Bank of Hawaii's 1Q profit climbs despite steep drop in fees

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Bank of Hawaii's first-quarter profit increased 5% over the same period last year, to $54 million, as strong consumer and and commercial loan growth and an expanding net interest margin compensated for losses on investment securities and declining fee income.

The Honolulu company, with $17.1 billion of assets, said its earnings per share came in at $1.28, 6 cents higher than the mean estimate of analysts polled by FactSet Research Systems.

In a news release, Bank of Hawaii said it benefited from growth in tourism. Through the first two months if 2018, tourist arrivals increased 7.7% in Hawaii and visitor spending increased 8.5% from last year.

Total loans and leases increased 8.8% to $9.9 billion year over year, as commercial loans climbed 4.5% to $3.8 billion and consumer loans increased 11.7% to $6.1 billion.

The net interest income increased 8% to $119 million, and the net interest margin expanded 11 basis points to 3.00%.

Total deposits increased 3% to $14.9 billion. While consumer deposits grew 6.5% to $7.7 billion, commercial deposits declined 2.6% to $5.9 billion.

"We were pleased with our financial performance during the first quarter of 2018," President and CEO Peter S. Ho said in the release. "Our balance sheet remained strong, our net interest margin expanded, asset quality continued its stable trend, and expenses were well controlled."

Noninterest income fell 21% to $44 million. The biggest factor was a $666,000 loss on investment securities, compared with a $12.5 million gain on the sale of 90,000 Visa Class B shares in the year-ago quarter. Mortgage banking income declined 35% to $2.1 million, and deposit fee income declined 14% to $7.1 million.

Noninterest expenses increased 6% to $94.4 million, driven mainly by increases in salaries and benefits.

Nonperforming assets declined 17% to $15.7 million and represented 0.16% of total loans and leases, compared with 0.21% a year ago. Net charge-offs declined to $3.5 million, or 0.15% of total loans, from $3.6 million, or 0.16%, last year.

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