July 16, 2012 / 5:03 PM / 5 years ago

TEXT-Fitch affirms Bank of the West, First Hawaiian Bank viability ratings

July 16 - Fitch Ratings has affirmed the Viability Ratings (VR) of Bank of
the West (BOW) and First Hawaiian Bank (FHB) at 'a-'.

The affirmation of BOW and FHB's VRs reflects the combined risk profile and
operating performance of the two banks. Although the VR is a stand-alone rating,
Fitch effectively analyzes the two banks as one combined entity due to the
FDIC's cross guarantee authority. Cross guarantee authority allows the FDIC to
assess liability across commonly controlled institutions. Therefore, the
probability of failure for each bank is the same.

Capital and loan loss reserve levels for both institutions are solid. Tangible
common equity ratios for BOW and FHB were 12.13% and 11.06%, respectively, at
end-March 2012 which compares favorably to similarly rated peers. Reserve
coverage of non-performing loans (NPLs), which include non-accrual loans and
accruing troubled debt restructurings, totaled 66% for BOW and 135% for FHB,
which also compares favorably to peers. Although excluded in the analysis of the
VRs, the banks' holding company, BancWest Corp, maintains above average double
leverage.

Fitch expects FHB and BOW problem asset levels to continue to outperform their
similarly rated peers. NPLs have remained relatively low throughout the credit
cycle due to solid underwriting standards. At the end of 1Q'12 NPL totaled 1.09%
of gross loans at FHB and 2.92% of gross loans at BOW. In particular, FHB has
performed particularly well due to the relative strength of the local Hawaiian
economy compared to the mainland.

BOW's operating performance ranks below similarly rated peers with an ROAA of
.82%. Unlike FHB, BOW experienced earnings volatility through the crisis due to
its geographic concentration in California and elevated credit costs in its
consumer and C&D portfolio. Since posting negative profits in 2009, BOW has
reported improved profitability for three consecutive years. Fitch expects
earnings to continue its upward trend as credit costs recede.

FHB's operating performance is strong with an ROAA of 1.42% in 1Q'12. FHB's ROAA
has remained fairly consistent throughout the credit cycle due to its strong
asset quality, geography and valuable deposit franchise. Fitch expects FHB's
ROAA to grow modestly as loan growth picks up in their local markets and credit
cost continue to decline.

Fitch believes the VR ratings have limited upside in the near term. However,
elevated capital levels at the holding company level, credit improvement on a
consolidated basis and sustained earnings commensurate with higher rated peers
could positively affect the VR in the medium term. Conversely, negative pressure
on the ratings could occur should current positive credit trends materially
reverse and credit losses escalate and/or core earnings deteriorate from current
levels.

First Hawaiian Bank and Bank of the West are subsidiaries of the BancWest
holding company. Together, the two banks have over $78 billion in assets.
BancWest is a wholly owned subsidiary of BNP Paribas.


Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011).

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria

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