Bankoh earnings slip 3.8%


POSTED: Tuesday, January 27, 2009

Bank of Hawaii Corp., the state's second-largest bank in terms of assets, said yesterday that net income slipped 3.8 percent in the fourth quarter after taking a $7.1 million noncash charge for changing the estimated value of its mortgage servicing rights.




Fourth-quarter net
$39.3 million

Year-earlier net
$40.9 million



In what has been a difficult year for banks nationwide, Bankoh wrapped up the three-month period ended Dec. 31 with net income of $39.3 million, or 82 cents a share, compared with $40.9 million, or 83 cents a share, a year ago. Analysts were forecasting earnings of 87 cents a share.

Revenue, which consists of net interest income and noninterest income, edged up 0.4 percent to $160.3 million from $159.7 million.

Brett Rabatin, senior research analyst of Birmingham, Ala.-based Sterne Agee, called the results “;exemplary given the overall economic environment.”;

“;The difficult question is how earnings and profitability will look six months or a year from now,”; he said. “;But the fourth-quarter trends continue to be similar to the past year in terms of overall profitability, and asset quality remains very good.”;

Despite the challenging quarter, Bankoh Chairman and Chief Executive Allan Landon said he was happy with the results.

“;In the context of what's happening in the economy, we feel very fortunate with the way things went in the fourth quarter,”; he said. “;Our deposits are up, our reserves are up, our capital is up and our nonperforming assets are still very modest. It was a very strong, solid quarter.”;

Landon said he expects the challenging economic environment to continue this year, but noted that Bankoh “;still has one of the best credit profiles in the country.”;

“;We're cautious about local and national economic conditions, and we're well reserved for increased loan losses should they arise,”; he said.

For the year, net income rose 4.6 percent to $192.2 million, or $3.99 a share, from $183.7 million, or $3.69 a share. Revenue increased 6.5 percent to $676.9 million from $635.5 million.

Fourth-quarter net interest income, reflecting the difference between what Bankoh pays depositors and what it brings in from loans, rose 6.4 percent to $105.9 million from $99.4 million. Net interest margin rose to 4.43 percent from 4.12 percent a year ago.

Noninterest income, which includes fees and service charges, decreased 9.6 percent in the quarter to $54.5 million from $60.3 million. The lower noninterest income was largely due to the $7.1 million mortgage services charge and a reduction of $1.9 million in trust and asset management fees, the bank said. Mortgage servicing rights are future revenue that the bank receives for servicing mortgages for investors.

The bank also set aside $18.6 million during the quarter for potential loan losses, up from $5.4 million a year ago but down from $20.4 million in the third quarter. Net charge-offs during the fourth quarter were $10.6 million compared with $5.4 million a year ago.

Total nonperforming assets more than doubled during the quarter to $14.9 million from $5.3 million a year ago.

Non-accrual loans, which are overdue loans that the bank has stopped factoring into its financials, also more than doubled to $14.5 million from $5.1 million a year ago. The non-accrual loans, as a percentage of total loans and leases, were 0.22 percent at the end of the quarter compared with 0.08 percent a year ago.

Total assets rose 2.8 percent to $10.8 billion from $10.5 billion. Total loans and leases fell 0.8 percent to $6.5 billion from $6.6 billion. And total deposits, bolstered by a net increase of about 1,600 deposit accounts, increased 4.4 percent to $8.3 billion from $7.9 billion.

The bank also maintained its quarterly dividend at 45 cents. It will be payable March 13 to shareholders as of Feb. 27.