Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.88 for the fourth quarter of 2013, up from $0.85 per share in the previous quarter, and down from $0.90 per share in the same quarter last year. Net income for the fourth quarter of 2013 was $39.1 million, compared to net income of $37.7 million in the third quarter of 2013 and $40.3 million in the same quarter last year.

Loan and lease balances were $6.1 billion at December 31, 2013, up 1.5 percent from September 30, 2013 and up 4.1 percent compared with December 31, 2012. Deposit growth remained strong during the quarter, increasing 2.6 percent from September 30, 2013 and 3.3 percent from December 31, 2012. The net interest margin increased to 2.85 percent during the fourth quarter of 2013 compared with 2.83 percent in the previous quarter.

"Bank of Hawaii finished 2013 with another quarter of solid financial performance," said Peter Ho, Chairman, President, and CEO. "During the quarter loan balances and deposits continued to grow. Our net interest margin improved, credit quality remained stable, our capital ratios remain quite strong, and we maintained our focus on disciplined expense management."

The return on average assets for the fourth quarter of 2013 was 1.12 percent, compared with 1.09 percent in the third quarter of 2013 and 1.19 percent in the fourth quarter last year. The return on average equity for the fourth quarter of 2013 was 15.36 percent, compared with 15.02 percent in the third quarter of 2013 and 15.47 percent in the fourth quarter last year. The return on average assets for the full year of 2013 was 1.10 percent compared with 1.22 percent in 2012. The return on average equity for the full year of 2013 was 14.78 percent compared with 16.23 percent in 2012.

Financial Highlights

Net interest income, on a taxable-equivalent basis, for the fourth quarter of 2013 was $94.8 million, an increase of $1.3 million from net interest income of $93.5 million in the third quarter of 2013, and up $2.1 million from net interest income of $92.7 million in the fourth quarter last year. Net interest income, on a taxable-equivalent basis, for the full year of 2013 was $369.1 million, a decrease of $17.6 million from net interest income of $386.7 million in 2012. Analyses of changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin was 2.85 percent in the fourth quarter of 2013, an improvement of 2 basis points from the third quarter of 2013 and down 2 basis points from the net interest margin of 2.87 percent in the fourth quarter last year. The net interest margin for the full year of 2013 was 2.81 percent, a 16 basis point decrease from the net interest margin of 2.97 percent in 2012.

Noninterest income was $45.3 million for the fourth quarter of 2013, up $0.2 million from noninterest income of $45.1 million in the third quarter of 2013 and down $7.7 million compared with noninterest income of $53.0 million in the fourth quarter of 2012. Noninterest income included mortgage banking revenue of $2.8 million in the fourth quarter of 2013 compared with $4.1 million in the previous quarter and $11.3 million in the same quarter last year. Noninterest income for the full year of 2013 was $186.2 million compared with noninterest income of $200.3 million in 2012. The decrease in noninterest revenue compared with the previous year was the result of lower mortgage banking revenue which totaled $19.2 million in 2013 compared with a historical high of $35.6 million in 2012.

Noninterest expense was $82.4 million in the fourth quarter of 2013, down $0.6 million from noninterest expense of $83.0 million in the third quarter of 2013, and down $1.0 million from noninterest expenses of $83.5 million in the fourth quarter of 2012. There were no significant noninterest expense items in the fourth quarter of 2013. Noninterest expense in the third quarter of 2013 included separation expense of $1.8 million. Noninterest expense in the fourth quarter of 2012 included total charges of $1.5 million related to the closure of branches in American Samoa. The components of salaries and benefits are presented in Table 9. Noninterest expense for the full year of 2013 was $331.0 million, down $3.3 million, or 1.0 percent, from noninterest expense of $334.3 million in 2012.

The efficiency ratio for the fourth quarter of 2013 was 59.99 percent compared with 61.01 percent in the previous quarter and 58.24 percent in the same quarter last year. The efficiency ratio for the full year of 2013 was 60.71 percent compared with 57.88 percent during the full year of 2012.

The effective tax rate for the fourth quarter of 2013 was 28.96 percent compared with 28.91 percent in the previous quarter and 32.67 percent in the same quarter last year. The effective tax rate for the full year of 2013 was 29.73 percent compared with 31.46 percent for the full year of 2012. The lower effective tax rates during 2013 were due to the release of tax reserves and low-income housing and other tax credits.

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 remained stable during the fourth quarter of 2013. Total non-performing assets were $39.7 million at December 31, 2013, up from $33.8 million at September 30, 2013 and $37.1 million at December 31, 2012. The increase in non-performing assets was largely due to the addition of one commercial loan in Guam. Non-performing assets continue to remain above historical levels due to the lengthy judicial foreclosure process for residential mortgage loans. Non-performing assets, as a percentage of total loans and leases and foreclosed real estate, were 0.65 percent at December 31, 2013, up from 0.56 percent at September 30, 2013 and 0.63 percent at December 31, 2012.

Accruing loans and leases past due 90 days or more were $9.9 million at December 31, 2013, down from $11.4 million at September 30, 2013 and $10.4 million at December 30, 2012. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $51.1 million at December 31, 2013, up from $39.8 million at September 30, 2013, and $31.8 million at December 31, 2012. The increase in restructured loans was primarily due to the restructure of a commercial loan in Hawaii which is expected to be fully repaid during the first quarter of 2014. Restructured loans are primarily comprised of residential mortgage loans with lowered monthly payments to accommodate the borrowers' financial needs for a period of time. 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 2013 were $8.2 million or 0.54 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $10.4 million during the quarter were partially offset by recoveries of $2.2 million. Fourth quarter charge-offs included $6.6 million related to a commercial loan in Guam. Net charge-offs during the third quarter of 2013 were $0.9 million or 0.06 percent annualized, and were comprised of charge-offs of $4.7 million and recoveries of $3.8 million. Net charge-offs during the fourth quarter of 2012 were $2.1 million, or 0.15 percent annualized, and were comprised of charge-offs of $5.4 million and recoveries of $3.3 million. Net charge-offs for the full year of 2013 were $13.4 million, or 0.23 percent of total average loans and leases, compared with $10.7 million or 0.19 percent of total average loans and leases in 2012.

The allowance for loan and lease losses was $115.5 million at December 31, 2013, down $8.2 million from the allowance for loan and lease losses of $123.7 million at September 30, 2013 and down $13.4 million from the allowance for loan and lease losses of $128.9 million at December 31, 2012. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.89 percent at December 31, 2013, a decrease of 17 basis points from the previous quarter and 31 basis points from the same quarter last year. The reserve for unfunded commitments at December 31, 2013 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 $14.08 billion at December 31, 2013, up $235.4 million from total assets of $13.85 billion at September 30, 2013, and up $355.9 million from total assets of $13.73 billion at December 31, 2012. Average total assets were $13.86 billion during the fourth quarter of 2013, up $95.2 million from average total assets of $13.77 billion during the third quarter of 2013, and up $348.4 million from average total assets of $13.52 billion during the fourth quarter of 2012.

Total loans and leases increased to $6.10 billion at December 31, 2013, up from $6.01 billion at September 30, 2013, and up from $5.85 billion at December 31, 2012. The commercial loan portfolio was $2.53 billion at the end of the fourth quarter of 2013, up 2.0 percent from commercial loans of $2.48 billion at the end of the third quarter of 2013 and up 9.2 percent from commercial loans of $2.32 billion at the end of the fourth quarter last year. Consumer loans were $3.57 billion at December 31, 2013, up 1.1 percent from consumer loans of $3.53 billion at the end of the third quarter of 2013 and up 0.8 percent from consumer loans of $3.54 billion at the end of the fourth quarter last year. Average total loans and leases were $6.05 billion during the fourth quarter of 2013, up from $5.89 billion during the previous quarter and $5.80 billion during the same quarter last year. Loan and lease portfolio balances, including the higher risk loans and leases outstanding, are summarized in Table 10.

Deposit generation continued to remain strong during the fourth quarter of 2013. Total deposits increased to $11.91 billion at December 31, 2013, up from total deposits of $11.61 billion at September 30, 2013 and $11.53 billion at December 31, 2012. Average total deposits were $11.57 billion in the fourth quarter of 2013, up from $11.48 billion during the previous quarter and $11.38 billion during the same quarter last year. Deposit balances are summarized in Tables 7a, 7b, and 10.

Long-term debt was $174.7 million at December 31, 2013, essentially unchanged from September 30, 2013 and up $46.7 million from December 31, 2012. The increase in long-term debt during 2013 was primarily for asset/liability management purposes.

As a result of the strong deposit growth, which exceeded loan growth during the fourth quarter, the investment portfolio increased to $6.99 billion at December 31, 2013, compared to $6.91 billion at September 30, 2013, and $6.96 billion at December 31, 2012. The investment portfolio remains largely comprised of securities issued by U. S. government agencies and includes $4.74 billion in securities held to maturity and $2.24 billion in securities available for sale.

During the fourth quarter of 2013, the Company repurchased 86.3 thousand shares of common stock at a total cost of $5.0 million under its share repurchase program. The average cost was $57.87 per share repurchased. From January 2 through January 24, 2014, the Company repurchased an additional 56.0 thousand shares of common stock at an average cost of $58.95 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through December 31, 2013, the Company has repurchased 50.9 million shares and returned $1.9 billion to shareholders at an average cost of $36.54 per share. Remaining buyback authority under the share repurchase program was $34.0 million at December 31, 2013.

Total shareholders' equity was $1.01 billion at December 31, 2013, up from $0.99 billion at September 30, 2013, and down from $1.02 billion at December 31, 2012. The ratio of tangible common equity to risk-weighted assets was 15.49 percent at December 31, 2013 compared with 15.43 percent at September 30, 2013 and 17.24 percent at December 31, 2012. The Tier 1 leverage ratio at December 31, 2013 was 7.07 percent, up from 6.95 percent at September 30, 2013 and 6.83 percent at December 31, 2012.

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, 2014 to shareholders of record at the close of business on February 28, 2014.

Hawaii Economy

General economic conditions in Hawaii continue to be healthy, led by a strong tourism industry, relatively low unemployment, rising real estate prices, and accelerating construction activity. For the first eleven months of 2013, total visitor arrivals increased by 3.0 percent and visitor spending increased by 2.9 percent compared to the same period in 2012. While the rate of visitor growth has eased from the prior year, 2013 is on track to be another record year for tourism in Hawaii. The statewide seasonally-adjusted unemployment rate was at 4.4 percent in November 2013, compared to 7.0 percent nationally. The volume of single-family home sales on Oahu was 4.6 percent higher in 2013 compared to 2012 and the volume of condominium sales on Oahu was 11.8 percent higher compared to 2012. The median price of single-family home sales on Oahu increased 4.8 percent in 2013 and the median price of condominium sales on Oahu was 4.6 percent higher compared to 2012. As of December 31, 2013, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 2.7 months and 2.9 months, respectively. According to the National Housing Trend Report for December 2013, Honolulu has the third lowest median number of days on the market for housing inventory in the United States.

Conference Call Information

The Company will review its 2013 financial results today at 1:00 p.m. Hawaii Time (6:00 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. Conference call participants located in the United States or Canada should dial 1 (800) 708-4540. All 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, January 27, 2014 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 36402452# 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, 2012, 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 1a
  Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands, except per share amounts)  

2013

     2013     2012     2013     2012

For the Period:

Operating Results
Net Interest Income $ 92,120 $ 90,887 $ 90,310 $ 358,907 $ 377,271
Provision for Credit Losses - - - - 979
Total Noninterest Income 45,278 45,126 52,982 186,223 200,286
Total Noninterest Expense 82,424 82,977 83,456 330,969 334,288
Net Income 39,055 37,704 40,287 150,502 166,076
Basic Earnings Per Share 0.88 0.85 0.90 3.39 3.68
Diluted Earnings Per Share 0.88 0.85 0.90 3.38 3.67
Dividends Declared Per Share 0.45 0.45 0.45 1.80 1.80
 
Performance Ratios
Return on Average Assets 1.12 % 1.09 % 1.19 % 1.10 % 1.22 %
Return on Average Shareholders' Equity 15.36 15.02 15.47 14.78 16.23
Efficiency Ratio 1 59.99 61.01 58.24 60.71 57.88
Net Interest Margin 2 2.85 2.83 2.87 2.81 2.97
Dividend Payout Ratio 3 51.14 52.94 50.00 53.10 48.91
Average Shareholders' Equity to Average Assets 7.28 7.23 7.67 7.44 7.52
 
Average Balances
Average Loans and Leases $ 6,053,607 $ 5,892,888 $ 5,798,057 $ 5,883,686 $ 5,680,279
Average Assets 13,864,914 13,769,699 13,516,519 13,692,133 13,609,188
Average Deposits 11,571,905 11,479,185 11,376,875 11,396,801 10,935,016
Average Shareholders' Equity 1,008,813 995,661 1,036,223 1,018,287 1,023,256
 
Per Share of Common Stock
Book Value $ 22.75 $ 22.29 $ 22.83 $ 22.75 $ 22.83
Tangible Book Value 22.04 21.58 22.12 22.04 22.12
Market Value
Closing 59.14 54.45 44.05 59.14 44.05
High 59.92 57.13 46.38 59.92 49.99
Low 53.16 50.50 41.41 44.88 41.41
 
December 31, September 30, December 31,
                2013     2013     2012

As of Period End:

Balance Sheet Totals
Loans and Leases $ 6,095,387 $ 6,006,642 $ 5,854,521
Total Assets 14,084,280 13,848,871 13,728,372
Total Deposits 11,914,656 11,608,134 11,529,482
Long-Term Debt 174,706 174,717 128,055
Total Shareholders' Equity 1,011,976 992,686 1,021,665
 
Asset Quality
Allowance for Loan and Lease Losses $ 115,454 $ 123,680 $ 128,857
Non-Performing Assets 39,650 33,832 37,083
 
Financial Ratios
Allowance to Loans and Leases Outstanding 1.89 % 2.06 % 2.20 %
Tier 1 Capital Ratio 15.55 15.42 16.13
Total Capital Ratio 16.81 16.68 17.39
Tier 1 Leverage Ratio 7.07 6.95 6.83
Total Shareholders' Equity to Total Assets 7.19 7.17 7.44
Tangible Common Equity to Tangible Assets 4 6.98 6.96 7.23
Tangible Common Equity to Risk-Weighted Assets 4 15.49 15.43 17.24
 
Non-Financial Data
Full-Time Equivalent Employees 2,196 2,205 2,276
Branches and Offices 74 74 76
ATMs 466 468 494
 
 
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 Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 1b "Reconciliation of Non-GAAP Financial Measures."
 
     
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures   Table 1b
December 31, September 30, December 31,
(dollars in thousands)   2013   2013   2012
 
Total Shareholders' Equity $ 1,011,976 $ 992,686 $ 1,021,665
Less: Goodwill 31,517 31,517 31,517
Intangible Assets     -       -       33  
Tangible Common Equity   $ 980,459     $ 961,169     $ 990,115  
 
Total Assets $ 14,084,280 $ 13,848,871 $ 13,728,372
Less: Goodwill 31,517 31,517 31,517
Intangible Assets     -       -       33  
Tangible Assets   $ 14,052,763     $ 13,817,354     $ 13,696,822  
 

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

$ 6,330,532 $ 6,228,293 $ 5,744,722
 
Total Shareholders' Equity to Total Assets 7.19 % 7.17 % 7.44 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.98 % 6.96 % 7.23 %
 
Tier 1 Capital Ratio 15.55 % 15.42 % 16.13 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 15.49 % 15.43 % 17.24 %
 
         
Bank of Hawaii Corporation and Subsidiaries
Net Significant Items   Table 2
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands)   2013   2013   2012   2013   2012
Net Gains on Disposal of Leased Equipment $ - $ - $ - $ - $ 2,473
Decrease in Allowance for Loan and Lease Losses 8,225 896 2,114 13,403 9,749
Planned Branch Closures in American Samoa - - (1,105 ) - (1,105 )
Separation Expense 1 (394 ) (1,753 ) (556 ) (4,486 ) (2,394 )
PC Refresh     -       -       -       -       (1,163 )
Significant Items Before the Provision (Benefit) for Income Taxes     7,831       (857 )     453       8,917       7,560  
Income Taxes Impact Related to Lease Transactions - - - - (2,733 )
Release of Tax Reserve - (1,267 ) - (2,357 ) -
Income Tax Impact     2,741       (300 )     159       3,121       1,430  
Net Significant Items   $ 5,090     $ 710     $ 294     $ 8,153     $ 8,863  
 
 
1 Includes $360 thousand for the planned branch closures in American Samoa in the fourth quarter of 2012.
 
       
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)   2013   2013   2012   2013   2012
Interest Income
Interest and Fees on Loans and Leases $ 63,809 $ 63,918 $ 64,627 $ 253,276 $ 257,896
Income on Investment Securities
Available-for-Sale 10,608 12,038 15,349 53,570 65,972
Held-to-Maturity 26,882 24,137 20,253 90,062 94,952
Deposits 3 3 3 10 9
Funds Sold 105 177 180 415 533
Other     302     301     283     1,172     1,127  
Total Interest Income     101,709     100,574     100,695     398,505     420,489  
Interest Expense
Deposits 2,418 2,500 2,753 10,143 12,376
Securities Sold Under Agreements to Repurchase 6,530 6,551 7,158 26,837 28,897
Funds Purchased 8 4 4 44 21
Short-Term Borrowings 2 - - 2 -
Long-Term Debt     631     632     470     2,572     1,924  
Total Interest Expense     9,589     9,687     10,385     39,598     43,218  
Net Interest Income 92,120 90,887 90,310 358,907 377,271
Provision for Credit Losses     -     -     -     -     979  
Net Interest Income After Provision for Credit Losses     92,120     90,887     90,310     358,907     376,292  
Noninterest Income
Trust and Asset Management 12,240 11,717 12,066 47,932 45,229
Mortgage Banking 2,823 4,132 11,268 19,186 35,644
Service Charges on Deposit Accounts 9,326 9,385 9,459 37,124 37,621
Fees, Exchange, and Other Service Charges 12,670 12,732 12,333 50,469 48,965
Investment Securities Gains (Losses), Net - - - - (77 )
Insurance 2,295 2,177 2,550 9,190 9,553
Bank-Owned Life Insurance 1,895 1,365 1,557 5,892 6,805
Other     4,029     3,618     3,749     16,430     16,546  
Total Noninterest Income     45,278     45,126     52,982     186,223     200,286  
Noninterest Expense
Salaries and Benefits 43,643 46,552 46,116 184,211 184,408
Net Occupancy 9,602 9,847 11,867 38,745 42,965
Net Equipment 4,837 4,572 4,705 18,366 19,723
Data Processing 3,827 3,697 3,058 13,840 13,202
Professional Fees 2,669 2,119 2,611 9,405 9,623
FDIC Insurance 1,954 1,913 1,892 7,765 7,873
Other     15,892     14,277     13,207     58,637     56,494  
Total Noninterest Expense     82,424     82,977     83,456     330,969     334,288  
Income Before Provision for Income Taxes 54,974 53,036 59,836 214,161 242,290
Provision for Income Taxes     15,919     15,332     19,549     63,659     76,214  
Net Income   $ 39,055   $ 37,704   $ 40,287   $ 150,502   $ 166,076  
Basic Earnings Per Share $ 0.88 $ 0.85 $ 0.90 $ 3.39 $ 3.68
Diluted Earnings Per Share $ 0.88 $ 0.85 $ 0.90 $ 3.38 $ 3.67
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 1.80 $ 1.80
Basic Weighted Average Shares 44,223,281 44,267,356 44,623,823 44,380,948 45,115,441
Diluted Weighted Average Shares     44,496,313     44,479,472     44,740,109     44,572,725     45,249,300  
 
         
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)   2013   2013   2012   2013   2012
Net Income $ 39,055 $ 37,704 $ 40,287 $ 150,502 $ 166,076
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Losses on Investment Securities (6,006 ) (6,986 ) (9,858 ) (69,206 ) (3,155 )
Defined Benefit Plans     7,694       202       (3,358 )     8,175       (2,900 )
Total Other Comprehensive Income (Loss) 1,688 (6,784 ) (13,216 ) (61,031 ) (6,055 )
                     
Comprehensive Income   $ 40,743     $ 30,920     $ 27,071     $ 89,471     $ 160,021  
 
     
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition   Table 5
December 31, September 30, December 31,
(dollars in thousands)   2013   2013   2012
Assets
Interest-Bearing Deposits $ 3,617 $ 3,048 $ 3,393
Funds Sold 271,414 254,940 185,682
Investment Securities
Available-for-Sale 2,243,697 2,277,136 3,367,557
Held to Maturity (Fair Value of $4,697,587; $4,621,491; and $3,687,676) 4,744,519 4,633,399 3,595,065
Loans Held for Sale 6,435 18,795 21,374
Loans and Leases 6,095,387 6,006,642 5,854,521
Allowance for Loan and Lease Losses     (115,454 )     (123,680 )     (128,857 )
Net Loans and Leases     5,979,933       5,882,962       5,725,664  
Total Earning Assets     13,249,615       13,070,280       12,898,735  
Cash and Noninterest-Bearing Deposits 188,715 131,228 163,786
Premises and Equipment 108,636 105,181 105,005
Accrued Interest Receivable 43,930 46,047 43,077
Foreclosed Real Estate 3,205 3,036 3,887
Mortgage Servicing Rights 28,123 28,015 25,240
Goodwill 31,517 31,517 31,517
Other Assets     430,539       433,567       457,125  
Total Assets   $ 14,084,280     $ 13,848,871     $ 13,728,372  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 3,681,128 $ 3,524,638 $ 3,367,185
Interest-Bearing Demand 2,355,608 2,320,452 2,163,473
Savings 4,560,150 4,503,963 4,399,316
Time     1,317,770       1,259,081       1,599,508  
Total Deposits     11,914,656       11,608,134       11,529,482  
Funds Purchased 9,982 9,983 11,296
Securities Sold Under Agreements to Repurchase 770,049 847,239 758,947
Long-Term Debt 174,706 174,717 128,055
Retirement Benefits Payable 34,965 47,338 47,658
Accrued Interest Payable 4,871 6,040 4,776
Taxes Payable and Deferred Taxes 34,907 40,364 88,014
Other Liabilities     128,168       122,370       138,479  
Total Liabilities     13,072,304       12,856,185       12,706,707  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: December 31, 2013 - 57,480,846 / 44,490,385; September 30, 2013 - 57,487,855 / 44,539,247; and December 31, 2012 - 57,319,352 / 44,754,835)

572 572 571
Capital Surplus 522,505 520,510 515,619
Accumulated Other Comprehensive Income (Loss) (31,823 ) (33,510 ) 29,208
Retained Earnings 1,151,754 1,132,996 1,084,477

Treasury Stock, at Cost (Shares: December 31, 2013 - 12,990,461; September 30, 2013 - 12,948,608; and December 31, 2012 - 12,564,517)

    (631,032 )     (627,882 )     (608,210 )
Total Shareholders' Equity     1,011,976       992,686       1,021,665  
Total Liabilities and Shareholders' Equity   $ 14,084,280     $ 13,848,871     $ 13,728,372  
 
             

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, 2011 45,947,116 $ 571 $ 507,558 $ 35,263 $ 1,003,938 $ (544,663 ) $ 1,002,667
Net Income - - - - 166,076 - 166,076
Other Comprehensive Loss - - - (6,055 ) - - (6,055 )
Share-Based Compensation - - 7,537 - - - 7,537
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 565,956 - 524 - (3,892 ) 17,897 14,529
Common Stock Repurchased (1,758,237 ) - - - - (81,444 ) (81,444 )
Cash Dividends Paid ($1.80 per share)   -       -     -     -       (81,645 )     -       (81,645 )
Balance as of December 31, 2012   44,754,835     $ 571   $ 515,619   $ 29,208     $ 1,084,477     $ (608,210 )   $ 1,021,665  
 
Net Income - $ - $ - $ - $ 150,502 $ - $ 150,502
Other Comprehensive Loss - - - (61,031 ) (61,031 )
Share-Based Compensation - - 5,546 - - - 5,546
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 505,691 1 1,340 - (2,691 ) 16,833 15,483
Common Stock Repurchased (770,141 ) - - - - (39,655 ) (39,655 )
Cash Dividends Paid ($1.80 per share)   -       -     -     -       (80,534 )     -       (80,534 )
Balance as of December 31, 2013   44,490,385     $ 572   $ 522,505   $ (31,823 )   $ 1,151,754     $ (631,032 )   $ 1,011,976  
 
               
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, 2013 September 30, 2013 December 31, 2012
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 $ 3.2 $ - 0.42 % $ 4.3 $ - 0.30 % $ 4.4 $ - 0.29 %
Funds Sold 222.8 0.1 0.18 335.3 0.2 0.21 332.1 0.2 0.21
Investment Securities
Available-for-Sale 2,274.8 12.4 2.17 2,495.9 13.7 2.18 3,277.2 17.6 2.15
Held-to-Maturity 4,653.4 27.7 2.38 4,385.5 25.0 2.28 3,406.3 20.3 2.38
Loans Held for Sale 7.8 0.1 5.07 16.7 0.2 4.42 18.9 0.2 4.36
Loans and Leases 1
Commercial and Industrial 906.3 7.8 3.42 877.3 7.7 3.49 811.3 7.8 3.84
Commercial Mortgage 1,237.0 12.4 3.97 1,164.9 12.1 4.12 1,063.6 11.2 4.18
Construction 115.2 1.3 4.63 120.1 1.4 4.71 104.5 1.2 4.77
Commercial Lease Financing 255.6 1.4 2.14 253.0 1.5 2.32 275.9 1.7 2.46
Residential Mortgage 2,284.4 24.8 4.35 2,255.9 25.3 4.49 2,369.5 27.5 4.64
Home Equity 767.7 7.8 4.04 757.6 7.9 4.13 771.3 8.1 4.18
Automobile 248.9 3.4 5.39 240.6 3.3 5.43 205.6 3.0 5.73
Other 2     238.5     4.9   8.08       223.5     4.6   8.23       196.4     4.0   8.15
Total Loans and Leases     6,053.6     63.8   4.19       5,892.9     63.8   4.31       5,798.1     64.5   4.44
Other     77.5     0.3   1.55       78.1     0.3   1.54       79.5     0.3   1.43
Total Earning Assets 3     13,293.1     104.4   3.13       13,208.7     103.2   3.11       12,916.5     103.1   3.19
Cash and Noninterest-Bearing Deposits 136.8 140.3 144.8
Other Assets   435.0   420.7   455.2
Total Assets $ 13,864.9 $ 13,769.7 $ 13,516.5
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,245.5 0.1 0.03 $ 2,147.8 0.1 0.03 $ 2,011.2 0.1 0.03
Savings 4,499.5 1.0 0.09 4,485.3 1.0 0.09 4,451.4 1.0 0.09
Time     1,331.2     1.3   0.38       1,401.5     1.4   0.38       1,755.6     1.6   0.36
Total Interest-Bearing Deposits     8,076.2     2.4   0.12       8,034.6     2.5   0.12       8,218.2     2.7   0.13
Short-Term Borrowings 28.3 - 0.15 11.7 - 0.14 11.0 - 0.14
Securities Sold Under Agreements to Repurchase 832.6 6.6 3.07 847.2 6.6 3.03 776.8 7.2 3.61
Long-Term Debt     174.7     0.6   1.44       174.7     0.6   1.44       36.7     0.5   5.12
Total Interest-Bearing Liabilities     9,111.8     9.6   0.41       9,068.2     9.7   0.42       9,042.7     10.4   0.45
Net Interest Income $ 94.8 $ 93.5 $ 92.7
Interest Rate Spread 2.72 % 2.69 % 2.74 %
Net Interest Margin 2.85 % 2.83 % 2.87 %
Noninterest-Bearing Demand Deposits 3,495.7 3,444.6 3,158.7
Other Liabilities 248.6 261.2 278.9
Shareholders' Equity   1,008.8   995.7   1,036.2
Total Liabilities and Shareholders' Equity $ 13,864.9 $ 13,769.7 $ 13,516.5
 

 

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 $2,696,000, $2,597,000, and $2,394,000 for the three months ended December 31, 2013, September 30, 2013, and December 31, 2012, respectively.

 
           
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis   Table 7b
Year Ended Year Ended
December 31, 2013 December 31, 2012
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions)   Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 4.0 $ - 0.26 % $ 3.7 $ - 0.26 %
Funds Sold 221.2 0.4 0.19 263.5 0.5 0.20
Investment Securities
Available-for-Sale 2,822.5 61.6 2.18 3,346.3 75.0 2.24
Held-to-Maturity 4,086.6 91.8 2.25 3,636.7 95.0 2.61
Loans Held for Sale 16.4 0.7 4.18 14.7 0.6 4.29
Loans and Leases 1
Commercial and Industrial 865.8 30.9 3.57 800.2 31.3 3.91
Commercial Mortgage 1,152.9 46.9 4.06 988.2 42.9 4.34
Construction 114.6 5.4 4.75 101.9 5.1 5.04
Commercial Lease Financing 261.6 6.0 2.31 283.3 6.8 2.39
Residential Mortgage 2,275.8 101.7 4.47 2,349.6 111.3 4.74
Home Equity 761.5 31.4 4.12 773.2 33.4 4.31
Automobile 232.3 12.7 5.48 196.8 11.7 5.96
Other 2     219.2     18.0   8.21       187.1     15.2   8.11
Total Loans and Leases     5,883.7     253.0   4.30       5,680.3     257.7   4.54
Other     78.3     1.2   1.50       79.9     1.1   1.41
Total Earning Assets 3     13,112.7     408.7   3.12       13,025.1     429.9   3.30
Cash and Noninterest-Bearing Deposits 138.9 137.2
Other Assets   440.5   446.9
Total Assets $ 13,692.1 $ 13,609.2
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand 2,140.5 0.6 0.03 1,938.6 0.5 0.03
Savings 4,461.4 3.9 0.09 4,447.8 4.5 0.10
Time     1,406.2     5.6   0.40       1,524.6     7.4   0.48
Total Interest-Bearing Deposits     8,008.1     10.1   0.13       7,911.0     12.4   0.16
Short-Term Borrowings 31.7 - 0.15 15.1 - 0.14
Securities Sold Under Agreements to Repurchase 809.4 26.9 3.32 1,335.7 28.9 2.16
Long-Term Debt     171.0     2.6   1.50       31.5     1.9   6.10
Total Interest-Bearing Liabilities     9,020.2     39.6   0.44       9,293.3     43.2   0.47
Net Interest Income $ 369.1 $ 386.7
Interest Rate Spread 2.68 % 2.83 %
Net Interest Margin 2.81 % 2.97 %
Noninterest-Bearing Demand Deposits 3,388.7 3,024.0
Other Liabilities 264.9 268.6
Shareholders' Equity   1,018.3   1,023.3
Total Liabilities and Shareholders' Equity $ 13,692.1 $ 13,609.2
 
 

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 $10,194,000 and $9,473,000 for the year ended December 31, 2013 and 2012, respectively.

 
     
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8a
Three Months Ended December 31, 2013
Compared to September 30, 2013
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ (0.1 ) $ - $ (0.1 )
Investment Securities
Available-for-Sale (1.2 ) (0.1 ) (1.3 )
Held-to-Maturity 1.5 1.2 2.7
Loans Held for Sale (0.1 ) - (0.1 )
Loans and Leases
Commercial and Industrial 0.3 (0.2 ) 0.1
Commercial Mortgage 0.7 (0.4 ) 0.3
Construction (0.1 ) - (0.1 )
Commercial Lease Financing - (0.1 ) (0.1 )
Residential Mortgage 0.3 (0.8 ) (0.5 )
Home Equity 0.1 (0.2 ) (0.1 )
Automobile 0.1 - 0.1
Other 2     0.4       (0.1 )     0.3  
Total Loans and Leases     1.8       (1.8 )     -  
Total Change in Interest Income     1.9       (0.7 )     1.2  
 
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     (0.2 )     0.1       (0.1 )
 
Change in Net Interest Income   $ 2.1     $ (0.8 )   $ 1.3  
 
 

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, 2013
Compared to December 31, 2012
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ (0.1 ) $ - $ (0.1 )
Investment Securities
Available-for-Sale (5.5 ) 0.3 (5.2 )
Held-to-Maturity 7.4 - 7.4
Loans Held for Sale (0.1 ) - (0.1 )
Loans and Leases
Commercial and Industrial 0.9 (0.9 ) -
Commercial Mortgage 1.8 (0.6 ) 1.2
Construction 0.1 - 0.1
Commercial Lease Financing (0.1 ) (0.2 ) (0.3 )
Residential Mortgage (1.0 ) (1.7 ) (2.7 )
Home Equity - (0.3 ) (0.3 )
Automobile 0.6 (0.2 ) 0.4
Other 2     0.9       -       0.9  
Total Loans and Leases     3.2       (3.9 )     (0.7 )
Total Change in Interest Income     4.9       (3.6 )     1.3  
 
Change in Interest Expense:
Interest-Bearing Deposits
Time     (0.4 )     0.1       (0.3 )
Total Interest-Bearing Deposits     (0.4 )     0.1       (0.3 )
Securities Sold Under Agreements to Repurchase 0.5 (1.1 ) (0.6 )
Long-Term Debt     0.7       (0.6 )     0.1  
Total Change in Interest Expense     0.8       (1.6 )     (0.8 )
 
Change in Net Interest Income   $ 4.1     $ (2.0 )   $ 2.1  
 

 

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
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis   Table 8c
Year Ended December 31, 2013
Compared to December 31, 2012
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ (0.1 ) $ - $ (0.1 )
Investment Securities
Available-for-Sale (11.5 ) (1.9 ) (13.4 )
Held-to-Maturity 11.0 (14.2 ) (3.2 )
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 2.5 (2.9 ) (0.4 )
Commercial Mortgage 6.9 (2.9 ) 4.0
Construction 0.6 (0.3 ) 0.3
Commercial Lease Financing (0.6 ) (0.2 ) (0.8 )
Residential Mortgage (3.4 ) (6.2 ) (9.6 )
Home Equity (0.5 ) (1.5 ) (2.0 )
Automobile 2.0 (1.0 ) 1.0
Other 2     2.6       0.2       2.8  
Total Loans and Leases     10.1       (14.8 )     (4.7 )
Other     -       0.1       0.1  
Total Change in Interest Income     9.6       (30.8 )     (21.2 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Savings - (0.6 ) (0.6 )
Time     (0.6 )     (1.2 )     (1.8 )
Total Interest-Bearing Deposits     (0.5 )     (1.8 )     (2.3 )
Securities Sold Under Agreements to Repurchase (13.9 ) 11.9 (2.0 )
Long-Term Debt     3.1       (2.4 )     0.7  
Total Change in Interest Expense     (11.3 )     7.7       (3.6 )
 
Change in Net Interest Income     20.9       (38.5 )     (17.6 )
 

 

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)   2013   2013   2012   2013   2012
Salaries $ 28,636 $ 28,985 $ 29,378 $ 115,389 $ 115,208
Incentive Compensation 4,681 4,242 4,248 16,568 16,926
Share-Based Compensation 1,158 1,333 1,701 4,932 6,961
Commission Expense 1,222 1,888 1,953 6,874 6,993
Retirement and Other Benefits 3,183 4,144 3,821 15,289 16,014
Payroll Taxes 2,091 2,335 2,071 11,242 10,593
Medical, Dental, and Life Insurance 2,278 1,872 2,388 9,431 9,319
Separation Expense     394     1,753     556     4,486     2,394
Total Salaries and Benefits   $ 43,643   $ 46,552   $ 46,116   $ 184,211   $ 184,408
 
         
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)   2013   2013   2013   2013   2012
Commercial
Commercial and Industrial $ 911,367 $ 895,040 $ 875,702 $ 834,801 $ 829,512
Commercial Mortgage 1,247,510 1,203,670 1,160,977 1,104,718 1,097,425
Construction 107,349 124,230 107,016 117,797 113,987
Lease Financing     262,207     255,550     257,067     269,107     274,969
Total Commercial     2,528,433     2,478,490     2,400,762     2,326,423     2,315,893
Consumer
Residential Mortgage 2,282,894 2,282,305 2,252,117 2,275,209 2,349,916
Home Equity 773,385 765,841 751,790 757,877 770,376
Automobile 255,986 246,704 233,475 220,362 209,832
Other 1     254,689     233,302     221,008     203,098     208,504
Total Consumer     3,566,954     3,528,152     3,458,390     3,456,546     3,538,628
Total Loans and Leases   $ 6,095,387   $ 6,006,642   $ 5,859,152   $ 5,782,969   $ 5,854,521
 
 
Higher Risk Loans and Leases Outstanding
December 31, September 30, June 30, March 31, December 31,
(dollars in thousands)   2013   2013   2013   2013   2012
Residential Land Loans 2 $ 11,922 $ 13,635 $ 13,708 $ 13,996 $ 14,984
Home Equity Loans 3 12,594 12,588 13,578 20,786 19,914
Air Transportation 4     26,152     26,492     26,436     27,115     27,782
Total Higher Risk Loans   $ 50,668   $ 52,715   $ 53,722   $ 61,897   $ 62,680
 
1 Comprised of other revolving credit, installment, and lease financing.
2 We consider all of our residential land loans, which are consumer loans secured by unimproved lots, to be of higher risk due to the volatility in the value of the underlying collateral.
3 Higher risk home equity loans are defined as those loans originated in 2005 or later, with current monitoring credit scores below 600, and with original loan-to-value ratios greater than 70%.
4 We consider all of our air transportation leases to be of higher risk due to the weak financial profile of the industry.
 
 
Deposits
December 31, September 30, June 30, March 31, December 31,
(dollars in thousands)   2013   2013   2013   2013   2012
Consumer $ 5,829,352 $ 5,707,125 $ 5,626,515 $ 5,607,862 $ 5,537,624
Commercial 4,814,076 4,680,370 4,537,120 4,505,835 4,576,410
Public and Other     1,271,228     1,220,639     1,285,563     1,138,163     1,415,448
Total Deposits   $ 11,914,656   $ 11,608,134   $ 11,449,198   $ 11,251,860   $ 11,529,482
 
         
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)   2013     2013   2013   2013   2012
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 11,929 $ 5,295 $ 4,909 $ 5,033 $ 5,534
Commercial Mortgage 2,512 2,355 2,772 2,910 3,030
Construction - - - - 833
Lease Financing     -       -       16       -       -  
Total Commercial     14,441       7,650       7,697       7,943       9,397  
Consumer
Residential Mortgage 20,264 20,637 22,876 24,700 21,725
Home Equity     1,740       2,509       2,602       2,413       2,074  
Total Consumer     22,004       23,146       25,478       27,113       23,799  
Total Non-Accrual Loans and Leases     36,445       30,796       33,175       35,056       33,196  
Foreclosed Real Estate     3,205       3,036       3,256       3,318       3,887  
Total Non-Performing Assets   $ 39,650     $ 33,832     $ 36,431     $ 38,374     $ 37,083  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial   $ 1,173     $ 8     $ -     $ 230     $ 27  
Total Commercial     1,173       8       -       230       27  
Consumer
Residential Mortgage 4,564 7,460 6,876 5,967 6,908
Home Equity 3,009 2,896 2,768 4,538 2,701
Automobile 322 193 95 241 186
Other 1     790       841       855       676       587  
Total Consumer     8,685       11,390       10,594       11,422       10,382  
Total Accruing Loans and Leases Past Due 90 Days or More   $ 9,858     $ 11,398     $ 10,594     $ 11,652     $ 10,409  

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

   $ 51,123     $ 39,845     $ 39,154     $ 30,065     $ 31,844  
Total Loans and Leases   $ 6,095,387     $ 6,006,642     $ 5,859,152     $ 5,782,969     $ 5,854,521  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases     0.60 %     0.51 %     0.57 %     0.61 %     0.57 %
 

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

    0.65 %     0.56 %     0.62 %     0.66 %     0.63 %
 

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

    0.61 %     0.35 %     0.37 %     0.39 %     0.45 %
 

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

    0.68 %     0.71 %     0.80 %     0.85 %     0.75 %
 

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

    0.81 %     0.75 %     0.80 %     0.86 %     0.81 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 33,832 $ 36,431 $ 38,374 $ 37,083 $ 40,284
Additions 13,040 3,395 2,647 7,304 3,837
Reductions
Payments (932 ) (2,954 ) (1,306 ) (2,630 ) (3,994 )
Return to Accrual Status (2,308 ) (1,166 ) (1,978 ) (1,132 ) (728 )
Sales of Foreclosed Real Estate (1,431 ) (1,498 ) (1,257 ) (1,910 ) (1,354 )
Charge-offs/Write-downs     (2,551 )     (376 )     (49 )     (341 )     (962 )
Total Reductions     (7,222 )     (5,994 )     (4,590 )     (6,013 )     (7,038 )
Balance at End of Quarter   $ 39,650     $ 33,832     $ 36,431     $ 38,374     $ 37,083  
 
 
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)   2013   2013   2012   2013   2012  
Balance at Beginning of Period $ 129,747 $ 130,494 $ 136,390 $ 134,276 $ 144,025
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (6,828 ) (607 ) (589 ) (8,083 ) (3,617 )
Construction - - - - (330 )
Lease Financing - (16 ) - (16 ) -
Consumer
Residential Mortgage (185 ) (405 ) (831 ) (2,013 ) (4,408 )
Home Equity (721 ) (1,106 ) (1,558 ) (5,220 ) (6,717 )
Automobile (670 ) (457 ) (646 ) (2,131 ) (2,082 )
Other 1     (2,039 )     (2,083 )     (1,806 )     (7,657 )     (7,005 )
Total Loans and Leases Charged-Off     (10,443 )     (4,674 )     (5,430 )     (25,120 )     (24,159 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 308 498 904 1,681 3,939
Commercial Mortgage 14 519 19 557 67
Construction 8 11 5 365 8
Lease Financing 8 11 11 41 177
Consumer
Residential Mortgage 828 1,290 1,039 3,540 2,820
Home Equity 246 614 342 1,943 1,335
Automobile 363 348 478 1,628 1,931
Other 1     442       488       518       1,962       3,154  
Total Recoveries on Loans and Leases Previously Charged-Off     2,217       3,779       3,316       11,717       13,431  
Net Loans and Leases Charged-Off (8,226 ) (895 ) (2,114 ) (13,403 ) (10,728 )
Provision for Credit Losses - - - - 979
Provision for Unfunded Commitments     -       148       -       648       -  
Balance at End of Period 2   $ 121,521     $ 129,747     $ 134,276     $ 121,521     $ 134,276  
 
Components
Allowance for Loan and Lease Losses $ 115,454 $ 123,680 $ 128,857 $ 115,454 $ 128,857
Reserve for Unfunded Commitments     6,067       6,067       5,419       6,067       5,419  
Total Reserve for Credit Losses   $ 121,521     $ 129,747     $ 134,276     $ 121,521     $ 134,276  
 
Average Loans and Leases Outstanding   $ 6,053,607     $ 5,892,888     $ 5,798,057     $ 5,883,686     $ 5,680,279  
 

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

0.54 % 0.06 % 0.15 % 0.23 % 0.19 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.89 % 2.06 % 2.20 % 1.89 % 2.20 %
 
 
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, 2013
Net Interest Income $ 42,155 $ 25,647 $ 2,614 $ 21,704 $ 92,120
Provision for Credit Losses     1,790       6,419       (19 )     (8,190 )     -  
Net Interest Income After Provision for Credit Losses 40,365 19,228 2,633 29,894 92,120
Noninterest Income 20,377 6,564 14,862 3,475 45,278
Noninterest Expense     (50,015 )     (16,296 )     (13,353 )     (2,760 )     (82,424 )
Income Before Provision for Income Taxes 10,727 9,496 4,142 30,609 54,974
Provision for Income Taxes     (3,970 )     (3,054 )     (1,533 )     (7,362 )     (15,919 )
Net Income     6,757       6,442       2,609       23,247       39,055  
Total Assets as of December 31, 2013   $ 3,658,495     $ 2,426,452     $ 189,421     $ 7,809,912     $ 14,084,280  
 
 
Three Months Ended December 31, 2012 1
Net Interest Income $ 43,553 $ 25,780 $ 2,955 $ 18,022 $ 90,310
Provision for Credit Losses     2,768       (584 )     (69 )     (2,115 )     -  
Net Interest Income After Provision for Credit Losses 40,785 26,364 3,024 20,137 90,310
Noninterest Income 28,422 6,006 15,347 3,207 52,982
Noninterest Expense     (51,857 )     (15,166 )     (13,438 )     (2,995 )     (83,456 )
Income Before Provision for Income Taxes 17,350 17,204 4,933 20,349 59,836
Provision for Income Taxes     (6,420 )     (5,928 )     (1,825 )     (5,376 )     (19,549 )
Net Income     10,930       11,276       3,108       14,973       40,287  
Total Assets as of December 31, 2012 1   $ 3,663,287     $ 2,196,682     $ 190,383     $ 7,678,020     $ 13,728,372  
 
 
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, 2013
Net Interest Income $ 164,597 $ 99,623 $ 10,552 $ 84,135 $ 358,907
Provision for Credit Losses     8,565       4,918       (71 )     (13,412 )     -  
Net Interest Income After Provision for Credit Losses 156,032 94,705 10,623 97,547 358,907
Noninterest Income 88,063 26,946 59,308 11,906 186,223
Noninterest Expense     (200,853 )     (64,253 )     (54,307 )     (11,556 )     (330,969 )
Income Before Provision for Income Taxes 43,242 57,398 15,624 97,897 214,161
Provision for Income Taxes     (16,000 )     (19,467 )     (5,781 )     (22,411 )     (63,659 )
Net Income     27,242       37,931       9,843       75,486       150,502  
Total Assets as of December 31, 2013   $ 3,658,495     $ 2,426,452     $ 189,421     $ 7,809,912     $ 14,084,280  
 
 
Year Ended December 31, 2012 1
Net Interest Income $ 177,083 $ 103,754 $ 12,448 $ 83,986 $ 377,271
Provision for Credit Losses     11,916       (1,382 )     196       (9,751 )     979  
Net Interest Income After Provision for Credit Losses 165,167 105,136 12,252 93,737 376,292
Noninterest Income 104,654 26,408 57,454 11,770 200,286
Noninterest Expense     (206,740 )     (62,165 )     (55,543 )     (9,840 )     (334,288 )
Income Before Provision for Income Taxes 63,081 69,379 14,163 95,667 242,290
Provision for Income Taxes     (23,340 )     (19,864 )     (5,240 )     (27,770 )     (76,214 )
Net Income     39,741       49,515       8,923       67,897       166,076  
Total Assets as of December 31, 2012 1   $ 3,663,287     $ 2,196,682     $ 190,383     $ 7,678,020     $ 13,728,372  
 
 
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)   2013   2013   2013   2013   2012
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 63,809 $ 63,918 $ 62,729 $ 62,820 $ 64,627
Income on Investment Securities
Available-for-Sale 10,608 12,038 15,073 15,851 15,349
Held-to-Maturity 26,882 24,137 19,189 19,854 20,253
Deposits 3 3 1 3 3
Funds Sold 105 177 74 59 180
Other     302       301       285       284       283  
Total Interest Income     101,709       100,574       97,351       98,871       100,695  
Interest Expense
Deposits 2,418 2,500 2,579 2,646 2,753
Securities Sold Under Agreements to Repurchase 6,530 6,551 6,751 7,005 7,158
Funds Purchased 8 4 10 22 4
Short-Term Borrowings 2 - - - -
Long-Term Debt     631       632       671       638       470  
Total Interest Expense     9,589       9,687       10,011       10,311       10,385  
Net Interest Income 92,120 90,887 87,340 88,560 90,310
Provision for Credit Losses     -       -       -       -       -  
Net Interest Income After Provision for Credit Losses     92,120       90,887       87,340       88,560       90,310  
Noninterest Income
Trust and Asset Management 12,240 11,717 12,089 11,886 12,066
Mortgage Banking 2,823 4,132 5,820 6,411 11,268
Service Charges on Deposit Accounts 9,326 9,385 9,112 9,301 9,459
Fees, Exchange, and Other Service Charges 12,670 12,732 13,133 11,934 12,333
Investment Securities Gains (Losses), Net - - - - -
Insurance 2,295 2,177 2,393 2,325 2,550
Bank-Owned Life Insurance 1,895 1,365 1,335 1,297 1,557
Other     4,029       3,618       4,159       4,624       3,749  
Total Noninterest Income     45,278       45,126       48,041       47,778       52,982  
Noninterest Expense
Salaries and Benefits 43,643 46,552 45,341 48,675 46,116
Net Occupancy 9,602 9,847 9,661 9,635 11,867
Net Equipment 4,837 4,572 4,380 4,577 4,705
Data Processing 3,827 3,697 3,050 3,266 3,058
Professional Fees 2,669 2,119 2,391 2,226 2,611
FDIC Insurance 1,954 1,913 1,949 1,949 1,892
Other     15,892       14,277       14,409       14,059       13,207  
Total Noninterest Expense     82,424       82,977       81,181       84,387       83,456  
Income Before Provision for Income Taxes 54,974 53,036 54,200 51,951 59,836
Provision for Income Taxes     15,919       15,332       16,437       15,971       19,549  
Net Income   $ 39,055     $ 37,704     $ 37,763     $ 35,980     $ 40,287  
 
Basic Earnings Per Share $ 0.88 $ 0.85 $ 0.85 $ 0.81 $ 0.90
Diluted Earnings Per Share $ 0.88 $ 0.85 $ 0.85 $ 0.81 $ 0.90
 
Balance Sheet Totals
Loans and Leases $ 6,095,387 $ 6,006,642 $ 5,859,152 $ 5,782,969 $ 5,854,521
Total Assets 14,084,280 13,848,871 13,733,418 13,525,667 13,728,372
Total Deposits 11,914,656 11,608,134 11,449,198 11,251,860 11,529,482
Total Shareholders' Equity 1,011,976 992,686 986,368 1,026,104 1,021,665
 
Performance Ratios
Return on Average Assets 1.12 % 1.09 % 1.12 % 1.08 % 1.19 %
Return on Average Shareholders' Equity 15.36 15.02 14.64 14.10 15.47
Efficiency Ratio 1 59.99 61.01 59.96 61.90 58.24
Net Interest Margin 2 2.85 2.83 2.77 2.82 2.87
 
 
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, 2013     December 31, 2012     December 31, 2011  
Hawaii Economic Trends
State General Fund Revenues 1 $ 5,013.3

 

4.1

%

$ 5,259.1 12.8 % $ 4,662.5 8.1 %
General Excise and Use Tax Revenue 1 $ 2,679.3

 

2.3

%

$ 2,844.7 9.9 % $ 2,588.5 8.8 %
Jobs 2 622.4 619.3 614.2
                                       
November 30, September 30, June 30, December 31,  
(spot rates)   2013   2013   2013   2012   2011   2010  
Unemployment 3
Statewide, seasonally adjusted 4.4 % 4.3 % 4.6 % 5.2 % 6.2 % 6.3 %
 
Oahu 4.2 4.1 4.7 4.3 5.4 4.8
Island of Hawaii 6.2 6.1 7.5 6.9 8.9 8.6
Maui 4.9 4.8 5.4 5.2 7.1 7.4
Kauai 5.5 5.2 5.9 6.0 7.8 7.8
                                       
December 31, September 30, June 30, December 31,  
(percentage change, except months of inventory)   2013   2013   2013   2012   2011   2010  
Housing Trends (Single Family Oahu) 4
Median Home Price 4.8 % 3.3 % 0.8 % 7.8 % (3.0 ) % 3.1 %
Home Sales Volume (units) 4.6 % 7.0 % 11.6 % 6.5 % (2.7 ) % 13.4 %
Months of Inventory 2.7 2.8 2.7 2.5 4.8 6.0
                                       
Monthly Visitor Arrivals, Percentage Change
(in thousands)               Seasonally Adjusted     from Previous Month  
Tourism 5
 
October 31, 2013 649.9 0.5 %
September 30, 2013 646.7 (4.5 )
August 31, 2013 677.0 1.2
July 31, 2013 668.7 (3.7 )
June 30, 2013 694.3 1.9
May 31, 2013 681.2 2.5
April 30, 2013 664.4 (6.1 )
March 31, 2013 707.3 4.9
February 28, 2013 674.2 0.2
January 31, 2013 673.2 (0.8 )
December 31, 2012 678.5 (2.5 )
November 30, 2012 696.2 5.5
October 31, 2012 659.8 0.6
September 30, 2012 655.7 (0.4 )
August 31, 2012 658.6 3.1
July 31, 2012 639.0 (2.7 )
June 30, 2012 656.6 0.8
May 31, 2012 651.7 1.5
April 30, 2012 641.9 (2.0 )
March 31, 2012 654.9 3.4
February 29, 2012 633.5 (1.1 )
January 31, 2012 640.6 2.0
December 31, 2011 628.3 2.0
November 30, 2011 616.3 0.9
 
1 Source: Hawaii Department of Business, Economic Development & Tourism
2 Source: U. S. Bureau of Labor, preliminary figure
3 Source: Hawaii Department of Labor and Industrial Relations
4 Source: Honolulu Board of REALTORS
5 Source: University of Hawaii Economic Research Organization
Note: Certain prior period seasonally adjusted information has been revised.
 

Bank of Hawaii Corporation
Media Inquiries
Stafford Kiguchi, 808-694-8580
Mobile: 808-265-6367
Stafford.Kiguchi@boh.com
Investor/Analyst Inquiries
Cindy Wyrick, 808-694-8430
Cindy.Wyrick@boh.com