Bank of Hawaii Corporation Second Quarter 2006 Financial Results
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HONOLULU--(BUSINESS WIRE)--July 24, 2006--Bank of Hawaii Corporation (NYSE:BOH)
- Board of Directors Increases Share Repurchase Authorization $100 Million
- Board of Directors Declares Dividend of $0.37 Per Share
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per diluted share, as a result of the recently-enacted Tax Increase Prevention and Reconciliation Act ("TIPRA") which repealed the exclusion from federal income taxation of a portion of the income from foreign sales corporations.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 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.
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.
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 TIPRA 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.
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.
Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited) Table 1
----------------------------------------------------------------------
Three Months Ended
June 30, March 31, June 30,
(dollars in thousands
except per share
amounts) 2006 2006 2005
----------------------------------------------------------------------
For the Period:
Interest Income $ 140,769 $ 135,403 $ 124,105
Net Interest Income 99,856 102,202 101,039
Net Income 37,176 45,350 46,429
Basic Earnings Per Share 0.74 0.89 0.90
Diluted Earnings Per
Share 0.73 0.87 0.87
Dividends Declared Per
Share 0.37 0.37 0.33
Net Income to Average
Total Assets (ROA) 1.47% 1.82% 1.87%
Net Income to Average
Shareholders' Equity
(ROE) 21.70 26.13 25.98
Net Interest Margin (1) 4.25 4.41 4.36
Efficiency Ratio (2) 51.45 52.22 52.07
Average Assets $10,169,341 $10,091,665 $ 9,969,243
Average Loans and Leases 6,317,623 6,181,697 6,090,149
Average Deposits 7,728,227 7,742,623 7,747,331
Average Shareholders'
Equity 687,083 703,856 716,767
Average Equity to
Average Assets 6.76% 6.97% 7.19%
Market Price Per Share
of Common Stock:
Closing $ 49.60 $ 53.31 $ 50.75
High 54.51 55.15 51.30
Low 48.33 51.40 43.82
Six Months Ended
June 30,
(dollars in thousands
except per share
amounts) 2006 2005
----------------------------------------------------------------------
For the Period:
Interest Income $ 276,172 $ 244,263
Net Interest Income 202,058 201,697
Net Income 82,526 91,951
Basic Earnings Per Share 1.63 1.75
Diluted Earnings Per
Share 1.60 1.69
Dividends Declared Per
Share 0.74 0.66
Net Income to Average
Total Assets (ROA) 1.64% 1.87%
Net Income to Average
Shareholders' Equity
(ROE) 23.93 24.78
Net Interest Margin (1) 4.33 4.39
Efficiency Ratio (2) 51.83 52.47
Average Assets $10,130,718 $ 9,907,845
Average Loans and Leases 6,250,035 6,045,609
Average Deposits 7,735,384 7,717,729
Average Shareholders'
Equity 695,424 748,344
Average Equity to
Average Assets 6.86% 7.55%
Market Price Per Share
of Common Stock:
Closing $ 49.60 $ 50.75
High 55.15 51.30
Low 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.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
----------------------------------------------------------------------
Three Months Ended
June 30, March 31, June 30,
(dollars in thousands except
per share amounts) 2006 2006 2005
----------------------------------------------------------------------
Interest Income
Interest and Fees on Loans
and Leases $ 104,388 $ 99,371 $ 90,119
Income on Investment
Securities - Available for
Sale 31,226 30,835 27,987
Income on Investment
Securities - Held to
Maturity 4,658 4,757 5,527
Deposits 55 43 36
Funds Sold 170 125 165
Other 272 272 271
----------------------------------------------------------------------
Total Interest Income 140,769 135,403 124,105
----------------------------------------------------------------------
Interest Expense
Deposits 24,656 19,633 13,577
Securities Sold Under
Agreements to Repurchase 9,802 7,890 4,562
Funds Purchased 2,652 1,893 1,151
Short-Term Borrowings 73 57 45
Long-Term Debt 3,730 3,728 3,731
----------------------------------------------------------------------
Total Interest Expense 40,913 33,201 23,066
----------------------------------------------------------------------
Net Interest Income 99,856 102,202 101,039
Provision for Credit Losses 2,069 2,761 -
----------------------------------------------------------------------
Net Interest Income After
Provision for Credit Losses 97,787 99,441 101,039
----------------------------------------------------------------------
Non-Interest Income
Trust and Asset Management 14,537 14,848 14,058
Mortgage Banking 2,569 2,987 2,594
Service Charges on Deposit
Accounts 9,695 10,132 9,569
Fees, Exchange, and Other
Service Charges 15,633 14,767 15,211
Investment Securities Gains
(Losses), Net - - 337
Insurance 4,691 5,019 4,330
Other 6,076 4,819 4,575
----------------------------------------------------------------------
Total Non-Interest Income 53,201 52,572 50,674
----------------------------------------------------------------------
Non-Interest Expense
Salaries and Benefits 44,811 45,786 43,856
Net Occupancy 9,376 9,643 9,189
Net Equipment 4,802 5,028 5,377
Professional Fees 2,589 438 2,905
Other 17,164 19,923 17,677
----------------------------------------------------------------------
Total Non-Interest Expense 78,742 80,818 79,004
----------------------------------------------------------------------
Income Before Income Taxes 72,246 71,195 72,709
Provision for Income Taxes 35,070 25,845 26,280
----------------------------------------------------------------------
Net Income $ 37,176 $ 45,350 $ 46,429
======================================================================
Basic Earnings Per Share $ 0.74 $ 0.89 $ 0.90
Diluted Earnings Per Share $ 0.73 $ 0.87 $ 0.87
Dividends Declared Per Share $ 0.37 $ 0.37 $ 0.33
Basic Weighted Average Shares 50,181,817 50,785,244 51,873,772
Diluted Weighted Average Shares 51,217,281 52,106,954 53,403,781
======================================================================
Six Months Ended
June 30,
(dollars in thousands except
per share amounts) 2006 2005
---------------------------------------------------------------------
Interest Income
Interest and Fees on Loans
and Leases $ 203,759 $ 176,586
Income on Investment
Securities - Available for
Sale 62,061 55,306
Income on Investment
Securities - Held to
Maturity 9,415 11,352
Deposits 98 59
Funds Sold 295 240
Other 544 720
----------------------------------------------------------------------
Total Interest Income 276,172 244,263
----------------------------------------------------------------------
Interest Expense
Deposits 44,289 25,181
Securities Sold Under
Agreements to Repurchase 17,692 7,887
Funds Purchased 4,545 1,884
Short-Term Borrowings 130 77
Long-Term Debt 7,458 7,537
----------------------------------------------------------------------
Total Interest Expense 74,114 42,566
----------------------------------------------------------------------
Net Interest Income 202,058 201,697
Provision for Credit Losses 4,830 -
----------------------------------------------------------------------
Net Interest Income After
Provision for Credit Losses 197,228 201,697
----------------------------------------------------------------------
Non-Interest Income
Trust and Asset Management 29,385 28,680
Mortgage Banking 5,556 5,184
Service Charges on Deposit
Accounts 19,827 19,748
Fees, Exchange, and Other
Service Charges 30,400 29,047
Investment Securities Gains
(Losses), Net - 337
Insurance 9,710 10,118
Other 10,895 9,875
----------------------------------------------------------------------
Total Non-Interest Income 105,773 102,989
----------------------------------------------------------------------
Non-Interest Expense
Salaries and Benefits 90,597 88,625
Net Occupancy 19,019 18,734
Net Equipment 9,830 10,848
Professional Fees 3,027 5,956
Other 37,087 35,704
----------------------------------------------------------------------
Total Non-Interest Expense 159,560 159,867
----------------------------------------------------------------------
Income Before Income Taxes 143,441 144,819
Provision for Income Taxes 60,915 52,868
----------------------------------------------------------------------
Net Income $ 82,526 $ 91,951
======================================================================
Basic Earnings Per Share $ 1.63 $ 1.75
Diluted Earnings Per Share $ 1.60 $ 1.69
Dividends Declared Per Share $ 0.74 $ 0.66
Basic Weighted Average Shares 50,481,864 52,646,022
Diluted Weighted Average Shares 51,596,303 54,250,018
======================================================================
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
----------------------------------------------------------------------
Accum.
Other
Compre-
Common Capital hensive
(dollars in thousands) Total Stock Surplus Loss
----------------------------------------------------------------------
Balance at December 31,
2005 $ 693,352 $ 565 $ 473,338 $ (47,818)
Comprehensive Income:
Net Income 82,526 - - -
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities (28,386) - - (28,386)
Total Comprehensive
Income
Common Stock Issued under
Stock Plans and Related
Tax Benefits (537,554
shares) 22,401 1 (3,877) -
Treasury Stock Purchased
(1,241,303 shares) (65,453) - - -
Cash Dividends Paid (37,712) - - -
----------------------------------------------------------------------
Balance at June 30, 2006 $ 666,728 $ 566 $ 469,461 $ (76,204)
======================================================================
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31,
2005 $ 546,591 $(11,080) $ (268,244)
Comprehensive Income:
Net Income 82,526 - - $ 82,526
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities - - - (28,386)
----------
Total Comprehensive
Income $ 54,140
==========
Common Stock Issued under
Stock Plans and Related
Tax Benefits (537,554
shares) (9,999) 11,080 25,196
Treasury Stock Purchased
(1,241,303 shares) - - (65,453)
Cash Dividends Paid (37,712) - -
------------------------------------------------------------
Balance at June 30, 2006 $ 581,406 $ - $ (308,501)
============================================================
Accum.
Other
Compre-
Common Capital hensive
(dollars in thousands) Total Stock Surplus Loss
----------------------------------------------------------------------
Balance at December 31,
2004 $ 814,834 $ 813 $ 450,998 $ (12,917)
Comprehensive Income:
Net Income 91,951 - - -
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities (5,554) - - (5,554)
Total Comprehensive
Income
Common Stock Issued under
Stock Plans and Related
Tax Benefits (605,364
shares) 21,499 2 6,282 -
Treasury Stock Purchased
(3,710,379 shares) (175,914) - - -
Cash Dividends Paid (34,647) - - -
----------------------------------------------------------------------
Balance at June 30, 2005 $ 712,169 $ 815 $ 457,280 $ (18,471)
======================================================================
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31,
2004 $1,282,425 $ (8,433) $ (898,052)
Comprehensive Income:
Net Income 91,951 - - $ 91,951
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities - - - (5,554)
----------
Total Comprehensive
Income $ 86,397
==========
Common Stock Issued under
Stock Plans and
Related Tax Benefits
(605,364 shares) (610) 1,267 14,558
Treasury Stock Purchased
(3,710,379 shares) - - (175,914)
Cash Dividends Paid (34,647) - -
------------------------------------------------------------
Balance at June 30, 2005 $1,339,119 $ (7,166) $(1,059,408)
============================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable Table 5
Equivalent Basis (Unaudited)
----------------------------------------------------------------------
Three Months Ended
June 30, 2006
Average Income/ Yield/
(dollars in millions) Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest-Bearing Deposits $ 5.7 $ 0.1 3.82 %
Funds Sold 13.9 0.2 4.89
Investment Securities
Available for Sale 2,564.2 31.4 4.90
Held to Maturity 429.5 4.6 4.34
Loans Held for Sale 8.9 0.1 6.25
Loans and Leases (2)
Commercial and Industrial 967.5 17.6 7.29
Construction 176.7 3.6 8.08
Commercial Mortgage 598.8 9.9 6.66
Residential Mortgage 2,461.4 36.6 5.94
Other Revolving Credit and Installment 718.0 16.3 9.10
Home Equity 900.5 16.6 7.39
Lease Financing 494.7 3.7 2.99
----------------------------------------------------------------------
Total Loans and Leases 6,317.6 104.3 6.61
----------------------------------------------------------------------
Other 79.4 0.3 1.37
----------------------------------------------------------------------
Total Earning Assets (3) 9,419.2 141.0 5.99
----------------------------------------------------------------------
Cash and Non-Interest-Bearing Deposits 304.3
Other Assets 445.8
-----------
Total Assets $ 10,169.3
===========
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 1,611.7 3.9 0.97
Savings 2,699.0 9.4 1.39
Time 1,432.6 11.4 3.20
----------------------------------------------------------------------
Total Interest-Bearing Deposits 5,743.3 24.7 1.72
----------------------------------------------------------------------
Short-Term Borrowings 219.0 2.7 4.99
Securities Sold Under Agreements to
Repurchase 855.9 9.8 4.57
Long-Term Debt 242.7 3.7 6.15
----------------------------------------------------------------------
Total Interest-Bearing Liabilities 7,060.9 40.9 2.32
----------------------------------------------------------------------
Net Interest Income $ 100.1
=========
Interest Rate Spread 3.67 %
Net Interest Margin 4.25 %
Non-Interest-Bearing Demand Deposits 1,984.9
Other Liabilities 436.4
Shareholders' Equity 687.1
-----------
Total Liabilities and Shareholders'
Equity $ 10,169.3
===========
Three Months Ended
March 31, 2006 (1)
Average Income/ Yield/
(dollars in millions) Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest-Bearing Deposits $ 5.3 $ - 3.30 %
Funds Sold 11.0 0.1 4.61
Investment Securities
Available for Sale 2,589.4 31.0 4.80
Held to Maturity 443.7 4.8 4.29
Loans Held for Sale 12.0 0.2 6.02
Loans and Leases (2)
Commercial and Industrial 932.3 16.2 7.05
Construction 142.6 2.8 8.03
Commercial Mortgage 571.9 9.2 6.50
Residential Mortgage 2,436.0 35.7 5.85
Other Revolving Credit and Installment 725.7 15.9 8.89
Home Equity 880.7 15.2 7.01
Lease Financing 492.5 4.2 3.42
----------------------------------------------------------------------
Total Loans and Leases 6,181.7 99.2 6.47
----------------------------------------------------------------------
Other 79.4 0.3 1.37
----------------------------------------------------------------------
Total Earning Assets (3) 9,322.5 135.6 5.85
----------------------------------------------------------------------
Cash and Non-Interest-Bearing Deposits 331.8
Other Assets 437.4
-----------
Total Assets $ 10,091.7
===========
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 1,654.7 3.3 0.82
Savings 2,756.2 7.2 1.06
Time 1,309.7 9.1 2.82
----------------------------------------------------------------------
Total Interest-Bearing Deposits 5,720.6 19.6 1.39
----------------------------------------------------------------------
Short-Term Borrowings 178.0 2.0 4.44
Securities Sold Under Agreements to
Repurchase 772.0 7.9 4.13
Long-Term Debt 242.7 3.7 6.16
----------------------------------------------------------------------
Total Interest-Bearing Liabilities 6,913.3 33.2 1.94
----------------------------------------------------------------------
Net Interest Income $ 102.4
=========
Interest Rate Spread 3.91 %
Net Interest Margin 4.41 %
Non-Interest-Bearing Demand Deposits 2,022.0
Other Liabilities 452.5
Shareholders' Equity 703.9
-----------
Total Liabilities and Shareholders'
Equity $ 10,091.7
===========
Three Months Ended
June 30, 2005 (1)
Average Income/ Yield/
(dollars in millions) Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest-Bearing Deposits $ 6.0 $ - 2.36 %
Funds Sold 23.1 0.2 2.87
Investment Securities
Available for Sale 2,542.5 28.1 4.42
Held to Maturity 544.1 5.5 4.06
Loans Held for Sale 15.1 0.2 5.72
Loans and Leases (2)
Commercial and Industrial 958.2 14.5 6.06
Construction 121.0 1.8 5.94
Commercial Mortgage 599.3 8.8 5.89
Residential Mortgage 2,349.3 33.1 5.65
Other Revolving Credit and Installment 740.9 15.4 8.36
Home Equity 822.3 11.6 5.64
Lease Financing 499.2 4.7 3.73
----------------------------------------------------------------------
Total Loans and Leases 6,090.2 89.9 5.91
----------------------------------------------------------------------
Other 66.3 0.3 1.64
----------------------------------------------------------------------
Total Earning Assets (3) 9,287.3 124.2 5.35
----------------------------------------------------------------------
Cash and Non-Interest-Bearing Deposits 305.8
Other Assets 376.1
-----------
Total Assets $ 9,969.2
===========
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 1,667.3 2.4 0.58
Savings 2,970.8 4.8 0.65
Time 1,159.0 6.4 2.20
----------------------------------------------------------------------
Total Interest-Bearing Deposits 5,797.1 13.6 0.94
----------------------------------------------------------------------
Short-Term Borrowings 164.0 1.2 2.92
Securities Sold Under Agreements to
Repurchase 658.9 4.6 2.78
Long-Term Debt 242.7 3.7 6.16
----------------------------------------------------------------------
Total Interest-Bearing Liabilities 6,862.7 23.1 1.35
----------------------------------------------------------------------
Net Interest Income $ 101.1
=========
Interest Rate Spread 4.00 %
Net Interest Margin 4.36 %
Non-Interest-Bearing Demand Deposits 1,950.2
Other Liabilities 439.5
Shareholders' Equity 716.8
-----------
Total Liabilities and Shareholders'
Equity $ 9,969.2
===========
Six Months Ended
June 30, 2006
Average Income/ Yield/
(dollars in millions) Balance Expense Rate
---------------------------------------------------------------------
Earning Assets
Interest-Bearing Deposits $ 5.5 $ 0.1 3.57 %
Funds Sold 12.5 0.3 4.77
Investment Securities
Available for Sale 2,576.7 62.4 4.85
Held to Maturity 436.6 9.4 4.31
Loans Held for Sale 10.4 0.3 6.12
Loans and Leases (2)
Commercial and Industrial 950.0 33.8 7.17
Construction 159.8 6.4 8.06
Commercial Mortgage 585.4 19.1 6.58
Residential Mortgage 2,448.8 72.3 5.90
Other Revolving Credit and Installment 721.8 32.2 9.00
Home Equity 890.6 31.8 7.20
Lease Financing 493.6 7.9 3.20
---------------------------------------------------------------------
Total Loans and Leases 6,250.0 203.5 6.54
---------------------------------------------------------------------
Other 79.4 0.5 1.37
---------------------------------------------------------------------
Total Earning Assets (3) 9,371.1 276.5 5.92
---------------------------------------------------------------------
Cash and Non-Interest-Bearing Deposits 318.0
Other Assets 441.6
-----------
Total Assets $ 10,130.7
===========
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 1,633.1 7.2 0.89
Savings 2,727.4 16.5 1.22
Time 1,371.5 20.6 3.02
---------------------------------------------------------------------
Total Interest-Bearing Deposits 5,732.0 44.3 1.56
---------------------------------------------------------------------
Short-Term Borrowings 198.6 4.7 4.75
Securities Sold Under Agreements to
Repurchase 814.2 17.7 4.36
Long-Term Debt 242.7 7.4 6.16
---------------------------------------------------------------------
Total Interest-Bearing Liabilities 6,987.5 74.1 2.14
---------------------------------------------------------------------
Net Interest Income $ 202.4
=========
Interest Rate Spread 3.78 %
Net Interest Margin 4.33 %
Non-Interest-Bearing Demand Deposits 2,003.4
Other Liabilities 444.4
Shareholders' Equity 695.4
-----------
Total Liabilities and Shareholders'
Equity $ 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%.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable Table 6
Equivalent Basis (Unaudited)
----------------------------------------------------------------------
Three Months Ended June 30, 2006
compared to March 31, 2006
(dollars in millions) Volume(1) Rate(1) Time(1) Total
----------------------------------------------------------------------
Change in Interest Income:
Interest-Bearing Deposits $ - $ 0.1 $ - $ 0.1
Funds Sold 0.1 - - 0.1
Investment Securities
Available for Sale (0.3) 0.6 0.1 0.4
Held to Maturity (0.3) 0.1 - (0.2)
Loans Held for Sale (0.1) - - (0.1)
Loans and Leases
Commercial and Industrial 0.6 0.6 0.2 1.4
Construction 0.8 - - 0.8
Commercial Mortgage 0.4 0.2 0.1 0.7
Residential Mortgage 0.4 0.5 - 0.9
Other Revolving Credit and
Installment (0.2) 0.4 0.2 0.4
Home Equity 0.4 0.8 0.2 1.4
Lease Financing - (0.5) - (0.5)
----------------------------------------------------------------------
Total Loans and Leases 2.4 2.0 0.7 5.1
----------------------------------------------------------------------
Total Change in Interest Income 1.8 2.8 0.8 5.4
----------------------------------------------------------------------
Change in Interest Expense:
Interest-Bearing Deposits
Demand (0.1) 0.6 0.1 0.6
Savings (0.2) 2.3 0.1 2.2
Time 1.0 1.3 - 2.3
----------------------------------------------------------------------
Total Interest-Bearing Deposits 0.7 4.2 0.2 5.1
----------------------------------------------------------------------
Short-Term Borrowings 0.5 0.2 - 0.7
Securities Sold Under Agreements to
Repurchase 0.9 0.9 0.1 1.9
----------------------------------------------------------------------
Total Change in Interest Expense 2.1 5.3 0.3 7.7
----------------------------------------------------------------------
Change in Net Interest Income $ (0.3)$ (2.5)$ 0.5 $(2.3)
======================================================================
(1) The changes for each category of interest income and expense are
allocated between the portion of changes attributable to the
variance in volume, rate or time for that category.
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits (Unaudited) Table 7
----------------------------------------------------------------------
Three Months Ended
June 30, March 31, June 30,
(dollars in thousands) 2006 2006 2005 (1)
--------------------------------------------------------------
Salaries $ 27,727 $ 26,724 $ 26,758
Incentive Compensation 3,844 4,321 3,725
Share-Based Compensation 1,631 1,481 1,828
Commission Expense 1,833 1,922 2,281
Retirement and Other Benefits 4,833 5,235 4,437
Payroll Taxes 2,297 3,385 2,205
Medical, Dental, and Life
Insurance 2,185 2,161 1,823
Separation Expense 461 557 799
--------------------------------------------------------------
Total Salaries and Benefits $ 44,811 $ 45,786 $ 43,856
==============================================================
Six Months Ended
June 30,
(dollars in thousands) 2006 2005 (1)
--------------------------------------------------
Salaries $ 54,451 $ 52,869
Incentive Compensation 8,165 7,693
Share-Based Compensation 3,112 3,543
Commission Expense 3,755 4,533
Retirement and Other Benefits 10,068 9,205
Payroll Taxes 5,682 5,658
Medical, Dental, and Life
Insurance 4,346 4,054
Separation Expense 1,018 1,070
--------------------------------------------------
Total Salaries and Benefits $ 90,597 $ 88,625
==================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances (Unaudited) Table 8
----------------------------------------------------------------------
June 30, March 31, December 31, June 30,
(dollars in thousands) 2006 2006 2005 (1) 2005 (1)
----------------------------------------------------------------------
Commercial
Commercial and
Industrial $1,008,618 $ 957,893 $ 918,842 $1,010,597
Commercial Mortgage 619,839 591,770 558,346 563,581
Construction 212,490 154,737 153,682 144,840
Lease Financing 475,549 467,688 470,155 471,600
----------------------------------------------------------------------
Total Commercial 2,316,496 2,172,088 2,101,025 2,190,618
----------------------------------------------------------------------
Consumer
Residential Mortgage 2,472,937 2,441,664 2,431,198 2,354,636
Home Equity 914,316 888,528 874,400 832,967
Other Revolving
Credit and
Installment 714,617 719,553 736,364 744,570
Lease Financing 23,259 24,292 25,549 28,627
----------------------------------------------------------------------
Total Consumer 4,125,129 4,074,037 4,067,511 3,960,800
----------------------------------------------------------------------
Total Loans and Leases $6,441,625 $6,246,125 $ 6,168,536 $6,151,418
======================================================================
Air Transportation Credit Exposure (2) (Unaudited)
----------------------------------------------------------------------
June 30, 2006
------------------------------------
Unused Total
(dollars in thousands) Outstanding Commitments Exposure
----------------------------------------------------------------------
Passenger Carriers Based In the
United States $ 68,213 $ - $ 68,213
Passenger Carriers Based Outside
the United States 19,542 - 19,542
Cargo Carriers 13,240 - 13,240
----------------------------------------------------------------------
Total Air Transportation Credit
Exposure $ 100,995 $ - $ 100,995
======================================================================
Mar. 31, 2006 June 30, 2005
-----------------------------
Total Total
(dollars in thousands) Exposure Exposure
--------------------------------------------------------------
Passenger Carriers Based In the
United States $ 68,609 $ 86,385
Passenger Carriers Based Outside
the United States 20,613 22,249
Cargo Carriers 13,240 13,475
--------------------------------------------------------------
Total Air Transportation Credit
Exposure $ 102,462 $ 122,109
==============================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) Exposure includes loans, leveraged leases and operating leases.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans and Table 9
Leases Past Due 90 Days or More (Unaudited)
----------------------------------------------------------------------
June 30, March 31,December 31,
(dollars in thousands) 2006 2006 2005 (1)
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 227 $ 236 $ 212
Commercial Mortgage 48 52 130
Lease Financing - - -
----------------------------------------------------------------------
Total Commercial 275 288 342
----------------------------------------------------------------------
Consumer
Residential Mortgage 4,628 4,922 5,439
Home Equity 204 38 39
----------------------------------------------------------------------
Total Consumer 4,832 4,960 5,478
----------------------------------------------------------------------
Total Non-Accrual Loans and Leases 5,107 5,248 5,820
----------------------------------------------------------------------
Foreclosed Real Estate 188 358 358
Other Investments 82 300 300
----------------------------------------------------------------------
Total Non-Performing Assets $ 5,377 $ 5,906 $ 6,478
======================================================================
Accruing Loans and Leases Past Due
90 Days or More
Commercial
Commercial and Industrial $ - $ - $ -
Commercial Mortgage - - -
----------------------------------------------------------------------
Total Commercial - - -
----------------------------------------------------------------------
Consumer
Residential Mortgage 1,157 464 1,132
Home Equity 86 85 185
Other Revolving Credit and
Installment 1,561 1,390 1,504
Lease Financing - 18 29
----------------------------------------------------------------------
Total Consumer 2,804 1,957 2,850
----------------------------------------------------------------------
Total Accruing Loans and Leases
Past Due 90 Days or More $ 2,804 $ 1,957 $ 2,850
======================================================================
Total Loans and Leases $6,441,625 $ 6,246,125 $ 6,168,536
======================================================================
Ratio of Non-Accrual Loans and
Leases to Total Loans and Leases 0.08% 0.08% 0.09%
----------------------------------------------------------------------
Ratio of Non-Performing Assets to
Total Loans and Leases,
Foreclosed Real Estate and Other
Investments 0.08% 0.09% 0.11%
----------------------------------------------------------------------
Ratio of Non-Performing Assets and
Accruing Loans and Leases Past
Due 90 Days or More to Total
Loans and Leases 0.13% 0.13% 0.15%
----------------------------------------------------------------------
Quarter to Quarter Changes in Non-
Performing Assets
Balance at Beginning of Quarter $ 5,906 $ 6,478 $ 8,250
Additions 1,509 907 1,191
Reductions
Payments (1,347) (445) (2,345)
Return to Accrual (260) (985) (231)
Sales of Foreclosed Assets (99) - (122)
Charge-offs/Write-downs (332) (49) (265)
----------------------------------------------------------------------
Total Reductions (2,038) (1,479) (2,963)
----------------------------------------------------------------------
Balance at End of Quarter $ 5,377 $ 5,906 $ 6,478
======================================================================
September 30, June 30,
(dollars in thousands) 2005 (1) 2005 (1)
-------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 471 $ 430
Commercial Mortgage 1,617 1,805
Lease Financing 4 1,586
-------------------------------------------------------------
Total Commercial 2,092 3,821
-------------------------------------------------------------
Consumer
Residential Mortgage 5,021 5,968
Home Equity 41 156
-------------------------------------------------------------
Total Consumer 5,062 6,124
-------------------------------------------------------------
Total Non-Accrual Loans and Leases 7,154 9,945
-------------------------------------------------------------
Foreclosed Real Estate 413 292
Other Investments 683 683
-------------------------------------------------------------
Total Non-Performing Assets $ 8,250 $ 10,920
=============================================================
Accruing Loans and Leases Past Due
90 Days or More
Commercial
Commercial and Industrial $ - $ 9
Commercial Mortgage - 2,213
-------------------------------------------------------------
Total Commercial - 2,222
-------------------------------------------------------------
Consumer
Residential Mortgage 1,545 1,310
Home Equity 83 -
Other Revolving Credit and
Installment 1,479 1,417
Lease Financing 51 -
-------------------------------------------------------------
Total Consumer 3,158 2,727
-------------------------------------------------------------
Total Accruing Loans and Leases
Past Due 90 Days or More $ 3,158 $ 4,949
=============================================================
Total Loans and Leases $ 6,202,546 $ 6,151,418
=============================================================
Ratio of Non-Accrual Loans and
Leases to Total Loans and Leases 0.12% 0.16%
-------------------------------------------------------------
Ratio of Non-Performing Assets to
Total Loans and Leases,
Foreclosed Real Estate and Other
Investments 0.13% 0.18%
-------------------------------------------------------------
Ratio of Non-Performing Assets and
Accruing Loans and Leases Past
Due 90 Days or More to Total
Loans and Leases 0.18% 0.26%
-------------------------------------------------------------
Quarter to Quarter Changes in Non-
Performing Assets
Balance at Beginning of Quarter $ 10,920 $ 13,365
Additions 919 3,088
Reductions
Payments (1,326) (5,097)
Return to Accrual (2,007) (392)
Sales of Foreclosed Assets - -
Charge-offs/Write-downs (256) (44)
-------------------------------------------------------------
Total Reductions (3,589) (5,533)
-------------------------------------------------------------
Balance at End of Quarter $ 8,250 $ 10,920
=============================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Reserve for Credit Losses (Unaudited) Table 10
----------------------------------------------------------------------
Three Months Ended
June 30, March 31, June 30,
(dollars in thousands) 2006 2006 2005
----------------------------------------------------------------------
Balance at Beginning of Period $ 96,167 $ 96,167 $ 109,906
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (677) (382) (581)
Consumer
Residential Mortgage (29) (10) (67)
Home Equity (86) (141) (406)
Other Revolving Credit and
Installment (4,467) (4,254) (4,546)
Lease Financing - (12) (29)
----------------------------------------------------------------------
Total Loans and Leases Charged-
Off (5,259) (4,799) (5,629)
----------------------------------------------------------------------
Recoveries on Loans and Leases
Previously Charged-Off
Commercial
Commercial and Industrial 1,445 295 211
Commercial Mortgage 335 89 32
Lease Financing - - 130
Consumer
Residential Mortgage 119 122 189
Home Equity 127 61 125
Other Revolving Credit and
Installment 1,158 1,462 1,166
Lease Financing 6 9 33
----------------------------------------------------------------------
Total Recoveries on Loans and
Leases Previously Charged-Off 3,190 2,038 1,886
----------------------------------------------------------------------
Net Loan and Lease Charge-Offs (2,069) (2,761) (3,743)
Provision for Credit Losses 2,069 2,761 -
----------------------------------------------------------------------
Balance at End of Period (1) $ 96,167 $ 96,167 $ 106,163
======================================================================
Components
Allowance for Loan and Lease
Losses 91,035 91,064 101,587
Reserve for Unfunded
Commitments 5,132 5,103 4,576
----------------------------------------------------------------------
Total Reserve for Credit Losses $ 96,167 $ 96,167 $ 106,163
======================================================================
Average Loans and Leases
Outstanding $6,317,623 $6,181,697 $6,090,149
======================================================================
Ratio of Net Loan and Lease
Charge-Offs to Average Loans
and Leases Outstanding
(annualized) 0.13% 0.18% 0.25%
Ratio of Allowance for Loan and
Lease Losses to Loans and
Leases Outstanding 1.41% 1.46% 1.65%
Six Months Ended
June 30,
(dollars in thousands) 2006 2005
------------------------------------------------------------
Balance at Beginning of Period $ 96,167 $ 113,596
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (1,060) (1,155)
Consumer
Residential Mortgage (39) (382)
Home Equity (227) (698)
Other Revolving Credit and
Installment (8,721) (9,128)
Lease Financing (12) (63)
------------------------------------------------------------
Total Loans and Leases Charged-
Off (10,059) (11,426)
------------------------------------------------------------
Recoveries on Loans and Leases
Previously Charged-Off
Commercial
Commercial and Industrial 1,740 753
Commercial Mortgage 424 94
Lease Financing - 162
Consumer
Residential Mortgage 241 295
Home Equity 188 184
Other Revolving Credit and
Installment 2,621 2,453
Lease Financing 15 52
------------------------------------------------------------
Total Recoveries on Loans and
Leases Previously Charged-Off 5,229 3,993
------------------------------------------------------------
Net Loan and Lease Charge-Offs (4,830) (7,433)
Provision for Credit Losses 4,830 -
------------------------------------------------------------
Balance at End of Period (1) $ 96,167 $ 106,163
============================================================
Components
Allowance for Loan and Lease
Losses 91,035 101,587
Reserve for Unfunded
Commitments 5,132 4,576
------------------------------------------------------------
Total Reserve for Credit Losses $ 96,167 $ 106,163
============================================================
Average Loans and Leases
Outstanding $6,250,035 $6,045,609
============================================================
Ratio of Net Loan and Lease
Charge-Offs to Average Loans
and Leases Outstanding
(annualized) 0.16% 0.25%
Ratio of Allowance for Loan and
Lease Losses to Loans and
Leases Outstanding 1.41% 1.65%
(1) Included in this analysis is activity related to the Company's
reserve for unfunded commitments, which is separately recorded in
other liabilities in the Consolidated Statements of Condition.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information (Unaudited) Table 11a
----------------------------------------------------------------------
Investment Treasury
and
Retail Commercial Services Other Consolidated
(dollars in Banking Banking Group Corporate Total
thousands)
----------------------------------------------------------------------
Three Months
Ended June 30,
2006
Net Interest
Income $ 58,667 $ 33,020 $ 4,477 $ 3,692 $ 99,856
Provision for
Credit Losses 1,862 317 999 (1,109) 2,069
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 56,805 32,703 3,478 4,801 97,787
Non-Interest
Income 23,915 8,783 17,561 2,942 53,201
----------------------------------------------------------------------
80,720 41,486 21,039 7,743 150,988
Non-Interest
Expense (40,824) (20,085) (16,512) (1,321) (78,742)
----------------------------------------------------------------------
Income Before
Income Taxes 39,896 21,401 4,527 6,422 72,246
Provision for
Income Taxes (14,761) (16,585) (1,666) (2,058) (35,070)
----------------------------------------------------------------------
Allocated Net
Income 25,135 4,816 2,861 4,364 37,176
----------------------------------------------------------------------
Allowance
Funding Value (198) (602) (8) 808 -
Provision for
Credit Losses 1,862 317 999 (1,109) 2,069
Economic
Provision (3,076) (2,188) (85) - (5,349)
Tax Effect of
Adjustments 522 915 (335) 111 1,213
----------------------------------------------------------------------
Income Before
Capital Charge 24,245 3,258 3,432 4,174 35,109
Capital Charge (5,311) (4,126) (1,588) (7,868) (18,893)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 18,934 $ (868)$ 1,844 $ (3,694)$ 16,216
======================================================================
RAROC (ROE for
the Company) 50% 9% 24% 13% 22%
======================================================================
Total Assets at
June 30, 2006 $3,946,568 $2,676,749 $ 228,584 $3,473,289 $10,325,190
======================================================================
Three Months
Ended June 30,
2005 (1)
Net Interest
Income $ 54,170 $ 34,266 $ 4,523 $ 8,080 $ 101,039
Provision for
Credit Losses 3,531 236 - (3,767) -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 50,639 34,030 4,523 11,847 101,039
Non-Interest
Income 22,411 8,441 17,192 2,630 50,674
----------------------------------------------------------------------
73,050 42,471 21,715 14,477 151,713
Non-Interest
Expense (39,848) (20,188) (17,243) (1,725) (79,004)
----------------------------------------------------------------------
Income Before
Income Taxes 33,202 22,283 4,472 12,752 72,709
Provision for
Income Taxes (12,285) (8,133) (1,655) (4,207) (26,280)
----------------------------------------------------------------------
Allocated Net
Income 20,917 14,150 2,817 8,545 46,429
----------------------------------------------------------------------
Allowance
Funding Value (168) (601) (6) 775 -
Provision for
Credit Losses 3,531 236 - (3,767) -
Economic
Provision (3,435) (2,430) (105) (1) (5,971)
Tax Effect of
Adjustments 27 1,034 41 1,107 2,209
----------------------------------------------------------------------
Income Before
Capital Charge 20,872 12,389 2,747 6,659 42,667
Capital Charge (5,259) (4,510) (1,646) (8,295) (19,710)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 15,613 $ 7,879 $ 1,101 $ (1,636)$ 22,957
======================================================================
RAROC (ROE for
the Company) 44% 30% 18% 14% 26%
======================================================================
Total Assets at
June 30, 2005 $3,786,308 $2,512,459 $ 216,626 $3,544,297 $10,059,690
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information (Unaudited) Table 11b
----------------------------------------------------------------------
Investment Treasury
and
Retail Commercial Services Other Consolidated
(dollars in Banking Banking Group Corporate Total
thousands)
----------------------------------------------------------------------
Six Months
Ended June 30,
2006
Net Interest
Income $ 116,326 $ 66,795 $ 8,882 $ 10,055 $ 202,058
Provision for
Credit Losses 4,357 738 999 (1,264) 4,830
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 111,969 66,057 7,883 11,319 197,228
Non-Interest
Income 46,952 18,267 35,307 5,247 105,773
----------------------------------------------------------------------
158,921 84,324 43,190 16,566 303,001
Non-Interest
Expense (81,721) (41,252) (33,454) (3,133) (159,560)
----------------------------------------------------------------------
Income Before
Income Taxes 77,200 43,072 9,736 13,433 143,441
Provision for
Income Taxes (28,564) (24,551) (3,594) (4,206) (60,915)
----------------------------------------------------------------------
Allocated Net
Income 48,636 18,521 6,142 9,227 82,526
----------------------------------------------------------------------
Allowance
Funding Value (387) (1,149) (16) 1,552 -
Provision for
Credit Losses 4,357 738 999 (1,264) 4,830
Economic
Provision (6,236) (4,470) (188) (1) (10,895)
Tax Effect of
Adjustments 839 1,806 (294) (107) 2,244
----------------------------------------------------------------------
Income Before
Capital Charge 47,209 15,446 6,643 9,407 78,705
Capital Charge (10,704) (8,496) (3,216) (15,844) (38,260)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 36,505 $ 6,950 $ 3,427 $ (6,437)$ 40,445
======================================================================
RAROC (ROE for
the Company) 49% 20% 23% 15% 24%
======================================================================
Total Assets at
June 30, 2006 $3,946,568 $2,676,749 $ 228,584 $3,473,289 $10,325,190
======================================================================
Six Months
Ended June 30,
2005 (1)
Net Interest
Income $ 106,480 $ 67,770 $ 8,510 $ 18,937 $ 201,697
Provision for
Credit Losses 7,016 652 (1) (7,667) -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 99,464 67,118 8,511 26,604 201,697
Non-Interest
Income 43,939 19,622 34,882 4,546 102,989
----------------------------------------------------------------------
143,403 86,740 43,393 31,150 304,686
Non-Interest
Expense (80,121) (41,928) (34,058) (3,760) (159,867)
----------------------------------------------------------------------
Income Before
Income Taxes 63,282 44,812 9,335 27,390 144,819
Provision for
Income Taxes (23,414) (16,514) (3,454) (9,486) (52,868)
----------------------------------------------------------------------
Allocated Net
Income 39,868 28,298 5,881 17,904 91,951
----------------------------------------------------------------------
Allowance
Funding Value (331) (1,202) (12) 1,545 -
Provision for
Credit Losses 7,016 652 (1) (7,667) -
Economic
Provision (6,941) (4,886) (198) (1) (12,026)
Tax Effect of
Adjustments 94 2,011 78 2,267 4,450
----------------------------------------------------------------------
Income Before
Capital Charge 39,706 24,873 5,748 14,048 84,375
Capital Charge (10,546) (9,092) (3,208) (18,325) (41,171)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 29,160 $ 15,781 $ 2,540 $ (4,277)$ 43,204
======================================================================
RAROC (ROE for
the Company) 42% 30% 20% 17% 25%
======================================================================
Total Assets at
June 30, 2005 $3,786,308 $2,512,459 $ 216,626 $3,544,297 $10,059,690
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data Table 12
(Unaudited)
----------------------------------------------------------------------
Three Months Ended
June 30, March 31, December 31,
(dollars in thousands except
per share amounts) 2006 2006 2005 (1)
----------------------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans
and Leases $ 104,388 $ 99,371 $ 97,697
Income on Investment
Securities - Available for
Sale 31,226 30,835 29,820
Income on Investment
Securities - Held to
Maturity 4,658 4,757 4,899
Deposits 55 43 103
Funds Sold 170 125 154
Other 272 272 272
----------------------------------------------------------------------
Total Interest Income 140,769 135,403 132,945
----------------------------------------------------------------------
Interest Expense
Deposits 24,656 19,633 17,479
Securities Sold Under
Agreements to Repurchase 9,802 7,890 6,504
Funds Purchased 2,652 1,893 1,730
Short-Term Borrowings 73 57 61
Long-Term Debt 3,730 3,728 3,715
----------------------------------------------------------------------
Total Interest Expense 40,913 33,201 29,489
----------------------------------------------------------------------
Net Interest Income 99,856 102,202 103,456
Provision for Credit Losses 2,069 2,761 1,588
----------------------------------------------------------------------
Net Interest Income After
Provision for Credit Losses 97,787 99,441 101,868
----------------------------------------------------------------------
Non-Interest Income
Trust and Asset Management 14,537 14,848 14,098
Mortgage Banking 2,569 2,987 2,597
Service Charges on Deposit
Accounts 9,695 10,132 10,151
Fees, Exchange, and Other
Service Charges 15,633 14,767 15,147
Investment Securities Gains
(Losses), Net - - (4)
Insurance 4,691 5,019 4,201
Other 6,076 4,819 4,619
----------------------------------------------------------------------
Total Non-Interest Income 53,201 52,572 50,809
----------------------------------------------------------------------
Non-Interest Expense
Salaries and Benefits 44,811 45,786 43,319
Net Occupancy 9,376 9,643 9,643
Net Equipment 4,802 5,028 5,358
Professional Fees 2,589 438 4,057
Other 17,164 19,923 20,802
----------------------------------------------------------------------
Total Non-Interest Expense 78,742 80,818 83,179
----------------------------------------------------------------------
Income Before Income Taxes 72,246 71,195 69,498
Provision for Income Taxes 35,070 25,845 24,717
----------------------------------------------------------------------
Net Income $ 37,176 $ 45,350 $ 44,781
======================================================================
Basic Earnings Per Share $ 0.74 $ 0.89 $ 0.88
Diluted Earnings Per Share $ 0.73 $ 0.87 $ 0.86
Balance Sheet Totals
Total Assets $10,325,190 $10,528,049 $10,187,038
Net Loans and Leases 6,350,590 6,155,061 6,077,446
Total Deposits 7,766,033 8,147,101 7,907,468
Total Shareholders' Equity 666,728 681,078 693,352
Performance Ratios
Net Income to Average Total
Assets (ROA) 1.47% 1.82% 1.76%
Net Income to Average
Shareholders' Equity (ROE) 21.70 26.13 25.19
Net Interest Margin (2) 4.25 4.41 4.43
Efficiency Ratio (3) 51.45 52.22 53.92
Three Months Ended
September 30, June 30,
(dollars in thousands except
per share amounts) 2005 2005
--------------------------------------------------------
Quarterly Operating Results
Interest Income
Interest and Fees on Loans
and Leases $ 94,381 $ 90,119
Income on Investment
Securities - Available for
Sale 28,482 27,987
Income on Investment
Securities - Held to
Maturity 5,109 5,527
Deposits 57 36
Funds Sold 935 165
Other 270 271
--------------------------------------------------------
Total Interest Income 129,234 124,105
--------------------------------------------------------
Interest Expense
Deposits 15,766 13,577
Securities Sold Under
Agreements to Repurchase 6,796 4,562
Funds Purchased 901 1,151
Short-Term Borrowings 50 45
Long-Term Debt 3,761 3,731
--------------------------------------------------------
Total Interest Expense 27,274 23,066
--------------------------------------------------------
Net Interest Income 101,960 101,039
Provision for Credit Losses 3,000 -
--------------------------------------------------------
Net Interest Income After
Provision for Credit Losses 98,960 101,039
--------------------------------------------------------
Non-Interest Income
Trust and Asset Management 14,052 14,058
Mortgage Banking 2,618 2,594
Service Charges on Deposit
Accounts 10,046 9,569
Fees, Exchange, and Other
Service Charges 15,394 15,211
Investment Securities Gains
(Losses), Net 8 337
Insurance 5,324 4,330
Other 8,074 4,575
--------------------------------------------------------
Total Non-Interest Income 55,516 50,674
--------------------------------------------------------
Non-Interest Expense
Salaries and Benefits 44,366 43,856
Net Occupancy 9,896 9,189
Net Equipment 5,335 5,377
Professional Fees 5,689 2,905
Other 19,310 17,677
--------------------------------------------------------
Total Non-Interest Expense 84,596 79,004
--------------------------------------------------------
Income Before Income Taxes 69,880 72,709
Provision for Income Taxes 25,051 26,280
--------------------------------------------------------
Net Income $ 44,829 $ 46,429
========================================================
Basic Earnings Per Share $ 0.87 $ 0.90
Diluted Earnings Per Share $ 0.85 $ 0.87
Balance Sheet Totals
Total Assets $10,085,235 $10,059,690
Net Loans and Leases 6,110,892 6,049,831
Total Deposits 7,756,586 7,726,758
Total Shareholders' Equity 696,311 712,169
Performance Ratios
Net Income to Average Total
Assets (ROA) 1.74% 1.87%
Net Income to Average
Shareholders' Equity (ROE) 24.61 25.98
Net Interest Margin (2) 4.30 4.36
Efficiency Ratio (3) 53.72 52.07
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) The net interest margin is defined as net interest income, on a
fully-taxable equivalent basis, as a percentage of average earning
assets.
(3) The efficiency ratio is defined as non-interest expense divided by
total revenue (net interest income and non-interest income).
CONTACT: Bank of Hawaii Corporation Media: Stafford Kiguchi, 808-537-8580 or Mobile: 808-265-6367 skiguchi@boh.com or Investors/Analysts: Cindy Wyrick, 808-537-8430 cwyrick@boh.com SOURCE: Bank of Hawaii Corporation