EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
BANK OF HAWAII CORPORATION
EXHIBIT TO CURRENT REPORT ON
FORM 8-K DATED April 28, 2003
Commission File Number 1-6887
Bank of Hawaii Corporation First Quarter 2003 Financial Results
• Diluted Earnings Per Share Increases to $0.47
• Net Income of $29.8 Million for the Quarter
• Board of Directors Declares Dividend of $0.19 Per Share
FOR IMMEDIATE RELEASE
HONOLULU, HI (April 28, 2003) — Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $0.47 for the first quarter of 2003, up from diluted earnings per share of $0.44 in the fourth quarter of 2002 and up from $0.41 in the comparable quarter last year. Net income for the first quarter was $29.8 million, up from $28.9 million in the previous quarter and down slightly from $31.1 million reported in the same quarter last year.
The return on average assets for the first quarter of 2003 was 1.31 percent, up from 1.20 percent in the fourth quarter of 2002 and up from 1.21 percent in the first quarter of 2002. The return on average equity was 12.42 percent in the first quarter, up from 10.72 percent in the previous quarter and a significant improvement from 9.97 percent in the same quarter last year.
“We are encouraged by the first quarter results for 2003,” said Michael E. O’Neill, Chairman and CEO. “Despite weak financial market conditions, our net interest income and margin are up, credit losses and other credit quality indicators have improved, and our expenses are coming down. We are pleased to see growth in both loans and deposits. The Hawaii economy has held up well in the face of uncertainty. Our system conversion is on schedule and on budget, and we are looking forward to the benefits it will create for both our customers and our shareholders.”
Net income in the first quarter of 2003 included charges of $7.4 million related to the information technology systems replacement project. Included in the fourth quarter of 2002 were charges of $7.0 million related to the information technology systems replacement project and $0.4 million in net restructuring expenses related to the divestiture program. Non-core items in the first quarter of 2002 included net restructuring expenses of $2.0 million.
-more-
Bank of Hawaii Corporation First Quarter 2003 Financial Results
Financial Highlights
Net interest income for the first quarter of 2003 on a fully taxable equivalent basis was $91.0 million, up $0.8 million from the fourth quarter of 2002, primarily due to increased loan volumes and a reduction in rates on deposits and borrowings. An analysis of the change in net interest income is included in Table 6. Net interest income was down $3.9 million from the first quarter of 2002 primarily due to lower interest rates.
The net interest margin was 4.29 percent for the first quarter of 2003, a 24 basis point increase from 4.05 percent in the previous quarter and a 37 basis point increase from 3.92 percent in the same quarter last year. The significant improvement in the net interest margin was largely due to lengthening the maturities of certain short-term investments, an improved earning asset mix, and reductions in short-term borrowings and time deposits, as well as debt repurchases in 2002, which lowered the Company’s cost of funds.
Bank of Hawaii Corporation’s credit quality continued to improve during the first quarter of 2003. As a result, the Company did not recognize a provision for loan and lease losses during the quarter. The allowance for loan and lease losses was reduced by $2.8 million from December 31, 2002, which equaled the amount of net charge-offs for the quarter. The Company did not recognize a provision for loan and lease losses during the fourth quarter of 2002. The provision for loan and lease losses was $8.3 million in the first quarter of 2002, which equaled net charge-offs for that quarter.
Non-interest income was $44.8 million for the quarter compared to non-interest income of $50.4 million in the fourth quarter of 2002 and $53.0 million in the first quarter of 2002. The decrease was largely due to a reduction in gains on sales of mortgage loans resulting from the decision at the end of 2002 to hold the majority of first quarter 2003 mortgage loan originations in the portfolio rather than selling them in the secondary market. The decrease in sales gains offset growth in other non-interest revenue, including tax preparation fees, service charges on deposits and other service fee income.
Non-interest expense for the first quarter of 2003 was $90.2 million, including the previously mentioned $7.4 million in information technology system replacement costs. Non-interest expense for the fourth quarter of 2002 also included a combined $7.4 million in information technology system replacement and net restructuring costs, as discussed above. By comparison, non-interest expense in the first quarter of 2002 included net restructuring costs of $2.0 million. Excluding these items, non-interest expense was $82.8 million in the first quarter of 2003, a decrease of $6.5 million, or 7.3 percent, compared to the previous quarter and a decrease of $6.7 million, or 7.4 percent, from the same quarter last year.
The efficiency ratio was 66.4 percent for the first quarter of 2003. Excluding systems replacement project costs and non-core items, the efficiency ratio was 61.0 percent in the first quarter, compared to 63.5 percent in the previous quarter and 60.5 percent in the same quarter last year.
The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services Group, and Treasury and Other Corporate. Business segment results are determined based on the Company’s internal financial management reporting process and organizational structure. Business segment performance details are summarized in Table 11.
2
Asset Quality
Bank of Hawaii Corporation’s credit quality reflected continued improvement in the first quarter of 2003. Non-performing assets were $44.2 million at the end of the quarter, a decrease of $10.2 million, or 18.8 percent, from non-performing assets of $54.4 million at the end of the fourth quarter. Compared to the same period last year, non-performing assets declined $46.5 million, or 51.3 percent. At March 31, 2003 the ratio of non-performing assets to total loans plus foreclosed assets and non-performing loans held for sale was 0.79 percent down from 1.01 percent at December 31, 2002 and down from 1.61 percent at March 31, 2002.
Non-accrual loans were $35.1 million at March 31, 2003, a reduction of $9.9 million, or 22.0 percent, from $45.0 million at December 31, 2002 and down $28.6 million, or 44.9 percent, from $63.7 million at March 31, 2002. Non-accrual loans as a percentage of total loans were 0.63 percent at March 31, 2003 down from 0.84 percent at the end of the previous quarter and down from 1.14 percent at the end of the comparable quarter last year.
Net charge-offs for the first quarter of 2003 were $2.8 million, or 0.21 percent (annualized) of total average loans. Charge-offs during the quarter of $6.1 million were partially offset by recoveries of $3.3 million. Net charge-offs in the fourth quarter of 2002 were $11.6 million, or 0.88 percent (annualized) of total average loans. Net charge-offs during the first quarter of 2002 were $8.3 million, or 0.60 percent (annualized) of total average loans.
The allowance for loan and lease losses was $140.0 million at March 31, 2003. The ratio of the allowance for loan and lease losses to total loans was 2.52 percent at March 31, 2003 compared with 2.67 percent at December 31, 2002 and 2.84 percent at the end of the same quarter last year.
Concentrations of credit exposure to selected components of the portfolio are summarized in Table 7.
Other Financial Highlights
Total assets were $9.4 billion at the end of March 31, 2003, down slightly from $9.5 billion at the end of December 31, 2002 and down from $10.2 billion at the end of March 31, 2002. The decrease of $106 million from the previous quarter was largely due to reductions in short-term investments. Partially offsetting the decrease in short-term investments was growth in loans, which increased $206 million from December 31, 2002. Compared to the previous year, the decrease in total assets was largely due to reductions in short-term investments as excess liquidity was utilized for share repurchases and debt reduction.
Total deposits at March 31, 2003 were $7.0 billion, up $67 million from December 31, 2002 and up $444 million from March 31, 2002 as growth in demand and savings deposits continued to offset managed decreases in time and foreign deposits. During the first quarter of 2003 the number of checking and savings accounts increased in response to deposit promotions and other initiatives. Offsetting the deposit growth were decreases in short-term borrowings, which reflected the lower funding needs of the Company.
3
During the first quarter of 2003, Bank of Hawaii Corporation repurchased 2.9 million shares of common stock at a total cost of $86.3 million under the share repurchase program. The average cost per share was $30.22 during the quarter. From the beginning of the program through March 31, 2003, the Company had repurchased a total of 23.0 million shares and returned a total of $614.2 million to the shareholder at an average cost of $26.71 per share. Through April 25, 2003, the Company repurchased an additional 0.14 million shares of common stock at a cost of $31.87 per share. Remaining buyback authority was $181.3 million at April 25, 2003.
The Company’s capital and liquidity remained exceptionally strong during the first quarter of 2003. At March 31, 2003 the Tier 1 leverage ratio was 10.03 percent compared to 10.34 percent at December 31, 2002 and 12.64 percent at March 31, 2002.
The Company’s Board of Directors declared a quarterly cash dividend of $0.19 per share on the Company’s outstanding shares. The dividend will be payable on June 13, 2003 to shareholders of record at the close of business on May 23, 2003.
Information Technology Systems Replacement Project
Bank of Hawaii Corporation signed an agreement with Metavante Corporation in July 2002 to serve as the Company’s primary technology systems provider. The seven-year outsourcing arrangement remains on schedule to be operational in the third quarter of 2003 and is expected to provide annual cost savings of over $17 million compared to 2002 expense levels. In connection with this project, the Company estimates that it will recognize transition charges of approximately $35 million over the five-quarter conversion period that began in the third quarter of 2002. During the first quarter of 2003, $7.4 million in transition costs were incurred, bringing the total project-to-date cost to $21.0 million. System conversion costs are estimated to be approximately $10.2 million in the second quarter of 2003. Additional details on this project may be found in Table 10.
Economic Outlook
The Hawaii economy remained relatively strong during the first quarter of 2003 and is forecast to remain healthy during the remainder of the year. The construction and real estate investment sectors continue to lead the Hawaii economy. Tourism, as measured by passenger arrivals, was up 4.1 percent in the first quarter of 2003 compared to the same quarter last year. The recent conflict in Iraq had minimal effects on Hawaii tourism. Unemployment in Hawaii declined to 3.0 percent during the quarter, about half the national unemployment level. Job growth in the state is projected to be approximately 2.0 percent for 2003 and real income is forecast to grow about 3.0 percent. Inflation expectations remain relatively low at 1.5 percent. For more economic information, visit the Company’s web site http://www.boh.com/econ/.
Earnings Outlook
The Company’s previously published earnings guidance of $131 million in net income for the full year of 2003 remains unchanged. Based on current conditions, the Company does not expect to record a provision for loan losses in 2003. However, the actual amount of the provision for loan losses will depend on determinations of credit risk that will be made near the end of each quarter. Earnings per share and return on equity projections continue to be dependent upon the terms and timing of share repurchases.
4
Conference Call Information
The Company will review its first quarter 2003 financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The presentation 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 is (800) 915-4836 in the U.S. or (973) 317-5319 for international callers. A replay will be available for one week beginning at 9:00 a.m. Hawaii Time (3:00 p.m. Eastern Time) on Monday, April 28, 2003 by calling (800) 428-6051 in the U.S or (973) 709-2089 for international and entering the number 273138 when prompted. A replay of the presentation will be also available on the Company’s web site.
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.
This news release contains forward-looking statements concerning the expected efficiency ratio, expected level of loan loss provisioning, anticipated costs and annual savings of our technology systems replacement project, and anticipated revenues and expenses in 2003 and beyond. We believe the assumptions underlying our forward-looking statements are reasonable. However, any of the assumptions could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons, including, but not limited to: 1) unanticipated changes in business and economic conditions, the competitive environment, fiscal and monetary policies, or legislation in Hawaii and the other markets we serve; 2) changes in our credit quality or risk profile which may increase or decrease the required level of allowance for loan and lease losses; 3) changes in market interest rates may deteriorate our credit markets and ability to maintain our net interest margin; 4) changes to the amount and timing of our proposed equity repurchases; 5) inability to achieve expected benefits of our technology outsourcing project and other business process changes due to adverse changes in implementation processes or costs, operational savings, or timing; 6) actions by the United States military and real or threatened terrorist activity affecting business conditions; and 7) adverse weather and other natural conditions impacting our and customers’ operations. We do not undertake any obligation to update any forward-looking statements to reflect later events or circumstances.
# # # #
5
Bank of Hawaii Corporation and Subsidiaries
Highlights (Unaudited) | Table 1 |
(dollars in thousands except per share amounts)
|
| Three Months Ended |
| ||||
Earnings Highlights and Performance Ratios |
| March 31, 2003 |
| March 31, 2002(1) |
| ||
|
|
|
|
|
| ||
Net Income |
| $ | 29,801 |
| $ | 31,056 |
|
Basic Earnings Per Share |
| 0.49 |
| 0.42 |
| ||
Diluted Earnings Per Share |
| 0.47 |
| 0.41 |
| ||
Cash Dividends |
| 11,562 |
| 13,177 |
| ||
Return on Average Assets |
| 1.31 | % | 1.21 | % | ||
Return on Average Equity |
| 12.42 | % | 9.97 | % | ||
Net Interest Margin |
| 4.29 | % | 3.92 | % | ||
Efficiency Ratio |
| 66.44 | % | 61.81 | % | ||
Efficiency Ratio excluding ITSRP and Restructuring Costs |
| 60.98 | % | 60.47 | % | ||
Statement of Condition Highlights and Performance Ratios |
| March 31, 2003 |
| March 31, 2002(1) |
| ||
|
|
|
|
|
| ||
Total Assets |
| $ | 9,410,210 |
| $ | 10,245,021 |
|
Net Loans |
| 5,425,343 |
| 5,442,601 |
| ||
Total Deposits |
| 6,987,331 |
| 6,543,781 |
| ||
Total Shareholders’ Equity |
| 952,007 |
| 1,265,907 |
| ||
|
|
|
|
|
| ||
Book Value Per Common Share |
| $ | 15.76 |
| $ | 17.24 |
|
Allowance / Loans Outstanding |
| 2.52 | % | 2.84 | % | ||
Average Equity / Average Assets |
| 10.53 | % | 12.13 | % | ||
Employees (FTE) |
| 2,891 |
| 3,082 |
| ||
Branches and offices |
| 91 |
| 104 |
| ||
|
|
|
|
|
| ||
Market Price Per Share of Common Stock for the Quarter Ended: |
|
|
|
|
| ||
Closing |
| $ | 30.80 |
| $ | 26.06 |
|
High |
| $ | 31.50 |
| $ | 27.79 |
|
Low |
| $ | 29.25 |
| $ | 23.79 |
|
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
6
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited) | Table 2 |
|
| Three Months Ended(1) |
| ||||
(dollars in thousands except per share amounts) |
| March 31, 2003 |
| March 31, 2002 |
| ||
Interest Income |
|
|
|
|
| ||
Interest and Fees on Loan and Leases |
| $ | 85,773 |
| $ | 98,645 |
|
Income on Investment Securities - Held to Maturity |
| 2,283 |
| 5,145 |
| ||
Income on Investment Securities - Available for Sale |
| 22,463 |
| 27,193 |
| ||
Deposits |
| 1,307 |
| 5,047 |
| ||
Funds Sold and Security Resale Agreements |
| 764 |
| 1,003 |
| ||
Other |
| 1,189 |
| 1,332 |
| ||
Total Interest Income |
| 113,779 |
| 138,365 |
| ||
Interest Expense |
|
|
|
|
| ||
Deposits |
| 14,447 |
| 23,978 |
| ||
Security Repurchase Agreements |
| 2,242 |
| 10,293 |
| ||
Funds Purchased |
| 205 |
| 231 |
| ||
Short-Term Borrowings |
| 24 |
| 649 |
| ||
Long-Term Debt |
| 5,861 |
| 8,319 |
| ||
Total Interest Expense |
| 22,779 |
| 43,470 |
| ||
Net Interest Income |
| 91,000 |
| 94,895 |
| ||
Provision for Loan and Lease Losses |
| — |
| 8,292 |
| ||
Net Interest Income After Provision for Loan and Lease Losses |
| 91,000 |
| 86,603 |
| ||
Non-Interest Income |
|
|
|
|
| ||
Trust and Asset Management |
| 13,190 |
| 14,818 |
| ||
Mortgage Banking |
| 283 |
| 7,957 |
| ||
Service Charges on Deposit Accounts |
| 8,950 |
| 8,410 |
| ||
Fees, Exchange, and Other Service Charges |
| 12,980 |
| 12,452 |
| ||
Investment Securities Gains |
| 583 |
| — |
| ||
Insurance |
| 2,982 |
| 2,599 |
| ||
Other |
| 5,785 |
| 6,789 |
| ||
Total Non-Interest Income |
| 44,753 |
| 53,025 |
| ||
Non-Interest Expense |
|
|
|
|
| ||
Salaries |
| 36,459 |
| 39,187 |
| ||
Pensions and Other Employee Benefits |
| 9,970 |
| 9,996 |
| ||
Net Occupancy Expense |
| 9,613 |
| 9,593 |
| ||
Net Equipment Expense |
| 9,748 |
| 10,121 |
| ||
Restructuring and Other Related Costs |
| — |
| 1,979 |
| ||
Information Technology Systems Replacement Project |
| 7,417 |
| — |
| ||
Other |
| 16,993 |
| 20,547 |
| ||
Total Non-Interest Expense |
| 90,200 |
| 91,423 |
| ||
Income Before Income Taxes |
| 45,553 |
| 48,205 |
| ||
Provision for Income Taxes |
| 15,752 |
| 17,149 |
| ||
Net Income |
| $ | 29,801 |
| $ | 31,056 |
|
Basic Earnings Per Share |
| $ | 0.49 |
| $ | 0.42 |
|
Diluted Earnings Per Share |
| $ | 0.47 |
| $ | 0.41 |
|
Dividends Per Share |
| $ | 0.19 |
| $ | 0.18 |
|
Basic Weighted Average Shares |
| 61,294,460 |
| 73,312,573 |
| ||
Diluted Weighted Average Shares |
| 63,535,609 |
| 75,199,181 |
| ||
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
7
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition (Unaudited) | Table 3 |
(dollars in thousands) |
| March 31, |
| December 31, |
| March 31, |
| |||
Assets |
|
|
|
|
|
|
| |||
Interest-Bearing Deposits |
| $ | 157,067 |
| $ | 549,978 |
| $ | 1,347,611 |
|
Investment Securities - Held to Maturity |
| 175,600 |
| 229,720 |
| 344,723 |
| |||
Investment Securities - Available for Sale |
| 2,497,508 |
| 2,287,201 |
| 1,980,378 |
| |||
Funds Sold |
| 175,000 |
| 195,000 |
| 135,000 |
| |||
Loans Held for Sale |
| 47,269 |
| 40,118 |
| 99,773 |
| |||
Loans |
| 5,565,371 |
| 5,359,004 |
| 5,601,580 |
| |||
Allowance for Loan and Lease Losses |
| (140,028 | ) | (142,853 | ) | (158,979 | ) | |||
Net Loans |
| 5,425,343 |
| 5,216,151 |
| 5,442,601 |
| |||
Total Earning Assets |
| 8,477,787 |
| 8,518,168 |
| 9,350,086 |
| |||
Cash and Non-Interest Bearing Deposits |
| 331,994 |
| 374,352 |
| 248,307 |
| |||
Premises and Equipment |
| 170,696 |
| 176,969 |
| 192,291 |
| |||
Customers’ Acceptance Liability |
| 1,372 |
| 2,680 |
| 1,007 |
| |||
Accrued Interest Receivable |
| 36,845 |
| 36,722 |
| 40,940 |
| |||
Foreclosed Real Estate |
| 9,097 |
| 9,434 |
| 19,181 |
| |||
Mortgage Servicing Rights |
| 25,801 |
| 28,820 |
| 30,501 |
| |||
Goodwill |
| 36,216 |
| 36,216 |
| 36,216 |
| |||
Other Assets |
| 320,402 |
| 333,057 |
| 326,492 |
| |||
Total Assets |
| $ | 9,410,210 |
| $ | 9,516,418 |
| $ | 10,245,021 |
|
Liabilities |
|
|
|
|
|
|
| |||
Domestic Deposits |
|
|
|
|
|
|
| |||
Non-Interest Bearing Demand |
| $ | 1,714,601 |
| $ | 1,719,633 |
| $ | 1,592,955 |
|
Interest Bearing Demand |
| 1,162,202 |
| 1,169,128 |
| 933,801 |
| |||
Savings |
| 2,669,409 |
| 2,535,219 |
| 2,089,257 |
| |||
Time |
| 1,416,860 |
| 1,461,780 |
| 1,807,015 |
| |||
Foreign Deposits |
|
|
|
|
|
|
| |||
Time Due to Banks |
| 276 |
| 1,130 |
| 42,261 |
| |||
Other Savings and Time |
| 23,983 |
| 33,271 |
| 78,492 |
| |||
Total Deposits |
| 6,987,331 |
| 6,920,161 |
| 6,543,781 |
| |||
Securities Sold Under Agreements to Repurchase |
| 646,317 |
| 735,621 |
| 1,544,718 |
| |||
Funds Purchased |
| 69,890 |
| 64,467 |
| 43,485 |
| |||
Current Maturities of Long-Term Debt |
| 118,792 |
| 114,781 |
| 64,975 |
| |||
Short-Term Borrowings |
| 12,096 |
| 33,420 |
| 20,644 |
| |||
Banker’s Acceptances Outstanding |
| 1,372 |
| 2,680 |
| 1,007 |
| |||
Retirement Benefits Payable |
| 62,091 |
| 61,385 |
| 37,055 |
| |||
Accrued Interest Payable |
| 12,761 |
| 13,731 |
| 27,983 |
| |||
Taxes Payable |
| 206,139 |
| 196,813 |
| 146,360 |
| |||
Other Liabilities |
| 70,644 |
| 82,596 |
| 84,874 |
| |||
Long-Term Debt |
| 270,770 |
| 275,004 |
| 464,232 |
| |||
Total Liabilities |
| 8,458,203 |
| 8,500,659 |
| 8,979,114 |
| |||
Shareholders’ Equity |
|
|
|
|
|
|
| |||
Common Stock ($.01 par value); authorized 500,000,000 shares; issued / outstanding: March 2003 - 81,276,420 / 60,418,539; December 2002 - 81,294,730 / 63,015,442; March 2002 - 81,346,027 / 73,409,966 |
| 807 |
| 806 |
| 806 |
| |||
Capital Surplus |
| 372,887 |
| 372,192 |
| 369,541 |
| |||
Accumulated Other Comprehensive Income |
| 8,273 |
| 11,659 |
| 20,389 |
| |||
Retained Earnings |
| 1,133,642 |
| 1,115,910 |
| 1,065,706 |
| |||
Deferred Stock Grants |
| 74 |
| (1,424 | ) | (4,933 | ) | |||
Treasury Stock, at Cost (Shares: March 2003 - 20,857,881; December 2002 - 18,279,288; March 2002 - 7,936,061) |
| (563,676 | ) | (483,384 | ) | (185,602 | ) | |||
Total Shareholders’ Equity |
| 952,007 |
| 1,015,759 |
| 1,265,907 |
| |||
Total Liabilities and Shareholders’ Equity |
| $ | 9,410,210 |
| $ | 9,516,418 |
| $ | 10,245,021 |
|
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
8
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity (Unaudited) | Table 4 |
(dollars in thousands) |
| Total |
| Common |
| Capital |
| Accum. |
| Retained |
| Deferred |
| Treasury |
| Compre– |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance at December 31, 2002 |
| $ | 1,015,759 |
| $ | 806 |
| $ | 372,192 |
| $ | 11,659 |
| $ | 1,115,910 |
| $ | (1,424 | ) | $ | (483,384 | ) |
|
| |||
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net Income |
| 29,801 |
| — |
| — |
| — |
| 29,801 |
| — |
| — |
| $ | 29,801 |
| |||||||||
Other Comprehensive Income, Net of Tax |
| (3,386 | ) | — |
| — |
| (3,386 | ) | — |
| — |
| — |
| (3,386 | ) | ||||||||||
Total Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 26,415 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Common Stock Issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
9,930 |
| Profit Sharing Plan |
| 216 |
| — |
| — |
| — |
| — |
| — |
| 216 |
|
|
| ||||||||
245,213 |
| Stock Option Plan |
| 5,834 |
| — |
| 1,083 |
| — |
| (507 | ) | (44 | ) | 5,302 |
|
|
| ||||||||
24,969 |
| Dividend Reinvestment Plan |
| 543 |
| — |
| — |
| — |
| — |
| — |
| 543 |
|
|
| ||||||||
690 |
| Directors’ Restricted Shares and Deferred Compensation Plan |
| (6 | ) | 1 |
| 20 |
| — |
| — |
| — |
| (27 | ) |
|
| ||||||||
(19,000) |
| Employees’ Restricted Shares |
| 1,134 |
| — |
| (408 | ) | — |
| — |
| 1,542 |
| — |
|
|
| ||||||||
Treasury Stock Purchased (2,856,600 shares) |
| (86,326 | ) | — |
| — |
| — |
| — |
| — |
| (86,326 | ) |
|
| ||||||||||
Cash Dividends Paid |
| (11,562 | ) | — |
| — |
| — |
| (11,562 | ) | — |
| — |
|
|
| ||||||||||
Balance at March 31, 2003 |
| $ | 952,007 |
| $ | 807 |
| $ | 372,887 |
| $ | 8,273 |
| $ | 1,133,642 |
| $ | 74 |
| $ | (563,676 | ) |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance at December 31, 2001 |
| $ | 1,247,012 |
| $ | 806 |
| $ | 367,672 |
| $ | 22,761 |
| $ | 1,055,424 |
| $ | (7,637 | ) | $ | (192,014 | ) |
|
| |||
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net Income |
| 31,056 |
| — |
| — |
| — |
| 31,056 |
| — |
| — |
| $ | 31,056 |
| |||||||||
Other Comprehensive Income, Net of Tax |
| (1,913 | ) | — |
| — |
| (1,913 | ) | — |
| — |
| — |
| (1,913 | ) | ||||||||||
Foreign Currency Translation Adjustment |
| (459 | ) | — |
| — |
| (459 | ) | — |
| — |
| — |
| (459 | ) | ||||||||||
Total Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 28,684 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Common Stock Issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
12,113 |
| Profit Sharing Plan |
| 325 |
| — |
| 37 |
| — |
| — |
| — |
| 288 |
|
|
| ||||||||
884,893 |
| Stock Option Plan |
| 18,237 |
| — |
| 2,455 |
| — |
| (7,595 | ) | 746 |
| 22,631 |
|
|
| ||||||||
27,454 |
| Dividend Reinvestment Plan |
| 731 |
| — |
| 77 |
| — |
| (2 | ) | — |
| 656 |
|
|
| ||||||||
(114) |
| Directors’ Restricted Shares and Deferred Compensation Plan |
| (16 | ) | — |
| (1 | ) | — |
| — |
| — |
| (15 | ) |
|
| ||||||||
(31,100) |
| Employees’ Restricted Shares |
| 1,259 |
| — |
| (699 | ) | — |
| — |
| 1,958 |
| — |
|
|
| ||||||||
Treasury Stock Purchased (701,000 shares) |
| (17,148 | ) | — |
| — |
| — |
| — |
| — |
| (17,148 | ) |
|
| ||||||||||
Cash Dividends Paid |
| (13,177 | ) | — |
| — |
| — |
| (13,177 | ) | — |
| — |
|
|
| ||||||||||
Balance at March 31, 2002 |
| $ | 1,265,907 |
| $ | 806 |
| $ | 369,541 |
| $ | 20,389 |
| $ | 1,065,706 |
| $ | (4,933 | ) | $ | (185,602 | ) |
|
| |||
9
Bank of Hawaii Corporation and Subsidiaries
Consolidated Average Balances and Interest Rates - Taxable Equivalent Basis (Unaudited) | Table 5 |
|
| Three Months Ended |
| Three Months Ended(1) |
| Three Months Ended(1) |
| ||||||||||||||||||
(dollars in millions) |
| Average |
| Income/ |
| Yield/ |
| Average |
| Income/ |
| Yield/ |
| Average |
| Income/ |
| Yield/ |
| ||||||
Earning Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest Bearing Deposits |
| $ | 253.8 |
| $ | 1.3 |
| 2.09 | % | $ | 796.6 |
| $ | 3.6 |
| 1.78 | % | $ | 1,154.7 |
| $ | 5.0 |
| 1.77 | % |
Funods Sold |
| 250.5 |
| 0.8 |
| 1.22 |
| 234.5 |
| 0.8 |
| 1.42 |
| 237.3 |
| 1.0 |
| 1.69 |
| ||||||
Investment Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
- Held-to-Maturity |
| 202.0 |
| 2.3 |
| 4.61 |
| 253.8 |
| 3.2 |
| 4.98 |
| 368.7 |
| 5.2 |
| 5.66 |
| ||||||
- Available for Sale |
| 2,268.1 |
| 22.5 |
| 3.96 |
| 2,273.3 |
| 24.1 |
| 4.24 |
| 1,939.1 |
| 27.2 |
| 5.61 |
| ||||||
Loans Held for Sale |
| 10.1 |
| 0.1 |
| 5.16 |
| 38.9 |
| 0.6 |
| 5.88 |
| 340.9 |
| 5.7 |
| 6.66 |
| ||||||
Net Loans and Lease Financing Domestic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
- Commercial and Industrial |
| 871.7 |
| 10.7 |
| 4.96 |
| 867.7 |
| 11.4 |
| 5.20 |
| 1,150.9 |
| 14.5 |
| 5.11 |
| ||||||
- Construction |
| 115.4 |
| 1.4 |
| 5.08 |
| 131.5 |
| 1.8 |
| 5.30 |
| 169.8 |
| 2.2 |
| 5.20 |
| ||||||
-Commercial Mortgage |
| 597.8 |
| 9.0 |
| 6.14 |
| 610.5 |
| 9.9 |
| 6.40 |
| 625.9 |
| 10.5 |
| 6.77 |
| ||||||
-Residential Mortgage |
| 2,249.0 |
| 37.7 |
| 6.70 |
| 2,212.6 |
| 38.5 |
| 6.97 |
| 2,394.0 |
| 42.8 |
| 7.15 |
| ||||||
-Installment |
| 501.9 |
| 12.6 |
| 10.21 |
| 443.3 |
| 11.5 |
| 10.38 |
| 390.6 |
| 11.0 |
| 11.46 |
| ||||||
-Home Equity |
| 434.5 |
| 5.7 |
| 5.28 |
| 422.2 |
| 5.9 |
| 5.50 |
| 347.9 |
| 5.3 |
| 6.22 |
| ||||||
-Purchased Home Equity |
| 180.2 |
| 2.6 |
| 5.78 |
| 10.1 |
| — |
| — |
| — |
| — |
| — |
| ||||||
-Lease Financing |
| 495.6 |
| 5.9 |
| 4.81 |
| 498.5 |
| 6.3 |
| 5.03 |
| 492.0 |
| 6.6 |
| 5.46 |
| ||||||
Total Domestic Loans |
| 5,446.1 |
| 85.6 |
| 6.33 |
| 5,196.4 |
| 85.3 |
| 6.54 |
| 5,571.1 |
| 92.9 |
| 6.72 |
| ||||||
Foreign |
| 14.7 |
| — |
| — |
| 14.0 |
| — |
| — |
| 14.3 |
| 0.1 |
| 1.71 |
| ||||||
Total Loans |
| 5,460.8 |
| 85.6 |
| 6.32 |
| 5,210.4 |
| 85.3 |
| 6.52 |
| 5,585.4 |
| 93.0 |
| 6.71 |
| ||||||
Other |
| 74.6 |
| 1.2 |
| 6.47 |
| 78.7 |
| 1.3 |
| 6.62 |
| 88.4 |
| 1.3 |
| 6.12 |
| ||||||
Total Earning Assets |
| 8,519.9 |
| 113.8 |
| 5.38 |
| 8,886.2 |
| 118.9 |
| 5.33 |
| 9,714.5 |
| 138.4 |
| 5.73 |
| ||||||
Cash and Non-interest Bearing Deposits |
| 331.6 |
|
|
|
|
| 305.2 |
|
|
|
|
| 304.0 |
|
|
|
|
| ||||||
Other Assets |
| 391.5 |
|
|
|
|
| 363.4 |
|
|
|
|
| 398.3 |
|
|
|
|
| ||||||
Total Assets |
| $ | 9,243.0 |
|
|
|
|
| $ | 9,554.8 |
|
|
|
|
| $ | 10,416.8 |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest Bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest Bearing Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Domestic Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
-Demand |
| $ | 1,149.2 |
| 0.7 |
| 0.26 |
| $ | 1,099.9 |
| 1.1 |
| 0.38 |
| $ | 926.4 |
| 1.0 |
| 0.45 |
| |||
- Savings |
| 2,608.2 |
| 4.6 |
| 0.71 |
| 2,468.2 |
| 6.4 |
| 1.03 |
| 2,045.5 |
| 7.2 |
| 1.43 |
| ||||||
- Time |
| 1,443.3 |
| 9.1 |
| 2.55 |
| 1,501.1 |
| 10.1 |
| 2.66 |
| 1,891.0 |
| 14.8 |
| 3.17 |
| ||||||
Total Domestic Deposits |
| 5,200.7 |
| 14.4 |
| 1.12 |
| 5,069.2 |
| 17.6 |
| 1.37 |
| 4,862.9 |
| 23.0 |
| 1.92 |
| ||||||
Foreign Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
- Time Due to Banks |
| 1.0 |
| — |
| — |
| 2.9 |
| — |
| — |
| 118.7 |
| 0.6 |
| 2.09 |
| ||||||
- Other Time and Savings |
| 30.5 |
| 0.1 |
| 1.23 |
| 39.4 |
| 0.1 |
| 1.38 |
| 83.9 |
| 0.4 |
| 1.70 |
| ||||||
Total Foreign Deposits |
| 31.5 |
| 0.1 |
| 1.11 |
| 42.3 |
| 0.1 |
| 1.29 |
| 202.6 |
| 1.0 |
| 1.93 |
| ||||||
Total Interest Bearing Deposits |
| 5,232.2 |
| 14.5 |
| 1.12 |
| 5,111.5 |
| 17.7 |
| 1.37 |
| 5,065.5 |
| 24.0 |
| 1.92 |
| ||||||
Short-Term Borrowings |
| 649.8 |
| 2.5 |
| 1.54 |
| 1,053.5 |
| 5.1 |
| 1.90 |
| 1,738.8 |
| 11.2 |
| 2.61 |
| ||||||
Long-Term Debt |
| 390.4 |
| 5.8 |
| 6.09 |
| 389.9 |
| 5.9 |
| 6.05 |
| 538.2 |
| 8.3 |
| 6.27 |
| ||||||
Total Interest Bearing Liabilities |
| 6,272.4 |
| 22.8 |
| 1.47 |
| 6,554.9 |
| 28.7 |
| 1.73 |
| 7,342.5 |
| 43.5 |
| 2.40 |
| ||||||
Net Interest Income |
|
|
| $ | 91.0 |
|
|
|
|
| $ | 90.2 |
|
|
|
|
| $ | 94.9 |
|
|
| |||
Interest Rate Spread |
|
|
|
|
| 3.91 | % |
|
|
|
| 3.60 | % |
|
|
|
| 3.33 | % | ||||||
Net Interest Margin |
|
|
|
|
| 4.29 | % |
|
|
|
| 4.05 | % |
|
|
|
| 3.92 | % | ||||||
Non-Interest Bearing Demand Deposits (Domestic) |
| 1,636.8 |
|
|
|
|
| 1,601.0 |
|
|
|
|
| 1,508.9 |
|
|
|
|
| ||||||
Other Liabilities |
| 360.7 |
|
|
|
|
| 329.3 |
|
|
|
|
| 301.9 |
|
|
|
|
| ||||||
Shareholders’ Equity |
| 973.1 |
|
|
|
|
| 1,069.6 |
|
|
|
|
| 1,263.5 |
|
|
|
|
| ||||||
Total Liabilities and Shareholders’ Equity |
| $ | 9,243.0 |
|
|
|
|
| $ | 9,554.8 |
|
|
|
|
| $ | 10,416.8 |
|
|
|
|
| |||
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
10
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income –Tax Equivalent Basis (Unaudited) | Table 6 |
|
| Three Months Ended March 31, 2003 Compared to December 31, 2002(2) |
| ||||||||||
(dollars in millions) |
| Volume(1) |
| Rate(1) |
| Time(1) |
| Total |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Change in Interest Income: |
|
|
|
|
|
|
|
|
| ||||
Interest Bearing Deposits |
| $ | (2.8 | ) | $ | 0.6 |
| $ | (0.1 | ) | $ | (2.3 | ) |
Fed Funds Sold |
| 0.1 |
| (0.1 | ) | — |
| — |
| ||||
Investment Securities |
|
|
|
|
|
|
|
|
| ||||
Held-to-Maturity |
| (0.6 | ) | (0.3 | ) | — |
| (0.9 | ) | ||||
Available for Sale |
| (0.1 | ) | (1.5 | ) | — |
| (1.6 | ) | ||||
Loans Held for Sale |
| (0.4 | ) | (0.1 | ) | — |
| (0.5 | ) | ||||
Loans |
|
|
|
|
|
|
|
|
| ||||
Commercial and Industrial |
| — |
| (0.5 | ) | (0.2 | ) | (0.7 | ) | ||||
Construction |
| (0.2 | ) | (0.1 | ) | (0.1 | ) | (0.4 | ) | ||||
Commercial Mortgage |
| (0.3 | ) | (0.4 | ) | (0.2 | ) | (0.9 | ) | ||||
Residential Mortgage |
| 0.7 |
| (1.5 | ) | — |
| (0.8 | ) | ||||
Installment |
| 1.5 |
| (0.2 | ) | (0.2 | ) | 1.1 |
| ||||
Home Equity |
| 0.2 |
| (0.2 | ) | (0.2 | ) | (0.2 | ) | ||||
Purchased Home Equity |
| 2.4 |
| 0.2 |
| — |
| 2.6 |
| ||||
Lease Financing |
| — |
| (0.3 | ) | (0.1 | ) | (0.4 | ) | ||||
Total Loans |
| 4.3 |
| (3.0 | ) | (1.0 | ) | 0.3 |
| ||||
Other |
| (0.1 | ) | — |
| — |
| (0.1 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Change in Interest Income |
| 0.4 |
| (4.4 | ) | (1.1 | ) | (5.1 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Change in Interest Expense: |
|
|
|
|
|
|
|
|
| ||||
Interest Bearing Deposits |
|
|
|
|
|
|
|
|
| ||||
Demand |
| — |
| (0.4 | ) | — |
| (0.4 | ) | ||||
Savings |
| 0.2 |
| (1.9 | ) | (0.1 | ) | (1.8 | ) | ||||
Time |
| (0.4 | ) | (0.4 | ) | (0.2 | ) | (1.0 | ) | ||||
Total Interest Bearing Deposits |
| (0.2 | ) | (2.7 | ) | (0.3 | ) | (3.2 | ) | ||||
Short-Term Borrowings |
| (1.6 | ) | (0.9 | ) | (0.1 | ) | (2.6 | ) | ||||
Long-Term Debt |
| — |
| — |
| (0.1 | ) | (0.1 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Change in Interest Expense |
| (1.8 | ) | (3.6 | ) | (0.5 | ) | (5.9 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Change in Net Interest Income |
| $ | 2.2 |
| $ | (0.8 | ) | $ | (0.6 | ) | $ | 0.8 |
|
(1) The changes for each category of interest income and expense are allocated between the portion of changes attributable to the variance in volume, rate or time for that category.
(2) Certain 2002 information has been reclassified to conform to 2003 presentation.
11
Bank of Hawaii Corporation and Subsidiaries
Loan Portfolio Balances (Unaudited) | Table 7 |
(dollars in millions) |
| March 31, |
| December 31, |
| March 31, |
| |||
Domestic |
|
|
|
|
|
|
| |||
Commercial |
|
|
|
|
|
|
| |||
Commercial and Industrial |
| $ | 824.9 |
| $ | 875.0 |
| $ | 1,114.9 |
|
Commercial Mortgage |
| 691.7 |
| 591.1 |
| 617.6 |
| |||
Construction |
| 86.7 |
| 127.5 |
| 161.4 |
| |||
Lease Financing |
| 430.4 |
| 427.3 |
| 436.1 |
| |||
Total Commercial |
| 2,033.7 |
| 2,020.9 |
| 2,330.0 |
| |||
Consumer |
|
|
|
|
|
|
| |||
Residential Mortgage |
| 2,305.3 |
| 2,131.4 |
| 2,409.4 |
| |||
Home Equity |
| 439.1 |
| 428.2 |
| 369.8 |
| |||
Purchased Home Equity |
| 170.9 |
| 185.8 |
| — |
| |||
Other Consumer |
| 518.5 |
| 493.3 |
| 389.5 |
| |||
Lease Financing |
| 33.8 |
| 34.5 |
| 37.9 |
| |||
Total Consumer |
| 3,467.6 |
| 3,273.2 |
| 3,206.6 |
| |||
Total Domestic |
| 5,501.3 |
| 5,294.1 |
| 5,536.6 |
| |||
Foreign |
| 64.1 |
| 64.9 |
| 65.0 |
| |||
Total Loans |
| $ | 5,565.4 |
| $ | 5,359.0 |
| $ | 5,601.6 |
|
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
Selected Concentrations of Credit Exposure (Unaudited)
|
| March 31, 2003 |
| Dec. 31, 2002 |
| Mar. 31, 2002 |
| |||||||||
(dollars in millions) |
| Outstanding |
| Unused |
| Total |
| Total |
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Air Transportation |
|
|
|
|
|
|
|
|
|
|
| |||||
Regional Passenger Carriers |
| $ | 46.4 |
| $ | 12.3 |
| $ | 58.7 |
| $ | 57.3 |
| $ | 59.8 |
|
United States Based Passenger Carriers |
| 39.7 |
| — |
| 39.7 |
| 39.6 |
| 48.7 |
| |||||
International Based Passenger Carriers |
| 31.9 |
| — |
| 31.9 |
| 32.1 |
| 32.4 |
| |||||
Cargo Carriers |
| 14.7 |
| — |
| 14.7 |
| 15.0 |
| 14.8 |
| |||||
Total Air Transportation |
| $ | 132.7 |
| $ | 12.3 |
| $ | 145.0 |
| $ | 144.0 |
| $ | 155.7 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Guam |
|
|
|
|
|
|
|
|
|
|
| |||||
Hotels |
| $ | 42.8 |
| $ | — |
| $ | 42.8 |
| $ | 44.4 |
| $ | 42.8 |
|
Other Commercial |
| 139.6 |
| 31.7 |
| 171.3 |
| 166.0 |
| 230.5 |
| |||||
Consumer |
| 254.0 |
| 9.9 |
| 263.9 |
| 257.4 |
| 283.2 |
| |||||
Total Guam |
| $ | 436.4 |
| $ | 41.6 |
| $ | 478.0 |
| $ | 467.8 |
| $ | 556.5 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Syndicated Exposure |
| $ | 319.4 |
| $ | 633.1 |
| $ | 952.5 |
| $ | 1,002.1 |
| $ | 1,352.2 |
|
(1) Exposure includes loans, leveraged and operating leases.
12
Bank of Hawaii Corporation and Subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past Due 90 Days or More (Unaudited) | Table 8 |
(dollars in millions) |
| March 31, |
| December 31, |
| September 30, |
| June 30, |
| March 31, |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Non-Performing Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Non-Accrual Loans |
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial |
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial and Industrial |
| $ | 2.4 |
| $ | 5.9 |
| $ | 6.4 |
| $ | 14.4 |
| $ | 27.4 |
|
Commercial Mortgage |
| 17.9 |
| 20.3 |
| 18.1 |
| 25.3 |
| 15.1 |
| |||||
Construction |
| — |
| 0.5 |
| 0.9 |
| 0.7 |
| 1.0 |
| |||||
Lease Financing |
| 3.2 |
| 4.1 |
| 5.7 |
| 6.9 |
| 4.4 |
| |||||
Total Commercial |
| 23.5 |
| 30.8 |
| 31.1 |
| 47.3 |
| 47.9 |
| |||||
Consumer |
|
|
|
|
|
|
|
|
|
|
| |||||
Residential Mortgage |
| 11.5 |
| 13.9 |
| 14.3 |
| 14.2 |
| 15.3 |
| |||||
Home Equity |
| 0.1 |
| 0.3 |
| 0.2 |
| 0.1 |
| 0.4 |
| |||||
Other Consumer |
| — |
| — |
| 0.1 |
| — |
| 0.1 |
| |||||
Total Consumer |
| 11.6 |
| 14.2 |
| 14.6 |
| 14.3 |
| 15.8 |
| |||||
Total Non-Accrual Loans |
| 35.1 |
| 45.0 |
| 45.7 |
| 61.6 |
| 63.7 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Non-Accrual Loans Held for Sale |
| — |
| — |
| — |
| — |
| 7.8 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreclosed Real Estate |
| 9.1 |
| 9.4 |
| 17.6 |
| 17.2 |
| 19.2 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total Non-Performing Assets |
| $ | 44.2 |
| $ | 54.4 |
| $ | 63.3 |
| $ | 78.8 |
| $ | 90.7 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accruing Loans Past Due 90 Days or More |
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial |
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial and Industrial |
| $ | — |
| $ | 0.2 |
| $ | — |
| $ | — |
| $ | 0.2 |
|
Commercial Mortgage |
| 0.4 |
| 0.3 |
| — |
| — |
| 1.2 |
| |||||
Total Commercial |
| 0.4 |
| 0.5 |
| — |
| — |
| 1.4 |
| |||||
Consumer |
|
|
|
|
|
|
|
|
|
|
| |||||
Residential Mortgage |
| 1.6 |
| 0.6 |
| 1.4 |
| 0.9 |
| 2.1 |
| |||||
Other Consumer |
| 2.3 |
| 0.7 |
| 0.3 |
| 0.5 |
| 0.7 |
| |||||
Lease Financing |
| — |
| — |
| — |
| 0.1 |
| 0.1 |
| |||||
Total Consumer |
| 3.9 |
| 1.3 |
| 1.7 |
| 1.5 |
| 2.9 |
| |||||
Total Accruing and Past Due |
| $ | 4.3 |
| $ | 1.8 |
| $ | 1.7 |
| $ | 1.5 |
| $ | 4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total Loans |
| $ | 5,565.4 |
| $ | 5,359.0 |
| $ | 5,259.3 |
| $ | 5,409.2 |
| $ | 5,601.6 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Ratio of Non-Accrual Loans to Total Loans |
| 0.63 | % | 0.84 | % | 0.87 | % | 1.14 | % | 1.14 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Ratio of Non-Performing Assets to Total Loans, Foreclosed Real Estate and Non-Performing Loans Held for Sale |
| 0.79 | % | 1.01 | % | 1.20 | % | 1.45 | % | 1.61 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Ratio of Non-Performing Assets and Accruing Loans Past Due 90 Days or More to Total Loans |
| 0.87 | % | 1.05 | % | 1.24 | % | 1.48 | % | 1.70 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Quarter to Quarter Changes in Non-Performing Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Balance at Beginning of Quarter |
| $ | 54.4 |
| $ | 63.3 |
| $ | 78.8 |
| $ | 90.7 |
| $ | 79.7 |
|
Additions |
| 4.8 |
| 12.0 |
| 7.0 |
| 20.5 |
| 36.4 |
| |||||
Reductions |
|
|
|
|
|
|
|
|
|
|
| |||||
Payments and Sales of Loans |
| (5.6 | ) | (6.9 | ) | (8.5 | ) | (20.6 | ) | (12.9 | ) | |||||
Return to Accrual |
| (5.6 | ) | (1.9 | ) | (9.1 | ) | (6.2 | ) | (6.3 | ) | |||||
Sales of Foreclosed Assets |
| (1.1 | ) | (9.4 | ) | (1.4 | ) | (3.5 | ) | (0.9 | ) | |||||
Charge-offs |
| (2.7 | ) | (2.7 | ) | (3.5 | ) | (2.1 | ) | (5.3 | ) | |||||
Total Reductions |
| (15.0 | ) | (20.9 | ) | (22.5 | ) | (32.4 | ) | (25.4 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance at End of Quarter |
| $ | 44.2 |
| $ | 54.4 |
| $ | 63.3 |
| $ | 78.8 |
| $ | 90.7 |
|
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
13
Bank of Hawaii Corporation and Subsidiaries |
|
Consolidated Allowance for Loan and Lease Losses (Unaudited) | Table 9 |
|
| Three Months Ended(1) |
| |||||||
(dollars in millions) |
| March 31, 2003 |
| December 31, 2002 |
| March 31, 2002 |
| |||
|
|
|
|
|
|
|
| |||
Balance at Beginning of Period |
| $ | 142.9 |
| $ | 154.5 |
| $ | 159.0 |
|
Loans Charged-Off |
|
|
|
|
|
|
| |||
Commercial |
|
|
|
|
|
|
| |||
Commercial and Industrial |
| (1.6 | ) | (2.0 | ) | (7.3 | ) | |||
Construction |
| (0.5 | ) | — |
| (0.5 | ) | |||
Lease Financing |
| — |
| (9.6 | ) | — |
| |||
Consumer |
|
|
|
|
|
|
| |||
Residential Mortgage |
| (0.7 | ) | (0.4 | ) | (1.4 | ) | |||
Home Equity |
| (0.1 | ) | (0.1 | ) | (0.1 | ) | |||
Other Consumer |
| (3.1 | ) | (2.8 | ) | (3.7 | ) | |||
Lease Financing |
| (0.1 | ) | (0.1 | ) | (0.1 | ) | |||
Total Charge-Offs |
| (6.1 | ) | (15.0 | ) | (13.1 | ) | |||
Recoveries on Loans Previously Charged-Off |
|
|
|
|
|
|
| |||
Commercial |
|
|
|
|
|
|
| |||
Commercial and Industrial |
| 0.6 |
| 1.4 |
| 0.7 |
| |||
Commercial Mortgage |
| — |
| 0.1 |
| 1.8 |
| |||
Construction |
| 0.9 |
| 0.2 |
| — |
| |||
Consumer |
|
|
|
|
|
|
| |||
Residential Mortgage |
| 0.2 |
| 0.3 |
| 0.3 |
| |||
Home Equity |
| 0.1 |
| — |
| 0.1 |
| |||
Other Consumer |
| 1.3 |
| 1.3 |
| 1.8 |
| |||
Lease Financing |
| 0.1 |
| 0.1 |
| — |
| |||
Foreign |
| 0.1 |
| — |
| 0.1 |
| |||
Total Recoveries |
| 3.3 |
| 3.4 |
| 4.8 |
| |||
Net Loan Charge-Offs |
| (2.8 | ) | (11.6 | ) | (8.3 | ) | |||
Provision for Loan and Lease Losses |
| — |
| — |
| 8.3 |
| |||
Balance at End of Period(2) |
| $ | 140.0 |
| $ | 142.9 |
| $ | 159.0 |
|
|
|
|
|
|
|
|
| |||
Average Loans Outstanding |
| $ | 5,460.8 |
| $ | 5,210.4 |
| $ | 5,585.4 |
|
|
|
|
|
|
|
|
| |||
Ratio of Net Charge-Offs to Average Loans Outstanding (annualized) |
| 0.21 | % | 0.88 | % | 0.60 | % | |||
Ratio of Allowance to Loans Outstanding |
| 2.52 | % | 2.67 | % | 2.84 | % | |||
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
(2) Totals may not add due to rounding.
14
Bank of Hawaii Corporation and Subsidiaries |
|
Information Technology Systems Replacement Project (Unaudited) | Table 10 |
(dollars in millions) |
| Professional |
| Employee |
| Accelerated |
| Other |
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Costs Incurred: |
|
|
|
|
|
|
|
|
|
|
| |||||
Three Months Ended: |
|
|
|
|
|
|
|
|
|
|
| |||||
September 30, 2002 |
| $ | 1.9 |
| $ | 1.0 |
| $ | 3.2 |
| $ | 0.5 |
| $ | 6.6 |
|
December 31, 2002 |
| 3.2 |
| 0.2 |
| 2.2 |
| 1.4 |
| 7.0 |
| |||||
Year Ended December 31, 2002 |
| 5.1 |
| 1.2 |
| 5.4 |
| 1.9 |
| 13.6 |
| |||||
Three Months Ended March 31, 2003 |
| 3.5 |
| 0.4 |
| 2.0 |
| 1.5 |
| 7.4 |
| |||||
Total Costs Incurred |
| $ | 8.6 |
| $ | 1.6 |
| $ | 7.4 |
| $ | 3.4 |
| $ | 21.0 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total Expected Project Costs |
| $ | 13.1 |
| $ | 5.9 |
| $ | 9.2 |
| $ | 7.3 |
| $ | 35.5 |
|
(1) Includes contract termination, equipment, excise tax and other costs.
15
Bank of Hawaii Corporation and Subsidiaries |
|
Business Segment Selected Financial Information (Unaudited) | Table 11 |
(dollars in thousands) |
| Retail |
| Commercial |
| Investment |
| Treasury |
| Consolidated |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Three Months Ended March 31, 2003 |
|
|
|
|
|
|
|
|
|
|
| |||||
Net Interest Income |
| $ | 54,988 |
| $ | 36,383 |
| $ | 3,970 |
| $ | (4,341 | ) | $ | 91,000 |
|
Provision for Loan and Lease Losses |
| (848 | ) | (2,151 | ) | — |
| 2,999 |
| — |
| |||||
Net Interest Income After Provision for Loan and Lease Losses |
| 54,140 |
| 34,232 |
| 3,970 |
| (1,342 | ) | 91,000 |
| |||||
Non-Interest Income |
| 17,364 |
| 8,415 |
| 15,680 |
| 3,294 |
| 44,753 |
| |||||
|
| 71,504 |
| 42,647 |
| 19,650 |
| 1,952 |
| 135,753 |
| |||||
Information Technology Systems Replacement Project |
| (583 | ) | (23 | ) | (244 | ) | (6,567 | ) | (7,417 | ) | |||||
Non-Interest Expense |
| (40,846 | ) | (22,541 | ) | (15,904 | ) | (3,492 | ) | (82,783 | ) | |||||
Income Before Income Taxes |
| 30,075 |
| 20,083 |
| 3,502 |
| (8,107 | ) | 45,553 |
| |||||
Provision for Income Taxes |
| (11,128 | ) | (7,334 | ) | (1,296 | ) | 4,006 |
| (15,752 | ) | |||||
Allocated Net Income (Loss) |
| 18,947 |
| 12,749 |
| 2,206 |
| (4,101 | ) | 29,801 |
| |||||
Allowance Funding Value |
| (152 | ) | (1,141 | ) | (10 | ) | 1,303 |
| — |
| |||||
GAAP Provision |
| 848 |
| 2,151 |
| — |
| (2,999 | ) | — |
| |||||
Economic Provision |
| (2,708 | ) | (3,058 | ) | (132 | ) | (6 | ) | (5,904 | ) | |||||
Tax Effect of Adjustments |
| 744 |
| 758 |
| 53 |
| 629 |
| 2,184 |
| |||||
Capital Charge |
| (5,403 | ) | (5,367 | ) | (1,517 | ) | (14,464 | ) | (26,751 | ) | |||||
Net Income (Loss) After Capital Charge (NIACC) |
| $ | 12,276 |
| $ | 6,092 |
| $ | 600 |
| $ | (19,638 | ) | $ | (670 | ) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
RAROC (ROE for the Company) |
| 36 | % | 24 | % | 16 | % | (4 | )% | 12 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total Assets at March 31, 2003 |
| $ | 3,471,677 |
| $ | 2,242,681 |
| $ | 145,925 |
| $ | 3,549,927 |
| $ | 9,410,210 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Three Months Ended March 31, 2002 |
|
|
|
|
|
|
|
|
|
|
| |||||
Net Interest Income |
| $ | 49,556 |
| $ | 35,630 |
| $ | 3,001 |
| $ | 6,708 |
| $ | 94,895 |
|
Provision for Loan and Lease Losses |
| (1,942 | ) | (6,510 | ) | — |
| 160 |
| (8,292 | ) | |||||
Net Interest Income After Provision for Loan and Lease Losses |
| 47,614 |
| 29,120 |
| 3,001 |
| 6,868 |
| 86,603 |
| |||||
Non-Interest Income |
| 24,052 |
| 8,621 |
| 17,824 |
| 2,528 |
| 53,025 |
| |||||
|
| 71,666 |
| 37,741 |
| 20,825 |
| 9,396 |
| 139,628 |
| |||||
Restructuring and Other Related Costs |
| — |
| — |
| — |
| (1,979 | ) | (1,979 | ) | |||||
Non-Interest Expense |
| (46,314 | ) | (24,955 | ) | (16,061 | ) | (2,114 | ) | (89,444 | ) | |||||
Income Before Income Taxes |
| 25,352 |
| 12,786 |
| 4,764 |
| 5,303 |
| 48,205 |
| |||||
Provision for Income Taxes |
| (9,380 | ) | (4,655 | ) | (1,763 | ) | (1,351 | ) | (17,149 | ) | |||||
Allocated Net Income |
| 15,972 |
| 8,131 |
| 3,001 |
| 3,952 |
| 31,056 |
| |||||
Allowance Funding Value |
| (267 | ) | (1,551 | ) | (7 | ) | 1,825 |
| — |
| |||||
GAAP Provision |
| 1,942 |
| 6,510 |
| — |
| (160 | ) | 8,292 |
| |||||
Economic Provision |
| (2,504 | ) | (4,239 | ) | (127 | ) | (1 | ) | (6,871 | ) | |||||
Tax Effect of Adjustments |
| 307 |
| (266 | ) | 50 |
| (617 | ) | (526 | ) | |||||
Capital Charge |
| (5,323 | ) | (6,559 | ) | (1,501 | ) | (21,366 | ) | (34,749 | ) | |||||
Net Income (Loss) After Capital Charge (NIACC) |
| $ | 10,127 |
| $ | 2,026 |
| $ | 1,416 |
| $ | (16,367 | ) | $ | (2,798 | ) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
RAROC (ROE for the Company) |
| 32 | % | 15 | % | 22 | % | 24 | % | 10 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total Assets at March 31, 2002 |
| $ | 3,243,345 |
| $ | 2,598,482 |
| $ | 113,914 |
| $ | 4,289,280 |
| $ | 10,245,021 |
|
16
Bank of Hawaii Corporation and Subsidiaries |
|
Quarterly Summary of Selected Consolidated Financial Data (Unaudited) | Table 12 |
|
| Three Months Ended(1) |
| |||||||||||||
(dollars in thousands except per share amounts) |
| March 31, |
| December 31, |
| September 30, |
| June 30, |
| March 31, |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Quarterly Operating Results |
|
|
|
|
|
|
|
|
|
|
| |||||
Interest Income |
|
|
|
|
|
|
|
|
|
|
| |||||
Interest and Fees on Loan and Leases |
| $ | 85,773 |
| $ | 85,945 |
| $ | 89,335 |
| $ | 92,441 |
| $ | 98,645 |
|
Income on Investment Securities - Held to Maturity |
| 2,283 |
| 3,122 |
| 3,963 |
| 4,544 |
| 5,145 |
| |||||
Income on Investment Securities - Available for Sale |
| 22,463 |
| 24,088 |
| 26,175 |
| 26,805 |
| 27,193 |
| |||||
Deposits |
| 1,307 |
| 3,578 |
| 5,384 |
| 6,011 |
| 5,047 |
| |||||
Funds Sold and Security Resale Agreements |
| 764 |
| 834 |
| 914 |
| 752 |
| 1,003 |
| |||||
Other |
| 1,189 |
| 1,312 |
| 1,575 |
| 1,395 |
| 1,332 |
| |||||
Total Interest Income |
| 113,779 |
| 118,879 |
| 127,346 |
| 131,948 |
| 138,365 |
| |||||
Interest Expense |
|
|
|
|
|
|
|
|
|
|
| |||||
Deposits |
| 14,447 |
| 17,657 |
| 20,547 |
| 22,166 |
| 23,978 |
| |||||
Security Repurchase Agreements |
| 2,242 |
| 4,585 |
| 7,039 |
| 8,256 |
| 10,293 |
| |||||
Funds Purchased |
| 205 |
| 255 |
| 299 |
| 245 |
| 231 |
| |||||
Short-Term Borrowings |
| 24 |
| 217 |
| 334 |
| 289 |
| 649 |
| |||||
Long-Term Debt |
| 5,861 |
| 5,947 |
| 6,946 |
| 8,055 |
| 8,319 |
| |||||
Total Interest Expense |
| 22,779 |
| 28,661 |
| 35,165 |
| 39,011 |
| 43,470 |
| |||||
Net Interest Income |
| 91,000 |
| 90,218 |
| 92,181 |
| 92,937 |
| 94,895 |
| |||||
Provision for Loan and Lease Losses |
| — |
| — |
| — |
| 3,324 |
| 8,292 |
| |||||
Net Interest Income After Provision for Loan and Lease Losses |
| 91,000 |
| 90,218 |
| 92,181 |
| 89,613 |
| 86,603 |
| |||||
Non-Interest Income |
|
|
|
|
|
|
|
|
|
|
| |||||
Trust and Asset Management |
| 13,190 |
| 13,085 |
| 13,655 |
| 14,175 |
| 14,818 |
| |||||
Mortgage Banking |
| 283 |
| 4,398 |
| 3,669 |
| 2,842 |
| 7,957 |
| |||||
Service Charges on Deposit Accounts |
| 8,950 |
| 8,326 |
| 7,925 |
| 7,956 |
| 8,410 |
| |||||
Fees, Exchange, and Other Service Charges |
| 12,980 |
| 12,963 |
| 13,114 |
| 13,065 |
| 12,452 |
| |||||
Investment Securities Gains |
| 583 |
| 612 |
| — |
| 3 |
| — |
| |||||
Insurance |
| 2,982 |
| 3,099 |
| 2,677 |
| 2,563 |
| 2,599 |
| |||||
Other |
| 5,785 |
| 7,872 |
| 5,997 |
| 7,314 |
| 6,789 |
| |||||
Total Non-Interest Income |
| 44,753 |
| 50,355 |
| 47,037 |
| 47,918 |
| 53,025 |
| |||||
Non-Interest Expense |
|
|
|
|
|
|
|
|
|
|
| |||||
Salaries |
| 36,459 |
| 38,462 |
| 37,994 |
| 37,884 |
| 39,187 |
| |||||
Pensions and Other Employee Benefits |
| 9,970 |
| 6,272 |
| 7,377 |
| 9,391 |
| 9,996 |
| |||||
Net Occupancy Expense |
| 9,613 |
| 10,638 |
| 9,597 |
| 9,321 |
| 9,593 |
| |||||
Net Equipment Expense |
| 9,748 |
| 11,077 |
| 10,058 |
| 9,997 |
| 10,121 |
| |||||
Restructuring and Other Related Costs |
| — |
| 385 |
| — |
| — |
| 1,979 |
| |||||
Information Technology Systems Replacement Project |
| 7,417 |
| 7,052 |
| 6,576 |
| — |
| — |
| |||||
Other |
| 16,993 |
| 22,827 |
| 20,141 |
| 22,777 |
| 20,547 |
| |||||
Total Non-Interest Expense |
| 90,200 |
| 96,713 |
| 91,743 |
| 89,370 |
| 91,423 |
| |||||
Income Before Income Taxes |
| 45,553 |
| 43,860 |
| 47,475 |
| 48,161 |
| 48,205 |
| |||||
Provision for Income Taxes |
| 15,752 |
| 14,952 |
| 17,275 |
| 17,145 |
| 17,149 |
| |||||
Net Income |
| $ | 29,801 |
| $ | 28,908 |
| $ | 30,200 |
| $ | 31,016 |
| $ | 31,056 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic Earnings Per Share |
| $ | 0.49 |
| $ | 0.45 |
| $ | 0.44 |
| $ | 0.43 |
| $ | 0.42 |
|
Diluted Earnings Per Share |
| $ | 0.47 |
| $ | 0.44 |
| $ | 0.43 |
| $ | 0.42 |
| $ | 0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance Sheet Totals |
|
|
|
|
|
|
|
|
|
|
| |||||
Total Assets |
| 9,410,210 |
| 9,516,418 |
| 9,702,700 |
| 9,824,065 |
| 10,245,021 |
| |||||
Net Loans |
| 5,425,343 |
| 5,216,151 |
| 5,104,857 |
| 5,250,216 |
| 5,442,601 |
| |||||
Total Deposits |
| 6,987,331 |
| 6,920,161 |
| 6,627,673 |
| 6,455,981 |
| 6,543,781 |
| |||||
Total Shareholders’ Equity |
| 952,007 |
| 1,015,759 |
| 1,100,706 |
| 1,191,072 |
| 1,265,907 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Performance Ratios |
|
|
|
|
|
|
|
|
|
|
| |||||
Return on Average Assets |
| 1.31 | % | 1.20 | % | 1.22 | % | 1.23 | % | 1.21 | % | |||||
Return on Average Equity |
| 12.42 | % | 10.72 | % | 10.40 | % | 9.94 | % | 9.97 | % | |||||
Efficiency Ratio |
| 66.44 | % | 68.80 | % | 65.90 | % | 63.45 | % | 61.81 | % | |||||
Efficiency Ratio excluding ITSRP and Restructuring Costs |
| 60.98 | % | 63.51 | % | 61.18 | % | 63.45 | % | 60.47 | % | |||||
(1) Certain 2002 information has been reclassified to conform to 2003 presentation.
17