Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.95 for the second quarter of 2015, down from diluted earnings per share of $0.97 in the previous quarter and up from diluted earnings per share of $0.94 in the same quarter last year. Net income for the second quarter of 2015 was $41.2 million compared with net income of $42.4 million in the first quarter of 2015 and net income of $41.5 million in the second quarter of 2014. There were no sales of Visa Class B shares during the second quarter of 2015.

Loan and lease balances increased to $7.4 billion at June 30, 2015, up 3.5 percent from March 31, 2015 and up 15.6 percent compared with June 30, 2014. During the quarter the Company resumed sales of mortgages and sold $64.4 million in loans, increasing noninterest income $1.2 million. Deposits remained strong during the quarter, as balances increased to $13.1 billion at June 30, 2015 compared with $13.0 billion at March 31, 2015 and $12.7 billion at June 30, 2014.

“Bank of Hawaii Corporation continued to perform well during the second quarter of 2015,” said Peter Ho, Chairman, President, and CEO. “Loan balances continued to grow, our margin was stable at 2.81 percent, asset quality remains strong, and expenses were well controlled.”

The return on average assets for the second quarter of 2015 was 1.10 percent, down from 1.15 percent in the previous quarter and 1.17 percent in the same quarter last year. The return on average equity for the second quarter of 2015 was 15.33 percent, down from 16.18 percent for the first quarter of 2015 and 15.87 percent in the second quarter of 2014. The efficiency ratio for the second quarter of 2015 was 58.16 percent, an improvement from 58.30 percent in the previous quarter and 58.38 percent in the same quarter last year.

For the six-month period ended June 30, 2015, net income was $83.6 million, an increase from net income of $80.1 million during the same period last year. Diluted earnings per share were $1.92 for the first half of 2015, up from diluted earnings per share of $1.81 for the first half of 2014. The year-to-date return on average assets for the six-month period ended June 30, 2015 was 1.12 percent compared with 1.14 percent for the same six months in 2014. The year-to-date return on average equity was 15.75 percent, up from 15.51 percent for the six months ended June 30, 2014. The efficiency ratio for the first half of 2015 improved to 58.23 percent compared with 59.46 percent in the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2015 was $100.8 million, up $1.2 million from net interest income of $99.6 million in the first quarter of 2015 and up $3.5 million from net interest income of $97.3 million in the second quarter of 2014. Net interest income for the first half of 2015 was $200.4 million, an increase of $7.1 million compared with $193.3 million for the first half of 2014. Analyses of the changes in net interest income are included in Tables 8a, 8b, and 8c.

The net interest margin was 2.81 percent for the second quarter of 2015, unchanged from the previous quarter and a 5 basis point decrease from the net interest margin of 2.86 percent in the second quarter of 2014. The net interest margin for the first six months of 2015 was 2.81 percent compared with 2.87 percent for the same six-month period last year.

The Company did not record a provision for credit losses during the first half of 2015. A negative provision for credit losses of $2.2 million was recorded during the second quarter of 2014 due to strong credit recoveries and improving asset quality.

Noninterest income was $45.9 million in the second quarter of 2015, a decrease of $6.4 million compared with noninterest income of $52.3 million in the first quarter of 2015, and an increase of $1.4 million compared with noninterest income of $44.5 million in the second quarter of 2014. Mortgage banking income increased to $3.5 million in the second quarter of 2015 compared with $1.7 million in the previous quarter and $1.8 million in the same quarter last year. Noninterest income in the first quarter of 2015 included a net gain of $10.1 million resulting from the sale of 95,000 Visa Class B shares. Noninterest income in the second quarter of 2014 included a gain of $2.0 million resulting from the sale of 23,500 Visa Class B shares. Noninterest income for the first half of 2015 was $98.2 million, an increase of $9.0 million compared with $89.2 million for the first half of 2014. The increase was primarily due to the timing of the Visa Class B shares sales.

Noninterest expense was $83.6 million in the second quarter of 2015, down $3.3 million compared with noninterest expense of $86.9 million in the first quarter of 2015, and up $2.5 million compared with noninterest expense of $81.1 million in the second quarter last year. First quarter expenses include seasonal payroll-related expenses resulting from annual payments from the Company’s incentive compensation plans and higher payroll taxes. Noninterest expense in the second quarter of 2015 included separation expense of $0.9 million compared with $1.9 million in the previous quarter and $87 thousand in the same quarter last year. An analysis of noninterest expenses related to salaries and benefits is included in Table 9. Noninterest expense for the first half of 2015 was $170.5 million, an increase of $5.9 million compared with $164.6 million for the first half of 2014.

The effective tax rate for the second quarter of 2015 was 31.56 percent compared with 31.72 percent in the previous quarter and 30.86 percent in the same quarter last year. The effective tax rate for the first half of 2015 was 31.64 percent compared with 30.04 percent during the same period last year. The lower effective tax rate in 2014 was primarily due to the release of reserves related to prior year tax issues.

The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services, and Treasury & Other. 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 13a and 13b.

Asset Quality

The Company’s asset quality remained strong during the second quarter of 2015. Total non-performing assets were $29.5 million at June 30, 2015, up $0.7 million from non-performing assets of $28.8 million at March 31, 2015 and down $4.9 million from non-performing assets of $34.4 million at June 30, 2014. As a percentage of total loans and leases, including foreclosed real estate, non-performing assets were 0.40 percent at the end of the second quarter of 2015, unchanged from the first quarter of 2015, and down from 0.53 percent at the end of the second quarter last year.

Accruing loans and leases past due 90 days or more were $9.7 million at June 30, 2015, up from $8.0 million at March 31, 2015 and down slightly from June 30, 2014. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $48.3 million at June 30, 2015 compared with $43.6 million at June 30, 2014. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loan and lease charge-offs during the second quarter of 2015 were $1.5 million or 0.08 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $3.5 million were partially offset by recoveries of $2.0 million. Net loan and lease charge-offs during the first quarter of 2015 were $1.2 million or 0.07 percent annualized of total average loans and leases outstanding and were comprised of $4.1 million in charge-offs partially offset by recoveries of $2.9 million. Net recoveries in the second quarter of 2014 were $1.9 million and comprised of $4.0 million in charge-offs and recoveries of $5.9 million. Net charge-offs in the first half of 2015 were $2.7 million or 0.08 percent annualized of total average loans and leases outstanding compared with net recoveries of $0.6 million in the first half of 2014.

The allowance for loan and lease losses was reduced to $106.0 million at June 30, 2015. The ratio of the allowance for loan and lease losses to total loans and leases was 1.43 percent at June 30, 2015, a decrease of 7 basis points from the previous quarter and commensurate with improvements in credit quality and the Hawaii economy. The reserve for unfunded commitments at June 30, 2015 was unchanged at $5.9 million. Details of loan and lease charge-offs, recoveries, and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $15.25 billion at June 30, 2015, up from total assets of $15.14 billion at March 31, 2015 and $14.84 billion at June 30, 2014. Average total assets increased to $15.04 billion during the second quarter of 2015, up from $14.95 billion during the previous quarter and $14.25 billion during the same quarter last year.

The investment securities portfolio was $6.47 billion at June 30, 2015, down from $6.58 billion at March 31, 2015 and $6.91 billion at June 30, 2014. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $4.20 billion in securities held to maturity and $2.28 billion in securities available for sale at June 30, 2015.

Total loans and leases were $7.43 billion at June 30, 2015, up from total loans and leases of $7.18 billion at March 31, 2015 and total loans and leases of $6.43 billion at June 30, 2014. Year-to-date total loan growth in 2015 was 7.7 percent compared with growth of 5.4 percent during the same period last year. Average total loans and leases were $7.30 billion during the second quarter of 2015, up from $7.05 billion during the first quarter of 2015, and up from $6.27 billion during the same quarter last year.

The commercial loan portfolio was $3.04 billion at the end of the second quarter of 2015, an increase of 3.0 percent from commercial loans of $2.96 billion at the end of the first quarter of 2015, and up 13.0 percent from commercial loans of $2.69 billion at the end of the same quarter last year. The consumer loan portfolio was $4.39 billion at the end of the second quarter of 2015, an increase of 3.8 percent from consumer loans of $4.22 billion at the end of the first quarter of 2015 and up 17.5 percent from $3.73 billion at the end of the same quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits increased to $13.09 billion at June 30, 2015 compared with total deposits of $12.98 billion at March 31, 2015 and total deposits of $12.67 billion at June 30, 2014. Average total deposits were $12.86 billion during the second quarter of 2015, up from $12.79 billion during the previous quarter and $12.03 billion during the same quarter last year.

Consumer deposits were $6.22 billion at June 30, 2015, up slightly from March 31, 2015 and up 4.8 percent compared with June 30, 2014. Commercial deposits were $5.52 billion at June 30, 2015, up 1.5 percent from March 31, 2015 and up 6.1 percent compared with June 30, 2014. Other deposits, including public funds, were $1.34 billion at June 30, 2015, an increase of 2.3 percent from March 31, 2015 and down 11.8 percent compared with June 30, 2014. The decrease in other deposits compared with the end of the second quarter of 2014 was due to short-term public funds. Deposit balances are summarized in Tables 7 and 10.

During the second quarter of 2015, the Company repurchased 183.7 thousand shares of common stock at a total cost of $11.5 million under its share repurchase program. The average cost was $62.46 per share repurchased. From the beginning of the share repurchase program initiated during July of 2001 through June 30, 2015, the Company has repurchased 52.4 million shares and returned over $1.9 billion to shareholders at an average cost of $37.12 per share. From July 1 through July 24, 2015, the Company repurchased an additional 42.5 thousand shares of common stock at an average cost of $66.93 per share. Remaining buyback authority under the share repurchase program was $48.6 million at July 24, 2015.

Total shareholders’ equity was $1.08 billion at June 30, 2015, up slightly from March 31, 2015 and up from $1.05 billion at June 30, 2014. At June 30, 2015, the Tier 1 Capital Ratio was 14.47 percent compared with 14.62 percent at March 31, 2015 and 15.66 percent at June 30, 2014. The Tier 1 leverage ratio at June 30, 2015 was 7.21 percent compared with 7.17 percent at March 31, 2015 and 7.20 percent at June 30, 2014. Capital ratios are calculated under Basel III rules, which became effective January 1, 2015.

The Company’s Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s outstanding shares. The dividend will be payable on September 15, 2015 to shareholders of record at the close of business on August 31, 2015.

Hawaii Economy

Economic conditions in Hawaii continue to remain positive due to an active construction industry, stable tourism, low unemployment, and a strong real estate market. For the first five months of 2015, total visitor spending increased 2.0 percent and total arrivals increased 4.1 percent compared to the same period in 2014. The statewide seasonally-adjusted unemployment rate was at 4.0 percent in June 2015 compared to 5.3 percent nationally. For the first six months of 2015, the volume of single-family home sales on Oahu increased 3.4 percent compared with the same period in 2014. The volume of condominium sales on Oahu increased 3.3 percent compared with the same period in 2014. During the first half of 2015 the median price of single-family home sales on Oahu was 2.3 percent higher and the median price of a condominium was 2.4 percent higher compared with 2014. As of June 30, 2015, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 3.2 months and 3.5 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its second quarter 2015 financial results today at 2:00 p.m. Eastern Time (8:00 a.m. Hawaii Time). The conference call will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation’s web site, www.boh.com. Conference call participants located in the United States or Canada should dial 1 (800) 708-4540. Other international conference call participants should dial 1 (847) 619-6397. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning on Monday, July 27, 2015 by dialing 1 (888) 843-7419 in the United States or Canada and 1 (630) 652-3042 from other international locations. Enter the pass code number 40183653# when prompted. A replay of the conference call will also be available via the Investor Relations link on the Company’s website, www.boh.com.

Forward-Looking Statements

This news release, and other statements made by the Company in connection with it may contain "forward-looking statements", such as forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation's Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the U.S. Securities and Exchange Commission. We have not committed to update forward-looking statements to reflect later events or circumstances.

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
Financial Highlights     Table 1
    Three Months Ended   Six Months Ended
June 30,   March 31,   June 30, June 30,
(dollars in thousands, except per share amounts)     2015     2015     2014     2015     2014

For the Period:

Operating Results
Net Interest Income $ 97,782 $ 96,770 $ 94,412 $ 194,552 $ 187,645
Provision for Credit Losses - - (2,199 ) - (2,199 )
Total Noninterest Income 45,925 52,307 44,481 98,232 89,249
Total Noninterest Expense 83,574 86,915 81,082 170,489 164,629
Net Income 41,154 42,442 41,490 83,596 80,082
Basic Earnings Per Share 0.95 0.98 0.94 1.93 1.81
Diluted Earnings Per Share 0.95 0.97 0.94 1.92 1.81
Dividends Declared Per Share 0.45 0.45 0.45 0.90 0.90
 
Performance Ratios
Return on Average Assets 1.10 % 1.15 % 1.17 % 1.12 % 1.14 %
Return on Average Shareholders' Equity 15.33 16.18 15.87 15.75 15.51
Efficiency Ratio 1 58.16 58.30 58.38 58.23 59.46
Net Interest Margin 2 2.81 2.81 2.86 2.81 2.87
Dividend Payout Ratio 3 47.37 45.92 47.87 46.63 49.72
Average Shareholders' Equity to Average Assets 7.16 7.12 7.36 7.14 7.36
 
Average Balances
Average Loans and Leases $ 7,300,506 $ 7,053,061 $ 6,274,595 $ 7,177,467 $ 6,189,789
Average Assets 15,038,500 14,946,037 14,253,384 14,992,524 14,144,273
Average Deposits 12,863,274 12,786,449 12,030,010 12,825,074 11,922,874
Average Shareholders' Equity 1,076,467 1,064,112 1,048,429 1,070,324 1,040,962
 
Per Share of Common Stock
Book Value $ 24.88 $ 24.63 $ 23.72 $ 24.88 $ 23.72
Tangible Book Value 24.15 23.91 23.01 24.15 23.01
Market Value

Closing

66.68 61.21 58.69 66.68 58.69
High 68.10 62.58 61.73 68.10 61.73
Low 58.70 53.90 53.45 53.90 53.45
 
June 30, March 31, December 31, June 30,
              2015       2015     2014     2014

As of Period End:

Balance Sheet Totals
Loans and Leases $ 7,428,438 $ 7,178,628 $ 6,897,589 $ 6,426,353
Total Assets 15,248,043 15,139,179 14,787,208 14,844,505
Total Deposits 13,090,695 12,979,616 12,633,089 12,670,034
Other Debt 170,816 173,898 173,912 173,671
Total Shareholders' Equity 1,082,939 1,075,251 1,055,086 1,050,801
 
Asset Quality
Non-Performing Assets $ 29,450 $ 28,777 $ 30,082 $ 34,389
Allowance for Loan and Lease Losses 106,006 107,461 108,688 113,838
Allowance to Loans and Leases Outstanding 1.43 % 1.50 % 1.58 % 1.77 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 4 14.47 % 14.62 % n/a n/a
Tier 1 Capital Ratio 4 14.47 14.62 14.69 % 15.66 %
Total Capital Ratio 4 15.72 15.87 15.94 16.91
Tier 1 Leverage Ratio 4 7.21 7.17 7.13 7.20
Total Shareholders' Equity to Total Assets 7.10 7.10 7.14 7.08
Tangible Common Equity to Tangible Assets 5 6.91 6.91 6.94 6.88

Tangible Common Equity to Risk-Weighted Assets 4, 5

 14.03 14.27 14.46 15.54
 
Non-Financial Data
Full-Time Equivalent Employees 2,166 2,156 2,161 2,194
Branches 71 74 74 74
ATMs 455 456 459 457
 

1

  

Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).

2

Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.

3

Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share.

4

Capital ratios as of June 30, 2015 and March 31, 2015 calculated under Basel III rules, which became effective January 1, 2015.

5

Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 2 “Reconciliation of Non-GAAP Financial Measures."

 
   
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures     Table 2
    June 30,     March 31,     December 31, June 30,
(dollars in thousands)     2015     2015     2014     2014
Total Shareholders' Equity $ 1,082,939 $ 1,075,251 $ 1,055,086 $ 1,050,801

Less: Goodwill

      31,517         31,517         31,517         31,517  
Tangible Common Equity     $ 1,051,422       $ 1,043,734       $ 1,023,569       $ 1,019,284  
 
Total Assets $ 15,248,043 $ 15,139,179 $ 14,787,208 $ 14,844,505

Less: Goodwill

      31,517         31,517         31,517         31,517  
Tangible Assets     $ 15,216,526       $ 15,107,662       $ 14,755,691       $ 14,812,988  
 

Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements 1

 $ 7,495,744 $ 7,313,682 $ 7,077,035 $ 6,559,897
 
Total Shareholders' Equity to Total Assets 7.10 % 7.10 % 7.14 % 7.08 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.91 % 6.91 % 6.94 % 6.88 %
 
Tier 1 Capital Ratio 1 14.47 % 14.62 % 14.69 % 15.66 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 1 14.03 % 14.27 % 14.46 % 15.54 %
 

1

  

Risk-weighted assets and capital ratios as of June 30, 2015 and March 31, 2015 calculated under Basel III rules, which became effective January 1, 2015.

 
       
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income           Table 3
    Three Months Ended

 

Six Months Ended

June 30,     March 31,     June 30, June 30,
(dollars in thousands, except per share amounts)     2015     2015     2014     2015     2014
Interest Income
Interest and Fees on Loans and Leases $ 73,565 $ 70,961 $ 65,818 $ 144,526 $ 129,344
Income on Investment Securities
Available-for-Sale 10,273 10,198 10,697 20,471 21,457
Held-to-Maturity 22,832 24,407 26,938 47,239 54,827
Deposits 2 3 1 5 4
Funds Sold 268 259 168 527 305
Other       310       302       302         612       604  
Total Interest Income       107,250       106,130       103,924         213,380       206,541  
Interest Expense
Deposits 2,405 2,368 2,393 4,773 4,751
Securities Sold Under Agreements to Repurchase 6,440 6,371 6,465 12,811 12,862
Funds Purchased 3 3 4 6 7
Other Debt       620       618       650         1,238       1,276  
Total Interest Expense       9,468       9,360       9,512         18,828       18,896  
Net Interest Income 97,782 96,770 94,412 194,552 187,645
Provision for Credit Losses       -       -       (2,199 )       -       (2,199 )
Net Interest Income After Provision for Credit Losses       97,782       96,770       96,611         194,552       189,844  
Noninterest Income
Trust and Asset Management 12,355 12,180 12,005 24,535 23,857
Mortgage Banking 3,469 1,693 1,804 5,162 3,809
Service Charges on Deposit Accounts 8,203 8,537 8,638 16,740 17,516
Fees, Exchange, and Other Service Charges 13,352 12,897 13,370 26,249 26,309
Investment Securities Gains, Net 86 10,231 2,079 10,317 4,239
Annuity and Insurance 1,885 2,044 1,930 3,929 4,053
Bank-Owned Life Insurance 2,088 1,734 1,519 3,822 3,121
Other       4,487       2,991       3,136         7,478       6,345  
Total Noninterest Income       45,925       52,307       44,481         98,232       89,249  
Noninterest Expense
Salaries and Benefits 47,610 49,780 45,081 97,390 91,978
Net Occupancy 8,605 9,333 9,254 17,938 18,671
Net Equipment 4,826 5,288 4,669 10,114 9,272
Data Processing 3,673 3,773 3,842 7,446 7,491
Professional Fees 2,265 2,334 2,613 4,599 4,873
FDIC Insurance 2,068 2,140 2,055 4,208 4,131
Other       14,527       14,267       13,568         28,794       28,213  
Total Noninterest Expense       83,574       86,915       81,082         170,489       164,629  
Income Before Provision for Income Taxes 60,133 62,162 60,010 122,295 114,464
Provision for Income Taxes       18,979       19,720       18,520         38,699       34,382  
Net Income     $ 41,154     $ 42,442     $ 41,490       $ 83,596     $ 80,082  
Basic Earnings Per Share $ 0.95 $ 0.98 $ 0.94 $ 1.93 $ 1.81
Diluted Earnings Per Share $ 0.95 $ 0.97 $ 0.94 $ 1.92 $ 1.81
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 0.90 $ 0.90
Basic Weighted Average Shares 43,305,813 43,386,402 44,053,899 43,345,667 44,123,030
Diluted Weighted Average Shares       43,518,349       43,597,504       44,246,431         43,558,664       44,332,838  
 
   
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income     Table 4
    Three Months Ended     Six Months Ended
June 30,     March 31,     June 30, June 30,
(dollars in thousands)     2015     2015     2014     2015     2014
Net Income $ 41,154 $ 42,442 $ 41,490 $ 83,596 $ 80,082
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities (7,610 ) 5,294 8,617 (2,316 ) 14,888
Defined Benefit Plans       220         220       156       440         312
Total Other Comprehensive Income (Loss)       (7,390 )       5,514       8,773       (1,876 )       15,200
Comprehensive Income     $ 33,764       $ 47,956     $ 50,263     $ 81,720       $ 95,282
 
   
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition     Table 5
    June 30,     March 31,     December 31, June 30,
(dollars in thousands)     2015     2015     2014     2014
Assets
Interest-Bearing Deposits in Other Banks $ 3,420 $ 3,383 $ 2,873 $ 4,552
Funds Sold 602,598 620,331 360,577 796,275
Investment Securities
Available-for-Sale 2,275,361 2,271,186 2,289,190 2,209,763
Held-to-Maturity (Fair Value of $4,240,732; $4,378,007; $4,504,495; and $4,743,012) 4,199,121 4,306,353 4,466,679 4,704,551
Loans Held for Sale 18,483 1,951 5,136 3,678
Loans and Leases 7,428,438 7,178,628 6,897,589 6,426,353
Allowance for Loan and Lease Losses       (106,006 )       (107,461 )       (108,688 )       (113,838 )
Net Loans and Leases       7,322,432         7,071,167         6,788,901         6,312,515  
Total Earning Assets       14,421,415         14,274,371         13,913,356         14,031,334  
Cash and Due from Banks 150,874 151,793 172,126 141,950
Premises and Equipment, Net 108,439 109,223 109,854 108,116
Accrued Interest Receivable 44,475 47,017 44,654 44,311
Foreclosed Real Estate 1,989 2,095 2,311 3,944
Mortgage Servicing Rights 23,426 23,643 24,695 26,397
Goodwill 31,517 31,517 31,517 31,517
Bank-Owned Life Insurance 265,133 264,228 262,807 260,403
Other Assets       200,775         235,292         225,888         196,533  
Total Assets     $ 15,248,043       $ 15,139,179       $ 14,787,208       $ 14,844,505  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,156,847 $ 4,047,334 $ 3,832,943 $ 4,070,334
Interest-Bearing Demand 2,699,517 2,608,664 2,559,570 2,566,240
Savings 5,044,711 5,014,686 4,806,575 4,525,593
Time       1,189,620         1,308,932         1,434,001         1,507,867  
Total Deposits       13,090,695         12,979,616         12,633,089         12,670,034  
Funds Purchased 8,459 8,459 8,459 8,467
Securities Sold Under Agreements to Repurchase 672,310 672,329 688,601 745,626
Other Debt 170,816 173,898 173,912 173,671
Retirement Benefits Payable 55,181 55,197 55,477 35,017
Accrued Interest Payable 5,254 5,836 5,148 5,099
Taxes Payable and Deferred Taxes 26,244 46,987 27,777 42,131
Other Liabilities       136,145         121,606         139,659         113,659  
Total Liabilities       14,165,104         14,063,928         13,732,122         13,793,704  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2015 - 57,745,324 / 43,535,020; March 31, 2015 - 57,733,267 / 43,652,628; December 31, 2014 - 57,634,755 / 43,724,208; and June 30, 2014 - 57,631,552 / 44,297,228)

575 575 574 573
Capital Surplus 536,782 534,141 531,932 527,284
Accumulated Other Comprehensive Loss (28,562 ) (21,172 ) (26,686 ) (16,623 )
Retained Earnings 1,278,672 1,257,341 1,234,801 1,191,512

Treasury Stock, at Cost (Shares: June 30, 2015 - 14,210,304; March 31, 2015 - 14,080,639; December 31, 2014 - 13,910,547; and June 30, 2014 - 13,334,324)

      (704,528 )       (695,634 )       (685,535 )       (651,945 )
Total Shareholders' Equity       1,082,939         1,075,251         1,055,086         1,050,801  
Total Liabilities and Shareholders' Equity     $ 15,248,043       $ 15,139,179       $ 14,787,208       $ 14,844,505  
 
 
Bank of Hawaii Corporation and Subsidiaries    
Consolidated Statements of Shareholders' Equity     Table 6
                Accum.        
Other
Compre-
hensive
Common Shares Common Capital Income Retained Treasury
(dollars in thousands)     Outstanding     Stock     Surplus     (Loss)     Earnings     Stock     Total
Balance as of December 31, 2014 43,724,208 $ 574 $ 531,932 $ (26,686 ) $ 1,234,801 $ (685,535 ) $ 1,055,086
Net Income - - - - 83,596 - 83,596
Other Comprehensive Loss - - - (1,876 ) - - (1,876 )
Share-Based Compensation - - 3,731 - - - 3,731
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 213,289 1 1,119 - (408 ) 5,394 6,106
Common Stock Repurchased (402,477 ) - - - - (24,387 ) (24,387 )
Cash Dividends Declared ($0.90 per share)     -         -       -       -         (39,317 )       -         (39,317 )
Balance as of June 30, 2015     43,535,020       $ 575     $ 536,782     $ (28,562 )     $ 1,278,672       $ (704,528 )     $ 1,082,939  
 
Balance as of December 31, 2013 44,490,385 $ 572 $ 522,505 $ (31,823 ) $ 1,151,754 $ (631,032 ) $ 1,011,976
Net Income - - - - 80,082 - 80,082
Other Comprehensive Income - - - 15,200 - - 15,200
Share-Based Compensation - - 3,820 - - - 3,820
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 274,621 1 959 - (279 ) 6,074 6,755
Common Stock Repurchased (467,778 ) - - - - (26,987 ) (26,987 )
Cash Dividends Declared ($0.90 per share)     -         -       -       -         (40,045 )       -         (40,045 )
Balance as of June 30, 2014     44,297,228       $ 573     $ 527,284     $ (16,623 )     $ 1,191,512       $ (651,945 )     $ 1,050,801  
 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis     Table 7a
    Three Months Ended   Three Months Ended Three Months Ended
June 30, 2015 March 31, 2015 June 30, 2014
Average     Income/     Yield/ Average     Income/     Yield/ Average     Income/     Yield/
(dollars in millions)     Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.5 $ - 0.17 % $ 3.1 $ - 0.44 % $ 4.0 $ - 0.12 %
Funds Sold 473.5 0.3 0.22 484.3 0.2 0.21 308.3 0.2 0.22
Investment Securities
Available-for-Sale
Taxable 1,558.6 6.5 1.68 1,560.8 6.5 1.67 1,525.1 7.0 1.84
Non-Taxable 725.8 5.8 3.17 723.3 5.7 3.16 701.6 5.7 3.25
Held-to-Maturity
Taxable 4,006.4 21.3 2.12 4,140.9 22.8 2.21 4,505.0 25.3 2.25
Non-Taxable       248.2       2.4     3.93       249.1       2.5     3.94       251.8       2.5     3.96
Total Investment Securities       6,539.0       36.0     2.20       6,674.1       37.5     2.25       6,983.5       40.5     2.32
Loans Held for Sale 11.1 0.1 3.66 3.1 - 3.63 3.6 - 4.33
Loans and Leases 1
Commercial and Industrial 1,156.3 9.1 3.16 1,130.5 8.9 3.18 950.2 8.1 3.42
Commercial Mortgage 1,499.7 14.4 3.85 1,449.5 13.7 3.83 1,302.2 12.7 3.91
Construction 126.0 1.5 4.85 103.8 1.1 4.39 103.2 1.2 4.48
Commercial Lease Financing 225.1 2.0 3.47 225.9 1.9 3.42 241.2 1.7 2.80
Residential Mortgage 2,736.2 28.3 4.14 2,631.3 27.5 4.18 2,323.5 25.4 4.38
Home Equity 906.8 8.1 3.60 878.5 8.1 3.72 805.9 7.9 3.93
Automobile 344.4 4.5 5.20 331.5 4.3 5.25 280.6 3.7 5.33
Other 2       306.0       5.7     7.51       302.1       5.5     7.36       267.8       5.1     7.65
Total Loans and Leases       7,300.5       73.6     4.04       7,053.1       71.0     4.06       6,274.6       65.8     4.20
Other       51.6       0.3     2.40       66.0       0.3     1.83       74.1       0.3     1.63
Total Earning Assets 3       14,379.2       110.3     3.07       14,283.7       109.0     3.07       13,648.1       106.8     3.13
Cash and Due from Banks 125.8 136.5 138.3
Other Assets   533.5   525.8   467.0
Total Assets $ 15,038.5 $ 14,946.0 $ 14,253.4
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,611.9 0.2 0.03 $ 2,577.1 0.2 0.03 $ 2,359.2 0.2 0.03
Savings 5,023.5 1.1 0.09 4,941.0 1.1 0.09 4,540.3 1.0 0.09
Time       1,256.6       1.1     0.35       1,378.3       1.1     0.33       1,506.5       1.2     0.33
Total Interest-Bearing Deposits       8,892.0       2.4     0.11       8,896.4       2.4     0.11       8,406.0       2.4     0.11
Short-Term Borrowings 8.5 - 0.14 8.5 - 0.14 9.3 - 0.14
Securities Sold Under Agreements to Repurchase 672.2 6.5 3.79 678.0 6.4 3.76 789.9 6.5 3.24
Other Debt       173.9       0.6     1.43       173.9       0.6     1.43       175.3       0.6     1.49
Total Interest-Bearing Liabilities       9,746.6       9.5     0.39       9,756.8       9.4     0.39       9,380.5       9.5     0.40
Net Interest Income $ 100.8 $ 99.6 $ 97.3
Interest Rate Spread 2.68 % 2.68 % 2.73 %
Net Interest Margin 2.81 % 2.81 % 2.86 %
Noninterest-Bearing Demand Deposits 3,971.3 3,890.0 3,624.0
Other Liabilities 244.1 235.1 200.5
Shareholders' Equity   1,076.5   1,064.1   1,048.4
Total Liabilities and Shareholders' Equity $ 15,038.5 $ 14,946.0 $ 14,253.4
 

1

  

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.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.

3

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $3,008,000, $2,878,000 and $2,874,000 for the three months ended June 30, 2015, March 31, 2015, and June 30, 2014, respectively.

 
   
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis     Table 7b
    Six Months Ended   Six Months Ended
June 30, 2015 June 30, 2014
Average     Income/     Yield/ Average Income/     Yield/
(dollars in millions)     Balance     Expense     Rate     Balance     Expense     Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.2 $ - 0.30 % $ 4.8 $ - 0.18 %
Funds Sold 478.9 0.5 0.22 289.5 0.3 0.21
Investment Securities
Available-for-Sale
Taxable 1,559.7 13.0 1.67 1,536.9 14.2 1.85
Non-Taxable 724.6 11.5 3.17 689.6 11.2 3.26
Held-to-Maturity
Taxable 4,073.2 44.0 2.17 4,503.3 51.6 2.29
Non-Taxable       248.7       4.9     3.94       252.2       4.9     3.96
Total Investment Securities       6,606.2       73.4     2.23       6,982.0       81.9     2.35
Loans Held for Sale 7.1 0.1 3.65 3.9 0.1 4.52
Loans and Leases 1
Commercial and Industrial 1,143.5 18.0 3.17 937.1 15.9 3.42
Commercial Mortgage 1,474.8 28.1 3.84 1,276.2 25.4 4.01
Construction 115.0 2.6 4.64 100.3 2.2 4.45
Commercial Lease Financing 225.5 3.9 3.44 243.5 3.1 2.56
Residential Mortgage 2,684.0 55.8 4.16 2,305.3 49.8 4.32
Home Equity 892.7 16.2 3.66 793.9 15.6 3.95
Automobile 338.0 8.8 5.23 272.0 7.2 5.36
Other 2       304.0       11.2     7.43       261.5       10.1     7.77
Total Loans and Leases       7,177.5       144.6     4.05       6,189.8       129.3     4.20
Other       58.8       0.6     2.08       75.5       0.6     1.60
Total Earning Assets 3       14,331.7       219.2     3.07       13,545.5       212.2     3.14
Cash and Due from Banks 131.1 140.4
Other Assets   529.7   458.4
Total Assets $ 14,992.5 $ 14,144.3
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,594.6 0.4 0.03 $ 2,342.6 0.4 0.03
Savings 4,982.5 2.2 0.09 4,528.0 1.9 0.09
Time       1,317.1       2.2     0.34       1,440.2       2.5     0.35
Total Interest-Bearing Deposits       8,894.2       4.8     0.11       8,310.8       4.8     0.12
Short-Term Borrowings 8.4 - 0.14 9.6 - 0.14
Securities Sold Under Agreements to Repurchase 675.2 12.8 3.77 792.2 12.8 3.23
Other Debt       173.9       1.2     1.43       175.0       1.3     1.46
Total Interest-Bearing Liabilities       9,751.7       18.8     0.39       9,287.6       18.9     0.41
Net Interest Income $ 200.4 $ 193.3
Interest Rate Spread 2.68 % 2.73 %
Net Interest Margin 2.81 % 2.87 %
Noninterest-Bearing Demand Deposits 3,930.9 3,612.1
Other Liabilities 239.6 203.6
Shareholders' Equity   1,070.3   1,041.0
Total Liabilities and Shareholders' Equity $ 14,992.5 $ 14,144.3
 

1

  

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.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.

3

Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $5,886,000 and $5,698,000 for the six months ended June 30, 2015 and June 30, 2014, respectively.

 
   
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8a
    Three Months Ended June 30, 2015
Compared to March 31, 2015
(dollars in millions)     Volume 1    

  Rate 1  

    Total
Change in Interest Income:    
Funds Sold $ - $ 0.1 $ 0.1
Investment Securities
Available-for-Sale
Non-Taxable - 0.1 0.1
Held-to-Maturity
Taxable (0.7 ) (0.8 ) (1.5 )
Non-Taxable       -         (0.1 )       (0.1 )
Total Investment Securities       (0.7 )       (0.8 )       (1.5 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 0.3 (0.1 ) 0.2
Commercial Mortgage 0.6 0.1 0.7
Construction 0.3 0.1 0.4
Commercial Lease Financing - 0.1 0.1
Residential Mortgage 1.1 (0.3 ) 0.8
Home Equity 0.2 (0.2 ) -
Automobile 0.2 - 0.2
Other 2       0.1         0.1         0.2  
Total Loans and Leases       2.8         (0.2 )       2.6  
Other       (0.1 )       0.1         -  
Total Change in Interest Income       2.1         (0.8 )       1.3  
 
Change in Interest Expense:
Interest-Bearing Deposits
Time       (0.1 )       0.1         -  
Total Interest-Bearing Deposits       (0.1 )       0.1         -  
Securities Sold Under Agreements to Repurchase       -         0.1         0.1  
Total Change in Interest Expense       (0.1 )       0.2         0.1  
 
Change in Net Interest Income     $ 2.2       $ (1.0 )     $ 1.2  
 

1

  

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.

 
   
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8b
    Three Months Ended June 30, 2015
Compared to June 30, 2014
(dollars in millions)     Volume 1    

  Rate 1  

    Total
Change in Interest Income:    
Funds Sold $ 0.1 $ - $ 0.1
Investment Securities
Available-for-Sale
Taxable 0.1 (0.6 ) (0.5 )
Non-Taxable 0.2 (0.1 ) 0.1
Held-to-Maturity
Taxable (2.7 ) (1.3 ) (4.0 )
Non-Taxable       -         (0.1 )       (0.1 )
Total Investment Securities       (2.4 )       (2.1 )       (4.5 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 1.7 (0.7 ) 1.0
Commercial Mortgage 1.9 (0.2 ) 1.7
Construction 0.3 - 0.3
Commercial Lease Financing (0.1 ) 0.4 0.3
Residential Mortgage 4.3 (1.4 ) 2.9
Home Equity 0.9 (0.7 ) 0.2
Automobile 0.8 - 0.8
Other 2       0.7         (0.1 )       0.6  
Total Loans and Leases       10.5         (2.7 )       7.8  
Other       (0.1 )       0.1         -  
Total Change in Interest Income       8.2         (4.7 )       3.5  
 
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 - 0.1
Time       (0.2 )       0.1         (0.1 )
Total Interest-Bearing Deposits       (0.1 )       0.1         -  
Securities Sold Under Agreements to Repurchase       (1.0 )       1.0         -  
Total Change in Interest Expense       (1.1 )       1.1         -  
 
Change in Net Interest Income     $ 9.3       $ (5.8 )     $ 3.5  
 

1

  

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.

 
   
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8c
    Six Months Ended June 30, 2015
Compared to June 30, 2014
(dollars in millions)     Volume 1    

  Rate 1  

    Total
Change in Interest Income:    
Funds Sold $ 0.2 $ - $ 0.2
Investment Securities
Available-for-Sale
Taxable 0.2 (1.4 ) (1.2 )
Non-Taxable 0.6 (0.3 ) 0.3
Held-to-Maturity
Taxable       (4.8 )       (2.8 )       (7.6 )
Total Investment Securities       (4.0 )       (4.5 )       (8.5 )
Loans Held for Sale 0.1 (0.1 ) -
Loans and Leases
Commercial and Industrial 3.3 (1.2 ) 2.1
Commercial Mortgage 3.8 (1.1 ) 2.7
Construction 0.3 0.1 0.4
Commercial Lease Financing (0.2 ) 1.0 0.8
Residential Mortgage 7.9 (1.9 ) 6.0
Home Equity 1.8 (1.2 ) 0.6
Automobile 1.7 (0.1 ) 1.6
Other 2       1.6         (0.5 )       1.1  
Total Loans and Leases       20.2         (4.9 )       15.3  
Other       (0.2 )       0.2         -  
Total Change in Interest Income       16.3         (9.3 )       7.0  
 
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.2 0.1 0.3
Time       (0.2 )       (0.1 )       (0.3 )
Total Interest-Bearing Deposits       -         -         -  
Securities Sold Under Agreements to Repurchase (2.0 ) 2.0 -
Other Debt       (0.1 )       -         (0.1 )
Total Change in Interest Expense       (2.1 )       2.0         (0.1 )
 
Change in Net Interest Income     $ 18.4       $ (11.3 )     $ 7.1  
 

1

  

The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

2

Comprised of other consumer revolving credit, installment, and consumer lease financing.

 
   
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits     Table 9
    Three Months Ended    

  Six Months Ended  

  June 30,  

    

  March 31,  

    

  June 30,  

June 30,
(dollars in thousands)     2015     2015     2014     2015     2014
Salaries $ 28,214 $ 27,914 $ 28,544 $ 56,128 $ 56,458
Incentive Compensation 4,959 4,514 4,359 9,473 8,590
Share-Based Compensation 2,751 2,345 2,271 5,096 4,240
Commission Expense 1,927 1,592 1,106 3,519 2,165
Retirement and Other Benefits 4,117 4,731 3,811 8,848 8,797
Payroll Taxes 2,278 3,585 2,179 5,863 5,747
Medical, Dental, and Life Insurance 2,449 3,184 2,724 5,633 5,345
Separation Expense       915       1,915       87       2,830       636
Total Salaries and Benefits     $ 47,610     $ 49,780     $ 45,081     $ 97,390     $ 91,978
 
   
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances     Table 10
    June 30,     March 31,     December 31,     September 30, June 30,
(dollars in thousands)     2015     2015     2014     2014     2014
Commercial
Commercial and Industrial $ 1,173,259 $ 1,141,408 $ 1,055,243 $ 991,157 $ 988,940
Commercial Mortgage 1,528,685 1,477,902 1,437,513 1,373,289 1,345,549
Construction 118,714 111,381 109,183 132,097 121,434
Lease Financing       222,113       224,419       226,189       232,381       237,585
Total Commercial       3,042,771       2,955,110       2,828,128       2,728,924       2,693,508
Consumer
Residential Mortgage 2,787,847 2,699,434 2,571,090 2,444,989 2,355,085
Home Equity 931,191 884,742 866,688 838,206 811,180
Automobile 352,128 339,686 323,848 306,003 287,794
Other 1       314,501       299,656       307,835       288,228       278,786
Total Consumer       4,385,667       4,223,518       4,069,461       3,877,426       3,732,845
Total Loans and Leases     $ 7,428,438     $ 7,178,628     $ 6,897,589     $ 6,606,350     $ 6,426,353
 
 
Deposits                              
June 30, March 31, December 31, September 30, June 30,
(dollars in thousands)     2015     2015     2014     2014     2014
Consumer $ 6,221,691 $ 6,220,391 $ 6,092,929 $ 5,972,435 $ 5,938,123
Commercial 5,524,153 5,444,814 5,163,352 5,070,080 5,207,026
Public and Other       1,344,851       1,314,411       1,376,808       1,318,926       1,524,885
Total Deposits     $ 13,090,695     $ 12,979,616     $ 12,633,089     $ 12,361,441     $ 12,670,034
 

1

   Comprised of other revolving credit, installment, and lease financing.
 
   
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More     Table 11
    June 30,     March 31,     December 31,     September 30, June 30,
(dollars in thousands)     2015     2015     2014     2014     2014
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 8,299 $ 8,641 $ 9,088 $ 8,952 $ 10,437
Commercial Mortgage       716         732         745         1,366         1,403  
Total Commercial       9,015         9,373         9,833         10,318         11,840  
Consumer
Residential Mortgage 14,918 14,344 14,841 16,756 15,818
Home Equity       3,528         2,965         3,097         2,671         2,787  
Total Consumer       18,446         17,309         17,938         19,427         18,605  
Total Non-Accrual Loans and Leases       27,461         26,682         27,771         29,745         30,445  
Foreclosed Real Estate       1,989         2,095         2,311         3,562         3,944  
Total Non-Performing Assets     $ 29,450       $ 28,777       $ 30,082       $ 33,307       $ 34,389  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial     $ 750       $ -       $ 2       $ 14       $ -  
Total Commercial       750         -         2         14         -  
Consumer
Residential Mortgage 4,789 3,914 4,506 4,819 6,082
Home Equity 2,395 2,425 2,596 2,816 2,505
Automobile 323 537 616 612 236
Other 1       1,395         1,078         941         842         844  
Total Consumer       8,902         7,954         8,659         9,089         9,667  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 9,652       $ 7,954       $ 8,661       $ 9,103       $ 9,667  

Restructured Loans on Accrual Status and Not Past Due 90 Days or More

     $ 48,339       $ 46,639       $ 45,474       $ 45,169       $ 43,625  
Total Loans and Leases     $ 7,428,438       $ 7,178,628       $ 6,897,589       $ 6,606,350       $ 6,426,353  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.37 %       0.37 %       0.40 %       0.45 %       0.47 %
 

Ratio of Non-Performing Assets to Total Loans and Leases and Foreclosed Real Estate

      0.40 %       0.40 %       0.44 %       0.50 %       0.53 %
 

Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases and Commercial Foreclosed Real Estate

      0.32 %       0.34 %       0.38 %       0.42 %       0.48 %
 

Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate

      0.45 %       0.44 %       0.47 %       0.56 %       0.57 %
 

Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases and Foreclosed Real Estate

      0.53 %       0.51 %       0.56 %       0.64 %       0.69 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 28,777 $ 30,082 $ 33,307 $ 34,389 $ 37,048
Additions 1,909 621 1,885 2,565 2,798
Reductions
Payments (1,020 ) (1,427 ) (1,822 ) (2,381 ) (2,753 )
Return to Accrual Status - (187 ) (1,291 ) (704 ) (904 )
Sales of Foreclosed Real Estate (83 ) (37 ) (1,480 ) (449 ) (1,782 )
Charge-offs/Write-downs       (133 )       (275 )       (517 )       (113 )       (18 )
Total Reductions       (1,236 )       (1,926 )       (5,110 )       (3,647 )       (5,457 )
Balance at End of Quarter     $ 29,450       $ 28,777       $ 30,082       $ 33,307       $ 34,389  
 

1

  

Comprised of other revolving credit, installment, and lease financing.

 
   
Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses     Table 12
    Three Months Ended     Six Months Ended

  June 30,  

    

  March 31,  

    

  June 30,  

June 30,
(dollars in thousands)     2015     2015     2014     2015     2014
Balance at Beginning of Period $ 113,348 $ 114,575 $ 120,136 $ 114,575 $ 121,521
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (255 ) (235 ) (749 ) (490 ) (1,568 )
Lease Financing - - (66 ) - (66 )
Consumer
Residential Mortgage (54 ) (559 ) (323 ) (613 ) (652 )
Home Equity (211 ) (216 ) (553 ) (427 ) (904 )
Automobile (1,237 ) (1,428 ) (711 ) (2,665 ) (1,628 )
Other 1       (1,739 )       (1,650 )       (1,595 )       (3,389 )       (3,217 )
Total Loans and Leases Charged-Off       (3,496 )       (4,088 )       (3,997 )       (7,584 )       (8,035 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 456 646 2,132 1,102 3,052
Commercial Mortgage 14 14 15 28 29
Construction 8 8 8 16 13
Lease Financing 8 68 1 76 3
Consumer
Residential Mortgage 96 342 2,335 438 2,607
Home Equity 566 881 351 1,447 902
Automobile 396 494 343 890 788
Other 1       497         408         723         905         1,224  
Total Recoveries on Loans and Leases Previously Charged-Off       2,041         2,861         5,908         4,902         8,618  
Net Loans and Leases Recovered (Charged-Off) (1,455 ) (1,227 ) 1,911 (2,682 ) 583
Provision for Credit Losses - - (2,199 ) - (2,199 )
Provision for Unfunded Commitments       -         -         (123 )       -         (180 )
Balance at End of Period 2     $ 111,893       $ 113,348       $ 119,725       $ 111,893       $ 119,725  
 
Components
Allowance for Loan and Lease Losses $ 106,006 $ 107,461 $ 113,838 $ 106,006 $ 113,838
Reserve for Unfunded Commitments       5,887         5,887         5,887         5,887         5,887  
Total Reserve for Credit Losses     $ 111,893       $ 113,348       $ 119,725       $ 111,893       $ 119,725  
 
Average Loans and Leases Outstanding     $ 7,300,506       $ 7,053,061       $ 6,274,595       $ 7,177,467       $ 6,189,789  
 
Ratio of Net Loans and Leases Charged-Off (Recovered) to
Average Loans and Leases Outstanding (annualized) 0.08 % 0.07 % -0.12 % 0.08 % -0.02 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.43 % 1.50 % 1.77 % 1.43 % 1.77 %
 

1

  

Comprised of other revolving credit, installment, and lease financing.

2

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 Segments Selected Financial Information     Table 13a
    Retail     Commercial     Investment     Treasury Consolidated
(dollars in thousands)     Banking     Banking     Services     and Other     Total
Three Months Ended June 30, 2015
Net Interest Income $ 50,550 $ 35,880 $ 4,335 $ 7,017 $ 97,782
Provision for Credit Losses       1,727         (266 )       (8 )       (1,453 )       -  
Net Interest Income After Provision for Credit Losses 48,823 36,146 4,343 8,470 97,782
Noninterest Income 20,809 5,793 15,680 3,643 45,925
Noninterest Expense       (49,158 )       (16,569 )       (14,572 )       (3,275 )       (83,574 )
Income Before Provision for Income Taxes 20,474 25,370 5,451 8,838 60,133
Provision for Income Taxes       (7,219 )       (8,975 )       (2,017 )       (768 )       (18,979 )
Net Income     $ 13,255       $ 16,395       $ 3,434       $ 8,070       $ 41,154  
Total Assets as of June 30, 2015     $ 4,404,619       $ 2,984,756       $ 204,253       $ 7,654,415       $ 15,248,043  
 
 
Three Months Ended June 30, 2014 1
Net Interest Income $ 44,094 $ 28,222 $ 3,679 $ 18,417 $ 94,412
Provision for Credit Losses       (414 )       (1,269 )       (226 )       (290 )       (2,199 )
Net Interest Income After Provision for Credit Losses 44,508 29,491 3,905 18,707 96,611
Noninterest Income 19,988 5,581 14,411 4,501 44,481
Noninterest Expense       (48,647 )       (16,462 )       (13,342 )       (2,631 )       (81,082 )
Income Before Provision for Income Taxes 15,849 18,610 4,974 20,577 60,010
Provision for Income Taxes       (5,936 )       (6,320 )       (1,844 )       (4,420 )       (18,520 )
Net Income     $ 9,913       $ 12,290       $ 3,130       $ 16,157       $ 41,490  
Total Assets as of June 30, 2014 1     $ 3,761,140       $ 2,633,218       $ 194,220       $ 8,255,927       $ 14,844,505  
 

1

  

Certain prior period information has been reclassified to conform to current presentation.

 
   
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information     Table 13b
    Retail     Commercial     Investment     Treasury Consolidated
(dollars in thousands)     Banking     Banking     Services     and Other     Total
Six Months Ended June 30, 2015
Net Interest Income $ 98,900 $ 70,148 $ 8,636 $ 16,868 $ 194,552
Provision for Credit Losses       3,450         (730 )       (16 )       (2,704 )       -  
Net Interest Income After Provision for Credit Losses 95,450 70,878 8,652 19,572 194,552
Noninterest Income 39,915 11,349 30,407 16,561 98,232
Noninterest Expense       (99,498 )       (34,304 )       (29,162 )       (7,525 )       (170,489 )
Income Before Provision for Income Taxes 35,867 47,923 9,897 28,608 122,295
Provision for Income Taxes       (12,744 )       (16,859 )       (3,662 )       (5,434 )       (38,699 )
Net Income     $ 23,123       $ 31,064       $ 6,235       $ 23,174       $ 83,596  
Total Assets as of June 30, 2015     $ 4,404,619       $ 2,984,756       $ 204,253       $ 7,654,415       $ 15,248,043  
 
 
Six Months Ended June 30, 2014 1
Net Interest Income $ 85,538 $ 55,144 $ 7,234 $ 39,729 $ 187,645
Provision for Credit Losses       1,041         (1,329 )       (294 )       (1,617 )       (2,199 )
Net Interest Income After Provision for Credit Losses 84,497 56,473 7,528 41,346 189,844
Noninterest Income 39,343 11,799 28,761 9,346 89,249
Noninterest Expense       (98,013 )       (33,424 )       (27,763 )       (5,429 )       (164,629 )
Income Before Provision for Income Taxes 25,827 34,848 8,526 45,263 114,464
Provision for Income Taxes       (9,750 )       (11,740 )       (3,161 )       (9,731 )       (34,382 )
Net Income     $ 16,077       $ 23,108       $ 5,365       $ 35,532       $ 80,082  
Total Assets as of June 30, 2014 1     $ 3,761,140       $ 2,633,218       $ 194,220       $ 8,255,927       $ 14,844,505  
 

1

  

Certain prior period information has been reclassified to conform to current presentation.

 
 
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data     Table 14
    Three Months Ended
June 30,   March 31,   December 31,   September 30, June 30,
(dollars in thousands, except per share amounts)     2015     2015     2014     2014     2014
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 73,565 $ 70,961 $ 69,974 $ 68,089 $ 65,818
Income on Investment Securities
Available-for-Sale 10,273 10,198 10,732 10,286 10,697
Held-to-Maturity 22,832 24,407 24,966 26,067 26,938
Deposits 2 3 2 3 1
Funds Sold 268 259 192 176 168
Other       310         302         303         302         302  
Total Interest Income       107,250         106,130         106,169         104,923         103,924  
Interest Expense
Deposits 2,405 2,368 2,392 2,391 2,393
Securities Sold Under Agreements to Repurchase 6,440 6,371 6,520 6,523 6,465
Funds Purchased 3 3 3 3 4
Other Debt       620         618         622         627         650  
Total Interest Expense       9,468         9,360         9,537         9,544         9,512  
Net Interest Income 97,782 96,770 96,632 95,379 94,412
Provision for Credit Losses       -         -         -         (2,665 )       (2,199 )
Net Interest Income After Provision for Credit Losses       97,782         96,770         96,632         98,044         96,611  
Noninterest Income
Trust and Asset Management 12,355 12,180 12,225 11,716 12,005
Mortgage Banking 3,469 1,693 2,116 1,646 1,804
Service Charges on Deposit Accounts 8,203 8,537 9,058 9,095 8,638
Fees, Exchange, and Other Service Charges 13,352 12,897 13,702 13,390 13,370
Investment Securities Gains, Net 86 10,231 1,966 1,858 2,079
Annuity and Insurance 1,885 2,044 1,664 2,348 1,930
Bank-Owned Life Insurance 2,088 1,734 1,874 1,644 1,519
Other       4,487         2,991         3,213         3,253         3,136  
Total Noninterest Income       45,925         52,307         45,818         44,950         44,481  
Noninterest Expense
Salaries and Benefits 47,610 49,780 45,520 45,530 45,081
Net Occupancy 8,605 9,333 9,291 9,334 9,254
Net Equipment 4,826 5,288 4,734 4,473 4,669
Data Processing 3,673 3,773 3,823 3,665 3,842
Professional Fees 2,265 2,334 3,086 1,835 2,613
FDIC Insurance 2,068 2,140 2,055 1,750 2,055
Other       14,527         14,267         12,731         14,443         13,568  
Total Noninterest Expense       83,574         86,915         81,240         81,030         81,082  
Income Before Provision for Income Taxes 60,133 62,162 61,210 61,964 60,010
Provision for Income Taxes       18,979         19,720         20,019         20,195         18,520  
Net Income     $ 41,154       $ 42,442       $ 41,191       $ 41,769       $ 41,490  
 
Basic Earnings Per Share $ 0.95 $ 0.98 $ 0.95 $ 0.95 $ 0.94
Diluted Earnings Per Share $ 0.95 $ 0.97 $ 0.94 $ 0.95 $ 0.94
 
Balance Sheet Totals
Loans and Leases $ 7,428,438 $ 7,178,628 $ 6,897,589 $ 6,606,350 $ 6,426,353
Total Assets 15,248,043 15,139,179 14,787,208 14,510,166 14,844,505
Total Deposits 13,090,695 12,979,616 12,633,089 12,361,441 12,670,034
Total Shareholders' Equity 1,082,939 1,075,251 1,055,086 1,057,413 1,050,801
 
Performance Ratios
Return on Average Assets 1.10 % 1.15 % 1.12 % 1.15 % 1.17 %
Return on Average Shareholders' Equity 15.33 16.18 15.39 15.57 15.87
Efficiency Ratio 1 58.16 58.30 57.03 57.74 58.38
Net Interest Margin 2 2.81 2.81 2.84 2.85 2.86
 

1

  

Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).

2

Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.

 
   
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends       Table 15
    Five Months Ended     Year Ended  
($ in millions; jobs in thousands)     May 31, 2015       December 31, 2014       December 31, 2013  
Hawaii Economic Trends          
State General Fund Revenues 1 $ 2,489.5 6.3 % $ 5,535.7 1.6 % $ 5,450.6 3.7 %
General Excise and Use Tax Revenue 1 $ 1,308.3 2.1 % $ 2,979.8 2.5 % $ 2,907.6 2.2 %
Jobs 2 648.8 643.7 629.9
                                                 
June 30, December 31,  
(spot rates)                           2015       2014      

  2013  

  
Unemployment 3
Statewide, seasonally adjusted 4.0 % 4.0 % 4.7 %
 
Oahu 4.1 3.5 3.8
Island of Hawaii 5.5 4.7 5.9
Maui 4.4 3.8 4.7
Kauai 4.8 4.3 5.2
                                                 
June 30,   December 31,  
(percentage change, except months of inventory)                 2015       2014       2013      

  2012  

  
Housing Trends (Single Family Oahu) 4
Median Home Price 2.3 % 3.8 % 4.8 % 7.8 %
Home Sales Volume (units) 3.4 % (0.8 ) % 4.6 % 6.5 %
Months of Inventory 3.2 2.6 2.7 2.5
                                                 
Monthly Visitor Arrivals, Percentage Change
(in thousands)                 Not Seasonally Adjusted       from Previous Year  
Tourism 5
May 31, 2015 709.7 9.3
April 30, 2015 677.8 2.3
March 31, 2015 780.1 7.0
February 28, 2015 661.7 2.3
January 31, 2015 678.9 (0.6 )
December 31, 2014 765.3 6.2
November 30, 2014 637.7 2.2
October 31, 2014 659.8 3.0
September 30, 2014 622.2 4.1
August 31, 2014 730.7 (2.4 )
July 31, 2014 772.1 1.9
June 30, 2014 725.1 1.2
May 31, 2014 649.1 1.8
April 30, 2014 662.6 (0.7 )
March 31, 2014 728.8 (5.2 )
February 28, 2014 646.8 (4.3 )
January 31, 2014 682.6 0.1
December 31, 2013 720.8 (1.8 )
November 30, 2013 624.1 (4.2 )
October 31, 2013 640.3 (0.1 )
September 30, 2013 597.7 0.5
August 31, 2013 748.8 2.5
July 31, 2013 758.0 4.6
June 30, 2013 716.6 5.5
May 31, 2013 637.5 2.4
April 30, 2013 667.0 3.1
March 31, 2013 769.1 7.6
February 28, 2013 675.5 7.8
January 31, 2013 681.9 5.9
December 31, 2012 733.7 6.3
November 30, 2012 651.2 14.5
October 31, 2012 640.7 8.6
September 30, 2012 595.0 6.1
August 31, 2012 725.6 11.0
July 31, 2012 720.4 7.8
June 30, 2012 677.2 11.5
May 31, 2012 622.9 12.5
 

1

  

Source: Hawaii Department of Business, Economic Development & Tourism

2

Source: U. S. Bureau of Labor

3

Source: Hawaii Department of Labor and Industrial Relations, County jobs data not seasonally adjusted.

4

Source: Honolulu Board of REALTORS

5

Source: Hawaii Tourism Authority

Note: Certain prior period seasonally adjusted information has been revised.