POSTED: 01:30 a.m. HST, Jan 25, 2011
Bank of Hawaii Corp. posted flat fourth-quarter net income compared with a year ago but showed continued improvement in its credit portfolio and beat analysts' earnings expectations.
Peter Ho, chairman, president and CEO, described the quarter yesterday as being "solid" but said the bank has a cautious outlook for 2011.
"There's a difference between having the bottom formed in the economy and getting back to meaningful growth in the marketplace," he said. "That element is still elusive for us, and for that kind of environment, we'll need to really get back on the substantial growth track as a company."
Ho said Bank of Hawaii intends to open three new branches this year to increase its total systemwide to 85. The branches are planned for Hilo, Beretania Street and Moiliili.
The bank's earnings last quarter edged up 0.2 percent to $40.6 million, or 84 cents a share, compared with $40.5 million, or 84 cents a share, a year ago.
Analysts surveyed by Thomson First Call were looking for 69 cents a share. Sterne Agee analyst Brett Rabatin, who was forecasting 72 cents a share, said the bank came in at 73 cents on a "normalized" basis after excluding a tax benefit and nonrecurring expenses.
Revenue fell 19.9 percent to $147.8 million from $184.3 million, largely because of a 36.3 percent drop in noninterest income that was inflated a year ago from a $25.7 million gain on the sales of investment securities and a $2.5 million gain related to the sale of the bank's insurance subsidiary and the disposal of leased assets.
Bankoh's stock slipped 13 cents yesterday to $47.49 after hitting an intraday high of $49.23 on the New York Stock Exchange.
With the improving state economy, Bank of Hawaii's asset quality showed marked improvement last quarter from the same period in 2009.
Nonperforming assets were cut to $37.8 million from $48.3 million a year ago, while net charge-offs decreased to $5.3 million from $25.8 million in the fourth quarter of 2009. The charge-offs would have been higher if not for the recovery of $7.3 million from two construction loans — one to a self-storage facility in which Bankoh was able to negotiate a sale, and the other related to a property note sale for a luxury project on the Big Island.
The bank needed to set aside $5.3 million last quarter for potential loan losses compared with $26.8 million in the year-earlier quarter.
"We've had improving credit for a couple of quarters now, and we're hoping that is truly a trend," Ho said.
The bank's assets increased 5.7 percent to $13.1 billion last quarter from $12.4 billion a year ago, while deposits rose 5.1 percent to $9.9 billion from $9.4 billion.
Bank of Hawaii is the state's second-largest bank in terms of assets. First Hawaiian Bank reported $15.2 billion in assets last quarter.
Loans and leases fell 7.4 percent to $5.34 billion from $5.8 billion in the year-earlier quarter but rose 0.4 percent from $5.31 billion at the end of the third quarter.
"It was the first quarter in a long time we've seen them grow the loan portfolio, but it's still a challenging environment to grow loans," Rabatin said. "It's something that Bank of Hawaii needs to do given the level of liquidity they have."
For the year, the bank's net income jumped 27.7 percent to $183.9 million, or $3.80 a share, from $144 million, or $3 a share, a year ago.
Bank of Hawaii maintained its dividend at 45 cents a share. It will be payable March 14 to shareholders of record at the close of business on Feb. 28.