Bank of Hawaii Corp. posted lower first-quarter earnings but said it was unaffected by Wall Street fears of customers scrambling to withdraw their money from regional banks following the failures in March of larger institutions Silicon Valley Bank and Signature Bank.
The bank’s deposits remained relatively flat with average deposits up 0.4% in the January-March period from the fourth quarter, and quarter-end deposits down 0.6% on March 31 from three months earlier. Year over year, deposits fell 1.1% to $20.49 billion.
“Despite the banking drama and challenges of the past month and a half, Bank of Hawaii recorded solid results and our operation was unaffected by the challenges on the mainland,” Bank of Hawaii Chairman, President and CEO Peter Ho said via email Monday. “Loans grew nicely across both commercial and consumer categories. Margins were somewhat lower reflecting the Fed-induced inverted yield curve (long-term interest rates are less than short-term interest rates). Credit losses remain very, very low reflecting a Hawaiian economy that continues to recover from the effects of the pandemic. In short, it was a pretty normal quarter for Bank of Hawaii.”
The state’s second-largest bank reported before the market opened Monday that its net income fell 14.6% during the quarter to $46.8 million, or $1.14 a share. That missed analysts’ consensus estimate of $1.22 a share, according to data compiled by Yahoo Finance.
Still, the bank’s stock ended the day up 83 cents at $49.63.
The first-quarter results included $2 million that the bank set aside for potential loan losses, compared with a benefit of $5.5 million that it released from its reserve in the year-earlier quarter.
In the first quarter of 2022, Bankoh earned $54.8 million, or $1.32 a share.
Ho spent considerable time on the conference call with analysts explaining how Bank of Hawaii — as well as other banks in the state — are different from their mainland counterparts.
“The mainland banks that got into trouble had a very different business model than Bank of Hawaii,” Ho said by email after the conference call. “They served a very small niche of customers and generally had built somewhat short-term relationships with them.
“Bank of Hawaii, and our Hawaii banks in general, are very different in style and operation. Our quality results, for the quarter, reflect the 125-year history Bank of Hawaii enjoys in the islands, the trust and relationships we have been able to build with our customers over the long term and the diversity of customers that we have. Bank of Hawaii serves many different customers (one out of every two households in the state) and serves many different types of customers as well — small businesses and big businesses, not-for-profit organizations, as well as many different types of individual consumers.”
The bank’s loans rose 10.2% to $13.82 billion from the year-earlier quarter and were up 1.3% from the previous quarter. Total assets rose 4.1% to $23.93 billion from the year-earlier quarter and were up 1.4% from the preceding quarter.
Net interest income, the spread between what the bank generates in loans and pays out for deposits, rose 8.5% to $136 million from the year-earlier quarter. The bank’s net interest margin rose 13 basis points to 2.47% from 2.34% in the year-earlier quarter but worsened by a similar 13 basis points from the fourth quarter.
Noninterest income, which includes services charges and fees, declined 6.5% to $40.7 million from the year-earlier quarter.
The bank maintained its quarterly dividend at 70 cents a share. It will be payable June 14 to shareholders of record at the close of business May 31.
FIRST-QUARTER NET
$46.8 million
YEAR-EARLIER NET
$54.8 million
