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Bank of Hawaii Corporation Second Quarter 2009 Financial Results

Mon. July 27, 2009; Posted: 07:00 AM
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HONOLULU, Jul 27, 2009 (BUSINESS WIRE) -- BOH | Quote | Chart | News | PowerRating -- --Net Income for the Quarter $31.0 Million

--Board of Directors Declares Dividend of $0.45 Per Share

Bank of Hawaii Corporation (NYSE:BOH) today reported diluted earnings per share of $0.65 for the second quarter of 2009, down from diluted earnings per share of $1.00 in the same quarter last year. Net income for the second quarter of 2009 was $31.0 million compared to net income of $48.3 million in the second quarter of 2008. Results for the second quarter of 2009 included FDIC insurance expense of $9.0 million compared with $0.2 million in the second quarter of 2008. Second quarter 2009 results also included a provision for credit losses of $28.7 million compared to a provision for credit losses of $7.2 million in the same quarter last year. The return on average assets for the second quarter of 2009 was 1.06 percent, compared to 1.85 percent during the same quarter last year. The return on average equity for the second quarter of 2009 was 14.49 percent compared to 24.82 percent for the second quarter of 2008.

During the quarter, the Company sold a loan made to a major mall owner, restructured a leveraged lease that involved a bankrupt automobile manufacturer, and wrote down the carrying value of a non-relationship syndicated credit that was subsequently sold. The result of these three transactions was an increase in net charge-offs of $13.6 million.

Average deposits increased $471 million during the second quarter of 2009. Shareholders' equity increased $12 million to $846 million at June 30, 2009. The allowance for loan and lease losses increased $3 million during the second quarter of 2009 and currently represents 2.23 percent of outstanding loans and leases.

"We continued to pursue our near-term strategies of maintaining strong liquidity, reserves, and capital during the second quarter of 2009," said Allan R. Landon, Chairman, and CEO. "Our profitability during the quarter was helped by increased net interest income. The Company's results included an industry-wide FDIC assessment and losses from the resolution of three significant credits. Bank of Hawaii has a strong balance sheet and is well prepared."

For the six months ended June 30, 2009, net income was $67.0 million, down $38.5 million compared to net income of $105.5 million for the same period last year. Diluted earnings per share were $1.40 for the first half of 2009, down from $2.18 for the first half of 2008. The year-to-date return on average assets was 1.18 percent, down from 2.01 percent for the same period in 2008. The year-to-date return on average equity was 16.13 percent, down from 27.33 percent for the six months ended June 30, 2008.

Results for the first six months of 2009 included gains of $13.7 million from the disposition of leased equipment and the sale of the Company's retail insurance brokerage business. These gains were offset by increases in the allowance for loan and lease losses and expenses for legal contingencies, an industry-wide FDIC assessment, and early debt retirement. Results for the first half of 2008 included $25.3 million from the redemption of Visa shares and a lessee's early buy-out of an aircraft lease. Partially offsetting these prior year gains were expenses for employee incentives, legal contingencies, a call premium on Capital Securities, an increase in the allowance for loan and lease losses, and contributions to the Bank of Hawaii Charitable Foundation. Details of these items are included in Table 2.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the second quarter of 2009 was $103.2 million, down $4.2 million from net interest income of $107.4 million in the second quarter of 2008, and up $5.9 million from net interest income of $97.3 million in the first quarter of 2009. The decrease in net interest income compared to the second quarter of 2008 was largely due to a lower net interest margin resulting from greater liquidity being held at low yields, lower interest rates, and lower levels of loans. The increase compared to the first quarter of 2009 was mainly due to a higher level of earning assets. For the six months ended June 30, 2009, net interest income on a taxable-equivalent basis was $200.5 million compared to $209.8 million for the same period in 2008. Analyses of the changes in net interest income are included in Tables 7a, 7b and 7c.

The net interest margin was 3.73 percent for the second quarter of 2009, a 68 basis point decrease from 4.41 percent in the second quarter of 2008 and a decrease of 3 basis points from 3.76 percent in the first quarter of 2009. For the six months ended June 30, 2009, the net interest margin was 3.75 percent compared to 4.29 percent for the same six months in 2008. The decrease in the net interest margin was largely the result of lower interest rates and the Company's strategy to increase liquidity and reduce risk.

Results for the second quarter of 2009 included a provision for credit losses of $28.7 million compared with $7.2 million in the second quarter of 2008 and $24.9 million in the first quarter of 2009. The provision for credit losses exceeded net charge-offs by $3.0 million in the second quarter of 2009. The provision for credit losses exceeded net charge-offs by $2.5 million in the second quarter of 2008 and exceeded net charge-offs by $10.9 million in the first quarter of 2009.

Noninterest income was $59.8 million for the second quarter of 2009, a decrease of $0.7 million compared to $60.5 million in the second quarter of 2008, and a decrease of $10.5 million compared to $70.4 million in the first quarter of 2009. Noninterest income in the second quarter of 2009 included a gain of $2.8 million related to the Company's sale of its equity interest in an aircraft lease to a cargo carrier and $0.9 million due to the previously mentioned sale of the retail insurance brokerage business. Results for the first quarter of 2009 included a gain of $10.0 million related to the disposition of leveraged leases for two watercraft.

Noninterest expense was $89.6 million in the second quarter of 2009, up $5.7 million from $83.9 million in the same quarter last year, and up $1.7 million from $87.9 million in the previous quarter. Noninterest expense in the second quarter of 2009 included FDIC insurance expense of $9.0 million, including the Company's $5.7 million share of an industry-wide assessment. FDIC insurance expense in the second quarter of 2008 was $0.2 million and $1.8 million in the first quarter of 2009. Salaries and benefits decreased during the second quarter of 2009 primarily due to a reduction in the reserves for medical and dental expenses, and lower payroll taxes. An analysis of salary and benefit expenses is included in Table 8.

The efficiency ratio for the second quarter of 2009 was 55.07 percent, compared with an efficiency ratio of 50.01 percent in the same quarter last year and 52.52 percent in the previous quarter. The efficiency ratio for the first half of 2009 was 53.78 percent compared with 49.80 percent for the same period last year.

The effective tax rate for the second quarter of 2009 was 30.18 percent compared to 37.03 percent during the same quarter last year and 34.00 percent in the previous quarter. The lower effective tax rate in the second quarter of 2009 was primarily due to accounting for the termination of the leveraged lease that resulted in a $1.6 million income tax benefit.

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

Credit quality continued to reflect the weak economy during the second quarter of 2009. Non-accrual loans and leases were $38.6 million at the end of June 30, 2009, up from $6.5 million at June 30, 2008, and down from $40.0 million at March 31, 2009. As a percentage of total loans and leases, non-accrual loans and leases were 0.63 percent at June 30, 2009. The decrease in non-accrual loans and leases compared to the prior quarter was due to the previously mentioned sale of a commercial loan made to a mall owner, which was partially offset by an increase in consumer non-accrual loans. The increase in non-accrual consumer loans was largely due to land loans, second homes, and investor properties on neighbor islands. More information on changes in nonperforming assets is presented in Table 10.

During the quarter, the Company restructured an existing leveraged lease covering 31 locomotives, which was originally guaranteed by an automotive company that went through bankruptcy proceedings. The restructured lease is now accounted for as a direct financing lease. In terminating the existing leveraged lease transaction, the Company removed $17.9 million from lease outstandings, recognized $45.9 million in the new direct financing lease, and recognized $32.4 million in non-recourse debt. As a result of the restructuring, the Company recorded a $4.4 million charge-off and a $1.6 million income tax benefit.

Net charge-offs during the second quarter of 2009 were $25.7 million compared to $4.7 million in the second quarter last year and $14.0 million in the first quarter of 2009. Net charge-offs for the second quarter of 2009 included $6.9 million for the previously discussed commercial loan sold during the quarter, $4.4 million as a result of the lease restructuring, and $2.3 million related to a syndicated credit that was sold. The remaining net charge-offs were largely in the consumer portfolio.

The allowance for loan and lease losses was $137.4 million at June 30, 2009, up from $102.5 million at June 30, 2008, and up from $134.4 million at March 31, 2009. The ratio of the allowance for loan and lease losses to total loans and leases increased to 2.23 percent at June 30, 2009. The reserve for unfunded commitments at June 30, 2009 was $5.4 million. Details of charge-offs, recoveries and the components of the total reserve for credit losses are summarized in Table 11.

Other Financial Highlights

Total assets were $12.19 billion at June 30, 2009, up $1.82 billion from $10.37 billion at June 30, 2008, and up $747 million from $11.45 billion at March 31, 2009. Average total assets were $11.75 billion during the second quarter of 2009, up $1.25 billion from $10.50 billion during the second quarter last year, and up $657 million from $11.10 billion during the previous quarter. The growth in assets was the result of the Company's strong deposit generation.

Total loans and leases were $6.15 billion at June 30, 2009, down $368 million from $6.52 billion at June 30, 2008, and down $189 million compared with $6.34 billion at March 31, 2009. Average loans and leases were $6.26 billion during the second quarter of 2009, down $273 million from average loans and leases of $6.53 billion during the second quarter last year, and down $188 million from $6.45 billion during the previous quarter. Total commercial loans were $2.33 billion at June 30, 2009, down $44 million from $2.37 billion at June 30, 2008, and down slightly from March 31, 2009. Total consumer loans were $3.82 billion at June 30, 2009, down in all loan products compared with previous quarters due to reduced consumer demand. Loan and lease portfolio balances are summarized in Tables 6a, 6b, and 9.

Total deposits were $9.02 billion at June 30, 2009, up $1.12 billion from $7.90 billion at June 30, 2008, and down $193 million from $9.21 billion at March 31, 2009. The increase in total deposits compared with the same period last year was widespread among deposit categories. The decrease in deposits compared with the previous quarter was due to a reduction in public funds, partially offset by continued growth in consumer and commercial deposits. Average total deposits were $9.22 billion during the second quarter of 2009, up $1.26 billion from $7.96 billion during the second quarter last year, and up $471 million from $8.75 billion during the previous quarter. Deposit balances are summarized in Table 9.

Total long-term debt was $91.4 million at June 30, 2009, down $113.9 million from long-term debt of $205.4 million at June 30, 2008, and up $32.4 million from $59.0 million at March 31, 2009. The decrease compared to the same quarter last year was due to the repayment of $119.0 million in subordinated notes and the early payment of $25.0 million in privately placed notes during the first quarter of 2009. The increase in long-term debt compared to the previous quarter was due to the accounting for the previously discussed leveraged lease restructure.

Consistent with the Company's plans to build capital levels, no shares were repurchased during the second quarter of 2009. Remaining buyback authority under the share repurchase program was $85.4 million at June 30, 2009. Total shareholders' equity was $845.9 million at June 30, 2009, up from $767.6 million at June 30, 2008, and up from $833.9 million at March 31, 2009. The ratio of tangible common equity to risk weighted assets was 13.02 percent at June 30, 2009, up from 10.81 percent at June 30, 2008, and up from 12.47 percent at March 31, 2009. At June 30, 2009, the Tier 1 leverage ratio was 6.66 percent compared to 7.01 percent at June 30, 2008 and 6.94 percent at March 31, 2009. The decrease in the Tier 1 leverage ratio compared with the prior quarters was due to significant growth in marketable securities.

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 September 15, 2009 to shareholders of record at the close of business on August 31, 2009.

Hawaii Economy

Hawaii's economy continued to reflect weakness during the second quarter of 2009. The statewide unemployment rate increased to 7.4 percent on a seasonally adjusted basis during the quarter and total jobs contracted 3.1 percent from the beginning of the year. Residential real estate prices in Hawaii have held their value better than many U.S. mainland markets. While total 30 days-plus mortgage delinquencies in the state of Hawaii rose to 5.64 percent, they remain significantly below the national average of 8.22 percent. Bank of Hawaii's 30 days-plus mortgage delinquencies were 1.07 percent at June 30, 2009. Visitor levels, both arrivals and expenditures, remain below the comparable periods last year, although arrivals from the Pacific states, the largest regional market, rose 5.4 percent in May, the first increase since February 2008. More information on Hawaii economic trends is presented in Table 14.

Conference Call Information

The Company will review its second quarter 2009 financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The conference 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 866-383-8008. International participants should call 617-597-5341. No pass code is required. A replay of the conference call will be available for one week beginning Monday, July 27, 2009 by calling 888-286-8010 in the United States or 617-801-6888 internationally and entering the pass code number 75775269 when prompted. A replay will also be available on 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, 2008, which was filed with the U.S. Securities and Exchange Commission. We have not committed 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 (Unaudited)                                                                                                             Table 1
                                                    Three Months Ended                                               Six Months Ended
(dollars in thousands, except per share amounts)    June 30,             March 31,            June 30,               June 30,
                                                    2009                 2009                 2008                   2009                       2008
For the Period:
Operating Results
Net Interest Income                                 $  102,851           $    97,062          $   107,168            $    199,913               $    209,348
Provision for Credit Losses                            28,690                 24,887              7,172                   53,577                     21,599
Total Noninterest Income                               59,832                 70,365              60,539                  130,197                    146,664
Total Noninterest Expense                              89,584                 87,933              83,862                  177,517                    177,294
Net Income                                             31,006                 36,040              48,282                  67,046                     105,497
Basic Earnings Per Share                               0.65                   0.76                1.01                    1.41                       2.20
Diluted Earnings Per Share                             0.65                   0.75                1.00                    1.40                       2.18
Dividends Declared Per Share                           0.45                   0.45                0.44                    0.90                       0.88
Performance Ratios
Return on Average Assets                               1.06          %        1.32       %        1.85           %        1.18            %          2.01       %
Return on Average Shareholders' Equity                 14.49                  17.86               24.82                   16.13                      27.33
Efficiency Ratio (1)                                   55.07                  52.52               50.01                   53.78                      49.80
Operating Leverage (2)                                 (8.04      )           2.41                (11.62     )            (14.62     )               16.01
Net Interest Margin (3)                                3.73                   3.76                4.41                    3.75                       4.29
Dividend Payout Ratio (4)                              69.23                  59.21               43.56                   63.83                      40.00
Average Shareholders' Equity to Average Assets         7.30                   7.37                7.45                    7.34                       7.34
Average Balances
Average Loans and Leases                            $  6,258,403         $    6,446,513       $   6,531,587          $    6,351,938             $    6,559,753
Average Assets                                         11,753,580             11,096,322          10,504,421              11,426,766                 10,574,162
Average Deposits                                       9,222,130              8,751,374           7,958,171               8,988,053                  7,955,360
Average Shareholders' Equity                           858,139                818,218             782,429                 838,288                    776,293
Market Price Per Share of Common Stock
Closing                                             $  35.83             $    32.98           $   47.80              $    35.83                 $    47.80
High                                                   41.42                  45.24               57.37                   45.24                      57.37
Low                                                    31.35                  25.33               46.62                   25.33                      40.95
                                                                         June 30,             March 31,              December 31,               June 30,
                                                                         2009                 2009                   2008                       2008
As of Period End:
Balance Sheet Totals
Loans and Leases                                                         $    6,149,911       $   6,338,726          $    6,530,233             $    6,518,128
Total Assets                                                                  12,194,695          11,448,128              10,763,475                 10,371,149
Total Deposits                                                                9,019,661           9,212,791               8,292,098                  7,903,990
Long-Term Debt                                                                91,432              59,003                  203,285                    205,351
Total Shareholders' Equity                                                    845,885             833,935                 790,704                    767,558
Asset Quality
Allowance for Loan and Lease Losses                                      $    137,416         $   134,416            $    123,498               $    102,498
Non-Performing Assets                                                         39,054              40,329                  14,949                     6,680
Financial Ratios
Allowance to Loans and Leases Outstanding                                     2.23       %        2.12           %        1.89            %          1.57       %
Tier 1 Capital Ratio                                                          12.56               12.02                   11.24                      10.86
Total Capital Ratio                                                           13.82               13.28                   12.49                      12.12
Leverage Ratio (5)                                                            6.66                6.94                    7.30                       7.01
Tangible Common Equity to Total Assets (6)                                    6.65                6.97                    7.01                       7.06
Tangible Common Equity to Risk-Weighted Assets (6)                            13.02               12.47                   11.28                      10.81
Non-Financial Data
Full-Time Equivalent Employees                                                2,533               2,587                   2,581                      2,534
Branches and Offices        85     85      85      84
ATMs                        486    463     462     417
(1) Efficiency ratio is defined as noninterest expense
divided by total revenue (net interest income and total noninterest
income).
(2) Operating leverage is defined as the percentage change
in income before the provision for credit losses and the provision
for income taxes. Measures are presented on a linked quarter basis.
(3) Net interest margin is defined as net interest income,
on a taxable equivalent basis, as a percentage of average earning
assets.
(4) Dividend payout ratio is defined as dividends declared
per share divided by basic earnings per share.
(5) Leverage ratio as of June 30, 2008 was revised from
7.04%.
(6) 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 (Unaudited).
Bank of Hawaii Corporation and Subsidiaries
Net Significant Income (Expense) Items (Unaudited)                                                                            Table 2
                                                                  Three Months Ended                           Six Months Ended
(dollars in thousands)                                            June 30,      March 31,        June 30,      June 30,
                                                                  2009          2009             2008          2009           2008
Gain on Disposal of Leased Equipment                              $  2,782      $   10,036       $  -          $  12,818      $  11,588
Gain on Sale of BOHIS                                                852            -               -             852            -
Gain on Mandatory Redemption of Visa Shares                          -              -               -             -              13,737
Increase in Allowance for Loan and Lease Losses                      (3,000 )       (10,918 )       (2,500 )      (13,918 )      (11,500 )
FDIC Special Assessment                                              (5,744 )       -               -             (5,744  )      -
Market Premium on Repurchased Long-Term Privately Placed Debt        -              (875    )       -             (875    )      -
Cash Grants for the Purchase of Company Stock                        -              -               -             -              (4,640  )
Employee Incentive Awards                                            -              -               -             -              (4,386  )
Legal Contingencies                                                  -              (1,500  )       -             (1,500  )      (3,016  )
Bank of Hawaii Charitable Foundation and Other Contributions         -              -               -             -              (2,250  )
Call Premium on Capital Securities                                   -              -               -             -              (991    )
Separation Expense                                                   -              -               -             -              (615    )
Reversal of Visa Legal Costs                                         -              -               -             -              5,649
Significant Income (Expense) Items Before the Benefit for Income     (5,110 )       (3,257  )       (2,500 )      (8,367  )      3,576
Taxes
Benefit for Income Taxes                                             (1,472 )       (780    )       (875   )      (2,252  )      (4,256  )
Net Significant Income (Expense) Items                            $  (3,638 )   $   (2,477  )    $  (1,625 )   $  (6,115  )   $  7,832
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)                                                                             Table 3
                                                       Three Months Ended                                 Six Months Ended
(dollars in thousands, except per share amounts)       June 30,         March 31,        June 30,         June 30,
                                                       2009             2009             2008 (1)         2009            2008 (1)
Interest Income
Interest and Fees on Loans and Leases                  $    83,342      $    86,592      $    97,959      $   169,934     $    202,372
Income on Investment Securities
Trading                                                     -                594              1,209           594              2,369
Available-for-Sale                                          38,155           32,301           35,321          70,456           69,572
Held-to-Maturity                                            2,369            2,567            3,033           4,936            6,272
Deposits                                                    5                10               204             15               399
Funds Sold                                                  526              577              420             1,103            1,412
Other                                                       276              276              489             552              915
Total Interest Income                                       124,673          122,917          138,635         247,590          283,311
Interest Expense
Deposits                                                    14,481           17,025           20,238          31,506           47,703
Securities Sold Under Agreements to Repurchase              6,477            6,652            7,488           13,129           18,105
Funds Purchased                                             5                5                270             10               903
Short-Term Borrowings                                       -                -                12              -                46
Long-Term Debt                                              859              2,173            3,459           3,032            7,206
Total Interest Expense                                      21,822           25,855           31,467          47,677           73,963
Net Interest Income                                         102,851          97,062           107,168         199,913          209,348
Provision for Credit Losses                                 28,690           24,887           7,172           53,577           21,599
Net Interest Income After Provision for Credit Losses       74,161           72,175           99,996          146,336          187,749
Noninterest Income
Trust and Asset Management                                  11,881           11,632           15,460          23,513           30,546
Mortgage Banking                                            5,443            8,678            2,738           14,121           7,035
Service Charges on Deposit Accounts                         12,910           13,386           12,411          26,296           24,494
Fees, Exchange, and Other Service Charges                   15,410           14,976           16,103          30,386           31,494
Investment Securities Gains, Net                            12               56               157             68               287
Insurance                                                   4,744            5,641            5,590           10,385           12,720
Other                                                       9,432            15,996           8,080           25,428           40,088
Total Noninterest Income                                    59,832           70,365           60,539          130,197          146,664
Noninterest Expense
Salaries and Benefits                                       44,180           47,028           45,984          91,208           101,457
Net Occupancy                                               10,008           10,328           11,343          20,336           21,786
Net Equipment                                               4,502            4,316            4,474           8,818            8,795
Professional Fees                                           4,005            2,549            2,588           6,554            5,201
FDIC Insurance                                              8,987            1,814            247             10,801           496
Other                                                       17,902           21,898           19,226          39,800           39,559
Total Noninterest Expense                                   89,584           87,933           83,862          177,517          177,294
Income Before Provision for Income Taxes                    44,409           54,607           76,673          99,016           157,119
Provision for Income Taxes                                  13,403           18,567           28,391          31,970           51,622
Net Income                                             $    31,006      $    36,040      $    48,282      $   67,046      $    105,497
Basic Earnings Per Share                               $    0.65        $    0.76        $    1.01        $   1.41        $    2.20
Diluted Earnings Per Share                             $    0.65        $    0.75        $    1.00        $   1.40        $    2.18
Dividends Declared Per Share                           $    0.45        $    0.45        $    0.44        $   0.90        $    0.88
Basic Weighted Average Shares                               47,682,604       47,566,005       47,733,278      47,624,521       47,849,945
Diluted Weighted Average Shares                             47,948,531       47,802,249       48,300,049      47,876,509       48,423,619
(1 )Certain prior period information has been
reclassified to conform to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition (Unaudited)                                                                                 Table 4
(dollars in thousands)                                             June 30,            March 31,           December 31,          June 30,
                                                                   2009                2009                2008                  2008 (1)
Assets
Interest-Bearing Deposits                                          $   4,537           $   5,031           $    5,094            $  6,056
Funds Sold                                                             656,000             895,595              405,789             -
Investment Securities
Trading                                                                -                   -                    91,500              94,347
Available-for-Sale                                                     4,292,911           3,106,608            2,519,239           2,646,506
Held-to-Maturity (Fair Value of $214,484; $233,633; $242,175; and      209,807             228,177              239,635             260,592
$255,905)
Loans Held for Sale                                                    40,994              24,121               21,540              11,183
Loans and Leases                                                       6,149,911           6,338,726            6,530,233           6,518,128
Allowance for Loan and Lease Losses                                    (137,416   )        (134,416   )         (123,498   )        (102,498   )
Net Loans and Leases                                                   6,012,495           6,204,310            6,406,735           6,415,630
Total Earning Assets                                                   11,216,744          10,463,842           9,689,532           9,434,314
Cash and Noninterest-Bearing Deposits                                  294,022             299,393              385,599             280,635
Premises and Equipment                                                 112,681             114,536              116,120             117,323
Customers' Acceptances                                                 2,084               822                  1,308               1,856
Accrued Interest Receivable                                            43,042              36,928               39,905              42,295
Foreclosed Real Estate                                                 438                 346                  428                 229
Mortgage Servicing Rights                                              24,731              23,528               21,057              30,272
Goodwill                                                               34,959              34,959               34,959              34,959
Other Assets                                                           465,994             473,774              474,567             429,266
Total Assets                                                       $   12,194,695      $   11,448,128      $    10,763,475       $  10,371,149
Liabilities
Deposits
Noninterest-Bearing Demand                                         $   2,109,270       $   1,970,041       $    1,754,724        $  1,876,782
Interest-Bearing Demand                                                1,589,300           1,926,576            1,854,611           1,631,586
Savings                                                                4,054,039           3,905,709            3,104,863           2,816,222
Time                                                                   1,267,052           1,410,465            1,577,900           1,579,400
Total Deposits                                                         9,019,661           9,212,791            8,292,098           7,903,990
Funds Purchased                                                        8,670               9,665                15,734              69,400
Short-Term Borrowings                                                  10,000              10,000               4,900               10,180
Securities Sold Under Agreements to Repurchase                         1,799,794           844,283              1,028,835           1,028,518
Long-Term Debt (includes $119,275 and $121,326 carried at fair         91,432              59,003               203,285             205,351
value as of December 31, 2008 and June 30, 2008, respectively)
Banker's Acceptances                                                   2,084               822                  1,308               1,856
Retirement Benefits Payable                                            54,286              54,450               54,776              29,478
Accrued Interest Payable                                               7,765               10,010               13,837              13,588
Taxes Payable and Deferred Taxes                                       226,936             258,505              229,699             250,125
Other Liabilities                                                      128,182             154,664              128,299             91,105
Total Liabilities                                                      11,348,810          10,614,193           9,972,771           9,603,591
Shareholders' Equity
Common Stock ($.01 par value; authorized 500,000,000 shares;           569                 569                  568                 568
issued / outstanding: June 30, 2009 - 57,028,940 / 47,881,083;
March 31, 2009 - 57,019,595 / 47,803,544; December 31, 2008 -
57,019,887 / 47,753,371; and June 30, 2008 - 57,016,182 /
47,941,409)
Capital Surplus                                                        491,784             491,352              492,515             489,335
Accumulated Other Comprehensive Loss                                   (1,870     )        (1,319     )         (28,888    )        (15,813    )
Retained Earnings                                                      811,121             802,195              787,924             745,244
Treasury Stock, at Cost (Shares: June 30, 2009 - 9,147,857; March      (455,719   )        (458,862   )         (461,415   )        (451,776   )
31, 2009 - 9,216,051; December 31, 2008 - 9,266,516; and June 30,
2008 - 9,074,773)
Total Shareholders' Equity                                             845,885             833,935              790,704             767,558
Total Liabilities and Shareholders' Equity                         $   12,194,695      $   11,448,128      $    10,763,475       $  10,371,149
(1 )Certain prior period information has been reclassified
to conform to current presentation.
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)                                                                                             Table 5
(dollars in thousands)                                                                                    Accum.
                                                                                                          Other
                                                                                                          Compre-                                       Compre-
                                                                                  Common   Capital        hensive        Retained       Treasury        hensive
                                                                   Total          Stock    Surplus        Loss           Earnings       Stock           Income
Balance as of December 31, 2008                                    $  790,704     $   568  $  492,515     $  (28,888 )   $  787,924     $  (461,415 )
Comprehensive Income:
Net Income                                                            67,046          -       -              -              67,046         -            $  67,046
Other Comprehensive Income, Net of Tax:
Change in Unrealized Gains and Losses on Investment Securities        26,302          -       -              26,302         -              -               26,302
Available-for-Sale
Amortization of Net Loss Related to Pension and Postretirement        716             -       -              716            -              -               716
Benefit Plans
Total Comprehensive Income                                                                                                                              $  94,064
Share-Based Compensation                                              944             -       944            -              -              -
Net Tax Benefits related to Share-Based Compensation                  (430    )       -       (430    )      -              -              -
Common Stock Issued under Purchase and Equity Compensation Plans      4,517           1       (1,245  )      -              (791    )      6,552
(152,582 shares)
Common Stock Repurchased (24,870 shares)                              (856    )       -       -              -              -              (856     )
Cash Dividends Paid                                                   (43,058 )       -       -              -              (43,058 )      -
Balance as of June 30, 2009                                        $  845,885     $   569  $  491,784     $  (1,870  )   $  811,121     $  (455,719 )
Balance as of December 31, 2007                                    $  750,255     $   567  $  484,790     $  (5,091  )   $  688,638     $  (418,649 )
Cumulative-Effect Adjustment of a Change in Accounting Principle,
Net of Tax:
SFAS No. 159, "The Fair Value Option for Financial Assets and         (2,736  )       -       -              -              (2,736  )      -
Financial Liabilities, including an amendment of FASB Statement
No. 115"
Comprehensive Income:
Net Income                                                            105,497         -       -              -              105,497        -            $  105,497
Other Comprehensive Income, Net of Tax:
Change in Unrealized Gains and Losses on Investment Securities        (10,820 )       -       -              (10,820 )      -              -               (10,820 )
Available-for-Sale
Amortization of Net Loss Related to Pension and Postretirement        98              -       -              98             -              -               98
Benefit Plans
Total Comprehensive Income                                                                                                                              $  94,775
Share-Based Compensation                                              3,072           -       3,072          -              -              -
Net Tax Benefits related to Share-Based Compensation                  1,304           -       1,304          -              -              -
Common Stock Issued under Purchase and Equity Compensation Plans      8,478           1       169            -              (3,812  )      12,120
(276,946 shares)
Common Stock Repurchased (923,330 shares)                             (45,247 )       -       -              -              -              (45,247  )
Cash Dividends Paid                                                   (42,343 )       -       -              -              (42,343 )      -
Balance as of June 30, 2008                                        $  767,558     $   568  $  489,335     $  (15,813 )   $  745,244     $  (451,776 )
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable Equivalent Basis                                                                        Table 6a
(Unaudited)
(dollars in millions)                           Three Months Ended                  Three Months Ended                  Three Months Ended
                                                June 30, 2009                       March 31, 2009                      June 30, 2008( 1)
                                                Average       Income/    Yield/     Average       Income/    Yield/     Average       Income/    Yield/
                                                Balance       Expense    Rate       Balance       Expense    Rate       Balance       Expense    Rate
Earning Assets
Interest-Bearing Deposits                       $   5.2       $   -      0.36   %   $   4.9       $   -      0.84   %   $   33.0      $   0.2    2.45   %
Funds Sold                                          833.2         0.5    0.25           912.9         0.6    0.25           81.9          0.4    2.03
Investment Securities
Trading                                             -             -      -              48.8          0.6    4.87           97.6          1.2    4.96
Available-for-Sale                                  3,662.1       38.5   4.21           2,628.7       32.5   4.95           2,649.9       35.6   5.37
Held-to-Maturity                                    219.9         2.4    4.31           235.0         2.6    4.37           269.6         3.1    4.50
Loans Held for Sale                                 24.1          0.2    4.21           21.8          0.2    4.41           9.3           0.1    5.78
Loans and Leases (2)
Commercial and Industrial                           984.1         9.9    4.02           1,031.3       10.4   4.11           1,060.7       14.3   5.42
Commercial Mortgage                                 763.8         9.9    5.22           730.6         9.6    5.32           663.0         10.1   6.15
Construction                                        144.5         1.5    4.03           154.1         1.6    4.21           177.3         2.5    5.76
Commercial Lease Financing                          450.2         3.5    3.13           462.9         3.7    3.16           470.6         4.1    3.50
Residential Mortgage                                2,359.0       34.6   5.88           2,437.4       36.3   5.96           2,494.1       38.0   6.09
Home Equity                                         999.3         12.6   5.07           1,028.7       13.0   5.13           983.7         14.3   5.85
Automobile                                          325.5         6.5    7.96           356.3         7.0    7.94           423.1         8.6    8.16
Other (3)                                           232.0         4.6    7.89           245.2         4.8    7.86           259.1         5.9    9.11
Total Loans and Leases                              6,258.4       83.1   5.32           6,446.5       86.4   5.40           6,531.6       97.8   6.01
Other                                               79.7          0.3    1.39           79.7          0.3    1.39           79.6          0.5    2.46
Total Earning Assets (4)                            11,082.6      125.0  4.52           10,378.3      123.2  4.77           9,752.5       138.9  5.71
Cash and Noninterest-Bearing Deposits               203.9                               243.4                               272.9
Other Assets                                        467.1                               474.6                               479.0
Total Assets                                    $   11,753.6                        $   11,096.3                        $   10,504.4
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand                                          $   1,907.7       0.3    0.07       $   1,888.6       0.3    0.06       $   1,561.2       1.2    0.29
Savings                                             4,036.9       7.8    0.77           3,533.0       8.2    0.94           2,861.3       6.5    0.92
Time                                                1,330.6       6.4    1.92           1,500.8       8.5    2.30           1,646.5       12.5   3.07
Total Interest-Bearing Deposits                     7,275.2       14.5   0.80           6,922.4       17.0   1.00           6,069.0       20.2   1.34
Short-Term Borrowings                               16.4          -      0.12           18.7          -      0.11           61.2          0.3    1.82
Securities Sold Under Agreements to Repurchase      1,168.2       6.5    2.20           935.4         6.7    2.85           1,060.2       7.5    2.81
Long-Term Debt                                      71.1          0.8    4.84           148.2         2.2    5.88           224.3         3.5    6.18
Total Interest-Bearing Liabilities                  8,530.9       21.8   1.02           8,024.7       25.9   1.30           7,414.7       31.5   1.70
Net Interest Income                                           $   103.2                           $   97.3                            $   107.4
Interest Rate Spread                                                     3.50   %                            3.47   %                            4.01   %
Net Interest Margin                                                      3.73   %                            3.76   %                            4.41   %
Noninterest-Bearing Demand Deposits                 1,946.9                             1,829.0                             1,889.2
Other Liabilities                                   417.7                               424.4                               418.1
Shareholders' Equity                                858.1                               818.2                               782.4
Total Liabilities and Shareholders' Equity      $   11,753.6                        $   11,096.3                        $   10,504.4
(1 )Certain prior period information has been reclassified
to conform to current presentation.
(2 )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.
(3) Comprised of other consumer revolving credit,
installment, and consumer lease financing.
(4) Interest income includes taxable equivalent basis
adjustments, based upon a federal statutory tax rate of 35%, of
$331,000, $226,000, and $239,000 for the three months ended June
30, 2009, March 31, 2009, and June 30, 2008, respectively.
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable Equivalent Basis                                                Table 6b
(Unaudited)
(dollars in millions)                           Six Months Ended                     Six Months Ended
                                                June 30, 2009                        June 30, 2008( 1)
                                                Average       Income/    Yield/      Average       Income/    Yield/
                                                Balance       Expense    Rate        Balance       Expense    Rate
Earning Assets
Interest-Bearing Deposits                       $   5.0       $   -      0.59   %    $   30.2      $   0.4    2.62     %
Funds Sold                                          872.8         1.1    0.25            110.1         1.4    2.54
Investment Securities
Trading                                             24.3          0.6    4.90            96.7          2.4    4.90
Available-for-Sale                                  3,148.3       71.0   4.51            2,640.8       70.0   5.31
Held-to-Maturity                                    227.4         4.9    4.34            277.5         6.3    4.52
Loans Held for Sale                                 23.0          0.5    4.30            9.9           0.3    5.59
Loans and Leases (2)
Commercial and Industrial                           1,007.6       20.3   4.06            1,062.9       30.9   5.84
Commercial Mortgage                                 747.3         19.5   5.27            656.0         20.5   6.30
Construction                                        149.3         3.1    4.12            188.5         5.9    6.27
Commercial Lease Financing                          456.5         7.2    3.14            474.2         8.1    3.43
Residential Mortgage                                2,398.0       71.0   5.92            2,495.4       76.2   6.11
Home Equity                                         1,013.9       25.6   5.10            988.6         30.7   6.23
Automobile                                          340.8         13.4   7.95            430.9         17.5   8.17
Other (3)                                           238.5         9.3    7.88            263.3         12.3   9.43
Total Loans and Leases                              6,351.9       169.4  5.36            6,559.8       202.1  6.18
Other                                               79.7          0.6    1.39            79.5          0.9    2.30
Total Earning Assets (4)                            10,732.4      248.1  4.64            9,804.5       283.8  5.80
Cash and Noninterest-Bearing Deposits               223.6                                283.5
Other Assets                                        470.8                                486.2
Total Assets                                    $   11,426.8                         $   10,574.2
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand                                          $   1,898.2       0.6    0.07        $   1,556.1       3.4    0.44
Savings                                             3,786.4       16.0   0.85            2,808.2       15.8   1.13
Time                                                1,415.2       14.9   2.12            1,696.9       28.5   3.38
Total Interest-Bearing Deposits                     7,099.8       31.5   0.89            6,061.2       47.7   1.58
Short-Term Borrowings                               17.6          -      0.11            70.4          1.0    2.67
Securities Sold Under Agreements to Repurchase      1,052.4       13.1   2.48            1,112.2       18.1   3.24
Long-Term Debt                                      109.4         3.0    5.56            232.0         7.2    6.22
Total Interest-Bearing Liabilities                  8,279.2       47.6   1.16            7,475.8       74.0   1.98
Net Interest Income                                           $   200.5                            $   209.8
Interest Rate Spread                                                     3.48   %                             3.82     %
Net Interest Margin                                                      3.75   %                             4.29     %
Noninterest-Bearing Demand Deposits                 1,888.3                              1,894.2
Other Liabilities                                   421.0                                427.9
Shareholders' Equity                                838.3                                776.3
Total Liabilities and Shareholders' Equity      $   11,426.8                         $   10,574.2
(1 )Certain prior period information has been reclassified
to conform to current presentation.
(2 )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.
(3) Comprised of other consumer revolving credit,
installment, and consumer lease financing.
(4) Interest income includes taxable equivalent basis
adjustments, based upon a federal statutory tax rate of 35%, of
$557,000 and $477,000 for the six months ended June 30, 2009 and
2008, respectively.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable Equivalent                               Table 7a
Basis (Unaudited)
(dollars in millions)                           Three Months Ended June 30, 2009
                                                Compared to March 31, 2009
                                                Volume (1)      Rate (1)        Time (1)     Total
Change in Interest Income:
Funds Sold                                      $    (0.1 )     $    -          $    -       $  (0.1 )
Investment Securities
Trading                                              (0.3 )          (0.3 )          -          (0.6 )
Available-for-Sale                                   11.2            (5.5 )          0.3        6.0
Held-to-Maturity                                     (0.2 )          (0.1 )          0.1        (0.2 )
Loans and Leases
Commercial and Industrial                            (0.4 )          (0.2 )          0.1        (0.5 )
Commercial Mortgage                                  0.4             (0.2 )          0.1        0.3
Construction                                         (0.1 )          -               -          (0.1 )
Commercial Lease Financing                           (0.1 )          (0.1 )          -          (0.2 )
Residential Mortgage                                 (1.5 )          (0.6 )          0.4        (1.7 )
Home Equity                                          (0.3 )          (0.1 )          -          (0.4 )
Automobile                                           (0.6 )          -               0.1        (0.5 )
Other (2)                                            (0.2 )          -               -          (0.2 )
Total Loans and Leases                               (2.8 )          (1.2 )          0.7        (3.3 )
Total Change in Interest Income                      7.8             (7.1 )          1.1        1.8
Change in Interest Expense:
Interest-Bearing Deposits
Savings                                              1.1             (1.6 )          0.1        (0.4 )
Time                                                 (0.9 )          (1.3 )          0.1        (2.1 )
Total Interest-Bearing Deposits                      0.2             (2.9 )          0.2        (2.5 )
Securities Sold Under Agreements to Repurchase       1.4             (1.7 )          0.1        (0.2 )
Long-Term Debt                                       (1.0 )          (0.4 )          -          (1.4 )
Total Change in Interest Expense                     0.6             (5.0 )          0.3        (4.1 )
Change in Net Interest Income                   $    7.2        $    (2.1 )     $    0.8     $  5.9
(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, and time 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                     Table 7b
Basis (Unaudited)
(dollars in millions)                           Three Months Ended June 30, 2009
                                                Compared to June 30, 2008
                                                Volume (1)       Rate (1)          Total
Change in Interest Income:
Interest-Bearing Deposits                       $      (0.1   )  $      (0.1   )   $   (0.2  )
Funds Sold                                             0.8              (0.7   )       0.1
Investment Securities
Trading                                                (0.6   )         (0.6   )       (1.2  )
Available-for-Sale                                     11.7             (8.8   )       2.9
Held-to-Maturity                                       (0.6   )         (0.1   )       (0.7  )
Loans Held for Sale                                    0.2              (0.1   )       0.1
Loans and Leases
Commercial and Industrial                              (0.9   )         (3.5   )       (4.4  )
Commercial Mortgage               
For full details on Bank of Hawaii Corp (BOH) click here. Bank of Hawaii Corp (BOH) has Short Term PowerRatings of 6. Details on Bank of Hawaii Corp (BOH) Short Term PowerRatings is available at This Link.

    


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