Bank of Hawaii Corp. posted double-digit loan growth for the ninth straight quarter, hit record levels for deposits and assets, and increased its dividend for the third time in nine months as it continued to flourish from the state’s strong economy.
The state’s second-largest bank reported Monday that fourth-quarter net income matched analysts’ consensus earnings-per-share estimate and rose 1.6 percent to $43.5 million, or $1.02 a share. That’s up from $42.8 million, or 99 cents a share, in the year-earlier period.
For all of 2016, earnings jumped 12.9 percent to $181.5 million, or a record $4.23 a share, from $160.7 million, or $3.70 a share, in 2015.
“It was a good quarter and a very good year for us,” Peter Ho, Bankoh chairman, president and CEO, said in a phone interview. “The loans in 2016 grew over a billion dollars, and deposits in the year grew over a billion dollars. It was a very strong year for our residential lending team, which grew production by 30 percent in 2016. We did $1.26 billion in residential loan production (home purchases, refinance and home construction). That’s a very solid performance in an important loan category.”
| FOURTH-QUARTER NET
$43.5 million
YEAR-EARLIER NET
$42.8 million
|
In the fourth quarter, loans rose 13.6 percent to $8.95 billion, deposits increased 8.1 percent to $14.32 billion and assets rose 6.7 percent to $16.49 billion.
The bank also declared a dividend of 50 cents a share, up from 48 cents, that will be payable March 14 to shareholders of record at the close of business Feb. 28.
Bankoh’s stock, which rose 41 percent last year amid solid fundamentals and a push from the presidential election, closed down $1.94, or 2.2 percent, at $86.33 Monday. The shares are down 2.7 percent so far in 2017.
“What bank stocks have responded to, as related to the Trump administration, is the idea of higher growth,” Ho said. “And some of that growth being financed through Treasury bonds, resulting in higher interest rates, which would be good for bank margins. I think the market, in general, likes the idea of a permanent tax reduction in corporate income taxes. That also plays out to what happens in bank stock values.”
Analyst Aaron Deer, who said Bankoh beat his earnings-per-share estimate by a penny, said it was another solid quarter for the bank.
“The upside … came from better-than-expected loan growth and net interest margin (from the third quarter),” said Deer, of San Francisco-based Sandler O’Neill + Partners. “I thought the revenue trend was generally favorable, but operating expenses came in a little higher than expected. While they’ve been very cost-conscious, they’re also spending a lot in reinvestment in the franchise.”
Ho said the dividend increase stems from the bank’s improved earnings.
“Earnings have moved up, and our dividend policy is basically to redistribute back to shareholders about half of our earnings to dividends,” he said.
Ho said it’s unlikely, though, that the bank will split its stock, even though it’s near its all-time high of $90.36 achieved Jan. 4 and is closing in on $100 a share.
“We do an analysis from time to time, and we still are of the belief that the administrative cost of splitting the stock doesn’t make up for the value created by splitting the stock,” he said. “So we won’t likely split the stock going forward even as we move well into the 80s (price range).”
Bankoh’s net interest income, the difference between the interest Bankoh pays on deposits and the interest it receives on loans, rose 5.4 percent to $107.1 million from $101.6 million. Its net interest margin was 2.83 percent, an improvement from 2.80 percent in the third quarter but down from 2.85 percent in the fourth quarter of 2015.
The bank’s noninterest income, which includes service charges and fees, increased 3.9 percent to $46.5 million.
Bankoh’s noninterest expense rose 4.5 percent to $89.6 million.
