Bank of Hawaii Corp. said Monday that its second-quarter net income rose 28% from a year earlier.
Growth in fee revenue, continued expense discipline, and a large tax benefit fueled the increase, Bank of Hawaii said. Related Links
Net income of $47.7 million came to 95 cents a share, up a penny from the first quarter and 23 cents from a year earlier, the Honolulu company said. Analysts had expected earnings of 93 cents a share, according to Thomson Financial.
Though net income topped the estimate, it benefited from some unusual items.
Noninterest income rose 9% from a year earlier, to $58 million, and net interest income fell 1%, to $99.1 million, because of rising funding costs, the $10.7 billion-asset company said. It said fee income growth was widespread and included an 11% rise in trust and asset management fees and a 14% jump in deposit service charges.
"Fee income has been the source of revenue growth for us," Allan R. Landon, Bank of Hawaii's chairman and chief executive, said in an interview Monday.
Bank of Hawaii's efficiency ratio improved 57 basis points from a year earlier, to 50.88%. Noninterest expense fell 3% from the first quarter and rose 1% from a year earlier, to $79.8 million.
Expense control "is something we've been working on for a number of years, and it is something that is paying off in this environment now," Mr. Landon said. "But we continue to look for opportunities to grow. We would happily spend more if we could find good places to get a return."
Bank of Hawaii operates primarily in Hawaii. It is seeking opportunities to open more branches to bring in more deposits and increase customer service, Mr. Landon said.
Brent Christ, an analyst at Fox-Pitt, Kelton Inc., called Bank of Hawaii's operating earnings "a little light."
In a report Monday, Mr. Christ wrote that earnings were lifted by $2 million in unusual gains, including a $1.5 million benefit from resolution of a tax dispute on a leverage lease transaction and $500,000 of securities gains.
Mr. Christ called Bank of Hawaii's core trends stable and wrote that its results were similar to "recent quarters as the company relied on tight expense control, share buyback, and benign credit metrics to offset relatively modest revenue growth."
Loans rose 2% from a year earlier, to $6.57 billion. Consumer loans were flat at $4.14 billion and commercial loans rose 5%, to $2.43 billion. The net interest margin fell 13 basis points from a year earlier and rose 5 basis points from the first quarter, to 4.12%. The company said higher funding costs accounted for the year-over-year decline.
Bank of Hawaii said its second-quarter provision increased 62% from a year earlier and 31% from the first quarter, to $3.4 million. It said provisions, which equaled net chargeoffs, rose because of lower recoveries.
