Posted on: Wednesday, July 18, 2001
BancWest earnings jump 22 percent
By Frank Cho
Advertiser Staff Writer
BancWest Corp. said second-quarter earnings soared 22.2 percent, as Hawai'i's largest bank holding company reported stronger performance in both its Mainland and Hawai'i operations.
In what will likely be its last public quarterly financial report before it goes private, the $19-billion Honolulu company said net income for the quarter that ended in June rose to nearly $66 million, or 52 cents a share, compared to $54 million, or 43 cents a share, in the same period last year.
The earnings beat analysts' average estimate of 47 cents a share, according to Zacks Investment Research.
But concerns about a slowing U.S. economy and California's energy crisis have prompted the company to prepare for a possible rise in the number of problem loans.
During the quarter, BancWest increased its provisions for loan losses to $23.2 million, up $6.9 million from the same quarter a year ago. That brings total provisions for loan losses for the first half of this year to $58.4 million, nearly double what it was a year ago.
"We believe an increased loan loss provision is necessary and prudent given the concern about the economic slowdown nationally and continuing problems with energy in California," Walter Dods, BancWest's chairman and chief executive officer, said in a statement.
The provisioning represents 1.32 percent of total loans and leases at the end of June, compared to 1.23 percent at the end of 2000, and 1.2 percent the same time a year ago.
"I generally think that banks that have a few extra dollars will more than likely plow it into the reserves," said Brock Vandervliet, a New York-based banking analyst with Lehman Brothers.
Vandervliet said many U.S. banks are preparing for a downturn in the credit cycle that could bring an increase in problem loans. But because of BancWest's relatively conservative portfolio, Vandervliet said he does not see any significant problems for the company. He said many Wall Street analysts have stopped following the Hawai'i company closely since it agreed in May to be acquired by a French bank.
Paris-based BNP Paribas, France's biggest bank and BancWest's single-largest shareholder, offered $2.5 billion for the 55 percent of BancWest it doesn't already own. The deal should be concluded in the third quarter, pending regulatory and shareholder approval. Once private, BancWest no longer will be required to publicly report its financial performance.
In May, BNP Paribas offered $35 a share for BancWest, a 40 percent premium over its closing price of $24.98 before the offer.
BancWest, which is the parent company of First Hawaiian Bank and San Francisco-based Bank of the West, is the largest Hawai'i-based financial institution with more than 1 million customers more than 250 branches in Hawai'i, California, Oregon, Idaho, New Mexico, Nevada, Guam and Saipan.
BancWest reported total assets of $19.3 billion as of June 30, up 8.3 percent from a year ago. Loans outstanding at the end of June were $14.5 billion, up 8.5 percent, and deposits stood at $14.65 billion, up 8.2 percent. For the first half of 2001, BancWest reported net income of $127.7 million, up 23.5 percent from a the same period a year ago. On a per-share basis, the company reported earnings of $1.01 a share, up 21.7 percent.
