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Bank of Hawaii Corporation First Quarter 2019 Financial Results

HONOLULU--(BUSINESS WIRE)--

  • Diluted Earnings Per Share $1.43
  • Net Income $58.8 Million
  • Board of Directors Increases Dividend to $0.65 Per Share

Bank of Hawaii Corporation (BOH) today reported diluted earnings per share of $1.43 for the first quarter of 2019, an increase from diluted earnings per share of $1.30 in the previous quarter and $1.28 in the same quarter last year. Net income for the first quarter of 2019 was $58.8 million, an increase of $4.9 million compared with net income of $53.9 million in the fourth quarter of 2018 and up $4.8 million from net income of $54.0 million in the first quarter of 2018.

“We were pleased with our financial performance during the first quarter of 2019,” said Peter S. Ho, Chairman, President, and CEO. “We had growth in both loans and deposits, our net interest margin expanded, asset quality remained strong, and expenses were well controlled.”

The return on average assets for the first quarter of 2019 was 1.38 percent, up from 1.26 percent during the previous quarter and 1.29 percent in the same quarter last year. The return on average equity for the first quarter of 2019 was 18.81 percent, up from 17.05 percent in the fourth quarter of 2018 and 17.74 percent in the first quarter of 2018.

Financial Highlights

Net interest income, on a taxable-equivalent basis, for the first quarter of 2019 was $125.8 million, an increase of $0.6 million from net interest income of $125.2 million in the fourth quarter of 2018 and an increase of $5.5 million from net interest income of $120.3 million in the first quarter of 2018. The net interest margin was 3.12 percent for the first quarter of 2019, up 2 basis points compared with the net interest margin of 3.10 percent in the previous quarter and up 12 basis points from the net interest margin of 3.00 percent for the first quarter last year. Analyses of the changes in net interest income are included in Tables 8a and 8b.

Results for the first quarter of 2019 included a provision for credit losses of $3.0 million compared with a provision for credit losses of $2.0 million in the fourth quarter of 2018 and $4.1 million in the first quarter of 2018. The lower provision for credit losses during the fourth quarter of 2018 was largely due to the release of credit loss reserves related to the sale of the credit card portfolio.

Noninterest income was $43.7 million in the first quarter of 2019, an increase of $1.6 million compared with noninterest income of $42.1 million in the fourth quarter of 2018 and a decrease of $0.3 million compared with noninterest income of $44.0 million in the first quarter of 2018. Noninterest income in the first quarter of 2019 included a $1.4 million commission related to insurance products offered through a third-party administrator Noninterest income in the first quarter of 2018 included $2.8 million from a low-income housing investment sale. There were no significant items in noninterest income during the fourth quarter of 2018.

Noninterest expense was $93.1 million in the first quarter of 2019, a decrease of $2.8 million compared with noninterest expense of $95.9 million in the fourth quarter of 2018 and a decrease of $1.3 million from noninterest expense of $94.4 million in the same quarter last year. Noninterest expense in the first quarter of 2019 included seasonal payroll expenses of approximately $2.7 million. Noninterest expense in the fourth quarter of 2018 included $3.0 million in one-time significant items related to a medical expense, an operational loss, and legal expenses. Noninterest expense in the first quarter of 2018 included seasonal payroll expenses of approximately $2.5 million in addition to a legal reserve of $2.0 million. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The efficiency ratio during the first quarter of 2019 declined to 55.22 percent compared with 57.75 percent in the previous quarter and 57.91 percent in the same quarter last year.

The effective tax rate for the first quarter of 2019 was 18.85 percent compared with an effective tax rate of 20.92 percent in the previous quarter and 16.19 percent during the same quarter last year. The first quarter of 2019 included tax benefits of $1.9 million related to a commercial customer’s exercise of an early-buy-out option on a leveraged lease. There were no significant items impacting the tax rate during the fourth quarter of 2018. The tax rate during the first quarter of 2018 was favorably impacted by a $2.0 million adjustment to the Company’s low-income housing investments.

The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services and Private Banking, and Treasury & Other. Results for the business segments are determined based on the Company’s internal financial management reporting process and organizational structure. Selected financial information is included in Table 13.

Asset Quality

The Company’s asset quality remained strong during the first quarter of 2019. Total non-performing assets were $17.9 million at March 31, 2019, compared with non-performing assets of $12.9 million at December 31, 2018 and $15.7 million at March 31, 2018. As a percentage of total loans and leases, including foreclosed real estate, non-performing assets were 0.17 percent at the end of the first quarter of 2019, compared with 0.12 percent at the end of the fourth quarter of 2018 and 0.16 percent at the end of the first quarter last year.

Accruing loans and leases past due 90 days or more were $6.1 million at March 31, 2019, compared with $6.6 million at December 31, 2018 and $8.2 million at March 31, 2018. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $48.6 million at March 31, 2019, down from $48.7 million at December 31, 2018 and $56.7 million at March 31, 2018. 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 first quarter of 2019 were $3.7 million or 0.14 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $6.8 million during the quarter were partially offset by recoveries of $3.2 million. Net charge-offs during the fourth quarter of 2018 were $4.0 million or 0.15 percent annualized of total average loans and leases outstanding and were comprised of $6.9 million in charge-offs partially offset by recoveries of $2.9 million. Net charge-offs during the first quarter of 2018 were $3.5 million or 0.15 percent annualized of total average loans and leases outstanding and were comprised of $6.0 million in charge-offs partially offset by recoveries of $2.5 million.

The allowance for loan and lease losses was $106.0 million at March 31, 2019, a decrease from $106.7 million at December 31, 2018 and $107.9 million at March 31, 2018. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.01 percent at March 31, 2019 compared with 1.02 percent at December 31, 2018 and 1.09 percent at March 31, 2018. The reserve for unfunded commitments of $6.8 million at March 31, 2019 was unchanged from the prior quarter and the same quarter last year. Details of loan and lease charge-offs, recoveries, and components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $17.4 billion at March 31, 2019, up from total assets of $17.1 billion at December 31, 2018 and $17.1 billion at March 31, 2018. Average total assets were $17.2 billion during the first quarter of 2019, an increase from average total assets of $17.0 billion during the previous quarter and the same quarter last year.

The investment securities portfolio was $5.5 billion at March 31, 2019 compared with $5.5 billion at December 31, 2018 and $6.0 billion at March 31, 2018. The portfolio at March 31, 2019 remains largely comprised of securities issued by U.S. government agencies and includes $3.7 billion in securities held to maturity and $1.9 billion in securities available for sale.

Total loans and leases were $10.5 billion at March 31, 2019, an increase of $99.8 million or 1.0 percent from total loans and leases of $10.4 billion at December 31, 2018 and up $632.0 million or 6.4 percent from $9.9 billion at March 31, 2018. Average total loans and leases were $10.5 billion during the first quarter of 2019, an increase of 1.4 percent from average loans and leases of $10.3 billion during the previous quarter and up 6.8 percent from $9.8 billion during the same quarter last year. The commercial portfolio was $4.0 billion at the end of the first quarter of 2019, up $20.5 million or 0.5 percent from commercial loans of $4.0 billion at the end of the fourth quarter of 2018 and up $207.5 million or 5.5 percent from commercial loans of $3.8 billion at the end of the first quarter last year. The previously mentioned early buy out of a leveraged lease during the first quarter of 2019 reduced the commercial loan portfolio by $15.0 million in outstanding balances. Consumer loans were $6.5 billion at March 31, 2019, up $79.4 million or 1.2 percent from consumer loans of $6.5 billion at the end of the fourth quarter of 2018 and up $424.5 million or 6.9 percent from $6.1 billion at the end of the first quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $15.3 billion at March 31, 2019, up $240.1 million or 1.6 percent from total deposits of $15.0 billion at December 31, 2018 and up $310.2 million or 2.1 percent from total deposits of $15.0 billion at March 31, 2018. Average total deposits were $15.0 billion during the first quarter of 2019, an increase of $191.9 million compared with average total deposits of $14.8 billion during the previous quarter and an increase of $251.1 million compared with average total deposits of $14.7 billion during the same quarter last year. Consumer deposits increased to $7.9 billion at March 31, 2019, up $218.1 million or 2.8 percent from consumer deposits of $7.7 billion at the end of the fourth quarter of 2018 and up $278.9 million or 3.6 percent from $7.7 billion at the end of the first quarter last year. Commercial deposits increased to $6.2 billion at March 31, 2019, up $63.9 million or 1.0 percent from commercial deposits of $6.1 billion at the end of the fourth quarter of 2018 and up $264.8 million or 4.5 percent from $5.9 billion at the end of the first quarter last year. Other deposits, including public funds, were $1.2 billion at March 31, 2019, down slightly from $1.2 billion at December 31, 2018 and down from $1.4 billion at March 31, 2018. Deposit balances are summarized in Tables 7 and 10.

Total shareholders’ equity was $1.3 billion at March 31, 2019, up slightly from December 31, 2018 and an increase from $1.2 billion at March 31, 2018. The Tier 1 Capital Ratio was 12.75 percent at March 31, 2019 compared with 13.07 percent at December 31, 2018 and 13.37 percent at March 31, 2018. The Tier 1 Leverage Ratio at March 31, 2019 was 7.46 percent compared with 7.60 percent at December 31, 2018 and 7.46 percent at March 31, 2018.

During the first quarter of 2019, the Company repurchased 513.4 thousand shares of common stock at a total cost of $39.9 million under its share repurchase program. The average cost was $77.79 per share repurchased. From the beginning of the share repurchase program initiated during July 2001 through March 31, 2019, the Company has repurchased 55.8 million shares and returned over $2.2 billion to shareholders at an average cost of $39.50 per share. Remaining buyback authority under the share repurchase program was $121.8 million at March 31, 2019. From April 1 through April 18, 2019 the Company repurchased an additional 114.0 thousand shares of common stock at an average cost of $80.79 per share.

The Company’s Board of Directors declared a quarterly cash dividend of $0.65 per share on the Company’s outstanding shares, an increase of 4.8 percent from the cash dividend of $0.62 per share in the previous quarter. The dividend will be payable on June 14, 2019 to shareholders of record at the close of business on May 31, 2019.

Hawaii Economy

General economic conditions in Hawaii remained healthy during the first quarter of 2019. The statewide seasonally-adjusted unemployment continues to remain low at 2.8 percent in March 2019, well below the 3.8 percent unemployment rate nationally.

The real estate market on Oahu remained strong during the first quarter of 2019 with a moderate decrease in home sales. Single-family home sales declined 5.7 percent and condominium sales declined 10.5 percent compared with sales during the first quarter of 2018. The median sales price of a single-family home increased 2.0 percent and the median sales price of a condominium decreased 3.2 percent compared with the same quarter last year. As of March 31, 2019, the inventory of single-family homes and condominiums on Oahu was 3.4 months and 3.6 months, respectively.

For the first two months of 2019, total visitor arrivals increased 1.8 percent although visitor spending declined 2.4 percent compared to the same period in 2018. Tourism during 2019 is expected to continue performing well. Scheduled air seats to Hawaii are projected to expand as Southwest Airlines began flying to Hawaii in March and Hawaiian Airlines began offering the first non-stop flights between Hawaii and Boston in April. More information on current Hawaii economic trends is presented in Table 15.

Conference Call Information

The Company will review its first quarter financial results today at 2:00 p.m. Eastern Daylight Time (8:00 a.m. Hawaii Time). The 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 1 (844) 543-5235 in the United States and Canada and 1 (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 10:00 a.m. Hawaii Time on Monday, April 22, 2019. The replay number is 1 (855) 859-2056 in the United States and Canada and 1 (404) 537-3406 from other international locations. Enter the pass code 4456158 when prompted. 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, 2018, 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 website, www.boh.com.

 
Bank of Hawaii Corporation and Subsidiaries
Financial Highlights               Table 1
  Three Months Ended
March 31,   December 31,   March 31,
(dollars in thousands, except per share amounts)   2019     2018     2018

For the Period:

Operating Results
Net Interest Income $ 124,837 $ 123,973 $ 118,956
Provision for Credit Losses 3,000 2,000 4,125
Total Noninterest Income 43,679 42,108 44,035
Total Noninterest Expense 93,057 95,911 94,384
Net Income 58,799 53,911 54,040
Basic Earnings Per Share 1.44 1.30 1.29
Diluted Earnings Per Share 1.43 1.30 1.28
Dividends Declared Per Share 0.62 0.62 0.52
 
Performance Ratios
Return on Average Assets 1.38 % 1.26 % 1.29 %
Return on Average Shareholders' Equity 18.81 17.05 17.74
Efficiency Ratio 1 55.22 57.75 57.91
Net Interest Margin 2 3.12 3.10 3.00
Dividend Payout Ratio 3 43.06 47.69 40.31
Average Shareholders' Equity to Average Assets 7.35 7.39 7.29
 
Average Balances
Average Loans and Leases $ 10,467,321 $ 10,320,051 $ 9,803,753
Average Assets 17,236,059 16,988,550 16,957,430
Average Deposits 14,971,404 14,779,511 14,720,266
Average Shareholders' Equity 1,267,438 1,254,704 1,235,550
 
Per Share of Common Stock
Book Value $ 30.91 $ 30.56 $ 29.33
Tangible Book Value 30.14 29.80 28.59
Market Value
Closing 78.87 67.32 83.10
High 83.94 82.80 89.09
Low 66.54 63.64 78.40
 
March 31, December 31, March 31,
    2019     2018     2018

As of Period End:

Balance Sheet Totals
Loans and Leases $ 10,548,609 $ 10,448,774 $ 9,916,628
Total Assets 17,446,413 17,143,974 17,136,030
Total Deposits 15,267,310 15,027,242 14,957,133
Other Debt 110,624 135,643 235,699
Total Shareholders' Equity 1,269,690 1,268,200 1,241,193
 
Asset Quality
Non-Performing Assets $ 17,925 $ 12,930 $ 15,736
Allowance for Loan and Lease Losses 106,023 106,693 107,938
Allowance to Loans and Leases Outstanding 1.01 % 1.02 % 1.09 %
 
Capital Ratios
Common Equity Tier 1 Capital Ratio 12.75 % 13.07 % 13.37 %
Tier 1 Capital Ratio 12.75 13.07 13.37
Total Capital Ratio 13.87 14.21 14.58
Tier 1 Leverage Ratio 7.46 7.60 7.46
Total Shareholders' Equity to Total Assets 7.28 7.40 7.24
Tangible Common Equity to Tangible Assets 4 7.11 7.23 7.07
Tangible Common Equity to Risk-Weighted Assets 4 12.28 12.52 12.80
 
Non-Financial Data
Full-Time Equivalent Employees 2,112 2,122 2,138
Branches 69 69 69
ATMs 385 382 377
 
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.”

Note: Total Capital Ratio was revised from 14.59% as of March 31, 2018.
 
 
Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures           Table 2
      March 31,   December 31,   March 31,
(dollars in thousands)   2019   2018   2018
 
Total Shareholders' Equity $ 1,269,690 $ 1,268,200 $ 1,241,193

Less: Goodwill

    31,517       31,517       31,517  
Tangible Common Equity   $ 1,238,173     $ 1,236,683     $ 1,209,676  
 
Total Assets $ 17,446,413 $ 17,143,974 $ 17,136,030
Less: Goodwill     31,517       31,517       31,517  
Tangible Assets   $ 17,414,896     $ 17,112,457     $ 17,104,513  
 

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

$ 10,079,858 $ 9,878,904 $ 9,452,847
 
Total Shareholders' Equity to Total Assets 7.28 % 7.40 % 7.24 %
Tangible Common Equity to Tangible Assets (Non-GAAP) 7.11 % 7.23 % 7.07 %
 
Tier 1 Capital Ratio 12.75 % 13.07 % 13.37 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 12.28 % 12.52 % 12.80 %
 
Note: Risk-Weighted Assets was revised from $9,451,647 as of March 31, 2018.
 
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income           Table 3
  Three Months Ended
March 31,   December 31,   March 31,
(dollars in thousands, except per share amounts)   2019   2018   2018
Interest Income
Interest and Fees on Loans and Leases $ 108,511 $ 107,404 $ 97,634
Income on Investment Securities
Available-for-Sale 13,432 13,043 12,141
Held-to-Maturity 21,921 21,482 21,296
Deposits 15 10 18
Funds Sold 1,444 727 757
Other     319       352       300  
Total Interest Income     145,642       143,018       132,146  
Interest Expense
Deposits 15,284 13,172 7,581
Securities Sold Under Agreements to Repurchase 4,571 4,671 4,564
Funds Purchased 157 440 53
Short-Term Borrowings 36 88 16
Other Debt     757       674       976  
Total Interest Expense     20,805       19,045       13,190  
Net Interest Income 124,837 123,973 118,956
Provision for Credit Losses     3,000       2,000       4,125  
Net Interest Income After Provision for Credit Losses     121,837       121,973       114,831  
Noninterest Income
Trust and Asset Management 10,761 10,558 11,181
Mortgage Banking 2,287 2,148 2,145
Service Charges on Deposit Accounts 7,364 7,562 7,129
Fees, Exchange, and Other Service Charges 14,208 14,576 14,333
Investment Securities Gains (Losses), Net (835 ) (841 ) (666 )
Annuity and Insurance 2,578 1,409 1,206
Bank-Owned Life Insurance 1,710 1,941 1,842
Other     5,606       4,755       6,865  
Total Noninterest Income     43,679       42,108       44,035  
Noninterest Expense
Salaries and Benefits 56,586 54,856 54,422
Net Occupancy 7,594 8,918 8,534
Net Equipment 6,833 6,364 5,527
Data Processing 4,526 5,151 3,891
Professional Fees 2,453 2,467 2,773
FDIC Insurance 1,269 1,336 2,157
Other     13,796       16,819       17,080  
Total Noninterest Expense     93,057       95,911       94,384  
Income Before Provision for Income Taxes 72,459 68,170 64,482
Provision for Income Taxes     13,660       14,259       10,442  
Net Income   $ 58,799     $ 53,911     $ 54,040  
Basic Earnings Per Share $ 1.44 $ 1.30 $ 1.29
Diluted Earnings Per Share $ 1.43 $ 1.30 $ 1.28
Dividends Declared Per Share $ 0.62 $ 0.62 $ 0.52
Basic Weighted Average Shares 40,938,318 41,325,456 42,038,573
Diluted Weighted Average Shares     41,213,453       41,601,649       42,358,425  
 
     
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income           Table 4
  Three Months Ended
March 31, December 31, March 31,
(dollars in thousands)   2019   2018   2018
Net Income $ 58,799 $ 53,911 $ 54,040
Other Comprehensive Income (Loss), Net of Tax:
Net Unrealized Gains (Losses) on Investment Securities 6,919 11,169 (9,121 )
Defined Benefit Plans     246     (2,974 )     216  
Other Comprehensive Income (Loss)     7,165     8,195       (8,905 )
Comprehensive Income   $ 65,964   $ 62,106     $ 45,135  
 
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition           Table 5
  March 31,   December 31,   March 31,
(dollars in thousands)   2019   2018   2018
Assets
Interest-Bearing Deposits in Other Banks $ 3,550 $ 3,028 $ 2,589
Funds Sold 243,867 198,860 387,766
Investment Securities
Available-for-Sale 1,859,256 2,007,942 2,184,187
Held-to-Maturity (Fair Value of $3,637,496; $3,413,994; and $3,711,149) 3,668,811 3,482,092 3,789,092
Loans Held for Sale 17,909 10,987 23,548
Loans and Leases 10,548,609 10,448,774 9,916,628
Allowance for Loan and Lease Losses     (106,023 )     (106,693 )     (107,938 )
Net Loans and Leases     10,442,586       10,342,081       9,808,690  
Total Earning Assets     16,235,979       16,044,990       16,195,872  
Cash and Due from Banks 293,871 324,081 174,871
Premises and Equipment, Net 159,344 151,837 137,201
Operating Lease Right-of-Use Assets 104,166 - -
Accrued Interest Receivable 52,820 51,230 52,941
Foreclosed Real Estate 3,225 1,356 2,768
Mortgage Servicing Rights 24,149 24,310 24,493
Goodwill 31,517 31,517 31,517
Bank-Owned Life Insurance 285,155 283,771 280,537
Other Assets     256,187       230,882       235,830  
Total Assets   $ 17,446,413     $ 17,143,974     $ 17,136,030  
 
Liabilities
Deposits
Noninterest-Bearing Demand $ 4,595,915 $ 4,739,596 $ 4,759,777
Interest-Bearing Demand 2,961,444 3,002,925 3,028,373
Savings 5,946,881 5,539,199 5,397,291
Time     1,763,070       1,745,522       1,771,692  
Total Deposits     15,267,310       15,027,242       14,957,133  
Short-Term Borrowings - 199 -
Securities Sold Under Agreements to Repurchase 504,299 504,296 505,293
Other Debt 110,624 135,643 235,699
Operating Lease Liabilities 111,230 - -
Retirement Benefits Payable 40,343 40,494 37,046
Accrued Interest Payable 8,474 8,253 8,229
Taxes Payable and Deferred Taxes 29,935 19,736 29,557
Other Liabilities     104,508       139,911       121,880  
Total Liabilities     16,176,723       15,875,774       15,894,837  
Shareholders' Equity
Common Stock ($.01 par value; authorized 500,000,000 shares;
issued / outstanding: March 31, 2019 - 58,166,535 / 41,078,688;
December 31, 2018 - 58,063,689 / 41,499,898;
and March 31, 2018 - 58,051,646 / 42,314,414) 578 577 577
Capital Surplus 574,594 571,704 563,598
Accumulated Other Comprehensive Loss (43,878 ) (51,043 ) (51,097 )
Retained Earnings 1,674,264 1,641,314 1,551,900
Treasury Stock, at Cost (Shares: March 31, 2019 - 17,087,847;
December 31, 2018 - 16,563,791; and March 31, 2018 - 15,737,232)     (935,868 )     (894,352 )     (823,785 )
Total Shareholders' Equity     1,269,690       1,268,200       1,241,193  
Total Liabilities and Shareholders' Equity   $ 17,446,413     $ 17,143,974     $ 17,136,030  
 
           
Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity                         Table 6
  Accum.
Other
Compre-
hensive
Common Shares Common Capital Income Retained Treasury
(dollars in thousands)   Outstanding   Stock   Surplus   (Loss)   Earnings   Stock   Total
Balance as of December 31, 2018 41,499,898 $ 577 $ 571,704 $ (51,043 ) $ 1,641,314 $ (894,352 ) $ 1,268,200
Net Income - - - - 58,799 - 58,799
Other Comprehensive Income - - - 7,165 - - 7,165
Share-Based Compensation - - 2,274 - - - 2,274

Common Stock Issued under Purchase and Equity Compensation Plans

131,529 1 616 - (203 ) 1,673 2,087
Common Stock Repurchased (552,739 ) - - - - (43,189 ) (43,189 )
Cash Dividends Declared ($0.62 per share)   -       -     -     -       (25,646 )     -       (25,646 )
Balance as of March 31, 2019   41,078,688     $ 578   $ 574,594   $ (43,878 )   $ 1,674,264     $ (935,868 )   $ 1,269,690  
 
Balance as of December 31, 2017 42,401,443 $ 576 $ 561,161 $ (34,715 ) $ 1,512,218 $ (807,372 ) $ 1,231,868
Net Income - - - - 54,040 - 54,040
Other Comprehensive Loss - - - (8,905 ) - - (8,905 )

Reclassification of the Income Tax Effects of the Tax Cuts and Jobs Act from AOCI

- - - (7,477 ) 7,477 - -
Share-Based Compensation - - 1,867 - - - 1,867

Common Stock Issued under Purchase and Equity Compensation Plans

121,299 1 570 - 252 1,128 1,951
Common Stock Repurchased (208,328 ) - - - - (17,541 ) (17,541 )
Cash Dividends Declared ($0.52 per share)   -       -     -     -       (22,087 )     -       (22,087 )
Balance as of March 31, 2018   42,314,414     $ 577   $ 563,598   $ (51,097 )   $ 1,551,900     $ (823,785 )   $ 1,241,193  
 
               
Bank of Hawaii Corporation and Subsidiaries
Average Balances and Interest Rates - Taxable-Equivalent Basis                           Table 7
    Three Months Ended Three Months Ended Three Months Ended
March 31, 2019 December 31, 2018 March 31, 2018
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(dollars in millions)   Balance   Expense   Rate     Balance   Expense   Rate     Balance   Expense   Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 3.0 $ - 2.05 % $ 3.3 $ - 1.21 % $ 3.0 $ - 2.34 %
Funds Sold 241.6 1.5 2.39 128.2 0.7 2.22 204.7 0.8 1.48
Investment Securities
Available-for-Sale
Taxable 1,595.8 11.5 2.90 1,480.5 10.0 2.70 1,595.1 8.9 2.23
Non-Taxable 279.1 2.4 3.45 556.4 3.8 2.77 604.7 4.1 2.74
Held-to-Maturity
Taxable 3,373.5 20.5 2.43 3,360.5 20.0 2.38 3,631.2 19.8 2.18
Non-Taxable     234.1     1.8   3.15       235.1     1.9   3.16       238.0     1.9   3.18
Total Investment Securities     5,482.5     36.2   2.65       5,632.5     35.7   2.53       6,069.0     34.7   2.29
Loans Held for Sale 12.4 0.1 4.35 12.1 0.2 4.63 14.1 0.1 3.76
Loans and Leases 1
Commercial and Industrial 1,357.8 15.3 4.57 1,351.1 14.3 4.21 1,280.9 11.8 3.73
Commercial Mortgage 2,310.4 24.9 4.36 2,256.0 24.2 4.25 2,096.4 20.6 3.99
Construction 150.4 1.9 5.08 179.8 2.2 4.79 189.4 2.1 4.45
Commercial Lease Financing 160.9 0.9 2.28 173.2 1.0 2.42 179.6 1.0 2.21
Residential Mortgage 3,680.2 35.5 3.86 3,615.8 35.1 3.88 3,478.2 33.3 3.83
Home Equity 1,690.0 16.1 3.87 1,652.4 15.7 3.78 1,595.4 14.6 3.70
Automobile 668.2 6.0 3.66 641.8 6.0 3.73 541.5 5.6 4.19
Other 2     449.4     7.9   7.13       450.0     8.8   7.72       442.4     8.6   7.91
Total Loans and Leases     10,467.3     108.5   4.18       10,320.1     107.3   4.14       9,803.8     97.6   4.02
Other     35.5     0.3   3.60       36.8     0.4   3.82       40.7     0.3   2.95
Total Earning Assets 3     16,242.3     146.6   3.64       16,133.0     144.3   3.56       16,135.3     133.5   3.33
Cash and Due from Banks 240.8 234.3 228.6
Other Assets   753.0   621.3   593.5
Total Assets $ 17,236.1 $ 16,988.6 $ 16,957.4
 
Interest-Bearing Liabilities
Interest-Bearing Deposits
Demand $ 2,939.9 1.5 0.20 $ 2,888.3 1.5 0.20 $ 2,978.1 0.8 0.10
Savings 5,760.8 6.7 0.47 5,494.5 4.5 0.32 5,366.3 2.1 0.16
Time     1,703.4     7.1   1.69       1,800.7     7.2   1.59       1,713.5     4.7   1.11
Total Interest-Bearing Deposits     10,404.1     15.3   0.60       10,183.5     13.2   0.51       10,057.9     7.6   0.31
Short-Term Borrowings 31.1 0.2 2.49 89.6 0.5 2.31 19.1 0.1 1.45
Securities Sold Under Agreements to Repurchase 504.3 4.6 3.63 504.3 4.7 3.62 505.3 4.5 3.61
Other Debt     120.0     0.7   2.55       145.2     0.7   1.85       257.1     1.0   1.54
Total Interest-Bearing Liabilities     11,059.5     20.8   0.76       10,922.6     19.1   0.69       10,839.4     13.2   0.49
Net Interest Income $ 125.8 $ 125.2 $ 120.3
Interest Rate Spread 2.88 % 2.87 % 2.84 %
Net Interest Margin 3.12 % 3.10 % 3.00 %
Noninterest-Bearing Demand Deposits 4,567.3 4,596.0 4,662.4
Other Liabilities 341.9 215.3 220.0
Shareholders' Equity   1,267.4   1,254.7   1,235.6
Total Liabilities and Shareholders' Equity $ 17,236.1 $ 16,988.6 $ 16,957.4
 
 
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 21%, of $981,000, $1,263,000, and $1,344,000 for the three months ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively.

 
     
Bank of Hawaii Corporation and Subsidiaries
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis           Table 8a
Three Months Ended March 31, 2019
Compared to December 31, 2018
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ 0.7 $ 0.1 $ 0.8
Investment Securities
Available-for-Sale
Taxable 0.8 0.7 1.5
Non-Taxable (2.2 ) 0.8 (1.4 )
Held-to-Maturity
Taxable 0.1 0.4 0.5
Non-Taxable     (0.1 )     -       (0.1 )
Total Investment Securities     (1.4 )     1.9       0.5  
Loans Held for Sale - (0.1 ) (0.1 )
Loans and Leases
Commercial and Industrial 0.1 0.9 1.0
Commercial Mortgage 0.3 0.4 0.7
Construction (0.4 ) 0.1 (0.3 )
Commercial Lease Financing (0.1 ) - (0.1 )
Residential Mortgage 0.6 (0.2 ) 0.4
Home Equity 0.2 0.2 0.4
Automobile 0.2 (0.2 ) -
Other 2     (0.1 )     (0.8 )     (0.9 )
Total Loans and Leases     0.8       0.4       1.2  
Other     -       (0.1 )     (0.1 )
Total Change in Interest Income     0.1       2.2       2.3  
 
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.2 2.0 2.2
Time     (0.5 )     0.4       (0.1 )
Total Interest-Bearing Deposits     (0.3 )     2.4       2.1  
Short-Term Borrowings (0.4 ) 0.1 (0.3 )
Securities Sold Under Agreements to Repurchase - (0.1 ) (0.1 )
Other Debt     (0.1 )     0.1       -  
Total Change in Interest Expense     (0.8 )     2.5       1.7  
 
Change in Net Interest Income   $ 0.9     $ (0.3 )   $ 0.6  
 
 
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 March 31, 2019
Compared to March 31, 2018
(dollars in millions)   Volume 1   Rate 1   Total
Change in Interest Income:
Funds Sold $ 0.2 $ 0.5 $ 0.7
Investment Securities
Available-for-Sale
Taxable - 2.6 2.6
Non-Taxable (2.6 ) 0.9 (1.7 )
Held-to-Maturity
Taxable (1.4 ) 2.1 0.7
Non-Taxable     (0.1 )     -       (0.1 )
Total Investment Securities     (4.1 )     5.6       1.5  
Loans and Leases
Commercial and Industrial 0.8 2.7 3.5
Commercial Mortgage 2.2 2.1 4.3
Construction (0.5 ) 0.3 (0.2 )
Commercial Lease Financing ...