Bank of Hawaii Corp., two-thirds of the way into its three-year plan, said today that third-quarter net income slipped 2.8 percent as the effects of divestitures and the transition to an outside technology system provider continue to effect earnings. Bankoh ups dividend
on future strengthNonrecurring costs drag down
earnings nearly 3 percentBy Dave Segal
dsegal@starbulletin.com
However, the company said its ongoing effort to improve its credit portfolio is succeeding and it feels comfortable enough with its future that it will be increasing its stock dividend for the first time in 11 quarters.
Bank of Hawaii said earnings for the quarter were $30.2 million, or 43 cents a share, compared with $31.1 million, or 37 cents a share, a year ago. Earnings per share were up due to the bank's ongoing share buyback program.
"Over the last seven quarters our stock has been the best performer in Lehman Brothers' 56-bank universe," said Michael E. O'Neill, chairman, chief executive officer and president of Bank of Hawaii. "So I think the market feels we're pretty darn well positioned."
Bank of Hawaii's stock gained 7 cents today to $29.49, up 13.9 percent for the year and just off its 52-week closing high of $29.97.
"We think we have another year of hard work to be where I'd like the company to be," added O'Neill, who took over the helm in November 2000. "Our two big objectives this year are improving our ability to serve our customers and, secondly, to successfully complete our systems conversion project which will have a big impact on our efficiency."
Bank of Hawaii, which took a $6.6 million charge this quarter as part of its five-quarter transition to technology system provider Metavante, said it will take another transition charge of approximately $7.9 million in the fourth quarter and the remaining $20.5 million of an overall transition charge of $35 million over the three subsequent quarters. The company also said it had a gain of $49.4 million from divestitures in the third quarter of 2001 that was offset by related sales costs, tax obligations, other nonrecurring adjustments and restructuring costs that resulted in a net expense of $400,000 after taxes.
O'Neill said improvements in the bank's credit quality and in the Hawaii economy resulted in the bank not making any provision for loan and lease losses during the quarter as it reduced its allowance by net charge-offs of $4.5 million.
"Our nonperforming loans are the lowest level they have been since 1996," O'Neill said. "They have come down steadily and really quite dramatically. They were over $200 million about nine quarters ago and they were $63 million at the end of September."
Bank of Hawaii, which boosted its dividend 5.6 percent to 19 cents from 18 cents, said it will be payable Dec. 13 to shareholders of record at the close of business on Nov. 22. "I think it's a signal we feel comfortable where we are and where we're headed," O'Neill said. "We've got a lot of excess liquidity, and where we're spending most of that buying back shares, we also felt it was appropriate to reward long-term shareholders."
Bank of Hawaii repurchased 4 million shares of common stock at an average cost of $27.55, totaling $109.4 million, in the third quarter.
Meanwhile, assets, loans and deposits were lower as a result of either the company's divestitures or its credit-risk reduction. Total assets were $9.7 billion, down 18.8 percent from $11.9 billion. Net loans were $5.1 billion, down 22.5 percent from $6.6 billion. Total deposits were $6.6 billion, off 10.4 percent from $7.4 billion.