Bankoh’s quarter earnings increase
Visa share sale, lease buyout boosts Bankoh’s quarter
STORY SUMMARY »
Bank of Hawaii Corp.'s earnings jumped nearly 21 percent in the first quarter after receiving $13.7 million from the mandatory sale of Visa Inc. shares and $11.6 million from an international airline's early buyout of an aircraft lease.
The state's second-largest bank said yesterday it had a net income of $57.2 million, or $1.18 a share, compared with $47.3 million, or 94 cents a share, a year ago.
Revenue rose 18.4 percent to $188.3 million from $159.1 million.
Bankoh said the net effect of one-time items, combined with various offsets in the quarter and a $9 million increase in its loan-loss provision was a $9.5 million gain in net income.
The results easily beat analysts' earnings-per-share forecasts of 90 cents.
FULL STORY »
Bank of Hawaii Corp.'s net income soared 20.9 percent in the first quarter, largely due to a big boost from the sale of
Visa Inc. shares and an early buyout of an aircraft lease.
First-quarter net:
$57.2 million
Year-earlier net:
$47.3 million
|
The state's second-largest bank in terms of assets said yesterday it had earnings of $57.2 million, or $1.18 a share, compared with $47.3 million, or 94 cents a share, a year ago.
Analysts surveyed by Thomson Financial were forecasting 90 cents a share.
Revenue rose 18.4 percent to $188.3 million from $159.1 million.
Bankoh received $13.7 million after the mandatory sale of just under half of the 900,000 shares it owned in Visa, which went public in March. Bankoh also reversed $5.6 million of legal expenses related to Visa that the bank had taken as a charge in the fourth quarter.
The charge taken by Bankoh and other banks was tied to antitrust lawsuits filed against Visa after the U.S. Supreme Court ruled in 2004 that the credit-card company violated antitrust laws by preventing member banks from offering competitors' cards. Visa was able to reimburse its member banks after raising $17.9 billion in its initial public offering.
The other major transaction that boosted Bankoh's earnings was the $11.6 million that the bank received due to an international airline's early buyout of an aircraft lease that was acquired in the early 1990s. Bankoh, which in the first quarter released previously accrued income taxes related to that lease, has fewer than 10 customers with aircraft under leases that were originated in the 1990s or earlier.
Bankoh said it partially offset the proceeds from the Visa and aircraft lease transactions by using $4.4 million for employee incentive expenses, paying a predetermined cost of $991,000 to retire early some of its most expensive debt, and contributing $2.25 million to the Bank of Hawaii Charitable Foundation and other causes.
The bank also said it was increasing its loan-loss provision to $100 million from $91 million a year ago to reflect increased risk in the bank's air transportation exposure, and its small business and consumer portfolios.
Bankoh said the net effect of the one-time items, the offsets in the quarter and the increased loan-loss provision was a $9.5 million gain in net income. Earlier this month, the bank estimated that the net effect of the various items, offsets and increased loan-loss provision would boost net income from $7 million to $9 million.
Net interest income, which reflects the difference of what Bankoh pays depositors and what it brings in from loans, rose 4.1 percent to $102.2 million from $98.1 million. Its net-interest margin increased to 4.17 percent from 4.07 percent.
Noninterest income, which includes the Visa redemption and the early lease buyout, as well as service charges and fees, soared 41.3 percent to $86.1 million from $61 million.
Total assets rose 3.2 percent to $10.8 billion from $10.5 billion. Total loans and leases gained 1.1 percent to $6.6 billion from $6.5 billion. And total deposits increased 1.9 percent to $8.1 billion from $8 billion.
Bankoh Chairman and Chief Executive Al Landon called it a "solid" quarter and noted that all of the bank's performance indicators were very strong.
"Our net interest income increased, our fee revenue was up, we controlled our expenses and we were able to add to our reserves in anticipation of a slower economy," he said.
Analyst Brett Rabatin of Nashville, Tenn.-based FTN MidWest Research said he was impressed with the quarter.
"The thing about this environment is it's not getting any easier," he said. "They're going to have headwinds to report strong growth going forward, but they did a great job. They had a better quarter than the industry in the first quarter."
Rabatin said that a slower growth environment makes it difficult to grow earnings.
"If they can post earnings growth this year of any magnitude, that's going to be better than the industry because the industry as a whole is going to experience a decline in earnings this year," Rabatin said.
Landon said the bank no longer issues earnings guidance and that the expected slowdown in Hawaii's economy "makes us cautious in growth projections."
"We don't really look at growth as the primary measure," he said. "We're much more about taking care of our customers and profitability."
Separately, Bankoh said that Chief Financial Officer and Vice Chairman Dan Stevens will resign on Friday to return to the mainland to be closer to his family, and that a replacement will be named in the "near future."
In addition, the bank maintained its dividend at 44 cents a share. It will be payable June 13 for shareholders of record at the close of business on May 30.
