HONOLULU--(BUSINESS WIRE)--Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per share of $3.86 for the full year of 2020 compared with diluted earnings per share of $5.56 in 2019. Net income for the year was $153.8 million compared with net income of $225.9 million in the previous year. The return on average assets for the full year of 2020 was 0.79 percent compared with 1.29 percent in 2019. The return on average equity for the full year of 2020 was 11.38 percent compared with 17.65 percent in 2019. The efficiency ratio for the full year of 2020 improved to 54.91 percent compared with 55.68 percent in 2019.

“Bank of Hawaii finished 2020 with solid financial performance despite the many challenges we faced during the year due to the COVID-19 pandemic," said Peter Ho, Chairman, President, and CEO. “Our loan balances grew 8.6 percent in 2020 and our deposit balances reached another record high, growing 15.4 percent compared with the prior year. Total assets expanded to a new record high of $20.6 billion at the end of the year. Our overall asset quality remained stable and our capital and liquidity all remain strong. During the year our disciplined approach to expense management allowed us to continue making significant progress on our strategic initiatives which position us well for continued growth in the future.”

Diluted earnings per share were $1.06 for the fourth quarter of 2020, an increase from $0.95 in the third quarter of 2020 and down from $1.45 in the fourth quarter of 2019. Net income for the fourth quarter of 2020 was $42.3 million, up from $37.8 million in the previous quarter and down from $58.1 million in the same quarter in 2019. The return on average assets for the fourth quarter of 2020 was 0.83 percent compared with 0.76 percent in the third quarter of 2020 and 1.29 percent in the fourth quarter of 2019. The return on average equity for the fourth quarter of 2020 was 12.26 percent compared with 11.01 percent in the third quarter of 2020 and 17.84 percent in the fourth quarter of 2019. The efficiency ratio for the fourth quarter of 2020 was 59.88 percent compared with 54.22 percent in the previous quarter and 54.26 percent in the same quarter in 2019.

Financial Highlights

Net interest income, on a taxable-equivalent basis, was $497.6 million for the full year of 2020, a decrease of $2.3 million from net interest income of $499.9 million in 2019. Net interest income, on a taxable-equivalent basis, for the fourth quarter of 2020 was $119.8 million, a decrease of $4.7 million compared with net interest income of $124.5 million in the third quarter of 2020 and down $4.4 million from net interest income of $124.2 million in the fourth quarter of 2019. Net interest income in the fourth quarter of 2020 included a charge of $3.0 million related to an impairment in the residual value of a leveraged lease which had a negative impact of 6 basis points on the net interest margin. Analyses of changes in net interest income are included in Tables 8a, 8b and 8c.

The net interest margin for the full year of 2020 was 2.73 percent, a decrease of 30 basis points from the net interest margin of 3.03 percent in 2019. Adjusted for the lease impairment, the decrease in the net interest margin is largely due to lower rates and higher levels of liquidity from continued strong deposit growth. The net interest margin was 2.48 percent in the fourth quarter of 2020, a decrease of 19 basis points from the previous quarter and 47 basis points from the same quarter in 2019.

The provision for credit losses for the full year of 2020 was $117.8 million compared with a provision for credit losses of $16.0 million in 2019. Results for the fourth quarter of 2020 included a provision for credit losses of $15.2 million compared with $28.6 million in the previous quarter and $4.8 million in the same quarter in 2019.

Noninterest income for the full year of 2020 was $184.4 million, an increase of $1.1 million or 0.6 percent compared with noninterest income of $183.3 million in 2019. Noninterest income was $45.3 million in the fourth quarter of 2020 compared with noninterest income of $41.7 million in the third quarter of 2020 and $47.7 million in the fourth quarter of 2019. The increase in noninterest income during the fourth quarter of 2020 compared with the prior quarter is largely due to an increase in mortgage banking income.

Noninterest expense for the full year of 2020 was $373.8 million, a decrease of $5.4 million or 1.4 percent compared with noninterest expense of $379.2 million in 2019. Noninterest expense was $98.7 million in the fourth quarter of 2020 compared with noninterest expense of $89.9 million in the third quarter of 2020 and $93.1 million in the fourth quarter of 2019. Noninterest expense in the fourth quarter of 2020 included $6.1 million in charges related to the decision to permanently close twelve branches and reduce the current number of cash-only ATMs. Noninterest expense in the fourth quarter also included a charge of $0.8 million related to the true-up of amortization on an investment. Noninterest expense during the third quarter of 2020 included a gain of $1.9 million related to the sale of a branch building partially offset by $1.8 million in severance. There were no significant items in noninterest expense during the fourth quarter of 2019. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The effective tax rate for the full year of 2020 was 18.68 percent compared with 20.96 percent for the full year of 2019. The effective tax rate for the fourth quarter of 2020 was 16.87 percent compared with 20.09 percent in the previous quarter and 21.15 percent during the same quarter in 2019. The decrease in the effective tax rate for the fourth quarter of 2020 is primarily due to a return to provision adjustment of $1.6 million.

The Company’s business segments are defined as Consumer Banking, Commercial 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 Tables 13a and 13b.

Asset Quality

The Company’s overall asset quality continued to remain relatively stable during the fourth quarter of 2020. Total non-performing assets were $18.5 million at December 31, 2020, down from $18.6 million at September 30, 2020 and $20.1 million at December 31, 2019. Non-performing assets as a percentage of total loans and leases and foreclosed real estate were 0.15 percent at December 31, 2020 compared with 0.16 percent at September 30, 2020 and 0.18 percent at December 31, 2019.

Accruing loans and leases past due 90 days or more were $10.5 million at December 31, 2020 compared with $9.6 million at September 30, 2020 and $8.4 million at December 31, 2019. Restructured loans and leases not included in non-accrual loans or accruing loans past due 90 days or more were $68.1 million at December 31, 2020 compared with $58.7 million at September 30, 2020 and $63.1 million at December 31, 2019. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net charge-offs for the full year of 2020 were $7.1 million or 0.06 percent of total average loans and leases compared with net charge-offs of $12.7 million or 0.12 percent of total average loans and leases in 2019. Net charge-offs during the fourth quarter of 2020 were a net recovery of $0.3 million and were comprised of charge-offs of $3.2 million fully offset by recoveries of $3.5 million. Net charge-offs during the third quarter of 2020 were a net recovery of $1.5 million as loan charge-offs of $2.3 million were fully offset by recoveries of $3.8 million. Net charge-offs during the fourth quarter of 2019 were $3.7 million or 0.13 percent annualized of total average loans and leases outstanding and were comprised of charge-offs of $6.2 million and recoveries of $2.6 million.

The allowance for credit losses was $216.3 million at December 31, 2020, an increase from $203.5 million at September 30, 2020 and $110.0 million at December 31, 2019. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.81 percent at December 31, 2020, up from 1.73 percent at September 30, 2020 and 1.00 percent at December 31, 2019. The reserve for unfunded commitments was $2.4 million at December 31, 2020, a slight increase from $2.3 million at the end of the prior quarter and down from $6.8 million at the end of the same quarter in 2019. Details of loan and lease charge-offs, recoveries, and the components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets increased to a new record of $20.6 billion at December 31, 2020 compared with total assets of $20.1 billion at September 30, 2020 and total assets of $18.1 billion at December 31, 2019. Average total assets were $19.4 billion for the full year of 2020, an increase of 10.5 percent from average total assets of $17.5 billion during 2019.

The investment securities portfolio was $7.1 billion at December 31, 2020, up from total securities of $6.4 billion at September 30, 2020 and $5.7 billion at December 31, 2019 due to growth in deposits that continued to outpace loan growth. The portfolio remains largely comprised of securities issued by U.S. government agencies and includes $3.3 billion in securities held to maturity and $3.8 billion in securities available for sale at December 31, 2020. The securities portfolio at September 30, 2020 included $3.2 billion in securities held to maturity and $3.2 billion in securities available for sale compared with $3.0 billion in securities held to maturity and $2.6 billion in securities available for sale at December 31, 2019.

Total loans and leases were $11.9 billion at December 31, 2020, an increase of 1.2 percent from total loans and leases of $11.8 billion at September 30, 2020 and up 8.6 percent from total loans and leases of $11.0 billion at December 31, 2019. Average total loans and leases were $11.6 billion during the full year of 2020, an increase of 8.5 percent from average total loans and leases of $10.7 billion during 2019.

The commercial loan portfolio was $5.1 billion at the end of December 31, 2020, an increase of $83.8 million or 1.7 percent from $5.0 billion at the end of the third quarter of 2020 and up $886.9 million or 21.0 percent from $4.2 billion at the end of the fourth quarter of 2019. Consumer loans were $6.8 billion at December 31, 2020, an increase of $62.6 million or 0.9 percent from $6.8 billion at the end of the third quarter of 2020 and up $62.3 million or 0.9 percent from $6.8 billion at the end of the fourth quarter of 2019. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $18.2 billion at December 31, 2020, an increase of 2.7 percent from total deposits of $17.7 billion at September 30, 2020 and up 15.4 percent from total deposits of $15.8 billion at December 31, 2019. Average total deposits were $16.9 billion during the full year of 2020, an increase of 11.0 percent from average total deposits of $15.2 billion during 2019.

Consumer deposits were $9.3 billion at December 31, 2020, an increase of $443.9 million or 5.0 percent from $8.9 billion at the end of the third quarter of 2020 and an increase of $1.2 billion or 15.1 percent from $8.1 billion at the end of the fourth quarter of 2019. Commercial deposits were $7.3 billion at December 31, 2020, an increase of $143.3 million or 2.0 percent from $7.2 billion at the end of the third quarter of 2020 and an increase of $978.6 million or 15.5 percent from $6.3 billion at the end of the fourth quarter of 2019. Other deposits, including public funds, were $1.6 billion at December 31, 2020, a decrease of $114.5 million or 6.8 percent from $1.7 billion at the end of the third quarter of 2020 and an increase of $219.3 million or 16.3 percent from $1.3 billion at the end of the fourth quarter of 2019. Deposit balances are summarized in Tables 7a, 7b, and 10.

Total shareholders’ equity was $1.4 billion at December 31, 2020, an increase of $12.8 million from September 30, 2020, and up $87.7 million from December 31, 2019. There were no shares repurchased during the fourth quarter of 2020. The Tier 1 Capital Ratio was 12.06 percent at December 31, 2020 compared with 12.09 percent at September 30, 2020 and 12.18 percent at December 31, 2019. The Tier 1 Leverage Ratio at December 31, 2020 was 6.71 percent compared with 6.81 percent at September 30, 2020 and 7.25 percent at December 31, 2019. The decrease in the Tier 1 Leverage ratio is due to balance sheet growth related to the significant increase in customer deposits.

The Company’s Board of Directors declared a quarterly cash dividend of $0.67 per share on the Company’s outstanding shares. The dividend will be payable on March 12, 2021 to shareholders of record at the close of business on February 26, 2021.

Conference Call Information

The Company will review its 2020 financial results today at 8:00 a.m. Hawaii Time (1:00 p.m. Eastern Time). The live call, including a slide presentation, will be accessible on the investor relations link of Bank of Hawaii Corporation's website, www.boh.com. The webcast link is https://edge.media-server.com/mmc/p/ukntid8g. The toll-free number for the teleconference 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 of the conference call will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, January 25, 2021. 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 conference ID 4199179 when prompted. In addition, the 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" (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties that could cause results to be materially different from expectations. Forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations are examples of certain of these forward-looking statements. 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, 2019, and its Form 10-Qs for the fiscal quarters ended March 31, 2020, June 30, 2020 and October 31, 2020, which were filed with the U.S. Securities and Exchange Commission. These forward-looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.

Bank of Hawaii Corporation is an independent regional financial services company serving businesses, consumers, and governments in Hawaii and the West Pacific. The Company's principal subsidiary, Bank of Hawaii, was founded in 1897. For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com.

Bank of Hawaii Corporation and Subsidiaries
Financial Highlights													Table 1
	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,
(dollars in thousands, except per share amounts)		2020			2020			2019			2020			2019
For the Period:
Operating Results
Net Interest Income	$	119,499		$	124,166		$	123,885		$	496,322		$	497,715
Provision for Credit Losses		15,200			28,600			4,750			117,800			16,000
Total Noninterest Income		45,258			41,734			47,702			184,409			183,338
Total Noninterest Expense		98,654			89,949			93,096			373,807			379,227
Net Income		42,314			37,840			58,143			153,804			225,913
Basic Earnings Per Share		1.06			0.95			1.46			3.87			5.59
Diluted Earnings Per Share		1.06			0.95			1.45			3.86			5.56
Dividends Declared Per Share		0.67			0.67			0.67			2.68			2.59

Performance Ratios
Return on Average Assets		0.83	%		0.76	%		1.29	%		0.79	%		1.29	%
Return on Average Shareholders' Equity		12.26			11.01			17.84			11.38			17.65
Efficiency Ratio ¹		59.88			54.22			54.26			54.91			55.68
Net Interest Margin ²		2.48			2.67			2.95			2.73			3.03
Dividend Payout Ratio ³		63.21			70.53			45.89			69.25			46.33
Average Shareholders' Equity to Average Assets		6.74			6.93			7.26			6.97			7.30

Average Balances
Average Loans and Leases	$	11,835,929		$	11,739,785		$	10,878,672		$	11,592,093		$	10,688,424
Average Assets		20,382,633			19,741,139			17,821,004			19,387,693			17,537,570
Average Deposits		17,819,116			17,270,206			15,441,097			16,900,186			15,228,066
Average Shareholders' Equity		1,372,971			1,367,756			1,292,930			1,351,583			1,280,082

Per Share of Common Stock
Book Value	$	34.26		$	33.99		$	32.14		$	34.26		$	32.14
Tangible Book Value		33.47			33.21			31.35			33.47			31.35
Market Value
Closing		76.62			50.52			95.16			76.62			95.16
High		80.38			61.94			95.68			95.53			95.68
Low		49.25			48.77			81.29			46.70			66.54

							December 31,			September 30,			December 31,
								2020			2020			2019
As of Period End:
Balance Sheet Totals
Loans and Leases							$	11,940,020		$	11,793,608		$	10,990,892
Total Assets								20,603,651			20,109,489			18,095,496
Total Deposits								18,211,621			17,738,883			15,784,482
Other Debt								60,481			60,502			85,565
Total Shareholders' Equity								1,374,507			1,361,739			1,286,832

Asset Quality
Non-Performing Assets							$	18,481		$	18,626		$	20,117
Allowance for Credit Losses								216,252			203,496			110,027
Allowance to Loans and Leases Outstanding								1.81	%		1.73	%		1.00	%

Capital Ratios ⁴
Common Equity Tier 1 Capital Ratio								12.06	%		12.09	%		12.18	%
Tier 1 Capital Ratio								12.06			12.09			12.18
Total Capital Ratio								13.31			13.35			13.28
Tier 1 Leverage Ratio								6.71			6.81			7.25
Total Shareholders' Equity to Total Assets								6.67			6.77			7.11
Tangible Common Equity to Tangible Assets ⁵								6.53			6.63			6.95
Tangible Common Equity to Risk-Weighted Assets⁵								11.89			12.02			11.85

Non-Financial Data
Full-Time Equivalent Employees								2,022			2,038			2,124
Branches								65			67			68
ATMs								357			358			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 Regulatory capital ratios as of December 31, 2020 are preliminary.

⁵Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. See Table 2 “Reconciliation of Non-GAAP Financial Measures."

Bank of Hawaii Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures							Table 2
	December 31,			September 30,			December 31,
(dollars in thousands)		2020			2020			2019

Total Shareholders' Equity	$	1,374,507		$	1,361,739		$	1,286,832
Less: Goodwill		31,517			31,517			31,517
Tangible Common Equity	$	1,342,990		$	1,330,222		$	1,255,315

Total Assets	$	20,603,651		$	20,109,489		$	18,095,496
Less: Goodwill		31,517			31,517			31,517
Tangible Assets	$	20,572,134		$	20,077,972		$	18,063,979

Risk-Weighted Assets, determined in accordance
with prescribed regulatory requirements	$	11,295,077		$	11,068,888		$	10,589,061

Total Shareholders' Equity to Total Assets		6.67	%		6.77	%		7.11	%
Tangible Common Equity to Tangible Assets (Non-GAAP)		6.53	%		6.63	%		6.95	%

Tier 1 Capital Ratio		12.06	%		12.09	%		12.18	%
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP)		11.89	%		12.02	%		11.85	%

Note: Risk-Weighted Assets and Regulatory capital ratios as of December 31, 2020 are preliminary.

Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Income												Table 3
	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,
(dollars in thousands, except per share amounts)		2020			2020			2019			2020		2019
Interest Income
Interest and Fees on Loans and Leases	$	98,471		$	103,189		$	109,223		$	417,498	$	439,012
Income on Investment Securities
Available-for-Sale		15,449			14,558			16,158			61,294		62,174
Held-to-Maturity		14,113			15,967			18,750			66,055		81,616
Deposits		1			3			8			14		41
Funds Sold		115			149			723			902		3,553
Other		167			151			239			661		1,001
Total Interest Income		128,316			134,017			145,101			546,424		587,397
Interest Expense
Deposits		4,861			5,891			16,407			32,966		68,374
Securities Sold Under Agreements to Repurchase		3,614			3,622			4,071			15,281		17,522
Funds Purchased		5			-			25			95		840
Short-Term Borrowings		-			1			-			62		38
Other Debt		337			337			713			1,698		2,908
Total Interest Expense		8,817			9,851			21,216			50,102		89,682
Net Interest Income		119,499			124,166			123,885			496,322		497,715
Provision for Credit Losses		15,200			28,600			4,750			117,800		16,000
Net Interest Income After Provision for Credit Losses		104,299			95,566			119,135			378,522		481,715
Noninterest Income
Trust and Asset Management		11,239			10,752			11,157			43,456		44,233
Mortgage Banking		6,851			4,047			3,199			17,871		13,686
Service Charges on Deposit Accounts		6,335			6,027			7,835			24,910		30,074
Fees, Exchange, and Other Service Charges		12,143			12,296			14,533			47,056		57,893
Investment Securities Gains (Losses), Net		(1,193	)		(1,121	)		(906	)		9,932		(3,986	)
Annuity and Insurance		670			881			1,272			3,362		6,934
Bank-Owned Life Insurance		2,353			1,806			1,879			7,388		7,015
Other		6,860			7,046			8,733			30,434		27,489
Total Noninterest Income		45,258			41,734			47,702			184,409		183,338
Noninterest Expense
Salaries and Benefits		50,200			51,951			51,664			207,329		216,106
Net Occupancy		14,536			7,281			8,824			39,533		33,800
Net Equipment		9,574			9,223			7,930			35,448		29,295
Data Processing		4,604			4,691			4,828			18,499		18,757
Professional Fees		3,174			2,743			3,257			12,186		10,071
FDIC Insurance		1,484			1,282			1,376			5,780		5,192
Other		15,082			12,778			15,217			55,032		66,006
Total Noninterest Expense		98,654			89,949			93,096			373,807		379,227
Income Before Provision for Income Taxes		50,903			47,351			73,741			189,124		285,826
Provision for Income Taxes		8,589			9,511			15,598			35,320		59,913
Net Income	$	42,314		$	37,840		$	58,143		$	153,804	$	225,913
Basic Earnings Per Share	$	1.06		$	0.95		$	1.46		$	3.87	$	5.59
Diluted Earnings Per Share	$	1.06		$	0.95		$	1.45		$	3.86	$	5.56
Dividends Declared Per Share	$	0.67		$	0.67		$	0.67		$	2.68	$	2.59
Basic Weighted Average Shares		39,773,851			39,745,120			39,880,619			39,726,210		40,384,328
Diluted Weighted Average Shares		39,963,736			39,869,135			40,179,016			39,892,107		40,649,570

Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income														Table 4
		Three Months Ended									Year Ended
		December 31,			September 30,			December 31,			December 31,
(dollars in thousands)			2020			2020			2019			2020			2019
Net Income		$	42,314		$	37,840		$	58,143		$	153,804		$	225,913
Other Comprehensive Income (Loss), Net of Tax:
	Net Unrealized Gains (Losses) on Investment Securities		(961	)		(4,900	)		(5,856	)		43,428			22,677
	Defined Benefit Plans		(5,616	)		374			(3,482	)		(4,494	)		(2,746	)
Other Comprehensive Income (Loss)			(6,577	)		(4,526	)		(9,338	)		38,934			19,931
Comprehensive Income		$	35,737		$	33,314		$	48,805		$	192,738		$	245,844

Bank of Hawaii Corporation and Subsidiaries
Consolidated Statements of Condition					Table 5
	December 31,		September 30,		December 31,
(dollars in thousands)		2020		2020		2019
Assets
Interest-Bearing Deposits in Other Banks	$	1,646	$	4,233	$	4,979
Funds Sold

Bank of Hawaii Corporation 2020 Financial Results