Bankoh earnings
jump 33.5%Net income soars for
Bank of Hawaii, beating
forecast results
Bank of Hawaii Corp., embarking on its new three-year strategic plan, posted a 33.5 percent jump in first-quarter earnings to exceed even the most optimistic analyst forecasts.
Net income rose to $39.8 million, or 69 cents a share, from $29.8 million, or 47 cents a share a year ago. The consensus of nine analysts was 66 cents a share, with a high of 67 cents, according to Thomson Financial.
"By all measures we have performed extremely well," Michael O'Neill, Bank of Hawaii's chairman and chief executive officer, said yesterday. "Our returns have improved, our operating leverage was positive, asset quality remains solid, customer and employee confidences have reached new highs, and the Hawaii economy continues to reflect strength.
"What can I say? I'm very happy with the results and very proud of the team that delivered them."
The bank also announced several managerial changes, including giving President Allan Landon the additional responsibility of chief operating officer. Landon, who was chief financial officer, will relinquish that title to Richard Keene, who will become vice chairman and CFO. Keene previously was executive vice president and controller.
Landon, in his new role, will oversee commercial banking, investment services, and corporate and regulatory administration in addition to his current responsibilities in finance and investor relations, human resources, legal issues, and technology and operations.
"Picking up the chief operating officer title in addition to president is a reward for a job well done for Al, who has done whatever we've ever asked of him and performed extremely well," O'Neill said. "Our list of changes really begins to set up our management succession program, which I've said before is one of my highest priorities."
O'Neill new three-year plan, which includes developing management teams, improving efficiency and reducing credit risk, said the outsourcing of its information technology system to Milwaukee-based Metavante Corp. is delivering on promised cost savings.
"We told people it would cost $35 million to save $17 million a year, and we are on track to that level of savings," O'Neill said.
Other developments
>> Bank of Hawaii's board maintained the quarterly dividend at 30 cents a share. It will be payable June 14 to shareholders of record at the close of business on May 24.>> The board also declared an additional program to repurchase as much as $50 million of common stock on top of its previous authorizations of $1 billion that began in July 2001. Bank of Hawaii repurchased 1.3 million shares worth $57.8 million at an average cost per share of $44.77 during the first quarter.
>> The bank maintained its previous earnings guidance for the year of $157 million in net income and said it does not expect to record a provision for loan and lease losses this year based on current conditions.
"We're quite confident in the future operating performance of the company," O'Neill said. "Everything this quarter certainly gave us a lot of confidence."
Bank of Hawaii, which has 89 branches, saw its total assets rise 6.4 percent to $10 billion from $9.4 billion a year ago. Net loans increased 3 percent to $5.6 billion from $5.4 billion. And total deposits rose 5.7 percent to $7.4 billion from $7 billion.
The bank's net interest margin, which reflects the difference of what a bank pays depositors and what it brings in from loans, edged up to 4.3 percent from 4.29 percent a year ago. However, it fell from 4.35 percent in the fourth quarter because of a decrease in the average yield in its loan portfolio.
Net interest income rose 5.5 percent to $96.1 million from $91 million a year ago because of lower interest rates paid on deposits and a reduction in long-term debt.
Bank of Hawaii's return-on-assets ratio, which indicates how many dollars of profits it achieves for each dollar of assets it controls, improved to 1.65 percent from 1.31 percent a year ago but was flat with the 1.66 percent achieved in the fourth quarter.
The bank's return-on-equity ratio, a measure of how well it used reinvested earnings to generate additional earnings, jumped to nearly 20 percent from 12.4 percent a year ago and from 18.6 percent in the fourth quarter.
Better loans
Bank of Hawaii's credit quality showed substantial improvement as its nonperforming assets decreased 37 percent to $27.9 million from $44.2 million a year ago. At the end of March, the ratio of nonperforming assets to total loans and foreclosed real estate was 0.5 percent, down from 0.8 percent a year ago."The key to avoiding bad loans is to pick our borrowers well," O'Neill said. "We have done a lot of work on who to work with, and then working very hard to deliver quality service. I think that's coming through a revamped credit process and suggests continued improvement."
Noninterest income, which includes revenue from service charges and fees, rose 9.1 percent last quarter to $48.8 million from $44.8 million a year ago but slipped 1.2 percent from the fourth quarter because of a reduction in mortgage banking income.
Personnel changes
Among other appointments announced yesterday, Donna Tanoue, vice chairwoman of the Investment Services Group, will take on the newly created position of vice chairman and chief administrative officer.Peter Ho, group executive vice president of the Hawaii Commercial Group, was promoted to vice chairman of the Investment Services Group.
Vice Chairman Neal Hocklander, who oversees human resources and security, will additionally supervise technology and operations under his new title of vice chairman, information, operations and human services. He will take over some of the duties previously administered by Vice Chairman Gretchen Mohen, who is relocating to the mainland.
