Magazine article American Banker

2Q Earnings: Welcome Signs of Stability for Pair in Hawaii

Magazine article American Banker

2Q Earnings: Welcome Signs of Stability for Pair in Hawaii

Article excerpt

Byline: Kevin Dobbs

Hawaii's two largest banking companies posted earnings increases and showed they have avoided the turmoil that has rocked many other regionals.

Bank of Hawaii Corp., which reported its second-quarter earnings Monday, and First Hawaiian Bank, a unit of BNP Paribas SA that reported after the markets closed Friday, said margins propped up their profits, though both companies cited some evidence of an economic slowdown.

Bank of Hawaii credited solid net interest income, which rose 8% from a year earlier, to $107.4 million, and a 29-basis-point increase in its net interest margin, to 4.41%, which was fueled by a decrease in the federal funds rate.

The margin expansion was "probably the most significant factor for us," Allan R. Landon, the Honolulu company's chairman and chief executive, said in an interview Monday.

The $10.4 billion-asset Bank of Hawaii said its net income edged up 1.2% from a year earlier, to $48.3 million, or $1 a share. Analysts polled by Thomson Reuters on average had expected a profit of 93 cents.

The $13 billion-asset First Hawaiian said its earnings rose 6% from a year earlier, to $55.1 million.

"Revenue growth, margin, and asset quality all remained strong," Don Horner, the Honolulu bank's president and CEO, said in a press release. "Our relationship strategy initiatives, productivity improvements, and consistent credit policies have positioned us well for continued growth."

First Hawaiian did not quantify its margin increase. Its revenue rose 12%, to $345 million, and total loans and leases rose 18%, to $7.4 billion.

"Despite the slowing local and national economies, the bank continued to perform well," Mr. Horner said.

BancWest Corp. of San Francisco, the immediate parent company for First Hawaiian, and BNP Paribas will report their results Aug. 6.

"Relative to what's happening in the rest of the sector, things in Hawaii seem to look pretty good," Brent Christ, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, said in an interview Monday. "Certainly, things are slowing, with the cost of oil and the impact on travel, but it doesn't look like the economy there has cracked like it has in some other states on the mainland."

The Federal Reserve Board's latest Beige Book, a gathering of reports on local economic activity, showed that tourism, Hawaii's economic engine, is down slightly this summer. …

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