Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.85 for the fourth quarter of 2011, down from $0.92 per share in the previous quarter, and up from $0.84 per share in the same quarter last year. Net income for the fourth quarter of 2011 was $39.2 million, compared to net income of $43.3 million in the third quarter of 2011 and $40.6 million in the same quarter last year.

Loan and lease balances grew to $5.5 billion during the fourth quarter of 2011, increasing by 3.5 percent compared with the third quarter of 2011. Deposit growth remained strong, growing by 5.8 percent to $10.6 billion at December 31, 2011. As a result of continued strength in asset quality and an improving Hawaii economy, the allowance for loan and lease losses decreased by $4.8 million to $138.6 million, representing 2.50 percent of outstanding loans and leases.

"Bank of Hawaii finished 2011 with solid financial performance," said Peter S. Ho, Chairman, President, and CEO. "During the quarter, we were pleased that our loan balances increased across most categories and deposit growth remained strong. Credit quality remained strong during the quarter. Our balance sheet remains solid, with high levels of liquidity, capital, and reserves due to our continued focus on disciplined capital and risk management. During the quarter we reduced our shares outstanding by 1.3 percent and maintained our quarterly dividend of $0.45 per share."

The return on average assets for the fourth quarter of 2011 was 1.17 percent, compared with 1.31 percent in the previous quarter and 1.24 percent in the same quarter last year. The return on average equity for the fourth quarter of 2011 was 15.23 percent, compared with 16.80 percent in the previous quarter and 15.08 percent in the same quarter last year. The return on average assets for the full year of 2011 was 1.22 percent, down from 1.45 percent in 2010. The return on average equity for the full year of 2011 was 15.69 percent compared with 18.16 percent in 2010.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the fourth quarter of 2011 was $97.2 million, up slightly from net interest income of $97.1 million in the third quarter of 2011 and up $0.6 million from net interest income of $96.6 million in the fourth quarter of 2010. Net interest income, on a taxable equivalent basis, for the full year of 2011 was $392.3 million, down $15.2 million from net interest income of $407.5 million in 2010. Analyses of changes in net interest income are included in Tables 7a, 7b and 7c.

The net interest margin was 3.04 percent for the fourth quarter of 2011, a 5 basis point decrease from the previous quarter and an 11 basis point decrease from the same quarter last year. The net interest margin for the full year of 2011 was 3.13 percent, a 28 basis point decrease from 3.41 percent in 2010. The reduction in the net interest margin was largely the result of higher levels of liquidity, lower average loan balances, and lower interest rates which resulted in lower yields on loans and investments.

During the fourth quarter of 2011 the provision for credit losses was $2.2 million, or $4.8 million less than net charge-offs. The provision for credit losses during the third quarter of 2011 was $2.2 million, or $1.6 million less than net charge-offs. The provision for credit losses during the fourth quarter of 2010 was $5.3 million and equaled net charge-offs. The provision for credit losses for the full year of 2011 was $12.7 million compared with $55.3 million in 2010.

Noninterest income was $43.4 million for the fourth quarter of 2011, compared with $50.9 million in the third quarter of 2011 and $51.5 million in the fourth quarter of 2010. There were no significant noninterest revenue items in the fourth quarter of 2011 or the fourth quarter of 2010. Noninterest income in the third quarter of 2011 included a $2.0 million contingent payment received from the sale of the Company's proprietary mutual funds in 2010. The decline in noninterest revenue compared with the previous quarter is primarily due to lower debit card revenue resulting from implementation of the Durbin Amendment. Mortgage Banking revenue also declined compared to the prior quarters due to the Company's decision to portfolio some saleable mortgages. Noninterest income for the full year of 2011 was $197.7 million compared with noninterest income of $255.3 million in 2010. Results for 2011 included $6.4 million in gains on the sales of investment securities compared with similar gains of $42.8 million in 2010. Excluding the securities gains, noninterest revenue declined in 2011 compared with 2010 primarily due to reduced overdraft fees.

Noninterest expense was $84.4 million in the fourth quarter of 2011, up slightly from noninterest expense of $84.0 million in the third quarter of 2011, and down from $88.7 million in the fourth quarter of 2010. There were no significant noninterest expense items in the fourth quarter of 2011. Noninterest expense in the third quarter of 2011 included a donation of $2.0 million to the Bank of Hawaii Foundation. Noninterest expense in the fourth quarter of 2010 included $1.9 million for employee incentives, $1.2 million for a refresh of personal computers, and a donation of $1.0 million to the Bank of Hawaii Foundation. In the fourth quarter of 2010 these items were partially offset by a $1.3 million gain on the sale of foreclosed real estate and a $1.0 million settlement gain on the extinguishment of retiree life insurance obligations. Noninterest expense for the full year of 2011 was $348.2 million, up slightly from noninterest expense of $346.2 million in 2010. Results for 2011 included a second quarter litigation settlement of $9.0 million.

The efficiency ratio for the fourth quarter of 2011 was 60.42 percent compared with 56.87 percent in the previous quarter and 60.05 percent in the same quarter last year. The efficiency ratio for the full year of 2011 was 59.23 percent compared with 52.32 percent during the full year of 2010.

The effective tax rate for the fourth quarter of 2011 was 26.1 percent compared with 29.6 percent in the previous quarter and 24.5 percent in the same quarter last year. The effective tax rate for the full year of 2011 was 29.5 percent compared with 29.3 percent for the full year of 2010. The effective tax rate for the fourth quarters of 2011 and 2010 were favorably impacted by the release of tax reserves determined during the quarter.

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 12a and 12b.

Asset Quality

The Company's overall asset quality reflects the gradually improving Hawaii economy despite continuing weakness in the construction sector. Total non-performing assets increased to $40.8 million at December 31, 2011 primarily due to the addition of one $2.1 million construction loan and are centered in residential mortgage loans which are taking longer to resolve through the judiciary foreclosure process. As a percentage of total loans and leases, including loans held for sale and foreclosed real estate, non-performing assets were 0.73 percent at December 31, 2011, up from 0.70 percent as of September 30, 2011 and 0.71 percent at December 31, 2010.

Accruing loans and leases past due 90 days or more were $9.2 million at December 31, 2011, down from $10.9 million at September 30, 2011, and up from $7.6 million at December 31, 2010. Delinquencies in residential first mortgage and home equity loans continue to be primarily on neighbor island properties. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $33.7 million at December 31, 2011 and was 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 10.

Net charge-offs during the fourth quarter of 2011 were $7.0 million or 0.51 percent annualized of total average loans and leases outstanding. Total charge-offs of $9.6 million were partially offset by total recoveries of $2.6 million. Net charge-offs during the third quarter of 2011 were $3.8 million or 0.28 percent annualized, and were comprised of charge-offs of $10.8 million and recoveries of $7.0 million. Net charge-offs in the fourth quarter of 2010 were $5.3 million, or 0.39 percent annualized, and were comprised of charge-offs of $15.7 million and recoveries of $10.4 million. Net charge-offs for the full year of 2011 were $21.4 million, or 0.40 percent of total average loans and leases, down from $51.6 million, or 0.94 percent of total average loans and leases in 2010.

The allowance for loan and lease losses was $138.6 million at December 31, 2011, down $4.8 million from the allowance for loan and lease losses of $143.4 million at September 30, 2011 and $147.4 million at December 31, 2010. The ratio of the allowance for loan and lease losses to total loans and leases was 2.50 percent at December 31, 2011, a decrease of 18 basis points from the previous quarter. The reserve for unfunded commitments at December 31, 2011 was unchanged at $5.4 million. Details of loan and lease charge-offs, recoveries, and the components of the total reserve for credit losses are summarized in Table 11.

Other Financial Highlights

Total assets increased to $13.85 billion at December 31, 2011, up from total assets of $13.30 billion at September 30, 2011, and up from total assets of $13.13 billion at December 31, 2010. Average total assets were $13.36 billion during the fourth quarter of 2011, up from average total assets of $13.13 billion during the third quarter of 2011, and up from average total assets of $12.96 billion during the fourth quarter of 2010.

Total loans and leases grew to $5.54 billion at December 31, 2011, up from $5.35 billion at September 30, 2011, and up from $5.34 billion at December 31, 2010. Average total loans and leases were $5.42 billion during the fourth quarter of 2011, up from $5.34 billion during the previous quarter, and up from $5.32 billion during the same quarter last year. Loan and lease portfolio balances, including the higher risk loans outstanding, are summarized in Table 9.

Deposit generation continued to remain strong during the fourth quarter of 2011, increasing to $10.59 billion at December 31, 2011, up from $10.01 billion at September 30, 2011, and up from $9.89 billion at December 31, 2010. Average total deposits were $10.16 billion in the fourth quarter of 2011, higher than average deposits of $9.87 billion during the previous quarter, and up from average deposits of $9.68 billion during the same quarter last year.

As a result of the strong deposit growth, which exceeded loan growth during the fourth quarter, the investment portfolio grew to $7.11 billion at year-end 2011, compared to $6.97 billion at September 30, 2011 and $6.66 billion at December 31, 2010. The Company's municipal bond portfolio increased by $247 million during the fourth quarter of 2011, which represents 6.0 percent of the total securities portfolio at December 31, 2011. The investment portfolio remains largely comprised of securities issued by U. S. government agencies.

During the fourth quarter of 2011, the Company repurchased 702.3 thousand shares of common stock at a total cost of $29.1 million under its share repurchase program. The average cost was $41.44 per share repurchased. From January 3 through January 20, 2012, the Company repurchased an additional 70.0 thousand shares of common stock at an average cost of $46.28 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through December 31, 2011, the Company has repurchased 48.5 million shares and returned over $1.7 billion to shareholders at an average cost of $35.98 per share. Remaining buyback authority under the share repurchase program was $74.0 million at December 31, 2011.

Total shareholders' equity was $1.00 billion at December 31, 2011, down slightly from $1.02 billion at September 30, 2011 and $1.01 billion at December 31, 2010. The ratio of tangible common equity to risk-weighted assets was 17.93 percent at December 31, 2011, compared with 18.90 percent at September 30, 2011 and 19.29 percent at December 31, 2010. The Tier 1 leverage ratio at December 31, 2011 was 6.73 percent, down from 6.95 percent at September 30, 2011 and 7.15 percent at December 31, 2010.

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, 2012 to shareholders of record at the close of business on February 29, 2012.

Hawaii Economy

Hawaii's economy continued to slowly recover during the fourth quarter of 2011 due to increasing visitor arrivals and spending. For the first 11 months of 2011, total visitor arrivals increased 3.4 percent compared to the same period in 2010. Total visitor spending for the first 11 months of 2011 increased 15.1 percent compared to the same period last year primarily due to strong spending growth from international visitors from the Asia-Pacific region, Canada, Australia, and New Zealand. Hotel occupancy continued to improve and revenue per available room reflects signs of improvement. Overall, employment continues to be stable. The statewide unemployment rate remains significantly below the national average at 6.5 percent for the month of November. More information on current Hawaii economic trends is presented in Table 14.

Conference Call Information

The Company will review its 2011 financial results today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern Time). The call will be accessible via teleconference and via the Investor Relations link of Bank of Hawaii Corporation's web site, www.boh.com. The conference call number for participants in the United States is 800-901-5231. International participants should call 617-786-2961. Use the pass code "Bank of Hawaii" to access the call. A replay of the conference call will be available for one week beginning Monday, January 23, 2012 by calling 888-286-8010 in the United States or 617-801-6888 internationally and entering the number 83186423 when prompted. A replay will also be available via the Investor Relations link of the Company's web site.

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, 2010, 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
(dollars in thousands, except per share amounts)   Three Months Ended   Year Ended
December 31,   September 30,   December 31, December 31,
  2011     2011     2010     2011     2010

For the Period:

  
Operating Results
Net Interest Income $ 96,246 $ 96,766 $ 96,273 $ 390,208 $ 406,480
Provision for Credit Losses 2,219 2,180 5,278 12,690 55,287
Total Noninterest Income 43,407 50,863 51,477 197,655 255,258
Total Noninterest Expense 84,382 83,955 88,722 348,193 346,236
Net Income 39,229 43,306 40,578 160,043 183,942
Basic Earnings Per Share 0.85 0.93 0.84 3.40 3.83
Diluted Earnings Per Share 0.85 0.92 0.84 3.39 3.80
Dividends Declared Per Share 0.45 0.45 0.45 1.80 1.80
 
Performance Ratios
Return on Average Assets 1.17 % 1.31 % 1.24 % 1.22 % 1.45 %
Return on Average Shareholders' Equity 15.23 16.80 15.08 15.69 18.16
Efficiency Ratio 1 60.42 56.87 60.05 59.23 52.32
Net Interest Margin 2 3.04 3.09 3.15 3.13 3.41
Dividend Payout Ratio 3 52.94 48.39 53.57 52.94 47.00
Average Shareholders' Equity to Average Assets 7.65 7.79 8.23 7.78 7.98
 
Average Balances
Average Loans and Leases $ 5,420,352 $ 5,340,406 $ 5,317,815 $ 5,349,938 $ 5,472,534
Average Assets 13,357,646 13,125,077 12,964,973 13,105,029 12,687,717
Average Deposits 10,160,392 9,871,750 9,677,452 9,924,697 9,509,130
Average Shareholders' Equity 1,022,012 1,022,585 1,067,429 1,020,065 1,012,746
 
Market Price Per Share of Common Stock
Closing $ 44.49 $ 36.40 $ 47.21 $ 44.49 $ 47.21
High 45.13 47.10 48.27 49.26 54.10
Low 34.50 35.30 42.94 34.50 41.60
 
December 31, September 30, December 31,
                2011     2011     2010

As of Period End:

Balance Sheet Totals
Loans and Leases $ 5,538,304 $ 5,348,472 $ 5,335,792
Total Assets 13,846,391 13,304,758 13,126,787
Total Deposits 10,592,623 10,009,013 9,888,995
Long-Term Debt 30,696 30,705 32,652
Total Shareholders' Equity 1,002,667 1,017,775 1,011,133
 
Asset Quality
Allowance for Loan and Lease Losses $ 138,606 $ 143,410 $ 147,358
Non-Performing Assets 40,790 37,770 37,786
 
Financial Ratios
Allowance to Loans and Leases Outstanding 2.50 % 2.68 % 2.76 %
Tier 1 Capital Ratio 16.68 17.57 18.28
Total Capital Ratio 17.95 18.83 19.55
Tier 1 Leverage Ratio 6.73 6.95 7.15
Total Shareholders' Equity to Total Assets 7.24 7.65 7.70
Tangible Common Equity to Tangible Assets 4 7.03 7.43 7.48
Tangible Common Equity to Risk-Weighted Assets 4 17.93 18.90 19.29
 
Non-Financial Data
Full-Time Equivalent Employees 2,370 2,381 2,399
Branches and Offices 81 82 82
ATMs 506 508 502
 
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, a non-GAAP financial measure, is defined by the Company as shareholders' equity minus goodwill and intangible assets. Intangible assets are included as a component of other assets in the Consolidated Statements of Condition.

 

Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures Table 1b
(dollars in thousands)   December 31,   September 30,   December 31,
  2011   2011   2010
 
Total Shareholders' Equity $ 1,002,667 $ 1,017,775 $ 1,011,133
Less: Goodwill 31,517 31,517 31,517
Intangible Assets     83       96       154  
Tangible Common Equity   $ 971,067     $ 986,162     $ 979,462  
 
Total Assets $ 13,846,391 $ 13,304,758 $ 13,126,787
Less: Goodwill 31,517 31,517 31,517
Intangible Assets     83       96       154  
Tangible Assets   $ 13,814,791     $ 13,273,145     $ 13,095,116  
 

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

$ 5,414,481 $ 5,218,651 $ 5,076,909
 
Total Shareholders' Equity to Total Assets 7.24 % 7.65 % 7.70 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.03 % 7.43 % 7.48 %
 
Tier 1 Capital Ratio 16.68 % 17.57 % 18.28 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 17.93 % 18.90 % 19.29 %
 
Bank of Hawaii Corporation and Subsidiaries
Net Significant Income (Expense) Items Table 2
(dollars in thousands)   Three Months Ended   Year Ended
December 31,   September 30,   December 31, December 31,
  2011   2011   2010   2011   2010
Cash Basis Interest Recoveries $ - $ - $ - $ - $ 2,832
Investment Securities Gains, Net - - - 6,366 42,848
Gain on Mutual Fund Sale - 1,956 - 1,956 2,852
Gains (Loss) on Disposal of Leased Equipment - - - - (260 )
Gain on Sale of Insurance Subsidiary - - - - 904
Decrease (Increase) in Allowance for Loan and Lease Losses 4,804 1,566 - 8,752 (3,700 )
Employee Incentive Awards - - (1,949 ) - (1,949 )
Cash Grants for the Purchase of Company Stock - - (196 ) - (3,446 )
Settlement Gain on the Extinguishment of Retiree Life Insurance Obligation - - 951 - 951
PC Refresh - - (1,192 ) - (1,192 )
Settlement Related to Overdraft Claims - - - (9,000 ) -
Bank of Hawaii Charitable Foundation - (2,000 ) (1,000 ) (2,000 ) (1,000 )
Gain on Sale of Foreclosed Real Estate - - 1,343 - 1,343
REPO Early Termination Expense     -     -       -       -       (5,189 )
Significant Income (Expense) Items Before the Provision (Benefit) for Income Taxes     4,804     1,522       (2,043 )     6,074       34,994  
Income Taxes Impact Related to Lease Transactions - - - - (3,541 )
Income Tax Impact     1,681     533       (715 )     2,126       12,340  
Net Significant Income (Expense) Items   $ 3,123   $ 989     $ (1,328 )   $ 3,948     $ 26,195  
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income Table 3
(dollars in thousands, except per share amounts)   Three Months Ended   Year Ended
December 31,   September 30,   December 31, December 31,
  2011   2011   2010   2011   2010
Interest Income
Interest and Fees on Loans and Leases $ 64,760 $ 65,344 $ 67,915 $ 262,239 $ 287,381
Income on Investment Securities
Available-for-Sale 19,107 23,097 39,546 103,363 169,151
Held-to-Maturity 23,608 20,344 1,388 72,138 6,504
Deposits 2 6 7 8 28
Funds Sold 120 160 160 828 1,076
Other     280     279     279       1,117     1,111
Total Interest Income     107,877     109,230     109,295       439,693     465,251
Interest Expense
Deposits 3,736 4,561 5,918 18,321 29,196
Securities Sold Under Agreements to Repurchase 7,392 7,400 6,425 29,171 25,996
Funds Purchased 5 4 7 20 30
Long-Term Debt     498     499     672       1,973     3,549
Total Interest Expense     11,631     12,464     13,022       49,485     58,771
Net Interest Income 96,246 96,766 96,273 390,208 406,480
Provision for Credit Losses     2,219     2,180     5,278       12,690     55,287
Net Interest Income After Provision for Credit Losses     94,027     94,586     90,995       377,518     351,193
Noninterest Income
Trust and Asset Management 11,025 10,788 11,190 45,046 44,889
Mortgage Banking 3,401 5,480 4,549 14,664 18,576
Service Charges on Deposit Accounts 9,606 9,820 11,632 38,733 53,039
Fees, Exchange, and Other Service Charges 12,401 16,219 15,196 60,227 61,006
Investment Securities Gains (Losses), Net 282 - (1 ) 6,366 42,848
Insurance 2,312 2,664 2,309 10,957 9,961
Other     4,380     5,892     6,602       21,662     24,939
Total Noninterest Income     43,407     50,863     51,477       197,655     255,258
Noninterest Expense
Salaries and Benefits 44,927 44,307 46,809 182,816 185,713
Net Occupancy 11,253 11,113 10,504 43,169 40,988
Net Equipment 4,748 4,662 5,902 18,849 19,371
Professional Fees 1,926 2,245 2,116 8,623 7,104
FDIC Insurance 2,027 2,065 3,198 9,346 12,564
Other     19,501     19,563     20,193       85,390     80,496
Total Noninterest Expense     84,382     83,955     88,722       348,193     346,236
Income Before Provision for Income Taxes 53,052 61,494 53,750 226,980 260,215
Provision for Income Taxes     13,823     18,188     13,172       66,937     76,273
Net Income   $ 39,229   $ 43,306   $ 40,578     $ 160,043   $ 183,942
Basic Earnings Per Share $ 0.85 $ 0.93 $ 0.84 $ 3.40 $ 3.83
Diluted Earnings Per Share $ 0.85 $ 0.92 $ 0.84 $ 3.39 $ 3.80
Dividends Declared Per Share $ 0.45 $ 0.45 $ 0.45 $ 1.80 $ 1.80
Basic Weighted Average Shares 46,195,147 46,806,439 48,034,234 47,064,925 48,055,025
Diluted Weighted Average Shares     46,324,734     46,934,140     48,275,474       47,224,981     48,355,965
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition Table 4
(dollars in thousands)   December 31,   September 30, December 31,
  2011   2011   2010
Assets
Interest-Bearing Deposits $ 3,036 $ 3,543 $ 3,472
Funds Sold 512,384 242,062 438,327
Investment Securities
Available-for-Sale 3,451,885 4,448,898 6,533,874
Held-to-Maturity (Fair Value of $3,754,206; $2,610,081; and $134,028) 3,657,796 2,520,422 127,249
Loans Held for Sale 18,957 12,745 17,564
Loans and Leases 5,538,304 5,348,472 5,335,792
Allowance for Loan and Lease Losses     (138,606 )     (143,410 )     (147,358 )
Net Loans and Leases     5,399,698       5,205,062       5,188,434  
Total Earning Assets     13,043,756       12,432,732       12,308,920  
Cash and Noninterest-Bearing Deposits 154,489 206,875 165,748
Premises and Equipment 103,550 104,509 108,170
Customers' Acceptances 476 749 437
Accrued Interest Receivable 43,510 43,319 41,151
Foreclosed Real Estate 3,042 3,341 1,928
Mortgage Servicing Rights 24,279 23,990 25,379
Goodwill 31,517 31,517 31,517
Other Assets     441,772       457,726       443,537  
Total Assets   $ 13,846,391     $ 13,304,758     $ 13,126,787  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 2,850,923 $ 2,702,296 $ 2,447,713
Interest-Bearing Demand 2,005,983 1,745,812 1,871,718
Savings 4,398,638 4,449,351 4,526,893
Time     1,337,079       1,111,554       1,042,671  
Total Deposits     10,592,623       10,009,013       9,888,995  
Funds Purchased 10,791 9,882 9,478
Short-Term Borrowings - 6,400 6,200
Securities Sold Under Agreements to Repurchase 1,925,998 1,929,266 1,901,084
Long-Term Debt 30,696 30,705 32,652
Banker's Acceptances 476 749 437
Retirement Benefits Payable 46,949 30,704 30,885
Accrued Interest Payable 5,330 6,751 5,007
Taxes Payable and Deferred Taxes 95,840 114,842 121,517
Other Liabilities     135,021       148,671       119,399  
Total Liabilities     12,843,724       12,286,983       12,115,654  
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: December 31, 2011 - 57,134,470 / 45,947,116; September 30, 2011 - 57,132,310 / 46,570,413; and December 31, 2010 - 57,115,287 / 48,097,672)

571 571 570
Capital Surplus 507,558 503,255 500,888
Accumulated Other Comprehensive Income 35,263 46,754 26,965
Retained Earnings 1,003,938 986,202 932,629

Treasury Stock, at Cost (Shares: December 31, 2011 - 11,187,354; September 30, 2011 - 10,561,897; and December 31, 2010 - 9,017,615)

    (544,663 )     (519,007 )     (449,919 )
Total Shareholders' Equity     1,002,667       1,017,775       1,011,133  
Total Liabilities and Shareholders' Equity   $ 13,846,391     $ 13,304,758     $ 13,126,787  
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity Table 5
(dollars in thousands)        

Accum.

    
Other
Compre-
hensive Compre-
Common Capital Income Retained Treasury hensive
  Total   Stock   Surplus   (Loss)   Earnings   Stock   Income
Balance as of December 31, 2009 $ 895,973 $ 569 $ 494,318 $ 6,925 $ 843,521 $ (449,360 )
 
Comprehensive Income:
Net Income 183,942 - - - 183,942 - $ 183,942
Other Comprehensive Income, Net of Tax:
Net Unrealized Gains on Investment Securities,
Net of Reclassification Adjustment 20,231 - - 20,231 - - 20,231
Settlement Gain Related to Defined Benefit Plan (608 ) - - (608 ) - - (608 )
Net Gains related to Defined Benefit Plans 417 - - 417 - -   417  
Total Comprehensive Income $ 203,982  
Share-Based Compensation 3,841 - 3,841 - - -
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits (617,345 shares) 19,141 1 2,729 - (8,011 ) 24,422
Common Stock Repurchased (538,616 shares) (24,981 ) - - - - (24,981 )
Cash Dividends Paid ($1.80 per share)     (86,823 )     -     -     -       (86,823 )     -  
Balance as of December 31, 2010   $ 1,011,133     $ 570   $ 500,888   $ 26,965     $ 932,629     $ (449,919 )
 
Comprehensive Income:
Net Income 160,043 - - - 160,043 - $ 160,043
Other Comprehensive Income, Net of Tax:
Net Unrealized Gains on Investment Securities,
Net of Reclassification Adjustment 16,411 - - 16,411 - - 16,411
Net Losses related to Defined Benefit Plans (8,113 ) - - (8,113 ) - -   (8,113 )
Total Comprehensive Income $ 168,341  
Share-Based Compensation 6,216 - 6,216 - - -
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits (389,470 shares) 13,412 1 454 - (3,843 ) 16,800
Common Stock Repurchased (2,540,026 shares) (111,544 ) - - - - (111,544 )
Cash Dividends Paid ($1.80 per share)     (84,891 )     -     -     -       (84,891 )     -  
Balance as of December 31, 2011   $ 1,002,667     $ 571   $ 507,558   $ 35,263     $ 1,003,938     $ (544,663 )
 
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable Equivalent Basis Table 6a
(dollars in millions)   Three Months Ended   Three Months Ended   Three Months Ended
December 31, 2011 September 30, 2011 December 31, 2010
Average   Income/   Yield/ Average   Income/   Yield/ Average   Income/   Yield/
  Balance   Expense   Rate     Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 3.9 $ - 0.23 % $ 3.7 $ - 0.56 % $ 3.2 $ - 0.81 %
Funds Sold 239.0 0.1 0.20 309.4 0.2 0.20 211.4 0.2 0.30
Investment Securities
Available-for-Sale 3,763.7 19.9 2.12 4,309.3 23.5 2.18 6,468.5 39.8 2.46
Held-to-Maturity 3,259.8 23.6 2.90 2,511.0 20.3 3.24 134.8 1.4 4.12
Loans Held for Sale 14.7 0.2 4.73 9.2 0.1 4.87 13.2 0.1 4.77
Loans and Leases 1
Commercial and Industrial 798.3 8.0 3.99 815.5 8.2 3.97 752.7 7.8 4.13
Commercial Mortgage 929.0 10.9 4.66 876.7 10.7 4.85 838.0 10.5 5.00
Construction 85.7 1.1 4.84 74.5 1.0 5.15 86.1 1.1 5.09
Commercial Lease Financing 311.0 2.1 2.68 314.6 2.0 2.61 352.6 2.3 2.57
Residential Mortgage 2,163.1 27.3 5.05 2,129.8 27.8 5.23 2,078.1 28.4 5.46
Home Equity 778.1 9.0 4.57 780.5 9.3 4.72 821.3 10.3 4.95
Automobile 190.7 3.1 6.40 191.4 3.2 6.66 214.4 4.0 7.38
Other 2     164.5     3.2   7.76       157.4     3.0   7.50       174.6     3.4   7.68
Total Loans and Leases     5,420.4     64.7   4.75       5,340.4     65.2   4.86       5,317.8     67.8   5.07
Other     79.9     0.3   1.40       79.9     0.3   1.40       79.9     0.3   1.39
Total Earning Assets 3     12,781.4     108.8   3.40       12,562.9     109.6   3.48       12,228.8     109.6   3.57
Cash and Noninterest-Bearing Deposits 142.2 135.1 240.3
Other Assets   434.0   427.1   495.9
Total Assets $ 13,357.6 $ 13,125.1 $ 12,965.0
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 1,799.9 0.1 0.03 $ 1,772.5 0.2 0.04 $ 1,769.4 0.2 0.06
Savings 4,447.8 1.4 0.13 4,497.1 1.8 0.16 4,486.7 2.6 0.23
Time     1,145.4     2.2   0.76       1,069.4     2.6   0.96       1,050.9     3.1   1.18
Total Interest-Bearing Deposits     7,393.1     3.7   0.20       7,339.0     4.6   0.25       7,307.0     5.9   0.32
Short-Term Borrowings 20.4 - 0.08 19.0 - 0.08 20.1 - 0.14
Securities Sold Under Agreements to Repurchase 1,848.9 7.4 1.57 1,908.9 7.4 1.52 1,774.8 6.4 1.42
Long-Term Debt     30.7     0.5   6.49       30.7     0.5   6.50       40.0     0.7   6.72
Total Interest-Bearing Liabilities     9,293.1     11.6   0.49       9,297.6     12.5   0.53       9,141.9     13.0   0.56
Net Interest Income $ 97.2 $ 97.1 $ 96.6
Interest Rate Spread 2.91 % 2.95 % 3.01 %
Net Interest Margin 3.04 % 3.09 % 3.15 %
Noninterest-Bearing Demand Deposits 2,767.3 2,532.8 2,370.5
Other Liabilities 275.2 272.1 385.2
Shareholders' Equity   1,022.0   1,022.6   1,067.4
Total Liabilities and Shareholders' Equity $ 13,357.6 $ 13,125.1 $ 12,965.0
 
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 $938,000, $364,000, and $300,000 for the three months ended December 31, 2011, September 30, 2011, and December 31, 2010, respectively.

 

Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable Equivalent Basis Table 6b
(dollars in millions)   Year Ended   Year Ended
December 31, 2011 December 31, 2010
Average   Income/   Yield/ Average Income/   Yield/
  Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits $ 4.2 $ - 0.19 % $ 4.7 $ - 0.59 %
Funds Sold 380.2 0.8 0.22 390.2 1.1 0.28
Investment Securities
Available-for-Sale 4,439.8 105.4 2.37 5,854.1 170.1 2.91
Held-to-Maturity 2,279.6 72.2 3.16 154.2 6.5 4.22
Loans Held for Sale 11.0 0.5 4.54 10.8 0.9 8.51
Loans and Leases 1
Commercial and Industrial 790.6 31.8 4.02 764.2 33.7 4.41
Commercial Mortgage 887.1 42.8 4.82 827.7 42.0 5.07
Construction 80.1 4.0 5.06 95.4 4.8 5.08
Commercial Lease Financing 322.1 8.7 2.71 385.1 11.3 2.92
Residential Mortgage 2,126.9 111.5 5.24 2,105.6 118.7 5.64
Home Equity 784.9 37.4 4.76 863.7 43.2 4.99
Automobile 194.4 13.2 6.78 241.2 18.3 7.58
Other 2     163.8     12.4   7.57       189.6     14.5   7.66
Total Loans and Leases     5,349.9     261.8   4.89       5,472.5     286.5   5.23
Other     79.9     1.1   1.40       79.8     1.1   1.39
Total Earning Assets 3     12,544.6     441.8   3.52       11,966.3     466.2   3.90
Cash and Noninterest-Bearing Deposits 135.3 229.6
Other Assets   425.1   491.8
Total Assets $ 13,105.0 $ 12,687.7
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 1,786.7 0.7 0.04 $ 1,715.8 1.1 0.06
Savings 4,501.0 7.3 0.16 4,465.0 14.7 0.33
Time     1,067.8     10.3   0.96       1,088.7     13.4   1.23
Total Interest-Bearing Deposits     7,355.5     18.3   0.25       7,269.5     29.2   0.40
Short-Term Borrowings 18.2 - 0.11 23.3 - 0.13
Securities Sold Under Agreements to Repurchase 1,845.8 29.2 1.58 1,700.2 26.0 1.53
Long-Term Debt     31.6     2.0   6.23       61.0     3.5   5.81
Total Interest-Bearing Liabilities     9,251.1     49.5   0.53       9,054.0     58.7   0.65
Net Interest Income $ 392.3 $ 407.5
Interest Rate Spread 2.99 % 3.25 %
Net Interest Margin 3.13 % 3.41 %
Noninterest-Bearing Demand Deposits 2,569.2 2,239.6
Other Liabilities 264.6 381.4
Shareholders' Equity   1,020.1   1,012.7
Total Liabilities and Shareholders' Equity $ 13,105.0 $ 12,687.7
 
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 $2,080,000 and $975,000 for the year ended December 31, 2011 and 2010, respectively.
 
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable Equivalent Basis Table 7a
(dollars in millions)   Three Months Ended December 31, 2011
Compared to September 30, 2011
  Volume 1   Rate 1   Total
Change in Interest Income:  
Funds Sold $ (0.1 ) $ - $ (0.1 )
Investment Securities
Available-for-Sale (2.9 ) (0.7 ) (3.6 )
Held-to-Maturity 5.6 (2.3 ) 3.3
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial (0.2 ) - (0.2 )
Commercial Mortgage 0.6 (0.4 ) 0.2
Construction 0.2 (0.1 ) 0.1
Commercial Lease Financing - 0.1 0.1
Residential Mortgage 0.4 (0.9 ) (0.5 )
Home Equity - (0.3 ) (0.3 )
Automobile - (0.1 ) (0.1 )
Other 2     0.1       0.1       0.2  
Total Loans and Leases     1.1       (1.6 )     (0.5 )
Total Change in Interest Income     3.8       (4.6 )     (0.8 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - (0.1 ) (0.1 )
Savings - (0.4 ) (0.4 )
Time     0.1       (0.5 )     (0.4 )
Total Interest-Bearing Deposits     0.1       (1.0 )     (0.9 )
Securities Sold Under Agreements to Repurchase     (0.2 )     0.2       -  
Total Change in Interest Expense     (0.1 )     (0.8 )     (0.9 )
 
Change in Net Interest Income   $ 3.9     $ (3.8 )   $ 0.1  
 
1 The changes for each category of interest income and expense are allocated between the portion of changes attributable to the variance in volume and rate for that category.
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 7b
(dollars in millions)   Three Months Ended December 31, 2011
Compared to December 31, 2010
  Volume 1   Rate 1   Total
Change in Interest Income:    
Funds Sold $ - $ (0.1 ) $ (0.1 )
Investment Securities
Available-for-Sale (15.0 ) (4.9 ) (19.9 )
Held-to-Maturity 22.7 (0.5 ) 22.2
Loans Held for Sale 0.1 - 0.1
Loans and Leases
Commercial and Industrial 0.5 (0.3 ) 0.2
Commercial Mortgage 1.1 (0.7 ) 0.4
Commercial Lease Financing (0.3 ) 0.1 (0.2 )
Residential Mortgage 1.1 (2.2 ) (1.1 )
Home Equity (0.5 ) (0.8 ) (1.3 )
Automobile (0.4 ) (0.5 ) (0.9 )
Other 2     (0.2 )     -       (0.2 )
Total Loans and Leases     1.3       (4.4 )     (3.1 )
Total Change in Interest Income     9.1       (9.9 )     (0.8 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - (0.1 ) (0.1 )
Savings (0.1 ) (1.1 ) (1.2 )
Time     0.3       (1.2 )     (0.9 )
Total Interest-Bearing Deposits     0.2       (2.4 )     (2.2 )
Securities Sold Under Agreements to Repurchase 0.3 0.7 1.0
Long-Term Debt     (0.1 )     (0.1 )     (0.2 )
Total Change in Interest Expense     0.4       (1.8 )     (1.4 )
 
Change in Net Interest Income   $ 8.7     $ (8.1 )   $ 0.6  
 
1 The changes for each category of interest income and expense are allocated between the portion of changes attributable to the variance in volume and rate for that category.
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 7c
(dollars in millions)   Year Ended December 31, 2011
Compared to December 31, 2010
  Volume 1   Rate 1   Total
Change in Interest Income:  
Funds Sold $ - $ (0.3 ) $ (0.3 )
Investment Securities
Available-for-Sale (36.5 ) (28.2 ) (64.7 )
Held-to-Maturity 67.7 (2.0 ) 65.7
Loans Held for Sale - (0.4 ) (0.4 )
Loans and Leases
Commercial and Industrial 1.1 (3.0 ) (1.9 )
Commercial Mortgage 2.9 (2.1 ) 0.8
Construction (0.8 ) - (0.8 )
Commercial Lease Financing (1.8 ) (0.8 ) (2.6 )
Residential Mortgage 1.2 (8.4 ) (7.2 )
Home Equity (3.8 ) (2.0 ) (5.8 )
Automobile (3.3 ) (1.8 ) (5.1 )
Other 2     (1.9 )     (0.2 )     (2.1 )
Total Loans and Leases     (6.4 )     (18.3 )     (24.7 )
Total Change in Interest Income     24.8       (49.2 )     (24.4 )
 
Change in Interest Expense:
Interest-Bearing Deposits
Demand - (0.4 ) (0.4 )
Savings 0.1 (7.5 ) (7.4 )
Time     (0.2 )     (2.9 )     (3.1 )
Total Interest-Bearing Deposits     (0.1 )     (10.8 )     (10.9 )
Securities Sold Under Agreements to Repurchase 2.3 0.9 3.2
Long-Term Debt     (1.8 )     0.3       (1.5 )
Total Change in Interest Expense     0.4       (9.6 )     (9.2 )
 
Change in Net Interest Income   $ 24.4     $ (39.6 )   $ (15.2 )
 
1 The changes for each category of interest income and expense are allocated between the portion of changes attributable to the variance in volume and rate for that category.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
 
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits Table 8
(dollars in thousands)   Three Months Ended Year Ended
December 31,   September 30,   December 31, December 31,
  2011   2011   2010   2011   2010
Salaries $ 28,330 $ 28,965 $ 30,350 $ 115,512   $ 119,515
Incentive Compensation 3,881 4,777 5,248 16,367 15,544

Share-Based Compensation and Cash Grants for the Purchase of Company Stock

1,819 743 1,220 5,720 6,805
Commission Expense 1,701 1,572 2,225 6,489 6,666
Retirement and Other Benefits 4,429 3,634 3,564 16,829 15,708
Payroll Taxes 2,030 2,241 2,033 10,645 10,084
Medical, Dental, and Life Insurance 2,322 2,056 1,018 9,039 8,242
Separation Expense     415     319     1,151     2,215     3,149
Total Salaries and Benefits   $ 44,927   $ 44,307   $ 46,809   $ 182,816   $ 185,713
 
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances Table 9
(dollars in thousands)   December 31,   September 30,   June 30, March 31,   December 31,
  2011   2011   2011   2011   2010
Commercial
Commercial and Industrial $ 817,170 $ 790,294 $ 815,912 $ 771,923 $ 772,624
Commercial Mortgage 938,250 922,075 872,283 883,360 863,385
Construction 98,669 69,635 81,432 80,360 80,325
Lease Financing     311,928     312,159     316,776     331,491     334,997
Total Commercial     2,166,017     2,094,163     2,086,403     2,067,134     2,051,331
Consumer
Residential Mortgage 2,215,892 2,130,589 2,130,335 2,108,376 2,094,189
Home Equity 780,691 775,105 783,582 787,179 807,479
Automobile 192,506 191,497 191,739 196,649 209,008
Other 1     183,198     157,118     159,414     167,591     173,785
Total Consumer     3,372,287     3,254,309     3,265,070     3,259,795     3,284,461
Total Loans and Leases   $ 5,538,304   $ 5,348,472   $ 5,351,473   $ 5,326,929   $ 5,335,792
 
 
Higher Risk Loans Outstanding
(dollars in thousands) December 31, September 30, June 30, March 31, December 31,
  2011   2011   2011   2011   2010
Residential Home Building 2 $ 13,475 $ 15,379 $ 16,186 $ 14,744 $ 14,964
Residential Land Loans 3 18,163 18,305 19,960 21,595 23,745
Home Equity Loans 4 21,413 22,321 21,778 23,783 23,179
Air Transportation 5     36,144     36,511     36,961     37,440     37,879
Total Higher Risk Loans   $ 89,195   $ 92,516   $ 94,885   $ 97,562   $ 99,767
 
1 Comprised of other revolving credit, installment, and lease financing.

2 Residential home building loans were $29.0 million as of December 31, 2011. Higher risk loans within this segment are defined as those loans with a well-defined weakness or weaknesses that jeopardizes the orderly repayment of the loan.

3 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. Residential Land Loans were revised from $18,285 as of September 30, 2011.

4 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%.
5 We consider all of our air transportation leases to be of higher risk due to the weak financial profile of the industry.
 
Deposits
(dollars in thousands) December 31, September 30, June 30, March 31, December 31,
  2011   2011   2011   2011   2010
Consumer $ 5,241,827 $ 5,137,548 $ 5,073,101 $ 5,097,056 $ 5,082,802
Commercial 4,320,712 4,275,915 4,165,435 4,326,495 4,292,108
Public and Other     1,030,084     595,550     740,498     488,840     514,085
Total Deposits   $ 10,592,623   $ 10,009,013   $ 9,979,034   $ 9,912,391   $ 9,888,995
 
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 10
(dollars in thousands)   December 31,   September 30,   June 30, March 31,   December 31,
  2011   2011   2011   2011   2010
Non-Performing Assets 1
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 6,243 $ 6,593 $ 1,839 $ 1,107 $ 1,642
Commercial Mortgage 2,140 2,188 3,290 3,421 3,503
Construction 2,080 - 288 288 288
Lease Financing     5       6       8       9       19  
Total Commercial     10,468       8,787       5,425       4,825       5,452  
Consumer
Residential Mortgage 25,256 23,779 23,970 24,372 28,152
Home Equity 2,024 1,863 2,155 2,602 2,254
Other 2     -       -       16       -       -  
Total Consumer     27,280       25,642       26,141       26,974       30,406  
Total Non-Accrual Loans and Leases     37,748       34,429       31,566       31,799       35,858  
Foreclosed Real Estate     3,042       3,341       2,590       2,793       1,928  
Total Non-Performing Assets   $ 40,790     $ 37,770     $ 34,156     $ 34,592     $ 37,786  
 
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial   $ 1     $ -     $ -     $ -     $ -  
Total Commercial     1       -       -       -       -  
Consumer
Residential Mortgage 6,422 7,664 5,854 3,614 5,399
Home Equity 2,194 2,639 1,147 1,100 1,067
Automobile 170 138 167 260 410
Other 2     435       414       604       578       707  
Total Consumer     9,221       10,855       7,772       5,552       7,583  
Total Accruing Loans and Leases Past Due 90 Days or More   $ 9,222     $ 10,855     $ 7,772     $ 5,552     $ 7,583  

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

   $ 33,703     $ 33,140     $ 28,193     $ 29,513     $ 23,724  
Total Loans and Leases   $ 5,538,304     $ 5,348,472     $ 5,351,473     $ 5,326,929     $ 5,335,792  
 
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases     0.68 %     0.64 %     0.59 %     0.60 %     0.67 %
 

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

    0.73 %     0.70 %     0.64 %     0.65 %     0.71 %
 

Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases, Commercial Loans Held for Sale, and Commercial Foreclosed Real Estate

    0.56 %     0.52 %     0.34 %     0.31 %     0.31 %
 

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

    0.85 %     0.82 %     0.83 %     0.86 %     0.95 %
 

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

    0.90 %     0.91 %     0.78 %     0.75 %     0.85 %
 
Quarter to Quarter Changes in Non-Performing Assets 1
Balance at Beginning of Quarter $ 37,770 $ 34,156 $ 34,592 $ 37,786 $ 45,174
Additions 8,653 8,552 6,079 5,591 7,042
Reductions
Payments (1,173 ) (3,237 ) (2,363 ) (2,164 ) (5,019 )
Return to Accrual Status (2,421 ) (401 ) (3,226 ) (6,408 ) (1,250 )
Sales of Foreclosed Real Estate (1,320 ) (157 ) (497 ) - (5,427 )
Charge-offs/Write-downs     (719 )     (1,143 )     (429 )     (213 )     (2,734 )
Total Reductions     (5,633 )     (4,938 )     (6,515 )     (8,785 )     (14,430 )
Balance at End of Quarter   $ 40,790     $ 37,770     $ 34,156     $ 34,592     $ 37,786  
 
1 Excluded from non-performing assets was a contractually binding non-accrual loan held for sale of $7.5 million as of March 31, 2011.
2 Comprised of other revolving credit, installment, and lease financing.
 
Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses Table 11
  Three Months Ended   Year Ended
December 31,   September 30,   December 31, December 31,
(dollars in thousands)   2011   2011   2010   2011   2010
Balance at Beginning of Period $ 148,829 $ 150,395 $ 152,777 $ 152,777   $ 149,077
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (733 ) (4,215 ) (6,528 ) (8,112 ) (21,125 )
Commercial Mortgage - - (745 ) - (2,048 )
Construction - - - - (2,274 )
Lease Financing - - (95 ) - (500 )
Consumer
Residential Mortgage (2,888 ) (1,558 ) (3,182 ) (8,174 ) (12,139 )
Home Equity (3,714 ) (2,528 ) (1,859 ) (10,853 ) (15,052 )
Automobile (688 ) (715 ) (1,116 ) (3,229 ) (6,425 )
Other 1     (1,585 )     (1,755 )     (2,137 )     (6,392 )     (10,315 )
Total Loans and Leases Charged-Off     (9,608 )     (10,771 )     (15,662 )     (36,760 )     (69,878 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 469 994 424 2,434 2,082
Commercial Mortgage 8 530 44 538 68
Construction - - 7,321 - 7,321
Lease Financing 29 3,405 118 3,528 158
Consumer
Residential Mortgage 531 740 190 2,152 1,544
Home Equity 469 137 967 1,695 1,597
Automobile 528 650 727 2,479 3,128
Other 1     551       569       593       2,492       2,393  
Total Recoveries on Loans and Leases Previously Charged-Off     2,585       7,025       10,384       15,318       18,291  
Net Loans and Leases Charged-Off (7,023 ) (3,746 ) (5,278 ) (21,442 ) (51,587 )
Provision for Credit Losses     2,219       2,180       5,278       12,690       55,287  
Balance at End of Period 2   $ 144,025     $ 148,829     $ 152,777     $ 144,025     $ 152,777  
 
Components
Allowance for Loan and Lease Losses $ 138,606 $ 143,410 $ 147,358 $ 138,606 $ 147,358
Reserve for Unfunded Commitments     5,419       5,419       5,419       5,419       5,419  
Total Reserve for Credit Losses   $ 144,025     $ 148,829     $ 152,777     $ 144,025     $ 152,777  
 
Average Loans and Leases Outstanding   $ 5,420,352     $ 5,340,406     $ 5,317,815     $ 5,349,938     $ 5,472,534  
 

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

0.51 % 0.28 % 0.39 % 0.40 % 0.94 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 2.50 % 2.68 % 2.76 % 2.50 % 2.76 %
 
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 12a
(dollars in thousands)   Retail   Commercial   Investment Treasury   Consolidated
  Banking   Banking   Services   and Other   Total
Three Months Ended December 31, 2011
Net Interest Income $ 42,333 $ 33,727 $ 3,784 $ 16,402 $ 96,246
Provision for Credit Losses     7,236       (212 )     (1 )     (4,804 )     2,219  
Net Interest Income After Provision for Credit Losses 35,097 33,939 3,785 21,206 94,027
Noninterest Income 17,513 8,907 13,636 3,351 43,407
Noninterest Expense     (45,523 )     (22,494 )     (14,125 )     (2,240 )     (84,382 )
Income Before Provision for Income Taxes 7,087 20,352 3,296 22,317 53,052
Provision for Income Taxes     (2,622 )     (7,099 )     (1,219 )     (2,883 )     (13,823 )
Net Income     4,465       13,253       2,077       19,434       39,229  
Total Assets as of December 31, 2011   $ 3,147,760     $ 2,337,214     $ 218,088     $ 8,143,329     $ 13,846,391  
 
 
Three Months Ended December 31, 2010 1
Net Interest Income $ 44,382 $ 34,333 $ 3,985 $ 13,573 $ 96,273
Provision for Credit Losses     6,861       (1,383 )     (199 )     (1 )     5,278  
Net Interest Income After Provision for Credit Losses 37,521 35,716 4,184 13,574 90,995
Noninterest Income 23,537 9,843 14,134 3,963 51,477
Noninterest Expense     (46,461 )     (24,015 )     (15,017 )     (3,229 )     (88,722 )
Income Before Provision for Income Taxes 14,597 21,544 3,301 14,308 53,750
Provision for Income Taxes     (5,401 )     (7,531 )     (1,221 )     981       (13,172 )
Net Income     9,196       14,013       2,080       15,289       40,578  
Total Assets as of December 31, 2010 1   $ 3,078,747     $ 2,244,788     $ 196,466     $ 7,606,786     $ 13,126,787  
 
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 12b
(dollars in thousands)   Retail   Commercial   Investment   Treasury   Consolidated
  Banking   Banking   Services   and Other   Total
Year Ended December 31, 2011
Net Interest Income $ 173,982 $ 137,351 $ 15,137 $ 63,738 $ 390,208
Provision for Credit Losses     22,341       (938 )     64       (8,777 )     12,690  
Net Interest Income After Provision for Credit Losses 151,641 138,289 15,073 72,515 377,518
Noninterest Income 84,008 37,132 59,891 16,624 197,655
Noninterest Expense     (186,872 )     (93,623 )     (59,187 )     (8,511 )     (348,193 )
Income Before Provision for Income Taxes 48,777 81,798 15,777 80,628 226,980
Provision for Income Taxes     (18,047 )     (28,401 )     (5,838 )     (14,651 )     (66,937 )
Net Income     30,730       53,397       9,939       65,977       160,043  
Total Assets as of December 31, 2011   $ 3,147,760     $ 2,337,214     $ 218,088     $ 8,143,329     $ 13,846,391  
 
 
Year Ended December 31, 2010 1
Net Interest Income $ 188,673 $ 147,016 $ 16,567 $ 54,224 $ 406,480
Provision for Credit Losses     38,377       17,085       (129 )     (46 )     55,287  
Net Interest Income After Provision for Credit Losses 150,296 129,931 16,696 54,270 351,193
Noninterest Income 100,859 41,304 59,948 53,147 255,258
Noninterest Expense     (175,621 )     (96,225 )     (58,467 )     (15,923 )     (346,236 )
Income Before Provision for Income Taxes 75,534 75,010 18,177 91,494 260,215
Provision for Income Taxes     (27,947 )     (22,273 )     (6,726 )     (19,327 )     (76,273 )
Net Income     47,587       52,737       11,451       72,167       183,942  
Total Assets as of December 31, 2010 1   $ 3,078,747     $ 2,244,788     $ 196,466     $ 7,606,786     $ 13,126,787  
 
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data Table 13
(dollars in thousands, except per share amounts)   Three Months Ended
December 31,   September 30,   June 30,   March 31,   December 31,
  2011     2011     2011     2011   2010
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 64,760 $ 65,344 $ 65,542 $ 66,593 $ 67,915
Income on Investment Securities
Available-for-Sale 19,107 23,097 23,490 37,669 39,546
Held-to-Maturity 23,608 20,344 20,553 7,633 1,388
Deposits 2 6 2 (2 ) 7
Funds Sold 120 160 297 251 160
Other     280       279       279       279       279  
Total Interest Income     107,877       109,230       110,163       112,423       109,295  
Interest Expense
Deposits 3,736 4,561 4,792 5,232 5,918
Securities Sold Under Agreements to Repurchase 7,392 7,400 7,338 7,041 6,425
Funds Purchased 5 4 5 6 7
Long-Term Debt     498       499       529       447       672  
Total Interest Expense     11,631       12,464       12,664       12,726       13,022  
Net Interest Income 96,246 96,766 97,499 99,697 96,273
Provision for Credit Losses     2,219       2,180       3,600       4,691       5,278  
Net Interest Income After Provision for Credit Losses     94,027       94,586       93,899       95,006       90,995  
Noninterest Income
Trust and Asset Management 11,025 10,788 11,427 11,806 11,190
Mortgage Banking 3,401 5,480 2,661 3,122 4,549
Service Charges on Deposit Accounts 9,606 9,820 9,375 9,932 11,632
Fees, Exchange, and Other Service Charges 12,401 16,219 16,662 14,945 15,196
Investment Securities Gains (Losses), Net 282 - - 6,084 (1 )
Insurance 2,312 2,664 3,210 2,771 2,309
Other     4,380       5,892       6,128       5,262       6,602  
Total Noninterest Income     43,407       50,863       49,463       53,922       51,477  
Noninterest Expense
Salaries and Benefits 44,927 44,307 46,800 46,782 46,809
Net Occupancy 11,253 11,113 10,476 10,327 10,504
Net Equipment 4,748 4,662 4,741 4,698 5,902
Professional Fees 1,926 2,245 2,294 2,158 2,116
FDIC Insurance 2,027 2,065 2,010 3,244 3,198
Other     19,501       19,563       27,453       18,873       20,193  
Total Noninterest Expense     84,382       83,955       93,774       86,082       88,722  
Income Before Provision for Income Taxes 53,052 61,494 49,588 62,846 53,750
Provision for Income Taxes     13,823       18,188       14,440       20,486       13,172  
Net Income   $ 39,229     $ 43,306     $ 35,148     $ 42,360     $ 40,578  
 
Basic Earnings Per Share $ 0.85 $ 0.93 $ 0.74 $ 0.89 $ 0.84
Diluted Earnings Per Share $ 0.85 $ 0.92 $ 0.74 $ 0.88 $ 0.84
 
Balance Sheet Totals
Loans and Leases $ 5,538,304 $ 5,348,472 $ 5,351,473 $ 5,326,929 $ 5,335,792
Total Assets 13,846,391 13,304,758 13,161,204 12,962,304 13,126,787
Total Deposits 10,592,623 10,009,013 9,979,034 9,912,391 9,888,995
Total Shareholders' Equity 1,002,667 1,017,775 1,003,450 996,225 1,011,133
 
Performance Ratios
Return on Average Assets 1.17 % 1.31 % 1.09 % 1.32

%

1.24
Return on Average Shareholders' Equity 15.23 16.80 13.86 16.86 15.08
Efficiency Ratio 1 60.42 56.87 63.81 56.04 60.05
Net Interest Margin 2 3.04 3.09 3.16 3.24 3.15
 
1 The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
2 The net interest margin is defined as net interest income, on a fully-taxable equivalent basis, as a percentage of average earning assets.
 
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends Table 14
($ in millions; jobs in thousands)   Eleven Months Ended   Year Ended
  November 30, 2011     December 31, 2010     December 31, 2009  
Hawaii Economic Trends        
State General Fund Revenues 1 $ 4,258.0 7.8 % $ 4,314.1 7.4 % $ 4,018.2 (12.8 ) %
General Excise and Use Tax Revenue 1 $ 2,383.1 9.0 $ 2,379.9 3.6 $ 2,296.3 (10.6 )
Jobs 2 599.7 1.3 586.8 (0.8 ) 591.7 (4.4 )
                                   
November 30, December 31,
(spot rates)     2011     2010     2009     2008  
Unemployment 3
Statewide, seasonally adjusted 6.5 % 6.3 % 6.9 % 5.6 %
 
Oahu 5.7 4.8 5.4 4.3
Island of Hawaii 9.6 8.6 9.5 7.4
Maui 7.7 7.4 8.8 6.9
Kauai 8.8 7.8 8.7 7.8
                                   
December 31,
(percentage change, except months of inventory)           2011     2010     2009  
Housing Trends (Single Family Oahu) 4
Median Home Price (3.0 ) % 3.1 % (7.3 ) %
Home Sales Volume (units) (2.7 ) % 13.4 % (1.8 ) %
Months of Inventory 4.8 6.0 6.8
                                   
Monthly Visitor Arrivals, Percentage Change
(in thousands)     Seasonally Adjusted     from Previous Month  
Tourism 2
 
October 31, 2011 605.9 (2.8 ) %
September 30, 2011 623.4 7.7
August 31, 2011 578.6 (1.2 )
July 31, 2011 585.4 2.4
June 30, 2011 572.0 (0.1 )
May 31, 2011 572.5 (2.2 )
April 30, 2011 585.3 1.9
March 31, 2011 574.4 (4.5 )
February 28, 2011 601.6 (0.5 )
January 31, 2011 604.7 1.1
December 31, 2010 598.2 (2.0 )
November 30, 2010 610.6 1.0
October 31, 2010 604.5 0.9
September 30, 2010 598.9 (1.1 )
August 31, 2010 605.9 1.3
July 31, 2010 597.9 1.2
June 30, 2010 590.9 3.1
May 31, 2010 572.9 1.4
April 30, 2010 564.8 1.8
March 31, 2010 554.9 2.6
February 28, 2010 540.6 (0.3 )
January 31, 2010 542.5 (0.1 )
 

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