Bank of Hawaii Corporation Third Quarter 2021 Financial Results

October 25, 2021
  • Diluted Earnings Per Common Share $1.52
  • Net Income $62.1 Million
  • Board of Directors Declares Dividend of $0.70 Per Share

HONOLULU--(BUSINESS WIRE)--Oct. 25, 2021-- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per common share of $1.52 for the third quarter of 2021, compared with diluted earnings per common share of $1.68 in the previous quarter and $0.95 in the same quarter last year. Net income for the third quarter of 2021 was $62.1 million, down 8.1% from the second quarter of 2021 and up 64.0% from the third quarter of 2020.

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“Bank of Hawaii’s operating results were solid in the third quarter of 2021," said Peter Ho, Chairman, President, and CEO. “Core consumer and commercial loan and deposit growth was strong in the quarter. Credit quality in the quarter remained good.”

Financial Highlights

  • The return on average assets for the third quarter of 2021 was 1.07% compared with 1.23% in the previous quarter and 0.76% in the same quarter last year.
  • The return on average common equity for the third quarter of 2021 was 17.08% compared with 19.61% in the previous quarter and 11.01% in the same quarter last year.
  • Net interest income for the third quarter of 2021 was $126.8 million, an increase of 2.7% from the second quarter of 2021 and an increase of 2.1% from the third quarter of 2020. Net interest margin was 2.32% in the third quarter of 2021, a decrease of 5 basis points from the previous quarter and 35 basis points from the same quarter last year.
    • The decrease in the net interest margin from prior year is largely due to higher levels of liquidity from continued strong deposit growth and lower interest rates, partially offset by higher fees from Paycheck Protection Program (“PPP”) loans, deployment of excess liquidity and core loan growth.
  • The provision for credit losses for the third quarter of 2021 was a net benefit of $10.4 million compared with a net benefit of $16.1 million in the previous quarter and net expense of $28.6 million in the same quarter last year.
  • Noninterest income was $41.4 million in the third quarter of 2021, a decrease of 6.9% from the second quarter of 2021 and a decrease of 0.9% from the third quarter of 2020.
    • One-time items in the second quarter of 2021 included a gain of $3.7 million related to the sale of investment securities.
  • Noninterest expense was $96.5 million in the third quarter of 2021, flat to the second quarter of 2021 and an increase of 7.3% from the third quarter of 2020.
    • One-time significant items in the third quarter of 2021 included a gain of $6.3 million related to the sale of property partially offset by $3.8 million of fees related to the early termination of repurchase agreements and $1.2 million in severance.
    • One-time significant items in the second quarter of 2021 included fees related to the early termination of FHLB advances and repurchase agreements of $3.2 million offset by a gain on the sale of property of $3.1 million.
    • One-time significant items in the third quarter of 2020 included a gain of $1.9 million related to the sale of a branch building partially offset by $1.8 million in severance.
  • The efficiency ratio during the third quarter of 2021 was 57.38% compared with 57.47% in the previous quarter and 54.22% during the same quarter last year.
    • The increase in the efficiency ratio from prior year is driven by an increase in noninterest expense.
  • The effective tax rate for the third quarter of 2021 was 24.40% compared with 22.84% in the previous quarter and 20.09% during the same quarter last year.
    • The increase from same quarter prior year is primarily due to higher pretax book income compared to relatively stable tax adjustments and the delayed impact of the TCJA on the deductibility of deferred executive compensation.

Asset Quality

The Company’s overall asset quality continued to remain stable during the third quarter of 2021.

  • Total non-performing assets were $20.6 million at September 30, 2021, up $1.6 million from June 30, 2021 and $2.0 million from September 30, 2020. Non-performing assets as percentage of total loans and leases and foreclosed real estate were 0.17% at the end of the quarter of 2021, up 1 basis point from the end of the prior quarter and the end of the same quarter last year.
  • Net loan and lease charge-offs during the third quarter of 2021 were $1.2 million or 0.04% annualized of total average loans and leases outstanding.
    • Net loan and lease charge-offs for the third quarter of 2021 were comprised of charge-offs of $3.4 million partially offset by recoveries of $2.3 million.
    • Compared to the prior quarter, net loan and lease charge-offs were flat.
    • Compared to the third quarter of 2020, net loan and lease charge-offs increased by $2.7 million or 9 basis points annualized on total average loans and leases outstanding.
  • The allowance for credit losses on loans and leases was $167.9 million at September 30, 2021, a decrease of $12.5 million from June 30, 2021 and $35.6 million from September 30, 2020. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.39% at the end of the quarter, down 11 basis points from the end of the prior quarter and 34 basis points from the end of the same quarter last year.

Balance Sheet

  • Total assets increased to a new record of $23.0 billion at September 30, 2021, an increase of 1.3% from June 30, 2021 and 14.2% from September 30, 2020.
  • The investment securities portfolio was $9.3 billion at September 30, 2021, up 9.2% from June 30, 2021 and 44.8% from September 30, 2020 due to growth in deposits that continued to outpace loan growth.
    • The investment portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises.
  • Total loans and leases were $12.1 billion at September 30, 2021, an increase of 0.3% from June 30, 2021 and 2.4% from September 30, 2020.
    • Total loans excluding PPP loans were $11.8 billion at September 30, 2021, an increase of 2.4% from June 30, 2021 and an increase of 4.8% from September 30, 2020.
  • Total deposits were $20.5 billion at September 30, 2021, an increase of 1.6% from June 30, 2021 and an increase of 15.5% from September 30, 2020.
  • The Company early terminated $100.0 million of repurchase agreements in the third quarter of 2021.

Capital and Dividends

  • The Tier 1 Capital Ratio was 13.47% at September 30, 2021 compared with 13.87% at June 30, 2021 and 12.09% at September 30, 2020.
    • The increase from the same quarter in the prior year was driven by the issuance of preferred stock in the second quarter of 2021.
  • The Tier 1 Leverage Ratio was 7.10% at September 30, 2021 compared with 7.31% at June 30, 2021 and 6.81% at September 30, 2020.
    • The increase from the same quarter in the prior year was driven by the issuance of $180 million of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A in the second quarter of 2021.
  • The Company repurchased 241.3 thousand shares of common stock at a total cost of $20.0 million under its share repurchase program in the third quarter of 2021 at an average cost of $82.89 per share repurchased.
    • Total remaining buyback authority under the share repurchase program was $93.1 million at September 30, 2021.
  • The Company’s Board of Directors declared a quarterly cash dividend of $0.70 per share on the Company’s outstanding common shares. The dividend will be payable on December 14, 2021 to shareholders of record at the close of business on November 30, 2021.
  • On October 5, 2021, the Board of Directors declared the quarterly dividend payment of $10.94 per share, equivalent to $0.2735 per depositary share, on its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A. The depositary shares representing the Series A Preferred Stock are traded on the NYSE under the symbol “BOH.PRA.” The dividend will be payable on November 1, 2021 to shareholders of record of the preferred stock at the close of business on October 18, 2021.

Conference Call Information

The Company will review its third quarter financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The live call, including a slide presentation, will be accessible on the investor relations link of Bank of Hawaii Corporation's website, www.boh.com.

  • The webcast link is https://edge.media-server.com/mmc/p/3r3nw6ad
  • The toll-free number for the teleconference is 1 (844) 543-5235 in the United States and Canada and 1 (703) 318-2209 for other international callers. Use the pass code “Bank of Hawaii” to access the call.
  • A replay of the conference call will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, October 25, 2021. The replay number is 1 (855) 859-2056 in the United States and Canada and 1 (404) 537-3406 from other international locations. Enter the conference ID 6897518 when prompted. In addition, the replay will be available on the Company's website, www.boh.com.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties that could cause results to be materially different from expectations. Forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations are examples of certain of these forward-looking statements. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation's Annual Report on Form 10-K for the year ended December 31, 2020 and its Form 10-Q for the fiscal quarters ended March 31, 2021 and June 30, 2021, which were filed with the U.S. Securities and Exchange Commission. These forward-looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.

Bank of Hawaii Corporation is an independent regional financial services company serving businesses, consumers, and governments in Hawaii and the West Pacific. The Company's principal subsidiary, Bank of Hawaii, was founded in 1897. For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com.

     
  Bank of Hawaii Corporation and Subsidiaries  
  Financial Highlights                          

Table 1

 
    Three Months Ended   Nine Months Ended  
      September 30,     June 30,     September 30,   September 30,  
  (dollars in thousands, except per share amounts)

 

2021

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 
  For the Period:              
  Operating Results              
  Net Interest Income

$

126,819

 

$

123,514

 

$

124,166

 

$

370,902

 

$

376,823

 
  Provision for Credit Losses 1

 

(10,400

)

 

(16,100

)

 

28,600

 

 

(40,800

)

 

102,600

 
  Total Noninterest Income

 

41,378

 

 

44,431

 

 

41,734

 

 

128,779

 

 

139,151

 
  Total Noninterest Expense

 

96,519

 

 

96,527

 

 

89,949

 

 

291,911

 

 

275,153

 
  Net Income

 

62,053

 

 

67,533

 

 

37,840

 

 

189,535

 

 

111,490

 
  Basic Earnings Per Common Share

 

1.53

 

 

1.69

 

 

0.95

 

 

4.73

 

 

2.81

 
  Diluted Earnings Per Common Share

 

1.52

 

 

1.68

 

 

0.95

 

 

4.70

 

 

2.80

 
  Dividends Declared Per Common Share

 

0.70

 

 

0.67

 

 

0.67

 

 

2.04

 

 

2.01

 
                 
  Performance Ratios              
  Return on Average Assets

 

1.07

%

 

1.23

%

 

0.76

%

 

1.15

%

 

0.78

%

  Return on Average Shareholders' Equity

 

15.41

 

 

19.17

 

 

11.01

 

 

17.31

 

 

11.08

 
  Return on Average Common Equity 8

 

17.08

 

 

19.61

 

 

11.01

 

 

18.10

 

 

11.08

 
  Efficiency Ratio 2

 

57.38

 

 

57.47

 

 

54.22

 

 

58.42

 

 

53.33

 
  Net Interest Margin 3

 

2.32

 

 

2.37

 

 

2.67

 

 

2.37

 

 

2.82

 
  Dividend Payout Ratio 4

 

45.75

 

 

39.64

 

 

70.53

 

 

42.95

 

 

71.53

 
  Average Shareholders' Equity to Average Assets

 

6.95

 

 

6.40

 

 

6.93

 

 

6.63

 

 

7.06

 
                 
  Average Balances              
  Average Loans and Leases

$

11,958,321

 

$

12,096,308

 

$

11,739,785

 

$

12,002,426

 

$

11,510,222

 
  Average Assets

 

22,993,036

 

 

22,073,569

 

 

19,741,139

 

 

22,079,174

 

 

19,053,626

 
  Average Deposits

 

20,473,777

 

 

19,698,285

 

 

17,270,206

 

 

19,619,053

 

 

16,591,640

 
  Average Shareholders' Equity

 

1,598,076

 

 

1,412,924

 

 

1,367,756

 

 

1,463,566

 

 

1,344,402

 
                 
  Per Share of Common Stock              
  Book Value

$

35.30

 

$

34.80

 

$

33.99

 

$

35.30

 

$

33.99

 
  Tangible Book Value 8

 

34.38

 

 

33.91

 

 

33.21

 

 

34.38

 

 

33.21

 
  Market Value              
  Closing

 

82.17

 

 

84.22

 

 

50.52

 

 

82.17

 

 

50.52

 
  High

 

87.12

 

 

95.95

 

 

61.94

 

 

99.10

 

 

95.53

 
  Low

 

75.68

 

 

81.23

 

 

48.77

 

 

75.65

 

 

46.70

 
                 
       

September 30,

   

June 30,

   

December 31,

   

September 30,

 
     

 

2021

 

 

2021

 

 

2020

 

 

2020

 
  As of Period End:              
  Balance Sheet Totals              
  Loans and Leases  

$

12,072,750

 

$

12,041,378

 

$

11,940,020

 

$

11,793,608

 
  Total Assets  

 

22,965,383

 

 

22,672,183

 

 

20,603,651

 

 

20,109,489

 
  Total Deposits  

 

20,493,678

 

 

20,169,709

 

 

18,211,621

 

 

17,738,883

 
  Other Debt  

 

10,414

 

 

10,437

 

 

60,481

 

 

60,502

 
  Total Shareholders' Equity  

 

1,597,109

 

 

1,583,531

 

 

1,374,507

 

 

1,361,739

 
                 
  Asset Quality              
  Non-Performing Assets  

$

20,620

 

$

18,974

 

$

18,481

 

$

18,626

 
  Allowance for Credit Losses - Loans and Leases  

 

167,920

 

 

180,385

 

 

216,252

 

 

203,496

 
  Allowance to Loans and Leases Outstanding 5  

 

1.39

%

 

1.50

%

 

1.81

%

 

1.73

%
                 
  Capital Ratios 6              
  Common Equity Tier 1 Capital Ratio  

 

12.02

%

 

12.36

%

 

12.06

%

 

12.09

%
  Tier 1 Capital Ratio  

 

13.47

 

 

13.87

 

 

12.06

 

 

12.09

 
  Total Capital Ratio  

 

14.72

 

 

15.13

 

 

13.31

 

 

13.35

 
  Tier 1 Leverage Ratio  

 

7.10

 

 

7.31

 

 

6.71

 

 

6.81

 
  Total Shareholders' Equity to Total Assets  

 

6.95

 

 

6.98

 

 

6.67

 

 

6.77

 
  Tangible Common Equity to Tangible Assets 7, 8  

 

6.04

 

 

6.06

 

 

6.53

 

 

6.63

 
  Tangible Common Equity to Risk-Weighted Assets 7,8  

 

11.46

 

 

11.81

 

 

11.89

 

 

12.02

 
                 
  Non-Financial Data              
  Full-Time Equivalent Employees  

 

2,049

 

 

2,085

 

 

2,022

 

 

2,038

 
  Branches  

 

54

 

 

54

 

 

65

 

 

67

 
  ATMs  

 

303

 

 

312

 

 

357

 

 

358

 
                 

1

Provision for Credit Losses for 2021 includes Provision for Unfunded Commitments and Accrued Interest Receivable, 2020 represents only Provisions for Loans and Leases.

2

Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).

3

Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.

4

Dividend payout ratio is defined as dividends declared per common share divided by basic earnings per common share.

5

The numerator comprises the Allowance for Credit Losses - Loans and Leases.

6

Regulatory capital ratios as of September 30, 2021 are preliminary.

7

Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. Tangible common equity is defined by the Company as common shareholders' equity minus goodwill and intangible assets. Intangible assets are included as a component of other assets in the Consolidated Statements of Condition. See Table 2 “Reconciliation of Non-GAAP Financial Measures."

8

Return on Average Common Equity was revised from 19.60% for the three months ended June 30, 2021, Tangible Common Equity to Tangible Asset was revised from 6.08% for the three months ended June 30, 2021, Tangible Common Equity to Risk-Weighted Assets was revised from 11.85% for the three months ended June 30, 2021, and Tangible Book Value was revised from $34.02 for the three months ended June 30, 2021.
         
Bank of Hawaii Corporation and Subsidiaries        
Reconciliation of Non-GAAP Financial Measures        

Table 2

 
     

 

September 30,

 

 

June 30,

 

 

December 31,

 

 

September 30,

 

(dollars in thousands)

 

2021

 

 

2021

 

 

2020

 

 

2020

 

             
Total Shareholders' Equity

$

1,597,109

 

$

1,583,531

 

$

1,374,507

 

$

1,361,739

 

Less: Preferred Stock

 

180,000

 

 

180,000

 

 

-

 

 

-

 

  Goodwill

 

31,517

 

 

31,517

 

 

31,517

 

 

31,517

 

Tangible Common Equity

$

1,385,592

 

$

1,372,014

 

$

1,342,990

 

$

1,330,222

 

             
Total Assets

$

22,965,383

 

$

22,672,183

 

$

20,603,651

 

$

20,109,489

 

Less: Goodwill

 

31,517

 

 

31,517

 

 

31,517

 

 

31,517

 

Tangible Assets

$

22,933,866

 

$

22,640,666

 

$

20,572,134

 

$

20,077,972

 

             
Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements

$

12,093,010

 

$

11,614,522

 

$

11,295,077

 

$

11,068,888

 

             
Total Shareholders' Equity to Total Assets

 

6.95

%

 

6.98

%

 

6.67

%

 

6.77

%

Tangible Common Equity to Tangible Assets (Non-GAAP)

 

6.04

%

 

6.06

%

 

6.53

%

 

6.63

%

             
Tier 1 Capital Ratio

 

13.47

%

 

13.87

%

 

12.06

%

 

12.09

%

Tangible Common Equity to Risk-Weighted Assets (Non-GAAP)

 

11.46

%

 

11.81

%

 

11.89

%

 

12.02

%

             
Note: Risk-Weighted Assets and Regulatory capital ratios as of September 30, 2021 are preliminary.
           
Bank of Hawaii Corporation and Subsidiaries          
Consolidated Statements of Income           Table 3
  Three Months Ended   Nine Months Ended
  September 30, June 30, September 30,   September 30,
(dollars in thousands, except per share amounts)

2021

2021

2020

 

2021

2020

Interest Income            
Interest and Fees on Loans and Leases

$

100,570

 

$

100,894

 

$

103,189

 

 

$

300,763

 

$

319,027

Income on Investment Securities            
Available-for-Sale

 

16,396

 

 

16,467

 

 

14,558

 

 

 

48,700

 

 

45,845

Held-to-Maturity

 

16,754

 

 

13,576

 

 

15,967

 

 

 

43,630

 

 

51,942

Deposits

 

2

 

 

-

 

 

3

 

 

 

9

 

 

13

Funds Sold

 

382

 

 

260

 

 

149

 

 

 

779

 

 

787

Other

 

159

 

 

182

 

 

151

 

 

 

526

 

 

494

Total Interest Income

 

134,263

 

 

131,379

 

 

134,017

 

 

 

394,407

 

 

418,108

Interest Expense            
Deposits

 

3,837

 

 

4,152

 

 

5,891

 

 

 

12,318

 

 

28,105

Securities Sold Under Agreements to Repurchase

 

3,423

 

 

3,470

 

 

3,622

 

 

 

10,426

 

 

11,667

Funds Purchased

 

-

 

 

-

 

 

-

 

 

 

1

 

 

90

Short-Term Borrowings

 

-

 

 

-

 

 

1

 

 

 

-

 

 

62

Other Debt

 

184

 

 

243

 

 

337

 

 

 

760

 

 

1,361

Total Interest Expense

 

7,444

 

 

7,865

 

 

9,851

 

 

 

23,505

 

 

41,285

Net Interest Income

 

126,819

 

 

123,514

 

 

124,166

 

 

 

370,902

 

 

376,823

Provision for Credit Losses

 

(10,400

)

 

(16,100

)

 

28,600

 

 

 

(40,800

)

 

102,600

Net Interest Income After Provision for Credit Losses

 

137,219

 

 

139,614

 

 

95,566

 

 

 

411,702

 

 

274,223

Noninterest Income            
Trust and Asset Management

 

11,415

 

 

11,682

 

 

10,752

 

 

 

34,375

 

 

32,217

Mortgage Banking

 

3,136

 

 

3,058

 

 

4,047

 

 

 

12,056

 

 

11,020

Service Charges on Deposit Accounts

 

6,510

 

 

6,065

 

 

6,027

 

 

 

18,703

 

 

18,575

Fees, Exchange, and Other Service Charges

 

13,604

 

 

13,807

 

 

12,296

 

 

 

41,018

 

 

34,913

Investment Securities Gains (Losses), Net

 

(1,259

)

 

2,423

 

 

(1,121

)

 

 

(39

)

 

11,125

Annuity and Insurance

 

735

 

 

911

 

 

881

 

 

 

2,348

 

 

2,692

Bank-Owned Life Insurance

 

1,897

 

 

2,063

 

 

1,806

 

 

 

5,877

 

 

5,035

Other

 

5,340

 

 

4,422

 

 

7,046

 

 

 

14,441

 

 

23,574

Total Noninterest Income

 

41,378

 

 

44,431

 

 

41,734

 

 

 

128,779

 

 

139,151

Noninterest Expense            
Salaries and Benefits

 

56,447

 

 

56,161

 

 

51,951

 

 

 

168,859

 

 

157,129

Net Occupancy

 

3,079

 

 

5,047

 

 

7,281

 

 

 

17,216

 

 

24,997

Net Equipment

 

8,924

 

 

8,796

 

 

9,223

 

 

 

26,598

 

 

25,874

Data Processing

 

4,722

 

 

4,557

 

 

4,691

 

 

 

15,601

 

 

13,895

Professional Fees

 

2,948

 

 

3,114

 

 

2,743

 

 

 

9,468

 

 

9,012

FDIC Insurance

 

1,594

 

 

1,669

 

 

1,282

 

 

 

4,917

 

 

4,296

Other

 

18,805

 

 

17,183

 

 

12,778

 

 

 

49,252

 

 

39,950

Total Noninterest Expense

 

96,519

 

 

96,527

 

 

89,949

 

 

 

291,911

 

 

275,153

Income Before Provision for Income Taxes

 

82,078

 

 

87,518

 

 

47,351

 

 

 

248,570

 

 

138,221

Provision for Income Taxes

 

20,025

 

 

19,985

 

 

9,511

 

 

 

59,035

 

 

26,731

Net Income

$

62,053

 

$

67,533

 

$

37,840

 

 

$

189,535

 

$

111,490

Preferred Stock Dividends

 

1,006

 

 

-

 

 

-

 

 

 

1,006

 

 

-

Net Income Available to Common Shareholders

$

61,047

 

$

67,533

 

$

37,840

 

 

$

188,529

 

$

111,490

Basic Earnings Per Common Share

$

1.53

 

$

1.69

 

$

0.95

 

 

$

4.73

 

$

2.81

Diluted Earnings Per Common Share

$

1.52

 

$

1.68

 

$

0.95

 

 

$

4.70

 

$

2.80

Dividends Declared Per Common Share

$

0.70

 

$

0.67

 

$

0.67

 

 

$

2.04

 

$

2.01

Basic Weighted Average Common Shares

 

39,881,437

 

 

39,902,583

 

 

39,745,120

 

 

 

39,870,450

 

 

39,710,252

Diluted Weighted Average Common Shares

 

40,080,919

 

 

40,122,905

 

 

39,869,135

 

 

 

40,088,899

 

 

39,872,406

       
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income  

Table 4

  Three Months Ended   Nine Months Ended
  September 30, June 30, September 30,   September 30,
(dollars in thousands)

2021

2021

2020

 

2021

2020

Net Income

$

62,053

 

$

67,533

 

$

37,840

 

 

$

189,535

 

$

111,490

Other Comprehensive Income (Loss), Net of Tax:            
Net Unrealized Gains (Losses) on Investment Securities

 

(7,541

)

 

(123

)

 

(4,900

)

 

 

(57,714

)

 

44,389

Defined Benefit Plans

 

441

 

 

442

 

 

374

 

 

 

1,324

 

 

1,122

Other Comprehensive Income (Loss)

 

(7,100

)

 

319

 

 

(4,526

)

 

 

(56,390

)

 

45,511

Comprehensive Income

$

54,953

 

$

67,852

 

$

33,314

 

 

$

133,145

 

$

157,001

         
Bank of Hawaii Corporation and Subsidiaries        
Consolidated Statements of Condition       Table 5
   

September 30,

   

June 30,

   

December 31,

   

September 30,

 
(dollars in thousands)

 

2021

 

 

2021

 

 

2020

 

 

2020

 

Assets        
Interest-Bearing Deposits in Other Banks

$

2,188

 

$

2,584

 

$

1,646

 

$

4,233

 

Funds Sold

 

422,063

 

 

909,730

 

 

333,022

 

 

736,524

 

Investment Securities        
Available-for-Sale

 

4,353,520

 

 

4,522,941

 

 

3,791,689

 

 

3,190,313

 

Held-to-Maturity (Fair Value of $4,895,763; $3,965,117; $3,348,693; and $3,288,668)

 

4,899,880

 

 

3,947,613

 

 

3,262,727

 

 

3,198,830

 

Loans Held for Sale

 

21,965

 

 

47,490

 

 

82,565

 

 

-

 

Loans and Leases

 

12,072,750

 

 

12,041,378

 

 

11,940,020

 

 

11,793,608

 

Allowance for Credit Losses

 

(167,920

)

 

(180,385

)

 

(216,252

)

 

(203,496

)

Net Loans and Leases

 

11,904,830

 

 

11,860,993

 

 

11,723,768

 

 

11,590,112

 

Total Earning Assets

 

21,604,446

 

 

21,291,351

 

 

19,195,417

 

 

18,720,012

 

Cash and Due from Banks

 

231,711

 

 

269,153

 

 

279,420

 

 

260,167

 

Premises and Equipment, Net

 

199,144

 

 

198,508

 

 

199,695

 

 

199,021

 

Operating Lease Right-of-Use Assets

 

97,007

 

 

97,264

 

 

99,542

 

 

96,200

 

Accrued Interest Receivable

 

46,751

 

 

47,046

 

 

49,303

 

 

57,370

 

Foreclosed Real Estate

 

2,332

 

 

2,332

 

 

2,332

 

 

2,332

 

Mortgage Servicing Rights

 

22,099

 

 

21,473

 

 

19,652

 

 

21,887

 

Goodwill

 

31,517

 

 

31,517

 

 

31,517

 

 

31,517

 

Bank-Owned Life Insurance

 

293,230

 

 

292,805

 

 

291,480

 

 

291,231

 

Other Assets

 

437,146

 

 

420,734

 

 

435,293

 

 

429,752

 

Total Assets

$

22,965,383

 

$

22,672,183

 

$

20,603,651

 

$

20,109,489

 

         
Liabilities        
Deposits        
Noninterest-Bearing Demand

$

7,111,693

 

$

6,570,232

 

$

5,749,612

 

$

5,428,567

 

Interest-Bearing Demand

 

4,768,725

 

 

4,498,825

 

 

4,040,733

 

 

3,824,448

 

Savings

 

7,540,345

 

 

7,704,575

 

 

6,759,213

 

 

6,763,891

 

Time

 

1,072,915

 

 

1,396,077

 

 

1,662,063

 

 

1,721,977

 

Total Deposits

 

20,493,678

 

 

20,169,709

 

 

18,211,621

 

 

17,738,883

 

Securities Sold Under Agreements to Repurchase

 

450,490

 

 

550,490

 

 

600,590

 

 

602,106

 

Other Debt

 

10,414

 

 

10,437

 

 

60,481

 

 

60,502

 

Operating Lease Liabilities

 

104,452

 

 

105,380

 

 

107,412

 

 

103,869

 

Retirement Benefits Payable

 

49,802

 

 

50,260

 

 

51,197

 

 

43,505

 

Accrued Interest Payable

 

3,415

 

 

3,879

 

 

5,117

 

 

6,613

 

Taxes Payable and Deferred Taxes

 

9,815

 

 

11,844

 

 

2,463

 

 

12,124

 

Other Liabilities

 

246,208

 

 

186,653

 

 

190,263

 

 

180,148

 

Total Liabilities

 

21,368,274

 

 

21,088,652

 

 

19,229,144

 

 

18,747,750

 

Shareholders' Equity        
Preferred Stock ($.01 par value; authorized 180,000 shares; issued and outstanding: September 30, 2021 and June 30, 2021 - 180,000 shares)

 

180,000

 

 

180,000

 

 

-

 

 

-

 

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: September 30, 2021 - 58,559,089 / 40,305,801; June 30, 2021 - 58,557,754 / 40,465,482; December 31, 2020 - 58,285,624 / 40,119,312; and September 30, 2020 - 58,248,690 / 40,060,675)

 

580

 

 

580

 

 

580

 

 

580

 

Capital Surplus

 

598,341

 

 

594,261

 

 

591,360

 

 

588,632

 

Accumulated Other Comprehensive Income (Loss)

 

(48,568

)

 

(41,468

)

 

7,822

 

 

14,399

 

Retained Earnings

 

1,916,861

 

 

1,884,431

 

 

1,811,979

 

 

1,797,763

 

Treasury Stock, at Cost (Shares: September 30, 2021 - 18,253,288; June 30, 2021 - 18,092,272; December 31, 2020 - 18,166,312; and September 30, 2020 - 18,188,015)

 

(1,050,105

)

 

(1,034,273

)

 

(1,037,234

)

 

(1,039,635

)

Total Shareholders' Equity

 

1,597,109

 

 

1,583,531

 

 

1,374,507

 

 

1,361,739

 

Total Liabilities and Shareholders' Equity

$

22,965,383

 

$

22,672,183

 

$

20,603,651

 

$

20,109,489

 

                             
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity       Table 6
   

 

 

 

 

 

 

 

 

 

 

Accum.

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

Compre-

 

 

 

 

 

 

   

Preferred

 

 

 

Common

 

 

 

 

 

hensive

 

 

 

 

 

 

   

Shares

 

Preferred

 

Shares

 

Common

 

Capital

 

Income

 

Retained

 

Treasury

 

 

(dollars in thousands)  

Outstanding

 

Stock

 

Outstanding

 

Stock

 

Surplus

 

(Loss)

 

Earnings

 

Stock

 

Total

Balance as of December 31, 2020  

-

 

$

-

 

40,119,312

 

 

$

580

 

$

591,360

 

 

$

7,822

 

 

$

1,811,979

 

 

$

(1,037,234

)

 

$

1,374,507

 

Net Income  

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

189,535

 

 

 

-

 

 

 

189,535

 

Other Comprehensive Loss  

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

(56,390

)

 

 

-

 

 

 

-

 

 

 

(56,390

)

Share-Based Compensation  

-

 

 

-

 

-

 

 

 

-

 

 

9,658

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,658

 

Preferred Stock Issued, Net  

180,000

 

 

180,000

 

-

 

 

 

-

 

 

(4,513

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

175,487

 

Common Stock Issued under Purchase and Equity Compensation Plans  

-

 

 

-

 

466,265

 

 

 

-

 

 

1,836

 

 

 

-

 

 

 

(1,218

)

 

 

10,541

 

 

 

11,159

 

Common Stock Repurchased  

-

 

 

-

 

(279,776

)

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(23,412

)

 

 

(23,412

)

Cash Dividends Declared Common Stock
($2.04 per share)
 

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(82,429

)

 

 

-

 

 

 

(82,429

)

Cash Dividends Declared Preferred Stock  

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(1,006

)

 

 

-

 

 

 

(1,006

)

Balance as of September 30, 2021  

180,000

 

$

180,000

 

40,305,801

 

 

$

580

 

$

598,341

 

 

$

(48,568

)

 

$

1,916,861

 

 

$

(1,050,105

)

 

$

1,597,109

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2019  

-

 

$

-

 

40,039,695

 

 

$

579

 

$

582,566

 

 

$

(31,112

)

 

$

1,761,415

 

 

$

(1,026,616

)

 

$

1,286,832

 

Net Income  

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

111,490

 

 

 

-

 

 

 

111,490

 

Other Comprehensive Income  

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

45,511

 

 

 

-

 

 

 

-

 

 

 

45,511

 

Cumulative Change in Accounting Principle  

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

3,632

 

 

 

-

 

 

 

3,632

 

Share-Based Compensation  

-

 

 

-

 

-

 

 

 

-

 

 

5,347

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,347

 

Common Stock Issued under Purchase and Equity Compensation Plans  

-

 

 

-

 

222,682

 

 

 

1

 

 

719

 

 

 

-

 

 

 

1,762

 

 

 

4,878

 

 

 

7,360

 

Common Stock Repurchased  

-

 

 

-

 

(201,702

)

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(17,897

)

 

 

(17,897

)

Cash Dividends Declared Common Stock
($2.01 per share)
 

-

 

 

-

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(80,536

)

 

 

-

 

 

 

(80,536

)

Balance as of September 30, 2020  

-

 

$

-

 

40,060,675

 

 

$

580

 

$

588,632

 

 

$

14,399

 

 

$

1,797,763

 

 

$

(1,039,635

)

 

$

1,361,739

 

  Bank of Hawaii Corporation and Subsidiaries
  Average Balances and Interest Rates - Taxable-Equivalent Basis  

Table 7a

 
      Three Months Ended     Three Months Ended     Three Months Ended  
      September 30, 2021     June 30, 2021     September 30, 2020  
      Average   Income/   Yield/     Average   Income/   Yield/     Average   Income/   Yield/  
  (dollars in millions)   Balance   Expense   Rate     Balance   Expense   Rate     Balance   Expense   Rate  
  Earning Assets                                          
  Interest-Bearing Deposits in Other Banks  

$

3.2

 

$

-

 

0.23

%

 

$

2.2

 

$

-

 

0.04

%

 

$

2.6

 

$

-

 

0.45

%

  Funds Sold  

 

999.5

 

 

0.4

 

0.15

   

 

946.2

 

 

0.3

 

0.11

   

 

584.2

 

 

0.1

 

0.10

 
  Investment Securities                                          
  Available-for-Sale                                          
  Taxable  

 

4,454.9

 

 

16.3

 

1.46

   

 

4,290.8

 

 

16.3

 

1.53

   

 

2,918.6

 

 

14.3

 

1.96

 
  Non-Taxable  

 

10.1

 

 

0.1

 

4.34

   

 

12.3

 

 

0.1

 

4.27

   

 

25.8

 

 

0.3

 

4.22

 
  Held-to-Maturity                                          
  Taxable  

 

4,294.6

 

 

16.5

 

1.53

   

 

3,496.2

 

 

13.4

 

1.53

   

 

3,257.7

 

 

15.7

 

1.93

 
  Non-Taxable  

 

64.8

 

 

0.4

 

2.37

   

 

41.5

 

 

0.3

 

2.53

   

 

54.1

 

 

0.4

 

2.66

 
  Total Investment Securities  

 

8,824.4

 

 

33.3

 

1.51

   

 

7,840.8

 

 

30.1

 

1.54

   

 

6,256.2

 

 

30.7

 

1.96

 
  Loans Held for Sale  

 

24.6

 

 

0.2

 

2.80

   

 

25.7

 

 

0.2

 

2.86

   

 

15.9

 

 

0.1

 

3.24

 
  Loans and Leases 1                                          
  Commercial and Industrial  

 

1,644.8

 

 

17.0

 

4.09

   

 

1,934.5

 

 

16.8

 

3.49

   

 

1,917.0

 

 

14.1

 

2.93

 
  Commercial Mortgage  

 

2,952.7

 

 

21.9

 

2.94

   

 

2,883.5

 

 

21.3

 

2.96

   

 

2,722.3

 

 

21.7

 

3.18

 
  Construction  

 

289.9

 

 

2.5

 

3.38

   

 

285.6

 

 

2.6

 

3.66

   

 

234.0

 

 

2.1

 

3.60

 
  Commercial Lease Financing  

 

109.3

 

 

0.4

 

1.58

   

 

105.7

 

 

0.4

 

1.54

   

 

110.7

 

 

0.5

 

1.82

 
  Residential Mortgage  

 

4,253.2

 

 

34.8

 

3.27

   

 

4,234.3

 

 

35.6

 

3.35

   

 

3,988.7

 

 

36.7

 

3.68

 
  Home Equity  

 

1,621.4

 

 

12.2

 

2.97

   

 

1,573.4

 

 

12.1

 

3.09

   

 

1,625.2

 

 

14.1

 

3.45

 
  Automobile  

 

718.7

 

 

6.2

 

3.41

   

 

710.4

 

 

6.1

 

3.45

   

 

708.3

 

 

6.4

 

3.59

 
  Other 2  

 

368.3

 

 

5.7

 

6.16

   

 

368.9

 

 

6.0

 

6.53

   

 

433.6

 

 

7.6

 

6.96

 
  Total Loans and Leases  

 

11,958.3

 

 

100.7

 

3.35

   

 

12,096.3

 

 

100.9

 

3.34

   

 

11,739.8

 

 

103.2

 

3.50

 
  Other  

 

31.5

 

 

0.2

 

2.02

   

 

32.3

 

 

0.2

 

2.26

   

 

33.3

 

 

0.2

 

1.81

 
  Total Earning Assets 3  

 

21,841.5

 

 

134.8

 

2.45

   

 

20,943.5

 

 

131.7

 

2.52

   

 

18,632.0

 

 

134.3

 

2.88

 
  Cash and Due from Banks  

 

252.2

           

 

256.1

           

 

234.3

         
  Other Assets  

 

899.3

           

 

874.0

           

 

874.8

         
  Total Assets  

$

22,993.0

           

$

22,073.6

           

$

19,741.1

         
                                             
  Interest-Bearing Liabilities                                          
  Interest-Bearing Deposits                                          
  Demand  

$

4,707.1

 

 

0.7

 

0.06

   

$

4,452.4

 

 

0.7

 

0.07

   

$

3,465.5

 

 

0.4

 

0.04

 
  Savings  

 

7,687.0

 

 

1.8

 

0.09

   

 

7,533.0

 

 

1.8

 

0.09

   

 

6,886.0

 

 

1.7

 

0.10

 
  Time  

 

1,267.0

 

 

1.4

 

0.44

   

 

1,418.4

 

 

1.7

 

0.47

   

 

1,568.3

 

 

3.8

 

0.97

 
  Total Interest-Bearing Deposits  

 

13,661.1

 

 

3.9

 

0.11

   

 

13,403.8

 

 

4.2

 

0.12

   

 

11,919.8

 

 

5.9

 

0.20

 
  Securities Sold Under Agreements to Repurchase  

 

547.8

 

 

3.4

 

2.45

   

 

570.3

 

 

3.5

 

2.41

   

 

602.9

 

 

3.6

 

2.35

 
  Other Debt  

 

10.4

 

 

0.2

 

7.04

   

 

30.2

 

 

0.2

 

3.22

   

 

60.5

 

 

0.3

 

2.22

 
  Total Interest-Bearing Liabilities  

 

14,219.3

 

 

7.5

 

0.21

   

 

14,004.3

 

 

7.9

 

0.22

   

 

12,583.2

 

 

9.8

 

0.31

 
  Net Interest Income      

$

127.3

           

$

123.8

           

$

124.5

     
  Interest Rate Spread          

2.24

%

 

 

     

2.30

%

 

 

     

2.57

%

  Net Interest Margin          

2.32

%

 

 

     

2.37

%

 

 

     

2.67

%

  Noninterest-Bearing Demand Deposits  

 

6,812.7

           

 

6,294.5

           

 

5,350.4

         
  Other Liabilities  

 

362.9

           

 

361.9

           

 

439.7

         
  Shareholders' Equity  

 

1,598.1

           

 

1,412.9

           

 

1,367.8

         
  Total Liabilities and Shareholders' Equity  

$

22,993.0

           

$

22,073.6

           

$

19,741.1

         
                                             

1

Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

 2

Comprised of other consumer revolving credit, installment, and consumer lease financing.

3

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21%, of $315,000, $269,000, and $295,000 for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively.
                               
  Bank of Hawaii Corporation and Subsidiaries  
  Average Balances and Interest Rates - Taxable-Equivalent Basis  

Table 7b

 
     

Nine Months Ended

 

 

Nine Months Ended

 
     

September 30, 2021

 

 

September 30, 2020

 
     

Average

 

Income/

 

Yield/

 

 

Average

 

Income/

 

Yield/

 
  (dollars in millions)  

Balance

 

Expense

 

Rate

 

 

Balance

 

Expense

 

Rate

 
  Earning Assets                            
  Interest-Bearing Deposits in Other Banks  

$

2.9

 

$

-

 

0.44

%

 

$

2.2

 

$

-

 

0.76

%

  Funds Sold  

 

833.7

 

 

0.8

 

0.12

   

 

428.3

 

 

0.8

 

0.24

 
  Investment Securities                            
  Available-for-Sale                            
  Taxable  

 

4,252.9

 

 

48.4

 

1.52

   

 

2,745.7

 

 

45.1

 

2.19

 
  Non-Taxable  

 

11.5

 

 

0.4

 

4.29

   

 

30.1

 

 

1.0

 

4.37

 
  Held-to-Maturity                            
  Taxable  

 

3,728.9

 

 

42.9

 

1.53

   

 

3,084.4

 

 

51.0

 

2.21

 
  Non-Taxable  

 

48.2

 

 

0.9

 

2.46

   

 

54.4

 

 

1.1

 

2.66

 
  Total Investment Securities  

 

8,041.5

 

 

92.6

 

1.54

   

 

5,914.6

 

 

98.2

 

2.21

 
  Loans Held for Sale  

 

25.5

 

 

0.5

 

2.81

   

 

20.8

 

 

0.5

 

3.35

 
  Loans and Leases 1                            
  Commercial and Industrial  

 

1,826.9

 

 

48.1

 

3.52

   

 

1,763.9

 

 

45.2

 

3.43

 
  Commercial Mortgage  

 

2,894.5

 

 

64.5

 

2.98

   

 

2,631.9

 

 

69.2

 

3.51

 
  Construction  

 

280.0

 

 

7.3

 

3.51

   

 

234.3

 

 

7.1

 

4.04

 
  Commercial Lease Financing  

 

107.1

 

 

1.2

 

1.52

   

 

111.0

 

 

1.6

 

1.88

 
  Residential Mortgage  

 

4,211.8

 

 

106.2

 

3.36

   

 

3,941.3

 

 

109.5

 

3.70

 
  Home Equity  

 

1,596.4

 

 

36.9

 

3.09

   

 

1,656.8

 

 

43.6

 

3.51

 
  Automobile  

 

712.5

 

 

18.4

 

3.46

   

 

710.2

 

 

19.0

 

3.57

 
  Other 2  

 

373.2

 

 

18.1

 

6.48

   

 

460.8

 

 

23.9

 

6.93

 
  Total Loans and Leases  

 

12,002.4

 

 

300.7

 

3.35

   

 

11,510.2

 

 

319.1

 

3.70

 
  Other  

 

32.4

 

 

0.5

 

2.17

   

 

33.9

 

 

0.5

 

1.95

 
  Total Earning Assets 3  

 

20,938.4

 

 

395.1

 

2.52

   

 

17,910.0

 

 

419.1

 

3.12

 
  Cash and Due from Banks  

 

259.6

           

 

271.7

         
  Other Assets  

 

881.2

           

 

871.9

         
  Total Assets  

$

22,079.2

           

$

19,053.6

         
                               
  Interest-Bearing Liabilities                            
  Interest-Bearing Deposits                            
  Demand  

$

4,450.6

 

 

2.0

 

0.06

   

$

3,268.1

 

 

1.9

 

0.08

 
  Savings  

 

7,414.6

 

 

5.0

 

0.09

   

 

6,693.9

 

 

11.0

 

0.22

 
  Time  

 

1,437.1

 

 

5.3

 

0.49

   

 

1,712.2

 

 

15.2

 

1.19

 
  Total Interest-Bearing Deposits  

 

13,302.3

 

 

12.3

 

0.12

   

 

11,674.2

 

 

28.1

 

0.32

 
  Short-Term Borrowings  

 

0.8

 

 

-

 

0.09

   

 

38.3

 

 

0.2

 

0.52

 
  Securities Sold Under Agreements to Repurchase  

 

572.7

 

 

10.4

 

2.40

   

 

603.4

 

 

11.6

 

2.54

 
  Other Debt  

 

33.5

 

 

0.8

 

3.03

   

 

62.6

 

 

1.4

 

2.90

 
  Total Interest-Bearing Liabilities  

 

13,909.3

 

 

23.5

 

0.22

   

 

12,378.5

 

 

41.3

 

0.44

 
  Net Interest Income      

$

371.6

           

$

377.8

     
  Interest Rate Spread          

2.30

%

         

2.68

%

  Net Interest Margin          

2.37

%

         

2.82

%

  Noninterest-Bearing Demand Deposits  

 

6,316.8

           

 

4,917.4

         
  Other Liabilities  

 

389.5

           

 

413.3

         
  Shareholders' Equity  

 

1,463.6

           

 

1,344.4

         
  Total Liabilities and Shareholders' Equity  

$

22,079.2

           

$

19,053.6

         
                               

1

Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.

3

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 21%, of $836,000 and $1,010,000 for the nine months ended September 30, 2021 and September 30, 2020, respectively.
         
  Bank of Hawaii Corporation and Subsidiaries
  Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
    Three Months Ended September 30, 2021
    Compared to June 30, 2021
  (dollars in millions)

Volume 1

Rate 1

Total

  Change in Interest Income:      
  Funds Sold

$

-

 

$

0.1

 

$

0.1

 

  Investment Securities      
  Available-for-Sale      
  Taxable

 

0.6

 

 

(0.6

)

 

-

 

  Held-to-Maturity      
  Taxable

 

3.1

 

 

-

 

 

3.1

 

  Non-Taxable

 

0.1

 

 

-

 

 

0.1

 

  Total Investment Securities

 

3.8

 

 

(0.6

)

 

3.2

 

  Loans and Leases      
  Commercial and Industrial

 

(4.0

)

 

4.2

 

 

0.2

 

  Commercial Mortgage

 

0.7

 

 

(0.1

)

 

0.6

 

  Construction

 

0.1

 

 

(0.2

)

 

(0.1

)

  Commercial Lease Financing

 

0.1

 

 

(0.1

)

 

-

 

  Residential Mortgage

 

0.2

 

 

(1.0

)

 

(0.8

)

  Home Equity

 

0.5

 

 

(0.4

)

 

0.1

 

  Automobile

 

0.1

 

 

-

 

 

0.1

 

  Other 2

 

-

 

 

(0.3

)

 

(0.3

)

  Total Loans and Leases

 

(2.3

)

 

2.1

 

 

(0.2

)

  Total Change in Interest Income

 

1.5

 

 

1.6

 

 

3.1

 

         
  Change in Interest Expense:      
  Interest-Bearing Deposits      
  Demand

 

0.1

 

 

(0.1

)

 

-

 

  Time

 

(0.2

)

 

(0.1

)

 

(0.3

)

  Total Interest-Bearing Deposits

 

(0.1

)

 

(0.2

)

 

(0.3

)

  Securities Sold Under Agreements to Repurchase

 

(0.1

)

 

-

 

 

(0.1

)

  Other Debt

 

(0.2

)

 

0.2

 

 

-

 

  Total Change in Interest Expense

 

(0.4

)

 

-

 

 

(0.4

)

         
  Change in Net Interest Income

$

1.9

 

$

1.6

 

$

3.5

 

         

1

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.
   
  Bank of Hawaii Corporation and Subsidiaries
  Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8b
    Three Months Ended September 30, 2021
    Compared to September 30, 2020
  (dollars in millions)

Volume 1

Rate 1

Total

  Change in Interest Income:      
  Funds Sold

$

0.2

 

$

0.1

 

$

0.3

 

  Investment Securities      
  Available-for-Sale      
  Taxable

 

6.3

 

 

(4.3

)

 

2.0

 

  Non-Taxable

 

(0.2

)

 

-

 

 

(0.2

)

  Held-to-Maturity      
  Taxable

 

4.4

 

 

(3.6

)

 

0.8

 

  Non-Taxable

 

0.1

 

 

(0.1

)

 

-

 

  Total Investment Securities

 

10.6

 

 

(8.0

)

 

2.6

 

  Loans Held for Sale

 

0.1

 

 

-

 

 

0.1

 

  Loans and Leases      
  Commercial and Industrial

 

(2.1

)

 

5.0

 

 

2.9

 

  Commercial Mortgage

 

1.8

 

 

(1.6

)

 

0.2

 

  Construction

 

0.5

 

 

(0.1

)

 

0.4

 

  Commercial Lease Financing

 

-

 

 

(0.1

)

 

(0.1

)

  Residential Mortgage

 

2.3

 

 

(4.2

)

 

(1.9

)

  Home Equity

 

-

 

 

(1.9

)

 

(1.9

)

  Automobile

 

0.1

 

 

(0.3

)

 

(0.2

)

  Other 2

 

(1.1

)

 

(0.8

)

 

(1.9

)

  Total Loans and Leases

 

1.5

 

 

(4.0

)

 

(2.5

)

  Total Change in Interest Income

 

12.4

 

 

(11.9

)

 

0.5

 

         
  Change in Interest Expense:      
  Interest-Bearing Deposits      
  Demand

 

0.2

 

 

0.1

 

 

0.3

 

  Savings

 

0.2

 

 

(0.1

)

 

0.1

 

  Time

 

(0.6

)

 

(1.8

)

 

(2.4

)

  Total Interest-Bearing Deposits

 

(0.2

)

 

(1.8

)

 

(2.0

)

  Securities Sold Under Agreements to Repurchase

 

(0.3

)

 

0.1

 

 

(0.2

)

  Other Debt

 

(0.4

)

 

0.3

 

 

(0.1

)

  Total Change in Interest Expense

 

(0.9

)

 

(1.4

)

 

(2.3

)

         
  Change in Net Interest Income

$

13.3

 

$

(10.5

)

$

2.8

 

         

1

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.
         
  Bank of Hawaii Corporation and Subsidiaries
  Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8c
    Nine Months Ended September 30, 2021
    Compared to September 30, 2020
  (dollars in millions)

Volume 1

Rate 1

Total

  Change in Interest Income:      
  Funds Sold

$

0.5

 

$

(0.5

)

$

-

 

  Investment Securities      
  Available-for-Sale      
  Taxable

 

19.9

 

 

(16.6

)

 

3.3

 

  Non-Taxable

 

(0.6

)

 

-

 

 

(0.6

)

  Held-to-Maturity      
  Taxable

 

9.4

 

 

(17.5

)

 

(8.1

)

  Non-Taxable

 

(0.1

)

 

(0.1

)

 

(0.2

)

  Total Investment Securities

 

28.6

 

 

(34.2

)

 

(5.6

)

  Loans Held for Sale

 

0.1

 

 

(0.1

)

 

-

 

  Loans and Leases      
  Commercial and Industrial

 

6.4

 

 

(3.5

)

 

2.9

 

  Commercial Mortgage

 

6.5

 

 

(11.2

)

 

(4.7

)

  Construction

 

1.2

 

 

(1.0

)

 

0.2

 

  Commercial Lease Financing

 

(0.1

)

 

(0.3

)

 

(0.4

)

  Residential Mortgage

 

7.2

 

 

(10.5

)

 

(3.3

)

  Home Equity

 

(1.5

)

 

(5.2

)

 

(6.7

)

  Automobile

 

-

 

 

(0.6

)

 

(0.6

)

  Other 2

 

(4.3

)

 

(1.5

)

 

(5.8

)

  Total Loans and Leases

 

15.4

 

 

(33.8

)

 

(18.4

)

  Total Change in Interest Income

 

44.6

 

 

(68.6

)

 

(24.0

)

         
  Change in Interest Expense:      
  Interest-Bearing Deposits      
  Demand

 

0.6

 

 

(0.5

)

 

0.1

 

  Savings

 

1.1

 

 

(7.1

)

 

(6.0

)

  Time

 

(2.1

)

 

(7.8

)

 

(9.9

)

  Total Interest-Bearing Deposits

 

(0.4

)

 

(15.4

)

 

(15.8

)

  Short-Term Borrowings

 

(0.1

)

 

(0.1

)

 

(0.2

)

  Securities Sold Under Agreements to Repurchase

 

(0.6

)

 

(0.6

)

 

(1.2

)

  Other Debt

 

(0.7

)

 

0.1

 

 

(0.6

)

  Total Change in Interest Expense

 

(1.8

)

 

(16.0

)

 

(17.8

)

         
  Change in Net Interest Income

$

46.4

 

$

(52.6

)

$

(6.2

)

         

1

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.
             
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits  

Table 9

  Three Months Ended   Nine Months Ended
 

September 30,

 

June 30,

 

September 30,

 

September 30,

(dollars in thousands)

 

2021

 

 

2021

 

 

2020

 

 

2021

 

 

2020

Salaries

$

34,676

 

$

33,413

 

$

34,046

 

$

99,658

 

$

100,271

Incentive Compensation

 

4,677

 

 

5,172

 

 

2,683

 

 

15,763

 

 

6,069

Share-Based Compensation

 

3,335

 

 

3,174

 

 

1,442

 

 

9,093

 

 

4,754

Commission Expense

 

1,772

 

 

2,599

 

 

1,800

 

 

6,807

 

 

4,821

Retirement and Other Benefits

 

4,746

 

 

5,289

 

 

4,164

 

 

15,552

 

 

13,316

Payroll Taxes

 

2,825

 

 

3,026

 

 

2,624

 

 

9,819

 

 

9,949

Medical, Dental, and Life Insurance

 

3,222

 

 

3,204

 

 

3,422

 

 

8,850

 

 

11,394

Separation Expense

 

1,194

 

 

284

 

 

1,770

 

 

3,317

 

 

6,555

Total Salaries and Benefits

$

56,447

 

$

56,161

 

$

51,951

 

$

168,859

 

$

157,129

                   
  Bank of Hawaii Corporation and Subsidiaries
  Loan and Lease Portfolio Balances  

Table 10

     

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

  (dollars in thousands)  

 

2021

 

 

2021

 

 

2021

 

 

2020

 

 

2020

  Commercial                    
  Commercial and Industrial  

$

1,325,446

 

$

1,257,305

 

$

1,288,496

 

$

1,357,610

 

$

1,376,843

  PPP 1  

 

268,480

 

 

513,513

 

 

725,485

 

 

517,683

 

 

531,639

  Commercial Mortgage  

 

2,994,520

 

 

2,944,435

 

 

2,859,246

 

 

2,854,829

 

 

2,745,611

  Construction  

 

296,052

 

 

277,393

 

 

281,164

 

 

259,798

 

 

250,943

  Lease Financing  

 

107,526

 

 

110,500

 

 

104,980

 

 

110,766

 

 

111,831

  Total Commercial  

 

4,992,024

 

 

5,103,146

 

 

5,259,371

 

 

5,100,686

 

 

5,016,867

  Consumer                    
  Residential Mortgage  

 

4,272,540

 

 

4,264,180

 

 

4,216,976

 

 

4,130,513

 

 

4,044,228

  Home Equity  

 

1,680,229

 

 

1,594,781

 

 

1,577,500

 

 

1,604,538

 

 

1,605,486

  Automobile  

 

727,234

 

 

714,729

 

 

710,407

 

 

708,800

 

 

709,937

  Other 2  

 

400,723

 

 

364,542

 

 

376,449

 

 

395,483

 

 

417,090

  Total Consumer  

 

7,080,726

 

 

6,938,232

 

 

6,881,332

 

 

6,839,334

 

 

6,776,741

  Total Loans and Leases  

$

12,072,750

 

$

12,041,378

 

$

12,140,703

 

$

11,940,020

 

$

11,793,608

                       
                       
  Deposits                
     

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

  (dollars in thousands)  

 

2021

 

 

2021

 

 

2021

 

 

2020

 

 

2020

  Consumer  

$

10,150,199

 

$

9,848,285

 

$

9,746,713

 

$

9,347,725

 

$

8,903,808

  Commercial  

 

8,767,733

 

 

8,675,909

 

 

8,241,102

 

 

7,302,832

 

 

7,159,531

  Public and Other  

 

1,575,746

 

 

1,645,515

 

 

1,568,836

 

 

1,561,064

 

 

1,675,544

  Total Deposits  

$

20,493,678

 

$

20,169,709

 

$

19,556,651

 

$

18,211,621

 

$

17,738,883

                       

1

The PPP amounts presented, which are reported net of deferred costs and fees, were previously included as a component of the Commercial and Industrial loan class.

2

Comprised of other revolving credit, installment, and lease financing.
                 
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More  

Table 11

   

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

(dollars in thousands)  

2021

 

2021

 

2021

 

2020

 

2020

Non-Performing Assets                    
Non-Accrual Loans and Leases                    
Commercial                    
Commercial and Industrial  

$

209

 

 

$

258

 

 

$

293

 

 

$

441

 

 

$

475

 

Commercial Mortgage  

 

8,309

 

 

 

8,413

 

 

 

8,503

 

 

 

8,527

 

 

 

8,615

 

Total Commercial  

 

8,518

 

 

 

8,671

 

 

 

8,796

 

 

 

8,968

 

 

 

9,090

 

Consumer                    
Residential Mortgage  

 

4,348

 

 

 

2,437

 

 

 

1,804

 

 

 

3,223

 

 

 

3,543

 

Home Equity  

 

5,422

 

 

 

5,534

 

 

 

4,951

 

 

 

3,958

 

 

 

3,661

 

Total Consumer  

 

9,770

 

 

 

7,971

 

 

 

6,755

 

 

 

7,181

 

 

 

7,204

 

Total Non-Accrual Loans and Leases  

 

18,288

 

 

 

16,642

 

 

 

15,551

 

 

 

16,149

 

 

 

16,294

 

Foreclosed Real Estate  

 

2,332

 

 

 

2,332

 

 

 

2,332

 

 

 

2,332

 

 

 

2,332

 

Total Non-Performing Assets  

$

20,620

 

 

$

18,974

 

 

$

17,883

 

 

$

18,481

 

 

$

18,626

 

                     
Accruing Loans and Leases Past Due 90 Days or More                    
Commercial                    
Commercial and Industrial  

$

-

 

 

$

-

 

 

$

9

 

 

$

-

 

 

$

-

 

Total Commercial  

 

-

 

 

 

-

 

 

 

9

 

 

 

-

 

 

 

-

 

Consumer                    
Residential Mortgage  

$

4,776

 

 

$

4,069

 

 

$

4,069

 

 

$

5,274

 

 

$

6,607

 

Home Equity  

 

2,946

 

 

 

4,498

 

 

 

4,906

 

 

 

3,187

 

 

 

2,571

 

Automobile  

 

395

 

 

 

277

 

 

 

604

 

 

 

925

 

 

 

156

 

Other 1  

 

593

 

 

 

434

 

 

 

828

 

 

 

1,160

 

 

 

258

 

Total Consumer  

 

8,710

 

 

 

9,278

 

 

 

10,407

 

 

 

10,546

 

 

 

9,592

 

Total Accruing Loans and Leases Past Due 90 Days or More  

$

8,710

 

 

$

9,278

 

 

$

10,416

 

 

$

10,546

 

 

$

9,592

 

Restructured Loans on Accrual Status and Not Past Due 90 Days or More  

$

62,787

 

 

$

74,926

 

 

$

74,216

 

 

$

68,065

 

 

$

58,650

 

Total Loans and Leases  

$

12,072,750

 

 

$

12,041,378

 

 

$

12,140,703

 

 

$

11,940,020

 

 

$

11,793,608

 

                     
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases  

 

0.15

%

 

 

0.14

%

 

 

0.13

%

 

 

0.14

%

 

 

0.14

%

                     
Ratio of Non-Performing Assets to Total Loans and Leases and Foreclosed Real Estate  

 

0.17

%

 

 

0.16

%

 

 

0.15

%

 

 

0.15

%

 

 

0.16

%

                     
Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases and Commercial Foreclosed Real Estate  

 

0.17

%

 

 

0.17

%

 

 

0.17

%

 

 

0.18

%

 

 

0.18

%

                     
Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate  

 

0.17

%

 

 

0.15

%

 

 

0.13

%

 

 

0.14

%

 

 

0.14

%

                     
Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases and Foreclosed Real Estate  

 

0.24

%

 

 

0.23

%

 

 

0.23

%

 

 

0.24

%

 

 

0.24

%

                     
Quarter to Quarter Changes in Non-Performing Assets                    
Balance at Beginning of Quarter  

$

18,974

 

 

$

17,883

 

 

$

18,481

 

 

$

18,626

 

 

$

22,701

 

Additions  

 

3,171

 

 

 

2,229

 

 

 

2,992

 

 

 

434

 

 

 

938

 

Reductions                    
Payments  

 

(889

)

 

 

(722

)

 

 

(2,481

)

 

 

(490

)

 

 

(3,729

)

Return to Accrual Status  

 

(606

)

 

 

(416

)

 

 

(1,014

)

 

 

-

 

 

 

(1,035

)

Sales of Foreclosed Real Estate  

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(175

)

Charge-offs/Write-downs  

 

(30

)

 

 

-

 

 

 

(95

)

 

 

(89

)

 

 

(74

)

Total Reductions  

 

(1,525

)

 

 

(1,138

)

 

 

(3,590

)

 

 

(579

)

 

 

(5,013

)

Balance at End of Quarter  

$

20,620

 

 

$

18,974

 

 

$

17,883

 

 

$

18,481

 

 

$

18,626

 

                     
1 Comprised of other revolving credit, installment, and lease financing.
                       
  Bank of Hawaii Corporation and Subsidiaries
  Reserve for Credit Losses                   Table 12
     

Three Months Ended

 

Nine Months Ended

     

September 30,

 

June 30,

 

September 30,

 

September 30,

  (dollars in thousands)  

2021

 

2021

 

2020

 

2021

 

2020

  Balance at Beginning of Period  

$

186,371

 

 

$

203,779

 

 

$

175,958

 

 

$

221,303

 

 

 

116,849

 

                       
  CECL Adoption (Day 1) Impact  

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,072

)

                       
  Loans and Leases Charged-Off                    
  Commercial                    
  Commercial and Industrial  

 

(196

)

 

 

(456

)

 

 

(171

)

 

 

(900

)

 

 

(1,520

)

  Consumer                    
  Residential Mortgage  

 

(197

)

 

 

(115

)

 

 

-

 

 

 

(316

)

 

 

(84

)

  Home Equity  

 

(289

)

 

 

(107

)

 

 

(43

)

 

 

(412

)

 

 

(316

)

  Automobile  

 

(576

)

 

 

(1,209

)

 

 

(489

)

 

 

(3,894

)

 

 

(6,103

)

  Other 1  

 

(2,187

)

 

 

(2,422

)

 

 

(1,644

)

 

 

(8,523

)

 

 

(9,784

)

  Total Loans and Leases Charged-Off  

 

(3,445

)

 

 

(4,309

)

 

 

(2,347

)

 

 

(14,045

)

 

 

(17,807

)

  Recoveries on Loans and Leases Previously Charged-Off                    
  Commercial                    
  Commercial and Industrial  

 

118

 

 

 

144

 

 

 

231

 

 

 

374

 

 

 

2,044

 

  Commercial Mortgage  

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

40

 

  Consumer                    
  Residential Mortgage  

 

173

 

 

 

481

 

 

 

414

 

 

 

1,609

 

 

 

795

 

  Home Equity  

 

216

 

 

 

527

 

 

 

727

 

 

 

1,276

 

 

 

2,024

 

  Automobile  

 

943

 

 

 

1,172

 

 

 

1,313

 

 

 

3,034

 

 

 

2,865

 

  Other 1  

 

802

 

 

 

801

 

 

 

1,119

 

 

 

2,459

 

 

 

2,645

 

  Total Recoveries on Loans and Leases Previously Charged-Off  

 

2,252

 

 

 

3,125

 

 

 

3,804

 

 

 

8,752

 

 

 

10,413

 

  Net Recovered (Charged-Off) - Loans and Leases  

 

(1,193

)

 

 

(1,184

)

 

 

1,457

 

 

 

(5,293

)

 

 

(7,394

)

  Net Charged-Off - Accrued Interest Receivable  

 

(70

)

 

 

(124

)

 

 

-

 

 

 

(502

)

   
  Provision for Credit Losses:                    
  Loans and Leases  

 

(11,272

)

 

 

(16,774

)

 

 

28,600

 

 

 

(43,039

)

 

 

102,600

 

  Accrued Interest Receivable  

 

(703

)

 

 

(828

)

 

 

-

 

 

 

(1,531

)

 

 

-

 

  Unfunded Commitments  

 

1,575

 

 

 

1,502

 

 

 

(202

)

 

 

3,770

 

 

 

(1,170

)

  Balance at End of Period 2  

$

174,708

 

 

$

186,371

 

 

$

205,813

 

 

$

174,708

 

 

$

205,813

 

                       
  Components                    
  Allowance for Credit Losses - Loans and Leases  

$

167,920

 

 

 

180,385

 

 

 

203,496

 

 

$

167,920

 

 

 

203,496

 

  Allowance for Credit Losses - Accrued Interest Receivable  

 

667

 

 

 

1,440

 

 

 

-

 

 

 

667

 

 

 

-

 

  Reserve for Unfunded Commitments  

 

6,121

 

 

 

4,546

 

 

 

2,317

 

 

 

6,121

 

 

 

2,317

 

  Total Reserve for Credit Losses  

$

174,708

 

 

$

186,371

 

 

$

205,813

 

 

$

174,708

 

 

$

205,813

 

                       
  Average Loans and Leases Outstanding  

$

11,958,321

 

 

$

12,096,308

 

 

$

11,739,785

 

 

$

12,002,426

 

 

$

11,510,222

 

                       
  Ratio of Net Loans and Leases Charged-Off (Recovered) to                    
  Average Loans and Leases Outstanding (annualized)  

 

0.04

%

 

 

0.04

%

 

 

(0.05

%)

 

 

0.06

%

 

 

0.09

%

  Ratio of Allowance for Credit Losses to Loans and Leases Outstanding 3  

 

1.39

%

 

 

1.50

%

 

 

1.73

%

 

 

1.39

%

 

 

1.73

%

                       

1

Comprised of other revolving credit, installment, and lease financing.

2

Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.

3

The numerator comprises the Allowance for Credit Losses - Loans and Leases.
 
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information   Table 13a
   

Consumer

 

Commercial

 

Treasury

 

Consolidated

(dollars in thousands)  

Banking

 

Banking

 

and Other

 

Total

Three Months Ended September 30, 2021                
Net Interest Income  

$

72,062

 

 

$

50,088

 

 

$

4,669

 

 

$

126,819

 

Provision for Credit Losses  

 

1,235

 

 

 

(42

)

 

 

(11,593

)

 

 

(10,400

)

Net Interest Income After Provision for Credit Losses  

 

70,827

 

 

 

50,130

 

 

 

16,262

 

 

 

137,219

 

Noninterest Income  

 

32,046

 

 

 

7,906

 

 

 

1,426

 

 

 

41,378

 

Noninterest Expense  

 

(71,377

)

 

 

(15,924

)

 

 

(9,218

)

 

 

(96,519

)

Income Before Income Taxes  

 

31,496

 

 

 

42,112

 

 

 

8,470

 

 

 

82,078

 

Provision for Income Taxes  

 

(8,001

)

 

 

(10,373

)

 

 

(1,651

)

 

 

(20,025

)

Net Income  

$

23,495

 

 

$

31,739

 

 

$

6,819

 

 

$

62,053

 

Total Assets as of September 30, 2021  

$

7,530,513

 

 

$

5,087,831

 

 

$

10,347,039

 

 

$

22,965,383

 

                 
Three Months Ended September 30, 2020                
Net Interest Income  

$

73,868

 

 

$

47,797

 

 

$

2,501

 

 

$

124,166

 

Provision for Credit Losses  

 

(1,372

)

 

 

(85

)

 

 

30,057

 

 

 

28,600

 

Net Interest Income (Loss) After Provision for Credit Losses  

 

75,240

 

 

 

47,882

 

 

 

(27,556

)

 

 

95,566

 

Noninterest Income  

 

31,776

 

 

 

7,672

 

 

 

2,286

 

 

 

41,734

 

Noninterest Expense  

 

(69,408

)

 

 

(15,430

)

 

 

(5,111

)

 

 

(89,949

)

Income (Loss) Before Income Taxes  

 

37,608

 

 

 

40,124

 

 

 

(30,381

)

 

 

47,351

 

Provision for Income Taxes