Bank of Hawaii Corporation Third Quarter 2004 Financial Results
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HONOLULU--(BUSINESS WIRE)--Oct. 25, 2004--Bank of Hawaii Corporation (NYSE:BOH)
- Diluted Earnings Per Share $0.78, Year-to-Date Earnings Per Share $2.26
- Net Income of $43.1 Million, Year-to-Date Net Income $127.1 Million
- Board of Directors Declares Dividend of $0.33 Per Share, Up 10 Percent
Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.78 for the third quarter of 2004, down $0.01 or 1.3 percent from $0.79 in the second quarter of 2004, and up $0.17 or 27.9 percent from $0.61 reported in the comparable quarter last year. Net income for the third quarter of 2004 was $43.1 million, down $1.2 million or 2.6 percent from $44.2 million in the previous quarter and up $6.4 million or 17.4 percent from $36.7 million reported in the same quarter last year.
Return on average assets for the third quarter of 2004 was 1.77 percent, down slightly from 1.80 percent in the second quarter of 2004, and up from 1.53 percent in the third quarter of 2003. Return on average equity was 23.42 percent for the third quarter of 2004, down from 24.28 percent in the previous quarter and up from 16.69 percent in the same quarter last year.
For nine months ended September 30, 2004, net income was $127.1 million, up $30.6 million or 31.7 percent from net income of $96.5 million for the same period last year. Diluted earnings per share were $2.26 for the first nine months of 2004, an increase of 44.9 percent from diluted earnings per share of $1.56 for the comparable period last year. The year-to-date return on average assets was 1.74 percent, up from 1.37 percent for the same nine months in 2003. The year-to-date return on average equity was 22.48 percent, up from 13.95 percent for the nine-month period ended September 30, 2003.
"Bank of Hawaii had another good quarter and I am pleased by the ongoing improvement demonstrated by our financial results," said Allan R. Landon, Chairman, CEO and President. "The Hawaii economy remains solid and we remain confident that we are well on the way to achieving the goals of our three-year plan."
Financial Highlights
Net interest income, on a taxable equivalent basis, for the third quarter of 2004 was $98.8 million, up $2.9 million from net interest income of $95.9 million in the second quarter of 2004, and up $7.7 million from net interest income of $91.1 million in the third quarter of 2003. An analysis of the change in net interest income is included in Table 6.
The net interest margin was 4.39 percent for the third quarter of 2004, up 22 basis points from the net interest margin of 4.17 percent in the previous quarter and up 24 basis points from 4.15 percent in the same quarter last year. The increase in the net interest margin from the previous quarter was largely due to higher average balances of short-term investments in the second quarter of 2004. In addition, the margin was further improved in the third quarter of 2004 as a result of increased yields on earnings assets, stable interest rates paid on deposits and continuing reductions in short-term borrowings and long-term debt.
Credit quality continued to improve during the quarter. The Company did not recognize a provision for loan and lease losses during the third quarter of 2004. A negative provision of $3.5 million was recognized in the previous quarter. The allowance for loan and lease losses was reduced $0.3 million from June 30, 2004, which equaled the amount of net charge-offs for the third quarter of 2004.
Non-interest income was $53.1 million for the third quarter of 2004 compared to non-interest income of $54.8 million in the second quarter of 2004 and $53.8 million in the third quarter of 2003. Non-interest income in the third quarter of 2004 included a gain of $5.2 million on the sale of assets at the end of a leveraged lease transaction, compared to the previous quarter which included a partnership distribution of $3.2 million and a gain of $2.5 million on the sale of land. Included in the third quarter of 2003 was a $3.1 million prepayment fee on a commercial real estate loan. Excluding these items, non-interest income decreased from the second quarter of 2004 by $1.4 million largely due to a decline in gains on the sale of mortgage loans.
Non-interest expense for the third quarter of 2004 was $84.2 million, down $0.9 million from $85.1 million in the previous quarter and down $4.7 million or 5.3 percent from non-interest expense of $88.9 million in the third quarter of 2003. The decrease from the previous quarter was largely the result of $2.2 million recorded in the second quarter primarily related to a legal settlement. Non-interest expense in the third quarter of 2003 included $4.3 million in systems replacement costs.
The efficiency ratio was 55.45 percent for the third quarter of 2004, down from 56.49 percent in the second quarter of 2004 and 61.34 percent in the third quarter of 2003. Excluding systems replacement costs, the efficiency ratio was 58.34 percent in the third quarter of 2003. For nine months ended September 30, 2004, the efficiency ratio was 56.40 percent compared to 65.06 percent for the same period in 2003. Excluding systems replacement costs, the efficiency ratio was 59.88 percent for the nine-month period last year.
The Company's business segments are defined as Retail Banking, Commercial Banking, Investment Services Group, and Treasury and Other Corporate. Results are determined based on the Company's internal financial management reporting process and organizational structure. Business segment performance details are summarized in Table 11a and 11b.
Asset Quality
Non-performing assets declined to $16.0 million at the end of the third quarter of 2004, a decrease of $5.2 million, or 24.5 percent, from non-performing assets of $21.2 million at the end of the second quarter of 2004. Non-performing assets decreased $24.2 million, or 60.2 percent, compared to non-performing assets of $40.1 million at the end of the same quarter last year. At September 30, 2004, the ratio of non-performing assets to total loans and foreclosed real estate was 0.27 percent, down from 0.37 percent at June 30, 2004 and down from 0.72 percent at September 30, 2003.
Non-accrual loans were $15.8 million at September 30, 2004, a reduction of $0.5 million, or 3.1 percent, from $16.3 million at June 30, 2004 and down $15.6 million, or 49.8 percent, from $31.4 million at September 30, 2003. Non-accrual loans as a percentage of total loans were 0.27 percent at September 30, 2004, down from 0.28 percent at the end of the previous quarter and down from 0.56 percent at the end of the comparable quarter last year.
Net charge-offs were $0.3 million in the third quarter of 2004, or 0.02 percent (annualized) of total average loans. Charge-offs of $5.0 million during the third quarter of 2004 were offset by recoveries of $4.7 million. Net charge-offs were in a net recovery position of $1.2 million in the second quarter of 2004 as recoveries of $10.0 million more than offset charge-offs of $8.8 million. Net charge-offs during the third quarter of 2003 were $5.3 million, or 0.38 percent (annualized) of total average loans. Net charge-offs for the first nine months of 2004 were $0.9 million, or 0.02 percent (annualized) of total average loans. In the same period last year, net charge-offs were $10.2 million, or 0.25 percent (annualized) of total average loans.
The allowance for loan and lease losses was $124.7 million at September 30, 2004. The ratio of the allowance for loan and lease losses to total loans was 2.14 percent at September 30, 2004 compared with 2.16 percent at June 30, 2004 and 2.38 percent at the end of the same quarter last year.
Concentrations of credit exposure to selected components of the portfolio are summarized in Table 8.
Other Financial Highlights
Total assets were $9.59 billion at September 30, 2004, a decrease from total assets of $9.69 billion at June 30, 2004 and an increase from total assets of $9.37 billion at September 30, 2003. The decrease from the previous quarter was largely due to a reduction in short-term assets that were utilized to pay down debt. Total loans and leases were $5.82 billion at September 30, 2004, up from $5.79 billion at June 30, 2004 and $5.57 billion at September 30, 2003. The increase in total loans and leases is due to ongoing growth in consumer lending. Commercial loan originations remain strong, but were offset by loan prepayments during the quarter.
Total deposits at September 30, 2004 were $7.41 billion, down from total deposits of $7.47 billion at June 30, 2004 and up from total deposits of $7.10 billion at September 30, 2003. The decrease from the previous quarter was mostly due to a reduction in custodial deposits related to mortgage banking activity and a continuation of the decline in time deposits. The Company had a net increase of approximately 2,000 non-interest bearing checking accounts during the quarter.
During the third quarter of 2004, Bank of Hawaii Corporation repurchased 0.7 million shares of common stock at a total cost of $31.4 million under its share repurchase program. The average cost was $46.08 per share repurchased during the quarter. From the beginning of the share repurchase program in July 2001 through September 30, 2004, the Company repurchased a total of 33.9 million shares and returned a total of $1,037.1 million to the shareholders at an average cost of $30.59 per share. From October 1, 2004 through October 22, 2004, the Company repurchased an additional 0.1 million shares of common stock at an average cost of $49.11 per share. Remaining buyback authority under the share repurchase program was $108.9 million at October 22, 2004.
The Company's capital and liquidity remain strong. At September 30, 2004, the Tier 1 leverage ratio was 7.69 percent compared to 7.16 percent at June 30, 2004 and 8.52 percent at September 30, 2003.
The Company's Board of Directors has declared a quarterly cash dividend of $0.33 per share on the Company's outstanding shares, an increase of $0.03 per share or 10.0 percent. The dividend will be payable on December 14, 2004 to shareholders of record at the close of business on November 29, 2004.
Economic Outlook
Hawaii's economy continued to grow during the third quarter of 2004. Tourism remains strong and is on track to establish 2004 as a record year in terms of total visitors. Hawaii's unemployment rate fell below 3.0 percent, the lowest in the country, as job growth continued in excess of 2.0 percent. Real estate transactions and valuations continued to increase and military housing privatization initiatives are expected to augment private construction growth, beginning in the fourth quarter of 2004. These trends are expected to drive capital spending forward for several more years. A rise in core inflation in the Honolulu consumer price index (CPI) from around 1.5 percent to 3.0 percent during the first half of 2004 may indicate the state economy is approaching full employment. However, Hawaii's real personal income growth remains stable at 2.0 percent to 3.0 percent in 2004, as it has since 1997.
Earnings Outlook
Bank of Hawaii Corporation currently anticipates net income for the full year of 2004 will be approximately $166 million to $168 million. Based on present conditions, the Company does not expect to record a provision for loan and lease losses during the fourth quarter of 2004. However, the actual amount of the provision for loan and lease losses depends on determinations of credit risk that are made near the end of each quarter. Earnings per share and return on average equity projections continue to be dependent upon the terms and timing of share repurchases.
Conference Call Information
The Company will review its third quarter 2004 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 800-599-9795 in the United States or 617-786-2905 for international callers. No confirmation code is required to access the call. A replay will be available for one week beginning Monday, October 25, 2004 by calling 888-286-8010 in the United States or 617-801-6888 for international callers and entering the number 83955183 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 forward-looking statements concerning, among other things, the economic environment in our service area, the expected level of loan and lease loss provisioning, and anticipated net income, dividends, revenues and expenses during 2004 and beyond. 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, fiscal and monetary policies, or legislation in Hawaii and the other markets we serve; 2) changes in our credit quality or risk profile which may increase or decrease the required level of allowance for loan and lease losses; 3) changes in market interest rates that may affect our credit markets and ability to maintain our net interest margin; 4) changes to the amount and timing of our proposed equity repurchases and repayment of maturing debt; 5) inability to achieve expected benefits of our business process changes due to adverse changes in implementation processes or costs, operational savings, or timing; 6) real or threatened acts of war or terrorist activity affecting business conditions; and 7) adverse weather and other natural conditions impacting our and our customers' operations. We do not undertake any obligation to update forward-looking statements to reflect later events or circumstances.
Bank of Hawaii Corporation and Subsidiaries Highlights (Unaudited) Table 1 ---------------------------------------------------------------------- (dollars in thousands except per share amounts) Three Months Ended Nine Months Ended Earnings Highlights and September 30, September 30, Performance Ratios 2004 2003 2004 2003 ---------------------------------------------------------------------- Net Income $43,067 $36,687 $127,098 $96,522 Basic Earnings Per Share 0.82 0.64 2.40 1.63 Diluted Earnings Per Share 0.78 0.61 2.26 1.56 Cash Dividends 15,904 10,887 48,126 33,819 Net Income to Average Total Assets (ROA) 1.77% 1.53% 1.74% 1.37% Net Income to Average Shareholders' Equity (ROE) 23.42% 16.69% 22.48% 13.95% Net Interest Margin 4.39% 4.15% 4.29% 4.19% Efficiency Ratio (1) 55.45% 61.34% 56.40% 65.06% Efficiency Ratio excluding Systems Replacement Costs 55.45% 58.34% 56.40% 59.88% ---------------------------------------------------------------------- Statement of Condition Highlights and September 30, Performance Ratios 2004 2003 ---------------------------------------------- ----------------------- Total Assets $9,594,809 $9,370,755 Net Loans 5,690,924 5,437,730 Total Deposits 7,413,240 7,102,116 Total Shareholders' Equity 756,707 823,760 Book Value Per Common Share $14.27 $14.71 Allowance / Loans and Leases Outstanding 2.14% 2.38% Average Equity / Average Assets 7.75% 9.82% Employees (FTE) 2,655 2,764 Branches and offices 88 89 Market Price Per Share of Common Stock for the Quarter Ended: Closing $47.25 $33.58 High $48.07 $35.55 Low $43.55 $32.92 (1) The efficiency ratio is defined as non-interest expense divided by total revenue (net interest income and non-interest income). Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) Table 2 ---------------------------------------------------------------------- (dollars in thousands Three Months Ended Nine Months Ended except per share September 30, September 30, amounts) 2004 2003 2004 2003 ---------------------------------------------------------------------- Interest Income Interest and Fees on Loans and Leases $82,079 $82,715 $243,853 $254,442 Income on Investment Securities - Available for Sale 24,543 16,483 67,134 58,761 Income on Investment Securities - Held to Maturity 6,370 6,407 20,057 11,773 Deposits 496 1,179 3,373 3,647 Funds Sold 108 248 702 1,834 Other 801 1,032 2,524 3,237 ---------------------------------------------------------------------- Total Interest Income 114,397 108,064 337,643 333,694 ---------------------------------------------------------------------- Interest Expense Deposits 8,990 10,284 26,750 38,040 Securities Sold Under Agreements to Repurchase 2,085 1,947 6,233 6,580 Funds Purchased 683 271 1,420 695 Short-Term Borrowings 15 26 43 75 Long-Term Debt 3,845 4,431 12,538 15,714 ---------------------------------------------------------------------- Total Interest Expense 15,618 16,959 46,984 61,104 ---------------------------------------------------------------------- Net Interest Income 98,779 91,105 290,659 272,590 Provision for Loan and Lease Losses - - (3,500) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 98,779 91,105 294,159 272,590 ---------------------------------------------------------------------- Non-Interest Income Trust and Asset Management 12,672 12,511 39,531 38,237 Mortgage Banking 1,711 5,888 6,496 12,232 Service Charges on Deposit Accounts 9,472 8,901 28,962 26,496 Fees, Exchange, and Other Service Charges 13,741 16,034 41,223 42,496 Investment Securities Gains (Losses) - 639 (37) 1,809 Insurance 3,560 3,988 10,506 10,083 Other 11,898 5,830 30,063 17,930 ---------------------------------------------------------------------- Total Non-Interest Income 53,054 53,791 156,744 149,283 ---------------------------------------------------------------------- Non-Interest Expense Salaries and Benefits 46,566 45,731 139,256 139,871 Net Occupancy Expense 9,812 9,806 28,741 29,047 Net Equipment Expense 5,847 7,301 17,610 26,257 Information Technology Systems Replacement Project - 4,349 - 21,871 Other 21,965 21,690 66,730 57,425 ---------------------------------------------------------------------- Total Non-Interest Expense 84,190 88,877 252,337 274,471 ---------------------------------------------------------------------- Income Before Income Taxes 67,643 56,019 198,566 147,402 Provision for Income Taxes 24,576 19,332 71,468 50,880 ---------------------------------------------------------------------- Net Income $43,067 $36,687 $127,098 $96,522 ====================================================================== Basic Earnings Per Share $0.82 $0.64 $2.40 $1.63 Diluted Earnings Per Share $0.78 $0.61 $2.26 $1.56 Dividends Declared Per Share $0.30 $0.19 $0.90 $0.57 Basic Weighted Average Shares 52,390,081 57,195,570 53,053,770 59,337,319 Diluted Weighted Average Shares 55,472,868 59,961,823 56,297,277 61,911,794 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Condition Table 3 ---------------------------------------------------------------------- Sept. 30, Dec. 31, Sept. 30, (dollars in thousands) 2004 2003 2003 ---------------------------------------------------------------------- (Unaudited) (Unaudited) Assets Interest-Bearing Deposits $29,976 $154,735 $208,712 Investment Securities - Available for Sale 2,328,327 1,991,116 2,027,062 Investment Securities - Held to Maturity (Market Value of $624,587, $720,699, and $749,036) 630,276 727,233 754,659 Funds Sold 25,000 - - Loans Held for Sale 18,595 9,211 23,144 Loans and Leases 5,815,575 5,757,175 5,570,405 Allowance for Loan and Lease Losses (124,651) (129,080) (132,675) ---------------------------------------------------------------------- Net Loans 5,690,924 5,628,095 5,437,730 ---------------------------------------------------------------------- Total Earning Assets 8,723,098 8,510,390 8,451,307 ---------------------------------------------------------------------- Cash and Non-Interest-Bearing Deposits 290,974 363,495 329,705 Premises and Equipment 149,698 160,005 163,277 Customers' Acceptance Liability 920 1,707 1,077 Accrued Interest Receivable 36,074 32,672 33,210 Foreclosed Real Estate 208 4,377 8,757 Mortgage Servicing Rights 19,995 22,178 23,266 Goodwill 36,216 36,216 36,216 Other Assets 337,626 330,607 323,940 ---------------------------------------------------------------------- Total Assets $9,594,809 $9,461,647 $9,370,755 ====================================================================== Liabilities Deposits Non-Interest-Bearing Demand $1,898,602 $1,933,928 $1,846,030 Interest-Bearing Demand 1,471,836 1,356,330 1,269,227 Savings 2,991,386 2,833,379 2,760,418 Time 1,051,416 1,209,142 1,226,441 ---------------------------------------------------------------------- Total Deposits 7,413,240 7,332,779 7,102,116 ---------------------------------------------------------------------- Securities Sold Under Agreements to Repurchase 682,630 472,757 646,890 Funds Purchased 69,755 109,090 90,520 Short-Term Borrowings 11,939 12,690 14,796 Banker's Acceptances Outstanding 920 1,707 1,077 Retirement Benefits Payable 62,976 61,841 63,281 Accrued Interest Payable 6,162 7,483 7,207 Taxes Payable and Deferred Taxes 249,265 207,101 195,628 Other Liabilities 88,596 138,999 101,179 Long-Term Debt 252,619 324,068 324,301 ---------------------------------------------------------------------- Total Liabilities 8,838,102 8,668,515 8,546,995 ---------------------------------------------------------------------- Shareholders' Equity Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: September 2004 - 81,710,695 / 53,021,591, December 2003 - 81,647,729 / 54,928,480, September 2003 - 81,568,791 / 55,985,364 813 807 807 Capital Surplus 413,696 391,701 385,694 Accumulated Other Comprehensive Income (Loss) (5,698) (5,711) (2,799) Retained Earnings 1,277,615 1,199,077 1,177,459 Deferred Stock Grants (9,490) (8,309) (7,466) Treasury Stock, at Cost (Shares: September 2004 - 28,689,104, December 2003 - 26,719,249, September 2003 - 25,583,427) (920,229) (784,433) (729,935) ---------------------------------------------------------------------- Total Shareholders' Equity 756,707 793,132 823,760 ---------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $9,594,809 $9,461,647 $9,370,755 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Shareholders' Equity (Unaudited) Table 4 ---------------------------------------------------------------------- Accum. Other Compre- hensive Common Capital Income (dollars in thousands) Total Stock Surplus (Loss) ---------------------------------------------------------------------- Balance at December 31, 2003 $793,132 $807 $391,701 $(5,711) Comprehensive Income: Net Income 127,098 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities 13 - - 13 Total Comprehensive Income Common Stock Issued under Stock Plans and Related Tax Benefits (2,305,545 shares) 71,984 6 21,995 - Treasury Stock Purchased (4,209,363 shares) (187,394) - - - Cash Dividends Paid (48,126) - - - ---------------------------------------------------------------------- Balance at September 30, 2004 $756,707 $813 $413,696 $(5,698) ====================================================================== Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659 Comprehensive Income: Net Income 96,522 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities (14,458) - - (14,458) Total Comprehensive Income Common Stock Issued under Stock Plans and Related Tax Benefits (1,143,267 shares) 25,491 1 13,502 - Treasury Stock Purchased (8,166,579 shares) (265,735) - - - Cash Dividends Paid (33,819) - - - ---------------------------------------------------------------------- Balance at September 30, 2003 $823,760 $807 $385,694 $(2,799) ====================================================================== Deferred Compre- Retained Stock Treasury hensive (dollars in thousands) Earnings Grants Stock Income ---------------------------------------------------------------------- Balance at December 31, 2003 $1,199,077 $(8,309) $(784,433) Comprehensive Income: Net Income 127,098 - - $127,098 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - - - 13 --------- Total Comprehensive Income $127,111 ========= Common Stock Issued under Stock Plans and Related Tax Benefits (2,305,545 shares) (434) (1,181) 51,598 Treasury Stock Purchased (4,209,363 shares) - - (187,394) Cash Dividends Paid (48,126) - - ------------------------------------------------------------ Balance at September 30, 2004 $1,277,615 $(9,490) $(920,229) ============================================================ Balance at December 31, 2002 $1,115,910 $(1,424) $(483,384) Comprehensive Income: Net Income 96,522 - - $96,522 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - - - (14,458) --------- Total Comprehensive Income $82,064 ========= Common Stock Issued under Stock Plans and Related Tax Benefits (1,143,267 shares) (1,154) (6,042) 19,184 Treasury Stock Purchased (8,166,579 shares) - - (265,735) Cash Dividends Paid (33,819) - - ------------------------------------------------------------ Balance at September 30, 2003 $1,177,459 $(7,466) $(729,935) ============================================================ 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, 2004 June 30, 2004 (dollars in Average Income/ Yield/ Average Income/ Yield/ millions) Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- Earning Assets Interest-Bearing Deposits $82.6 $0.5 2.39% $408.8 $1.6 1.62% Funds Sold 28.6 0.1 1.51 71.3 0.2 0.99 Investment Securities Available for Sale 2,325.5 24.6 4.23 2,148.9 21.8 4.06 Held to Maturity 659.0 6.3 3.87 709.8 6.7 3.78 Loans Held for Sale 11.3 0.2 5.74 20.7 0.3 5.54 Loans and Leases Commercial and Industrial 796.2 10.6 5.34 828.0 10.2 4.97 Construction 81.1 1.0 5.01 100.4 0.9 3.80 Commercial Mortgage 658.9 8.8 5.29 638.9 8.6 5.39 Residential Mortgage 2,282.6 32.1 5.62 2,281.8 32.2 5.65 Installment 722.7 15.2 8.38 700.4 14.5 8.34 Home Equity 583.7 7.1 4.83 534.6 6.1 4.63 Purchased Home Equity 155.2 1.7 4.29 178.8 1.9 4.16 Lease Financing 516.0 5.4 4.17 510.1 5.6 4.38 ---------------------------------------------------------------------- Total Loans and Leases 5,796.4 81.9 5.63 5,773.0 80.0 5.56 ---------------------------------------------------------------------- Other 78.7 0.8 4.05 78.1 0.9 4.45 ---------------------------------------------------------------------- Total Earning Assets 8,982.1 114.4 5.08 9,210.6 111.5 4.86 ---------------------------------------------------------------------- Cash and Non- Interest-Bearing Deposits 316.9 306.3 Other Assets 369.5 376.4 --------- --------- Total Assets $9,668.5 $9,893.3 ========= ========= Interest-Bearing Liabilities Interest-Bearing Deposits Demand $1,471.0 0.9 0.24 $1,390.2 0.6 0.17 Savings 2,998.4 3.2 0.43 2,911.5 3.1 0.43 Time 1,078.4 4.9 1.81 1,129.5 4.9 1.74 ---------------------------------------------------------------------- Total Interest- Bearing Deposits 5,547.8 9.0 0.64 5,431.2 8.6 0.63 ---------------------------------------------------------------------- Short-Term Borrowings 816.9 2.8 1.36 1,082.5 2.7 1.02 Long-Term Debt 246.8 3.8 6.22 317.3 4.3 5.48 ---------------------------------------------------------------------- Total Interest- Bearing Liabilities 6,611.5 15.6 0.94 6,831.0 15.6 0.92 ---------------------------------------------------------------------- Net Interest Income $98.8 $95.9 ======= ======= Interest Rate Spread 4.14% 3.94% Net Interest Margin 4.39% 4.17% Non-Interest-Bearing Demand Deposits 1,932.0 1,940.2 Other Liabilities 393.4 389.4 Shareholders' Equity 731.6 732.7 --------- --------- Total Liabilities and Shareholders' Equity $9,668.5 $9,893.3 ========= ========= Three Months Ended Nine Months Ended September 30, 2003 September 30, 2004 (dollars in Average Income/ Yield/ Average Income/ Yield/ millions) Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- Earning Assets Interest-Bearing Deposits $224.7 $1.2 2.08% $246.4 $3.4 1.83% Funds Sold 102.4 0.3 0.97 89.4 0.7 1.05 Investment Securities Available for Sale 2,090.6 16.5 3.16 2,154.9 67.2 4.16 Held to Maturity 675.1 6.4 3.80 696.1 20.1 3.84 Loans Held for Sale 52.2 0.7 5.45 15.8 0.7 5.53 Loans and Leases Commercial and Industrial 862.4 10.8 4.95 822.8 31.0 5.04 Construction 87.8 0.9 4.26 93.9 3.0 4.33 Commercial Mortgage 670.6 9.4 5.56 644.0 25.9 5.38 Residential Mortgage 2,298.8 36.2 6.30 2,293.9 97.6 5.67 Installment 558.6 12.8 9.09 691.5 44.1 8.51 Home Equity 448.1 5.6 4.99 536.0 19.0 4.74 Purchased Home Equity 132.6 0.7 2.20 179.5 6.2 4.59 Lease Financing 487.2 5.6 4.52 509.0 16.4 4.29 ---------------------------------------------------------------------- Total Loans and Leases 5,546.1 82.0 5.89 5,770.6 243.2 5.63 ---------------------------------------------------------------------- Other 76.1 1.0 5.38 78.1 2.5 4.32 ---------------------------------------------------------------------- Total Earning Assets 8,767.2 108.1 4.91 9,051.3 337.8 4.98 ---------------------------------------------------------------------- Cash and Non- Interest-Bearing Deposits 333.2 316.9 Other Assets 399.2 378.1 --------- --------- Total Assets $9,499.6 $9,746.3 ========= ========= Interest-Bearing Liabilities Interest-Bearing Deposits Demand $1,245.8 0.5 0.15 $1,410.6 1.9 0.19 Savings 2,754.6 3.4 0.49 2,927.5 9.6 0.44 Time 1,285.7 6.4 1.97 1,132.0 15.3 1.79 ---------------------------------------------------------------------- Total Interest- Bearing Deposits 5,286.1 10.3 0.77 5,470.1 26.8 0.65 ---------------------------------------------------------------------- Short-Term Borrowings 827.8 2.3 1.08 920.2 7.7 1.12 Long-Term Debt 325.7 4.4 5.43 294.8 12.5 5.67 ---------------------------------------------------------------------- Total Interest- Bearing Liabilities 6,439.6 17.0 1.05 6,685.1 47.0 0.94 ---------------------------------------------------------------------- Net Interest Income $91.1 $290.8 ======= ======= Interest Rate Spread 3.86% 4.04% Net Interest Margin 4.15% 4.29% Non-Interest-Bearing Demand Deposits 1,844.0 1,920.6 Other Liabilities 344.1 385.5 Shareholders' Equity 871.9 755.1 --------- --------- Total Liabilities and Shareholders' Equity $9,499.6 $9,746.3 ========= ========= Bank of Hawaii Corporation and Subsidiaries Analysis of Change in Net Interest Income - Taxable Equivalent Basis (Unaudited) Table 6 ---------------------------------------------------------------------- Three Months Ended September 30, 2004 Compared to June 30, 2004 (dollars in millions) Volume (1) Rate (1) Time (1) Total ---------------------------------------------------------------------- Change in Interest Income: Interest-Bearing Deposits $(1.9) $0.8 $- $(1.1) Funds Sold (0.2) 0.1 - (0.1) Investment Securities Available for Sale 1.9 0.9 - 2.8 Held to Maturity (0.5) 0.1 - (0.4) Loans Held for Sale (0.1) - - (0.1) Loans and Leases Commercial and Industrial (0.4) 0.7 0.1 0.4 Construction (0.2) 0.3 - 0.1 Commercial Mortgage 0.2 (0.1) 0.1 0.2 Residential Mortgage - (0.1) - (0.1) Installment 0.4 0.1 0.2 0.7 Home Equity 0.6 0.3 0.1 1.0 Purchased Home Equity (0.3) 0.1 - (0.2) Lease Financing 0.1 (0.3) - (0.2) ---------------------------------------------------------------------- Total Loans and Leases 0.4 1.0 0.5 1.9 ---------------------------------------------------------------------- Other - (0.1) - (0.1) ---------------------------------------------------------------------- Total Change in Interest Income (0.4) 2.8 0.5 2.9 ---------------------------------------------------------------------- Change in Interest Expense: Interest-Bearing Deposits Demand - 0.3 - 0.3 Savings 0.1 - - 0.1 Time (0.2) 0.2 - - ---------------------------------------------------------------------- Total Interest-Bearing Deposits (0.1) 0.5 - 0.4 ---------------------------------------------------------------------- Short-Term Borrowings (0.9) 0.9 0.1 0.1 Long-Term Debt (1.1) 0.6 - (0.5) ---------------------------------------------------------------------- Total Change in Interest Expense (2.1) 2.0 0.1 - ---------------------------------------------------------------------- Change in Net Interest Income $1.7 $0.8 $0.4 $2.9 ====================================================================== (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 Nine Months Ended September 30, September 30, (dollars in thousands) 2004 2003 2004 2003 ---------------------------------------------------------------------- Salaries $27,796 $28,107 $82,904 $86,404 Incentive Compensation 4,383 4,033 11,459 10,617 Stock Based Compensation 2,671 763 8,800 4,087 Commission Expense 1,780 3,552 5,691 8,964 Retirement and Other Benefits 4,099 4,929 12,670 13,471 Payroll Taxes 2,415 2,288 8,948 8,445 Medical, Dental, and Life Insurance 2,064 1,641 6,304 5,390 Separation Expense 1,358 418 2,480 2,493 ---------------------------------------------------------------------- Total Salaries and Benefits $46,566 $45,731 $139,256 $139,871 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Loan Portfolio Balances (Unaudited) Table 8 ---------------------------------------------------------------------- Sept. 30, June 30, Dec. 31, Sept. 30, (dollars in thousands) 2004 2004 2003 2003 ---------------------------------------------------------------------- Domestic Loans Commercial Commercial and Industrial $755,455 $776,815 $816,246 $843,895 Commercial Mortgage 648,991 643,382 639,354 629,225 Construction 104,709 98,916 101,321 92,343 Lease Financing 447,005 447,673 435,934 426,839 ---------------------------------------------------------------------- Total Commercial 1,956,160 1,966,786 1,992,855 1,992,302 ---------------------------------------------------------------------- Consumer Residential Mortgage 2,261,814 2,257,624 2,320,410 2,329,321 Home Equity 609,981 559,225 467,019 446,032 Purchased Home Equity 143,300 162,730 212,514 109,814 Other Consumer 729,747 721,386 658,831 582,934 Lease Financing 33,796 34,676 35,320 35,347 ---------------------------------------------------------------------- Total Consumer 3,778,638 3,735,641 3,694,094 3,503,448 ---------------------------------------------------------------------- Total Domestic Loans 5,734,798 5,702,427 5,686,949 5,495,750 ---------------------------------------------------------------------- Foreign Loans 80,777 84,887 70,226 74,655 ---------------------------------------------------------------------- Total Loans and Leases $5,815,575 $5,787,314 $5,757,175 $5,570,405 ====================================================================== Selected Concentrations of Credit Exposure (Unaudited) ---------------------------------------------------------------------- Dec. 31, Sept. 30, September 30, 2004 2003(1) 2003(1) Unused Total Total Total (dollars in Outstanding Commitments Exposure Exposure Exposure thousands) ---------------------------------------------------------------------- Air Transportation United States Regional Passenger Carriers $44,602 $12,903 $57,505 $59,231 $59,866 United States National Passenger Carriers 37,771 - 37,771 37,259 37,684 Passenger Carriers Based Outside United States 28,540 - 28,540 31,549 31,670 Cargo Carriers 13,771 - 13,771 14,405 14,405 ---------------------------------------------------------------------- Total Air Transportation $124,684 $12,903 $137,587 $142,444 $143,625 ====================================================================== Guam Hotel $9,348 $- $9,348 $17,733 $17,768 Other Commercial 156,592 40,868 197,460 184,129 183,115 Consumer 308,689 12,968 321,657 288,831 277,521 ---------------------------------------------------------------------- Total Guam $474,629 $53,836 $528,465 $490,693 $478,404 ====================================================================== Syndicated Exposure $186,214 $604,141 $790,354 $925,864 $918,503 ====================================================================== Other Large Borrowers (2) $81,394 $216,632 $298,026 $336,748 $350,897 ====================================================================== Exposure includes loans, leveraged leases and operating leases. (1) For three borrowers, reclassifications occurred between Regional and National Carriers. Syndicated Exposure was restated. (2) Other Large Borrowers is defined as exposure with commitments of $25 million and greater, excluding those collateralized by cash and those separately identified as Air Transportation, Guam, and Syndicated Exposure. Bank of Hawaii Corporation and Subsidiaries Consolidated Non-Performing Assets and Accruing Loans Past Due 90 Days or More (Unaudited) Table 9 ---------------------------------------------------------------------- (dollars in Sept. 30, June 30, March 31, Dec. 31, Sept. 30, thousands) 2004 2004 2004 2003 2003 ---------------------------------------------------------------------- Non-Performing Assets Non-Accrual Loans Commercial Commercial and Industrial $775 $680 $6,009 $6,015 $7,856 Commercial Mortgage 5,552 5,649 7,388 9,337 10,977 Lease Financing 1,913 1,948 1,962 2,181 2,388 ---------------------------------------------------------------------- Total Commercial 8,240 8,277 15,359 17,533 21,221 ---------------------------------------------------------------------- Consumer Residential Mortgage 7,278 7,688 7,685 9,354 9,669 Home Equity 251 306 406 460 497 ---------------------------------------------------------------------- Total Consumer 7,529 7,994 8,091 9,814 10,166 ---------------------------------------------------------------------- Total Non- Accrual Loans 15,769 16,271 23,450 27,347 31,387 ---------------------------------------------------------------------- Foreclosed Real Estate 208 4,889 4,416 4,377 8,757 ---------------------------------------------------------------------- Total Non- Performing Assets $15,977 $21,160 $27,866 $31,724 $40,144 ====================================================================== Accruing Loans Past Due 90 Days or More Commercial Commercial and Industrial $65 $19 $707 $725 $695 Commercial Mortgage 688 693 702 - - Lease Financing - - - 117 - ---------------------------------------------------------------------- Total Commercial 753 712 1,409 842 695 ---------------------------------------------------------------------- Consumer Residential Mortgage 2,588 698 595 1,430 2,027 Purchased Home Equity 97 32 107 - 107 Other Consumer 1,533 1,142 1,180 1,210 1,059 Lease Financing 32 57 - - - ---------------------------------------------------------------------- Total Consumer 4,250 1,929 1,882 2,640 3,193 ---------------------------------------------------------------------- Total Accruing and Past Due $5,003 $2,641 $3,291 $3,482 $3,888 ====================================================================== Total Loans and Leases $5,815,575 $5,787,314 $5,714,996 $5,757,175 $5,570,405 ====================================================================== Ratio of Non- Accrual Loans to Total Loans 0.27% 0.28% 0.41% 0.48% 0.56% ---------------------------------------------------------------------- Ratio of Non- Performing Assets to Total Loans and Foreclosed Real Estate 0.27% 0.37% 0.49% 0.55% 0.72% ---------------------------------------------------------------------- Ratio of Non- Performing Assets and Accruing Loans Past Due 90 Days or More to Total Loans 0.36% 0.41% 0.55% 0.61% 0.79% ---------------------------------------------------------------------- Quarter to Quarter Changes in Non-Performing Assets Balance at Beginning of Quarter $21,160 $27,866 $31,724 $40,144 $41,952 Additions 2,094 3,909 3,293 2,340 3,199 Reductions Payments (1,386) (4,232) (4,555) (3,416) (1,782) Return to Accrual (1,122) (2,700) (1,444) (839) (1,464) Sales of Foreclosed Assets (682) (147) (310) (4,418) (1,025) Charge-offs/ Write-downs (88) (3,536) (842) (2,087) (736) Transfer to Premises (3,999) - - - - ---------------------------------------------------------------------- Total Reductions (7,277) (10,615) (7,151) (10,760) (5,007) ---------------------------------------------------------------------- Balance at End of Quarter $15,977 $21,160 $27,866 $31,724 $40,144 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Consolidated Allowance for Loan and Lease Losses (Unaudited) Table 10 ---------------------------------------------------------------------- Three Months Ended Nine Months Ended (dollars in Sept. 30, June 30, Sept. 30, September 30, thousands) 2004 2004 2003 2004 2003 ---------------------------------------------------------------------- Balance at Beginning of Period $124,904 $127,185 $137,974 $129,080 $142,853 Loans Charged- Off Commercial Commercial and Industrial 227 3,328 1,132 3,942 3,314 Commercial Mortgage - - 149 574 549 Construction - - - - 529 Lease Financing - 379 12 607 352 Consumer Residential Mortgage 226 319 39 690 1,416 Home Equity 11 9 - 20 89 Purchased Home Equity 173 201 114 464 114 Other Consumer 4,268 4,564 6,784 13,487 13,492 Lease Financing 45 28 50 109 167 ---------------------------------------------------------------------- Total Loans Charged-Off 4,950 8,828 8,280 19,893 20,022 ---------------------------------------------------------------------- Recoveries on Loans Previously Charged-Off Commercial Commercial and Industrial 1,206 1,245 551 3,431 2,942 Commercial Mortgage 1,093 151 31 1,933 105 Construction 94 - - 529 955 Lease Financing 2 1 1 18 18 Consumer Residential Mortgage 207 304 455 805 912 Home Equity 14 101 25 154 129 Purchased Home Equity 51 57 - 108 - Other Consumer 1,502 1,703 1,494 4,868 4,163 Lease Financing 9 16 - 80 52 Foreign 519 6,469 424 7,038 568 ---------------------------------------------------------------------- Total Recoveries on Loans Previously Charged-Off 4,697 10,047 2,981 18,964 9,844 ---------------------------------------------------------------------- Net Loan Recoveries (Charge-Offs) (253) 1,219 (5,299) (929) (10,178) Provision for Loan and Lease Losses - (3,500) - (3,500) - ---------------------------------------------------------------------- Balance at End of Period $124,651 $124,904 $132,675 $124,651 $132,675 ====================================================================== Average Loans Outstanding $5,796,350 $5,772,926 $5,546,154 $5,770,642 $5,508,778 ====================================================================== Ratio of Net Loan Charge- Offs to Average Loans Outstanding (annualized) 0.02% (0.08)% 0.38% 0.02% 0.25% Ratio of Allowance to Loans and Leases Outstanding 2.14% 2.16% 2.38% 2.14% 2.38% Bank of Hawaii Corporation and Subsidiaries Business Segment Selected Financial Information (Unaudited) Table 11a ---------------------------------------------------------------------- Investment Treasury (dollars in Retail Commercial Services and Other Consolidated thousands) Banking Banking Group Corporate Total ---------------------------------------------------------------------- Three Months Ended September 30, 2004 Net Interest Income $51,347 $33,978 $2,893 $10,561 $98,779 Provision for Loan and Lease Losses 2,121 (847) (1) (1,273) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 49,226 34,825 2,894 11,834 98,779 Non-Interest Income 22,430 15,399 12,762 2,463 53,054 ---------------------------------------------------------------------- 71,656 50,224 15,656 14,297 151,833 Non-Interest Expense (43,605) (23,092) (13,559) (3,934) (84,190) ---------------------------------------------------------------------- Income Before Income Taxes 28,051 27,132 2,097 10,363 67,643 Provision for Income Taxes (10,379) (10,062) (776) (3,359) (24,576) ---------------------------------------------------------------------- Allocated Net Income 17,672 17,070 1,321 7,004 43,067 ---------------------------------------------------------------------- Allowance Funding Value (166) (621) (6) 793 - GAAP Provision 2,121 (847) (1) (1,273) - Economic Provision (3,584) (2,467) (86) (1) (6,138) Tax Effect of Adjustments 602 1,456 34 179 2,271 ---------------------------------------------------------------------- Income Before Capital Charge 16,645 14,591 1,262 6,702 39,200 Capital Charge (5,441) (4,828) (1,339) (8,516) (20,124) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $11,204 $9,763 $(77) $(1,814) $19,076 ====================================================================== RAROC (ROE for the Company) 33% 33% 10% 20% 23% ====================================================================== Total Assets at September 30, 2004 $3,711,048 $2,295,916 $124,929 $3,462,916 $9,594,809 ====================================================================== Three Months Ended September 30, 2003 (1) Net Interest Income $53,167 $34,126 $2,672 $1,140 $91,105 Provision for Loan and Lease Losses 2,451 3,549 (5) (5,995) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 50,716 30,577 2,677 7,135 91,105 Non-Interest Income 25,629 12,656 12,196 3,310 53,791 ---------------------------------------------------------------------- 76,345 43,233 14,873 10,445 144,896 Information Technology Systems Replacement Project (36) - - (4,313) (4,349) Non-Interest Expense (47,267) (22,966) (12,083) (2,212) (84,528) ---------------------------------------------------------------------- Income Before Income Taxes 29,042 20,267 2,790 3,920 56,019 Provision for Income Taxes (10,746) (7,366) (1,032) (188) (19,332) ---------------------------------------------------------------------- Allocated Net Income 18,296 12,901 1,758 3,732 36,687 ---------------------------------------------------------------------- Allowance Funding Value (152) (940) (7) 1,099 - GAAP Provision 2,451 3,549 (5) (5,995) - Economic Provision (3,014) (3,147) (98) (12) (6,271) Tax Effect of Adjustments 264 199 41 1,817 2,321 ---------------------------------------------------------------------- Income Before Capital Charge 17,845 12,562 1,689 641 32,737 Capital Charge (5,797) (5,657) (1,238) (11,272) (23,964) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $12,048 $6,905 $451 $(10,631) $8,773 ====================================================================== RAROC (ROE for the Company) 34% 24% 15% 2% 17% ====================================================================== Total Assets at September 30, 2003 $3,512,927 $2,257,905 $111,474 $3,488,449 $9,370,755 ====================================================================== (1) Certain 2003 information has been reclassified to conform to 2004 presentation. Bank of Hawaii Corporation and Subsidiaries Business Segment Selected Financial Information (Unaudited) Table 11b ---------------------------------------------------------------------- Investment Treasury (dollars in Retail Commercial Services and Other Consolidated thousands) Banking Banking Group Corporate Total ---------------------------------------------------------------------- Nine Months Ended September 30, 2004 Net Interest Income $151,155 $101,648 $8,572 $29,284 $290,659 Provision for Loan and Lease Losses 7,455 1,630 47 (12,632) (3,500) ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 143,700 100,018 8,525 41,916 294,159 Non-Interest Income 67,833 38,060 40,101 10,750 156,744 ---------------------------------------------------------------------- 211,533 138,078 48,626 52,666 450,903 Non-Interest Expense (131,382) (69,339) (39,641) (11,975) (252,337) ---------------------------------------------------------------------- Income Before Income Taxes 80,151 68,739 8,985 40,691 198,566 Provision for Income Taxes (29,656) (25,436) (3,324) (13,052) (71,468) ---------------------------------------------------------------------- Allocated Net Income 50,495 43,303 5,661 27,639 127,098 ---------------------------------------------------------------------- Allowance Funding Value (442) (2,045) (20) 2,507 - GAAP Provision 7,455 1,630 47 (12,632) (3,500) Economic Provision (10,489) (8,065) (279) (6) (18,839) Tax Effect of Adjustments 1,286 3,138 93 3,749 8,266 ---------------------------------------------------------------------- Income Before Capital Charge 48,305 37,961 5,502 21,257 113,025 Capital Charge (16,696) (15,233) (3,919) (26,465) (62,313) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $31,609 $22,728 $1,583 $(5,208) $50,712 ====================================================================== RAROC (ROE for the Company) 32% 27% 15% 24% 22% ====================================================================== Total Assets at September 30, 2004 $3,711,048 $2,295,916 $124,929 $3,462,916 $9,594,809 ====================================================================== Nine Months Ended September 30, 2003 (1) Net Interest Income $158,498 $103,479 $8,627 $1,986 $272,590 Provision for Loan and Lease Losses 4,620 6,721 (5) (11,336) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 153,878 96,758 8,632 13,322 272,590 Non-Interest Income 71,938 29,756 37,537 10,052 149,283 ---------------------------------------------------------------------- 225,816 126,514 46,169 23,374 421,873 Information Technology Systems Replacement Project (986) (23) (333) (20,529) (21,871) Non-Interest Expense (136,145) (70,274) (36,457) (9,724) (252,600) ---------------------------------------------------------------------- Income (Loss) Before Income Taxes 88,685 56,217 9,379 (6,879) 147,402 Provision for Income Taxes (32,814) (20,453) (3,470) 5,857 (50,880) ---------------------------------------------------------------------- Allocated Net Income (Loss) 55,871 35,764 5,909 (1,022) 96,522 ---------------------------------------------------------------------- Allowance Funding Value (465) (3,181) (23) 3,669 - GAAP Provision 4,620 6,721 (5) (11,336) - Economic Provision (8,623) (9,241) (334) (21) (18,219) Tax Effect of Adjustments 1,653 2,109 134 2,845 6,741 ---------------------------------------------------------------------- Income (Loss) Before Capital Charge 53,056 32,172 5,681 (5,865) 85,044 Capital Charge (17,052) (16,522) (3,761) (39,011) (76,346) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $36,004 $15,650 $1,920 $(44,876) $8,698 ====================================================================== RAROC (ROE for the Company) 34% 21% 17% (6)% 14% ====================================================================== Total Assets at September 30, 2003 $3,512,927 $2,257,905 $111,474 $3,488,449 $9,370,755 ====================================================================== (1) Certain 2003 information has been reclassified to conform to 2004 presentation. Bank of Hawaii Corporation and Subsidiaries Quarterly Summary of Selected Consolidated Financial Data (Unaudited) Table 12 ---------------------------------------------------------------------- (dollars in Three Months Ended thousands except Sept. 30, June 30, March 31, Dec. 31, Sept. 30, per share amounts) 2004 2004 2004 2003 2003 ---------------------------------------------------------------------- Quarterly Operating Results Interest Income Interest and Fees on Loans and Leases $82,079 $80,346 $81,428 $80,351 $82,715 Income on Investment Securities - Available for Sale 24,543 21,745 20,846 19,032 16,483 Income on Investment Securities - Held to Maturity 6,370 6,711 6,976 7,183 6,407 Deposits 496 1,646 1,231 1,169 1,179 Funds Sold 108 177 417 85 248 Other 801 865 858 1,007 1,032 ---------------------------------------------------------------------- Total Interest Income 114,397 111,490 111,756 108,827 108,064 ---------------------------------------------------------------------- Interest Expense Deposits 8,990 8,560 9,200 9,433 10,284 Securities Sold Under Agreements to Repurchase 2,085 2,222 1,926 1,359 1,947 Funds Purchased 683 506 231 249 271 Short-Term Borrowings 15 13 15 17 26 Long-Term Debt 3,845 4,340 4,353 4,417 4,431 ---------------------------------------------------------------------- Total Interest Expense 15,618 15,641 15,725 15,475 16,959 ---------------------------------------------------------------------- Net Interest Income 98,779 95,849 96,031 93,352 91,105 Provision for Loan and Lease Losses - (3,500) - - - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 98,779 99,349 96,031 93,352 91,105 ---------------------------------------------------------------------- Non-Interest Income Trust and Asset Management 12,672 12,995 13,864 12,759 12,511 Mortgage Banking 1,711 2,808 1,977 3,324 5,888 Service Charges on Deposit Accounts 9,472 9,540 9,950 9,442 8,901 Fees, Exchange, and Other Service Charges 13,741 14,243 13,239 13,725 16,034 Investment Securities Gains (Losses) - (37) - (20) 639 Insurance 3,560 3,303 3,643 3,597 3,988 Other 11,898 11,996 6,169 6,610 5,830 ---------------------------------------------------------------------- Total Non-Interest Income 53,054 54,848 48,842 49,437 53,791 ---------------------------------------------------------------------- Non-Interest Expense Salaries and Benefits 46,566 46,689 46,001 46,409 45,731 Net Occupancy Expense 9,812 9,543 9,386 9,933 9,806 Net Equipment Expense 5,847 5,799 5,964 7,395 7,301 Information Technology Systems Replacement Project - - - - 4,349 Other 21,965 23,094 21,671 19,667 21,690 ---------------------------------------------------------------------- Total Non-Interest Expense 84,190 85,125 83,022 83,404 88,877 ---------------------------------------------------------------------- Income Before Income Taxes 67,643 69,072 61,851 59,385 56,019 Provision for Income Taxes 24,576 24,840 22,052 20,712 19,332 ---------------------------------------------------------------------- Net Income $43,067 $44,232 $39,799 $38,673 $36,687 ====================================================================== Basic Earnings Per Share $0.82 $0.84 $0.73 $0.70 $0.64 Diluted Earnings Per Share $0.78 $0.79 $0.69 $0.66 $0.61 Balance Sheet Totals Total Assets 9,594,809 9,688,769 10,013,442 9,461,647 9,370,755 Net Loans 5,690,924 5,662,410 5,587,811 5,628,095 5,437,730 Total Deposits 7,413,240 7,469,288 7,363,922 7,332,779 7,102,116 Total Shareholders' Equity 756,707 699,438 785,768 793,132 823,760 Performance Ratios Net Income to Average Total Assets (ROA) 1.77% 1.80% 1.65% 1.66% 1.53% Net Income to Average Shareholders' Equity (ROE) 23.42% 24.28% 19.98% 18.59% 16.69% Efficiency Ratio (1) 55.45% 56.49% 57.31% 58.41% 61.34% Efficiency Ratio excluding Systems Replacement Costs 55.45% 56.49% 57.31% 58.41% 58.34% (1) 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
Stafford Kiguchi, 808-537-8580 (Media)
Pager: 877-849-5423
skiguchi@boh.com
Cindy Wyrick, 808-537-8430 (Investors/Analysts)
cwyrick@boh.com
SOURCE: Bank of Hawaii Corporation