BancWest earnings
rise 11.5 percent
First Hawaiian Bank's parent, benefiting from a reduction in its nonperforming assets and an improved Hawaii economy, said yesterday that net income rose 11.5 percent in the second quarter from a year ago.
BancWest Corp., which also owns San Francisco-based Bank of the West, posted $107.7 million in earnings for the quarter, compared with $96.6 million a year ago. This was the first full quarter in which numbers from the March 2002 acquisition of United California Bank could be equally compared on a year-over-year basis.
"If you look at what's happening in U.S. banking, you'll find the results are very strong," said Walter Dods, chairman and chief executive officer of BancWest. "Most U.S. banking companies have been announcing single-digit increases so far."
BancWest, a subsidiary of French banking giant BNP Paribas SA, doesn't provide earnings per share since it is no longer publicly traded. However, it provides separate earnings reports.
Total assets rose 7.3 percent to $36.4 billion from $34 billion a year ago. Loans and leases gained 3.7 percent to $25.1 billion from $24.2 billion. And deposits increased 3.8 percent to $25 billion from $24.1 billion.
Dods said he attributes double-digit earnings increases at First Hawaiian Bank and Bank of the West to BancWest's economic diversification and the successful integration of the UCB purchase. He also said the Hawaii recovery is "starting to show some real strength."
BancWest, with 357 branches, has a presence in California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Washington, as well as Guam and Saipan. The March 15 acquisition of UCB, which previously was the largest Los Angeles bank, more than doubled BancWest's California branches.
"The other (reason for BancWest's improvement) is we've also significantly reduced nonperforming assets, which we've done in a growing environment with a merger," Dods said. "That's really a positive."
BancWest's nonperforming assets improved to 0.75 percent of loans and foreclosed properties from 0.98 percent at the end of the first quarter and 1.04 percent a year ago.
As a result, the provision for credit losses was reduced to $18.9 million for the second quarter from $22.9 million a year ago.
The company's net interest margin, which is the difference between what it pays depositors and what it brings in from loans, slipped to 4.39 percent from 4.65 percent a year earlier as falling interest rates began to compress margins.
Overall revenue, which includes net interest income and noninterest income, rose 2.8 percent from a year earlier to $421.8 million. Net interest margin was unchanged from the second quarter of 2002 due to 5.8 percent growth in average earnings assets, offset by a lower net interest margin for the quarter.
"The net interest margin compression is a real challenge for American banks because banks can't drop any more on the deposit side," Dods said. "Fortunately, for our franchise, our noninterest income (up 13.8 percent to $100.6 million) is increasing with our sales of annuities, insurance and other investment products."
