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Bank of Hawaii Corporation Third Quarter 2002 Financial Results

-- Net Income $30.2 Million, or $0.43 Per Share
-- Board of Directors Increases Dividend to $0.19 Per Share
-- Shares Repurchases Total 4.0 Million During the Quarter

HONOLULU, Oct 23, 2002 (BUSINESS WIRE) --Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.43 for the third quarter of 2002, an increase of 16.2 percent from $0.37 in the third quarter of 2001. Net income for the quarter was $30.2 million, down slightly from $31.1 million in the comparable quarter last year. The return on average assets for the quarter was 1.22 percent, up from 1.00 percent in the same period last year. The return on average equity was 10.40 percent for the quarter, compared to 8.88 percent in the third quarter of 2001.

"We continued to make progress on several key initiatives in the third quarter of 2002," said Michael E. O'Neill, Chairman, CEO and President. "Our credit quality continued to improve, we are progressing on our systems conversions and are investing in our Hawaii market to improve our customer service. We are encouraged by the strengthening economy in Hawaii which is being led by the construction and real estate sectors."

For nine months ended September 30, 2002, net income was $92.3 million, up slightly from net income of $91.5 million for the same period last year. Diluted earnings per share were $1.26 for the first nine months of 2002, an increase of 13.5 percent from $1.11 per share for the first nine months of 2001. The year-to-date return on average assets was 1.22 percent, up from 0.94 percent for the same nine months in 2001. The year-to-date return on average equity was 10.10 percent versus 8.96 percent for the nine months ended September 30, 2001.

The presence of non-core items and the effects of business divestitures in prior quarters continue to have a significant impact on the comparability of results. Included in the third quarter of 2002 were charges of $6.6 million related to the information technology systems replacement project. Earnings for the third quarter of 2001 included a gain of $49.4 million from divestitures offset by related sales costs, tax obligations, other non-recurring adjustments and restructuring costs, which netted to a cost of $0.4 million after tax. Supplemental information has been provided in Table 11 that summarizes the continuing core business results for the last seven quarters.

Financial Highlights

Net interest income for the third quarter of 2002 on a fully taxable equivalent basis was $92.2 million, down $0.8 million from the previous quarter. Net interest income was down $19.6 million from the prior year quarter primarily due to lower earning assets related to the divestitures, the exit of the Asia business and the managed reduction of loans in an effort to reduce credit risk.

Bank of Hawaii Corporation's net interest margin was 4.03 percent for the third quarter of 2002, a 6 basis point increase from 3.97 percent in the previous quarter and a 14 basis point increase from 3.89 percent in the third quarter last year. The improvement in the margin was due to lengthening the maturities of some short-term investments, reductions in short-term borrowings and time deposits, and debt repurchases, which lowered the Company's cost of funds. The Company remains asset sensitive.

Given further improvements in Bank of Hawaii's credit quality and the resiliency of the Hawaii economy, the Company did not recognize a provision for loan and lease losses and thereby reduced its allowance by net charge-offs of $4.5 million during the third quarter. The provision for loan and lease losses was $3.3 million in the second quarter of 2002 and $0.9 million in the third quarter last year. The lower provision in the third quarter of 2001 was the result of significant recoveries during that quarter, including a $6.5 million recovery in Asia.

Non-interest income was $48.2 million for the quarter, a decrease of $0.7 million, or 1.4 percent, from $48.9 million in the second quarter of 2002. The decrease was primarily due to a reduction in revenue from trust and asset management activities. Non-interest income of $113.4 million for the third quarter of 2001 included $51.6 million in non-recurring items. Excluding these items, non-interest income for the quarter decreased $13.5 million from the previous year quarter largely due to decreased mortgage banking income and reductions in revenue associated with the divested businesses.

Non-interest expense for the third quarter of 2002 was $93.0 million, including $6.6 million in information technology system replacement costs. Excluding these charges, non-interest expense declined by $4.0 million, or 4.4 percent, to $86.4 million compared to $90.4 million in the previous quarter. Non-interest expense of $122.6 million for the third quarter of 2001 included restructuring and other related costs of $3.0 million. Excluding these items, non-interest expense declined $33.2 million, or 27.8 percent, from the same quarter last year. The most significant reduction from the prior year was salaries, which were largely associated with the divested businesses.

The efficiency ratio was 66.2 percent for the third quarter of 2002. Excluding the systems replacement costs, the efficiency ratio was 61.5 percent compared to 63.7 percent in the previous quarter and a continuing business ratio of 61.0 percent in the same quarter last year. For the nine months ending September 30, 2002, the continuing business efficiency ratio was 62.0 percent compared to 60.8 percent in the same period last year.

The 35.9 percent effective tax rate for the first nine months of 2002 is a decrease from the prior year as the effective tax rate in 2001 reflected the impact of divestitures and foreign taxes.

Asset Quality

Bank of Hawaii Corporation's credit quality continued to improve during the third quarter of 2002 as measured by reductions in non-performing assets, the decline in year-to-date net charge-off rates and additional improvement in the Company's internal credit risk ratings.

Non-performing assets were $63.3 million at the end of the third quarter of 2002, a decrease of $15.5 million, or 19.7 percent, from $78.8 million at the end of the second quarter. The decline is primarily due to the return to accrual and payoff of loans to two Hawaii borrowers. Compared to the same quarter last year, non-performing assets declined $43.1 million, or 40.5 percent. At September 30, 2002 the ratio of non-performing assets to total loans plus foreclosed assets and non-performing loans held for sale was 1.20 percent, down from 1.45 percent at June 30, 2002 and down from 1.56 percent at September 30, 2001.

Non-accrual loans were $45.7 million at September 30, 2002, a reduction of $15.9 million, or 25.8 percent, from $61.6 million at June 30, 2002 and down $16.1 million, or 26.1 percent, from $61.8 million at September 30, 2001. Non-accrual loans as a percentage of total loans were 0.87 percent at September 30, 2002, down from 1.14 percent the previous quarter and down from 0.91 percent at September 30, 2001.

Net charge-offs for the third quarter of 2002 were $4.5 million, or 0.33 percent, of total average loans (annualized). Charge-offs of $7.2 million were partially offset by recoveries of $2.7 million. Year-to-date net charge-offs were 0.39 percent of total average loans (annualized), a significant improvement from net charge-offs of 1.76 percent in the prior year.

The allowance for loan and lease losses of $154.5 million at September 30, 2002 declined by $4.5 million, the amount of net charge-offs, from June 30, 2002 and represented a decrease of $28.0 million from September 30, 2001. The decline from the previous year also reflects the South Pacific divestitures. The ratio of the allowance for loan and lease losses to total loans was 2.94 percent at the end of the third quarter of 2002, unchanged from the end of the previous quarter and up from 2.70 percent at the end of the same quarter last year.

The concentration of credit exposure to selected industries and the amount of the Company's syndicated exposure are summarized in Table 7.

Other Financial Highlights

Total assets were $9.7 billion at the end of September 30, 2002, down from $10.6 billion at December 31, 2001 and down from $11.9 billion at the end of September 30, 2001. The most significant reductions were in commercial loans and foreign loans resulting from the divestitures and strategic risk reductions in the portfolio. In addition, the Company significantly reduced its loans held for sale.

Compared to June 30, 2002, total assets decreased $121 million from $9.8 billion. The decrease was due to comparable reductions in both the commercial and consumer loan portfolios. Commercial loans decreased as the Company utilized opportunities during the quarter to further reduce syndicated loans outstanding by $36 million. Reductions in the consumer loan portfolio were due to a small increase in mortgage prepayments, which more than offset growth in home equity and other consumer loans.

Mortgage servicing rights represent approximately 0.78 percent of the balance of loans serviced and did not require an adjustment for impairment at September 30, 2002 as the market value substantially exceeded the carrying value. Hawaii prepayment speeds remain significantly slower than national averages.

Investment securities increased during the quarter as some of the excess liquidity was invested in medium-term securities.

Total deposits at September 30, 2002 were $6.6 billion, essentially flat with December 31, 2001 and down $0.8 billion from the end of September 30, 2001. The decline from the prior year is primarily due to the divested foreign operations.

Compared to June 30, 2002, total deposits increased $172 million from $6.5 billion. Growth in demand and savings deposits more than offset a $123 million decrease in time and foreign deposits. Long-term debt, including current maturities, decreased $95 million due to repayments and repurchases. The Company continues to manage down its higher cost funds, including time deposits, purchased funds, short-term borrowings and long-term debt.

During the third quarter of 2002, Bank of Hawaii Corporation repurchased 4.0 million shares of common stock at an average cost of $27.55, totaling $109.4 million. At September 30, 2002, the Company had repurchased a total of 16.9 million shares under its previously announced share repurchase programs. Through September 30, 2002, a total of $433.8 million has been returned to the shareholder at an average cost of $25.69 per share. Remaining buyback authority under the existing repurchase programs was $136.2 million at September 30, 2002. Through October 22, 2002, the Company repurchased an additional 1.3 million shares of common stock at a cost of $27.08 per share.

Capital and liquidity remain exceptionally strong at the Company. At September 30, 2002, the Tier 1 leverage ratio was 11.07 percent compared to 12.11 percent at June 30, 2002 and 11.37 percent at September 30, 2001.

Bank of Hawaii Corporation's Board of Directors increased the quarterly cash dividend to $0.19 per share on the Company's outstanding shares. The dividend will be payable on December 13, 2002 to shareholders of record at the close of business on November 22, 2002.

Information Technology Systems Replacement Project

Bank of Hawaii Corporation signed an agreement with Metavante Corporation in July 2002 to serve as the Company's primary technology systems provider. The seven-year outsourcing arrangement is expected to be operational in the third quarter of 2003 and should provide annual cost savings of over $17 million compared to current expense levels.

In connection with this decision, the Company estimates that it will recognize transition charges of approximately $35 million over the five-quarter conversion period. During the third quarter of 2002, the Company incurred $6.6 million in transition costs. Incremental system conversion costs are estimated to be approximately $7.9 million in the fourth quarter of 2002.

Additional details on this project may be found in Table 10.

Economic Outlook

One year after the September 11 attacks, Hawaii tourism has returned to near normal levels. Through the end of August, travel to Hawaii from the western United States was at record levels, with all-time highs for the California market and high single-digit growth from the intermountain west. East Coast travel to Hawaii was down and travel from Japan remains about 15 percent below pre-September 11 volumes.

The momentum in Hawaii growth continues coming from construction and real estate investment. This growth was sufficient to sustain Hawaii's 4.0 percent seasonally-adjusted unemployment rate in August 2002, against the backdrop of a low 1.1 percent consumer price inflation during the first half of 2002 and roughly 2.0 percent real growth in total personal income during the two reported quarters following September 11.

Overall, the outlook for Hawaii is continued modest growth that is expected to slightly outpace the national economy. This outlook is confirmed by a 4.2 percent year-over-year increase in scheduled air seats to Hawaii during August 2002 and renewed state tax revenue growth of 3 to 4 percent in the first three months of the new fiscal year.

Investment in Hawaii

Bank of Hawaii Corporation is increasingly focused on strengthening its competitive position in its markets, primarily Hawaii. Through the end of the third quarter of 2002, the following were accomplished:

  • Education of nearly 1,300 personnel on customer focused sales and service.
  • Investment of $7.0 million in new and improved branch facilities.
  • Selection and investment of $6.6 million in primary and supporting systems to improve customer service.
  • Special investments in community organizations of $4.0 million.
  • Contributions of $1.3 million to local non-profit organizations from Bank of Hawaii and its charitable foundation.

Earnings Outlook

The Company affirmed its expectation that earnings for the full year 2002 will equal or exceed $120 million. Earnings for the fourth quarter are expected to approximate third quarter levels, but could decrease slightly due to higher costs for the systems replacement projects, branch closings in the West Pacific and seasonal increases in compensation and other expense categories.

Earnings expectations for 2003, which were established at $130 million in April 2001, are being reviewed and should be updated in January when the 2002 earnings are announced.

Based on current conditions, the Company does not expect to record a provision for loan losses. However, the actual amount of the provision for loan losses will depend on determinations of credit risk that will be 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.

Conference Call Information

The Company will review its third quarter 2002 earnings today at 2:00 p.m. ET. The presentation will be accessible via teleconference and via the investor relations link on Bank of Hawaii Corporation's web site, www.boh.com. The conference call number is (800) 997-8642 in the U.S. or (973) 694-6836 for international callers. A replay of the call will be available for one week beginning at 4:00 p.m. ET on Wednesday, October 23, 2002 by calling (800) 428-6051 in the U.S. or (973) 709-2089 for international callers and entering the number 261724 when prompted. A replay of the presentation will be also available on 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 anticipated revenues and expenses in 2002 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: the Hawaii economy may not continue at the pace we anticipate; our refocused emphasis on our Hawaii market may not achieve the customer and revenue gains we anticipate; our credit markets may deteriorate and our credit quality may fall short of our goals; we may not achieve the expense reductions we expect; we may not be able to maintain our net interest margin; we may not be able to implement our proposed equity repurchases in the amount or at the times planned; the economics or timing, or both, of our technology outsourcing project may not result in the expected benefits; unanticipated difficulties or delays in the conversion of our data processing to outsourcing may result in the reduction or delay of anticipated cost savings or increased cost of conversion; the technology outsourcing project may not be able to achieve the projected reductions in staffing; we may encounter unanticipated difficulties or costs in exiting existing data processing agreements with third parties; the required level of reserves for loan and lease losses may increase or decrease due to changes in our credit quality or risk profile; there may be economic volatility in the markets we serve; and there may be changes in business and economic conditions, competition, fiscal and monetary policies or legislation. We do not undertake any obligation to update any 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    Nine Months Ended
Earnings Highlights and         September 30          September 30
 Performance Ratios            2002      2001         2002      2001
---------------------------- ------------------     ------------------
Net Income                   $30,200   $31,059      $92,272   $91,475
Basic Earnings Per Share        0.44      0.39         1.30      1.14
Diluted Earnings Per Share      0.43      0.37         1.26      1.11
Cash Dividends                12,197    14,625       38,442    43,415
Return on Average Assets        1.22%     1.00%        1.22%     0.94%
Return on Average Equity       10.40%     8.88%       10.10%     8.96%
Net Interest Margin             4.03%     3.89%        3.97%     3.91%
Efficiency Ratio               66.19%    54.46%       63.95%    62.89%
Continuing Business
 Efficiency Ratio(1)           61.51%    61.03%       61.96%    60.81%
----------------------------------------------------------------------
Statement of Condition Highlights and               September 30
 Performance Rati-         -        -
Cash Dividends Paid               (38,442)       -         -        -
----------------------------------------------------------------------
Balance at September 30, 2002  $1,100,706     $806  $371,098 $ 26,038
======================================================================
Nine Months Ended September
 30, 2001
Balance at December
 31, 2000                      $1,301,356     $806  $346,045 $(25,079)
Comprehensive Income
 Net Income                        91,475        -         -        -
 Other Comprehensive
  Income, Net of Tax
   Unrealized Gain on
    Investment Securities          23,906        -         -   23,906
   Foreign Currency
    Translation Adjustment         25,911        -         -   25,911
   Pension Liability
    Adjustments                      (159)       -         -     (159)
 Total Comprehensive Income
Common Stock Issued
   46,408 Profit Sharing Plan       1,065        -       257        -
  604,264 Stock Option Plan        11,160        -       892        -
   91,764 Dividend Reinvestment
           Plan                     2,103        -       483        -
    4,248 Directors' Restricted
           Shares and Deferred
            Compensation Plan         341        -        95        -
  724,600 Employees' Restricted
           Shares                   2,797        -    18,323        -
   65,146 Hawaii Insurance
           Network                  1,299        -     1,299        -
Treasury Stock Purchased
 (1,965,000 shares)               (46,784)       -         -        -
Cash Dividends Paid               (43,415)       -         -        -
----------------------------------------------------------------------
Balance at September 30, 2001  $1,371,055     $806  $367,394 $ 24,579
======================================================================
                                           Deferred           Compre-
                                  Retained Stock    Treasury  hensive
(dollars in thousands)            Earnings Grants   Stock     Income
----------------------------------------------------------------------
Nine Months Ended September
 30, 2002
Balance at December 31, 2001   $1,055,424 $ (7,637)$(192,014)
Comprehensive Income
 Net Income                        92,272        -         - $ 92,272
 Other Comprehensive
  Income, Net of Tax
   Unrealized Gain on
    Investment Securities                -       -         -    3,859
   Foreign Currency
    Translation Adjustment               -       -         -     (582)
                                                             ---------
     Total Comprehensive Income                              $ 95,549
                                                             =========
Common Stock Issued
   33,402 Profit Sharing Plan            -       -       737
1,369,679 Stock Option Plan        (9,236)    (233)   33,342
   77,270 Dividend Reinvestment
           Plan                        (2)       -     1,715
    4,101 Directors' Restricted
           Shares and Deferred
            Compensation Plan           -        -       (73)
  (71,300)Employees' Restricted
           Shares                       -    4,984         -
Treasury Stock Purchased
 (8,581,000 shares)                     -        -  (238,073)
Cash Dividends Paid               (38,442)       -         -
-------------------------------------------------------------
Balance at September 30, 2002  $1,100,016 $ (2,886)$(394,366)
=============================================================
Nine Months Ended September
 30, 2001
Balance at December 31, 2000   $  996,791 $      - $ (17,207)
Comprehensive Income
 Net Income                        91,475        -         - $ 91,475
 Other Comprehensive
  Income, Net of Tax
   Unrealized Gain on
    Investment Securities               -        -         -   23,906
   Foreign Currency Translation
    Adjustment                          -        -         -   25,911
   Pension Liability Adjustments        -        -         -     (159)
                                                             ---------
     Total Comprehensive Income                              $141,133
                                                             =========
Common Stock Issued
   46,408 Profit Sharing Plan           -        -       808
  604,264 Stock Option Plan          (812)     847    10,233
   91,764 Dividend Reinvestment
           Plan                         -        -     1,620
    4,248 Directors' Restricted
           Shares and Deferred
            Compensation Plan           -        -       246
  724,600 Employees' Restricted
           Shares                       -  (15,526)        -
   65,146 Hawaii Insurance
           Network                      -        -         -
Treasury Stock Purchased
 (1,965,000 shares)                     -        -   (46,784)
Cash Dividends Paid               (43,415)       -         -
-------------------------------------------------------------
Balance at September 30, 2001  $1,044,039 $(14,679)$ (51,084)
=============================================================
Bank of Hawaii Corporation and subsidiaries
Consolidated Average Balances and Interest Rates - Taxable
 Equivalent Basis (Unaudited)                                  Table 5
                         Three Months Ended       Three Months Ended
                         September 30, 2002          June 30, 2002
                       Average Income/ Yield/  Average  Income/ Yield/
(dollars in millions)  Balance Expense  Rate   Balance  Expense  Rate
----------------------------------------------------------------------
Earning Assets
  Interest Bearing
   Deposits            $1,142.3  $ 5.4  1.87% $ 1,310.0  $ 6.0  1.84%
  Funds Sold              210.2    0.9  1.74      173.3    0.8  1.74
  Investment Securities
   -  Held to Maturity    296.9    5.0  6.63      328.6    5.0  6.06
   -  Available for
    Sale                2,009.5   25.3  5.03    1,890.3   26.5  5.60
  Loans Held for Sale      40.0    0.6  6.24       65.2    1.1  6.88
  Net Loans and Lease
   Financing
    Domestic
     - Commercial and
        Industrial        963.9   12.9  5.31    1,061.1   13.5  5.12
     - Construction       147.7    2.1  5.57      157.5    2.3  5.72
     - Mortgage         2,904.9   50.4  6.93    2,985.4   52.3  7.01
     - Installment        818.1   17.0  8.25      783.2   16.6  8.50
     - Lease Financing    500.8    6.3  4.98      502.1    6.6  5.25
                       ---------------------- -----------------------
   Total Domestic Loans 5,335.4   88.7  6.62    5,489.3   91.3  6.66
   Foreign                 14.1      -     -       14.1      -     -
                       ---------------------- -----------------------
   Total Loans          5,349.5   88.7  6.60    5,503.4   91.3  6.65
  Other                    99.6    1.5  6.28       99.2    1.3  5.64
                       ---------------------- -----------------------
    Total Earning
     Assets             9,148.0  127.4  5.55    9,370.0  132.0  5.64
Cash and Non-Interest
 Bearing Deposits         297.6                   341.8
Other Assets              358.3                   367.1
                       ---------              ----------
    Total Assets       $9,803.9               $10,078.9
                       =========              ==========
Interest Bearing
 Liabilities
  Domestic Deposits
    - Demand           $2,036.0    4.0  0.78  $ 1,974.6    4.4  0.88
    - Savings           1,346.2    5.0  1.46    1,164.0    4.5  1.57
    - Time              1,600.0   11.4  2.82    1,732.0   12.9  2.98
                       ---------------------- -----------------------
     Total Domestic
      Deposits          4,982.2   20.4  1.62    4,870.6   21.8  1.79
  Foreign Deposits
    - Time Due to
        Banks               9.6      -     -       37.3    0.1  1.47
    - Other Time and
        Savings            38.3    0.2  1.68       59.1    0.3  1.67
                       ---------------------- -----------------------
     Total Foreign
      Deposits             47.9    0.2  1.59       96.4    0.4  1.59
                       ---------------------- -----------------------
     Total Interest
      Bearing Deposits  5,030.1   20.6  1.62    4,967.0   22.2  1.79
  Short-Term Borrowings 1,301.3    7.7  2.34    1,475.9    8.8  2.39
  Long-Term Debt          451.6    6.9  6.10      507.1    8.0  6.37
                       ---------------------- -----------------------
    Total Interest
     Bearing
     Liabilities        6,783.0   35.2  2.06    6,950.0   39.0  2.25
                       ---------------------- -----------------------
     Net Interest
      Income                      92.2                    93.0
        Interest Rate
         Spread                         3.49%                   3.39%
        Net Interest
         Margin                         4.03%                   3.97%
Non-Interest Bearing
 Demand Deposits
    - Domestic          1,547.0                 1,565.6
    - Foreign                 -                       -
                       ---------              ----------
     Total Non-Int
      Bearing Demand
      Deposits          1,547.0                 1,565.6
Other Liabilities         321.6                   312.3
Shareholders' Equity    1,152.3                 1,251.0
                       ---------              ----------
    Total Liabilities
     and Shareholders'
     Equity            $9,803.9               $10,078.9
                       =========              ==========
Provision for Loan and
 Lease Losses                        -                     3.3
Net Overhead                      44.6                    41.5
                                -------                 -------
Income Before Income
 Taxes                            47.6                    48.2
Provision for Income
 Taxes                            17.3                    17.1
Tax-Equivalent
 Adjustment                        0.1                     0.1
                                -------                 -------
Net Income                       $30.2                   $31.0
                                =======                 =======
                         Three Months Ended(1)    Nine Months Ended
                         September 30, 2001      September 30, 2002
                       Average  Income/ Yield/ Average  Income/ Yield/
(dollars in millions)  Balance  Expense  Rate  Balance  Expense   Rate
----------------------------------------------------------------------
Earning Assets
  Interest Bearing
   Deposits            $   938.7 $  9.4  3.98% $ 1,202.3 $ 16.4  1.83%
  Funds Sold               194.3    1.8  3.59      206.9    2.7  1.72
  Investment Securities
    - Held to Maturity     526.9    8.1  6.12      331.1   15.2  6.11
    - Available for
    Sale                 2,139.7   31.4  5.86    1,946.5   78.9  5.40
  Loans Held for Sale      310.6    5.3  6.83      147.6    7.4  6.70
  Net Loans and Lease
   Financing
   Domestic
    - Commercial and
       Industrial        1,583.9   27.8  6.96    1,057.9   41.0  5.18
    - Construction         223.0    4.2  7.41      158.3    6.5  5.49
    - Mortgage           3,261.2   62.3  7.58    2,969.0  155.9  7.01
    - Installment          751.6   19.4 10.22      780.2   50.0  8.56
    - Lease Financing      533.4    7.4  5.53      498.3   19.4  5.22
                       ----------------------- -----------------------
   Total Domestic Loans  6,353.1  121.1  7.59    5,463.7  272.8  6.67
   Foreign                 920.4   16.8  7.23       14.2    0.2  1.61
                       ----------------------- -----------------------
   Total Loans           7,273.5  137.9  7.54    5,477.9  273.0  6.65
  Other                     78.8    1.4  6.96       95.8    4.3  6.01
                       ----------------------- -----------------------
    Total Earning
     Assets             11,462.5  195.3  6.78    9,408.1  397.9  5.65
Cash and Non-Interest
 Bearing Deposits          347.3                   313.7
Other Assets               488.9                   375.1
                       ----------              ----------
    Total Assets       $12,298.7               $10,096.9
                       ==========              ==========
Interest Bearing
 Liabilities
  Domestic Deposits
    - Demand           $ 1,892.6    8.3  1.74  $ 1,982.2   12.8  0.86
    - Savings              794.9    4.6  2.29    1,183.6   13.4  1.51
    - Time               2,432.0   29.5  4.81    1,739.8   39.0  3.00
                       ----------------------- -----------------------
     Total Domestic
      Deposits           5,119.5   42.4  3.29    4,905.6   65.2  1.78
  Foreign Deposits
    - Time Due to
       Banks               235.3    2.2  3.78       54.8    0.8  1.90
    - Other Time and
       Savings             640.7    5.5  3.41       60.2    0.7  1.69
                       ----------------------- -----------------------
     Total Foreign
      Deposits             876.0    7.7  3.51      115.0    1.5  1.79
                       ----------------------- -----------------------
     Total Interest
      Bearing Deposits   5,995.5   50.1  3.32    5,020.6   66.7  1.78
  Short-Term Borrowings  2,012.6   20.9  4.11    1,503.7   27.6  2.46
  Long-Term Debt           746.0   12.5  6.63      498.7   23.3  6.25
                       ----------------------- -----------------------
    Total Interest
     Bearing
     Liabilities         8,754.1   83.5  3.78    7,023.0  117.6  2.24
                       ----------------------- -----------------------
     Net Interest
      Income                      111.8                   280.3
       Interest Rate
        Spread                           3.00%                   3.41%
       Net Interest
        Margin                           3.89%                   3.97%
Non-Interest Bearing
 Demand Deposits
    - Domestic           1,509.0                 1,540.0
    - Foreign              330.7                       -
                       ----------              ----------
     Total Non-Int
      Bearing Demand
      Deposits           1,839.7                 1,540.0
Other Liabilities          316.6                   312.0
Shareholders' Equity     1,388.3                 1,221.9
                       ----------              ----------
    Total Liabilities
     and Shareholders'
     Equity            $12,298.7               $10,096.9
                       ==========              ==========
Provision for Loan and
 Lease Losses                       0.9                    11.6
Net Overhead                        9.2                   124.6
                                 -------                 -------
Income Before Income
 Taxes                            101.7                   144.1
Provision for Income
 Taxes                             70.5                    51.6
Tax-Equivalent Adjustment           0.1                     0.2
                                 -------                 -------
Net Income                       $ 31.1                  $ 92.3
                                 =======                 =======
(1) Adjusted to reflect the reclassification of certain average
balances and other interest income.
Bank of Hawaii Corporation and subsidiaries
Loan Portfolio Balances (Unaudited)                            Table 6
----------------------------------------------------------------------
                         September 30 June 30 December 31 September 30
(dollars in millions)            2002    2002        2001         2001
----------------------------------------------------------------------
Domestic
  Commercial
    Commercial and
     Industrial(1)          $  869.4 $  999.6   $1,175.5     $1,413.6
    Mortgage -
     Commercial(1)             616.5    562.5      640.7        667.9
    Construction               146.3    148.6      169.6        175.7
    Lease Financing            451.8    450.8      441.8        466.8
                         ---------------------------------------------
      Total Commercial       2,084.0  2,161.5    2,427.6      2,724.0
  Consumer
    Mortgage -
     Residential             2,259.2  2,360.5    2,419.4      2,440.4
    Home Equity                419.2    404.2      329.9        306.3
    Other Consumer             421.6    403.2      399.8        428.4
    Lease Financing             36.5     37.3       38.9         41.2
                         ---------------------------------------------
        Total Consumer       3,136.5  3,205.2    3,188.0      3,216.3
----------------------------------------------------------------------
     Total Domestic          5,220.5  5,366.7    5,615.6      5,940.3
----------------------------------------------------------------------
Foreign                         38.2     41.8       36.9        825.8
----------------------------------------------------------------------
     Total Loans            $5,258.7 $5,408.5   $5,652.5     $6,766.1
======================================================================
(1) $42.3 million in loans were reclassified to mortgage-commercial
from commercial and industrial during the third quarter of 2002.
Bank of Hawaii Corporation and subsidiaries
Selected Concentrations of Credit Exposure (Unaudited)         Table 7
----------------------------------------------------------------------
                                                              June 30,
                                September 30, 2002(1)           2002
                                         Unused      Total     Total
(dollars in millions)    Outstandings  Commitments Exposure   Exposure
----------------------------------------------------------------------
Air Transportation
  Regional Passenger
   Carriers                      $ 49         $  8   $   57    $   58
  United States Based
   Passenger Carriers              48            -       48        49
  International Based
   Passenger Carriers              32            -       32        32
  Cargo Carriers                   15            -       15        15
                         -----------------------------------  --------
Total Air Transportation         $144         $  8   $  152    $  154
                         ===================================  ========
Lodging( 2)
  National Hotel
   Companies                     $ 31         $ 74   $  105    $  104
  Hawaii Hotels                   103           32      135       137
  West Pacific Hotels              47            -       47        43
                         -----------------------------------  --------
Total Lodging                    $181         $106   $  287    $  284
                         ===================================  ========
Telecommunication
 Companies                       $  6         $ 25   $   31    $   45
                         ===================================  ========
Syndicated Exposure              $312         $764   $1,076    $1,096
                         ===================================  ========
(1) The credit exposures to the air transportation, lodgings, and
telecommunication industries were current at September 30, 2002.
(2) One collateralized loan in the West Pacific with $5.6 million of
exposure was reclassified in the third quarter from commercial and
industrial loans to mortgage commercial-hotels. This loan is on
non-accrual, but remains current on payments. Approximately 95% of the
Hawaii and West Pacific hotel loans are collateralized by hotel
properties or guaranteed by either financial institutions or entities
with limited exposure to tourism.
Bank of Hawaii Corporation and subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past     Table 8
 Due 90 Days or More (Unaudited)
----------------------------------------------------------------------
                          Sept. 30  June 30  March 31 Dec. 31 Sept. 30
(dollars in millions)       2002     2002     2002     2001     2001
----------------------------------------------------------------------
Non-Accrual Loans
      Commercial and
       Industrial        $    6.4 $   14.4 $   27.4 $   18.9 $   10.5
      Mortgage -
       Commercial            18.1     25.3     15.1     16.3     12.8
      Construction            0.9      0.7      1.0      9.3      0.7
      Lease Financing         5.7      6.9      4.4      0.8      1.0
      Mortgage -
       Residential           14.5     14.3     15.7     15.4     19.5
      Other Consumer          0.1        -      0.1      0.1      0.1
      Foreign                   -        -        -        -     17.2
                         ---------------------------------------------
       Total Non-Accrual
        Loans                45.7     61.6     63.7     60.8     61.8
Non-Accrual Loans Held
 For Sale                       -        -      7.8      1.7      7.4
Foreclosed Real Estate
      Domestic               17.6     17.2     19.2     17.2     36.9
      Foreign                   -        -        -        -      0.3
                         ---------------------------------------------
       Total Foreclosed
        Real Estate          17.6     17.2     19.2     17.2     37.2
                         ---------------------------------------------
         Total Non-
          Performing
          Assets         $   63.3 $   78.8 $   90.7 $   79.7 $  106.4
                         =============================================
Accruing Loans Past Due
 90 Days or More
      Commercial and
       Industrial        $      - $      - $    0.2 $    0.1 $    0.1
      Mortgage -
       Commercial               -        -      1.2        -        -
      Lease Financing           -      0.1      0.1      0.1        -
      Mortgage -
       Residential            1.4      0.9      2.1      3.8      3.4
      Other Consumer          0.3      0.5      0.7      0.9      1.0
      Foreign                   -        -        -        -      0.8
                         ---------------------------------------------
         Total Accruing
          and Past Due   $    1.7 $    1.5 $    4.3 $    4.9 $    5.3
                         =============================================
Total Loans              $5,258.7 $5,408.5 $5,601.3 $5,652.5 $6,766.1
                         =============================================
----------------------------------------------------------------------
Ratio of Non-Accrual
 Loans to Total Loans        0.87%    1.14%    1.14%    1.08%    0.91%
----------------------------------------------------------------------
Ratio of Non-Performing
 Assets to Total Loans,
 Foreclosed Real Estate
 and Non-Performing Loans
 Held for Sale               1.20%    1.45%    1.61%    1.41%    1.56%
----------------------------------------------------------------------
Ratio of Non-Performing
 Assets and Accruing
 Loans Past Due 90 Days
 or More to Total Loans      1.24%    1.48%    1.70%    1.50%    1.65%
----------------------------------------------------------------------
Quarter to Quarter
 Changes in Non-Performing
 Assets Balance at
  Beginning of Quarter   $   78.8 $   90.7 $   79.7 $  106.4 $  118.9
  Additions                   7.0     20.5     36.4     43.8     23.2
  Reductions
    Payments and Sales
     of Loans                (8.5)   (20.6)   (12.9)   (40.9)   (25.8)
    Return to Accrual        (9.1)    (6.2)    (6.3)    (3.6)    (0.9)
    Sales of Foreclosed
     Assets                  (1.4)    (3.5)    (0.9)   (21.9)    (2.2)
    Charge-offs              (3.5)    (2.1)    (5.3)    (4.1)    (6.8)
                         ---------------------------------------------
  Total Reductions          (22.5)   (32.4)   (25.4)   (70.5)   (35.7)
                         ---------------------------------------------
   Balance at End of
    Quarter              $   63.3 $   78.8 $   90.7 $   79.7 $  106.4
                        =============================================
Bank of Hawaii Corporation and subsidiaries
Consolidated Allowance for Loan and Lease Losses (Unaudited)   Table 9
----------------------------------------------------------------------
                             Three Months Ended      Nine Months Ended
                          Sept. 30 June 30  Sept. 30      Sept. 30
(dollars in millions)       2002     2002     2001      2002     2001
----------------------------------------------------------------------
Balance of Allowance for
 Loan and Lease Losses
 at Beginning of Period $  159.0 $  159.0 $  199.8  $  159.0 $  246.2
 Loans Charged-Off
  Commercial and
   Industrial               (0.7)    (1.0)    (3.4)     (9.0)   (87.8)
  Mortgage - Commercial     (2.5)    (1.8)    (2.6)     (4.3)   (16.1)
  Construction                 -        -        -      (0.5)       -
  Lease Financing           (0.4)    (0.5)    (0.6)     (0.9)    (0.7)
  Mortgage - Residential    (0.6)    (1.3)    (1.3)     (3.3)    (5.5)
  Other Consumer            (3.0)    (2.9)    (5.4)     (9.8)   (15.0)
  Foreign                      -        -     (4.1)        -    (18.0)
                        ----------------------------------------------
Total Charge-Offs           (7.2)    (7.5)   (17.4)    (27.8)  (143.1)
Recoveries on Loans
 Previously Charged-Off
  Commercial and
   Industrial                1.0      2.3      1.1       4.0      8.1
  Mortgage - Commercial      0.1      0.1      1.3       2.0      2.4
  Lease Financing            0.1        -        -       0.1      0.2
  Mortgage - Residential     0.1      0.3      0.2       0.7      0.7
  Other Consumer             1.4      1.6      2.2       4.9      5.6
  Foreign                      -     (0.1)    10.2         -     19.1
                        ----------------------------------------------
Total Recoveries             2.7      4.2     15.0      11.7     36.1
                        ----------------------------------------------
Net Loan Charge-Offs        (4.5)    (3.3)    (2.4)    (16.1)  (107.0)
Provision for Loan and
 Lease Losses                  -      3.3      0.9      11.6     59.8
Allowance Related to
 Disposition                   -        -    (16.4)        -    (16.4)
Foreign Currency
 Translation                   -        -      0.6         -     (0.1)
                        ----------------------------------------------
Balance at End of
 Period                 $  154.5 $  159.0 $  182.5  $  154.5 $  182.5
                        ==============================================
Average Loans
 Outstanding            $5,349.5 $5,503.4 $7,273.5  $5,477.9 $8,121.1
Ratio of Net Charge-Offs
 to Average Loans
 Outstanding
  (annualized)              0.33%    0.24%    0.13%     0.39%    1.76%
Ratio of Allowance to
 Loans and Leases
 Outstanding                2.94%    2.94%    2.70%     2.94%    2.70%
Bank of Hawaii Corporation and subsidiaries
Information Technology Systems
 Replacement Project (Unaudited)                              Table 10
----------------------------------------------------------------------
(dollars in   Professional    Employee  Accelerated       Other  Total
 thousands)           Fees Termination  Depreciation Associated
                              Benefits                  Costs(2)
----------------------------------------------------------------------
Costs
 Incurred(1)     $  1,875     $ 1,042      $ 3,197    $   462 $ 6,576
Total Project
 Expected
 Costs           $ 12,481     $ 6,371      $ 9,371    $ 7,236 $35,459
(1) Three months and nine months ended September 30, 2002 and
project-to-date results are the same.
(2) Includes contract termination, equipment, excise tax, and other
costs.
Bank of Hawaii Corporation and subsidiaries
Quarterly Summary of Selected Consolidated Financial Data     Table 11
 (Unaudited)
----------------------------------------------------------------------
(dollars in millions except      Sept. 30        June 30     March 31
 per share amounts)                2002           2002         2002
----------------------------------------------------------------------
Balance Sheet Totals
Total Assets                     $9,702.0       $9,823.3    $10,244.8
Net Loans                         5,104.2        5,249.5      5,442.4
Total Deposits                    6,627.0        6,455.3      6,543.5
Total Shareholders' Equity        1,100.7        1,191.1      1,265.9
Quarterly Operating Results
Net Interest Income              $   92.2       $   92.9    $    94.9
Provision for Loan and Lease
 Losses                                 -            3.3          8.3
Non-Interest Income                  48.2           48.9         54.0
Gain on Sales of Banking
 Operations, Net of Venture
 Investment Losses                      -              -            -
Non-Interest Expense                 86.4           90.4         90.4
Restructuring and Other
 Related Costs                          -              -          2.0
Information Technology System
 Replacement Project                  6.6              -            -
Net Income                           30.2           31.0         31.1
Basic Earnings Per Share         $   0.44       $   0.43    $    0.42
Diluted Earnings Per Share       $   0.43       $   0.42    $    0.41
Return on Average Assets             1.22%          1.23%        1.21%
Return on Average Equity            10.40%          9.94%        9.97%
Efficiency Ratio                    66.19%         63.71%       62.06%
Continuing Business Operating
 Results(1)
Net Interest Income              $   92.2       $   92.9    $    94.9
Provision for Loan and Lease
 Losses                                 -            3.3          8.3
Non-Interest Income                  48.2           48.9         54.0
Non-Interest Expense(2)              86.4           90.4         90.4
Net Income(2)                        34.4           31.0         32.3
Diluted Earnings Per Share(2)    $   0.49       $   0.42    $    0.43
Return on Average Equity(2)         11.84%          9.94%       10.37%
Efficiency Ratio(2)                 61.51%         63.71%       60.73%
(dollars in millions except   Dec. 31   Sept. 30   June 30  March 31
 per share amounts)             2001      2001      2001      2001
---------------------------------------------------------------------
Balance Sheet Totals
Total Assets                 $10,627.8 $11,944.1 $12,755.5 $13,710.5
Net Loans                      5,493.5   6,583.5   7,418.0   8,224.6
Total Deposits                 6,673.6   7,399.7   8,108.5   8,815.4
Total Shareholders' Equity     1,247.0   1,371.1   1,395.7   1,371.9
Quarterly Operating Results
Net Interest Income          $   106.1 $   111.7 $   116.7 $   125.2
Provision for Loan and Lease
 Losses                           14.5       0.9       6.4      52.5
Non-Interest Income               51.2      65.6      73.2      88.4
Gain on Sales of Banking
 Operations, Net of Venture
 Investment Losses                28.7      47.8      24.8      72.1
Non-Interest Expense             122.3     119.6     122.4     127.9
Restructuring and Other
 Related Costs                    18.5       3.0      38.9      44.4
Information Technology System
 Replacement Project                 -         -         -         -
Net Income                        26.3      31.1      26.7      33.7
Basic Earnings Per Share     $    0.35 $    0.39 $    0.33 $    0.42
Diluted Earnings Per Share   $    0.34 $    0.37 $    0.32 $    0.42
Return on Average Assets          0.90%     1.00%     0.83%     0.99%
Return on Average Equity          8.14%     8.88%     7.69%    10.42%
Efficiency Ratio                 75.73%    54.46%    75.15%    60.33%
Continuing Business Operating
 Results(1)
Net Interest Income          $    93.8 $    91.0 $    87.8 $    92.2
Provision for Loan and Lease
 Losses                           16.6       6.4       2.6      12.1
Non-Interest Income               44.7      53.7      54.9      54.6
Non-Interest Expense(2)          100.2      88.3      89.3      86.4
Net Income(2)                     21.3      31.4      32.6      28.3
Diluted Earnings Per
 Share(2)                    $    0.28 $    0.38 $    0.39 $    0.35
Return on Average Equity(2)       6.59%     8.96%     9.37%     8.76%
Efficiency Ratio(2)              72.36%    61.03%    62.58%    58.88%
(1) Excludes the effects of the businesses that were divested in 2001,
restructuring, non-core transactions and costs associated with the
information technology system replacement project. 2001 Quarterly
information has been reclassified to conform to December 31, 2001
presentation.
(2) Adjusted to exclude goodwill amortization expense in 2001.

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

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