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The Honolulu Advertiser

Posted at 12:01 p.m., Monday, July 22, 2002

BOH earnings rise while core profits fall

By John Duchemin
Advertiser Staff Writer

Bank of Hawaii Corp. earnings rose in the second quarter compared with the year-ago period, but profits in its core businesses declined thanks to a slow local economy.

Net income for the $10 billion bank holding company was $31 million in the three months ending June 30, up 16 percent from an unusually low $26.7 million in the same quarter last year. Earnings per share were 42 cents, compared to 32 cents per share the year earlier.

But that growth was from a second-quarter 2001 that was depressed because of millions of dollars in one-time charges. When "continuing operations" are compared, the bank's earnings dropped 4.9 percent.

Michael O'Neill, the bank's chairman, president and chief executive, blamed the poor post-Sept. 11 economy for the decline, but said the bank's ability to weather challenging times has improved because of a massive restructuring that has trimmed billions in assets from Hawai'i's second largest bank.

"I think the environment has clearly had an impact on things like loan demand (which has dropped)," O'Neill said today. But, he added, "we're using our assets much more efficiently."

Bank of Hawaii's credit quality improved as bad loans and other nonperforming assets dropped from $118 million last year to $78.8 million as of June 30. Return on assets, an important indicator of bank profitability, increased to 1.23 percent from 0.83 percent last year.

The bank's total assets were $9.8 billion as of June 30, down from $12.8 billion last year. Net loans were $5.2 billion, down from $6.6 billion, while deposits of $6.5 billion were down from $7.4 billion last year.

O'Neill said the large declines were almost entirely because of the sell-off of assets, including operations and investments in Asia, the South and West Pacific, Australia and the U.S. Mainland.

The bank expects earnings of $120 million for the year, but O'Neill said profits could be dampened by the recent declines in the stock market, which will lower income for the bank's trust division.

Bank of Hawaii shares fell 28 cents today to close at $24.84.