Regulators say a bank failure in Hawaii is unlikely

The collapse of a third major mainland bank in a matter of weeks has shaken the U.S. banking system
Published: May. 1, 2023 at 8:56 PM HST
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HONOLULU (HawaiiNewsNow) - The collapse of a third major mainland bank has shaken the U.S. banking system. But state regulators say a bank failure here is unlikely.

That’s because Hawaii banks tend to be much more conservative in their lending than their mainland counterparts, and their depositors tend to be more loyal.

“Their (loan) portfolios are very stable ... oriented for some moderate growth, not that super quick and easy growth like in those failed banks,” said Iris Ikeda, state Commissioner of Financial Institutions.

Like all financial institutions nationwide, higher interest rates have put a lid on earnings, but it hasn’t led to the type of deposit flight that doomed First Republic.

Also, much of the local bank loans are real estate-based — a market which has remained strong.

By contrast, Silicon Valley Bank failed in March and was a big lender to start-ups and the high-tech crowd.

“They are continuing to make money; they’re continuing to grow, but not exponentially, like those recently failed banks,” said Ikeda said of the Hawaii banks.

The last Hawaii bank failure occurred in 2000 when state and federal regulators seized the Bank of Honolulu.