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Bank of Hawaii Corporation Third Quarter 2017 Financial Results

  • Diluted Earnings Per Share $1.08
  • Net Income $45.9 Million
  • Board of Directors Declares Dividend of $0.52 Per Share
  • Board of Directors Increases Share Repurchase Authorization $100 Million

HONOLULU--(BUSINESS WIRE)-- Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $1.08 for the third quarter of 2017, up from $1.05 in the second quarter of 2017 and $1.02 in the third quarter of 2016. Net income for the third quarter of 2017 was $45.9 million, an increase of $1.2 million from net income of $44.7 million in the previous quarter and an increase of $2.4 million from net income of $43.5 million in the same quarter last year.

Loan and lease balances increased to $9.6 billion at September 30, 2017, up 2.0 percent from June 30, 2017 and up 10.1 percent compared with September 30, 2016. Deposits grew to $15.0 billion at the end of the third quarter of 2017, up 1.8 percent from the previous quarter and up 9.0 percent compared with the same quarter last year.

“Bank of Hawaii’s financial results remained strong through the third quarter of 2017,” said Peter S. Ho, Chairman, President and CEO. “Loan and deposit balances increased, asset quality remained solid, our net interest margin was stable, and our core expenses declined during the quarter.”

The return on average assets for the third quarter of 2017 was 1.07 percent, down from 1.09 percent in the previous quarter and 1.09 percent in the same quarter last year. The return on average equity for the third quarter of 2017 was 14.89 percent, up from 14.87 percent for the second quarter of 2017 and equal to the return on average equity of 14.89 percent in the third quarter of 2016. The efficiency ratio for the third quarter of 2017 was 55.82 percent compared with 55.99 percent in the previous quarter and 57.58 percent in the same quarter last year.

For the nine-month period ended September 30, 2017, net income was $141.7 million, an increase of $3.8 million from net income of $137.9 million for the same period last year. Diluted earnings per share were $3.32 for the nine-month period in 2017 compared with diluted earnings per share of $3.21 for the same period in 2016. The 2017 year-to-date return on average assets was 1.14 percent compared with 1.17 percent for the same period in 2016. The 2017 year-to-date return on average equity was 15.77 percent compared with 16.09 percent for the nine months ended September 30, 2016. The efficiency ratio for the nine-month period ended September 30, 2017 declined to 55.05 percent compared with 56.57 percent for the same period last year.

Financial Highlights

Net interest income, on a taxable equivalent basis, for the third quarter of 2017 was $119.2 million, an increase of $3.9 million from net interest income of $115.3 million in the second quarter of 2017 and an increase of $12.3 million from net interest income of $106.9 million in the third quarter of last year. Net interest income in the third quarter of 2016 included a reversal of $0.8 million for an interest recovery previously recorded in the second quarter of 2016. Net interest income for the nine-month period in 2017 was $347.5 million, an increase of $28.1 million from net interest income of $319.4 million for the same period in 2016. Analyses of the changes in net interest income are included in Tables 8a, 8b, and 8c.

The net interest margin was 2.92 percent for the third quarter of 2017, unchanged from the second quarter of 2017 and a 12 basis point increase from the net interest margin of 2.80 percent in the third quarter of 2016. Adjusted for the interest reversal, the net interest margin in the third quarter of 2016 was 2.82 percent. The net interest margin for the first nine months of 2017 was 2.91 percent compared with 2.84 percent for the same nine-month period last year.

Results for the third quarter of 2017 included a provision for credit losses of $4.0 million due to the continued strong growth of loans and leases. Second quarter of 2017 results included a provision for credit losses of $4.3 million. Results for the third quarter of 2016 included a provision for credit losses of $2.5 million. The provision for credit losses during the first nine months of 2017 was $12.7 million compared with $1.5 million during the same period in 2016. Provision expense in 2016 reflected a recovery of $6.6 million related to one commercial client in Guam.

Noninterest income was $42.4 million in the third quarter of 2017, down $2.8 million from noninterest income of $45.2 million in the second quarter of 2017 and down $5.7 million from $48.1 million in the same quarter last year. Mortgage banking income decreased to $3.2 million in the third quarter of 2017 compared with $3.8 million in the second quarter of 2017 and $6.4 million in the third quarter last year. Noninterest income for the nine-months ended September 30, 2017 was $143.6 million compared with noninterest income of $150.8 million for the same period in 2016. The decrease from the previous year was primarily due to the decline in mortgage banking income, lower revenue from the customer derivative program and gains on sales of assets during 2016.

Noninterest expense was $88.6 million in the third quarter of 2017, up $0.4 million from noninterest expense of $88.2 million in the previous quarter and up $1.1 million from $87.5 million in the same quarter last year. Noninterest expense in the third quarter of 2017 included $2.1 million in severance which was partially offset by a reduction of $0.9 million in share-based compensation. Noninterest expense for the nine-months ended September 30, 2017 was $265.4 million compared with noninterest expense of $261.0 million for the same period in 2016. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The effective tax rate for the third quarter of 2017 was 30.62 percent compared with 31.37 percent in the previous quarter and 29.84 percent during the same quarter last year. Taxes for the third quarter of 2016 included a $0.7 million release of reserves. The effective tax rate for the nine-month period ended September 30, 2017 was 30.54 percent compared with 30.62 percent for the same period last year.

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 13a and 13b.

Asset Quality

The Company’s overall asset quality remained solid during the third quarter of 2017. Total non-performing assets were $17.0 million at September 30, 2017 compared with $16.4 million at June 30, 2017 and $18.7 million at September 30, 2016. As a percentage of total loans and leases and foreclosed real estate, non-performing assets were 0.18 percent at September 30, 2017 compared with 0.17 percent at June 30, 2017 and 0.21 percent at September 30, 2016.

Accruing loans and leases past due 90 days or more were $6.7 million at September 30, 2017 compared with $7.0 million at June 30, 2017 and $5.6 million at September 30, 2016. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $55.0 million at September 30, 2017 compared with $53.2 million at June 30, 2017 and $52.1 million at September 30, 2016. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loans and leases charged off during the third quarter of 2017 were $3.5 million or 0.15 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $6.2 million during the quarter were partially offset by recoveries of $2.7 million. Net charge-offs during the second quarter of 2017 were $3.0 million or 0.13 percent annualized of total average loans and leases outstanding and were comprised of $5.5 million in charge-offs partially offset by recoveries of $2.5 million. Net charge-offs during the third quarter of 2016 were $2.4 million or 0.11 percent annualized of total average loans and leases outstanding and were comprised of $4.9 million in charge-offs partially offset by recoveries of $2.5 million. Net charge-offs in the nine-month period ended September 30, 2017 were $10.0 million, or 0.15 percent annualized of total average loans and leases outstanding compared with net charge-offs of $0.3 million, or 0.01 percent annualized of total average loans and leases outstanding for the same period in 2016. The lower charge-off rate during 2016 was largely due to the previously mentioned recovery of previously charged off loans to a commercial client in Guam.

The allowance for loan and lease losses increased to $106.9 million at September 30, 2017 due to continued strong loan growth. The allowance for loan and lease losses was $106.4 million at June 30, 2017 and $104.0 million at September 30, 2016. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.12 percent at September 30, 2017, a decrease of 1 basis point from the previous quarter and down 8 basis points from the end of the same quarter last year. The reserve for unfunded commitments at September 30, 2017 of $6.8 million was unchanged from June 30, 2017 and up from $6.6 million at September 30, 2016. Details of loan and lease charge-offs, recoveries and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $17.3 billion at September 30, 2017, an increase of $287.0 million from total assets of $17.0 billion at June 30, 2017 and $1.3 billion from total assets of $16.0 billion at September 30, 2016. Average total assets were $17.0 billion during the third quarter of 2017 compared with $16.5 billion during the previous quarter and $15.9 billion during the same quarter last year.

The investment securities portfolio was $6.3 billion at September 30, 2017, reflecting increases of $183.8 million from total securities of $6.1 billion at June 30, 2017 and $253.9 million from total securities of $6.0 billion at September 30, 2016. The portfolio remains largely comprised of securities issued by U. S. government agencies and included $4.0 billion in securities held to maturity and $2.3 billion in securities available for sale at September 30, 2017.

Total loans and leases were $9.6 billion at September 30, 2017, an increase of $186.3 million from total loans and leases of $9.4 billion at June 30, 2017 and $879.9 million from total loans and leases of $8.7 billion at September 30, 2016. Average total loans and leases increased to $9.5 billion during the third quarter of 2017 compared with $9.2 billion during the second quarter of 2017 and $8.5 billion during the same quarter last year. The commercial loan portfolio increased to $3.7 billion at the end of the third quarter of 2017, up slightly from the end of the previous quarter and up from $3.5 billion at the end of the same quarter last year. Total consumer loans increased to $5.8 billion at the end of the third quarter of 2017, up from $5.7 billion at the end of the second quarter of 2017 and $5.2 billion at the end of the third quarter of 2016. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $15.0 billion at September 30, 2017, an increase of $263.5 million from total deposits of $14.8 billion at June 30, 2017 and $1.2 billion from total deposits of $13.8 billion at September 30, 2016. Average total deposits increased to $14.7 billion during the third quarter of 2017 compared with $14.3 billion during the previous quarter and $13.7 billion during the same quarter last year. Consumer deposits were $7.3 billion at the end of the third quarter of 2017, up slightly from the end of the previous quarter and up from $6.8 billion at the end of the same quarter last year. Commercial deposits were $6.1 billion at the end of the third quarter of 2017, up from $5.9 billion at the end of the previous quarter and up from $5.8 billion at the end of the same quarter last year. Other deposits, including public funds, were $1.7 billion at the end of the third quarter of 2017, up from $1.6 billion at the end of the previous quarter and up from $1.3 billion at the end of the same quarter last year. Deposit balances are summarized in Tables 7 and 10.

During the third quarter of 2017, the Company repurchased 183.5 thousand shares of common stock at a total cost of $14.8 million under its share repurchase program. The average cost was $80.89 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through September 30, 2017, the Company repurchased 54.1 million shares and returned nearly $2.1 billion to shareholders at an average cost of $38.19 per share. The Company’s Board of Directors increased the authorization under the share repurchase program by an additional $100.0 million. From October 2 through October 20, 2017 the Company repurchased an additional 44.5 thousand shares of common stock at an average cost of $83.97 per share. Remaining buyback authority under the share repurchase program was $126.9 million at October 20, 2017.

Total shareholders’ equity was $1.2 billion at September 30, 2017. The Tier 1 Capital Ratio was 13.27 percent at September 30, 2017 compared with 13.34 percent at June 30, 2017 and 13.40 percent at September 30, 2016. The Tier 1 leverage ratio at September 30, 2017 was 7.24 percent compared with 7.37 percent at June 30, 2017 and 7.25 percent at September 30, 2016.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.52 per share on the Company’s outstanding shares. The dividend will be payable on December 14, 2017 to shareholders of record at the close of business on November 30, 2017.

Hawaii Economy

General economic conditions in Hawaii remained positive during the third quarter of 2017. The statewide seasonally-adjusted unemployment rate continues to remain low, declining to 2.5 percent in September 2017 compared to 4.2 percent nationally. Tourism remained robust through the first eight months of 2017. Total visitor spending increased 8.5 percent due to growth of 4.7 percent in visitor arrivals and an increase of 3.9 percent in daily spending compared to the same eight-month period in 2016. The real estate market also remains strong. For the first nine months of 2017, the volume of single-family home sales on Oahu increased 5.0 percent and the volume of condominium sales on Oahu increased 5.8 percent compared with the same period in 2016. The median sales price of a single-family home on Oahu increased 3.4 percent and the median price of a condominium on Oahu increased 5.4 percent for the first nine months of 2017 compared to the same nine-month period in 2016. As of September 30, 2017, months of inventory of single-family homes and condominiums on Oahu were 2.4 months and 2.6 months, respectively. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its third quarter 2017 financial results today at 2:00 p.m. Eastern Time (8:00 a.m. Hawaii Time). The conference call will be accessible via teleconference and via the investor relations link of Bank of Hawaii Corporation's website, www.boh.com. The toll-free number is (844) 543-5235 in the United States and Canada and (703) 318-2209 for other international callers. Use the pass code “Bank of Hawaii” to access the call. A replay will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, October 23, 2017. The replay number is (855) 859-2056 in the United States and Canada and (404) 537-3406 from other international locations. Enter the pass code 95696390 when prompted. Participants can also dial 1 (800) 585-8367 to access the replay. In addition, a replay will be available on the Company's website, www.boh.com.

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, 2016, 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 an independent 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. For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com.

Bank of Hawaii Corporation and Subsidiaries
Financial Highlights Table 1
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands, except per share amounts) 2017 2017 2016 2017 2016

For the Period:

Operating Results
Net Interest Income $ 116,317 $ 112,279 $ 103,912 $ 338,468 $ 310,486
Provision for Credit Losses 4,000 4,250 2,500 12,650 1,500
Total Noninterest Income 42,410 45,236 48,114 143,562 150,840
Total Noninterest Expense 88,598 88,189 87,532 265,355 260,989
Net Income 45,881 44,662 43,493 141,719 137,948
Basic Earnings Per Share 1.09 1.05 1.02 3.35 3.23
Diluted Earnings Per Share 1.08 1.05 1.02 3.32 3.21
Dividends Declared Per Share 0.52 0.50 0.48 1.52 1.41
Performance Ratios
Return on Average Assets 1.07 % 1.09 % 1.09 % 1.14 % 1.17 %
Return on Average Shareholders' Equity 14.89 14.87 14.89 15.77 16.09
Efficiency Ratio 1 55.82 55.99 57.58 55.05 56.57
Net Interest Margin 2 2.92 2.92 2.80 2.91 2.84
Dividend Payout Ratio 3 47.71 47.62 47.06 45.37 43.65
Average Shareholders' Equity to Average Assets 7.21 7.30 7.30 7.22 7.30
Average Balances
Average Loans and Leases $ 9,451,972 $ 9,217,779 $ 8,483,588 $ 9,231,615 $ 8,210,596
Average Assets 16,972,202 16,495,925 15,906,760 16,636,213 15,695,251
Average Deposits 14,727,469 14,253,149 13,687,186 14,401,698 13,492,609
Average Shareholders' Equity 1,222,885 1,204,837 1,161,655 1,201,850 1,145,094
Per Share of Common Stock
Book Value $ 28.88 $ 28.45 $ 27.24 $ 28.88 $ 27.24
Tangible Book Value 28.14 27.72 26.50 28.14 26.50
Market Value
Closing 83.36 82.97 72.62 83.36 72.62
High 86.19 84.99 73.44 90.80 73.44
Low 74.72 75.92 65.19 74.72 54.55
September 30, June 30, December 31, September 30,
2017 2017 2016 2016

As of Period End:

Balance Sheet Totals
Loans and Leases $ 9,573,956 $ 9,387,613 $ 8,949,785 $ 8,694,097
Total Assets 17,268,302 16,981,292 16,492,367 16,014,643
Total Deposits 15,048,160 14,784,649 14,320,240 13,808,365
Other Debt 267,887 267,904 267,938 267,954
Total Shareholders' Equity 1,227,893 1,213,757 1,161,537 1,163,859
Asset Quality
Non-Performing Assets $ 17,035 $ 16,368 $ 19,761 $ 18,672
Allowance for Loan and Lease Losses 106,881 106,353 104,273 104,033
Allowance to Loans and Leases Outstanding 1.12 % 1.13 % 1.17 % 1.20 %
Capital Ratios
Common Equity Tier 1 Capital Ratio 13.27 % 13.34 % 13.24 % 13.40 %
Tier 1 Capital Ratio 13.27 13.34 13.24 13.40
Total Capital Ratio 14.51 14.58 14.49 14.65
Tier 1 Leverage Ratio 7.24 7.37 7.21 7.25
Total Shareholders' Equity to Total Assets 7.11 7.15 7.04 7.27
Tangible Common Equity to Tangible Assets 4 6.94 6.97 6.86 7.08
Tangible Common Equity to Risk-Weighted Assets 4 12.96 13.01 12.81 13.18
Non-Financial Data
Full-Time Equivalent Employees 2,120 2,142 2,122 2,125
Branches 69 69 69 70
ATMs 388 388 449 450
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income).
2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
3 Dividend payout ratio is defined as dividends declared per share divided by basic earnings per share.

4 Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 2 “Reconciliation of Non-GAAP Financial Measures."

Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures Table 2
(dollars in thousands) September 30,
2017
June 30,
2017
December 31,
2016
September 30,
2016
Total Shareholders' Equity $ 1,227,893 $ 1,213,757 $ 1,161,537 $ 1,163,859
Less: Goodwill 31,517 31,517 31,517 31,517
Tangible Common Equity $ 1,196,376 $ 1,182,240 $ 1,130,020 $ 1,132,342
Total Assets $ 17,268,302 $ 16,981,292 $ 16,492,367 $ 16,014,643
Less: Goodwill 31,517 31,517 31,517 31,517
Tangible Assets $ 17,236,785 $ 16,949,775 $ 16,460,850 $ 15,983,126

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

$ 9,233,969 $ 9,087,057 $ 8,823,485 $ 8,591,440
Total Shareholders' Equity to Total Assets 7.11 % 7.15 % 7.04 % 7.27 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 6.94 % 6.97 % 6.86 % 7.08 %
Tier 1 Capital Ratio 13.27 % 13.34 % 13.24 % 13.40 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 12.96 % 13.01 % 12.81 % 13.18 %
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income Table 3
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands, except per share amounts) 2017 2017 2016 2017 2016
Interest Income
Interest and Fees on Loans and Leases $ 94,621 $ 90,909 $ 83,489 $ 273,467 $ 246,707
Income on Investment Securities
Available-for-Sale 11,987 11,835 10,313 34,906 31,648
Held-to-Maturity 20,334 19,918 19,315 59,958 59,874
Deposits 5 2 1 12 7
Funds Sold 1,579 696 695 3,165 2,066
Other 235 208 166 673 531
Total Interest Income 128,761 123,568 113,979 372,181 340,833
Interest Expense
Deposits 6,663 4,998 3,232 15,352 9,199
Securities Sold Under Agreements to Repurchase 4,664 5,079 5,713 14,928 18,000
Funds Purchased - 39 3 42 9
Short-Term Borrowings - 64 - 64 -
Other Debt 1,117 1,109 1,119 3,327 3,139
Total Interest Expense 12,444 11,289 10,067 33,713 30,347
Net Interest Income 116,317 112,279 103,912 338,468 310,486
Provision for Credit Losses 4,000 4,250 2,500 12,650 1,500
Net Interest Income After Provision for Credit Losses 112,317 108,029 101,412 325,818 308,986
Noninterest Income
Trust and Asset Management 11,050 11,796 11,008 34,325 34,971
Mortgage Banking 3,237 3,819 6,362 10,356 13,639
Service Charges on Deposit Accounts 8,188 8,009 8,524 24,522 25,117
Fees, Exchange, and Other Service Charges 13,764 13,965 14,023 41,061 41,445
Investment Securities Gains (Losses), Net (566 ) (520 ) (328 ) 11,047 10,540
Annuity and Insurance 1,429 2,161 1,653 5,585 5,560
Bank-Owned Life Insurance 1,861 1,550 1,911 4,908 5,010
Other 3,447 4,456 4,961 11,758 14,558
Total Noninterest Income 42,410 45,236 48,114 143,562 150,840
Noninterest Expense
Salaries and Benefits 51,626 50,113 49,725 153,341 150,528
Net Occupancy 7,727 8,131 8,510 24,026 22,671
Net Equipment 5,417 5,706 4,913 16,624 15,387
Data Processing 3,882 3,881 3,620 11,173 11,543
Professional Fees 3,044 2,592 2,396 8,415 7,082
FDIC Insurance 2,107 2,097 2,104 6,413 6,600
Other 14,795 15,669 16,264 45,363 47,178
Total Noninterest Expense 88,598 88,189 87,532 265,355 260,989
Income Before Provision for Income Taxes 66,129 65,076 61,994 204,025 198,837
Provision for Income Taxes 20,248 20,414 18,501 62,306 60,889
Net Income $ 45,881 $ 44,662 $ 43,493 $ 141,719 $ 137,948
Basic Earnings Per Share $ 1.09 $ 1.05 $ 1.02 $ 3.35 $ 3.23
Diluted Earnings Per Share $ 1.08 $ 1.05 $ 1.02 $ 3.32 $ 3.21
Dividends Declared Per Share $ 0.52 $ 0.50 $ 0.48 $ 1.52 $ 1.41
Basic Weighted Average Shares 42,251,541 42,353,976 42,543,122 42,336,441 42,730,571
Diluted Weighted Average Shares 42,565,364 42,658,885 42,778,346 42,662,163 42,947,059
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income Table 4
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands) 2017 2017 2016 2017 2016
Net Income $ 45,881 $ 44,662 $ 43,493 $ 141,719 $ 137,948
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities 444 3,106 (5,528 ) 8,444 8,323
Defined Benefit Plans 146 147 140 439 422
Total Other Comprehensive Income (Loss) 590 3,253 (5,388 ) 8,883 8,745
Comprehensive Income $ 46,471 $ 47,915 $ 38,105 $ 150,602 $ 146,693
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition Table 5
September 30, June 30, December 31, September 30,
(dollars in thousands) 2017 2017 2016 2016
Assets
Interest-Bearing Deposits in Other Banks $ 3,161 $ 3,913 $ 3,187 $ 4,181
Funds Sold 512,868 742,221 707,343 506,604
Investment Securities
Available-for-Sale 2,322,668 2,316,728 2,186,041 2,213,482
Held-to-Maturity (Fair Value of $3,960,956; $3,785,641; $3,827,527; and $3,893,542) 3,960,598 3,782,702 3,832,997 3,815,915
Loans Held for Sale 9,752 20,354 62,499 68,066
Loans and Leases 9,573,956 9,387,613 8,949,785 8,694,097
Allowance for Loan and Lease Losses (106,881 ) (106,353 ) (104,273 ) (104,033 )
Net Loans and Leases 9,467,075 9,281,260 8,845,512 8,590,064
Total Earning Assets 16,276,122 16,147,178 15,637,579 15,198,312
Cash and Due from Banks 245,487 128,093 169,077 127,326
Premises and Equipment, Net 125,162 119,569 113,505 110,288
Accrued Interest Receivable 51,526 46,595 46,444 46,925
Foreclosed Real Estate 1,393 1,991 1,686 1,747
Mortgage Servicing Rights 24,436 24,471 23,663 20,991
Goodwill 31,517 31,517 31,517 31,517
Bank-Owned Life Insurance 278,425 277,235 274,188 272,637
Other Assets 234,234 204,643 194,708 204,900
Total Assets $ 17,268,302 $ 16,981,292 $ 16,492,367 $ 16,014,643
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,825,643 $ 4,706,962 $ 4,772,727 $ 4,437,963
Interest-Bearing Demand 2,896,559 3,029,549 2,934,107 2,777,095
Savings 5,363,866 5,364,191 5,395,699 5,306,880
Time 1,962,092 1,683,947 1,217,707 1,286,427
Total Deposits 15,048,160 14,784,649 14,320,240 13,808,365
Funds Purchased - - 9,616 9,616
Securities Sold Under Agreements to Repurchase 505,293 505,292 523,378 551,683
Other Debt 267,887 267,904 267,938 267,954
Retirement Benefits Payable 38,308 48,346 48,451 47,522
Accrued Interest Payable 6,717 5,105 5,334 6,115
Taxes Payable and Deferred Taxes 31,360 31,444 21,674 24,922
Other Liabilities 142,684 124,795 134,199 134,607
Total Liabilities 16,040,409 15,767,535 15,330,830 14,850,784
Shareholders' Equity

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: September 30, 2017 - 57,958,200 / 42,513,348; June 30, 2017 - 57,972,647 / 42,655,954; December 31, 2016 - 57,856,672 / 42,635,978; and September 30, 2016 - 57,854,843 / 42,733,513)

576 576 576 576
Capital Surplus 558,530 556,409 551,628 549,064
Accumulated Other Comprehensive Loss (25,023 ) (25,613 ) (33,906 ) (14,812 )
Retained Earnings 1,491,830 1,468,328 1,415,440 1,393,231

Treasury Stock, at Cost (Shares: September 30, 2017 - 15,444,852; June 30, 2017 - 15,316,693; December 31, 2016 - 15,220,694; and September 30, 2016 - 15,121,330)

(798,020 ) (785,943 ) (772,201 ) (764,200 )
Total Shareholders' Equity 1,227,893 1,213,757 1,161,537 1,163,859
Total Liabilities and Shareholders' Equity $ 17,268,302 $ 16,981,292 $ 16,492,367 $ 16,014,643
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity Table 6
(dollars in thousands) Common Shares
Outstanding
Common
Stock
Capital
Surplus
Accum.
Other
Compre-
hensive
Income
(Loss)
Retained
Earnings
Treasury
Stock
Total
Balance as of December 31, 2016 42,635,978 $ 576 $ 551,628 $ (33,906 ) $ 1,415,440 $ (772,201 ) $ 1,161,537
Net Income - - - - 141,719 - 141,719
Other Comprehensive Income - - - 8,883 - - 8,883
Share-Based Compensation - - 5,332 - - - 5,332
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 319,377 - 1,570 - (383 ) 10,552 11,739
Common Stock Repurchased (442,007 ) - - - - (36,371 ) (36,371 )
Cash Dividends Declared ($1.52 per share) - - - - (64,946 ) - (64,946 )
Balance as of September 30, 2017 42,513,348 $ 576 $ 558,530 $ (25,023 ) $ 1,491,830 $ (798,020 ) $ 1,227,893
Balance as of December 31, 2015 43,282,153 $ 575 $ 542,041 $ (23,557 ) $ 1,316,260 $ (719,059 ) $ 1,116,260
Net Income - - - - 137,948 - 137,948
Other Comprehensive Income - - - 8,745 - - 8,745
Share-Based Compensation - - 5,020 - - - 5,020
Common Stock Issued under Purchase and Equity
Compensation Plans and Related Tax Benefits 224,018 1 2,003 - (314 ) 6,224 7,914
Common Stock Repurchased (772,658 ) - - - - (51,365 ) (51,365 )
Cash Dividends Declared ($1.41 per share) - - - - (60,663 ) - (60,663 )
Balance as of September 30, 2016 42,733,513 $ 576 $ 549,064 $ (14,812 ) $ 1,393,231 $ (764,200 ) $ 1,163,859
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis Table 7a
Three Months Ended
September 30, 2017
Three Months Ended
June 30, 2017
Three Months Ended
September 30, 2016
(dollars in millions) Average
Balance
Income/
Expense
Yield/
Rate
Average
Balance
Income/
Expense
Yield/
Rate
Average
Balance
Income/
Expense
Yield/
Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.5 $ - 0.48 % $ 3.6 $ - 0.29 % $ 4.1 $ - 0.19 %
Funds Sold 575.2 1.6 1.07 353.5 0.7 0.78 585.9 0.7 0.46
Investment Securities
Available-for-Sale
Taxable 1,658.2 8.6 2.08 1,683.4 8.4 1.98 1,574.9 6.8 1.72
Non-Taxable 636.7 5.2 3.26 658.9 5.4 3.26 687.1 5.4 3.16
Held-to-Maturity
Taxable 3,631.1 18.8 2.07 3,596.1 18.4 2.05 3,563.8 17.8 1.99
Non-Taxable 239.9 2.4 3.87 240.9 2.3 3.88 243.7 2.4 3.90
Total Investment Securities 6,165.9 35.0 2.27 6,179.3 34.5 2.23 6,069.5 32.4 2.13
Loans Held for Sale 20.6 0.2 3.88 23.8 0.2 4.04 57.7 0.5 3.52
Loans and Leases 1
Commercial and Industrial 1,251.5 11.3 3.58 1,251.2 10.9 3.51 1,192.0 9.8 3.26
Commercial Mortgage 2,015.0 19.6 3.87 1,946.3 18.4 3.80 1,730.2 15.4 3.55
Construction 241.0 2.9 4.73 240.0 2.8 4.70 239.4 2.6 4.38
Commercial Lease Financing 204.7 1.2 2.30 208.0 1.2 2.27 195.1 1.2 2.38
Residential Mortgage 3,333.3 31.8 3.82 3,272.7 31.1 3.80 3,082.9 30.4 3.94
Home Equity 1,502.9 13.8 3.65 1,445.8 13.1 3.62 1,254.4 11.3 3.59
Automobile 493.2 5.9 4.71 474.1 5.9 4.97 426.2 5.5 5.15
Other 2 410.4 8.2 7.98 379.7 7.6 8.06 363.4 7.0 7.69
Total Loans and Leases 9,452.0 94.7 3.99 9,217.8 91.0 3.96 8,483.6 83.2 3.91
Other 40.2 0.2 2.34 41.0 0.2 2.03 39.9 0.1 1.66
Total Earning Assets 3 16,257.4 131.7 3.23 15,819.0 126.6 3.21 15,240.7 116.9 3.06
Cash and Due from Banks 151.2 120.8 133.2
Other Assets 563.6 556.1 532.9
Total Assets $ 16,972.2 $ 16,495.9 $ 15,906.8
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,880.0 0.5 0.07 $ 2,862.7 0.5 0.07 $ 2,770.2 0.2 0.03
Savings 5,374.4 1.8 0.13 5,376.9 1.6 0.12 5,208.3 1.1 0.09
Time 1,788.2 4.4 0.97 1,480.5 2.9 0.78 1,272.6 1.9 0.59
Total Interest-Bearing Deposits 10,042.6 6.7 0.26 9,720.1 5.0 0.21 9,251.1 3.2 0.14
Short-Term Borrowings - - - 36.5 0.1 1.10 8.7 - 0.13
Securities Sold Under Agreements to Repurchase 505.3 4.7 3.61 505.3 5.1 3.98 556.5 5.7 4.02
Other Debt 267.9 1.1 1.66 267.9 1.1 1.66 268.0 1.1 1.66
Total Interest-Bearing Liabilities 10,815.8 12.5 0.45 10,529.8 11.3 0.43 10,084.3 10.0 0.39
Net Interest Income $ 119.2 $ 115.3 $ 106.9
Interest Rate Spread 2.78 % 2.78 % 2.67 %
Net Interest Margin 2.92 % 2.92 % 2.80 %
Noninterest-Bearing Demand Deposits 4,684.9 4,533.0 4,436.1
Other Liabilities 248.6 228.3 224.7
Shareholders' Equity 1,222.9 1,204.8 1,161.7
Total Liabilities and Shareholders' Equity $ 16,972.2 $ 16,495.9 $ 15,906.8

1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $2,920,000, $3,054,000 and $2,967,000 for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016, respectively.

Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis Table 7b
Nine Months Ended
September 30, 2017
Nine Months Ended
September 30, 2016
(dollars in millions) Average
Balance
Income/
Expense
Yield/
Rate
Average
Balance
Income/
Expense
Yield/
Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.5 $ - 0.44 % $ 4.2 $ - 0.26 %
Funds Sold 491.1 3.2 0.85 586.8 2.0 0.46
Investment Securities
Available-for-Sale
Taxable 1,655.8 24.6 1.98 1,594.3 20.9 1.75
Non-Taxable 652.0 15.9 3.26 697.9 16.5 3.16
Held-to-Maturity
Taxable 3,605.8 55.4 2.05 3,627.4 55.2 2.03
Non-Taxable 240.9 7.0 3.88 244.6 7.2 3.91
Total Investment Securities 6,154.5 102.9 2.23 6,164.2 99.8 2.16
Loans Held for Sale 24.9 0.7 3.98 30.0 0.8 3.58
Loans and Leases 1
Commercial and Industrial 1,255.4 32.7 3.49 1,165.2 30.3 3.48
Commercial Mortgage 1,948.1 55.5 3.81 1,702.1 47.5 3.73
Construction 246.7 8.6 4.66 206.9 6.9 4.47
Commercial Lease Financing 207.1 3.5 2.25 196.8 3.7 2.48
Residential Mortgage 3,269.7 93.8 3.82 3,002.6 90.0 4.00
Home Equity 1,439.2 38.9 3.61 1,176.5 32.0 3.63
Automobile 476.4 17.5 4.90 407.0 15.8 5.17
Other 2 389.0 23.2 7.98 353.5 20.4 7.70
Total Loans and Leases 9,231.6 273.7 3.96 8,210.6 246.6 4.01
Other 40.4 0.7 2.22 38.8 0.5 1.83
Total Earning Assets 3 15,946.0 381.2 3.19 15,034.6 349.7 3.10
Cash and Due from Banks 134.8 128.2
Other Assets 555.4 532.5
Total Assets $ 16,636.2 $ 15,695.3
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,869.7 1.3 0.06 $ 2,756.7 0.7 0.03
Savings 5,385.7 4.7 0.12 5,177.0 3.4 0.09
Time 1,529.2 9.4 0.82 1,232.1 5.1 0.55
Total Interest-Bearing Deposits 9,784.6 15.4 0.21 9,165.8 9.2 0.13
Short-Term Borrowings 15.3 0.1 0.91 7.9 - 0.14
Securities Sold Under Agreements to Repurchase 507.7 14.9 3.88 582.0 18.0 4.06
Other Debt 267.9 3.3 1.66 242.5 3.1 1.73
Total Interest-Bearing Liabilities 10,575.5 33.7 0.42 9,998.2 30.3 0.40
Net Interest Income $ 347.5 $ 319.4
Interest Rate Spread 2.77 % 2.70 %
Net Interest Margin 2.91 % 2.84 %
Noninterest-Bearing Demand Deposits 4,617.1 4,326.8
Other Liabilities 241.7 225.2
Shareholders' Equity 1,201.9 1,145.1
Total Liabilities and Shareholders' Equity $ 16,636.2 $ 15,695.3

1 Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

2 Comprised of other consumer revolving credit, installment, and consumer lease financing.

3 Interest income includes taxable-equivalent basis adjustments, based upon a federal statutory tax rate of 35%, of $9,035,000 and $8,957,000 for the nine months ended September 30, 2017 and September 30, 2016, respectively.

Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8a
Three Months Ended September 30, 2017
Compared to June 30, 2017
(dollars in millions) Volume 1 Rate 1 Total
Change in Interest Income:
Funds Sold $ 0.6 $ 0.3 $ 0.9
Investment Securities
Available-for-Sale
Taxable (0.2 ) 0.4 0.2
Non-Taxable (0.2 ) - (0.2 )
Held-to-Maturity
Taxable 0.2 0.2 0.4
Non-Taxable - 0.1 0.1
Total Investment Securities (0.2 ) 0.7 0.5
Loans and Leases
Commercial and Industrial - 0.4 0.4
Commercial Mortgage 0.8 0.4 1.2
Construction - 0.1 0.1
Residential Mortgage 0.6 0.1 0.7
Home Equity 0.6 0.1 0.7
Automobile 0.3 (0.3 ) -
Other 2 0.7 (0.1 ) 0.6
Total Loans and Leases 3.0 0.7 3.7
Total Change in Interest Income 3.4 1.7 5.1
Change in Interest Expense:
Interest-Bearing Deposits
Savings - 0.2 0.2
Time 0.7 0.8 1.5
Total Interest-Bearing Deposits 0.7 1.0 1.7
Short-Term Borrowings (0.1 ) - (0.1 )
Securities Sold Under Agreements to Repurchase - (0.4 ) (0.4 )
Total Change in Interest Expense 0.6 0.6 1.2
Change in Net Interest Income $ 2.8 $ 1.1 $ 3.9
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8b
Three Months Ended September 30, 2017
Compared to September 30, 2016
(dollars in millions) Volume 1 Rate 1 Total
Change in Interest Income:
Funds Sold $ - $ 0.9 $ 0.9
Investment Securities
Available-for-Sale
Taxable 0.4 1.4 1.8
Non-Taxable (0.4 ) 0.2 (0.2 )
Held-to-Maturity
Taxable 0.3 0.7 1.0
Total Investment Securities 0.3 2.3 2.6
Loans Held for Sale (0.4 ) 0.1 (0.3 )
Loans and Leases
Commercial and Industrial 0.5 1.0 1.5
Commercial Mortgage 2.7 1.5 4.2
Construction 0.1 0.2 0.3
Commercial Lease Financing 0.1 (0.1 ) -
Residential Mortgage 2.4 (1.0 ) 1.4
Home Equity 2.3 0.2 2.5
Automobile 0.9 (0.5 ) 0.4
Other 2 0.9 0.3 1.2
Total Loans and Leases 9.9 1.6 11.5
Other - 0.1 0.1
Total Change in Interest Income 9.8 5.0 14.8
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 0.2 0.3
Savings - 0.7 0.7
Time 1.0 1.5 2.5
Total Interest-Bearing Deposits 1.1 2.4 3.5
Securities Sold Under Agreements to Repurchase (0.5 ) (0.5 ) (1.0 )
Total Change in Interest Expense 0.6 1.9 2.5
Change in Net Interest Income $ 9.2 $ 3.1 $ 12.3
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis Table 8c
Nine Months Ended September 30, 2017
Compared to September 30, 2016
(dollars in millions) Volume 1 Rate 1 Total
Change in Interest Income:
Funds Sold $ (0.4 ) $ 1.6 $ 1.2
Investment Securities
Available-for-Sale
Taxable 0.9 2.8 3.7
Non-Taxable (1.1 ) 0.5 (0.6 )
Held-to-Maturity
Taxable (0.3 ) 0.5 0.2
Non-Taxable (0.1 ) (0.1 ) (0.2 )
Total Investment Securities (0.6 ) 3.7 3.1
Loans Held for Sale (0.2 ) 0.1 (0.1 )
Loans and Leases
Commercial and Industrial 2.3 0.1 2.4
Commercial Mortgage 6.9 1.1 8.0
Construction 1.4 0.3 1.7
Commercial Lease Financing 0.2 (0.4 ) (0.2 )
Residential Mortgage 7.8 (4.0 ) 3.8
Home Equity 7.1 (0.2 ) 6.9
Automobile 2.6 (0.9 ) 1.7
Other 2 2.1 0.7 2.8
Total Loans and Leases 30.4 (3.3 ) 27.1
Other - 0.2 0.2
Total Change in Interest Income 29.2 2.3 31.5
Change in Interest Expense:
Interest-Bearing Deposits
Demand 0.1 0.5 0.6
Savings 0.1 1.2 1.3
Time 1.5 2.8 4.3
Total Interest-Bearing Deposits 1.7 4.5 6.2
Short-Term Borrowings - 0.1 0.1
Securities Sold Under Agreements to Repurchase (2.3 ) (0.8 ) (3.1 )
Other Debt 0.3 (0.1 ) 0.2
Total Change in Interest Expense (0.3 ) 3.7 3.4
Change in Net Interest Income $ 29.5 $ (1.4 ) $ 28.1
1 The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
2 Comprised of other consumer revolving credit, installment, and consumer lease financing.
Bank of Hawaii Corporation and Subsidiaries
Salaries and Benefits Table 9
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands) 2017 2017 2016 2017 2016
Salaries $ 31,224 $ 30,553 $ 29,401 $ 91,202 $ 87,339
Incentive Compensation 4,857 5,125 5,743 15,756 17,625
Share-Based Compensation 1,962 2,879 2,968 7,144 8,024
Commission Expense 1,439 1,791 2,051 5,066 5,559
Retirement and Other Benefits 4,279 4,159 3,866 13,479 12,912
Payroll Taxes 2,353 2,427 2,224 8,724 8,089
Medical, Dental, and Life Insurance 3,444 3,136 3,366 9,859 10,130
Separation Expense 2,068 43 106 2,111 850
Total Salaries and Benefits $ 51,626 $ 50,113 $ 49,725 $ 153,341 $ 150,528
Bank of Hawaii Corporation and Subsidiaries
Loan and Lease Portfolio Balances Table 10
(dollars in thousands) September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Commercial
Commercial and Industrial $ 1,252,238 $ 1,241,953 $ 1,250,006 $ 1,249,791 $ 1,217,849
Commercial Mortgage 2,050,998 2,009,886 1,909,064 1,889,551 1,807,190
Construction 232,487 248,030 262,660 270,018 263,079
Lease Financing 204,240 205,043 208,765 208,332 201,436
Total Commercial 3,739,963 3,704,912 3,630,495 3,617,692 3,489,554
Consumer
Residential Mortgage 3,366,634 3,317,179 3,224,206 3,163,073 3,098,936
Home Equity 1,528,353 1,473,123 1,411,489 1,334,163 1,295,993
Automobile 506,102 484,092 468,078 454,333 437,659
Other 1 432,904 408,307 379,541 380,524 371,955
Total Consumer 5,833,993 5,682,701 5,483,314 5,332,093 5,204,543
Total Loans and Leases $ 9,573,956 $ 9,387,613 $ 9,113,809 $ 8,949,785 $ 8,694,097
Deposits
(dollars in thousands) September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Consumer $ 7,303,546 $ 7,278,536 $ 7,196,781 $ 6,997,482 $ 6,781,371
Commercial 6,091,800 5,903,639 6,051,721 6,110,189 5,751,184
Public and Other 1,652,814 1,602,474 1,228,031 1,212,569 1,275,810
Total Deposits $ 15,048,160 $ 14,784,649 $ 14,476,533 $ 14,320,240 $ 13,808,365
1 Comprised of other revolving credit, installment, and lease financing.
Bank of Hawaii Corporation and Subsidiaries
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11
(dollars in thousands) September 30,
2017
June 31,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial
Commercial and Industrial $ 901 $ 175 $ 228 $ 151 $ 201
Commercial Mortgage 1,425 1,460 973 997 1,023
Total Commercial 2,326 1,635 1,201 1,148 1,224
Consumer
Residential Mortgage 9,188 9,337 11,756 13,780 12,735
Home Equity 4,128 3,405 3,517 3,147 2,966
Total Consumer 13,316 12,742 15,273 16,927 15,701
Total Non-Accrual Loans and Leases 15,642 14,377 16,474 18,075 16,925
Foreclosed Real Estate 1,393 1,991 2,529 1,686 1,747
Total Non-Performing Assets $ 17,035 $ 16,368 $ 19,003 $ 19,761 $ 18,672
Accruing Loans and Leases Past Due 90 Days or More
Commercial
Commercial and Industrial $ 5 $ - $ - $ - $ -
Total Commercial 5 - - - -
Consumer
Residential Mortgage $ 2,933 $ 2,269 $ 2,313 $ 3,127 $ 2,583
Home Equity 1,392 2,343 1,133 1,457 1,210
Automobile 806 539 673 894 578
Other 1 1,528 1,859 1,738 1,592 1,273
Total Consumer 6,659 7,010 5,857 7,070 5,644
Total Accruing Loans and Leases Past Due 90 Days or More $ 6,664 $ 7,010 $ 5,857 $ 7,070 $ 5,644

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

$ 55,038 $ 53,158 $ 52,965 $ 52,208 $ 52,095
Total Loans and Leases $ 9,573,956 $ 9,387,613 $ 9,113,809 $ 8,949,785 $ 8,694,097
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases 0.16 % 0.15 % 0.18 % 0.20 % 0.19 %

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

0.18 % 0.17 % 0.21 % 0.22 % 0.21 %

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

0.06 % 0.04 % 0.03 % 0.03 % 0.04 %

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

0.25 % 0.26 % 0.32 % 0.35 % 0.34 %

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

0.25 % 0.25 % 0.27 % 0.30 % 0.28 %
Quarter to Quarter Changes in Non-Performing Assets
Balance at Beginning of Quarter $ 16,368 $ 19,003 $ 19,761 $ 18,672 $ 16,280
Additions 2,212 1,572 1,221 2,142 3,730
Reductions
Payments (199 ) (497 ) (1,017 ) (252 ) (501 )
Return to Accrual Status (305 ) (1,370 ) (645 ) (653 ) (701 )
Sales of Foreclosed Real Estate (951 ) (1,883 ) - (61 ) -
Charge-offs/Write-downs (90 ) (457 ) (317 ) (87 ) (136 )
Total Reductions (1,545 ) (4,207 ) (1,979 ) (1,053 ) (1,338 )
Balance at End of Quarter $ 17,035 $ 16,368 $ 19,003 $ 19,761 $ 18,672

1 Comprised of other revolving credit, installment, and lease financing.

Bank of Hawaii Corporation and Subsidiaries
Reserve for Credit Losses Table 12
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands) 2017 2017 2016 2017 2016
Balance at Beginning of Period $ 113,175 $ 111,636 $ 110,504 $ 110,845 108,952
Loans and Leases Charged-Off
Commercial
Commercial and Industrial (611 ) (124 ) (209 ) (909 ) (670 )
Consumer
Residential Mortgage (36 ) (506 ) (104 ) (725 ) (388 )
Home Equity (129 ) (282 ) (222 ) (774 ) (848 )
Automobile (1,921 ) (1,512 ) (1,703 ) (5,723 ) (4,635 )
Other 1 (3,521 ) (3,063 ) (2,678 ) (9,278 ) (7,017 )
Total Loans and Leases Charged-Off (6,218 ) (5,487 ) (4,916 ) (17,409 ) (13,558 )
Recoveries on Loans and Leases Previously Charged-Off
Commercial
Commercial and Industrial 597 265 282 1,198 7,552
Commercial Mortgage - - 14 - 42
Construction - - - - 23
Lease Financing 1 1 - 2 2
Consumer
Residential Mortgage 89 264 517 457 997
Home Equity 837 838 618 2,183 1,453
Automobile 692 607 615 1,919 1,748
Other 1 530 551 471 1,608 1,394
Total Recoveries on Loans and Leases Previously Charged-Off 2,746 2,526 2,517 7,367 13,211
Net Loans and Leases Charged-Off (3,472 ) (2,961 ) (2,399 ) (10,042 ) (347 )
Provision for Credit Losses 4,000 4,250 2,500 12,650 1,500
Provision for Unfunded Commitments - 250 - 250 500
Balance at End of Period 2 $ 113,703 $ 113,175 $ 110,605 $ 113,703 $ 110,605
Components
Allowance for Loan and Lease Losses $ 106,881 $ 106,353 104,033 $ 106,881 104,033
Reserve for Unfunded Commitments 6,822 6,822 6,572 6,822 6,572
Total Reserve for Credit Losses $ 113,703 $ 113,175 $ 110,605 $ 113,703 $ 110,605
Average Loans and Leases Outstanding $ 9,451,972 $ 9,217,779 $ 8,483,588 $ 9,231,615 $ 8,210,596

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

0.15 % 0.13 % 0.11 % 0.15 % 0.01 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.12 % 1.13 % 1.20 % 1.12 % 1.20 %
1 Comprised of other revolving credit, installment, and lease financing.
2 Included in this analysis is activity related to the Company's reserve for unfunded commitments, which is separately recorded in other liabilities in the Consolidated Statements of Condition.
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information Table 13a
(dollars in thousands) Retail
Banking
Commercial
Banking
Investment
Services and
Private
Banking
Treasury
and Other
Consolidated
Total
Three Months Ended September 30, 2017
Net Interest Income $ 67,128 $ 43,438 $ 7,321 $ (1,570 ) $ 116,317
Provision for Credit Losses 3,512 (35 ) (5 ) 528 4,000
Net Interest Income After Provision for Credit Losses 63,616 43,473 7,326 (2,098 ) 112,317
Noninterest Income 21,287 5,137 13,593 2,393 42,410
Noninterest Expense (51,507 ) (17,721 ) (14,925 ) (4,445 ) (88,598 )
Income Before Provision for Income Taxes 33,396 30,889 5,994 (4,150 ) 66,129
Provision for Income Taxes (11,908 ) (10,891 ) (2,218 ) 4,769 (20,248 )
Net Income $ 21,488 $ 19,998 $ 3,776 $ 619 $ 45,881
Total Assets as of September 30, 2017 $ 5,758,799 $ 3,695,606 $ 305,015 $ 7,508,882 $ 17,268,302
Three Months Ended September 30, 2016
Net Interest Income $ 61,747 $ 38,613 $ 6,029 $ (2,477 ) $ 103,912
Provision for Credit Losses 2,574 (168 ) (7 ) 101 2,500
Net Interest Income After Provision for Credit Losses 59,173 38,781 6,036 (2,578 ) 101,412
Noninterest Income 24,786 6,977 13,662 2,689 48,114
Noninterest Expense (51,892 ) (17,449 ) (14,579 ) (3,612 ) (87,532 )
Income Before Provision for Income Taxes 32,067 28,309 5,119 (3,501 ) 61,994
Provision for Income Taxes (11,329 ) (10,073 ) (1,894 ) 4,795 (18,501 )
Net Income $ 20,738 $ 18,236 $ 3,225 $ 1,294 $ 43,493
Total Assets as of September 30, 2016 $ 5,206,442 $ 3,428,424 $ 290,207 $ 7,089,570 $ 16,014,643
Bank of Hawaii Corporation and Subsidiaries
Business Segments Selected Financial Information Table 13b
(dollars in thousands) Retail
Banking
Commercial
Banking
Investment
Services and
Private
Banking
Treasury
and Other
Consolidated
Total
Nine Months Ended September 30, 2017
Net Interest Income $ 198,633 $ 127,106 $ 20,685 $ (7,956 ) $ 338,468
Provision for Credit Losses 10,413 (355 ) (16 ) 2,608 12,650
Net Interest Income After Provision for Credit Losses 188,220 127,461 20,701 (10,564 ) 325,818
Noninterest Income 64,132 16,451 43,389 19,590 143,562
Noninterest Expense (155,786 ) (54,483 ) (45,692 ) (9,394 ) (265,355 )
Income Before Provision for Income Taxes 96,566 89,429 18,398 (368 ) 204,025
Provision for Income Taxes (34,323 ) (31,472 ) (6,807 ) 10,296 (62,306 )
Net Income $ 62,243 $ 57,957 $ 11,591 $ 9,928 $ 141,719
Total Assets as of September 30, 2017 $ 5,758,799 $ 3,695,606 $ 305,015 $ 7,508,882 $ 17,268,302
Nine Months Ended September 30, 2016
Net Interest Income $ 179,798 $ 115,112 $ 18,518 $ (2,942 ) $ 310,486
Provision for Credit Losses 7,415 (7,052 ) (18 ) 1,155 1,500
Net Interest Income After Provision for Credit Losses 172,383 122,164 18,536 (4,097 ) 308,986
Noninterest Income 67,364 21,015 43,632 18,829 150,840
Noninterest Expense (155,391 ) (52,479 ) (44,786 ) (8,333 ) (260,989 )
Income Before Provision for Income Taxes 84,356 90,700 17,382 6,399 198,837
Provision for Income Taxes (29,958 ) (32,337 ) (6,431 ) 7,837 (60,889 )
Net Income $ 54,398 $ 58,363 $ 10,951 $ 14,236 $ 137,948
Total Assets as of September 30, 2016 $ 5,206,442 $ 3,428,424 $ 290,207 $ 7,089,570 $ 16,014,643
Bank of Hawaii Corporation and Subsidiaries
Selected Quarterly Financial Data Table 14
Three Months Ended
(dollars in thousands, except per share amounts) September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Quarterly Operating Results
Interest Income
Interest and Fees on Loans and Leases $ 94,621 $ 90,909 $ 87,937 $ 86,532 $ 83,489
Income on Investment Securities
Available-for-Sale 11,987 11,835 11,084 10,244 10,313
Held-to-Maturity 20,334 19,918 19,706 19,213 19,315
Deposits 5 2 5 2 1
Funds Sold 1,579 696 890 795 695
Other 235 208 230 281 166
Total Interest Income 128,761 123,568 119,852 117,067 113,979
Interest Expense
Deposits 6,663 4,998 3,691 3,448 3,232
Securities Sold Under Agreements to Repurchase 4,664 5,079 5,185 5,406 5,713
Funds Purchased - 39 3 3 3
Short-Term Borrowings - 64 - - -
Other Debt 1,117 1,109 1,101 1,117 1,119
Total Interest Expense 12,444 11,289 9,980 9,974 10,067
Net Interest Income 116,317 112,279 109,872 107,093 103,912
Provision for Credit Losses 4,000 4,250 4,400 3,250 2,500
Net Interest Income After Provision for Credit Losses 112,317 108,029 105,472 103,843 101,412
Noninterest Income
Trust and Asset Management 11,050 11,796 11,479 11,232 11,008
Mortgage Banking 3,237 3,819 3,300 6,256 6,362
Service Charges on Deposit Accounts 8,188 8,009 8,325 8,537 8,524
Fees, Exchange, and Other Service Charges 13,764 13,965 13,332 13,731 14,023
Investment Securities Gains (Losses), Net (566 ) (520 ) 12,133 (337 ) (328 )
Annuity and Insurance 1,429 2,161 1,995 1,457 1,653
Bank-Owned Life Insurance 1,861 1,550 1,497 1,551 1,911
Other 3,447 4,456 3,855 4,076 4,961
Total Noninterest Income 42,410 45,236 55,916 46,503 48,114
Noninterest Expense
Salaries and Benefits 51,626 50,113 51,602 50,622 49,725
Net Occupancy 7,727 8,131 8,168 7,581 8,510
Net Equipment 5,417 5,706 5,501 5,191 4,913
Data Processing 3,882 3,881 3,410 3,665 3,620
Professional Fees 3,044 2,592 2,779 2,990 2,396
FDIC Insurance 2,107 2,097 2,209 2,015 2,104
Other 14,795 15,669 14,899 17,525 16,264
Total Noninterest Expense 88,598 88,189 88,568 89,589 87,532
Income Before Provision for Income Taxes 66,129 65,076 72,820 60,757 61,994
Provision for Income Taxes 20,248 20,414 21,644 17,244 18,501
Net Income $ 45,881 $ 44,662 $ 51,176 $ 43,513 $ 43,493
Basic Earnings Per Share $ 1.09 $ 1.05 $ 1.21 $ 1.03 $ 1.02
Diluted Earnings Per Share $ 1.08 $ 1.05 $ 1.20 $ 1.02 $ 1.02
Balance Sheet Totals
Loans and Leases $ 9,573,956 $ 9,387,613 $ 9,113,809 $ 8,949,785 $ 8,694,097
Total Assets 17,268,302 16,981,292 16,664,215 16,492,367 16,014,643
Total Deposits 15,048,160 14,784,649 14,476,533 14,320,240 13,808,365
Total Shareholders' Equity 1,227,893 1,213,757 1,193,137 1,161,537 1,163,859
Performance Ratios
Return on Average Assets 1.07 % 1.09 % 1.26 % 1.07 % 1.09 %
Return on Average Shareholders' Equity 14.89 14.87 17.63 14.90 14.89
Efficiency Ratio 1 55.82 55.99 53.42 58.33 57.58
Net Interest Margin 2 2.92 2.92 2.89 2.83 2.80
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets.
Bank of Hawaii Corporation and Subsidiaries
Hawaii Economic Trends Table 15
Eight Months Ended Year Ended
($ in millions; jobs in thousands) August 31, 2017 December 31, 2016 December 31, 2015
Hawaii Economic Trends
State General Fund Revenues 1 $ 4,357.2 4.5 % $ 6,215.4 3.6 % $ 5,998.6 8.4 %
General Excise and Use Tax Revenue 1 $ 2,250.2 4.8 % $ 3,205.7 2.0 % $ 3,141.5 5.4 %
Jobs 2 672.4 671.7 658.8
September 30, December 31,
(spot rates) 2017 2016 2015
Unemployment 3
Statewide, seasonally adjusted 2.5 % 2.9 % 3.2 %
Oahu 2.3 2.4 2.7
Island of Hawaii 2.8 3.1 3.7
Maui 2.5 2.7 3.1
Kauai 2.3 2.8 3.5
September 30, December 31,
(percentage change, except months of inventory) 2017 2016 2015 2014
Housing Trends (Single Family Oahu) 4
Median Home Price 3.4 % 5.0 % 3.7 % 3.8 %
Home Sales Volume (units) 5.0 % 6.5 % 5.2 % (0.8 ) %
Months of Inventory 2.4 2.5 2.6 2.6
(in thousands) Monthly Visitor Arrivals,
Not Seasonally Adjusted
Percentage Change
from Previous Year
Tourism 5
August 31, 2017 818.6 4.8
July 31, 2017 891.9 6.8
June 30, 2017 835.9 4.5
May 31, 2017 751.2 4.5
April 30, 2017 753.0 7.5
March 31, 2017 802.8 2.1
February 28, 2017 700.4 1.7
January 31, 2017 756.3 4.9
December 31, 2016 828.5 3.6
November 30, 2016 696.9 4.7
October 31, 2016 717.5 4.3
September 30, 2016 666.6 3.0
August 31, 2016 780.7 3.1
July 31, 2016 835.4 2.1
June 30, 2016 800.3 4.2
May 31, 2016 718.9 1.3
April 30, 2016 700.6 3.4
March 31, 2016 786.3 0.8
February 29, 2016 688.8 4.1
January 31, 2016 721.0 6.2
December 31, 2015 799.5 4.4
November 30, 2015 665.9 4.4
October 31, 2015 687.7 4.0
September 30, 2015 647.2 3.9
August 31, 2015 757.5 3.1
July 31, 2015 818.5 5.9
June 30, 2015 767.9 6.0
May 31, 2015 709.7 9.3
April 30, 2015 677.8 2.3
March 31, 2015 780.1 7.0
February 28, 2015 661.7 2.3
January 31, 2015 678.9 (0.6 )

1 Source: Hawaii Department of Business, Economic Development & Tourism

2 Source: U. S. Bureau of Labor

3 Source: Hawaii Department of Labor and Industrial Relations, County jobs data not seasonally adjusted.

4 Source: Honolulu Board of REALTORS

5 Source: Hawaii Tourism Authority

Note: Certain prior period seasonally adjusted information has been revised.

View source version on businesswire.com: http://www.businesswire.com/news/home/20171023005314/en/

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

Source: Bank of Hawaii Corporation