Hawaii’s largest banks report a healthy 2009

First Hawaiian Bank, the state’s largest, finished 2009 with a 3.6 percent increase in profits, a record. Meanwhile, Bank of Hawaii is at the top of the Forbes magazine list of the nation’s healthiest banks.

First Hawaiian said on Jan. 28 it earned $230.5 million last year. Deposits were up 9.1 percent over 2008, and total assets grew 6.7 percent to $13.7 billion. Chairman and CEO Don Horner said despite the economy, Hawaii's largest bank saw growth in profits, deposits, loans and assets. The bank made more than $2 billion in loans during 2009 and reached $10 billion in total deposits, he said.

The $48.3 million in earnings for the fourth quarter was down 13.6 percent from the same period in the previous year because of a one-time tax gain First Hawaiian realized in the fourth quarter of 2008. Without counting the tax gain in 2008, the 2009 fourth quarter earnings would have reflected a 2.2 percent increase over 2008, the bank said.

Forbes cited Bank of Hawaii’s robust capital ratios, stock performance and the small percentage of its money tied up in bad loans, in its Dec. 30 online issue, which announced that Bankoh was No. 1 on its list of healthy banks, beating out giants like Bank of America and Citigroup.

Forbes reviewed the financials of the nation’s 100 largest banks and thrifts, asking researchers at SNL Financial in Charlottesville, Va. to look at eight financial measures including return on average equity, net interest margin, non-performing loans as a percentage of loans, non-performing assets as percentage of assets, reserves as a percentage of non-performing loans, two capital ratios and leverage ratio.

Bank of Hawaii, the state’s second largest bank, came out on top, thanks to “its starchy balance sheet and a focus on risk-adjusted performance. When the housing market heated up earlier this decade, Bank of Hawaii stayed very conservative in its underwriting strategy, which helped minimize its bad loans today,” Forbes said.

Forbes also noted Bank of Hawaii’s decision not to take government TARP money last year, which diluted the stocks of many of the banks that took the bailout. Central Pacific Bank was among them and found itself near the bottom of the list, ranked 92nd out of 100. Forbes didn’t have much to say about Central Pacific, Hawaii’s fourth largest bank, noting only that the value of its stock has fallen 86 percent in the past year.