To Our Shareholders:
For the second quarter of 1995, Bancorp Hawaii, Inc.
reported earnings of $28.5 million, 16.4% lower than for the same
period last year and 1.1% above the first quarter 1995. Earnings
per share for the second quarter of 1995 were $0.68, compared to
$0.79 for the second quarter of 1994. Based on June 30, 1995
results, year-to-date return on average assets was 0.93% and
return on average equity was 11.42%.
Year-to-date earnings were $56.8 million, compared to $68.6
million for the first half of 1994. Year-to-date earnings per
share were $1.35, compared to $1.59 at June 30, 1994. Total
assets on June 30, 1995 stood at $12.6 billion, a 0.6% decline
from 1994's second quarter-end. Net loans increased to $7.4
billion from $7.2 billion reported at June 30, 1994.
These results were expected, and we are optimistic about
your company's growth this quarter in key areas, particularly fee
income for trust services and expense control. Bancorp's asset
quality remains exceptionally strong, and your company currently
ranks among the nation's top 30 bank holding companies in this
important measure of financial strength. During the second
quarter, non-performing assets (NPA) stood at $51.0 million
representing a 4.3% decline from second quarter last year and a
2.5% drop from first quarter 1995.
In June, Bancorp was named one of the nation's top 100
consumer lending banks with growth in consumer loans up
significantly from the previous year. Also during the quarter:
Bank of Hawaii, together with partners Continental Airlines and
Visa USA, issued its first co-branded credit card, the
Continental OnePass Visa card; First National Bank of Arizona
opened a banking center in Scottsdale bringing its branch count
to five; and Bank of Hawaii expanded its network of in-store
branches to the Big Island with the opening of an ISB in the
Puainako KTA Superstore.
Despite last year's volatile interest rate environment and
Hawaii's slow economic recovery, Bancorp's earnings picture is
showing some positive trends. The interest rate margin widened
substantially from 3.61% at year end 1994 to 3.80% for the
quarter ending June 30, 1995, an indication that your company is
successfully rebalancing its asset mix and addressing interest
rate sensitivity. Trust income is another positive factor,
showing year-to-date growth in excess of 10% over the same six-
month period in 1994.
We are very pleased by the contribution to earnings made by
recently acquired affiliates in the South Pacific, including the
National Bank of Solomon Islands and Banque d'Hawaii (Vanuatu)
Ltd. Additionally, growth in non-interest expense has been held
to less than 4% although your company has made a significant
investment in technology to support Bancorp 2000, our vision of
the future. Positive results in these areas reaffirm the
soundness of Bancorp's long range strategic plans for growth,
development and geographic diversification.
On July 26, the Board of Directors declared a quarterly
dividend of 27 1/4 cents payable on September 15, 1995, to
shareholders of record on August 21, 1995.
Bancorp is continually seeking better ways to serve our
markets in Hawaii, Arizona, Asia and the Pacific Rim region
through innovative delivery channels and by broadening our range
of financial products and services. Your company's performance
reflects its management's long-term approach to maintaining
strong asset quality, while at the same time investing in
opportunities for growth and controlling costs. We will continue
to implement strategies that build on Bancorp's reputation as the
leading financial services organization in the Pacific and
maintain a steady approach to enhancing shareholder value.
Sincerely,
LAWRENCE M. JOHNSON
Lawrence M. Johnson
Chairman and Chief Executive Officer
July 31, 1995
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
Sharlene K. Bliss
Assistant Vice President and Investor Relations Officer
(808) 537-8037
or
Cori C. Weston
Corporate Secretary
(808) 537-8272
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Highlights (Unaudited) Bancorp Hawaii, Inc., and subsidiaries
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June 30 June 30
1995 1994
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Return on Average Assets 0.93% 1.10%
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Return on Average Equity 11.42% 14.40%
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Average Spread on Earning Assets 3.71% 3.98%
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Book Value Per Common Share $24.59 $22.63
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Loss Reserve/Loans and Leases Outstanding 1.99% 1.91%
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Average Equity/Average Assets 8.16% 7.61%
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Common Stock Price Range High Low Dividend
1994.......................... $34.75 $24.13 $1.04
1995 First Quarter............ $28.50 $24.88 $0.26
1995 Second Quarter........... $30.88 $27.63 $0.27
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) 1995 1994 1995 1994
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Total Interest Income $221,830 $201,461 $436,415 $395,157
Total Interest Expense 114,683 85,254 226,947 163,043
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Net Interest Income 107,147 116,207 209,468 232,114
Provision for Possible Loan Losses 4,120 5,964 8,573 14,222
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Net Interest Income After Provision for Possible Loan Losses 103,027 110,243 200,895 217,892
Total Non-Interest Income 35,978 34,470 75,789 70,344
Total Non-Interest Expense 93,689 89,749 184,744 177,993
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Income Before Income Taxes 45,316 54,964 91,940 110,243
Provision for Income Taxes 16,768 20,802 35,144 41,689
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Net Income $28,548 $34,162 $56,796 $68,554
==================================================================================================================
Earnings Per Common Share and Common Share Equivalents $0.68 $0.79 $1.35 $1.59
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Average Common Shares and Common Share Equivalents Outstanding 42,121,368 43,056,348 42,129,385 43,006,653
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Consolidated Statements of Condition (Unaudited)
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June 30 December 31 June 30
(in thousands of dollars) 1995 1994 1994
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Assets
Interest-Bearing Deposits $752,923 $727,016 $842,255
Investment Securities
(Market Value of $3,108,419, $3,101,584 and $3,491,979, respectively) 3,117,484 3,150,885 3,532,916
Securities Purchased Under Agreements to Resell 90,000 -- --
Funds Sold 144,900 54,167 80,470
Loans 7,704,174 7,891,993 7,523,003
Unearned Income (142,084) (144,034) (146,163)
Reserve for Possible Loan Losses (150,302) (148,508) (141,210)
Net Loans 7,411,788 7,599,451 7,235,630
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Total Earning Assets 11,517,095 11,531,519 11,691,271
Cash and Non-Interest Bearing Deposits 474,554 508,762 460,935
Premises and Equipment 231,978 221,806 187,710
Other Assets 350,024 324,263 307,384
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Total Assets $12,573,651 $12,586,350 $12,647,300
==================================================================================================================
Liabilities
Deposits $7,003,918 $7,115,054 $7,082,778
Securities Sold Under Agreements to Repurchase 2,250,738 2,136,204 2,316,161
Funds Purchased 379,473 609,574 575,220
Short-Term Borrowings 655,652 594,475 818,168
Other Liabilities 385,362 302,683 399,617
Long-Term Debt 877,640 861,572 495,991
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Total Liabilities 11,552,783 11,619,562 11,687,935
Shareholders' Equity
Common Stock ($2 par value), authorized 100,000,000 shares;
outstanding, June 1995 - 41,520,923;
December 1994 - 41,851,466; June 1994 - 42,396,059; 83,042 83,703 84,792
Surplus 249,718 260,040 276,379
Unrealized Valuation Adjustments 12,410 (18,122) (15,758)
Retained Earnings 675,698 641,167 613,952
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Total Shareholders' Equity 1,020,868 966,788 959,365
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Total Liabilities and Shareholders' Equity $12,573,651 $12,586,350 $12,647,300
==================================================================================================================
Starting in 1995, Bancorp Hawaii will discontinue 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