First Hawaiian Bank’s Profits Rose 4% in the Fourth Quarter

The state’s largest bank grew its assets to a record $15.2B in 2010 despite the economy

By Dave Segal
Article from: Honolulu Star-Advertiser

First Hawaiian Bank’s earnings rose 4 percent in the fourth quarter to $50.2 million and its assets reached a record $15.2 billion despite an economy that Chairman and Chief Executive Officer Don Horner expects to remain sluggish through 2011.

The state’s largest bank in terms of assets said yesterday it ended the year with $212.6 million in net income, down 7.8 percent over a $230.5 million profit in 2009 that included a one-time leverage lease tax gain of $29.4 million for the sale of leased equipment.

Excluding the tax gain, First Hawaiian’s core earnings for 2010 were up 5.8 percent from $201 million in 2009. In the fourth quarter of 2009, First Hawaiian earned $48.3 million.

Horner said he expects the state economy to remain sluggish this year because businesses remain in a wait-and-see mode despite signs of recovery.

“They have not begun to reinvest in their businesses because they’re remaining cautious,” Horner said. “Therefore, they are not adding to inventory or hiring or beginning construction projects because they’re still not confident in the future. There’s more cautious optimism in 2011 than there was in 2010, but that optimism is, at best, guarded because they still have this attitude of wait and see.”

Still, First Hawaiian was able to increase its portfolio of total loans and leases 3.3 percent to $8.3 billion from 2009 when it reached $8 billion for the first time. During 2010, the bank made in excess of $2.5 billion in new loans compared with more than $2 billion in 2009.

“Even though the bank had an uptick in loan demand and was one of the few banks in the state that grew its portfolio, the increase was fairly modest,” Horner said. “When we see loan growth in the 5 percent growth area, I will be more optimistic that the business investment community has gotten off the bench and gotten back into the game. Most businesses in the state continue to be very conservative and cautious and actually continue to pare down their expenses on the balance sheet as opposed to making investments.”

First Hawaiian’s assets were up 10.9 percent at year-end from $13.7 billion a year earlier while total deposits rose 2.7 percent to $10.5 billion from $10.2 billion. During the quarter, the bank set aside $12.9 million to cover potential loan losses compared with $11.2 million in the fourth quarter of 2009.

Nonperforming assets to total assets remained low at 0.25 percent compared with 0.27 percent a year earlier.

First Hawaiian, a wholly owned subsidiary of French banking giant BNP Paribas, is not required to separately report its earnings but does so voluntarily each quarter.

The Honolulu-based bank, founded in 1858, has 58 branches in Hawaii, three on Guam and two on Saipan.