Earnings Performance
Earnings performance determines the profitability of the company. Over the last five years, Ohana Pacific Bank’s earning ratings have been increasing, scoring a 10 out of the possible 30 in 2019. Despite the increment, the bank earnings were below the national average of 15.12. Return of equity is another measure of the bank’s earnings performance. The score is calculated by dividing the profit by the amount of equity (FFIEC 051 Call Report, 2019). The most recent return on equity score for the company was therefore 4.54%, and this was also below 8.10%, which was the national average. In 2017, the bank reported a net income of $759,000 with a total equity of $17.1 million. The annual return on assets for the company has been stagnating at approximately 0.55%, which is below the required industry standards and the average for the US banks ROA of 1%. The return on equity measures the efficiency of a bank makes money from the existing capital. By 2019, the company ROE was 7.49%, implying that the company is well run (BestCashCow, 2020).
Loan Portfolio Decomposition
Ohana Pacific Bank loan portfolio is divided into the mortgage and consumer loans, as indicated below. The loans have been overly increasingly, indicating the bank’s ability to raise its funds and manage its loans. Increase in commercial real estate has been sharply increasing (46.47% in 2019) relative to other loans; 1-4 family residential loan (32.77%), multifamily mortgages (10.09%), commercial and industrial loans (10.77%), and construction and development loans (0.34%) (BestCashCow, 2020). This follows the bank’s specialty in this type of loan (BestCashCow, 2020).
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Consumer Loans
The bank provides consumer loan for small businesses and small farms. The bank provides the loan based on a number of metrics. For instance, the original amount that the borrower holds, the number of loans that the borrower desires and the records of outstanding loans that the borrower has within the company (Banknet Financial Reports Center, 2019). In 2015, the total consumer loans were $17,575 (Reports for 2015). The values for the years 2016, 2017, 2018 and 2019 are provided as follows; $18,907 (Reports for 2016), $19,324 (Reports for 2017), $22,456 (Reports for 2018), and $23654 (Reports for 2019).
Mortgage Loans
The bank provides mortgage loans. In 2015, the total mortgages, both on leases and loans net of the unearned income was $80,129 (Banknet Financial Reports Center, 2019). This included loans for the foreign government institutions, commercial and industrial loans, loans to depository institutions and acceptance by other banks, loans secured by owner-occupied non-farm residential properties, loans secured by multifamily residential properties, loans secured by first liens, loans secured by family residential properties and extended under lines of credit, other construct loans, land development and other lands loans (Banknet Financial Reports Center, 2019). The according to Banknet Financial Reports Center (2019), the total loan for the 2016, 2017, 2018 and 2019 were reported respectively as; $97,198 (Reports for 2016), $109,785 (Reports for 2017), $109,795 (Reports for 2018), and $137,859 (Reports for 2019).
Asset Growth
The assets growth is dependent on the quality of asset scores which banks use to test the impact of unpaid liabilities on their performances. The existence of such liabilities may force the company to use their operating capital to offset them, therefore diminishing its equity buffer. However, the Ohana Bank has been performing well as far as asset performance is concerned, reporting an asset quality score of 40 out of the possible 40 in 2019 (Ohana Pacific Bank, 2019). The price returns for the company grew by 12.34% within the first year since 2015, rose to 36.98% in the next two years, and achieved a rate of 48.87% in another two years (Ohana Pacific Bank, 2019). The total price return was also reflected by the same rates of 12.34% from 2015 to 2016, rising to 36.98% for the next two years and further shooting to 48.87% in another two years (Ohana Pacific Bank, 2019). The price returns for the company increased from 20.43% in 2015 to 27.96% in 29.03% in 2016, and sharply increased to 72.04% in 2017, dropped to 52.69% in 2018 and increased to 70.97% in 2019 (Ohana Pacific Bank, 2019). The upward trend is attributed to the increasing bank’s high Texas Ratio (0.48%), which measures the ability to offset and cover problem loans (BestCashCow, 2020).
Capital Levels
In 2015, the company registered total equity capital of $15.416 million. Since then, the capital share has significantly risen. Currently, the company’s capital score is 14 out of the possible 30 points (Ohana Pacific Bank, 2019). Capital score is used to measure the adequacy of an institution to handle any financial difficulties. Further, the Tier 1 capital ratio of the company was 16.63%, which is above the recommended regulator’s level of 6% (Ohana Pacific Bank, 2019). However, the score is less than the national average of 25.65%. For the five years, the company’s capital ratio has been significantly rising, which implies that the company is increasingly achieving financial stability, and therefore able to weather all its financial difficulties.
Liquidity
Since the 2009 accusation of the company by the Federal Deposit Insurance Corporation (FDIC) following inadequate reserves set aside to settle its liabilities, and the lack of adequate capital in terms of asset quality, the bank put in place reinforcement actions to improve its asset quality, strengthen its capital and maintain adequate liquidity levels (Dayson, 2009). Since then, the company has been performing well in this aspect. In the same year, the company listed assets of approximately $75 million, loans of approximately $67 million and deposits of approximately $66 (Dayson, 2009). In 2015, the bank listed assets worth $113.98 million and liabilities worth 98.564 million, assets and liabilities worth $125,392 and $109,308 in 2016, assets and liabilities worth $136,620 and $119,969 respectively in 2017, assets and liabilities worth $152,072 and $143,675 respectively in 2018, and assets worth $165, 393 and $146,629 respectively.
References
Alpha, S. (2020). OHPB - Ohana Pacific Bank. https://seekingalpha.com/symbol/OHPB/momentum/performance#
Banknet Financial Reports Center (2019). Ohana Pacific Bank: Reports for 2015.
https://www.ibanknet.com/scripts/callreports/reportlist.aspx?ibnid=usa_3447772&per=20151231&actn=open
Banknet Financial Reports Center (2019). Ohana Pacific Bank: Reports for 2016.
https://www.ibanknet.com/scripts/callreports/reportlist.aspx?ibnid=usa_3447772&per=20161231&actn=open
Banknet Financial Reports Center (2019). Ohana Pacific Bank: Reports for 2017.
https://www.ibanknet.com/scripts/callreports/reportlist.aspx?ibnid=usa_3447772&per=20171231&actn=open
Banknet Financial Reports Center (2019). Ohana Pacific Bank: Reports for 2018.
https://www.ibanknet.com/scripts/callreports/reportlist.aspx?ibnid=usa_3447772&per=20181231&actn=open
Banknet Financial Reports Center (2019). Ohana Pacific Bank: Reports for 2019.
https://www.ibanknet.com/scripts/callreports/reportlist.aspx?ibnid=usa_3447772&per=20191231
BestCashCow. (2020). Ohana Pacific Bank.
https://www.bestcashcow.com/banks/ohana-pacific-bank-58231
Daysog, R. (2009). Isle bank accused of unsafe practices. http://the.honoluluadvertiser.com/article/2009/Dec/01/bz/hawaii912010312.html
FFIEC 051 Call Report (March 2019). Instruction book update.
www.fdic.gov › call › crinst-051 ›
Ohana Pacific Bank. (n.d.). The Institution's Score.
https://www.bankrate.com/banks/ohana-pacific-bank/3447772/
