Bank of Hawaii Corporation 2004 Financial Results
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HONOLULU--(BUSINESS WIRE)--Jan. 24, 2005--Bank of Hawaii Corporation (NYSE:BOH)
- 2004 Diluted Earnings Per Share $3.08, Up 39% From 2003
- 2004 Net Income $173.3 Million, Up 28% From 2003
- Board of Directors Increases Share Repurchase Authorization $100 Million
- Board of Directors Declares Dividend of $0.33 Per Share
Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share for 2004 of $3.08, up $0.87 or 39.4 percent from diluted earnings per share of $2.21 in 2003. Net income for the year was $173.3 million, up $38.1 million or 28.2 percent from $135.2 million in the previous year. The return on average assets in 2004 was 1.78 percent, up from 1.44 percent in 2003. The return on average equity for the year was 22.78 percent, up from 15.02 percent in 2003.
"I am very pleased with Bank of Hawaii Corporation's financial performance in 2004. We exceeded the financial objectives of the first year of our three-year plan," said Allan R. Landon, Chairman and CEO. "Additionally, we grew our businesses, improved our processes, and maintained excellent asset quality. The Hawaii economy remains solid and we are optimistic about 2005."
Diluted earnings per share for the fourth quarter of 2004 were $0.82, up $0.16 or 24.2 percent from $0.66 per diluted share for the same period last year. Net income in the fourth quarter of 2004 was $46.2 million, up $7.6 million or 19.6 percent from net income of $38.7 million in the fourth quarter last year. Results for the fourth quarter of 2004 included a return to income of $6.5 million before tax ($4.1 million after tax or $0.07 per diluted share), resulting from a release of the allowance for loan and lease losses due to further improvement in the Company's credit quality and continued strong economic conditions. The return on average assets for the fourth quarter of 2004 was 1.89 percent, up from 1.66 percent in the fourth quarter of 2003. The return on average equity was 23.63 percent for the quarter, up from 18.59 percent in the same quarter last year.
Financial Highlights
Net interest income, on a taxable equivalent basis, for the fourth quarter of 2004 was $100.0 million, up $1.2 million from $98.8 million in the third quarter of 2004 and up $6.6 million from $93.4 million in the fourth quarter last year. The increase in net interest income from the previous quarter was largely due to an increase in average earning assets. An analysis of the change in net interest income for the full year of 2004 is included in Table 6.
The net interest margin was 4.40 percent for the fourth quarter of 2004, a 1 basis point increase from 4.39 percent in the previous quarter and a 5 basis point increase from 4.35 percent in the fourth quarter of 2003. The net interest margin for the full year of 2004 was 4.32 percent, a 9 basis point increase from 4.23 percent in 2003.
The Company returned to income $6.5 million of the allowance for loan and lease losses during the fourth quarter of 2004. This was attributable to further improvement in the credit quality of the loan portfolio, lower than anticipated net charge-offs during 2004, management's ongoing assessment of the portfolio, and continued strength in the economic environment. In addition, the Company revised its allocation of the components of the allowance for loan and lease losses as a result of current accounting interpretations.
Non-interest income was $48.4 million for the fourth quarter, a decrease of $4.7 million or 8.9 percent compared to non-interest income of $53.1 million in the third quarter of 2004. 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. Excluding this gain, non-interest income increased $0.5 million as growth in trust and asset management fees and service charges on deposits offset losses on the sale of investment securities and a decline in insurance income. Non-interest income was down $1.1 million or 2.2 percent from non-interest income of $49.4 million in the fourth quarter of 2003 largely due to a decline in gains on sales of mortgage loans.
Non-interest expense was $82.1 million in the fourth quarter of 2004, down $2.1 million or 2.5 percent from $84.2 million in the previous quarter and down $1.3 million or 1.6 percent from $83.4 million in the same quarter last year. The decrease for both periods was due to a reduction in salaries and benefits related to incentive compensation and separation expenses. In addition, the fourth quarter of 2003 included higher stock-based compensation expense that was offset by a curtailment gain on post-retirement benefits. An analysis of salary and benefit expenses is included in Table 7.
The efficiency ratio for the fourth quarter of 2004 was 55.37 percent, an improvement from 55.45 percent in the previous quarter and from 58.41 percent in the same quarter last year. The efficiency ratio for the full year of 2004 was 56.14 percent compared to 63.38 percent for 2003. Excluding systems replacement costs, the efficiency ratio for 2003 was 59.51 percent.
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 methodologies. Business segment performance details are summarized in Tables 11a and 11b.
Asset Quality
Bank of Hawaii Corporation's strong credit quality continued to improve during the fourth quarter of 2004. Non-performing assets were $13.9 million at the end of the quarter, a decrease of $2.1 million, or 13.3 percent, compared to non-performing assets of $16.0 million at the end of the previous quarter. Non-performing assets declined $17.9 million, or 56.3 percent, compared to $31.7 million at the end of 2003. At December 31, 2004 the ratio of non-performing assets to total loans and foreclosed real estate was 0.23 percent compared with 0.27 percent at September 30, 2004 and 0.55 percent at December 31, 2003.
Non-accrual loans were $13.7 million at December 31, 2004, a reduction of $2.1 million, or 13.3 percent, from $15.8 million at September 30, 2004 and down $13.7 million, or 50.0 percent, from $27.3 million at December 31, 2003. Non-accrual loans as a percentage of total loans were 0.23 percent at December 31, 2004, down from 0.27 percent at the end of the previous quarter and down from 0.48 percent at the end of 2003.
Net charge-offs during the fourth quarter of 2004 were $4.6 million, or 0.31 percent (annualized) of total average loans, compared to $0.3 million, or 0.02 percent (annualized) of total average loans in the third quarter of 2004. Net charge-offs in the fourth quarter of 2004 were comprised of $6.7 million in charge-offs partially offset by recoveries of $2.1 million. Net charge-offs during the fourth quarter of 2003 were $3.6 million, or 0.26 percent (annualized) of total average loans. Net charge-offs for the full year of 2004 were $5.5 million, or 0.09 percent of total average loans, a decrease of $8.3 million, or 60.2 percent, from net charge-offs of $13.8 million, or 0.25 percent of total average loans in 2003.
The allowance for loan and lease losses was $106.8 million at December 31, 2004 down from $124.7 million at September 30, 2004 and down from $129.1 million at December 31, 2003. The decrease in the allowance from the previous quarter was partially due to the previously mentioned $6.5 million return to income from the allowance for loan and lease losses. The decrease from the previous year also reflects a $3.5 million return to income from the allowance for loan and lease losses during the second quarter of 2004. In addition, during the fourth quarter of 2004 $6.8 million was reclassified from the allowance for loan and lease losses to other liabilities representing the estimate for probable credit losses inherent in unfunded commitments to extend credit. The process used to determine the reserve for unfunded commitments remains consistent with the process for determining the allowance for loan and lease losses. The allowance for unfunded commitments at December 31, 2004 was up from $6.7 million at September 30, 2004 and down from $6.9 million at December 31, 2003.
The ratio of the allowance for loan and lease losses to total loans was 1.78 percent at December 31, 2004, down from 2.14 percent at September 30, 2004 and down from 2.24 percent at December 31, 2003. If the allowance for unfunded commitments had been reclassified at either September 30, 2004 or at December 31, 2003, the ratio of the allowance for loan and lease losses to total loans would have been 2.03 percent and 2.12 percent, respectively.
Concentrations of credit exposure to selected components of the portfolio are summarized in Table 8.
Other Financial Highlights
Total assets were $9.77 billion at December 31, 2004, up from $9.59 billion at September 30, 2004 and up from $9.46 billion at December 31, 2003. Total loans and leases were $5.99 billion at December 31, 2004, up from $5.82 billion at September 30, 2004 and up from $5.76 billion at December 31, 2003. Commercial lending increased during the quarter. Total commercial loans were $2.04 billion at December 31, 2004, up $87 million compared to $1.96 billion at September 30, 2004 and up $51 million from $1.99 billion at December 31, 2003. Consumer lending continued its solid pace in the fourth quarter. Total consumer loans were $3.86 billion at December 31, 2004, up $79 million compared to $3.78 billion at the end of the previous quarter and up $163 million compared to $3.69 billion at the end of 2003.
Total deposits at December 31, 2004 were $7.56 billion, up $151 million from total deposits of $7.41 billion at September 30, 2004 and up $232 million from total deposits of $7.33 billion at December 31, 2003. Non-interest bearing demand deposits were $1.98 billion at December 31, 2004, up $79 million compared to $1.90 billion at September 30, 2004 and up $44 million from $1.93 billion at December 31, 2003.
During the fourth quarter of 2004, Bank of Hawaii Corporation repurchased 1.0 million shares of common stock at a total cost of $50.3 million under its share repurchase program. The average cost was $49.01 per share repurchased during the quarter. From the beginning of the share repurchase program in July 2001 through December 31, 2004, the Company repurchased a total of 34.9 million shares and returned a total of $1,087.5 million to the shareholders at an average cost of $31.13 per share.
The Company's Board of Directors has increased the authorization under the share repurchase program by an additional $100 million of common stock. This new authorization, combined with the previously announced authorizations of $1,150 million, brings the total repurchase authority to $1,250 million. From January 1, 2005 through January 21, 2005, the Company repurchased an additional 0.4 million shares of common stock at an average cost of $48.98 per share. Remaining buyback authority under the share repurchase program was $141.7 million at January 21, 2005.
The Company's capital and liquidity remain strong. At December 31, 2004 the Tier 1 leverage ratio was 8.29 percent compared to 7.69 percent at September 30, 2004 and 8.43 percent at December 31, 2003.
The Company's Board of Directors has declared a quarterly cash dividend of $0.33 per share on the Company's outstanding shares. The dividend will be payable on March 14, 2005 to shareholders of record at the close of business on February 28, 2005.
Outlook
Hawaii enters 2005 with continued payroll growth, low unemployment, nominal personal income growth approaching 6.0 percent, reasonable inflation, and tourism at record levels. The dollar's continuing weakness and solid economic growth in Asia should contribute to further increases in international tourism. Construction and real estate investment are expected to remain strong drivers of growth in the Hawaii economy.
Bank of Hawaii Corporation currently estimates that its net income for 2005 should be approximately $174 million to $177 million. Based on current economic conditions, the Company expects further credit quality improvement and, as a result, the allowance for loan and lease losses may be further reduced. Net income estimates for 2005 include a $10 million provision for loan and lease losses. An analysis of credit quality is performed quarterly to determine the adequacy of the allowance for loan and lease losses. The results of this analysis determine the timing and amount of the provision for loan and lease losses. Earnings per share and return on equity projections continue to be dependent upon, among other things, the terms and timing of share repurchases.
Conference Call Information
The Company will review its fourth quarter 2004 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 800-573-4752 in the United States or 617-224-4324 for international callers. No confirmation code is required to access the call. A replay will be available for one week beginning Monday, January 24, 2005 by calling 888-286-8010 in the United States or 617-801-6888 for international callers and entering the number 60030955 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, including the statements under the caption "Outlook," contains forward-looking statements concerning, among other things, the economic and business environment in our service area and elsewhere, credit quality, the expected level of loan and lease loss provisioning, and anticipated net income and other financial and business matters in future periods. 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 Year Ended Ended Earnings Highlights and December 31, December 31, Performance Ratios 2004 2003 2004 2003 ---------------------------------------------------------------------- Net Income $46,241 $38,673 $173,339 $135,195 Basic Earnings Per Share 0.86 0.70 3.26 2.32 Diluted Earnings Per Share 0.82 0.66 3.08 2.21 Cash Dividends 18,200 16,770 66,326 50,589 Net Income to Average Total Assets (ROA) 1.89% 1.66% 1.78% 1.44% Net Income to Average Shareholders' Equity (ROE) 23.63% 18.59% 22.78% 15.02% Net Interest Margin 4.40% 4.35% 4.32% 4.23% Efficiency Ratio (1) 55.37% 58.41% 56.14% 63.38% Efficiency Ratio excluding System Replacement Costs 55.37% 58.41% 56.14% 59.51% ---------------------------------------------------------------------- Statement of Condition Highlights and December 31, Performance Ratios 2004 2003 ------------------------------------- ------------------------ Total Assets $9,766,191 $9,461,647 Net Loans 5,880,134 5,628,095 Total Deposits 7,564,667 7,332,779 Total Shareholders' Equity 814,834 793,132 Book Value Per Common Share $14.83 $14.44 Allowance / Loans and Leases Outstanding 1.78% 2.24% Average Equity / Average Assets 7.81% 9.60% Employees (FTE) 2,623 2,702 Branches and offices 87 89 Market Price Per Share of Common Stock for the Quarter Ended: Closing $50.74 $42.20 High $51.10 $42.99 Low $46.80 $33.69 (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 Year Ended except per share December 31, December 31, amounts) 2004 2003 2004 2003 ---------------------------------------------------------------------- Interest Income Interest and Fees on Loans and Leases $84,100 $80,351 $327,953 $334,793 Income on Investment Securities - Available for Sale 26,394 19,032 93,528 77,793 Income on Investment Securities - Held to Maturity 6,147 7,183 26,204 18,956 Deposits 107 1,169 3,480 4,816 Funds Sold 356 85 1,058 1,919 Other 267 1,007 2,791 4,244 ---------------------------------------------------------------------- Total Interest Income 117,371 108,827 455,014 442,521 ---------------------------------------------------------------------- Interest Expense Deposits 9,993 9,433 36,743 47,473 Securities Sold Under Agreements to Repurchase 3,120 1,359 9,353 7,939 Funds Purchased 395 249 1,815 944 Short-Term Borrowings 39 17 82 92 Long-Term Debt 3,893 4,417 16,431 20,131 ---------------------------------------------------------------------- Total Interest Expense 17,440 15,475 64,424 76,579 ---------------------------------------------------------------------- Net Interest Income 99,931 93,352 390,590 365,942 Provision for Loan and Lease Losses (6,500) - (10,000) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 106,431 93,352 400,590 365,942 ---------------------------------------------------------------------- Non-Interest Income Trust and Asset Management 13,934 12,759 53,465 50,996 Mortgage Banking 1,516 3,324 8,012 15,556 Service Charges on Deposit Accounts 10,155 9,442 39,117 35,938 Fees, Exchange, and Other Service Charges 13,684 13,725 54,907 56,221 Investment Securities Gains (Losses) (757) (20) (794) 1,789 Insurance 4,234 4,762 19,241 19,145 Other 5,584 5,445 31,146 19,075 ---------------------------------------------------------------------- Total Non-Interest Income 48,350 49,437 205,094 198,720 ---------------------------------------------------------------------- Non-Interest Expense Salaries and Benefits 45,043 46,409 184,299 186,280 Net Occupancy Expense 9,606 9,933 38,347 38,980 Net Equipment Expense 6,316 7,395 23,926 33,652 Information Technology Systems Replacement Project - - - 21,871 Other 21,138 19,667 87,868 77,092 ---------------------------------------------------------------------- Total Non-Interest Expense 82,103 83,404 334,440 357,875 ---------------------------------------------------------------------- Income Before Income Taxes 72,678 59,385 271,244 206,787 Provision for Income Taxes 26,437 20,712 97,905 71,592 ---------------------------------------------------------------------- Net Income $46,241 $38,673 $173,339 $135,195 ====================================================================== Basic Earnings Per Share $0.86 $0.70 $3.26 $2.32 Diluted Earnings Per Share $0.82 $0.66 $3.08 $2.21 Dividends Declared Per Share $0.33 $0.30 $1.23 $0.87 Basic Weighted Average Shares 53,766,057 55,374,874 53,232,815 58,338,566 Diluted Weighted Average Shares 56,055,531 58,570,941 56,241,044 61,085,567 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Consolidated Statements of Condition (Unaudited) Table 3 ---------------------------------------------------------------------- December 31, December 31, (dollars in thousands) 2004 2003 ---------------------------------------------------------------------- Assets Interest-Bearing Deposits $4,592 $154,735 Investment Securities - Available for Sale 2,483,719 1,991,116 Investment Securities - Held to Maturity (Market Value of $585,836 and $720,699) 589,908 727,233 Funds Sold 21,000 - Loans Held for Sale 17,642 9,211 Loans and Leases 5,986,930 5,757,175 Allowance for Loan and Lease Losses (106,796) (129,080) ---------------------------------------------------------------------- Net Loans 5,880,134 5,628,095 ---------------------------------------------------------------------- Total Earning Assets 8,996,995 8,510,390 ---------------------------------------------------------------------- Cash and Non-Interest-Bearing Deposits 225,359 363,495 Premises and Equipment 146,095 160,005 Customers' Acceptance Liability 1,406 1,707 Accrued Interest Receivable 36,044 32,672 Foreclosed Real Estate 191 4,377 Mortgage Servicing Rights 18,769 22,178 Goodwill 36,216 36,216 Other Assets 305,116 330,607 ---------------------------------------------------------------------- Total Assets $9,766,191 $9,461,647 ====================================================================== Liabilities Deposits Non-Interest-Bearing Demand $1,977,703 $1,933,928 Interest-Bearing Demand 1,536,323 1,356,330 Savings 2,960,351 2,833,379 Time 1,090,290 1,209,142 ---------------------------------------------------------------------- Total Deposits 7,564,667 7,332,779 ---------------------------------------------------------------------- Securities Sold Under Agreements to Repurchase 568,981 472,757 Funds Purchased 149,635 109,090 Short-Term Borrowings 15,000 12,690 Banker's Acceptances Outstanding 1,406 1,707 Retirement Benefits Payable 65,708 61,841 Accrued Interest Payable 7,021 7,483 Taxes Payable and Deferred Taxes 229,928 207,101 Other Liabilities 96,373 138,999 Long-Term Debt 252,638 324,068 ---------------------------------------------------------------------- Total Liabilities 8,951,357 8,668,515 ---------------------------------------------------------------------- Shareholders' Equity Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: December 2004 - 81,711,752 / 54,960,857, December 2003 - 81,647,729 / 54,928,480, 813 807 Capital Surplus 450,998 391,701 Accumulated Other Comprehensive Income (Loss) (12,917) (5,711) Retained Earnings 1,282,425 1,199,077 Deferred Stock Grants (8,433) (8,309) Treasury Stock, at Cost (Shares: December 2004 - 26,750,895, December 2003 - 26,719,249) (898,052) (784,433) ---------------------------------------------------------------------- Total Shareholders' Equity 814,834 793,132 ---------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $9,766,191 $9,461,647 ====================================================================== 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 173,339 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities (5,519) - - (5,519) Change in Pension Liability Adjustments (1,687) - - (1,687) Total Comprehensive Income Common Stock Issued under Stock Plans and Related Tax Benefits (5,280,205 shares) 159,972 6 59,297 - Treasury Stock Purchased (5,243,458 shares) (238,077) - - - Cash Dividends Paid (66,326) - - - ---------------------------------------------------------------------- Balance at December 31, 2004 $814,834 $813 $450,998 $(12,917) ====================================================================== Balance at December 31, 2002 $1,015,759 $806 $372,192 $11,659 Comprehensive Income: Net Income 135,195 - - - Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities (16,434) - - (16,434) Change in Pension Liability Adjustments (936) - - (936) Total Comprehensive Income Common Stock Issued under Stock Plans and Related Tax Benefits (1,683,424 shares) 40,115 1 19,509 - Treasury Stock Purchased (9,762,079 shares) (329,978) - - - Cash Dividends Paid (50,589) - - - ---------------------------------------------------------------------- Balance at December 31, 2003 $793,132 $807 $391,701 $(5,711) ====================================================================== ---------------------------------------------------------------------- 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 173,339 - - $173,339 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - - - (5,519) Change in Pension Liability Adjustments - - - (1,687) ---------- Total Comprehensive Income $166,133 ========== Common Stock Issued under Stock Plans and Related Tax Benefits (5,280,205 shares) (23,665) (124) 124,458 Treasury Stock Purchased (5,243,458 shares) - - (238,077) Cash Dividends Paid (66,326) - - ------------------------------------------------------------- Balance at December 31, 2004 $1,282,425 $(8,433) $(898,052) ============================================================= Balance at December 31, 2002 $1,115,910 $(1,424) $(483,384) Comprehensive Income: Net Income 135,195 - - $135,195 Other Comprehensive Income, Net of Tax: Change in Unrealized Gains and Losses on Investment Securities - - - (16,434) Change in Pension Liability Adjustments - - - (936) ---------- Total Comprehensive Income $117,825 ========== Common Stock Issued under Stock Plans and Related Tax Benefits (1,683,424 shares) (1,439) (6,885) 28,929 Treasury Stock Purchased (9,762,079 shares) - - (329,978) Cash Dividends Paid (50,589) - - ------------------------------------------------------------- Balance at December 31, 2003 $1,199,077 $(8,309) $(784,433) ============================================================= Bank of Hawaii Corporation and Subsidiaries Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited) Table 5a ---------------------------------------------------------------------- Three Months Ended Three Months Ended December 31, 2004 September 30, 2004 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- Earning Assets Interest-Bearing Deposits $21.0 $0.1 2.05% $82.6 $0.5 2.39% Funds Sold 74.3 0.4 1.92 28.6 0.1 1.51 Investment Securities Available for Sale 2,444.9 26.4 4.32 2,325.5 24.6 4.23 Held to Maturity 615.1 6.1 4.00 659.0 6.3 3.87 Loans Held for Sale 15.9 0.2 5.72 11.3 0.2 5.74 Loans and Leases Commercial and Industrial 773.6 11.2 5.78 796.2 10.6 5.34 Construction 115.2 1.5 5.10 81.1 1.0 5.01 Commercial Mortgage 624.4 8.6 5.47 658.9 8.8 5.29 Residential Mortgage 2,304.9 32.3 5.61 2,282.6 32.1 5.62 Installment 738.2 15.6 8.38 722.7 15.2 8.38 Home Equity 632.6 8.4 5.25 583.7 7.1 4.83 Purchased Home Equity 134.4 1.2 3.71 155.2 1.7 4.29 Lease Financing 511.1 5.1 3.97 516.0 5.4 4.17 ---------------------------------------------------------------------- Total Loans and Leases 5,834.4 83.9 5.73 5,796.4 81.9 5.63 ---------------------------------------------------------------------- Other 60.7 0.3 1.74 78.7 0.8 4.05 ---------------------------------------------------------------------- Total Earning Assets 9,066.3 117.4 5.17 8,982.1 114.4 5.08 ---------------------------------------------------------------------- Cash and Non-Interest- Bearing Deposits 307.5 316.9 Other Assets 369.2 369.5 --------- --------- Total Assets $9,743.0 $9,668.5 ========= ========= Interest-Bearing Liabilities Interest-Bearing Deposits Demand $1,500.0 $1.3 0.33% $1,471.0 $0.9 0.24% Savings 2,998.5 3.6 0.48 2,998.4 3.2 0.43 Time 1,063.7 5.1 1.92 1,078.4 4.9 1.81 ---------------------------------------------------------------------- Total Interest-Bearing Deposits 5,562.2 10.0 0.71 5,547.8 9.0 0.64 ---------------------------------------------------------------------- Short-Term Borrowings 776.0 3.5 1.82 816.9 2.8 1.36 Long-Term Debt 252.6 3.9 6.16 246.8 3.8 6.22 ---------------------------------------------------------------------- Total Interest-Bearing Liabilities 6,590.8 17.4 1.05 6,611.5 15.6 0.94 ---------------------------------------------------------------------- Net Interest Income $100.0 $98.8 ======= ======= Interest Rate Spread 4.12% 4.14% Net Interest Margin 4.40% 4.39% Non-Interest-Bearing Demand Deposits 1,954.2 1,932.0 Other Liabilities 419.4 393.4 Shareholders' Equity 778.6 731.6 --------- --------- Total Liabilities and Shareholders' Equity $9,743.0 $9,668.5 ========= ========= ----------------------------------------------- Three Months Ended December 31, 2003 Average Income/ Yield/ (dollars in millions) Balance Expense Rate ----------------------------------------------- Earning Assets Interest-Bearing Deposits $218.6 $1.2 2.12% Funds Sold 34.3 0.1 0.99 Investment Securities Available for Sale 1,900.2 19.0 4.01 Held to Maturity 740.5 7.2 3.88 Loans Held for Sale 13.9 0.2 6.21 Loans and Leases Commercial and Industrial 858.2 10.6 4.90 Construction 99.2 1.1 4.30 Commercial Mortgage 627.4 8.9 5.62 Residential Mortgage 2,336.3 34.5 5.90 Installment 598.1 13.4 8.89 Home Equity 453.0 5.6 4.89 Purchased Home Equity 104.7 0.6 2.24 Lease Financing 494.0 5.5 4.44 ----------------------------------------------- Total Loans and Leases 5,570.9 80.2 5.73 ----------------------------------------------- Other 76.8 1.0 5.20 ----------------------------------------------- Total Earning Assets 8,555.2 108.9 5.07 ----------------------------------------------- Cash and Non-Interest- Bearing Deposits 323.5 Other Assets 379.1 --------- Total Assets $9,257.8 ========= Interest-Bearing Liabilities Interest-Bearing Deposits Demand $1,293.8 0.5 0.16% Savings 2,786.6 3.2 0.46 Time 1,227.9 5.7 1.83 ----------------------------------------------- Total Interest-Bearing Deposits 5,308.3 9.4 0.71 ----------------------------------------------- Short-Term Borrowings 608.0 1.7 1.06 Long-Term Debt 324.2 4.4 5.43 ----------------------------------------------- Total Interest-Bearing Liabilities 6,240.5 15.5 0.99 ----------------------------------------------- Net Interest Income $93.4 ======= Interest Rate Spread 4.08% Net Interest Margin 4.35% Non-Interest-Bearing Demand Deposits 1,836.4 Other Liabilities 355.7 Shareholders' Equity 825.2 --------- Total Liabilities and Shareholders' Equity $9,257.8 ========= Bank of Hawaii Corporation and Subsidiaries Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited) Table 5b ---------------------------------------------------------------------- Year Ended Year Ended December 31, 2004 December 31, 2003 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- Earning Assets Interest-Bearing Deposits $189.7 $3.5 1.83% $227.3 $4.8 2.12% Funds Sold 85.6 1.0 1.24 162.9 1.9 1.18 Investment Securities Available for Sale 2,227.8 93.7 4.21 2,142.8 77.9 3.64 Held to Maturity 675.7 26.2 3.88 487.6 19.0 3.89 Loans Held for Sale 15.8 0.9 5.58 39.5 2.2 5.48 Loans and Leases Commercial and Industrial 810.4 42.3 5.22 860.3 41.9 4.87 Construction 99.3 4.5 4.56 96.3 4.4 4.56 Commercial Mortgage 639.1 34.5 5.40 644.8 37.4 5.81 Residential Mortgage 2,296.7 129.9 5.66 2,295.0 145.6 6.34 Installment 703.2 59.6 8.47 548.8 52.6 9.59 Home Equity 560.3 27.4 4.88 444.6 22.5 5.05 Purchased Home Equity 168.2 7.4 4.41 144.7 5.9 4.10 Lease Financing 509.5 21.5 4.21 489.9 22.3 4.55 ---------------------------------------------------------------------- Total Loans and Leases 5,786.7 327.1 5.65 5,524.4 332.6 6.02 ---------------------------------------------------------------------- Other 73.8 2.8 3.78 75.7 4.3 5.61 ---------------------------------------------------------------------- Total Earning Assets 9,055.1 455.2 5.03 8,660.2 442.7 5.11 ---------------------------------------------------------------------- Cash and Non-Interest- Bearing Deposits 314.6 328.4 Other Assets 375.8 388.9 --------- --------- Total Assets $9,745.5 $9,377.5 ========= ========= Interest-Bearing Liabilities Interest-Bearing Deposits Demand $1,433.1 $3.2 0.22% $1,215.7 $2.5 0.20% Savings 2,945.3 13.2 0.45 2,723.9 15.7 0.58 Time 1,114.8 20.3 1.82 1,352.3 29.3 2.17 ---------------------------------------------------------------------- Total Interest-Bearing Deposits 5,493.2 36.7 0.67 5,291.9 47.5 0.90 ---------------------------------------------------------------------- Short-Term Borrowings 884.0 11.3 1.27 724.2 9.0 1.24 Long-Term Debt 284.2 16.4 5.78 352.7 20.1 5.71 ---------------------------------------------------------------------- Total Interest-Bearing Liabilities 6,661.4 64.4 0.97 6,368.8 76.6 1.20 ---------------------------------------------------------------------- Net Interest Income $390.8 $366.1 ======= ======= Interest Rate Spread 4.06% 3.91% Net Interest Margin 4.32% 4.23% Non-Interest-Bearing Demand Deposits 1,929.1 1,753.9 Other Liabilities 394.0 354.7 Shareholders' Equity 761.0 900.1 --------- --------- Total Liabilities and Shareholders' Equity $9,745.5 $9,377.5 ========= ========= Bank of Hawaii Corporation and Subsidiaries Analysis of Change in Net Interest Income - Taxable Equivalent Basis (Unaudited) Table 6 ---------------------------------------------------------------------- Year Ended December 31, 2004 Compared to December 31, 2003 (dollars in millions) Volume (1) Rate (1) Total ---------------------------------------------------------------------- Change in Interest Income: Interest-Bearing Deposits $(0.7) $(0.6) $(1.3) Funds Sold (1.0) 0.1 (0.9) Investment Securities Available for Sale 3.2 12.6 15.8 Held to Maturity 7.2 - 7.2 Loans Held for Sale (1.3) - (1.3) Loans and Leases Commercial and Industrial (2.5) 2.9 0.4 Construction 0.1 - 0.1 Commercial Mortgage (0.3) (2.6) (2.9) Residential Mortgage 0.1 (15.8) (15.7) Installment 13.6 (6.6) 7.0 Home Equity 5.7 (0.8) 4.9 Purchased Home Equity 1.0 0.5 1.5 Lease Financing 0.9 (1.7) (0.8) ---------------------------------------------------------------------- Total Loans and Leases 18.6 (24.1) (5.5) ---------------------------------------------------------------------- Other (0.1) (1.4) (1.5) ---------------------------------------------------------------------- Total Change in Interest Income 25.9 (13.4) 12.5 ---------------------------------------------------------------------- Change in Interest Expense: Interest-Bearing Deposits Demand 0.5 0.2 0.7 Savings 1.2 (3.7) (2.5) Time (4.7) (4.3) (9.0) ---------------------------------------------------------------------- Total Interest-Bearing Deposits (3.0) (7.8) (10.8) ---------------------------------------------------------------------- Short-Term Borrowings 2.1 0.2 2.3 Long-Term Debt (3.9) 0.2 (3.7) ---------------------------------------------------------------------- Total Change in Interest Expense (4.8) (7.4) (12.2) ---------------------------------------------------------------------- Change in Net Interest Income $30.7 $(6.0) $24.7 ====================================================================== (1) The changes for each category of interest income and expense are divided between the portion of changes attributable to the variance in volume or rate for that category. Bank of Hawaii Corporation and Subsidiaries Salaries and Benefits (Unaudited) Table 7 ---------------------------------------------------------------------- Three Months Year Ended Ended December 31, December 31, (dollars in thousands) 2004 2003 2004 2003 ---------------------------------------------------------------------- Salaries $27,947 $27,972 $110,851 $114,376 Incentive Compensation 3,999 5,130 15,458 15,747 Stock-Based Compensation 2,926 5,128 11,726 9,215 Commission Expense 1,991 1,833 7,682 10,797 Retirement and Other Benefits 3,230 882 15,900 14,353 Payroll Taxes 2,115 2,009 11,063 10,454 Medical, Dental, and Life Insurance 2,050 1,981 8,354 7,371 Separation Expense 785 1,474 3,265 3,967 ---------------------------------------------------------------------- Total Salaries and Benefits $45,043 $46,409 $184,299 $186,280 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Loan Portfolio Balances (Unaudited) Table 8 ---------------------------------------------------------------------- December September June March December (dollars in 31, 30, 30, 31, 31, thousands) 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Domestic Loans Commercial Commercial and Industrial $871,485 $755,455 $776,815 $793,293 $816,246 Commercial Mortgage 602,678 648,991 643,382 650,566 639,354 Construction 122,355 104,709 98,916 91,002 101,321 Lease Financing 446,937 447,005 447,673 442,590 435,934 ---------------------------------------------------------------------- Total Commercial 2,043,455 1,956,160 1,966,786 1,977,451 1,992,855 ---------------------------------------------------------------------- Consumer Residential Mortgage 2,293,202 2,261,814 2,257,624 2,254,654 2,320,410 Home Equity 657,164 609,981 559,225 510,378 467,019 Purchased Home Equity 122,728 143,300 162,730 191,066 212,514 Other Consumer 751,821 729,747 721,386 671,893 658,831 Lease Financing 32,535 33,796 34,676 34,816 35,320 ---------------------------------------------------------------------- Total Consumer 3,857,450 3,778,638 3,735,641 3,662,807 3,694,094 ---------------------------------------------------------------------- Total Domestic Loans 5,900,905 5,734,798 5,702,427 5,640,258 5,686,949 ---------------------------------------------------------------------- Foreign Loans 86,025 80,777 84,887 74,738 70,226 ---------------------------------------------------------------------- Total Loans and Leases $5,986,930 $5,815,575 $5,787,314 $5,714,996 $5,757,175 ====================================================================== Selected Concentrations of Credit Exposure (Unaudited) ---------------------------------------------------------------------- December 31, 2004 Sept. 30, Dec. 31, 2004 2003 (1) (dollars in Unused Total Total Total thousands) Outstanding Commitments Exposure Exposure Exposure ---------------------------------------------------------------------- Air Transportation United States Regional Passenger Carriers $41,057 $11,707 $52,764 $57,505 $59,231 United States National Passenger Carriers 39,594 - 39,594 37,771 37,259 Passenger Carriers Based Outside United States 25,910 - 25,910 28,540 31,549 Cargo Carriers 13,771 - 13,771 13,771 14,405 ---------------------------------------------------------------------- Total Air Transportation $120,332 $11,707 $132,039 $137,587 $142,444 ====================================================================== Guam Hotel $6,014 $- $6,014 $9,348 $17,733 Other Commercial 143,819 42,467 186,286 197,460 184,129 Consumer 376,948 13,486 390,434 321,657 288,831 ---------------------------------------------------------------------- Total Guam $526,781 $55,953 $582,734 $528,465 $490,693 ====================================================================== Syndicated Exposure $201,359 $588,399 $789,758 $790,354 $925,864 ====================================================================== Other Large Borrowers (2) $109,921 $192,481 $302,402 $298,026 $336,748 ====================================================================== 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 ---------------------------------------------------------------------- December September June March December (dollars in 31, 30, 30, 31, 31, thousands) 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Non-Performing Assets Non-Accrual Loans Commercial Commercial and Industrial $683 $775 $680 $6,009 $6,015 Commercial Mortgage 2,106 5,552 5,649 7,388 9,337 Lease Financing 2,973 1,913 1,948 1,962 2,181 ---------------------------------------------------------------------- Total Commercial 5,762 8,240 8,277 15,359 17,533 ---------------------------------------------------------------------- Consumer Residential Mortgage 7,688 7,278 7,688 7,685 9,354 Home Equity 218 251 306 406 460 ---------------------------------------------------------------------- Total Consumer 7,906 7,529 7,994 8,091 9,814 ---------------------------------------------------------------------- Total Non- Accrual Loans 13,668 15,769 16,271 23,450 27,347 ---------------------------------------------------------------------- Foreclosed Real Estate 191 208 4,889 4,416 4,377 ---------------------------------------------------------------------- Total Non- Performing Assets $13,859 $15,977 $21,160 $27,866 $31,724 ====================================================================== Accruing Loans Past Due 90 Days or More Commercial Commercial and Industrial $52 $65 $19 $707 $725 Commercial Mortgage - 688 693 702 - Lease Financing - - - - 117 ---------------------------------------------------------------------- Total Commercial 52 753 712 1,409 842 ---------------------------------------------------------------------- Consumer Residential Mortgage 387 2,588 698 595 1,430 Purchased Home Equity 183 97 32 107 - Other Consumer 1,433 1,533 1,142 1,180 1,210 Lease Financing 30 32 57 - - ---------------------------------------------------------------------- Total Consumer 2,033 4,250 1,929 1,882 2,640 ---------------------------------------------------------------------- Total Accruing and Past Due $2,085 $5,003 $2,641 $3,291 $3,482 ====================================================================== Total Loans and Leases $5,986,930 $5,815,575 $5,787,314 $5,714,996 $5,757,175 ====================================================================== Ratio of Non- Accrual Loans to Total Loans 0.23% 0.27% 0.28% 0.41% 0.48% ---------------------------------------------------------------------- Ratio of Non- Performing Assets to Total Loans and Foreclosed Real Estate 0.23% 0.27% 0.37% 0.49% 0.55% ---------------------------------------------------------------------- Ratio of Non- Performing Assets and Accruing Loans Past Due 90 Days or More to Total Loans 0.27% 0.36% 0.41% 0.55% 0.61% ---------------------------------------------------------------------- Quarter to Quarter Changes in Non-Performing Assets Balance at Beginning of Quarter $15,977 $21,160 $27,866 $31,724 $40,144 Additions 7,178 2,094 3,909 3,293 2,340 Reductions Payments (8,449) (1,386) (4,232) (4,555) (3,416) Return to Accrual (456) (1,122) (2,700) (1,444) (839) Sales of Foreclosed Assets (206) (682) (147) (310) (4,418) Charge- offs/Write- downs (185) (88) (3,536) (842) (2,087) Transfer to Premises - (3,999) - - - ---------------------------------------------------------------------- Total Reductions (9,296) (7,277) (10,615) (7,151) (10,760) ---------------------------------------------------------------------- Balance at End of Quarter $13,859 $15,977 $21,160 $27,866 $31,724 ====================================================================== Bank of Hawaii Corporation and Subsidiaries Consolidated Allowance for Loan and Lease Losses (Unaudited) Table 10 ---------------------------------------------------------------------- Three Months Ended Year Ended December September December December (dollars in 31, 30, 31, 31, thousands) 2004 2004 2003 2004 2003 ---------------------------------------------------------------------- Balance at Beginning of Period $124,651 $124,904 $132,675 $129,080 $142,853 Loans Charged- Off Commercial Commercial and Industrial 465 227 1,997 4,408 5,311 Commercial Mortgage - - - 575 548 Construction - - - - 529 Lease Financing 774 - - 1,381 353 Consumer Residential Mortgage 128 226 462 819 1,877 Home Equity - 11 250 20 339 Purchased Home Equity 343 173 143 807 257 Other Consumer 4,903 4,268 3,919 18,390 17,412 Lease Financing 47 45 100 155 267 ---------------------------------------------------------------------- Total Loans Charged-Off 6,660 4,950 6,871 26,555 26,893 ---------------------------------------------------------------------- Recoveries on Loans Previously Charged-Off Commercial Commercial and Industrial 542 1,206 936 3,973 3,878 Commercial Mortgage 119 1,093 23 2,052 129 Construction - 94 3 529 958 Lease Financing 1 2 88 19 106 Consumer Residential Mortgage 109 207 115 915 1,027 Home Equity 5 14 4 158 - Purchased Home Equity 16 51 - 125 133 Other Consumer 1,267 1,502 2,015 6,136 6,177 Lease Financing 23 9 30 103 82 Foreign 23 519 62 7,061 630 ---------------------------------------------------------------------- Total Recoveries on Loans Previously Charged-Off 2,105 4,697 3,276 21,071 13,120 ---------------------------------------------------------------------- Net Loan Recoveries (Charge-Offs) (4,555) (253) (3,595) (5,484) (13,773) Provision for Loan and Lease Losses (6,500) - - (10,000) - Other Adjustments (6,800) - - (6,800) - ---------------------------------------------------------------------- Balance at End of Period $106,796 $124,651 $129,080 $106,796 $129,080 ====================================================================== Average Loans Outstanding $5,834,379 $5,796,350 $5,570,844 $5,786,663 $5,524,423 ====================================================================== Ratio of Net Loan Charge- Offs to Average Loans Outstanding (annualized) 0.31% 0.02% 0.26% 0.09% 0.25% Ratio of Allowance to Loans and Leases Outstanding 1.78% 2.14% 2.24% 1.78% 2.24% 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 December 31, 2004 Net Interest Income $52,531 $33,905 $2,995 $10,500 $99,931 Provision for Loan and Lease Losses 2,991 1,602 - (11,093) (6,500) ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 49,540 32,303 2,995 21,593 106,431 Non-Interest Income 22,590 9,410 13,747 2,603 48,350 ---------------------------------------------------------------------- 72,130 41,713 16,742 24,196 154,781 Non-Interest Expense (43,287) (21,758) (12,377) (4,681) (82,103) ---------------------------------------------------------------------- Income Before Income Taxes 28,843 19,955 4,365 19,515 72,678 Provision for Income Taxes (10,672) (7,379) (1,615) (6,771) (26,437) ---------------------------------------------------------------------- Allocated Net Income 18,171 12,576 2,750 12,744 46,241 ---------------------------------------------------------------------- Allowance Funding Value (162) (608) (6) 776 - GAAP Provision 2,991 1,602 - (11,093) (6,500) Economic Provision (3,565) (2,463) (91) (1) (6,120) Tax Effect of Adjustments 272 544 36 3,817 4,669 ---------------------------------------------------------------------- Income Before Capital Charge 17,707 11,651 2,689 6,243 38,290 Capital Charge (5,461) (4,672) (1,289) (9,992) (21,414) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $12,246 $6,979 $1,400 $(3,749) $16,876 ====================================================================== RAROC (ROE for the Company) 35% 27% 23% 16% 24% ====================================================================== Total Assets at December 31, 2004 $3,773,950 $2,376,776 $117,602 $3,497,863 $9,766,191 ====================================================================== Three Months Ended December 31, 2003 (1) Net Interest Income $49,691 $33,685 $2,888 $7,088 $93,352 Provision for Loan and Lease Losses 2,288 1,694 - (3,982) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 47,403 31,991 2,888 11,070 93,352 Non-Interest Income 23,229 11,218 12,461 2,529 49,437 ---------------------------------------------------------------------- 70,632 43,209 15,349 13,599 142,789 Non-Interest Expense (44,340) (21,102) (12,716) (5,246) (83,404) ---------------------------------------------------------------------- Income Before Income Taxes 26,292 22,107 2,633 8,353 59,385 Provision for Income Taxes (9,728) (8,049) (974) (1,961) (20,712) ---------------------------------------------------------------------- Allocated Net Income 16,564 14,058 1,659 6,392 38,673 ---------------------------------------------------------------------- Allowance Funding Value (130) (806) (8) 944 - GAAP Provision 2,288 1,694 - (3,982) - Economic Provision (3,309) (2,879) (98) (4) (6,290) Tax Effect of Adjustments 426 737 39 1,126 2,328 ---------------------------------------------------------------------- Income Before Capital Charge 15,839 12,804 1,592 4,476 34,711 Capital Charge (5,663) (5,367) (1,271) (10,396) (22,697) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $10,176 $7,437 $321 $(5,920) $12,014 ====================================================================== RAROC (ROE for the Company) 31% 26% 14% 21% 19% ====================================================================== Total Assets at December 31, 2003 $3,667,095 $2,323,267 $109,003 $3,362,282 $9,461,647 ====================================================================== (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 ---------------------------------------------------------------------- Year Ended December 31, 2004 Net Interest Income $203,541 $135,477 $11,524 $40,048 $390,590 Provision for Loan and Lease Losses 10,446 3,232 47 (23,725) (10,000) ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 193,095 132,245 11,477 63,773 400,590 Non-Interest Income 90,424 47,470 53,847 13,353 205,094 ---------------------------------------------------------------------- 283,519 179,715 65,324 77,126 605,684 Non-Interest Expense (174,670) (91,097) (52,018) (16,655) (334,440) ---------------------------------------------------------------------- Income Before Income Taxes 108,849 88,618 13,306 60,471 271,244 Provision for Income Taxes (40,274) (32,790) (4,924) (19,917) (97,905) ---------------------------------------------------------------------- Allocated Net Income 68,575 55,828 8,382 40,554 173,339 ---------------------------------------------------------------------- Allowance Funding Value (605) (2,653) (25) 3,283 - GAAP Provision 10,446 3,232 47 (23,725) (10,000) Economic Provision (14,054) (10,528) (370) (8) (24,960) Tax Effect of Adjustments 1,559 3,681 129 7,566 12,935 ---------------------------------------------------------------------- Income Before Capital Charge 65,921 49,560 8,163 27,670 151,314 Capital Charge (22,157) (19,905) (5,209) (36,458) (83,729) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $43,764 $29,655 $2,954 $(8,788) $67,585 ====================================================================== RAROC (ROE for the Company) 33% 27% 17% 22% 23% ====================================================================== Total Assets at December 31, 2004 $3,773,950 $2,376,776 $117,602 $3,497,863 $9,766,191 ====================================================================== Year Ended December 31, 2003 (1) Net Interest Income $208,189 $137,164 $11,515 $9,074 $365,942 Provision for Loan and Lease Losses 6,909 8,415 (5) (15,319) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 201,280 128,749 11,520 24,393 365,942 Non-Interest Income 95,168 40,975 49,998 12,579 198,720 ---------------------------------------------------------------------- 296,448 169,724 61,518 36,972 564,662 Information Technology Systems Replacement Project (986) (23) (333) (20,529) (21,871) Non-Interest Expense (180,484) (91,376) (49,174) (14,970) (336,004) ---------------------------------------------------------------------- Income Before Income Taxes 114,978 78,325 12,011 1,473 206,787 Provision for Income Taxes (42,542) (28,502) (4,444) 3,896 (71,592) ---------------------------------------------------------------------- Allocated Net Income 72,436 49,823 7,567 5,369 135,195 ---------------------------------------------------------------------- Allowance Funding Value (595) (3,987) (32) 4,614 - GAAP Provision 6,909 8,415 (5) (15,319) - Economic Provision (11,932) (12,120) (432) (25) (24,509) Tax Effect of Adjustments 2,079 2,846 174 3,969 9,068 ---------------------------------------------------------------------- Income (Loss) Before Capital Charge 68,897 44,977 7,272 (1,392) 119,754 Capital Charge (22,715) (21,889) (5,032) (49,405) (99,041) ---------------------------------------------------------------------- Net Income (Loss) After Capital Charge (NIACC) $46,182 $23,088 $2,240 $(50,797) $20,713 ====================================================================== RAROC (ROE for the Company) 33% 23% 16% (1)% 15% ====================================================================== Total Assets at December 31, 2003 $3,667,095 $2,323,267 $109,003 $3,362,282 $9,461,647 ====================================================================== (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 ---------------------------------------------------------------------- Three Months Ended (dollars in December September June March December thousands except 31, 30, 30, 31, 31, per share amounts) 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Quarterly Operating Results Interest Income Interest and Fees on Loans and Leases $84,100 $82,079 $80,346 $81,428 $80,351 Income on Investment Securities - Available for Sale 26,394 24,543 21,745 20,846 19,032 Income on Investment Securities - Held to Maturity 6,147 6,370 6,711 6,976 7,183 Deposits 107 496 1,646 1,231 1,169 Funds Sold 356 108 177 417 85 Other 267 801 865 858 1,007 ---------------------------------------------------------------------- Total Interest Income 117,371 114,397 111,490 111,756 108,827 ---------------------------------------------------------------------- Interest Expense Deposits 9,993 8,990 8,560 9,200 9,433 Securities Sold Under Agreements to Repurchase 3,120 2,085 2,222 1,926 1,359 Funds Purchased 395 683 506 231 249 Short-Term Borrowings 39 15 13 15 17 Long-Term Debt 3,893 3,845 4,340 4,353 4,417 ---------------------------------------------------------------------- Total Interest Expense 17,440 15,618 15,641 15,725 15,475 ---------------------------------------------------------------------- Net Interest Income 99,931 98,779 95,849 96,031 93,352 Provision for Loan and Lease Losses (6,500) - (3,500) - - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan and Lease Losses 106,431 98,779 99,349 96,031 93,352 ---------------------------------------------------------------------- Non-Interest Income Trust and Asset Management 13,934 12,672 12,995 13,864 12,759 Mortgage Banking 1,516 1,711 2,808 1,977 3,324 Service Charges on Deposit Accounts 10,155 9,472 9,540 9,950 9,442 Fees, Exchange, and Other Service Charges 13,684 13,741 14,243 13,239 13,725 Investment Securities Gains (Losses) (757) - (37) - (20) Insurance 4,234 5,423 4,926 4,658 4,762 Other 5,584 10,035 10,373 5,154 5,445 ---------------------------------------------------------------------- Total Non-Interest Income 48,350 53,054 54,848 48,842 49,437 ---------------------------------------------------------------------- Non-Interest Expense Salaries and Benefits 45,043 46,566 46,689 46,001 46,409 Net Occupancy Expense 9,606 9,812 9,543 9,386 9,933 Net Equipment Expense 6,316 5,847 5,799 5,964 7,395 Other 21,138 21,965 23,094 21,671 19,667 ---------------------------------------------------------------------- Total Non-Interest Expense 82,103 84,190 85,125 83,022 83,404 ---------------------------------------------------------------------- Income Before Income Taxes 72,678 67,643 69,072 61,851 59,385 Provision for Income Taxes 26,437 24,576 24,840 22,052 20,712 ---------------------------------------------------------------------- Net Income $46,241 $43,067 $44,232 $39,799 $38,673 ====================================================================== Basic Earnings Per Share $0.86 $0.82 $0.84 $0.73 $0.70 Diluted Earnings Per Share $0.82 $0.78 $0.79 $0.69 $0.66 Balance Sheet Totals Total Assets 9,766,191 9,594,809 9,688,769 10,013,442 9,461,647 Net Loans 5,880,134 5,690,924 5,662,410 5,587,811 5,628,095 Total Deposits 7,564,667 7,413,240 7,469,288 7,363,922 7,332,779 Total Shareholders' Equity 814,834 756,707 699,438 785,768 793,132 Performance Ratios Net Income to Average Total Assets (ROA) 1.89% 1.77% 1.80% 1.65% 1.66% Net Income to Average Shareholders' Equity (ROE) 23.63% 23.42% 24.28% 19.98% 18.59% Efficiency Ratio (1) 55.37% 55.45% 56.49% 57.31% 58.41% (1) The efficiency ratio is defined as non-interest expense divided by total revenue (net interest income and non-interest income).
CONTACT: Bank of Hawaii Corporation
Stafford Kiguchi, 808-537-8580 (Media)
Pager: 877-849-5423
skiguchi@boh.com
Cindy Wyrick, 808-537-8430 (Investors/Analysts)
cwyrick@boh.com
SOURCE: Bank of Hawaii Corporation