Bankoh matches forecasts


POSTED: Tuesday, October 28, 2008

Bank of Hawaii Corp., navigating through a difficult economic environment, said yesterday its net income dipped 0.8 percent in the third quarter as lending decreased, but earnings per share rose 3.1 percent and matched analysts' expectations.





Third-quarter net

        $47.4 million




Year-earlier net

        $47.8 million



The bank also increased its dividend 2.3 percent - a move that comes at a time when many other banks are cutting their quarterly payouts - and boosted its share buyback program by $50 million.

Bankoh had net income of $47.4 million, or 99 cents a share, compared with $47.8 million, or 96 cents a share, a year ago. Last quarter included an $8.9 million net credit related to the company's pending resolution of sale in/lease out, or SILO, leases with the Internal Revenue Service.

Bankoh previously paid the IRS back taxes over the disputed complex leasing strategy, and the $8.9 million credit reflected excess money that the bank put aside that wasn't needed to pay the IRS.

Despite the lower net income from the year-earlier period, Bankoh's earnings per share rose 3.1 percent due to the bank spending $16.2 million to repurchase 332,200 shares during the quarter at an average price of $48.74 a share. Revenue edged up 0.5 percent to $160.6 million from $160 million.

The company also set aside $20.4 million during the quarter for potential loan losses due to “;heightened risk”; in three mainland transactions and due to general risk from the weakening Hawaii and mainland economy, the bank said. The loan-loss provision was an increase from $7.2 million in the second quarter and $4.1 million in the third quarter of 2007.

Bankoh had net charge-offs last quarter of $7.4 million.

Total nonperforming assets were $5.9 million at the end of the quarter, up from $4.3 million a year ago but down from $6.7 million at the end of the second quarter.

Bankoh Chairman and Chief Executive Al Landon said the bank has been well prepared for the economic downturn.

“;We've been conservative, so (the bank's credit quality) aligns pretty well with where we thought the economy might go in terms of impact,”; he said. “;We're seeing reduced demand for borrowing, and the uncertainty of the national market has created customer anxiety here.”;

Analyst Brett Rabatin of FTN MidWest Research said Bankoh's credit quality remains impressive in light of the economic situation.

“;Overall, they're being conservative and addressing credit quality and don't have any meaningful credit-quality issues to speak of. In this environment, that's fantastic to hear,”; Rabatin said.

Net interest income, which reflects the difference between what Bankoh pays depositors and what it brings in from loans, rose 5.1 percent to $103.6 million from $98.6 million. The net interest margin increased to 4.33 percent from 4.03 percent a year ago.

Noninterest income, which includes fees and service charges, declined 6.9 percent to $57 million from $61.2 million.

Bankoh's dividend of 45 cents a share - up from 44 cents a share - will be payable Dec. 12 to shareholders of record at the close of business on Nov. 28.