Fitch Affirms Bank of Hawaii Corporation's IDR at 'A-'; Outlook Stable

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NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings of Bank of Hawaii Corporation (BOH) and its bank subsidiary, Bank of Hawaii. The Rating Outlook is Stable. A complete list of ratings follows at the end of this release.

Fitch's rating action reflects BOH's solid balance sheet fundamentals, as well as its consistent earnings and credit performance. The company's strong local Hawaii franchise provides the company with a good core funding base and contributes to its healthy liquidity position. Further, the company maintains a strong high-quality capital base.

BOH's relatively healthy performance is driven by a reliable source of spread income, low credit costs, and good operating efficiency. Credit quality has remained solid and did not exhibit much volatility during the more challenging operating environment in Hawaii.

Fitch does expect BOH's future earnings growth to be constrained despite the improving economic conditions on Hawaii. While BOH's earnings will benefit from further reductions in credit costs, revenue growth will remain challenged. Limited loan growth and declining yields in the securities portfolio will hamper spread earnings. Further, regulatory rules have and will continue to pressure non-interest income. That said, Fitch still expects the company to remain solidly profitable.

The company has become a more active capital manager as a result of limited organic growth and in the absence of other strategic alternatives. However, concerns regarding BOH becoming a more aggressive capital manager are balanced against its strong credit fundamentals and consistent profitability. Additionally, Fitch does not anticipate a material diminution in BOH's capital position from its current or planned capital actions.

The Stable Rating Outlook considers that the company's conservative risk management has limited the level of credit problems arising from its geographically concentrated loan portfolio. Further, BOH has maintained sound capital and reserve positions, which is considered prudent and necessary given its geographic concentration risk, and should protect the company should the Hawaii economy see a reversal of recent stabilizing trends.

The company's geographic concentration and limited diversification remain key rating constraints. BOH's ratings are toward the high end of their potential range and therefore, upward ratings momentum from improved earnings and credit performance is limited. BOH's ratings could move lower should there be a material deterioration in credit quality or if BOH does not maintain a conservative posture toward capital. Fitch expects BOH to maintain ample reserve and capital coverage given its geographic concentration.

Fitch affirms the following ratings with a Stable Rating Outlook:

Bank of Hawaii Corporation

--Long-term Issuer Default Rating (IDR) at 'A-';

--Short-term IDR at 'F1';

--Viability Rating at 'a-';

--Individual at 'B';

--Support at '5';

--Support Floor at 'NF'.

Bank of Hawaii

--Long-term IDR at 'A-';

--Short-term IDR at 'F1';

--Long-term deposits at 'A';

--Short-term deposits at 'F1';

--Viability Rating at 'a-';

--Individual at 'B';

--Support at '5';

--Support Floor at 'NF'.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

In addition to the source(s) of information identified in the Master Criteria, this action was additionally informed by information provided by the company.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);

--'Bank Holding Companies' (Aug. 16, 2011).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171

Bank Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648612

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