Delaware | 99-0148992 | |
(State of incorporation) | (I.R.S. Employer Identification No.) | |
130 Merchant Street, Honolulu, Hawaii | 96813 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Page | ||
Part I - Financial Information | ||
Item 1. | Financial Statements (Unaudited) | |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(dollars in thousands, except per share amounts) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Interest Income | |||||||||||||||
Interest and Fees on Loans and Leases | $ | 62,729 | $ | 63,910 | $ | 125,549 | $ | 128,601 | |||||||
Income on Investment Securities | |||||||||||||||
Available-for-Sale | 15,073 | 16,988 | 30,924 | 34,701 | |||||||||||
Held-to-Maturity | 19,189 | 25,054 | 39,043 | 51,467 | |||||||||||
Deposits | 1 | 1 | 4 | 3 | |||||||||||
Funds Sold | 74 | 119 | 133 | 248 | |||||||||||
Other | 285 | 281 | 569 | 561 | |||||||||||
Total Interest Income | 97,351 | 106,353 | 196,222 | 215,581 | |||||||||||
Interest Expense | |||||||||||||||
Deposits | 2,579 | 3,219 | 5,225 | 6,692 | |||||||||||
Securities Sold Under Agreements to Repurchase | 6,751 | 7,250 | 13,756 | 14,554 | |||||||||||
Funds Purchased | 10 | 5 | 32 | 10 | |||||||||||
Long-Term Debt | 671 | 498 | 1,309 | 996 | |||||||||||
Total Interest Expense | 10,011 | 10,972 | 20,322 | 22,252 | |||||||||||
Net Interest Income | 87,340 | 95,381 | 175,900 | 193,329 | |||||||||||
Provision for Credit Losses | — | 628 | — | 979 | |||||||||||
Net Interest Income After Provision for Credit Losses | 87,340 | 94,753 | 175,900 | 192,350 | |||||||||||
Noninterest Income | |||||||||||||||
Trust and Asset Management | 12,089 | 11,195 | 23,975 | 22,113 | |||||||||||
Mortgage Banking | 5,820 | 7,581 | 12,231 | 12,631 | |||||||||||
Service Charges on Deposit Accounts | 9,112 | 9,225 | 18,413 | 18,816 | |||||||||||
Fees, Exchange, and Other Service Charges | 13,133 | 12,326 | 25,067 | 24,725 | |||||||||||
Investment Securities Losses, Net | — | — | — | (90 | ) | ||||||||||
Insurance | 2,393 | 2,399 | 4,718 | 4,677 | |||||||||||
Bank-Owned Life Insurance | 1,335 | 1,739 | 2,632 | 3,220 | |||||||||||
Other | 4,159 | 2,383 | 8,783 | 8,838 | |||||||||||
Total Noninterest Income | 48,041 | 46,848 | 95,819 | 94,930 | |||||||||||
Noninterest Expense | |||||||||||||||
Salaries and Benefits | 45,341 | 44,037 | 94,016 | 91,061 | |||||||||||
Net Occupancy | 9,661 | 10,058 | 19,296 | 20,574 | |||||||||||
Net Equipment | 4,380 | 4,669 | 8,957 | 10,495 | |||||||||||
Data Services | 3,050 | 3,160 | 6,316 | 6,747 | |||||||||||
Professional Fees | 2,391 | 2,386 | 4,617 | 4,518 | |||||||||||
FDIC Insurance | 1,949 | 2,088 | 3,898 | 4,159 | |||||||||||
Other | 14,409 | 14,349 | 28,468 | 28,400 | |||||||||||
Total Noninterest Expense | 81,181 | 80,747 | 165,568 | 165,954 | |||||||||||
Income Before Provision for Income Taxes | 54,200 | 60,854 | 106,151 | 121,326 | |||||||||||
Provision for Income Taxes | 16,437 | 20,107 | 32,408 | 36,769 | |||||||||||
Net Income | $ | 37,763 | $ | 40,747 | $ | 73,743 | $ | 84,557 | |||||||
Basic Earnings Per Share | $ | 0.85 | $ | 0.90 | $ | 1.66 | $ | 1.86 | |||||||
Diluted Earnings Per Share | $ | 0.85 | $ | 0.90 | $ | 1.65 | $ | 1.85 | |||||||
Dividends Declared Per Share | $ | 0.45 | $ | 0.45 | $ | 0.90 | $ | 0.90 | |||||||
Basic Weighted Average Shares | 44,493,069 | 45,221,293 | 44,518,629 | 45,465,910 | |||||||||||
Diluted Weighted Average Shares | 44,608,497 | 45,347,368 | 44,644,348 | 45,610,489 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(dollars in thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net Income | $ | 37,763 | $ | 40,747 | $ | 73,743 | $ | 84,557 | ||||||||
Other Comprehensive Income (Loss), Net of Tax: | ||||||||||||||||
Net Unrealized Gains (Losses) on Investment Securities | (46,572 | ) | 3,387 | (56,213 | ) | (3,067 | ) | |||||||||
Defined Benefit Plans | 201 | 153 | 279 | 306 | ||||||||||||
Total Other Comprehensive Income (Loss) | (46,371 | ) | 3,540 | (55,934 | ) | (2,761 | ) | |||||||||
Comprehensive Income (Loss) | $ | (8,608 | ) | $ | 44,287 | $ | 17,809 | $ | 81,796 |
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Assets | |||||||
Interest-Bearing Deposits | $ | 4,635 | $ | 3,393 | |||
Funds Sold | 329,922 | 185,682 | |||||
Investment Securities | |||||||
Available-for-Sale | 2,815,408 | 3,367,557 | |||||
Held to Maturity (Fair Value of $4,036,197 and $3,687,676) | 4,027,829 | 3,595,065 | |||||
Loans Held for Sale | 25,880 | 21,374 | |||||
Loans and Leases | 5,859,152 | 5,854,521 | |||||
Allowance for Loan and Lease Losses | (124,575 | ) | (128,857 | ) | |||
Net Loans and Leases | 5,734,577 | 5,725,664 | |||||
Total Earning Assets | 12,938,251 | 12,898,735 | |||||
Cash and Noninterest-Bearing Deposits | 136,386 | 163,786 | |||||
Premises and Equipment | 105,752 | 105,005 | |||||
Customers’ Acceptances | 114 | 173 | |||||
Accrued Interest Receivable | 43,375 | 43,077 | |||||
Foreclosed Real Estate | 3,256 | 3,887 | |||||
Mortgage Servicing Rights | 27,631 | 25,240 | |||||
Goodwill | 31,517 | 31,517 | |||||
Other Assets | 447,136 | 456,952 | |||||
Total Assets | $ | 13,733,418 | $ | 13,728,372 | |||
Liabilities | |||||||
Deposits | |||||||
Noninterest-Bearing Demand | $ | 3,396,835 | $ | 3,367,185 | |||
Interest-Bearing Demand | 2,269,196 | 2,163,473 | |||||
Savings | 4,433,042 | 4,399,316 | |||||
Time | 1,350,125 | 1,599,508 | |||||
Total Deposits | 11,449,198 | 11,529,482 | |||||
Funds Purchased | 9,983 | 11,296 | |||||
Securities Sold Under Agreements to Repurchase | 866,237 | 758,947 | |||||
Long-Term Debt | 174,727 | 128,055 | |||||
Banker’s Acceptances | 114 | 173 | |||||
Retirement Benefits Payable | 47,318 | 47,658 | |||||
Accrued Interest Payable | 4,399 | 4,776 | |||||
Taxes Payable and Deferred Taxes | 48,947 | 88,014 | |||||
Other Liabilities | 146,127 | 138,306 | |||||
Total Liabilities | 12,747,050 | 12,706,707 | |||||
Shareholders’ Equity | |||||||
Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding: June 30, 2013 - 57,488,745 / 44,644,596 and December 31, 2012 - 57,319,352 / 44,754,835) | 572 | 571 | |||||
Capital Surplus | 518,804 | 515,619 | |||||
Accumulated Other Comprehensive Income (Loss) | (26,726 | ) | 29,208 | ||||
Retained Earnings | 1,115,594 | 1,084,477 | |||||
Treasury Stock, at Cost (Shares: June 30, 2013 - 12,844,149 and December 31, 2012 - 12,564,517) | (621,876 | ) | (608,210 | ) | |||
Total Shareholders’ Equity | 986,368 | 1,021,665 | |||||
Total Liabilities and Shareholders’ Equity | $ | 13,733,418 | $ | 13,728,372 |
(dollars in thousands) | Common Shares Outstanding | Common Stock | Capital Surplus | Accum. Other Compre- hensive Income (Loss) | Retained Earnings | Treasury Stock | Total | |||||||||||||||||||
Balance as of December 31, 2012 | 44,754,835 | $ | 571 | $ | 515,619 | $ | 29,208 | $ | 1,084,477 | $ | (608,210 | ) | $ | 1,021,665 | ||||||||||||
Net Income | — | — | — | — | 73,743 | — | 73,743 | |||||||||||||||||||
Other Comprehensive Loss | — | — | — | (55,934 | ) | — | — | (55,934 | ) | |||||||||||||||||
Share-Based Compensation | — | — | 2,732 | — | — | — | 2,732 | |||||||||||||||||||
Common Stock Issued under Purchase and Equity Compensation Plans and Related Tax Benefits | 379,870 | 1 | 453 | — | (2,235 | ) | 10,294 | 8,513 | ||||||||||||||||||
Common Stock Repurchased | (490,109 | ) | — | — | — | — | (23,960 | ) | (23,960 | ) | ||||||||||||||||
Cash Dividends Paid ($0.90 per share) | — | — | — | — | (40,391 | ) | — | (40,391 | ) | |||||||||||||||||
Balance as of June 30, 2013 | 44,644,596 | $ | 572 | $ | 518,804 | $ | (26,726 | ) | $ | 1,115,594 | $ | (621,876 | ) | $ | 986,368 | |||||||||||
Balance as of December 31, 2011 | 45,947,116 | $ | 571 | $ | 507,558 | $ | 35,263 | $ | 1,003,938 | $ | (544,663 | ) | $ | 1,002,667 | ||||||||||||
Net Income | — | — | — | — | 84,557 | — | 84,557 | |||||||||||||||||||
Other Comprehensive Loss | — | — | — | (2,761 | ) | — | — | (2,761 | ) | |||||||||||||||||
Share-Based Compensation | — | — | 3,723 | — | — | — | 3,723 | |||||||||||||||||||
Common Stock Issued under Purchase and Equity Compensation Plans and Related Tax Benefits | 400,094 | — | 448 | — | (2,758 | ) | 10,684 | 8,374 | ||||||||||||||||||
Common Stock Repurchased | (1,098,933 | ) | — | — | — | — | (51,586 | ) | (51,586 | ) | ||||||||||||||||
Cash Dividends Paid ($0.90 per share) | — | — | — | — | (41,149 | ) | — | (41,149 | ) | |||||||||||||||||
Balance as of June 30, 2012 | 45,248,277 | $ | 571 | $ | 511,729 | $ | 32,502 | $ | 1,044,588 | $ | (585,565 | ) | $ | 1,003,825 |
Six Months Ended | |||||||
June 30, | |||||||
(dollars in thousands) | 2013 | 2012 | |||||
Operating Activities | |||||||
Net Income | $ | 73,743 | $ | 84,557 | |||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||
Provision for Credit Losses | — | 979 | |||||
Depreciation and Amortization | 6,106 | 6,883 | |||||
Amortization of Deferred Loan and Lease Fees | (1,807 | ) | (1,548 | ) | |||
Amortization and Accretion of Premiums/Discounts on Investment Securities, Net | 31,996 | 28,147 | |||||
Share-Based Compensation | 2,732 | 3,723 | |||||
Benefit Plan Contributions | (677 | ) | (5,574 | ) | |||
Deferred Income Taxes | (4,650 | ) | (11,358 | ) | |||
Net Gains on Sales of Loans and Leases | (13,938 | ) | (7,542 | ) | |||
Net Losses on Investment Securities | — | 90 | |||||
Proceeds from Sales of Loans Held for Sale | 445,293 | 198,197 | |||||
Originations of Loans Held for Sale | (438,711 | ) | (189,219 | ) | |||
Tax Benefits from Share-Based Compensation | (491 | ) | (623 | ) | |||
Net Change in Other Assets and Other Liabilities | 22,287 | (11,086 | ) | ||||
Net Cash Provided by Operating Activities | 121,883 | 95,626 | |||||
Investing Activities | |||||||
Investment Securities Available-for-Sale: | |||||||
Proceeds from Prepayments and Maturities | 567,569 | 468,489 | |||||
Proceeds from Sales | — | 34,831 | |||||
Purchases | (373,053 | ) | (401,944 | ) | |||
Investment Securities Held-to-Maturity: | |||||||
Proceeds from Prepayments and Maturities | 569,150 | 446,346 | |||||
Purchases | (769,040 | ) | (540,472 | ) | |||
Net Change in Loans and Leases | (11,483 | ) | (141,526 | ) | |||
Premises and Equipment, Net | (6,853 | ) | (10,755 | ) | |||
Net Cash Used in Investing Activities | (23,710 | ) | (145,031 | ) | |||
Financing Activities | |||||||
Net Change in Deposits | (80,284 | ) | 955,370 | ||||
Net Change in Short-Term Borrowings | 105,977 | (857,380 | ) | ||||
Proceeds from Long-Term Debt | 50,000 | — | |||||
Tax Benefits from Share-Based Compensation | 491 | 623 | |||||
Proceeds from Issuance of Common Stock | 8,076 | 7,858 | |||||
Repurchase of Common Stock | (23,960 | ) | (51,586 | ) | |||
Cash Dividends Paid | (40,391 | ) | (41,149 | ) | |||
Net Cash Provided by Financing Activities | 19,909 | 13,736 | |||||
Net Change in Cash and Cash Equivalents | 118,082 | (35,669 | ) | ||||
Cash and Cash Equivalents at Beginning of Period | 352,861 | 669,909 | |||||
Cash and Cash Equivalents at End of Period | $ | 470,943 | $ | 634,240 | |||
Supplemental Information | |||||||
Cash Paid for Interest | $ | 21,281 | $ | 23,152 | |||
Cash Paid for Income Taxes | 33,554 | 41,775 | |||||
Non-Cash Investing Activities: | |||||||
Transfer from Investment Securities Available-For-Sale to Investment Securities Held-To-Maturity | 254,779 | — | |||||
Transfer from Loans to Foreclosed Real Estate | 2,551 | 2,309 |
(dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
June 30, 2013 | |||||||||||||||
Available-for-Sale: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 570,944 | $ | 15,125 | $ | (43 | ) | $ | 586,026 | ||||||
Debt Securities Issued by States and Political Subdivisions | 565,781 | 9,189 | (13,050 | ) | 561,920 | ||||||||||
Debt Securities Issued by Corporations | 280,438 | 1,336 | (6,485 | ) | 275,289 | ||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | 798,266 | 17,696 | (635 | ) | 815,327 | ||||||||||
Residential - U.S. Government-Sponsored Enterprises | 26,872 | 1,606 | — | 28,478 | |||||||||||
Commercial - Government Agencies | 575,246 | — | (26,878 | ) | 548,368 | ||||||||||
Total Mortgage-Backed Securities | 1,400,384 | 19,302 | (27,513 | ) | 1,392,173 | ||||||||||
Total | $ | 2,817,547 | $ | 44,952 | $ | (47,091 | ) | $ | 2,815,408 | ||||||
Held-to-Maturity: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 365,272 | $ | 3,832 | $ | (2,796 | ) | $ | 366,308 | ||||||
Debt Securities Issued by States and Political Subdivisions | 254,741 | 1,761 | — | 256,502 | |||||||||||
Debt Securities Issued by Corporations | 113,621 | — | (3,326 | ) | 110,295 | ||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | 3,268,222 | 37,866 | (30,497 | ) | 3,275,591 | ||||||||||
Residential - U.S. Government-Sponsored Enterprises | 25,973 | 1,528 | — | 27,501 | |||||||||||
Total Mortgage-Backed Securities | 3,294,195 | 39,394 | (30,497 | ) | 3,303,092 | ||||||||||
Total | $ | 4,027,829 | $ | 44,987 | $ | (36,619 | ) | $ | 4,036,197 | ||||||
December 31, 2012 | |||||||||||||||
Available-for-Sale: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 855,070 | $ | 14,936 | $ | (17 | ) | $ | 869,989 | ||||||
Debt Securities Issued by States and Political Subdivisions | 753,207 | 30,159 | (955 | ) | 782,411 | ||||||||||
Debt Securities Issued by Corporations | 82,450 | 1,984 | — | 84,434 | |||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | 1,041,669 | 27,283 | (292 | ) | 1,068,660 | ||||||||||
Residential - U.S. Government-Sponsored Enterprises | 35,234 | 2,064 | — | 37,298 | |||||||||||
Commercial - Government Agencies | 524,055 | 1,907 | (1,197 | ) | 524,765 | ||||||||||
Total Mortgage-Backed Securities | 1,600,958 | 31,254 | (1,489 | ) | 1,630,723 | ||||||||||
Total | $ | 3,291,685 | $ | 78,333 | $ | (2,461 | ) | $ | 3,367,557 | ||||||
Held-to-Maturity: | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 190,168 | $ | 5,198 | $ | — | $ | 195,366 | |||||||
Debt Securities Issued by Corporations | 24,000 | 4 | — | 24,004 | |||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | 3,349,403 | 86,673 | (1,366 | ) | 3,434,710 | ||||||||||
Residential - U.S. Government-Sponsored Enterprises | 31,494 | 2,102 | — | 33,596 | |||||||||||
Total Mortgage-Backed Securities | 3,380,897 | 88,775 | (1,366 | ) | 3,468,306 | ||||||||||
Total | $ | 3,595,065 | $ | 93,977 | $ | (1,366 | ) | $ | 3,687,676 |
(dollars in thousands) | Amortized Cost | Fair Value | |||||
Available-for-Sale: | |||||||
Due in One Year or Less | $ | 168,292 | $ | 168,666 | |||
Due After One Year Through Five Years | 256,637 | 260,614 | |||||
Due After Five Years Through Ten Years | 624,515 | 614,924 | |||||
Due After Ten Years | 367,719 | 379,031 | |||||
1,417,163 | 1,423,235 | ||||||
Mortgage-Backed Securities: | |||||||
Residential - Government Agencies | 798,266 | 815,327 | |||||
Residential - U.S. Government-Sponsored Enterprises | 26,872 | 28,478 | |||||
Commercial - Government Agencies | 575,246 | 548,368 | |||||
Total Mortgage-Backed Securities | 1,400,384 | 1,392,173 | |||||
Total | $ | 2,817,547 | $ | 2,815,408 | |||
Held-to-Maturity: | |||||||
Due in One Year or Less | $ | 70,241 | $ | 70,603 | |||
Due After One Year Through Five Years | 295,032 | 295,706 | |||||
Due After Five Years Through Ten Years | 94,830 | 95,553 | |||||
Due After Ten Years | 273,531 | 271,243 | |||||
733,634 | 733,105 | ||||||
Mortgage-Backed Securities: | |||||||
Residential - Government Agencies | 3,268,222 | 3,275,591 | |||||
Residential - U.S. Government-Sponsored Enterprises | 25,973 | 27,501 | |||||
Total Mortgage-Backed Securities | 3,294,195 | 3,303,092 | |||||
Total | $ | 4,027,829 | $ | 4,036,197 |
Less Than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
(dollars in thousands) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
June 30, 2013 | |||||||||||||||||||||||
Available-for-Sale: | |||||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 2,706 | $ | (40 | ) | $ | 429 | $ | (3 | ) | $ | 3,135 | $ | (43 | ) | ||||||||
Debt Securities Issued by States and Political Subdivisions | 352,120 | (13,050 | ) | — | — | 352,120 | (13,050 | ) | |||||||||||||||
Debt Securities Issued by Corporations | 201,741 | (6,485 | ) | — | — | 201,741 | (6,485 | ) | |||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | 46,355 | (179 | ) | 12,288 | (456 | ) | 58,643 | (635 | ) | ||||||||||||||
Commercial - Government Agencies | 548,367 | (26,878 | ) | — | — | 548,367 | (26,878 | ) | |||||||||||||||
Total Mortgage-Backed Securities | 594,722 | (27,057 | ) | 12,288 | (456 | ) | 607,010 | (27,513 | ) | ||||||||||||||
Total | $ | 1,151,289 | $ | (46,632 | ) | $ | 12,717 | $ | (459 | ) | $ | 1,164,006 | $ | (47,091 | ) | ||||||||
Held-to-Maturity: | |||||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 183,046 | $ | (2,796 | ) | $ | — | $ | — | $ | 183,046 | $ | (2,796 | ) | |||||||||
Debt Securities Issued by Corporations | 88,295 | (3,326 | ) | — | — | 88,295 | (3,326 | ) | |||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | 1,513,576 | (30,497 | ) | — | — | 1,513,576 | (30,497 | ) | |||||||||||||||
Total | $ | 1,784,917 | $ | (36,619 | ) | $ | — | $ | — | $ | 1,784,917 | $ | (36,619 | ) | |||||||||
December 31, 2012 | |||||||||||||||||||||||
Available-for-Sale: | |||||||||||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 2,295 | $ | (14 | ) | $ | 564 | $ | (3 | ) | $ | 2,859 | $ | (17 | ) | ||||||||
Debt Securities Issued by States and Political Subdivisions | 72,400 | (955 | ) | — | — | 72,400 | (955 | ) | |||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | 7,325 | (57 | ) | 22,389 | (235 | ) | 29,714 | (292 | ) | ||||||||||||||
Commercial - Government Agencies | 261,883 | (1,197 | ) | — | — | 261,883 | (1,197 | ) | |||||||||||||||
Total Mortgage-Backed Securities | 269,208 | (1,254 | ) | 22,389 | (235 | ) | 291,597 | (1,489 | ) | ||||||||||||||
Total | $ | 343,903 | $ | (2,223 | ) | $ | 22,953 | $ | (238 | ) | $ | 366,856 | $ | (2,461 | ) | ||||||||
Held-to-Maturity: | |||||||||||||||||||||||
Mortgage-Backed Securities: | |||||||||||||||||||||||
Residential - Government Agencies | $ | 351,762 | $ | (1,366 | ) | $ | — | $ | — | $ | 351,762 | $ | (1,366 | ) | |||||||||
Total | $ | 351,762 | $ | (1,366 | ) | $ | — | $ | — | $ | 351,762 | $ | (1,366 | ) |
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Federal Home Loan Bank Stock | $ | 59,109 | $ | 60,200 | |||
Federal Reserve Bank Stock | 19,055 | 18,952 | |||||
Total | $ | 78,164 | $ | 79,152 |
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Commercial | |||||||
Commercial and Industrial | $ | 875,702 | $ | 829,512 | |||
Commercial Mortgage | 1,160,977 | 1,097,425 | |||||
Construction | 107,016 | 113,987 | |||||
Lease Financing | 257,067 | 274,969 | |||||
Total Commercial | 2,400,762 | 2,315,893 | |||||
Consumer | |||||||
Residential Mortgage | 2,252,117 | 2,349,916 | |||||
Home Equity | 751,790 | 770,376 | |||||
Automobile | 233,475 | 209,832 | |||||
Other 1 | 221,008 | 208,504 | |||||
Total Consumer | 3,458,390 | 3,538,628 | |||||
Total Loans and Leases | $ | 5,859,152 | $ | 5,854,521 |
1 | Comprised of other revolving credit, installment, and lease financing. |
(dollars in thousands) | Commercial | Consumer | Total | ||||||||
Three Months Ended June 30, 2013 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | 73,416 | $ | 53,462 | $ | 126,878 | |||||
Loans and Leases Charged-Off | (266 | ) | (4,438 | ) | (4,704 | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | 470 | 1,931 | 2,401 | ||||||||
Net Loans and Leases Charged-Off | 204 | (2,507 | ) | (2,303 | ) | ||||||
Provision for Credit Losses | (3,423 | ) | 3,423 | — | |||||||
Balance at End of Period | $ | 70,197 | $ | 54,378 | $ | 124,575 | |||||
Six Months Ended June 30, 2013 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | 72,704 | $ | 56,153 | $ | 128,857 | |||||
Loans and Leases Charged-Off | (648 | ) | (9,355 | ) | (10,003 | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | 1,267 | 4,454 | 5,721 | ||||||||
Net Loans and Leases Charged-Off | 619 | (4,901 | ) | (4,282 | ) | ||||||
Provision for Credit Losses | (3,126 | ) | 3,126 | — | |||||||
Balance at End of Period | $ | 70,197 | $ | 54,378 | $ | 124,575 | |||||
As of June 30, 2013 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Individually Evaluated for Impairment | $ | 195 | $ | 3,927 | $ | 4,122 | |||||
Collectively Evaluated for Impairment | 70,002 | 50,451 | 120,453 | ||||||||
Total | $ | 70,197 | $ | 54,378 | $ | 124,575 | |||||
Recorded Investment in Loans and Leases: | |||||||||||
Individually Evaluated for Impairment | $ | 20,059 | $ | 36,756 | $ | 56,815 | |||||
Collectively Evaluated for Impairment | 2,380,703 | 3,421,634 | 5,802,337 | ||||||||
Total | $ | 2,400,762 | $ | 3,458,390 | $ | 5,859,152 | |||||
Three Months Ended June 30, 2012 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | 78,174 | $ | 57,432 | $ | 135,606 | |||||
Loans and Leases Charged-Off | (1,078 | ) | (4,858 | ) | (5,936 | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | 545 | 1,600 | 2,145 | ||||||||
Net Loans and Leases Charged-Off | (533 | ) | (3,258 | ) | (3,791 | ) | |||||
Provision for Credit Losses | 371 | 257 | 628 | ||||||||
Balance at End of Period | $ | 78,012 | $ | 54,431 | $ | 132,443 | |||||
Six Months Ended June 30, 2012 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Balance at Beginning of Period | $ | 80,562 | $ | 58,044 | $ | 138,606 | |||||
Loans and Leases Charged-Off | (2,839 | ) | (10,856 | ) | (13,695 | ) | |||||
Recoveries on Loans and Leases Previously Charged-Off | 2,574 | 3,979 | 6,553 | ||||||||
Net Loans and Leases Charged-Off | (265 | ) | (6,877 | ) | (7,142 | ) | |||||
Provision for Credit Losses | (2,285 | ) | 3,264 | 979 | |||||||
Balance at End of Period | $ | 78,012 | $ | 54,431 | $ | 132,443 | |||||
As of June 30, 2012 | |||||||||||
Allowance for Loan and Lease Losses: | |||||||||||
Individually Evaluated for Impairment | $ | 54 | $ | 4,774 | $ | 4,828 | |||||
Collectively Evaluated for Impairment | 77,958 | 49,657 | 127,615 | ||||||||
Total | $ | 78,012 | $ | 54,431 | $ | 132,443 | |||||
Recorded Investment in Loans and Leases: | |||||||||||
Individually Evaluated for Impairment | $ | 14,131 | $ | 32,687 | $ | 46,818 | |||||
Collectively Evaluated for Impairment | 2,108,229 | 3,516,436 | 5,624,665 | ||||||||
Total | $ | 2,122,360 | $ | 3,549,123 | $ | 5,671,483 |
Pass: | Loans and leases in all classes within the commercial and consumer portfolio segments that are not adversely rated. Management believes that there is a low likelihood of loss related to those loans and leases that are considered pass. |
Special Mention: | Loans and leases in the classes within the commercial portfolio segment that have potential weaknesses that deserve management’s close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease. The special mention credit quality indicator is not used for classes of loans and leases that are included in the consumer portfolio segment. Management believes that there is a moderate likelihood of some loss related to those loans and leases that are considered special mention. |
Classified: | Loans and leases in the classes within the commercial portfolio segment that are inadequately protected by the sound worth and paying capacity of the borrower or of the collateral pledged, if any. Classified loans and leases are also those in the classes within the consumer portfolio segment that are past due 90 days or more as to principal or interest. Residential mortgage loans that are past due 90 days or more as to principal or interest may be considered pass if the Company is in the process of collection and the current loan-to-value ratio is 60% or less. Home equity loans that are past due 90 days or more as to principal or interest may be considered pass if the Company is in the process of collection, the first mortgage is with the Company, and the current combined loan-to-value ratio is 60% or less. Residential mortgage and home equity loans may be current as to principal and interest, but may be considered classified for a period of up to six months following a loan modification. Following a period of demonstrated performance in accordance with the modified contractual terms, the loan may be removed from classified status. Management believes that there is a distinct possibility that the Company will sustain some loss if the deficiencies related to classified loans and leases are not corrected in a timely manner. |
June 30, 2013 | |||||||||||||||||||
(dollars in thousands) | Commercial and Industrial | Commercial Mortgage | Construction | Lease Financing | Total Commercial | ||||||||||||||
Pass | $ | 822,965 | $ | 1,086,806 | $ | 90,439 | $ | 230,545 | $ | 2,230,755 | |||||||||
Special Mention | 9,736 | 25,044 | 13,542 | 25,696 | 74,018 | ||||||||||||||
Classified | 43,001 | 49,127 | 3,035 | 826 | 95,989 | ||||||||||||||
Total | $ | 875,702 | $ | 1,160,977 | $ | 107,016 | $ | 257,067 | $ | 2,400,762 | |||||||||
(dollars in thousands) | Residential Mortgage | Home Equity | Automobile | Other 1 | Total Consumer | ||||||||||||||
Pass | $ | 2,228,382 | $ | 747,318 | $ | 233,380 | $ | 220,153 | $ | 3,429,233 | |||||||||
Classified | 23,735 | 4,472 | 95 | 855 | 29,157 | ||||||||||||||
Total | $ | 2,252,117 | $ | 751,790 | $ | 233,475 | $ | 221,008 | $ | 3,458,390 | |||||||||
Total Recorded Investment in Loans and Leases | $ | 5,859,152 |
December 31, 2012 | |||||||||||||||||||
(dollars in thousands) | Commercial and Industrial | Commercial Mortgage | Construction | Lease Financing | Total Commercial | ||||||||||||||
Pass | $ | 779,654 | $ | 1,018,128 | $ | 96,058 | $ | 247,401 | $ | 2,141,241 | |||||||||
Special Mention | 22,759 | 23,848 | 15,839 | 26,540 | 88,986 | ||||||||||||||
Classified | 27,099 | 55,449 | 2,090 | 1,028 | 85,666 | ||||||||||||||
Total | $ | 829,512 | $ | 1,097,425 | $ | 113,987 | $ | 274,969 | $ | 2,315,893 | |||||||||
(dollars in thousands) | Residential Mortgage | Home Equity | Automobile | Other 1 | Total Consumer | ||||||||||||||
Pass | $ | 2,326,216 | $ | 766,912 | $ | 209,646 | $ | 207,917 | $ | 3,510,691 | |||||||||
Classified | 23,700 | 3,464 | 186 | 587 | 27,937 | ||||||||||||||
Total | $ | 2,349,916 | $ | 770,376 | $ | 209,832 | $ | 208,504 | $ | 3,538,628 | |||||||||
Total Recorded Investment in Loans and Leases | $ | 5,854,521 |
1 | Comprised of other revolving credit, installment, and lease financing. |
(dollars in thousands) | 30 - 59 Days Past Due | 60 - 89 Days Past Due | Past Due 90 Days or More | Non- Accrual | Total Past Due and Non-Accrual | Current | Total Loans and Leases | Non-Accrual Loans and Leases that are Current 2 | |||||||||||||||||||||||
As of June 30, 2013 | |||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||
Commercial and Industrial | $ | 467 | $ | 1,255 | $ | — | $ | 4,909 | $ | 6,631 | $ | 869,071 | $ | 875,702 | $ | 4,332 | |||||||||||||||
Commercial Mortgage | 422 | 742 | — | 2,772 | 3,936 | 1,157,041 | 1,160,977 | 1,938 | |||||||||||||||||||||||
Construction | — | — | — | — | — | 107,016 | 107,016 | — | |||||||||||||||||||||||
Lease Financing | — | — | — | 16 | 16 | 257,051 | 257,067 | — | |||||||||||||||||||||||
Total Commercial | 889 | 1,997 | — | 7,697 | 10,583 | 2,390,179 | 2,400,762 | 6,270 | |||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||
Residential Mortgage | 8,191 | 3,134 | 6,875 | 22,876 | 41,076 | 2,211,041 | 2,252,117 | 4,002 | |||||||||||||||||||||||
Home Equity | 4,533 | 4,285 | 2,768 | 2,602 | 14,188 | 737,602 | 751,790 | 736 | |||||||||||||||||||||||
Automobile | 3,313 | 355 | 95 | — | 3,763 | 229,712 | 233,475 | — | |||||||||||||||||||||||
Other 1 | 2,243 | 1,296 | 855 | — | 4,394 | 216,614 | 221,008 | — | |||||||||||||||||||||||
Total Consumer | 18,280 | 9,070 | 10,593 | 25,478 | 63,421 | 3,394,969 | 3,458,390 | 4,738 | |||||||||||||||||||||||
Total | $ | 19,169 | $ | 11,067 | $ | 10,593 | $ | 33,175 | $ | 74,004 | $ | 5,785,148 | $ | 5,859,152 | $ | 11,008 | |||||||||||||||
As of December 31, 2012 | |||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||
Commercial and Industrial | $ | 806 | $ | 10,382 | $ | 27 | $ | 5,534 | $ | 16,749 | $ | 812,763 | $ | 829,512 | $ | 4,963 | |||||||||||||||
Commercial Mortgage | 188 | 542 | — | 3,030 | 3,760 | 1,093,665 | 1,097,425 | 1,810 | |||||||||||||||||||||||
Construction | — | — | — | 833 | 833 | 113,154 | 113,987 | 833 | |||||||||||||||||||||||
Lease Financing | — | — | — | — | — | 274,969 | 274,969 | — | |||||||||||||||||||||||
Total Commercial | 994 | 10,924 | 27 | 9,397 | 21,342 | 2,294,551 | 2,315,893 | 7,606 | |||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||
Residential Mortgage | 6,891 | 5,433 | 6,908 | 21,725 | 40,957 | 2,308,959 | 2,349,916 | 4,941 | |||||||||||||||||||||||
Home Equity | 6,768 | 3,267 | 2,701 | 2,074 | 14,810 | 755,566 | 770,376 | 191 | |||||||||||||||||||||||
Automobile | 3,758 | 586 | 186 | — | 4,530 | 205,302 | 209,832 | — | |||||||||||||||||||||||
Other 1 | 2,144 | 1,093 | 587 | — | 3,824 | 204,680 | 208,504 | — | |||||||||||||||||||||||
Total Consumer | 19,561 | 10,379 | 10,382 | 23,799 | 64,121 | 3,474,507 | 3,538,628 | 5,132 | |||||||||||||||||||||||
Total | $ | 20,555 | $ | 21,303 | $ | 10,409 | $ | 33,196 | $ | 85,463 | $ | 5,769,058 | $ | 5,854,521 | $ | 12,738 |
1 | Comprised of other revolving credit, installment, and lease financing. |
2 | Represents non-accrual loans that are not past due 30 days or more; however, full payment of principal and interest is still not expected. |
(dollars in thousands) | Recorded Investment | Unpaid Principal Balance | Related Allowance for Loan Losses | ||||||||
June 30, 2013 | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | 9,166 | $ | 14,415 | $ | — | |||||
Commercial Mortgage | 8,318 | 8,818 | — | ||||||||
Total Commercial | 17,484 | 23,233 | — | ||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | 17,484 | $ | 23,233 | $ | — | |||||
Impaired Loans with an Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | 2,528 | $ | 2,528 | $ | 184 | |||||
Commercial Mortgage | 47 | 47 | 11 | ||||||||
Total Commercial | 2,575 | 2,575 | 195 | ||||||||
Consumer | |||||||||||
Residential Mortgage | 31,327 | 37,580 | 3,846 | ||||||||
Automobile | 5,151 | 5,151 | 69 | ||||||||
Other 1 | 278 | 278 | 12 | ||||||||
Total Consumer | 36,756 | 43,009 | 3,927 | ||||||||
Total Impaired Loans with an Allowance Recorded | $ | 39,331 | $ | 45,584 | $ | 4,122 | |||||
Impaired Loans: | |||||||||||
Commercial | $ | 20,059 | $ | 25,808 | $ | 195 | |||||
Consumer | 36,756 | 43,009 | 3,927 | ||||||||
Total Impaired Loans | $ | 56,815 | $ | 68,817 | $ | 4,122 | |||||
December 31, 2012 | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | 7,464 | $ | 12,714 | $ | — | |||||
Commercial Mortgage | 2,971 | 3,471 | — | ||||||||
Construction | 833 | 1,163 | — | ||||||||
Total Commercial | 11,268 | 17,348 | — | ||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | 11,268 | $ | 17,348 | $ | — | |||||
Impaired Loans with an Allowance Recorded: | |||||||||||
Commercial | |||||||||||
Commercial and Industrial | $ | 1,772 | $ | 1,772 | $ | 148 | |||||
Commercial Mortgage | 58 | 58 | 13 | ||||||||
Total Commercial | 1,830 | 1,830 | 161 | ||||||||
Consumer | |||||||||||
Residential Mortgage | 31,577 | 38,219 | 3,492 | ||||||||
Automobile | 5,641 | 5,641 | 58 | ||||||||
Other 1 | 282 | 282 | 14 | ||||||||
Total Consumer | 37,500 | 44,142 | 3,564 | ||||||||
Total Impaired Loans with an Allowance Recorded | $ | 39,330 | $ | 45,972 | $ | 3,725 | |||||
Impaired Loans: | |||||||||||
Commercial | $ | 13,098 | $ | 19,178 | $ | 161 | |||||
Consumer | 37,500 | 44,142 | 3,564 | ||||||||
Total Impaired Loans | $ | 50,598 | $ | 63,320 | $ | 3,725 |
1 | Comprised of other revolving credit and installment financing. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||||
(dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | 8,067 | $ | — | $ | 9,093 | $ | — | |||||||
Commercial Mortgage | 6,085 | — | 2,571 | — | |||||||||||
Construction | — | — | 1,332 | — | |||||||||||
Total Commercial | 14,152 | — | 12,996 | — | |||||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | 14,152 | $ | — | $ | 12,996 | $ | — | |||||||
Impaired Loans with an Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | 2,386 | $ | 72 | $ | 918 | $ | 31 | |||||||
Commercial Mortgage | 50 | 43 | 146 | 4 | |||||||||||
Total Commercial | 2,436 | 115 | 1,064 | 35 | |||||||||||
Consumer | |||||||||||||||
Residential Mortgage | 31,112 | 173 | 25,133 | 77 | |||||||||||
Automobile | 5,223 | 125 | 5,803 | 149 | |||||||||||
Other 1 | 278 | 3 | 402 | 3 | |||||||||||
Total Consumer | 36,613 | 301 | 31,338 | 229 | |||||||||||
Total Impaired Loans with an Allowance Recorded | $ | 39,049 | $ | 416 | $ | 32,402 | $ | 264 | |||||||
Impaired Loans: | |||||||||||||||
Commercial | $ | 16,588 | $ | 115 | $ | 14,060 | $ | 35 | |||||||
Consumer | 36,613 | 301 | 31,338 | 229 | |||||||||||
Total Impaired Loans | $ | 53,201 | $ | 416 | $ | 45,398 | $ | 264 | |||||||
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||||
(dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Impaired Loans with No Related Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | 7,866 | $ | — | $ | 8,121 | $ | — | |||||||
Commercial Mortgage | 5,047 | — | 2,427 | — | |||||||||||
Construction | 278 | — | 888 | — | |||||||||||
Total Commercial | 13,191 | — | 11,436 | — | |||||||||||
Total Impaired Loans with No Related Allowance Recorded | $ | 13,191 | $ | — | $ | 11,436 | $ | — | |||||||
Impaired Loans with an Allowance Recorded: | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | $ | 2,181 | $ | 122 | $ | 2,094 | $ | 64 | |||||||
Commercial Mortgage | 53 | 51 | 195 | 8 | |||||||||||
Construction | — | — | 693 | — | |||||||||||
Total Commercial | 2,234 | 173 | 2,982 | 72 | |||||||||||
Consumer | |||||||||||||||
Residential Mortgage | 31,267 | 320 | 25,330 | 157 | |||||||||||
Home Equity | — | — | 7 | — | |||||||||||
Automobile | 5,362 | 258 | 5,932 | 303 | |||||||||||
Other 1 | 279 | 6 | 444 | 10 | |||||||||||
Total Consumer | 36,908 | 584 | 31,713 | 470 | |||||||||||
Total Impaired Loans with an Allowance Recorded | $ | 39,142 | $ | 757 | $ | 34,695 | $ | 542 | |||||||
Impaired Loans: | |||||||||||||||
Commercial | $ | 15,425 | $ | 173 | $ | 14,418 | $ | 72 | |||||||
Consumer | 36,908 | 584 | 31,713 | 470 | |||||||||||
Total Impaired Loans | $ | 52,333 | $ | 757 | $ | 46,131 | $ | 542 |
1 | Comprised of other revolving credit and installment financing. |
Loans Modified as a TDR for the Three Months Ended June 30, 2013 | Loans Modified as a TDR for the Three Months Ended June 30, 2012 | ||||||||||||||||||||
Recorded | Increase in | Recorded | Increase in | ||||||||||||||||||
Troubled Debt Restructurings | Number of | Investment | Allowance | Number of | Investment | Allowance | |||||||||||||||
(dollars in thousands) | Contracts | (as of period end)1 | (as of period end) | Contracts | (as of period end)1 | (as of period end) | |||||||||||||||
Commercial | |||||||||||||||||||||
Commercial and Industrial | 18 | $ | 3,580 | $ | 122 | 1 | $ | 45 | $ | 3 | |||||||||||
Commercial Mortgage | 4 | 4,617 | — | — | — | — | |||||||||||||||
Construction | — | — | — | 1 | 1,182 | — | |||||||||||||||
Total Commercial | 22 | 8,197 | 122 | 2 | 1,227 | 3 | |||||||||||||||
Consumer | |||||||||||||||||||||
Residential Mortgage | 9 | 3,092 | 865 | 5 | 4,367 | 826 | |||||||||||||||
Automobile | 43 | 549 | 7 | 48 | 516 | 4 | |||||||||||||||
Other 2 | 1 | 3 | — | — | — | — | |||||||||||||||
Total Consumer | 53 | 3,644 | 872 | 53 | 4,883 | 830 | |||||||||||||||
Total | 75 | $ | 11,841 | $ | 994 | 55 | $ | 6,110 | $ | 833 | |||||||||||
Loans Modified as a TDR for the Six Months Ended June 30, 2013 | Loans Modified as a TDR for the Six Months Ended June 30, 2012 | ||||||||||||||||||||
Recorded | Increase in | Recorded | Increase in | ||||||||||||||||||
Troubled Debt Restructurings | Number of | Investment | Allowance | Number of | Investment | Allowance | |||||||||||||||
(dollars in thousands) | Contracts | (as of period end)1 | (as of period end) | Contracts | (as of period end)1 | (as of period end) | |||||||||||||||
Commercial | |||||||||||||||||||||
Commercial and Industrial | 22 | $ | 3,620 | $ | 123 | 1 | $ | 45 | $ | 3 | |||||||||||
Commercial Mortgage | 5 | 5,593 | — | — | — | — | |||||||||||||||
Construction | — | — | — | 1 | 1,182 | — | |||||||||||||||
Total Commercial | 27 | 9,213 | 123 | 2 | 1,227 | 3 | |||||||||||||||
Consumer | |||||||||||||||||||||
Residential Mortgage | 11 | 4,068 | 1,050 | 5 | 4,367 | 826 | |||||||||||||||
Automobile | 82 | 980 | 13 | 88 | 934 | 8 | |||||||||||||||
Other 2 | 1 | 3 | — | — | — | — | |||||||||||||||
Total Consumer | 94 | 5,051 | 1,063 | 93 | 5,301 | 834 | |||||||||||||||
Total | 121 | $ | 14,264 | $ | 1,186 | 95 | $ | 6,528 | $ | 837 |
1 | The period end balances reflect all paydowns and charge-offs since the modification date. TDRs fully paid-off, charged-off, or foreclosed upon by period end are not included. |
2 | Comprised of other revolving credit and installment financing. |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | ||||||||||||
TDRs that Defaulted During the Period, | Recorded | Recorded | |||||||||||
Within Twelve Months of their Modification Date | Number of | Investment | Number of | Investment | |||||||||
(dollars in thousands) | Contracts | (as of period end)1 | Contracts | (as of period end)1 | |||||||||
Commercial | |||||||||||||
Commercial and Industrial | 2 | $ | 515 | — | $ | — | |||||||
Total Commercial | 2 | 515 | — | — | |||||||||
Consumer | |||||||||||||
Automobile | 3 | 41 | 3 | 27 | |||||||||
Total Consumer | 3 | 41 | 3 | 27 | |||||||||
Total | 5 | $ | 556 | 3 | $ | 27 | |||||||
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
TDRs that Defaulted During the Period, | Recorded | Recorded | |||||||||||
Within Twelve Months of their Modification Date | Number of | Investment | Number of | Investment | |||||||||
(dollars in thousands) | Contracts | (as of period end)1 | Contracts | (as of period end)1 | |||||||||
Commercial | |||||||||||||
Commercial and Industrial | 2 | $ | 515 | — | $ | — | |||||||
Total Commercial | 2 | 515 | — | — | |||||||||
Consumer | |||||||||||||
Residential Mortgage | — | — | 2 | 702 | |||||||||
Automobile | 6 | 69 | 4 | 37 | |||||||||
Total Consumer | 6 | 69 | 6 | 739 | |||||||||
Total | 8 | $ | 584 | 6 | $ | 739 |
1 | The period end balances reflect all paydowns and charge-offs since the modification date. TDRs fully paid-off, charged-off, or foreclosed upon by period end are not included. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Balance at Beginning of Period | $ | 4,436 | $ | 6,423 | $ | 4,761 | $ | 7,131 | |||||||
Change in Fair Value: | |||||||||||||||
Due to Change in Valuation Assumptions 1 | 30 | (568 | ) | 64 | (881 | ) | |||||||||
Due to Payoffs | (308 | ) | (396 | ) | (667 | ) | (791 | ) | |||||||
Total Changes in Fair Value of Mortgage Servicing Rights | (278 | ) | (964 | ) | (603 | ) | (1,672 | ) | |||||||
Balance at End of Period | $ | 4,158 | $ | 5,459 | $ | 4,158 | $ | 5,459 |
1 | Principally represents changes in discount rates and loan repayment rate assumptions, mostly due to changes in interest rates. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Balance at Beginning of Period | $ | 22,104 | $ | 17,492 | $ | 20,479 | $ | 17,148 | |||||||
Servicing Rights that Resulted From Asset Transfers | 2,003 | 961 | 4,253 | 1,969 | |||||||||||
Amortization | (634 | ) | (658 | ) | (1,259 | ) | (1,322 | ) | |||||||
Balance at End of Period | $ | 23,473 | $ | 17,795 | $ | 23,473 | $ | 17,795 | |||||||
Fair Value of Mortgage Servicing Rights Accounted for Under the Amortization Method | |||||||||||||||
Beginning of Period | $ | 26,564 | $ | 20,406 | $ | 23,143 | $ | 17,159 | |||||||
End of Period | $ | 28,442 | $ | 18,937 | $ | 28,442 | $ | 18,937 |
June 30, 2013 | December 31, 2012 | ||||
Weighted-Average Constant Prepayment Rate 1 | 9.88 | % | 12.26 | % | |
Weighted-Average Life (in years) | 7.21 | 6.24 | |||
Weighted-Average Note Rate | 4.38 | % | 4.59 | % | |
Weighted-Average Discount Rate 2 | 6.31 | % | 5.57 | % |
1 | Represents annualized loan repayment rate assumption. |
2 | Derived from multiple interest rate scenarios that incorporate a spread to the London Interbank Offered Rate swap curve and market volatilities. |
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Constant Prepayment Rate | |||||||
Decrease in fair value from 25 basis points (“bps”) adverse change | $ | (411 | ) | $ | (378 | ) | |
Decrease in fair value from 50 bps adverse change | (811 | ) | (746 | ) | |||
Discount Rate | |||||||
Decrease in fair value from 25 bps adverse change | (490 | ) | (439 | ) | |||
Decrease in fair value from 50 bps adverse change | (967 | ) | (864 | ) |
Gross Amounts Recognized in the Statements of Condition | Gross Amounts Offset in the Statements of Condition | Net Amounts Presented in the Statements of Condition | Gross Amounts Not Offset in the Statements of Condition | |||||||||||||||||||||
(dollars in thousands) | Financial Instruments | Cash Collateral Pledged | Net Amount | |||||||||||||||||||||
June 30, 2013 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest Rate Swap Agreements: | ||||||||||||||||||||||||
Institutional Counterparties | (a) | $ | 158 | $ | — | $ | 158 | $ | (158 | ) | $ | — | $ | — | ||||||||||
Liabilities: | ||||||||||||||||||||||||
Interest Rate Swap Agreements: | ||||||||||||||||||||||||
Institutional Counterparties | (a) | $ | 24,204 | $ | — | $ | 24,204 | $ | (24,204 | ) | $ | — | $ | — | ||||||||||
Repurchase Agreements: | ||||||||||||||||||||||||
Private Institutions | (b) | 600,000 | — | 600,000 | (600,000 | ) | — | — | ||||||||||||||||
Government Entities | (c) | 266,237 | — | 266,237 | (266,237 | ) | — | — | ||||||||||||||||
$ | 866,237 | $ | — | $ | 866,237 | $ | (866,237 | ) | $ | — | $ | — | ||||||||||||
December 31, 2012 | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Interest Rate Swap Agreements: | ||||||||||||||||||||||||
Institutional Counterparties | (a) | $ | 32,441 | $ | — | $ | 32,441 | $ | (32,441 | ) | $ | — | $ | — | ||||||||||
Repurchase Agreements: | ||||||||||||||||||||||||
Private Institutions | (b) | 600,000 | — | 600,000 | (600,000 | ) | — | — | ||||||||||||||||
Government Entities | (c) | 158,947 | — | 158,947 | (158,947 | ) | — | — | ||||||||||||||||
$ | 758,947 | $ | — | $ | 758,947 | $ | (758,947 | ) | $ | — | $ | — |
(dollars in thousands) | Before Tax | Tax Effect | Net of Tax | ||||||||
Three Months Ended June 30, 2013 | |||||||||||
Net Unrealized Losses on Investment Securities: | |||||||||||
Net Unrealized Losses Arising During the Period | $ | (73,912 | ) | $ | (29,136 | ) | $ | (44,776 | ) | ||
Less: Reclassification Adjustment for Gains Realized in Net Income 1 | (2,966 | ) | (1,170 | ) | (1,796 | ) | |||||
Net Unrealized Losses on Investment Securities | (76,878 | ) | (30,306 | ) | (46,572 | ) | |||||
Defined Benefit Plans: | |||||||||||
Amortization of Net Actuarial Losses | 413 | 163 | 250 | ||||||||
Amortization of Prior Service Credit | (81 | ) | (32 | ) | (49 | ) | |||||
Defined Benefit Plans, Net | 332 | 131 | 201 | ||||||||
Other Comprehensive Loss | $ | (76,546 | ) | $ | (30,175 | ) | $ | (46,371 | ) | ||
Three Months Ended June 30, 2012 | |||||||||||
Net Unrealized Gains on Investment Securities: | |||||||||||
Net Unrealized Gains Arising During the Period | $ | 9,582 | $ | 3,808 | $ | 5,774 | |||||
Less: Reclassification Adjustment for Gains Realized in Net Income 1 | (3,939 | ) | (1,552 | ) | (2,387 | ) | |||||
Net Unrealized Gains on Investment Securities | 5,643 | 2,256 | 3,387 | ||||||||
Defined Benefit Plans: | |||||||||||
Amortization of Net Actuarial Losses | 335 | 132 | 203 | ||||||||
Amortization of Prior Service Credit | (81 | ) | (31 | ) | (50 | ) | |||||
Defined Benefit Plans, Net | 254 | 101 | 153 | ||||||||
Other Comprehensive Income | $ | 5,897 | $ | 2,357 | $ | 3,540 | |||||
Six Months Ended June 30, 2013 | |||||||||||
Net Unrealized Losses on Investment Securities: | |||||||||||
Net Unrealized Losses Arising During the Period | $ | (86,507 | ) | $ | (34,093 | ) | $ | (52,414 | ) | ||
Less: Reclassification Adjustment for Gains Realized in Net Income 1 | (6,273 | ) | (2,474 | ) | (3,799 | ) | |||||
Net Unrealized Losses on Investment Securities | (92,780 | ) | (36,567 | ) | (56,213 | ) | |||||
Defined Benefit Plans: | |||||||||||
Net Actuarial Losses Arising During the Period | (206 | ) | (81 | ) | (125 | ) | |||||
Amortization of Net Actuarial Losses | 827 | 326 | 501 | ||||||||
Amortization of Prior Service Credit | (161 | ) | (64 | ) | (97 | ) | |||||
Defined Benefit Plans, Net | 460 | 181 | 279 | ||||||||
Other Comprehensive Loss | $ | (92,320 | ) | $ | (36,386 | ) | $ | (55,934 | ) | ||
Six Months Ended June 30, 2012 | |||||||||||
Net Unrealized Losses on Investment Securities: | |||||||||||
Net Unrealized Gains Arising During the Period | $ | 2,996 | $ | 1,236 | $ | 1,760 | |||||
Less: Reclassification Adjustment for Gains Realized in Net Income 1 | (7,963 | ) | (3,136 | ) | (4,827 | ) | |||||
Net Unrealized Losses on Investment Securities | (4,967 | ) | (1,900 | ) | (3,067 | ) | |||||
Defined Benefit Plans: | |||||||||||
Amortization of Net Actuarial Losses | 667 | 262 | 405 | ||||||||
Amortization of Prior Service Credit | (162 | ) | (63 | ) | (99 | ) | |||||
Defined Benefit Plans, Net | 505 | 199 | 306 | ||||||||
Other Comprehensive Loss | $ | (4,462 | ) | $ | (1,701 | ) | $ | (2,761 | ) |
1 | Includes amounts related to the amortization/accretion of unrealized net gains and losses related to the Company's reclassification of available-for-sale investment securities to the held-to-maturity category. The unrealized net gains/losses will be amortized/accreted over the remaining life of the investment securities as an adjustment of yield. |
(dollars in thousands) | Investment Securities-Available-for-Sale1 | Investment Securities-Held-to-Maturity1 | Defined Benefit Plans1 | Accumulated Other Comprehensive Income (Loss) | ||||||||||||
Three Months Ended June 30, 2013 | ||||||||||||||||
Balance at Beginning of Period | $ | 38,358 | $ | 11,778 | $ | (30,491 | ) | $ | 19,645 | |||||||
Other Comprehensive Loss Before Reclassifications | (39,641 | ) | (5,135 | ) | — | (44,776 | ) | |||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income | — | (1,796 | ) | 201 | (1,595 | ) | ||||||||||
Total Other Comprehensive Income (Loss) | (39,641 | ) | (6,931 | ) | 201 | (46,371 | ) | |||||||||
Balance at End of Period | $ | (1,283 | ) | $ | 4,847 | $ | (30,290 | ) | $ | (26,726 | ) | |||||
Three Months Ended June 30, 2012 | ||||||||||||||||
Balance at Beginning of Period | $ | 35,436 | $ | 21,043 | $ | (27,517 | ) | $ | 28,962 | |||||||
Other Comprehensive Income Before Reclassifications | 5,774 | — | — | 5,774 | ||||||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income | — | (2,387 | ) | 153 | (2,234 | ) | ||||||||||
Total Other Comprehensive Income (Loss) | 5,774 | (2,387 | ) | 153 | 3,540 | |||||||||||
Balance at End of Period | $ | 41,210 | $ | 18,656 | $ | (27,364 | ) | $ | 32,502 | |||||||
Six Months Ended June 30, 2013 | ||||||||||||||||
Balance at Beginning of Period | $ | 45,996 | $ | 13,781 | $ | (30,569 | ) | $ | 29,208 | |||||||
Other Comprehensive Loss Before Reclassifications | (47,279 | ) | (5,135 | ) | (125 | ) | (52,539 | ) | ||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income | — | (3,799 | ) | 404 | (3,395 | ) | ||||||||||
Total Other Comprehensive Income (Loss) | (47,279 | ) | (8,934 | ) | 279 | (55,934 | ) | |||||||||
Balance at End of Period | $ | (1,283 | ) | $ | 4,847 | $ | (30,290 | ) | $ | (26,726 | ) | |||||
Six Months Ended June 30, 2012 | ||||||||||||||||
Balance at Beginning of Period | $ | 39,396 | $ | 23,537 | $ | (27,670 | ) | $ | 35,263 | |||||||
Other Comprehensive Income Before Reclassifications | 1,760 | — | — | 1,760 | ||||||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income | 54 | (4,881 | ) | 306 | (4,521 | ) | ||||||||||
Total Other Comprehensive Income (Loss) | 1,814 | (4,881 | ) | 306 | (2,761 | ) | ||||||||||
Balance at End of Period | $ | 41,210 | $ | 18,656 | $ | (27,364 | ) | $ | 32,502 |
1 | Amounts in parentheses indicate debits. |
Details about Accumulated Other Comprehensive Income (Loss) Components | Amount Reclassified from Accumulated Other Comprehensive Income(Loss)1 | Affected Line Item in the Statement Where Net Income Is Presented | |||||
Three Months Ended June 30, | |||||||
(dollars in thousands) | 2013 | 2012 | |||||
Amortization of Unrealized Holding Gains (Losses) on Investment Securities Transferred from Available-for-Sale to Held-to-Maturity | $ | 2,966 | $ | 3,939 | Interest Income | ||
(1,170 | ) | (1,552 | ) | Tax Expense | |||
1,796 | 2,387 | Net of Tax | |||||
Amortization of Defined Benefit Plan Items | |||||||
Prior Service Credit 2 | 81 | 81 | |||||
Net Actuarial Losses 2 | (413 | ) | (335 | ) | |||
(332 | ) | (254 | ) | Total Before Tax | |||
131 | 101 | Tax Benefit | |||||
(201 | ) | (153 | ) | Net of Tax | |||
Total Reclassifications for the Period | $ | 1,595 | $ | 2,234 | Net of Tax | ||
Details about Accumulated Other Comprehensive Income (Loss) Components | Amount Reclassified from Accumulated Other Comprehensive Income (Loss)1 | Affected Line Item in the Statement Where Net Income Is Presented | |||||
Six Months Ended June 30, | |||||||
(dollars in thousands) | 2013 | 2012 | |||||
Amortization of Unrealized Holding Gains (Losses) on Investment Securities Transferred from Available-for-Sale to Held-to-Maturity | $ | 6,273 | $ | 8,053 | Interest Income | ||
(2,474 | ) | (3,172 | ) | Tax Expense | |||
3,799 | 4,881 | Net of Tax | |||||
Sale of Investment Securities Available-for-Sale | — | (90 | ) | Investment Securities Losses, Net | |||
— | 36 | Tax Benefit | |||||
— | (54 | ) | Net of tax | ||||
Amortization of Defined Benefit Plan Items | |||||||
Prior Service Credit 2 | 161 | 162 | |||||
Net Actuarial Losses 2 | (827 | ) | (667 | ) | |||
(666 | ) | (505 | ) | Total Before Tax | |||
262 | 199 | Tax Benefit | |||||
(404 | ) | (306 | ) | Net of Tax | |||
Total Reclassifications for the Period | $ | 3,395 | $ | 4,521 | Net of Tax | ||
1 | Amounts in parentheses indicate reductions to net income. |
2 | These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost and are included in Salaries and Benefits on the consolidated statements of income (see Note 9 for additional details). |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2013 | 2012 | 2013 | 2012 | ||||
Denominator for Basic Earnings Per Share | 44,493,069 | 45,221,293 | 44,518,629 | 45,465,910 | |||
Dilutive Effect of Stock Options | 72,016 | 106,502 | 75,527 | 123,706 | |||
Dilutive Effect of Restricted Stock | 43,412 | 19,573 | 50,192 | 20,873 | |||
Denominator for Diluted Earnings Per Share | 44,608,497 | 45,347,368 | 44,644,348 | 45,610,489 | |||
Antidilutive Stock Options and Restricted Stock Outstanding | 170,372 | 537,383 | 170,372 | 537,383 |
(dollars in thousands) | Retail Banking | Commercial Banking | Investment Services | Treasury and Other | Consolidated Total | ||||||||||||||
Three Months Ended June 30, 2013 | |||||||||||||||||||
Net Interest Income | $ | 35,725 | $ | 28,554 | $ | 2,594 | $ | 20,467 | $ | 87,340 | |||||||||
Provision for Credit Losses | 1,857 | 472 | (12 | ) | (2,317 | ) | — | ||||||||||||
Net Interest Income After Provision for Credit Losses | 33,868 | 28,082 | 2,606 | 22,784 | 87,340 | ||||||||||||||
Noninterest Income | 20,871 | 9,117 | 15,288 | 2,765 | 48,041 | ||||||||||||||
Noninterest Expense | (43,540 | ) | (22,011 | ) | (13,135 | ) | (2,495 | ) | (81,181 | ) | |||||||||
Income Before Provision for Income Taxes | 11,199 | 15,188 | 4,759 | 23,054 | 54,200 | ||||||||||||||
Provision for Income Taxes | (4,144 | ) | (5,177 | ) | (1,761 | ) | (5,355 | ) | (16,437 | ) | |||||||||
Net Income | $ | 7,055 | $ | 10,011 | $ | 2,998 | $ | 17,699 | $ | 37,763 | |||||||||
Total Assets as of June 30, 2013 | $ | 3,283,634 | $ | 2,567,461 | $ | 188,871 | $ | 7,693,452 | $ | 13,733,418 | |||||||||
Three Months Ended June 30, 2012 | |||||||||||||||||||
Net Interest Income | $ | 39,118 | $ | 30,817 | $ | 3,150 | $ | 22,296 | $ | 95,381 | |||||||||
Provision for Credit Losses | 3,334 | 157 | 301 | (3,164 | ) | 628 | |||||||||||||
Net Interest Income After Provision for Credit Losses | 35,784 | 30,660 | 2,849 | 25,460 | 94,753 | ||||||||||||||
Noninterest Income | 22,376 | 8,552 | 14,071 | 1,849 | 46,848 | ||||||||||||||
Noninterest Expense | (44,164 | ) | (21,577 | ) | (13,415 | ) | (1,591 | ) | (80,747 | ) | |||||||||
Income Before Provision for Income Taxes | 13,996 | 17,635 | 3,505 | 25,718 | 60,854 | ||||||||||||||
Provision for Income Taxes | (5,178 | ) | (6,042 | ) | (1,297 | ) | (7,590 | ) | (20,107 | ) | |||||||||
Net Income | $ | 8,818 | $ | 11,593 | $ | 2,208 | $ | 18,128 | $ | 40,747 | |||||||||
Total Assets as of June 30, 2012 | $ | 3,344,319 | $ | 2,289,255 | $ | 189,008 | $ | 8,093,044 | $ | 13,915,626 | |||||||||
Six Months Ended June 30, 2013 | |||||||||||||||||||
Net Interest Income | $ | 71,634 | $ | 58,426 | $ | 5,365 | $ | 40,475 | $ | 175,900 | |||||||||
Provision for Credit Losses | 4,035 | 301 | (33 | ) | (4,303 | ) | — | ||||||||||||
Net Interest Income After Provision for Credit Losses | 67,599 | 58,125 | 5,398 | 44,778 | 175,900 | ||||||||||||||
Noninterest Income | 41,355 | 18,517 | 30,098 | 5,849 | 95,819 | ||||||||||||||
Noninterest Expense | (87,994 | ) | (44,895 | ) | (27,270 | ) | (5,409 | ) | (165,568 | ) | |||||||||
Income Before Provision for Income Taxes | 20,960 | 31,747 | 8,226 | 45,218 | 106,151 | ||||||||||||||
Provision for Income Taxes | (7,755 | ) | (10,849 | ) | (3,044 | ) | (10,760 | ) | (32,408 | ) | |||||||||
Net Income | $ | 13,205 | $ | 20,898 | $ | 5,182 | $ | 34,458 | $ | 73,743 | |||||||||
Total Assets as of June 30, 2013 | $ | 3,283,634 | $ | 2,567,461 | $ | 188,871 | $ | 7,693,452 | $ | 13,733,418 | |||||||||
Six Months Ended June 30, 2012 | |||||||||||||||||||
Net Interest Income | $ | 79,303 | $ | 62,259 | $ | 6,483 | $ | 45,284 | $ | 193,329 | |||||||||
Provision for Credit Losses | 7,364 | (511 | ) | 289 | (6,163 | ) | 979 | ||||||||||||
Net Interest Income After Provision for Credit Losses | 71,939 | 62,770 | 6,194 | 51,447 | 192,350 | ||||||||||||||
Noninterest Income | 41,916 | 20,129 | 27,741 | 5,144 | 94,930 | ||||||||||||||
Noninterest Expense | (88,776 | ) | (45,099 | ) | (28,177 | ) | (3,902 | ) | (165,954 | ) | |||||||||
Income Before Provision for Income Taxes | 25,079 | 37,800 | 5,758 | 52,689 | 121,326 | ||||||||||||||
Provision for Income Taxes | (9,279 | ) | (9,063 | ) | (2,130 | ) | (16,297 | ) | (36,769 | ) | |||||||||
Net Income | $ | 15,800 | $ | 28,737 | $ | 3,628 | $ | 36,392 | $ | 84,557 | |||||||||
Total Assets as of June 30, 2012 | $ | 3,344,319 | $ | 2,289,255 | $ | 189,008 | $ | 8,093,044 | $ | 13,915,626 |
Pension Benefits | Postretirement Benefits | ||||||||||||||
(dollars in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Three Months Ended June 30, | |||||||||||||||
Service Cost | $ | — | $ | — | $ | 173 | $ | 145 | |||||||
Interest Cost | 1,129 | 1,263 | 305 | 319 | |||||||||||
Expected Return on Plan Assets | (1,313 | ) | (1,449 | ) | — | — | |||||||||
Amortization of: | |||||||||||||||
Prior Service Credit | — | — | (81 | ) | (81 | ) | |||||||||
Net Actuarial Losses | 413 | 335 | — | — | |||||||||||
Net Periodic Benefit Cost | $ | 229 | $ | 149 | $ | 397 | $ | 383 | |||||||
Six Months Ended June 30, | |||||||||||||||
Service Cost | $ | — | $ | — | $ | 205 | $ | 290 | |||||||
Interest Cost | 2,257 | 2,526 | 362 | 639 | |||||||||||
Expected Return on Plan Assets | (2,626 | ) | (3,017 | ) | — | — | |||||||||
Amortization of: | |||||||||||||||
Prior Service Credit | — | — | (161 | ) | (162 | ) | |||||||||
Net Actuarial Losses | 827 | 667 | — | — | |||||||||||
Net Periodic Benefit Cost | $ | 458 | $ | 176 | $ | 406 | $ | 767 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Derivative Financial Instruments Not Designated as Hedging Instruments1 (dollars in thousands) | Asset Derivatives | Liability Derivatives | Asset Derivatives | Liability Derivatives | |||||||||||
Interest Rate Lock Commitments | $ | 1,754 | $ | 1,953 | $ | 10,188 | $ | — | |||||||
Forward Commitments | 4,337 | 240 | 189 | 329 | |||||||||||
Interest Rate Swap Agreements | 24,176 | 24,361 | 32,193 | 32,441 | |||||||||||
Foreign Exchange Contracts | 52 | 184 | 40 | 856 | |||||||||||
Total | $ | 30,319 | $ | 26,738 | $ | 42,610 | $ | 33,626 |
1 | Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the consolidated statements of condition. |
Location of | |||||||||||||||||
Derivative Financial Instruments | Net Gains (Losses) | Three Months Ended | Six Months Ended | ||||||||||||||
Not Designated as Hedging Instruments | Recognized in the | June 30, | June 30, | ||||||||||||||
(dollars in thousands) | Statements of Income | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest Rate Lock Commitments | Mortgage Banking | $ | (682 | ) | $ | 9,363 | $ | 2,576 | $ | 13,066 | |||||||
Forward Commitments | Mortgage Banking | 5,433 | (2,028 | ) | 7,662 | (1,762 | ) | ||||||||||
Interest Rate Swap Agreements | Other Noninterest Income | 243 | (11 | ) | 263 | 5 | |||||||||||
Foreign Exchange Contracts | Other Noninterest Income | 703 | 713 | 1,600 | 1,580 | ||||||||||||
Total | $ | 5,697 | $ | 8,037 | $ | 12,101 | $ | 12,889 |
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Unfunded Commitments to Extend Credit | $ | 2,255,270 | $ | 1,999,542 | |||
Standby Letters of Credit | 60,663 | 62,043 | |||||
Commercial Letters of Credit | 15,307 | 13,871 | |||||
Total Credit Commitments | $ | 2,331,240 | $ | 2,075,456 |
Level 1: | Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. A contractually binding sales price also provides reliable evidence of fair value. |
Level 2: | Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that utilize model-based techniques for which all significant assumptions are observable in the market. |
Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement; inputs to the valuation methodology that utilize model-based techniques for which significant assumptions are not observable in the market; or inputs to the valuation methodology that require significant management judgment or estimation, some of which may be internally developed. |
Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||
(dollars in thousands) | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||
June 30, 2013 | |||||||||||||||
Assets: | |||||||||||||||
Investment Securities Available-for-Sale | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 218,962 | $ | 367,064 | $ | — | $ | 586,026 | |||||||
Debt Securities Issued by States and Political Subdivisions | — | 561,920 | — | 561,920 | |||||||||||
Debt Securities Issued by Corporations | — | 275,289 | — | 275,289 | |||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | — | 815,327 | — | 815,327 | |||||||||||
Residential - U.S. Government-Sponsored Enterprises | — | 28,478 | — | 28,478 | |||||||||||
Commercial - Government Agencies | — | 548,368 | — | 548,368 | |||||||||||
Total Mortgage-Backed Securities | — | 1,392,173 | — | 1,392,173 | |||||||||||
Total Investment Securities Available-for-Sale | 218,962 | 2,596,446 | — | 2,815,408 | |||||||||||
Loans Held for Sale | — | 25,880 | — | 25,880 | |||||||||||
Mortgage Servicing Rights | — | — | 4,158 | 4,158 | |||||||||||
Other Assets | 14,004 | — | — | 14,004 | |||||||||||
Derivatives 1 | — | 4,389 | 25,930 | 30,319 | |||||||||||
Total Assets Measured at Fair Value on a Recurring Basis as of June 30, 2013 | $ | 232,966 | $ | 2,626,715 | $ | 30,088 | $ | 2,889,769 | |||||||
Liabilities: | |||||||||||||||
Derivatives 1 | $ | — | $ | 424 | $ | 26,314 | $ | 26,738 | |||||||
Total Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2013 | $ | — | $ | 424 | $ | 26,314 | $ | 26,738 | |||||||
December 31, 2012 | |||||||||||||||
Assets: | |||||||||||||||
Investment Securities Available-for-Sale | |||||||||||||||
Debt Securities Issued by the U.S. Treasury and Government Agencies | $ | 470,535 | $ | 399,454 | $ | — | $ | 869,989 | |||||||
Debt Securities Issued by States and Political Subdivisions | — | 782,411 | — | 782,411 | |||||||||||
Debt Securities Issued by Corporations | — | 84,434 | — | 84,434 | |||||||||||
Mortgage-Backed Securities: | |||||||||||||||
Residential - Government Agencies | — | 1,068,660 | — | 1,068,660 | |||||||||||
Residential - U.S. Government-Sponsored Enterprises | — | 37,298 | — | 37,298 | |||||||||||
Commercial - Government Agencies | — | 524,765 | — | 524,765 | |||||||||||
Total Mortgage-Backed Securities | — | 1,630,723 | — | 1,630,723 | |||||||||||
Total Investment Securities Available-for-Sale | 470,535 | 2,897,022 | — | 3,367,557 | |||||||||||
Loans Held for Sale | — | 21,374 | — | 21,374 | |||||||||||
Mortgage Servicing Rights | — | — | 4,761 | 4,761 | |||||||||||
Other Assets | 12,566 | — | — | 12,566 | |||||||||||
Derivatives 1 | — | 229 | 42,381 | 42,610 | |||||||||||
Total Assets Measured at Fair Value on a Recurring Basis as of December 31, 2012 | $ | 483,101 | $ | 2,918,625 | $ | 47,142 | $ | 3,448,868 | |||||||
Liabilities: | |||||||||||||||
Derivatives 1 | $ | — | $ | 1,185 | $ | 32,441 | $ | 33,626 | |||||||
Total Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2012 | $ | — | $ | 1,185 | $ | 32,441 | $ | 33,626 |
1 | The fair value of each class of derivatives is shown in Note 10 to the Consolidated Financial Statements. |
(dollars in thousands) | Mortgage Servicing Rights 1 | Net Derivative Assets and Liabilities 2 | Total | ||||||||
Three Months Ended June 30, 2013 | |||||||||||
Balance as of April 1, 2013 | $ | 4,436 | $ | 4,978 | $ | 9,414 | |||||
Realized and Unrealized Net Losses: | |||||||||||
Included in Net Income | (278 | ) | (639 | ) | (917 | ) | |||||
Transfers to Loans Held for Sale | — | (4,723 | ) | (4,723 | ) | ||||||
Balance as of June 30, 2013 | $ | 4,158 | $ | (384 | ) | $ | 3,774 | ||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2013 | $ | 30 | $ | (384 | ) | $ | (354 | ) | |||
Three Months Ended June 30, 2012 | |||||||||||
Balance as of April 1, 2012 | $ | 6,423 | $ | 2,052 | $ | 8,475 | |||||
Realized and Unrealized Net Gains (Losses): | |||||||||||
Included in Net Income | (964 | ) | 9,352 | 8,388 | |||||||
Transfers to Loans Held for Sale | — | (4,298 | ) | (4,298 | ) | ||||||
Balance as of June 30, 2012 | $ | 5,459 | $ | 7,106 | $ | 12,565 | |||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2012 | $ | (568 | ) | $ | 7,106 | $ | 6,538 | ||||
Six Months Ended June 30, 2013 | |||||||||||
Balance as of January 1, 2013 | $ | 4,761 | $ | 9,940 | $ | 14,701 | |||||
Realized and Unrealized Net Gains (Losses): | |||||||||||
Included in Net Income | (603 | ) | 2,639 | 2,036 | |||||||
Transfers to Loans Held for Sale | — | (12,963 | ) | (12,963 | ) | ||||||
Balance as of June 30, 2013 | $ | 4,158 | $ | (384 | ) | $ | 3,774 | ||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2013 | $ | 64 | $ | (384 | ) | $ | (320 | ) | |||
Six Months Ended June 30, 2012 | |||||||||||
Balance as of January 1, 2012 | $ | 7,131 | $ | 2,058 | $ | 9,189 | |||||
Realized and Unrealized Net Gains (Losses): | |||||||||||
Included in Net Income | (1,672 | ) | 13,071 | 11,399 | |||||||
Transfers to Loans Held for Sale | — | (8,023 | ) | (8,023 | ) | ||||||
Balance as of June 30, 2012 | $ | 5,459 | $ | 7,106 | $ | 12,565 | |||||
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of June 30, 2012 | $ | (881 | ) | $ | 7,106 | $ | 6,225 |
1 | Realized and unrealized gains and losses related to mortgage servicing rights are reported as a component of mortgage banking income in the Company’s consolidated statements of income. |
2 | Realized and unrealized gains and losses related to interest rate lock commitments are reported as a component of mortgage banking income in the Company’s consolidated statements of income. Realized and unrealized gains and losses related to interest rate swap agreements are reported as a component of other noninterest income in the Company’s consolidated statements of income. |
Significant Unobservable Inputs (weighted-average) | Fair Value | |||||||||||||||||
(dollars in thousands) | Valuation Technique | Description | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Dec. 31, 2012 | ||||||||||||
Mortgage Servicing Rights | Discounted Cash Flow | Constant Prepayment Rate 1 | 9.88 | % | 12.26 | % | $ | 32,600 | $ | 27,904 | ||||||||
Discount Rate 2 | 6.31 | % | 5.57 | % | ||||||||||||||
Net Derivative Assets and Liabilities: | ||||||||||||||||||
Interest Rate Lock Commitments | Pricing Model | Closing Ratio | 93.22 | % | 88.86 | % | $ | (199 | ) | $ | 10,188 | |||||||
Interest Rate Swap Agreements | Discounted Cash Flow | Credit Factor | 0.76 | % | 0.77 | % | $ | (185 | ) | $ | (248 | ) |
1 | Represents annualized loan repayment rate assumption. |
2 | Derived from multiple interest rate scenarios that incorporate a spread to the London Interbank Offered Rate swap curve and market volatilities. |
(dollars in thousands) | Aggregate Fair Value | Aggregate Unpaid Principal | Aggregate Fair Value Less Aggregate Unpaid Principal | ||||||||||
June 30, 2013 | |||||||||||||
Loans Held for Sale | $ | 25,880 | $ | 26,266 | $ | (386 | ) | ||||||
December 31, 2012 | |||||||||||||
Loans Held for Sale | $ | 21,374 | $ | 20,492 | $ | 882 |
Fair Value Measurements | |||||||||||||||||||
Carrying | Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||
(dollars in thousands) | Amount | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
June 30, 2013 | |||||||||||||||||||
Financial Instruments - Assets | |||||||||||||||||||
Investment Securities Held-to-Maturity | $ | 4,027,829 | $ | 4,036,197 | $ | 366,308 | $ | 3,669,889 | $ | — | |||||||||
Loans 1 | 5,476,129 | 5,779,297 | — | — | 5,779,297 | ||||||||||||||
Financial Instruments - Liabilities | |||||||||||||||||||
Time Deposits | 1,350,125 | 1,355,930 | — | 1,355,930 | — | ||||||||||||||
Securities Sold Under Agreements to Repurchase | 866,237 | 950,866 | — | 950,866 | — | ||||||||||||||
Long-Term Debt 2 | 165,877 | 167,066 | — | 167,066 | — | ||||||||||||||
December 31, 2012 | |||||||||||||||||||
Financial Instruments - Assets | |||||||||||||||||||
Investment Securities Held-to-Maturity | $ | 3,595,065 | $ | 3,687,676 | $ | 195,366 | $ | 3,492,310 | $ | — | |||||||||
Loans 1 | 5,451,935 | 5,846,906 | — | — | 5,846,906 | ||||||||||||||
Financial Instruments - Liabilities | |||||||||||||||||||
Time Deposits | 1,599,508 | 1,609,506 | — | 1,609,506 | — | ||||||||||||||
Securities Sold Under Agreements to Repurchase | 758,947 | 868,199 | — | 868,199 | — | ||||||||||||||
Long-Term Debt 2 | 119,185 | 121,906 | — | 121,906 | — |
1 | Net of unearned income and the Allowance. |
2 | Excludes capitalized lease obligations. |
• | Net interest income for the second quarter of 2013 was $87.3 million, a decrease of $8.0 million or 8% compared to the same period in 2012. Our net interest margin was 2.77% in the second quarter of 2013, a decrease of 21 basis points compared to the same period in 2012. This decrease was primarily due to the reinvestment of investment securities and the repricing of loans at lower yields. |
• | Mortgage banking income for the second quarter of 2013 was $5.8 million, a decrease of $1.8 million or 23% compared to the same period in 2012. This decrease was primarily due to lower conforming loan production and margins as a result of higher interest rates in the second quarter of 2013. Should market interest rates continue to increase during the remainder of 2013, we may experience lower mortgage application and production volume, particularly refinancing volume, which may result in lower mortgage banking income. |
• | Salaries and benefits expense for the second quarter of 2013 was $45.3 million, an increase of $1.3 million or 3% compared to the same period in 2012. This increase was primarily due to higher separation expense, executive deferred compensation expense, and merit increases. |
• | Net interest income for the first six months of 2013 was $175.9 million, a decrease of $17.4 million or 9% compared to the same period in 2012. Our net interest margin was 2.80% for the first six months of 2013, a decrease of 22 basis points compared to the same period in 2012. This decrease was primarily due to lower yields on loans and investment securities, a result of the low interest rate environment. |
• | Salaries and benefits expense for the first six months of 2013 was $94.0 million, an increase of $3.0 million or 3% compared to the same period in 2012. This increase was primarily due to higher separation expense and lower deferred salaries as a result of lower portfolio loan production in the first six months of 2013. |
• | Other noninterest income for the first six months of 2012 was favorably impacted by a $3.5 million pre-tax gain related to a lessee exercising its early buy-out option on two cargo ship leveraged leases in the first quarter of 2012. This transaction also resulted in a tax gain of $2.7 million. |
• | The allowance for loan and lease losses (the “Allowance”) was $124.6 million as of June 30, 2013, a decrease of $4.3 million or 3% from December 31, 2012. Absent significant deterioration in the economy and assuming continued improvement or stability in credit quality, we may further decrease the level of the Allowance in future periods. |
• | Total deposits were $11.4 billion as of June 30, 2013, a decrease of $80.3 million or less than 1% from December 31, 2012. This decrease was primarily due to lower levels of public time deposits as of June 30, 2013. |
• | We continued to invest excess liquidity in high-grade investment securities. As of June 30, 2013, the total carrying value of our investment securities portfolio was $6.8 billion, a decrease of $119.4 million or 2% compared to December 31, 2012. During the first six months of 2013, we slightly changed the composition of our investment securities portfolio. We continued to reduce our positions in mortgage-backed securities issued by the Government National Mortgage Corporation (“Ginnie Mae”) in an effort to manage extension risk related to our mortgage-backed securities. We re-invested these proceeds, in part, into corporate bonds and state and municipal bond holdings. |
• | Total shareholders’ equity was $986.4 million as of June 30, 2013, a decrease of $35.3 million or 3% from December 31, 2012. This decrease in shareholders' equity was primarily due to a $47.3 million after-tax decrease in the fair value of our available-for-sale investment securities. Should market interest rates continue to increase during the remainder of 2013, we may experience further reductions in the fair value of our available-for-sale investment securities, which may result in lower levels of capital. We also continued to return capital to our shareholders in the form of share repurchases and dividends. During the first six months of 2013, we repurchased 441,649 shares of our common stock at a total cost of $21.6 million under our share repurchase program. During the first six months of 2013, we also repurchased 48,460 shares of our common stock from employees and/or directors in connection with stock swaps, shares repurchased for a deferred compensation plan, and income tax withholdings related to the vesting of restricted stock at a total cost of $2.3 million. We also paid cash dividends of $40.4 million during the first six months of 2013. |
Financial Highlights | Table 1 | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(dollars in thousands, except per share amounts) | 2013 | 2012 | 2013 | 2012 | |||||||||||
For the Period: | |||||||||||||||
Operating Results | |||||||||||||||
Net Interest Income | $ | 87,340 | $ | 95,381 | $ | 175,900 | $ | 193,329 | |||||||
Provision for Credit Losses | — | 628 | — | 979 | |||||||||||
Total Noninterest Income | 48,041 | 46,848 | 95,819 | 94,930 | |||||||||||
Total Noninterest Expense | 81,181 | 80,747 | 165,568 | 165,954 | |||||||||||
Net Income | 37,763 | 40,747 | 73,743 | 84,557 | |||||||||||
Basic Earnings Per Share | 0.85 | 0.90 | 1.66 | 1.86 | |||||||||||
Diluted Earnings Per Share | 0.85 | 0.90 | 1.65 | 1.85 | |||||||||||
Dividends Declared Per Share | 0.45 | 0.45 | 0.90 | 0.90 | |||||||||||
Performance Ratios | |||||||||||||||
Return on Average Assets | 1.12 | % | 1.19 | % | 1.10 | % | 1.24 | % | |||||||
Return on Average Shareholders’ Equity | 14.64 | 16.19 | 14.37 | 16.73 | |||||||||||
Efficiency Ratio 1 | 59.96 | 56.77 | 60.93 | 57.57 | |||||||||||
Net Interest Margin 2 | 2.77 | 2.98 | 2.80 | 3.02 | |||||||||||
Dividend Payout Ratio 3 | 52.94 | 50.00 | 54.22 | 48.39 | |||||||||||
Average Shareholders’ Equity to Average Assets | 7.62 | 7.36 | 7.63 | 7.41 | |||||||||||
Average Balances | |||||||||||||||
Average Loans and Leases | $ | 5,781,898 | $ | 5,641,588 | $ | 5,792,641 | $ | 5,602,473 | |||||||
Average Assets | 13,572,329 | 13,750,488 | 13,564,885 | 13,715,859 | |||||||||||
Average Deposits | 11,244,600 | 10,622,420 | 11,265,924 | 10,526,317 | |||||||||||
Average Shareholders’ Equity | 1,034,366 | 1,012,182 | 1,034,603 | 1,016,425 | |||||||||||
Market Price Per Share of Common Stock | |||||||||||||||
Closing | $ | 50.32 | $ | 45.95 | $ | 50.32 | $ | 45.95 | |||||||
High | 52.17 | 49.99 | 52.17 | 49.99 | |||||||||||
Low | 46.04 | 44.02 | 44.88 | 44.02 | |||||||||||
June 30, 2013 | December 31, 2012 | ||||||||||||||
As of Period End: | |||||||||||||||
Balance Sheet Totals | |||||||||||||||
Loans and Leases | $ | 5,859,152 | $ | 5,854,521 | |||||||||||
Total Assets | 13,733,418 | 13,728,372 | |||||||||||||
Total Deposits | 11,449,198 | 11,529,482 | |||||||||||||
Long-Term Debt | 174,727 | 128,055 | |||||||||||||
Total Shareholders’ Equity | 986,368 | 1,021,665 | |||||||||||||
Asset Quality | |||||||||||||||
Allowance for Loan and Lease Losses | $ | 124,575 | $ | 128,857 | |||||||||||
Non-Performing Assets | 36,431 | 37,083 | |||||||||||||
Financial Ratios | |||||||||||||||
Allowance to Loans and Leases Outstanding | 2.13 | % | 2.20 | % | |||||||||||
Tier 1 Capital Ratio | 15.53 | 16.13 | |||||||||||||
Total Capital Ratio | 16.79 | 17.39 | |||||||||||||
Tier 1 Leverage Ratio | 6.95 | 6.83 | |||||||||||||
Total Shareholders’ Equity to Total Assets | 7.18 | 7.44 | |||||||||||||
Tangible Common Equity to Tangible Assets 4 | 6.97 | 7.23 | |||||||||||||
Tangible Common Equity to Risk-Weighted Assets 4 | 15.65 | 17.24 | |||||||||||||
Non-Financial Data | |||||||||||||||
Full-Time Equivalent Employees | 2,227 | 2,276 | |||||||||||||
Branches and Offices | 75 | 76 | |||||||||||||
ATMs | 486 | 494 |
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 the “Use of Non-GAAP Financial Measures” section below. |
GAAP to Non-GAAP Reconciliation | Table 2 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Total Shareholders’ Equity | $ | 986,368 | $ | 1,021,665 | |||
Less: Goodwill | 31,517 | 31,517 | |||||
Intangible Assets | 8 | 33 | |||||
Tangible Common Equity | $ | 954,843 | $ | 990,115 | |||
Total Assets | $ | 13,733,418 | $ | 13,728,372 | |||
Less: Goodwill | 31,517 | 31,517 | |||||
Intangible Assets | 8 | 33 | |||||
Tangible Assets | $ | 13,701,893 | $ | 13,696,822 | |||
Risk-Weighted Assets, determined in accordance with prescribed regulatory requirements | $ | 6,099,770 | $ | 5,744,722 | |||
Total Shareholders’ Equity to Total Assets | 7.18 | % | 7.44 | % | |||
Tangible Common Equity to Tangible Assets (Non-GAAP) | 6.97 | % | 7.23 | % | |||
Tier 1 Capital Ratio | 15.53 | % | 16.13 | % | |||
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) | 15.65 | % | 17.24 | % |
Average Balances and Interest Rates - Taxable-Equivalent Basis | Table 3 | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||||||||||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||||||||||||||
(dollars in millions) | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||||||||||||||
Earning Assets | |||||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits | $ | 4.5 | $ | — | 0.06 | % | $ | 3.0 | $ | — | 0.12 | % | $ | 4.2 | $ | — | 0.18 | % | $ | 3.1 | $ | — | 0.19 | % | |||||||||||||||||||
Funds Sold | 168.3 | 0.1 | 0.18 | 237.8 | 0.1 | 0.20 | 162.4 | 0.1 | 0.16 | 250.1 | 0.2 | 0.20 | |||||||||||||||||||||||||||||||
Investment Securities | |||||||||||||||||||||||||||||||||||||||||||
Available-for-Sale | 3,212.2 | 17.4 | 2.17 | 3,410.4 | 19.4 | 2.27 | 3,266.9 | 35.6 | 2.18 | 3,431.0 | 39.0 | 2.28 | |||||||||||||||||||||||||||||||
Held-to-Maturity | 3,714.3 | 19.2 | 2.07 | 3,788.9 | 25.1 | 2.65 | 3,646.6 | 39.1 | 2.14 | 3,763.1 | 51.5 | 2.74 | |||||||||||||||||||||||||||||||
Loans Held for Sale | 22.9 | 0.2 | 3.87 | 12.1 | 0.1 | 4.22 | 20.6 | 0.4 | 3.90 | 12.0 | 0.3 | 4.22 | |||||||||||||||||||||||||||||||
Loans and Leases 1 | |||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial | 855.5 | 7.8 | 3.65 | 786.3 | 7.7 | 3.93 | 839.3 | 15.4 | 3.70 | 796.1 | 15.8 | 3.98 | |||||||||||||||||||||||||||||||
Commercial Mortgage | 1,114.8 | 11.3 | 4.08 | 953.5 | 10.4 | 4.40 | 1,104.1 | 22.4 | 4.09 | 947.6 | 21.0 | 4.45 | |||||||||||||||||||||||||||||||
Construction | 107.5 | 1.2 | 4.61 | 99.7 | 1.3 | 5.07 | 111.5 | 2.7 | 4.83 | 101.6 | 2.6 | 5.21 | |||||||||||||||||||||||||||||||
Commercial Lease Financing | 265.2 | 1.6 | 2.36 | 284.5 | 1.7 | 2.36 | 268.9 | 3.2 | 2.38 | 289.4 | 3.4 | 2.35 | |||||||||||||||||||||||||||||||
Residential Mortgage | 2,252.1 | 25.5 | 4.53 | 2,371.7 | 27.9 | 4.71 | 2,281.7 | 51.5 | 4.51 | 2,318.0 | 55.7 | 4.80 | |||||||||||||||||||||||||||||||
Home Equity | 752.9 | 7.8 | 4.15 | 772.3 | 8.4 | 4.36 | 760.4 | 15.7 | 4.15 | 775.6 | 16.9 | 4.39 | |||||||||||||||||||||||||||||||
Automobile | 225.0 | 3.1 | 5.51 | 193.7 | 2.9 | 6.03 | 219.5 | 6.0 | 5.56 | 193.4 | 5.9 | 6.12 | |||||||||||||||||||||||||||||||
Other 2 | 208.9 | 4.3 | 8.22 | 179.9 | 3.6 | 8.12 | 207.2 | 8.5 | 8.28 | 180.8 | 7.3 | 8.10 | |||||||||||||||||||||||||||||||
Total Loans and Leases | 5,781.9 | 62.6 | 4.34 | 5,641.6 | 63.9 | 4.54 | 5,792.6 | 125.4 | 4.35 | 5,602.5 | 128.6 | 4.60 | |||||||||||||||||||||||||||||||
Other | 78.6 | 0.3 | 1.45 | 80.0 | 0.3 | 1.41 | 78.8 | 0.5 | 1.44 | 80.0 | 0.6 | 1.40 | |||||||||||||||||||||||||||||||
Total Earning Assets 3 | 12,982.7 | 99.8 | 3.08 | 13,173.8 | 108.9 | 3.31 | 12,972.1 | 201.1 | 3.11 | 13,141.8 | 220.2 | 3.36 | |||||||||||||||||||||||||||||||
Cash and Noninterest-Bearing Deposits | 136.8 | 131.7 | 139.4 | 134.5 | |||||||||||||||||||||||||||||||||||||||
Other Assets | 452.8 | 445.0 | 453.4 | 439.6 | |||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 13,572.3 | $ | 13,750.5 | $ | 13,564.9 | $ | 13,715.9 | |||||||||||||||||||||||||||||||||||
Interest-Bearing Liabilities | |||||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits | |||||||||||||||||||||||||||||||||||||||||||
Demand | $ | 2,106.0 | $ | 0.2 | 0.03 | % | $ | 1,906.1 | $ | 0.1 | 0.03 | % | $ | 2,083.4 | $ | 0.3 | 0.03 | % | $ | 1,886.6 | $ | 0.2 | 0.03 | % | |||||||||||||||||||
Savings | 4,451.1 | 1.0 | 0.09 | 4,444.5 | 1.1 | 0.10 | 4,429.9 | 1.9 | 0.09 | 4,441.8 | 2.4 | 0.11 | |||||||||||||||||||||||||||||||
Time | 1,381.4 | 1.4 | 0.42 | 1,253.9 | 2.0 | 0.63 | 1,446.8 | 3.0 | 0.42 | 1,257.0 | 4.1 | 0.64 | |||||||||||||||||||||||||||||||
Total Interest-Bearing Deposits | 7,938.5 | 2.6 | 0.13 | 7,604.5 | 3.2 | 0.17 | 7,960.1 | 5.2 | 0.13 | 7,585.4 | 6.7 | 0.18 | |||||||||||||||||||||||||||||||
Short-Term Borrowings | 29.4 | — | 0.12 | 15.0 | — | 0.14 | 43.7 | — | 0.14 | 15.3 | — | 0.13 | |||||||||||||||||||||||||||||||
Securities Sold Under Agreements to Repurchase | 800.1 | 6.7 | 3.34 | 1,808.5 | 7.3 | 1.59 | 778.2 | 13.8 | 3.52 | 1,862.3 | 14.6 | 1.55 | |||||||||||||||||||||||||||||||
Long-Term Debt | 177.3 | 0.7 | 1.52 | 30.6 | 0.5 | 6.51 | 167.3 | 1.3 | 1.57 | 30.7 | 1.0 | 6.50 | |||||||||||||||||||||||||||||||
Total Interest-Bearing Liabilities | 8,945.3 | 10.0 | 0.44 | 9,458.6 | 11.0 | 0.46 | 8,949.3 | 20.3 | 0.45 | 9,493.7 | 22.3 | 0.47 | |||||||||||||||||||||||||||||||
Net Interest Income | $ | 89.8 | $ | 97.9 | $ | 180.8 | $ | 197.9 | |||||||||||||||||||||||||||||||||||
Interest Rate Spread | 2.64 | % | 2.85 | % | 2.66 | % | 2.89 | % | |||||||||||||||||||||||||||||||||||
Net Interest Margin | 2.77 | % | 2.98 | % | 2.80 | % | 3.02 | % | |||||||||||||||||||||||||||||||||||
Noninterest-Bearing Demand Deposits | 3,306.1 | 3,017.9 | 3,305.8 | 2,940.9 | |||||||||||||||||||||||||||||||||||||||
Other Liabilities | 286.5 | 261.8 | 275.2 | 264.9 | |||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity | 1,034.4 | 1,012.2 | 1,034.6 | 1,016.4 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 13,572.3 | $ | 13,750.5 | $ | 13,564.9 | $ | 13,715.9 |
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 35%, of $2,490,000 and $2,481,000 for the three months ended June 30, 2013 and 2012, respectively, and $4,901,000 and $4,551,000 for the six months ended June 30, 2013 and 2012, respectively. |
Analysis of Change in Net Interest Income - Taxable-Equivalent Basis | Table 4 | ||||||||||
Six Months Ended June 30, 2013 Compared to June 30, 2012 | |||||||||||
(dollars in millions) | Volume 1 | Rate 1 | Total | ||||||||
Change in Interest Income: | |||||||||||
Funds Sold | $ | (0.1 | ) | $ | — | $ | (0.1 | ) | |||
Investment Securities | |||||||||||
Available-for-Sale | (1.8 | ) | (1.6 | ) | (3.4 | ) | |||||
Held-to-Maturity | (1.5 | ) | (10.9 | ) | (12.4 | ) | |||||
Loans Held for Sale | 0.1 | — | 0.1 | ||||||||
Loans and Leases | |||||||||||
Commercial and Industrial | 0.8 | (1.2 | ) | (0.4 | ) | ||||||
Commercial Mortgage | 3.2 | (1.8 | ) | 1.4 | |||||||
Construction | 0.3 | (0.2 | ) | 0.1 | |||||||
Commercial Lease Financing | (0.3 | ) | 0.1 | (0.2 | ) | ||||||
Residential Mortgage | (0.9 | ) | (3.3 | ) | (4.2 | ) | |||||
Home Equity | (0.3 | ) | (0.9 | ) | (1.2 | ) | |||||
Automobile | 0.7 | (0.6 | ) | 0.1 | |||||||
Other 2 | 1.1 | 0.1 | 1.2 | ||||||||
Total Loans and Leases | 4.6 | (7.8 | ) | (3.2 | ) | ||||||
Other | (0.1 | ) | — | (0.1 | ) | ||||||
Total Change in Interest Income | 1.2 | (20.3 | ) | (19.1 | ) | ||||||
Change in Interest Expense: | |||||||||||
Interest-Bearing Deposits | |||||||||||
Demand | — | 0.1 | 0.1 | ||||||||
Savings | — | (0.5 | ) | (0.5 | ) | ||||||
Time | 0.5 | (1.6 | ) | (1.1 | ) | ||||||
Total Interest-Bearing Deposits | 0.5 | (2.0 | ) | (1.5 | ) | ||||||
Securities Sold Under Agreements to Repurchase | (11.8 | ) | 11.0 | (0.8 | ) | ||||||
Long-Term Debt | 1.5 | (1.2 | ) | 0.3 | |||||||
Total Change in Interest Expense | (9.8 | ) | 7.8 | (2.0 | ) | ||||||
Change in Net Interest Income | $ | 11.0 | $ | (28.1 | ) | $ | (17.1 | ) |
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. |
Noninterest Income | Table 5 | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(dollars in thousands) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||
Trust and Asset Management | $ | 12,089 | $ | 11,195 | $ | 894 | $ | 23,975 | $ | 22,113 | $ | 1,862 | |||||||||||
Mortgage Banking | 5,820 | 7,581 | (1,761 | ) | 12,231 | 12,631 | (400 | ) | |||||||||||||||
Service Charges on Deposit Accounts | 9,112 | 9,225 | (113 | ) | 18,413 | 18,816 | (403 | ) | |||||||||||||||
Fees, Exchange, and Other Service Charges | 13,133 | 12,326 | 807 | 25,067 | 24,725 | 342 | |||||||||||||||||
Investment Securities Losses, Net | — | — | — | — | (90 | ) | 90 | ||||||||||||||||
Insurance | 2,393 | 2,399 | (6 | ) | 4,718 | 4,677 | 41 | ||||||||||||||||
Bank-Owned Life Insurance | 1,335 | 1,739 | (404 | ) | 2,632 | 3,220 | (588 | ) | |||||||||||||||
Other Income | 4,159 | 2,383 | 1,776 | 8,783 | 8,838 | (55 | ) | ||||||||||||||||
Total Noninterest Income | $ | 48,041 | $ | 46,848 | $ | 1,193 | $ | 95,819 | $ | 94,930 | $ | 889 |
Noninterest Expense | Table 6 | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(dollars in thousands) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||
Salaries | $ | 28,690 | $ | 27,831 | $ | 859 | $ | 57,768 | $ | 56,518 | $ | 1,250 | |||||||||||
Incentive Compensation | 3,861 | 4,132 | (271 | ) | 7,645 | 8,186 | (541 | ) | |||||||||||||||
Share-Based Compensation | 1,305 | 1,758 | (453 | ) | 2,441 | 3,443 | (1,002 | ) | |||||||||||||||
Commission Expense | 1,983 | 1,754 | 229 | 3,764 | 3,290 | 474 | |||||||||||||||||
Retirement and Other Benefits | 3,594 | 3,481 | 113 | 7,962 | 7,871 | 91 | |||||||||||||||||
Payroll Taxes | 2,576 | 2,437 | 139 | 6,816 | 6,255 | 561 | |||||||||||||||||
Medical, Dental, and Life Insurance | 2,468 | 2,239 | 229 | 5,281 | 4,676 | 605 | |||||||||||||||||
Separation Expense | 864 | 405 | 459 | 2,339 | 822 | 1,517 | |||||||||||||||||
Total Salaries and Benefits | 45,341 | 44,037 | 1,304 | 94,016 | 91,061 | 2,955 | |||||||||||||||||
Net Occupancy | 9,661 | 10,058 | (397 | ) | 19,296 | 20,574 | (1,278 | ) | |||||||||||||||
Net Equipment | 4,380 | 4,669 | (289 | ) | 8,957 | 10,495 | (1,538 | ) | |||||||||||||||
Data Processing | 3,050 | 3,160 | (110 | ) | 6,316 | 6,747 | (431 | ) | |||||||||||||||
Professional Fees | 2,391 | 2,386 | 5 | 4,617 | 4,518 | 99 | |||||||||||||||||
FDIC Insurance | 1,949 | 2,088 | (139 | ) | 3,898 | 4,159 | (261 | ) | |||||||||||||||
Other Expense: | |||||||||||||||||||||||
Delivery and Postage Services | 2,106 | 2,132 | (26 | ) | 4,265 | 4,225 | 40 | ||||||||||||||||
Mileage Program Travel | 1,560 | 1,730 | (170 | ) | 3,261 | 3,351 | (90 | ) | |||||||||||||||
Merchant Transaction and Card Processing Fees | 1,189 | 1,378 | (189 | ) | 2,352 | 2,800 | (448 | ) | |||||||||||||||
Advertising | 1,281 | 1,036 | 245 | 2,625 | 2,260 | 365 | |||||||||||||||||
Other | 8,273 | 8,073 | 200 | 15,965 | 15,764 | 201 | |||||||||||||||||
Total Other Expense | 14,409 | 14,349 | 60 | 28,468 | 28,400 | 68 | |||||||||||||||||
Total Noninterest Expense | $ | 81,181 | $ | 80,747 | $ | 434 | $ | 165,568 | $ | 165,954 | $ | (386 | ) |
Provision for Income Taxes and Effective Tax Rates | Table 7 | ||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Provision for Income Taxes | $ | 16,437 | $ | 20,107 | $ | 32,408 | $ | 36,769 | |||||||
Effective Tax Rates | 30.33 | % | 33.04 | % | 30.53 | % | 30.31 | % |
Loan and Lease Portfolio Balances | Table 8 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Commercial | |||||||
Commercial and Industrial | $ | 875,702 | $ | 829,512 | |||
Commercial Mortgage | 1,160,977 | 1,097,425 | |||||
Construction | 107,016 | 113,987 | |||||
Lease Financing | 257,067 | 274,969 | |||||
Total Commercial | 2,400,762 | 2,315,893 | |||||
Consumer | |||||||
Residential Mortgage | 2,252,117 | 2,349,916 | |||||
Home Equity | 751,790 | 770,376 | |||||
Automobile | 233,475 | 209,832 | |||||
Other 1 | 221,008 | 208,504 | |||||
Total Consumer | 3,458,390 | 3,538,628 | |||||
Total Loans and Leases | $ | 5,859,152 | $ | 5,854,521 |
1 | Comprised of other revolving credit, installment, and lease financing. |
Geographic Distribution of Loan and Lease Portfolio | Table 9 | ||||||||||||||||||||||
(dollars in thousands) | Hawaii | U.S. Mainland 1 | Guam | Other Pacific Islands | Foreign 2 | Total | |||||||||||||||||
June 30, 2013 | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Commercial and Industrial | $ | 783,095 | $ | 35,518 | $ | 55,156 | $ | 1,693 | $ | 240 | $ | 875,702 | |||||||||||
Commercial Mortgage | 1,049,985 | 32,832 | 78,160 | — | — | 1,160,977 | |||||||||||||||||
Construction | 99,182 | — | 7,834 | — | — | 107,016 | |||||||||||||||||
Lease Financing | 32,278 | 193,362 | 8,654 | — | 22,773 | 257,067 | |||||||||||||||||
Total Commercial | 1,964,540 | 261,712 | 149,804 | 1,693 | 23,013 | 2,400,762 | |||||||||||||||||
Consumer | |||||||||||||||||||||||
Residential Mortgage | 2,122,913 | — | 125,153 | 4,051 | — | 2,252,117 | |||||||||||||||||
Home Equity | 723,425 | 6,273 | 20,197 | 1,895 | — | 751,790 | |||||||||||||||||
Automobile | 173,807 | 2,583 | 53,471 | 3,614 | — | 233,475 | |||||||||||||||||
Other 3 | 155,684 | — | 26,262 | 39,056 | 6 | 221,008 | |||||||||||||||||
Total Consumer | 3,175,829 | 8,856 | 225,083 | 48,616 | 6 | 3,458,390 | |||||||||||||||||
Total Loans and Leases | $ | 5,140,369 | $ | 270,568 | $ | 374,887 | $ | 50,309 | $ | 23,019 | $ | 5,859,152 | |||||||||||
December 31, 2012 | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Commercial and Industrial | $ | 726,401 | $ | 29,571 | $ | 70,622 | $ | 2,213 | $ | 705 | $ | 829,512 | |||||||||||
Commercial Mortgage | 988,165 | 33,240 | 76,020 | — | — | 1,097,425 | |||||||||||||||||
Construction | 109,956 | — | 4,031 | — | — | 113,987 | |||||||||||||||||
Lease Financing | 31,871 | 207,236 | 13,070 | — | 22,792 | 274,969 | |||||||||||||||||
Total Commercial | 1,856,393 | 270,047 | 163,743 | 2,213 | 23,497 | 2,315,893 | |||||||||||||||||
Consumer | |||||||||||||||||||||||
Residential Mortgage | 2,209,882 | — | 135,491 | 4,543 | — | 2,349,916 | |||||||||||||||||
Home Equity | 740,939 | 7,784 | 19,682 | 1,971 | — | 770,376 | |||||||||||||||||
Automobile | 152,031 | 4,068 | 50,716 | 3,017 | — | 209,832 | |||||||||||||||||
Other 3 | 148,724 | — | 23,867 | 35,904 | 9 | 208,504 | |||||||||||||||||
Total Consumer | 3,251,576 | 11,852 | 229,756 | 45,435 | 9 | 3,538,628 | |||||||||||||||||
Total Loans and Leases | $ | 5,107,969 | $ | 281,899 | $ | 393,499 | $ | 47,648 | $ | 23,506 | $ | 5,854,521 |
1 | For secured loans and leases, classification as U.S. Mainland is made based on where the collateral is located. For unsecured loans and leases, classification as U.S. Mainland is made based on the location where the majority of the borrower’s business operations are conducted. |
2 | Loans classified as Foreign represent those which are recorded in the Company’s international business units. Lease financing classified as Foreign represent those with air transportation carriers based outside the United States. |
3 | Comprised of other revolving credit, installment, and lease financing. |
Other Assets | Table 10 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Bank-Owned Life Insurance | $ | 221,061 | $ | 218,429 | |||
Federal Home Loan Bank and Federal Reserve Bank Stock | 78,164 | 79,152 | |||||
Derivative Financial Instruments | 30,319 | 42,610 | |||||
Low-Income Housing and Other Equity Investments | 45,793 | 48,373 | |||||
Prepaid Expenses | 7,565 | 21,820 | |||||
Accounts Receivable | 17,766 | 13,854 | |||||
State Tax Deposits | 6,069 | 6,069 | |||||
Other | 40,399 | 26,645 | |||||
Total Other Assets | $ | 447,136 | $ | 456,952 |
Deposits | Table 11 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Consumer | $ | 5,626,515 | $ | 5,537,624 | |||
Commercial | 4,537,120 | 4,576,410 | |||||
Public and Other | 1,285,563 | 1,415,448 | |||||
Total Deposits | $ | 11,449,198 | $ | 11,529,482 |
Savings Deposits | Table 12 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Money Market | $ | 1,615,329 | $ | 1,607,738 | |||
Regular Savings | 2,817,713 | 2,791,578 | |||||
Total Savings Deposits | $ | 4,433,042 | $ | 4,399,316 |
Average Time Deposits of $100,000 or More | Table 13 | ||||||
Three Months Ended | |||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Average Time Deposits | $ | 1,063,173 | $ | 1,423,228 |
Securities Sold Under Agreements to Repurchase | Table 14 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Government Entities | $ | 266,237 | $ | 158,947 | |||
Private Institutions | 600,000 | 600,000 | |||||
Total Securities Sold Under Agreements to Repurchase | $ | 866,237 | $ | 758,947 |
Business Segment Net Income | Table 15 | ||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Retail Banking | $ | 7,055 | $ | 8,818 | $ | 13,205 | $ | 15,800 | |||||||
Commercial Banking | 10,011 | 11,593 | 20,898 | 28,737 | |||||||||||
Investment Services | 2,998 | 2,208 | 5,182 | 3,628 | |||||||||||
Total | 20,064 | 22,619 | 39,285 | 48,165 | |||||||||||
Treasury and Other | 17,699 | 18,128 | 34,458 | 36,392 | |||||||||||
Consolidated Total | $ | 37,763 | $ | 40,747 | $ | 73,743 | $ | 84,557 |
Higher Risk Loans and Leases Outstanding | Table 16 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Residential Land Loans | $ | 13,708 | $ | 14,984 | |||
Home Equity Loans | 13,578 | 19,914 | |||||
Air Transportation Leases | 26,436 | 27,782 | |||||
Total | $ | 53,722 | $ | 62,680 |
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More | Table 17 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Non-Performing Assets | |||||||
Non-Accrual Loans and Leases | |||||||
Commercial | |||||||
Commercial and Industrial | $ | 4,909 | $ | 5,534 | |||
Commercial Mortgage | 2,772 | 3,030 | |||||
Construction | — | 833 | |||||
Lease Financing | 16 | — | |||||
Total Commercial | 7,697 | 9,397 | |||||
Consumer | |||||||
Residential Mortgage | 22,876 | 21,725 | |||||
Home Equity | 2,602 | 2,074 | |||||
Total Consumer | 25,478 | 23,799 | |||||
Total Non-Accrual Loans and Leases | 33,175 | 33,196 | |||||
Foreclosed Real Estate | 3,256 | 3,887 | |||||
Total Non-Performing Assets | $ | 36,431 | $ | 37,083 | |||
Accruing Loans and Leases Past Due 90 Days or More | |||||||
Commercial | |||||||
Commercial and Industrial | $ | — | $ | 27 | |||
Total Commercial | — | 27 | |||||
Consumer | |||||||
Residential Mortgage | 6,876 | 6,908 | |||||
Home Equity | 2,768 | 2,701 | |||||
Automobile | 95 | 186 | |||||
Other 1 | 855 | 587 | |||||
Total Consumer | 10,594 | 10,382 | |||||
Total Accruing Loans and Leases Past Due 90 Days or More | $ | 10,594 | $ | 10,409 | |||
Restructured Loans on Accrual Status and Not Past Due 90 Days or More | $ | 39,154 | $ | 31,844 | |||
Total Loans and Leases | $ | 5,859,152 | $ | 5,854,521 | |||
Ratio of Non-Accrual Loans and Leases to Total Loans and Leases | 0.57 | % | 0.57 | % | |||
Ratio of Non-Performing Assets to Total Loans and Leases, and Foreclosed Real Estate | 0.62 | % | 0.63 | % | |||
Ratio of Commercial Non-Performing Assets to Total Commercial Loans and Leases, and Commercial Foreclosed Real Estate | 0.37 | % | 0.45 | % | |||
Ratio of Consumer Non-Performing Assets to Total Consumer Loans and Leases and Consumer Foreclosed Real Estate | 0.80 | % | 0.75 | % | |||
Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases, and Foreclosed Real Estate | 0.80 | % | 0.81 | % | |||
Changes in Non-Performing Assets | |||||||
Balance as of December 31, 2012 | $ | 37,083 | |||||
Additions | 9,951 | ||||||
Reductions | |||||||
Payments | (3,936 | ) | |||||
Return to Accrual Status | (3,110 | ) | |||||
Sales of Foreclosed Real Estate | (3,167 | ) | |||||
Charge-offs/Write-downs | (390 | ) | |||||
Total Reductions | (10,603 | ) | |||||
Balance as of June 30, 2013 | $ | 36,431 |
1 | Comprised of other revolving credit, installment, and lease financing. |
Loans Modified in a Troubled Debt Restructuring | Table 18 | ||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Commercial | |||||||
Commercial and Industrial | $ | 7,305 | $ | 4,319 | |||
Commercial Mortgage | 6,642 | 1,032 | |||||
Construction | — | 833 | |||||
Total Commercial | 13,947 | 6,184 | |||||
Consumer | |||||||
Residential Mortgage | 31,327 | 29,036 | |||||
Automobile | 5,151 | 5,641 | |||||
Other 1 | 278 | 282 | |||||
Total Consumer | 36,756 | 34,959 | |||||
Total | $ | 50,703 | $ | 41,143 |
1 | Comprised of other revolving credit, installment, and lease financing. |
Reserve for Credit Losses | Table 19 | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(dollars in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Balance at Beginning of Period | $ | 132,297 | $ | 141,025 | $ | 134,276 | $ | 144,025 | |||||||
Loans and Leases Charged-Off | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | (266 | ) | (1,078 | ) | (648 | ) | (2,509 | ) | |||||||
Construction | — | — | — | (330 | ) | ||||||||||
Consumer | |||||||||||||||
Residential Mortgage | (188 | ) | (1,369 | ) | (1,423 | ) | (2,949 | ) | |||||||
Home Equity | (2,016 | ) | (1,657 | ) | (3,393 | ) | (4,098 | ) | |||||||
Automobile | (429 | ) | (438 | ) | (1,004 | ) | (964 | ) | |||||||
Other 1 | (1,805 | ) | (1,394 | ) | (3,535 | ) | (2,845 | ) | |||||||
Total Loans and Leases Charged-Off | (4,704 | ) | (5,936 | ) | (10,003 | ) | (13,695 | ) | |||||||
Recoveries on Loans and Leases Previously Charged-Off | |||||||||||||||
Commercial | |||||||||||||||
Commercial and Industrial | 437 | 524 | 875 | 2,457 | |||||||||||
Commercial Mortgage | 14 | 10 | 24 | 34 | |||||||||||
Construction | 8 | — | 346 | — | |||||||||||
Lease Financing | 11 | 11 | 22 | 83 | |||||||||||
Consumer | |||||||||||||||
Residential Mortgage | 634 | 376 | 1,422 | 1,042 | |||||||||||
Home Equity | 335 | 165 | 1,083 | 735 | |||||||||||
Automobile | 456 | 482 | 917 | 1,020 | |||||||||||
Other 1 | 506 | 577 | 1,032 | 1,182 | |||||||||||
Total Recoveries on Loans and Leases Previously Charged-Off | 2,401 | 2,145 | 5,721 | 6,553 | |||||||||||
Net Loans and Leases Charged-Off | (2,303 | ) | (3,791 | ) | (4,282 | ) | (7,142 | ) | |||||||
Provision for Credit Losses | — | 628 | — | 979 | |||||||||||
Provision for Unfunded Commitments | 500 | — | 500 | — | |||||||||||
Balance at End of Period 2 | $ | 130,494 | $ | 137,862 | $ | 130,494 | $ | 137,862 | |||||||
Components | |||||||||||||||
Allowance for Loan and Lease Losses | $ | 124,575 | $ | 132,443 | $ | 124,575 | $ | 132,443 | |||||||
Reserve for Unfunded Commitments | 5,919 | 5,419 | 5,919 | 5,419 | |||||||||||
Total Reserve for Credit Losses | $ | 130,494 | $ | 137,862 | $ | 130,494 | $ | 137,862 | |||||||
Average Loans and Leases Outstanding | $ | 5,781,898 | $ | 5,641,588 | $ | 5,792,641 | $ | 5,602,473 | |||||||
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding (annualized) | 0.16 | % | 0.27 | % | 0.15 | % | 0.26 | % | |||||||
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding | 2.13 | % | 2.34 | % | 2.13 | % | 2.34 | % |
1 | Comprised of other revolving credit, installment, and lease financing. |
2 | Included in this analysis is activity related to the Company’s reserve for unfunded commitments, which is separately recorded in other liabilities in the consolidated statements of condition. |
• | adjusting the balance sheet mix or altering the interest rate characteristics of assets and liabilities; |
• | changing product pricing strategies; |
• | modifying characteristics of the investment securities portfolio; or |
• | using derivative financial instruments. |
Net Interest Income Sensitivity Profile | Table 20 | ||||||||||||
Impact on Future Annual Net Interest Income | |||||||||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||||||||
Gradual Change in Interest Rates (basis points) | |||||||||||||
+200 | $ | 5,232 | 1.4 | % | $ | 9,396 | 2.6 | % | |||||
+100 | 2,945 | 0.8 | % | 4,893 | 1.4 | % | |||||||
-100 | (5,463 | ) | -1.5 | % | (8,387 | ) | -2.4 | % | |||||
Immediate Change in Interest Rates (basis points) | |||||||||||||
+200 | $ | 15,524 | 4.3 | % | $ | 26,050 | 7.3 | % | |||||
+100 | 9,426 | 2.6 | % | 14,449 | 4.1 | % | |||||||
-100 | (18,413 | ) | -5.1 | % | (25,931 | ) | -7.3 | % |
Regulatory Capital and Ratios | Table 21 | ||||||||
(dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||||
Regulatory Capital | |||||||||
Shareholders’ Equity | $ | 986,368 | $ | 1,021,665 | |||||
Less: | Goodwill | 31,517 | 31,517 | ||||||
Postretirement Benefit Liability Adjustments | 1,344 | 1,442 | |||||||
Net Unrealized Gains on Investment Securities | 3,564 | 59,777 | |||||||
Other | 2,564 | 2,326 | |||||||
Tier 1 Capital | 947,379 | 926,603 | |||||||
Allowable Reserve for Credit Losses | 76,917 | 72,580 | |||||||
Total Regulatory Capital | $ | 1,024,296 | $ | 999,183 | |||||
Risk-Weighted Assets | $ | 6,099,770 | $ | 5,744,722 | |||||
Key Regulatory Capital Ratios | |||||||||
Tier 1 Capital Ratio | 15.53 | % | 16.13 | % | |||||
Total Capital Ratio | 16.79 | 17.39 | |||||||
Tier 1 Leverage Ratio | 6.95 | 6.83 |
Issuer Purchases of Equity Securities | |||||||||||||
Period | Total Number of Shares Purchased 1 | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2 | |||||||||
April 1 - 30, 2013 | 82,886 | $ | 48.01 | 70,000 | $ | 59,511,215 | |||||||
May 1 - 31, 2013 | 85,647 | 49.58 | 84,500 | 55,321,337 | |||||||||
June 1 - 30, 2013 | 150,149 | 49.52 | 150,149 | 47,886,341 | |||||||||
Total | 318,682 | $ | 49.14 | 304,649 |
1 | During the second quarter of 2013, 14,033 shares were purchased from employees and/or directors in connection with stock swaps, shares purchased for a deferred compensation plan, and income tax withholdings related to the vesting of restricted stock. These shares were not purchased as part of the publicly announced program. The shares were purchased at the closing price of the Parent’s common stock on the dates of purchase. |
2 | The share repurchase program was first announced in July 2001. As of June 30, 2013, $47.9 million remained of the total $1.9 billion total repurchase amount authorized by the Parent’s Board of Directors under the share repurchase program. The program has no set expiration or termination date. |
Date: | July 22, 2013 | Bank of Hawaii Corporation | |
By: | /s/ Peter S. Ho | ||
Peter S. Ho | |||
Chairman of the Board, | |||
Chief Executive Officer, and | |||
President | |||
By: | /s/ Kent T. Lucien | ||
Kent T. Lucien | |||
Chief Financial Officer |
Exhibit Number | |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934 |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934 |
32 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101 | Interactive Data File |
1. | I have reviewed this quarterly report on Form 10-Q of Bank of Hawaii Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit and risk committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 22, 2013 | /s/ Peter S. Ho |
Peter S. Ho | ||
Chairman of the Board, | ||
Chief Executive Officer, and | ||
President |
1. | I have reviewed this quarterly report on Form 10-Q of Bank of Hawaii Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit and risk committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 22, 2013 | /s/ Kent T. Lucien |
Kent T. Lucien | ||
Chief Financial Officer |
• | fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
• | the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Bank of Hawaii Corporation. |
Date: | July 22, 2013 | /s/ Peter S. Ho |
Peter S. Ho | ||
Chairman of the Board, | ||
Chief Executive Officer, and | ||
President | ||
/s/ Kent T. Lucien | ||
Kent T. Lucien | ||
Chief Financial Officer |
Pension Plans and Postretirement Benefit Plan
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Jun. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans and Postretirement Benefit Plan | Pension Plans and Postretirement Benefit Plan Components of net periodic benefit cost for the Company’s pension plans and the postretirement benefit plan are presented in the following table for the three and six months ended June 30, 2013 and 2012.
The net periodic benefit cost for the Company’s pension plans and postretirement benefit plan are recorded as a component of salaries and benefits in the consolidated statements of income. For the three and six months ended June 30, 2013, the Company contributed $0.1 million and $0.2 million, respectively, to the pension plans and $0.2 million and $0.4 million, respectively, to the postretirement benefit plan. The Company expects to contribute $0.5 million to the pension plans and $1.4 million to the postretirement benefit plan for the year ending December 31, 2013. |
Business Segments (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Segment Reporting [Abstract] | |||||
Federal and State Effective Tax Rate Used for Segment Reporting | 37.00% | ||||
Business segment financial information | |||||
Net Interest Income | $ 87,340 | $ 95,381 | $ 175,900 | $ 193,329 | |
Provision for Credit Losses | 0 | 628 | 0 | 979 | |
Net Interest Income After Provision for Credit Losses | 87,340 | 94,753 | 175,900 | 192,350 | |
Noninterest Income | 48,041 | 46,848 | 95,819 | 94,930 | |
Noninterest Expense | (81,181) | (80,747) | (165,568) | (165,954) | |
Income Before Provision for Income Taxes | 54,200 | 60,854 | 106,151 | 121,326 | |
Provision for Income Taxes | (16,437) | (20,107) | (32,408) | (36,769) | |
Net Income | 37,763 | 40,747 | 73,743 | 84,557 | |
Total Assets | 13,733,418 | 13,915,626 | 13,733,418 | 13,915,626 | 13,728,372 |
Retail Banking
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Business segment financial information | |||||
Number of branch locations through which products and services are delivered to customers | 66 | ||||
Number of ATM's through which products and services are delivered to customers | 486 | ||||
Net Interest Income | 35,725 | 39,118 | 71,634 | 79,303 | |
Provision for Credit Losses | 1,857 | 3,334 | 4,035 | 7,364 | |
Net Interest Income After Provision for Credit Losses | 33,868 | 35,784 | 67,599 | 71,939 | |
Noninterest Income | 20,871 | 22,376 | 41,355 | 41,916 | |
Noninterest Expense | (43,540) | (44,164) | (87,994) | (88,776) | |
Income Before Provision for Income Taxes | 11,199 | 13,996 | 20,960 | 25,079 | |
Provision for Income Taxes | (4,144) | (5,178) | (7,755) | (9,279) | |
Net Income | 7,055 | 8,818 | 13,205 | 15,800 | |
Total Assets | 3,283,634 | 3,344,319 | 3,283,634 | 3,344,319 | |
Commercial Banking
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Business segment financial information | |||||
Number of branches in which international banking and operations is included | 9 | ||||
Net Interest Income | 28,554 | 30,817 | 58,426 | 62,259 | |
Provision for Credit Losses | 472 | 157 | 301 | (511) | |
Net Interest Income After Provision for Credit Losses | 28,082 | 30,660 | 58,125 | 62,770 | |
Noninterest Income | 9,117 | 8,552 | 18,517 | 20,129 | |
Noninterest Expense | (22,011) | (21,577) | (44,895) | (45,099) | |
Income Before Provision for Income Taxes | 15,188 | 17,635 | 31,747 | 37,800 | |
Provision for Income Taxes | (5,177) | (6,042) | (10,849) | (9,063) | |
Net Income | 10,011 | 11,593 | 20,898 | 28,737 | |
Total Assets | 2,567,461 | 2,289,255 | 2,567,461 | 2,289,255 | |
Investment Services
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Business segment financial information | |||||
Net Interest Income | 2,594 | 3,150 | 5,365 | 6,483 | |
Provision for Credit Losses | (12) | 301 | (33) | 289 | |
Net Interest Income After Provision for Credit Losses | 2,606 | 2,849 | 5,398 | 6,194 | |
Noninterest Income | 15,288 | 14,071 | 30,098 | 27,741 | |
Noninterest Expense | (13,135) | (13,415) | (27,270) | (28,177) | |
Income Before Provision for Income Taxes | 4,759 | 3,505 | 8,226 | 5,758 | |
Provision for Income Taxes | (1,761) | (1,297) | (3,044) | (2,130) | |
Net Income | 2,998 | 2,208 | 5,182 | 3,628 | |
Total Assets | 188,871 | 189,008 | 188,871 | 189,008 | |
Treasury and Other
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Business segment financial information | |||||
Net Interest Income | 20,467 | 22,296 | 40,475 | 45,284 | |
Provision for Credit Losses | (2,317) | (3,164) | (4,303) | (6,163) | |
Net Interest Income After Provision for Credit Losses | 22,784 | 25,460 | 44,778 | 51,447 | |
Noninterest Income | 2,765 | 1,849 | 5,849 | 5,144 | |
Noninterest Expense | (2,495) | (1,591) | (5,409) | (3,902) | |
Income Before Provision for Income Taxes | 23,054 | 25,718 | 45,218 | 52,689 | |
Provision for Income Taxes | (5,355) | (7,590) | (10,760) | (16,297) | |
Net Income | 17,699 | 18,128 | 34,458 | 36,392 | |
Total Assets | $ 7,693,452 | $ 8,093,044 | $ 7,693,452 | $ 8,093,044 |
Investment Securities
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Jun. 30, 2013
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of June 30, 2013 and December 31, 2012 were as follows:
The table below presents an analysis of the contractual maturities of the Company’s investment securities as of June 30, 2013. Mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.
Investment securities with carrying values of $2.7 billion and $2.9 billion as of June 30, 2013 and December 31, 2012, respectively, were pledged to secure deposits of governmental entities and securities sold under agreements to repurchase. There were no sales of investment securities for the three and six months ended June 30, 2013 and for the three months ended June 30, 2012. Gross realized gains on the sales of investment securities were $0.2 million and gross realized losses on the sales of investment securities were $0.3 million for the six months ended June 30, 2012. The Company’s investment securities in an unrealized loss position, segregated by continuous length of impairment, were as follows:
The Company does not believe that the investment securities that were in an unrealized loss position as of June 30, 2013, which was comprised of 247 securities, represent an other-than-temporary impairment. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. As of June 30, 2013 and December 31, 2012, the gross unrealized losses reported for mortgage-backed securities were related to investment securities issued by the Government National Mortgage Association. The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost bases, which may be at maturity. As of June 30, 2013, included in the Company's investment securities at fair value were securities issued by political subdivisions within the State of Hawaii of $569.9 million, representing 70% of the total fair value of the Company's municipal debt securities. Of the entire Hawaii municipal bond portfolio, 94% were credit-rated Aa2 or better by Moody's while the remaining Hawaii municipal bonds were credit-rated A2 or better by at least one nationally recognized statistical rating organization. Also, approximately 76% of the Company's Hawaii municipal bond holdings were general obligation issuances. As of June 30, 2013, there were no other holdings of municipal debt securities that were issued by a single state or political subdivision which comprised more than 5% of the total fair value of the Company's municipal debt securities. As of June 30, 2013, the carrying value of the Company’s Federal Home Loan Bank and Federal Reserve Bank stock was as follows:
These securities can only be redeemed or sold at their par value and only to the respective issuing government-supported institution or to another member institution. The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than by recognizing temporary declines in value. |
Mortgage Servicing Rights (Tables)
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Jun. 30, 2013
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Mortgage Servicing Rights Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of change in carrying value of entity's mortgage servicing rights accounted for under the fair value measurement method | For the three and six months ended June 30, 2013 and 2012, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the fair value measurement method was as follows:
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Schedule of change in carrying value of entity's mortgage servicing rights including fair value of mortgage servicing rights accounted for under the amortization method | For the three and six months ended June 30, 2013 and 2012, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the amortization method was as follows:
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Schedule of key data and assumptions used in estimating the fair value of entity's mortgage servicing rights | The key data and assumptions used in estimating the fair value of the Company’s mortgage servicing rights as of June 30, 2013 and December 31, 2012 were as follows:
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Schedule of sensitivity analysis of the entity's fair value of mortgage servicing rights to changes in certain key assumptions | A sensitivity analysis of the Company’s fair value of mortgage servicing rights to changes in certain key assumptions as of June 30, 2013 and December 31, 2012 is presented in the following table.
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Derivative Financial Instruments (Details 2) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Derivative Instruments, Gain (Loss) | ||||
Net gains (losses) recognized in income | $ 5,697 | $ 8,037 | $ 12,101 | $ 12,889 |
Interest Rate Lock Commitments | Mortgage Banking Income
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Derivative Instruments, Gain (Loss) | ||||
Net gains (losses) recognized in income | (682) | 9,363 | 2,576 | 13,066 |
Forward Commitments | Mortgage Banking Income
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Derivative Instruments, Gain (Loss) | ||||
Net gains (losses) recognized in income | 5,433 | (2,028) | 7,662 | (1,762) |
Interest Rate Swap Agreements | Other Noninterest Income
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Derivative Instruments, Gain (Loss) | ||||
Net gains (losses) recognized in income | 243 | (11) | 263 | 5 |
Foreign Exchange Contracts | Other Noninterest Income
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Derivative Instruments, Gain (Loss) | ||||
Net gains (losses) recognized in income | $ 703 | $ 713 | $ 1,600 | $ 1,580 |
Derivative Financial Instruments
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The following table presents the Company’s derivative financial instruments, their fair values, and balance sheet location as of June 30, 2013 and December 31, 2012:
The following table presents the Company’s derivative financial instruments and the amount and location of the net gains recognized in the consolidated statements of income for the three and six months ended June 30, 2013 and 2012:
Management has received authorization from the Bank’s Board of Directors to use derivative financial instruments as an end-user in connection with its risk management activities and to accommodate the needs of its customers. As with any financial instrument, derivative financial instruments have inherent risks. Market risk is defined as the risk of adverse financial impact due to fluctuations in interest rates, foreign exchange rates, and equity prices. Market risks associated with derivative financial instruments are balanced with the expected returns to enhance earnings performance and shareholder value, while limiting the volatility of each. The Company uses various processes to monitor its overall market risk exposure, including sensitivity analysis, value-at-risk calculations, and other methodologies. Derivative financial instruments are also subject to credit and counterparty risk, which is defined as the risk of financial loss if a borrower or counterparty is either unable or unwilling to repay borrowings or settle a transaction in accordance with the underlying contractual terms. Credit and counterparty risks associated with derivative financial instruments are similar to those relating to traditional financial instruments. The Company manages derivative credit and counterparty risk by evaluating the creditworthiness of each borrower or counterparty, adhering to the same credit approval process used for commercial lending activities. As of June 30, 2013 and December 31, 2012, the Company did not designate any derivative financial instruments in formal hedging relationships. The Company’s free-standing derivative financial instruments are required to be carried at their fair value on the Company’s consolidated statements of condition. These financial instruments have been limited to interest rate lock commitments (“IRLCs”), forward commitments, interest rate swap agreements, and foreign exchange contracts. The Company enters IRLCs for residential mortgage loans which commit us to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. To mitigate this risk, the Company utilizes forward commitments as economic hedges against the potential decreases in the values of the loans held for sale. The IRLCs and forward commitments are free-standing derivatives which are carried at fair value with changes recorded in the mortgage banking component of noninterest income in the Company’s consolidated statements of income. Changes in the fair value of IRLCs and forward commitments subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time. The Company enters into interest rate swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. The Company mitigates the risk of entering into these agreements by entering into equal and offsetting interest rate swap agreements with highly rated third party financial institutions. The interest rate swap agreements are free-standing derivatives and are recorded at fair value in the Company's consolidated statements of condition. Fair value changes are recorded in other noninterest income in the Company’s consolidated statements of income. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. Collateral, usually in the form of marketable securities, is posted by the counterparty with net liability positions in accordance with contract thresholds. See Note 5 to the Consolidated Financial Statements for more information. The Company’s interest rate swap agreements with institutional counterparties contain credit-risk-related contingent features tied to the Company’s debt ratings or capitalization levels. Under these provisions, if the Company’s debt rating falls below investment grade or if the Company’s capitalization levels fall below stipulated thresholds, certain counterparties may require immediate and ongoing collateralization on interest rate swaps in net liability positions, or may require immediate settlement of the contracts. As of June 30, 2013, the Company’s debt ratings and capital levels were in excess of these minimum requirements. The Company utilizes foreign exchange contracts to offset risks related to transactions executed on behalf of customers. The foreign exchange contracts are free-standing derivatives which are carried at fair value with changes included in other noninterest income in the Company’s consolidated statements of income. |
Commitments, Contingencies, and Guarantees (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Credit Commitments | ||
Total Credit Commitments | $ 2,331,240 | $ 2,075,456 |
Unfunded Commitments to Extend Credit
|
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Credit Commitments | ||
Total Credit Commitments | 2,255,270 | 1,999,542 |
Standby Letters of Credit
|
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Credit Commitments | ||
Total Credit Commitments | 60,663 | 62,043 |
Commercial Letters of Credit
|
||
Credit Commitments | ||
Total Credit Commitments | $ 15,307 | $ 13,871 |
Earnings Per Share (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the weighted average number of common shares outstanding for computing diluted earnings per share and antidilutive stock options and restricted stock outstanding | The following is a reconciliation of the weighted average number of common shares outstanding for computing diluted earnings per share and antidilutive stock options and restricted stock outstanding for the three and six months ended June 30, 2013 and 2012:
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Accumulated Other Comprehensive Income (Loss) (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other comprehensive income | The following table presents the components of other comprehensive income (loss) for the three and six months ended June 30, 2013 and 2012:
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2013 and 2012:
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Reclassification Out of Accumulated Other Comprehensive Income | The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and six months ended June 30, 2013 and 2012:
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Mortgage Servicing Rights (Details 3) (Mortgage Servicing Rights)
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6 Months Ended | 12 Months Ended |
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Jun. 30, 2013
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Dec. 31, 2012
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Mortgage Servicing Rights
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Key data and assumptions used in estimating the fair value of mortgage servicing rights | ||
Weighted-Average Constant Prepayment Rate (as a percent) | 9.88% | 12.26% |
Weighted-Average Life (in years) | 7 years 2 months 16 days | 6 years 2 months 26 days |
Weighted-Average Note Rate (as a percent) | 4.38% | 4.59% |
Weighted-Average Discount Rate (as a percent) | 6.31% | 5.57% |
Commitments, Contingencies, and Guarantees (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit commitments | The Company’s credit commitments as of June 30, 2013 and December 31, 2012 were as follows:
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Mortgage Servicing Rights - Narrative (Details) (Mortgage Servicing Rights, USD $)
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3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Mortgage Servicing Rights
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Servicing Assets at Fair Value [Line Items] | |||||
Residential mortgage loans serviced for third parties | $ 3,100,000,000 | $ 3,100,000,000 | $ 3,100,000,000 | ||
Servicing income, including late and ancillary fees | $ 2,000,000 | $ 2,100,000 | $ 4,000,000 | $ 4,200,000 |
Assets and Liabilities Subject to Enforceable Master Netting Arrangements (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Offsetting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets and Liabilities | The following table presents the assets and liabilities subject to an enforceable master netting arrangement or repurchase agreements as of June 30, 2013 and December 31, 2012. The swap agreements we have with our commercial banking customers are not subject to an enforceable master netting arrangement, and therefore, are excluded from this table.
(a) Collateral is posted by the counterparty with net liability positions in accordance with contract thresholds. As of June 30, 2013 and December 31, 2012, the fair value of securities pledged by the Company was $2.6 million and $3.1 million, respectively. (b) As of June 30, 2013 and December 31, 2012, the fair value of securities pledged was $0.7 billion and $0.8 billion, respectively. (c) The investment securities pledged to each government entity collectively secure both deposits as well as repurchase agreements. The Company had government entity deposits totaling $1.3 billion and $1.4 billion as of June 30, 2013 and December 31, 2012, respectively. The investment securities pledged as of June 30, 2013 and December 31, 2012 had a fair value of $2.0 billion and $2.2 billion, respectively. |
Loans and Leases and the Allowance for Loan and Lease Losses
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Jun. 30, 2013
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Loans and Leases and Allowance for Loan and Lease Losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases and the Allowance for Loan and Lease Losses | Loans and Leases and the Allowance for Loan and Lease Losses Loans and Leases The Company’s loan and lease portfolio was comprised of the following as of June 30, 2013 and December 31, 2012:
Most of the Company's lending activity is with customers located in the State of Hawaii. A substantial portion of the Company's real estate loans are secured by real estate in Hawaii. Net gains related to sales of residential mortgage loans, recorded as a component of mortgage banking income, were $4.8 million and $2.3 million for the three months ended June 30, 2013 and 2012, respectively, and $12.4 million and $4.7 million for the six months ended June 30, 2013 and 2012, respectively. Allowance for Loan and Lease Losses (the “Allowance”) The following presents by portfolio segment, the activity in the Allowance for the three and six months ended June 30, 2013 and 2012. The following also presents by portfolio segment, the balance in the Allowance disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans and leases as of June 30, 2013 and 2012.
Credit Quality Indicators The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company uses an internal credit risk rating system that categorizes loans and leases into pass, special mention, or classified categories. Credit risk ratings are applied individually to those classes of loans and leases that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans and leases to businesses or individuals in the classes which comprise the commercial portfolio segment. Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk-rated and monitored collectively. These are typically loans and leases to individuals in the classes which comprise the consumer portfolio segment. The following are the definitions of the Company’s credit quality indicators:
The Company’s credit quality indicators are periodically updated on a case-by-case basis. The following presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of June 30, 2013 and December 31, 2012.
Aging Analysis The following presents by class, an aging analysis of the Company’s loan and lease portfolio as of June 30, 2013 and December 31, 2012.
Impaired Loans The following presents by class, information related to impaired loans as of June 30, 2013 and December 31, 2012.
The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three and six months ended June 30, 2013 and 2012.
For the three and six months ended June 30, 2013 and 2012, the amount of interest income recognized by the Company within the periods that the loans were impaired were primarily related to loans modified in a troubled debt restructuring that remained on accrual status. For the three and six months ended June 30, 2013 and 2012, the amount of interest income recognized using a cash-basis method of accounting during the periods that the loans were impaired was not material. Modifications A modification of a loan constitutes a troubled debt restructuring (“TDR”) when the Company for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Loans modified in a TDR were $50.7 million and $41.1 million as of June 30, 2013 and December 31, 2012, respectively. There were no commitments to lend additional funds on loans modified in a TDR as of June 30, 2013. The Company offers various types of concessions when modifying a loan or lease, however, forgiveness of principal is rarely granted. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. Lease financing modifications generally involve a short-term forbearance period, usually about three months, after which the missed payments are added to the end of the lease term, thereby extending the maturity date. Interest continues to accrue on the missed payments and as a result, the effective yield on the lease remains unchanged. As the forbearance period usually involves an insignificant payment delay, lease financing modifications typically do not meet the reporting criteria for a TDR. Prior to November 2012, residential mortgage loans modified in a TDR were primarily comprised of loans where monthly payments were lowered to accommodate the borrowers' financial needs for a period of time, normally two years. During that time, the borrower's entire monthly payment was applied to principal. After the lowered monthly payment period ended, the borrower reverted back to paying principal and interest per the original terms with the maturity date adjusted accordingly. Effective November 2012, the Company revised its modification program to resemble the Federal Government's Home Affordable Modification Payment (“HAMP”) Tier 2 program. Under this modification program, the concessions generally include a lower interest rate and the loan being fully amortized for up to 40 years from the modification effective date. In some cases, the Company may forbear a portion of the unpaid principal balance with a balloon payment due upon maturity or pay-off of the loan. Land loans are also included in the class of residential mortgage loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Prior to September 2012, land loans modified in a TDR typically involved extending the balloon payment by one to three years, changing the monthly payments from interest-only to principal and interest, while leaving the interest rate unchanged. In September 2012, the land loan modification program was changed to offer an extension to term-out and fully amortize the loan over a period of up to 360 months. Home equity modifications are made infrequently and are offered to borrowers if the Company does not hold the first mortgage. Home equity modifications are uniquely designed to meet the specific needs of each borrower. Borrowers having both a first mortgage and home equity loan with the Company are offered a residential mortgage loan modification. Automobile loans modified in a TDR are primarily comprised of loans where the Company has lowered monthly payments by extending the term. Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR may have the financial effect of increasing the specific Allowance associated with the loan. An Allowance for impaired consumer and commercial loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. The following presents by class, information related to loans modified in a TDR during the three and six months ended June 30, 2013 and 2012.
The following presents by class, all loans modified in a TDR that defaulted during the three and six months ended June 30, 2013 and 2012, and within twelve months of their modification date. A TDR is considered to be in default once it becomes 60 days or more past due following a modification.
Commercial and consumer loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment. The specific Allowance associated with the loan may be increased, adjustments may be made in the allocation of the Allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan. |
Summary of Significant Accounting Policies
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Jun. 30, 2013
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Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation Bank of Hawaii Corporation (the “Parent”) is a Delaware corporation and a bank holding company headquartered in Honolulu, Hawaii. Bank of Hawaii Corporation and its Subsidiaries (the “Company”) provides a broad range of financial products and services to customers in Hawaii, Guam, and other Pacific Islands. The Parent’s principal and only operating subsidiary is Bank of Hawaii (the “Bank”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and accompanying notes required by GAAP for complete financial statements. In the opinion of management, the consolidated financial statements reflect normal recurring adjustments necessary for a fair presentation of the results for the interim periods. Certain prior period information has been reclassified to conform to the current period presentation. These statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements. Investment Securities Realized gains and losses are recorded in noninterest income using the specific identification method. Offsetting Assets and Liabilities In December 2011, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2011-11, “Disclosures About Offsetting Assets and Liabilities.” This project began as an attempt to converge the offsetting requirements under U.S. GAAP and International Financial Reporting Standards ("IFRS"). However, as the FASB and International Accounting Standards Board were not able to reach a converged solution with regards to offsetting requirements, they each developed convergent disclosure requirements to assist in reconciling differences in the offsetting requirements under U.S. GAAP and IFRS. The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. ASU No. 2011-11 also requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. In January 2013, the FASB issued ASU No. 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities." The provisions of ASU No. 2013-01 limit the scope of the new balance sheet offsetting disclosures to the following financial instruments, to the extent they are offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the statement of financial position: (1) derivative financial instruments; (2) repurchase agreements and reverse repurchase agreements; and (3) securities borrowing and securities lending transactions. The Company adopted the provisions of ASU No. 2011-11 and ASU No. 2013-01 effective January 1, 2013. As the provisions of ASU No. 2011-11 and ASU No. 2013-01 only impacted the disclosure requirements related to the offsetting of assets and liabilities and information about instruments and transactions eligible for offset in the statement of financial position, the adoption had no impact on the Company's consolidated statements of income and condition. See Note 5 to the Consolidated Financial Statements for the disclosures required by ASU No. 2011-11 and ASU No. 2013-01. Reclassifications Out of Accumulated Other Comprehensive Income In February 2013, the FASB issued ASU No. 2013-02, "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income," to improve the transparency of reporting these reclassifications. ASU No. 2013-02 does not amend any existing requirements for reporting net income or other comprehensive income in the financial statements. ASU No. 2013-02 requires an entity to disaggregate the total change of each component of other comprehensive income (e.g., unrealized gains or losses on available-for-sale investment securities) and separately present reclassification adjustments and current period other comprehensive income. The provisions of ASU No. 2013-02 also require that entities present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source (e.g., unrealized gains or losses on available-for-sale investment securities) and the income statement line item affected by the reclassification (e.g., realized gains (losses) on sales of investment securities). If a component is not required to be reclassified to net income in its entirety (e.g., amortization of defined benefit plan items), entities would instead cross reference to the related note to the financial statements for additional information (e.g., pension footnote). The Company adopted the provisions of ASU No. 2013-02 effective January 1, 2013. As the provisions of ASU No. 2013-02 only amended the disclosure requirements for accumulated other comprehensive income, the adoption had no impact on the Company's consolidated statements of income and condition. See Note 6 to the Consolidated Financial Statements for the disclosures required by ASU No. 2013-02. |
Business Segments (Tables)
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Selected business segment financial information | Selected business segment financial information as of and for the three and six months ended June 30, 2013 and 2012 were as follows:
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Fair Value of Assets and Liabilities (Tables)
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances of assets and liabilities measured at fair value on a recurring basis | The table below presents the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:
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Changes in Level 3 assets and liabilities measured at fair value on a recurring basis | For the three and six months ended June 30, 2013 and 2012, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
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Summary of the significant unobservable inputs | For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of June 30, 2013 and December 31, 2012, the significant unobservable inputs used in the fair value measurements were as follows:
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Schedule of difference between the aggregate fair value and the aggregate unpaid principal balance of the Company's residential mortgage loans held for sale | The following table reflects the difference between the aggregate fair value and the aggregate unpaid principal balance of the Company’s residential mortgage loans held for sale as of June 30, 2013 and December 31, 2012.
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Schedule of carrying amount, fair value, and fair value hierarchy of financial instruments | The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of June 30, 2013 and December 31, 2012. This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For non-marketable equity securities such as Federal Home Loan Bank and Federal Reserve Bank stock, the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.
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Loans and Leases and the Allowance for Loan and Lease Losses (Details) (USD $)
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3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Loan and lease portfolio | |||||
Loans and Leases | $ 5,859,152,000 | $ 5,671,483,000 | $ 5,859,152,000 | $ 5,671,483,000 | $ 5,854,521,000 |
Net gains related to sales of mortgage loans | 4,800,000 | 2,300,000 | 12,400,000 | 4,700,000 | |
Commercial
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Loan and lease portfolio | |||||
Loans and Leases | 2,400,762,000 | 2,122,360,000 | 2,400,762,000 | 2,122,360,000 | 2,315,893,000 |
Commercial and Industrial
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Loan and lease portfolio | |||||
Loans and Leases | 875,702,000 | 875,702,000 | 829,512,000 | ||
Commercial Mortgage
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Loan and lease portfolio | |||||
Loans and Leases | 1,160,977,000 | 1,160,977,000 | 1,097,425,000 | ||
Construction
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Loan and lease portfolio | |||||
Loans and Leases | 107,016,000 | 107,016,000 | 113,987,000 | ||
Lease Financing
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Loan and lease portfolio | |||||
Loans and Leases | 257,067,000 | 257,067,000 | 274,969,000 | ||
Consumer
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Loan and lease portfolio | |||||
Loans and Leases | 3,458,390,000 | 3,549,123,000 | 3,458,390,000 | 3,549,123,000 | 3,538,628,000 |
Residential Mortgage
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Loan and lease portfolio | |||||
Loans and Leases | 2,252,117,000 | 2,252,117,000 | 2,349,916,000 | ||
Home Equity
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Loan and lease portfolio | |||||
Loans and Leases | 751,790,000 | 751,790,000 | 770,376,000 | ||
Automobile
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Loan and lease portfolio | |||||
Loans and Leases | 233,475,000 | 233,475,000 | 209,832,000 | ||
Other
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Loan and lease portfolio | |||||
Loans and Leases | $ 221,008,000 | $ 221,008,000 | $ 208,504,000 |
Derivative Financial Instruments (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Derivative Financial Instruments Not Designated as Hedging Instruments | ||
Asset Derivatives | $ 30,319 | $ 42,610 |
Liability Derivatives | 26,738 | 33,626 |
Interest Rate Lock Commitments
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Derivative Financial Instruments Not Designated as Hedging Instruments | ||
Asset Derivatives | 1,754 | 10,188 |
Liability Derivatives | 1,953 | 0 |
Forward Commitments
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Derivative Financial Instruments Not Designated as Hedging Instruments | ||
Asset Derivatives | 4,337 | 189 |
Liability Derivatives | 240 | 329 |
Interest Rate Swap Agreements
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Derivative Financial Instruments Not Designated as Hedging Instruments | ||
Asset Derivatives | 24,176 | 32,193 |
Liability Derivatives | 24,361 | 32,441 |
Foreign Exchange Contracts
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Derivative Financial Instruments Not Designated as Hedging Instruments | ||
Asset Derivatives | 52 | 40 |
Liability Derivatives | $ 184 | $ 856 |