Bank of Hawaii Corporation 2003 Financial Results
HONOLULU--(BUSINESS WIRE)--Jan. 26, 2004--Bank of Hawaii Corporation (NYSE:BOH)
- 2003 Diluted Earnings Per Share Increase to $2.21, Up 30% From 2002
- 2003 Net Income $135.2 Million, Up 12% From 2002
- Board of Directors Declares Dividend of $0.30 Per Share
Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share for 2003 of $2.21, up $0.51 or 30.0 percent from diluted earnings per share of $1.70 in 2002. Net income for the year was $135.2 million, up $14.0 million or 11.6 percent from $121.2 million in the previous year. The return on average assets in 2003 was 1.44 percent, up from 1.22 percent in 2002. The return on average equity for the year was 15.02 percent, up from 10.24 percent in 2002.
"Our positive financial results for 2003 reflect the hard work and focus of our employees, and I'm proud of their accomplishments," said Michael E. O'Neill, Chairman and CEO. "Last year marked the final phase of our ambitious three-year strategic plan which began in 2001, and I'm pleased to report that we have exceeded all of our key goals. Entering 2004, Hawaii's economy continues its strong pace, and we believe our company is ready to build on its successes. We look forward to continuing the momentum as we prepare to execute our next three-year plan that will guide us through 2006."
Diluted earnings per share for the fourth quarter of 2003 were $0.66, up $0.22 or 50.0 percent from $0.44 per diluted share for the same period last year. Net income in the fourth quarter was $38.7 million, up 33.8 percent from net income of $28.9 million in the fourth quarter last year. The return on average assets for the fourth quarter of 2003 was 1.66 percent, up from 1.53 percent in the previous quarter and up from 1.20 percent in the fourth quarter of 2002. The return on average equity was 18.59 percent during the quarter, up from 16.69 percent in the third quarter of 2003 and up significantly from 10.72 percent in the same quarter last year.
Financial Highlights
Net interest income for the fourth quarter of 2003 was $93.4 million, up $2.3 million from net interest income of $91.1 million in the third quarter of 2003 and up $3.2 million from $90.2 million in the same quarter last year. The increase in net interest income from the previous quarter was largely due to higher yields on investment securities. The increase in net interest income from the fourth quarter of 2002 was primarily due to lower interest rates on deposits and a decline in short-term borrowings. An analysis of the change in net interest income is included in Table 6.
The net interest margin was 4.35 percent for the fourth quarter of 2003, a 20 basis point increase from 4.15 percent in the previous quarter and a 30 basis point increase from 4.05 percent in the fourth quarter of 2002. The net interest margin for the full year of 2003 was 4.23 percent, a 24 basis point increase from 3.99 percent in 2002.
The Company did not recognize a provision for loan and lease losses during the fourth quarter of 2003 and has not recorded a provision for the last six quarters. The allowance for loan and lease losses was reduced $3.6 million from September 30, 2003, which equaled the amount of net charge-offs for the fourth quarter.
Non-interest income was $49.4 million for the quarter, a decrease of $4.4 million or 8.1 percent compared to non-interest income of $53.8 million in the third quarter of 2003. The decrease was primarily due to reduced gains on sales of mortgage loans and lower commercial loan prepayment penalties during the fourth quarter. Non-interest income was down $0.9 million or 1.8 percent from non-interest income of $50.4 million in the fourth quarter of 2002 largely due to a decline in gains on sales of mortgage loans.
Non-interest expense was $83.4 million in the fourth quarter of 2003, down $5.5 million or 6.2 percent from $88.9 million in the previous quarter and down $13.3 million or 13.8 percent from $96.7 million in the same quarter last year. Non-interest expense for the third quarter of 2003 and the fourth quarter of 2002 included $4.4 million and $7.1 million, respectively, in systems replacement costs. The fourth quarter of 2002 also included $0.4 million in net restructuring costs. Excluding these costs, non-interest expense was down $1.1 million compared to the third quarter of 2003. The decrease was primarily due to a gain on the sale of foreclosed property in the fourth quarter and the third quarter donation to the Bank of Hawaii Charitable Foundation, partially offset by increased salaries and benefits related to employee incentives. An analysis of salary and benefit expenses is included in Table 7. Excluding systems replacement and net restructuring costs, non-interest expense decreased $5.9 million or 6.6 percent from the same quarter last year largely due to cost savings associated with the systems replacement project.
The efficiency ratio for the full year of 2003 was 63.4 percent. Excluding systems replacement and net restructuring costs, the efficiency ratio for 2003 was 59.5 percent, a significant improvement compared to 62.1 percent in the previous year. The efficiency ratio for the fourth quarter of 2003 was 58.4 percent compared to 63.5 percent, excluding systems replacement and net restructuring costs, in the fourth quarter last year.
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. Previously reported results have been reclassified to conform to current methodologies. Business segment performance details are summarized in Tables 11a and 11b.
Asset Quality
Bank of Hawaii Corporation's strong credit quality continued to improve during the fourth quarter of 2003. Non-performing assets were $31.7 million at the end of the quarter, a decrease of $8.4 million, or 20.9 percent compared to non-performing assets of $40.1 million at the end of the previous quarter. Contributing to the improvement in non-performing assets was the fourth quarter 2003 sale of a $3.7 million foreclosed property. Non-performing assets declined $22.7 million, or 41.7 percent compared to $54.4 million at the end of the fourth quarter last year. At December 31, 2003 the ratio of non-performing assets to total loans and foreclosed real estate was 0.55 percent compared with 0.72 percent at September 30, 2003 and 1.01 percent at December 31, 2002.
Non-accrual loans were $27.3 million at December 31, 2003, a reduction of $4.1 million, or 13.1 percent, from $31.4 million at September 30, 2003 and down $17.7 million, or 39.3 percent, from $45.0 million at December 31, 2002. Non-accrual loans as a percentage of total loans were 0.47 percent at December 31, 2003, down from 0.56 percent at the end of the previous quarter and down from 0.84 percent at the end of the comparable quarter last year.
Net charge-offs during the fourth quarter of 2003 were $3.6 million, or 0.26 percent (annualized) of total average loans, down from $5.3 million, or 0.38 percent (annualized) of total average loans in the third quarter of 2003. Net charge-offs in the fourth quarter of 2003 were comprised of $6.9 million in charge-offs partially offset by recoveries of $3.3 million. Net charge-offs during the fourth quarter of 2002 were $11.6 million, or 0.88 percent (annualized) of total average loans. Net charge-offs for the full year of 2003 were $13.8 million, or 0.25 percent of total average loans, a decrease of 50.2 percent from net charge-offs of $27.7 million, or 0.51 percent of total average loans in 2002.
The allowance for loan and lease losses was $129.1 million at December 31, 2003. The ratio of the allowance for loan and lease losses to total loans was 2.24 percent at December 31, 2003 down from 2.38 percent at September 30, 2003 and down from 2.67 percent at December 31, 2002.
Concentrations of credit exposure to selected components of the portfolio are summarized in Table 8.
Other Financial Highlights
Total assets were $9.5 billion at December 31, 2003, up from total assets of $9.4 billion at September 30, 2003 and essentially flat compared with total assets of $9.5 billion at December 31, 2002. Total loans were $5.8 billion at December 31, 2003, up from total loans of $5.6 billion at September 30, 2003 and up from total loans of $5.4 billion at December 31, 2002. Total deposits at December 31, 2003 were $7.3 billion, up $231 million from September 30, 2003 and up $413 million from December 31, 2002. The increase in deposits was primarily due to continued growth in demand and savings deposits.
During the fourth quarter of 2003, Bank of Hawaii Corporation repurchased 1.6 million shares of common stock at a total cost of $64.2 million under the share repurchase program. The average cost per share was $40.27 during the quarter. From the beginning of the share repurchase program in July 2001 through December 31, 2003, the Company had repurchased a total of 29.8 million shares and returned a total of $855.0 million to the shareholders at an average cost of $28.68 per share. Through January 23, 2004, the Company repurchased an additional 0.3 million shares of common stock at a cost of $42.79 per share. Remaining buyback authority was $133.2 million at January 23, 2004.
The Company's capital and liquidity remain strong. At December 31, 2003 the Tier 1 leverage ratio was 8.43 percent compared to 8.52 percent at September 30, 2003 and 10.34 percent at December 31, 2002.
The Company's Board of Directors has declared a quarterly cash dividend of $0.30 per share on the Company's outstanding shares. The dividend will be payable on March 12, 2004 to shareholders of record at the close of business on March 1, 2004.
Economic Update
During the fourth quarter of 2003, Hawaii's economy continued to outperform the national average. Hawaii's 4.0 percent fourth quarter unemployment rate, employment growth rate of 4.5 percent (persons), and job growth rate of 2.0 percent (payrolls) ranked among the top five states nationwide. Travel volumes continued to grow at 3-4 percent overall during the fourth quarter, recovering from SARS effects in the second quarter of 2003. Tourism is expected to reach record volumes for domestic travelers during 2003, and an all-time high for overall visitor days (arrivals times stay length) for the year. International travel prospects were enhanced during the fourth quarter by the strengthening yen against the US dollar. Home sales reached record high volumes with record high prices during the quarter. Construction spending, up 40 percent over the last four years, headed into the fourth quarter of 2003 running ahead of prior year volumes 4-5 percent. For more economic information, visit the Company's web site http://www.boh.com/econ/.
Business and Earnings Outlook -- Plan for 2004 to 2006
In 2001, the Company announced a three-year plan designed to refocus on maximizing shareholder value over time, which continues to be our governing objective. That plan was successfully completed in 2003. The new three-year plan for 2004-2006 continues to build on the winning strategy of that plan. There are five key elements of the new plan: 1) accelerate revenue growth in island markets; 2) better integrate our business segments; 3) develop our management teams; 4) improve efficiency; and 5) maintain a discipline of dependable risk and capital management. Bank of Hawaii Corporation currently estimates that its net income for 2004 should be approximately $157 million. Based on current conditions, the Company does not expect to record a provision for loan and lease losses in 2004. However, the actual amount of the provision for loan and lease losses depends on determinations of credit risk that are made near the end of each quarter. Earnings per share and return on equity projections continue to be dependent upon the terms and timing of share repurchases. A summary of the Company's financial targets for 2004-2006 are included in Table 13.
Conference Call Information
The Company will review its 2003 financial results and discuss the new 2004-2006 plan today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern Time). The presentation will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation's web site, www.boh.com. The conference call number is 800-299-7635 in the United States or 617-786-2901 for international callers. No confirmation code is required to access the call. A replay will be available for one week beginning at 10:00 a.m. Hawaii Time (3:00 p.m. Eastern Time) on Monday, January 26, 2004 by calling 888-286-8010 in the United States or 617-801-6888 for international callers and entering the number 54443887 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.
This news release contains forward-looking statements concerning, among other things, the economic environment in our service area, the expected level of loan loss provisioning, anticipated savings of our systems replacement project, the effect of our new three-year plan, and anticipated dividends, revenues and expenses during 2004 and beyond. We believe the assumptions underlying our forward-looking statements are reasonable. However, any of the assumptions 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, fiscal and monetary policies, or legislation in Hawaii and the other markets we serve; 2) changes in our credit quality or risk profile which may increase or decrease the required level of allowance for loan and lease losses; 3) changes in market interest rates that may affect our credit markets and ability to maintain our net interest margin; 4) changes to the amount and timing of our proposed equity repurchases; 5) inability to achieve expected benefits of our business process changes due to adverse changes in implementation processes or costs, operational savings, or timing; 6) real or threatened acts of war or terrorist activity affecting business conditions; and 7) adverse weather and other natural conditions impacting our and our customers' operations. We do not undertake any obligation to update forward-looking statements to reflect later events or circumstances.
Bank of Hawaii Corporation and Subsidiaries Highlights (Unaudited) Table 1 ---------------------------------------------------------------------- (dollars in thousands except per share amounts) Three Months Ended Year Ended Earnings Highlights and December 31, December 31, Performance Ratios 2003 2002 (1) 2003 2002 (1) ---------------------------- ----------------------------------------- Net Income $38,673 $28,908 $135,195 $121,180 Basic Earnings Per Share 0.70 0.45 2.32 1.75 Diluted Earnings Per Share 0.66 0.44 2.21 1.70 Cash Dividends 16,770 12,193 50,589 50,635 Return on Average Assets 1.66% 1.20% 1.44% 1.22% Return on Average Equity 18.59% 10.72% 15.02% 10.24% Net Interest Margin 4.35% 4.05% 4.23% 3.99% Efficiency Ratio 58.41% 68.80% 63.38% 64.94% Efficiency Ratio excluding ITSRP and Restructuring Costs 58.41% 63.51% 59.51% 62.13% ---------------------------------------------------------------------- Statement of Condition Highlights and December 31, Performance Ratios 2003 2002 ------------------------------------- ---------------------- Total Assets $9,461,647 $9,516,418 Net Loans 5,628,095 5,216,151 Total Deposits 7,332,779 6,920,161 Total Shareholders' Equity 793,132 1,015,759 Book Value Per Common Share $14.44 $16.12 Allowance / Loans and Leases Outstanding 2.24% 2.67% Average Equity / Average Assets 9.60% 11.88% Employees (FTE) 2,702 2,891 Branches and offices 89 93 Market Price Per Share of Common Stock for the Quarter Ended: Closing $42.20 $30.39 High $42.99 $31.05 Low $33.69 $25.40 (1) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) Table 2 ---------------------------------------------------------------------- Three Months Ended Year Ended (dollars in thousands December 31, December 31, except per share amounts) 2003 2002 (1) 2003 2002 (1) ---------------------------------------------------------------------- Interest Income Interest and Fees on Loans and Leases $80,351 $85,945 $334,793 $366,366 Income on Investment Securities - Held to Maturity 7,183 3,122 18,956 16,774 Income on Investment Securities - Available for Sale 19,032 24,088 77,793 104,261 Deposits 1,169 3,578 4,816 20,020 Funds Sold 85 834 1,919 3,503 Other 1,007 1,312 4,244 5,614 ---------------------------------------------------------------------- Total Interest Income 108,827 118,879 442,521 516,538 Interest Expense Deposits 9,433 17,657 47,473 84,348 Security Repurchase Agreements 1,359 4,585 7,939 30,173 Funds Purchased 249 255 944 1,030 Short-Term Borrowings 17 217 92 1,489 Long-Term Debt 4,417 5,947 20,131 29,267 ---------------------------------------------------------------------- Total Interest Expense 15,475 28,661 76,579 146,307 ---------------------------------------------------------------------- Net Interest Income 93,352 90,218 365,942 370,231 Provision for Loan and Lease Losses - - - 11,616 ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 93,352 90,218 365,942 358,615 Non-Interest Income Trust and Asset Management 12,759 13,085 50,996 55,733 Mortgage Banking 3,324 4,398 15,556 18,866 Service Charges on Deposit Accounts 9,442 8,326 35,938 32,617 Fees, Exchange, and Other Service Charges 13,725 12,963 56,221 51,594 Investment Securities Gains (Losses) (20) 612 1,789 615 Insurance 3,597 3,099 13,680 10,938 Other 6,610 7,872 24,540 27,972 ---------------------------------------------------------------------- Total Non-Interest Income 49,437 50,355 198,720 198,335 Non-Interest Expense Salaries and Benefits 46,409 44,734 186,280 186,563 Net Occupancy Expense 9,933 10,638 38,980 39,149 Net Equipment Expense 7,395 11,077 33,652 41,253 Restructuring and Other Related Costs - 385 - 2,364 Information Technology Systems Replacement Project - 7,052 21,871 13,628 Other 19,667 22,827 77,092 86,292 ---------------------------------------------------------------------- Total Non-Interest Expense 83,404 96,713 357,875 369,249 ---------------------------------------------------------------------- Income Before Income Taxes 59,385 43,860 206,787 187,701 Provision for Income Taxes 20,712 14,952 71,592 66,521 ---------------------------------------------------------------------- Net Income $38,673 $28,908 $135,195 $121,180 ====================================================================== Basic Earnings Per Share $0.70 $0.45 $2.32 $1.75 Diluted Earnings Per Share $0.66 $0.44 $2.21 $1.70 Dividends Declared Per Share $0.30 $0.00 $0.87 $0.73 Basic Weighted Average Shares 55,374,874 64,154,477 58,338,566 69,385,745 Diluted Weighted Average Shares 58,570,941 66,378,208 61,085,567 71,447,333 ====================================================================== (1) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Condition (Unaudited) Table 3 ---------------------------------------------------------------------- December 31, December 31, (dollars in thousands) 2003 2002 ---------------------------------------------------------------------- Assets Interest-Bearing Deposits $154,735 $549,978 Investment Securities - Held to Maturity (Market Value of $720,699 and $236,016) 727,233 229,720 Investment Securities - Available for Sale 1,991,116 2,287,201 Funds Sold - 195,000 Loans Held for Sale 9,211 40,118 Loans 5,757,175 5,359,004 Allowance for Loan and Lease Losses (129,080) (142,853) ---------------------------------------------------------------------- Net Loans 5,628,095 5,216,151 ---------------------------------------------------------------------- Total Earning Assets 8,510,390 8,518,168 Cash and Non-Interest Bearing Deposits 363,495 374,352 Premises and Equipment 160,005 176,969 Customers' Acceptance Liability 1,707 2,680 Accrued Interest Receivable 32,672 36,722 Foreclosed Real Estate 4,377 9,434 Mortgage Servicing Rights 22,178 28,820 Goodwill 36,216 36,216 Other Assets 330,607 333,057 ---------------------------------------------------------------------- Total Assets $9,461,647 $9,516,418 ====================================================================== Liabilities Deposits Non-Interest Bearing Demand $1,933,928 $1,719,633 Interest Bearing Demand 1,356,330 1,171,832 Savings 2,833,379 2,535,219 Time 1,209,142 1,493,477 ---------------------------------------------------------------------- Total Deposits 7,332,779 6,920,161 Securities Sold Under Agreements to Repurchase 472,757 735,621 Funds Purchased 109,090 64,467 Short-Term Borrowings 12,690 33,420 Current Maturities of Long-Term Debt 96,505 114,781 Banker's Acceptances Outstanding 1,707 2,680 Retirement Benefits Payable 61,841 61,385 Accrued Interest Payable 7,483 13,731 Taxes Payable 207,101 196,813 Other Liabilities 138,999 82,596 Long-Term Debt 227,563 275,004 ---------------------------------------------------------------------- Total Liabilities 8,668,515 8,500,659 Shareholders' Equity Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: December 2003 - 81,647,729 / 54,928,480, December 2002 - 81,294,730 / 63,015,442 807 806 Capital Surplus 391,701 372,192 Accumulated Other Comprehensive Income (Loss) (5,711) 11,659 Retained Earnings 1,199,077 1,115,910 Deferred Stock Grants (8,309) (1,424) Treasury Stock, at Cost (Shares: December 2003 - 26,719,249, December 2002 - 18,279,288) (784,433) (483,384) ---------------------------------------------------------------------- Total Shareholders' Equity 793,132 1,015,759 ---------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $9,461,647 $9,516,418 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Shareholders' Equity (Unaudited) Table 4 ---------------------------------------------------------------------- Accum. Other Compre- hensive Common Capital Income (dollars in thousands) Total Stock Surplus (Loss) ---------------------------------------------------------------------- Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659 Comprehensive Income: Net Income 135,195 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities (16,434) - - (16,434) Pension Liability Adjustment (936) - - (936) Total Comprehensive Income Common Stock Issued: 38,928 Retirement Savings Plan 1,370 - 526 - 1,213,303 Stock Option Plan 28,712 - 5,380 - 94,511 Dividend Reinvestment Plan 3,292 - 1,237 - 8,482 Directors' Restricted Shares and Deferred Compensation Plan 48 1 286 - 328,200 Employees' Restricted Shares 6,693 - 12,080 - Treasury Stock Purchased (9,762,079 shares) (329,978) - - - Cash Dividends Paid (50,589) - - - ---------------------------------------------------------------------- Balance at December 31, 2003 $793,132 $807 $391,701 $(5,711) ====================================================================== Balance at December 31, 2001 $1,247,012 $806 $367,672 $22,761 Comprehensive Income: Net Income 121,180 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities 4,237 - - 4,237 Foreign Currency Translation Adjustment (582) - - (582) Pension Liability Adjustment (14,757) - - (14,757) Total Comprehensive Income Common Stock Issued: 43,449 Profit Sharing Plan 1,240 - 288 - 1,581,876 Stock Option Plan 32,279 - 5,352 - 101,796 Dividend Reinvestment Plan 2,893 - 656 - 4,792 Directors' Restricted Shares and Deferred Compensation Plan 20 - 141 - (81,600)Employees' Restricted Shares 5,089 - (1,917) - Treasury Stock Purchased (11,838,800 shares) (332,217) - - - Cash Dividends Paid (50,635) - - - ---------------------------------------------------------------------- Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659 ====================================================================== Deferred Compre- Retained Stock Treasury hensive (dollars in thousands) Earnings Grants Stock Income ---------------------------------------------------------------------- Balance at December 31, 2002 $1,115,910 $(1,424) $(483,384) Comprehensive Income: Net Income 135,195 - - $135,195 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - - - (16,434) Pension Liability Adjustment - - - (936) --------- Total Comprehensive Income $117,825 ========= Common Stock Issued: 38,928 Retirement Savings Plan - - 844 1,213,303 Stock Option Plan (1,439) (1,498) 26,269 94,511 Dividend Reinvestment Plan - - 2,055 8,482 Directors' Restricted Shares and Deferred Compensation Plan - - (239) 328,200 Employees' Restricted Shares - (5,387) - Treasury Stock Purchased (9,762,079 shares) - - (329,978) Cash Dividends Paid (50,589) - - ------------------------------------------------------------- Balance at December 31, 2003 $1,199,077 $(8,309) $(784,433) ============================================================= Balance at December 31, 2001 $1,055,424 $(7,637) $(192,014) Comprehensive Income: Net Income 121,180 - - $121,180 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - - - 4,237 Foreign Currency Translation Adjustment - - - (582) Pension Liability Adjustment - - - (14,757) --------- Total Comprehensive Income $110,078 ========= Common Stock Issued: 43,449 Profit Sharing Plan - - 952 1,581,876 Stock Option Plan (10,057) (793) 37,777 101,796 Dividend Reinvestment Plan (2) - 2,239 4,792 Directors' Restricted Shares and Deferred Compensation Plan - - (121) (81,600)Employees' Restricted Shares - 7,006 - Treasury Stock Purchased (11,838,800 shares) - - (332,217) Cash Dividends Paid (50,635) - - ------------------------------------------------------------- Balance at December 31, 2002 $1,115,910 $(1,424) $(483,384) ============================================================= Bank of Hawaii Corporation and Subsidiaries Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited) Table 5a ---------------------------------------------------------------------- Three Months Ended Three Months Ended December 31, 2003 September 30, 2003 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- Earning Assets Interest Bearing Deposits $218.6 $1.2 2.12% $224.7 $1.2 2.08% Funds Sold 34.3 0.1 0.99 102.4 0.3 0.97 Investment Securities Held to Maturity 742.1 7.2 3.89 675.1 6.4 3.82 Available for Sale 1,898.6 19.0 4.01 2,090.6 16.5 3.15 Loans Held for Sale 13.9 0.2 6.21 52.2 0.7 5.45 Loans and Lease Financing Commercial and Industrial 858.2 10.6 4.90 862.8 10.8 4.95 Construction 99.2 1.1 4.30 87.8 0.9 4.26 Commercial Mortgage 627.4 8.9 5.62 670.6 9.4 5.56 Residential Mortgage 2,336.3 34.5 5.90 2,298.8 36.2 6.30 Installment 598.1 13.4 8.89 558.6 12.8 9.09 Home Equity 453.0 5.6 4.89 448.1 5.6 4.99 Purchased Home Equity 104.7 0.6 2.24 132.6 0.7 2.20 Lease Financing 494.0 5.5 4.44 487.2 5.6 4.52 ---------------------------------------------------------------------- Total Loans and Lease Financing 5,570.9 80.2 5.73 5,546.5 82.0 5.89 Other 76.8 1.0 5.20 76.1 1.0 5.38 ---------------------------------------------------------------------- Total Earning Assets 8,555.2 108.9 5.07 8,767.6 108.1 4.91 Cash and Non-Interest Bearing Deposits 323.5 333.2 Other Assets 379.1 399.2 -------- -------- Total Assets $9,257.8 $9,500.0 ======== ======== Interest Bearing Liabilities Interest Bearing Deposits Demand $1,293.8 $0.5 0.16% $1,245.8 $0.5 0.15% Savings 2,786.6 3.2 0.46 2,754.6 3.4 0.49 Time 1,227.9 5.7 1.83 1,285.7 6.4 1.97 ---------------------------------------------------------------------- Total Interest Bearing Deposits 5,308.3 9.4 0.71 5,286.1 10.3 0.77 Short-Term Borrowings 608.0 1.7 1.06 827.8 2.3 1.08 Long-Term Debt 324.2 4.4 5.41 325.7 4.4 5.40 ---------------------------------------------------------------------- Total Interest Bearing Liabilities 6,240.5 15.5 0.98 6,439.6 17.0 1.04 ---------------------------------------------------------------------- Net Interest Income $93.4 $91.1 ====== ====== Interest Rate Spread 4.09% 3.87% Net Interest Margin 4.35% 4.15% Non-Interest Bearing Demand Deposits 1,836.4 1,844.4 Other Liabilities 355.7 344.1 Shareholders' Equity 825.2 871.9 -------- -------- Total Liabilities and Shareholders' Equity $9,257.8 $9,500.0 ======== ======== Three Months Ended December 31, 2002 (1) Average Income/ Yield/ (dollars in millions) Balance Expense Rate --------------------------------------------------------------------- Earning Assets Interest Bearing Deposits $796.6 $3.6 1.78% Funds Sold 234.5 0.8 1.42 Investment Securities Held to Maturity 253.8 3.2 4.98 Available for Sale 2,273.3 24.1 4.24 Loans Held for Sale 38.9 0.6 5.88 Loans and Lease Financing Commercial and Industrial 881.7 11.3 5.07 Construction 131.5 1.8 5.30 Commercial Mortgage 610.5 9.9 6.40 Residential Mortgage 2,212.7 38.5 6.97 Installment 443.3 11.7 10.53 Home Equity 422.1 5.8 5.50 Purchased Home Equity 10.1 - - Lease Financing 498.5 6.3 5.03 --------------------------------------------------------------------- Total Loans and Lease Financing 5,210.4 85.3 6.52 Other 78.7 1.3 6.62 --------------------------------------------------------------------- Total Earning Assets 8,886.2 118.9 5.33 Cash and Non-Interest Bearing Deposits 305.2 Other Assets 363.4 -------- Total Assets $9,554.8 ======== Interest Bearing Liabilities Interest Bearing Deposits Demand $1,105.1 $1.1 0.39% Savings 2,468.2 6.4 1.03 Time 1,538.2 10.2 2.63 --------------------------------------------------------------------- Total Interest Bearing Deposits 5,111.5 17.7 1.37 Short-Term Borrowings 1,053.5 5.1 1.90 Long-Term Debt 389.9 5.9 6.05 --------------------------------------------------------------------- Total Interest Bearing Liabilities 6,554.9 28.7 1.73 --------------------------------------------------------------------- Net Interest Income $90.2 ====== Interest Rate Spread 3.60% Net Interest Margin 4.05% Non-Interest Bearing Demand Deposits 1,601.0 Other Liabilities 329.3 Shareholders' Equity 1,069.6 -------- Total Liabilities and Shareholders' Equity $9,554.8 ======== (1) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited) Table 5b ---------------------------------------------------------------------- Year Ended Year Ended December 31, 2003 December 31, 2002 (1) Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- Earning Assets Interest Bearing Deposits $227.3 $4.8 2.12% $1,100.0 $20.0 1.82% Funds Sold 162.9 1.9 1.18 213.8 3.5 1.64 Investment Securities Held to Maturity 488.0 19.1 3.92 311.7 17.0 5.47 Available for Sale 2,142.4 77.8 3.63 2,028.9 104.3 5.14 Loans Held for Sale 39.5 2.2 5.48 120.2 8.0 6.65 Loans and Lease Financing Commercial and Industrial 860.3 41.9 4.87 1,024.1 52.0 5.08 Construction 96.3 4.4 4.56 151.5 8.3 5.45 Commercial Mortgage 644.8 37.4 5.81 598.7 40.0 6.68 Residential Mortgage 2,295.0 145.6 6.34 2,334.4 164.3 7.04 Installment 548.8 52.6 9.59 408.3 45.1 11.05 Home Equity 444.6 22.5 5.05 393.4 22.9 5.81 Purchased Home Equity 144.7 5.9 4.10 2.5 - - Lease Financing 489.9 22.3 4.55 498.4 25.8 5.17 ---------------------------------------------------------------------- Total Loans and Lease Financing 5,524.4 332.6 6.02 5,411.3 358.4 6.62 Other 75.7 4.3 5.61 91.5 5.6 6.14 ---------------------------------------------------------------------- Total Earning Assets 8,660.2 442.7 5.11 9,277.4 516.8 5.57 Cash and Non-Interest Bearing Deposits 328.4 313.2 Other Assets 388.9 370.6 -------- -------- Total Assets $9,377.5 $9,961.2 ======== ======== Interest Bearing Liabilities Interest Bearing Deposits Demand $1,215.7 $2.5 0.20% $1,014.7 $4.3 0.42% Savings 2,723.9 15.7 0.58 2,263.4 29.4 1.30 Time 1,352.3 29.3 2.17 1,765.5 50.6 2.87 ---------------------------------------------------------------------- Total Interest Bearing Deposits 5,291.9 47.5 0.90 5,043.6 84.3 1.67 Short-Term Borrowings 724.2 9.0 1.24 1,390.2 32.7 2.35 Long-Term Debt 352.7 20.1 5.71 471.3 29.3 6.21 ---------------------------------------------------------------------- Total Interest Bearing Liabilities 6,368.8 76.6 1.20 6,905.1 146.3 2.12 ---------------------------------------------------------------------- Net Interest Income $366.1 $370.5 ====== ====== Interest Rate Spread 3.91% 3.45% Net Interest Margin 4.23% 3.99% Non-Interest Bearing Demand Deposits 1,753.9 1,556.3 Other Liabilities 354.7 316.3 Shareholders' Equity 900.1 1,183.5 -------- -------- Total Liabilities and Shareholders' Equity $9,377.5 $9,961.2 ======== ======== (1) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries Analysis of Change in Net Interest Income - Tax Equivalent Basis (Unaudited) Table 6 --------------------------------------------------------------------- Year Ended December 31, 2003 Compared to 2002 (2) (dollars in millions) Volume(1) Rate(1) Total --------------------------------------------------------------------- Change in Interest Income: Interest Bearing Deposits $(18.0) $2.8 $(15.2) Funds Sold (0.7) (0.9) (1.6) Investment Securities Held to Maturity 7.8 (5.7) 2.1 Available for Sale 5.6 (32.1) (26.5) Loans Held for Sale (4.6) (1.2) (5.8) Loans and Lease Financing Commercial and Industrial (8.0) (2.1) (10.1) Construction (2.7) (1.2) (3.9) Commercial Mortgage 2.8 (5.4) (2.6) Residential Mortgage (2.7) (16.0) (18.7) Installment 14.0 (6.5) 7.5 Home Equity 2.8 (3.2) (0.4) Purchased Home Equity 0.1 5.8 5.9 Lease Financing (0.4) (3.1) (3.5) --------------------------------------------------------------------- Total Loans and Lease Financing 5.9 (31.7) (25.8) Other (0.9) (0.4) (1.3) --------------------------------------------------------------------- Total Change in Interest Income (4.9) (69.2) (74.1) --------------------------------------------------------------------- Change in Interest Expense: Interest Bearing Deposits Demand 0.7 (2.5) (1.8) Savings 5.1 (18.8) (13.7) Time (10.4) (10.9) (21.3) --------------------------------------------------------------------- Total Interest Bearing Deposits (4.6) (32.2) (36.8) Short-Term Borrowings (11.9) (11.8) (23.7) Long-Term Debt (6.9) (2.3) (9.2) --------------------------------------------------------------------- Total Change in Interest Expense (23.4) (46.3) (69.7) --------------------------------------------------------------------- Change in Net Interest Income $18.5 $(22.9) $(4.4) ===================================================================== (1) The changes for each category of interest income and expense are divided between the portion of changes attributable to the variance in volume or rate for that category. (2) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries Salaries and Benefits (Unaudited) Table 7 --------------------------------------------------------------------- Three Months Ended Year Ended December 31, December 31, (dollars in thousands) 2003 2002 2003 2002 --------------------------------------------------------------------- Salaries $27,972 $30,300 $114,376 $123,601 Incentive Compensation 5,130 3,333 15,747 12,871 Stock Based Compensation 5,128 1,330 9,215 4,553 Commission Expense 1,833 2,809 10,797 9,113 Retirement and Other Benefits 882 2,115 14,353 14,134 Payroll Taxes 2,009 2,159 10,454 10,894 Medical, Dental, and Life Insurance 1,981 1,998 7,371 8,008 Separation Expense 1,474 690 3,967 3,389 --------------------------------------------------------------------- Total Salaries and Benefits $46,409 $44,734 $186,280 $186,563 ===================================================================== Bank of Hawaii Corporation and Subsidiaries Loan Portfolio Balances (Unaudited) Table 8 ---------------------------------------------------------------------- December September June March December 31, 30, 30, 31, 31, (dollars in millions) 2003 2003 2003 2003 2002 ---------------------------------------------------------------------- Domestic Commercial Commercial and Industrial $816.2 $843.9 $808.5 $824.9 $875.0 Commercial Mortgage 639.4 629.2 689.7 691.7 591.1 Construction 101.3 92.3 83.6 86.7 127.5 Lease Financing 435.8 426.9 416.9 430.4 427.3 ---------------------------------------------------------------------- Total Commercial 1,992.7 1,992.3 1,998.7 2,033.7 2,020.9 Consumer Residential Mortgage 2,320.5 2,329.4 2,222.0 2,305.3 2,131.4 Home Equity 467.0 446.0 450.3 439.1 428.2 Purchased Home Equity 212.5 109.8 145.6 170.9 185.8 Other Consumer 658.8 582.9 554.8 518.5 493.3 Lease Financing 35.3 35.3 34.0 33.8 34.5 ---------------------------------------------------------------------- Total Consumer 3,694.1 3,503.4 3,406.7 3,467.6 3,273.2 ---------------------------------------------------------------------- Total Domestic 5,686.8 5,495.7 5,405.4 5,501.3 5,294.1 ---------------------------------------------------------------------- Foreign 70.4 74.7 66.5 64.1 64.9 ---------------------------------------------------------------------- Total Loans $5,757.2 $5,570.4 $5,471.9 $5,565.4 $5,359.0 ====================================================================== Selected Concentrations of Credit Exposure (Unaudited) ---------------------------------------------------------------------- Sep. 30, Dec. 31, December 31, 2003 2003 2002 Unused Total Total Total (dollars in Outstanding Commitments Exposure Exposure Exposure millions) ---------------------------------------------------------------------- Air Transportation Regional Passenger Carriers $44.0 $12.5 $56.5 $57.6 $57.3 United States Based Passenger Carriers 40.0 - 40.0 39.9 39.6 International Based Passenger Carriers 31.5 - 31.5 31.7 32.1 Cargo Carriers 14.4 - 14.4 14.4 15.0 ---------------------------------------------------------------------- Total Air Transportation $129.9 $12.5 $142.4 $143.6 $144.0 ====================================================================== Guam Hotel $17.7 $- $17.7 $17.8 $44.4 Other Commercial 135.4 48.8 184.2 183.1 166.0 Consumer 282.5 6.3 288.8 277.5 257.4 ---------------------------------------------------------------------- Total Guam $435.6 $55.1 $490.7 $478.4 $467.8 ====================================================================== Syndicated Exposure $244.5 $623.4 $867.9 $873.5 $1,002.1 ====================================================================== Exposure includes loans, leveraged leases and operating leases. Bank of Hawaii Corporation and Subsidiaries Consolidated Non-Performing Assets and Accruing Loans Past Due 90 Days or More (Unaudited) Table 9 ---------------------------------------------------------------------- December September June March December 31, 30, 30, 31, 31, (dollars in millions) 2003 2003 2003 2003 2002 ---------------------------------------------------------------------- Non-Performing Assets Non-Accrual Loans Commercial Commercial and Industrial $6.0 $7.8 $8.8 $2.4 $5.9 Commercial Mortgage 9.3 11.0 11.2 17.9 20.3 Construction - - - - 0.5 Lease Financing 2.2 2.4 2.5 3.2 4.1 ---------------------------------------------------------------------- Total Commercial 17.5 21.2 22.5 23.5 30.8 Consumer Residential Mortgage 9.3 9.7 10.2 11.5 13.9 Home Equity 0.5 0.5 - 0.1 0.3 ---------------------------------------------------------------------- Total Consumer 9.8 10.2 10.2 11.6 14.2 ---------------------------------------------------------------------- Total Non-Accrual Loans 27.3 31.4 32.7 35.1 45.0 ---------------------------------------------------------------------- Foreclosed Real Estate 4.4 8.7 9.3 9.1 9.4 ---------------------------------------------------------------------- Total Non-Performing Assets $31.7 $40.1 $42.0 $44.2 $54.4 ====================================================================== Accruing Loans Past Due 90 Days or More Commercial Commercial and Industrial $0.7 $0.7 $0.5 $- $0.2 Commercial Mortgage - - - 0.4 0.3 Lease Financing 0.1 - - - - ---------------------------------------------------------------------- Total Commercial 0.8 0.7 0.5 0.4 0.5 Consumer Residential Mortgage 1.4 2.0 1.8 1.6 0.6 Home Equity - - 0.1 - - Purchased Home Equity - 0.1 0.1 - - Other Consumer 1.3 1.1 0.4 2.3 0.7 ---------------------------------------------------------------------- Total Consumer 2.7 3.2 2.4 3.9 1.3 ---------------------------------------------------------------------- Total Accruing and Past Due $3.5 $3.9 $2.9 $4.3 $1.8 ====================================================================== Total Loans $5,757.2 $5,570.4 $5,471.9 $5,565.4 $5,359.0 ====================================================================== Ratio of Non-Accrual Loans to Total Loans 0.47% 0.56% 0.60% 0.63% 0.84% ---------------------------------------------------------------------- Ratio of Non-Performing Assets to Total Loans and Foreclosed Real Estate 0.55% 0.72% 0.77% 0.79% 1.01% ---------------------------------------------------------------------- Ratio of Non-Performing Assets and Accruing Loans Past Due 90 Days or More to Total Loans 0.61% 0.79% 0.82% 0.87% 1.05% ---------------------------------------------------------------------- Quarter to Quarter Changes in Non-Performing Assets Balance at Beginning of Quarter $40.1 $42.0 $44.2 $54.4 $63.3 Additions 2.3 3.2 11.6 4.8 12.0 Reductions Payments and Sales of Loans (3.4) (1.8) (4.3) (5.6) (6.9) Return to Accrual (0.8) (1.5) (7.5) (5.6) (1.9) Sales of Foreclosed Assets (4.4) (1.0) (0.7) (1.1) (9.4) Charge-offs/Write- downs (2.1) (0.8) (1.3) (2.7) (2.7) ---------------------------------------------------------------------- Total Reductions (10.7) (5.1) (13.8) (15.0) (20.9) ---------------------------------------------------------------------- Balance at End of Quarter $31.7 $40.1 $42.0 $44.2 $54.4 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Consolidated Allowance for Loan and Lease Losses (Unaudited) Table 10 ---------------------------------------------------------------------- Three Months Ended December September December Year Ended 31, 30, 31, December 31, (dollars in millions) 2003 2003 2002 2003 2002 ---------------------------------------------------------------------- Balance at Beginning of Period $132.7 $138.0 $154.5 $142.9 $159.0 Loans Charged-Off Commercial Commercial and Industrial (2.0) (1.1) (2.0) (5.3) (13.0) Commercial Mortgage - (0.2) - (0.6) (2.9) Construction - - - (0.5) (0.5) Lease Financing - - (9.6) (0.3) (9.9) Consumer Residential Mortgage (0.5) (0.1) (0.4) (1.9) (3.5) Home Equity (0.3) - (0.1) (0.4) (0.2) Purchased Home Equity (0.1) (0.1) - (0.2) - Other Consumer (3.9) (6.8) (2.8) (17.4) (12.5) Lease Financing (0.1) - (0.1) (0.3) (0.3) ---------------------------------------------------------------------- Total Charge-Offs (6.9) (8.3) (15.0) (26.9) (42.8) Recoveries on Loans Previously Charged-Off Commercial Commercial and Industrial 0.9 0.6 1.4 3.9 4.7 Commercial Mortgage - - 0.1 0.1 2.1 Construction - - 0.2 1.0 0.2 Lease Financing 0.1 - - 0.1 - Consumer Residential Mortgage 0.1 0.5 0.3 1.0 1.1 Home Equity - - - 0.1 0.1 Other Consumer 2.0 1.5 1.3 6.2 6.1 Lease Financing - - 0.1 0.1 0.1 Foreign 0.1 0.4 - 0.6 0.7 ---------------------------------------------------------------------- Total Recoveries 3.3 3.0 3.4 13.1 15.1 ---------------------------------------------------------------------- Net Loan Charge-Offs (3.6) (5.3) (11.6) (13.8) (27.7) Provision for Loan and Lease Losses - - - - 11.6 ---------------------------------------------------------------------- Balance at End of Period $129.1 $132.7 $142.9 $129.1 $142.9 ====================================================================== Average Loans Outstanding $5,570.9 $5,546.5 $5,210.4 $5,524.4 $5,411.3 ====================================================================== Ratio of Net Charge-Offs to Average Loans Outstanding (annualized) 0.26% 0.38% 0.88% 0.25% 0.51% Ratio of Allowance to Loans and Leases Outstanding 2.24% 2.38% 2.67% 2.24% 2.67% Totals may not add due to rounding. Bank of Hawaii Corporation and Subsidiaries Business Segment Selected Financial Information (Unaudited) Table 11a ---------------------------------------------------------------------- Investment Treasury (dollars in Retail Commercial Services and Other Consolidated thousands) Banking Banking Group Corporate Total ---------------------------------------------------------------------- Three Months Ended December 31, 2003 Net Interest Income $49,617 $33,505 $3,215 $7,015 $93,352 Provision for Loan and Lease Losses (2,288) (1,694) - 3,982 - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 47,329 31,811 3,215 10,997 93,352 Non-Interest Income 21,051 10,654 15,203 2,529 49,437 ---------------------------------------------------------------------- 68,380 42,465 18,418 13,526 142,789 Non-Interest Expense (41,334) (20,410) (16,415) (5,245) (83,404) ---------------------------------------------------------------------- Income Before Income Taxes 27,046 22,055 2,003 8,281 59,385 Provision for Income Taxes (10,007) (8,032) (741) (1,932) (20,712) ---------------------------------------------------------------------- Allocated Net Income 17,039 14,023 1,262 6,349 38,673 ---------------------------------------------------------------------- Allowance Funding Value (130) (806) (8) 944 - GAAP Provision 2,288 1,694 - (3,982) - Economic Provision (3,309) (2,870) (107) (3) (6,289) Tax Effect of Adjustments 444 746 46 1,091 2,327 ---------------------------------------------------------------------- Income Before Capital Charge 16,332 12,787 1,193 4,399 34,711 Capital Charge (5,481) (5,292) (1,529) (10,394) (22,696) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $10,851 $7,495 $(336) $(5,995) $12,015 ====================================================================== RAROC (ROE for the Company) 33% 26% 8% 21% 19% ====================================================================== Total Assets at December 31, 2003 $3,665,571 $2,295,422 $130,206 $3,370,448 $9,461,647 ====================================================================== Three Months Ended December 31, 2002 (1) Net Interest Income $49,998 $35,557 $3,623 $1,040 $90,218 Provision for Loan and Lease Losses (848) (10,841) - 11,689 - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 49,150 24,716 3,623 12,729 90,218 Non-Interest Income 21,486 8,815 15,850 4,204 50,355 ---------------------------------------------------------------------- 70,636 33,531 19,473 16,933 140,573 Restructuring and Other Related Costs - - - (385) (385) Information Technology Systems Replacement Project (782) - - (6,270) (7,052) Non-Interest Expense (43,625) (27,373) (16,068) (2,210) (89,276) ---------------------------------------------------------------------- Income Before Income Taxes 26,229 6,158 3,405 8,068 43,860 Provision for Income Taxes (9,705) (1,294) (1,260) (2,693) (14,952) ---------------------------------------------------------------------- Allocated Net Income 16,524 4,864 2,145 5,375 28,908 ---------------------------------------------------------------------- Allowance Funding Value (163) (1,380) (9) 1,552 - GAAP Provision 848 10,841 - (11,689) - Economic Provision (3,218) (3,135) (127) (9) (6,489) Tax Effect of Adjustments 937 (2,341) 50 3,755 2,401 ---------------------------------------------------------------------- Income (Loss) Before Capital Charge 14,928 8,849 2,059 (1,016) 24,820 Capital Charge (5,338) (5,890) (1,513) (16,669) (29,410) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $9,590 $2,959 $546 $(17,685) $(4,590) ====================================================================== RAROC (ROE for the Company) 30% 16% 15% (4)% 11% ====================================================================== Total Assets at December 31, 2002 $3,293,761 $2,242,035 $134,954 $3,845,668 $9,516,418 ====================================================================== (1) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries Business Segment Selected Financial Information (Unaudited) Table 11b ---------------------------------------------------------------------- Investment Treasury (dollars in Retail Commercial Services and Other Consolidated thousands) Banking Banking Group Corporate Total ---------------------------------------------------------------------- Year Ended December 31, 2003 Net Interest Income $206,135 $136,486 $12,879 $10,442 $365,942 Provision for Loan and Lease Losses (6,909) (8,415) 5 15,319 - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 199,226 128,071 12,884 25,761 365,942 Non-Interest Income 85,380 39,162 61,598 12,580 198,720 ---------------------------------------------------------------------- 284,606 167,233 74,482 38,341 564,662 Information Technology Systems Replacement Project (986) (23) (333) (20,529) (21,871) Non-Interest Expense (168,369) (88,647) (64,019) (14,969) (336,004) ---------------------------------------------------------------------- Income Before Income Taxes 115,251 78,563 10,130 2,843 206,787 Provision for Income Taxes (42,643) (28,592) (3,748) 3,391 (71,592) ---------------------------------------------------------------------- Allocated Net Income 72,608 49,971 6,382 6,234 135,195 ---------------------------------------------------------------------- Allowance Funding Value (595) (3,987) (32) 4,614 - GAAP Provision 6,909 8,415 (5) (15,319) - Economic Provision (11,932) (12,095) (457) (25) (24,509) Tax Effect of Adjustments 2,093 2,848 186 3,941 9,068 ---------------------------------------------------------------------- Income (Loss) Before Capital Charge 69,083 45,152 6,074 (555) 119,754 Capital Charge (21,980) (21,606) (6,051) (49,404) (99,041) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $47,103 $23,546 $23 $(49,959) $20,713 ====================================================================== RAROC (ROE for the Company) 35% 23% 11% 0% 15% ====================================================================== Total Assets at December 31, 2003 $3,665,571 $2,295,422 $130,206 $3,370,448 $9,461,647 ====================================================================== Year Ended December 31, 2002 (1) Net Interest Income $203,304 $143,937 $13,263 $9,727 $370,231 Provision for Loan and Lease Losses (4,061) (24,902) (75) 17,422 (11,616) ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 199,243 119,035 13,188 27,149 358,615 Non-Interest Income 83,870 34,497 67,691 12,277 198,335 ---------------------------------------------------------------------- 283,113 153,532 80,879 39,426 556,950 Restructuring and Other Related Costs - - - (2,364) (2,364) Information Technology Systems Replacement Project (1,369) - - (12,259) (13,628) Non-Interest Expense (177,079) (100,977) (65,898) (9,303) (353,257) ---------------------------------------------------------------------- Income Before Income Taxes 104,665 52,555 14,981 15,500 187,701 Provision for Income Taxes (38,725) (18,221) (5,543) (4,032) (66,521) ---------------------------------------------------------------------- Allocated Net Income 65,940 34,334 9,438 11,468 121,180 ====================================================================== Allowance Funding Value (835) (6,035) (28) 6,898 - GAAP Provision 4,061 24,902 75 (17,422) 11,616 Economic Provision (11,754) (14,383) (499) (17) (26,653) Tax Effect of Adjustments 3,155 (1,659) 167 3,901 5,564 ---------------------------------------------------------------------- Income Before Capital Charge 60,567 37,159 9,153 4,828 111,707 Capital Charge (21,125) 24,229 (6,110) (78,777) (130,241) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $39,442 $12,930 $3,043 $(73,949) $(18,534) ====================================================================== RAROC (ROE for the Company) 32% 17% 16% 6% 10% ====================================================================== Total Assets at December 31, 2002 $3,293,761 $2,242,035 $134,954 $3,845,668 $9,516,418 ====================================================================== (1) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries Quarterly Summary of Selected Consolidated Financial Data (Unaudited) Table 12 ---------------------------------------------------------------------- Three Months Ended (1) (dollars in thousands except Dec. 31, Sept. 30, June 30, March 31, per share amounts) 2003 2003 2003 2003 ---------------------------------------------------------------------- Quarterly Operating Results Interest Income Interest and Fees on Loans and Leases $80,351 $82,715 $85,954 $85,773 Income on Investment Securities - Held to Maturity 7,183 6,407 3,083 2,283 Income on Investment Securities - Available for Sale 19,032 16,483 19,815 22,463 Deposits 1,169 1,179 1,161 1,307 Funds Sold 85 248 822 764 Other 1,007 1,032 1,016 1,189 ---------------------------------------------------------------------- Total Interest Income 108,827 108,064 111,851 113,779 Interest Expense Deposits 9,433 10,284 13,309 14,447 Security Repurchase Agreements 1,359 1,947 2,391 2,242 Funds Purchased 249 271 219 205 Short-Term Borrowings 17 26 25 24 Long-Term Debt 4,417 4,431 5,422 5,861 ---------------------------------------------------------------------- Total Interest Expense 15,475 16,959 21,366 22,779 ---------------------------------------------------------------------- Net Interest Income 93,352 91,105 90,485 91,000 Provision for Loan and Lease Losses - - - - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 93,352 91,105 90,485 91,000 Non-Interest Income Trust and Asset Management 12,759 12,511 12,545 13,181 Mortgage Banking 3,324 5,888 6,061 283 Service Charges on Deposit Accounts 9,442 8,901 8,645 8,950 Fees, Exchange, and Other Service Charges 13,725 16,034 13,473 12,989 Investment Securities Gains (Losses) (20) 639 587 583 Insurance 3,597 3,988 3,015 3,080 Other 6,610 5,830 6,413 5,687 ---------------------------------------------------------------------- Total Non-Interest Income 49,437 53,791 50,739 44,753 Non-Interest Expense Salaries and Benefits 46,409 45,731 47,711 46,429 Net Occupancy Expense 9,933 9,806 9,628 9,613 Net Equipment Expense 7,395 7,301 9,208 9,748 Restructuring and Other Related Costs - - - - Information Technology Systems Replacement Project - 4,349 10,105 7,417 Other 19,667 21,690 18,742 16,993 ---------------------------------------------------------------------- Total Non-Interest Expense 83,404 88,877 95,394 90,200 ---------------------------------------------------------------------- Income Before Income Taxes 59,385 56,019 45,830 45,553 Provision for Income Taxes 20,712 19,332 15,796 15,752 ---------------------------------------------------------------------- Net Income $38,673 $36,687 $30,034 $29,801 ====================================================================== Basic Earnings Per Share $0.70 $0.64 $0.50 $0.49 Diluted Earnings Per Share $0.66 $0.61 $0.48 $0.47 Balance Sheet Totals Total Assets 9,461,647 9,370,755 9,550,934 9,410,210 Net Loans 5,628,095 5,437,730 5,333,896 5,425,343 Total Deposits 7,332,779 7,102,116 7,140,849 6,987,331 Total Shareholders' Equity 793,132 823,760 913,010 952,007 Performance Ratios Return on Average Assets 1.66% 1.53% 1.27% 1.31% Return on Average Equity 18.59% 16.69% 12.93% 12.42% Efficiency Ratio 58.41% 61.34% 67.55% 66.44% Efficiency Ratio excluding ITSRP and Restructuring Costs 58.41% 58.34% 60.39% 60.98% Three Months Ended (1) (dollars in thousands except Dec. 31, Sept. 30, June 30, March 31, per share amounts) 2002 2002 2002 2002 ---------------------------------------------------------------------- Quarterly Operating Results Interest Income Interest and Fees on Loans and Leases $85,945 $89,335 $92,441 $98,645 Income on Investment Securities - Held to Maturity 3,122 3,963 4,544 5,145 Income on Investment Securities - Available for Sale 24,088 26,175 26,805 27,193 Deposits 3,578 5,384 6,011 5,047 Funds Sold 834 914 752 1,003 Other 1,312 1,575 1,395 1,332 ---------------------------------------------------------------------- Total Interest Income 118,879 127,346 131,948 138,365 Interest Expense Deposits 17,657 20,547 22,166 23,978 Security Repurchase Agreements 4,585 7,039 8,256 10,293 Funds Purchased 255 299 245 231 Short-Term Borrowings 217 334 289 649 Long-Term Debt 5,947 6,946 8,055 8,319 ---------------------------------------------------------------------- Total Interest Expense 28,661 35,165 39,011 43,470 ---------------------------------------------------------------------- Net Interest Income 90,218 92,181 92,937 94,895 Provision for Loan and Lease Losses - - 3,324 8,292 ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 90,218 92,181 89,613 86,603 Non-Interest Income Trust and Asset Management 13,085 13,655 14,175 14,818 Mortgage Banking 4,398 3,669 2,842 7,957 Service Charges on Deposit Accounts 8,326 7,925 7,956 8,410 Fees, Exchange, and Other Service Charges 12,963 13,114 13,065 12,452 Investment Securities Gains (Losses) 612 - 3 - Insurance 3,099 2,677 2,563 2,599 Other 7,872 5,997 7,314 6,789 ---------------------------------------------------------------------- Total Non-Interest Income 50,355 47,037 47,918 53,025 Non-Interest Expense Salaries and Benefits 44,734 45,371 47,275 49,183 Net Occupancy Expense 10,638 9,597 9,321 9,593 Net Equipment Expense 11,077 10,058 9,997 10,121 Restructuring and Other Related Costs 385 - - 1,979 Information Technology Systems Replacement Project 7,052 6,576 - - Other 22,827 20,141 22,777 20,547 ---------------------------------------------------------------------- Total Non-Interest Expense 96,713 91,743 89,370 91,423 ---------------------------------------------------------------------- Income Before Income Taxes 43,860 47,475 48,161 48,205 Provision for Income Taxes 14,952 17,275 17,145 17,149 ---------------------------------------------------------------------- Net Income $28,908 $30,200 $31,016 $31,056 ====================================================================== Basic Earnings Per Share $0.45 $0.44 $0.43 $0.42 Diluted Earnings Per Share $0.44 $0.43 $0.42 $0.41 Balance Sheet Totals Total Assets 9,516,418 9,702,700 9,824,065 10,245,021 Net Loans 5,216,151 5,104,857 5,250,216 5,442,601 Total Deposits 6,920,161 6,627,673 6,455,981 6,543,781 Total Shareholders' Equity 1,015,759 1,100,706 1,191,072 1,265,907 Performance Ratios Return on Average Assets 1.20% 1.22% 1.23% 1.21% Return on Average Equity 10.72% 10.40% 9.94% 9.97% Efficiency Ratio 68.80% 65.90% 63.45% 61.81% Efficiency Ratio excluding ITSRP and Restructuring Costs 63.51% 61.18% 63.45% 60.47% (1) Certain 2002 information has been reclassified to conform to 2003 presentation. Bank of Hawaii Corporation and Subsidiaries 2004-2006 Plan (Unaudited) Table 13 --------------------------------------------------------------------- (dollars in millions, except per share Year Ended amounts) 2003 2004 2006 --------------------------------------------------------------------- Anticipated Financial Results -------------------------------------------- Operating Income $229 $243 $301 Information Technology Systems Replacement Project 22 - - Provision for Loan and Lease Losses - - 26 Provision for Income Taxes 72 86 97 --------------------------------------------------------------------- Net Income $135 $157 $178 ===================================================================== Average Assets $9,378 $9,941 $10,763 Shareholders' Equity $793 $733 $733 Economic Performance: -------------------------------------------- NIACC $21 $51 $92 RAROC 21% 23% 27% Performance Ratios: -------------------------------------------- Diluted Earnings Per Share $2.21 $2.76 $3.39 Return on Average Assets 1.44% 1.58% 1.65% Return on Average Equity 15% 20% 24% Net Interest Margin 4.23% 4.10% 4.12% Efficiency Ratio excluding ITSRP 59.5% 58.0% 53.0% Leverage Capital Ratio 8.4% 7.4% 7.0% Tier 1 Capital Ratio (1) 12.6% 11.4% 10.9% The 2004 and 2006 information presented above represents anticipated financial results. Achievement of these results is subject to a number of assumptions, risks, and uncertainties, including those described on page 5 of this release and those set forth from time to time in the Company's reports filed with the Securities and Exchange Commission. Actual results could differ materially from these anticipated financial results. (1) Preliminary for 2003.CONTACT: Bank of Hawaii Corporation
Stafford Kiguchi, 808-537-8580 (Media)
877-849-5423 (pager)
skiguchi@boh.com
Cindy Wyrick, 808-537-8430 (Investors/Analysts)
cwyrick@boh.com
SOURCE: Bank of Hawaii Corporation