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The Honolulu Advertiser
Posted on: Tuesday, July 28, 2009

Bankoh profits drop 36% in 2nd quarter

BY Greg Wiles
Advertiser Staff Writer

Bank of Hawaii Corp.'s net income fell by more than a third during the second quarter, as it incurred higher FDIC insurance costs and experienced a lower return on assets.

The state's second-largest bank by assets said it had a profit of $31 million, or 65 cents a share, during the April-to-June quarter as an economic downturn continued to grip the state.

That compared with a profit of $48.3 million, or $1 a share, a year earlier.

The results, while lower than a year earlier, exceeded the expectations of financial analysts who follow the company. The company reported earnings that were 5 cents a share higher on an adjusted basis than had been expected by Wall Street.

Shares of the company's stock jumped 8.4 percent, or $2.44, to $38.48.

"Bank of Hawaii remains solidly profitable in the second quarter, despite increasing costs for FDIC insurance and the impact of the weak economy," said Chairman and Chief Executive Officer Allan Landon, on a conference call discussing the results with large investors and analysts.

Landon noted the bank remains focused on soundness and added to its reserves and capital during the quarter while increasing net interest income and keeping an eye on expenses.

The company said Federal Deposit Insurance Corp. costs rose to $9 million from $200,000 a year earlier and included the company's $5.7 million share of an industrywide assessment.

Meanwhile, the bank reported it aggressively dealt with three problem loans and leases in taking a credit provision of $28.7 million. A year earlier, its provision for credit losses had totaled $7.17 million.

Bank of Hawaii also reported:

  • The allowance for loans and lease losses increased to $137.4 million from $123.5 million a year earlier.

  • Nonperforming assets declined slightly from the first quarter at $39.1 million. But they were more than double a year earlier.

  • Net interest income of $102.9 million was higher than the first quarter but compared with $107.2 million a year prior.

  • Noninterest income, which include fees earned through services, leasing and other nonlending operations was $59.8 million, or roughly in line with a year earlier.

  • Return on average assets fell to 1.06 percent from 1.85 percent during the 2008 second quarter.

  • Total assets were $12.2 billion at the end of June, up $1.82 billion from a year earlier. The company reported success in growing deposits with its free checking offering.

    The company's board of directors also declared a cash dividend of 45 cents a share that will be payable on Sept. 15 to shareholders of record at the close of business on Aug. 31.