Economy hurts net at First Hawaiian

The bank's stock drops 4 percent after the company says its profits fell 1.1%

By Russ Lynch
Star-Bulletin

Shares of First Hawaiian Inc. lost about 4 percent of their value in trading today after the parent of First Hawaiian Bank reported a 1.1 percent dip in fourth-quarter earnings.

The company said it continued to be adversely affected by Hawaii's economy, which was stagnant in 1997 for the seventh consecutive year. But First Hawaiian said it showed some growth for the full year by expanding operations outside Hawaii and improving efficiency.

On the Nasdaq market today, First Hawaiian closed at $37.37, down $1.62 from yesterday's close.

The company reported a profit of $20.1 million, or 64 cents a share, for the final three months of 1997, down from $20.3 million, also 64 cents a share, in the 1996 quarter.

For the full year, the bank's profit was up 4.9 percent at $84.3 million, or $2.66 a share, compared with a profit of $80.3 million, or $2.56 a share, for 1996.

However, per-share earnings for both the latest quarter and the full year were below the estimates of leading Wall Street analysts, who had predicted 67 to 69 cents for the quarter and $2.70 to $2.90 for the year.

One analyst, David Winton of Keefe Bruyette & Woods Inc., said the earnings were lower than the 69 cents a share he predicted. He criticized the company for giving out minimal information in its earnings report."It looks light," he said. "For an $8 billion company, this is probably the least disclosure," he said.

The company ended the year with total assets of $8.1 billion, up 1.1 percent for the year. Deposits of $6.1 billion were up 2.6 percent and loans of $6.2 billion were up 7.4 percent. The company said it reduced its nonperforming assets by almost 12 percent during the year, to a level equal to 1.4 percent of total loans and real estate owned compared with 1.7 percent at the end of 1996.

Walter A. Dods Jr., First Hawaiian chairman and chief executive officer, said First Hawaiian was helped by geographic diversification.

Last year was the first full year in which its Pacific One Bank subsidiary in the Pacific Northwest was included in the results. Pacific One was responsible for much of First Hawaiian's 1997 earnings growth, Dods said.

Sixteen percent of First Hawaiian's earnings now come from outside Hawaii and the company is well on the way to meeting its goal of a 25 percent earnings contribution from non-Hawaii operations by the year 2000, Dods said.

During the year, First Hawaiian took steps to increase its efficiency, the biggest of which was merging its Pioneer Federal Savings Bank subsidiary into First Hawaiian Bank. By mid-year 1998, it will merge First Hawaiian Creditcorp, a 12-office real estate lending business, into First Hawaiian Bank as another efficiency step.