UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report
(Date of earliest event reported)		July 24, 2006

 

BANK OF HAWAII CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware	1-6887	99-0148992
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
130 Merchant Street, Honolulu, Hawaii		96813
(Address of principal executive offices)		(Zip Code)
(Registrant’s telephone number, including area code)		(808) 537-8430

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

 

Item 2.02.

Results of Operations and Financial Conditions.

 

On July 24, 2006, Bank of Hawaii Corporation announced its results of operations for the quarter ending June 30, 2006. The public announcement was made by means of a press release, the text of which is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

 

Item 9.01.		Financial Statements and Exhibits
(d)		Exhibits

 

	Exhibit No.
99.1				July 24, 2006 Press Release

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date July 26, 2006		BANK OF HAWAII CORPORATION
			/s/ Cynthia G. Wyrick
			Cynthia G. Wyrick Executive Vice President and
			Corporate Secretary

 

2

Exhibit 99.1

Bank of Hawaii Corporation Second Quarter 2006 Financial Results

·           Board of Directors Increases Share Repurchase Authorization $100 Million

·           Board of Directors Declares Dividend of $0.37 Per Share

FOR IMMEDIATE RELEASE

HONOLULU, HI (July 24, 2006) — Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.73 for the second quarter of 2006, down from $0.87 in the second quarter of 2005 and down from $0.87 in the first quarter of 2006.  Net income for the second quarter of 2006 was $37.2 million, down $9.3 million from $46.4 million in the second quarter of 2005 and down $8.2 million from $45.4 million in the first quarter of 2006.

Results for the second quarter of 2006 included the previously announced charge of approximately $9.0 million, or $0.17 per diluted share, as a result of the recently-enacted 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.  The TIPRA adjustment included a reduction of $0.6 million to net interest income and an increase of $8.2 million in the provision for income taxes, which represents the total amount of additional future tax payments.

The return on average assets for the second quarter of 2006 was 1.47 percent, compared to 1.87 percent in the second quarter of 2005 and 1.82 percent in the first quarter of 2006.  The return on average equity was 21.70 percent for the second quarter of 2006, down from 25.98 percent in the second quarter last year and down from 26.13 percent in the previous quarter.  Excluding the TIPRA adjustment, the return on average assets for the second quarter of 2006 was 1.81 percent and the return on average equity was 26.86 percent.

“Our underlying financial performance continues to be strong despite the disappointing effect of this change in tax legislation,” said Allan R. Landon, Chairman and CEO.  “We are especially pleased with our commercial and consumer loan growth, asset quality and expense control.”

For the six months ended June 30, 2006, net income was $82.5 million, down $9.4 million compared to net income of $92.0 million for the same period last year.  Diluted earnings per share were $1.60 for the first half of 2006, down from diluted earnings per share of $1.69 for

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the first half of 2005.  Excluding the TIPRA adjustment, results for the first half of 2006 were $91.4 million, a decrease of $0.6 million compared with the same period last year.  Results for the first half of 2006 included a provision for credit losses of $4.8 million. The Company did not record a provision for credit losses during the comparable period in 2005.

The year-to-date return on average assets was 1.64 percent, down from 1.87 percent for the same six months in 2005.  The year-to-date return on average equity was 23.93 percent, down from 24.78 percent for the six months ended June 30, 2005.  Excluding the TIPRA adjustment, the return on average assets for the first half of 2006 was 1.82 percent and the return on average equity was 26.49 percent.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2006 was $100.1 million, down $1.0 million from $101.1 million in the second quarter of 2005 and down $2.3 million from $102.4 million in the first quarter of 2006.  The decrease in net interest income was due to increased deposit costs and the $0.6 million TIPRA adjustment.  An analysis of the change in net interest income from the previous quarter is included in Table 6.

The net interest margin was 4.25 percent for the second quarter of 2006, an 11 basis point decrease from 4.36 percent in the second quarter of 2005 and a 16 basis point decrease from 4.41 percent in the first quarter of 2006.  The decrease from the previous quarter was primarily due to the effects of the flattening yield curve, a shift in the funding mix as well as a 3 basis point decrease resulting from the TIPRA adjustment.

Results for the second quarter of 2006 included a provision for credit losses of $2.1 million compared to $2.8 million in the first quarter of 2006.  The provision equaled net charge-offs for both quarters.  As previously mentioned, the Company did not record a provision for credit losses during the second quarter of 2005.

Non-interest income was $53.2 million for the second quarter of 2006, an increase of $2.5 million or 5.0 percent compared to non-interest income of $50.7 million in the second quarter of 2005 and up $0.6 million or 1.2 percent compared to non-interest income of $52.6 million in the first quarter of 2006.

Non-interest expense was $78.7 million in the second quarter of 2006, down $0.3 million or 0.3 percent from non-interest expense of $79.0 million in the same quarter last year and down $2.1 million or 2.6 percent from $80.8 million in the prior quarter.  An analysis of salary and benefit expenses is included in Table 7.

The efficiency ratio for the second quarter of 2006 was 51.45 percent, an improvement from 52.07 percent in the same quarter last year and from 52.22 percent in the previous quarter. For six months ended June 30, 2006, the efficiency ratio was 51.83 percent compared to 52.47 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.

2

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Asset Quality

The Company’s asset quality remained stable during the second quarter of 2006.  Non-performing assets decreased to $5.4 million at the end of the second quarter of 2006, down $5.5 million, or 50.8 percent, compared to $10.9 million at the end of the same quarter last year and down $0.5 million, or 9.0 percent, compared to $5.9 million at the end of the previous quarter.  At June 30, 2006 the ratio of non-performing assets to total loans, foreclosed real estate, and other investments was 0.08 percent, down from 0.18 percent at June 30, 2005 and down from 0.09 percent at March 31, 2006.

Non-accrual loans and leases were $5.1 million at June 30, 2006, down $4.8 million or 48.6 percent from $9.9 million at June 30, 2005 and a reduction of $0.1 million, or 2.7 percent from $5.2 million at March 31, 2006.  Non-accrual loans and leases as a percentage of total loans and leases at June 30, 2006 were 0.08 percent, down from 0.16 percent at June 30, 2005 and unchanged from March 31, 2006.

Net charge-offs for the second quarter of 2006 were $2.1 million, or 0.13 percent annualized, of total average loans and leases compared to net charge-offs of $3.7 million, or 0.25 percent annualized, of total average loans and leases in the same quarter last year.  Net charge-offs in the first quarter of 2006 were $2.8 million, or 0.18 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 $91.0 million at June 30, 2006, down from $101.6 million at June 30, 2005 and down slightly from $91.1 million at March 31, 2006.  The ratio of the allowance for loan and lease losses to total loans was 1.41 percent at June 30, 2006, down from 1.65 percent at June 30, 2005 and down from 1.46 percent at March 31, 2006.  The reserve for unfunded commitments at June 30, 2006 was $5.1 million, up from $4.6 at June 30, 2005 and unchanged from $5.1 million at March 31, 2006.

Credit exposure to the air transportation industry is summarized in Table 8.

Other Financial Highlights

Total assets were $10.33 billion at June 30, 2006, up from $10.06 billion at June 30, 2005 and down from $10.53 billion at March 31, 2006.  Total loans and leases were $6.44 billion at June 30, 2006, up from $6.15 billion at June 30, 2005 and up from $6.25 billion at March 31, 2006.  Commercial loans were $2.32 billion at June 30, 2006, up from $2.19 billion at June 30, 2005 and up from $2.17 billion at March 31, 2006.  Consumer loans were $4.13 billion at June 30, 2006, up from $3.96 billion at June 30, 2005 and up from $4.07 billion at March 31, 2006 due to continued growth in home equity lending and a strong Hawaii residential real estate market.

Total deposits at June 30, 2006 were $7.77 billion, up from $7.73 billion at June 30, 2005 and down from $8.15 billion at March 31, 2006.  The decrease in deposits compared to March 31, 2006 was primarily due to the drawdown of a large commercial deposit.  Although total deposits decreased as customers sought higher yielding products, the total number of deposit accounts increased compared to March 31, 2006 and June 30, 2005.

3

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During the second quarter of 2006, the Company repurchased 0.5 million shares of common stock at a total cost of $28.2 million under its share repurchase program.  The average cost was $52.14 per share repurchased.  From the beginning of the share repurchase program in July 2001 through June 30, 2006, the Company has repurchased a total of 41.2 million shares and returned nearly $1.4 billion to shareholders at an average cost of $33.88 per share.

The Company’s Board of Directors has increased the authorization under the share repurchase program by an additional $100 million.  This new authorization, combined with the previously announced authorizations of $1.45 billion, brings the total repurchase authority to $1.55 billion.  From July 1, 2006 through July 21, 2006, the Company repurchased an additional 80.0 thousand shares of common stock at an average cost of $48.61 per share.  Remaining buyback authority under the share repurchase program was $151.2 million at July 21, 2006.

At June 30, 2006 the Tier 1 leverage ratio was 7.09 percent compared to 7.14 percent at June 30, 2005 and 7.19 percent at March 31, 2006.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.37 per share on the Company’s outstanding shares.  The dividend will be payable on September 15, 2006 to shareholders of record at the close of business on August 31, 2006.

Financial Outlook

The Company’s previous earnings estimate of approximately $187 million in net income for the full year of 2006 has been revised to reflect the $9 million TPIRA adjustment.  The Company currently expects net income for the full year of 2006 to be approximately $178 million.  Good credit quality is expected to allow the provision for loan losses to be lower than previously estimated, however the continued flatness of the yield curve and customers seeking higher return uses of cash is expected to reduce the previous estimate for net interest income during the second half of 2006.  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.

Conference Call Information

The Company will review its second 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 800-706-7749 in the United States or 617-614-3474 for international callers.  No passcode is required to access the call.  A replay will be available for one week beginning Monday, July 24, 2006 by calling 888-286-8010 in the United States or 617-801-6888 internationally and entering the number 94430073 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.

4

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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 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.

# # # #

5

 

Bank of Hawaii Corporation and Subsidiaries

Highlights (Unaudited)

Table 1

 

		Three Months Ended									Six Months Ended
		June 30,			March 31,			June 30,			June 30,
(dollars in thousands except per share amounts)		2006			2006			2005			2006			2005
For the Period:
Interest Income		$	140,769		$	135,403		$	124,105		$	276,172		$	244,263
Net Interest Income		99,856			102,202			101,039			202,058			201,697
Net Income		37,176			45,350			46,429			82,526			91,951
Basic Earnings Per Share		0.74			0.89			0.90			1.63			1.75
Diluted Earnings Per Share		0.73			0.87			0.87			1.60			1.69
Dividends Declared Per Share		0.37			0.37			0.33			0.74			0.66
Net Income to Average Total Assets (ROA)		1.47		%	1.82		%	1.87		%	1.64		%	1.87		%
Net Income to Average Shareholders’ Equity (ROE)		21.70			26.13			25.98			23.93			24.78
Net Interest Margin (1)		4.25			4.41			4.36			4.33			4.39
Efficiency Ratio (2)		51.45			52.22			52.07			51.83			52.47
Average Assets		$	10,169,341		$	10,091,665		$	9,969,243		$	10,130,718		$	9,907,845
Average Loans and Leases		6,317,623			6,181,697			6,090,149			6,250,035			6,045,609
Average Deposits		7,728,227			7,742,623			7,747,331			7,735,384			7,717,729
Average Shareholders’ Equity		687,083			703,856			716,767			695,424			748,344
Average Equity to Average Assets		6.76		%	6.97		%	7.19		%	6.86		%	7.55		%
Market Price Per Share of Common Stock:
Closing		$	49.60		$	53.31		$	50.75		$	49.60		$	50.75
High		54.51			55.15			51.30			55.15			51.30
Low		48.33			51.40			43.82			48.33			43.82

 

						June 30,			March 31,			June 30,
						2006			2006			2005 (3)
At Period End:
Net Loans and Leases						$	6,350,590		$	6,155,061		$	6,049,831
Total Assets						10,325,190			10,528,049			10,059,690
Deposits						7,766,033			8,147,101			7,726,758
Long-Term Debt						242,749			242,730			242,674
Shareholders’ Equity						666,728			681,078			712,169
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding						1.41		%	1.46		%	1.65
Dividend Payout Ratio (4)						50.00			41.57			36.67
Leverage Capital Ratio						7.09			7.19			7.14
Book Value Per Common Share						$	13.18		$	13.36		$	13.73
Full-Time Equivalent Employees						2,563			2,561			2,561
Branches and Offices						86			85			86

 

(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 non-interest expense divided by total revenue (net interest income and non-interest 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.

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Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)						Table 2

 

		Three Months Ended									Six Months Ended
		June 30,			March 31,			June 30,			June 30,
(dollars in thousands except per share amounts)		2006			2006			2005			2006			2005
Interest Income
Interest and Fees on Loans and Leases		$	104,388		$	99,371		$	90,119		$	203,759		$	176,586
Income on Investment Securities - Available for Sale		31,226			30,835			27,987			62,061			55,306
Income on Investment Securities - Held to Maturity		4,658			4,757			5,527			9,415			11,352
Deposits		55			43			36			98			59
Funds Sold		170			125			165			295			240
Other		272			272			271			544			720
Total Interest Income		140,769			135,403			124,105			276,172			244,263
Interest Expense
Deposits		24,656			19,633			13,577			44,289			25,181
Securities Sold Under Agreements to Repurchase		9,802			7,890			4,562			17,692			7,887
Funds Purchased		2,652			1,893			1,151			4,545			1,884
Short-Term Borrowings		73			57			45			130			77
Long-Term Debt		3,730			3,728			3,731			7,458			7,537
Total Interest Expense		40,913			33,201			23,066			74,114			42,566
Net Interest Income		99,856			102,202			101,039			202,058			201,697
Provision for Credit Losses		2,069			2,761			—			4,830			—
Net Interest Income After Provision for Credit Losses		97,787			99,441			101,039			197,228			201,697
Non-Interest Income
Trust and Asset Management		14,537			14,848			14,058			29,385			28,680
Mortgage Banking		2,569			2,987			2,594			5,556			5,184
Service Charges on Deposit Accounts		9,695			10,132			9,569			19,827			19,748
Fees, Exchange, and Other Service Charges		15,633			14,767			15,211			30,400			29,047
Investment Securities Gains (Losses), Net		—			—			337			—			337
Insurance		4,691			5,019			4,330			9,710			10,118
Other		6,076			4,819			4,575			10,895			9,875
Total Non-Interest Income		53,201			52,572			50,674			105,773			102,989
Non-Interest Expense
Salaries and Benefits		44,811			45,786			43,856			90,597			88,625
Net Occupancy		9,376			9,643			9,189			19,019			18,734
Net Equipment		4,802			5,028			5,377			9,830			10,848
Professional Fees		2,589			438			2,905			3,027			5,956
Other		17,164			19,923			17,677			37,087			35,704
Total Non-Interest Expense		78,742			80,818			79,004			159,560			159,867
Income Before Income Taxes		72,246			71,195			72,709			143,441			144,819
Provision for Income Taxes		35,070			25,845			26,280			60,915			52,868
Net Income		$	37,176		$	45,350		$	46,429		$	82,526		$	91,951
Basic Earnings Per Share		$	0.74		$	0.89		$	0.90		$	1.63		$	1.75
Diluted Earnings Per Share		$	0.73		$	0.87		$	0.87		$	1.60		$	1.69
Dividends Declared Per Share		$	0.37		$	0.37		$	0.33		$	0.74		$	0.66
Basic Weighted Average Shares		50,181,817			50,785,244			51,873,772			50,481,864			52,646,022
Diluted Weighted Average Shares		51,217,281			52,106,954			53,403,781			51,596,303			54,250,018

 

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Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition (Unaudited)				Table 3

 

		June 30,			March 31,			December 31,			June 30,
(dollars in thousands)		2006			2006			2005			2005
Assets
Interest-Bearing Deposits		$	4,145		$	5,171		$	4,893		$	4,825
Funds Sold		—			328,000			—			50,000
Investment Securities - Available for Sale
Held in Portfolio		2,177,220			2,268,644			2,333,417			2,396,204
Pledged as Collateral		334,947			280,560			204,798			117,947
Investment Securities - Held to Maturity (Fair Value of $408,203, $417,938, $442,989, and $522,993)		426,910			433,021			454,240			526,767
Loans Held for Sale		15,506			22,754			17,915			17,435
Loans and Leases		6,441,625			6,246,125			6,168,536			6,151,418
Allowance for Loan and Lease Losses		(91,035		)	(91,064		)	(91,090		)	(101,587		)
Net Loans and Leases		6,350,590			6,155,061			6,077,446			6,049,831
Total Earning Assets		9,309,318			9,493,211			9,092,709			9,163,009
Cash and Non-Interest-Bearing Deposits		397,061			422,436			493,825			293,115
Premises and Equipment		130,435			143,392			133,913			137,907
Customers’ Acceptance Liability		646			729			1,056			1,598
Accrued Interest Receivable		45,343			44,149			43,033			38,540
Foreclosed Real Estate		188			358			358			292
Mortgage Servicing Rights		18,750			18,468			18,010			18,239
Goodwill		34,959			34,959			34,959			34,959
Other Assets		388,490			370,347			369,175			372,031
Total Assets		$	10,325,190		$	10,528,049		$	10,187,038		$	10,059,690
Liabilities
Deposits
Non-Interest-Bearing Demand		$	1,976,051		$	2,377,355		$	2,134,916		$	1,918,749
Interest-Bearing Demand		1,602,914			1,674,294			1,678,454			1,641,873
Savings		2,691,029			2,716,572			2,819,258			2,967,993
Time		1,496,039			1,378,880			1,274,840			1,198,143
Total Deposits		7,766,033			8,147,101			7,907,468			7,726,758
Funds Purchased		353,700			55,930			268,110			63,565
Short-Term Borrowings		12,100			2,025			9,447			9,894
Securities Sold Under Agreements to Repurchase		835,563			957,166			609,380			861,233
Long-Term Debt		242,749			242,730			242,703			242,674
Banker’s Acceptances Outstanding		646			729			1,056			1,598
Retirement Benefits Payable		72,192			71,708			71,116			66,638
Accrued Interest Payable		13,023			11,882			10,910			8,617
Taxes Payable and Deferred Taxes		274,146			273,088			269,094			283,082
Other Liabilities		88,310			84,612			104,402			83,462
Total Liabilities		9,658,462			9,846,971			9,493,686			9,347,521
Shareholders’ Equity
Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: June 2006 - 56,855,346 / 50,570,697, March 2006 - 56,858,558 / 50,970,829, December 2005 - 56,827,483 / 51,276,286, June 2005 - 81,721,733 / 51,853,734		566			566			565			815
Capital Surplus		469,461			467,678			473,338			457,280
Accumulated Other Comprehensive Loss		(76,204		)	(65,668		)	(47,818		)	(18,471		)
Retained Earnings		581,406			565,702			546,591			1,339,119
Deferred Stock Grants		—			—			(11,080		)	(7,166		)
Treasury Stock, at Cost (Shares: June 2006 - 6,284,649, March 2006 - 5,887,729, December 2005 - 5,551,197, June 2005 - 29,867,999)		(308,501		)	(287,200		)	(268,244		)	(1,059,408		)
Total Shareholders’ Equity		666,728			681,078			693,352			712,169
Total Liabilities and Shareholders’ Equity		$	10,325,190		$	10,528,049		$	10,187,038		$	10,059,690

 

 

Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity (Unaudited)	Table 4

 

(dollars in thousands)		Total			Common Stock			Capital Surplus			Accum. Other Comprehensive Loss			Retained Earnings			Deferred Stock Grants			Treasury Stock			Comprehensive Income
Balance at December 31, 2005		$	693,352		$	565		$	473,338		$	(47,818	)	$	546,591		$	(11,080	)	$	(268,244	)
Comprehensive Income:
Net Income		82,526			—			—			—			82,526			—			—			$	82,526
Other Comprehensive Income, Net of Tax:
Change in Unrealized Gains and Losses on Investment Securities		(28,386		)	—			—			(28,386		)	—			—			—			(28,386		)
Total Comprehensive Income																							$	54,140
Common Stock Issued under Stock Plans and Related Tax Benefits (537,554 shares)		22,401			1			(3,877		)	—			(9,999		)	11,080			25,196
Treasury Stock Purchased (1,241,303 shares)		(65,453		)	—			—			—			—			—			(65,453		)
Cash Dividends Paid		(37,712		)	—			—			—			(37,712		)	—			—
Balance at June 30, 2006		$	666,728		$	566		$	469,461		$	(76,204	)	$	581,406		$	—		$	(308,501	)
Balance at December 31, 2004		$	814,834		$	813		$	450,998		$	(12,917	)	$	1,282,425		$	(8,433	)	$	(898,052	)
Comprehensive Income:
Net Income		91,951			—			—			—			91,951			—			—			$	91,951
Other Comprehensive Income, Net of Tax:
Change in Unrealized Gains and Losses on Investment Securities		(5,554		)	—			—			(5,554		)	—			—			—			(5,554		)
Total Comprehensive Income																							$	86,397
Common Stock Issued under Stock Plans and Related Tax Benefits (605,364 shares)		21,499			2			6,282			—			(610		)	1,267			14,558
Treasury Stock Purchased (3,710,379 shares)		(175,914		)	—			—			—			—			—			(175,914		)
Cash Dividends Paid		(34,647		)	—			—			—			(34,647		)	—			—
Balance at June 30, 2005		$	712,169		$	815		$	457,280		$	(18,471	)	$	1,339,119		$	(7,166	)	$	(1,059,408	)

 

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Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited)	Table 5

 

		Three Months Ended June 30, 2006								Three Months Ended March 31, 2006 (1)								Three Months Ended June 30, 2005 (1)								Six Months Ended June 30, 2006
(dollars in millions)		Average Balance			Income/ Expense			Yield/ Rate		Average Balance			Income/ Expense			Yield/ Rate		Average Balance			Income/ Expense			Yield/ Rate		Average Balance			Income/ Expense			Yield/ Rate
Earning Assets
Interest-Bearing Deposits		$	5.7		$	0.1		3.82	%	$	5.3		$	—		3.30	%	$	6.0		$	—		2.36	%	$	5.5		$	0.1		3.57	%
Funds Sold		13.9			0.2			4.89		11.0			0.1			4.61		23.1			0.2			2.87		12.5			0.3			4.77
Investment Securities
Available for Sale		2,564.2			31.4			4.90		2,589.4			31.0			4.80		2,542.5			28.1			4.42		2,576.7			62.4			4.85
Held to Maturity		429.5			4.6			4.34		443.7			4.8			4.29		544.1			5.5			4.06		436.6			9.4			4.31
Loans Held for Sale		8.9			0.1			6.25		12.0			0.2			6.02		15.1			0.2			5.72		10.4			0.3			6.12
Loans and Leases (2)
Commercial and Industrial		967.5			17.6			7.29		932.3			16.2			7.05		958.2			14.5			6.06		950.0			33.8			7.17
Construction		176.7			3.6			8.08		142.6			2.8			8.03		121.0			1.8			5.94		159.8			6.4			8.06
Commercial Mortgage		598.8			9.9			6.66		571.9			9.2			6.50		599.3			8.8			5.89		585.4			19.1			6.58
Residential Mortgage		2,461.4			36.6			5.94		2,436.0			35.7			5.85		2,349.3			33.1			5.65		2,448.8			72.3			5.90
Other Revolving Credit and Installment		718.0			16.3			9.10		725.7			15.9			8.89		740.9			15.4			8.36		721.8			32.2			9.00
Home Equity		900.5			16.6			7.39		880.7			15.2			7.01		822.3			11.6			5.64		890.6			31.8			7.20
Lease Financing		494.7			3.7			2.99		492.5			4.2			3.42		499.2			4.7			3.73		493.6			7.9			3.20
Total Loans and Leases		6,317.6			104.3			6.61		6,181.7			99.2			6.47		6,090.2			89.9			5.91		6,250.0			203.5			6.54
Other		79.4			0.3			1.37		79.4			0.3			1.37		66.3			0.3			1.64		79.4			0.5			1.37
Total Earning Assets (3)		9,419.2			141.0			5.99		9,322.5			135.6			5.85		9,287.3			124.2			5.35		9,371.1			276.5			5.92
Cash and Non-Interest-Bearing Deposits		304.3								331.8								305.8								318.0
Other Assets		445.8								437.4								376.1								441.6
Total Assets		$	10,169.3							$	10,091.7							$	9,969.2							$	10,130.7
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand		$	1,611.7		3.9			0.97		$	1,654.7		3.3			0.82		$	1,667.3		2.4			0.58		$	1,633.1		7.2			0.89
Savings		2,699.0			9.4			1.39		2,756.2			7.2			1.06		2,970.8			4.8			0.65		2,727.4			16.5			1.22
Time		1,432.6			11.4			3.20		1,309.7			9.1			2.82		1,159.0			6.4			2.20		1,371.5			20.6			3.02
Total Interest-Bearing Deposits		5,743.3			24.7			1.72		5,720.6			19.6			1.39		5,797.1			13.6			0.94		5,732.0			44.3			1.56
Short-Term Borrowings		219.0			2.7			4.99		178.0			2.0			4.44		164.0			1.2			2.92		198.6			4.7			4.75
Securities Sold Under Agreements to Repurchase		855.9			9.8			4.57		772.0			7.9			4.13		658.9			4.6			2.78		814.2			17.7			4.36
Long-Term Debt		242.7			3.7			6.15		242.7			3.7			6.16		242.7			3.7			6.16		242.7			7.4			6.16
Total Interest-Bearing Liabilities		7,060.9			40.9			2.32		6,913.3			33.2			1.94		6,862.7			23.1			1.35		6,987.5			74.1			2.14
Net Interest Income					$	100.1							$	102.4							$	101.1							$	202.4
Interest Rate Spread								3.67	%							3.91	%							4.00	%							3.78	%
Net Interest Margin								4.25	%							4.41	%							4.36	%							4.33	%
Non-Interest-Bearing Demand Deposits		1,984.9								2,022.0								1,950.2								2,003.4
Other Liabilities		436.4								452.5								439.5								444.4
Shareholders’ Equity		687.1								703.9								716.8								695.4
Total Liabilities and Shareholders’ Equity		$	10,169.3							$	10,091.7							$	9,969.2							$	10,130.7

 

(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 taxable-equivalent basis adjustment based upon a statutory tax rate of 35%.