Hawaii Bank Run
Bank of Hawaii appears to become a safe investment. Hawaii real estate reaches for the moon. The wealth factor on the island chain is unreal. However, as we saw with Silicon Valley Bank, too many deposits can lead to too many problems! See our piece: What caused the run on Silicon Valley Bank?
Bank of Hawaii witnessed nearly all of their book value evaporate as their pile of loans purchased in the last few years took a nose dive with higher interest rates. So any run on the bank could become catastrophic!
Below we have a chart showing unrealized depreciation on Hold to Maturity Securities (HTM) for top 100 banks versus equity.
These unrealized losses are NOT reflected in profits or a deduct to equity via Other Comprehensive Income (OCI) – only in the footnotes! Moreover, we don’t find these losses reflected in stress tests or measures of capital adequacy.
Furthermore a 25 bp (1/4 of 1 percent) increase in rates for a 10-year security causes approximately 2 points in losses (100 par to 98 to reflect yield discount).
Lately all we can read about these days are banks failing everywhere! Now some worry Will Bank of America Collapse? And many others worry whether or not Will Wells Fargo Fail?. And of course many others worry about whether the more local establishments. Will First Republic Bank Fail ?
The Bank of Hawaii became founded in 1897 as the First National Bank of Hawaii. At the time, Hawaii was still a territory of the United States. Furthermore, the bank became established to serve the needs of the growing population and economy.
In the early years, the bank focused on providing services to the local community, including small businesses, farmers, and families. Over time, the bank grew in size and expanded its services to include commercial banking, trust and investment services, and international banking.
During World War II, the Bank of Hawaii played a critical role in supporting the war effort. The bank helped to finance the construction of military bases and provided banking services to the military and their families.
In the post-war years, the bank continued to grow and expand, opening branches throughout the Hawaiian Islands and developing new products and services to meet the changing needs of its customers.
Moreover, in 1959, Hawaii became the 50th state of the United States. And the bank changed its name to the Bank of Hawaii to reflect its statewide presence.
In conclusion, today, the Bank of Hawaii is one of the largest banks in the state, with over 60 branches throughout Hawaii, American Samoa, and the West Pacific. Lastly, the bank provides a wide range of financial products and services to individuals, businesses. In addition, government entities, including checking and savings accounts, loans, credit cards, and investment and wealth management services.
Hawaii Bank Run