Bank of Hawaii Corp. beats estimates

An analyst says the performance was "very good" in light of trends in the industry

Bank of Hawaii Corp. posted a 28.4 percent gain in net income for the second quarter and beat analysts' earnings estimates by 2 cents.

The state's second largest bank in terms of assets said yesterday that net income soared to $47.7 million, or 95 cents a share, from $37.2 million, or 72 cents a share, a year ago.

Analysts surveyed by Thomson Financial were expecting an average of 93 cents a share.

The results included a $1.5 million credit from a settlement with the Internal Revenue Service regarding a lease in/lease out leveraged lease.

In the year-ago quarter, Bankoh took an $8.8 million charge due to a tax law change involving foreign sales corporations. Revenue rose 2.5 percent to $156.9 million from $153.1 million.

"We've been thoughtful about positioning ourselves for potential rate changes and our management team has really done a good job of keeping ourselves in a situation where we can continue our strong performance," Bankoh Chairman and Chief Executive Al Landon said. "We haven't taken any big positions expecting increases to go one way or another."

FTN MidWest Research analyst Brett Rabatin said Bankoh's earnings were "very good" given trends in the banking industry.

"Expense management continues to be very impressive," he said. "And the margin was a little better than expected, so spread revenue increased (from the first quarter). That's pretty hard to do in this environment."

Net interest income, which reflects the difference between what Bankoh pays depositors and what it brings in from loans, slipped 0.9 percent to $99.1 million from $100 million. The net interest margin was 4.12 percent, down from 4.25 percent a year ago but up from 4.07 percent in the first quarter of this year.

Noninterest income, which includes services charges and fees, rose 9.1 percent to $58 million from $53.2 million. Total assets rose 3.8 percent to $10.7 billion from $10.3 billion.

Total loans and leases grew 1.9 percent to $6.6 billion from $6.4 billion. And total deposits rose 7.1 percent to $8.3 billion from $7.8 billion.

Nonperforming assets were $6.3 million, up from $5.4 million a year ago, largely due to the addition of one purchased lease of $900,000 collateralized by construction equipment.

The bank also declared a dividend of 41 cents a share that will be payable Sept. 14 to shareholders of record at the close of business on Aug. 31.