taxes       67,503       64,482       65,076       131,985       137,896
Provision for Income Taxes       12,785       10,442       20,414       23,227       42,058
Net Income     $ 54,718     $ 54,040     $ 44,662     $ 108,758     $ 95,838
Basic Earnings Per Share     $ 1.31     $ 1.29     $ 1.05     $ 2.59     $ 2.26
Diluted Earnings Per Share     $ 1.30     $ 1.28     $ 1.05     $ 2.57     $ 2.24
Dividends Declared Per Share     $ 0.60     $ 0.52     $ 0.50     $ 1.12     $ 1.00
Basic Weighted Average Shares       41,884,221       42,038,573       42,353,976       41,960,743       42,379,730
Diluted Weighted Average Shares       42,152,200       42,358,425       42,658,885       42,252,900       42,704,010
                       
Note: Certain prior period information has been reclassified to conform to current presentation.
     
                         
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income     Table 4
      Three Months Ended     Six Months Ended
      June 30,   March 31,   June 30,     June 30,
(dollars in thousands)     2018   2018   2017     2018   2017
Net Income     $ 54,718     $ 54,040     $ 44,662     $ 108,758     $ 95,838
Other Comprehensive Income (Loss), Net of Tax:                        
Net Unrealized Gains (Losses) on Investment Securities       (2,974 )     (9,121 )     3,106       (12,095 )     8,000
Defined Benefit Plans       216       216       147       432       293
Other Comprehensive Income (Loss)       (2,758 )     (8,905 )     3,253       (11,663 )     8,293
Comprehensive Income     $ 51,960     $ 45,135     $ 47,915     $ 97,095     $ 104,131
                                         
                   
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition   Table 5
      June 30,   March 31,   December 31,   June 30,
(dollars in thousands)       2018     2018     2017     2017
Assets                  
Interest-Bearing Deposits in Other Banks     $ 3,524     $ 2,589     $ 3,421     $ 3,913  
Funds Sold       361,933       387,766       181,413       742,221  
Investment Securities                  
Available-for-Sale       2,092,870       2,184,187       2,232,979       2,316,728  
Held-to-Maturity (Fair Value of $3,500,497; $3,711,149; $3,894,121; and $3,785,641)       3,595,891       3,789,092       3,928,170       3,782,702  
Loans Held for Sale       16,025       23,548       19,231       20,354  
Loans and Leases       10,053,323       9,916,628       9,796,947       9,387,613  
Allowance for Loan and Lease Losses       (108,188 )     (107,938 )     (107,346 )     (106,353 )
Net Loans and Leases       9,945,135       9,808,690       9,689,601       9,281,260  
Total Earning Assets       16,015,378       16,195,872       16,054,815       16,147,178  
Cash and Due from Banks       312,303       174,871       263,017       128,093  
Premises and Equipment, Net       142,791       137,201       130,926       119,569  
Accrued Interest Receivable       50,594       52,941       50,485       46,595  
Foreclosed Real Estate       2,926       2,768       1,040       1,991  
Mortgage Servicing Rights       24,583       24,493       24,622       24,471  
Goodwill       31,517       31,517       31,517       31,517  
Bank-Owned Life Insurance       281,018       280,537       280,034       277,235  
Other Assets       263,052       235,830       252,596       204,643  
Total Assets     $ 17,124,162     $ 17,136,030     $ 17,089,052     $ 16,981,292  
                   
Liabilities                  
Deposits                  
Noninterest-Bearing Demand     $ 4,729,203     $ 4,759,777     $ 4,724,300     $ 4,706,962  
Interest-Bearing Demand       3,111,069       3,028,373       3,082,563       3,029,549  
Savings       5,389,763       5,397,291       5,389,013       5,364,191  
Time       1,713,323       1,771,692       1,688,092       1,683,947  
Total Deposits       14,943,358       14,957,133       14,883,968       14,784,649  
Short-Term Borrowings       330       -       -       -  
Securities Sold Under Agreements to Repurchase       504,193       505,293       505,293       505,292  
Other Debt       235,681       235,699       260,716       267,904  
Retirement Benefits Payable       36,730       37,046       37,312       48,346  
Accrued Interest Payable       7,395       8,229       6,946       5,105  
Taxes Payable and Deferred Taxes       15,136       29,557       24,009       31,444  
Other Liabilities       133,622       121,880       138,940       124,795  
Total Liabilities       15,876,445       15,894,837       15,857,184       15,767,535  
Shareholders' Equity                  

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2018 - 58,070,285 / 42,084,066; March 31, 2018 - 58,051,646 / 42,314,414; December 31, 2017 - 57,959,074 / 42,401,443; and June 30, 2017 - 57,972,647 / 42,655,954)

      577       577       576       576  
Capital Surplus       566,436       563,598       561,161       556,409  
Accumulated Other Comprehensive Loss       (53,855 )     (51,097 )     (34,715 )     (25,613 )
Retained Earnings       1,581,168       1,551,900       1,512,218       1,468,328  

Treasury Stock, at Cost (Shares: June 30, 2018 - 15,986,219; March 31, 2018 - 15,737,232; December 31, 2017 - 15,557,631; and June 30, 2017 - 15,316,693)

      (846,609 )     (823,785 )     (807,372 )     (785,943 )
Total Shareholders' Equity       1,247,717       1,241,193       1,231,868       1,213,757  
Total Liabilities and Shareholders' Equity     $ 17,124,162     $ 17,136,030     $ 17,089,052     $ 16,981,292  
                   
                               
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, 2017     42,401,443     $ 576   $ 561,161   $ (34,715 )   $ 1,512,218     $ (807,372 )   $ 1,231,868  
Net Income     -       -     -     -       108,758       -       108,758  
Other Comprehensive Loss     -       -     -     (11,663 )     -       -       (11,663 )

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

    -       -     -     (7,477 )     7,477       -       -  
Share-Based Compensation     -       -     4,055     -       -       -       4,055  

Common Stock Issued under Purchase and Equity Compensation Plans

    179,644       1     1,220     -       166       2,992       4,379  
Common Stock Repurchased     (497,021 )     -     -     -       -       (42,229 )     (42,229 )
Cash Dividends Declared ($1.12 per share)     -       -     -     -       (47,451 )     -       (47,451 )
Balance as of June 30, 2018     42,084,066     $ 577   $ 566,436   $ (53,855 )   $ 1,581,168     $ (846,609 )   $ 1,247,717  
                               
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

    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  
                               
   
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, 2018     March 31, 2018     June 30, 2017  
      Average   Income/  

  Yield/

    Average   Income/  

  Yield/

    Average   Income/  

  Yield/

 
(dollars in millions)     Balance   Expense   Rate     Balance   Expense   Rate     Balance   Expense   Rate  
Earning Assets                                            
Interest-Bearing Deposits in Other Banks     $ 2.9   $ -   (0.52) %   $ 3.0   $ -   2.34 %   $ 3.6   $ -   0.29 %
Funds Sold       185.2     0.8   1.81       204.7     0.8   1.48       353.5     0.7   0.78  
Investment Securities                                            
Available-for-Sale                                            
Taxable       1,564.5     9.2   2.35       1,595.1     8.9   2.23       1,683.4     8.4   1.98  
Non-Taxable       583.6     4.0   2.78       604.7     4.1   2.74       658.9     5.4   3.26  
Held-to-Maturity                                            
Taxable       3,471.7     19.2   2.22       3,631.2     19.8   2.18       3,596.1     18.4   2.05  
Non-Taxable       237.1     1.9   3.17       238.0     1.9   3.18       240.9     2.3   3.88  
Total Investment Securities       5,856.9     34.3   2.35       6,069.0     34.7   2.29       6,179.3     34.5   2.23  
Loans Held for Sale       14.8     0.2   4.44       14.1     0.1   3.76       23.8     0.2   4.04  
Loans and Leases 1                                            
Commercial and Industrial       1,307.6     12.8   3.92       1,280.9     11.8   3.73       1,251.2     10.9   3.51  
Commercial Mortgage       2,123.5     21.9   4.13       2,096.4     20.6   3.99       1,946.3     18.4   3.80  
Construction       183.4     2.2   4.82       189.4     2.1   4.45       240.0     2.8   4.70  
Commercial Lease Financing       179.4     1.0   2.24       179.6     1.0   2.21       208.0     1.2   2.27  
Residential Mortgage       3,526.9     33.6   3.81       3,478.2     33.3   3.83       3,272.7     31.1   3.80  
Home Equity       1,612.7     15.1   3.76       1,595.4     14.6   3.70       1,445.8     13.1   3.62  
Automobile       573.6     5.7   3.97       541.5     5.6   4.19       474.1     5.9   4.97  
Other 2       455.8     8.9   7.86       442.4     8.6   7.91       379.7     7.6   8.06  
Total Loans and Leases       9,962.9     101.2   4.07       9,803.8     97.6   4.02       9,217.8     91.0   3.96  
Other       39.8     0.4   3.43       40.7     0.3   2.95       41.0     0.2   2.03  
Total Earning Assets 3       16,062.5     136.9   3.41       16,135.3     133.5   3.33       15,819.0     126.6   3.21  
Cash and Due from Banks       251.0               228.6               120.8          
Other Assets       608.3               593.5               556.1          
Total Assets     $ 16,921.8             $ 16,957.4             $ 16,495.9          
                                             
Interest-Bearing Liabilities                                            
Interest-Bearing Deposits                                            
Demand     $ 2,969.8     1.2   0.16     $ 2,978.1     0.8   0.10     $ 2,862.7     0.5   0.07  
Savings       5,392.2     3.1   0.23       5,366.3     2.1   0.16       5,376.9     1.6   0.12  
Time       1,705.7     5.2   1.21       1,713.5     4.7   1.11       1,480.5     2.9   0.78  
Total Interest-Bearing Deposits       10,067.7     9.5   0.38       10,057.9     7.6   0.31       9,720.1     5.0   0.21  
Short-Term Borrowings       21.0     0.1   1.80       19.1     0.1   1.45       36.5     0.1   1.10  
Securities Sold Under Agreements to Repurchase       505.1     4.6   3.62       505.3     4.5   3.61       505.3     5.1   3.98  
Other Debt       235.7     0.9   1.56       257.1     1.0   1.54       267.9     1.1   1.66  
Total Interest-Bearing Liabilities       10,829.5     15.1   0.56       10,839.4     13.2   0.49       10,529.8     11.3   0.43  
Net Interest Income         $ 121.8             $ 120.3             $ 115.3      
Interest Rate Spread             2.85 %           2.84 %           2.78 %
Net Interest Margin             3.04 %           3.00 %           2.92 %
Noninterest-Bearing Demand Deposits       4,641.6               4,662.4               4,533.0          
Other Liabilities       209.0               220.0               228.3          
Shareholders' Equity       1,241.7               1,235.6               1,204.8          
Total Liabilities and Shareholders' Equity     $ 16,921.8             $ 16,957.4             $ 16,495.9          
                                                   

1

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

2

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

3

  Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% for 2018 and 35% for 2017, of $1,298,000 for the three months ended June 30, 2018, $1,344,000 for the three months ended March 31, 2018, and $3,054,000 for the three months ended June 30, 2017.
     
                               
Bank of Hawaii Corporation and Subsidiaries  
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7b  
      Six Months Ended     Six Months Ended  
      June 30, 2018     June 30, 2017  
      Average   Income/  

  Yield/

    Average   Income/  

  Yield/

 
(dollars in millions)     Balance   Expense   Rate     Balance   Expense   Rate  
Earning Assets                              
Interest-Bearing Deposits in Other Banks     $ 2.9   $ -   0.94 %   $ 3.5   $ -   0.42 %
Funds Sold       194.9     1.6   1.64       448.3     1.6   0.70  
Investment Securities                              
Available-for-Sale                              
Taxable       1,579.7     18.0   2.29       1,654.6     15.9   1.93  
Non-Taxable       594.1     8.2   2.76       659.8     10.7   3.26  
Held-to-Maturity                              
Taxable       3,551.0     39.0   2.20       3,592.9     36.6   2.04  
Non-Taxable       237.6     3.8   3.17       241.4     4.7   3.88  
Total Investment Securities       5,962.4     69.0   2.32       6,148.7     67.9   2.21  
Loans Held for Sale       14.5     0.3   4.11       27.1     0.6   4.01  
Loans and Leases 1                              
Commercial and Industrial       1,294.3     24.6   3.83       1,257.4     21.5   3.44  
Commercial Mortgage       2,110.0     42.4   4.06       1,914.1     35.9   3.78  
Construction       186.4     4.3   4.63       249.5     5.7   4.62  
Commercial Lease Financing       179.5     2.0   2.22       208.3     2.3   2.22  
Residential Mortgage       3,502.6     66.9   3.82       3,237.4     62.0   3.83  
Home Equity       1,604.1     29.7   3.73       1,406.8     25.0   3.59  
Automobile       557.7     11.3   4.08       467.9     11.6   5.01  
Other 2       449.1     17.6   7.88       378.2     15.0   7.98  
Total Loans and Leases       9,883.7     198.8   4.04       9,119.6     179.0   3.95  
Other       40.3     0.7   3.19       40.5     0.4   2.16  
Total Earning Assets 3       16,098.7     270.4   3.37       15,787.7     249.5   3.17  
Cash and Due from Banks       239.9               126.5          
Other Assets       600.9               551.2          
Total Assets     $ 16,939.5             $ 16,465.4          
                               
Interest-Bearing Liabilities                              
Interest-Bearing Deposits                              
Demand     $ 2,974.0     1.9   0.13     $ 2,864.6     0.8   0.06  
Savings       5,379.3     5.3   0.20       5,391.4     2.9   0.11  
Time       1,709.6     9.8   1.16       1,397.5     5.0   0.72  
Total Interest-Bearing Deposits       10,062.9     17.0   0.34       9,653.5     8.7   0.18  
Short-Term Borrowings       20.0     0.2   1.64       23.1     0.1   0.91  
Securities Sold Under Agreements to Repurchase       505.2     9.2   3.61       508.8     10.2   4.01  
Other Debt       246.3     1.9   1.55       267.9     2.2   1.66  
Total Interest-Bearing Liabilities       10,834.4     28.3   0.52       10,453.3     21.2   0.41  
Net Interest Income         $ 242.1             $ 228.3      
Interest Rate Spread             2.85 %           2.76 %
Net Interest Margin             3.02 %           2.90 %
Noninterest-Bearing Demand Deposits       4,651.9               4,582.6          
Other Liabilities       214.6               238.3          
Shareholders' Equity       1,238.6               1,191.2          
Total Liabilities and Shareholders' Equity     $ 16,939.5             $ 16,465.4          
                                   

1

 

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

2

 

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

3

 

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% for 2018 and 35% for 2017, of $2,642,000 for the six months ended June 30, 2018 and $6,115,000 for the six months ended June 30, 2017.

   

 

               
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
      Three Months Ended June 30, 2018
      Compared to March 31, 2018
(dollars in millions)     Volume 1  

  Rate 1

 

 Total

Change in Interest Income:              
Funds Sold     $ (0.1 )   $ 0.1     $ -  
Investment Securities              
Available-for-Sale              
Taxable       (0.2 )     0.5       0.3  
Non-Taxable       (0.1 )     -       (0.1 )
Held-to-Maturity              
Taxable       (0.9 )     0.3       (0.6 )
Total Investment Securities       (1.2 )     0.8       (0.4 )
Loans Held for Sale       -       0.1       0.1  
Loans and Leases              
Commercial and Industrial       0.3       0.7       1.0  
Commercial Mortgage       0.3       1.0       1.3  
Construction       (0.1 )     0.2       0.1  
Residential Mortgage       0.5       (0.2 )     0.3  
Home Equity       0.2       0.3       0.5  
Automobile       0.4       (0.3 )     0.1  
Other 2       0.3       -       0.3  
Total Loans and Leases       1.9       1.7       3.6  
Other       -       0.1       0.1  
Total Change in Interest Income       0.6       2.8       3.4  
               
Change in Interest Expense:              
Interest-Bearing Deposits              
Demand       -       0.4       0.4  
Savings       -       1.0       1.0  
Time       -       0.5       0.5  
Total Interest-Bearing Deposits       -       1.9       1.9  
Securities Sold Under Agreements to Repurchase       -       0.1       0.1  
Other Debt       (0.1 )     -       (0.1 )
Total Change in Interest Expense       (0.1 )     2.0       1.9  
               
Change in Net Interest Income     $ 0.7     $ 0.8     $ 1.5  
                           

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, 2018
      Compared to June 30, 2017
(dollars in millions)     Volume 1  

  Rate 1

 

 Total

Change in Interest Income:              
Funds Sold     $ (0.5 )   $ 0.6     $ 0.1  
Investment Securities              
Available-for-Sale              
Taxable       (0.6 )     1.4       0.8  
Non-Taxable       (0.6 )     (0.8 )     (1.4 )
Held-to-Maturity              
Taxable       (0.7 )     1.5       0.8  
Non-Taxable       -       (0.4 )     (0.4 )
Total Investment Securities       (1.9 )     1.7       (0.2 )
Loans Held for Sale       (0.1 )     0.1       -  
Loans and Leases              
Commercial and Industrial       0.6       1.3       1.9  
Commercial Mortgage       1.8       1.7       3.5  
Construction       (0.7 )     0.1       (0.6 )
Commercial Lease Financing       (0.2 )     -       (0.2 )
Residential Mortgage       2.4       0.1       2.5  
Home Equity       1.5       0.5       2.0  
Automobile       1.1       (1.3 )     (0.2 )
Other 2       1.5       (0.2 )     1.3  
Total Loans and Leases       8.0       2.2       10.2  
Other       -       0.2       0.2  
Total Change in Interest Income       5.5       4.8       10.3  
               
Change in Interest Expense:              
Interest-Bearing Deposits              
Demand       -       0.7       0.7  
Savings       -       1.5       1.5  
Time       0.5       1.8       2.3  
Total Interest-Bearing Deposits       0.5       4.0       4.5  
Short-Term Borrowings       (0.1 )     0.1       -  
Securities Sold Under Agreements to Repurchase       -       (0.5 )     (0.5 )
Other Debt       (0.1 )     (0.1 )     (0.2 )
Total Change in Interest Expense       0.3       3.5       3.8  
               
Change in Net Interest Income     $ 5.2     $ 1.3     $ 6.5  
                           

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, 2018
      Compared to June 30, 2017
(dollars in millions)     Volume 1  

  Rate 1

 

 Total

Change in Interest Income:              
Funds Sold     $ (1.3 )   $ 1.3     $ -  
Investment Securities              
Available-for-Sale              
Taxable       (0.8 )     2.9       2.1  
Non-Taxable       (1.0 )     (1.5 )     (2.5 )
Held-to-Maturity              
Taxable       (0.4 )     2.8       2.4  
Non-Taxable       (0.1 )     (0.8 )     (0.9 )
Total Investment Securities       (2.3 )     3.4       1.1  
Loans Held for Sale       (0.3 )     -       (0.3 )
Loans and Leases              
Commercial and Industrial       0.6       2.5       3.1  
Commercial Mortgage       3.8       2.7       6.5  
Construction       (1.4 )     -       (1.4 )
Commercial Lease Financing       (0.3 )     -       (0.3 )
Residential Mortgage       5.0       (0.1 )     4.9  
Home Equity       3.6       1.1       4.7  
Automobile       2.0       (2.3 )     (0.3 )
Other 2       2.8       (0.2 )     2.6  
Total Loans and Leases       16.1       3.7       19.8  
Other       -       0.3       0.3  
Total Change in Interest Income       12.2       8.7       20.9  
               
Change in Interest Expense:              
Interest-Bearing Deposits              
Demand       -       1.1       1.1  
Savings       -       2.4       2.4  
Time       1.3       3.5       4.8  
Total Interest-Bearing Deposits       1.3       7.0       8.3  
Short-Term Borrowings       -       0.1       0.1  
Securities Sold Under Agreements to Repurchase       (0.1 )     (0.9 )     (1.0 )
Other Debt       (0.2 )     (0.1 )     (0.3 )
Total Change in Interest Expense       1.0       6.1       7.1  
               
Change in Net Interest Income     $ 11.2     $ 2.6     $ 13.8  
               

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
Salaries and Benefits   Table 9
      Three Months Ended     Six Months Ended
      June 30,   March 31,   June 30,     June 30,
(dollars in thousands)     2018   2018   2017     2018   2017
Salaries     $ 33,269   $ 32,704   $ 30,553     $ 65,973   $ 59,978
Incentive Compensation       4,416     5,178     5,125       9,594     10,899
Share-Based Compensation       2,423     2,081     2,879       4,504     5,182
Commission Expense       1,272     954     1,791       2,226     3,627
Retirement and Other Benefits       4,178     4,841     3,722       9,019     8,326
Payroll Taxes       2,568     4,172     2,427       6,740     6,371
Medical, Dental, and Life Insurance       3,820     3,461     3,136       7,281     6,415
Separation Expense       202     1,031     43       1,233     43
Total Salaries and Benefits     $ 52,148   $ 54,422   $ 49,676     $ 106,570   $ 100,841
                         
Note: Certain prior period information has been reclassified to conform to current presentation.
     
                       
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances   Table 10
      June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands)     2018   2018   2017   2017   2017
Commercial                      
Commercial and Industrial     $ 1,282,967   $ 1,329,096   $ 1,279,347   $ 1,252,238   $ 1,241,953
Commercial Mortgage       2,169,357     2,097,339     2,103,967     2,050,998     2,009,886
Construction       185,350     186,530     202,253     232,487     248,030
Lease Financing       178,598     179,771     180,931     204,240     205,043
Total Commercial       3,816,272     3,792,736     3,766,498     3,739,963     3,704,912
Consumer                      
Residential Mortgage       3,548,444     3,505,239     3,466,773     3,366,634     3,317,179
Home Equity       1,622,314     1,601,698     1,585,455     1,528,353     1,473,123
Automobile       592,705     558,468     528,474     506,102     484,092
Other 1       473,588     458,487     449,747     432,904     408,307
Total Consumer       6,237,051     6,123,892     6,030,449     5,833,993     5,682,701
Total Loans and Leases     $ 10,053,323   $ 9,916,628   $ 9,796,947   $ 9,573,956   $ 9,387,613
                       
                       
Deposits                      
      June 30,   March 31,   December 31,   September 30,   June 30,
(dollars in thousands)       2018     2018     2017     2017     2017
Consumer     $ 7,672,435   $ 7,665,926   $ 7,478,228   $ 7,303,546   $ 7,278,536
Commercial       5,921,414     5,897,194     5,973,763     6,091,800     5,903,639
Public and Other       1,349,509     1,394,013     1,431,977     1,652,814     1,602,474
Total Deposits     $ 14,943,358   $ 14,957,133   $ 14,883,968   $ 15,048,160   $ 14,784,649
                       
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)       2018     2018     2017     2017     2017
Non-Performing Assets                      
Non-Accrual Loans and Leases                      
Commercial                      
Commercial and Industrial     $ 917     $ 986     $ 448     $ 901     $ 175  
Commercial Mortgage       659       1,367       1,398       1,425       1,460  
Total Commercial       1,576       2,353       1,846       2,326       1,635  
Consumer                      
Residential Mortgage       6,722       6,725       9,243       9,188       9,337  
Home Equity       3,933       3,890       3,991       4,128       3,405  
Total Consumer       10,655       10,615       13,234       13,316       12,742  
Total Non-Accrual Loans and Leases       12,231       12,968       15,080       15,642       14,377  
Foreclosed Real Estate       2,926       2,768       1,040       1,393       1,991  
Total Non-Performing Assets     $ 15,157     $ 15,736     $ 16,120     $ 17,035     $ 16,368  
                       
Accruing Loans and Leases Past Due 90 Days or More                      
Commercial                      
Commercial and Industrial     $ 2     $ -     $ -     $ 5     $ -  
Commercial Mortgage       5,680       -       -       -       -  
Total Commercial       5,682       -       -       5       -  
Consumer                      
Residential Mortgage     $ 2,281     $ 2,927     $ 2,703     $ 2,933     $ 2,269  
Home Equity       3,016       3,013       1,624       1,392       2,343  
Automobile       674       333       886       806       539  
Other 1       1,660       1,895       1,934       1,528       1,859  
Total Consumer       7,631       8,168       7,147       6,659       7,010  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 13,313     $ 8,168     $ 7,147     $ 6,664     $ 7,010  

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

    $ 50,212     $ 56,743     $ 55,672     $ 55,038     $ 53,158  
Total Loans and Leases     $ 10,053,323     $ 9,916,628     $ 9,796,947     $ 9,573,956     $ 9,387,613  
                       
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.12 %     0.13 %     0.15 %     0.16 %     0.15 %
                       

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

      0.15 %     0.16 %     0.16 %     0.18 %     0.17 %
                       

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

      0.04 %     0.06 %     0.05 %     0.06 %     0.04 %
                       

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

      0.22 %     0.22 %     0.24 %     0.25 %     0.26 %
                       

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

      0.28 %     0.24 %     0.24 %     0.25 %     0.25 %
                       
Quarter to Quarter Changes in Non-Performing Assets                      
Balance at Beginning of Quarter     $ 15,736     $ 16,120     $ 17,035     $ 16,368     $ 19,003  
Additions       1,949       2,332       2,109       2,212       1,572  
Reductions                      
Payments       (1,847 )     (1,251 )     (368 )     (199 )     (497 )
Return to Accrual Status       (126 )     (1,270 )     (1,779 )     (305 )     (1,370 )
Sales of Foreclosed Real Estate       (421 )     -       (353 )     (951 )     (1,883 )
Charge-offs/Write-downs       (134 )     (195 )     (524 )     (90 )     (457 )
Total Reductions       (2,528 )     (2,716 )     (3,024 )     (1,545 )     (4,207 )
Balance at End of Quarter     $ 15,157     $ 15,736     $ 16,120     $ 17,035     $ 16,368  
                       
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)     2018   2018   2017   2018   2017
Balance at Beginning of Period     $ 114,760     $ 114,168     $ 111,636     $ 114,168     $ 110,845  
Loans and Leases Charged-Off                      
Commercial                      
Commercial and Industrial       (485 )     (206 )     (124 )     (691 )     (298 )
Consumer                      
Residential Mortgage       (3 )     (97 )     (506 )     (100 )     (689 )
Home Equity       (44 )     (91 )     (282 )     (135 )     (645 )
Automobile       (1,515 )     (2,254 )     (1,512 )     (3,769 )     (3,802 )
Other 1       (3,614 )     (3,340 )     (3,063 )     (6,954 )     (5,757 )
Total Loans and Leases Charged-Off       (5,661 )     (5,988 )     (5,487 )     (11,649 )     (11,191 )
Recoveries on Loans and Leases Previously Charged-Off                      
Commercial                      
Commercial and Industrial       366       328       265       694       601  
Lease Financing       -       -       1       -       1  
Consumer                      
Residential Mortgage       214       220       264       434       368  
Home Equity       451       625       838       1,076       1,346  
Automobile       738       599       607       1,337       1,227  
Other 1       642       683       551       1,325       1,078  
Total Recoveries on Loans and Leases Previously Charged-Off       2,411       2,455       2,526       4,866       4,621  
Net Loans and Leases Charged-Off       (3,250 )     (3,533 )     (2,961 )     (6,783 )     (6,570 )
Provision for Credit Losses       3,500       4,125       4,250       7,625       8,650  
Provision for Unfunded Commitments       -       -       250       -       250  
Balance at End of Period 2     $ 115,010     $ 114,760     $ 113,175     $ 115,010     $ 113,175  
                       
Components                      
Allowance for Loan and Lease Losses     $ 108,188     $ 107,938     $ 106,353     $ 108,188     $ 106,353  
Reserve for Unfunded Commitments       6,822       6,822       6,822       6,822       6,822  
Total Reserve for Credit Losses     $ 115,010     $ 114,760     $ 113,175     $ 115,010     $ 113,175  
                       
Average Loans and Leases Outstanding     $ 9,962,860     $ 9,803,753     $ 9,217,779     $ 9,883,746     $ 9,119,610  
                       

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

      0.13 %     0.15 %     0.13 %     0.14 %     0.15 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding       1.08 %     1.09 %     1.13 %     1.08 %     1.13 %
                       

1

 

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

2

 

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

     
                       
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13a
              Investment        
              Services and        
      Retail   Commercial   Private   Treasury   Consolidated
(dollars in thousands)     Banking   Banking   Banking   and Other   Total
Three Months Ended June 30, 2018                      
Net Interest Income     $ 65,683     $ 44,010     $ 10,526     $ 277     $ 120,496  
Provision for Credit Losses       3,445       (194 )     -       249       3,500  
Net Interest Income After Provision for Credit Losses       62,238       44,204       10,526       28       116,996  
Noninterest Income       19,598       5,512       14,745       1,443       41,298  
Noninterest Expense       (51,939 )     (19,858 )     (16,400 )     (2,594 )     (90,791 )
Income Before Provision for Income Taxes       29,897       29,858       8,871       (1,123 )     67,503  
Provision for Income Taxes       (7,473 )     (6,740 )     (2,338 )     3,766       (12,785 )
Net Income     $ 22,424     $ 23,118     $ 6,533     $ 2,643     $ 54,718  
Total Assets as of June 30, 2018     $ 6,142,457     $ 3,799,535     $ 342,464     $ 6,839,706     $ 17,124,162  
                       
                       
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  
                       
                       
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13b
              Investment        
              Services and        
      Retail   Commercial   Private   Treasury   Consolidated
(dollars in thousands)     Banking   Banking   Banking   and Other   Total
Six Months Ended June 30, 2018                      
Net Interest Income     $ 130,080     $ 86,908     $ 20,413     $ 2,051     $ 239,452  
Provision for Credit Losses       7,188       (345 )     (60 )     842       7,625  
Net Interest Income After Provision for Credit Losses       122,892       87,253       20,473       1,209       231,827  
Noninterest Income       38,851       11,154       28,415       6,913       85,333  
Noninterest Expense       (106,538 )     (40,190 )     (32,607 )     (5,840 )     (185,175 )
Income Before Provision for Income Taxes       55,205       58,217       16,281       2,282       131,985  
Provision for Income Taxes       (13,764 )     (13,564 )     (4,292 )     8,393       (23,227 )
Net Income     $ 41,441     $ 44,653     $ 11,989     $ 10,675     $ 108,758  
Total Assets as of June 30, 2018     $ 6,142,457     $ 3,799,535     $ 342,464     $ 6,839,706     $ 17,124,162  
                       
                       
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  
                       
                                 
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)       2018       2018       2017       2017       2017  
Quarterly Operating Results                                
Interest Income                                
Interest and Fees on Loans and Leases     $ 101,311     $ 97,634     $ 96,974     $ 94,621     $ 90,909  
Income on Investment Securities                                
Available-for-Sale       12,380       12,141       11,866       11,987       11,835  
Held-to-Maturity       20,711       21,296       21,782       20,334       19,918  
Deposits       (4)       18       3       5       2  
Funds Sold       846       757       717       1,579       696  
Other       341       300       271       235       208  
Total Interest Income       135,585       132,146       131,613       128,761       123,568  
Interest Expense                                
Deposits       9,459       7,581       6,980       6,663       4,998  
Securities Sold Under Agreements to Repurchase       4,617       4,564       4,664       4,664       5,079  
Funds Purchased       83       53       81       -       39  
Short-Term Borrowings       13       16       -       -       64  
Other Debt       917       976       1,118       1,117       1,109  
Total Interest Expense       15,089       13,190       12,843       12,444       11,289  
Net Interest Income       120,496       118,956       118,770       116,317       112,279  
Provision for Credit Losses       3,500       4,125       4,250       4,000       4,250  
Net Interest Income After Provision for Credit Losses       116,996       114,831       114,520       112,317       108,029  
Noninterest Income                                
Trust and Asset Management       11,356       11,181       11,105       11,050       11,796  
Mortgage Banking       2,179       2,145       2,593       3,237       3,819  
Service Charges on Deposit Accounts       6,865       7,129       8,053       8,188       8,009  
Fees, Exchange, and Other Service Charges       14,400       14,333       13,784       13,764       13,965  
Investment Securities Gains (Losses), Net      

(1,702

)

   

(666

)

   

(617

)

   

(566

)

   

(520

)

Annuity and Insurance       1,847       1,206       1,273       1,429       2,161  
Bank-Owned Life Insurance       1,796       1,842       1,609       1,861       1,550  
Other       4,557       6,865       4,055       3,447       4,456  
Total Noninterest Income       41,298       44,035       41,855       42,410       45,236  
Noninterest Expense                                
Salaries and Benefits       52,148       54,422       51,698       51,190       49,676  
Net Occupancy       8,588       8,534       8,510       7,727       8,131  
Net Equipment       5,845       5,527       5,454       5,417       5,706  
Data Processing       4,563       3,891       4,310       3,882       3,881  
Professional Fees       2,546       2,773       3,266       3,044       2,592  
FDIC Insurance       2,182       2,157       2,253       2,107       2,097  
Other       14,919       17,080       16,845       15,231       16,106  
Total Noninterest Expense       90,791       94,384       92,336       88,598       88,189  
Income Before Provision for Income Taxes       67,503       64,482       64,039       66,129       65,076  
Provision for Income Taxes       12,785       10,442       21,086       20,248       20,414  
Net Income     $ 54,718     $ 54,040     $ 42,953     $ 45,881     $ 44,662  
                                 
Basic Earnings Per Share     $ 1.31     $ 1.29     $ 1.02     $ 1.09     $ 1.05  
Diluted Earnings Per Share     $ 1.30     $ 1.28     $ 1.01     $ 1.08     $ 1.05  
                                 
Balance Sheet Totals                                
Loans and Leases     $ 10,053,323     $ 9,916,628     $ 9,796,947     $ 9,573,956     $ 9,387,613  
Total Assets       17,124,162       17,136,030       17,089,052       17,268,302       16,981,292  
Total Deposits       14,943,358       14,957,133       14,883,968       15,048,160       14,784,649  
Total Shareholders' Equity       1,247,717       1,241,193       1,231,868       1,227,893       1,213,757  
                                 
Performance Ratios                                
Return on Average Assets       1.30

%

    1.29 %     1.00 %     1.07 %     1.09 %
Return on Average Shareholders' Equity       17.68       17.74       13.85       14.89       14.87  
Efficiency Ratio 1       56.12       57.91       57.49       55.82       55.99  
Net Interest Margin 2       3.04       3.00       2.98       2.92       2.92  
                                 

1

 

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

2

 

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

Note: Certain prior period information has been reclassified to conform to current presentation.
 
                               
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends     Table 15
      Five Months Ended     Year Ended
($ in millions; jobs in thousands)     May 31, 2018     December 31, 2017     December 31, 2016  
Hawaii Economic Trends                                    
State General Fund Revenues 1     $ 3,003.1  

  12.1

%   $ 6,485.5     4.3 %   $ 6,215.4     3.6 %

General Excise and Use Tax Revenue 1

    $ 1,432.5   3.5 %   $ 3,349.8     4.5 %   $ 3,205.7     2.0 %
Jobs 2       672.8           668.2             669.4        
                                     
                      June 30,     December 31,  
(spot rates)                     2018     2017  

 2016 

 
Unemployment 3                                    
Statewide, seasonally adjusted                     2.1 %     2.1 %   2.9 %
                                     
Oahu                     2.6       1.7     2.4  
Island of Hawaii                     3.4       2.0     3.1  
Maui                     2.7       1.8     2.7  
Kauai                     2.9       1.7     2.8  
                                     
                June 30,     December 31,  
(percentage change, except months of inventory)     2018     2017     2016   2015  
Housing Trends (Single Family Oahu) 4                                    
Median Home Price                 3.9 %   2.7 %     5.0 %   3.7 %
Home Sales Volume (units)                 (1.6) %   6.3 %     6.5 %   5.2 %
Months of Inventory                 2.7     2.1       2.5     2.6  
                                     
                Monthly Visitor Arrivals,   Percentage Change  
(in thousands)               Not Seasonally Adjusted  

  from Previous Year  

 
Tourism 5                                    
                                     
May 31, 2018                     804.1           7.0  
April 30, 2018                     803.0           6.6  
March 31, 2018                     903.6           12.5  
February 28, 2018                     778.6           10.3  
January 31, 2018                     796.5           5.4  
December 31, 2017                     880.4           6.3  
November 30, 2017                     748.3           7.3  
October 31, 2017                     737.0           2.8  
September 30, 2017                     701.8           5.1  
August 31, 2017                     818.6           4.8  
July 31, 2017                     891.9           6.8  
June 30, 2017                     835.9           4.5  
May 31, 2017                     751.2           4.5  
April 30, 2017                     753.0           7.5  
March 31, 2017                     802.8           2.1  
February 28, 2017                     706.1           2.5  
January 31, 2017                     756.0           4.9  
December 31, 2016                     828.2           3.6  
November 30, 2016                     697.1           4.7  
October 31, 2016                     717.0           4.3  
September 30, 2016                     667.6           3.1  
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  
                                     

1

 

Source: Hawaii Department of Business, Economic Development & Tourism

2

 

Source: U. S. Bureau of Labor Statistics

3

 

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

4

 

Source: Honolulu Board of REALTORS

5

 

Source: Hawaii Tourism Authority

 

Source: Bank of Hawaii Corporation

Bank of Hawaii Corporation
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or
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