Bank of Hawaii Corp. posted solid loan growth but saw its net income dip in the fourth quarter after taking a $3.6 million write-down due to the newly enacted tax law.
Like other financial institutions nationwide, the state’s second-largest bank had to revalue deferred tax assets because the maximum federal corporate tax rate was reduced to 21 percent from 35 percent. Despite the short-term hit, Bankoh and other banks are expected ultimately to benefit from the lower tax rate.
Bankoh said today its earnings slipped 1.3 percent last quarter to $43 million, or $1.01 a share, from $43.5 million, or $1.02 a share, in the year-earlier quarter. Excluding the additional tax expense, net income was $46.5 million, or $1.10 a share.
For the year, the bank had net income of $184.7 million, or a record $4.33 earnings per share, compared with $181.5 million, or $4.23 a share, in 2016.
Loans rose 9.5 percent to $9.8 billion from $8.95 billion. Deposits increased 3.9 percent to $14.88 billion from $14.32 billion. Assets gained 3.6 percent to $17.01 billion from $16.49 billion.
The bank’s noninterest expense for the quarter included one-time $1,000 employee bonuses totaling $2.2 million, including payroll taxes. The increase in the minimum wage at the bank to $15 an hour from $12 an hour began on Jan. 1 and had no impact on the fourth-quarter results.
“During the year our loan and deposit balances continued to grow and our net interest margin (the spread between the interest paid on deposits and the rates received as interest on loans) expanded due to increased rates and the positive remixing of our balance sheet,” Peter Ho, chairman, president and CEO of Bank of Hawaii, said in a statement. “Expenses were well controlled and our asset quality, capital and liquidity all remained strong.”