Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.99 for the fourth quarter of 2015, up from $0.79 per share in the previous quarter, and up from $0.94 per share in the same quarter last year. Net income for the fourth quarter of 2015 was $42.8 million, compared to net income of $34.3 million in the third quarter of 2015 and $41.2 million in the same quarter last year. The return on average assets for the fourth quarter of 2015 was 1.11 percent, compared with 0.89 percent in the third quarter of 2015 and 1.12 percent in the fourth quarter last year. The return on average equity for the fourth quarter of 2015 was 15.41 percent, compared with 12.45 percent in the third quarter of 2015 and 15.39 percent in the fourth quarter last year.

Loan and lease balances were $7.9 billion at December 31, 2015, up 2.5 percent from September 30, 2015 and up 14.2 percent compared with December 31, 2014. Deposit growth remained strong during the fourth quarter, increasing 2.4 percent from September 30, 2015 and 4.9 percent from December 31, 2014. The net interest margin was 2.85 percent during the fourth quarter of 2015 compared with 2.77 percent in the previous quarter and 2.84 percent in the same quarter last year. The net interest margin for the full year of 2015 was 2.81 percent, down 4 basis points from the net interest margin of 2.85 percent in 2014.

“Bank of Hawaii finished 2015 with another year of solid financial performance,” said Peter Ho, Chairman, President and CEO. “During the fourth quarter our loan balances and deposits continued to grow and we returned to provisioning due to our high level of loan production. During 2015, our net interest margin was relatively stable, asset quality remained solid, capital and liquidity remains strong, core expenses were well controlled, and we maintained our strategic and disciplined approach to grow our businesses.”

Diluted earnings per share for the full year of 2015 were $3.70, up slightly from diluted earnings per share of $3.69 in 2014. Net income for the year was $160.7 million, down $2.3 million or 1.4 percent from net income of $163.0 million in the previous year. The return on average assets for the full year of 2015 was 1.06 percent compared with 1.14 percent in 2014. The return on average equity for the full year of 2015 was 14.82 percent compared with 15.50 percent in 2014.

Financial Highlights

Net interest income, on a taxable-equivalent basis, for the fourth quarter of 2015 was $104.7 million, an increase of $3.8 million compared with $100.9 million in the third quarter of 2015 and up $5.2 million compared with $99.5 million in the fourth quarter last year. Net interest income, on a taxable-equivalent basis, for the full year of 2015 was $406.0 million, an increase of $14.9 million from net interest income of $391.1 million in 2014. Analyses of changes in net interest income are included in Tables 8a, 8b and 8c.

Results for the fourth quarter of 2015 included a provision for credit losses of $1.0 million due to the continued strong growth of loans and leases during the year offset by improved credit metrics. There were no provisions for credit losses during the previous three quarters in 2015. 2014 financial results included a negative provision for credit losses of $4.9 million.

Noninterest income was $44.8 million in the fourth quarter of 2015, an increase of $1.6 million compared with $43.2 million in the third quarter of 2015 and a decrease of $1.0 million compared with $45.8 million in the fourth quarter of 2014. Noninterest income in the fourth quarter of 2015 included a gain of $1.0 million due to a distribution from a low-income housing partnership. Noninterest income in the third quarter of 2015 included a loss of $1.0 million on the sale of an aircraft lease. Noninterest income in the fourth quarter of 2014 included a gain of $2.0 million from the sale of 22,000 Visa Class B shares. Noninterest income for the full year of 2015 was $186.2 million compared with noninterest income of $180.0 million in 2014. The increase in noninterest income compared with the previous year was primarily the result of higher mortgage banking income which totaled $11.6 million in 2015 compared with $7.6 million in 2014 and increased gains on the sales of Visa Class B shares which totaled $10.1 million in 2015 compared with $7.9 million in 2014.

Noninterest expense was $85.7 million in the fourth quarter of 2015, down $6.2 million compared with $91.9 million in the third quarter of 2015 and up $4.5 million compared with $81.2 million in the fourth quarter of 2014. Noninterest expense in the fourth quarter of 2015 included net gains of $3.9 million related to the disposal of two branches which was partially offset by expenses of $1.3 million for the roll-out of chip-enabled debit cards, operating losses of $1.1 million, and severance expenses of $0.5 million. Noninterest expenses in the third quarter of 2015 included a $9.5 million impairment on the residual values of six aircraft in which the leases had expired. Noninterest expense in the fourth quarter of 2014 included an insurance reserve reduction of $2.0 million. Noninterest expense for the full year of 2015 was $348.1 million compared with noninterest expense of $326.9 million in 2014.

The efficiency ratio for the fourth quarter of 2015 was 58.55 percent compared with 65.12 percent in the previous quarter and 57.03 percent in the same quarter last year. The efficiency ratio for the full year of 2015 was 59.99 percent compared with 58.41 percent during the full year of 2014.

The effective tax rate for the fourth quarter of 2015 was 28.23 percent compared with 30.37 percent in the previous quarter and 32.71 percent in the same quarter last year. The lower effective tax rate during the fourth quarter of 2015 was due to the release of a valuation allowance related to the sale of a low-income housing investment. The effective tax rate for the full year of 2015 was 30.49 percent compared with 31.39 percent for the full year of 2014.

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 overall asset quality continued to remain strong during the fourth quarter of 2015. Total non-performing assets decreased to $28.8 million at December 31, 2015, down from $29.5 million at September 30, 2015 and $30.1 million at December 31, 2014. Non-performing assets, as a percentage of total loans and leases and foreclosed real estate, were 0.37 percent at December 31, 2015, down from 0.38 percent at September 30, 2015 and 0.44 percent at December 31, 2014.

Accruing loans and leases past due 90 days or more were $7.6 million at December 31, 2015, down from $8.1 million at September 30, 2015 and $8.7 million at December 31, 2014. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $49.4 million at December 31, 2015 compared with $49.5 million at September 30, 2015 and $45.5 million at December 31, 2014. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net charge-offs during the fourth quarter of 2015 were $2.2 million or 0.11 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $4.5 million during the quarter were partially offset by recoveries of $2.3 million. Net charge-offs during the third quarter of 2015 were $2.0 million or 0.10 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $4.4 million and recoveries of $2.4 million. Net charge-offs during the fourth quarter of 2014 were $1.7 million or 0.10 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $3.7 million and recoveries of $2.1 million. Net charge-offs for the full year of 2015 were $6.8 million or 0.09 percent of total average loans and leases compared with $1.9 million or 0.03 percent of total average loans and leases in 2014.

The allowance for loan and lease losses was $102.9 million at December 31, 2015, down $1.1 million compared with $104.0 million at September 30, 2015 and down $5.8 million compared with $108.7 million at December 31, 2014. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.31 percent at December 31, 2015, a decrease of 4 basis points from September 30, 2015 and down 27 basis points from December 31, 2014. The decrease in the allowance for loan and lease losses is commensurate with the continued improvement in credit quality and the Hawaii economy. The total reserve for unfunded commitments at December 31, 2015 was unchanged from the prior quarter and remained at $6.1 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

The Company’s total assets increased to $15.5 billion at December 31, 2015, up $290.9 million from total assets of $15.2 billion at September 30, 2015 and up $667.8 million from total assets of $14.8 billion at December 31, 2014. Average total assets were $15.3 billion during the fourth quarter of 2015, up $114.9 million from average total assets of $15.2 billion during the third quarter of 2015 and up $732.1 million from average total assets of $14.6 billion during the fourth quarter of 2014.

The investment portfolio was $6.2 billion at December 31, 2015 compared to $6.4 billion at September 30, 2015 and $6.8 billion at December 31, 2014. The investment portfolio remains largely comprised of securities issued by U. S. government agencies and includes $4.0 billion in securities held to maturity and $2.2 billion in securities available for sale.

Total loans and leases increased to $7.9 billion at December 31, 2015, up from $7.7 billion at September 30, 2015 and up from $6.9 billion at December 31, 2014. The commercial loan portfolio was $3.2 billion at the end of the fourth quarter of 2015, up 1.0 percent from commercial loans of $3.1 billion at the end of the third quarter of 2015 and up 11.5 percent from commercial loans of $2.8 billion at the end of the fourth quarter last year. Consumer loans increased to $4.7 billion at December 31, 2015, up 3.5 percent from consumer loans of $4.6 billion at the end of the third quarter of 2015 and up 16.1 percent from consumer loans of $4.1 billion at the end of the fourth quarter last year. Average total loans and leases were $7.8 billion during the fourth quarter of 2015, up from $7.5 billion during the previous quarter and $6.7 billion during the same quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Deposit generation continued to remain strong during the fourth quarter of 2015. Total deposits increased to $13.3 billion at December 31, 2015, up from total deposits of $12.9 billion at September 30, 2015 and $12.6 billion at December 31, 2014. Average total deposits were $13.0 billion in the fourth quarter of 2015, up slightly from the previous quarter and up from $12.4 billion during the same quarter last year. Deposit balances are summarized in Tables 7a, 7b, and 10.

During the fourth quarter of 2015, the Company repurchased 214.0 thousand shares of common stock at a total cost of $13.9 million under its share repurchase program. The average cost was $65.08 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through December 31, 2015, the Company has repurchased 52.8 million shares and returned nearly $2.0 billion to shareholders at an average cost of $37.35 per share. Remaining buyback authority under the share repurchase program was $23.0 million at December 31, 2015. From January 4 through January 22, 2016, the Company repurchased an additional 62.5 thousand shares of common stock at an average cost of $58.81 per share repurchased.

Total shareholders’ equity was $1.12 billion at December 31, 2015, up from $1.10 billion at September 30, 2015 and $1.06 billion at December 31, 2014. The Tier 1 Capital Ratio was 13.97 percent at December 31, 2015 compared with 14.11 percent at September 30, 2015 and 14.69 percent at December 31, 2014. The Tier 1 Leverage Ratio at December 31, 2015 was 7.26 percent compared with 7.18 percent at September 30, 2015 and 7.13 percent at December 31, 2014.

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 March 14, 2016 to shareholders of record at the close of business on February 29, 2016.

Hawaii Economy

General economic conditions in Hawaii continued to be healthy during the fourth quarter of 2015, led by a strong tourism industry, relatively low unemployment, rising real estate prices, and an active construction industry. For the first eleven months of 2015, total visitor arrivals increased by 4.2 percent and visitor spending increased by 2.2 percent compared to the same period in 2014. The statewide seasonally-adjusted unemployment rate declined to 3.2 percent in November 2015 compared to 5.0 percent nationally. Real estate prices on Oahu reached new records during 2015. The volume of single-family home sales on Oahu during the year increased 5.2 percent and the volume of condominium sales on Oahu increased 4.5 percent compared with 2014. The median price of single-family homes on Oahu increased 3.7 percent and the median price of condominiums on Oahu increased 2.9 percent compared with sales during 2014. As of December 31, 2015, months of inventory of single-family homes and condominiums on Oahu declined to 2.6 months and 2.9 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its 2015 financial results today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern Time). The call will be accessible via teleconference and via the investor relations link of Bank of Hawaii Corporation's website, www.boh.com. The toll-free number is 1 (877) 783-7534 in the United States and 1 (530) 379-4714 for international callers. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, January 25, 2016. The replay number is 1 (855) 859-2056 in the United States and 1 (404) 537-3406 from international locations. Enter the pass code 21670681 when prompted. Participants may also dial 1 (800) 585-8367 to access the replay. A replay will also be available via the investor relations link of 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 do not promise 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 Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands, except per share amounts)     2015       2015       2014       2015       2014

For the Period:

Operating Results
Net Interest Income $ 101,644 $ 97,891 $ 96,632 $ 394,087 $ 379,656
Provision for Credit Losses 1,000 - - 1,000 (4,864 )
Total Noninterest Income 44,766 43,221 45,818 186,219 180,017
Total Noninterest Expense 85,727 91,888 81,240 348,104 326,899
Net Income 42,832 34,276 41,191 160,704 163,042
Basic Earnings Per Share 1.00 0.79 0.95 3.72 3.71
Diluted Earnings Per Share 0.99 0.79 0.94 3.70 3.69
Dividends Declared Per Share 0.45 0.45 0.45 1.80 1.80
 
Performance Ratios
Return on Average Assets 1.11 % 0.89 % 1.12 % 1.06 % 1.14 %
Return on Average Shareholders' Equity 15.41 12.45 15.39 14.82 15.50
Efficiency Ratio 1 58.55 65.12 57.03 59.99 58.41
Net Interest Margin 2 2.85 2.77 2.84 2.81 2.85
Dividend Payout Ratio 3 45.00 56.96 47.37 48.39 48.52
Average Shareholders' Equity to Average Assets 7.19 7.18 7.27 7.16 7.35
 
Average Balances
Average Loans and Leases $ 7,785,346 $ 7,545,985 $ 6,746,332 $ 7,423,572 $ 6,405,431
Average Assets 15,335,574 15,220,660 14,603,493 15,136,494 14,317,516
Average Deposits 13,038,637 13,008,890 12,435,692 12,925,235 12,122,148
Average Shareholders' Equity 1,102,548 1,092,592 1,061,900 1,084,059 1,052,195
 
Per Share of Common Stock
Book Value $ 25.79 $ 25.34 $ 24.13 $ 25.79 $ 24.13
Tangible Book Value 25.06 24.61 23.41 25.06 23.41
Market Value
Closing 62.90 63.49 59.31 62.90 59.31
High 70.07 69.00 61.00 70.07 61.73
Low 60.55 58.53 52.70 53.90 52.70
 
December 31, September 30, December 31,
                      2015       2015       2014

As of Period End:

Balance Sheet Totals
Loans and Leases $ 7,878,985 $ 7,689,772 $ 6,897,589
Total Assets 15,455,016 15,164,123 14,787,208
Total Deposits 13,251,103 12,936,962 12,633,089
Other Debt 245,786 270,801 173,912
Total Shareholders' Equity 1,116,260 1,098,354 1,055,086
 
Asset Quality
Non-Performing Assets $ 28,801 $ 29,545 $ 30,082
Allowance for Loan and Lease Losses 102,880 104,038 108,688
Allowance to Loans and Leases Outstanding 1.31 % 1.35 % 1.58 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 4 13.97 % 14.11 % n/a
Tier 1 Capital Ratio 4 13.97 14.11 14.69 %
Total Capital Ratio 4 15.22 15.37 15.94
Tier 1 Leverage Ratio 4 7.26 7.18 7.13
Total Shareholders' Equity to Total Assets 7.22 7.24 7.14
Tangible Common Equity to Tangible Assets 5 7.03 7.05 6.94
Tangible Common Equity to Risk-Weighted Assets 4, 5 13.62 13.78 14.46
 
Non-Financial Data
Full-Time Equivalent Employees 2,164 2,154 2,161
Branches 70 72 74
ATMs 456 455 459
 

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 December 31, 2015 and September 30, 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
December 31, September 30, December 31,
(dollars in thousands)     2015     2015     2014
Total Shareholders' Equity $ 1,116,260 $ 1,098,354 $ 1,055,086

Less: Goodwill

      31,517         31,517         31,517  
Tangible Common Equity     $ 1,084,743       $ 1,066,837       $ 1,023,569  
 
Total Assets $ 15,455,016 $ 15,164,123 $ 14,787,208

Less: Goodwill

      31,517         31,517         31,517  
Tangible Assets     $ 15,423,499       $ 15,132,606       $ 14,755,691  
 

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

 $ 7,962,484 $ 7,740,028 $ 7,077,035
 
Total Shareholders' Equity to Total Assets 7.22 % 7.24 % 7.14 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.03 % 7.05 % 6.94 %
 
Tier 1 Capital Ratio 1 13.97 % 14.11 % 14.69 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 1 13.62 % 13.78 % 14.46 %
 

1

  

Risk-weighted assets and capital ratios 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 Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands, except per share amounts)     2015     2015     2014       2015     2014
Interest Income
Interest and Fees on Loans and Leases $ 78,122 $ 75,874 $ 69,974 $ 298,522 $ 267,407
Income on Investment Securities
Available-for-Sale 10,829 10,192 10,732 41,492 42,475
Held-to-Maturity 21,722 20,689 24,966 89,650 105,860
Deposits 1 2 2 8 9
Funds Sold 315 291 192 1,133 673
Other       381         312       303         1,305       1,209  
Total Interest Income       111,370         107,360       106,169         432,110       417,633  
Interest Expense
Deposits 2,443 2,410 2,392 9,626 9,534
Securities Sold Under Agreements to Repurchase 6,246 6,307 6,520 25,364 25,905
Funds Purchased 3 3 3 12 13
Other Debt       1,034         749       622         3,021       2,525  
Total Interest Expense       9,726         9,469       9,537         38,023       37,977  
Net Interest Income 101,644 97,891 96,632 394,087 379,656
Provision for Credit Losses       1,000         -       -         1,000       (4,864 )
Net Interest Income After Provision for Credit Losses       100,644         97,891       96,632         393,087       384,520  
Noninterest Income
Trust and Asset Management 11,243 11,907 12,225 47,685 47,798
Mortgage Banking 3,130 3,291 2,116 11,583 7,571
Service Charges on Deposit Accounts 8,663 8,669 9,058 34,072 35,669
Fees, Exchange, and Other Service Charges 13,764 13,340 13,702 53,353 53,401
Investment Securities Gains, Net (181 ) 24 1,966 10,160 8,063
Annuity and Insurance 2,014 1,721 1,664 7,664 8,065
Bank-Owned Life Insurance 1,608 1,609 1,874 7,039 6,639
Other       4,525         2,660       3,213         14,663       12,811  
Total Noninterest Income       44,766         43,221       45,818         186,219       180,017  
Noninterest Expense
Salaries and Benefits 47,997 46,576 45,520 191,963 183,028
Net Occupancy 4,876 7,403 9,291 30,217 37,296
Net Equipment 5,244 4,804 4,734 20,162 18,479
Data Processing 5,106 3,920 3,823 16,472 14,979
Professional Fees 2,803 2,258 3,086 9,660 9,794
FDIC Insurance 2,322 2,139 2,055 8,669 7,936
Other       17,379         24,788       12,731         70,961       55,387  
Total Noninterest Expense       85,727         91,888       81,240         348,104       326,899  
Income Before Provision for Income Taxes 59,683 49,224 61,210 231,202 237,638
Provision for Income Taxes       16,851         14,948       20,019         70,498       74,596  
Net Income     $ 42,832       $ 34,276     $ 41,191       $ 160,704     $ 163,042  
Basic Earnings Per Share $ 1.00 $ 0.79 $ 0.95 $ 3.72 $ 3.71
Diluted Earnings Per Share $ 0.99 $ 0.79 $ 0.94 $ 3.70 $ 3.69
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 1.80 $ 1.80
Basic Weighted Average Shares 43,003,191 43,181,233 43,499,627 43,217,818 43,899,208
Diluted Weighted Average Shares       43,275,377         43,427,730       43,758,873         43,454,877       44,125,456  
 
                     
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income                               Table 4
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands)     2015     2015     2014       2015     2014
Net Income $ 42,832 $ 34,276 $ 41,191 $ 160,704 $ 163,042
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities (6,860 ) 7,051 1,567 (2,125 ) 16,858
Defined Benefit Plans       4,595         219       (12,190 )         5,254         (11,721 )
Total Other Comprehensive Income (Loss)       (2,265 )       7,270       (10,623 )         3,129         5,137  
Comprehensive Income     $ 40,567       $ 41,546     $ 30,568         $ 163,833       $ 168,179  
 
           
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition                 Table 5
December 31, September 30, December 31,
(dollars in thousands)     2015     2015     2014
Assets
Interest-Bearing Deposits in Other Banks $ 4,130 $ 3,609 $ 2,873
Funds Sold 592,892 274,873 360,577
Investment Securities
Available-for-Sale 2,256,818 2,279,722 2,289,190
Held-to-Maturity (Fair Value of $4,006,412; $4,181,613; and $4,504,495) 3,982,736 4,121,768 4,466,679
Loans Held for Sale 4,808 3,222 5,136
Loans and Leases 7,878,985 7,689,772 6,897,589
Allowance for Loan and Lease Losses       (102,880 )       (104,038 )       (108,688 )
Net Loans and Leases       7,776,105         7,585,734         6,788,901  
Total Earning Assets       14,617,489         14,268,928         13,913,356  
Cash and Due from Banks 158,699 208,601 172,126
Premises and Equipment, Net 111,199 108,987 109,854
Accrued Interest Receivable 44,719 47,512 44,654
Foreclosed Real Estate 824 1,392 2,311
Mortgage Servicing Rights 23,002 23,301 24,695
Goodwill 31,517 31,517 31,517
Bank-Owned Life Insurance 268,175 266,568 262,807
Other Assets       199,392         207,317         225,888  
Total Assets     $ 15,455,016       $ 15,164,123       $ 14,787,208  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,286,331 $ 4,102,713 $ 3,832,943
Interest-Bearing Demand 2,761,930 2,631,542 2,559,570
Savings 5,025,191 5,016,462 4,806,575
Time       1,177,651         1,186,245         1,434,001  
Total Deposits       13,251,103         12,936,962         12,633,089  
Funds Purchased 7,333 8,459 8,459
Securities Sold Under Agreements to Repurchase 628,857 632,138 688,601
Other Debt 245,786 270,801 173,912
Retirement Benefits Payable 47,374 54,978 55,477
Accrued Interest Payable 5,032 5,869 5,148
Taxes Payable and Deferred Taxes 17,737 25,294 27,777
Other Liabilities       135,534         131,268         139,659  
Total Liabilities       14,338,756         14,065,769         13,732,122  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: December 31, 2015 - 57,749,071 / 43,282,153; September 30, 2015 - 57,749,071 / 43,342,940; and December 31, 2014 - 57,634,755 / 43,724,208)

575 575 574
Capital Surplus 542,041 539,112 531,932
Accumulated Other Comprehensive Loss (23,557 ) (21,292 ) (26,686 )
Retained Earnings 1,316,260 1,293,416 1,234,801

Treasury Stock, at Cost (Shares: December 31, 2015 - 14,466,918; September 30, 2015 - 14,406,131; and December 31, 2014 - 13,910,547)

      (719,059 )       (713,457 )       (685,535 )
Total Shareholders' Equity       1,116,260         1,098,354         1,055,086  
Total Liabilities and Shareholders' Equity     $ 15,455,016       $ 15,164,123       $ 14,787,208  
 
                       
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, 2013 44,490,385 $ 572 $ 522,505 $ (31,823 ) $ 1,151,754 $ (631,032 ) $ 1,011,976
Net Income - - - - 163,042 - 163,042
Other Comprehensive Income - - - 5,137 5,137
Share-Based Compensation - - 7,870 - - - 7,870
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 345,278 2 1,557 - (335 ) 9,543 10,767
Common Stock Repurchased (1,111,455 ) - - - - (64,046 ) (64,046 )
Cash Dividends Declared ($1.80 per share)     -         -       -       -         (79,660 )       -         (79,660 )
Balance as of December 31, 2014     43,724,208         574       531,932       (26,686 )       1,234,801         (685,535 )       1,055,086  
Net Income - - - - 160,704 - 160,704
Other Comprehensive Income - - - 3,129 - - 3,129
Share-Based Compensation - - 7,689 - - - 7,689
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 401,904 1 2,420 - (878 ) 19,457 21,000
Common Stock Repurchased (843,959 ) - - - - (52,981 ) (52,981 )
Cash Dividends Paid ($1.80 per share)     -         -       -       -         (78,367 )       -         (78,367 )
Balance as of December 31, 2015     43,282,153       $ 575     $ 542,041     $ (23,557 )     $ 1,316,260       $ (719,059 )     $ 1,116,260  
 
                         
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
December 31, 2015 September 30, 2015 December 31, 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 $ 3.8 $ - 0.10 % $ 3.4 $ - 0.22 % $ 3.4 $ - 0.24 %
Funds Sold 466.3 0.3 0.26 508.2 0.3 0.22 358.8 0.2 0.21
Investment Securities
Available-for-Sale
Taxable 1,573.3 7.1 1.81 1,524.4 6.5 1.69 1,563.9 7.0 1.78
Non-Taxable 718.5 5.7 3.18 719.4 5.8 3.19 715.1 5.8 3.24
Held-to-Maturity
Taxable 3,827.9 20.2 2.10 3,953.3 19.1 1.93 4,256.3 23.3 2.19
Non-Taxable       246.6       2.4     3.92         247.3       2.4     3.93         250.0       2.5     3.95
Total Investment Securities       6,366.3       35.4     2.22         6,444.4       33.8     2.09         6,785.3       38.6     2.27
Loans Held for Sale 7.1 0.1 4.26 13.4 0.1 3.82 2.8 - 3.92
Loans and Leases 1
Commercial and Industrial 1,155.2 9.4 3.22 1,166.7 9.3 3.15 1,025.3 8.5 3.30
Commercial Mortgage 1,653.9 15.5 3.71 1,568.2 15.0 3.79 1,421.3 13.9 3.87
Construction 140.9 1.7 4.90 124.5 1.5 4.93 110.4 1.2 4.52
Commercial Lease Financing 204.2 1.8 3.46 216.2 1.9 3.50 228.7 1.9 3.41
Residential Mortgage 2,895.3 29.2 4.04 2,832.4 28.8 4.07 2,501.8 26.5 4.24
Home Equity 1,027.4 9.3 3.61 961.3 8.6 3.58 850.5 8.2 3.82
Automobile 373.7 4.9 5.19 359.2 4.7 5.18 314.0 4.2 5.29
Other 2       334.7       6.4     7.57         317.5       6.1     7.60         294.3       5.5     7.37
Total Loans and Leases       7,785.3       78.2     4.00         7,546.0       75.9     4.00         6,746.3       69.9     4.13
Other       41.1       0.4     3.71         37.5       0.3     3.33         68.7       0.3     1.76
Total Earning Assets 3       14,669.9       114.4     3.11         14,552.9       110.4     3.02         13,965.3       109.0     3.11
Cash and Due from Banks 126.2 131.6 140.2
Other Assets   539.5   536.2   498.0
Total Assets $ 15,335.6 $ 15,220.7 $ 14,603.5
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,653.2 0.2 0.03 $ 2,622.4 0.2 0.03 $ 2,459.0 0.2 0.03
Savings 5,028.8 1.1 0.09 5,067.8 1.1 0.09 4,720.7 1.0 0.09
Time       1,178.2       1.1     0.38         1,201.3       1.1     0.36         1,480.5       1.2     0.32
Total Interest-Bearing Deposits       8,860.2       2.4     0.11         8,891.5       2.4     0.11         8,660.2       2.4     0.11
Short-Term Borrowings 8.1 - 0.14 8.5 - 0.14 8.5 - 0.14
Securities Sold Under Agreements to Repurchase 630.5 6.3 3.88 643.3 6.3 3.84 693.2 6.5 3.68
Other Debt       306.4       1.0     1.34         223.2       0.8     1.34         173.9       0.6     1.43
Total Interest-Bearing Liabilities       9,805.2       9.7     0.39         9,766.5       9.5     0.38         9,535.8       9.5     0.39
Net Interest Income $ 104.7 $ 100.9 $ 99.5
Interest Rate Spread 2.72 % 2.64 % 2.72 %
Net Interest Margin 2.85 % 2.77 % 2.84 %
Noninterest-Bearing Demand Deposits 4,178.4 4,117.4 3,775.5
Other Liabilities 249.5 244.2 230.3
Shareholders' Equity   1,102.5   1,092.6   1,061.9
Total Liabilities and Shareholders' Equity $ 15,335.6 $ 15,220.7 $ 14,603.5
 

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 $3,016,000, $3,035,000 and $2,908,000 for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, respectively.

 
             
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis             Table 7b
    Year Ended Year Ended
December 31, 2015 December 31, 2014
Average     Income/     Yield/ Average Income/ Yield/
(dollars in millions)     Balance     Expense     Rate       Balance     Expense     Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.4 $ - 0.22 % $ 4.3 $ - 0.21 %
Funds Sold 483.1 1.1 0.23 316.2 0.7 0.21
Investment Securities
Available-for-Sale
Taxable 1,554.2 26.6 1.71 1,536.5 27.7 1.80
Non-Taxable 721.7 22.9 3.18 699.6 22.7 3.24
Held-to-Maturity
Taxable 3,981.2 83.3 2.09 4,412.5 99.4 2.25
Non-Taxable       247.8       9.8     3.93         251.3       10.0     3.95
Total Investment Securities       6,504.9       142.6     2.19         6,899.9       159.8     2.32
Loans Held for Sale 8.7 0.3 3.83 3.2 0.1 4.31
Loans and Leases 1
Commercial and Industrial 1,152.3 36.6 3.18 970.3 33.3 3.43
Commercial Mortgage 1,543.5 58.5 3.79 1,331.5 52.5 3.94
Construction 123.9 5.9 4.79 109.4 4.8 4.40
Commercial Lease Financing 217.8 7.5 3.46 237.6 7.0 2.96
Residential Mortgage 2,774.7 113.9 4.10 2,377.9 101.6 4.27
Home Equity 944.0 34.2 3.63 815.6 31.9 3.91
Automobile 352.3 18.4 5.21 288.8 15.4 5.32
Other 2       315.1       23.7     7.51         274.3       20.8     7.58
Total Loans and Leases       7,423.6       298.7     4.02         6,405.4       267.3     4.17
Other       49.0       1.3     2.67         72.7       1.2     1.66
Total Earning Assets 3       14,472.7       444.0     3.07         13,701.7       429.1     3.13
Cash and Due from Banks 130.0 143.4
Other Assets   533.8   472.4
Total Assets $ 15,136.5 $ 14,317.5
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,616.4 0.8 0.03 $ 2,390.8 0.7 0.03
Savings 5,015.6 4.4 0.09 4,592.6 3.9 0.09
Time       1,252.9       4.4     0.35         1,450.3       4.9     0.34
Total Interest-Bearing Deposits       8,884.9       9.6     0.11         8,433.7       9.5     0.11
Short-Term Borrowings 8.4 - 0.15 9.3 - 0.14
Securities Sold Under Agreements to Repurchase 655.9 25.4 3.87 747.9 25.9 3.46
Other Debt       219.7       3.0     1.37         174.4       2.6     1.45
Total Interest-Bearing Liabilities       9,768.9       38.0     0.39         9,365.3       38.0     0.41
Net Interest Income $ 406.0 $ 391.1
Interest Rate Spread 2.68 % 2.72 %
Net Interest Margin 2.81 % 2.85 %
Noninterest-Bearing Demand Deposits 4,040.3 3,688.4
Other Liabilities 243.2 211.6
Shareholders' Equity   1,084.1   1,052.2
Total Liabilities and Shareholders' Equity $ 15,136.5 $ 14,317.5
 

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 $11,937,000 and $11,479,000 for the year ended December 31, 2015 and December 31, 2014, respectively.

 
           
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis                 Table 8a
Three Months Ended December 31, 2015
Compared to September 30, 2015
(dollars in millions)     Volume 1     Rate 1     Total
Change in Interest Income:
Investment Securities
Available-for-Sale
Taxable $ 0.2 $ 0.4 $ 0.6
Non-Taxable - (0.1 ) (0.1 )
Held-to-Maturity
Taxable       (0.6 )       1.7         1.1  
Total Investment Securities       (0.4 )       2.0         1.6  
Loans and Leases
Commercial and Industrial (0.1 ) 0.2 0.1
Commercial Mortgage 0.8 (0.3 ) 0.5
Construction 0.2 - 0.2
Commercial Lease Financing (0.1 ) - (0.1 )
Residential Mortgage 0.6 (0.2 ) 0.4
Home Equity 0.6 0.1 0.7
Automobile 0.2 - 0.2
Other 2       0.3         -         0.3  
Total Loans and Leases       2.5         (0.2 )       2.3  
Other       -         0.1         0.1  
Total Change in Interest Income       2.1         1.9         4.0  
 
Change in Interest Expense:
Securities Sold Under Agreements to Repurchase (0.1 ) 0.1 -
Other Debt       0.2         -         0.2  
Total Change in Interest Expense       0.1         0.1         0.2  
 
Change in Net Interest Income     $ 2.0       $ 1.8       $ 3.8  
 

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 December 31, 2015
Compared to December 31, 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 0.1
Non-Taxable - (0.1 ) (0.1 )
Held-to-Maturity
Taxable (2.3 ) (0.8 ) (3.1 )
Non-Taxable       (0.1 )       -         (0.1 )
Total Investment Securities       (2.4 )       (0.8 )       (3.2 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 1.1 (0.2 ) 0.9
Commercial Mortgage 2.2 (0.6 ) 1.6
Construction 0.4 0.1 0.5
Commercial Lease Financing (0.1 ) - (0.1 )
Residential Mortgage 4.0 (1.3 ) 2.7
Home Equity 1.6 (0.5 ) 1.1
Automobile 0.8 (0.1 ) 0.7
Other 2       0.8         0.1         0.9  
Total Loans and Leases       10.8         (2.5 )       8.3  
Other       (0.2 )       0.3         0.1  
Total Change in Interest Income       8.4         (3.0 )       5.4  
 
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 - 0.1
Time       (0.3 )       0.2         (0.1 )
Total Interest-Bearing Deposits       (0.2 )       0.2         -  
Securities Sold Under Agreements to Repurchase (0.5 ) 0.3 (0.2 )
Other Debt       0.4         -         0.4  
Total Change in Interest Expense       (0.3 )       0.5         0.2  
 
Change in Net Interest Income     $ 8.7       $ (3.5 )     $ 5.2  
 

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 8c
Year Ended December 31, 2015
Compared to December 31, 2014
(dollars in millions)     Volume 1     Rate 1     Total
Change in Interest Income:
Funds Sold $ 0.3 $ 0.1 $ 0.4
Investment Securities
Available-for-Sale
Taxable 0.3 (1.4 ) (1.1 )
Non-Taxable 0.7 (0.5 ) 0.2
Held-to-Maturity
Taxable (9.3 ) (6.8 ) (16.1 )
Non-Taxable       (0.1 )       (0.1 )       (0.2 )
Total Investment Securities       (8.4 )       (8.8 )       (17.2 )
Loans Held for Sale 0.2 - 0.2
Loans and Leases
Commercial and Industrial 5.9 (2.6 ) 3.3
Commercial Mortgage 8.1 (2.1 ) 6.0
Construction 0.7 0.4 1.1
Commercial Lease Financing (0.6 ) 1.1 0.5
Residential Mortgage 16.5 (4.2 ) 12.3
Home Equity 4.7 (2.4 ) 2.3
Automobile 3.3 (0.3 ) 3.0
Other 2       3.1         (0.2 )       2.9  
Total Loans and Leases       41.7         (10.3 )       31.4  
Other       (0.5 )       0.6         0.1  
Total Change in Interest Income       33.3         (18.4 )       14.9  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Savings 0.4 0.1 0.5
Time       (0.7 )       0.2         (0.5 )
Total Interest-Bearing Deposits       (0.2 )       0.3         0.1  
Securities Sold Under Agreements to Repurchase (3.3 ) 2.8 (0.5 )
Other Debt       0.5         (0.1 )       0.4  
Total Change in Interest Expense       (3.0 )       3.0         -  
 
Change in Net Interest Income     $ 36.3       $ (21.4 )     $ 14.9  
 

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 Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands)     2015     2015     2014       2015     2014
Salaries $ 29,356 $ 28,905 $ 28,751 $ 114,389 $ 114,199
Incentive Compensation 4,971 4,223 4,639 18,667 17,471
Share-Based Compensation 2,678 2,616 2,342 10,390 8,808
Commission Expense 1,375 1,639 1,383 6,533 4,831
Retirement and Other Benefits 4,056 4,064 3,947 16,968 16,800
Payroll Taxes 2,032 2,200 2,007 10,095 9,916
Medical, Dental, and Life Insurance 3,077 2,870 2,653 11,580 10,555
Separation Expense       452       59       (202 )         3,341       448
Total Salaries and Benefits     $ 47,997     $ 46,576     $ 45,520         $ 191,963     $ 183,028
 
               
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances                       Table 10
    December 31, September 30, June 30, March 31, December 31,
(dollars in thousands)     2015     2015     2015     2015     2014
Commercial
Commercial and Industrial $ 1,115,168 $ 1,169,817 $ 1,173,259 $ 1,141,408 $ 1,055,243
Commercial Mortgage 1,677,147 1,622,119 1,528,685 1,477,902 1,437,513
Construction 156,660 129,254 118,714 111,381 109,183
Lease Financing       204,877       202,055       222,113       224,419       226,189
Total Commercial       3,153,852       3,123,245       3,042,771       2,955,110       2,828,128
Consumer
Residential Mortgage 2,925,605 2,875,605 2,787,847 2,699,434 2,571,090
Home Equity 1,069,400 993,817 931,191 884,742 866,688
Automobile 381,735 367,640 352,128 339,686 323,848
Other 1       348,393       329,465       314,501       299,656       307,835
Total Consumer       4,725,133       4,566,527       4,385,667       4,223,518       4,069,461
Total Loans and Leases     $ 7,878,985     $ 7,689,772     $ 7,428,438     $ 7,178,628     $ 6,897,589
 
 
Deposits                              
December 31, September 30, June 30, March 31, December 31,
(dollars in thousands)     2015     2015     2015     2015     2014
Consumer $ 6,445,510 $ 6,254,862 $ 6,221,691 $ 6,220,391 $ 6,092,929
Commercial 5,502,739 5,397,857 5,524,153 5,444,814 5,163,352
Public and Other       1,302,854       1,284,243       1,344,851       1,314,411       1,376,808
Total Deposits     $ 13,251,103     $ 12,936,962     $ 13,090,695     $ 12,979,616     $ 12,633,089
 

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
    December 31,     September 30,     June 30, March 31, December 31,
(dollars in thousands)     2015     2015     2015     2015     2014
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 5,829 $ 8,532 $ 8,299 $ 8,641 $ 9,088
Commercial Mortgage       3,469         1,058         716         732         745  
Total Commercial       9,298         9,590         9,015         9,373         9,833  
Consumer
Residential Mortgage 14,598 14,749 14,918 14,344 14,841
Home Equity       4,081         3,814         3,528         2,965         3,097  
Total Consumer       18,679         18,563         18,446         17,309         17,938  
Total Non-Accrual Loans and Leases       27,977         28,153         27,461         26,682         27,771  
Foreclosed Real Estate       824         1,392         1,989         2,095         2,311  
Total Non-Performing Assets     $ 28,801       $ 29,545       $ 29,450       $ 28,777       $ 30,082  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial     $ -       $ -       $ 750       $ -       $ 2  
Total Commercial       -         -         750         -         2  
Consumer
Residential Mortgage 4,453 5,060 4,789 3,914 4,506
Home Equity 1,710 1,396 2,395 2,425 2,596
Automobile 315 631 323 537 616

Other 1

       1,096         1,058         1,395         1,078         941  
Total Consumer       7,574         8,145         8,902         7,954         8,659  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 7,574       $ 8,145       $ 9,652       $ 7,954       $ 8,661  

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

     $ 49,430       $ 49,506       $ 48,339       $ 46,639       $ 45,474  
Total Loans and Leases     $ 7,878,985       $ 7,689,772       $ 7,428,438       $ 7,178,628       $ 6,897,589  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.36 %       0.37 %       0.37 %       0.37 %       0.40 %
 

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

      0.37 %       0.38 %       0.40 %       0.40 %       0.44 %
 

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

      0.29 %       0.31 %       0.32 %       0.34 %       0.38 %
 

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

      0.41 %       0.44 %       0.45 %       0.44 %       0.47 %
 

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

      0.46 %       0.49 %       0.53 %       0.51 %       0.56 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 29,545 $ 29,450 $ 28,777 $ 30,082 $ 33,307
Additions 2,353 4,427 1,909 621 1,885
Reductions
Payments (2,473 ) (1,191 ) (1,020 ) (1,427 ) (1,822 )
Return to Accrual Status (24 ) (1,748 ) - (187 ) (1,291 )
Sales of Foreclosed Real Estate (458 ) (1,300 ) (83 ) (37 ) (1,480 )
Charge-offs/Write-downs       (142 )       (93 )       (133 )       (275 )       (517 )
Total Reductions       (3,097 )       (4,332 )       (1,236 )       (1,926 )       (5,110 )
Balance at End of Quarter     $ 28,801       $ 29,545       $ 29,450       $ 28,777       $ 30,082  
 

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 Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands)     2015     2015     2014       2015     2014
Balance at Beginning of Period $ 110,110 $ 111,893 $ 116,249 $ 114,575 $ 121,521
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (304 ) (160 ) (205 ) (954 ) (2,002 )
Lease Financing - - - - (66 )
Consumer
Residential Mortgage - - (97 ) (613 ) (771 )
Home Equity (269 ) (634 ) (293 ) (1,330 ) (1,672 )
Automobile (1,719 ) (1,476 ) (1,376 ) (5,860 ) (3,961 )
Other 1       (2,170 )       (2,123 )       (1,772 )         (7,682 )       (6,967 )
Total Loans and Leases Charged-Off       (4,462 )       (4,393 )       (3,743 )         (16,439 )       (15,439 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 420 426 396 1,948 4,625
Commercial Mortgage 18 15 14 61 57
Construction 8 8 8 32 29
Lease Financing 1 55 4 132 10
Consumer
Residential Mortgage 577 282 542 1,297 3,448
Home Equity 349 693 204 2,489 1,637
Automobile 519 508 467 1,917 1,577
Other 1       412         438         434           1,755         2,154  
Total Recoveries on Loans and Leases Previously Charged-Off       2,304         2,425         2,069           9,631         13,537  
Net Loans and Leases Charged-Off (2,158 ) (1,968 ) (1,674 ) (6,808 ) (1,902 )
Provision for Credit Losses 1,000 - - 1,000 (4,864 )
Provision for Unfunded Commitments       -         185         -           185         (180 )
Balance at End of Period 2     $ 108,952       $ 110,110       $ 114,575         $ 108,952       $ 114,575  
 
Components
Allowance for Loan and Lease Losses $ 102,880 $ 104,038 $ 108,688 $ 102,880 $ 108,688
Reserve for Unfunded Commitments       6,072         6,072         5,887           6,072         5,887  
Total Reserve for Credit Losses     $ 108,952       $ 110,110       $ 114,575         $ 108,952       $ 114,575  
 
Average Loans and Leases Outstanding     $ 7,785,346       $ 7,545,985       $ 6,746,332         $ 7,423,572       $ 6,405,431  
 

Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding (annualized)

0.11 % 0.10 % 0.10 % 0.09 % 0.03 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.31 % 1.35 % 1.58 % 1.31 % 1.58 %
 

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 December 31, 2015
Net Interest Income $ 51,628 $ 36,652 $ 5,341 $ 8,023 $ 101,644
Provision for Credit Losses       2,373         (209 )       (7 )       (1,157 )       1,000  
Net Interest Income After Provision for Credit Losses 49,255 36,861 5,348 9,180 100,644
Noninterest Income 21,268 5,679 14,065 3,754 44,766
Noninterest Expense       (50,111 )       (17,105 )       (14,659 )       (3,852 )       (85,727 )
Income Before Provision for Income Taxes 20,412 25,435 4,754 9,082 59,683
Provision for Income Taxes       (7,233 )       (9,008 )       (1,759 )       1,149         (16,851 )
Net Income     $ 13,179       $ 16,427       $ 2,995       $ 10,231       $ 42,832  
Total Assets as of December 31, 2015     $ 4,680,888       $ 3,099,132       $ 274,469       $ 7,400,527       $ 15,455,016  
 
 
Three Months Ended December 31, 2014 1
Net Interest Income $ 47,509 $ 32,721 $ 4,140 $ 12,262 $ 96,632
Provision for Credit Losses       1,888         (205 )       (10 )       (1,673 )       -  
Net Interest Income After Provision for Credit Losses 45,621 32,926 4,150 13,935 96,632
Noninterest Income 20,089 6,018 14,390 5,321 45,818
Noninterest Expense       (49,673 )       (16,926 )       (13,192 )       (1,449 )       (81,240 )
Income Before Provision for Income Taxes 16,037 22,018 5,348 17,807 61,210
Provision for Income Taxes       (5,831 )       (7,609 )       (1,982 )       (4,597 )       (20,019 )
Net Income     $ 10,206       $ 14,409       $ 3,366       $ 13,210       $ 41,191  
Total Assets as of December 31, 2014 1     $ 4,088,878       $ 2,787,537       $ 202,645       $ 7,708,148       $ 14,787,208  
 

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
Year Ended December 31, 2015
Net Interest Income $ 202,259 $ 143,944 $ 18,494 $ 29,390 $ 394,087
Provision for Credit Losses       8,033         (1,165 )       (43 )       (5,825 )       1,000  
Net Interest Income After Provision for Credit Losses 194,226 145,109 18,537 35,215 393,087
Noninterest Income 82,391 21,804 58,835 23,189 186,219
Noninterest Expense       (199,572 )       (76,891 )       (57,852 )       (13,789 )       (348,104 )
Income Before Provision for Income Taxes 77,045 90,022 19,520 44,615 231,202
Provision for Income Taxes       (27,330 )       (31,457 )       (7,222 )       (4,489 )       (70,498 )
Net Income     $ 49,715       $ 58,565       $ 12,298       $ 40,126       $ 160,704  
Total Assets as of December 31, 2015     $ 4,680,888       $ 3,099,132       $ 274,469       $ 7,400,527       $ 15,455,016  
 
 
Year Ended December 31, 2014 1
Net Interest Income $ 178,480 $ 119,655 $ 15,238 $ 66,283 $ 379,656
Provision for Credit Losses       4,783         (2,369 )       (313 )       (6,965 )       (4,864 )
Net Interest Income After Provision for Credit Losses 173,697 122,024 15,551 73,248 384,520
Noninterest Income 79,562 23,635 57,618 19,202 180,017
Noninterest Expense       (196,254 )       (66,760 )       (54,571 )       (9,314 )       (326,899 )
Income Before Provision for Income Taxes 57,005 78,899 18,598 83,136 237,638
Provision for Income Taxes       (21,079 )       (26,952 )       (6,894 )       (19,671 )       (74,596 )
Net Income     $ 35,926       $ 51,947       $ 11,704       $ 63,465       $ 163,042  
Total Assets as of December 31, 2014 1     $ 4,088,878       $ 2,787,537       $ 202,645       $ 7,708,148       $ 14,787,208  
 

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
December 31, September 30, June 30, March 31, December 31,
(dollars in thousands, except per share amounts)     2015       2015       2015       2015       2014
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 78,122 $ 75,874 $ 73,565 $ 70,961 $ 69,974
Income on Investment Securities
Available-for-Sale 10,829 10,192 10,273 10,198 10,732
Held-to-Maturity 21,722 20,689 22,832 24,407 24,966
Deposits 1 2 2 3 2
Funds Sold 315 291 268 259 192
Other       381           312         310         302         303
Total Interest Income       111,370           107,360         107,250         106,130         106,169
Interest Expense
Deposits 2,443 2,410 2,405 2,368 2,392
Securities Sold Under Agreements to Repurchase 6,246 6,307 6,440 6,371 6,520
Funds Purchased 3 3 3 3 3
Other Debt       1,034           749         620         618         622
Total Interest Expense       9,726           9,469         9,468         9,360         9,537
Net Interest Income 101,644 97,891 97,782 96,770 96,632
Provision for Credit Losses       1,000           -         -         -         -
Net Interest Income After Provision for Credit Losses       100,644           97,891         97,782         96,770         96,632
Noninterest Income
Trust and Asset Management 11,243 11,907 12,355 12,180 12,225
Mortgage Banking 3,130 3,291 3,469 1,693 2,116
Service Charges on Deposit Accounts 8,663 8,669 8,203 8,537 9,058
Fees, Exchange, and Other Service Charges 13,764 13,340 13,352 12,897 13,702
Investment Securities Gains, Net (181 ) 24 86 10,231 1,966
Annuity and Insurance 2,014 1,721 1,885 2,044 1,664
Bank-Owned Life Insurance 1,608 1,609 2,088 1,734 1,874
Other       4,525           2,660         4,487         2,991         3,213
Total Noninterest Income       44,766           43,221         45,925         52,307         45,818
Noninterest Expense
Salaries and Benefits 47,997 46,576 47,610 49,780 45,520
Net Occupancy 4,876 7,403 8,605 9,333 9,291
Net Equipment 5,244 4,804 4,826 5,288 4,734
Data Processing 5,106 3,920 3,673 3,773 3,823
Professional Fees 2,803 2,258 2,265 2,334 3,086
FDIC Insurance 2,322 2,139 2,068 2,140 2,055
Other       17,379           24,788         14,527         14,267         12,731
Total Noninterest Expense       85,727           91,888         83,574         86,915         81,240
Income Before Provision for Income Taxes 59,683 49,224 60,133 62,162 61,210
Provision for Income Taxes       16,851           14,948         18,979         19,720         20,019
Net Income     $ 42,832         $ 34,276       $ 41,154       $ 42,442       $ 41,191
 
Basic Earnings Per Share $ 1.00 $ 0.79 $ 0.95 $ 0.98 $ 0.95
Diluted Earnings Per Share $ 0.99 $ 0.79 $ 0.95 $ 0.97 $ 0.94
 
Balance Sheet Totals
Loans and Leases $ 7,878,985 $ 7,689,772 $ 7,428,438 $ 7,178,628 $ 6,897,589
Total Assets 15,455,016 15,164,123 15,248,043 15,139,179 14,787,208
Total Deposits 13,251,103 12,936,962 13,090,695 12,979,616 12,633,089
Total Shareholders' Equity 1,116,260 1,098,354 1,082,939 1,075,251 1,055,086
 
Performance Ratios
Return on Average Assets 1.11 % 0.89 % 1.10 % 1.15 % 1.12 %
Return on Average Shareholders' Equity 15.41 12.45 15.33 16.18 15.39
Efficiency Ratio 1 58.55 65.12 58.16 58.30 57.03
Net Interest Margin 2 2.85 2.77 2.81 2.81 2.84
 

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
Eleven Months Ended Year Ended
($ in millions; jobs in thousands)     November 30, 2015       December 31, 2014      

December 31, 2013

Hawaii Economic Trends

State General Fund Revenues 1

 $ 5,495.9 8.1 % $ 5,535.7 1.6 % $ 5,450.6 3.7 %

General Excise and Use Tax Revenue 1

 $ 2,884.2 4.8 % $ 2,979.8 2.5 % $ 2,907.6 2.2 %
Jobs 2 657.8 643.7 629.9
                                                     
November 30, December 31,
(spot rates)                               2015       2014       2013

Unemployment 3

Statewide, seasonally adjusted 3.2 % 4.0 % 4.7 %
 
Oahu 3.0 3.5 3.8
Island of Hawaii 4.1 4.7 5.9
Maui 3.4 3.8 4.7
Kauai 3.9 4.3 5.2
                                                     
December 31, December 31,
(percentage change, except months of inventory)                     2015       2014       2013       2012
Housing Trends (Single Family Oahu) 4
Median Home Price 3.7 % 3.8 % 4.8 % 7.8 %
Home Sales Volume (units) 5.2 % (0.8 ) % 4.6 % 6.5 %
Months of Inventory 2.6 2.6 2.7 2.5
                                                     
Monthly Visitor Arrivals, Percentage Change
(in thousands)                     Not Seasonally Adjusted       from Previous Year
Tourism 5
November 30, 2015 661.4 3.7
October 31, 2015 692.9 4.8
September 30, 2015 652.6 4.7
August 31, 2015 755.9 2.9
July 31, 2015 816.3 5.6
June 30, 2015 767.9 6.0
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 638.0 2.2
October 31, 2014 661.0 3.2
September 30, 2014 623.1 4.2
August 31, 2014 734.7 (1.9 )
July 31, 2014 772.8 2.0
June 30, 2014 724.5 1.1
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
 

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.