MEDIA RELEASE

Highlights:
* 2011 Diluted Earnings Per Share $3.39
* 2011 Net Income $160.0 Million
* Diluted Earnings Per Share for the Fourth Quarter of 2011 $0.85
* Net Income for the Fourth Quarter of 2011 $39.2 Million
* Board of Directors Declares Dividend of $0.45 Per Share

Bank of Hawaii Corporation reports diluted earnings per share of $0.85 for the fourth quarter of 2011, down from $0.92 per share in the previous quarter, and up from $0.84 per share in the same quarter last year.

Net income for the fourth quarter of 2011 was $39.2 million, compared to net income of $43.3 million in the third quarter of 2011 and $40.6 million in the same quarter last year.

Loan and lease balances grew to $5.5 billion during the fourth quarter of 2011, increasing by 3.5 percent compared with the third quarter of 2011. Deposit growth remained strong, growing by 5.8 percent to $10.6 billion at Dec. 31, 2011.

As a result of continued strength in asset quality and an improving Hawaii economy, the allowance for loan and lease losses decreased by $4.8 million to $138.6 million, representing 2.50 percent of outstanding loans and leases.

“Bank of Hawaii finished 2011with solid financial performance,” said Peter S. Ho, Chairman, President, and CEO. “During the quarter, we were pleased that our loan balances increased across most categories and deposit growth remained strong. Credit quality remained strong during the quarter. Our balance sheet remains solid, with high levels of liquidity, capital, and reserves due to our continued focus on disciplined capital and risk management. During the quarter we reduced our shares outstanding by 1.3 percent and maintained our quarterly dividend of $0.45 per share.”

The return on average assets for the fourth quarter of 2011 was 1.17 percent, compared with 1.31 percent in the previous quarter and 1.24 percent in the same quarter last year.

The return on average equity for the fourth quarter of 2011 was 15.23 percent, compared with 16.80 percent in the previous quarter and 15.08 percent in the same quarter last year.

The return on average assets for the full year of 2011 was 1.22 percent, down from 1.45 percent in 2010. The return on average equity for the full year of 2011 was 15.69 percent compared with 18.16 percent in 2010.

Net interest income, on a taxable equivalent basis, for the fourth quarter of 2011 was $97.2 million, up slightly from net interest income of $97.1 million in the third quarter of 2011 and up $0.6 million from net interest income of $96.6 million in the fourth quarter of 2010.

Net interest income, on a taxable equivalent basis, for the full year of 2011 was $392.3 million, down $15.2 million from net interest income of $407.5 million in 2010. Analyses of changes in net interest income are included in Tables 7a, 7b and 7c.

The net interest margin was 3.04 percent for the fourth quarter of 2011, a 5 basis point decrease from the previous quarter and an 11 basis point decrease from the same quarter last year. The net interest margin for the full year of 2011 was 3.13 percent, a 28 basis point decrease from 3.41 percent in 2010.

The reduction in the net interest margin was largely the result of higher levels of liquidity, lower average loan balances, and lower interest rates which resulted in lower yields on loans and investments.

During the fourth quarter of 2011 the provision for credit losses was $2.2 million, or $4.8 million less than net charge-offs. The provision for credit losses during the third quarter of 2011 was $2.2 million, or $1.6 million less than net charge-offs. The provision for credit losses during the fourth quarter of 2010 was $5.3 million and equaled net charge-offs. The provision for credit losses for the full year of 2011 was $12.7 million compared with $55.3 million in 2010.

Noninterest income was $43.4 million for the fourth quarter of 2011, compared with $50.9 million in the third quarter of 2011 and $51.5 million in the fourth quarter of 2010. There were no significant noninterest revenue items in the fourth quarter of 2011 or the fourth quarter of 2010.

Noninterest income in the third quarter of 2011 included a $2.0 million contingent payment received from the sale of the Company’s proprietary mutual funds in 2010. The decline in noninterest revenue compared with the previous quarter is primarily due to lower debit card revenue resulting from implementation of the Durbin Amendment.

Mortgage Banking revenue also declined compared to the prior quarters due to the Company’s decision to portfolio some saleable mortgages. Noninterest income for the full year of 2011 was $197.7 million compared with noninterest income of $255.3 million in 2010.

Results for 2011 included $6.4 million in gains on the sales of investment securities compared with similar gains of $42.8 million in 2010. Excluding the securities gains, noninterest revenue declined in 2011 compared with 2010 primarily due to reduced overdraft fees.

Noninterest expense was $84.4 million in the fourth quarter of 2011, up slightly from noninterest expense of $84.0 million in the third quarter of 2011, and down from $88.7 million in the fourth quarter of 2010. There were no significant noninterest expense items in the fourth quarter of 2011. Noninterest expense in the third quarter of 2011 included a donation of $2.0 million to the Bank of Hawaii Foundation.

Noninterest expense in the fourth quarter of 2010 included $1.9 million for employee incentives, $1.2 million for a refresh of personal computers, and a donation of $1.0 million to the Bank of Hawaii Foundation.

In the fourth quarter of 2010 these items were partially offset by a $1.3 million gain on the sale of foreclosed real estate and a $1.0 million settlement gain on the extinguishment of retiree life insurance obligations. Noninterest expense for the full year of 2011 was $348.2 million, up slightly from noninterest expense of $346.2 million in 2010. Results for 2011 included a second quarter litigation settlement of $9.0 million.

The efficiency ratio for the fourth quarter of 2011 was 60.42 percent compared with 56.87 percent in the previous quarter and 60.05 percent in the same quarter last year. The efficiency ratio for the full year of 2011 was 59.23 percent compared with 52.32 percent during the full year of 2010.

The effective tax rate for the fourth quarter of 2011 was 26.1 percent compared with 29.6 percent in the previous quarter and 24.5 percent in the same quarter last year. The effective tax rate for the full year of 2011 was 29.5 percent compared with 29.3 percent for the full year of 2010.

The effective tax rate for the fourth quarters of 2011 and 2010 were favorably impacted by the release of tax reserves determined during the quarter.

— Find out more:
www.boh.com