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Bank of Hawaii Corporation Third Quarter 2018 Financial Results
Supporting Materials:
  • Diluted Earnings Per Share $1.36
  • Net Income $56.9 Million
  • Board of Directors Declares Dividend of $0.62 Per Share

HONOLULU--(BUSINESS WIRE)--Oct. 22, 2018-- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $1.36 for the third quarter of 2018, up from $1.30 in the second quarter of 2018 and $1.08 in the third quarter of 2017. Net income for the third quarter of 2018 was $56.9 million, an increase of $2.2 million from net income of $54.7 million in the previous quarter and an increase of $11.0 million from net income of $45.9 million in the same quarter last year.

Loan and lease balances increased to $10.2 billion at September 30, 2018, up 1.8 percent from June 30, 2018 and up 6.9 percent compared with September 30, 2017. Deposits were $14.8 billion at the end of the third quarter of 2018, down slightly due to the planned decline in public deposits.

“We were pleased with Bank of Hawaii’s financial results during the third quarter of 2018,” said Peter S. Ho, Chairman, President, and CEO. “Loan balances continue to grow, deposits were in line with our expectations, our margin increased, asset quality remains strong, and our expenses were well controlled.”

The return on average assets for the third quarter of 2018 was 1.33 percent, up from 1.30 percent in the previous quarter and 1.07 percent in the same quarter last year. The return on average equity for the third quarter of 2018 was 18.06 percent, up from 17.68 percent for the second quarter of 2018 and up from 14.89 percent in the third quarter of 2017. The efficiency ratio for the third quarter of 2018 was 55.07 percent down from 56.12 percent in the previous quarter and 55.82 percent in the same quarter last year.

For the nine-month period ended September 30, 2018, net income was $165.7 million, an increase of $24.0 million from net income of $141.7 million for the same period last year. Diluted earnings per share were $3.93 for the nine-month period in 2018 compared with diluted earnings per share of $3.32 for the same period in 2017. The 2018 year-to-date return on average assets was 1.31 percent compared with 1.14 percent for the same period in 2017. The 2018 year-to-date return on average equity was 17.83 percent compared with 15.77 percent for the nine months ended September 30, 2017. The efficiency ratio for the nine-month period ended September 30, 2018 was 56.36 percent compared with 55.05 percent for the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the third quarter of 2018 was $124.2 million, an increase of $2.4 million from net interest income of $121.8 million in the second quarter of 2018 and an increase of $5.0 million from net interest income of $119.2 million in the third quarter of last year. Net interest income for the nine-month period in 2018 was $366.3 million, an increase of $18.8 million from net interest income of $347.5 million for the same period in 2017. Analyses of the changes in net interest income are included in Tables 8a, 8b, and 8c.

The net interest margin was 3.07 percent for the third quarter of 2018, an increase of 3 basis points from the net interest margin of 3.04 percent in the second quarter of 2018 and a 15 basis point increase from the net interest margin of 2.92 percent in the third quarter of 2017. The net interest margin for the first nine months of 2018 was 3.04 percent, an increase of 13 basis points compared with 2.91 percent for the same nine-month period last year.

Results for the third quarter of 2018 included a provision for credit losses of $3.8 million compared with a provision for credit losses of $3.5 million in the previous quarter and $4.0 million in the same quarter last year. The provision for credit losses during the first nine months of 2018 was $11.4 million compared with $12.7 million during the same period in 2017.

Noninterest income was $41.5 million in the third quarter of 2018, up $0.2 million from noninterest income of $41.3 million in the second quarter of 2018 and down $0.9 million from $42.4 million in the same quarter last year. There were no significant items in noninterest income during the third quarters of 2018 or 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. The decline in noninterest income compared to the third quarter of 2017 was largely due to a decline in mortgage banking income. Noninterest income for the nine-months ended September 30, 2018 was $126.8 million compared with noninterest income of $143.6 million for the same period in 2017. Results for the nine-month period in 2017 included a gain of $12.5 million on the sale of Visa Class B shares compared with a charge of $1.0 million for the adjustment to the conversions ratio in 2018. Excluding the Visa sale, the decrease from the previous year was primarily due to a decline in mortgage banking income.

Noninterest expense was $90.5 million in the third quarter of 2018, down $0.3 million from noninterest expense of $90.8 million in the previous quarter and up $1.9 million from $88.6 million in the same quarter last year. There were no significant items in noninterest expense during the third quarter or second quarter of 2018. Noninterest expense in the third quarter of 2017 included $2.1 million in severance which was partially offset by a reduction of $0.9 million in share-based compensation. Noninterest expense for the nine-months ended September 30, 2018 was $275.7 million compared with noninterest expense of $265.4 million for the same period in 2017. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The effective tax rate for the third quarter of 2018 was 18.75 percent compared with 18.94 percent in the previous quarter and 30.62 percent during the same quarter last year. The effective tax rate for the nine-month period ended September 30, 2018 was 18.00 percent compared with 30.54 percent for the same period last year. The lower effective tax rate in 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 Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services and Private Banking, and Treasury and Other. Results are determined based on the Company’s internal financial management reporting process and organizational structure. Selected financial information for the business segments is included in Tables 13a and 13b.

Asset Quality

The Company’s overall asset quality remained strong during the third quarter of 2018. Total non-performing assets were $13.8 million at September 30, 2018, down from $15.2 million at June 30, 2018 and $17.0 million at September 30, 2017. As a percentage of total loans and leases and foreclosed real estate, non-performing assets were 0.13 percent at September 30, 2018 compared with 0.15 percent at June 30, 2018 and 0.18 percent at September 30, 2017.

Accruing loans and leases past due 90 days or more were $8.1 million at September 30, 2018 compared with $13.3 million at June 30, 2018 and $6.7 million at September 30, 2017. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $49.5 million at September 30, 2018, down from $50.2 million at June 30, 2018 and $55.0 million at September 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 loans and leases charged off during the third 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 $6.0 million during the quarter were partially offset by recoveries of $2.7 million. Net charge-offs during the second quarter of 2018 were $3.3 million or 0.13 percent annualized of total average loans and leases outstanding and were comprised of $5.7 million in charge-offs partially offset by recoveries of $2.4 million. Net charge-offs during the third quarter of 2017 were $3.5 million or 0.15 percent annualized of total average loans and leases outstanding and were comprised of $6.2 million in charge-offs partially offset by recoveries of $2.7 million. Net charge-offs in the nine-month period ended September 30, 2018 were $10.1 million, or 0.14 percent annualized of total average loans and leases outstanding compared with net charge-offs of $10.0 million, or 0.15 percent annualized of total average loans and leases outstanding for the same period in 2017.

The allowance for loan and lease losses increased to $108.7 million at September 30, 2018 compared with $108.2 million at June 30, 2018 and $106.9 million at September 30, 2017. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.06 percent at September 30, 2018, a decrease of 2 basis points from the previous quarter and down 6 basis points from the end of the same quarter last year. The reserve for unfunded commitments at September 30, 2018 of $6.8 million was unchanged from June 30, 2018 and September 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 $17.0 billion at September 30, 2018, a decrease of $132.4 million from total assets of $17.1 billion at June 30, 2018 and $276.6 million from total assets of $17.3 billion at September 30, 2017. Average total assets were $17.0 billion during the third quarter of 2018 compared with $16.9 billion during the previous quarter and $17.0 billion during the same quarter last year.

The investment securities portfolio was $5.7 billion at September 30, 2018, an increase of $25.4 million from total securities of $5.7 billion at June 30, 2018 and a decrease of $569.1 million from total securities of $6.3 billion at September 30, 2017. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $3.7 billion in securities held to maturity and $2.0 billion in securities available for sale at September 30, 2018.

Total loans and leases were $10.2 billion at September 30, 2018, an increase of $177.7 million from total loans and leases of $10.1 billion at June 30, 2018 and $657.1 million from total loans and leases of $9.6 billion at September 30, 2017. Average total loans and leases were $10.1 billion during the third quarter of 2018 compared with $10.0 billion during the previous quarter and $9.5 billion during the same quarter last year. The commercial loan portfolio increased to $3.9 billion at the end of the third quarter of 2018, up from $3.8 billion at the end of the previous quarter and $3.7 billion at the end of the third quarter last year. Total consumer loans increased to $6.3 billion at the end of the third quarter of 2018, up from $6.2 billion at the end of the previous quarter and $5.8 billion at the end of the third quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $14.8 billion at September 30, 2018, a decrease of $100.0 million from total deposits of $14.9 billion at June 30, 2018 and $204.8 million from total deposits of $15.0 billion at September 30, 2017. Average total deposits were $14.8 billion during the third quarter of 2018 compared with $14.7 billion during the previous quarter and the same quarter last year. Consumer deposits were $7.6 billion at the end of the third quarter of 2018, down from $7.7 billion at the end of the previous quarter and up from $7.3 billion at the end of the same quarter last year. Commercial deposits were $6.0 billion at the end of the third quarter of 2018, up from $5.9 billion at the end of the previous quarter and down from $6.1 billion at the end of the same quarter last year. Other deposits, including public funds, were $1.2 billion at September 30, 2018, down from $1.3 billion at June 30, 2018 and $1.7 billion at September 30, 2017. Deposit balances are summarized in Tables 7 and 10.

During the third quarter of 2018, the Company repurchased 296.5 thousand shares of common stock at a total cost of $24.6 million under its share repurchase program. The average cost was $83.04 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through September 30, 2018, the Company has repurchased 54.9 million shares and returned over $2.1 billion to shareholders at an average cost of $38.92 per share. Remaining buyback authority under the share repurchase program was $56.7 million at September 30, 2018. From October 1 through October 19, 2018 the Company repurchased an additional 72.0 thousand shares of common stock at an average cost of $78.79 per share.

Total shareholders’ equity was $1.25 billion at September 30, 2018 up slightly from June 30, 2018 and up from $1.23 billion at September 30, 2017. The Tier 1 Capital Ratio was 13.19 percent at September 30, 2018 compared with 13.27 percent at June 30, 2018 and September 30, 2017. The Tier 1 leverage ratio at September 30, 2018 was 7.55 percent compared with 7.53 percent at June 30, 2018 and 7.24 percent at September 30, 2017.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.62 per share on the Company’s outstanding shares. The dividend will be payable on December 14, 2018 to shareholders of record at the close of business on November 30, 2018.

Hawaii Economy

General economic conditions in Hawaii remained positive during the third quarter of 2018. The statewide seasonally-adjusted unemployment rate continues to remain low at 2.2 percent in September 2018 compared to 3.7 percent nationally. Tourism continued to remain robust through the first eight months of 2018. Total visitor spending increased 8.8 percent compared to the same eight-month period in 2017 due to growth of 7.2 percent in visitor arrivals and an increase of 2.2 percent in daily spending. All four larger Hawaiian Islands saw growth in both visitor spending and visitor arrivals during the first eight months of 2018. The real estate market also remains strong. For the first nine months of 2018, the median sales price of a single-family home on Oahu increased 4.2 percent and the median price of a condominium on Oahu increased 5.5 percent compared with the same period in 2017. The volume of single-family home sales on Oahu decreased 3.7 percent and the volume of condominium sales on Oahu decreased 0.1 percent for the first nine months of 2018 compared to the same nine-month period in 2017. As of September 30, 2018, months of inventory of single-family homes and condominiums on Oahu were 2.8 months and 2.9 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its third 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 password “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, October 22, 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 2175919 when prompted. In addition, a replay will be available on the Company's website, www.boh.com.

Forward-Looking Statements

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

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

                           
Bank of Hawaii Corporation and Subsidiaries  
Financial Highlights     Table 1  
      Three Months Ended     Nine Months Ended  
      September 30,   June 30,     September 30,     September 30,  
(dollars in thousands, except per share amounts)       2018       2018       2017       2018       2017  

For the Period:

                               
Operating Results                                
Net Interest Income     $ 122,927     $ 120,496     $ 116,317     $ 362,379     $ 338,468  
Provision for Credit Losses       3,800       3,500       4,000       11,425       12,650  
Total Noninterest Income       41,482       41,298       42,410       126,815       143,562  
Total Noninterest Expense       90,538       90,791       88,598       275,713       265,355  
Net Income       56,933       54,718       45,881       165,691       141,719  
Basic Earnings Per Share       1.37       1.31       1.09       3.96       3.35  
Diluted Earnings Per Share       1.36       1.30       1.08       3.93       3.32  
Dividends Declared Per Share       0.60       0.60       0.52       1.72       1.52  
                                 
Performance Ratios                                
Return on Average Assets       1.33 %     1.30 %     1.07 %     1.31 %     1.14 %
Return on Average Shareholders' Equity       18.06       17.68       14.89       17.83       15.77  
Efficiency Ratio 1       55.07       56.12       55.82       56.36       55.05  
Net Interest Margin 2       3.07       3.04       2.92       3.04       2.91  
Dividend Payout Ratio 3       43.80       45.80       47.71       43.43       45.37  
Average Shareholders' Equity to Average Assets       7.35       7.34       7.21       7.32       7.22  
                                 
Average Balances                                
Average Loans and Leases     $ 10,081,886     $ 9,962,860     $ 9,451,972     $ 9,950,518     $ 9,231,615  
Average Assets       17,015,340       16,921,820       16,972,202       16,965,075       16,636,213  
Average Deposits       14,820,480       14,709,299       14,727,469       14,750,382       14,401,698  
Average Shareholders' Equity       1,250,500       1,241,672       1,222,885       1,242,629       1,201,850  
                                 
Per Share of Common Stock                                
Book Value     $ 29.98     $ 29.65     $ 28.88     $ 29.98     $ 28.88  
Tangible Book Value       29.22       28.90       28.14       29.22       28.14  
Market Value                                
Closing       78.91       83.42       83.36       78.91       83.36  
High       86.53       88.92       86.19       89.09       90.80  
Low       78.30       80.20       74.72       78.30       74.72  
                                 
            September 30,     June 30,     December 31,     September 30,  
              2018       2018       2017       2017  

As of Period End:

                               
Balance Sheet Totals                                
Loans and Leases           $ 10,231,062     $ 10,053,323     $ 9,796,947     $ 9,573,956  
Total Assets             16,991,734       17,124,162       17,089,052       17,268,302  
Total Deposits             14,843,335       14,943,358       14,883,968       15,048,160  
Other Debt             185,662       235,681       260,716       267,887  
Total Shareholders' Equity             1,253,327       1,247,717       1,231,868       1,227,893  
                                 
Asset Quality                                
Non-Performing Assets           $ 13,798     $ 15,157     $ 16,120     $ 17,035  
Allowance for Loan and Lease Losses             108,690       108,188       107,346       106,881  
Allowance to Loans and Leases Outstanding       1.06 %     1.08 %     1.10 %     1.12 %
                                 
Capital Ratios                                
Common Equity Tier 1 Capital Ratio             13.19 %     13.27 %     13.24 %     13.27 %
Tier 1 Capital Ratio             13.19       13.27       13.24       13.27  
Total Capital Ratio             14.38       14.47       14.46       14.51  
Tier 1 Leverage Ratio             7.55       7.53       7.26       7.24  
Total Shareholders' Equity to Total Assets       7.38       7.29       7.21       7.11  
Tangible Common Equity to Tangible Assets 4       7.20       7.12       7.04       6.94  
Tangible Common Equity to Risk-Weighted Assets 4       12.55       12.68       12.84       12.96  
                                 
Non-Financial Data                                
Full-Time Equivalent Employees             2,143       2,173       2,132       2,120  
Branches             69       69       69       69  
ATMs             382       385       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."

     
                   
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures   Table 2
      September 30,   June 30,   December 31,   September 30,
(dollars in thousands)     2018   2018   2017   2017
                   
Total Shareholders' Equity     $ 1,253,327     $ 1,247,717     $ 1,231,868     $ 1,227,893  
Less: Goodwill       31,517       31,517       31,517       31,517  
Tangible Common Equity     $ 1,221,810     $ 1,216,200     $ 1,200,351     $ 1,196,376  
                   
Total Assets     $ 16,991,734     $ 17,124,162     $ 17,089,052     $ 17,268,302  
Less: Goodwill       31,517       31,517       31,517       31,517  
Tangible Assets     $ 16,960,217     $ 17,092,645     $ 17,057,535     $ 17,236,785  
                   

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

    $ 9,732,618     $ 9,593,242     $ 9,348,296     $ 9,234,050  
                   
Total Shareholders' Equity to Total Assets       7.38 %     7.29 %     7.21 %     7.11 %
Tangible Common Equity to Tangible Assets (Non-GAAP)       7.20 %     7.12 %     7.04 %     6.94 %
                   
Tier 1 Capital Ratio       13.19 %     13.27 %     13.24 %     13.27 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP)       12.55 %     12.68 %     12.84 %     12.96 %
                   
                   
Note: Risk-Weighted Assets as of September 30, 2017 was revised from $9,233,969.
 
                   
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income     Table 3
      Three Months Ended     Nine Months Ended
      September 30,   June 30,   September 30,     September 30,
(dollars in thousands, except per share amounts)     2018   2018   2017     2018   2017
Interest Income                        
Interest and Fees on Loans and Leases     $ 104,248     $ 101,311     $ 94,621       $ 303,193     $ 273,467
Income on Investment Securities                        
Available-for-Sale       12,588       12,380       11,987         37,109       34,906
Held-to-Maturity       20,821       20,711       20,334         62,828       59,958
Deposits       10       (4 )     5         24       12
Funds Sold       1,393       846       1,579         2,996       3,165
Other       364       341       235         1,005       673
Total Interest Income       139,424       135,585       128,761         407,155       372,181
Interest Expense                        
Deposits       10,931       9,459       6,663         27,971       15,352
Securities Sold Under Agreements to Repurchase       4,667       4,617       4,664         13,848       14,928
Funds Purchased       33       83       -         169       42
Short-Term Borrowings       28       13       -         57       64
Other Debt       838       917       1,117         2,731       3,327
Total Interest Expense       16,497       15,089       12,444         44,776       33,713
Net Interest Income       122,927       120,496       116,317         362,379       338,468
Provision for Credit Losses       3,800       3,500       4,000         11,425       12,650
Net Interest Income After Provision for Credit Losses       119,127       116,996       112,317         350,954       325,818
Noninterest Income                        
Trust and Asset Management       10,782       11,356       11,050         33,319       34,325
Mortgage Banking       1,965       2,179       3,237         6,289       10,356
Service Charges on Deposit Accounts       7,255       6,865       8,188         21,249       24,522
Fees, Exchange, and Other Service Charges       14,173       14,400       13,764         42,906       41,061
Investment Securities Gains (Losses), Net       (729 )     (1,702 )     (566 )       (3,097 )     11,047
Annuity and Insurance       1,360       1,847       1,429         4,413       5,585
Bank-Owned Life Insurance       1,620       1,796       1,861         5,258       4,908
Other       5,056       4,557       3,447         16,478       11,758
Total Noninterest Income       41,482       41,298       42,410         126,815       143,562
Noninterest Expense                        
Salaries and Benefits       51,782       52,148       51,190         158,352       152,031
Net Occupancy       8,702       8,588       7,727         25,824       24,026
Net Equipment       6,116       5,845       5,417         17,488       16,624
Data Processing       4,241       4,563       3,882         12,695       11,173
Professional Fees       2,206       2,546       3,044         7,525       8,415
FDIC Insurance       2,057       2,182       2,107         6,396       6,413
Other       15,434       14,919       15,231         47,433       46,673
Total Noninterest Expense       90,538       90,791       88,598         275,713       265,355
Income Before Provision for Income Taxes       70,071       67,503       66,129         202,056       204,025
Provision for Income Taxes       13,138       12,785       20,248         36,365       62,306
Net Income     $ 56,933     $ 54,718     $ 45,881       $ 165,691     $ 141,719
Basic Earnings Per Share     $ 1.37     $ 1.31     $ 1.09       $ 3.96     $ 3.35
Diluted Earnings Per Share     $ 1.36     $ 1.30     $ 1.08       $ 3.93     $ 3.32
Dividends Declared Per Share     $ 0.60     $ 0.60     $ 0.52       $ 1.72     $ 1.52
Basic Weighted Average Shares       41,620,776       41,884,221       42,251,541         41,846,080       42,336,441
Diluted Weighted Average Shares       41,899,401       42,152,200       42,565,364         42,133,776       42,662,163
                         
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     Nine Months Ended
      September 30,   June 30,   September 30,     September 30,
(dollars in thousands)     2018   2018   2017     2018   2017
Net Income     $ 56,933     $ 54,718     $ 45,881     $ 165,691     $ 141,719
Other Comprehensive Income (Loss), Net of Tax:                        
Net Unrealized Gains (Losses) on Investment Securities       (5,599 )     (2,974 )     444       (17,694 )     8,444
Defined Benefit Plans       216       216       146       648       439
Other Comprehensive Income (Loss)       (5,383 )     (2,758 )     590       (17,046 )     8,883
Comprehensive Income     $ 51,550     $ 51,960     $ 46,471     $ 148,645     $ 150,602
                         
                   
Bank of Hawaii Corporation and Subsidiaries  

Consolidated Statements of Condition

Table 5

      September 30,   June 30,   December 31,   September 30,
(dollars in thousands)       2018     2018     2017     2017
Assets                  
Interest-Bearing Deposits in Other Banks     $ 3,725     $ 3,524     $ 3,421     $ 3,161  
Funds Sold       104,199       361,933       181,413       512,868  
Investment Securities                  
Available-for-Sale       2,049,687       2,092,870       2,232,979       2,322,668  
Held-to-Maturity (Fair Value of $3,549,235; $3,500,497; $3,894,121; and $3,960,956)       3,664,487       3,595,891       3,928,170       3,960,598  
Loans Held for Sale       18,063       16,025       19,231       9,752  
Loans and Leases       10,231,062       10,053,323       9,796,947       9,573,956  
Allowance for Loan and Lease Losses       (108,690 )     (108,188 )     (107,346 )     (106,881 )
Net Loans and Leases       10,122,372       9,945,135       9,689,601       9,467,075  
Total Earning Assets       15,962,533       16,015,378       16,054,815       16,276,122  
Cash and Due from Banks       227,049       312,303       263,017       245,487  
Premises and Equipment, Net       142,928       142,791       130,926       125,162  
Accrued Interest Receivable       54,839       50,594       50,485       51,526  
Foreclosed Real Estate       1,909       2,926       1,040       1,393  
Mortgage Servicing Rights       24,463       24,583       24,622       24,436  
Goodwill       31,517       31,517       31,517       31,517  
Bank-Owned Life Insurance       282,637       281,018       280,034       278,425  
Other Assets       263,859       263,052       252,596       234,234  
Total Assets     $ 16,991,734     $ 17,124,162     $ 17,089,052     $ 17,268,302  
                   
Liabilities                  
Deposits                  
Noninterest-Bearing Demand     $ 4,678,981     $ 4,729,203     $ 4,724,300     $ 4,825,643  
Interest-Bearing Demand       2,975,069       3,111,069       3,082,563       2,896,559  
Savings       5,444,053       5,389,763       5,389,013       5,363,866  
Time       1,745,232       1,713,323       1,688,092       1,962,092  
Total Deposits       14,843,335       14,943,358       14,883,968       15,048,160  
Short-Term Borrowings       629       330       -       -  
Securities Sold Under Agreements to Repurchase       504,293       504,193       505,293       505,293  
Other Debt       185,662       235,681       260,716       267,887  
Retirement Benefits Payable       36,288       36,730       37,312       38,308  
Accrued Interest Payable       7,689       7,395       6,946       6,717  
Taxes Payable and Deferred Taxes       15,549       15,136       24,009       31,360  
Other Liabilities       144,962       133,622       138,940       142,684  
Total Liabilities       15,738,407       15,876,445       15,857,184       16,040,409  
Shareholders' Equity                  

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: September 30, 2018 - 58,070,578 / 41,809,551; June 30, 2018 - 58,070,285 / 42,084,066; December 31, 2017 - 57,959,074 / 42,401,443; and September 30, 2017 - 57,958,200 / 42,513,348)

      577       577       576       576  
Capital Surplus       569,223       566,436       561,161       558,530  
Accumulated Other Comprehensive Loss       (59,238 )     (53,855 )     (34,715 )     (25,023 )
Retained Earnings       1,612,998       1,581,168       1,512,218       1,491,830  

Treasury Stock, at Cost (Shares: September 30, 2018 - 16,261,027; June 30, 2018 - 15,986,219; December 31, 2017 - 15,557,631; and September 30, 2017 - 15,444,852)

      (870,233 )     (846,609 )     (807,372 )     (798,020 )
Total Shareholders' Equity       1,253,327       1,247,717       1,231,868       1,227,893  
Total Liabilities and Shareholders' Equity     $ 16,991,734     $ 17,124,162     $ 17,089,052     $ 17,268,302  
                   
                               
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     -       -     -     -       165,691       -       165,691  
Other Comprehensive Loss     -       -     -     (17,046 )     -       -       (17,046 )

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

    -       -     -     (7,477 )     7,477       -       -  
Share-Based Compensation     -       -     6,208     -       -       -       6,208  

Common Stock Issued under Purchase and Equity Compensation Plans

    203,289       1     1,854     -       251       4,127       6,233  
Common Stock Repurchased     (795,181 )     -     -     -       -       (66,988 )     (66,988 )
Cash Dividends Declared ($1.72 per share)     -       -     -     -       (72,639 )     -       (72,639 )
Balance as of September 30, 2018     41,809,551     $ 577   $ 569,223   $ (59,238 )   $ 1,612,998     $ (870,233 )   $ 1,253,327  
                               
Balance as of December 31, 2016     42,635,978     $ 576   $ 551,628   $ (33,906 )   $ 1,415,440     $ (772,201 )   $ 1,161,537  
Net Income     -       -     -     -       141,719       -       141,719  
Other Comprehensive Income     -       -     -     8,883       -       -       8,883  
Share-Based Compensation     -       -     5,332     -       -       -       5,332  

Common Stock Issued under Purchase and Equity Compensation Plans

    319,377       -     1,570     -       (383 )     10,552       11,739  
Common Stock Repurchased     (442,007 )     -     -     -       -       (36,371 )     (36,371 )
Cash Dividends Declared ($1.52 per share)     -       -     -     -       (64,946 )     -       (64,946 )
Balance as of September 30, 2017     42,513,348     $ 576   $ 558,530   $ (25,023 )   $ 1,491,830     $ (798,020 )   $ 1,227,893  
                               
                                             
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  
      September 30, 2018     June 30, 2018     September 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     $ 3.6   $ -   1.09 %   $ 2.9   $ -   (0.52 ) %   $ 3.5   $ -   0.48 %
Funds Sold       281.9     1.4   1.93       185.2     0.8   1.81         575.2     1.6   1.07  
Investment Securities                                            
Available-for-Sale                                            
Taxable       1,512.1     9.5   2.51       1,564.5     9.2   2.35         1,658.2     8.6   2.08  
Non-Taxable       567.5     3.9   2.75       583.6     4.0   2.78         636.7     5.2   3.26  
Held-to-Maturity                                            
Taxable       3,413.7     19.3   2.26       3,471.7     19.2   2.22         3,631.1     18.8   2.07  
Non-Taxable       236.1     1.9   3.16       237.1     1.9   3.17         239.9     2.4   3.87  
Total Investment Securities       5,729.4     34.6   2.41       5,856.9     34.3   2.35         6,165.9     35.0   2.27  
Loans Held for Sale       14.9     0.2   4.45       14.8     0.2   4.44         20.6     0.2   3.88  
Loans and Leases 1                                            
Commercial and Industrial       1,279.4     13.0   4.04       1,307.6     12.8   3.92         1,251.5     11.3   3.58  
Commercial Mortgage       2,180.5     23.0   4.19       2,123.5     21.9   4.13         2,015.0     19.6   3.87  
Construction       187.0     2.2   4.65       183.4     2.2   4.82         241.0     2.9   4.73  
Commercial Lease Financing       175.0     1.0   2.30       179.4     1.0   2.24         204.7     1.2   2.30  
Residential Mortgage       3,563.5     34.0   3.82       3,526.9     33.6   3.81         3,333.3     31.8   3.82  
Home Equity       1,622.4     15.7   3.83       1,612.7     15.1   3.76         1,502.9     13.8   3.65  
Automobile       606.3     5.9   3.84       573.6     5.7   3.97         493.2     5.9   4.71  
Other 2       467.8     9.3   7.90       455.8     8.9   7.86         410.4     8.2   7.98  
Total Loans and Leases       10,081.9     104.1   4.11       9,962.9     101.2   4.07         9,452.0     94.7   3.99  
Other       38.9     0.4   3.74       39.8     0.4   3.43         40.2     0.2   2.34  
Total Earning Assets 3       16,150.6     140.7   3.47       16,062.5     136.9   3.41         16,257.4     131.7   3.23  
Cash and Due from Banks       252.1               251.0               151.2          
Other Assets       612.6               608.3               563.6          
Total Assets     $ 17,015.3             $ 16,921.8             $ 16,972.2          
                                             
Interest-Bearing Liabilities                                            
Interest-Bearing Deposits                                            
Demand     $ 2,999.5     1.3   0.17     $ 2,969.8     1.2   0.16       $ 2,880.0     0.5   0.07  
Savings       5,482.4     3.8   0.28       5,392.2     3.1   0.23         5,374.4     1.8   0.13  
Time       1,683.0     5.8   1.37       1,705.7     5.2   1.21         1,788.2     4.4   0.97  
Total Interest-Bearing Deposits       10,164.9     10.9   0.43       10,067.7     9.5   0.38         10,042.6     6.7   0.26  
Short-Term Borrowings       11.6     0.1   2.06       21.0     0.1   1.80         -     -   -  
Securities Sold Under Agreements to Repurchase       504.3     4.7   3.62       505.1     4.6   3.62         505.3     4.7   3.61  
Other Debt       208.5     0.8   1.60       235.7     0.9   1.56         267.9     1.1   1.66  
Total Interest-Bearing Liabilities       10,889.3     16.5   0.60       10,829.5     15.1   0.56         10,815.8     12.5   0.45  
Net Interest Income         $ 124.2             $ 121.8             $ 119.2      
Interest Rate Spread             2.87 %       2.85   %       2.78 %
Net Interest Margin             3.07 %       3.04   %       2.92 %
Noninterest-Bearing Demand Deposits       4,655.6               4,641.6               4,684.9          
Other Liabilities       219.9               209.0               248.6          
Shareholders' Equity       1,250.5               1,241.7               1,222.9          
Total Liabilities and Shareholders' Equity     $ 17,015.3             $ 16,921.8             $ 16,972.2          
                                             

1

 

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

2

 

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

3

 

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% for 2018 and 35% for 2017, of $1,265,000 for the three months ended September 30, 2018, $1,298,000 for the three months ended June 30, 2018, and $2,920,000 for the three months ended September 30, 2017.

   

 

                               
Bank of Hawaii Corporation and Subsidiaries  
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7b  
      Nine Months Ended     Nine Months Ended  
      September 30, 2018     September 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     $ 3.2   $ -   0.99 %   $ 3.5   $ -   0.44 %
Funds Sold       224.3     3.0   1.76       491.1     3.2   0.85  
Investment Securities                              
Available-for-Sale                              
Taxable       1,556.9     27.6   2.36       1,655.8     24.6   1.98  
Non-Taxable       585.1     12.1   2.76       652.0     15.9   3.26  
Held-to-Maturity                              
Taxable       3,504.8     58.4   2.22       3,605.8     55.4   2.05  
Non-Taxable       237.0     5.6   3.17       240.9     7.0   3.88  
Total Investment Securities       5,883.8     103.7   2.35       6,154.5     102.9   2.23  
Loans Held for Sale       14.6     0.5   4.23       24.9     0.7   3.98  
Loans and Leases 1                              
Commercial and Industrial       1,289.3     37.6   3.90       1,255.4     32.7   3.49  
Commercial Mortgage       2,133.8     65.5   4.10       1,948.1     55.5   3.81  
Construction       186.6     6.5   4.64       246.7     8.6   4.66  
Commercial Lease Financing       178.0     3.0   2.25       207.1     3.5   2.25  
Residential Mortgage       3,523.1     100.9   3.82       3,269.7     93.8   3.82  
Home Equity       1,610.2     45.4   3.77       1,439.2     38.9   3.61  
Automobile       574.1     17.1   3.99       476.4     17.5   4.90  
Other 2       455.4     26.9   7.89       389.0     23.2   7.98  
Total Loans and Leases       9,950.5     302.9   4.07       9,231.6     273.7   3.96  
Other       39.8     1.0   3.37       40.4     0.7   2.22  
Total Earning Assets 3       16,116.2     411.1   3.41       15,946.0     381.2   3.19  
Cash and Due from Banks       244.0               134.8          
Other Assets       604.9               555.4          
Total Assets     $ 16,965.1             $ 16,636.2          
                               
Interest-Bearing Liabilities                              
Interest-Bearing Deposits                              
Demand     $ 2,982.5     3.2   0.15     $ 2,869.7     1.3   0.06  
Savings       5,414.1     9.1   0.22       5,385.7     4.7   0.12  
Time       1,700.6     15.7   1.23       1,529.2     9.4   0.82  
Total Interest-Bearing Deposits       10,097.2     28.0   0.37       9,784.6     15.4   0.21  
Short-Term Borrowings       17.2     0.2   1.73       15.3     0.1   0.91  
Securities Sold Under Agreements to Repurchase       504.9     13.9   3.62       507.7     14.9   3.88  
Other Debt       233.6     2.7   1.56       267.9     3.3   1.66  
Total Interest-Bearing Liabilities       10,852.9     44.8   0.55       10,575.5     33.7   0.42  
Net Interest Income         $ 366.3             $ 347.5      
Interest Rate Spread             2.86 %       2.77 %
Net Interest Margin             3.04 %       2.91 %
Noninterest-Bearing Demand Deposits       4,653.2               4,617.1          
Other Liabilities       216.4               241.7          
Shareholders' Equity       1,242.6               1,201.9          
Total Liabilities and Shareholders' Equity     $ 16,965.1             $ 16,636.2          
                                   

1

 

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

2

 

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

3

 

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21% for 2018 and 35% for 2017, of $3,907,000 for the nine months ended September 30, 2018 and $9,035,000 for the nine months ended September 30, 2017.

     
               
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
      Three Months Ended September 30, 2018
      Compared to June 30, 2018
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:              
Funds Sold     $ 0.5     $ 0.1     $ 0.6  
Investment Securities              
Available-for-Sale              
Taxable       (0.3 )     0.6       0.3  
Non-Taxable       (0.1 )     -       (0.1 )
Held-to-Maturity              
Taxable       (0.3 )     0.4       0.1  
Total Investment Securities       (0.7 )     1.0       0.3  
Loans and Leases              
Commercial and Industrial       (0.3 )     0.5       0.2  
Commercial Mortgage       0.7       0.4       1.1  
Construction       0.1       (0.1 )     -  
Residential Mortgage       0.4       -       0.4  
Home Equity       0.1       0.5       0.6  
Automobile       0.4       (0.2 )     0.2  
Other 2       0.3       0.1       0.4  
Total Loans and Leases       1.7       1.2       2.9  
Total Change in Interest Income       1.5       2.3       3.8  
               
Change in Interest Expense:              
Interest-Bearing Deposits              
Demand       -       0.1       0.1  
Savings       0.1       0.6       0.7  
Time       (0.1 )     0.7       0.6  
Total Interest-Bearing Deposits       -       1.4       1.4  
Securities Sold Under Agreements to Repurchase       0.1       -       0.1  
Other Debt       (0.1 )     -       (0.1 )
Total Change in Interest Expense       -       1.4       1.4  
               
Change in Net Interest Income     $ 1.5     $ 0.9     $ 2.4  
                           

1

 

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

2

 

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

     
               
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8b
      Three Months Ended September 30, 2018
      Compared to September 30, 2017
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:              
Funds Sold     $ (1.1 )   $ 0.9     $ (0.2 )
Investment Securities              
Available-for-Sale              
Taxable       (0.8 )     1.7       0.9  
Non-Taxable       (0.5 )     (0.8 )     (1.3 )
Held-to-Maturity              
Taxable       (1.2 )     1.7       0.5  
Non-Taxable       (0.1 )     (0.4 )     (0.5 )
Total Investment Securities       (2.6 )     2.2       (0.4 )
Loans Held for Sale       (0.1 )     0.1       -  
Loans and Leases              
Commercial and Industrial       0.2       1.5       1.7  
Commercial Mortgage       1.7       1.7       3.4  
Construction       (0.6 )     (0.1 )     (0.7 )
Commercial Lease Financing       (0.2 )     -       (0.2 )
Residential Mortgage       2.2       -       2.2  
Home Equity       1.1       0.8       1.9  
Automobile       1.2       (1.2 )     -  
Other 2       1.2       (0.1 )     1.1  
Total Loans and Leases       6.8       2.6       9.4  
Other       -       0.2       0.2  
Total Change in Interest Income       3.0       6.0       9.0  
               
Change in Interest Expense:              
Interest-Bearing Deposits              
Demand       -       0.8       0.8  
Savings       -       2.0       2.0  
Time       (0.3 )     1.7       1.4  
Total Interest-Bearing Deposits       (0.3 )     4.5       4.2  
Short-Term Borrowings       -       0.1       0.1  
Other Debt       (0.3 )     -       (0.3 )
Total Change in Interest Expense       (0.6 )     4.6       4.0  
               
Change in Net Interest Income     $ 3.6     $ 1.4     $ 5.0  
                           

1

 

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

2

 

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

     
               
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8c
      Nine Months Ended September 30, 2018
      Compared to September 30, 2017
(dollars in millions)     Volume 1   Rate 1   Total
Change in Interest Income:              
Funds Sold     $ (2.4 )   $ 2.2     $ (0.2 )
Investment Securities              
Available-for-Sale              
Taxable       (1.5 )     4.5       3.0  
Non-Taxable       (1.5 )     (2.3 )     (3.8 )
Held-to-Maturity              
Taxable       (1.6 )     4.6       3.0  
Non-Taxable       (0.1 )     (1.3 )     (1.4 )
Total Investment Securities       (4.7 )     5.5       0.8  
Loans Held for Sale       (0.3 )     0.1       (0.2 )
Loans and Leases              
Commercial and Industrial       0.9       4.0       4.9  
Commercial Mortgage       5.5       4.5       10.0  
Construction       (2.1 )     -       (2.1 )
Commercial Lease Financing       (0.5 )     -       (0.5 )
Residential Mortgage       7.2       (0.1 )     7.1  
Home Equity       4.8       1.7       6.5  
Automobile       3.2       (3.6 )     (0.4 )
Other 2       3.9       (0.2 )     3.7  
Total Loans and Leases       22.9       6.3       29.2  
Other       -       0.3       0.3  
Total Change in Interest Income       15.5       14.4       29.9  
               
Change in Interest Expense:              
Interest-Bearing Deposits              
Demand       0.1       1.8       1.9  
Savings       -       4.4       4.4  
Time       1.1       5.2       6.3  
Total Interest-Bearing Deposits       1.2       11.4       12.6  
Short-Term Borrowings       -       0.1       0.1  
Securities Sold Under Agreements to Repurchase       (0.1 )     (0.9 )     (1.0 )
Other Debt       (0.4 )     (0.2 )     (0.6 )
Total Change in Interest Expense       0.7       10.4       11.1  
               
Change in Net Interest Income     $ 14.8     $ 4.0     $ 18.8  
               

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     Nine Months Ended
      September 30,   June 30,   September 30,     September 30,
(dollars in thousands)     2018   2018   2017     2018   2017
Salaries     $ 33,308     $ 33,269   $ 31,224     $ 99,281   $ 91,202
Incentive Compensation       5,378       4,416     4,857       14,972     15,756
Share-Based Compensation       2,153       2,423     1,962       6,657     7,144
Commission Expense       1,034       1,272     1,439       3,260     5,066
Retirement and Other Benefits       3,925       4,178     3,843       12,944     12,169
Payroll Taxes       2,372       2,568     2,353       9,112     8,724
Medical, Dental, and Life Insurance       3,616       3,820     3,444       10,897     9,859
Separation Expense       (4 )     202     2,068       1,229     2,111
Total Salaries and Benefits     $ 51,782     $ 52,148   $ 51,190     $ 158,352   $ 152,031
                         
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
      September 30,   June 30,   March 31,   December 31,   September 30,
(dollars in thousands)       2018     2018     2018     2017     2017
Commercial                      
Commercial and Industrial     $ 1,314,609   $ 1,282,967   $ 1,329,096   $ 1,279,347   $ 1,252,238
Commercial Mortgage       2,237,020     2,169,357     2,097,339     2,103,967     2,050,998
Construction       176,447     185,350     186,530     202,253     232,487
Lease Financing       172,232     178,598     179,771     180,931     204,240
Total Commercial       3,900,308     3,816,272     3,792,736     3,766,498     3,739,963
Consumer                      
Residential Mortgage       3,596,627     3,548,444     3,505,239     3,466,773     3,366,634
Home Equity       1,625,208     1,622,314     1,601,698     1,585,455     1,528,353
Automobile       625,086     592,705     558,468     528,474     506,102
Other 1       483,833     473,588     458,487     449,747     432,904
Total Consumer       6,330,754     6,237,051     6,123,892     6,030,449     5,833,993
Total Loans and Leases     $ 10,231,062   $ 10,053,323   $ 9,916,628   $ 9,796,947   $ 9,573,956
                       
                       
Deposits                      
      September 30,   June 30,   March 31,   December 31,   September 30,
(dollars in thousands)       2018     2018     2018     2017     2017
Consumer     $ 7,627,527   $ 7,672,435   $ 7,665,926   $ 7,478,228   $ 7,303,546
Commercial       5,967,343     5,921,414     5,897,194     5,973,763     6,091,800
Public and Other       1,248,465     1,349,509     1,394,013     1,431,977     1,652,814
Total Deposits     $ 14,843,335   $ 14,943,358   $ 14,957,133   $ 14,883,968   $ 15,048,160
                       
                       
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
      September 30,   June 30,   March 31,   December 31,   September 30,
(dollars in thousands)       2018     2018     2018     2017     2017
Non-Performing Assets                      
Non-Accrual Loans and Leases                      
Commercial                      
Commercial and Industrial     $ 1,205     $ 917     $ 986     $ 448     $ 901  
Commercial Mortgage       652       659       1,367       1,398       1,425  
Total Commercial       1,857       1,576       2,353       1,846       2,326  
Consumer                      
Residential Mortgage       6,359       6,722       6,725       9,243       9,188  
Home Equity       3,673       3,933       3,890       3,991       4,128  
Total Consumer       10,032       10,655       10,615       13,234       13,316  
Total Non-Accrual Loans and Leases       11,889       12,231       12,968       15,080       15,642  
Foreclosed Real Estate       1,909       2,926       2,768       1,040       1,393  
Total Non-Performing Assets     $ 13,798     $ 15,157     $ 15,736     $ 16,120     $ 17,035  
                       
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     $ 2,426     $ 2,281     $ 2,927     $ 2,703     $ 2,933  
Home Equity       3,112       3,016       3,013       1,624       1,392  
Automobile       829       674       333       886       806  
Other 1       1,727       1,660       1,895       1,934       1,528  
Total Consumer       8,094       7,631       8,168       7,147       6,659  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 8,094     $ 13,313     $ 8,168     $ 7,147     $ 6,664  

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

    $ 49,462     $ 50,212     $ 56,743     $ 55,672     $ 55,038  
Total Loans and Leases     $ 10,231,062     $ 10,053,323     $ 9,916,628     $ 9,796,947     $ 9,573,956  
                       
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.12 %     0.12 %     0.13 %     0.15 %     0.16 %
                       

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

      0.13 %     0.15 %     0.16 %     0.16 %     0.18 %
                       

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

      0.05 %     0.04 %     0.06 %     0.05 %     0.06 %
                       

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

      0.19 %     0.22 %     0.22 %     0.24 %     0.25 %
                       

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

      0.21 %     0.28 %     0.24 %     0.24 %     0.25 %
                       
Quarter to Quarter Changes in Non-Performing Assets                      
Balance at Beginning of Quarter     $ 15,157     $ 15,736     $ 16,120     $ 17,035     $ 16,368  
Additions       2,030       1,949       2,332       2,109       2,212  
Reductions                      
Payments       (415 )     (1,847 )     (1,251 )     (368 )     (199 )
Return to Accrual Status       (1,420 )     (126 )     (1,270 )     (1,779 )     (305 )
Sales of Foreclosed Real Estate       (1,301 )     (421 )     -       (353 )     (951 )
Charge-offs/Write-downs       (253 )     (134 )     (195 )     (524 )     (90 )
Total Reductions       (3,389 )     (2,528 )     (2,716 )     (3,024 )     (1,545 )
Balance at End of Quarter     $ 13,798     $ 15,157     $ 15,736     $ 16,120     $ 17,035  
                       
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     Nine Months Ended
      September 30,   June 30,   September 30,     September 30,
(dollars in thousands)     2018   2018   2017     2018   2017
Balance at Beginning of Period     $ 115,010     $ 114,760     $ 113,175       $ 114,168       110,845  
Loans and Leases Charged-Off                        
Commercial                        
Commercial and Industrial       (449 )     (485 )     (611 )       (1,140 )     (909 )
Consumer                        
Residential Mortgage       -       (3 )     (36 )       (100 )     (725 )
Home Equity       (124 )     (44 )     (129 )       (259 )     (774 )
Automobile       (2,114 )     (1,515 )     (1,921 )       (5,883 )     (5,723 )
Other 1       (3,340 )     (3,614 )     (3,521 )       (10,294 )     (9,278 )
Total Loans and Leases Charged-Off       (6,027 )     (5,661 )     (6,218 )       (17,676 )     (17,409 )
Recoveries on Loans and Leases Previously Charged-Off                        
Commercial                        
Commercial and Industrial       542       366       597         1,236       1,198  
Lease Financing       -       -       1         -       2  
Consumer                        
Residential Mortgage       261       214       89         695       457  
Home Equity       558       451       837         1,634       2,183  
Automobile       616       738       692         1,953       1,919  
Other 1       752       642       530         2,077       1,608  
Total Recoveries on Loans and Leases Previously Charged-Off       2,729       2,411       2,746         7,595       7,367  
Net Loans and Leases Charged-Off       (3,298 )     (3,250 )     (3,472 )       (10,081 )     (10,042 )
Provision for Credit Losses       3,800       3,500       4,000         11,425       12,650  
Provision for Unfunded Commitments       -       -       -         -       250  
Balance at End of Period 2     $ 115,512     $ 115,010     $ 113,703       $ 115,512     $ 113,703  
                         
Components                        
Allowance for Loan and Lease Losses     $ 108,690     $ 108,188     $ 106,881         108,690       106,881  
Reserve for Unfunded Commitments       6,822       6,822       6,822         6,822       6,822  
Total Reserve for Credit Losses     $ 115,512     $ 115,010     $ 113,703       $ 115,512     $ 113,703  
                         
Average Loans and Leases Outstanding     $ 10,081,886     $ 9,962,860     $ 9,451,972       $ 9,950,518     $ 9,231,615  
                         

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

      0.13 %     0.13 %     0.15 %       0.14 %     0.15 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding       1.06 %     1.08 %     1.12 %       1.06 %     1.12 %
                         

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 September 30, 2018                      
Net Interest Income     $ 66,927     $ 46,240     $ 10,574     $ (814 )   $ 122,927  
Provision for Credit Losses       3,229       69       -       502       3,800  
Net Interest Income After Provision for Credit Losses       63,698       46,171       10,574       (1,316 )     119,127  
Noninterest Income       19,814       6,241       13,526       1,901       41,482  
Noninterest Expense       (51,806 )     (20,242 )     (15,657 )     (2,833 )     (90,538 )
Income Before Provision for Income Taxes       31,706       32,170       8,443       (2,248 )     70,071  
Provision for Income Taxes       (7,943 )     (7,218 )     (2,226 )     4,249       (13,138 )
Net Income     $ 23,763     $ 24,952     $ 6,217     $ 2,001     $ 56,933  
Total Assets as of September 30, 2018     $ 6,246,126     $ 3,873,454     $ 340,793     $ 6,531,361     $ 16,991,734  
                       
                       
Three Months Ended September 30, 2017                      
Net Interest Income     $ 67,128     $ 43,438     $ 7,321     $ (1,570 )   $ 116,317  
Provision for Credit Losses       3,512       (35 )     (5 )     528       4,000  
Net Interest Income After Provision for Credit Losses       63,616       43,473       7,326       (2,098 )     112,317  
Noninterest Income       21,287       5,137       13,593       2,393       42,410  
Noninterest Expense       (51,507 )     (17,721 )     (14,925 )     (4,445 )     (88,598 )
Income Before Provision for Income Taxes       33,396       30,889       5,994       (4,150 )     66,129  
Provision for Income Taxes       (11,908 )     (10,891 )     (2,218 )     4,769       (20,248 )
Net Income     $ 21,488     $ 19,998     $ 3,776     $ 619     $ 45,881  
Total Assets as of September 30, 2017     $ 5,758,799     $ 3,695,606     $ 305,015     $ 7,508,882     $ 17,268,302  
                       
                       
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
Nine Months Ended September 30, 2018                      
Net Interest Income     $ 197,007     $ 133,148     $ 30,987     $ 1,237     $ 362,379  
Provision for Credit Losses       10,417       (276 )     (60 )     1,344       11,425  
Net Interest Income After Provision for Credit Losses       186,590       133,424       31,047       (107 )     350,954  
Noninterest Income       58,665       17,395       41,941       8,814       126,815  
Noninterest Expense       (158,344 )     (60,432 )     (48,264 )     (8,673 )     (275,713 )
Income Before Provision for Income Taxes       86,911       90,387       24,724       34       202,056  
Provision for Income Taxes       (21,707 )     (20,782 )     (6,518 )     12,642       (36,365 )
Net Income     $ 65,204     $ 69,605     $ 18,206     $ 12,676     $ 165,691  
Total Assets as of September 30, 2018     $ 6,246,126     $ 3,873,454     $ 340,793     $ 6,531,361     $ 16,991,734  
                       
                       
Nine Months Ended September 30, 2017                      
Net Interest Income     $ 198,633     $ 127,106     $ 20,685     $ (7,956 )   $ 338,468  
Provision for Credit Losses       10,413       (355 )     (16 )     2,608       12,650  
Net Interest Income After Provision for Credit Losses       188,220       127,461       20,701       (10,564 )     325,818  
Noninterest Income       64,132       16,451       43,389       19,590       143,562  
Noninterest Expense       (155,786 )     (54,483 )     (45,692 )     (9,394 )     (265,355 )
Income Before Provision for Income Taxes       96,566       89,429       18,398       (368 )     204,025  
Provision for Income Taxes       (34,323 )     (31,472 )     (6,807 )     10,296       (62,306 )
Net Income     $ 62,243     $ 57,957     $ 11,591     $ 9,928     $ 141,719  
Total Assets as of September 30, 2017     $ 5,758,799     $ 3,695,606     $ 305,015     $ 7,508,882     $ 17,268,302  
                       
                                 
Bank of Hawaii Corporation and Subsidiaries  
Selected Quarterly Financial Data   Table 14  
      Three Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,  
(dollars in thousands, except per share amounts)       2018       2018       2018       2017       2017  
Quarterly Operating Results                                
Interest Income                                
Interest and Fees on Loans and Leases     $ 104,248       $ 101,311       $ 97,634       $ 96,974       $ 94,621    
Income on Investment Securities                                
Available-for-Sale       12,588         12,380         12,141         11,866         11,987    
Held-to-Maturity       20,821         20,711         21,296         21,782         20,334    
Deposits       10         (4 )       18         3         5    
Funds Sold       1,393         846         757         717         1,579    
Other       364         341         300         271         235    
Total Interest Income       139,424         135,585         132,146         131,613         128,761    
Interest Expense                                
Deposits       10,931         9,459         7,581         6,980         6,663    
Securities Sold Under Agreements to Repurchase       4,667         4,617         4,564         4,664         4,664    
Funds Purchased       33         83         53         81         -    
Short-Term Borrowings       28         13         16         -         -    
Other Debt       838         917         976         1,118         1,117    
Total Interest Expense       16,497         15,089         13,190         12,843         12,444    
Net Interest Income       122,927         120,496         118,956         118,770         116,317    
Provision for Credit Losses       3,800         3,500         4,125         4,250         4,000    
Net Interest Income After Provision for Credit Losses       119,127         116,996         114,831         114,520         112,317    
Noninterest Income                                
Trust and Asset Management       10,782         11,356         11,181         11,105         11,050    
Mortgage Banking       1,965         2,179         2,145         2,593         3,237    
Service Charges on Deposit Accounts       7,255         6,865         7,129         8,053         8,188    
Fees, Exchange, and Other Service Charges       14,173         14,400         14,333         13,784         13,764    
Investment Securities Gains (Losses), Net       (729 )       (1,702 )       (666 )       (617 )       (566 )  
Annuity and Insurance       1,360         1,847         1,206         1,273         1,429    
Bank-Owned Life Insurance       1,620         1,796         1,842         1,609         1,861    
Other       5,056         4,557         6,865         4,055         3,447    
Total Noninterest Income       41,482         41,298         44,035         41,855         42,410    
Noninterest Expense                                
Salaries and Benefits       51,782         52,148         54,422         51,698         51,190    
Net Occupancy       8,702         8,588         8,534         8,510         7,727    
Net Equipment       6,116         5,845         5,527         5,454         5,417    
Data Processing       4,241         4,563         3,891         4,310         3,882    
Professional Fees       2,206         2,546         2,773         3,266         3,044    
FDIC Insurance       2,057         2,182         2,157         2,253         2,107    
Other       15,434         14,919         17,080         16,845         15,231    
Total Noninterest Expense       90,538         90,791         94,384         92,336         88,598    
Income Before Provision for Income Taxes       70,071         67,503         64,482         64,039         66,129    
Provision for Income Taxes       13,138         12,785         10,442         21,086         20,248    
Net Income     $ 56,933       $ 54,718       $ 54,040       $ 42,953       $ 45,881    
                                 
Basic Earnings Per Share     $ 1.37       $ 1.31       $ 1.29       $ 1.02       $ 1.09    
Diluted Earnings Per Share     $ 1.36       $ 1.30       $ 1.28       $ 1.01       $ 1.08    
                                 
Balance Sheet Totals                                
Loans and Leases     $ 10,231,062       $ 10,053,323       $ 9,916,628       $ 9,796,947       $ 9,573,956    
Total Assets       16,991,734         17,124,162         17,136,030         17,089,052         17,268,302    
Total Deposits       14,843,335         14,943,358         14,957,133         14,883,968         15,048,160    
Total Shareholders' Equity       1,253,327         1,247,717         1,241,193         1,231,868         1,227,893    
                                 
Performance Ratios                                
Return on Average Assets       1.33   %     1.30   %     1.29   %     1.00   %     1.07   %
Return on Average Shareholders' Equity       18.06         17.68         17.74         13.85         14.89    
Efficiency Ratio 1       55.07         56.12         57.91         57.49         55.82    
Net Interest Margin 2       3.07         3.04         3.00         2.98         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
      Eight Months Ended     Year Ended
($ in millions; jobs in thousands)     August 31, 2018     December 31, 2017     December 31, 2016  
Hawaii Economic Trends                                    
State General Fund Revenues 1     $ 4,677.1   7.3 %   $ 6,485.0       4.3 %   $ 6,215.4     3.6 %
General Excise and Use Tax Revenue 1     $ 2,298.3   2.1 %   $ 3,349.8       4.5 %   $ 3,205.7     2.0 %
Jobs 2       672.7           668.2               669.4        
                                     
                      September 30,     December 31,  
(spot rates)                     2018       2017     2016  
Unemployment 3                                    
Statewide, seasonally adjusted                     2.2 %     2.1 %   2.9 %
                                     
Oahu                     2.4       1.7     2.4  
Island of Hawaii                     3.0       2.0     3.1  
Maui                     2.5       1.8     2.7  
Kauai                     2.9       1.7     2.8  
                                     
                September 30,     December 31,  
(percentage change, except months of inventory)             2018       2017       2016     2015  
Housing Trends (Single Family Oahu) 4                                    
Median Home Price                 4.2   %   2.7 %     5.0 %   3.7 %
Home Sales Volume (units)                 (3.7 ) %   6.3 %     6.5 %   5.2 %
Months of Inventory                 2.8       2.1       2.5     2.6  
                                     
                Monthly Visitor Arrivals,     Percentage Change  
(in thousands)               Not Seasonally Adjusted     from Previous Year  
Tourism 5                                    
                                     
August 31, 2018                     845.1           3.2  
July 31, 2018                     939.4           5.3  
June 30, 2018                     897.1           7.3  
May 31, 2018                     804.1           7.0  
April 30, 2018                     803.0           6.6  
March 31, 2018                     903.6           12.5  
February 28, 2018                     778.6           10.3  
January 31, 2018                     796.5           5.4  
December 31, 2017                     880.4           6.3  
November 30, 2017                     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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