To Our Shareholders:
For the second quarter of 1994, Bancorp Hawaii,
Inc. reported earnings of $34.2 million, a 1.2%
increase from second quarter 1993. Earnings per share
for the second quarter were $0.79, which matched that
of second quarter 1993.
For the first half of 1994, Bancorp Hawaii's
earnings were $68.6 million, which reflects a 2.7%
increase from the first six months of 1993. Return on
average assets was 1.10% and return on average equity
was 14.40% for the six-month period.
Your company's total assets on June 30, 1994 were
$12.6 billion, just slightly lower than assets at the
same time last year. Deposits and security repurchase
agreements were $9.4 billion, down 6.1% from June 30,
1993. Net loans increased 5.2% over the same period to
$7.2 billion, from $6.9 billion.
Asset quality throughout the year has continued to
improve. Total non-performing assets (NPAs) declined
to $53.3 million from $66.8 million at first quarter
1994, representing a decline of 20.2%. NPAs dropped
22.5% from the $68.8 million reported on December 31,
1993. NPAs at June 30, 1994 represented 0.71% of total
loans. Loan loss reserves at the end of the second
quarter were 1.91% of loans outstanding, up from 1.80%
reported on March 31, 1994.
Bancorp Hawaii's performance for the second
quarter, as well as for the first half of 1994 is
encouraging and consistent with management's focus on
improving asset quality and non-interest income.
Hawaii's slow economy, rising interest rates and slow
loan demand each had an impact on second quarter
earnings. We remain confident that our strength lies
in our cautious posture, our commitment to quality and
our long-term approach, all of which have contributed
to your company's steady financial performance.
In the second quarter, Bank of Hawaii, Bancorp's
principal subsidiary, opened the first of several in-
store banks at Safeway supermarkets in Hawaii. Also,
the bank launched a first-
time home buyers loan program. These additions to our
consumer banking area demonstrate our commitment to
offering quality and convenience to our customers.
The acquisition of trust holding company American
Financial Services, Inc. in 1993 has been a positive
one and we are pleased with its ahead-of-schedule
blending with Bank of Hawaii trust subsidiary, Hawaiian
Trust Company. In the June 30, 1994 issue of American
Banker, Bancorp Hawaii ranked 52nd among the nation's
top 100 bank holding companies based on discretionary
trust assets of $6.4 billion.
On July 27, 1994, the Board of Directors declared
a quarterly dividend of 26 cents payable on September
15, 1994 to shareholders of record on August 18, 1994.
It has been a distinct pleasure to serve as your
Chairman and Chief Executive Officer for the past five
years. During the 35 years of my career with the
company, I have had the honor of working with a
management group and staff of the highest caliber who
have been totally committed to furthering the
reputation of Bancorp Hawaii as the leading financial
institution in our markets. Now, as I retire from
Bancorp Hawaii, I have every confidence that your new
Chairman and Chief Executive Officer Lawrence M.
Johnson and President Richard J. Dahl will continue
your company along a path of solid financial
performance. The managing committee, along with the
executive and senior management team, is well-equipped
to guide Bancorp Hawaii successfully through a
continually changing financial services industry. I
look forward to my continuing role as a member of
Bancorp Hawaii's Board of Directors.
I thank everyone at Bancorp Hawaii, from our
tellers to our Board members, for their many
contributions to the company. And to you, our
shareholders, all of us at Bancorp Hawaii appreciate
your continuing support.
Aloha,
H. HOWARD STEPHENSON
H. Howard Stephenson
Chairman and Chief Executive Officer
July 31, 1994
Corporate Offices:
Financial Plaza of the Pacific
130 Merchant Street
Honolulu, Hawaii 96813
Investor or Analyst Inquiries:
David A. Houle
Senior Vice President, Treasurer and Chief Financial
Officer
(808) 537-8288
or
Dale L.I. Suezaki
Assistant Vice President and Investor Relations Officer
(808) 537-8037
or
Ruth E. Miyashiro
Corporate Secretary
(808) 537-8272
Highlights (Unaudited) Bancorp Hawaii, Inc., and subsidiaries
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June 30 June 30
1994 1993
Return on Average Assets* 1.10% 1.06%
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Return on Average Equity* 14.40% 15.55%
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Average Spread on Earning Assets* 4.03% 3.96%
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Book Value Per Common Share $22.63 $20.87
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Loss Reserve/Loans and Leases Outstanding 1.91% 1.87%
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Average Equity/Average Assets* 7.61% 6.83%
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Common Stock Price Range High Low Dividend
1993.......................... $35.92 $26.67 $0.90
1994 First Quarter............ $31.88 $26.92 $0.26
1994 Second Quarter........... $34.75 $29.38 $0.26
* year-to-date ratio
Consolidated Statements of Income (Unaudited)
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3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
(in thousands of dollars except per share amounts) 1994 1993 1994 1993
- --------------------------------------------------------------------------------------------------------------------
Total Interest Income $202,868 $202,180 $398,292 $406,334
Total Interest Expense 85,254 85,155 163,043 173,658
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Net Interest Income 117,614 117,025 235,249 232,676
Provision for Possible Loan Losses 5,964 12,204 14,222 21,216
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Net Interest Income After Provision for Possible Loan Losses 111,650 104,821 221,027 211,460
Total Non-Interest Income 33,063 31,034 67,209 58,873
Total Non-Interest Expense 89,749 82,736 177,993 165,246
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Income Before Income Taxes 54,964 53,119 110,243 105,087
Provision for Income Taxes 20,802 19,361 41,689 38,354
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Net Income $34,162 $33,758 $68,554 $66,733
====================================================================================================================
Earnings Per Common Share and Common Share Equivalents $0.79 $0.79 $1.59 $1.56
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Average Common Shares and Common Share Equivalents Outstanding 43,056,348 42,958,796 43,006,653 42,913,356
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Consolidated Statements of Condition (Unaudited)
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June 30 December 31 June 30
(in thousands of dollars) 1994 1993 1993
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Assets
Interest-Bearing Deposits $842,255 $837,704 $1,204,563
Investment Securities 3,532,916 3,647,043 3,709,392
(Market Value of $3,491,979, $3,684,781, $3,782,658, respectively)
Funds Sold 80,470 57,699 75,572
Loans 7,523,003 7,258,368 7,151,381
Unearned Income (146,163) (149,949) (141,574)
Reserve for Possible Loan Losses (141,210) (125,284) (131,249)
Net Loans 7,235,630 6,983,135 6,878,558
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Total Earning Assets 11,691,271 11,525,581 11,868,085
Cash and Non-Interest Bearing Deposits 460,935 395,315 398,203
Premises and Equipment 187,710 167,260 159,309
Other Assets 307,384 373,971 320,655
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Total Assets $12,647,300 $12,462,127 $12,746,252
====================================================================================================================
Liabilities
Deposits $7,082,778 $7,004,975 $7,202,427
Securities Sold Under Agreements to Repurchase 2,316,161 2,509,550 2,804,563
Funds Purchased 575,220 743,915 842,100
Short-Term Borrowings 718,228 600,266 426,168
Other Liabilities 399,617 307,447 336,975
Long-Term Debt 595,931 357,870 248,500
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Total Liabilities 11,687,935 11,524,023 11,860,733
Shareholders' Equity
Common Stock ($2 par value), authorized 100,000,000 shares;
issued/outstanding, June 1994 - 42,396,059;
December 1993 - 28,425,038; June 1993 - 28,288,988; 84,792 56,850 56,578
Surplus 276,379 284,886 280,698
Unrealized Valuation Adjustments (15,758) 537 (1,353)
Retained Earnings 613,952 595,831 549,596
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Total Shareholders' Equity 959,365 938,104 885,519
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Total Liabilities and Shareholders' Equity $12,647,300 $12,462,127 $12,746,252
====================================================================================================================
Starting in 1995, Bancorp Hawaii will stop mailing quarterly reports
to shareholders whose stock is held in "street name," for example
through brokerage houses. Bancorp can more quickly communicate the
company's performance through direct mail to these shareholders. If
your Bancorp stock is held in "street name" and you wish to continue
receiving Bancorp's quarterly reports, please complete the address
form and return it to Bancorp. Bancorp shareholders with stock held
in their own name are not affected and will continue to receive
quarterly reports as usual. Annual reports and proxy materials will
continue to be sent to all shareholders.
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My Bancorp Hawaii stock is held in "street name." Please continue to
send me Bancorp Hawaii, Inc., quarterly reports during 1995 at the
following address.
Please print or type
NAME__________________________________________________________________
ADDRESS_______________________________________________________________
CITY___________________________________STATE_____________ZIP__________
TELEPHONE_____________________________________________________________
Clip and mail this form to: Bancorp Hawaii, Inc.
Corporate Secretary
P. O. Box 2900
Honolulu, Hawaii 96846