Bank of Hawaii Corporation Third Quarter 2006 Financial Results
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A -- Board of Directors Increases Dividend 11 Percent to $0.41 Per ShareHONOLULU, Oct 23, 2006 (BUSINESS WIRE) -- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.93 for the third quarter of 2006, up from $0.85 in the third quarter of 2005 and up from $0.73 in the second quarter of 2006. Net income for the third quarter of 2006 was $46.9 million, up $2.1 million from $44.8 million in the third quarter of 2005 and up $9.7 million from $37.2 million in the second quarter of 2006.
The return on average assets for the third quarter of 2006 was 1.81 percent, compared to 1.74 percent in the third quarter of 2005 and 1.47 percent in the second quarter of 2006. The return on average shareholders equity was 27.09 percent for the third quarter of 2006, up from 24.61 percent in the third quarter last year and up from 21.70 percent in the previous quarter.
"Bank of Hawaii Corporation had another solid financial performance during the third quarter of 2006 despite a challenging rate environment," said Allan R. Landon, Chairman and CEO. "Loan growth and asset quality were strong during the third quarter and we were able to stabilize net interest income and overall deposit levels."
For the nine months ended September 30, 2006, net income was $129.4 million, down $7.3 million compared to net income of $136.8 million for the same period last year. Diluted earnings per share were $2.53 for the nine month period in 2006, down from diluted earnings per share of $2.55 for the same period in 2005. Results for 2006 include a charge of $8.8 million, or $0.17 per diluted share, as a result of the May 2006 Tax Increase Prevention and Reconciliation Act ("TIPRA"), which repealed the exclusion from federal income taxation of a portion of the income from foreign sales corporations. Excluding the TIPRA adjustment, results for the nine months ended September 30, 2006 were $138.3 million, an increase of $1.5 million compared with the same period last year. Results for the nine month period in 2006 included a provision for credit losses of $7.6 million compared to a provision for credit losses of $3.0 million during the comparable period in 2005.
The year-to-date return on average assets was 1.70 percent, down from 1.83 percent for the same period in 2005. The year-to-date return on average shareholders equity was 24.99 percent, up from 24.72 percent for the nine months ended September 30, 2005.
Financial Highlights
Net interest income, on a taxable equivalent basis, for the third quarter of 2006 was $100.5 million, down $1.6 million from $102.1 million in the third quarter of 2005 and up $0.5 million from $100.0 million in the second quarter of 2006. An analysis of the change in net interest income from the previous quarter is included in Table 6.
The net interest margin was 4.20 percent for the third quarter of 2006, a 10 basis point decrease from 4.30 percent in the third quarter of 2005 and a 5 basis point decrease from 4.25 percent in the second quarter of 2006. The decrease was primarily due to the effects of the inverted yield curve in the third quarter of 2006 and a continued shift in the funding mix.
Results for the third quarter of 2006 included a provision for credit losses of $2.8 million compared to $3.0 million in the third quarter of 2005 and $2.1 million in the second quarter of 2006.
Noninterest income was $56.9 million for the third quarter of 2006, an increase of $1.4 million or 2.5 percent compared to noninterest income of $55.5 million in the third quarter of 2005 and up $3.7 million or 6.9 percent compared to noninterest income of $53.2 million in the second quarter of 2006.
Noninterest expense was $79.8 million in the third quarter of 2006, down $4.8 million or 5.7 percent from noninterest expense of $84.6 million in the same quarter last year and up $1.1 million or 1.3 percent from $78.7 million in the prior quarter. An analysis of salary and benefit expenses is included in Table 7.
The efficiency ratio for the third quarter of 2006 was 50.75 percent, an improvement from 53.72 percent in the same quarter last year and from 51.45 percent in the previous quarter. For the nine months ended September 30, 2006, the efficiency ratio was 51.47 percent compared to 52.90 percent for the same period in 2005.
The Company's business segments are defined as Retail Banking, Commercial Banking, Investment Services Group, and Treasury and Other Corporate. Results are determined based on the Company's internal financial management reporting process and organizational structure. Selected financial information for the business segments is included in Tables 11a and 11b.
Asset Quality
Asset quality remained strong during the third quarter of 2006. Non-performing assets were $5.4 million at the end of the quarter, down $2.8 million, or 34.0 percent, compared to $8.3 million at the end of the same quarter last year and essentially flat with the end of the previous quarter. The ratio of non-performing assets to total loans, foreclosed real estate, and other investments at September 30, 2006 was 0.08 percent, down from 0.13 percent at September 30, 2005 and unchanged from June 30, 2006.
Non-accrual loans and leases were $5.0 million at September 30, 2006, down $2.2 million or 30.8 percent from $7.2 million at September 30, 2005 and down approximately $0.2 million, or 3.1 percent from $5.1 million at June 30, 2006. Non-accrual loans and leases as a percentage of total loans and leases at September 30, 2006 were 0.08 percent, down from 0.12 percent at September 30, 2005 and unchanged from June 30, 2006.
Net charge-offs for the third quarter of 2006 were $2.8 million or 0.17 percent annualized of total average loans and leases compared to net charge-offs of $13.0 million or 0.84 percent annualized of total average loans and leases in the same quarter last year. Net charge-offs during the third quarter of 2005 included a $10.0 million write-off of a fully reserved aircraft lease. Net charge-offs for the second quarter of 2006 were $2.1 million or 0.13 percent annualized of total average loans and leases. Details of the reserve for credit losses are summarized in Table 10.
The allowance for loan and lease losses was $90.8 million at September 30, 2006, down $0.9 million from $91.7 million at September 30, 2005 and down $0.2 million from $91.0 million at June 30, 2006. The ratio of allowance for loan and lease losses to total loans was 1.40 percent at September 30, 2006, down from 1.48 percent at September 30, 2005 and down from 1.41 percent at June 30, 2006. The reserve for unfunded commitments at September 30, 2006 was $5.4 million, up from $4.5 million at September 30, 2005 and up from $5.1 million at June 30, 2006.
Credit exposure to the air transportation industry is summarized in Table 8.
Other Financial Highlights
Total assets were $10.37 billion at September 30, 2006, up $286 million from $10.09 billion at September 30, 2005 and up $46 million from $10.33 billion at June 30, 2006. Total loans and leases were $6.49 billion at September 30, 2006, up $287 million from $6.20 billion at September 30, 2005 and up $47 million from $6.44 billion at June 30, 2006. Commercial loans were $2.36 billion at September 30, 2006, up $170 million from $2.19 billion at September 30, 2005 and up $42 million from $2.32 billion at June 30, 2006. Consumer loans were $4.13 billion at September 30, 2006, up $116 million from $4.01 billion at September 30, 2005 and up $6 million from $4.13 billion at June 30, 2006.
Total deposits at September 30, 2006 were $7.69 billion, down $69 million from $7.76 billion at September 30, 2005 and down $79 million from $7.77 billion at June 30, 2006. Despite lower deposit balances, the total number of business and consumer deposit accounts increased compared to June 30, 2006 and September 30, 2005. Average total deposits were $7.73 billion during the third quarter of 2006, down $102 million from the same quarter last year and up $4 million from $7.73 billion during the previous quarter.
During the third quarter of 2006, the Company repurchased 950.0 thousand shares of common stock at a total cost of $46.6 million under its share repurchase program. The average cost was $49.03 per share repurchased. From the beginning of the share repurchase program in July 2001 through September 30, 2006, the Company repurchased a total of 42.1 million shares and returned over $1.4 billion to shareholders at an average cost of $34.22 per share. From October 1, 2006 through October 20, 2006, the Company has repurchased an additional 122.5 thousand shares of common stock at an average cost of $48.36 per share. Remaining buyback authority under the share repurchase program was $102.5 million at October 20, 2006.
At September 30, 2006 the Tier 1 leverage ratio was 6.90 percent compared to 6.98 percent at September 30, 2005 and 7.09 percent at June 30, 2006.
The Company's Board of Directors has declared a quarterly cash dividend of $0.41 per share on the Company's outstanding shares. The dividend will be payable on December 14, 2006 to shareholders of record at the close of business on November 30, 2006.
Financial Outlook
The Company's previous earnings estimate of approximately $178 million in net income for the full year of 2006 remains unchanged. An analysis of credit quality is performed quarterly to determine the adequacy of the reserve for credit losses. This analysis determines the timing and amount of the provision for credit losses.
Forward-Looking Statements
This news release contains, and other statements made by the Company in connection with this earnings release may contain, forward-looking statements concerning, among other things, the economic and business environment in our service area and elsewhere, credit quality, anticipated net income and other financial and business matters in future periods. Our forward-looking statements are based on numerous assumptions, any of which could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons, including, but not limited to: 1) unanticipated changes in business and economic conditions, the competitive environment, taxing authority interpretations, legislation in Hawaii and the other markets we serve, or the timing and interpretation of proposed accounting standards; 2) changes in our credit quality or risk profile that may increase or decrease the required level of reserve for credit losses; 3) changes in market interest rates that may affect our credit markets and ability to maintain our net interest margin; 4) unpredictable costs and other consequences of legal, tax or regulatory matters involving the Company; 5) changes to the amount and timing of our proposed equity repurchases; 6) real or threatened acts of war or terrorist activity affecting business conditions; and 7) adverse weather, public health, and other natural hazards or conditions impacting the Company and its customers' operations. For further discussion of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements, please refer to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2005 filed with the U.S. Securities and Exchange Commission. We do not undertake an obligation to update forward-looking statements to reflect later events or circumstances.
Conference Call Information
The Company will review its third quarter 2006 financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The presentation will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation's web site, www.boh.com. The conference call number is 800-299-7928 in the United States or 617-614-3926 for international callers. No passcode is required to access the call. A replay will be available for one week beginning Monday, October 23, 2006 by calling 888-286-8010 in the United States or 617-801-6888 internationally and entering the number 97074126 when prompted. A replay of the presentation will also be available via the Investor Relations link of the Company's web site.
Bank of Hawaii Corporation is a regional financial services company serving businesses, consumers and governments in Hawaii, American Samoa and the West Pacific. The Company's principal subsidiary, Bank of Hawaii, was founded in 1897 and is the largest independent financial institution in Hawaii. For more information about Bank of Hawaii Corporation, see the Company's web site, www.boh.com.
Bank of Hawaii Corporation and Subsidiaries Highlights (Unaudited) Table 1 ---------------------------------------------------------------------- Three Months Ended --------------------------------------- September 30, June 30, September 30, (dollars in thousands, except per share amounts) 2006 2006 2005 ---------------------------------------------------------------------- For the Period: Interest Income $ 146,960 $ 140,769 $ 129,234 Net Interest Income 100,350 99,856 101,960 Net Income 46,920 37,176 44,829 Basic Earnings Per Share 0.95 0.74 0.87 Diluted Earnings Per Share 0.93 0.73 0.85 Dividends Declared Per Share 0.37 0.37 0.33 Net Income to Average Total Assets (ROA) 1.81 % 1.47 % 1.74 % Net Income to Average Shareholders' Equity (ROE) 27.09 21.70 24.61 Net Interest Margin (1) 4.20 4.25 4.30 Efficiency Ratio (2) 50.75 51.45 53.72 Average Assets $10,309,314 $10,169,341 $10,196,047 Average Loans and Leases 6,470,862 6,317,623 6,170,302 Average Deposits 7,731,993 7,728,227 7,833,638 Average Shareholders' Equity 687,172 687,083 722,758 Average Shareholders' Equity to Average Assets 6.67 % 6.76 % 7.09 % Market Price Per Share of Common Stock: Closing $ 48.16 $ 49.60 $ 49.22 High 50.75 54.51 54.44 Low 47.00 48.33 47.44 Nine Months Ended -------------------------- September 30, (dollars in thousands, except per share amounts) 2006 2005 --------------------------------------------------------------------- For the Period: Interest Income $ 423,132 $ 373,497 Net Interest Income 302,408 303,657 Net Income 129,446 136,780 Basic Earnings Per Share 2.58 2.62 Diluted Earnings Per Share 2.53 2.55 Dividends Declared Per Share 1.11 0.99 Net Income to Average Total Assets (ROA) 1.70 % 1.83 % Net Income to Average Shareholders' Equity (ROE) 24.99 24.72 Net Interest Margin (1) 4.29 4.36 Efficiency Ratio (2) 51.47 52.90 Average Assets $10,190,904 $10,004,968 Average Loans and Leases 6,324,454 6,087,629 Average Deposits 7,734,242 7,756,789 Average Shareholders' Equity 692,643 739,721 Average Shareholders' Equity to Average Assets 6.80 % 7.39 % Market Price Per Share of Common Stock: Closing $ 48.16 $ 49.22 High 55.15 54.44 Low 47.00 43.82 September 30, June 30, September 30, 2006 2006 2005 (3) --------------------------------------------------------------------- At Period End: Net Loans and Leases $ 6,398,262 $ 6,350,590 $ 6,110,892 Total Assets 10,371,215 10,325,190 10,085,235 Deposits 7,687,123 7,766,033 7,756,586 Long-Term Debt 265,268 242,749 242,692 Shareholders' Equity 683,472 666,728 696,311 Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.40 % 1.41 % 1.48 % Dividend Payout Ratio (4) 38.95 50.00 37.93 Leverage Capital Ratio 6.90 7.09 6.98 Book Value Per Common Share $ 13.72 $ 13.18 $ 13.58 Full-Time Equivalent Employees 2,589 2,563 2,591 Branches and Offices 86 86 85 (1) The net interest margin is defined as net interest income, on a fully-taxable equivalent basis, as a percentage of average earning assets. (2) The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income). (3) Certain prior period information has been reclassified to conform to current presentation. (4) Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share for the quarter.
Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) Table 2 ---------------------------------------------------------------------- Three Months Ended September 30, June 30, September 30, (dollars in thousands, except per share amounts) 2006 2006 2005 ---------------------------------------------------------------------- Interest Income Interest and Fees on Loans and Leases $ 110,065 $ 104,388 $ 94,381 Income on Investment Securities - Available-for- Sale 31,949 31,226 28,482 Income on Investment Securities - Held-to- Maturity 4,558 4,658 5,109 Deposits 50 55 57 Funds Sold 66 170 935 Other 272 272 270 ---------------------------------------------------------------------- Total Interest Income 146,960 140,769 129,234 ---------------------------------------------------------------------- Interest Expense Deposits 28,464 24,656 15,766 Securities Sold Under Agreements to Repurchase 11,959 9,802 6,796 Funds Purchased 2,270 2,652 901 Short-Term Borrowings 82 73 50 Long-Term Debt 3,835 3,730 3,761 ---------------------------------------------------------------------- Total Interest Expense 46,610 40,913 27,274 ---------------------------------------------------------------------- Net Interest Income 100,350 99,856 101,960 Provision for Credit Losses 2,785 2,069 3,000 ---------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 97,565 97,787 98,960 ---------------------------------------------------------------------- Noninterest Income Trust and Asset Management 14,406 14,537 14,052 Mortgage Banking 2,394 2,569 2,618 Service Charges on Deposit Accounts 10,723 9,695 10,046 Fees, Exchange, and Other Service Charges 16,266 15,633 15,394 Investment Securities Gains, Net 19 - 8 Insurance 6,713 4,691 5,324 Other 6,366 6,076 8,074 ---------------------------------------------------------------------- Total Noninterest Income 56,887 53,201 55,516 ---------------------------------------------------------------------- Noninterest Expense Salaries and Benefits 43,133 44,811 44,366 Net Occupancy 9,998 9,376 9,896 Net Equipment 5,285 4,802 5,335 Professional Fees 2,638 2,589 5,689 Other 18,751 17,164 19,310 ---------------------------------------------------------------------- Total Noninterest Expense 79,805 78,742 84,596 ---------------------------------------------------------------------- Income Before Provision for Income Taxes 74,647 72,246 69,880 Provision for Income Taxes 27,727 35,070 25,051 ---------------------------------------------------------------------- Net Income $ 46,920 $ 37,176 $ 44,829 ====================================================================== Basic Earnings Per Share $ 0.95 $ 0.74 $ 0.87 Diluted Earnings Per Share $ 0.93 $ 0.73 $ 0.85 Dividends Declared Per Share $ 0.37 $ 0.37 $ 0.33 Basic Weighted Average Shares 49,586,947 50,181,817 51,385,840 Diluted Weighted Average Shares 50,506,267 51,217,281 52,844,961 ====================================================================== Nine Months Ended September 30, (dollars in thousands, except per share amounts) 2006 2005 ---------------------------------------------------------------------- Interest Income Interest and Fees on Loans and Leases $ 313,824 $ 270,967 Income on Investment Securities - Available-for-Sale 94,010 83,788 Income on Investment Securities - Held- to-Maturity 13,973 16,461 Deposits 148 116 Funds Sold 361 1,175 Other 816 990 ---------------------------------------------------------------------- Total Interest Income 423,132 373,497 ---------------------------------------------------------------------- Interest Expense Deposits 72,753 40,947 Securities Sold Under Agreements to Repurchase 29,651 14,683 Funds Purchased 6,815 2,785 Short-Term Borrowings 212 127 Long-Term Debt 11,293 11,298 ---------------------------------------------------------------------- Total Interest Expense 120,724 69,840 ---------------------------------------------------------------------- Net Interest Income 302,408 303,657 Provision for Credit Losses 7,615 3,000 ---------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 294,793 300,657 ---------------------------------------------------------------------- Noninterest Income Trust and Asset Management 43,791 42,732 Mortgage Banking 7,950 7,802 Service Charges on Deposit Accounts 30,550 29,794 Fees, Exchange, and Other Service Charges 46,666 44,441 Investment Securities Gains, Net 19 345 Insurance 16,423 15,442 Other 17,261 17,949 ---------------------------------------------------------------------- Total Noninterest Income 162,660 158,505 ---------------------------------------------------------------------- Noninterest Expense Salaries and Benefits 133,730 132,991 Net Occupancy 29,017 28,630 Net Equipment 15,115 16,183 Professional Fees 5,665 11,645 Other 55,838 55,014 ---------------------------------------------------------------------- Total Noninterest Expense 239,365 244,463 ---------------------------------------------------------------------- Income Before Provision for Income Taxes 218,088 214,699 Provision for Income Taxes 88,642 77,919 ---------------------------------------------------------------------- Net Income $ 129,446 $ 136,780 ====================================================================== Basic Earnings Per Share $ 2.58 $ 2.62 Diluted Earnings Per Share $ 2.53 $ 2.55 Dividends Declared Per Share $ 1.11 $ 0.99 Basic Weighted Average Shares 50,180,280 52,221,345 Diluted Weighted Average Shares 51,226,763 53,745,612 ======================================================================
Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Condition (Unaudited) Table 3 ---------------------------------------------------------------------- September 30, June 30, (dollars in thousands) 2006 2006 ---------------------------------------------------------------------- Assets Interest-Bearing Deposits $ 5,238 $ 4,145 Funds Sold - - Investment Securities - Available-for-Sale Held in Portfolio 1,973,719 2,177,220 Pledged as Collateral 678,914 334,947 Investment Securities - Held-to-Maturity (Fair Value of $385,891; $408,203; $442,989; and $475,884) 397,520 426,910 Loans Held for Sale 15,336 15,506 Loans and Leases 6,489,057 6,441,625 Allowance for Loan and Lease Losses (90,795) (91,035) ---------------------------------------------------------------------- Net Loans and Leases 6,398,262 6,350,590 ---------------------------------------------------------------------- Total Earning Assets 9,468,989 9,309,318 ---------------------------------------------------------------------- Cash and Noninterest-Bearing Deposits 283,621 397,061 Premises and Equipment 127,521 130,435 Customers' Acceptances 673 646 Accrued Interest Receivable 49,339 45,343 Foreclosed Real Estate 409 188 Mortgage Servicing Rights 18,995 18,750 Goodwill 34,959 34,959 Other Assets 386,709 388,490 ---------------------------------------------------------------------- Total Assets $10,371,215 $10,325,190 ====================================================================== Liabilities Deposits Noninterest-Bearing Demand $ 1,879,644 $ 1,976,051 Interest-Bearing Demand 1,608,774 1,602,914 Savings 2,596,940 2,691,029 Time 1,601,765 1,496,039 ---------------------------------------------------------------------- Total Deposits 7,687,123 7,766,033 ---------------------------------------------------------------------- Funds Purchased 160,600 353,700 Short-Term Borrowings 11,290 12,100 Securities Sold Under Agreements to Repurchase 1,099,260 835,563 Long-Term Debt 265,268 242,749 Banker's Acceptances 673 646 Retirement Benefits Payable 72,651 72,192 Accrued Interest Payable 18,659 13,023 Taxes Payable and Deferred Taxes 280,611 274,146 Other Liabilities 91,608 88,310 ---------------------------------------------------------------------- Total Liabilities 9,687,743 9,658,462 ---------------------------------------------------------------------- Shareholders' Equity Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: September 2006 - 56,848,799 / 49,809,709; June 2006 - 56,855,346 / 50,570,697; December 2005 - 56,827,483 / 51,276,286; and September 2005 - 81,722,233 / 51,282,537 566 566 Capital Surplus 471,908 469,461 Accumulated Other Comprehensive Loss (49,422) (76,204) Retained Earnings 605,976 581,406 Deferred Stock Grants - - Treasury Stock, at Cost (Shares: September 2006 - 7,039,090; June 2006 - 6,284,649; December 2005 - 5,551,197; and September 2005 - 30,439,696) (345,556) (308,501) ---------------------------------------------------------------------- Total Shareholders' Equity 683,472 666,728 ---------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $10,371,215 $10,325,190 ====================================================================== December 31, September 30, (dollars in thousands) 2005 2005 ---------------------------------------------------------------------- Assets Interest-Bearing Deposits $ 4,893 $ 10,119 Funds Sold - 10,000 Investment Securities - Available-for-Sale Held in Portfolio 2,333,417 2,381,462 Pledged as Collateral 204,798 172,500 Investment Securities - Held-to-Maturity (Fair Value of $385,891; $408,203; $442,989; and $475,884) 454,240 485,041 Loans Held for Sale 17,915 18,095 Loans and Leases 6,168,536 6,202,546 Allowance for Loan and Lease Losses (91,090) (91,654) ---------------------------------------------------------------------- Net Loans and Leases 6,077,446 6,110,892 ---------------------------------------------------------------------- Total Earning Assets 9,092,709 9,188,109 ---------------------------------------------------------------------- Cash and Noninterest-Bearing Deposits 493,825 296,152 Premises and Equipment 133,913 135,952 Customers' Acceptances 1,056 1,081 Accrued Interest Receivable 43,033 40,898 Foreclosed Real Estate 358 413 Mortgage Servicing Rights 18,010 18,049 Goodwill 34,959 34,959 Other Assets 369,175 369,622 ---------------------------------------------------------------------- Total Assets $10,187,038 $10,085,235 ====================================================================== Liabilities Deposits Noninterest-Bearing Demand $ 2,134,916 $ 1,890,904 Interest-Bearing Demand 1,678,454 1,716,306 Savings 2,819,258 2,880,066 Time 1,274,840 1,269,310 ---------------------------------------------------------------------- Total Deposits 7,907,468 7,756,586 ---------------------------------------------------------------------- Funds Purchased 268,110 172,365 Short-Term Borrowings 9,447 8,537 Securities Sold Under Agreements to Repurchase 609,380 756,407 Long-Term Debt 242,703 242,692 Banker's Acceptances 1,056 1,081 Retirement Benefits Payable 71,116 67,136 Accrued Interest Payable 10,910 9,416 Taxes Payable and Deferred Taxes 269,094 276,678 Other Liabilities 104,402 98,026 ---------------------------------------------------------------------- Total Liabilities 9,493,686 9,388,924 ---------------------------------------------------------------------- Shareholders' Equity Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: September 2006 - 56,848,799 / 49,809,709; June 2006 - 56,855,346 / 50,570,697; December 2005 - 56,827,483 / 51,276,286; and September 2005 - 81,722,233 / 51,282,537 565 815 Capital Surplus 473,338 463,084 Accumulated Other Comprehensive Loss (47,818) (34,697) Retained Earnings 546,591 1,366,058 Deferred Stock Grants (11,080) (5,974) Treasury Stock, at Cost (Shares: September 2006 - 7,039,090; June 2006 - 6,284,649; December 2005 - 5,551,197; and September 2005 - 30,439,696) (268,244) (1,092,975) ---------------------------------------------------------------------- Total Shareholders' Equity 693,352 696,311 ---------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $10,187,038 $10,085,235 ======================================================================
Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Shareholders' Equity (Unaudited) Table 4 ---------------------------------------------------------------------- Accum. Other Compre- Common Capital hensive (dollars in thousands) Total Stock Surplus Loss ---------------------------------------------------------------------- Balance at December 31, 2005 $ 693,352 $ 565 $ 473,338 $ (47,818) Comprehensive Income: Net Income 129,446 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - Available-for- Sale (1,604) - - (1,604) Total Comprehensive Income Common Stock Issued under Share- Based Compensation Plans and Related Tax Benefits (730,432 shares) 30,766 1 (1,430) - Common Stock Repurchased (2,194,534 shares) (112,191) - - - Cash Dividends Paid (56,297) - - - ---------------------------------------------------------------------- Balance at September 30, 2006 $ 683,472 $ 566 $ 471,908 $ (49,422) ====================================================================== Balance at December 31, 2004 $ 814,834 $ 813 $ 450,998 $ (12,917) Comprehensive Income: Net Income 136,780 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - Available-for- Sale (21,780) - - (21,780) Total Comprehensive Income Common Stock Issued under Share- Based Compensation Plans and Related Tax Benefits (803,278 shares) 33,268 2 12,086 - Common Stock Repurchased (4,478,932 shares) (214,997) - - - Cash Dividends Paid (51,794) - - - ---------------------------------------------------------------------- Balance at September 30, 2005 $ 696,311 $ 815 $ 463,084 $ (34,697) ====================================================================== Deferred Compre- Retained Stock Treasury hensive (dollars in thousands) Earnings Grants Stock Income ---------------------------------------------------------------------- Balance at December 31, 2005 $ 546,591 $ (11,080)$ (268,244) Comprehensive Income: Net Income 129,446 - - $ 129,446 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - Available-for-Sale - - - (1,604) ---------- Total Comprehensive Income $ 127,842 ========== Common Stock Issued under Share-Based Compensation Plans and Related Tax Benefits (730,432 shares) (13,764) 11,080 34,879 Common Stock Repurchased (2,194,534 shares) - - (112,191) Cash Dividends Paid (56,297) - - ------------------------------------------------------------ Balance at September 30, 2006 $ 605,976 $ - $ (345,556) ============================================================ Balance at December 31, 2004 $1,282,425 $ (8,433)$ (898,052) Comprehensive Income: Net Income 136,780 - - $ 136,780 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - Available-for-Sale - - - (21,780) ---------- Total Comprehensive Income $ 115,000 ========== Common Stock Issued under Share-Based Compensation Plans and Related Tax Benefits (803,278 shares) (1,353) 2,459 20,074 Common Stock Repurchased (4,478,932 shares) - - (214,997) Cash Dividends Paid (51,794) - - ------------------------------------------------------------ Balance at September 30, 2005 $1,366,058 $ (5,974)$(1,092,975) ============================================================
Bank of Hawaii Corporation and Subsidiaries Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited) Table 5 ---------------------------------------------------------------------- Three Months Ended Three Months Ended September 30, 2006 June 30, 2006 (1) Average Income/ Yield/ Average Income/ Yield/ (dollars in Balance Expense Rate Balance Expense Rate millions) ---------------------------------------------------------------------- Earning Assets Interest-Bearing Deposits $ 4.9 $ 0.1 4.12 % $ 5.7 $ 0.1 3.82 % Funds Sold 5.1 0.1 5.16 13.9 0.2 4.89 Investment Securities Available-for-Sale 2,583.0 32.1 4.97 2,564.2 31.4 4.90 Held-to-Maturity 413.3 4.5 4.41 429.5 4.6 4.34 Loans Held for Sale 8.1 0.1 6.43 8.9 0.1 6.25 Loans and Leases(2) Commercial and Industrial 1,024.3 19.3 7.46 967.5 17.6 7.29 Construction 232.2 4.9 8.30 176.7 3.5 8.08 Commercial Mortgage 614.0 10.5 6.77 598.8 9.9 6.66 Residential Mortgage 2,454.6 36.8 6.01 2,449.1 36.4 5.94 Other Revolving Credit and Installment 705.6 16.4 9.21 718.0 16.3 9.10 Home Equity 937.2 17.9 7.59 912.8 16.8 7.39 Lease Financing 503.0 4.1 3.27 494.7 3.7 2.99 ---------------------------------------------------------------------- Total Loans and Leases 6,470.9 109.9 6.76 6,317.6 104.2 6.61 ---------------------------------------------------------------------- Other 79.4 0.3 1.37 79.4 0.3 1.37 ---------------------------------------------------------------------- Total Earning Assets(3) 9,564.7 147.1 6.13 9,419.2 140.9 5.99 ---------------------------------------------------------------------- Cash and Noninterest-Bearing Deposits 296.5 304.3 Other Assets 448.1 445.8 ---------- ----------- Total Assets $10,309.3 $10,169.3 ========== =========== Interest-Bearing Liabilities Interest-Bearing Deposits Demand $ 1,618.9 4.1 1.01 $ 1,611.7 3.9 0.97 Savings 2,641.4 10.6 1.59 2,699.0 9.4 1.39 Time 1,542.7 13.8 3.53 1,432.6 11.4 3.20 ---------------------------------------------------------------------- Total Interest- Bearing Deposits 5,803.0 28.5 1.95 5,743.3 24.7 1.72 ---------------------------------------------------------------------- Short-Term Borrowings 179.1 2.4 5.21 219.0 2.7 4.99 Securities Sold Under Agreements to Repurchase 1,005.8 11.9 4.69 855.9 9.8 4.57 Long-Term Debt 248.7 3.8 6.16 242.7 3.7 6.15 ---------------------------------------------------------------------- Total Interest- Bearing Liabilities 7,236.6 46.6 2.55 7,060.9 40.9 2.32 ---------------------------------------------------------------------- Net Interest Income $100.5 $100.0 ======= ======= Interest Rate Spread 3.58 % 3.67 % Net Interest Margin 4.20 % 4.25 Noninterest-Bearing Demand Deposits 1,929.0 1,984.9 Other Liabilities 456.5 436.4 Shareholders' Equity 687.2 687.1 ---------- ------------ Total Liabilities and Shareholders' Equity $10,309.3 $10,169.3 ========== ============ Three Months Ended Nine Months Ended September 30, 2005 (1) September 30, 2006 Average Income/ Yield/ Average Income/ Yield/ (dollars in Balance Expense Rate Balance Expense Rate millions) ---------------------------------------------------------------------- Earning Assets Interest-Bearing Deposits $ 6.4 $ 0.1 3.55 % $ 5.3 $ 0.1 3.74 % Funds Sold 105.7 0.9 3.51 10.0 0.4 4.83 Investment Securities Available-for-Sale 2,574.2 28.6 4.44 2,578.9 94.5 4.89 Held-to-Maturity 507.5 5.1 4.03 428.7 14.0 4.35 Loans Held for Sale 17.0 0.3 5.82 9.6 0.5 6.21 Loans and Leases(2) Commercial and Industrial 992.9 15.9 6.37 975.0 53.0 7.27 Construction 164.5 2.7 6.42 184.2 11.2 8.16 Commercial Mortgage 560.2 8.4 5.95 595.1 29.6 6.65 Residential Mortgage 2,352.3 33.7 5.73 2,442.2 108.7 5.93 Other Revolving Credit and Installment 744.0 15.9 8.50 716.3 48.6 9.07 Home Equity 858.7 13.0 6.02 914.9 50.2 7.33 Lease Financing 497.7 4.5 3.58 496.8 12.0 3.23 ---------------------------------------------------------------------- Total Loans and Leases 6,170.3 94.1 6.07 6,324.5 313.3 6.62 -------------------------------------- ------------------------ ----- Other 79.4 0.3 1.36 79.4 0.8 1.37 ---------------------------------------------------------------------- Total Earning Assets(3) 9,460.5 129.4 5.45 9,436.4 423.6 5.99 ---------------------------------------------------------------------- Cash and Noninterest- Bearing Deposits 316.1 310.7 Other Assets 419.4 443.8 ----------- ----------- Total Assets $10,196.0 $10,190.9 =========== =========== Interest-Bearing Liabilities Interest-Bearing Deposits Demand $ 1,730.7 2.9 0.66 $ 1,628.3 11.4 0.93 Savings 2,890.2 5.3 0.73 2,698.5 27.1 1.34 Time 1,241.9 7.6 2.42 1,429.1 34.3 3.20 ---------------------------------------------------------------------- Total Interest- Bearing Deposits 5,862.8 15.8 1.07 5,755.9 72.8 1.69 -------------------------------------- ------------------------ ----- Short-Term Borrowings 107.4 1.0 3.52 192.1 7.0 4.89 Securities Sold Under Agreements to Repurchase 845.8 6.7 3.18 878.8 29.6 4.49 Long-Term Debt 242.7 3.8 6.19 244.7 11.3 6.16 ---------------------------------------------------------------------- Total Interest- Bearing Liabilities 7,058.7 27.3 1.53 7,071.5 120.7 2.28 ---------------------------------------------------------------------- Net Interest Income $ 102.1 $302.9 ======== ======= Interest Rate Spread 3.92 % 3.71 % Net Interest Margin 4.30 % 4.29 % Noninterest-Bearing Demand Deposits 1,970.8 1,978.3 Other Liabilities 443.7 448.5 Shareholders' Equity 722.8 692.6 ----------- ----------- Total Liabilities and Shareholders' Equity $10,196.0 $10,190.9 =========== =========== (1) Certain prior period information has been reclassified to conform to current presentation. (2) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis. (3) Interest income includes a taxable-equivalent basis adjustment based upon a statutory tax rate of 35%.
Bank of Hawaii Corporation and Subsidiaries Analysis of Change in Net Interest Income - Taxable Equivalent Basis (Unaudited) Table 6 ---------------------------------------------------------------------- Three Months Ended September 30, 2006 Compared to June 30, 2006 (dollars in millions) Volume(1) Rate(1) Time(1) Total ---------------------------------------------------------------------- Change in Interest Income: Funds Sold $ (0.1) $ - $ - $ (0.1) Investment Securities Available-for-Sale 0.2 0.4 0.1 0.7 Held-to-Maturity (0.2) 0.1 - (0.1) Loans and Leases Commercial and Industrial 1.1 0.4 0.2 1.7 Construction 1.2 0.2 - 1.4 Commercial Mortgage 0.3 0.2 0.1 0.6 Residential Mortgage - 0.4 - 0.4 Other Revolving Credit and Installment (0.3) 0.2 0.2 0.1 Home Equity 0.4 0.5 0.2 1.1 Lease Financing 0.1 0.3 - 0.4 ---------------------------------------------------------------------- Total Loans and Leases 2.8 2.2 0.7 5.7 ---------------------------------------------------------------------- Total Change in Interest Income 2.7 2.7 0.8 6.2 ---------------------------------------------------------------------- Change in Interest Expense: Interest-Bearing Deposits Demand - 0.2 - 0.2 Savings (0.2) 1.3 0.1 1.2 Time 0.9 1.3 0.2 2.4 ---------------------------------------------------------------------- Total Interest-Bearing Deposits 0.7 2.8 0.3 3.8 ---------------------------------------------------------------------- Short-Term Borrowings (0.4) 0.1 - (0.3) Securities Sold Under Agreements to Repurchase 1.7 0.3 0.1 2.1 Long-Term Debt 0.1 - - 0.1 ---------------------------------------------------------------------- Total Change in Interest Expense 2.1 3.2 0.4 5.7 ---------------------------------------------------------------------- Change in Net Interest Income $ 0.6 $ (0.5) $ 0.4 $ 0.5 ====================================================================== (1) The changes for each category of interest income and expense are allocated between the portion of changes attributable to the variance in volume, rate or time for that category.
Bank of Hawaii Corporation and Subsidiaries Salaries and Benefits (Unaudited) Table 7 ---------------------------------------------------------------------- Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, (dollars in thousands) 2006 2006 2005 2006 2005 ---------------------------------------------------------------------- Salaries $27,829 $27,727 $27,652 $82,280 $80,521 Incentive Compensation 3,697 3,844 4,385 11,862 12,078 Share-Based Compensation 1,211 1,631 1,855 4,323 5,398 Commission Expense 1,721 1,833 1,864 5,476 6,397 Retirement and Other Benefits 4,454 4,833 4,512 14,522 13,717 Payroll Taxes 2,117 2,297 2,091 7,799 7,749 Medical, Dental, and Life Insurance 1,620 2,185 1,805 5,966 5,859 Separation Expense 484 461 202 1,502 1,272 ---------------------------------------------------------------------- Total Salaries and Benefits $43,133 $44,811 $44,366 $133,730 $132,991 ======================================================================
Bank of Hawaii Corporation and Subsidiaries Loan and Lease Portfolio Balances (Unaudited) Table 8 ---------------------------------------------------------------------- September 30, June 30, December 31, September 30, (dollars in thousands) 2006 2006 (1) 2005 (1) 2005 (1) ---------------------------------------------------------------------- Commercial Commercial and Industrial $ 994,531 $1,008,618 $ 918,842 $ 975,688 Commercial Mortgage 635,552 619,839 558,346 574,034 Construction 238,995 212,490 153,682 170,030 Lease Financing 489,183 475,549 470,155 468,378 ---------------------------------------------------------------------- Total Commercial 2,358,261 2,316,496 2,101,025 2,188,130 ---------------------------------------------------------------------- Consumer Residential Mortgage 2,464,240 2,457,867 2,417,523 2,370,391 Home Equity 942,743 929,386 888,075 871,771 Other Revolving Credit and Installment 701,759 714,617 736,364 745,149 Lease Financing 22,054 23,259 25,549 27,105 ---------------------------------------------------------------------- Total Consumer 4,130,796 4,125,129 4,067,511 4,014,416 ---------------------------------------------------------------------- Total Loans and Leases $6,489,057 $6,441,625 $ 6,168,536 $6,202,546 ====================================================================== Air Transportation Credit Exposure (2) (Unaudited) ---------------------------------------------------------------------- September 30, June 30, Sept. 30, 2006 2006 2005 ------------------------------------------------------- Unused Total Total Total (dollars in Outstanding Commitments Exposure Exposure Exposure thousands) ---------------------------------------------------------------------- Passenger Carriers Based In the United States $ 68,045 $ - $ 68,045 $ 68,213 $ 70,678 Passenger Carriers Based Outside the United States 19,475 - 19,475 19,542 21,573 Cargo Carriers 13,240 - 13,240 13,240 13,240 ---------------------------------------------------------------------- Total Air Transportation Credit Exposure $ 100,760 $ - $100,760 $100,995 $ 105,491 ====================================================================== (1) Certain prior period information has been reclassified to conform to current presentation. (2) Exposure includes loans, leveraged leases and operating leases.
Bank of Hawaii Corporation and Subsidiaries Consolidated Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More (Unaudited) Table 9 ---------------------------------------------------------------------- September 30, June 30, March 31, (dollars in thousands) 2006 2006 2006 ---------------------------------------------------------------------- Non-Performing Assets Non-Accrual Loans and Leases Commercial Commercial and Industrial $ 400 $ 227 $ 236 Commercial Mortgage 44 48 52 Lease Financing - - - ---------------------------------------------------------------------- Total Commercial 444 275 288 ---------------------------------------------------------------------- Consumer Residential Mortgage 4,253 4,628 4,922 Home Equity 254 204 38 ---------------------------------------------------------------------- Total Consumer 4,507 4,832 4,960 ---------------------------------------------------------------------- Total Non-Accrual Loans and Leases 4,951 5,107 5,248 ---------------------------------------------------------------------- Foreclosed Real Estate 409 188 358 Other Investments 82 82 300 ---------------------------------------------------------------------- Total Non-Performing Assets $ 5,442 $ 5,377 $ 5,906 ====================================================================== Accruing Loans and Leases Past Due 90 Days or More Residential Mortgage $ 882 $ 1,157 $ 464 Home Equity 62 86 85 Other Revolving Credit and Installment 2,044 1,561 1,390 Lease Financing - - 18 ---------------------------------------------------------------------- Total Accruing Loans and Leases Past Due 90 Days or More $ 2,988 $ 2,804 $ 1,957 ====================================================================== Total Loans and Leases $6,489,057 $6,441,625 $6,246,125 ====================================================================== Ratio of Non-Accrual Loans and Leases to Total Loans and Leases 0.08% 0.08% 0.08% ---------------------------------------------------------------------- Ratio of Non-Performing Assets to Total Loans and Leases, Foreclosed Real Estate and Other Investments 0.08% 0.08% 0.09% ---------------------------------------------------------------------- Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases 0.13% 0.13% 0.13% ---------------------------------------------------------------------- Quarter to Quarter Changes in Non- Performing Assets Balance at Beginning of Quarter $ 5,377 $ 5,906 $ 6,478 Additions 1,507 1,509 907 Reductions Payments (848) (1,347) (445) Return to Accrual (382) (260) (985) Sales of Foreclosed Assets (20) (99) - Charge-offs/Write-downs (192) (332) (49) ---------------------------------------------------------------------- Total Reductions (1,442) (2,038) (1,479) ---------------------------------------------------------------------- Balance at End of Quarter $ 5,442 $ 5,377 $ 5,906 ====================================================================== December 31, September 30, (dollars in thousands) 2005 (1) 2005 (1) ---------------------------------------------------------------------- Non-Performing Assets Non-Accrual Loans and Leases Commercial Commercial and Industrial $ 212 $ 471 Commercial Mortgage 130 1,617 Lease Financing - 4 ---------------------------------------------------------------------- Total Commercial 342 2,092 ---------------------------------------------------------------------- Consumer Residential Mortgage 5,439 5,021 Home Equity 39 41 ---------------------------------------------------------------------- Total Consumer 5,478 5,062 ---------------------------------------------------------------------- Total Non-Accrual Loans and Leases 5,820 7,154 ---------------------------------------------------------------------- Foreclosed Real Estate 358 413 Other Investments 300 683 ---------------------------------------------------------------------- Total Non-Performing Assets $ 6,478 $ 8,250 ====================================================================== Accruing Loans and Leases Past Due 90 Days or More Residential Mortgage $ 1,132 $ 1,545 Home Equity 185 83 Other Revolving Credit and Installment 1,504 1,479 Lease Financing 29 51 ---------------------------------------------------------------------- Total Accruing Loans and Leases Past Due 90 Days or More $ 2,850 $ 3,158 ====================================================================== Total Loans and Leases $6,168,536 $6,202,546 ====================================================================== Ratio of Non-Accrual Loans and Leases to Total Loans and Leases 0.09% 0.12% ---------------------------------------------------------------------- Ratio of Non-Performing Assets to Total Loans and Leases, Foreclosed Real Estate and Other Investments 0.11% 0.13% ---------------------------------------------------------------------- Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases 0.15% 0.18% ---------------------------------------------------------------------- Quarter to Quarter Changes in Non- Performing Assets Balance at Beginning of Quarter $ 8,250 $ 10,920 Additions 1,191 919 Reductions Payments (2,345) (1,326) Return to Accrual (231) (2,007) Sales of Foreclosed Assets (122) - Charge-offs/Write-downs (265) (256) ---------------------------------------------------------------------- Total Reductions (2,963) (3,589) ---------------------------------------------------------------------- Balance at End of Quarter $ 6,478 $ 8,250 ====================================================================== (1) Certain prior period information has been reclassified to conform to current presentation.
Bank of Hawaii Corporation and Subsidiaries Consolidated Reserve for Credit Losses (Unaudited) Table 10 ---------------------------------------------------------------------- Three Months Ended September 30, June 30, September 30, (dollars in thousands) 2006 2006 2005 ---------------------------------------------------------------------- Balance at Beginning of Period $ 96,167 $ 96,167 $ 106,163 Loans and Leases Charged-Off Commercial Commercial and Industrial (593) (677) (620) Lease Financing - - (10,049) Consumer Residential Mortgage - (29) (130) Home Equity (211) (86) (26) Other Revolving Credit and Installment (3,982) (4,467) (4,488) Lease Financing (18) - (6) ---------------------------------------------------------------------- Total Loans and Leases Charged-Off (4,804) (5,259) (15,319) ---------------------------------------------------------------------- Recoveries on Loans and Leases Previously Charged-Off Commercial Commercial and Industrial 325 1,445 528 Commercial Mortgage 84 335 146 Lease Financing 1 - - Consumer Residential Mortgage 223 119 190 Home Equity 120 127 130 Other Revolving Credit and Installment 1,250 1,158 1,322 Lease Financing 16 6 7 ---------------------------------------------------------------------- Total Recoveries on Loans and Leases Previously Charged-Off 2,019 3,190 2,323 ---------------------------------------------------------------------- Net Loan and Lease Charge-Offs (2,785) (2,069) (12,996) Provision for Credit Losses 2,785 2,069 3,000 ---------------------------------------------------------------------- Balance at End of Period (1) $ 96,167 $ 96,167 $ 96,167 ====================================================================== Components Allowance for Loan and Lease Losses $ 90,795 $ 91,035 $ 91,654 Reserve for Unfunded Commitments 5,372 5,132 4,513 ---------------------------------------------------------------------- Total Reserve for Credit Losses $ 96,167 $ 96,167 $ 96,167 ====================================================================== Average Loans and Leases Outstanding $ 6,470,862 $6,317,623 $ 6,170,302 ====================================================================== Ratio of Net Loan and Lease Charge-Offs to Average Loans and Leases Outstanding (annualized) 0.17% 0.13% 0.84% Ratio of Allowance for Loans and Lease Losses to Loans and Leases Outstanding 1.40% 1.41% 1.48% Nine Months Ended September 30, (dollars in thousands) 2006 2005 ---------------------------------------------------------------------- Balance at Beginning of Period $ 96,167 $ 113,596 Loans and Leases Charged-Off Commercial Commercial and Industrial (1,653) (1,775) Lease Financing - (10,049) Consumer Residential Mortgage (39) (512) Home Equity (438) (723) Other Revolving Credit and Installment (12,703) (13,617) Lease Financing (30) (69) ---------------------------------------------------------------------- Total Loans and Leases Charged-Off (14,863) (26,745) ---------------------------------------------------------------------- Recoveries on Loans and Leases Previously Charged-Off Commercial Commercial and Industrial 2,064 1,281 Commercial Mortgage 509 240 Lease Financing 1 162 Consumer Residential Mortgage 464 485 Home Equity 308 315 Other Revolving Credit and Installment 3,870 3,775 Lease Financing 32 58 ---------------------------------------------------------------------- Total Recoveries on Loans and Leases Previously Charged-Off 7,248 6,316 ---------------------------------------------------------------------- Net Loan and Lease Charge-Offs (7,615) (20,429) Provision for Credit Losses 7,615 3,000 ---------------------------------------------------------------------- Balance at End of Period (1) $ 96,167 $ 96,167 ====================================================================== Components Allowance for Loan and Lease Losses $ 90,795 $ 91,654 Reserve for Unfunded Commitments 5,372 4,513 ---------------------------------------------------------------------- Total Reserve for Credit Losses $ 96,167 $ 96,167 ====================================================================== Average Loans and Leases Outstanding $6,324,454 $6,087,629 ====================================================================== Ratio of Net Loan and Lease Charge-Offs to Average Loans and Leases Outstanding (annualized) 0.16% 0.45% Ratio of Allowance for Loans and Lease Losses to Loans and Leases Outstanding 1.40% 1.48% (1) Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.
Bank of Hawaii Corporation and Subsidiaries Business Segment Selected Financial Information (Unaudited) Table 11a ---------------------------------------------------------------------- Investment Treasury (dollars in Retail Commercial Services and Other Consolidated thousands) Banking Banking Group Corporate Total ---------------------------------------------------------------------- Three Months Ended September 30, 2006 Net Interest Income $ 59,397 $ 33,996 $ 4,293 $ 2,664 $ 100,350 Provision for Credit Losses 2,609 480 - (304) 2,785 ---------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 56,788 33,516 4,293 2,968 97,565 Noninterest Income 25,243 11,929 17,344 2,371 56,887 Noninterest Expense (43,030) (19,739) (15,432) (1,604) (79,805) ---------------------------------------------------------------------- Income Before Provision for Income Taxes 39,001 25,706 6,205 3,735 74,647 Provision for Income Taxes (14,430) (9,682) (2,296) (1,319) (27,727) ---------------------------------------------------------------------- Allocated Net Income 24,571 16,024 3,909 2,416 46,920 ---------------------------------------------------------------------- Allowance Funding Value (202) (660) (9) 871 - Provision for Credit Losses 2,609 480 - (304) 2,785 Economic Provision (3,105) (2,158) (98) - (5,361) Tax Effect of Adjustments 258 865 40 (210) 953 ---------------------------------------------------------------------- Income Before Capital Charge 24,131 14,551 3,842 2,773 45,297 Capital Charge (5,425) (3,914) (1,511) (8,048) (18,898) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $ 18,706 $ 10,637 $ 2,331 $ (5,275)$ 26,399 ====================================================================== RAROC (ROE for the Company) 49% 41% 28% 7% 27% ====================================================================== Total Assets at September 30, 2006 $3,931,334 $2,692,163 $219,715 $3,528,003 $10,371,215 ====================================================================== Three Months Ended September 30, 2005 (1) Net Interest Income $ 56,537 $ 34,602 $ 4,651 $ 6,170 $ 101,960 Provision for Credit Losses 2,946 10,564 - (10,510) 3,000 ---------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 53,591 24,038 4,651 16,680 98,960 Noninterest Income 24,136 12,329 16,611 2,440 55,516 Noninterest Expense (43,068) (20,155) (19,002) (2,371) (84,596) ---------------------------------------------------------------------- Income Before Provision for Income Taxes 34,659 16,212 2,260 16,749 69,880 Provision for Income Taxes (12,954) (5,974) (836) (5,287) (25,051) ---------------------------------------------------------------------- Allocated Net Income 21,705 10,238 1,424 11,462 44,829 ---------------------------------------------------------------------- Allowance Funding Value (178) (586) (5) 769 - Provision for Credit Losses 2,946 10,564 - (10,510) 3,000 Economic Provision (3,364) (2,409) (106) (1) (5,880) Tax Effect of Adjustments 221 (2,800) 41 3,604 1,066 ---------------------------------------------------------------------- Income Before Capital Charge 21,330 15,007 1,354 5,324 43,015 Capital Charge (5,481) (4,529) (1,751) (8,114) (19,875) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $ 15,849 $ 10,478 $ (397)$ (2,790)$ 23,140 ====================================================================== RAROC (ROE for the Company) 42% 36% 8% 16% 25% ====================================================================== Total Assets at September 30, 2005 $3,830,473 $2,512,802 $209,222 $3,532,738 $10,085,235 ====================================================================== (1) Certain prior period information has been reclassified to conform to current presentation.
Bank of Hawaii Corporation and Subsidiaries Business Segment Selected Financial Information (Unaudited) Table 11b ---------------------------------------------------------------------- Investment Treasury (dollars in Retail Commercial Services and Other Consolidated thousands) Banking Banking Group Corporate Total ---------------------------------------------------------------------- Nine Months Ended September 30, 2006 Net Interest Income $ 175,788 $ 100,725 $ 13,175 $ 12,720 $ 302,408 Provision for Credit Losses 6,965 1,218 999 (1,567) 7,615 ---------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 168,823 99,507 12,176 14,287 294,793 Noninterest Income 74,149 28,242 52,651 7,618 162,660 Noninterest Expense (126,851) (58,892) (48,886) (4,736) (239,365) ---------------------------------------------------------------------- Income Before Provision for Income Taxes 116,121 68,857 15,941 17,169 218,088 Provision for Income Taxes (42,965) (34,263) (5,889) (5,525) (88,642) ---------------------------------------------------------------------- Allocated Net Income 73,156 34,594 10,052 11,644 129,446 ---------------------------------------------------------------------- Allowance Funding Value (589) (1,809) (25) 2,423 - Provision for Credit Losses 6,965 1,218 999 (1,567) 7,615 Economic Provision (9,341) (6,628) (286) (1) (16,256) Tax Effect of Adjustments 1,097 2,671 (254) (316) 3,198 ---------------------------------------------------------------------- Income Before Capital Charge 71,288 30,046 10,486 12,183 124,003 Capital Charge (16,257) (12,282) (4,727) (23,893) (57,159) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $ 55,031 $ 17,764 $ 5,759 $ (11,710)$ 66,844 ====================================================================== RAROC (ROE for the Company) 48% 27% 24% 12% 25% ====================================================================== Total Assets at September 30, 2006 $3,931,334 $2,692,163 $219,715 $3,528,003 $10,371,215 ====================================================================== Nine Months Ended September 30, 2005 (1) Net Interest Income $ 163,084 $ 102,305 $ 13,161 $ 25,107 $ 303,657 Provision for Credit Losses 9,962 11,216 (1) (18,177) 3,000 ---------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 153,122 91,089 13,162 43,284 300,657 Noninterest Income 70,742 29,285 51,493 6,985 158,505 Noninterest Expense (126,816) (58,457) (53,059) (6,131) (244,463) ---------------------------------------------------------------------- Income Before Provision for Income Taxes 97,048 61,917 11,596 44,138 214,699 Provision for Income Taxes (35,908) (22,949) (4,290) (14,772) (77,919) ---------------------------------------------------------------------- Allocated Net Income 61,140 38,968 7,306 29,366 136,780 ---------------------------------------------------------------------- Allowance Funding Value (509) (1,788) (17) 2,314 - Provision for Credit Losses 9,962 11,216 (1) (18,177) 3,000 Economic Provision (10,304) (7,295) (304) (2) (17,905) Tax Effect of Adjustments 315 (789) 119 5,871 5,516 ---------------------------------------------------------------------- Income Before Capital Charge 60,604 40,312 7,103 19,372 127,391 Capital Charge (16,206) (13,443) (4,959) (26,436) (61,044) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $ 44,398 $ 26,869 $ 2,144 $ (7,064)$ 66,347 ====================================================================== RAROC (ROE for the Company) 41% 33% 16% 16% 25% ====================================================================== Total Assets at September 30, 2005 $3,830,473 $2,512,802 $209,222 $3,532,738 $10,085,235 ====================================================================== (1) Certain prior period information has been reclassified to conform to current presentation.
Bank of Hawaii Corporation and Subsidiaries Quarterly Summary of Selected Consolidated Financial Data (Unaudited) Table 12 ---------------------------------------------------------------------- Three Months Ended (dollars in thousands, except September 30, June 30, March 31, per share amounts) 2006 2006 2006 ---------------------------------------------------------------------- Interest Income Interest and Fees on Loans and Leases $ 110,065 $ 104,388 $ 99,371 Income on Investment Securities - Available- for-Sale 31,949 31,226 30,835 Income on Investment Securities - Held-to- Maturity 4,558 4,658 4,757 Deposits 50 55 43 Funds Sold 66 170 125 Other 272 272 272 ---------------------------------------------------------------------- Total Interest Income 146,960 140,769 135,403 ---------------------------------------------------------------------- Interest Expense Deposits 28,464 24,656 19,633 Securities Sold Under Agreements to Repurchase 11,959 9,802 7,890 Funds Purchased 2,270 2,652 1,893 Short-Term Borrowings 82 73 57 Long-Term Debt 3,835 3,730 3,728 ---------------------------------------------------------------------- Total Interest Expense 46,610 40,913 33,201 ---------------------------------------------------------------------- Net Interest Income 100,350 99,856 102,202 Provision for Credit Losses 2,785 2,069 2,761 ---------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 97,565 97,787 99,441 ---------------------------------------------------------------------- Noninterest Income Trust and Asset Management 14,406 14,537 14,848 Mortgage Banking 2,394 2,569 2,987 Service Charges on Deposit Accounts 10,723 9,695 10,132 Fees, Exchange, and Other Service Charges 16,266 15,633 14,767 Investment Securities Gains (Losses), Net 19 - - Insurance 6,713 4,691 5,019 Other 6,366 6,076 4,819 ---------------------------------------------------------------------- Total Noninterest Income 56,887 53,201 52,572 ---------------------------------------------------------------------- Noninterest Expense Salaries and Benefits 43,133 44,811 45,786 Net Occupancy 9,998 9,376 9,643 Net Equipment 5,285 4,802 5,028 Professional Fees 2,638 2,589 438 Other 18,751 17,164 19,923 ---------------------------------------------------------------------- Total Noninterest Expense 79,805 78,742 80,818 ---------------------------------------------------------------------- Income Before Provision for Income Taxes 74,647 72,246 71,195 Provision for Income Taxes 27,727 35,070 25,845 ---------------------------------------------------------------------- Net Income $ 46,920 $ 37,176 $ 45,350 ====================================================================== Basic Earnings Per Share $ 0.95 $ 0.74 $ 0.89 Diluted Earnings Per Share $ 0.93 $ 0.73 $ 0.87 Balance Sheet Totals Total Assets $10,371,215 $10,325,190 $10,528,049 Net Loans and Leases 6,398,262 6,350,590 6,155,061 Total Deposits 7,687,123 7,766,033 8,147,101 Total Shareholders' Equity 683,472 666,728 681,078 Performance Ratios Net Income to Average Total Assets (ROA) 1.81 % 1.47 % 1.82 % Net Income to Average Shareholders' Equity (ROE) 27.09 21.70 26.13 Net Interest Margin (2) 4.20 4.25 4.41 Efficiency Ratio (3) 50.75 51.45 52.22 Three Months Ended (dollars in thousands, except per share December 31, September 30, amounts) 2005 (1) 2005 ---------------------------------------------------------------------- Interest Income Interest and Fees on Loans and Leases $ 97,697 $ 94,381 Income on Investment Securities - Available-for-Sale 29,820 28,482 Income on Investment Securities - Held- to-Maturity 4,899 5,109 Deposits 103 57 Funds Sold 154 935 Other 272 270 --------------------------------------------------------------------- Total Interest Income 132,945 129,234 --------------------------------------------------------------------- Interest Expense Deposits 17,479 15,766 Securities Sold Under Agreements to Repurchase 6,504 6,796 Funds Purchased 1,730 901 Short-Term Borrowings 61 50 Long-Term Debt 3,715 3,761 --------------------------------------------------------------------- Total Interest Expense 29,489 27,274 --------------------------------------------------------------------- Net Interest Income 103,456 101,960 Provision for Credit Losses 1,588 3,000 --------------------------------------------------------------------- Net Interest Income After Provision for Credit Losses 101,868 98,960 --------------------------------------------------------------------- Noninterest Income Trust and Asset Management 14,098 14,052 Mortgage Banking 2,597 2,618 Service Charges on Deposit Accounts 10,151 10,046 Fees, Exchange, and Other Service Charges 15,147 15,394 Investment Securities Gains (Losses), Net (4) 8 Insurance 4,201 5,324 Other 4,619 8,074 --------------------------------------------------------------------- Total Noninterest Income 50,809 55,516 --------------------------------------------------------------------- Noninterest Expense Salaries and Benefits 43,319 44,366 Net Occupancy 9,643 9,896 Net Equipment 5,358 5,335 Professional Fees 4,057 5,689 Other 20,802 19,310 --------------------------------------------------------------------- Total Noninterest Expense 83,179 84,596 --------------------------------------------------------------------- Income Before Provision for Income Taxes 69,498 69,880 Provision for Income Taxes 24,717 25,051 --------------------------------------------------------------------- Net Income $ 44,781 $ 44,829 ===================================================================== Basic Earnings Per Share $ 0.88 $ 0.87 Diluted Earnings Per Share $ 0.86 $ 0.85 Balance Sheet Totals Total Assets $10,187,038 $10,085,235 Net Loans and Leases 6,077,446 6,110,892 Total Deposits 7,907,468 7,756,586 Total Shareholders' Equity 693,352 696,311 Performance Ratios Net Income to Average Total Assets (ROA) 1.76 % 1.74 % Net Income to Average Shareholders' Equity (ROE) 25.19 24.61 Net Interest Margin (2) 4.43 4.30 Efficiency Ratio (3) 53.92 53.72 (1) Certain prior period information has been reclassified to conform to current presentation. (2) The net interest margin is defined as net interest income, on a fully-taxable equivalent basis, as a percentage of average earning assets. (3) The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
SOURCE: Bank of Hawaii Corporation
Bank of Hawaii Corporation
Stafford Kiguchi, 808-537-8580 (Media)
Mobile: 808-265-6367
skiguchi@boh.com
Cindy Wyrick, 808-537-8430 (Investors/Analysts)
cwyrick@boh.com