Bank of Hawaii Corporation Third Quarter 2004 Financial Results
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HONOLULU--(BUSINESS WIRE)--Oct. 25, 2004--Bank of Hawaii Corporation (NYSE:BOH)
- Diluted Earnings Per Share $0.78, Year-to-Date Earnings Per Share $2.26
- Net Income of $43.1 Million, Year-to-Date Net Income $127.1 Million
- Board of Directors Declares Dividend of $0.33 Per Share, Up 10 Percent
Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.78 for the third quarter of 2004, down $0.01 or 1.3 percent from $0.79 in the second quarter of 2004, and up $0.17 or 27.9 percent from $0.61 reported in the comparable quarter last year. Net income for the third quarter of 2004 was $43.1 million, down $1.2 million or 2.6 percent from $44.2 million in the previous quarter and up $6.4 million or 17.4 percent from $36.7 million reported in the same quarter last year.
Return on average assets for the third quarter of 2004 was 1.77 percent, down slightly from 1.80 percent in the second quarter of 2004, and up from 1.53 percent in the third quarter of 2003. Return on average equity was 23.42 percent for the third quarter of 2004, down from 24.28 percent in the previous quarter and up from 16.69 percent in the same quarter last year.
For nine months ended September 30, 2004, net income was $127.1 million, up $30.6 million or 31.7 percent from net income of $96.5 million for the same period last year. Diluted earnings per share were $2.26 for the first nine months of 2004, an increase of 44.9 percent from diluted earnings per share of $1.56 for the comparable period last year. The year-to-date return on average assets was 1.74 percent, up from 1.37 percent for the same nine months in 2003. The year-to-date return on average equity was 22.48 percent, up from 13.95 percent for the nine-month period ended September 30, 2003.
"Bank of Hawaii had another good quarter and I am pleased by the ongoing improvement demonstrated by our financial results," said Allan R. Landon, Chairman, CEO and President. "The Hawaii economy remains solid and we remain confident that we are well on the way to achieving the goals of our three-year plan."
Financial Highlights
Net interest income, on a taxable equivalent basis, for the third quarter of 2004 was $98.8 million, up $2.9 million from net interest income of $95.9 million in the second quarter of 2004, and up $7.7 million from net interest income of $91.1 million in the third quarter of 2003. An analysis of the change in net interest income is included in Table 6.
The net interest margin was 4.39 percent for the third quarter of 2004, up 22 basis points from the net interest margin of 4.17 percent in the previous quarter and up 24 basis points from 4.15 percent in the same quarter last year. The increase in the net interest margin from the previous quarter was largely due to higher average balances of short-term investments in the second quarter of 2004. In addition, the margin was further improved in the third quarter of 2004 as a result of increased yields on earnings assets, stable interest rates paid on deposits and continuing reductions in short-term borrowings and long-term debt.
Credit quality continued to improve during the quarter. The Company did not recognize a provision for loan and lease losses during the third quarter of 2004. A negative provision of $3.5 million was recognized in the previous quarter. The allowance for loan and lease losses was reduced $0.3 million from June 30, 2004, which equaled the amount of net charge-offs for the third quarter of 2004.
Non-interest income was $53.1 million for the third quarter of 2004 compared to non-interest income of $54.8 million in the second quarter of 2004 and $53.8 million in the third quarter of 2003. Non-interest income in the third quarter of 2004 included a gain of $5.2 million on the sale of assets at the end of a leveraged lease transaction, compared to the previous quarter which included a partnership distribution of $3.2 million and a gain of $2.5 million on the sale of land. Included in the third quarter of 2003 was a $3.1 million prepayment fee on a commercial real estate loan. Excluding these items, non-interest income decreased from the second quarter of 2004 by $1.4 million largely due to a decline in gains on the sale of mortgage loans.
Non-interest expense for the third quarter of 2004 was $84.2 million, down $0.9 million from $85.1 million in the previous quarter and down $4.7 million or 5.3 percent from non-interest expense of $88.9 million in the third quarter of 2003. The decrease from the previous quarter was largely the result of $2.2 million recorded in the second quarter primarily related to a legal settlement. Non-interest expense in the third quarter of 2003 included $4.3 million in systems replacement costs.
The efficiency ratio was 55.45 percent for the third quarter of 2004, down from 56.49 percent in the second quarter of 2004 and 61.34 percent in the third quarter of 2003. Excluding systems replacement costs, the efficiency ratio was 58.34 percent in the third quarter of 2003. For nine months ended September 30, 2004, the efficiency ratio was 56.40 percent compared to 65.06 percent for the same period in 2003. Excluding systems replacement costs, the efficiency ratio was 59.88 percent for the nine-month period last year.
The Company's business segments are defined as Retail Banking, Commercial Banking, Investment Services Group, and Treasury and Other Corporate. Results are determined based on the Company's internal financial management reporting process and organizational structure. Business segment performance details are summarized in Table 11a and 11b.
Asset Quality
Non-performing assets declined to $16.0 million at the end of the third quarter of 2004, a decrease of $5.2 million, or 24.5 percent, from non-performing assets of $21.2 million at the end of the second quarter of 2004. Non-performing assets decreased $24.2 million, or 60.2 percent, compared to non-performing assets of $40.1 million at the end of the same quarter last year. At September 30, 2004, the ratio of non-performing assets to total loans and foreclosed real estate was 0.27 percent, down from 0.37 percent at June 30, 2004 and down from 0.72 percent at September 30, 2003.
Non-accrual loans were $15.8 million at September 30, 2004, a reduction of $0.5 million, or 3.1 percent, from $16.3 million at June 30, 2004 and down $15.6 million, or 49.8 percent, from $31.4 million at September 30, 2003. Non-accrual loans as a percentage of total loans were 0.27 percent at September 30, 2004, down from 0.28 percent at the end of the previous quarter and down from 0.56 percent at the end of the comparable quarter last year.
Net charge-offs were $0.3 million in the third quarter of 2004, or 0.02 percent (annualized) of total average loans. Charge-offs of $5.0 million during the third quarter of 2004 were offset by recoveries of $4.7 million. Net charge-offs were in a net recovery position of $1.2 million in the second quarter of 2004 as recoveries of $10.0 million more than offset charge-offs of $8.8 million. Net charge-offs during the third quarter of 2003 were $5.3 million, or 0.38 percent (annualized) of total average loans. Net charge-offs for the first nine months of 2004 were $0.9 million, or 0.02 percent (annualized) of total average loans. In the same period last year, net charge-offs were $10.2 million, or 0.25 percent (annualized) of total average loans.
The allowance for loan and lease losses was $124.7 million at September 30, 2004. The ratio of the allowance for loan and lease losses to total loans was 2.14 percent at September 30, 2004 compared with 2.16 percent at June 30, 2004 and 2.38 percent at the end of the same quarter last year.
Concentrations of credit exposure to selected components of the portfolio are summarized in Table 8.
Other Financial Highlights
Total assets were $9.59 billion at September 30, 2004, a decrease from total assets of $9.69 billion at June 30, 2004 and an increase from total assets of $9.37 billion at September 30, 2003. The decrease from the previous quarter was largely due to a reduction in short-term assets that were utilized to pay down debt. Total loans and leases were $5.82 billion at September 30, 2004, up from $5.79 billion at June 30, 2004 and $5.57 billion at September 30, 2003. The increase in total loans and leases is due to ongoing growth in consumer lending. Commercial loan originations remain strong, but were offset by loan prepayments during the quarter.
Total deposits at September 30, 2004 were $7.41 billion, down from total deposits of $7.47 billion at June 30, 2004 and up from total deposits of $7.10 billion at September 30, 2003. The decrease from the previous quarter was mostly due to a reduction in custodial deposits related to mortgage banking activity and a continuation of the decline in time deposits. The Company had a net increase of approximately 2,000 non-interest bearing checking accounts during the quarter.
During the third quarter of 2004, Bank of Hawaii Corporation repurchased 0.7 million shares of common stock at a total cost of $31.4 million under its share repurchase program. The average cost was $46.08 per share repurchased during the quarter. From the beginning of the share repurchase program in July 2001 through September 30, 2004, the Company repurchased a total of 33.9 million shares and returned a total of $1,037.1 million to the shareholders at an average cost of $30.59 per share. From October 1, 2004 through October 22, 2004, the Company repurchased an additional 0.1 million shares of common stock at an average cost of $49.11 per share. Remaining buyback authority under the share repurchase program was $108.9 million at October 22, 2004.
The Company's capital and liquidity remain strong. At September 30, 2004, the Tier 1 leverage ratio was 7.69 percent compared to 7.16 percent at June 30, 2004 and 8.52 percent at September 30, 2003.
The Company's Board of Directors has declared a quarterly cash dividend of $0.33 per share on the Company's outstanding shares, an increase of $0.03 per share or 10.0 percent. The dividend will be payable on December 14, 2004 to shareholders of record at the close of business on November 29, 2004.
Economic Outlook
Hawaii's economy continued to grow during the third quarter of 2004. Tourism remains strong and is on track to establish 2004 as a record year in terms of total visitors. Hawaii's unemployment rate fell below 3.0 percent, the lowest in the country, as job growth continued in excess of 2.0 percent. Real estate transactions and valuations continued to increase and military housing privatization initiatives are expected to augment private construction growth, beginning in the fourth quarter of 2004. These trends are expected to drive capital spending forward for several more years. A rise in core inflation in the Honolulu consumer price index (CPI) from around 1.5 percent to 3.0 percent during the first half of 2004 may indicate the state economy is approaching full employment. However, Hawaii's real personal income growth remains stable at 2.0 percent to 3.0 percent in 2004, as it has since 1997.
Earnings Outlook
Bank of Hawaii Corporation currently anticipates net income for the full year of 2004 will be approximately $166 million to $168 million. Based on present conditions, the Company does not expect to record a provision for loan and lease losses during the fourth quarter of 2004. However, the actual amount of the provision for loan and lease losses depends on determinations of credit risk that are made near the end of each quarter. Earnings per share and return on average equity projections continue to be dependent upon the terms and timing of share repurchases.
Conference Call Information
The Company will review its third quarter 2004 financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The presentation will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation's web site, www.boh.com. The conference call number is 800-599-9795 in the United States or 617-786-2905 for international callers. No confirmation code is required to access the call. A replay will be available for one week beginning Monday, October 25, 2004 by calling 888-286-8010 in the United States or 617-801-6888 for international callers and entering the number 83955183 when prompted. A replay of the presentation will also be available via the Investor Relations link of the Company's web site.
Bank of Hawaii Corporation is a regional financial services company serving businesses, consumers and governments in Hawaii, American Samoa and the West Pacific. The Company's principal subsidiary, Bank of Hawaii, was founded in 1897 and is the largest independent financial institution in Hawaii. For more information about Bank of Hawaii Corporation, see the Company's web site, www.boh.com.
Forward-Looking Statements
This news release contains forward-looking statements concerning, among other things, the economic environment in our service area, the expected level of loan and lease loss provisioning, and anticipated net income, dividends, revenues and expenses during 2004 and beyond. Our forward-looking statements are based on numerous assumptions, any of which could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons, including, but not limited to: 1) unanticipated changes in business and economic conditions, the competitive environment, fiscal and monetary policies, or legislation in Hawaii and the other markets we serve; 2) changes in our credit quality or risk profile which may increase or decrease the required level of allowance for loan and lease losses; 3) changes in market interest rates that may affect our credit markets and ability to maintain our net interest margin; 4) changes to the amount and timing of our proposed equity repurchases and repayment of maturing debt; 5) inability to achieve expected benefits of our business process changes due to adverse changes in implementation processes or costs, operational savings, or timing; 6) real or threatened acts of war or terrorist activity affecting business conditions; and 7) adverse weather and other natural conditions impacting our and our customers' operations. We do not undertake any obligation to update forward-looking statements to reflect later events or circumstances.
Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited) Table 1
----------------------------------------------------------------------
(dollars in thousands except
per share amounts)
Three Months Ended Nine Months Ended
Earnings Highlights and September 30, September 30,
Performance Ratios 2004 2003 2004 2003
----------------------------------------------------------------------
Net Income $43,067 $36,687 $127,098 $96,522
Basic Earnings Per Share 0.82 0.64 2.40 1.63
Diluted Earnings Per Share 0.78 0.61 2.26 1.56
Cash Dividends 15,904 10,887 48,126 33,819
Net Income to Average Total
Assets (ROA) 1.77% 1.53% 1.74% 1.37%
Net Income to Average
Shareholders' Equity (ROE) 23.42% 16.69% 22.48% 13.95%
Net Interest Margin 4.39% 4.15% 4.29% 4.19%
Efficiency Ratio (1) 55.45% 61.34% 56.40% 65.06%
Efficiency Ratio excluding
Systems Replacement Costs 55.45% 58.34% 56.40% 59.88%
----------------------------------------------------------------------
Statement of Condition Highlights and September 30,
Performance Ratios 2004 2003
---------------------------------------------- -----------------------
Total Assets $9,594,809 $9,370,755
Net Loans 5,690,924 5,437,730
Total Deposits 7,413,240 7,102,116
Total Shareholders' Equity 756,707 823,760
Book Value Per Common Share $14.27 $14.71
Allowance / Loans and Leases
Outstanding 2.14% 2.38%
Average Equity / Average Assets 7.75% 9.82%
Employees (FTE) 2,655 2,764
Branches and offices 88 89
Market Price Per Share of Common
Stock for the Quarter Ended:
Closing $47.25 $33.58
High $48.07 $35.55
Low $43.55 $32.92
(1) The efficiency ratio is defined as non-interest expense divided by
total revenue (net interest income and non-interest income).
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
----------------------------------------------------------------------
(dollars in thousands Three Months Ended Nine Months Ended
except per share September 30, September 30,
amounts) 2004 2003 2004 2003
----------------------------------------------------------------------
Interest Income
Interest and Fees on
Loans and Leases $82,079 $82,715 $243,853 $254,442
Income on Investment
Securities -
Available for Sale 24,543 16,483 67,134 58,761
Income on Investment
Securities - Held
to Maturity 6,370 6,407 20,057 11,773
Deposits 496 1,179 3,373 3,647
Funds Sold 108 248 702 1,834
Other 801 1,032 2,524 3,237
----------------------------------------------------------------------
Total Interest Income 114,397 108,064 337,643 333,694
----------------------------------------------------------------------
Interest Expense
Deposits 8,990 10,284 26,750 38,040
Securities Sold
Under Agreements to
Repurchase 2,085 1,947 6,233 6,580
Funds Purchased 683 271 1,420 695
Short-Term
Borrowings 15 26 43 75
Long-Term Debt 3,845 4,431 12,538 15,714
----------------------------------------------------------------------
Total Interest Expense 15,618 16,959 46,984 61,104
----------------------------------------------------------------------
Net Interest Income 98,779 91,105 290,659 272,590
Provision for Loan and
Lease Losses - - (3,500) -
----------------------------------------------------------------------
Net Interest Income
After Provision for
Loan and Lease Losses 98,779 91,105 294,159 272,590
----------------------------------------------------------------------
Non-Interest Income
Trust and Asset
Management 12,672 12,511 39,531 38,237
Mortgage Banking 1,711 5,888 6,496 12,232
Service Charges on
Deposit Accounts 9,472 8,901 28,962 26,496
Fees, Exchange, and
Other Service
Charges 13,741 16,034 41,223 42,496
Investment
Securities Gains
(Losses) - 639 (37) 1,809
Insurance 3,560 3,988 10,506 10,083
Other 11,898 5,830 30,063 17,930
----------------------------------------------------------------------
Total Non-Interest
Income 53,054 53,791 156,744 149,283
----------------------------------------------------------------------
Non-Interest Expense
Salaries and
Benefits 46,566 45,731 139,256 139,871
Net Occupancy
Expense 9,812 9,806 28,741 29,047
Net Equipment
Expense 5,847 7,301 17,610 26,257
Information
Technology Systems
Replacement Project - 4,349 - 21,871
Other 21,965 21,690 66,730 57,425
----------------------------------------------------------------------
Total Non-Interest
Expense 84,190 88,877 252,337 274,471
----------------------------------------------------------------------
Income Before Income
Taxes 67,643 56,019 198,566 147,402
Provision for Income
Taxes 24,576 19,332 71,468 50,880
----------------------------------------------------------------------
Net Income $43,067 $36,687 $127,098 $96,522
======================================================================
Basic Earnings Per
Share $0.82 $0.64 $2.40 $1.63
Diluted Earnings Per
Share $0.78 $0.61 $2.26 $1.56
Dividends Declared Per
Share $0.30 $0.19 $0.90 $0.57
Basic Weighted Average
Shares 52,390,081 57,195,570 53,053,770 59,337,319
Diluted Weighted
Average Shares 55,472,868 59,961,823 56,297,277 61,911,794
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition Table 3
----------------------------------------------------------------------
Sept. 30, Dec. 31, Sept. 30,
(dollars in thousands) 2004 2003 2003
----------------------------------------------------------------------
(Unaudited) (Unaudited)
Assets
Interest-Bearing Deposits $29,976 $154,735 $208,712
Investment Securities - Available
for Sale 2,328,327 1,991,116 2,027,062
Investment Securities - Held to
Maturity
(Market Value of $624,587,
$720,699, and $749,036) 630,276 727,233 754,659
Funds Sold 25,000 - -
Loans Held for Sale 18,595 9,211 23,144
Loans and Leases 5,815,575 5,757,175 5,570,405
Allowance for Loan and Lease
Losses (124,651) (129,080) (132,675)
----------------------------------------------------------------------
Net Loans 5,690,924 5,628,095 5,437,730
----------------------------------------------------------------------
Total Earning Assets 8,723,098 8,510,390 8,451,307
----------------------------------------------------------------------
Cash and Non-Interest-Bearing
Deposits 290,974 363,495 329,705
Premises and Equipment 149,698 160,005 163,277
Customers' Acceptance Liability 920 1,707 1,077
Accrued Interest Receivable 36,074 32,672 33,210
Foreclosed Real Estate 208 4,377 8,757
Mortgage Servicing Rights 19,995 22,178 23,266
Goodwill 36,216 36,216 36,216
Other Assets 337,626 330,607 323,940
----------------------------------------------------------------------
Total Assets $9,594,809 $9,461,647 $9,370,755
======================================================================
Liabilities
Deposits
Non-Interest-Bearing Demand $1,898,602 $1,933,928 $1,846,030
Interest-Bearing Demand 1,471,836 1,356,330 1,269,227
Savings 2,991,386 2,833,379 2,760,418
Time 1,051,416 1,209,142 1,226,441
----------------------------------------------------------------------
Total Deposits 7,413,240 7,332,779 7,102,116
----------------------------------------------------------------------
Securities Sold Under Agreements
to Repurchase 682,630 472,757 646,890
Funds Purchased 69,755 109,090 90,520
Short-Term Borrowings 11,939 12,690 14,796
Banker's Acceptances Outstanding 920 1,707 1,077
Retirement Benefits Payable 62,976 61,841 63,281
Accrued Interest Payable 6,162 7,483 7,207
Taxes Payable and Deferred Taxes 249,265 207,101 195,628
Other Liabilities 88,596 138,999 101,179
Long-Term Debt 252,619 324,068 324,301
----------------------------------------------------------------------
Total Liabilities 8,838,102 8,668,515 8,546,995
----------------------------------------------------------------------
Shareholders' Equity
Common Stock ($.01 par value);
authorized 500,000,000 shares;
issued / outstanding: September
2004 - 81,710,695 / 53,021,591,
December 2003 - 81,647,729 /
54,928,480, September 2003 -
81,568,791 / 55,985,364 813 807 807
Capital Surplus 413,696 391,701 385,694
Accumulated Other Comprehensive
Income (Loss) (5,698) (5,711) (2,799)
Retained Earnings 1,277,615 1,199,077 1,177,459
Deferred Stock Grants (9,490) (8,309) (7,466)
Treasury Stock, at Cost (Shares:
September 2004 - 28,689,104,
December 2003 - 26,719,249,
September 2003 - 25,583,427) (920,229) (784,433) (729,935)
----------------------------------------------------------------------
Total Shareholders' Equity 756,707 793,132 823,760
----------------------------------------------------------------------
Total Liabilities and
Shareholders' Equity $9,594,809 $9,461,647 $9,370,755
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited) Table 4
----------------------------------------------------------------------
Accum.
Other
Compre-
hensive
Common Capital Income
(dollars in thousands) Total Stock Surplus (Loss)
----------------------------------------------------------------------
Balance at December 31, 2003 $793,132 $807 $391,701 $(5,711)
Comprehensive Income:
Net Income 127,098 - - -
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities 13 - - 13
Total Comprehensive Income
Common Stock Issued under
Stock Plans and Related Tax
Benefits (2,305,545 shares) 71,984 6 21,995 -
Treasury Stock Purchased
(4,209,363 shares) (187,394) - - -
Cash Dividends Paid (48,126) - - -
----------------------------------------------------------------------
Balance at September 30,
2004 $756,707 $813 $413,696 $(5,698)
======================================================================
Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659
Comprehensive Income:
Net Income 96,522 - - -
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities (14,458) - - (14,458)
Total Comprehensive Income
Common Stock Issued under
Stock Plans and Related
Tax Benefits (1,143,267
shares) 25,491 1 13,502 -
Treasury Stock Purchased
(8,166,579 shares) (265,735) - - -
Cash Dividends Paid (33,819) - - -
----------------------------------------------------------------------
Balance at September 30,
2003 $823,760 $807 $385,694 $(2,799)
======================================================================
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31, 2003 $1,199,077 $(8,309) $(784,433)
Comprehensive Income:
Net Income 127,098 - - $127,098
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities - - - 13
---------
Total Comprehensive Income $127,111
=========
Common Stock Issued under
Stock Plans and Related Tax
Benefits (2,305,545 shares) (434) (1,181) 51,598
Treasury Stock Purchased
(4,209,363 shares) - - (187,394)
Cash Dividends Paid (48,126) - -
------------------------------------------------------------
Balance at September 30,
2004 $1,277,615 $(9,490) $(920,229)
============================================================
Balance at December 31, 2002 $1,115,910 $(1,424) $(483,384)
Comprehensive Income:
Net Income 96,522 - - $96,522
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities - - - (14,458)
---------
Total Comprehensive Income $82,064
=========
Common Stock Issued under
Stock Plans and Related
Tax Benefits (1,143,267
shares) (1,154) (6,042) 19,184
Treasury Stock Purchased
(8,166,579 shares) - - (265,735)
Cash Dividends Paid (33,819) - -
------------------------------------------------------------
Balance at September 30,
2003 $1,177,459 $(7,466) $(729,935)
============================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable
Equivalent Basis (Unaudited) Table 5
----------------------------------------------------------------------
Three Months Ended Three Months Ended
September 30, 2004 June 30, 2004
(dollars in Average Income/ Yield/ Average Income/ Yield/
millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest-Bearing
Deposits $82.6 $0.5 2.39% $408.8 $1.6 1.62%
Funds Sold 28.6 0.1 1.51 71.3 0.2 0.99
Investment
Securities
Available for Sale 2,325.5 24.6 4.23 2,148.9 21.8 4.06
Held to Maturity 659.0 6.3 3.87 709.8 6.7 3.78
Loans Held for Sale 11.3 0.2 5.74 20.7 0.3 5.54
Loans and Leases
Commercial and
Industrial 796.2 10.6 5.34 828.0 10.2 4.97
Construction 81.1 1.0 5.01 100.4 0.9 3.80
Commercial
Mortgage 658.9 8.8 5.29 638.9 8.6 5.39
Residential
Mortgage 2,282.6 32.1 5.62 2,281.8 32.2 5.65
Installment 722.7 15.2 8.38 700.4 14.5 8.34
Home Equity 583.7 7.1 4.83 534.6 6.1 4.63
Purchased Home
Equity 155.2 1.7 4.29 178.8 1.9 4.16
Lease Financing 516.0 5.4 4.17 510.1 5.6 4.38
----------------------------------------------------------------------
Total Loans and
Leases 5,796.4 81.9 5.63 5,773.0 80.0 5.56
----------------------------------------------------------------------
Other 78.7 0.8 4.05 78.1 0.9 4.45
----------------------------------------------------------------------
Total Earning Assets 8,982.1 114.4 5.08 9,210.6 111.5 4.86
----------------------------------------------------------------------
Cash and Non-
Interest-Bearing
Deposits 316.9 306.3
Other Assets 369.5 376.4
--------- ---------
Total Assets $9,668.5 $9,893.3
========= =========
Interest-Bearing
Liabilities
Interest-Bearing
Deposits
Demand $1,471.0 0.9 0.24 $1,390.2 0.6 0.17
Savings 2,998.4 3.2 0.43 2,911.5 3.1 0.43
Time 1,078.4 4.9 1.81 1,129.5 4.9 1.74
----------------------------------------------------------------------
Total Interest-
Bearing Deposits 5,547.8 9.0 0.64 5,431.2 8.6 0.63
----------------------------------------------------------------------
Short-Term
Borrowings 816.9 2.8 1.36 1,082.5 2.7 1.02
Long-Term Debt 246.8 3.8 6.22 317.3 4.3 5.48
----------------------------------------------------------------------
Total Interest-
Bearing Liabilities 6,611.5 15.6 0.94 6,831.0 15.6 0.92
----------------------------------------------------------------------
Net Interest Income $98.8 $95.9
======= =======
Interest Rate
Spread 4.14% 3.94%
Net Interest
Margin 4.39% 4.17%
Non-Interest-Bearing
Demand Deposits 1,932.0 1,940.2
Other Liabilities 393.4 389.4
Shareholders' Equity 731.6 732.7
--------- ---------
Total Liabilities
and Shareholders'
Equity $9,668.5 $9,893.3
========= =========
Three Months Ended Nine Months Ended
September 30, 2003 September 30, 2004
(dollars in Average Income/ Yield/ Average Income/ Yield/
millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest-Bearing
Deposits $224.7 $1.2 2.08% $246.4 $3.4 1.83%
Funds Sold 102.4 0.3 0.97 89.4 0.7 1.05
Investment
Securities
Available for Sale 2,090.6 16.5 3.16 2,154.9 67.2 4.16
Held to Maturity 675.1 6.4 3.80 696.1 20.1 3.84
Loans Held for Sale 52.2 0.7 5.45 15.8 0.7 5.53
Loans and Leases
Commercial and
Industrial 862.4 10.8 4.95 822.8 31.0 5.04
Construction 87.8 0.9 4.26 93.9 3.0 4.33
Commercial
Mortgage 670.6 9.4 5.56 644.0 25.9 5.38
Residential
Mortgage 2,298.8 36.2 6.30 2,293.9 97.6 5.67
Installment 558.6 12.8 9.09 691.5 44.1 8.51
Home Equity 448.1 5.6 4.99 536.0 19.0 4.74
Purchased Home
Equity 132.6 0.7 2.20 179.5 6.2 4.59
Lease Financing 487.2 5.6 4.52 509.0 16.4 4.29
----------------------------------------------------------------------
Total Loans and
Leases 5,546.1 82.0 5.89 5,770.6 243.2 5.63
----------------------------------------------------------------------
Other 76.1 1.0 5.38 78.1 2.5 4.32
----------------------------------------------------------------------
Total Earning Assets 8,767.2 108.1 4.91 9,051.3 337.8 4.98
----------------------------------------------------------------------
Cash and Non-
Interest-Bearing
Deposits 333.2 316.9
Other Assets 399.2 378.1
--------- ---------
Total Assets $9,499.6 $9,746.3
========= =========
Interest-Bearing
Liabilities
Interest-Bearing
Deposits
Demand $1,245.8 0.5 0.15 $1,410.6 1.9 0.19
Savings 2,754.6 3.4 0.49 2,927.5 9.6 0.44
Time 1,285.7 6.4 1.97 1,132.0 15.3 1.79
----------------------------------------------------------------------
Total Interest-
Bearing Deposits 5,286.1 10.3 0.77 5,470.1 26.8 0.65
----------------------------------------------------------------------
Short-Term
Borrowings 827.8 2.3 1.08 920.2 7.7 1.12
Long-Term Debt 325.7 4.4 5.43 294.8 12.5 5.67
----------------------------------------------------------------------
Total Interest-
Bearing Liabilities 6,439.6 17.0 1.05 6,685.1 47.0 0.94
----------------------------------------------------------------------
Net Interest Income $91.1 $290.8
======= =======
Interest Rate
Spread 3.86% 4.04%
Net Interest
Margin 4.15% 4.29%
Non-Interest-Bearing
Demand Deposits 1,844.0 1,920.6
Other Liabilities 344.1 385.5
Shareholders' Equity 871.9 755.1
--------- ---------
Total Liabilities
and Shareholders'
Equity $9,499.6 $9,746.3
========= =========
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable
Equivalent Basis (Unaudited) Table 6
----------------------------------------------------------------------
Three Months Ended September 30, 2004
Compared to June 30, 2004
(dollars in millions) Volume (1) Rate (1) Time (1) Total
----------------------------------------------------------------------
Change in Interest Income:
Interest-Bearing Deposits $(1.9) $0.8 $- $(1.1)
Funds Sold (0.2) 0.1 - (0.1)
Investment Securities
Available for Sale 1.9 0.9 - 2.8
Held to Maturity (0.5) 0.1 - (0.4)
Loans Held for Sale (0.1) - - (0.1)
Loans and Leases
Commercial and Industrial (0.4) 0.7 0.1 0.4
Construction (0.2) 0.3 - 0.1
Commercial Mortgage 0.2 (0.1) 0.1 0.2
Residential Mortgage - (0.1) - (0.1)
Installment 0.4 0.1 0.2 0.7
Home Equity 0.6 0.3 0.1 1.0
Purchased Home Equity (0.3) 0.1 - (0.2)
Lease Financing 0.1 (0.3) - (0.2)
----------------------------------------------------------------------
Total Loans and Leases 0.4 1.0 0.5 1.9
----------------------------------------------------------------------
Other - (0.1) - (0.1)
----------------------------------------------------------------------
Total Change in Interest Income (0.4) 2.8 0.5 2.9
----------------------------------------------------------------------
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.3 - 0.3
Savings 0.1 - - 0.1
Time (0.2) 0.2 - -
----------------------------------------------------------------------
Total Interest-Bearing Deposits (0.1) 0.5 - 0.4
----------------------------------------------------------------------
Short-Term Borrowings (0.9) 0.9 0.1 0.1
Long-Term Debt (1.1) 0.6 - (0.5)
----------------------------------------------------------------------
Total Change in Interest Expense (2.1) 2.0 0.1 -
----------------------------------------------------------------------
Change in Net Interest Income $1.7 $0.8 $0.4 $2.9
======================================================================
(1) The changes for each category of interest income and expense are
allocated between the portion of changes attributable to the
variance in volume, rate or time for that category.
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits (Unaudited) Table 7
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
(dollars in thousands) 2004 2003 2004 2003
----------------------------------------------------------------------
Salaries $27,796 $28,107 $82,904 $86,404
Incentive Compensation 4,383 4,033 11,459 10,617
Stock Based Compensation 2,671 763 8,800 4,087
Commission Expense 1,780 3,552 5,691 8,964
Retirement and Other Benefits 4,099 4,929 12,670 13,471
Payroll Taxes 2,415 2,288 8,948 8,445
Medical, Dental, and Life
Insurance 2,064 1,641 6,304 5,390
Separation Expense 1,358 418 2,480 2,493
----------------------------------------------------------------------
Total Salaries and Benefits $46,566 $45,731 $139,256 $139,871
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Loan Portfolio Balances (Unaudited) Table 8
----------------------------------------------------------------------
Sept. 30, June 30, Dec. 31, Sept. 30,
(dollars in thousands) 2004 2004 2003 2003
----------------------------------------------------------------------
Domestic Loans
Commercial
Commercial and
Industrial $755,455 $776,815 $816,246 $843,895
Commercial
Mortgage 648,991 643,382 639,354 629,225
Construction 104,709 98,916 101,321 92,343
Lease Financing 447,005 447,673 435,934 426,839
----------------------------------------------------------------------
Total Commercial 1,956,160 1,966,786 1,992,855 1,992,302
----------------------------------------------------------------------
Consumer
Residential
Mortgage 2,261,814 2,257,624 2,320,410 2,329,321
Home Equity 609,981 559,225 467,019 446,032
Purchased Home
Equity 143,300 162,730 212,514 109,814
Other Consumer 729,747 721,386 658,831 582,934
Lease Financing 33,796 34,676 35,320 35,347
----------------------------------------------------------------------
Total Consumer 3,778,638 3,735,641 3,694,094 3,503,448
----------------------------------------------------------------------
Total Domestic Loans 5,734,798 5,702,427 5,686,949 5,495,750
----------------------------------------------------------------------
Foreign Loans 80,777 84,887 70,226 74,655
----------------------------------------------------------------------
Total Loans and Leases $5,815,575 $5,787,314 $5,757,175 $5,570,405
======================================================================
Selected Concentrations of Credit Exposure (Unaudited)
----------------------------------------------------------------------
Dec. 31, Sept. 30,
September 30, 2004 2003(1) 2003(1)
Unused Total Total Total
(dollars in Outstanding Commitments Exposure Exposure Exposure
thousands)
----------------------------------------------------------------------
Air
Transportation
United States
Regional
Passenger
Carriers $44,602 $12,903 $57,505 $59,231 $59,866
United States
National
Passenger
Carriers 37,771 - 37,771 37,259 37,684
Passenger
Carriers
Based Outside
United States 28,540 - 28,540 31,549 31,670
Cargo Carriers 13,771 - 13,771 14,405 14,405
----------------------------------------------------------------------
Total Air
Transportation $124,684 $12,903 $137,587 $142,444 $143,625
======================================================================
Guam
Hotel $9,348 $- $9,348 $17,733 $17,768
Other
Commercial 156,592 40,868 197,460 184,129 183,115
Consumer 308,689 12,968 321,657 288,831 277,521
----------------------------------------------------------------------
Total Guam $474,629 $53,836 $528,465 $490,693 $478,404
======================================================================
Syndicated
Exposure $186,214 $604,141 $790,354 $925,864 $918,503
======================================================================
Other Large
Borrowers (2) $81,394 $216,632 $298,026 $336,748 $350,897
======================================================================
Exposure includes loans, leveraged leases and operating leases.
(1) For three borrowers, reclassifications occurred between Regional
and National Carriers. Syndicated Exposure was restated.
(2) Other Large Borrowers is defined as exposure with commitments of
$25 million and greater, excluding those collateralized by cash
and those separately identified as Air Transportation, Guam, and
Syndicated Exposure.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past
Due 90 Days or More (Unaudited) Table 9
----------------------------------------------------------------------
(dollars in Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
thousands) 2004 2004 2004 2003 2003
----------------------------------------------------------------------
Non-Performing
Assets
Non-Accrual
Loans
Commercial
Commercial
and
Industrial $775 $680 $6,009 $6,015 $7,856
Commercial
Mortgage 5,552 5,649 7,388 9,337 10,977
Lease
Financing 1,913 1,948 1,962 2,181 2,388
----------------------------------------------------------------------
Total
Commercial 8,240 8,277 15,359 17,533 21,221
----------------------------------------------------------------------
Consumer
Residential
Mortgage 7,278 7,688 7,685 9,354 9,669
Home Equity 251 306 406 460 497
----------------------------------------------------------------------
Total
Consumer 7,529 7,994 8,091 9,814 10,166
----------------------------------------------------------------------
Total Non-
Accrual Loans 15,769 16,271 23,450 27,347 31,387
----------------------------------------------------------------------
Foreclosed Real
Estate 208 4,889 4,416 4,377 8,757
----------------------------------------------------------------------
Total Non-
Performing
Assets $15,977 $21,160 $27,866 $31,724 $40,144
======================================================================
Accruing Loans
Past Due 90
Days or More
Commercial
Commercial
and
Industrial $65 $19 $707 $725 $695
Commercial
Mortgage 688 693 702 - -
Lease
Financing - - - 117 -
----------------------------------------------------------------------
Total
Commercial 753 712 1,409 842 695
----------------------------------------------------------------------
Consumer
Residential
Mortgage 2,588 698 595 1,430 2,027
Purchased
Home
Equity 97 32 107 - 107
Other
Consumer 1,533 1,142 1,180 1,210 1,059
Lease
Financing 32 57 - - -
----------------------------------------------------------------------
Total
Consumer 4,250 1,929 1,882 2,640 3,193
----------------------------------------------------------------------
Total Accruing
and Past Due $5,003 $2,641 $3,291 $3,482 $3,888
======================================================================
Total Loans and
Leases $5,815,575 $5,787,314 $5,714,996 $5,757,175 $5,570,405
======================================================================
Ratio of Non-
Accrual Loans
to Total Loans 0.27% 0.28% 0.41% 0.48% 0.56%
----------------------------------------------------------------------
Ratio of Non-
Performing
Assets to
Total Loans
and Foreclosed
Real Estate 0.27% 0.37% 0.49% 0.55% 0.72%
----------------------------------------------------------------------
Ratio of Non-
Performing
Assets and
Accruing Loans
Past Due 90
Days or
More to
Total Loans 0.36% 0.41% 0.55% 0.61% 0.79%
----------------------------------------------------------------------
Quarter to
Quarter
Changes in
Non-Performing
Assets
Balance at
Beginning of
Quarter $21,160 $27,866 $31,724 $40,144 $41,952
Additions 2,094 3,909 3,293 2,340 3,199
Reductions
Payments (1,386) (4,232) (4,555) (3,416) (1,782)
Return to
Accrual (1,122) (2,700) (1,444) (839) (1,464)
Sales of
Foreclosed
Assets (682) (147) (310) (4,418) (1,025)
Charge-offs/
Write-downs (88) (3,536) (842) (2,087) (736)
Transfer to
Premises (3,999) - - - -
----------------------------------------------------------------------
Total
Reductions (7,277) (10,615) (7,151) (10,760) (5,007)
----------------------------------------------------------------------
Balance at End
of Quarter $15,977 $21,160 $27,866 $31,724 $40,144
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Allowance for Loan and Lease Losses (Unaudited) Table 10
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
(dollars in Sept. 30, June 30, Sept. 30, September 30,
thousands) 2004 2004 2003 2004 2003
----------------------------------------------------------------------
Balance at
Beginning of
Period $124,904 $127,185 $137,974 $129,080 $142,853
Loans Charged-
Off
Commercial
Commercial
and
Industrial 227 3,328 1,132 3,942 3,314
Commercial
Mortgage - - 149 574 549
Construction - - - - 529
Lease
Financing - 379 12 607 352
Consumer
Residential
Mortgage 226 319 39 690 1,416
Home Equity 11 9 - 20 89
Purchased
Home
Equity 173 201 114 464 114
Other
Consumer 4,268 4,564 6,784 13,487 13,492
Lease
Financing 45 28 50 109 167
----------------------------------------------------------------------
Total Loans
Charged-Off 4,950 8,828 8,280 19,893 20,022
----------------------------------------------------------------------
Recoveries on
Loans
Previously
Charged-Off
Commercial
Commercial
and
Industrial 1,206 1,245 551 3,431 2,942
Commercial
Mortgage 1,093 151 31 1,933 105
Construction 94 - - 529 955
Lease
Financing 2 1 1 18 18
Consumer
Residential
Mortgage 207 304 455 805 912
Home Equity 14 101 25 154 129
Purchased
Home
Equity 51 57 - 108 -
Other
Consumer 1,502 1,703 1,494 4,868 4,163
Lease
Financing 9 16 - 80 52
Foreign 519 6,469 424 7,038 568
----------------------------------------------------------------------
Total
Recoveries on
Loans
Previously
Charged-Off 4,697 10,047 2,981 18,964 9,844
----------------------------------------------------------------------
Net Loan
Recoveries
(Charge-Offs) (253) 1,219 (5,299) (929) (10,178)
Provision for
Loan and Lease
Losses - (3,500) - (3,500) -
----------------------------------------------------------------------
Balance at End
of Period $124,651 $124,904 $132,675 $124,651 $132,675
======================================================================
Average Loans
Outstanding $5,796,350 $5,772,926 $5,546,154 $5,770,642 $5,508,778
======================================================================
Ratio of Net
Loan Charge-
Offs to
Average Loans
Outstanding
(annualized) 0.02% (0.08)% 0.38% 0.02% 0.25%
Ratio of
Allowance to
Loans and
Leases
Outstanding 2.14% 2.16% 2.38% 2.14% 2.38%
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information (Unaudited) Table 11a
----------------------------------------------------------------------
Investment Treasury
(dollars in Retail Commercial Services and Other Consolidated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Three Months
Ended
September 30,
2004
Net Interest
Income $51,347 $33,978 $2,893 $10,561 $98,779
Provision for
Loan and Lease
Losses 2,121 (847) (1) (1,273) -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 49,226 34,825 2,894 11,834 98,779
Non-Interest
Income 22,430 15,399 12,762 2,463 53,054
----------------------------------------------------------------------
71,656 50,224 15,656 14,297 151,833
Non-Interest
Expense (43,605) (23,092) (13,559) (3,934) (84,190)
----------------------------------------------------------------------
Income Before
Income Taxes 28,051 27,132 2,097 10,363 67,643
Provision for
Income Taxes (10,379) (10,062) (776) (3,359) (24,576)
----------------------------------------------------------------------
Allocated Net
Income 17,672 17,070 1,321 7,004 43,067
----------------------------------------------------------------------
Allowance
Funding Value (166) (621) (6) 793 -
GAAP Provision 2,121 (847) (1) (1,273) -
Economic
Provision (3,584) (2,467) (86) (1) (6,138)
Tax Effect of
Adjustments 602 1,456 34 179 2,271
----------------------------------------------------------------------
Income Before
Capital Charge 16,645 14,591 1,262 6,702 39,200
Capital Charge (5,441) (4,828) (1,339) (8,516) (20,124)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $11,204 $9,763 $(77) $(1,814) $19,076
======================================================================
RAROC (ROE for
the Company) 33% 33% 10% 20% 23%
======================================================================
Total Assets at
September 30,
2004 $3,711,048 $2,295,916 $124,929 $3,462,916 $9,594,809
======================================================================
Three Months
Ended
September 30,
2003 (1)
Net Interest
Income $53,167 $34,126 $2,672 $1,140 $91,105
Provision for
Loan and Lease
Losses 2,451 3,549 (5) (5,995) -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 50,716 30,577 2,677 7,135 91,105
Non-Interest
Income 25,629 12,656 12,196 3,310 53,791
----------------------------------------------------------------------
76,345 43,233 14,873 10,445 144,896
Information
Technology
Systems
Replacement
Project (36) - - (4,313) (4,349)
Non-Interest
Expense (47,267) (22,966) (12,083) (2,212) (84,528)
----------------------------------------------------------------------
Income Before
Income Taxes 29,042 20,267 2,790 3,920 56,019
Provision for
Income Taxes (10,746) (7,366) (1,032) (188) (19,332)
----------------------------------------------------------------------
Allocated Net
Income 18,296 12,901 1,758 3,732 36,687
----------------------------------------------------------------------
Allowance
Funding Value (152) (940) (7) 1,099 -
GAAP Provision 2,451 3,549 (5) (5,995) -
Economic
Provision (3,014) (3,147) (98) (12) (6,271)
Tax Effect of
Adjustments 264 199 41 1,817 2,321
----------------------------------------------------------------------
Income Before
Capital Charge 17,845 12,562 1,689 641 32,737
Capital Charge (5,797) (5,657) (1,238) (11,272) (23,964)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $12,048 $6,905 $451 $(10,631) $8,773
======================================================================
RAROC (ROE for
the Company) 34% 24% 15% 2% 17%
======================================================================
Total Assets at
September 30,
2003 $3,512,927 $2,257,905 $111,474 $3,488,449 $9,370,755
======================================================================
(1) Certain 2003 information has been reclassified to conform to 2004
presentation.
Bank of Hawaii Corporation and Subsidiaries
Business Segment Selected Financial Information (Unaudited) Table 11b
----------------------------------------------------------------------
Investment Treasury
(dollars in Retail Commercial Services and Other Consolidated
thousands) Banking Banking Group Corporate Total
----------------------------------------------------------------------
Nine Months
Ended
September 30,
2004
Net Interest
Income $151,155 $101,648 $8,572 $29,284 $290,659
Provision for
Loan and Lease
Losses 7,455 1,630 47 (12,632) (3,500)
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 143,700 100,018 8,525 41,916 294,159
Non-Interest
Income 67,833 38,060 40,101 10,750 156,744
----------------------------------------------------------------------
211,533 138,078 48,626 52,666 450,903
Non-Interest
Expense (131,382) (69,339) (39,641) (11,975) (252,337)
----------------------------------------------------------------------
Income Before
Income Taxes 80,151 68,739 8,985 40,691 198,566
Provision for
Income Taxes (29,656) (25,436) (3,324) (13,052) (71,468)
----------------------------------------------------------------------
Allocated Net
Income 50,495 43,303 5,661 27,639 127,098
----------------------------------------------------------------------
Allowance
Funding Value (442) (2,045) (20) 2,507 -
GAAP Provision 7,455 1,630 47 (12,632) (3,500)
Economic
Provision (10,489) (8,065) (279) (6) (18,839)
Tax Effect of
Adjustments 1,286 3,138 93 3,749 8,266
----------------------------------------------------------------------
Income Before
Capital Charge 48,305 37,961 5,502 21,257 113,025
Capital Charge (16,696) (15,233) (3,919) (26,465) (62,313)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $31,609 $22,728 $1,583 $(5,208) $50,712
======================================================================
RAROC (ROE for
the Company) 32% 27% 15% 24% 22%
======================================================================
Total Assets at
September 30,
2004 $3,711,048 $2,295,916 $124,929 $3,462,916 $9,594,809
======================================================================
Nine Months
Ended
September 30,
2003 (1)
Net Interest
Income $158,498 $103,479 $8,627 $1,986 $272,590
Provision for
Loan and Lease
Losses 4,620 6,721 (5) (11,336) -
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Loan and Lease
Losses 153,878 96,758 8,632 13,322 272,590
Non-Interest
Income 71,938 29,756 37,537 10,052 149,283
----------------------------------------------------------------------
225,816 126,514 46,169 23,374 421,873
Information
Technology
Systems
Replacement
Project (986) (23) (333) (20,529) (21,871)
Non-Interest
Expense (136,145) (70,274) (36,457) (9,724) (252,600)
----------------------------------------------------------------------
Income (Loss)
Before Income
Taxes 88,685 56,217 9,379 (6,879) 147,402
Provision for
Income Taxes (32,814) (20,453) (3,470) 5,857 (50,880)
----------------------------------------------------------------------
Allocated Net
Income (Loss) 55,871 35,764 5,909 (1,022) 96,522
----------------------------------------------------------------------
Allowance
Funding Value (465) (3,181) (23) 3,669 -
GAAP Provision 4,620 6,721 (5) (11,336) -
Economic
Provision (8,623) (9,241) (334) (21) (18,219)
Tax Effect of
Adjustments 1,653 2,109 134 2,845 6,741
----------------------------------------------------------------------
Income (Loss)
Before Capital
Charge 53,056 32,172 5,681 (5,865) 85,044
Capital Charge (17,052) (16,522) (3,761) (39,011) (76,346)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $36,004 $15,650 $1,920 $(44,876) $8,698
======================================================================
RAROC (ROE for
the Company) 34% 21% 17% (6)% 14%
======================================================================
Total Assets at
September 30,
2003 $3,512,927 $2,257,905 $111,474 $3,488,449 $9,370,755
======================================================================
(1) Certain 2003 information has been reclassified to conform to 2004
presentation.
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data
(Unaudited) Table 12
----------------------------------------------------------------------
(dollars in Three Months Ended
thousands except Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
per share amounts) 2004 2004 2004 2003 2003
----------------------------------------------------------------------
Quarterly Operating
Results
Interest Income
Interest and Fees
on Loans and
Leases $82,079 $80,346 $81,428 $80,351 $82,715
Income on
Investment
Securities -
Available for
Sale 24,543 21,745 20,846 19,032 16,483
Income on
Investment
Securities -
Held to Maturity 6,370 6,711 6,976 7,183 6,407
Deposits 496 1,646 1,231 1,169 1,179
Funds Sold 108 177 417 85 248
Other 801 865 858 1,007 1,032
----------------------------------------------------------------------
Total Interest
Income 114,397 111,490 111,756 108,827 108,064
----------------------------------------------------------------------
Interest Expense
Deposits 8,990 8,560 9,200 9,433 10,284
Securities Sold
Under Agreements
to Repurchase 2,085 2,222 1,926 1,359 1,947
Funds Purchased 683 506 231 249 271
Short-Term
Borrowings 15 13 15 17 26
Long-Term Debt 3,845 4,340 4,353 4,417 4,431
----------------------------------------------------------------------
Total Interest
Expense 15,618 15,641 15,725 15,475 16,959
----------------------------------------------------------------------
Net Interest Income 98,779 95,849 96,031 93,352 91,105
Provision for Loan
and Lease Losses - (3,500) - - -
----------------------------------------------------------------------
Net Interest Income
After Provision
for Loan and Lease
Losses 98,779 99,349 96,031 93,352 91,105
----------------------------------------------------------------------
Non-Interest Income
Trust and Asset
Management 12,672 12,995 13,864 12,759 12,511
Mortgage Banking 1,711 2,808 1,977 3,324 5,888
Service Charges
on Deposit
Accounts 9,472 9,540 9,950 9,442 8,901
Fees, Exchange,
and Other
Service Charges 13,741 14,243 13,239 13,725 16,034
Investment
Securities Gains
(Losses) - (37) - (20) 639
Insurance 3,560 3,303 3,643 3,597 3,988
Other 11,898 11,996 6,169 6,610 5,830
----------------------------------------------------------------------
Total Non-Interest
Income 53,054 54,848 48,842 49,437 53,791
----------------------------------------------------------------------
Non-Interest
Expense
Salaries and
Benefits 46,566 46,689 46,001 46,409 45,731
Net Occupancy
Expense 9,812 9,543 9,386 9,933 9,806
Net Equipment
Expense 5,847 5,799 5,964 7,395 7,301
Information
Technology
Systems
Replacement
Project - - - - 4,349
Other 21,965 23,094 21,671 19,667 21,690
----------------------------------------------------------------------
Total Non-Interest
Expense 84,190 85,125 83,022 83,404 88,877
----------------------------------------------------------------------
Income Before
Income Taxes 67,643 69,072 61,851 59,385 56,019
Provision for
Income Taxes 24,576 24,840 22,052 20,712 19,332
----------------------------------------------------------------------
Net Income $43,067 $44,232 $39,799 $38,673 $36,687
======================================================================
Basic Earnings Per
Share $0.82 $0.84 $0.73 $0.70 $0.64
Diluted Earnings
Per Share $0.78 $0.79 $0.69 $0.66 $0.61
Balance Sheet
Totals
Total Assets 9,594,809 9,688,769 10,013,442 9,461,647 9,370,755
Net Loans 5,690,924 5,662,410 5,587,811 5,628,095 5,437,730
Total Deposits 7,413,240 7,469,288 7,363,922 7,332,779 7,102,116
Total Shareholders'
Equity 756,707 699,438 785,768 793,132 823,760
Performance Ratios
Net Income to
Average Total
Assets (ROA) 1.77% 1.80% 1.65% 1.66% 1.53%
Net Income to
Average
Shareholders'
Equity (ROE) 23.42% 24.28% 19.98% 18.59% 16.69%
Efficiency Ratio
(1) 55.45% 56.49% 57.31% 58.41% 61.34%
Efficiency Ratio
excluding Systems
Replacement Costs 55.45% 56.49% 57.31% 58.41% 58.34%
(1) The efficiency ratio is defined as non-interest expense divided by
total revenue (net interest income and non-interest income).
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SOURCE: Bank of Hawaii Corporation