Bankoh’s stock jumps
on brighter outlook

Bank of Hawaii Corp., combining a solid quarter with a strong state economy, boosted its net income forecast for 2005 after blowing past analysts' earnings estimates for the first three months of the year.

Hawaii's second-largest bank based on assets increased earnings 14.4 percent to $45.5 million, or 83 cents a share, from $39.8 million, or 69 cents, a year earlier. Bankoh easily beat the consensus estimate of 11 analysts surveyed by Thomson Financial and even exceeded the high estimate of 80 cents.

The bank, which released earnings before the market opened yesterday, raised its earnings forecast for 2005 to $176 million to $179 million from the $174 million to $177 million forecast it made in January.

Bankoh's stock rose $1.83, or 4.1 percent, to $46.10 -- its highest level in five weeks -- in trading yesterday on the New York Stock Exchange.

"We had a good quarter," Chairman and Chief Executive Allan Landon said. "We were pleased with our financial performance, which was strong in nearly all categories."

The company's board increased the amount of shares it can buy back by an additional $100 million to raise the total to $1.35 billion. The bank bought back 2.4 million shares at a total cost of $112.6 million, or $47.52 a share, during the quarter.

Bank of Hawaii's board also maintained its quarterly dividend at 33 cents a share.

The bank's revenue rose 5.6 percent to $153.0 million from $144.9 million. Net interest income, which reflects the difference of what the bank pays depositors and what it brings in from loans, grew 4.8 percent to $100.7 million from $96 million. The net interest margin rose to 4.43 percent from 4.30 percent a year ago. Noninterest income, which includes revenue from service charges and fees, rose 7.1 percent to $52.3 million from $48.8 million.

Noninterest expense fell 2.6 percent to $80.9 million from $83 million a year ago.

Landon said the bank is benefiting from both improved operations and the strong Hawaii economy.

"I think it's a combination," he said. "We're fortunate to have the good economy here in Hawaii -- having the wind at our back. Of course, we're fortunate to have things working right for us right now."

The bank's assets slipped 1.1 percent to $9.9 billion from $10 billion a year ago and deposits increased 5.4 percent to $7.8 billion from $7.4 billion a year ago.

Total loans and leases gained 5.4 percent to $6 billion from $5.7 billion. Bankoh's consumer lending remained strong during the quarter as it rose 6.3 percent to $3.9 billion from $3.7 billion. Commercial loans rose 2.9 percent to $2.1 billion from just more than $2 billion.

Bank of Hawaii's return on equity, a measure of how well it used reinvested earnings to generate additional earnings, rose to 23.66 percent in the quarter from 19.98 percent a year earlier.

Its return on assets ratio, which indicates how many dollars of profit it achieves for each dollar of assets it controls, was 1.88 percent from 1.65 percent a year earlier.

Landon said he doesn't expect a cheating incident involving the bank's insurance services subsidiary to have much of an impact on earnings. The annual revenue from the subsidiary was about $5 million, he said.

Earlier this month, the bank informed the state Insurance Division that 11 of its insurance employees, including subsidiary President Wes Imamura, were fired for faking attendance in mandatory continuing-education courses.

"It's unfortunate," Landon said. "It has not had a significant impact on us. The business is small enough that we don't expect it will hurt net income in any meaningful way."

Bank of Hawaii's investment portfolio jumped 25.3 percent to an average balance of $2.5 billion from just under $2 billion while the yield it generated on those investments grew to 4.4 percent from 4.2 percent.

Bank of Hawaii's asset quality continued to improve as its nonperforming assets dropped 52 percent to $13.4 million in the first quarter. The ratio of nonperforming assets to total loans, foreclosed real estate and other investments was 0.22 percent compared with 0.49 percent a year ago.