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Hawaii's Most Profitable Companies 2012

First Hawaiian Bank is Hawaii's most profitable company and Bank of Hawaii is No. 2, both for the second year in a row

(page 5 of 6)

War

Military deployments not only disrupt the lives of the families directly involved, they have repercussions throughout the local economy and for local organizations. The surge in Afghanistan in 2009 and 2010 drastically reduced Chaminade’s enrollment in evening and online programs, which have traditionally attracted a lot of military personnel. Now that those deployments have eased, enrollment is rebounding.

“Prior to 9/11, we taught over 27,000 credit hours in that area,” says Ploeger. “That dropped to as low as 19,000 hours. But it’s been growing back at something like 8 percent a year for each of the past two years.” The resulting increase in enrollment has been a boon to Chaminade’s revenue, 60 percent of which comes from tuition.

Turnarounds

A few Hawaii companies returned to profitability in 2011 after a long period in the red. Those turnarounds offer a distinct perspective on the ways companies earn and account for profits.

Allowance for Loan
and Lease Losses

(percentage of assets)

For example, Hawaiian Telcom’s net income of $26.3 million in 2011 only hints at the numbers underlying its return to profitability. Case in point: Hawaiian Telcom was able to revalue its assets while in bankruptcy, which led to dramatically lower depreciation expenses on its income statement. Of course, lower expenses mean higher net income.

But the real measure of the company’s turnaround, says CFO Robert Reich, is its healthy cash flow. In 2011, Hawaiian Telcom’s first full year out of bankruptcy, the company generated $79.2 million in net cash from ­operations. That allowed the company to invest $78 million in capital expenditures – technology and products for the future – yet still maintain a healthy $82 million in cash on the books.

Central Pacific Bank also returned to profitability in 2011, mostly because of improving asset quality. “We’ve made incredible progress on our nonperforming assets,” says CEO John Dean. “In two years, they’ve gone from a peak of around $500 million down to about $195 million.” Banks are required to maintain an allowance for expected loan and lease losses, and Dean points out that CPB’s nonperforming assets are still high compared to other institutions.

Nevertheless, higher asset quality definitely showed up on the bottom line, as CPB was able to release more than $40 million from its loan-loss reserves.

Hawaiian Telcom’s Depreciation and Amortization Expense

Central Pacific Bank’s Net Income

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