Largest Hawaiian Bank Profits Rise As Credit Cautiousness Wanes
July 24 — One of Hawaii’s largest banks more than quadrupled its profits in the second quarter as the local economy continued to rebound from damage suffered last year.
First Hawaiian Bank said Friday it earned $ 86.7 million in the quarter ended June 30, compared to $ 20 million for the same period last year.
The bank’s second-quarter profit also exceeded what it earned in the same quarter in 2019, which was $ 72.4 million.
First Hawaiian made much of its last profit by withdrawing $ 35 million from a pool of cash set aside to cover potential loan losses.
The bank also earned more interest on loans as well as fees, and used its improved finances to repurchase 800,000 shares of its stock for $ 22.4 million during the April-June period.
“We are satisfied with our financial performance during the second quarter, which was driven by the strong return of tourism and the recovery of the local economy,” said Bob Harrison, President and CEO of First Hawaiian, in a statement.
The second quarter was the first time since last year that the bank reduced its reserves to cover possible loan losses.
First Hawaiian added about $ 122 million to those reserves last year as the state’s economy was elated by the impacts of COVID-19. In the first quarter of this year, the bank did not add additional liquidity to the pooled reserve, but also did not cancel any of last year’s contributions.
Banks are required to set aside loans that could become unpayable on their balance sheets to show whether they have enough money to meet the needs of depositors and regulators.
Total loan volume for First Hawaiian fell about 5% to $ 13.1 billion in the second quarter, from $ 13.8 billion in the same quarter in 2020.
Deposits rose about 8% to $ 20.8 billion, from $ 19.4 billion during the same period.
First Hawaiian’s total assets grew about 5%, from $ 23 billion to $ 24.2 billion.
The bank’s net interest income, which is the difference between what it generates from loans and what it pays out in deposits, increased by about 3% to $ 131.5 million in the second quarter, up from $ 127.8 million a year earlier.
Non-interest income, which includes fees and commissions, increased 8% to $ 49.4 million from $ 45.7 million during the same period.
First Hawaiian is maintaining its quarterly stock dividend at 26 cents per share, which will be payable September 3 to shareholders of record at the close of business on August 23.
Shares of First Hawaiian closed on Friday at $ 27.79 after the results were announced, down from $ 27.16 on Thursday.
The average cost of shares repurchased by First Hawaiian in the second quarter was $ 27.99. The bank, as of June 30, has been authorized by its board of directors to spend up to $ 43.1 million more on the repurchase of shares in the company.