Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.94 for the fourth quarter of 2014, down from $0.95 per share in the previous quarter, and up from $0.88 per share in the same quarter last year. Net income for the fourth quarter of 2014 was $41.2 million, compared to net income of $41.8 million in the third quarter of 2014 and $39.1 million in the same quarter last year. The return on average assets for the fourth quarter of 2014 was 1.12 percent, compared with 1.15 percent in the third quarter of 2014 and 1.12 percent in the fourth quarter last year. The return on average equity for the fourth quarter of 2014 was 15.39 percent, compared with 15.57 percent in the third quarter of 2014 and 15.36 percent in the fourth quarter last year.

Loan and lease balances were $6.9 billion at December 31, 2014, up 4.4 percent from September 30, 2014 and up 13.2 percent compared with December 31, 2013. Deposit growth remained strong during the quarter, increasing 2.2 percent from September 30, 2014 and 6.0 percent from December 31, 2013. The net interest margin was 2.84 percent during the fourth quarter of 2014 compared with 2.85 percent in the previous quarter and fourth quarter last year.

“Bank of Hawaii finished 2014 with strong financial performance,” said Peter Ho, Chairman, President, and CEO. “During the quarter loan balances and deposits continued to grow. Our net interest margin was relatively stable, credit quality remained solid, expenses were well controlled, and our capital ratios remain quite strong.”

Diluted earnings per share for the full year of 2014 were $3.69, up $0.31 or 9.2 percent from diluted earnings per share of $3.38 in 2013. Net income for the year was $163.0 million, up $12.5 million or 8.3 percent from net income of $150.5 million in the previous year. The return on average assets for the full year of 2014 was 1.14 percent, up from 1.10 percent in 2013. The return on average equity for the full year of 2014 was 15.50 percent, up from 14.78 percent in 2013.

Financial Highlights

Net interest income, on a taxable-equivalent basis, for the fourth quarter of 2014 was $99.5 million, an increase of $1.2 million from net interest income of $98.3 million in the third quarter of 2014, and up $4.7 million from net interest income of $94.8 million in the fourth quarter last year. Net interest income, on a taxable-equivalent basis, for the full year of 2014 was $391.1 million, an increase of $22.0 million from net interest income of $369.1 million in 2013. Analyses of changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin was 2.84 percent in the fourth quarter of 2014, a decrease of 1 basis point from the third quarter of 2014 and the fourth quarter last year. The net interest margin for the full year of 2014 was 2.85 percent, an increase of 4 basis points from the net interest margin of 2.81 percent in 2013.

Noninterest income was $45.8 million in the fourth quarter of 2014, an increase of $0.8 million compared with $45.0 million in the third quarter of 2014, and an increase of $0.5 million compared with $45.3 million in the fourth quarter of 2013. 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 (9,066 Class A equivalents). Noninterest income in the third quarter of 2014 included a net gain of $1.9 million resulting from the sale of 23,000 Visa Class B shares (9,478 Class A equivalents). The Company also contributed 4,700 Visa Class B shares (1,937 Class A equivalents) to the Bank of Hawaii Foundation during the fourth quarter of 2014. The contribution of Visa shares to the Bank of Hawaii Foundation had no impact on noninterest expense; however, the contributions favorably impacted the Company’s effective tax rate. As of December 31, 2014, the Company has 397,514 Visa Class B shares remaining (163,816 Class A equivalents). Noninterest income for the full year of 2014 was $180.0 million compared with noninterest income of $186.2 million in 2013. The decrease in noninterest income compared with the previous year was primarily the result of lower mortgage banking income which totaled $7.6 million in 2014 compared with $19.2 million in 2013. The reduction in mortgage banking income in 2014 was partially offset by $7.9 million in net gains on the sales of 90,500 Visa Class B shares.

Noninterest expense was $81.2 million in the fourth quarter of 2014, up $0.2 million from noninterest expense of $81.0 million in the third quarter of 2014, and down $1.2 million from noninterest expense of $82.4 million in the fourth quarter of 2013. Noninterest expense for the full year of 2014 was $326.9 million, down $4.1 million, or 1.2 percent, from noninterest expense of $331.0 million in 2013. The components of salaries and benefits are presented in Table 9.

The efficiency ratio for the fourth quarter of 2014 was 57.03 percent, an improvement from 57.74 percent in the previous quarter and 59.99 percent in the same quarter last year. The efficiency ratio for the full year of 2014 was 58.41 percent compared with 60.71 percent during the full year of 2013.

The effective tax rate for the fourth quarter of 2014 was 32.71 percent compared with 32.59 percent in the previous quarter and 28.96 percent in the same quarter last year. The effective tax rate for the full year of 2014 was 31.39 percent compared with 29.73 percent for the full year of 2013. The lower effective tax rate during 2013 was due to a larger release of tax reserves in 2013.

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 strong during the fourth quarter of 2014. Total non-performing assets decreased to $30.1 million at December 31, 2014, down from $33.3 million at September 30, 2014 and $39.7 million at December 31, 2013. Non-performing assets, as a percentage of total loans and leases and foreclosed real estate, were 0.44 percent at December 31, 2014, down from 0.50 percent at September 30, 2014 and 0.65 percent at December 31, 2013.

Accruing loans and leases past due 90 days or more were $8.7 million at December 31, 2014, down from $9.1 million at September 30, 2014 and $9.9 million at December 31, 2013. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $45.5 million at December 31, 2014 compared with $45.2 million at September 30, 2014 and $51.1 million at December 31, 2013. 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 2014 were $1.7 million or 0.10 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $3.7 million during the quarter were partially offset by recoveries of $2.1 million. Net charge-offs during the third quarter of 2014 were $0.8 million or 0.05 percent annualized, and were comprised of charge-offs of $3.7 million and recoveries of $2.9 million. Net charge-offs during the fourth quarter of 2013 were $8.2 million, or 0.54 percent annualized, and were comprised of charge-offs of $10.4 million and recoveries of $2.2 million. Net charge-offs for the full year of 2014 were $1.9 million, or 0.03 percent of total average loans and leases, compared with $13.4 million or 0.23 percent of total average loans and leases in 2013.

The allowance for loan and lease losses was $108.7 million at December 31, 2014, down $1.7 million from the allowance for loan and lease losses of $110.4 million at September 30, 2014 and down $6.8 million from the allowance for loan and lease losses of $115.5 million at December 31, 2013. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.58 percent at December 31, 2014, a decrease of 9 basis points from September 30, 2014, and commensurate with the continued improvement in credit quality and the Hawaii economy. The total reserve for unfunded commitments at December 31, 2014 was unchanged from the prior quarter and remained at $5.9 million. Details of loan and lease charge-offs, recoveries, and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

The Company’s total assets increased to $14.79 billion at December 31, 2014, up $277.0 million from total assets of $14.51 billion at September 30, 2014, and up $702.9 million from total assets of $14.08 billion at December 31, 2013. Average total assets were $14.60 billion during the fourth quarter of 2014, up $231.1 million from average total assets of $14.37 billion during the third quarter of 2014, and up $738.6 million from average total assets of $13.86 billion during the fourth quarter of 2013.

Total loans and leases increased to $6.90 billion at December 31, 2014, up from $6.61 billion at September 30, 2014, and up from $6.10 billion at December 31, 2013. The commercial loan portfolio was $2.83 billion at the end of the fourth quarter of 2014, up 3.6 percent from commercial loans of $2.73 billion at the end of the third quarter of 2014 and up 11.9 percent from commercial loans of $2.53 billion at the end of the fourth quarter last year. Consumer loans increased to $4.07 billion at December 31, 2014, up 5.0 percent from consumer loans of $3.88 billion at the end of the third quarter of 2014, and up 14.1 percent from consumer loans of $3.57 billion at the end of the fourth quarter last year. Average total loans and leases were $6.75 billion during the fourth quarter of 2014, up from $6.49 billion during the previous quarter and $6.05 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 2014. Total deposits increased to $12.63 billion at December 31, 2014, up from total deposits of $12.36 billion at September 30, 2014 and $11.91 billion at December 31, 2013. Average total deposits were $12.44 billion in the fourth quarter of 2014, up from $12.20 billion during the previous quarter and $11.57 billion during the same quarter last year. Deposit balances are summarized in Tables 7a, 7b, and 10.

The investment portfolio was $6.76 billion at December 31, 2014 compared to $6.78 billion at September 30, 2014 and $6.99 billion at December 31, 2013. The investment portfolio remains largely comprised of securities issued by U. S. government agencies and includes $4.47 billion in securities held to maturity and $2.29 billion in securities available for sale.

During the fourth quarter of 2014, the Company repurchased 280.5 thousand shares of common stock at a total cost of $16.0 million under its share repurchase program. The average cost was $56.94 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through December 31, 2014, the Company has repurchased 52.0 million shares and returned over $1.9 billion to shareholders at an average cost of $36.96 per share. Remaining buyback authority under the share repurchase program was $73.2 million at December 31, 2014. From January 2 through January 23, 2015, the Company repurchased an additional 75.0 thousand shares of common stock at an average cost of $56.02 per share repurchased.

Total shareholders’ equity was $1.06 billion at December 31, 2014, down slightly from September 30, 2014 and up from $1.01 billion at December 31, 2013. The Tier 1 Capital Ratio was 14.69 percent at December 31, 2014 compared with 15.32 percent at September 30, 2014 and 16.05 percent at December 31, 2013. The Tier 1 Leverage Ratio at December 31, 2014 was 7.13 percent, compared with 7.19 percent at September 30, 2014 and 7.24 percent at December 31, 2013.

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 13, 2015 to shareholders of record at the close of business on February 27, 2015.

Hawaii Economy

General economic conditions in Hawaii continued to be healthy during the fourth quarter of 2014, led by a strong tourism industry, relatively low unemployment, rising real estate prices, and accelerating construction activity. For the first eleven months of 2014, total visitor arrivals increased by 0.9 percent and visitor spending increased by 2.3 percent compared to the same period in 2013. While the rate of visitor growth has eased from the prior year, 2014 is on track to be another record year for tourism in Hawaii. The statewide seasonally adjusted unemployment rate held steady at 4.0 percent in December 2014, which is among the lowest in the nation. Real estate prices on Oahu reached new records during 2014, even as the number of sales declined slightly due to limited inventory of available properties on the market. The volume of single-family home sales on Oahu declined 0.8 percent in 2014 compared to 2013 and the volume of condominium sales on Oahu declined 1.3 percent compared to 2013. The median price of single-family home sales on Oahu increased 3.8 percent during 2014 and the median price of condominium sales on Oahu was 5.4 percent higher compared to 2013. As of December 31, 2014, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 2.6 months and 3.0 months, respectively.

Conference Call Information

The Company will review its 2014 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 web site, 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 26, 2015 by dialing 1 (888) 843-7419 in the United States or Canada and 1 (630) 652-3042 from other international locations. Enter the pass code number 38758852# 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, 2013, 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)     2014     2014     2013     2014     2013

For the Period:

  
Operating Results
Net Interest Income $ 96,632 $ 95,379 $ 92,120 $ 379,656 $ 358,907
Provision for Credit Losses - (2,665 ) - (4,864 ) -
Total Noninterest Income 45,818 44,950 45,278 180,017 186,223
Total Noninterest Expense 81,240 81,030 82,424 326,899 330,969
Net Income 41,191 41,769 39,055 163,042 150,502
Basic Earnings Per Share 0.95 0.95 0.88 3.71 3.39
Diluted Earnings Per Share 0.94 0.95 0.88 3.69 3.38
Dividends Declared Per Share 0.45 0.45 0.45 1.80 1.80
 
Performance Ratios
Return on Average Assets 1.12 % 1.15 % 1.12 % 1.14 % 1.10 %
Return on Average Shareholders' Equity 15.39 15.57 15.36 15.50 14.78
Efficiency Ratio 1 57.03 57.74 59.99 58.41 60.71
Net Interest Margin 2 2.84 2.85 2.85 2.85 2.81
Dividend Payout Ratio 3 47.37 47.37 51.14 48.52 53.10
Average Shareholders' Equity to Average Assets 7.27 7.41 7.28 7.35 7.44
 
Average Balances
Average Loans and Leases $ 6,746,332 $ 6,488,780 $ 6,053,607 $ 6,405,431 $ 5,883,686
Average Assets 14,603,493 14,372,375 13,864,914 14,317,516 13,692,133
Average Deposits 12,435,692 12,200,654 11,571,905 12,122,148 11,396,801
Average Shareholders' Equity 1,061,900 1,064,589 1,008,813 1,052,195 1,018,287
 
Per Share of Common Stock
Book Value $ 24.13 $ 24.04 $ 22.75 $ 24.13 $ 22.75
Tangible Book Value 23.41 23.32 22.04 23.41 22.04
Market Value
Closing 59.31 56.81 59.14 59.31 59.14
High 61.00 60.75 59.92 61.73 59.92
Low 52.70 55.55 53.16 52.70 44.88
 
December 31, September 30, December 31,
                    2014     2014     2013

As of Period End:

Balance Sheet Totals
Loans and Leases $ 6,897,589 $ 6,606,350 $ 6,095,387
Total Assets 14,787,208 14,510,166 14,084,280
Total Deposits 12,633,089 12,361,441 11,914,656
Long-Term Debt 173,912 173,926 174,706
Total Shareholders' Equity 1,055,086 1,057,413 1,011,976
 
Asset Quality
Allowance for Loan and Lease Losses $ 108,688 $ 110,362 $ 115,454
Non-Performing Assets 30,082 33,307 39,650
 
Financial Ratios
Allowance to Loans and Leases Outstanding 1.58 % 1.67 % 1.89 %
Tier 1 Capital Ratio 4 14.69 15.32 16.05
Total Capital Ratio 4 15.94 16.57 17.31
Tier 1 Leverage Ratio 4 7.13 7.19 7.24
Total Shareholders' Equity to Total Assets 7.14 7.29 7.19
Tangible Common Equity to Tangible Assets 5 6.94 7.09 6.98
Tangible Common Equity to Risk-Weighted Assets 4, 5 14.46 15.23 15.67
 
Non-Financial Data
Full-Time Equivalent Employees 2,161 2,170 2,196
Branches 74 74 74
ATMs 459 459 466
 
 
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 Financial ratios as of December 31, 2013 were revised to conform to the current period calculation.
5 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)     2014     2014     2013
Total Shareholders' Equity $ 1,055,086 $ 1,057,413 $ 1,011,976

Less: Goodwill

      31,517         31,517         31,517  
Tangible Common Equity     $ 1,023,569       $ 1,025,896       $ 980,459  
 
Total Assets $ 14,787,208 $ 14,510,166 $ 14,084,280

Less: Goodwill

      31,517         31,517         31,517  
Tangible Assets     $ 14,755,691       $ 14,478,649       $ 14,052,763  
 

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

 $ 7,077,035 $ 6,737,853 $ 6,258,178
 
Total Shareholders' Equity to Total Assets 7.14 % 7.29 % 7.19 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.94 % 7.09 % 6.98 %
 
Tier 1 Capital Ratio 1 14.69 % 15.32 % 16.05 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 1 14.46 % 15.23 % 15.67 %
 
 
1 Risk-weighted assets and financial ratios as of December 31, 2013 were revised to conform to the current period calculation.
 
 
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)     2014     2014     2013     2014     2013
Investment Securities Gains, Net $ 1,966 $ 1,858 $ - $ 8,063     $ -
Decrease in Allowance for Loan and Lease Losses 1,674 3,476 8,225 6,766 13,403
Separation Expense 202 (14 ) (394 ) (448 ) (4,486 )
Professional and Casualty Reserve Adjustment 2,009 - - 2,009 -
Operating Losses       -       -         -         (730 )       -  
Significant Items Before the Provision (Benefit) for Income Taxes       5,851       5,320         7,831         15,660         8,917  
Release of Tax Reserve - - - (1,249 ) (2,357 )
Income Tax Impact       2,294       2,085         2,741         6,139         3,121  
Net Significant Items     $ 3,557     $ 3,235       $ 5,090       $ 10,770       $ 8,153  
 
 
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)     2014     2014     2013     2014     2013
Interest Income    
Interest and Fees on Loans and Leases $ 69,974 $ 68,089 $ 63,809 $ 267,407 $ 253,276
Income on Investment Securities
Available-for-Sale 10,732 10,286 10,608 42,475 53,570
Held-to-Maturity 24,966 26,067 26,882 105,860 90,062
Deposits 2 3 3 9 10
Funds Sold 192 176 105 673 415
Other       303       302         302       1,209         1,172
Total Interest Income       106,169       104,923         101,709       417,633         398,505
Interest Expense
Deposits 2,392 2,391 2,418 9,534 10,143
Securities Sold Under Agreements to Repurchase 6,520 6,523 6,530 25,905 26,837
Funds Purchased 3 3 8 13 44
Short-Term Borrowings - - 2 - 2
Long-Term Debt       622       627         631       2,525         2,572
Total Interest Expense       9,537       9,544         9,589       37,977         39,598
Net Interest Income 96,632 95,379 92,120 379,656 358,907
Provision for Credit Losses       -       (2,665 )       -       (4,864 )       -
Net Interest Income After Provision for Credit Losses       96,632       98,044         92,120       384,520         358,907
Noninterest Income
Trust and Asset Management 12,225 11,716 12,240 47,798 47,932
Mortgage Banking 2,116 1,646 2,823 7,571 19,186
Service Charges on Deposit Accounts 9,058 9,095 9,326 35,669 37,124
Fees, Exchange, and Other Service Charges 13,702 13,390 12,670 53,401 50,469
Investment Securities Gains, Net 1,966 1,858 - 8,063 -
Annuity and Insurance 1,664 2,348 2,295 8,065 9,190
Bank-Owned Life Insurance 1,874 1,644 1,895 6,639 5,892
Other       3,213       3,253         4,029       12,811         16,430
Total Noninterest Income       45,818       44,950         45,278       180,017         186,223
Noninterest Expense
Salaries and Benefits 45,520 45,530 43,643 183,028 184,211
Net Occupancy 9,291 9,334 9,602 37,296 38,745
Net Equipment 4,734 4,473 4,837 18,479 18,366
Data Processing 3,823 3,665 3,827 14,979 13,840
Professional Fees 3,086 1,835 2,669 9,794 9,405
FDIC Insurance 2,055 1,750 1,954 7,936 7,765
Other       12,731       14,443         15,892       55,387         58,637
Total Noninterest Expense       81,240       81,030         82,424       326,899         330,969
Income Before Provision for Income Taxes 61,210 61,964 54,974 237,638 214,161
Provision for Income Taxes       20,019       20,195         15,919       74,596         63,659
Net Income     $ 41,191     $ 41,769       $ 39,055     $ 163,042       $ 150,502
Basic Earnings Per Share $ 0.95 $ 0.95 $ 0.88 $ 3.71 $ 3.39
Diluted Earnings Per Share $ 0.94 $ 0.95 $ 0.88 $ 3.69 $ 3.38
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 1.80 $ 1.80
Basic Weighted Average Shares 43,499,627 43,859,396 44,223,281 43,899,208 44,380,948
Diluted Weighted Average Shares       43,758,873       44,088,553         44,496,313       44,125,456         44,572,725
 
 
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)     2014     2014     2013     2014     2013
Net Income $ 41,191 $ 41,769 $ 39,055 $ 163,042     $ 150,502
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities 1,567 403 (6,006 ) 16,858 (69,206 )
Defined Benefit Plans       (12,190 )       157       7,694         (11,721 )       8,175  
Total Other Comprehensive Income (Loss)       (10,623 )       560       1,688         5,137         (61,031 )
Comprehensive Income     $ 30,568       $ 42,329     $ 40,743       $ 168,179       $ 89,471  
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition     Table 5
    December 31,     September 30,     December 31,
(dollars in thousands)     2014     2014     2013
Assets
Interest-Bearing Deposits in Other Banks $ 2,873 $ 3,883 $ 3,617
Funds Sold 360,577 377,303 271,414
Investment Securities
Available-for-Sale 2,289,190 2,220,913 2,243,697
Held to Maturity (Fair Value of $4,504,495; $4,576,396; and $4,697,587) 4,466,679 4,557,614 4,744,519
Loans Held for Sale 5,136 2,382 6,435
Loans and Leases 6,897,589 6,606,350 6,095,387
Allowance for Loan and Lease Losses       (108,688 )       (110,362 )       (115,454 )
Net Loans and Leases       6,788,901         6,495,988         5,979,933  
Total Earning Assets       13,913,356         13,658,083         13,249,615  
Cash and Due from Banks 172,126 172,386 188,715
Premises and Equipment, Net 109,854 107,560 108,636
Accrued Interest Receivable 44,654 46,641 43,930
Foreclosed Real Estate 2,311 3,562 3,205
Mortgage Servicing Rights 24,695 25,559 28,123
Goodwill 31,517 31,517 31,517
Bank-Owned Life Insurance 262,807 261,862 223,246
Other Assets       225,888         202,996         207,293  
Total Assets     $ 14,787,208       $ 14,510,166       $ 14,084,280  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 3,832,943 $ 3,824,544 $ 3,681,128
Interest-Bearing Demand 2,559,570 2,369,434 2,355,608
Savings 4,806,575 4,738,364 4,560,150
Time       1,434,001         1,429,099         1,317,770  
Total Deposits       12,633,089         12,361,441         11,914,656  
Funds Purchased 8,459 8,459 9,982
Securities Sold Under Agreements to Repurchase 688,601 700,203 770,049
Long-Term Debt 173,912 173,926 174,706
Retirement Benefits Payable 55,477 35,152 34,965
Accrued Interest Payable 5,148 6,086 4,871
Taxes Payable and Deferred Taxes 27,777 42,468 34,907
Other Liabilities       139,659         125,018         128,168  
Total Liabilities       13,732,122         13,452,753         13,072,304  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: December 31, 2014 - 57,634,755 / 43,724,208; September 30, 2014 - 57,633,855 / 43,993,729; and December 31, 2013 - 57,480,846 / 44,490,385)

574 573 572
Capital Surplus 531,932 529,530 522,505
Accumulated Other Comprehensive Loss (26,686 ) (16,063 ) (31,823 )
Retained Earnings 1,234,801 1,213,339 1,151,754

Treasury Stock, at Cost (Shares: December 31, 2014 - 13,910,547; September 30, 2014 - 13,640,126; and December 31, 2013 - 12,990,461)

      (685,535 )       (669,966 )       (631,032 )
Total Shareholders' Equity       1,055,086         1,057,413         1,011,976  
Total Liabilities and Shareholders' Equity     $ 14,787,208       $ 14,510,166       $ 14,084,280  
 
 
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, 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 Declared ($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  
 
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  
 
 
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, 2014 September 30, 2014 December 31, 2013
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 $ 3.4 $ - 0.24 % $ 4.1 $ - 0.24 % $ 3.2 $ - 0.42 %
Funds Sold 358.8 0.2 0.21 326.2 0.2 0.21 222.8 0.1 0.18
Investment Securities
Available-for-Sale
Taxable 1,563.9 7.0 1.78 1,508.0 6.6 1.75 1,654.6 7.3 1.77
Non-Taxable 715.1 5.8 3.24 704.0 5.7 3.22 620.2 5.1 3.26
Held-to-Maturity
Taxable 4,256.3 23.3 2.19 4,390.2 24.4 2.23 4,399.9 25.2 2.29
Non-Taxable       250.0       2.5     3.95       250.9       2.5     3.95       253.5       2.5     3.97
Total Investment Securities       6,785.3       38.6     2.27       6,853.1       39.2     2.29       6,928.2       40.1     2.32
Loans Held for Sale 2.8 - 3.92 2.0 - 4.03 7.8 0.1 5.07
Loans and Leases 1
Commercial and Industrial 1,025.3 8.5 3.30 980.8 8.9 3.61 906.3 7.8 3.42
Commercial Mortgage 1,421.3 13.9 3.87 1,350.6 13.3 3.89 1,237.0 12.4 3.97
Construction 110.4 1.2 4.52 126.2 1.3 4.20 115.2 1.3 4.63
Commercial Lease Financing 228.7 1.9 3.41 235.1 2.0 3.33 255.6 1.4 2.14
Residential Mortgage 2,501.8 26.5 4.24 2,396.7 25.3 4.22 2,284.4 24.8 4.35
Home Equity 850.5 8.2 3.82 823.3 8.1 3.92 767.7 7.8 4.04
Automobile 314.0 4.2 5.29 296.6 4.0 5.29 248.9 3.4 5.39
Other 2       294.3       5.5     7.37       279.5       5.2     7.45       238.5       4.9     8.08
Total Loans and Leases       6,746.3       69.9     4.13       6,488.8       68.1     4.18       6,053.6       63.8     4.19
Other       68.7       0.3     1.76       71.4       0.3     1.69       77.5       0.3     1.55
Total Earning Assets 3       13,965.3       109.0     3.11       13,745.6       107.8     3.13       13,293.1       104.4     3.13
Cash and Due from Banks 140.2 152.4 136.8
Other Assets   498.0   474.4   435.0
Total Assets $ 14,603.5 $ 14,372.4 $ 13,864.9
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,459.0 0.2 0.03 $ 2,417.4 0.2 0.03 $ 2,245.5 0.1 0.03
Savings 4,720.7 1.0 0.09 4,591.4 1.0 0.09 4,499.5 1.0 0.09
Time       1,480.5       1.2     0.32       1,440.1       1.2     0.34       1,331.2       1.3     0.38
Total Interest-Bearing Deposits       8,660.2       2.4     0.11       8,448.9       2.4     0.11       8,076.2       2.4     0.12
Short-Term Borrowings 8.5 - 0.14 9.3 - 0.14 28.3 - 0.15
Securities Sold Under Agreements to Repurchase 693.2 6.5 3.68 715.6 6.5 3.57 832.6 6.6 3.07
Long-Term Debt       173.9       0.6     1.43       173.8       0.6     1.44       174.7       0.6     1.44
Total Interest-Bearing Liabilities       9,535.8       9.5     0.39       9,347.6       9.5     0.40       9,111.8       9.6     0.41
Net Interest Income $ 99.5 $ 98.3 $ 94.8
Interest Rate Spread 2.72 % 2.73 % 2.72 %
Net Interest Margin 2.84 % 2.85 % 2.85 %
Noninterest-Bearing Demand Deposits 3,775.5 3,751.8 3,495.7
Other Liabilities 230.3 208.4 248.6
Shareholders' Equity   1,061.9   1,064.6   1,008.8
Total Liabilities and Shareholders' Equity $ 14,603.5 $ 14,372.4 $ 13,864.9
 
 

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 $2,908,000, $2,873,000 and $2,696,000 for the three months ended December 31, 2014, September 30, 2014, and December 31, 2013, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis     Table 7b
    Year Ended   Year Ended
December 31, 2014 December 31, 2013
Average     Income/     Yield/ Average     Income/     Yield/
(dollars in millions)     Balance     Expense     Rate     Balance     Expense     Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 4.3 $ - 0.21 % $ 4.0 $ - 0.26 %
Funds Sold 316.2 0.7 0.21 221.2 0.4 0.19
Investment Securities
Available-for-Sale
Taxable 1,536.5 27.7 1.80 2,138.3 38.7 1.81
Non-Taxable 699.6 22.7 3.24 684.2 22.9 3.35
Held-to-Maturity
Taxable 4,412.5 99.4 2.25 3,955.8 86.7 2.19
Non-Taxable       251.3       10.0     3.95       130.8       5.1     3.94
Total Investment Securities       6,899.9       159.8     2.32       6,909.1       153.4     2.22
Loans Held for Sale 3.2 0.1 4.31 16.4 0.7 4.18
Loans and Leases 1
Commercial and Industrial 970.3 33.3 3.43 865.8 30.9 3.57
Commercial Mortgage 1,331.5 52.5 3.94 1,152.9 46.9 4.06
Construction 109.4 4.8 4.40 114.6 5.4 4.75
Commercial Lease Financing 237.6 7.0 2.96 261.6 6.0 2.31
Residential Mortgage 2,377.9 101.6 4.27 2,275.8 101.7 4.47
Home Equity 815.6 31.9 3.91 761.5 31.4 4.12
Automobile 288.8 15.4 5.32 232.3 12.7 5.48
Other 2       274.3       20.8     7.58       219.2       18.0     8.21
Total Loans and Leases       6,405.4       267.3     4.17       5,883.7       253.0     4.30
Other       72.7       1.2     1.66       78.3       1.2     1.50
Total Earning Assets 3       13,701.7       429.1     3.13       13,112.7       408.7     3.12
Cash and Due from Banks 143.4 138.9
Other Assets   472.4   440.5
Total Assets $ 14,317.5 $ 13,692.1
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,390.8 0.7 0.03 $ 2,140.5 0.6 0.03
Savings 4,592.6 3.9 0.09 4,461.4 3.9 0.09
Time       1,450.3       4.9     0.34       1,406.2       5.6     0.40
Total Interest-Bearing Deposits       8,433.7       9.5     0.11       8,008.1       10.1     0.13
Short-Term Borrowings 9.3 - 0.14 31.7 - 0.15
Securities Sold Under Agreements to Repurchase 747.9 25.9 3.46 809.4 26.9 3.32
Long-Term Debt       174.4       2.6     1.45       171.0       2.6     1.50
Total Interest-Bearing Liabilities       9,365.3       38.0     0.41       9,020.2       39.6     0.44
Net Interest Income $ 391.1 $ 369.1
Interest Rate Spread 2.72 % 2.68 %
Net Interest Margin 2.85 % 2.81 %
Noninterest-Bearing Demand Deposits 3,688.4 3,388.7
Other Liabilities 211.6 264.9
Shareholders' Equity   1,052.2   1,018.3
Total Liabilities and Shareholders' Equity $ 14,317.5 $ 13,692.1
 
 

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 $11,479,000 and $10,194,000 for the years ended December 31, 2014 and December 31, 2013, respectively.

 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8a
    Three Months Ended December 31, 2014
Compared to September 30, 2014
(dollars in millions)    

Volume 1

     Rate 1     Total
Change in Interest Income:        
Investment Securities
Available-for-Sale
Taxable $ 0.2 $ 0.2 $ 0.4
Non-Taxable 0.1 - 0.1
Held-to-Maturity
Taxable       (0.7 )       (0.4 )       (1.1 )
Total Investment Securities       (0.4 )       (0.2 )       (0.6 )
Loans and Leases
Commercial and Industrial 0.4 (0.8 ) (0.4 )
Commercial Mortgage 0.7 (0.1 ) 0.6
Construction (0.2 ) 0.1 (0.1 )
Commercial Lease Financing (0.1 ) - (0.1 )
Residential Mortgage 1.1 0.1 1.2
Home Equity 0.3 (0.2 ) 0.1
Automobile 0.2 - 0.2
Other 2       0.3         -         0.3  
Total Loans and Leases       2.7         (0.9 )       1.8  
Total Change in Interest Income       2.3         (1.1 )       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       (0.2 )       0.2         -  
Total Change in Interest Expense       (0.1 )       0.1         -  
 
Change in Net Interest Income     $ 2.4       $ (1.2 )     $ 1.2  
 
 

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

2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis     Table 8b
    Three Months Ended December 31, 2014
Compared to December 31, 2013
(dollars in millions)     Volume 1     Rate 1     Total
Change in Interest Income:        
Funds Sold $ 0.1 $ - $ 0.1
Investment Securities
Available-for-Sale
Taxable (0.4 ) 0.1 (0.3 )
Non-Taxable 0.7 - 0.7
Held-to-Maturity
Taxable       (0.8 )       (1.1 )       (1.9 )
Total Investment Securities       (0.5 )       (1.0 )       (1.5 )
Loans Held for Sale (0.1 ) - (0.1 )
Loans and Leases
Commercial and Industrial 1.0 (0.3 ) 0.7
Commercial Mortgage 1.8 (0.3 ) 1.5
Construction (0.1 ) - (0.1 )
Commercial Lease Financing (0.2 ) 0.7 0.5
Residential Mortgage 2.3 (0.6 ) 1.7
Home Equity 0.8 (0.4 ) 0.4
Automobile 0.9 (0.1 ) 0.8
Other 2       1.1         (0.5 )       0.6  
Total Loans and Leases       7.6         (1.5 )       6.1  
Total Change in Interest Income       7.1         (2.5 )       4.6  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Time       0.1         (0.2 )       (0.1 )
Total Interest-Bearing Deposits       0.2         (0.2 )       -  
Securities Sold Under Agreements to Repurchase       (1.2 )       1.1         (0.1 )
Total Change in Interest Expense       (1.0 )       0.9         (0.1 )
 
Change in Net Interest Income     $ 8.1       $ (3.4 )     $ 4.7  
 
 

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, 2014
Compared to December 31, 2013
(dollars in millions)     Volume 1     Rate 1     Total
Change in Interest Income:        
Funds Sold $ 0.2 $ 0.1 $ 0.3
Investment Securities
Available-for-Sale
Taxable (10.9 ) (0.1 ) (11.0 )
Non-Taxable 0.6 (0.8 ) (0.2 )
Held-to-Maturity
Taxable 10.2 2.5 12.7
Non-Taxable       4.9         -         4.9  
Total Investment Securities       4.8         1.6         6.4  
Loans Held for Sale (0.6 ) - (0.6 )
Loans and Leases
Commercial and Industrial 3.6 (1.2 ) 2.4
Commercial Mortgage 7.0 (1.4 ) 5.6
Construction (0.2 ) (0.4 ) (0.6 )
Commercial Lease Financing (0.6 ) 1.6 1.0
Residential Mortgage 4.4 (4.5 ) (0.1 )
Home Equity 2.2 (1.7 ) 0.5
Automobile 3.0 (0.3 ) 2.7
Other 2       4.3         (1.5 )       2.8  
Total Loans and Leases       23.7         (9.4 )       14.3  
Other       (0.1 )       0.1         -  
Total Change in Interest Income       28.0         (7.6 )       20.4  
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 - 0.1
Savings 0.1 (0.1 ) -
Time       0.2         (0.9 )       (0.7 )
Total Interest-Bearing Deposits       0.4         (1.0 )       (0.6 )
Securities Sold Under Agreements to Repurchase (2.1 ) 1.1 (1.0 )
Long-Term Debt       0.1         (0.1 )       -  
Total Change in Interest Expense       (1.6 )       -         (1.6 )
 
Change in Net Interest Income     $ 29.6       $ (7.6 )     $ 22.0  
 
 

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)     2014     2014     2013     2014     2013
Salaries $ 28,751 $ 28,990 $ 28,636 $ 114,199     $ 115,389
Incentive Compensation 4,639 4,242 4,681 17,471 16,568
Share-Based Compensation 2,342 2,226 1,158 8,808 4,932
Commission Expense 1,383 1,283 1,222 4,831 6,874
Retirement and Other Benefits 3,947 4,056 3,183 16,800 15,289
Payroll Taxes 2,007 2,162 2,091 9,916 11,242
Medical, Dental, and Life Insurance 2,653 2,557 2,278 10,555 9,431
Separation Expense       (202 )       14       394       448       4,486
Total Salaries and Benefits     $ 45,520       $ 45,530     $ 43,643     $ 183,028     $ 184,211
 
 
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)     2014     2014     2014     2014     2013
Commercial
Commercial and Industrial $ 1,055,243 $ 991,157 $ 988,940 $ 955,599 $ 911,367
Commercial Mortgage 1,437,513 1,373,289 1,345,549 1,284,181 1,247,510
Construction 109,183 132,097 121,434 91,452 107,349
Lease Financing       226,189       232,381       237,585       240,931       262,207
Total Commercial       2,828,128       2,728,924       2,693,508       2,572,163       2,528,433
Consumer
Residential Mortgage 2,571,090 2,444,989 2,355,085 2,305,153 2,282,894
Home Equity 866,688 838,206 811,180 797,341 773,385
Automobile 323,848 306,003 287,794 273,553 255,986
Other 1       307,835       288,228       278,786       261,647       254,689
Total Consumer       4,069,461       3,877,426       3,732,845       3,637,694       3,566,954
Total Loans and Leases     $ 6,897,589     $ 6,606,350     $ 6,426,353     $ 6,209,857     $ 6,095,387
 
 
Higher Risk Loans and Leases Outstanding
December 31, September 30, June 30, March 31, December 31,
(dollars in thousands)     2014     2014     2014     2014     2013
Residential Land Loans 2 $ 8,565 $ 9,117 $ 10,016 $ 11,086 $ 11,922
Home Equity Loans 3 11,128 9,914 11,307 11,846 12,594
Air Transportation Leases 4       16,752       21,668       24,917       24,969       26,152
Total Higher Risk Loans and Leases     $ 36,445     $ 40,699     $ 46,240     $ 47,901     $ 50,668
 
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)     2014     2014     2014     2014     2013
Consumer $ 6,092,929 $ 5,972,435 $ 5,938,123 $ 5,960,485 $ 5,829,352
Commercial 5,163,352 5,070,080 5,207,026 4,742,308 4,814,076
Public and Other       1,376,808       1,318,926       1,524,885       1,341,680       1,271,228
Total Deposits     $ 12,633,089     $ 12,361,441     $ 12,670,034     $ 12,044,473     $ 11,914,656
 
 
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)     2014     2014     2014     2014     2013
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 9,088 $ 8,952 $ 10,437 $ 11,239 $ 11,929
Commercial Mortgage       745         1,366         1,403         1,421         2,512  
Total Commercial       9,833         10,318         11,840         12,660         14,441  
Consumer
Residential Mortgage 14,841 16,756 15,818 19,003 20,264
Home Equity       3,097         2,671         2,787         1,935         1,740  
Total Consumer       17,938         19,427         18,605         20,938         22,004  
Total Non-Accrual Loans and Leases       27,771         29,745         30,445         33,598         36,445  
Foreclosed Real Estate       2,311         3,562         3,944         3,450         3,205  
Total Non-Performing Assets     $ 30,082       $ 33,307       $ 34,389       $ 37,048       $ 39,650  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial     $ 2       $ 14       $ -       $ 150       $ 1,173  
Total Commercial       2         14         -         150         1,173  
Consumer
Residential Mortgage 4,506 4,819 6,082 5,729 4,564
Home Equity 2,596 2,816 2,505 2,845 3,009
Automobile 616 612 236 346 322
Other 1       941         842         844         644         790  
Total Consumer       8,659         9,089         9,667         9,564         8,685  
Total Accruing Loans and Leases Past Due 90 Days or More     $ 8,661       $ 9,103       $ 9,667       $ 9,714       $ 9,858  

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

     $ 45,474       $ 45,169       $ 43,625       $ 44,473       $ 51,123  
Total Loans and Leases     $ 6,897,589       $ 6,606,350       $ 6,426,353       $ 6,209,857       $ 6,095,387  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases       0.40 %       0.45 %       0.47 %       0.54 %       0.60 %
 

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

      0.44 %       0.50 %       0.53 %       0.60 %       0.65 %
 

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

      0.38 %       0.42 %       0.48 %       0.53 %       0.61 %
 

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

      0.47 %       0.56 %       0.57 %       0.64 %       0.68 %
 

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

      0.56 %       0.64 %       0.69 %       0.75 %       0.81 %
 
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 33,307 $ 34,389 $ 37,048 $ 39,650 $ 33,832
Additions 1,885 2,565 2,798 2,491 13,040
Reductions
Payments (1,822 ) (2,381 ) (2,753 ) (1,855 ) (932 )
Return to Accrual Status (1,291 ) (704 ) (904 ) (1,864 ) (2,308 )
Sales of Foreclosed Real Estate (1,480 ) (449 ) (1,782 ) (737 ) (1,431 )
Charge-offs/Write-downs       (517 )       (113 )       (18 )       (637 )       (2,551 )
Total Reductions       (5,110 )       (3,647 )       (5,457 )       (5,093 )       (7,222 )
Balance at End of Quarter     $ 30,082       $ 33,307       $ 34,389       $ 37,048       $ 39,650  
 
 

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)     2014     2014     2013     2014     2013
Balance at Beginning of Period $ 116,249 $ 119,725 $ 129,747 $ 121,521     $ 134,276
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (205 ) (229 ) (6,828 ) (2,002 ) (8,083 )
Lease Financing - - - (66 ) (16 )
Consumer
Residential Mortgage (97 ) (22 ) (185 ) (771 ) (2,013 )
Home Equity (293 ) (475 ) (721 ) (1,672 ) (5,220 )
Automobile (1,376 ) (957 ) (670 ) (3,961 ) (2,131 )
Other 1       (1,772 )       (1,978 )       (2,039 )       (6,967 )       (7,657 )
Total Loans and Leases Charged-Off       (3,743 )       (3,661 )       (10,443 )       (15,439 )       (25,120 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 396 1,177 308 4,625 1,681
Commercial Mortgage 14 14 14 57 557
Construction 8 8 8 29 365
Lease Financing 4 3 8 10 41
Consumer
Residential Mortgage 542 299 828 3,448 3,540
Home Equity 204 531 246 1,637 1,943
Automobile 467 322 363 1,577 1,628
Other 1       434         496         442         2,154         1,962  
Total Recoveries on Loans and Leases Previously Charged-Off       2,069         2,850         2,217         13,537         11,717  
Net Loans and Leases Charged-Off (1,674 ) (811 ) (8,226 ) (1,902 ) (13,403 )
Provision for Credit Losses - (2,665 ) - (4,864 ) -
Provision for Unfunded Commitments       -         -         -         (180 )       648  
Balance at End of Period 2     $ 114,575       $ 116,249       $ 121,521       $ 114,575       $ 121,521  
 
Components
Allowance for Loan and Lease Losses $ 108,688 $ 110,362 $ 115,454 $ 108,688 $ 115,454
Reserve for Unfunded Commitments       5,887         5,887         6,067         5,887         6,067  
Total Reserve for Credit Losses     $ 114,575       $ 116,249       $ 121,521       $ 114,575       $ 121,521  
 
Average Loans and Leases Outstanding     $ 6,746,332       $ 6,488,780       $ 6,053,607       $ 6,405,431       $ 5,883,686  
 
Ratio of Net Loans and Leases Charged-Off to
Average Loans and Leases Outstanding (annualized) 0.10 % 0.05 % 0.54 % 0.03 % 0.23 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.58 % 1.67 % 1.89 % 1.58 % 1.89 %
 
 
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, 2014
Net Interest Income $ 49,091 $ 32,445 $ 2,828 $ 12,268 $ 96,632
Provision for Credit Losses       1,888         (205 )       (10 )       (1,673 )       -  
Net Interest Income After Provision for Credit Losses 47,203 32,650 2,838 13,941 96,632
Noninterest Income 20,220 5,897 14,380 5,321 45,818
Noninterest Expense       (50,049 )       (16,737 )       (13,004 )       (1,450 )       (81,240 )
Income Before Provision for Income Taxes 17,374 21,810 4,214 17,812 61,210
Provision for Income Taxes       (6,204 )       (7,656 )       (1,559 )       (4,600 )       (20,019 )
Net Income     $ 11,170       $ 14,154       $ 2,655       $ 13,212       $ 41,191  
Total Assets as of December 31, 2014     $ 4,126,551       $ 2,749,228       $ 202,645       $ 7,708,784       $ 14,787,208  
 
 
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  
 
 
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, 2014
Net Interest Income $ 183,867 $ 118,761 $ 10,723 $ 66,305 $ 379,656
Provision for Credit Losses       4,783         (2,369 )       (313 )       (6,965 )       (4,864 )
Net Interest Income After Provision for Credit Losses 179,084 121,130 11,036 73,270 384,520
Noninterest Income 80,110 23,120 57,586 19,201 180,017
Noninterest Expense       (197,786 )       (65,952 )       (53,846 )       (9,315 )       (326,899 )
Income Before Provision for Income Taxes 61,408 78,298 14,776 83,156 237,638
Provision for Income Taxes       (22,221 )       (27,228 )       (5,467 )       (19,680 )       (74,596 )
Net Income     $ 39,187       $ 51,070       $ 9,309       $ 63,476       $ 163,042  
Total Assets as of December 31, 2014     $ 4,126,551       $ 2,749,228       $ 202,645       $ 7,708,784       $ 14,787,208  
 
 
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  
 
 
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)     2014     2014     2014   2014     2013
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 69,974 $ 68,089 $ 65,818 $ 63,526 $ 63,809
Income on Investment Securities
Available-for-Sale 10,732 10,286 10,697 10,760 10,608
Held-to-Maturity 24,966 26,067 26,938 27,889 26,882
Deposits 2 3 1 3 3
Funds Sold 192 176 168 137 105
Other       303         302         302       302         302
Total Interest Income       106,169         104,923         103,924       102,617         101,709
Interest Expense
Deposits 2,392 2,391 2,393 2,358 2,418
Securities Sold Under Agreements to Repurchase 6,520 6,523 6,465 6,397 6,530
Funds Purchased 3 3 4 3 8
Short-Term Borrowings - - - - 2
Long-Term Debt       622         627         650       626         631
Total Interest Expense       9,537         9,544         9,512       9,384         9,589
Net Interest Income 96,632 95,379 94,412 93,233 92,120
Provision for Credit Losses       -         (2,665 )       (2,199 )     -         -
Net Interest Income After Provision for Credit Losses       96,632         98,044         96,611       93,233         92,120
Noninterest Income
Trust and Asset Management 12,225 11,716 12,005 11,852 12,240
Mortgage Banking 2,116 1,646 1,804 2,005 2,823
Service Charges on Deposit Accounts 9,058 9,095 8,638 8,878 9,326
Fees, Exchange, and Other Service Charges 13,702 13,390 13,370 12,939 12,670
Investment Securities Gains, Net 1,966 1,858 2,079 2,160 -
Annuity and Insurance 1,664 2,348 1,930 2,123 2,295
Bank-Owned Life Insurance 1,874 1,644 1,519 1,602 1,895
Other       3,213         3,253         3,136       3,209         4,029
Total Noninterest Income       45,818         44,950         44,481       44,768         45,278
Noninterest Expense
Salaries and Benefits 45,520 45,530 45,081 46,897 43,643
Net Occupancy 9,291 9,334 9,254 9,417 9,602
Net Equipment 4,734 4,473 4,669 4,603 4,837
Data Processing 3,823 3,665 3,842 3,649 3,827
Professional Fees 3,086 1,835 2,613 2,260 2,669
FDIC Insurance 2,055 1,750 2,055 2,076 1,954
Other       12,731         14,443         13,568       14,645         15,892
Total Noninterest Expense       81,240         81,030         81,082       83,547         82,424
Income Before Provision for Income Taxes 61,210 61,964 60,010 54,454 54,974
Provision for Income Taxes       20,019         20,195         18,520       15,862         15,919
Net Income     $ 41,191       $ 41,769       $ 41,490     $ 38,592       $ 39,055
 
Basic Earnings Per Share $ 0.95 $ 0.95 $ 0.94 $ 0.87 $ 0.88
Diluted Earnings Per Share $ 0.94 $ 0.95 $ 0.94 $ 0.87 $ 0.88
 
Balance Sheet Totals
Loans and Leases $ 6,897,589 $ 6,606,350 $ 6,426,353 $ 6,209,857 $ 6,095,387
Total Assets 14,787,208 14,510,166 14,844,505 14,263,118 14,084,280
Total Deposits 12,633,089 12,361,441 12,670,034 12,044,473 11,914,656
Total Shareholders' Equity 1,055,086 1,057,413 1,050,801 1,028,904 1,011,976
 
Performance Ratios
Return on Average Assets 1.12 % 1.15 % 1.17 % 1.12 % 1.12 %
Return on Average Shareholders' Equity 15.39 15.57 15.87 15.15 15.36
Efficiency Ratio 1 57.03 57.74 58.38 60.54 59.99
Net Interest Margin 2 2.84 2.85 2.86 2.87 2.85
 
 
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, 2014       December 31, 2013       December 31, 2012
Hawaii Economic Trends                
State General Fund Revenues 1 $ 5,083.1 1.4 % $ 5,451.3 3.7 % $ 5,259.1 12.8 %
General Excise and Use Tax Revenue 1 $ 2,753.4 2.8 % $ 2,907.6 2.2 % $ 2,844.7 9.9 %
Jobs 2 642.8 623.1 619.3
                                                 

December 31,

December 31,
(spot rates)                           2014       2013     2012
Unemployment 3
Statewide, seasonally adjusted 4.0 % 4.7 % 5.1 %
 
Oahu

3.4

3.8 4.2
Island of Hawaii

4.7

5.9 6.9
Maui

3.8

4.7 5.2
Kauai

4.3

5.2 6.1
                                                 
December 31,
(percentage change, except months of inventory)                     2014     2013     2012
Housing Trends (Single Family Oahu) 4
Median Home Price 3.8 % 4.8 % 7.8 %
Home Sales Volume (units) (0.8 ) % 4.6 % 6.5 %
Months of Inventory 2.6 2.7 2.5
                                                 
Monthly Visitor Arrivals, Percentage Change
(in thousands)                     Not Seasonally Adjusted       from Previous Year
Tourism 5
November 30, 2014 637.7 2.2
October 31, 2014 659.8 3.0
September 30, 2014 622.2 4.1
August 31, 2014 730.7 (2.4 )
July 31, 2014 772.1 1.9
June 30, 2014 725.1 1.2
May 31, 2014 649.1 1.8
April 30, 2014 662.6 (0.7 )
March 31, 2014 728.8 (5.2 )
February 28, 2014 646.8 (4.3 )
January 31, 2014 682.6 0.1
December 31, 2013 722.4 (1.9 )
November 30, 2013 624.1 (4.2 )
October 31, 2013 640.3 (0.1 )
September 30, 2013 597.7 0.5
August 31, 2013 748.8 2.5
July 31, 2013 758.0 4.6
June 30, 2013 716.6 5.5
May 31, 2013 637.5 2.4
April 30, 2013 667.0 3.1
March 31, 2013 769.1 7.6
February 28, 2013 675.5 7.8
January 31, 2013 681.9 5.9
December 31, 2012 733.7 6.3
November 30, 2012 651.2 14.5
 
 

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

4 Source: Honolulu Board of REALTORS

5 Source: Hawaii Tourism Authority

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