UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C.  20549

 

FORM 11-K

 

(Mark One)

 

ý

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the fiscal year ended December 31, 2003

 

 

 

OR

 

 

o

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from                              to                              

 

Commission file number                                1-6887

 

A.                                   Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

Bank of Hawaii Retirement Savings Plan

 

B.                                     Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

Bank of Hawaii Corporation

130 Merchant Street

Honolulu, Hawaii 96813

 

REQUIRED INFORMATION

 

Listed below are the financial statements and exhibits filed as part of the annual report.

 

A.                                   Financial Statements

 

1.               Report of Independent Registered Public Accounting Firm

2.               Statements of Net Assets Available for Benefits as of December 31, 2003 and 2002

3.               Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2003 and 2002

4.               Notes to Financial Statements

5.               Schedule of Assets Held for Investment Purposes as of December 31, 2003

 

B.                                     Exhibits

 

Consent of Independent Registered Public Accounting Firm

 

 



 

SIGNATURES

 

The Plan.                                            Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

Bank of Hawaii Retirement Savings Plan

 

 

(Name of Plan)

 

 

 

 

 

 

 

Date :

 June 28, 2004

 

 

/s/ Michael E. O’Neill

 

 

 

Michael E. O’Neill

 

 

Chairman and Chief Executive Officer
of Bank of Hawaii Corporation

 

 

 

 

 

 

 

 

/s/ Allan R. Landon

 

 

 

Allan R. Landon

 

 

President and Chief Operating Officer
of Bank of Hawaii Corporation
and member of the Bank of Hawaii Benefit Plans Committee

 

 

 

 

 

 

 

 

/s/ Brian T. Stewart

 

 

 

Brian T. Stewart

 

 

Executive Vice President and Controller
of Bank of Hawaii Corporation

 



 

AUDITED FINANCIAL STATEMENTS

AND SUPPLEMENTAL SCHEDULE

 

Bank of Hawaii Retirement Savings Plan

Years Ended December 31, 2003 and 2002

with Report of Independent Registered Public Accounting Firm

 



 

Bank of Hawaii Retirement Savings Plan

 

Audited Financial Statements

and Supplemental Schedule

 

Years Ended December 31, 2003 and 2002

 

Contents

 

Report of Independent Registered Public Accounting Firm

 

 

 

Audited Financial Statements

 

 

 

Statements of Net Assets Available for Benefits

 

Statements of Changes in Net Assets Available for Benefits

 

Notes to Financial Statements

 

 

 

Supplemental Schedule

 

 

 

Schedule H, Line 4i - Schedule of Assets (Held at End of Year)

 

 



 

Report of Independent Registered Public Accounting Firm

 

The Board of Directors and

The Benefit Plans Committee of

Bank of Hawaii Corporation

Bank of Hawaii Retirement Savings Plan

 

We have audited the accompanying statements of net assets available for benefits of the Bank of Hawaii Retirement Savings Plan as of December 31, 2003 and 2002, and the related statements of changes in net assets available for benefits for the years then ended.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by the Plan’s management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2003 and 2002, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.

 

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole.  The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2003, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This supplemental schedule is the responsibility of the Plan’s management.  The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

 

 

 

/S/  ERNST & YOUNG LLP

 

 

 

Honolulu, Hawaii

June 24, 2004

 



 

Bank of Hawaii Retirement Savings Plan

 

Statements of Net Assets Available for Benefits

 

 

 

December 31,

 

 

 

2003

 

2002

 

 

 

(dollars in thousands)

 

Assets

 

 

 

 

 

Investments, at Fair Value

 

$

290,987

 

$

229,497

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

Employer Contribution

 

7,060

 

4,568

 

Participant Contribution

 

290

 

330

 

Total Receivables

 

7,350

 

4,898

 

Net Assets Available for Benefits

 

$

298,337

 

$

234,395

 

 

See accompanying notes to Financial Statements.

 

2



 

Bank of Hawaii Retirement Savings Plan

 

Statements of Changes in Net Assets Available for Benefits

 

 

 

Year ended December 31,

 

 

 

2003

 

2002

 

 

 

(dollars in thousands)

 

Additions

 

 

 

 

 

Investment Income – Interest and Dividends

 

$

6,208

 

$

6,180

 

Net Appreciation (Depreciation) in Fair Value of Investments

 

54,919

 

(18,476

)

 

 

 

 

 

 

Contributions:

 

 

 

 

 

Participants

 

9,388

 

9,094

 

Employer

 

9,808

 

7,079

 

Other

 

168

 

208

 

Total Contributions

 

19,364

 

16,381

 

 

 

 

 

 

 

Transfer from Bank of Hawaii Money Purchase Plan

 

 

25,194

 

Transfer from California United Bank 401(k) Plan

 

3,185

 

 

 

 

 

 

 

 

Total Additions

 

83,676

 

29,279

 

 

 

 

 

 

 

Deductions

 

 

 

 

 

Distributions to Participants

 

(19,734

)

(16,488

)

 

 

 

 

 

 

Net Increase

 

63,942

 

12,791

 

Net Assets Available for Benefits at Beginning of Year

 

234,395

 

221,604

 

Net Assets Available for Benefits at End of Year

 

$

298,337

 

$

234,395

 

 

See accompanying notes to Financial Statements.

 

3



 

Bank of Hawaii Retirement Savings Plan

 

Notes to Financial Statements

 

December 31, 2003

 

1. Description of the Plan and Summary of Significant Accounting Policies

 

Description of the Plan

 

The following description of the Bank of Hawaii Retirement Savings Plan (the “Plan”), formerly known as the Bank of Hawaii Profit Sharing Plan, provides only general information.  Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.

 

The Plan is a defined contribution plan for employees of Bank of Hawaii Corporation and certain of its subsidiaries (collectively “the Company”) who have fulfilled the Plan’s participation requirements.  The Plan is subject to the reporting and disclosure, fiduciary, vesting, and administration and enforcement provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

 

On May 24, 2002, the Board of Directors of Bank of Hawaii Corporation, the Plan’s sponsor, approved a resolution to merge the Bank of Hawaii Money Purchase Plan into the Plan, effective June 30, 2002.  The transfer of the assets is reported in the Statements of Changes in Net Assets Available for Benefits for year ended December 31, 2002.

 

The unvested Money Purchase Plan balances that merged into the Retirement Savings Plan on June 30, 2002, are maintained as a separate account and continue to have a five-year vesting period.  Participants are fully vested in all other Plan assets allocated to their account.

 

On November 12, 2003, the Board of Directors of Bank of Hawaii Corporation approved a resolution to merge the California United Bank 401(k) Plan into the Plan effective December 1, 2003.  The transfer of Plan assets was made subsequent to December 1, 2003 and the transfer is reported in the Statement of Changes in Net Assets Available for Benefits.

 

On behalf of the Company as Plan Administrator, the Plan is administered by the Benefit Plans Committee, a sub-committee of the Company’s Board of Directors.  All assets of the Plan are held in trust by Vanguard Fiduciary Trust Company, as trustee, and all benefits are provided by such trust fund.

 

4



 

Effective April 1, 1998, the portion of the Plan consisting of the Bank of Hawaii Corporation Stock Fund converted to an employee stock ownership plan (ESOP).  As an ESOP any cash dividends on Bank of Hawaii Corporation stock are passed through to the participants unless the participant elects against receiving the dividend.  The cash dividend on shares of Bank of Hawaii Corporation stock paid as a dividend pass-through is not treated as a distribution from the Plan, rather, it is accounted for as if the participant receiving the dividend was the direct owner of the shares of Bank of Hawaii Corporation stock.  For participants electing not to receive the dividend pass-through, the dividend is allocated to the participant’s account as income and is invested in additional shares.

 

Withdrawals are permitted for participants demonstrating immediate financial need.  Participants are allowed to borrow a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of the current value of their account balance.  Loan transactions are treated as a transfer from (to) the investment fund to (from) the loan fund.  Loan terms do not exceed 5 years unless the loan was used for the purchase of a primary residence.  The loans are secured by the balance in the participant’s account or other security deemed to be sufficient by the Benefit Plans Committee and are made at a reasonable rate of interest.  Principal and interest is repaid ratably through payroll deductions.  No withdrawals of loans are permitted from the Bank of Hawaii Corporation Stock fund.

 

For termination of employment due to retirement (normal and early), disability or death, a member or their beneficiary is entitled to receive an allocation of the employer matching contribution for the calendar quarter in which the member terminated employment.  A member is also entitled to an allocation of the company fixed and value sharing contributions for the calendar year in which the member terminated employment.  Under these conditions, the member’s account is distributed as soon as practicable after the quarter-end and year-end allocations are made.  However, the member may make an election to waive this allocation and receive an immediate distribution.  For termination of employment prior to retirement (normal and early), disability or death, the member’s vested account will be distributed as soon as practicable.  For all accounts under the Plan that exceed $5,000, a distribution can only be made if the member consents in writing to such a distribution.  Members are entitled to receive the vested portion of their money purchase account in the form of a joint and survivor or life annuity, unless elected otherwise.  Members may elect to waive distribution of benefits in such a manner and elect to receive distribution in the form of a single lump sum payment.  In case of death, beneficiaries may elect to receive distributions as a lump sum or as an annuity contract.  Participants may also elect to defer distributions.

 

5



 

In the event that a member terminates employment at a time when the member is not fully vested, the member forfeits the unvested portion of their money purchase account.  However, under ERISA regulations, the forfeiture will be reinstated if the participant is re-employed with the Company within five years.  Forfeitures for a calendar year are credited against employer contributions required for the calendar year.

 

In the event that the Board of Directors terminates the Plan, each member’s interest in the Plan will remain fully vested and non-forfeitable.  The Board of Directors may require all participants and beneficiaries to withdraw such amounts in cash, in kind, in any other form or any combination thereof, as it may determine in its sole discretion.

 

Basis of Accounting

 

The accounting records of the Plan are maintained on the accrual basis.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results may differ from those estimates.

 

Expenses

 

Fees paid to the Plan’s trustee and other administrative expenses incurred in connection with the operation of the Plan are paid by the Company.  Brokerage commissions and other expenses incurred in connection with the purchase or sale of investments are paid by the Plan.

 

Investments

 

Investments are stated at fair value.  Shares of mutual funds are valued at quoted market prices which represent the net asset value of shares held by the Plan at year end.  Units of the Vanguard Retirement Savings Trust are valued at net asset value at year end.  Shares of Bank of Hawaii Corporation stock are valued at the quoted market price at year end.

 

Purchases and sales of investments are recorded on a trade-date basis.  Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date.

 

6



 

The net realized gain or loss on investments sold during the year and the unrealized gain or loss on investments held at year end are reflected in the Statements of Changes in Net Assets Available for Benefits as net appreciation (depreciation) in fair value of investments.  The net realized gain and loss on investments sold is computed using the average cost method.

 

Contributions

 

Contributions from the Company and participants are accrued through December 31 in the Statements of Net Assets Available for Benefits.

 

Prior to July 1, 2002, members were allowed to contribute up to 10% of their eligible compensation (within federal limits) to the Plan.  The Company made matching contributions on behalf of members each calendar quarter equal to $1.25 for each $1.00 contributed by members up to 2% of the member’s eligible compensation.  Matching contributions were made to the Plan by the end of the following calendar quarter.

 

Beginning July 1, 2002, participating employees are allowed to contribute up to 50% of their eligible compensation (within federal limits) to the Plan.  The Company makes matching contributions on behalf of members each calendar quarter equal to $1.25 for each $1.00 contributed by a member up to 2% of the member’s eligible compensation and $0.50 for every $1.00 contributed by participants over 2% up to 5% of the participant’s eligible compensation.  In addition, all eligible members receive a pro rata annual 3% company fixed contribution and a discretionary value sharing contribution that is linked to the Company’s financial goals.  These contributions are made regardless of whether the member contributes to the Plan and are invested in accordance with the member’s selection of investment options available under the Plan.  Value Sharing contributions for the years ended December 31, 2003 and 2002 were approximately $2,767,000 and $1,856,000, respectively.  Total employer and employee contributions are limited to certain maximum annual amounts, including those imposed under the Internal Revenue Code.

 

Benefits

 

Benefits are recorded when paid.

 

7



 

2. Investments

 

The Vanguard Retirement Savings Trust is a collective trust investing in guaranteed investment contracts with selected insurance companies and commercial banks.  The contract value of guaranteed investment contracts generally approximates fair value and represents initial deposits, plus contributions and interest, less benefit payments.  The Vanguard Retirement Savings Trust allows for benefit responsive withdrawals by the Plan on behalf of members, at contract value, subject to certain market value adjustments.  The fair value of the guaranteed investment contracts held by the Vanguard Retirement Savings Trust at December 31, 2003 and 2002 were approximately $42,269,000 and $36,499,000, respectively.

 

During the years ended December 31, 2003 and 2002, the Plan’s investments, appreciated (depreciated) in fair value as follows:

 

 

 

Year ended December 31,

 

 

 

2003

 

2002

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

Mutual Funds

 

$

32,898

 

$

(28,373

)

Common Stock

 

22,021

 

9,897

 

Net Appreciation (Depreciation) in Fair Value of Investments

 

$

54,919

 

$

(18,476

)

 

The fair value of individual investments representing 5% or more of the Plan’s net assets at December 31, 2003 and 2002 are as follows:

 

 

 

December 31,

 

 

 

2003

 

2002

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

Bank of Hawaii Corporation Common Stock

 

$

75,296

 

$

61,976

 

Vanguard Windsor Fund

 

43,141

 

31,153

 

Vanguard Retirement Savings Trust

 

42,269

 

36,499

 

Vanguard 500 Index Fund

 

38,455

 

27,927

 

Vanguard Wellington Fund

 

38,150

 

31,976

 

 

8



 

3. Transactions and Agreements with Parties-in-Interest

 

The Bank of Hawaii Corporation Stock Fund invests in the common stock of Bank of Hawaii Corporation.

 

The Pacific Capital Growth Stock Fund, Pacific Capital Growth & Income Fund, Pacific Capital New Asia Growth Fund, Pacific Capital Diversified Fixed Income Fund, Pacific Capital International Stock Fund, Pacific Capital Small Cap Fund, Pacific Capital Value Fund, and Pacific Capital Short Intermediate U.S. Government Securities Fund belong to a family of proprietary mutual funds managed by the Asset Management Group of Bank of Hawaii, a subsidiary of Bank of Hawaii Corporation.

 

The Vanguard Wellington Fund, Vanguard Windsor Fund, Vanguard 500 Index Fund, and Vanguard Short-Term Federal Fund are mutual funds managed by an affiliate of Vanguard Fiduciary Trust Company.  The Vanguard Retirement Savings Trust is a collective trust managed by an affiliate of Vanguard Fiduciary Trust Company. Vanguard Fiduciary Trust Company acts as trustee for the Plan’s investments.

 

4. Income Tax Status

 

The Plan has received a determination letter from the Internal Revenue Service dated October 30, 2002, stating that the Plan is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation.  Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification.  The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, is qualified and the related trust is tax exempt.

 

9



 

Supplemental Schedule

 



 

Bank of Hawaii Retirement Savings Plan

 

Employer ID Number: 99-0033900/Plan Number: 091203

 

Schedule H, Line 4i - Schedule of Assets (Held at End of Year)

 

December 31, 2003

 

 

Description

 

Number of
Shares

 

Cost

 

Current
Value

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds

 

 

 

 

 

 

 

Vanguard 500 Index Fund*

 

374,553

 

$

35,618

 

$

38,455

 

Pacific Capital Diversified Fixed Income Fund*

 

218,333

 

2,465

 

2,469

 

Pacific Capital Growth & Income Fund*

 

654,864

 

9,106

 

7,767

 

Pacific Capital Growth Stock Fund*

 

1,600,461

 

17,655

 

13,700

 

Pacific Capital International Stock Fund*

 

201,665

 

1,814

 

1,585

 

Pacific Capital New Asia Growth Fund*

 

448,906

 

4,374

 

5,463

 

Pacific Capital Short Intermediate U.S. Government Securities Fund*

 

173,382

 

1,718

 

1,731

 

Pacific Capital Small Cap Fund*

 

519,727

 

6,783

 

8,331

 

Pacific Capital Value Fund*

 

124,813

 

978

 

1,045

 

Vanguard Short-Term Federal Fund*

 

646,859

 

6,846

 

6,844

 

Vanguard Wellington Fund*

 

1,324,197

 

33,234

 

38,150

 

Vanguard Windsor Fund*

 

2,653,188

 

38,349

 

43,141

 

Total Mutual Funds

 

 

 

158,940

 

168,681

 

 

 

 

 

 

 

 

 

Collective Trust

 

 

 

 

 

 

 

Vanguard Retirement Savings Trust *

 

42,268,972

 

42,269

 

42,269

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

Bank of Hawaii Corporation Common Stock *, **

 

1,784,259

 

26,779

 

75,615

 

 

 

 

 

 

 

 

 

Participant Loans

 

 

 

 

 

 

 

Participant Loans * -Interest rates ranging from 4.14% to 6.06%

 

 

 

 

4,422

 

 

 

 

 

 

 

 

$

290,987

 

 


* Indicates an investment with parties-in-interest to the Plan.

** Includes cash balance of $320

 

10


Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-57267) pertaining to the Retirement Savings Plan of Bank of Hawaii, of our report dated June 24, 2004 with respect to the financial statements and supplemental schedule of the Bank of Hawaii Retirement Savings Plan included in the Annual Report (Form 11-K) for the year ended December 31, 2003.

 

 

 

/S/  ERNST & YOUNG LLP

 

 

 

Honolulu, Hawaii

June 24, 2004