Like the rest of the world, Don Horner is waiting to see if President Bush orders the United States to attack Iraq. Iraq war’s effect
may be short-lived,
banker saysBut the fallout could last longer
than 9/11 if war lingers, according
to the First Hawaiian president
By Dave Segal
dsegal@starbulletin.comAlthough anxieties nationwide are running high, First Hawaiian Bank's president and chief operating officer said he expects the impact on the state's economy to be minimal.
"The Japanese get concerned when there's bullets in the air, and they don't fly. And when they don't fly, we have a problem in Hawaii," Horner said yesterday to the Rotary Club of Honolulu.
"But as a banker, we view business as a marathon, not a sprint. We create value on a sustainable basis. This (Rotary) community has seen a lot of challenges come and go from these shores. I think there will be an impact, but personally I think that impact will be short-lived."
Horner said the state, which a year later has had an uneven recovery from the fallout of 9/11, could face a longer recuperative period if the war lingers and Americans' psyche is effected.
"Hawaii is interdependent on tourism and tourism really comes from the heart," Horner said. "Many times when people travel it's because of how they feel, and if ... you have a period of protracted months (of war) it could hurt us up to 18 months. But I'm cautiously optimistic as a banker. So we're not retracting. We're not pulling in lending policies or anything else. If (war) happens, I'm confident Hawaii will continue to do well given the people we have here (in the state).
Horner, who on Jan. 1 was promoted to his current role from the positions of vice chairman and head of the retail banking group, said he expects First Hawaiian Bank to have "very solid growth" this year. He said that 50-year-low interest rates will encourage investing and spending for con- sumers and businesses.
The 52-year-old Horner also cited a reasonable supply of residential and commercial real estate, improving consumer confidence, lower-trending loan delinquencies and bankruptcies, a projected 6 percent increase in visitor arrivals, and an expected 7 1/2 percent gain in visitor spending.
He also said the "smart money," namely those interested in growth, are now coming to Hawaii rather than the "speculative money." Horner cited Macy's parent Federated Department Stores buying Liberty House; General Growth Properties purchasing Victoria Ward Ltd.; and Marriott International's property investments and improvements, including its Ritz-Carlton brand.
"These are all good signs that smart money from the mainland has confidence in Hawaii's economic future," he said.
On the residential front, Horner said foreign and mainland people have been buying second homes in Hawaii, especially on the neighbor islands.
"And most of this has been for cash," Horner said. "This again bodes well for a stable real estate market as opposed to a few years ago when we were dealing with high-leveraged and speculative investors, which was not good for Hawaii and created a bubble."
"The banks in Hawaii are extremely liquid and there's plenty of money to lend to help economic expansion," Horner added. "First Hawaiian has $1 billion on its balance sheet of excess liquidity waiting to lend."
Horner, who has assembled an eight-member senior management group, said the bank has 125 new initiatives on the docket this year. One of the main ones, he said, is improving relationships with key clients. Horner said that of the bank's 500,000 customers, 50,000 represent 7 percent of the bank's $9 billion in assets. Horner said other key initiatives are improving customer service and productivity, and reinvesting in staff development.