Bank of Hawaii is expecting to benefit from Southwest Airlines’ first flights to the Aloha State even as a white-hot local housing market is beginning to show signs of cooling off.
The bank is the second-largest based in Hawaii, with $17.4 billion in assets. It reported $58.7 million in profits for the first quarter, up nearly 9% from the same period last year.
Hawaii saw a 1.8% uptick in visitors to start the year, and the tourism industry — which the bank and its commercial clients rely on — is expected to “continue performing well” in 2019, according to an economic outlook in the firm’s earnings release Monday.
Yet adding more foot traffic to the islands might be crucial to that forecast as, according to the bank, tourist spending fell 2.4% early in the year even though there were more visitors.
The biggest boost is expected to come from the largest domestic carrier in the U.S. adding flights to Hawaii for the first time. Southwest began flights to the islands from California last month.
Bank of Hawaii also noted Hawaiian Airlines began offering its first nonstop flights from Boston in April.
A rush of outside investors for a dwindling inventory of homes in Hawaii has created a surge in prices over the past few years, but that may be ebbing.
Noninterest income for Bank of Hawaii’s mortgage banking business was nearly flat to start the year.
Single-family home sales were down 5.7% from the first quarter last year, and sales of condos — a critical part of the market there — fell more than 10%, the bank said.
The median sales price for condos dropped 3.2% from the same period one year prior.
“The first quarter was just a disaster residential-mortgage-volume wise,” Bank of Hawaii CEO Peter Ho said on a call with analysts Monday afternoon. “But as of the past month, with rates doing what they’ve done, there seems to be a real resurgence in that business.”
Total interest and noninterest income for the bank was $189.3 million for the first quarter, up a little more than 7% from one year ago. The bank’s total loans and leases grew 6.4% to $10.5 billion, including a more than 5% increase in commercial loans to $4 billlion.
Noninterest expenses were down slightly from the same time last year to $93.1 million, which included $2 million added to legal reserves.