Posted on: Friday, August 13, 2004

California subsidiary helps bank profits

By Deborah Adamson
Advertiser Staff Writer

Profit growth at BancWest Corp. in the second quarter came mainly from its Bank of the West subsidiary in California instead of First Hawaiian Bank, according to a Securities and Exchange Commission filing yesterday.

First Hawaiian Bank reported a net income of $35.3 million in the quarter compared with $35 million a year ago. Revenue rose by 0.5 percent to $123.4 million from $122.7 million last year. Deposits rose by 7.7 percent, while average assets went up by 7 percent to $10 billion.

A spokesman for the state's largest bank said last year's profits were enhanced by a one-time gain on the sale of an equipment lease. Without extraordinary items, earnings for the second quarter would have been up by 7 percent from 2003.

Bank of the West earned $101.4 million in the quarter, up 6 percent from last year's $95.6 million. Revenue went up by 3 percent to $344.3 million vs. $333.7 million. Average assets totaled $30 billion in the quarter.

Overall, BancWest Corp.'s profits rose by 6.6 percent to $114.8 million while revenue increased by 2.4 percent to $432.3 million.

Profit growth at First Hawaiian Bank's retail banking operations was offset by earnings declines in its consumer finance and commercial banking divisions.

Retail banking — which comprise bank branch operations — had a net income of $16.4 million in the quarter, up 2 percent from a year ago. Net interest income rose by 3.5 percent to $58.6 million while noninterest income climbed 6.6 percent to $14.5 million due to higher fees on deposit accounts. Expenses went up by 5.4 percent due to furniture and equipment write-offs.

Consumer finance profits fell by 10 percent to $8.9 million as a 34 percent decline in noninterest income offset an 11.6 percent increase in net interest income. Noninterest income weakened due to smaller gains on sales of mortgages. Consumer finance includes personal and auto loans and mortgages. Overall, loans are up 4.3 percent from a year ago.

Commercial banking profits fell by nearly 11 percent to $6.7 million. Net interest income fell by 9 percent and expenses soared by 135 percent, eclipsing a 70 percent gain in noninterest income mainly due to the sale of an investment in a lease.

Bank of the West is set to expand after its acquisition of two Mainland banks closes in the third quarter. Community First Bankshares of Fargo, N.D., operates 155 branches in 12 states and has total assets of $5.6 billion while USDB Bancorp. of Stockton, Calif., brings to the table 19 branches and total assets of $1.1 billion.

Honolulu-based BancWest Corp. is a wholly owned subsidiary of BNP Paribas in Paris.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.