Wednesday, March 18, 2009

Hawaii banks less 'troubled'

HONOLULU -- Hawaii banks are more solid than financial institutions in most other states, according to an online comparison project created by a journalism partnership.

The analysis of bank financial statements by the Investigative Reporting Workshop and msnbc.com found nonperforming loans and foreclosed properties on bank books nationwide more than doubled last year.

But Hawaii banks, which tended to avoid many speculative loans, seem on more solid footing, according to the reports filed by the group. That’s especially true of the larger banks. (Check out your bank here.)

“While the recession has put borrowers of all kinds under increasing pressure, the Workshop's analysis makes it clear that real estate lending is causing banks the most difficulty,” said author Wendell Cochran in the report.

“At the end of 2008, nearly 80 percent of the troubled assets were connected in some way to real estate lending, even though only about 60 percent of all loans were real estate-related.”

The analysis is based on reports every bank is required to file each quarter with the Federal Deposit Insurance Corp., the federal agency that protects deposits and is part of the bank regulatory system.

Bank profits have fallen dramatically, and the troubled asset ratio has risen. The troubled asset ratio is a measure of the stress placed on banks by loans. It compares loans that are not being paid on time, and property already acquired by the bank, against the bank's capital and loan loss reserves. The national average was 9.9.

In comparison, Hawaii’s largest bank, First Hawaiian Bank, had a troubled asset ratio of just 2.5 percent and the second largest, Bank of Hawaii, had a ratio of 3.4.