Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  Bank of Hawaii Corporation    BOH

BANK OF HAWAII CORPORATION

(BOH)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector news

BANK OF HAWAII : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

share with twitter share with LinkedIn share with facebook
07/31/2020 | 05:30pm EDT

Forward-Looking Statements


This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements can be
identified by the fact that they do not relate strictly to historical or current
facts and may include statements concerning, among other things, the anticipated
economic and business environment in our service area and elsewhere, credit
quality and other financial and business matters in future periods, our future
results of operations and financial position, our business strategy and plans
and our objectives and future operations. We also may make forward-looking
statements in our other documents filed with or furnished to the U.S. Securities
and Exchange Commission (the "SEC"). In addition, our senior management may make
forward-looking statements orally to analysts, investors, representatives of the
media and others. Our forward-looking statements are based on numerous
assumptions, any of which could prove to be inaccurate, and actual results may
differ materially from those projected because of a variety of risks and
uncertainties, including, but not limited to: 1) general economic conditions
either nationally, internationally, or locally may be different than expected,
and particularly, any event that negatively impacts the tourism industry in
Hawaii; 2) the effects of the COVID-19 pandemic, including reduced tourism in
Hawaii, volatility in the international and national economy and credit markets,
worker absenteeism, quarantines or other travel or health-related restrictions,
the length and severity of the COVID-19 pandemic and the pace of recovery
following the COVID-19 pandemic; 3) unanticipated changes in the securities
markets, public debt markets, and other capital markets in the U.S. and
internationally, including, without limitation, the anticipated elimination of
the London Interbank Offered Rate ("LIBOR") as a benchmark interest rate; 4)
competitive pressures in the markets for financial services and products; 5) the
impact of legislative and regulatory initiatives, particularly the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act")
and Economic Growth, Regulatory Relief, Consumer Protection Act of 2018, CARES
Act, and regulatory pronouncements around CARES Act; 6) changes in fiscal and
monetary policies of the markets in which we operate; 7) the increased cost of
maintaining or the Company's ability to maintain adequate liquidity and capital,
based on the requirements adopted by the Basel Committee on Banking Supervision
and U.S. regulators; 8) actual or alleged conduct which could harm our
reputation; 9) changes in accounting standards; 10) changes in tax laws or
regulations, including Public Law 115-97, commonly known as the Tax Cuts and
Jobs Act, or the interpretation of such laws and regulations; 11) changes in our
credit quality or risk profile that may increase or decrease the required level
of our reserve for credit losses; 12) changes in market interest rates that may
affect credit markets and our ability to maintain our net interest margin; 13)
the impact of litigation and regulatory investigations of the Company, including
costs, expenses, settlements, and judgments; 14) any failure in or breach of our
operational systems, information systems or infrastructure, or those of our
merchants, third party vendors and other service providers; 15) any interruption
or breach of security of our information systems resulting in failures or
disruptions in customer account management, general ledger processing, and loan
or deposit systems; 16) changes to the amount and timing of proposed common
stock repurchases; and 17) natural disasters, public unrest, adverse weather,
public health, disease outbreaks, and other conditions impacting us and our
customers' operations or negatively impacting the tourism industry in Hawaii.
Given these risks and uncertainties, investors should not place undue reliance
on any forward-looking statement as a prediction of our actual results. A
detailed discussion of these and other risks and uncertainties that could cause
actual results and events to differ materially from such forward-looking
statements is included under the section entitled "Risk Factors" in Part II of
this report and Part I of our Annual Report on Form 10-K for the year ended
December 31, 2019, and subsequent periodic and current reports filed with the
SEC. Words such as "believes," "anticipates," "expects," "intends," "targeted,"
and similar expressions are intended to identify forward-looking statements but
are not the exclusive means of identifying such statements. We undertake no
obligation to update forward-looking statements to reflect later events or
circumstances, except as may be required by law.


                                       54

--------------------------------------------------------------------------------

Table of Contents

Critical Accounting Policies


Our Consolidated Financial Statements were prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") and follow general practices
within the industries in which we operate. The most significant accounting
policies we follow are presented in Note 1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2019. Application of these principles
requires us to make estimates, assumptions, and judgments that affect the
amounts reported in the Consolidated Financial Statements and accompanying
notes. Most accounting policies are not considered by management to be critical
accounting policies. Several factors are considered in determining whether or
not a policy is critical in the preparation of the Consolidated Financial
Statements. These factors include among other things, whether the policy
requires management to make difficult, subjective, and complex judgments about
matters that are inherently uncertain and because it is likely that materially
different amounts would be reported under different conditions or using
different assumptions. The accounting policies which we believe to be most
critical in preparing our Consolidated Financial Statements are presented in the
section titled "Critical Accounting Policies" in Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2019. Other
than our methodology of estimating reserve for credit losses (mentioned below),
there have been no changes in the Company's application of critical accounting
policies since December 31, 2019.

Reserve for Credit Losses

A consequence of lending activities is that we may incur credit losses. The amount of such losses will vary depending upon the risk characteristics of the loan and lease portfolio as affected by economic conditions such as rising interest rates and the financial performance of borrowers.


The reserve for credit losses consists of the allowance for credit losses (the
"Allowance") and the reserve for unfunded commitments (the "Unfunded Reserve").
As a result of our January 1, 2020, adoption of ASU No. 2016-13, "Measurement of
Credit Losses on Financial Instruments," and its related amendments, our
methodology for estimating the reserve for credit losses changed significantly
from December 31, 2019. The standard replaced the "incurred loss" approach with
an "expected loss" approach known as current expected credit loss ("CECL"). The
CECL approach requires an estimate of the credit losses expected over the life
of an exposure (or pool of exposures). It removes the incurred loss approach's
threshold that delayed the recognition of a credit loss until it was "probable"
a loss event was "incurred."

The estimate of expected credit losses under the CECL approach is based on
relevant information about past events, current conditions, and reasonable and
supportable forecasts that affect the collectability of the reported amounts.
Historical loss experience is generally the starting point for estimating
expected credit losses. We then consider whether the historical loss experience
should be adjusted for asset-specific risk characteristics or current conditions
at the reporting date that did not exist over the period from which historical
experience was used. Finally, we consider forecasts about future economic
conditions that are reasonable and supportable. The Unfunded Reserve represents
the expected credit losses on off-balance sheet commitments such as unfunded
commitments to extend credit and standby letters of credit. However, a liability
is not recognized for commitments unconditionally cancellable by the Company.
The Unfunded Reserve is determined by estimating future draws and applying the
expected loss rates on those draws.

Management's evaluation of the appropriateness of the reserve for credit losses
is often the most critical of accounting estimates for a financial institution.
Our determination of the amount of the reserve for credit losses is a critical
accounting estimate as it requires significant reliance on the credit risk
rating we assign to individual borrowers, the use of estimates and significant
judgment as to the amount and timing of expected future cash flows on criticized
loans, significant reliance on historical loss rates on homogenous portfolios,
consideration of our quantitative and qualitative evaluation of economic
factors, and the reliance on our reasonable and supportable forecasts. While our
methodology in establishing the reserve for credit losses attributes portions of
the Allowance and Unfunded Reserve to the commercial and consumer portfolio
segments, the entire Allowance and Unfunded Reserve is available to absorb
credit losses inherent in the total loan and lease portfolio and total amount of
unfunded credit commitments, respectively.

The reserve for credit losses related to our commercial portfolio segment is
generally most sensitive to the credit risk rating assigned to each borrower.
Commercial loan risk ratings are evaluated based on each situation by
experienced senior credit officers and are subject to periodic review by an
independent internal team of credit specialists. The reserve for credit losses
related to our consumer portfolio segment is generally most sensitive to
economic assumptions and delinquency trends. The reserve for credit losses
attributable to each portfolio segment also includes an amount for inherent
risks not reflected in the historical analyses. Relevant factors include, but
are not limited to, concentrations of credit risk (geographic, large borrower,
and industry), economic trends and conditions, changes in underwriting
standards, experience and depth of lending staff, trends in delinquencies, and
the level of criticized loans.

                                       55

--------------------------------------------------------------------------------

Table of Contents



Going forward, the impact of utilizing the CECL approach to calculate the
reserve for credit losses will be significantly influenced by the composition,
characteristics and quality of our loan portfolio, as well as the prevailing
economic conditions and forecasts utilized. Material changes to these and other
relevant factors may result in greater volatility to the reserve for credit
losses, and therefore, greater volatility to our reported earnings. See Notes 1
and 4 to the Consolidated Financial Statements and the "Corporate Risk Profile -
Credit Risk" section in Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") for more information on the
Allowance and the Unfunded Reserve.

Overview

Bank of Hawaii Corporation (the "Parent") is a Delaware corporation and a bank holding company headquartered in Honolulu, Hawaii. The Parent's principal operating subsidiary is Bank of Hawaii (the "Bank").


The Bank, directly and through its subsidiaries, provides a broad range of
financial services and products to businesses, consumers, and governments in
Hawaii, Guam, and other Pacific Islands.  References to "we," "our," "us," or
the "Company" refer to the Parent and its subsidiaries that are consolidated for
financial reporting purposes.

The Company's business strategy is to use our unique market knowledge, prudent
management discipline and brand strength to deliver exceptional value to our
stakeholders.
Hawaii Economy

The year 2020 began with overall healthy economic conditions in Hawaii that were
sharply impacted by a shut-down of tourism at the end of March in an attempt to
isolate the State from additional travel-related transmission of COVID-19.  The
actions taken by the State of Hawaii beginning in March were imposed to mitigate
the spread and lessen the public health impact of the COVID-19 virus in Hawaii.
Although at risk industries of leisure and hospitality represents 19% of jobs
and 10% of Hawaii's GDP, Hawaii benefits from a wide range of industries that
help to provide stability in the case of economic shocks.  Federal government
jobs, primarily military, have historically been a stabilizing part of Hawaii's
economy and represent about 20% of GDP. Construction activity, including the
Honolulu Rail Project, and other non-visitor-related activities are proceeding
despite COVID-19.  Hawaii's large retiree population also contributes to a
stable economic base. Notwithstanding, the Hawaii economy will likely continue
to face significant challenges in the near future.

We are taking significant steps to help our customers who have been impacted by
COVID-19. For our consumer customers, we are providing payment relief for
residential mortgage, home equity, auto loan, auto lease and direct personal
loans for up to six months. We are waiving associated late fees, while not
reporting these payment deferrals as late payments to the credit bureaus for all
customers who were current prior to the event. For our commercial customers that
continue to make interest payments, we are providing six months of principal
deferral, or alternatively, three months of interest or interest and principal
deferral.

The Bank continues to responsibly lend to qualified consumer and commercial
customers. We have been a participant in the SBA's Small Business Paycheck
Protection Program. Through July 29, 2020, the Bank originated over 4,500 PPP
loans totaling approximately $560 million. The Bank also plans to participate in
the Federal Reserve Bank's Main Street Lending Program.

The Bank has taken additional steps to help minimize the financial impact of COVID-19 for its customers:


• Suspended ATM surcharge fees for other banks ATM users through June 30, 2020.



•      Waived ATM fees for Bank debit cardholders who used their cards at
       non-Bank ATMs in the U.S. and U.S. Territories through July 21, 2020.


• Suspended early withdrawal penalties for time deposit accounts through

       June 30, 2020.


• 40 Bank branches across the state of Hawaii and the West Pacific region

       remain open to serve the community.


• Temporarily increased our mobile deposits limit from $5,000 to $10,000 per

       rolling five business days.



•      Reserved the first branch hour of the day to serve our elderly (65 years
       and older) and those at-risk, as well as their caregivers or family
       members.




                                       56

--------------------------------------------------------------------------------

Table of Contents

• Increased our call center capabilities by training and deputizing more

than 100 branch, private banking and commercial staff members to provide

       additional support over the phone.


• Offered Small Dollar Emergency Relief Loan Program to assist customers who

were financially impacted by COVID-19 with loans up to $3,000.

Earnings Summary


Net income for the second quarter of 2020 was $38.9 million, a decrease of $18.0
million or 32% compared to the same period in 2019.  Diluted earnings per share
was $0.98 for the second quarter of 2020, a decrease of $0.42 or 30% compared to
the same period in 2019.

The Company's lower earnings for the second quarter of 2020 were primarily due to the following:

• Provision for credit losses for the second quarter of 2020 was $40.4 million,

an increase of $36.4 million compared to the same period in 2019. This

increase was primarily due to management's best estimate of losses over the

life of loans in our portfolio in accordance with the CECL approach, given

    the economic outlook and forecasts for COVID-19 pandemic driven market
    changes, as well as the impact of unprecedented intervention of fiscal,
    monetary and regulatory programs.


• Fees, exchange, and other service charges for the second quarter of 2020 was

$9.4 million, a decrease of $4.8 million or 34% compared to the same period

in 2019. This decrease was primarily due to lower debit and credit card

transaction volume. ATM surcharge fees were suspended for the second quarter

of 2020. In addition, merchant income decreased due to lower sales volume.

• Service charges on deposit accounts for the second quarter of 2020 was $5.1

million, a decrease of $2.2 million or 30% compared to the same period in

2019. This decrease was primarily due to suspending overdraft fees from April

1, 2020, through June 30, 2020, coupled with a decrease in account analysis

    fees.



• Net equipment expense for the second quarter of 2020 was $8.2 million, an

increase of $1.3 million or 19% compared to the same period in 2019. These

increases were due to higher depreciation expense.

This decrease was partially offset by the following:

• Investment securities gains (losses), net for the second quarter of 2020 was

$13.2 million compared to $(0.8) million during the same period in 2019. The

    net gain in the second quarter of 2020 was primarily due to the sale of
    80,214 Visa Class B Shares.


• The provision for income taxes for the second quarter of 2020 was $9.8

million, a decrease of $6.1 million or 39% compared to the same period in

2019 primarily due to lower pretax income. The effective tax rate for the

second quarter of 2020 was 20.05%, compared to 21.84% for the same period in

    2019.



• Total salaries and benefits expense for the second quarter of 2020 was $50.7

million, a decrease of $2.8 million or 5% compared to the same period in 2019

primarily due to a $2.3 million decrease in incentive compensation coupled

with a $0.3 million decrease in separation expense.

• Total other expense for the second quarter of 2020 was $12.2 million, a

decrease of $3.4 million or 22% compared to the same period in 2019. Reserve

for unfunded commitments decreased by $0.8 million. Operating losses

decreased by $0.7 million. Business development and travel decreased by $0.6

million. Merchant transactions and processing fees decreased by $0.5 million.

• Net interest income was $126.7 million for the second quarter of 2020, an

increase of $2.6 million or 2% compared to the same period in 2019. This

increase was primarily due to a higher level of earning assets, including

growth in our commercial lending portfolio. The higher level of earning

assets was primarily funded by higher deposit balances. Net interest margin

was 2.83% in the second quarter of 2020, a 21 basis point decrease from the

same period in 2019. We experienced lower yields in both our investment

securities portfolio and loan portfolios, which were offset by lower rates

    paid on our interest-bearing deposits, a reflection of the lower rate
    environment.




                                       57

--------------------------------------------------------------------------------

Table of Contents


Net income for the first six months of 2020 was $73.7 million, a decrease of
$18.0 million or 32% compared to the same period in 2019. Diluted earnings per
share was $1.85 for the first six months of 2020, a decrease of $0.42 or 30%
compared to the same period in 2019.
The Company's lower earnings for the first six months of 2020 were primarily due
to the following:
•   Provision for credit losses for the first six months of 2020 was $74.0

million, an increase of $67.0 million compared to the same period in 2019.

This increase was primarily due to management's best estimate of losses over

the life of loans in our portfolio in accordance with the CECL approach,

given the economic outlook and forecasts for COVID-19 pandemic driven market

changes, as well as the impact of unprecedented intervention of fiscal,

monetary and regulatory programs.

• Total salaries and benefits expense for the first six months of 2020 was

$105.2 million, a decrease of $4.9 million or 4% compared to the same period

in 2019 primarily due to an $8.0 million decrease in incentive compensation

coupled with a $1.8 million decrease in share-based compensation due to

forfeiture of unvested restricted stock grants and a lower number of

restricted stock units being amortized. These decreases were partially offset

by a $4.0 million increase in separation expense coupled with a $0.9 million

increase in salaries due to merit increases.

• Fees, exchange, and other service charges for the first six months of 2020

was $22.6 million, a decrease of $4.8 million or 34% compared to the same

period in 2019. This decrease was primarily due to lower debit and credit

card transaction volume. ATM surcharge fees were suspended for the second

quarter of 2020. In addition, merchant income decreased due to lower sales

volume.

• Net equipment expense for the first six months of 2020 was $16.7 million, an

increase of $2.9 million or 21% compared to the same period in 2019 primarily

due to higher depreciation expense.

• Annuity and insurance income for the first six months of 2020 was $1.8

million, a decrease of $2.6 million or 59% compared to the same period in

2019 primarily due to a one-time commission received related to insurance

products offered through a third-party administrator in the first quarter of

2019 and a decrease in annuity and life insurance products.

• Service charges on deposit accounts for the first six months of 2020 was

$12.5 million, a decrease of $2.1 million or 14% compared to the same period

in 2019. This decrease was primarily due to a decrease in overdraft fees

coupled with a decrease in account analysis fees.

• Professional fees for the first six months of 2020 was $6.3 million, an

increase of $1.6 million or 35% compared to the same period in 2019 primarily

due to an increase in corporate risk and legal fees.

• Net occupancy for the first six months of 2020 was $17.7 million, an increase

of $1.5 million of 10% compared to the same period in 2019. This increase was

primarily due to a $0.6 million gain on sale of real estate property on the

island of Oahu during the first quarter of 2019 coupled with a $0.5 million

increase in net rental expense.

This decrease was partially offset by the following:

• Investment securities gains (losses), net for the first six months of 2020

was $12.2 million compared to $(1.6) million during the same period in 2019.

The net gain was primarily due to the sale of 80,214 Visa Class B Shares

during the second quarter of 2020.

• The provision for income taxes for the first six months of 2020 was $17.2

million, a decrease of $12.3 million or 42% compared to the same period in

2019 primarily due to lower pretax income. The effective tax rate for the

first six months of 2020 was 18.95% compared to 20.35% for the same period in

    2019.



• Other noninterest income for the first six months of 2020 was $16.5 million,

an increase of $4.5 million or 38% primarily due to a $6.7 million increase

in fees related to our customer interest rate swap derivatives. This increase

was partially offset by a $1.1 million decrease in foreign currency

transactions.

• Net interest income for the first six months of 2020 was $252.7 million, an

increase of $3.7 million or 1% compared to the same period in 2019. This

increase was primarily due to a higher level of earning assets, including

growth in our commercial lending portfolio. The higher level of earning

assets was primarily funded by higher deposit balances. Net interest margin

was 2.90% for the first six months of 2020, an 18 basis point decrease from

the same period in 2019. We experienced lower yields in both our investment

securities portfolio and loan portfolios, which were offset by lower rates

    paid on our interest-bearing deposits, a reflection of the lower rate
    environment.



                                       58

--------------------------------------------------------------------------------

Table of Contents

• Mortgage banking income for the first six months of 2020 was $7.0 million, an

increase of $1.4 million or 24% compared to the same period in 2019. This

increase was primarily due to increased sales of conforming saleable loans

from current production.

• Total other expense for the first six months of 2020 was $27.2 million, a

decrease of $2.2 million or 7% compared to the same period in 2019 due to a

$1.0 million decrease in reserve for unfunded commitments, $0.7 million

decrease in operating losses, and $0.7 million in business development and

travel.



We maintained a strong balance sheet during the second quarter of 2020, with
what we believe are appropriate reserves for credit losses and high levels of
liquidity and capital.
•   Total loans and leases were $11.8 billion as of June 30, 2020, an increase of

$814.5 million or 7% from December 31, 2019, primarily due to growth in our

commercial lending portfolio.

• The Allowance was $173.4 million as of June 30, 2020, an increase of $63.4

million or 58% from December 31, 2019. The Allowance represents 1.47% of

total loans and leases outstanding as of June 30, 2020, and 1.00% of total

loans and leases outstanding as of December 31, 2019. The level of our

Allowance was commensurate with the Company's credit risk profile, future

economic outlook, and forecasts utilized.

• As of June 30, 2020, the total carrying value of the investment securities

portfolio was $6.0 billion, an increase of $342.0 million or 6% compared to

December 31, 2019. Mortgage-backed securities issued by Ginnie Mae, Fannie

Mae, and Freddie Mac are the largest concentration in our portfolio.

• Total deposits were $17.4 billion as of June 30, 2020, an increase of $1.6

billion or 10% from December 31, 2019, primarily due to an increase in

commercial and consumer deposits.

• Total shareholders' equity was $1.4 billion as of June 30, 2020, an increase

of $65.3 million or 5% from December 31, 2019. While we continued to return

capital to our shareholders in the form of dividends, in March 2020, we

suspended share repurchases in light of the COVID-19 pandemic. We believe

the suspension is prudent given uncertainty regarding the length and severity

of the COVID-19 pandemic. During the first six months of 2020, we acquired

199,764 shares of our common stock at a total cost of $17.8 million under our

share repurchase program and from shares obtained from employees and/or

directors in connection with income tax withholdings related to the vesting

of restricted stock and shares purchased for a deferred compensation plan,

less shares distributed from the deferred compensation plan.

• Cash dividends of $53.7 million were distributed during the first six months

    of 2020.



                                       59

--------------------------------------------------------------------------------

Table of Contents

Our financial highlights are presented in Table 1. Financial Highlights

                              Table 1
                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
(dollars in thousands, except per share amounts)         2020             2019             2020              2019
For the Period:
Operating Results
Net Interest Income                              $    126,691$    124,097$    252,657$     248,934
Provision for Credit Losses                            40,400            4,000           74,000             7,000
Total Noninterest Income                               51,268           45,450           97,417            89,129
Total Noninterest Expense                              88,892           92,725          185,204           185,782
Net Income                                             38,908           56,919           73,650           115,718
Basic Earnings Per Share                                 0.98             1.40             1.86              2.84
Diluted Earnings Per Share                               0.98             1.40             1.85              2.82
Dividends Declared Per Share                             0.67             0.65             1.34              1.27

Performance Ratios
Return on Average Assets                                 0.82 %           1.31 %           0.79 %            1.34 %
Return on Average Shareholders' Equity                  11.58            17.97            11.11             18.39
Efficiency Ratio 1                                      49.95            54.69            52.90             54.95
Net Interest Margin 2                                    2.83             3.04             2.90              3.08
Dividend Payout Ratio 3                                 68.37            46.43            72.04             44.72
Average Shareholders' Equity to Average Assets           7.04             7.27             7.12              7.31

Average Balances
Average Loans and Leases                         $ 11,727,649$ 10,631,558$ 11,394,178$  10,549,893
Average Assets                                     19,189,581       17,480,651       18,706,092        17,359,031
Average Deposits                                   16,679,511       15,162,782       16,248,628        15,067,622
Average Shareholders' Equity                        1,351,345        1,270,162        1,332,596         1,268,808

Market Price Per Share of Common Stock
Closing                                          $      61.41$      82.91$      61.41$       82.91
High                                                    72.74            84.53            95.53             84.53
Low                                                     51.15            75.24            46.70             66.54

                                                                                       June 30,      December 31,
                                                                                           2020              2019
As of Period End:
Balance Sheet Totals
Loans and Leases                                                                   $ 11,805,370$  10,990,892
Total Assets                                                                         19,769,942        18,095,496
Total Deposits                                                                       17,423,155        15,784,482
Other Debt                                                                               60,524            85,565
Total Shareholders' Equity                                                            1,352,082         1,286,832

Asset Quality
Non-Performing Assets                                                              $     22,701$      20,117
Allowance for Credit Losses                                                             172,039           110,027
Allowance to Loans and Leases Outstanding                                                  1.47 %            1.00 %

Capital Ratios
Common Equity Tier 1 Capital Ratio                                                        12.04 %           12.18 %
Tier 1 Capital Ratio                                                                      12.04             12.18
Total Capital Ratio                                                                       13.29             13.28
Tier 1 Leverage Ratio                                                                      6.90              7.25
Total Shareholders' Equity to Total Assets                                                 6.84              7.11
Tangible Common Equity to Tangible Assets 4                                                6.69              6.95
Tangible Common Equity to Risk-Weighted Assets 4                                          12.07             11.85

Non-Financial Data
Full-Time Equivalent Employees                                                            2,112             2,124
Branches                                                                                     67                68
ATMs                                                                                        367               387

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, a non-GAAP financial measure, is defined by the

Company as shareholders' equity minus goodwill and intangible assets.

Intangible assets are included as a component of other assets in the

Consolidated Statements of Condition.

                                       60

--------------------------------------------------------------------------------

Table of Contents

Use of Non-GAAP Financial Measures


The ratios "tangible common equity to tangible assets" and "tangible common
equity to risk-weighted assets" are Non-GAAP financial measures.  The Company
believes these measurements are useful for investors, regulators, management and
others to evaluate capital adequacy relative to other financial institutions.
Although these Non-GAAP financial measures are frequently used by stakeholders
in the evaluation of a financial institution, they have limitations as
analytical tools, and should not be considered in isolation, or as a substitute
for analyses of results as reported under GAAP.  Table 2 provides a
reconciliation of these Non-GAAP financial measures with their most closely
related GAAP measures.
GAAP to Non-GAAP Reconciliation                                                  Table 2
                                                              June 30,      December 31,
(dollars in thousands)                                            2020              2019
Total Shareholders' Equity                                $  1,352,082$   1,286,832
Less: Goodwill                                                  31,517            31,517
Tangible Common Equity                                    $  1,320,565$   1,255,315

Total Assets                                              $ 19,769,942$  18,095,496
Less: Goodwill                                                  31,517            31,517
Tangible Assets                                           $ 19,738,425$  18,063,979
Risk-Weighted Assets, determined in accordance
with prescribed regulatory requirements                   $ 10,941,894

$ 10,589,061


Total Shareholders' Equity to Total Assets                        6.84 %            7.11 %
Tangible Common Equity to Tangible Assets (Non-GAAP)              6.69 %    

6.95 %


Tier 1 Capital Ratio                                             12.04 %           12.18 %
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP)        12.07 %           11.85 %




                                       61

--------------------------------------------------------------------------------

Table of Contents

© Edgar Online, source Glimpses

share with twitter share with LinkedIn share with facebook
Latest news on BANK OF HAWAII CORPORATION
02:04pBANK OF HAWAII : Waikiki Branch Employee Tests Positive for COVID-19
PU
08/03BANK OF HAWAII : Guam Employee Tests Positive for COVID-19
PU
07/31BANK OF HAWAII : Management's Discussion and Analysis of Financial Condition and..
AQ
07/31BANK OF HAWAII : Employee Tests Positive for COVID-19
PU
07/31Electronic Arts Rides the Videogame Boom Electronic Arts Benefits From Gaming..
DJ
07/30For Videogame Giants, Pandemic Lockdowns Fuel Gamers' Spending -- Update
DJ
07/30For Videogame Giants, Pandemic Lockdowns Fuel Gamers' Spending
DJ
07/27BANK OF HAWAII CORP : Results of Operations and Financial Condition, Financial S..
AQ
07/27BANK OF HAWAII : 2Q Earnings Snapshot
AQ
07/27BANK OF HAWAII CORPORATION : Second Quarter 2020 Financial Results
BU
More news