Its financial position leads to the Forbes magazine rank for a second straight year
POSTED: 1:30 a.m. HST, Dec 23, 2010
Bank of Hawaii has been named the best bank in the country for the second straight year by Forbes magazine.
The Honolulu-based bank, which has assets of $12.7 billion, finished in the top 10 in five of the eight categories that were used to measure financial performance. Forbes determined the ranking by partnering with SNL Financial and evaluating the 100 largest U.S.-owned banks and thrift institutions ranging in asset size from $4.7 billion to $2.3 trillion.
First Hawaiian Bank, the largest bank in the state with $14.8 billion in assets, is owned by Paris-based BNP Paribas SA.
Forbes, which published its rankings online this week, said Bank of Hawaii "stayed very conservative in its underwriting strategy during the housing bubble, which helped minimize the bad loans on its books today."
The magazine said Bank of Hawaii's reserves are three times the size of its nonperforming loans, second-best among big banks.
"Wall Street certainly approves of how Bank of Hawaii runs it business: Its shares trade at a multiple of 2.2 times its book value, the second-highest ratio among the 100 largest banks," Forbes wrote.
Bank of Hawaii's stock closed up 44 cents yesterday at $47.70 on the New York Stock Exchange.
"Attaining this ranking for two consecutive years now certainly reflects positively on the quality of our community, our clients, and especially our people," Bank of Hawaii Chairman and Chief Executive Officer Peter Ho said. "This is a nice tribute to our employees, who work tirelessly to meet our customers' financial needs."
Analyst Joe Gladue of Haverford, Pa.-based B. Riley & Co. wasn't surprised by the ranking.
"I think it's one of the best-managed banks around," Gladue said. "After it attempted to expand to the mainland years back, the bank pulled back and decided to focus more on its core market in Hawaii and stayed very disciplined with that core franchise. They've been conservative lenders, and that's helped them get through this recent economic downturn."
The Forbes/SNL ranking was based on return on average equity, net interest margin, nonperforming loans as a percentage of loans, nonperforming assets as a percentage of assets, reserves as a percentage of nonperforming loans, two capital ratios (Tier 1 and risk-based), and leverage ratio.
"In this environment, they continue to do very well vis-a-vis their peers due to their low risk profile, adherence to strong credit underwriting standards, and continuing to follow a strategic plan that results in high profitability, low risk and strong shareholder returns," said senior research analyst Brett Rabatin of Birmingham, Ala.-based Sterne Agee.
Pasadena, Calif.-based East West Bancorp, the largest bank in the U.S. focused on serving the Asian-American community, was ranked second. Houston-based Prosperity Bancshares was ranked third.
Wilmington Trust, headquartered in Wilmington, Del., ranked last among the 100 largest banks.