UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D. C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

 

BANK OF HAWAII CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

Item 12.                                                       Results of Operations and Financial Conditions.

 

(a)            Exhibit 99.1

 

Press Release: Bank of Hawaii Corporation Third Quarter 2003 Financial Results

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: October 27, 2003		BANK OF HAWAII CORPORATION
		/s/ Michael E. O’Neill
		Michael E. O’Neill
		Chairman, Chief Executive Officer and President

 

2

EXHIBIT 99.1

 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

 

BANK OF HAWAII CORPORATION

 

 

EXHIBIT TO CURRENT REPORT ON
FORM 8-K DATED October 27, 2003

 

 

Commission File Number 1-6887

 

 

 

Bank of Hawaii Corporation Third Quarter 2003 Financial Results

 

•                  Diluted Earnings Per Share Increases to $0.61

•                  Net Income Increases to $36.7 Million for the Quarter

•                  Board of Directors Increases Quarterly Dividend 58% to $0.30 Per Share

 

FOR IMMEDIATE RELEASE

 

 

HONOLULU, HI (October 27, 2003) — Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.61 for the third quarter of 2003, up 27.1 percent from diluted earnings per share of $0.48 in the second quarter of 2003 and up 41.9 percent from $0.43 in the third quarter last year.  Net income for the quarter was $36.7 million, up 22.2 percent from $30.0 million in the previous quarter and up 21.5 percent from $30.2 million in the same quarter last year.

 

The return on average assets for the third quarter of 2003 was 1.53 percent, up from 1.27 percent in the second quarter of 2003 and up from 1.22 percent in the third quarter of 2002.  The return on average equity was 16.69 percent during the quarter, up 29.1 percent from 12.93 percent in the previous quarter and up 60.5 percent from 10.40 percent in the same quarter last year.

 

“I am pleased by the Company’s third quarter financial results,” said Michael E. O’Neill, Chairman, CEO and President.  “Our credit quality measures continued to improve, our margin increased, total revenue was up and our expenses are coming down.  The Hawaii economy is strengthening and, importantly, our businesses are growing.  This gives us the confidence to increase our quarterly dividend from $0.19 per share to $0.30 per share.” 

 

For nine months ended September 30, 2003, net income was $96.5 million, up $4.2 million or 4.6 percent from net income of $92.3 million for the same period last year.  Diluted earnings per share were $1.56 for the first nine months of 2003, up 23.8 percent from diluted earnings per share of $1.26 for the comparable period last year.  The year-to-date return on average assets was 1.37 percent, up from 1.22 percent for the same nine months in 2002.  The year-to-date return on average equity was 13.95 percent, up from 10.10 percent for the nine-month period ended September 30, 2002.

 

 

1

 

Financial Highlights

 

Net interest income for the third quarter of 2003 on a fully taxable equivalent basis was $91.1 million, up $0.6 million from the second quarter of 2003 and down $1.1 million from net interest income of $92.2 million in the third quarter of 2002.  The decrease in net interest income from the previous year was largely due to reductions in interest rates.  An analysis of the change in net interest income is included in Table 6.

 

The net interest margin was 4.15 percent for the third quarter of 2003, a 3 basis point increase from 4.12 percent in the previous quarter and a 12 basis point increase from 4.03 percent in the same quarter last year.

 

The Company did not recognize a provision for loan and lease losses during the third quarter of 2003 and has not recorded a provision for the last five quarters.  The allowance for loan and lease losses was reduced $5.3 million from June 30, 2003, which equaled the amount of net charge-offs for the third quarter of 2003.

 

Non-interest income was $53.8 million for the quarter, an increase of $3.1 million or 6.0 percent compared to non-interest income of $50.7 million in the second quarter of 2003.  This improvement was primarily due to a prepayment penalty on a commercial real estate loan and higher insurance income.  Non-interest income was up $6.8 million, or 14.4 percent from non-interest income of $47.0 million in the third quarter of 2002.  The improvement from the prior year quarter was largely due to higher levels of service charge and fee income, growth in insurance revenue and increased mortgage banking income.

 

Non-interest expense was $88.9 million in the third quarter of 2003, including $4.4 million in systems replacement costs.  Non-interest expense for the second quarter of 2003 included $10.1 million in systems replacement costs.  Excluding these costs, non-interest expense was $84.5 million in the third quarter of 2003, down $0.8 million compared to the previous quarter as reductions in salary and equipment expenses related to the systems replacement project were partially offset by a contribution to the Bank of Hawaii Charitable Foundation.  Non-interest expense for the third quarter of 2002 included $6.6 million in systems replacement costs.  Excluding these costs, non-interest expense decreased $0.6 million from the same quarter last year.

 

The efficiency ratio was 61.3 percent for the third quarter of 2003.  Excluding systems replacement costs, the efficiency ratio was 58.3 percent, a significant improvement compared to 60.4 percent in the previous quarter and 61.2 percent in the same quarter last year.  For the nine-month period ended September 30, 2003, the efficiency ratio, excluding systems replacement and net restructuring costs was 59.9 percent compared to 61.7 percent in the comparable 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.  Previously reported results have been reclassified to conform to current methodology for allocating interest income among the segments.  Business segment performance details are summarized in Tables 11 and 11a.

 

2

 

Asset Quality

 

Bank of Hawaii Corporation’s credit quality continued to improve during the third quarter of 2003.  Non-performing assets were $40.1 million at the end of the quarter, a decrease of $1.9 million, or 4.5 percent, from non-performing assets of $42.0 million at the end of the previous quarter.  Non-performing assets declined $23.2 million, or 36.7 percent compared to $63.3 million at the end of the third quarter last year.  At September 30, 2003 the ratio of non-performing assets to total loans and foreclosed real estate was 0.72 percent compared with 0.77 percent at June 30, 2003 and 1.20 percent at September 30, 2002.

 

Non-accrual loans were $31.4 million at September 30, 2003, a reduction of $1.3 million, or 4.0 percent, from $32.7 million at June 30, 2003 and down $14.3 million, or 31.3 percent, from $45.7 million at September 30, 2002.  Non-accrual loans as a percentage of total loans were 0.56 percent at September 30, 2003, down from 0.60 percent at the end of the previous quarter and down from 0.87 percent at the end of the comparable quarter last year.

 

Net charge-offs during the third quarter of 2003 were $5.3 million, or 0.38 percent (annualized) of total average loans, up from $2.1 million, or 0.15 percent (annualized) of total average loans in the second quarter of 2003.  The increase in net charge-offs from the previous quarter was largely due to $3.6 million in net charge-offs, primarily consumer loans, remaining from the Pacific Island branches closed last year.  Net charge-offs during the third quarter of 2002 were $4.5 million, or 0.33 percent (annualized) of total average loans.  Net charge-offs for the first nine months of 2003 were $10.2 million, or 0.25 percent (annualized) of total average loans, a decrease from $16.1 million, or 0.39 percent (annualized) of total average loans in the comparable period last year.

 

The allowance for loan and lease losses was $132.7 million at September 30, 2003.  The ratio of the allowance for loan and lease losses to total loans was 2.38 percent at September 30, 2003 down from 2.52 percent at June 30, 2003 and down from 2.94 percent at September 30, 2002.

 

Concentrations of credit exposure to selected components of the portfolio are summarized in Table 7.

 

Other Financial Highlights

 

Total assets were $9.4 billion at September 30, 2003, down slightly from total assets of $9.5 billion at December 31, 2002 and down from total assets of $9.7 billion at September 30, 2002.  Total assets were down $180 million from June 30, 2003.  The decrease from the prior periods was largely due to net loan growth that was offset by reductions in short-term investments as excess liquidity was utilized for share repurchases.

 

Total deposits at September 30, 2003 were $7.1 billion, up $182 million from December 31, 2002 and up $474 million from September 30, 2002 primarily due to continued growth in demand and savings deposits.  Total deposits decreased slightly from June 30, 2003.

 

3

 

During the third quarter of 2003, Bank of Hawaii Corporation repurchased 3.1 million shares of common stock at a total cost of $103.5 million under the share repurchase program.  The average cost per share was $33.85 during the quarter.  From the beginning of the share repurchase program in July 2001 through September 30, 2003, the Company had repurchased a total of 28.2 million shares and returned a total of $790.8 million to the shareholders at an average cost of $28.02 per share.  Through October 24, 2003, the Company repurchased an additional 0.2 million shares of common stock at a cost of $35.62 per share.  Remaining buyback authority, which was increased in September 2003, was $202.7 million at October 24, 2003.

 

The Company’s capital and liquidity remains exceptionally strong.  At September 30, 2003 the Tier 1 leverage ratio was 8.52 percent compared to 9.29 percent at June 30, 2003 and 11.07 percent at September 30, 2002.

 

Dividend Increase

 

The Company’s Board of Directors declared an increased quarterly cash dividend of $0.30 per share on the Company’s outstanding shares.  The dividend will be payable on December 12, 2003 to shareholders of record at the close of business on November 21, 2003.

 

Information Technology Systems Replacement Project

 

Bank of Hawaii Corporation completed the conversion of its core computer hardware and software systems to the Metavante platform on July 7, 2003 and has been successfully operating on Metavante since the conversion.  In connection with this project, the Company incurred transition charges of $35.5 million over the five-quarter conversion period that ended during the third quarter of 2003 and all costs have been incurred as of September 30, 2003.  Costs totaling $4.4 million were recognized during the third quarter of 2003.  The lower cost platform is expected to provide annual cost savings of over $17 million compared to second quarter 2002 technology expense levels.  Additional details on this project may be found in Table 10.

 

Economic Update

 

The Hawaii economy remained strong during the third quarter of 2003.  The construction and real estate investment sectors continued to surge over the summer months, especially in the neighbor island residential markets.  Tourism, as measured by passenger arrivals, also increased during the quarter.  August 2003 was a record month for Hawaii tourism.  Hawaii’s seasonally-adjusted unemployment increased slightly to 4.3 percent in August, while nonagricultural payrolls rose more than 2 percent in August 2003 from the prior year level.  For more economic information, visit the Company’s web site http://www.boh.com/econ/.

 

Earnings Outlook

 

The Company now believes that its earnings for 2003 should exceed the previously published earnings guidance of $131 million.  Based on current conditions, the Company does not expect to record a provision for loan and lease losses in 2003.  However, the actual amount of the provision for loan and lease losses depends on determinations of credit risk that are made near the end of each quarter.  Earnings per share and return on equity projections continue to be dependent upon the terms and timing of share repurchases.

 

4

 

Conference Call Information

 

The Company will review its third quarter 2003 financial results today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern Time).  The presentation will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation’s web site, www.boh.com.  The conference call number is (800) 915-4836 in the United States or (973) 317-5319 for international callers.  No confirmation code is required to access the call.  A replay will be available for one week beginning at 10:00 a.m. Hawaii Time (3:00 p.m. Eastern Time) on Monday, October 27, 2003 by calling (800) 428-6051 in the United States or (973) 709-2089 for international callers and entering the number 273140 when prompted.  A replay of the presentation will also be available via the Investor Relations link of the Company’s web site.

 

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

 

This news release contains forward-looking statements concerning, among other things, the economic environment in our service area, the expected level of loan loss provisioning, anticipated costs and annual savings of our information technology systems replacement project, and anticipated dividends, revenues and expenses during the remainder of 2003.  We believe the assumptions underlying our forward-looking statements are reasonable.  However, any of the assumptions could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons, including, but not limited to: 1) unanticipated changes in business and economic conditions, the competitive environment, fiscal and monetary policies, or legislation in Hawaii and the other markets we serve; 2) changes in our credit quality or risk profile which may increase or decrease the required level of allowance for loan and lease losses; 3) changes in market interest rates that may deteriorate our credit markets and ability to maintain our net interest margin; 4) changes to the amount and timing of our proposed equity repurchases; 5) inability to achieve expected benefits of our information technology systems replacement project and other business process changes due to adverse changes in implementation processes or costs, operational savings, or timing; 6) actions by the United States military and real or threatened 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 any forward-looking statements to reflect later events or circumstances.

 

# # # #

 

5

 

Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited)		Table 1

 

(dollars in thousands except per share amounts)

 

		Three Months Ended September 30,						Nine Months Ended September 30,
Earnings Highlights and Performance Ratios		2003			2002 (1)			2003			2002 (1)
Net Income		$	36,687		$	30,200		$	96,522		$	92,272
Basic Earnings Per Share		0.64			0.44			1.63			1.30
Diluted Earnings Per Share		0.61			0.43			1.56			1.26
Cash Dividends		10,887			12,197			33,819			38,442
Return on Average Assets		1.53		%	1.22		%	1.37		%	1.22		%
Return on Average Equity		16.69		%	10.40		%	13.95		%	10.10		%
Net Interest Margin		4.15		%	4.03		%	4.19		%	3.97		%
Efficiency Ratio		61.34		%	65.90		%	65.06		%	63.68		%
Efficiency Ratio excluding ITSRP and Restructuring Costs		58.34		%	61.18		%	59.88		%	61.68		%

 

			September 30,
Statement of Condition Highlights and Performance Ratios			2003			2002 (1)
Total Assets			$	9,370,755		$	9,702,700
Net Loans			5,437,730			5,104,857
Total Deposits			7,102,116			6,627,673
Total Shareholders’ Equity			823,760			1,100,706
Book Value Per Common Share			$	14.71		$	16.67
Allowance / Loans Outstanding			2.38		%	2.94		%
Average Equity / Average Assets			9.82		%	12.10		%
Employees (FTE)			2,764			2,934
Branches and offices			89			97
Market Price Per Share of Common Stock for the Quarter Ended:
	Closing		$	33.58		$	27.90
	High		$	35.55		$	30.00
	Low		$	32.92		$	22.79

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

6

 

Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)		Table 2

 

		Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands except per share amounts)		2003			2002 (1)			2003			2002 (1)
Interest Income
Interest and Fees on Loans and Leases		$	82,715		$	89,335		$	254,442		$	280,421
Income on Investment Securities — Held to Maturity		6,407			3,963			11,773			13,652
Income on Investment Securities — Available for Sale		16,483			26,175			58,761			80,173
Deposits		1,179			5,384			3,647			16,442
Funds Sold		248			914			1,834			2,669
Other		1,032			1,575			3,237			4,302
Total Interest Income		108,064			127,346			333,694			397,659
Interest Expense
Deposits		10,284			20,547			38,040			66,691
Security Repurchase Agreements		1,947			7,039			6,580			25,588
Funds Purchased		271			299			695			775
Short-Term Borrowings		26			334			75			1,272
Long-Term Debt		4,431			6,946			15,714			23,320
Total Interest Expense		16,959			35,165			61,104			117,646
Net Interest Income		91,105			92,181			272,590			280,013
Provision for Loan and Lease Losses		—			—			—			11,616
Net Interest Income After Provision for Loan and Lease Losses		91,105			92,181			272,590			268,397
Non-Interest Income
Trust and Asset Management		12,511			13,655			38,237			42,648
Mortgage Banking		5,888			3,669			12,232			14,468
Service Charges on Deposit Accounts		8,901			7,925			26,496			24,291
Fees, Exchange, and Other Service Charges		16,034			13,114			42,496			38,631
Investment Securities Gains		639			—			1,809			3
Insurance		3,988			2,677			10,083			7,839
Other		5,830			5,997			17,930			20,100
Total Non-Interest Income		53,791			47,037			149,283			147,980
Non-Interest Expense
Salaries		36,873			37,994			112,564			115,065
Pensions and Other Employee Benefits		8,858			7,377			27,307			26,764
Net Occupancy Expense		9,806			9,597			29,047			28,511
Net Equipment Expense		7,301			10,058			26,257			30,176
Restructuring and Other Related Costs		—			—			—			1,979
Information Technology Systems Replacement Project		4,349			6,576			21,871			6,576
Other		21,690			20,141			57,425			63,465
Total Non-Interest Expense		88,877			91,743			274,471			272,536
Income Before Income Taxes		56,019			47,475			147,402			143,841
Provision for Income Taxes		19,332			17,275			50,880			51,569
Net Income		$	36,687		$	30,200		$	96,522		$	92,272
Basic Earnings Per Share		$	0.64		$	0.44		$	1.63		$	1.30
Diluted Earnings Per Share		$	0.61		$	0.43		$	1.56		$	1.26
Dividends Declared Per Share		$	0.19		$	0.19		$	0.57		$	0.73
Basic Weighted Average Shares		57,195,570			67,893,086			59,337,319			71,148,663
Diluted Weighted Average Shares		59,961,823			69,910,264			61,911,794			73,158,354

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

7

 

Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition (Unaudited)		Table 3

 

(dollars in thousands)		September 30, 2003			December 31, 2002			September 30, 2002 (1)
Assets
Interest-Bearing Deposits		$	208,712		$	549,978		$	1,019,823
Investment Securities — Held to Maturity (Market Value of $749,036, $236,016 and $286,526, respectively)		754,659			229,720			277,856
Investment Securities — Available for Sale		2,027,062			2,287,201			2,241,106
Funds Sold		—			195,000			95,000
Loans Held for Sale		23,144			40,118			30,863
Loans		5,570,405			5,359,004			5,259,332
Allowance for Loan and Lease Losses		(132,675		)	(142,853		)	(154,475		)
Net Loans		5,437,730			5,216,151			5,104,857
Total Earning Assets		8,451,307			8,518,168			8,769,505
Cash and Non-Interest Bearing Deposits		329,705			374,352			331,786
Premises and Equipment		163,277			176,969			182,230
Customers’ Acceptance Liability		1,077			2,680			1,106
Accrued Interest Receivable		33,210			36,722			38,839
Foreclosed Real Estate		8,757			9,434			17,568
Mortgage Servicing Rights		23,266			28,820			29,911
Goodwill		36,216			36,216			36,216
Other Assets		323,940			333,057			295,539
Total Assets		$	9,370,755		$	9,516,418		$	9,702,700
Liabilities
Domestic Deposits
Non-Interest Bearing Demand		$	1,846,030		$	1,719,633		$	1,593,766
Interest Bearing Demand		1,266,530			1,169,128			1,042,937
Savings		2,760,418			2,535,219			2,403,209
Time		1,178,213			1,461,780			1,549,693
Foreign Deposits
Time Due to Banks		20,832			1,130			4,387
Other Savings and Time		30,093			33,271			33,681
Total Deposits		7,102,116			6,920,161			6,627,673
Securities Sold Under Agreements to Repurchase		646,890			735,621			1,089,287
Funds Purchased		90,520			64,467			116,775
Current Maturities of Long-Term Debt		96,757			114,781			122,945
Short-Term Borrowings		14,796			33,420			17,941
Banker’s Acceptances Outstanding		1,077			2,680			1,106
Retirement Benefits Payable		63,281			61,385			38,317
Accrued Interest Payable		7,207			13,731			21,870
Taxes Payable		195,628			196,813			191,519
Other Liabilities		101,179			82,596			87,736
Long-Term Debt		227,544			275,004			286,825
Total Liabilities		8,546,995			8,500,659			8,601,994
Shareholders’ Equity
Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: September 2003 — 81,568,791 / 55,985,364; December 2002 — 81,294,730 / 63,015,442; September 2002 — 81,310,042 / 66,048,072		807			806			806
Capital Surplus		385,694			372,192			371,098
Accumulated Other Comprehensive Income (Loss)		(2,799		)	11,659			26,038
Retained Earnings		1,177,459			1,115,910			1,100,016
Deferred Stock Grants		(7,466		)	(1,424		)	(2,886		)
Treasury Stock, at Cost (Shares: September 2003 — 25,583,427; December 2002 — 18,279,288; September 2002 — 15,261,970)		(729,935		)	(483,384		)	(394,366		)
Total Shareholders’ Equity		823,760			1,015,759			1,100,706
Total Liabilities and Shareholders’ Equity		$	9,370,755		$	9,516,418		$	9,702,700

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

8

 

Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity (Unaudited)		Table 4

 

(dollars in thousands)				Total			Common Stock			Capital Surplus			Accum. Other Compre- hensive Income (Loss)			Retained Earnings			Deferred Stock Grants			Treasury Stock			Compre- hensive Income
Balance at December 31, 2002				$	1,015,759		$	806		$	372,192		$	11,659		$	1,115,910		$	(1,424	)	$	(483,384	)
Comprehensive Income:
Net Income				96,522			—			—			—			96,522			—			—			$	96,522
Other Comprehensive Income, Net of Tax:
Change in Unrealized Gains and Losses on Investment Securities				(14,458		)	—			—			(14,458		)	—			—			—			(14,458		)
Total Comprehensive Income																									$	82,064
Common Stock Issued:
26,311		Retirement Savings Plan		860			—			269			—			—			—			591
775,872		Stock Option Plan		18,227			—			2,930			—			(1,154		)	(817		)	17,268
67,510		Dividend Reinvestment Plan		2,205			—			696			—			—			—			1,509
7,174		Directors’ Restricted Shares and Deferred Compensation Plan		54			1			237			—			—			—			(184		)
266,400		Employees’ Restricted Shares		4,145			—			9,370			—			—			(5,225		)	—
Treasury Stock Purchased (8,166,579 shares)				(265,735		)	—			—			—			—			—			(265,735		)
Cash Dividends Paid				(33,819		)	—			—			—			(33,819		)	—			—
Balance at September 30, 2003				$	823,760		$	807		$	385,694		$	(2,799	)	$	1,177,459		$	(7,466	)	$	(729,935	)
Balance at December 31, 2001				$	1,247,012		$	806		$	367,672		$	22,761		$	1,055,424		$	(7,637	)	$	(192,014	)
Comprehensive Income:
Net Income				92,272			—			—			—			92,272			—			—			$	92,272
Other Comprehensive Income, Net of Tax:
Change in Unrealized Gains and Losses on Investment Securities				3,859			—			—			3,859			—			—			—			3,859
Foreign Currency Translation Adjustment				(582		)	—			—			(582		)	—			—			—			(582		)
Total Comprehensive Income																									$	95,549
Common Stock Issued:
33,402		Retirement Savings Plan		933			—			196			—			—			—			737
1,369,679		Stock Option Plan		27,895			—			4,022			—			(9,236		)	(233		)	33,342
77,270		Dividend Reinvestment Plan		2,152			—			439			—			(2		)	—			1,715
4,101		Directors’ Restricted Shares and Deferred Compensation Plan		44			—			117			—			—			—			(73		)
(71,300	)	Employees’ Restricted Shares		3,636			—			(1,348		)	—			—			4,984			—
Treasury Stock Purchased (8,581,000 shares)				(238,073		)	—			—			—			—			—			(238,073		)
Cash Dividends Paid				(38,442		)	—			—			—			(38,442		)	—			—
Balance at September 30, 2002				$	1,100,706		$	806		$	371,098		$	26,038		$	1,100,016		$	(2,886	)	$	(394,366	)

 

9

 

Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited)		Table 5

 

		Three Months Ended September 30, 2003								Three Months Ended June 30, 2003								Three Months Ended (1) September 30, 2002								Nine Months Ended September 30, 2003
(dollars in millions)		Average Balance			Income/ Expense			Yield/ Rate		Average Balance			Income/ Expense			Yield/ Rate		Average Balance			Income/ Expense			Yield/ Rate		Average Balance			Income/ Expense			Yield/ Rate
Earning Assets
Interest Bearing Deposits		$	224.7		$	1.2		2.08	%	$	212.4		$	1.2		2.19	%	$	1,142.3		$	5.4		1.87	%	$	230.2		$	3.7		2.12	%
Funds Sold		102.4			0.3			0.97		267.3			0.9			1.23		210.2			0.9			1.74		206.2			1.8			1.19
Investment Securities
Held to Maturity		675.1			6.4			3.82		324.8			3.1			3.85		296.9			4.1			5.45		402.4			11.9			3.94
Available for Sale		2,090.6			16.5			3.15		2,316.9			19.8			3.42		2,009.5			26.2			5.21		2,224.5			58.8			3.52
Loans Held for Sale		52.2			0.7			5.45		81.6			1.1			5.43		40.0			0.6			6.24		48.1			1.9			5.40
Loans and Lease Financing
Commercial and Industrial		862.8			10.8			4.95		834.6			10.0			4.81		978.0			12.8			5.19		861.2			31.3			4.86
Construction		87.8			0.9			4.26		83.0			0.9			4.50		147.7			2.1			5.57		95.3			3.3			4.65
Commercial Mortgage		670.6			9.4			5.56		682.5			10.1			5.93		571.5			9.8			6.84		650.6			28.6			5.87
Residential Mortgage		2,298.8			36.2			6.30		2,295.1			37.3			6.50		2,333.9			40.5			6.94		2,281.1			111.2			6.50
Installment		558.6			12.8			9.09		535.6			13.6			10.18		406.8			11.3			11.01		532.2			39.2			9.85
Home Equity		448.1			5.6			4.99		442.7			5.6			5.06		411.3			5.9			5.70		441.8			16.9			5.11
Purchased Home Equity		132.6			0.7			2.20		162.3			2.0			4.96		—			—			—		158.2			5.3			4.51
Lease Financing		487.2			5.6			4.52		482.6			5.3			4.42		500.8			6.3			4.98		488.5			16.7			4.58
Total Loans and Lease Financing		5,546.5			82.0			5.89		5,518.4			84.8			6.16		5,350.0			88.7			6.60		5,508.9			252.5			6.12
Other		76.1			1.0			5.38		75.3			1.0			5.41		99.6			1.5			6.28		75.3			3.2			5.75
Total Earning Assets		8,767.6			108.1			4.91		8,796.7			111.9			5.09		9,148.5			127.4			5.55		8,695.6			333.8			5.12
Cash and Non-interest Bearing Deposits		333.2								325.6								300.2								330.1
Other Assets		399.2								385.9								355.7								392.3
Total Assets		$	9,500.0							$	9,508.2							$	9,804.4							$	9,418.0
Interest Bearing Liabilities
Interest Bearing Deposits
Domestic Deposits
Demand		$	1,242.7		$	0.5		0.15	%	$	1,164.8		$	0.7		0.25	%	$	1,021.5		$	0.9		0.37	%	$	1,185.9		$	1.9		0.22	%
Savings		2,754.6			3.4			0.49		2,744.1			4.5			0.65		2,360.7			8.1			1.35		2,702.8			12.5			0.62
Time		1,249.9			6.3			2.01		1,401.4			8.1			2.31		1,600.0			11.4			2.82		1,364.2			23.4			2.30
Total Domestic Deposits		5,247.2			10.2			0.77		5,310.3			13.3			1.00		4,982.2			20.4			1.62		5,252.9			37.8			0.96
Foreign Deposits
Time Due to Banks		5.3			—			—		—			—			—		9.6			—			—		2.1			—			—
Other Time and Savings		33.6			0.1			0.63		30.3			0.1			0.91		38.3			0.2			1.68		31.5			0.2			0.91
Total Foreign Deposits		38.9			0.1			0.78		30.3			0.1			0.91		47.9			0.2			1.59		33.6			0.2			0.92
Total Interest Bearing Deposits		5,286.1			10.3			0.77		5,340.6			13.4			1.00		5,030.1			20.6			1.62		5,286.5			38.0			0.96
Short-Term Borrowings		827.8			2.3			1.08		810.2			2.6			1.30		1,301.3			7.7			2.34		763.3			7.4			1.29
Long-Term Debt		325.7			4.4			5.40		371.5			5.4			5.85		451.6			6.9			6.10		362.3			15.7			5.80
Total Interest Bearing Liabilities		6,439.6			17.0			1.04		6,522.3			21.4			1.31		6,783.0			35.2			2.06		6,412.1			61.1			1.27
Net Interest Income					$	91.1							$	90.5							$	92.2							$	272.7
Interest Rate Spread								3.87	%							3.78	%							3.49	%							3.85	%
Net Interest Margin								4.15	%							4.12	%							4.03	%							4.19	%
Non-Interest Bearing Demand Deposits (Domestic)		1,844.4								1,695.3								1,547.5								1,726.2
Other Liabilities		344.1								358.7								321.6								354.4
Shareholders’ Equity		871.9								931.9								1,152.3								925.3
Total Liabilities and Shareholders’ Equity		$	9,500.0							$	9,508.2							$	9,804.4							$	9,418.0

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

10

 

Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Tax Equivalent Basis (Unaudited)		Table 6

 

		Three Months Ended September 30, 2003 Compared to June 30, 2003
(dollars in millions)		Volume (1)			Rate (1)			Time (1)			Total
Change in Interest Income:
Interest Bearing Deposits		$	0.1		$	(0.1	)	$	—		$	—
Funds Sold		(0.4		)	(0.2		)	—			(0.6		)
Investment Securities
Held to Maturity		3.4			(0.1		)	—			3.3
Available for Sale		(1.8		)	(1.8		)	0.3			(3.3		)
Loans Held for Sale		(0.4		)	—			—			(0.4		)
Loans and Lease Financing
Commercial and Industrial		0.4			0.3			0.1			0.8
Construction		0.1			(0.1		)	—			—
Commercial Mortgage		(0.2		)	(0.6		)	0.1			(0.7		)
Residential Mortgage		0.1			(1.2		)	—			(1.1		)
Installment		0.5			(1.4		)	0.1			(0.8		)
Home Equity		—			(0.1		)	0.1			—
Purchased Home Equity		(0.2		)	(1.1		)	—			(1.3		)
Lease Financing		0.1			0.1			0.1			0.3
Total Loans and Lease Financing		0.8			(4.1		)	0.5			(2.8		)
Total Change in Interest Income		1.7			(6.3		)	0.8			(3.8		)
Change in Interest Expense:
Interest Bearing Deposits (Domestic)
Demand		0.1			(0.3		)	—			(0.2		)
Savings		—			(1.1		)	—			(1.1		)
Time		(0.8		)	(1.1		)	0.1			(1.8		)
Total Interest Bearing Deposits		(0.7		)	(2.5		)	0.1			(3.1		)
Short-Term Borrowings		0.1			(0.5		)	0.1			(0.3		)
Long-Term Debt		(0.7		)	(0.4		)	0.1			(1.0		)
Total Change in Interest Expense		(1.3		)	(3.4		)	0.3			(4.4		)
Change in Net Interest Income		$	3.0		$	(2.9	)	$	0.5		$	0.6

 

(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.

 

11

 

Bank of Hawaii Corporation and Subsidiaries
Loan Portfolio Balances (Unaudited)		Table 7

 

(dollars in millions)		September 30, 2003			June 30, 2003			December 31, 2002			September 30, 2002 (1)
Domestic
Commercial
Commercial and Industrial		$	843.9		$	808.5		$	875.0		$	863.3
Commercial Mortgage		629.2			689.7			591.1			616.5
Construction		92.3			83.6			127.5			146.3
Lease Financing		426.9			416.9			427.3			433.6
Total Commercial		1,992.3			1,998.7			2,020.9			2,059.7
Consumer
Residential Mortgage		2,329.4			2,222.0			2,131.4			2,259.8
Home Equity		446.0			450.3			428.2			419.2
Purchased Home Equity		109.8			145.6			185.8			—
Other Consumer		582.9			554.8			493.3			421.6
Lease Financing		35.3			34.0			34.5			36.5
Total Consumer		3,503.4			3,406.7			3,273.2			3,137.1
Total Domestic		5,495.7			5,405.4			5,294.1			5,196.8
Foreign		74.7			66.5			64.9			62.5
Total Loans		$	5,570.4		$	5,471.9		$	5,359.0		$	5,259.3

 

Selected Concentrations of Credit Exposure (Unaudited)

 

		September 30, 2003									Dec. 31, 2002			Sept. 30, 2002 (1)
(dollars in millions)		Outstanding			Unused Commitments			Total Exposure			Total Exposure			Total Exposure
Air Transportation
Regional Passenger Carriers		$	45.1		$	12.5		$	57.6		$	57.3		$	57.2
United States Based Passenger Carriers		39.9			—			39.9			39.6			48.3
International Based Passenger Carriers		31.7			—			31.7			32.1			32.2
Cargo Carriers		14.4			—			14.4			15.0			15.0
Total Air Transportation		$	131.1		$	12.5		$	143.6		$	144.0		$	152.7
Guam
Hotel		$	17.8		$	—		$	17.8		$	44.4		$	104.7
Other Commercial		147.2			35.9			183.1			166.0			134.6
Consumer		271.0			6.5			277.5			257.4			250.6
Total Guam		$	436.0		$	42.4		$	478.4		$	467.8		$	489.9
Syndicated Exposure		$	249.1		$	624.4		$	873.5		$	1,002.1		$	1,075.8

 

Exposure includes loans, leveraged leases and operating leases.

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

12

 

Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past Due 90 Days or More (Unaudited)		Table 8

 

(dollars in millions)		September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002			September 30, 2002 (1)
Non-Performing Assets
Non-Accrual Loans
Commercial
Commercial and Industrial		$	7.8		$	8.8		$	2.4		$	5.9		$	6.4
Commercial Mortgage		11.0			11.2			17.9			20.3			18.1
Construction		—			—			—			0.5			0.9
Lease Financing		2.4			2.5			3.2			4.1			5.7
Total Commercial		21.2			22.5			23.5			30.8			31.1
Consumer
Residential Mortgage		9.7			10.2			11.5			13.9			14.3
Home Equity		0.5			—			0.1			0.3			0.2
Other Consumer		—			—			—			—			0.1
Total Consumer		10.2			10.2			11.6			14.2			14.6
Total Non-Accrual Loans		31.4			32.7			35.1			45.0			45.7
Foreclosed Real Estate		8.7			9.3			9.1			9.4			17.6
Total Non-Performing Assets		$	40.1		$	42.0		$	44.2		$	54.4		$	63.3
Accruing Loans Past Due 90 Days or More
Commercial
Commercial and Industrial		$	0.7		$	0.5		$	—		$	0.2		$	—
Commercial Mortgage		—			—			0.4			0.3			—
Total Commercial		0.7			0.5			0.4			0.5			—
Consumer
Residential Mortgage		2.0			1.8			1.6			0.6			1.4
Home Equity		—			0.1			—			—			—
Purchased Home Equity		0.1			0.1			—			—			—
Other Consumer		1.1			0.4			2.3			0.7			0.3
Total Consumer		3.2			2.4			3.9			1.3			1.7
Total Accruing and Past Due		$	3.9		$	2.9		$	4.3		$	1.8		$	1.7
Total Loans		$	5,570.4		$	5,471.9		$	5,565.4		$	5,359.0		$	5,259.3
Ratio of Non-Accrual Loans to Total Loans		0.56		%	0.60		%	0.63		%	0.84		%	0.87		%
Ratio of Non-Performing Assets to Total Loans and Foreclosed Real Estate		0.72		%	0.77		%	0.79		%	1.01		%	1.20		%
Ratio of Non-Performing Assets and Accruing Loans Past Due 90 Days or More to Total Loans		0.79		%	0.82		%	0.87		%	1.05		%	1.24		%
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter		$	42.0		$	44.2		$	54.4		$	63.3		$	78.8
Additions		3.2			11.6			4.8			12.0			7.0
Reductions
Payments and Sales of Loans		(1.8		)	(4.3		)	(5.6		)	(6.9		)	(8.5		)
Return to Accrual		(1.5		)	(7.5		)	(5.6		)	(1.9		)	(9.1		)
Sales of Foreclosed Assets		(1.0		)	(0.7		)	(1.1		)	(9.4		)	(1.4		)
Charge-offs		(0.8		)	(1.3		)	(2.7		)	(2.7		)	(3.5		)
Total Reductions		(5.1		)	(13.8		)	(15.0		)	(20.9		)	(22.5		)
Balance at End of Quarter		$	40.1		$	42.0		$	44.2		$	54.4		$	63.3

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

13

 

Bank of Hawaii Corporation and Subsidiaries
Consolidated Allowance for Loan and Lease Losses (Unaudited)		Table 9

 

(dollars in millions)		Three Months Ended									Nine Months Ended September 30,
		September 30, 2003			June 30, 2003			September 30, 2002 (1)
											2003			2002 (1)
Balance at Beginning of Period		$	138.0		$	140.0		$	159.0		$	142.9		$	159.0
Loans Charged-Off
Commercial
Commercial and Industrial		(1.1		)	(0.6		)	(0.9		)	(3.3		)	(11.0		)
Commercial Mortgage		(0.2		)	(0.4		)	(2.5		)	(0.6		)	(2.9		)
Construction		—			—			—			(0.5		)	(0.5		)
Lease Financing		—			(0.3		)	(0.1		)	(0.3		)	(0.3		)
Consumer
Residential Mortgage		(0.2		)	(0.7		)	(0.6		)	(1.5		)	(3.0		)
Home Equity		—			—			—			(0.1		)	(0.2		)
Other Consumer		(6.8		)	(3.6		)	(3.0		)	(13.5		)	(9.7		)
Lease Financing		—			—			(0.1		)	(0.2		)	(0.2		)
Total Charge-Offs		(8.3		)	(5.7		)	(7.2		)	(20.0		)	(27.8		)
Recoveries on Loans Previously Charged-Off
Commercial
Commercial and Industrial		0.6			1.8			0.7			3.0			3.4
Commercial Mortgage		—			0.1			—			0.1			2.0
Construction		—			0.1			—			1.0			—
Consumer
Residential Mortgage		0.5			0.3			0.1			0.9			0.8
Home Equity		—			—			—			0.1			0.1
Other Consumer		1.5			1.3			1.5			4.2			4.8
Lease Financing		—			—			—			—			—
Foreign		0.4			—			0.4			0.5			0.7
Total Recoveries		3.0			3.6			2.7			9.8			11.7
Net Loan Charge-Offs		(5.3		)	(2.1		)	(4.5		)	(10.2		)	(16.1		)
Provision for Loan and Lease Losses		—			—			—			—			11.6
Balance at End of Period		$	132.7		$	138.0		$	154.5		$	132.7		$	154.5
Average Loans Outstanding		$	5,546.5		$	5,518.4		$	5,350.0		$	5,508.9		$	5,479.1
Ratio of Net Charge-Offs to Average Loans Outstanding (annualized)		0.38		%	0.15		%	0.33		%	0.25		%	0.39		%
Ratio of Allowance to Loans Outstanding		2.38		%	2.52		%	2.94		%	2.38		%	2.94		%

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

Totals may not add due to rounding.

 

14

 

Bank of Hawaii Corporation and Subsidiaries
Information Technology Systems Replacement Project (Unaudited)		Table 10

 

(dollars in millions)		Professional Fees			Employee Termination Benefits			Accelerated Depreciation			Other Associated Costs (1)			Total
Costs Incurred:
Three Months Ended:
September 30, 2002		$	1.9		$	1.0		$	3.2		$	0.5		$	6.6
December 31, 2002		3.2			0.2			2.2			1.4			7.0
Year Ended December 31, 2002		5.1			1.2			5.4			1.9			13.6
Three Months Ended:
March 31, 2003		3.5			0.4			2.0			1.5			7.4
June 30, 2003		2.9			2.6			1.8			2.8			10.1
September 30, 2003		1.4			0.7			0.1			2.2			4.4
Nine Months Ended September 30, 2003		7.8			3.7			3.9			6.5			21.9
Total Costs Incurred		$	12.9		$	4.9		$	9.3		$	8.4		$	35.5
Total Expected Project Costs		$	12.9		$	4.9		$	9.3		$	8.4		$	35.5

 

(1)  Includes contract termination, equipment, excise tax and other costs.

 

15

 

Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information (Unaudited)		Table 11

 

(dollars in thousands)		Retail Banking			Commercial Banking			Investment Services Group			Treasury and Other Corporate			Consolidated Total
Three Months Ended September 30, 2003
Net Interest Income		$	51,317		$	33,958		$	3,001		$	2,829		$	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		48,866			30,409			3,006			8,824			91,105
Non-Interest Income		23,044			12,148			15,288			3,311			53,791
		71,910			42,557			18,294			12,135			144,896
Information Technology Systems Replacement Project		(36		)	—			—			(4,313		)	(4,349		)
Non-Interest Expense		(44,240		)	(22,313		)	(15,763		)	(2,212		)	(84,528		)
Income Before Income Taxes		27,634			20,244			2,531			5,610			56,019
Provision for Income Taxes		(10,224		)	(7,357		)	(937		)	(814		)	(19,332		)
Allocated Net Income		17,410			12,887			1,594			4,796			36,687
Allowance Funding Value		(152		)	(940		)	(7		)	1,099			—
GAAP Provision		2,451			3,549			(5		)	(5,995		)	—
Economic Provision		(3,014		)	(3,139		)	(106		)	(12		)	(6,271		)
Tax Effect of Adjustments		265			196			44			1,815			2,320
Income Before Capital Charge		16,960			12,553			1,520			1,703			32,736
Capital Charge		(5,614		)	(5,586		)	(1,493		)	(11,270		)	(23,963		)
Net Income (Loss) After Capital Charge (NIACC)		$	11,346		$	6,967		$	27		$	(9,567	)	$	8,773
RAROC (ROE for the Company)		33		%	25		%	11		%	1		%	17		%
Total Assets at September 30, 2003		$	3,507,960		$	2,226,160		$	140,735		$	3,495,900		$	9,370,755
Three Months Ended September 30, 2002 (1)
Net Interest Income		$	49,432		$	35,738		$	3,219		$	3,792		$	92,181
Provision for Loan and Lease Losses		(722		)	(4,456		)	(76		)	5,254			—
Net Interest Income After Provision for Loan and Lease Losses		48,710			31,282			3,143			9,046			92,181
Non-Interest Income		19,897			8,295			16,640			2,205			47,037
		68,607			39,577			19,783			11,251			139,218
Information Technology Systems Replacement Project		(587		)	—			—			(5,989		)	(6,576		)
Non-Interest Expense		(42,628		)	(24,260		)	(15,711		)	(2,568		)	(85,167		)
Income Before Income Taxes		25,392			15,317			4,072			2,694			47,475
Provision for Income Taxes		(9,395		)	(5,587		)	(1,507		)	(786		)	(17,275		)
Allocated Net Income		15,997			9,730			2,565			1,908			30,200
Allowance Funding Value		(201		)	(1,507		)	(8		)	1,716			—
GAAP Provision		722			4,456			76			(5,254		)	—
Economic Provision		(3,128		)	(3,340		)	(121		)	(7		)	(6,596		)
Tax Effect of Adjustments		965			144			20			1,312			2,441
Income (Loss) Before Capital Charge		14,355			9,483			2,532			(325		)	26,045
Capital Charge		(5,216		)	(5,814		)	(1,475		)	(19,176		)	(31,681		)
Net Income (Loss) After Capital Charge (NIACC)		$	9,139		$	3,669		$	1,057		$	(19,501	)	$	(5,636	)
RAROC (ROE for the Company)		30		%	18		%	19		%	0		%	10		%
Total Assets at September 30, 2002		$	3,135,752		$	2,325,782		$	118,625		$	4,122,541		$	9,702,700

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

16

 

Table 11a

 

(dollars in thousands)		Retail Banking			Commercial Banking			Investment Services Group			Treasury and Other Corporate			Consolidated Total
Nine Months Ended September 30, 2003
Net Interest Income		$	156,518		$	102,981		$	9,664		$	3,427		$	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		151,898			96,260			9,669			14,763			272,590
Non-Interest Income		64,328			28,507			46,396			10,052			149,283
		216,226			124,767			56,065			24,815			421,873
Information Technology Systems Replacement Project		(986		)	(23		)	(333		)	(20,529		)	(21,871		)
Non-Interest Expense		(127,035		)	(68,237		)	(47,604		)	(9,724		)	(252,600		)
Income (Loss) Before Income Taxes		88,205			56,507			8,128			(5,438		)	147,402
Provision for Income Taxes		(32,636		)	(20,560		)	(3,007		)	5,323			(50,880		)
Allocated Net Income (Loss)		55,569			35,947			5,121			(115		)	96,522
Allowance Funding Value		(465		)	(3,181		)	(23		)	3,669			—
GAAP Provision		4,620			6,721			(5		)	(11,336		)	—
Economic Provision		(8,623		)	(9,225		)	(350		)	(22		)	(18,220		)
Tax Effect of Adjustments		1,653			2,103			140			2,845			6,741
Income (Loss) Before Capital Charge		52,754			32,365			4,883			(4,959		)	85,043
Capital Charge		(16,500		)	(16,314		)	(4,523		)	(39,008		)	(76,345		)
Net Income (Loss) After Capital Charge (NIACC)		$	36,254		$	16,051		$	360		$	(43,967	)	$	8,698
RAROC (ROE for the Company)		35		%	22		%	12		%	(1		)%	14		%
Total Assets at September 30, 2003		$	3,507,960		$	2,226,160		$	140,735		$	3,495,900		$	9,370,755
Nine Months Ended September 30, 2002 (1)
Net Interest Income		$	153,306		$	108,380		$	9,640		$	8,687		$	280,013
Provision for Loan and Lease Losses		(3,213		)	(14,061		)	(76		)	5,734			(11,616		)
Net Interest Income After Provision for Loan and Lease Losses		150,093			94,319			9,564			14,421			268,397
Non-Interest Income		62,384			25,681			51,840			8,075			147,980
		212,477			120,000			61,404			22,496			416,377
Restructuring and Other Related Costs		—			—			—			(1,979		)	(1,979		)
Information Technology Systems Replacement Project		(587		)	—			—			(5,989		)	(6,576		)
Non-Interest Expense		(133,454		)	(73,604		)	(49,830		)	(7,093		)	(263,981		)
Income Before Income Taxes		78,436			46,396			11,574			7,435			143,841
Provision for Income Taxes		(29,021		)	(16,927		)	(4,283		)	(1,338		)	(51,569		)
Allocated Net Income		49,415			29,469			7,291			6,097			92,272
Allowance Funding Value		(672		)	(4,656		)	(19		)	5,347			—
GAAP Provision		3,213			14,061			76			(5,734		)	11,616
Economic Provision		(8,536		)	(11,247		)	(372		)	(9		)	(20,164		)
Tax Effect of Adjustments		2,218			682			117			146			3,163
Income Before Capital Charge		45,638			28,309			7,093			5,847			86,887
Capital Charge		(15,787		)	(18,423		)	(4,596		)	(62,026		)	(100,832		)
Net Income (Loss) After Capital Charge (NIACC)		$	29,851		$	9,886		$	2,497		$	(56,179	)	$	(13,945	)
RAROC (ROE for the Company)		32		%	17		%	17		%	13		%	10		%
Total Assets at September 30, 2002		$	3,135,752		$	2,325,782		$	118,625		$	4,122,541		$	9,702,700

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

17

 

Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data (Unaudited)		Table 12

 

		Three Months Ended (1)
(dollars in thousands except per share amounts)		Sept. 30, 2003				June 30, 2003			March 31, 2003			Dec. 31, 2002			Sept. 30, 2002			June 30, 2002			March 31, 2002
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases		$		82,715		$	85,954		$	85,773		$	85,945		$	89,335		$	92,441		$	98,645
Income on Investment Securities — Held to Maturity		6,407				3,083			2,283			3,122			3,963			4,544			5,145
Income on Investment Securities — Available for Sale		16,483				19,815			22,463			24,088			26,175			26,805			27,193
Deposits		1,179				1,161			1,307			3,578			5,384			6,011			5,047
Funds Sold		248				822			764			834			914			752			1,003
Other		1,032				1,016			1,189			1,312			1,575			1,395			1,332
Total Interest Income		108,064				111,851			113,779			118,879			127,346			131,948			138,365
Interest Expense
Deposits		10,284				13,309			14,447			17,657			20,547			22,166			23,978
Security Repurchase Agreements		1,947				2,391			2,242			4,585			7,039			8,256			10,293
Funds Purchased		271				219			205			255			299			245			231
Short-Term Borrowings		26				25			24			217			334			289			649
Long-Term Debt		4,431				5,422			5,861			5,947			6,946			8,055			8,319
Total Interest Expense		16,959				21,366			22,779			28,661			35,165			39,011			43,470
Net Interest Income		91,105				90,485			91,000			90,218			92,181			92,937			94,895
Provision for Loan and Lease Losses		—				—			—			—			—			3,324			8,292
Net Interest Income After Provision for Loan and Lease Losses		91,105				90,485			91,000			90,218			92,181			89,613			86,603
Non-Interest Income
Trust and Asset Management		12,511				12,545			13,181			13,085			13,655			14,175			14,818
Mortgage Banking		5,888				6,061			283			4,398			3,669			2,842			7,957
Service Charges on Deposit Accounts		8,901				8,645			8,950			8,326			7,925			7,956			8,410
Fees, Exchange, and Other Service Charges		16,034				13,473			12,989			12,963			13,114			13,065			12,452
Investment Securities Gains		639				587			583			612			—			3			—
Insurance		3,988				3,015			3,080			3,099			2,677			2,563			2,599
Other		5,830				6,413			5,687			7,872			5,997			7,314			6,789
Total Non-Interest Income		53,791				50,739			44,753			50,355			47,037			47,918			53,025
Non-Interest Expense
Salaries		36,873				39,232			36,459			38,462			37,994			37,884			39,187
Pensions and Other Employee Benefits		8,858				8,479			9,970			6,272			7,377			9,391			9,996
Net Occupancy Expense		9,806				9,628			9,613			10,638			9,597			9,321			9,593
Net Equipment Expense		7,301				9,208			9,748			11,077			10,058			9,997			10,121
Restructuring and Other Related Costs		—				—			—			385			—			—			1,979
Information Technology Systems Replacement Project		4,349				10,105			7,417			7,052			6,576			—			—
Other		21,690				18,742			16,993			22,827			20,141			22,777			20,547
Total Non-Interest Expense		88,877				95,394			90,200			96,713			91,743			89,370			91,423
Income Before Income Taxes		56,019				45,830			45,553			43,860			47,475			48,161			48,205
Provision for Income Taxes		19,332				15,796			15,752			14,952			17,275			17,145			17,149
Net Income		$	36,687			$	30,034		$	29,801		$	28,908		$	30,200		$	31,016		$	31,056
Basic Earnings Per Share		$	0.64			$	0.50		$	0.49		$	0.45		$	0.44		$	0.43		$	0.42
Diluted Earnings Per Share		$	0.61			$	0.48		$	0.47		$	0.44		$	0.43		$	0.42		$	0.41
Balance Sheet Totals
Total Assets		9,370,755				9,550,934			9,410,210			9,516,418			9,702,700			9,824,065			10,245,021
Net Loans		5,437,730				5,333,896			5,425,343			5,216,151			5,104,857			5,250,216			5,442,601
Total Deposits		7,102,116				7,140,849			6,987,331			6,920,161			6,627,673			6,455,981			6,543,781
Total Shareholders’ Equity		823,760				913,010			952,007			1,015,759			1,100,706			1,191,072			1,265,907
Performance Ratios
Return on Average Assets		1.53			%	1.27		%	1.31		%	1.20		%	1.22		%	1.23		%	1.21		%
Return on Average Equity		16.69			%	12.93		%	12.42		%	10.72		%	10.40		%	9.94		%	9.97		%
Efficiency Ratio		61.34			%	67.55		%	66.44		%	68.80		%	65.90		%	63.45		%	61.81		%
Efficiency Ratio excluding ITSRP and Restructuring Costs		58.34			%	60.39		%	60.98		%	63.51		%	61.18		%	63.45		%	60.47		%

 

(1)  Certain 2002 information has been reclassified to conform to 2003 presentation.

 

18