At the same time, DBRS Morningstar confirmed the ratings of its primary banking subsidiary,
KEY RATING CONSIDERATIONS
The ratings confirmation and Stable trend reflect BOH's strong banking franchise that is underpinned by a deeply entrenched presence within the Hawaiian markets. In addition, the Company has consistently generated strong financial results even during times of stress, while sustaining sound balance sheet fundamentals. DBRS Morningstar notes that the ratings also consider BOH's high level of real estate exposure, as well as its dependence on the Hawaiian economy. Global fallout from Coronavirus Disease (COVID-19), including a slowing economy and sharply lower interest rates that will result in declining profitability levels are also factored into the ratings.
RATING DRIVERS
DBRS Morningstar views BOH as comfortably placed within its rating category. Over the longer term, positive ratings implications could arise if the Company can grow its fee-based businesses to further diversify its revenue generation. Conversely, a sustained level of credit deterioration, or if BOH's risk appetite materially increases, could result in negative ratings pressure.
RATING RATIONALE
BOH benefits from having a strong brand within the Hawaiian Islands. In addition, the Company operates the most branches in
DBRS Morningstar views BOH's earnings power as strong, having generated a return on assets (ROA) above 1% and a double-digit return on equity (ROE) for 17 consecutive years, including another strong performance in 2019. For the year, the Company reported
Overall, we view BOH's balance sheet as strong and well positioned to cope with the adverse fallout from the coronavirus. Specifically, the balance sheet is underpinned by a substantial low-cost, core deposit base, which easily funds the loan portfolio (70% loans-to-deposits ratio). Moreover, DBRS Morningstar views BOH's risk profile as strong, notwithstanding its loan portfolio being heavily dependent on real estate and geographically concentrated in
The Grid Summary Grades for BOH are as follows: Franchise Strength - Strong/Good; Earnings Power - Strong; Risk Profile - Strong; Funding & Liquidity - Strong; Capitalization - Strong/Good.
Notes:
All figures are in
The principal methodology is Global Methodology for
The primary sources of information used for this rating include Company Documents and
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com.
Ratings
Date Issued Debt Rated Action Rating Trend Issued
i
US =
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU endorsed
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-Participating
18-Mar-20 Long-Term Issuer Rating Confirmed A (high) Stb US
18-Mar-20 Short-Term Issuer Rating Confirmed R-1 (middle) Stb US
18-Mar-20 Long-Term Senior Debt Confirmed A (high) Stb US
18-Mar-20 Short-Term Instruments Confirmed R-1 (middle) Stb US
18-Mar-20 Subordinated Debt Confirmed A Stb US
18-Mar-20 Long-Term Deposits Confirmed A (high) Stb US
Date Issued Debt Rated Action Rating Trend Issued
i
US =
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU endorsed
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-Participating
18-Mar-20 Long-Term Issuer Rating Confirmed A Stb US
18-Mar-20 Short-Term Issuer Rating Confirmed R-1 (low) Stb US
18-Mar-20 Long-Term Senior Debt Confirmed A Stb US
18-Mar-20 Short-Term Instruments Confirmed R-1 (low) Stb US
18-Mar-20 Subordinated Debt Confirmed A (low) Stb US
ALL DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.
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