Bank of Hawaii reported double-digit growth in its second-quarter profits as strong demand for consumer loans more than offset declines in fee income.
The $17 billion-asset Honolulu company said Monday that it earned $54.7 million in the quarter, or 22% more than it earned in the same quarter last year. Earnings per share totaled $1.30, meeting the mean estimate of analysts polled by FactSet Research Systems.
Net interest income increased 7% to $121.8 million, and the net interest margin expanded 12 basis points to 3.04%.
Loans and leases increased 7.1% to $10.1 billion in the quarter. The company’s commercial loan portfolio grew 3% to $3.8 billion, and its consumer portfolio grew 10% to $6.2 billion.
A robust local economy is fueling loan demand. For the first five months of the year, total visitor spending increased 10.9% and visitor arrivals increased 8.4% compared with the same period last year.
Net charge-offs in the second quarter totaled $3.3 million, compared with $3 million a year ago, and in both quarters represented 0.13% of total outstanding loans and leases. Bank of Hawaii’s provision for credit losses was $3.5 million, compared with $4.2 million a year earlier.
“Loans continued to grow, our margin expanded, asset quality remains strong,” President and CEO Peter Ho said in a press release.
The increase in loan balances offset weakness in fee income. Noninterest income fell 8.6% to $41.3 million, as fees from mortgage banking declined 42% to $2.2 million, and service charges on deposit accounts fell 15% to $6.8 million.
Total deposits increased 1% to $14.9 billion. Consumer deposits increased 5% to $7.7 billion, and commercial deposits were relatively flat at $5.9 billion. Other deposits, including public deposits, declined 15% to $1.35 billion.
Expenses increased 3% to $90.8 million, in part due to higher salary and benefits costs related to the bank's decision to increase its minimum wage from $12 per hour to $15.