Best Banking Investments This Side of Paradise
If you are a dedicated financial investor, you may find yourself dismayed by the rocky road that American banks have been traveling for the past few years. There is no need to despair, however. As the big banks continue to churn and grapple with problems that they have often brought on themselves, many regional banks are quietly and consistently going about the business of making money. There are quite a few jewels out there, a handful of which reside on the scenic islands of Hawaii.
A perennial favorite of investors and analysts alike is the well-regarded Bank of Hawaii (NYS: BOH) . This institution has occupied one of the two top spots on Forbes' annual list of bank rankings for the last three years, and is a featured investment pick by banking analysts here at the Motley Fool. This bank is well managed, and currently yields more than 4%, with a dividend of $1.80 per share, and the bank's dividends show a nice upward trend over the past several years. The bank's return on equity is more than 15%, nothing to sneeze at in the current banking climate. It's worth noting that BOH's conservative profile protected it from the mortgage meltdown, since the bank had no subprime loans on its books when the crisis struck.
Like BOH, Territorial Bancorp (NAS: TBNK) also has its headquarters in Honolulu. The bank increased its net income year over year from $3 million to $3.5 million, thanks to more loan-writing and a larger gain on sale of those loans. The bank recently increased its dividend from $0.10 to $0.11 per share, and is currently trading very near its 52-week high of $22. Territorial has noticed the increased interest in mobile banking, and has teamed up with e-commerce giant Fiserv (NYS: FISV) to offer its customers banking apps for iOS, Android, and Blackberry.
Another Honolulu native is Central Pacific Bank, owned by holding company Central Pacific Financial (NYS: CPF) . The bank has seen some hard times, and is experiencing a turnaround orchestrated by its current CEO, John Dean. The bank was suffering from sloggy earnings just two years ago, but Dean has steered the institution toward new profitability in the last year, though not enough to resume paying dividends. Despite its still somewhat delicate condition, it looks like this bank could rebound very nicely, if its recent performance continues.
If you want to own a piece of American Savings Bank, you'll have to invest in its parent company, Hawaiian Electric Industries (NYS: HE) . Don't let this deter you, however, since the largest utility in Hawaii is a pretty sweet investment in itself. American Savings Bank is the state's third-largest, and has increased its presence through strategic acquisitions. The bank has grown to 63 branch locations, slightly behind the 71 belonging to BOH.
Hawaiian banks look like a pretty healthy bunch, and investors are definitely taking notice. If you'd like a little slice of paradise to add to your banking portfolio, you could do worse than take a closer look at these banks.
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At the time this article was published Fool contributorAmanda Alixowns no shares in the companies mentioned above. The Motley Fool owns shares of Bank of Hawaii. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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