Banking ratings

Hawaii’s two largest banks were ranked at or near the top in the nation for financial performance in 2011, according to the ABA Banking Journal, a monthly national trade publication.

Bank of Hawaii Corp. was ranked the nation’s top-performing bank among public and private banks and thrifts with at least $10 billion in assets. It was the second year in a row that Bank of Hawaii, the state’s second-largest bank in assets, was awarded the No. 1 spot. It’s been annually ranked among the top 10 performing banks in the country since 2007.

First Hawaiian Bank’s holding company, Hono­lulu-based BancWest Corp., was ranked second among private and foreign-owned banks and thrifts with assets of $10 billion or more. BancWest is owned by French banking giant BNP Paribas. First Hawaiian is the state’s largest bank by assets.

ABA based its rankings on return on average equity, which measures how much profit a company generates with the money shareholders have invested. Rankings were compiled by using Securities and Exchange Commission filings as of Dec. 31.

Sixty-one banks, thrifts and holding companies, and 18 private or foreign institutions, qualified under the selection criteria.

Bank of Hawaii, which had assets of $13.8 billion at the end of 2011, had a return on average equity of 15.69 percent. The average of the top 10 banks was 12.77 percent, while the average for all banks was 6.43 percent.

BancWest, the parent of San Francisco-based Bank of the West in addition to First Hawaiian, had $78.1 billion in assets at the end of 2011 and a return on average equity of 6.32 percent. The ABA Banking Journal did not break out peer averages for the private and foreign-owned banks.

First Hawaiian had $15.8 billion in assets at year’s end but declined to calculate its return on average assets because it could not be certain it would be using the same measurements that were used in the report.

“They’re both obviously well-run institutions,” said Nashville, Tenn.-based analyst Brett Rabatin of brokerage firm Sterne Agee. “Given that they’re not going to be able to expand aggressively into new markets because in Hawaii there’s no place to expand unless you go to the mainland, you focus on what you can control. That is your market share and managing expenses. So typically, what the bigger companies in a market are going to end up with are relatively modest revenue growth but very strong profitability metrics and very stable earning power.”

Bank of Hawaii’s ranking comes on the heels of its rating by Forbes magazine as the second-best-performing U.S.-owned bank among the top 100 in the nation in 2011 and the No. 1 bank by Forbes in both 2009 and 2010. Texas-based Prosperity Bankshares, which beat Bank of Hawaii in 2011, had $9.6 billion in assets and didn’t meet the asset threshold for the ABA rankings.

Likewise, foreign-owned BancWest wasn’t eligible for the Forbes list that focused on U.S.-owned banks.

“Bank of Hawaii’s ranking comes as a result of a terrific community to operate in, great customers and, of course, our hard-working employees,” said Peter Ho, chairman, president and CEO of Bank of Hawaii.

“It’s confirmation that the organization is going down the right path,” he added. “It’s also a real testament to the community we operate in. We’re 90 percent plus in the state of Hawaii, and it’s good news for the community.”

Bank of Hawaii beat Minneapolis-based U.S. Bancorp ($340.1 billion in assets) and San Francisco-based First Republic Bank ($27.8 billion in assets), which were second and third, respectively. Among some of the other notables behind Bank of Hawaii in the rankings were San Francisco-based Wells Fargo & Co. ($1.3 trillion in assets) in eighth place, McLean, Va.-based Capital One Financial Corp. ($206 billion) in ninth place and New York-based JPMorgan Chase ($2.3 trillion) in 12th place.

BancWest, which was bought by BNP Paribas in 2001 but has local management, actually was the top foreign-owned bank in the rankings because the first-place institution, San Antonio-based USAA Federal Savings Bank ($52.2 billion in assets), is privately owned.

“This is quite an honor for the bank and is a tribute to our employees, who do an outstanding job servicing our customers,” First Hawaiian President and CEO Bob Harrison said. “Being a relationship bank, we feel an obligation to take care of the financial needs of our customers. We’ve been doing this for over 150 years, and will continue to support the communities we serve.”

Harrison said Hawaii benefits from having solid local banks.

“We are fortunate to have the resources to invest in our customers to help grow our economy,” he said. “The local banks also support the community with charitable giving, and our employees volunteer at many charities and nonprofits. A community that is strong socially is better off economically.”