Bank of Hawaii Corporation Third Quarter 2006 Financial Results
Bank of Hawaii Corporation Third Quarter 2006 Financial Results
October 23, 2006
Click here for a printable version of the Third Quarter 2006 Financial Results.
A -- Board of Directors Increases Dividend 11 Percent to $0.41 Per ShareHONOLULU, Oct 23, 2006 (BUSINESS WIRE) -- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.93 for the third quarter of 2006, up from $0.85 in the third quarter of 2005 and up from $0.73 in the second quarter of 2006. Net income for the third quarter of 2006 was $46.9 million, up $2.1 million from $44.8 million in the third quarter of 2005 and up $9.7 million from $37.2 million in the second quarter of 2006.
The return on average assets for the third quarter of 2006 was 1.81 percent, compared to 1.74 percent in the third quarter of 2005 and 1.47 percent in the second quarter of 2006. The return on average shareholders equity was 27.09 percent for the third quarter of 2006, up from 24.61 percent in the third quarter last year and up from 21.70 percent in the previous quarter.
"Bank of Hawaii Corporation had another solid financial performance during the third quarter of 2006 despite a challenging rate environment," said Allan R. Landon, Chairman and CEO. "Loan growth and asset quality were strong during the third quarter and we were able to stabilize net interest income and overall deposit levels."
For the nine months ended September 30, 2006, net income was $129.4 million, down $7.3 million compared to net income of $136.8 million for the same period last year. Diluted earnings per share were $2.53 for the nine month period in 2006, down from diluted earnings per share of $2.55 for the same period in 2005. Results for 2006 include a charge of $8.8 million, or $0.17 per diluted share, as a result of the May 2006 Tax Increase Prevention and Reconciliation Act ("TIPRA"), which repealed the exclusion from federal income taxation of a portion of the income from foreign sales corporations. Excluding the TIPRA adjustment, results for the nine months ended September 30, 2006 were $138.3 million, an increase of $1.5 million compared with the same period last year. Results for the nine month period in 2006 included a provision for credit losses of $7.6 million compared to a provision for credit losses of $3.0 million during the comparable period in 2005.
The year-to-date return on average assets was 1.70 percent, down from 1.83 percent for the same period in 2005. The year-to-date return on average shareholders equity was 24.99 percent, up from 24.72 percent for the nine months ended September 30, 2005.
Financial Highlights
Net interest income, on a taxable equivalent basis, for the third quarter of 2006 was $100.5 million, down $1.6 million from $102.1 million in the third quarter of 2005 and up $0.5 million from $100.0 million in the second quarter of 2006. An analysis of the change in net interest income from the previous quarter is included in Table 6.
The net interest margin was 4.20 percent for the third quarter of 2006, a 10 basis point decrease from 4.30 percent in the third quarter of 2005 and a 5 basis point decrease from 4.25 percent in the second quarter of 2006. The decrease was primarily due to the effects of the inverted yield curve in the third quarter of 2006 and a continued shift in the funding mix.
Results for the third quarter of 2006 included a provision for credit losses of $2.8 million compared to $3.0 million in the third quarter of 2005 and $2.1 million in the second quarter of 2006.
Noninterest income was $56.9 million for the third quarter of 2006, an increase of $1.4 million or 2.5 percent compared to noninterest income of $55.5 million in the third quarter of 2005 and up $3.7 million or 6.9 percent compared to noninterest income of $53.2 million in the second quarter of 2006.
Noninterest expense was $79.8 million in the third quarter of 2006, down $4.8 million or 5.7 percent from noninterest expense of $84.6 million in the same quarter last year and up $1.1 million or 1.3 percent from $78.7 million in the prior quarter. An analysis of salary and benefit expenses is included in Table 7.
The efficiency ratio for the third quarter of 2006 was 50.75 percent, an improvement from 53.72 percent in the same quarter last year and from 51.45 percent in the previous quarter. For the nine months ended September 30, 2006, the efficiency ratio was 51.47 percent compared to 52.90 percent for the same period in 2005.
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. Selected financial information for the business segments is included in Tables 11a and 11b.
Asset Quality
Asset quality remained strong during the third quarter of 2006. Non-performing assets were $5.4 million at the end of the quarter, down $2.8 million, or 34.0 percent, compared to $8.3 million at the end of the same quarter last year and essentially flat with the end of the previous quarter. The ratio of non-performing assets to total loans, foreclosed real estate, and other investments at September 30, 2006 was 0.08 percent, down from 0.13 percent at September 30, 2005 and unchanged from June 30, 2006.
Non-accrual loans and leases were $5.0 million at September 30, 2006, down $2.2 million or 30.8 percent from $7.2 million at September 30, 2005 and down approximately $0.2 million, or 3.1 percent from $5.1 million at June 30, 2006. Non-accrual loans and leases as a percentage of total loans and leases at September 30, 2006 were 0.08 percent, down from 0.12 percent at September 30, 2005 and unchanged from June 30, 2006.
Net charge-offs for the third quarter of 2006 were $2.8 million or 0.17 percent annualized of total average loans and leases compared to net charge-offs of $13.0 million or 0.84 percent annualized of total average loans and leases in the same quarter last year. Net charge-offs during the third quarter of 2005 included a $10.0 million write-off of a fully reserved aircraft lease. Net charge-offs for the second quarter of 2006 were $2.1 million or 0.13 percent annualized of total average loans and leases. Details of the reserve for credit losses are summarized in Table 10.
The allowance for loan and lease losses was $90.8 million at September 30, 2006, down $0.9 million from $91.7 million at September 30, 2005 and down $0.2 million from $91.0 million at June 30, 2006. The ratio of allowance for loan and lease losses to total loans was 1.40 percent at September 30, 2006, down from 1.48 percent at September 30, 2005 and down from 1.41 percent at June 30, 2006. The reserve for unfunded commitments at September 30, 2006 was $5.4 million, up from $4.5 million at September 30, 2005 and up from $5.1 million at June 30, 2006.
Credit exposure to the air transportation industry is summarized in Table 8.
Other Financial Highlights
Total assets were $10.37 billion at September 30, 2006, up $286 million from $10.09 billion at September 30, 2005 and up $46 million from $10.33 billion at June 30, 2006. Total loans and leases were $6.49 billion at September 30, 2006, up $287 million from $6.20 billion at September 30, 2005 and up $47 million from $6.44 billion at June 30, 2006. Commercial loans were $2.36 billion at September 30, 2006, up $170 million from $2.19 billion at September 30, 2005 and up $42 million from $2.32 billion at June 30, 2006. Consumer loans were $4.13 billion at September 30, 2006, up $116 million from $4.01 billion at September 30, 2005 and up $6 million from $4.13 billion at June 30, 2006.
Total deposits at September 30, 2006 were $7.69 billion, down $69 million from $7.76 billion at September 30, 2005 and down $79 million from $7.77 billion at June 30, 2006. Despite lower deposit balances, the total number of business and consumer deposit accounts increased compared to June 30, 2006 and September 30, 2005. Average total deposits were $7.73 billion during the third quarter of 2006, down $102 million from the same quarter last year and up $4 million from $7.73 billion during the previous quarter.
During the third quarter of 2006, the Company repurchased 950.0 thousand shares of common stock at a total cost of $46.6 million under its share repurchase program. The average cost was $49.03 per share repurchased. From the beginning of the share repurchase program in July 2001 through September 30, 2006, the Company repurchased a total of 42.1 million shares and returned over $1.4 billion to shareholders at an average cost of $34.22 per share. From October 1, 2006 through October 20, 2006, the Company has repurchased an additional 122.5 thousand shares of common stock at an average cost of $48.36 per share. Remaining buyback authority under the share repurchase program was $102.5 million at October 20, 2006.
At September 30, 2006 the Tier 1 leverage ratio was 6.90 percent compared to 6.98 percent at September 30, 2005 and 7.09 percent at June 30, 2006.
The Company's Board of Directors has declared a quarterly cash dividend of $0.41 per share on the Company's outstanding shares. The dividend will be payable on December 14, 2006 to shareholders of record at the close of business on November 30, 2006.
Financial Outlook
The Company's previous earnings estimate of approximately $178 million in net income for the full year of 2006 remains unchanged. An analysis of credit quality is performed quarterly to determine the adequacy of the reserve for credit losses. This analysis determines the timing and amount of the provision for credit losses.
Forward-Looking Statements
This news release contains, and other statements made by the Company in connection with this earnings release may contain, forward-looking statements concerning, among other things, the economic and business environment in our service area and elsewhere, credit quality, 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, taxing authority interpretations, legislation in Hawaii and the other markets we serve, or the timing and interpretation of proposed accounting standards; 2) changes in our credit quality or risk profile that may increase or decrease the required level of reserve for credit losses; 3) changes in market interest rates that may affect our credit markets and ability to maintain our net interest margin; 4) unpredictable costs and other consequences of legal, tax or regulatory matters involving the Company; 5) changes to the amount and timing of our proposed equity repurchases; 6) real or threatened acts of war or terrorist activity affecting business conditions; and 7) adverse weather, public health, and other natural hazards or conditions impacting the Company and its customers' operations. For further discussion of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements, please refer to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2005 filed with the U.S. Securities and Exchange Commission. We do not undertake an obligation to update forward-looking statements to reflect later events or circumstances.
Conference Call Information
The Company will review its third quarter 2006 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 800-299-7928 in the United States or 617-614-3926 for international callers. No passcode is required to access the call. A replay will be available for one week beginning Monday, October 23, 2006 by calling 888-286-8010 in the United States or 617-801-6888 internationally and entering the number 97074126 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.
Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited) Table 1
----------------------------------------------------------------------
Three Months Ended
---------------------------------------
September 30, June 30, September 30,
(dollars in thousands, except
per share amounts) 2006 2006 2005
----------------------------------------------------------------------
For the Period:
Interest Income $ 146,960 $ 140,769 $ 129,234
Net Interest Income 100,350 99,856 101,960
Net Income 46,920 37,176 44,829
Basic Earnings Per Share 0.95 0.74 0.87
Diluted Earnings Per Share 0.93 0.73 0.85
Dividends Declared Per Share 0.37 0.37 0.33
Net Income to Average Total
Assets (ROA) 1.81 % 1.47 % 1.74 %
Net Income to Average
Shareholders' Equity (ROE) 27.09 21.70 24.61
Net Interest Margin (1) 4.20 4.25 4.30
Efficiency Ratio (2) 50.75 51.45 53.72
Average Assets $10,309,314 $10,169,341 $10,196,047
Average Loans and Leases 6,470,862 6,317,623 6,170,302
Average Deposits 7,731,993 7,728,227 7,833,638
Average Shareholders' Equity 687,172 687,083 722,758
Average Shareholders' Equity
to Average Assets 6.67 % 6.76 % 7.09 %
Market Price Per Share of
Common Stock:
Closing $ 48.16 $ 49.60 $ 49.22
High 50.75 54.51 54.44
Low 47.00 48.33 47.44
Nine Months Ended
--------------------------
September 30,
(dollars in thousands, except per share
amounts) 2006 2005
---------------------------------------------------------------------
For the Period:
Interest Income $ 423,132 $ 373,497
Net Interest Income 302,408 303,657
Net Income 129,446 136,780
Basic Earnings Per Share 2.58 2.62
Diluted Earnings Per Share 2.53 2.55
Dividends Declared Per Share 1.11 0.99
Net Income to Average Total Assets (ROA) 1.70 % 1.83 %
Net Income to Average Shareholders' Equity
(ROE) 24.99 24.72
Net Interest Margin (1) 4.29 4.36
Efficiency Ratio (2) 51.47 52.90
Average Assets $10,190,904 $10,004,968
Average Loans and Leases 6,324,454 6,087,629
Average Deposits 7,734,242 7,756,789
Average Shareholders' Equity 692,643 739,721
Average Shareholders' Equity to Average
Assets 6.80 % 7.39 %
Market Price Per Share of Common Stock:
Closing $ 48.16 $ 49.22
High 55.15 54.44
Low 47.00 43.82
September 30, June 30, September 30,
2006 2006 2005 (3)
---------------------------------------------------------------------
At Period End:
Net Loans and Leases $ 6,398,262 $ 6,350,590 $ 6,110,892
Total Assets 10,371,215 10,325,190 10,085,235
Deposits 7,687,123 7,766,033 7,756,586
Long-Term Debt 265,268 242,749 242,692
Shareholders' Equity 683,472 666,728 696,311
Ratio of Allowance for Loan
and Lease Losses to Loans and
Leases Outstanding 1.40 % 1.41 % 1.48 %
Dividend Payout Ratio (4) 38.95 50.00 37.93
Leverage Capital Ratio 6.90 7.09 6.98
Book Value Per Common
Share $ 13.72 $ 13.18 $ 13.58
Full-Time Equivalent
Employees 2,589 2,563 2,591
Branches and Offices 86 86 85
(1) The net interest margin is defined as net interest income, on a
fully-taxable equivalent basis, as a percentage of average earning
assets.
(2) The efficiency ratio is defined as noninterest expense divided by
total revenue (net interest income and noninterest income).
(3) Certain prior period information has been reclassified to conform
to current presentation.
(4) Dividend payout ratio is defined as dividends declared per share
divided by basic earnings per share for the quarter.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
----------------------------------------------------------------------
Three Months Ended
September 30, June 30, September 30,
(dollars in thousands, except
per share amounts) 2006 2006 2005
----------------------------------------------------------------------
Interest Income
Interest and Fees on Loans
and Leases $ 110,065 $ 104,388 $ 94,381
Income on Investment
Securities - Available-for-
Sale 31,949 31,226 28,482
Income on Investment
Securities - Held-to-
Maturity 4,558 4,658 5,109
Deposits 50 55 57
Funds Sold 66 170 935
Other 272 272 270
----------------------------------------------------------------------
Total Interest Income 146,960 140,769 129,234
----------------------------------------------------------------------
Interest Expense
Deposits 28,464 24,656 15,766
Securities Sold Under
Agreements to Repurchase 11,959 9,802 6,796
Funds Purchased 2,270 2,652 901
Short-Term Borrowings 82 73 50
Long-Term Debt 3,835 3,730 3,761
----------------------------------------------------------------------
Total Interest Expense 46,610 40,913 27,274
----------------------------------------------------------------------
Net Interest Income 100,350 99,856 101,960
Provision for Credit Losses 2,785 2,069 3,000
----------------------------------------------------------------------
Net Interest Income After
Provision for Credit Losses 97,565 97,787 98,960
----------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 14,406 14,537 14,052
Mortgage Banking 2,394 2,569 2,618
Service Charges on Deposit
Accounts 10,723 9,695 10,046
Fees, Exchange, and Other
Service Charges 16,266 15,633 15,394
Investment Securities Gains,
Net 19 - 8
Insurance 6,713 4,691 5,324
Other 6,366 6,076 8,074
----------------------------------------------------------------------
Total Noninterest Income 56,887 53,201 55,516
----------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 43,133 44,811 44,366
Net Occupancy 9,998 9,376 9,896
Net Equipment 5,285 4,802 5,335
Professional Fees 2,638 2,589 5,689
Other 18,751 17,164 19,310
----------------------------------------------------------------------
Total Noninterest Expense 79,805 78,742 84,596
----------------------------------------------------------------------
Income Before Provision for
Income Taxes 74,647 72,246 69,880
Provision for Income Taxes 27,727 35,070 25,051
----------------------------------------------------------------------
Net Income $ 46,920 $ 37,176 $ 44,829
======================================================================
Basic Earnings Per Share $ 0.95 $ 0.74 $ 0.87
Diluted Earnings Per Share $ 0.93 $ 0.73 $ 0.85
Dividends Declared Per Share $ 0.37 $ 0.37 $ 0.33
Basic Weighted Average Shares 49,586,947 50,181,817 51,385,840
Diluted Weighted Average Shares 50,506,267 51,217,281 52,844,961
======================================================================
Nine Months Ended
September 30,
(dollars in thousands, except per share
amounts) 2006 2005
----------------------------------------------------------------------
Interest Income
Interest and Fees on Loans and Leases $ 313,824 $ 270,967
Income on Investment Securities -
Available-for-Sale 94,010 83,788
Income on Investment Securities - Held-
to-Maturity 13,973 16,461
Deposits 148 116
Funds Sold 361 1,175
Other 816 990
----------------------------------------------------------------------
Total Interest Income 423,132 373,497
----------------------------------------------------------------------
Interest Expense
Deposits 72,753 40,947
Securities Sold Under Agreements to
Repurchase 29,651 14,683
Funds Purchased 6,815 2,785
Short-Term Borrowings 212 127
Long-Term Debt 11,293 11,298
----------------------------------------------------------------------
Total Interest Expense 120,724 69,840
----------------------------------------------------------------------
Net Interest Income 302,408 303,657
Provision for Credit Losses 7,615 3,000
----------------------------------------------------------------------
Net Interest Income After Provision for
Credit Losses 294,793 300,657
----------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 43,791 42,732
Mortgage Banking 7,950 7,802
Service Charges on Deposit Accounts 30,550 29,794
Fees, Exchange, and Other Service Charges 46,666 44,441
Investment Securities Gains, Net 19 345
Insurance 16,423 15,442
Other 17,261 17,949
----------------------------------------------------------------------
Total Noninterest Income 162,660 158,505
----------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 133,730 132,991
Net Occupancy 29,017 28,630
Net Equipment 15,115 16,183
Professional Fees 5,665 11,645
Other 55,838 55,014
----------------------------------------------------------------------
Total Noninterest Expense 239,365 244,463
----------------------------------------------------------------------
Income Before Provision for Income Taxes 218,088 214,699
Provision for Income Taxes 88,642 77,919
----------------------------------------------------------------------
Net Income $ 129,446 $ 136,780
======================================================================
Basic Earnings Per Share $ 2.58 $ 2.62
Diluted Earnings Per Share $ 2.53 $ 2.55
Dividends Declared Per Share $ 1.11 $ 0.99
Basic Weighted Average Shares 50,180,280 52,221,345
Diluted Weighted Average Shares 51,226,763 53,745,612
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition (Unaudited) Table 3
----------------------------------------------------------------------
September 30, June 30,
(dollars in thousands) 2006 2006
----------------------------------------------------------------------
Assets
Interest-Bearing Deposits $ 5,238 $ 4,145
Funds Sold - -
Investment Securities - Available-for-Sale
Held in Portfolio 1,973,719 2,177,220
Pledged as Collateral 678,914 334,947
Investment Securities - Held-to-Maturity
(Fair Value of $385,891; $408,203;
$442,989; and $475,884) 397,520 426,910
Loans Held for Sale 15,336 15,506
Loans and Leases 6,489,057 6,441,625
Allowance for Loan and Lease Losses (90,795) (91,035)
----------------------------------------------------------------------
Net Loans and Leases 6,398,262 6,350,590
----------------------------------------------------------------------
Total Earning Assets 9,468,989 9,309,318
----------------------------------------------------------------------
Cash and Noninterest-Bearing Deposits 283,621 397,061
Premises and Equipment 127,521 130,435
Customers' Acceptances 673 646
Accrued Interest Receivable 49,339 45,343
Foreclosed Real Estate 409 188
Mortgage Servicing Rights 18,995 18,750
Goodwill 34,959 34,959
Other Assets 386,709 388,490
----------------------------------------------------------------------
Total Assets $10,371,215 $10,325,190
======================================================================
Liabilities
Deposits
Noninterest-Bearing Demand $ 1,879,644 $ 1,976,051
Interest-Bearing Demand 1,608,774 1,602,914
Savings 2,596,940 2,691,029
Time 1,601,765 1,496,039
----------------------------------------------------------------------
Total Deposits 7,687,123 7,766,033
----------------------------------------------------------------------
Funds Purchased 160,600 353,700
Short-Term Borrowings 11,290 12,100
Securities Sold Under Agreements to
Repurchase 1,099,260 835,563
Long-Term Debt 265,268 242,749
Banker's Acceptances 673 646
Retirement Benefits Payable 72,651 72,192
Accrued Interest Payable 18,659 13,023
Taxes Payable and Deferred Taxes 280,611 274,146
Other Liabilities 91,608 88,310
----------------------------------------------------------------------
Total Liabilities 9,687,743 9,658,462
----------------------------------------------------------------------
Shareholders' Equity
Common Stock ($.01 par value); authorized
500,000,000 shares; issued /
outstanding: September 2006 - 56,848,799
/ 49,809,709; June 2006 - 56,855,346 /
50,570,697; December 2005 - 56,827,483 /
51,276,286; and September 2005 -
81,722,233 / 51,282,537 566 566
Capital Surplus 471,908 469,461
Accumulated Other Comprehensive Loss (49,422) (76,204)
Retained Earnings 605,976 581,406
Deferred Stock Grants - -
Treasury Stock, at Cost (Shares: September
2006 - 7,039,090; June 2006 - 6,284,649;
December 2005 - 5,551,197; and September
2005 - 30,439,696) (345,556) (308,501)
----------------------------------------------------------------------
Total Shareholders' Equity 683,472 666,728
----------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $10,371,215 $10,325,190
======================================================================
December 31, September 30,
(dollars in thousands) 2005 2005
----------------------------------------------------------------------
Assets
Interest-Bearing Deposits $ 4,893 $ 10,119
Funds Sold - 10,000
Investment Securities - Available-for-Sale
Held in Portfolio 2,333,417 2,381,462
Pledged as Collateral 204,798 172,500
Investment Securities - Held-to-Maturity
(Fair Value of $385,891; $408,203;
$442,989; and $475,884) 454,240 485,041
Loans Held for Sale 17,915 18,095
Loans and Leases 6,168,536 6,202,546
Allowance for Loan and Lease Losses (91,090) (91,654)
----------------------------------------------------------------------
Net Loans and Leases 6,077,446 6,110,892
----------------------------------------------------------------------
Total Earning Assets 9,092,709 9,188,109
----------------------------------------------------------------------
Cash and Noninterest-Bearing Deposits 493,825 296,152
Premises and Equipment 133,913 135,952
Customers' Acceptances 1,056 1,081
Accrued Interest Receivable 43,033 40,898
Foreclosed Real Estate 358 413
Mortgage Servicing Rights 18,010 18,049
Goodwill 34,959 34,959
Other Assets 369,175 369,622
----------------------------------------------------------------------
Total Assets $10,187,038 $10,085,235
======================================================================
Liabilities
Deposits
Noninterest-Bearing Demand $ 2,134,916 $ 1,890,904
Interest-Bearing Demand 1,678,454 1,716,306
Savings 2,819,258 2,880,066
Time 1,274,840 1,269,310
----------------------------------------------------------------------
Total Deposits 7,907,468 7,756,586
----------------------------------------------------------------------
Funds Purchased 268,110 172,365
Short-Term Borrowings 9,447 8,537
Securities Sold Under Agreements to
Repurchase 609,380 756,407
Long-Term Debt 242,703 242,692
Banker's Acceptances 1,056 1,081
Retirement Benefits Payable 71,116 67,136
Accrued Interest Payable 10,910 9,416
Taxes Payable and Deferred Taxes 269,094 276,678
Other Liabilities 104,402 98,026
----------------------------------------------------------------------
Total Liabilities 9,493,686 9,388,924
----------------------------------------------------------------------
Shareholders' Equity
Common Stock ($.01 par value);
authorized 500,000,000 shares; issued /
outstanding: September 2006 -
56,848,799 / 49,809,709; June 2006 -
56,855,346 / 50,570,697; December 2005
- 56,827,483 / 51,276,286; and
September 2005 - 81,722,233 /
51,282,537 565 815
Capital Surplus 473,338 463,084
Accumulated Other Comprehensive Loss (47,818) (34,697)
Retained Earnings 546,591 1,366,058
Deferred Stock Grants (11,080) (5,974)
Treasury Stock, at Cost (Shares: September
2006 - 7,039,090; June 2006 - 6,284,649;
December 2005 - 5,551,197; and September
2005 - 30,439,696) (268,244) (1,092,975)
----------------------------------------------------------------------
Total Shareholders' Equity 693,352 696,311
----------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $10,187,038 $10,085,235
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited) Table 4
----------------------------------------------------------------------
Accum.
Other
Compre-
Common Capital hensive
(dollars in thousands) Total Stock Surplus Loss
----------------------------------------------------------------------
Balance at December 31, 2005 $ 693,352 $ 565 $ 473,338 $ (47,818)
Comprehensive Income:
Net Income 129,446 - - -
Other Comprehensive Income, Net
of Tax:
Change in Unrealized Gains and
Losses on Investment
Securities - Available-for-
Sale (1,604) - - (1,604)
Total Comprehensive Income
Common Stock Issued under Share-
Based Compensation Plans and
Related Tax Benefits (730,432
shares) 30,766 1 (1,430) -
Common Stock Repurchased
(2,194,534 shares) (112,191) - - -
Cash Dividends Paid (56,297) - - -
----------------------------------------------------------------------
Balance at September 30, 2006 $ 683,472 $ 566 $ 471,908 $ (49,422)
======================================================================
Balance at December 31, 2004 $ 814,834 $ 813 $ 450,998 $ (12,917)
Comprehensive Income:
Net Income 136,780 - - -
Other Comprehensive Income, Net
of Tax:
Change in Unrealized Gains and
Losses on Investment
Securities - Available-for-
Sale (21,780) - - (21,780)
Total Comprehensive Income
Common Stock Issued under Share-
Based Compensation Plans and
Related Tax Benefits (803,278
shares) 33,268 2 12,086 -
Common Stock Repurchased
(4,478,932 shares) (214,997) - - -
Cash Dividends Paid (51,794) - - -
----------------------------------------------------------------------
Balance at September 30, 2005 $ 696,311 $ 815 $ 463,084 $ (34,697)
======================================================================
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Balance at December 31,
2005 $ 546,591 $ (11,080)$ (268,244)
Comprehensive Income:
Net Income 129,446 - - $ 129,446
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities -
Available-for-Sale - - - (1,604)
----------
Total Comprehensive Income $ 127,842
==========
Common Stock Issued under
Share-Based Compensation
Plans and Related Tax
Benefits (730,432 shares) (13,764) 11,080 34,879
Common Stock Repurchased
(2,194,534 shares) - - (112,191)
Cash Dividends Paid (56,297) - -
------------------------------------------------------------
Balance at September 30,
2006 $ 605,976 $ - $ (345,556)
============================================================
Balance at December 31,
2004 $1,282,425 $ (8,433)$ (898,052)
Comprehensive Income:
Net Income 136,780 - - $ 136,780
Other Comprehensive
Income, Net of Tax:
Change in Unrealized
Gains and Losses on
Investment Securities -
Available-for-Sale - - - (21,780)
----------
Total Comprehensive Income $ 115,000
==========
Common Stock Issued under
Share-Based Compensation
Plans and Related Tax
Benefits (803,278 shares) (1,353) 2,459 20,074
Common Stock Repurchased
(4,478,932 shares) - - (214,997)
Cash Dividends Paid (51,794) - -
------------------------------------------------------------
Balance at September 30,
2005 $1,366,058 $ (5,974)$(1,092,975)
============================================================
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, 2006 June 30, 2006 (1)
Average Income/ Yield/ Average Income/ Yield/
(dollars in Balance Expense Rate Balance Expense Rate
millions)
----------------------------------------------------------------------
Earning Assets
Interest-Bearing
Deposits $ 4.9 $ 0.1 4.12 % $ 5.7 $ 0.1 3.82 %
Funds Sold 5.1 0.1 5.16 13.9 0.2 4.89
Investment
Securities
Available-for-Sale 2,583.0 32.1 4.97 2,564.2 31.4 4.90
Held-to-Maturity 413.3 4.5 4.41 429.5 4.6 4.34
Loans Held for Sale 8.1 0.1 6.43 8.9 0.1 6.25
Loans and Leases(2)
Commercial and
Industrial 1,024.3 19.3 7.46 967.5 17.6 7.29
Construction 232.2 4.9 8.30 176.7 3.5 8.08
Commercial Mortgage 614.0 10.5 6.77 598.8 9.9 6.66
Residential
Mortgage 2,454.6 36.8 6.01 2,449.1 36.4 5.94
Other Revolving
Credit and
Installment 705.6 16.4 9.21 718.0 16.3 9.10
Home Equity 937.2 17.9 7.59 912.8 16.8 7.39
Lease Financing 503.0 4.1 3.27 494.7 3.7 2.99
----------------------------------------------------------------------
Total Loans and
Leases 6,470.9 109.9 6.76 6,317.6 104.2 6.61
----------------------------------------------------------------------
Other 79.4 0.3 1.37 79.4 0.3 1.37
----------------------------------------------------------------------
Total Earning
Assets(3) 9,564.7 147.1 6.13 9,419.2 140.9 5.99
----------------------------------------------------------------------
Cash and
Noninterest-Bearing
Deposits 296.5 304.3
Other Assets 448.1 445.8
---------- -----------
Total Assets $10,309.3 $10,169.3
========== ===========
Interest-Bearing
Liabilities
Interest-Bearing
Deposits
Demand $ 1,618.9 4.1 1.01 $ 1,611.7 3.9 0.97
Savings 2,641.4 10.6 1.59 2,699.0 9.4 1.39
Time 1,542.7 13.8 3.53 1,432.6 11.4 3.20
----------------------------------------------------------------------
Total Interest-
Bearing Deposits 5,803.0 28.5 1.95 5,743.3 24.7 1.72
----------------------------------------------------------------------
Short-Term
Borrowings 179.1 2.4 5.21 219.0 2.7 4.99
Securities Sold
Under Agreements to
Repurchase 1,005.8 11.9 4.69 855.9 9.8 4.57
Long-Term Debt 248.7 3.8 6.16 242.7 3.7 6.15
----------------------------------------------------------------------
Total Interest-
Bearing Liabilities 7,236.6 46.6 2.55 7,060.9 40.9 2.32
----------------------------------------------------------------------
Net Interest Income $100.5 $100.0
======= =======
Interest Rate
Spread 3.58 % 3.67 %
Net Interest Margin 4.20 % 4.25
Noninterest-Bearing
Demand Deposits 1,929.0 1,984.9
Other Liabilities 456.5 436.4
Shareholders' Equity 687.2 687.1
---------- ------------
Total Liabilities
and Shareholders'
Equity $10,309.3 $10,169.3
========== ============
Three Months Ended Nine Months Ended
September 30, 2005 (1) September 30, 2006
Average Income/ Yield/ Average Income/ Yield/
(dollars in Balance Expense Rate Balance Expense Rate
millions)
----------------------------------------------------------------------
Earning Assets
Interest-Bearing
Deposits $ 6.4 $ 0.1 3.55 % $ 5.3 $ 0.1 3.74 %
Funds Sold 105.7 0.9 3.51 10.0 0.4 4.83
Investment
Securities
Available-for-Sale 2,574.2 28.6 4.44 2,578.9 94.5 4.89
Held-to-Maturity 507.5 5.1 4.03 428.7 14.0 4.35
Loans Held for Sale 17.0 0.3 5.82 9.6 0.5 6.21
Loans and Leases(2)
Commercial and
Industrial 992.9 15.9 6.37 975.0 53.0 7.27
Construction 164.5 2.7 6.42 184.2 11.2 8.16
Commercial
Mortgage 560.2 8.4 5.95 595.1 29.6 6.65
Residential
Mortgage 2,352.3 33.7 5.73 2,442.2 108.7 5.93
Other Revolving
Credit and
Installment 744.0 15.9 8.50 716.3 48.6 9.07
Home Equity 858.7 13.0 6.02 914.9 50.2 7.33
Lease Financing 497.7 4.5 3.58 496.8 12.0 3.23
----------------------------------------------------------------------
Total Loans and
Leases 6,170.3 94.1 6.07 6,324.5 313.3 6.62
-------------------------------------- ------------------------ -----
Other 79.4 0.3 1.36 79.4 0.8 1.37
----------------------------------------------------------------------
Total Earning
Assets(3) 9,460.5 129.4 5.45 9,436.4 423.6 5.99
----------------------------------------------------------------------
Cash and
Noninterest-
Bearing Deposits 316.1 310.7
Other Assets 419.4 443.8
----------- -----------
Total Assets $10,196.0 $10,190.9
=========== ===========
Interest-Bearing
Liabilities
Interest-Bearing
Deposits
Demand $ 1,730.7 2.9 0.66 $ 1,628.3 11.4 0.93
Savings 2,890.2 5.3 0.73 2,698.5 27.1 1.34
Time 1,241.9 7.6 2.42 1,429.1 34.3 3.20
----------------------------------------------------------------------
Total Interest-
Bearing Deposits 5,862.8 15.8 1.07 5,755.9 72.8 1.69
-------------------------------------- ------------------------ -----
Short-Term
Borrowings 107.4 1.0 3.52 192.1 7.0 4.89
Securities Sold
Under Agreements
to Repurchase 845.8 6.7 3.18 878.8 29.6 4.49
Long-Term Debt 242.7 3.8 6.19 244.7 11.3 6.16
----------------------------------------------------------------------
Total Interest-
Bearing
Liabilities 7,058.7 27.3 1.53 7,071.5 120.7 2.28
----------------------------------------------------------------------
Net Interest Income $ 102.1 $302.9
======== =======
Interest Rate
Spread 3.92 % 3.71 %
Net Interest
Margin 4.30 % 4.29 %
Noninterest-Bearing
Demand Deposits 1,970.8 1,978.3
Other Liabilities 443.7 448.5
Shareholders'
Equity 722.8 692.6
----------- -----------
Total Liabilities
and Shareholders'
Equity $10,196.0 $10,190.9
=========== ===========
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) Non-performing loans and leases are included in the respective
average loan and lease balances. Income, if any, on such loans and
leases is recognized on a cash basis.
(3) Interest income includes a taxable-equivalent basis adjustment
based upon a statutory tax rate of 35%.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable
Equivalent Basis (Unaudited) Table 6
----------------------------------------------------------------------
Three Months Ended September 30,
2006 Compared to June 30, 2006
(dollars in millions) Volume(1) Rate(1) Time(1) Total
----------------------------------------------------------------------
Change in Interest Income:
Funds Sold $ (0.1) $ - $ - $ (0.1)
Investment Securities
Available-for-Sale 0.2 0.4 0.1 0.7
Held-to-Maturity (0.2) 0.1 - (0.1)
Loans and Leases
Commercial and Industrial 1.1 0.4 0.2 1.7
Construction 1.2 0.2 - 1.4
Commercial Mortgage 0.3 0.2 0.1 0.6
Residential Mortgage - 0.4 - 0.4
Other Revolving Credit and
Installment (0.3) 0.2 0.2 0.1
Home Equity 0.4 0.5 0.2 1.1
Lease Financing 0.1 0.3 - 0.4
----------------------------------------------------------------------
Total Loans and Leases 2.8 2.2 0.7 5.7
----------------------------------------------------------------------
Total Change in Interest Income 2.7 2.7 0.8 6.2
----------------------------------------------------------------------
Change in Interest Expense:
Interest-Bearing Deposits
Demand - 0.2 - 0.2
Savings (0.2) 1.3 0.1 1.2
Time 0.9 1.3 0.2 2.4
----------------------------------------------------------------------
Total Interest-Bearing Deposits 0.7 2.8 0.3 3.8
----------------------------------------------------------------------
Short-Term Borrowings (0.4) 0.1 - (0.3)
Securities Sold Under Agreements to
Repurchase 1.7 0.3 0.1 2.1
Long-Term Debt 0.1 - - 0.1
----------------------------------------------------------------------
Total Change in Interest Expense 2.1 3.2 0.4 5.7
----------------------------------------------------------------------
Change in Net Interest Income $ 0.6 $ (0.5) $ 0.4 $ 0.5
======================================================================
(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, June 30, September 30, September 30,
(dollars in
thousands) 2006 2006 2005 2006 2005
----------------------------------------------------------------------
Salaries $27,829 $27,727 $27,652 $82,280 $80,521
Incentive
Compensation 3,697 3,844 4,385 11,862 12,078
Share-Based
Compensation 1,211 1,631 1,855 4,323 5,398
Commission
Expense 1,721 1,833 1,864 5,476 6,397
Retirement and
Other Benefits 4,454 4,833 4,512 14,522 13,717
Payroll Taxes 2,117 2,297 2,091 7,799 7,749
Medical, Dental,
and Life
Insurance 1,620 2,185 1,805 5,966 5,859
Separation
Expense 484 461 202 1,502 1,272
----------------------------------------------------------------------
Total Salaries
and Benefits $43,133 $44,811 $44,366 $133,730 $132,991
======================================================================
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances (Unaudited) Table 8
----------------------------------------------------------------------
September 30, June 30, December 31, September 30,
(dollars in
thousands) 2006 2006 (1) 2005 (1) 2005 (1)
----------------------------------------------------------------------
Commercial
Commercial and
Industrial $ 994,531 $1,008,618 $ 918,842 $ 975,688
Commercial
Mortgage 635,552 619,839 558,346 574,034
Construction 238,995 212,490 153,682 170,030
Lease Financing 489,183 475,549 470,155 468,378
----------------------------------------------------------------------
Total Commercial 2,358,261 2,316,496 2,101,025 2,188,130
----------------------------------------------------------------------
Consumer
Residential
Mortgage 2,464,240 2,457,867 2,417,523 2,370,391
Home Equity 942,743 929,386 888,075 871,771
Other Revolving
Credit and
Installment 701,759 714,617 736,364 745,149
Lease Financing 22,054 23,259 25,549 27,105
----------------------------------------------------------------------
Total Consumer 4,130,796 4,125,129 4,067,511 4,014,416
----------------------------------------------------------------------
Total Loans and
Leases $6,489,057 $6,441,625 $ 6,168,536 $6,202,546
======================================================================
Air Transportation Credit Exposure (2) (Unaudited)
----------------------------------------------------------------------
September 30, June 30, Sept. 30,
2006 2006 2005
-------------------------------------------------------
Unused Total Total Total
(dollars in Outstanding Commitments Exposure Exposure Exposure
thousands)
----------------------------------------------------------------------
Passenger
Carriers Based
In the United
States $ 68,045 $ - $ 68,045 $ 68,213 $ 70,678
Passenger
Carriers Based
Outside the
United States 19,475 - 19,475 19,542 21,573
Cargo Carriers 13,240 - 13,240 13,240 13,240
----------------------------------------------------------------------
Total Air
Transportation
Credit
Exposure $ 100,760 $ - $100,760 $100,995 $ 105,491
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) Exposure includes loans, leveraged leases and operating leases.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans and
Leases Past Due 90 Days or More (Unaudited) Table 9
----------------------------------------------------------------------
September 30, June 30, March 31,
(dollars in thousands) 2006 2006 2006
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 400 $ 227 $ 236
Commercial Mortgage 44 48 52
Lease Financing - - -
----------------------------------------------------------------------
Total Commercial 444 275 288
----------------------------------------------------------------------
Consumer
Residential Mortgage 4,253 4,628 4,922
Home Equity 254 204 38
----------------------------------------------------------------------
Total Consumer 4,507 4,832 4,960
----------------------------------------------------------------------
Total Non-Accrual Loans and Leases 4,951 5,107 5,248
----------------------------------------------------------------------
Foreclosed Real Estate 409 188 358
Other Investments 82 82 300
----------------------------------------------------------------------
Total Non-Performing Assets $ 5,442 $ 5,377 $ 5,906
======================================================================
Accruing Loans and Leases Past Due
90 Days or More
Residential Mortgage $ 882 $ 1,157 $ 464
Home Equity 62 86 85
Other Revolving Credit and
Installment 2,044 1,561 1,390
Lease Financing - - 18
----------------------------------------------------------------------
Total Accruing Loans and Leases
Past Due 90 Days or More $ 2,988 $ 2,804 $ 1,957
======================================================================
Total Loans and Leases $6,489,057 $6,441,625 $6,246,125
======================================================================
Ratio of Non-Accrual Loans and
Leases to Total Loans and Leases 0.08% 0.08% 0.08%
----------------------------------------------------------------------
Ratio of Non-Performing Assets to
Total Loans and Leases, Foreclosed
Real Estate and Other Investments 0.08% 0.08% 0.09%
----------------------------------------------------------------------
Ratio of Non-Performing Assets and
Accruing Loans and Leases Past Due
90 Days or More to Total Loans and
Leases 0.13% 0.13% 0.13%
----------------------------------------------------------------------
Quarter to Quarter Changes in Non-
Performing Assets
Balance at Beginning of Quarter $ 5,377 $ 5,906 $ 6,478
Additions 1,507 1,509 907
Reductions
Payments (848) (1,347) (445)
Return to Accrual (382) (260) (985)
Sales of Foreclosed Assets (20) (99) -
Charge-offs/Write-downs (192) (332) (49)
----------------------------------------------------------------------
Total Reductions (1,442) (2,038) (1,479)
----------------------------------------------------------------------
Balance at End of Quarter $ 5,442 $ 5,377 $ 5,906
======================================================================
December 31, September 30,
(dollars in thousands) 2005 (1) 2005 (1)
----------------------------------------------------------------------
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 212 $ 471
Commercial Mortgage 130 1,617
Lease Financing - 4
----------------------------------------------------------------------
Total Commercial 342 2,092
----------------------------------------------------------------------
Consumer
Residential Mortgage 5,439 5,021
Home Equity 39 41
----------------------------------------------------------------------
Total Consumer 5,478 5,062
----------------------------------------------------------------------
Total Non-Accrual Loans and Leases 5,820 7,154
----------------------------------------------------------------------
Foreclosed Real Estate 358 413
Other Investments 300 683
----------------------------------------------------------------------
Total Non-Performing Assets $ 6,478 $ 8,250
======================================================================
Accruing Loans and Leases Past Due 90 Days
or More
Residential Mortgage $ 1,132 $ 1,545
Home Equity 185 83
Other Revolving Credit and Installment 1,504 1,479
Lease Financing 29 51
----------------------------------------------------------------------
Total Accruing Loans and Leases Past Due 90
Days or More $ 2,850 $ 3,158
======================================================================
Total Loans and Leases $6,168,536 $6,202,546
======================================================================
Ratio of Non-Accrual Loans and Leases to
Total Loans and Leases 0.09% 0.12%
----------------------------------------------------------------------
Ratio of Non-Performing Assets to Total
Loans and Leases, Foreclosed Real Estate
and Other Investments 0.11% 0.13%
----------------------------------------------------------------------
Ratio of Non-Performing Assets and Accruing
Loans and Leases Past Due 90 Days or More
to Total Loans and Leases 0.15% 0.18%
----------------------------------------------------------------------
Quarter to Quarter Changes in Non-
Performing Assets
Balance at Beginning of Quarter $ 8,250 $ 10,920
Additions 1,191 919
Reductions
Payments (2,345) (1,326)
Return to Accrual (231) (2,007)
Sales of Foreclosed Assets (122) -
Charge-offs/Write-downs (265) (256)
----------------------------------------------------------------------
Total Reductions (2,963) (3,589)
----------------------------------------------------------------------
Balance at End of Quarter $ 6,478 $ 8,250
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Reserve for Credit Losses (Unaudited) Table 10
----------------------------------------------------------------------
Three Months Ended
September 30, June 30, September 30,
(dollars in thousands) 2006 2006 2005
----------------------------------------------------------------------
Balance at Beginning of Period $ 96,167 $ 96,167 $ 106,163
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (593) (677) (620)
Lease Financing - - (10,049)
Consumer
Residential Mortgage - (29) (130)
Home Equity (211) (86) (26)
Other Revolving Credit and
Installment (3,982) (4,467) (4,488)
Lease Financing (18) - (6)
----------------------------------------------------------------------
Total Loans and Leases
Charged-Off (4,804) (5,259) (15,319)
----------------------------------------------------------------------
Recoveries on Loans and Leases
Previously Charged-Off
Commercial
Commercial and Industrial 325 1,445 528
Commercial Mortgage 84 335 146
Lease Financing 1 - -
Consumer
Residential Mortgage 223 119 190
Home Equity 120 127 130
Other Revolving Credit and
Installment 1,250 1,158 1,322
Lease Financing 16 6 7
----------------------------------------------------------------------
Total Recoveries on Loans and
Leases Previously Charged-Off 2,019 3,190 2,323
----------------------------------------------------------------------
Net Loan and Lease Charge-Offs (2,785) (2,069) (12,996)
Provision for Credit Losses 2,785 2,069 3,000
----------------------------------------------------------------------
Balance at End of Period (1) $ 96,167 $ 96,167 $ 96,167
======================================================================
Components
Allowance for Loan and Lease
Losses $ 90,795 $ 91,035 $ 91,654
Reserve for Unfunded
Commitments 5,372 5,132 4,513
----------------------------------------------------------------------
Total Reserve for Credit
Losses $ 96,167 $ 96,167 $ 96,167
======================================================================
Average Loans and Leases
Outstanding $ 6,470,862 $6,317,623 $ 6,170,302
======================================================================
Ratio of Net Loan and Lease
Charge-Offs to Average Loans
and Leases Outstanding
(annualized) 0.17% 0.13% 0.84%
Ratio of Allowance for Loans
and Lease Losses to Loans and
Leases Outstanding 1.40% 1.41% 1.48%
Nine Months Ended
September 30,
(dollars in thousands) 2006 2005
----------------------------------------------------------------------
Balance at Beginning of Period $ 96,167 $ 113,596
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (1,653) (1,775)
Lease Financing - (10,049)
Consumer
Residential Mortgage (39) (512)
Home Equity (438) (723)
Other Revolving Credit and Installment (12,703) (13,617)
Lease Financing (30) (69)
----------------------------------------------------------------------
Total Loans and Leases Charged-Off (14,863) (26,745)
----------------------------------------------------------------------
Recoveries on Loans and Leases Previously
Charged-Off
Commercial
Commercial and Industrial 2,064 1,281
Commercial Mortgage 509 240
Lease Financing 1 162
Consumer
Residential Mortgage 464 485
Home Equity 308 315
Other Revolving Credit and Installment 3,870 3,775
Lease Financing 32 58
----------------------------------------------------------------------
Total Recoveries on Loans and Leases Previously
Charged-Off 7,248 6,316
----------------------------------------------------------------------
Net Loan and Lease Charge-Offs (7,615) (20,429)
Provision for Credit Losses 7,615 3,000
----------------------------------------------------------------------
Balance at End of Period (1) $ 96,167 $ 96,167
======================================================================
Components
Allowance for Loan and Lease Losses $ 90,795 $ 91,654
Reserve for Unfunded Commitments 5,372 4,513
----------------------------------------------------------------------
Total Reserve for Credit Losses $ 96,167 $ 96,167
======================================================================
Average Loans and Leases Outstanding $6,324,454 $6,087,629
======================================================================
Ratio of Net Loan and Lease Charge-Offs to
Average Loans and Leases Outstanding
(annualized) 0.16% 0.45%
Ratio of Allowance for Loans and Lease Losses to
Loans and Leases Outstanding 1.40% 1.48%
(1) Included in this analysis is activity related to the Company's
reserve for unfunded commitments, which is separately recorded in
other liabilities in the Consolidated Statements of Condition.
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,
2006
Net Interest
Income $ 59,397 $ 33,996 $ 4,293 $ 2,664 $ 100,350
Provision for
Credit Losses 2,609 480 - (304) 2,785
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 56,788 33,516 4,293 2,968 97,565
Noninterest
Income 25,243 11,929 17,344 2,371 56,887
Noninterest
Expense (43,030) (19,739) (15,432) (1,604) (79,805)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 39,001 25,706 6,205 3,735 74,647
Provision for
Income Taxes (14,430) (9,682) (2,296) (1,319) (27,727)
----------------------------------------------------------------------
Allocated Net
Income 24,571 16,024 3,909 2,416 46,920
----------------------------------------------------------------------
Allowance
Funding Value (202) (660) (9) 871 -
Provision for
Credit Losses 2,609 480 - (304) 2,785
Economic
Provision (3,105) (2,158) (98) - (5,361)
Tax Effect of
Adjustments 258 865 40 (210) 953
----------------------------------------------------------------------
Income Before
Capital Charge 24,131 14,551 3,842 2,773 45,297
Capital Charge (5,425) (3,914) (1,511) (8,048) (18,898)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 18,706 $ 10,637 $ 2,331 $ (5,275)$ 26,399
======================================================================
RAROC (ROE for
the Company) 49% 41% 28% 7% 27%
======================================================================
Total Assets at
September 30,
2006 $3,931,334 $2,692,163 $219,715 $3,528,003 $10,371,215
======================================================================
Three Months
Ended
September 30,
2005 (1)
Net Interest
Income $ 56,537 $ 34,602 $ 4,651 $ 6,170 $ 101,960
Provision for
Credit Losses 2,946 10,564 - (10,510) 3,000
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 53,591 24,038 4,651 16,680 98,960
Noninterest
Income 24,136 12,329 16,611 2,440 55,516
Noninterest
Expense (43,068) (20,155) (19,002) (2,371) (84,596)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 34,659 16,212 2,260 16,749 69,880
Provision for
Income Taxes (12,954) (5,974) (836) (5,287) (25,051)
----------------------------------------------------------------------
Allocated Net
Income 21,705 10,238 1,424 11,462 44,829
----------------------------------------------------------------------
Allowance
Funding Value (178) (586) (5) 769 -
Provision for
Credit Losses 2,946 10,564 - (10,510) 3,000
Economic
Provision (3,364) (2,409) (106) (1) (5,880)
Tax Effect of
Adjustments 221 (2,800) 41 3,604 1,066
----------------------------------------------------------------------
Income Before
Capital Charge 21,330 15,007 1,354 5,324 43,015
Capital Charge (5,481) (4,529) (1,751) (8,114) (19,875)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 15,849 $ 10,478 $ (397)$ (2,790)$ 23,140
======================================================================
RAROC (ROE for
the Company) 42% 36% 8% 16% 25%
======================================================================
Total Assets at
September 30,
2005 $3,830,473 $2,512,802 $209,222 $3,532,738 $10,085,235
======================================================================
(1) Certain prior period information has been reclassified to conform
to current 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,
2006
Net Interest
Income $ 175,788 $ 100,725 $ 13,175 $ 12,720 $ 302,408
Provision for
Credit Losses 6,965 1,218 999 (1,567) 7,615
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 168,823 99,507 12,176 14,287 294,793
Noninterest
Income 74,149 28,242 52,651 7,618 162,660
Noninterest
Expense (126,851) (58,892) (48,886) (4,736) (239,365)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 116,121 68,857 15,941 17,169 218,088
Provision for
Income Taxes (42,965) (34,263) (5,889) (5,525) (88,642)
----------------------------------------------------------------------
Allocated Net
Income 73,156 34,594 10,052 11,644 129,446
----------------------------------------------------------------------
Allowance
Funding Value (589) (1,809) (25) 2,423 -
Provision for
Credit Losses 6,965 1,218 999 (1,567) 7,615
Economic
Provision (9,341) (6,628) (286) (1) (16,256)
Tax Effect of
Adjustments 1,097 2,671 (254) (316) 3,198
----------------------------------------------------------------------
Income Before
Capital Charge 71,288 30,046 10,486 12,183 124,003
Capital Charge (16,257) (12,282) (4,727) (23,893) (57,159)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 55,031 $ 17,764 $ 5,759 $ (11,710)$ 66,844
======================================================================
RAROC (ROE for
the Company) 48% 27% 24% 12% 25%
======================================================================
Total Assets at
September 30,
2006 $3,931,334 $2,692,163 $219,715 $3,528,003 $10,371,215
======================================================================
Nine Months
Ended
September 30,
2005 (1)
Net Interest
Income $ 163,084 $ 102,305 $ 13,161 $ 25,107 $ 303,657
Provision for
Credit Losses 9,962 11,216 (1) (18,177) 3,000
----------------------------------------------------------------------
Net Interest
Income After
Provision for
Credit Losses 153,122 91,089 13,162 43,284 300,657
Noninterest
Income 70,742 29,285 51,493 6,985 158,505
Noninterest
Expense (126,816) (58,457) (53,059) (6,131) (244,463)
----------------------------------------------------------------------
Income Before
Provision for
Income Taxes 97,048 61,917 11,596 44,138 214,699
Provision for
Income Taxes (35,908) (22,949) (4,290) (14,772) (77,919)
----------------------------------------------------------------------
Allocated Net
Income 61,140 38,968 7,306 29,366 136,780
----------------------------------------------------------------------
Allowance
Funding Value (509) (1,788) (17) 2,314 -
Provision for
Credit Losses 9,962 11,216 (1) (18,177) 3,000
Economic
Provision (10,304) (7,295) (304) (2) (17,905)
Tax Effect of
Adjustments 315 (789) 119 5,871 5,516
----------------------------------------------------------------------
Income Before
Capital Charge 60,604 40,312 7,103 19,372 127,391
Capital Charge (16,206) (13,443) (4,959) (26,436) (61,044)
----------------------------------------------------------------------
Net Income
(Loss) After
Capital Charge
(NIACC) $ 44,398 $ 26,869 $ 2,144 $ (7,064)$ 66,347
======================================================================
RAROC (ROE for
the Company) 41% 33% 16% 16% 25%
======================================================================
Total Assets at
September 30,
2005 $3,830,473 $2,512,802 $209,222 $3,532,738 $10,085,235
======================================================================
(1) Certain prior period information has been reclassified to conform
to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Quarterly Summary of Selected Consolidated Financial Data
(Unaudited) Table 12
----------------------------------------------------------------------
Three Months Ended
(dollars in thousands, except September 30, June 30, March 31,
per share amounts) 2006 2006 2006
----------------------------------------------------------------------
Interest Income
Interest and Fees on Loans
and Leases $ 110,065 $ 104,388 $ 99,371
Income on Investment
Securities - Available-
for-Sale 31,949 31,226 30,835
Income on Investment
Securities - Held-to-
Maturity 4,558 4,658 4,757
Deposits 50 55 43
Funds Sold 66 170 125
Other 272 272 272
----------------------------------------------------------------------
Total Interest Income 146,960 140,769 135,403
----------------------------------------------------------------------
Interest Expense
Deposits 28,464 24,656 19,633
Securities Sold Under
Agreements to Repurchase 11,959 9,802 7,890
Funds Purchased 2,270 2,652 1,893
Short-Term Borrowings 82 73 57
Long-Term Debt 3,835 3,730 3,728
----------------------------------------------------------------------
Total Interest Expense 46,610 40,913 33,201
----------------------------------------------------------------------
Net Interest Income 100,350 99,856 102,202
Provision for Credit Losses 2,785 2,069 2,761
----------------------------------------------------------------------
Net Interest Income After
Provision for Credit Losses 97,565 97,787 99,441
----------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 14,406 14,537 14,848
Mortgage Banking 2,394 2,569 2,987
Service Charges on Deposit
Accounts 10,723 9,695 10,132
Fees, Exchange, and Other
Service Charges 16,266 15,633 14,767
Investment Securities Gains
(Losses), Net 19 - -
Insurance 6,713 4,691 5,019
Other 6,366 6,076 4,819
----------------------------------------------------------------------
Total Noninterest Income 56,887 53,201 52,572
----------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 43,133 44,811 45,786
Net Occupancy 9,998 9,376 9,643
Net Equipment 5,285 4,802 5,028
Professional Fees 2,638 2,589 438
Other 18,751 17,164 19,923
----------------------------------------------------------------------
Total Noninterest Expense 79,805 78,742 80,818
----------------------------------------------------------------------
Income Before Provision for
Income Taxes 74,647 72,246 71,195
Provision for Income Taxes 27,727 35,070 25,845
----------------------------------------------------------------------
Net Income $ 46,920 $ 37,176 $ 45,350
======================================================================
Basic Earnings Per Share $ 0.95 $ 0.74 $ 0.89
Diluted Earnings Per Share $ 0.93 $ 0.73 $ 0.87
Balance Sheet Totals
Total Assets $10,371,215 $10,325,190 $10,528,049
Net Loans and Leases 6,398,262 6,350,590 6,155,061
Total Deposits 7,687,123 7,766,033 8,147,101
Total Shareholders' Equity 683,472 666,728 681,078
Performance Ratios
Net Income to Average Total
Assets (ROA) 1.81 % 1.47 % 1.82 %
Net Income to Average
Shareholders' Equity (ROE) 27.09 21.70 26.13
Net Interest Margin (2) 4.20 4.25 4.41
Efficiency Ratio (3) 50.75 51.45 52.22
Three Months Ended
(dollars in thousands, except per share December 31, September 30,
amounts) 2005 (1) 2005
----------------------------------------------------------------------
Interest Income
Interest and Fees on Loans and Leases $ 97,697 $ 94,381
Income on Investment Securities -
Available-for-Sale 29,820 28,482
Income on Investment Securities - Held-
to-Maturity 4,899 5,109
Deposits 103 57
Funds Sold 154 935
Other 272 270
---------------------------------------------------------------------
Total Interest Income 132,945 129,234
---------------------------------------------------------------------
Interest Expense
Deposits 17,479 15,766
Securities Sold Under Agreements to
Repurchase 6,504 6,796
Funds Purchased 1,730 901
Short-Term Borrowings 61 50
Long-Term Debt 3,715 3,761
---------------------------------------------------------------------
Total Interest Expense 29,489 27,274
---------------------------------------------------------------------
Net Interest Income 103,456 101,960
Provision for Credit Losses 1,588 3,000
---------------------------------------------------------------------
Net Interest Income After Provision for
Credit Losses 101,868 98,960
---------------------------------------------------------------------
Noninterest Income
Trust and Asset Management 14,098 14,052
Mortgage Banking 2,597 2,618
Service Charges on Deposit Accounts 10,151 10,046
Fees, Exchange, and Other Service
Charges 15,147 15,394
Investment Securities Gains (Losses),
Net (4) 8
Insurance 4,201 5,324
Other 4,619 8,074
---------------------------------------------------------------------
Total Noninterest Income 50,809 55,516
---------------------------------------------------------------------
Noninterest Expense
Salaries and Benefits 43,319 44,366
Net Occupancy 9,643 9,896
Net Equipment 5,358 5,335
Professional Fees 4,057 5,689
Other 20,802 19,310
---------------------------------------------------------------------
Total Noninterest Expense 83,179 84,596
---------------------------------------------------------------------
Income Before Provision for Income Taxes 69,498 69,880
Provision for Income Taxes 24,717 25,051
---------------------------------------------------------------------
Net Income $ 44,781 $ 44,829
=====================================================================
Basic Earnings Per Share $ 0.88 $ 0.87
Diluted Earnings Per Share $ 0.86 $ 0.85
Balance Sheet Totals
Total Assets $10,187,038 $10,085,235
Net Loans and Leases 6,077,446 6,110,892
Total Deposits 7,907,468 7,756,586
Total Shareholders' Equity 693,352 696,311
Performance Ratios
Net Income to Average Total Assets (ROA) 1.76 % 1.74 %
Net Income to Average Shareholders' Equity
(ROE) 25.19 24.61
Net Interest Margin (2) 4.43 4.30
Efficiency Ratio (3) 53.92 53.72
(1) Certain prior period information has been reclassified to conform
to current presentation.
(2) The net interest margin is defined as net interest income, on a
fully-taxable equivalent basis, as a percentage of average earning
assets.
(3) The efficiency ratio is defined as noninterest expense divided by
total revenue (net interest income and noninterest income).
SOURCE: Bank of Hawaii Corporation
Bank of Hawaii Corporation
Stafford Kiguchi, 808-537-8580 (Media)
Mobile: 808-265-6367
skiguchi@boh.com
Cindy Wyrick, 808-537-8430 (Investors/Analysts)
cwyrick@boh.com