BancWest Has No Special "Vulnerability"
Any limited set of numbers can be taken out of context to reach a faulty conclusion. Of the dozens of ratios used to measure a bank's financial health, "Is Wachovia's plight a warning?" (News: Analysis & Commentary, July 3) picked three, then used them to construct a list claiming to identify banks most "vulnerable" to a recession because of poor loans. BancWest Corp. was on that list.
We respectfully disagree. We lend conservatively. Annual net loan losses never exceeded 6% of total loans despite recession and economic stagnation in Hawaii throughout the 1990s. Unlike some other banks, we never had to announce a special charge against earnings to cover nonperforming loans through this entire downturn.
Our 1999 loan losses (0.42%) were virtually equal to peer banks' (0.41%), according to Federal Reserve data. BancWest's loss rate in 2000's first quarter was even lower. Also, nonperforming loans are going down. BancWest's ratio of nonperforming assets to total loans has declined each year since 1995 and has continued to drop in 2000.
Finally, our reserves are adequate. BancWest's relatively heavier proportion of consumer loans has made loss rates more stable and predictable. Our reserve (1.29% of total loans and leases yearend) was triple our 1999 loss ratio.
Would an economic downturn be tough on banks, along with the rest of the economy? Of course. But nothing in BancWest's financial data suggests any special "vulnerability" to a future recession.
Walter A. Dods Jr.
Chairman and CEO
HonoluluReturn to top
Social (In)Security: Bush and Gore Miss the Mark
Business Week editors have fallen under the spell of "don't worry, be happy" after drinking from the New Economy fountain ("Social Security: Safer than you think," Editorials, July 3). Your premise assumes the factors bringing the U.S. its unprecedented favorable economic and productivity growth this past decade will continue long into the future. The editors could be correct, but chances are that long boom cycles are followed by long bust cycles, which have a tendency to have a negative impact on the "rose-colored" averages mentioned. Comparing Japan of the 1980s with the Japan of the 1990s is a case in point.
The retirement plans put forward by both Bush and Gore are political in nature, long on promises and short on specifics. Bush's plan of allowing citizens to keep 2% of their Social Security contributions is flawed. The Social Security system is already underfunded in the out years (2030 or so), when the largest numbers of baby boomers begin collecting monthly stipends en masse. Eliminating 2% of the 12.4% in annual contributions will only accelerate the day of reckoning. Any pension plan losing 16% of its annual contributions will soon find itself with large benefit cuts or payroll tax increases. Also, promising twentysomethings that their 2% contributions invested in stocks will grow into a large fortune flies in the face of reality. Instead of "buy low, sell high," they have to buy high and hope for the best.
Although I endorse Al Gore's commitment to pay down the national debt with the federal government surpluses, his retirement plan creates another government entitlement program--on top of the ones we already can't afford now. Also, I resent redistribution politics--in which any taxpayer receives $1,500 for putting only $500 down. This policy is an unintended bonus to citizens who operate in the underground economy, who understate their income, and who cheat on their income taxes, while penalizing honest citizens.
James H. Nicholas
Sellersville, Pa.Return to top