Bank of Hawaii Corporation Third Quarter 2002 Financial Results.Business Editors HONOLULU--(BUSINESS WIRE)--Oct. 23, 2002 -- Net Income $30.2 Million, or $0.43 Per Share -- Board of Directors Increases Dividend to $0.19 Per Share -- Shares Repurchases Total 4.0 Million During the Quarter Bank of Hawaii Bank of Hawaii, a subsidiary of Bank of Hawaii Corporation (NYSE: BOH), is a regional commercial bank headquartered in Honolulu, Hawaii. It is Hawaii's second oldest bank and its largest locally owned bank in that majority of the voting stockholders reside within the state. Corporation (NYSE NYSE See: New York Stock Exchange :BOH BOH Bournemouth (UK) Airport Identifier BOH Bank of Hawaii BOH Board of Health BOH Back Of House BOH Board of Housing (Montana Dept of Commerce) BOH Badge of Honor BOH Bridge Of Hope BOH Bag of Holding ) today reported diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.43 for the third quarter of 2002, an increase of 16.2 percent from $0.37 in the third quarter of 2001. Net income for the quarter was $30.2 million, down slightly from $31.1 million in the comparable quarter last year. The return on average assets for the quarter was 1.22 percent, up from 1.00 percent in the same period last year. The return on average equity was 10.40 percent for the quarter, compared to 8.88 percent in the third quarter of 2001. "We continued to make progress on several key initiatives in the third quarter of 2002," said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. E. O'Neill, Chairman, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and President. "Our credit quality continued to improve, we are progressing on our systems conversions and are investing in our Hawaii Hawaii, island, United States Hawaii, island (1990 pop. 120,217), 4,037 sq mi (10,456 sq km), largest and southernmost island of the state of Hawaii and coextensive with Hawaii co.; known as the Big Island. market to improve our customer service. We are encouraged by the strengthening economy in Hawaii which is being led by the construction and real estate sectors." For nine months ended September September: see month. 30, 2002, net income was $92.3 million, up slightly from net income of $91.5 million for the same period last year. Diluted earnings per share were $1.26 for the first nine months of 2002, an increase of 13.5 percent from $1.11 per share for the first nine months of 2001. The year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. return on average assets was 1.22 percent, up from 0.94 percent for the same nine months in 2001. The year-to-date return on average equity was 10.10 percent versus 8.96 percent for the nine months ended September 30, 2001. The presence of non-core items and the effects of business divestitures in prior quarters continue to have a significant impact on the comparability of results. Included in the third quarter of 2002 were charges of $6.6 million related to the information technology systems replacement project. Earnings for the third quarter of 2001 included a gain of $49.4 million from divestitures offset by related sales costs, tax obligations, other non-recurring adjustments and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs, which netted to a cost of $0.4 million after tax. Supplemental information has been provided in Table 11 that summarizes the continuing core business results for the last seven quarters. Financial Highlights Net interest income for the third quarter of 2002 on a fully taxable equivalent basis was $92.2 million, down $0.8 million from the previous quarter. Net interest income was down $19.6 million from the prior year quarter primarily due to lower earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin related to the divestitures, the exit of the Asia business and the managed reduction of loans in an effort to reduce credit risk. Bank of Hawaii Corporation's net interest margin was 4.03 percent for the third quarter of 2002, a 6 basis point increase from 3.97 percent in the previous quarter and a 14 basis point increase from 3.89 percent in the third quarter last year. The improvement in the margin was due to lengthening lengthening (lengkˑ·the·ning), n the use of various massage or muscle energy techniques to relax and stretch muscle and connective tissue. the maturities of some short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments, reductions in short-term borrowings and time deposits, and debt repurchases, which lowered the Company's cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. . The Company remains asset sensitive. Given further improvements in Bank of Hawaii's credit quality and the resiliency The ability to recover from a failure. The term may be applied to hardware, software or data. of the Hawaii economy, the Company did not recognize a provision for loan and lease losses and thereby reduced its allowance by net charge-offs of $4.5 million during the third quarter. The provision for loan and lease losses was $3.3 million in the second quarter of 2002 and $0.9 million in the third quarter last year. The lower provision in the third quarter of 2001 was the result of significant recoveries during that quarter, including a $6.5 million recovery in Asia. Non-interest income was $48.2 million for the quarter, a decrease of $0.7 million, or 1.4 percent, from $48.9 million in the second quarter of 2002. The decrease was primarily due to a reduction in revenue from trust and asset management activities. Non-interest income of $113.4 million for the third quarter of 2001 included $51.6 million in non-recurring items. Excluding these items, non-interest income for the quarter decreased $13.5 million from the previous year quarter largely due to decreased mortgage banking income and reductions in revenue associated with the divested businesses. Non-interest expense for the third quarter of 2002 was $93.0 million, including $6.6 million in information technology system replacement costs. Excluding these charges, non-interest expense declined by $4.0 million, or 4.4 percent, to $86.4 million compared to $90.4 million in the previous quarter. Non-interest expense of $122.6 million for the third quarter of 2001 included restructuring and other related costs of $3.0 million. Excluding these items, non-interest expense declined $33.2 million, or 27.8 percent, from the same quarter last year. The most significant reduction from the prior year was salaries, which were largely associated with the divested businesses. The efficiency ratio was 66.2 percent for the third quarter of 2002. Excluding the systems replacement costs, the efficiency ratio was 61.5 percent compared to 63.7 percent in the previous quarter and a continuing business ratio of 61.0 percent in the same quarter last year. For the nine months ending September 30, 2002, the continuing business efficiency ratio was 62.0 percent compared to 60.8 percent in the same period last year. The 35.9 percent effective tax rate for the first nine months of 2002 is a decrease from the prior year as the effective tax rate in 2001 reflected the impact of divestitures and foreign taxes. Asset Quality Bank of Hawaii Corporation's credit quality continued to improve during the third quarter of 2002 as measured by reductions in non-performing assets, the decline in year-to-date net charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. rates and additional improvement in the Company's internal credit risk ratings. Non-performing assets were $63.3 million at the end of the third quarter of 2002, a decrease of $15.5 million, or 19.7 percent, from $78.8 million at the end of the second quarter. The decline is primarily due to the return to accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. and payoff of loans to two Hawaii borrowers. Compared to the same quarter last year, non-performing assets declined $43.1 million, or 40.5 percent. At September 30, 2002 the ratio of non-performing assets to total loans plus foreclosed assets and non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. held for sale was 1.20 percent, down from 1.45 percent at June June: see month. 30, 2002 and down from 1.56 percent at September 30, 2001. Non-accrual loans were $45.7 million at September 30, 2002, a reduction of $15.9 million, or 25.8 percent, from $61.6 million at June 30, 2002 and down $16.1 million, or 26.1 percent, from $61.8 million at September 30, 2001. Non-accrual loans as a percentage of total loans were 0.87 percent at September 30, 2002, down from 1.14 percent the previous quarter and down from 0.91 percent at September 30, 2001. Net charge-offs for the third quarter of 2002 were $4.5 million, or 0.33 percent, of total average loans (annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. ). Charge-offs of $7.2 million were partially offset by recoveries of $2.7 million. Year-to-date net charge-offs were 0.39 percent of total average loans (annualized), a significant improvement from net charge-offs of 1.76 percent in the prior year. The allowance for loan and lease losses of $154.5 million at September 30, 2002 declined by $4.5 million, the amount of net charge-offs, from June 30, 2002 and represented a decrease of $28.0 million from September 30, 2001. The decline from the previous year also reflects the South Pacific divestitures. The ratio of the allowance for loan and lease losses to total loans was 2.94 percent at the end of the third quarter of 2002, unchanged from the end of the previous quarter and up from 2.70 percent at the end of the same quarter last year. The concentration of credit exposure to selected industries and the amount of the Company's syndicated exposure are summarized in Table 7. Other Financial Highlights Total assets were $9.7 billion at the end of September 30, 2002, down from $10.6 billion at December December: see month. 31, 2001 and down from $11.9 billion at the end of September 30, 2001. The most significant reductions were in commercial loans and foreign loans resulting from the divestitures and strategic risk reductions in the portfolio. In addition, the Company significantly reduced its loans held for sale. Compared to June 30, 2002, total assets decreased $121 million from $9.8 billion. The decrease was due to comparable reductions in both the commercial and consumer loan portfolios. Commercial loans decreased as the Company utilized opportunities during the quarter to further reduce syndicated loans Syndicated Loan A very large loan in which a group of banks work together to provide funds for one borrower. There is usually one lead bank that takes a small percentage of the loan and syndicates the rest to other banks. Notes: Also known as a "syndicated bank facility. outstanding by $36 million. Reductions in the consumer loan portfolio were due to a small increase in mortgage prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. , which more than offset growth in home equity and other consumer loans. Mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. rights represent approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 0.78 percent of the balance of loans serviced and did not require an adjustment for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. at September 30, 2002 as the market value substantially exceeded the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. . Hawaii prepayment speeds Prepayment speed Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities. remain significantly slower than national averages. Investment securities increased during the quarter as some of the excess liquidity was invested in medium-term securities. Total deposits at September 30, 2002 were $6.6 billion, essentially flat with December 31, 2001 and down $0.8 billion from the end of September 30, 2001. The decline from the prior year is primarily due to the divested foreign operations. Compared to June 30, 2002, total deposits increased $172 million from $6.5 billion. Growth in demand and savings deposits Savings deposits Accounts that pay interest, typically at below-market interest rates, that do not have a specific maturity, and that usually can be withdrawn upon demand. more than offset a $123 million decrease in time and foreign deposits. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , including current maturities, decreased $95 million due to repayments and repurchases. The Company continues to manage down its higher cost funds, including time deposits, purchased funds, short-term borrowings and long-term debt. During the third quarter of 2002, Bank of Hawaii Corporation repurchased 4.0 million shares of common stock at an average cost of $27.55, totaling $109.4 million. At September 30, 2002, the Company had repurchased a total of 16.9 million shares under its previously announced share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. programs. Through September 30, 2002, a total of $433.8 million has been returned to the shareholder at an average cost of $25.69 per share. Remaining buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may authority under the existing repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. programs was $136.2 million at September 30, 2002. Through October October: see month. 22, 2002, the Company repurchased an additional 1.3 million shares of common stock at a cost of $27.08 per share. Capital and liquidity remain exceptionally strong at the Company. At September 30, 2002, the Tier 1 leverage ratio was 11.07 percent compared to 12.11 percent at June 30, 2002 and 11.37 percent at September 30, 2001. Bank of Hawaii Corporation's Board of Directors increased the quarterly cash dividend to $0.19 per share on the Company's outstanding shares. The dividend will be payable on December 13, 2002 to shareholders of record at the close of business on November November: see month. 22, 2002. Information Technology Systems Replacement Project Bank of Hawaii Corporation signed an agreement with Metavante Corporation Metavante is a company that provides financial technology services and software to its customers, consisting primarily of small to large sized financial institutions. The $1.5 billion organization is headquartered in Milwaukee, Wisconsin and employs over 5,600 employees in 35 U.S. in July July: see month. 2002 to serve as the Company's primary technology systems provider. The seven-year outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. arrangement is expected to be operational in the third quarter of 2003 and should provide annual cost savings of over $17 million compared to current expense levels. In connection with this decision, the Company estimates that it will recognize transition charges of approximately $35 million over the five-quarter conversion period. During the third quarter of 2002, the Company incurred $6.6 million in transition costs. Incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. system conversion costs are estimated to be approximately $7.9 million in the fourth quarter of 2002. Additional details on this project may be found in Table 10. Economic Outlook One year after the September 11 attacks September 11 attacks Series of airline hijackings and suicide bombings against U.S. targets perpetrated by 19 militants associated with the Islamic extremist group al-Qaeda. , Hawaii tourism has returned to near normal levels. Through the end of August, travel to Hawaii from the western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River West Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century was at record levels, with all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal highs for the California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). market and high single-digit growth from the intermountain west The Intermountain West is a region of North America lying between the Rocky Mountains to the east and the Cascades and Sierra Nevada to the west. It is also called the Intermountain Region. . East Coast travel to Hawaii was down and travel from Japan remains about 15 percent below pre-September 11 volumes. The momentum in Hawaii growth continues coming from construction and real estate investment. This growth was sufficient to sustain Hawaii's 4.0 percent seasonally-adjusted unemployment rate in August 2002, against the backdrop Backdrop may refer to:
Overall, the outlook for Hawaii is continued modest growth that is expected to slightly outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, the national economy. This outlook is confirmed by a 4.2 percent year-over-year increase in scheduled air seats to Hawaii during August 2002 and renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. state tax revenue growth of 3 to 4 percent in the first three months of the new fiscal year. Investment in Hawaii Bank of Hawaii Corporation is increasingly focused on strengthening its competitive position in its markets, primarily Hawaii. Through the end of the third quarter of 2002, the following were accomplished: -- Education of nearly 1,300 personnel on customer focused sales and service. -- Investment of $7.0 million in new and improved branch facilities. -- Selection and investment of $6.6 million in primary and supporting systems to improve customer service. -- Special investments in community organizations of $4.0 million. -- Contributions of $1.3 million to local non-profit organizations from Bank of Hawaii and its charitable foundation. Earnings Outlook The Company affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its expectation that earnings for the full year 2002 will equal or exceed $120 million. Earnings for the fourth quarter are expected to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. third quarter levels, but could decrease slightly due to higher costs for the systems replacement projects, branch closings in the West Pacific and seasonal increases in compensation and other expense categories. Earnings expectations for 2003, which were established at $130 million in April 2001, are being reviewed and should be updated in January January: see month. when the 2002 earnings are announced. Based on current conditions, the Company does not expect to record a provision for loan losses. However, the actual amount of the provision for loan losses will depend on determinations of credit risk that will be made near the end of each quarter. Earnings per share and return on equity projections continue to be dependent upon the terms and timing of share repurchases. Conference Call Information The Company will review its third quarter 2002 earnings today at 2:00 p.m. ET. The presentation will be accessible via teleconference and via the investor relations Investor relations The process by which the corporation communicates with its investors. link on Bank of Hawaii Corporation's web site, www.boh.com. The conference call number is (800) 997-8642 in the U.S. or (973) 694-6836 for international callers. A replay of the call will be available for one week beginning at 4:00 p.m. ET on Wednesday Wednesday: see week. , October 23, 2002 by calling (800) 428-6051 in the U.S. or (973) 709-2089 for international callers and entering the number 261724 when prompted. A replay of the presentation will be also available on the Company's web site. Bank of Hawaii Corporation is a regional financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company serving businesses, consumers and governments in Hawaii, American Samoa American Samoa, officially Territory of American Samoa, unincorporated territory of the United States (2000 pop. 57,291), comprising the eastern half of the Samoa island chain in the South Pacific. and the West Pacific. The Company's principal subsidiary, Bank of Hawaii, was founded in 1897 and is the largest independent financial institution in Hawaii. For more information about Bank of Hawaii Corporation, see the Company's web site, www.boh.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. concerning anticipated revenues and expenses in 2002 and beyond. We believe the assumptions underlying our forward-looking statements are reasonable. However, any of the assumptions could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons including, but not limited to: the Hawaii economy may not continue at the pace we anticipate; our refocused emphasis on our Hawaii market may not achieve the customer and revenue gains we anticipate; our credit markets may deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. and our credit quality may fall short of our goals; we may not achieve the expense reductions we expect; we may not be able to maintain our net interest margin; we may not be able to implement our proposed equity repurchases in the amount or at the times planned; the economics or timing, or both, of our technology outsourcing project may not result in the expected benefits; unanticipated difficulties or delays in the conversion of our data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a to outsourcing may result in the reduction or delay of anticipated cost savings or increased cost of conversion; the technology outsourcing project may not be able to achieve the projected reductions in staffing; we may encounter unanticipated difficulties or costs in exiting existing data processing agreements with third parties; the required level of reserves for loan and lease losses may increase or decrease due to changes in our credit quality or risk profile; there may be economic volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the markets we serve; and there may be changes in business and economic conditions, competition, fiscal and monetary policies or legislation. We do not undertake any obligation to update any forward-looking statements to reflect later events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
Bank of Hawaii Corporation and subsidiaries
Highlights (Unaudited) Table 1
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(dollars in thousands except
per share amounts) Three Months Ended Nine Months Ended
Earnings Highlights and September 30 September 30
Performance Ratios 2002 2001 2002 2001
---------------------------- ------------------ ------------------
Net Income $30,200 $31,059 $92,272 $91,475
Basic Earnings Per Share 0.44 0.39 1.30 1.14
Diluted Earnings Per Share 0.43 0.37 1.26 1.11
Cash Dividends 12,197 14,625 38,442 43,415
Return on Average Assets 1.22% 1.00% 1.22% 0.94%
Return on Average Equity 10.40% 8.88% 10.10% 8.96%
Net Interest Margin 4.03% 3.89% 3.97% 3.91%
Efficiency Ratio 66.19% 54.46% 63.95% 62.89%
Continuing Business
Efficiency Ratio(1) 61.51% 61.03% 61.96% 60.81%
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Statement of Condition Highlights and September 30
Performance Ratios 2002 2001
------------------------------------- ----------- ------------
Total Assets $9,702,043 $11,944,139
Net Loans 5,104,200 6,583,522
Total Deposits 6,627,043 7,399,737
Total Shareholders' Equity 1,100,706 1,371,055
Book Value Per Common Share $ 16.67 $ 17.31
Allowance/Loans Outstanding 2.94% 2.70%
Average Equity/Average Assets 12.10% 10.47%
Employees (FTE) 2,934 3,881
Branches and offices 97 140
Market Price Per Share of Common
Stock for the Quarter Ended:
Closing $ 27.90 $ 23.37
High $ 30.00 $ 28.30
Low $ 22.79 $ 20.20
(1) Excludes the effects of the businesses that were divested in 2001,
restructuring, non-core transactions and costs associated with the
information technology system replacement project.
Bank of Hawaii Corporation and subsidiaries
Consolidated Statements of Income (Unaudited) Table 2
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Three Months Ended Nine Months Ended
(dollars in thousands September 30 September 30
except per share amounts) 2002 2001 2002 2001
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Interest Income
Interest and Fees on
Loan and Leases $ 89,335 $ 143,205 $ 280,421 $ 495,732
Income on Investment
Securities - Held to
Maturity 4,847 8,007 14,939 27,120
Income on Investment
Securities - Available
for Sale 25,291 31,390 78,886 107,982
Deposits 5,384 9,413 16,442 19,738
Funds Sold and Security
Resale Agreements 914 1,781 2,669 4,231
Other 1,575 1,384 4,302 3,948
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Total Interest Income 127,346 195,180 397,659 658,751
Interest Expense
Deposits 20,547 50,145 66,691 182,147
Security Repurchase
Agreements 7,039 17,576 25,588 63,049
Funds Purchased 299 1,279 775 9,735
Short-Term Borrowings 334 2,019 1,272 8,013
Long-Term Debt 6,946 12,459 23,320 42,232
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Total Interest Expense 35,165 83,478 117,646 305,176
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Net Interest Income 92,181 111,702 280,013 353,575
Provision for Loan and
Lease Losses - 919 11,616 59,798
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Net Interest Income
After Provision for
Loan and Lease Losses 92,181 110,783 268,397 293,777
Non-Interest Income
Trust and Asset
Management 13,655 13,999 42,648 45,041
Mortgage Banking 4,037 10,411 15,300 20,192
Service Charges on
Deposit Accounts 7,925 9,592 24,291 29,409
Fees, Exchange, and
Other Service Charges 13,114 17,587 38,631 60,837
Gain on Sales of Banking
Operations, Net of
Venture Investment
Losses - 47,771 - 144,680
Investment Securities
Gains - 935 3 32,914
Other 9,517 13,060 30,311 38,720
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Total Non-Interest
Income 48,248 113,355 151,184 371,793
Non-Interest Expense
Salaries 38,837 50,341 117,437 149,791
Pensions and Other
Employee Benefits 7,377 9,646 26,764 34,070
Net Occupancy Expense 9,597 11,422 28,511 35,447
Net Equipment Expense 10,058 12,443 30,176 38,929
Goodwill Amortization - 3,333 - 10,916
Restructuring and Other
Related Costs - 2,986 1,979 86,329
Information Technology
Systems Replacement
Project 6,576 - 6,576 -
Other 20,509 32,397 64,297 100,727
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Total Non-Interest
Expense 92,954 122,568 275,740 456,209
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Income Before Income Taxes 47,475 101,570 143,841 209,361
Provision for Income Taxes 17,275 70,511 51,569 117,886
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Net Income $ 30,200 $ 31,059 $ 92,272 $ 91,475
======================================================================
Basic Earnings Per Share $ 0.44 $ 0.39 $ 1.30 $ 1.14
Diluted Earnings Per
Share $ 0.43 $ 0.37 $ 1.26 $ 1.11
Dividends Declared Per
Share $ 0.19 $ 0.18 $ 0.55 $ 0.54
Basic Weighted Average
Shares 67,893,086 80,539,330 71,148,663 80,261,610
Diluted Weighted Average
Shares 69,910,264 83,418,955 73,158,354 82,497,107
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Bank of Hawaii Corporation and subsidiaries
Consolidated Statements of Condition (Unaudited) Table 3
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September 30 December 31 September 30
(dollars in thousands) 2002 2001 2001
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Assets
Interest-Bearing Deposits $1,019,823 $ 1,101,974 $ 1,227,095
Investment Securities - Held to
Maturity (Market Value of
$286,526, $407,838, and
$471,579, respectively) 277,856 396,216 460,461
Investment Securities - Available
for Sale 2,241,106 2,001,420 2,064,141
Securities Purchased Under
Agreements to Resell - - 7,639
Funds Sold 95,000 115,000 162,830
Loans Held for Sale 30,863 456,709 228,056
Loans 5,258,675 5,652,518 6,766,063
Allowance for Loan and Lease
Losses (154,475) (158,979) (182,541)
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Net Loans 5,104,200 5,493,539 6,583,522
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Total Earning Assets 8,768,848 9,564,858 10,733,744
Cash and Non-Interest Bearing
Deposits 328,135 405,981 426,884
Premises and Equipment 182,230 196,171 223,528
Customers' Acceptance Liability 1,106 593 1,310
Accrued Interest Receivable 38,839 42,687 55,968
Foreclosed Real Estate 17,568 17,174 37,240
Mortgage Servicing Rights 29,911 27,291 23,899
Goodwill 36,216 36,216 67,617
Other Assets 299,190 336,826 373,949
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Total Assets $9,702,043 $10,627,797 $11,944,139
======================================================================
Liabilities
Domestic Deposits
Demand - Non-Interest Bearing $1,593,137 $ 1,548,322 $ 1,428,454
- Interest Bearing 2,063,426 1,926,018 1,792,155
Savings 1,382,719 967,825 813,427
Time 1,549,693 1,927,778 2,186,849
Foreign Deposits
Demand-Non-Interest Bearing - 2 321,706
Time Due to Banks 4,387 230,247 30,357
Other Savings and Time 33,681 73,404 826,789
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Total Deposits 6,627,043 6,673,596 7,399,737
Securities Sold Under Agreements to
Repurchase 1,089,287 1,643,444 1,833,091
Funds Purchased 116,775 55,800 129,715
Current Maturities of Long-Term
Debt 15,975 100,670 216,670
Short-Term Borrowings 17,941 134,222 138,910
Banker's Acceptances Outstanding 1,106 593 1,310
Retirement Expense Payable 38,317 36,175 36,775
Accrued Interest Payable 21,870 29,762 49,057
Taxes Payable 191,519 138,366 224,915
Other Liabilities 87,709 98,422 65,166
Long-Term Debt 393,795 469,735 477,738
----------------------------------------------------------------------
Total Liabilities 8,601,337 9,380,785 10,573,084
Shareholders' Equity
Common Stock ($.01 par value),
authorized 500,000,000 shares;
issued/outstanding: September
2002 - 81,310,042/66,048,072;
December 2001 - 81,377,241/
73,218,326; September 2001 -
81,365,600/79,195,668 806 806 806
Capital Surplus 371,098 367,672 367,394
Accumulated Other Comprehensive
Income 26,038 22,761 24,579
Retained Earnings 1,100,016 1,055,424 1,044,039
Deferred Stock Grants (2,886) (7,637) (14,679)
Treasury Stock, at Cost (Shares:
September 2002 - 15,261,970;
December 2001 - 8,158,915;
September 2001 - 2,169,932) (394,366) (192,014) (51,084)
----------------------------------------------------------------------
Total Shareholders' Equity 1,100,706 1,247,012 1,371,055
----------------------------------------------------------------------
Total Liabilities and
Shareholders' Equity $9,702,043 $10,627,797 $11,944,139
======================================================================
Bank of Hawaii Corporation and subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited) Table 4
----------------------------------------------------------------------
Accum.
Other
Compre-
Common Capital hensive
(dollars in thousands) Total Stock Surplus Income
----------------------------------------------------------------------
Nine Months Ended September
30, 2002
Balance at December
31, 2001 $1,247,012 $806 $367,672 $ 22,761
Comprehensive Income
Net Income 92,272 - - -
Other Comprehensive
Income, Net of Tax
Unrealized Gain on
Investment Securities 3,859 - - 3,859
Foreign Currency
Translation Adjustment (582) - - (582)
Total Comprehensive Income
Common Stock Issued
33,402 Profit Sharing
Plan 933 - 196 -
1,369,679 Stock Option
Plan 27,895 - 4,022 -
77,270 Dividend
Reinvestment
Plan 2,152 - 439 -
4,101 Directors' Restricted
Shares and Deferred
Compensation Plan 44 - 117 -
(71,300)Employees'
Restricted
Shares 3,636 - (1,348) -
Treasury Stock Purchased
(8,581,000 shares) (238,073) - - -
Cash Dividends Paid (38,442) - - -
----------------------------------------------------------------------
Balance at September 30, 2002 $1,100,706 $806 $371,098 $ 26,038
======================================================================
Nine Months Ended September
30, 2001
Balance at December
31, 2000 $1,301,356 $806 $346,045 $(25,079)
Comprehensive Income
Net Income 91,475 - - -
Other Comprehensive
Income, Net of Tax
Unrealized Gain on
Investment Securities 23,906 - - 23,906
Foreign Currency
Translation Adjustment 25,911 - - 25,911
Pension Liability
Adjustments (159) - - (159)
Total Comprehensive Income
Common Stock Issued
46,408 Profit Sharing Plan 1,065 - 257 -
604,264 Stock Option Plan 11,160 - 892 -
91,764 Dividend Reinvestment
Plan 2,103 - 483 -
4,248 Directors' Restricted
Shares and Deferred
Compensation Plan 341 - 95 -
724,600 Employees' Restricted
Shares 2,797 - 18,323 -
65,146 Hawaii Insurance
Network 1,299 - 1,299 -
Treasury Stock Purchased
(1,965,000 shares) (46,784) - - -
Cash Dividends Paid (43,415) - - -
----------------------------------------------------------------------
Balance at September 30, 2001 $1,371,055 $806 $367,394 $ 24,579
======================================================================
Deferred Compre-
Retained Stock Treasury hensive
(dollars in thousands) Earnings Grants Stock Income
----------------------------------------------------------------------
Nine Months Ended September
30, 2002
Balance at December 31, 2001 $1,055,424 $ (7,637)$(192,014)
Comprehensive Income
Net Income 92,272 - - $ 92,272
Other Comprehensive
Income, Net of Tax
Unrealized Gain on
Investment Securities - - - 3,859
Foreign Currency
Translation Adjustment - - - (582)
---------
Total Comprehensive Income $ 95,549
=========
Common Stock Issued
33,402 Profit Sharing Plan - - 737
1,369,679 Stock Option Plan (9,236) (233) 33,342
77,270 Dividend Reinvestment
Plan (2) - 1,715
4,101 Directors' Restricted
Shares and Deferred
Compensation Plan - - (73)
(71,300)Employees' Restricted
Shares - 4,984 -
Treasury Stock Purchased
(8,581,000 shares) - - (238,073)
Cash Dividends Paid (38,442) - -
-------------------------------------------------------------
Balance at September 30, 2002 $1,100,016 $ (2,886)$(394,366)
=============================================================
Nine Months Ended September
30, 2001
Balance at December 31, 2000 $ 996,791 $ - $ (17,207)
Comprehensive Income
Net Income 91,475 - - $ 91,475
Other Comprehensive
Income, Net of Tax
Unrealized Gain on
Investment Securities - - - 23,906
Foreign Currency Translation
Adjustment - - - 25,911
Pension Liability Adjustments - - - (159)
---------
Total Comprehensive Income $141,133
=========
Common Stock Issued
46,408 Profit Sharing Plan - - 808
604,264 Stock Option Plan (812) 847 10,233
91,764 Dividend Reinvestment
Plan - - 1,620
4,248 Directors' Restricted
Shares and Deferred
Compensation Plan - - 246
724,600 Employees' Restricted
Shares - (15,526) -
65,146 Hawaii Insurance
Network - - -
Treasury Stock Purchased
(1,965,000 shares) - - (46,784)
Cash Dividends Paid (43,415) - -
-------------------------------------------------------------
Balance at September 30, 2001 $1,044,039 $(14,679)$ (51,084)
=============================================================
Bank of Hawaii Corporation and subsidiaries
Consolidated Average Balances and Interest Rates - Taxable
Equivalent Basis (Unaudited) Table 5
Three Months Ended Three Months Ended
September 30, 2002 June 30, 2002
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $1,142.3 $ 5.4 1.87% $ 1,310.0 $ 6.0 1.84%
Funds Sold 210.2 0.9 1.74 173.3 0.8 1.74
Investment Securities
- Held to Maturity 296.9 5.0 6.63 328.6 5.0 6.06
- Available for
Sale 2,009.5 25.3 5.03 1,890.3 26.5 5.60
Loans Held for Sale 40.0 0.6 6.24 65.2 1.1 6.88
Net Loans and Lease
Financing
Domestic
- Commercial and
Industrial 963.9 12.9 5.31 1,061.1 13.5 5.12
- Construction 147.7 2.1 5.57 157.5 2.3 5.72
- Mortgage 2,904.9 50.4 6.93 2,985.4 52.3 7.01
- Installment 818.1 17.0 8.25 783.2 16.6 8.50
- Lease Financing 500.8 6.3 4.98 502.1 6.6 5.25
---------------------- -----------------------
Total Domestic Loans 5,335.4 88.7 6.62 5,489.3 91.3 6.66
Foreign 14.1 - - 14.1 - -
---------------------- -----------------------
Total Loans 5,349.5 88.7 6.60 5,503.4 91.3 6.65
Other 99.6 1.5 6.28 99.2 1.3 5.64
---------------------- -----------------------
Total Earning
Assets 9,148.0 127.4 5.55 9,370.0 132.0 5.64
Cash and Non-Interest
Bearing Deposits 297.6 341.8
Other Assets 358.3 367.1
--------- ----------
Total Assets $9,803.9 $10,078.9
========= ==========
Interest Bearing
Liabilities
Domestic Deposits
- Demand $2,036.0 4.0 0.78 $ 1,974.6 4.4 0.88
- Savings 1,346.2 5.0 1.46 1,164.0 4.5 1.57
- Time 1,600.0 11.4 2.82 1,732.0 12.9 2.98
---------------------- -----------------------
Total Domestic
Deposits 4,982.2 20.4 1.62 4,870.6 21.8 1.79
Foreign Deposits
- Time Due to
Banks 9.6 - - 37.3 0.1 1.47
- Other Time and
Savings 38.3 0.2 1.68 59.1 0.3 1.67
---------------------- -----------------------
Total Foreign
Deposits 47.9 0.2 1.59 96.4 0.4 1.59
---------------------- -----------------------
Total Interest
Bearing Deposits 5,030.1 20.6 1.62 4,967.0 22.2 1.79
Short-Term Borrowings 1,301.3 7.7 2.34 1,475.9 8.8 2.39
Long-Term Debt 451.6 6.9 6.10 507.1 8.0 6.37
---------------------- -----------------------
Total Interest
Bearing
Liabilities 6,783.0 35.2 2.06 6,950.0 39.0 2.25
---------------------- -----------------------
Net Interest
Income 92.2 93.0
Interest Rate
Spread 3.49% 3.39%
Net Interest
Margin 4.03% 3.97%
Non-Interest Bearing
Demand Deposits
- Domestic 1,547.0 1,565.6
- Foreign - -
--------- ----------
Total Non-Int
Bearing Demand
Deposits 1,547.0 1,565.6
Other Liabilities 321.6 312.3
Shareholders' Equity 1,152.3 1,251.0
--------- ----------
Total Liabilities
and Shareholders'
Equity $9,803.9 $10,078.9
========= ==========
Provision for Loan and
Lease Losses - 3.3
Net Overhead 44.6 41.5
------- -------
Income Before Income
Taxes 47.6 48.2
Provision for Income
Taxes 17.3 17.1
Tax-Equivalent
Adjustment 0.1 0.1
------- -------
Net Income $30.2 $31.0
======= =======
Three Months Ended(1) Nine Months Ended
September 30, 2001 September 30, 2002
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Earning Assets
Interest Bearing
Deposits $ 938.7 $ 9.4 3.98% $ 1,202.3 $ 16.4 1.83%
Funds Sold 194.3 1.8 3.59 206.9 2.7 1.72
Investment Securities
- Held to Maturity 526.9 8.1 6.12 331.1 15.2 6.11
- Available for
Sale 2,139.7 31.4 5.86 1,946.5 78.9 5.40
Loans Held for Sale 310.6 5.3 6.83 147.6 7.4 6.70
Net Loans and Lease
Financing
Domestic
- Commercial and
Industrial 1,583.9 27.8 6.96 1,057.9 41.0 5.18
- Construction 223.0 4.2 7.41 158.3 6.5 5.49
- Mortgage 3,261.2 62.3 7.58 2,969.0 155.9 7.01
- Installment 751.6 19.4 10.22 780.2 50.0 8.56
- Lease Financing 533.4 7.4 5.53 498.3 19.4 5.22
----------------------- -----------------------
Total Domestic Loans 6,353.1 121.1 7.59 5,463.7 272.8 6.67
Foreign 920.4 16.8 7.23 14.2 0.2 1.61
----------------------- -----------------------
Total Loans 7,273.5 137.9 7.54 5,477.9 273.0 6.65
Other 78.8 1.4 6.96 95.8 4.3 6.01
----------------------- -----------------------
Total Earning
Assets 11,462.5 195.3 6.78 9,408.1 397.9 5.65
Cash and Non-Interest
Bearing Deposits 347.3 313.7
Other Assets 488.9 375.1
---------- ----------
Total Assets $12,298.7 $10,096.9
========== ==========
Interest Bearing
Liabilities
Domestic Deposits
- Demand $ 1,892.6 8.3 1.74 $ 1,982.2 12.8 0.86
- Savings 794.9 4.6 2.29 1,183.6 13.4 1.51
- Time 2,432.0 29.5 4.81 1,739.8 39.0 3.00
----------------------- -----------------------
Total Domestic
Deposits 5,119.5 42.4 3.29 4,905.6 65.2 1.78
Foreign Deposits
- Time Due to
Banks 235.3 2.2 3.78 54.8 0.8 1.90
- Other Time and
Savings 640.7 5.5 3.41 60.2 0.7 1.69
----------------------- -----------------------
Total Foreign
Deposits 876.0 7.7 3.51 115.0 1.5 1.79
----------------------- -----------------------
Total Interest
Bearing Deposits 5,995.5 50.1 3.32 5,020.6 66.7 1.78
Short-Term Borrowings 2,012.6 20.9 4.11 1,503.7 27.6 2.46
Long-Term Debt 746.0 12.5 6.63 498.7 23.3 6.25
----------------------- -----------------------
Total Interest
Bearing
Liabilities 8,754.1 83.5 3.78 7,023.0 117.6 2.24
----------------------- -----------------------
Net Interest
Income 111.8 280.3
Interest Rate
Spread 3.00% 3.41%
Net Interest
Margin 3.89% 3.97%
Non-Interest Bearing
Demand Deposits
- Domestic 1,509.0 1,540.0
- Foreign 330.7 -
---------- ----------
Total Non-Int
Bearing Demand
Deposits 1,839.7 1,540.0
Other Liabilities 316.6 312.0
Shareholders' Equity 1,388.3 1,221.9
---------- ----------
Total Liabilities
and Shareholders'
Equity $12,298.7 $10,096.9
========== ==========
Provision for Loan and
Lease Losses 0.9 11.6
Net Overhead 9.2 124.6
------- -------
Income Before Income
Taxes 101.7 144.1
Provision for Income
Taxes 70.5 51.6
Tax-Equivalent Adjustment 0.1 0.2
------- -------
Net Income $ 31.1 $ 92.3
======= =======
(1) Adjusted to reflect the reclassification of certain average
balances and other interest income.
Bank of Hawaii Corporation and subsidiaries
Loan Portfolio Balances (Unaudited) Table 6
----------------------------------------------------------------------
September 30 June 30 December 31 September 30
(dollars in millions) 2002 2002 2001 2001
----------------------------------------------------------------------
Domestic
Commercial
Commercial and
Industrial(1) $ 869.4 $ 999.6 $1,175.5 $1,413.6
Mortgage -
Commercial(1) 616.5 562.5 640.7 667.9
Construction 146.3 148.6 169.6 175.7
Lease Financing 451.8 450.8 441.8 466.8
---------------------------------------------
Total Commercial 2,084.0 2,161.5 2,427.6 2,724.0
Consumer
Mortgage -
Residential 2,259.2 2,360.5 2,419.4 2,440.4
Home Equity 419.2 404.2 329.9 306.3
Other Consumer 421.6 403.2 399.8 428.4
Lease Financing 36.5 37.3 38.9 41.2
---------------------------------------------
Total Consumer 3,136.5 3,205.2 3,188.0 3,216.3
----------------------------------------------------------------------
Total Domestic 5,220.5 5,366.7 5,615.6 5,940.3
----------------------------------------------------------------------
Foreign 38.2 41.8 36.9 825.8
----------------------------------------------------------------------
Total Loans $5,258.7 $5,408.5 $5,652.5 $6,766.1
======================================================================
(1) $42.3 million in loans were reclassified to mortgage-commercial
from commercial and industrial during the third quarter of 2002.
Bank of Hawaii Corporation and subsidiaries
Selected Concentrations of Credit Exposure (Unaudited) Table 7
----------------------------------------------------------------------
June 30,
September 30, 2002(1) 2002
Unused Total Total
(dollars in millions) Outstandings Commitments Exposure Exposure
----------------------------------------------------------------------
Air Transportation
Regional Passenger
Carriers $ 49 $ 8 $ 57 $ 58
United States Based
Passenger Carriers 48 - 48 49
International Based
Passenger Carriers 32 - 32 32
Cargo Carriers 15 - 15 15
----------------------------------- --------
Total Air Transportation $144 $ 8 $ 152 $ 154
=================================== ========
Lodging( 2)
National Hotel
Companies $ 31 $ 74 $ 105 $ 104
Hawaii Hotels 103 32 135 137
West Pacific Hotels 47 - 47 43
----------------------------------- --------
Total Lodging $181 $106 $ 287 $ 284
=================================== ========
Telecommunication
Companies $ 6 $ 25 $ 31 $ 45
=================================== ========
Syndicated Exposure $312 $764 $1,076 $1,096
=================================== ========
(1) The credit exposures to the air transportation, lodgings, and
telecommunication industries were current at September 30, 2002.
(2) One collateralized loan in the West Pacific with $5.6 million of
exposure was reclassified in the third quarter from commercial and
industrial loans to mortgage commercial-hotels. This loan is on
non-accrual, but remains current on payments. Approximately 95% of the
Hawaii and West Pacific hotel loans are collateralized by hotel
properties or guaranteed by either financial institutions or entities
with limited exposure to tourism.
Bank of Hawaii Corporation and subsidiaries
Consolidated Non-Performing Assets and Accruing Loans Past Table 8
Due 90 Days or More (Unaudited)
----------------------------------------------------------------------
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
(dollars in millions) 2002 2002 2002 2001 2001
----------------------------------------------------------------------
Non-Accrual Loans
Commercial and
Industrial $ 6.4 $ 14.4 $ 27.4 $ 18.9 $ 10.5
Mortgage -
Commercial 18.1 25.3 15.1 16.3 12.8
Construction 0.9 0.7 1.0 9.3 0.7
Lease Financing 5.7 6.9 4.4 0.8 1.0
Mortgage -
Residential 14.5 14.3 15.7 15.4 19.5
Other Consumer 0.1 - 0.1 0.1 0.1
Foreign - - - - 17.2
---------------------------------------------
Total Non-Accrual
Loans 45.7 61.6 63.7 60.8 61.8
Non-Accrual Loans Held
For Sale - - 7.8 1.7 7.4
Foreclosed Real Estate
Domestic 17.6 17.2 19.2 17.2 36.9
Foreign - - - - 0.3
---------------------------------------------
Total Foreclosed
Real Estate 17.6 17.2 19.2 17.2 37.2
---------------------------------------------
Total Non-
Performing
Assets $ 63.3 $ 78.8 $ 90.7 $ 79.7 $ 106.4
=============================================
Accruing Loans Past Due
90 Days or More
Commercial and
Industrial $ - $ - $ 0.2 $ 0.1 $ 0.1
Mortgage -
Commercial - - 1.2 - -
Lease Financing - 0.1 0.1 0.1 -
Mortgage -
Residential 1.4 0.9 2.1 3.8 3.4
Other Consumer 0.3 0.5 0.7 0.9 1.0
Foreign - - - - 0.8
---------------------------------------------
Total Accruing
and Past Due $ 1.7 $ 1.5 $ 4.3 $ 4.9 $ 5.3
=============================================
Total Loans $5,258.7 $5,408.5 $5,601.3 $5,652.5 $6,766.1
=============================================
----------------------------------------------------------------------
Ratio of Non-Accrual
Loans to Total Loans 0.87% 1.14% 1.14% 1.08% 0.91%
----------------------------------------------------------------------
Ratio of Non-Performing
Assets to Total Loans,
Foreclosed Real Estate
and Non-Performing Loans
Held for Sale 1.20% 1.45% 1.61% 1.41% 1.56%
----------------------------------------------------------------------
Ratio of Non-Performing
Assets and Accruing
Loans Past Due 90 Days
or More to Total Loans 1.24% 1.48% 1.70% 1.50% 1.65%
----------------------------------------------------------------------
Quarter to Quarter
Changes in Non-Performing
Assets Balance at
Beginning of Quarter $ 78.8 $ 90.7 $ 79.7 $ 106.4 $ 118.9
Additions 7.0 20.5 36.4 43.8 23.2
Reductions
Payments and Sales
of Loans (8.5) (20.6) (12.9) (40.9) (25.8)
Return to Accrual (9.1) (6.2) (6.3) (3.6) (0.9)
Sales of Foreclosed
Assets (1.4) (3.5) (0.9) (21.9) (2.2)
Charge-offs (3.5) (2.1) (5.3) (4.1) (6.8)
---------------------------------------------
Total Reductions (22.5) (32.4) (25.4) (70.5) (35.7)
---------------------------------------------
Balance at End of
Quarter $ 63.3 $ 78.8 $ 90.7 $ 79.7 $ 106.4
=============================================
Bank of Hawaii Corporation and subsidiaries
Consolidated Allowance for Loan and Lease Losses (Unaudited) Table 9
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
Sept. 30 June 30 Sept. 30 Sept. 30
(dollars in millions) 2002 2002 2001 2002 2001
----------------------------------------------------------------------
Balance of Allowance for
Loan and Lease Losses
at Beginning of Period $ 159.0 $ 159.0 $ 199.8 $ 159.0 $ 246.2
Loans Charged-Off
Commercial and
Industrial (0.7) (1.0) (3.4) (9.0) (87.8)
Mortgage - Commercial (2.5) (1.8) (2.6) (4.3) (16.1)
Construction - - - (0.5) -
Lease Financing (0.4) (0.5) (0.6) (0.9) (0.7)
Mortgage - Residential (0.6) (1.3) (1.3) (3.3) (5.5)
Other Consumer (3.0) (2.9) (5.4) (9.8) (15.0)
Foreign - - (4.1) - (18.0)
----------------------------------------------
Total Charge-Offs (7.2) (7.5) (17.4) (27.8) (143.1)
Recoveries on Loans
Previously Charged-Off
Commercial and
Industrial 1.0 2.3 1.1 4.0 8.1
Mortgage - Commercial 0.1 0.1 1.3 2.0 2.4
Lease Financing 0.1 - - 0.1 0.2
Mortgage - Residential 0.1 0.3 0.2 0.7 0.7
Other Consumer 1.4 1.6 2.2 4.9 5.6
Foreign - (0.1) 10.2 - 19.1
----------------------------------------------
Total Recoveries 2.7 4.2 15.0 11.7 36.1
----------------------------------------------
Net Loan Charge-Offs (4.5) (3.3) (2.4) (16.1) (107.0)
Provision for Loan and
Lease Losses - 3.3 0.9 11.6 59.8
Allowance Related to
Disposition - - (16.4) - (16.4)
Foreign Currency
Translation - - 0.6 - (0.1)
----------------------------------------------
Balance at End of
Period $ 154.5 $ 159.0 $ 182.5 $ 154.5 $ 182.5
==============================================
Average Loans
Outstanding $5,349.5 $5,503.4 $7,273.5 $5,477.9 $8,121.1
Ratio of Net Charge-Offs
to Average Loans
Outstanding
(annualized) 0.33% 0.24% 0.13% 0.39% 1.76%
Ratio of Allowance to
Loans and Leases
Outstanding 2.94% 2.94% 2.70% 2.94% 2.70%
Bank of Hawaii Corporation and subsidiaries
Information Technology Systems
Replacement Project (Unaudited) Table 10
----------------------------------------------------------------------
(dollars in Professional Employee Accelerated Other Total
thousands) Fees Termination Depreciation Associated
Benefits Costs(2)
----------------------------------------------------------------------
Costs
Incurred(1) $ 1,875 $ 1,042 $ 3,197 $ 462 $ 6,576
Total Project
Expected
Costs $ 12,481 $ 6,371 $ 9,371 $ 7,236 $35,459
(1) Three months and nine months ended September 30, 2002 and
project-to-date results are the same.
(2) Includes contract termination, equipment, excise tax, and other
costs.
Bank of Hawaii Corporation and subsidiaries
Quarterly Summary of Selected Consolidated Financial Data Table 11
(Unaudited)
----------------------------------------------------------------------
(dollars in millions except Sept. 30 June 30 March 31
per share amounts) 2002 2002 2002
----------------------------------------------------------------------
Balance Sheet Totals
Total Assets $9,702.0 $9,823.3 $10,244.8
Net Loans 5,104.2 5,249.5 5,442.4
Total Deposits 6,627.0 6,455.3 6,543.5
Total Shareholders' Equity 1,100.7 1,191.1 1,265.9
Quarterly Operating Results
Net Interest Income $ 92.2 $ 92.9 $ 94.9
Provision for Loan and Lease
Losses - 3.3 8.3
Non-Interest Income 48.2 48.9 54.0
Gain on Sales of Banking
Operations, Net of Venture
Investment Losses - - -
Non-Interest Expense 86.4 90.4 90.4
Restructuring and Other
Related Costs - - 2.0
Information Technology System
Replacement Project 6.6 - -
Net Income 30.2 31.0 31.1
Basic Earnings Per Share $ 0.44 $ 0.43 $ 0.42
Diluted Earnings Per Share $ 0.43 $ 0.42 $ 0.41
Return on Average Assets 1.22% 1.23% 1.21%
Return on Average Equity 10.40% 9.94% 9.97%
Efficiency Ratio 66.19% 63.71% 62.06%
Continuing Business Operating
Results(1)
Net Interest Income $ 92.2 $ 92.9 $ 94.9
Provision for Loan and Lease
Losses - 3.3 8.3
Non-Interest Income 48.2 48.9 54.0
Non-Interest Expense(2) 86.4 90.4 90.4
Net Income(2) 34.4 31.0 32.3
Diluted Earnings Per Share(2) $ 0.49 $ 0.42 $ 0.43
Return on Average Equity(2) 11.84% 9.94% 10.37%
Efficiency Ratio(2) 61.51% 63.71% 60.73%
(dollars in millions except Dec. 31 Sept. 30 June 30 March 31
per share amounts) 2001 2001 2001 2001
---------------------------------------------------------------------
Balance Sheet Totals
Total Assets $10,627.8 $11,944.1 $12,755.5 $13,710.5
Net Loans 5,493.5 6,583.5 7,418.0 8,224.6
Total Deposits 6,673.6 7,399.7 8,108.5 8,815.4
Total Shareholders' Equity 1,247.0 1,371.1 1,395.7 1,371.9
Quarterly Operating Results
Net Interest Income $ 106.1 $ 111.7 $ 116.7 $ 125.2
Provision for Loan and Lease
Losses 14.5 0.9 6.4 52.5
Non-Interest Income 51.2 65.6 73.2 88.4
Gain on Sales of Banking
Operations, Net of Venture
Investment Losses 28.7 47.8 24.8 72.1
Non-Interest Expense 122.3 119.6 122.4 127.9
Restructuring and Other
Related Costs 18.5 3.0 38.9 44.4
Information Technology System
Replacement Project - - - -
Net Income 26.3 31.1 26.7 33.7
Basic Earnings Per Share $ 0.35 $ 0.39 $ 0.33 $ 0.42
Diluted Earnings Per Share $ 0.34 $ 0.37 $ 0.32 $ 0.42
Return on Average Assets 0.90% 1.00% 0.83% 0.99%
Return on Average Equity 8.14% 8.88% 7.69% 10.42%
Efficiency Ratio 75.73% 54.46% 75.15% 60.33%
Continuing Business Operating
Results(1)
Net Interest Income $ 93.8 $ 91.0 $ 87.8 $ 92.2
Provision for Loan and Lease
Losses 16.6 6.4 2.6 12.1
Non-Interest Income 44.7 53.7 54.9 54.6
Non-Interest Expense(2) 100.2 88.3 89.3 86.4
Net Income(2) 21.3 31.4 32.6 28.3
Diluted Earnings Per
Share(2) $ 0.28 $ 0.38 $ 0.39 $ 0.35
Return on Average Equity(2) 6.59% 8.96% 9.37% 8.76%
Efficiency Ratio(2) 72.36% 61.03% 62.58% 58.88%
(1) Excludes the effects of the businesses that were divested in 2001,
restructuring, non-core transactions and costs associated with the
information technology system replacement project. 2001 Quarterly
information has been reclassified to conform to December 31, 2001
presentation.
(2) Adjusted to exclude goodwill amortization expense in 2001.
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