Bank of Hawaii is the primary subsidiary of Bank of Hawaii Corporation, a regional financial services company. Bank of Hawaii Corporation and its subsidiaries provide varied financial services to businesses, consumers and governments in Hawaii, American Samoa and the Pacific Islands. The company is listed on the New York Stock Exchange as "BOH." In the community, Bank of Hawaii is also affectionately known as "Bankoh."
Lawsuit claims Bank of Hawaii rearranged debit card transactions to maximize overdrafts
Bank of Hawaii has been sued by customers alleging the bank used "unfair and deceptive overdraft fee practices."
The complaint, filed as a class action Tuesday in state Circuit Court on behalf of Honolulu residents Lodley and Tehani Taulava, accuses Bank of Hawaii of engaging in a systematic policy of re-ordering debit card transactions from highest dollar amount to lowest dollar amount. The suit said this practice allowed the bank to deplete the customer's available funds as quickly as possible while maximizing the number of overdraft fees.
Bank of Hawaii spokes-man Stafford Kiguchi said yesterday that the bank changed its policy last month and now generally posts transactions from lowest dollar amount to highest. "This minimizes overdraft fees paid by customers," Kiguchi said.
The suit cited an example involving the Taulavas in which they were charged four overdraft fees of $26 each, or a total of $104, from debits that were posted on the same day (Aug. 18, 2010). The Taulavas had five transactions that day, including an ATM withdrawal, totaling $115.11. The debits were processed from highest to lowest. The suit said that if the bank had processed the transactions from lowest to highest or chronologically (based on time of day), the Taulavas would have been assessed only one overdraft fee of $26.
"Banks should not be allowed to gouge customers by unfairly manipulating the manner in which transactions are posted and overdrafts are charged," said John Perkin, a partner with Perkin & Faria LLLC, which represents the plaintiffs. "Such practices make it more difficult for thousands of Hawaii families to make ends meet. We are continuing to investigate other banks in Hawaii."
Kiguchi said the bank is aware of customers' concerns about overdraft fees. He said that until the bank changed its policy that this had been a common practice based on the belief that the higher debits were someone's mortgage, tuition or car payments.
Kiguchi said there are also many other ways customers can avoid overdraft fees.
"To ensure that customers know how much money they have to spend without overdrawing their account, Bank of Hawaii provides account balances through Internet banking, mobile banking, Bankoh by Phone and at ATMs," Kiguchi said.
"The bank provides ways to avoid having transactions denied and offers customers the ability to avoid overdrafts by linking a line of credit or savings account to their checking account."
This is the first such lawsuit against a Hawaii bank, but several mainland banks were recently sued over similar practices, Perkin & Faria said in a news release.
In August 2010, a California judge awarded Wells Fargo customers in that state $203 million in damages related to the bank's overdraft fee practices. Last month, a judge in Washington, D.C., approved a settlement in which National City Bank agreed to pay its customers $12.5 million. Earlier this month, Bank of America agreed to pay its customers $410 million.
The three mainland firms that are assisting Perkin & Faria in the Honolulu suit — Tycko & Zavareei LLP, Kopelowitz Ostrow and Chitwood Harley Harnes LLP — also were involved in one or all of those other recent settlements.
The Texas Ratio is an indicator of how much funds a bank has available compared to the total value of loans considered at risk. As of December 31, 2013 Bank of Hawaii had $49.44 million in non-current loans and owned real-estate with $1.06 billion in equity and loan loss allowances on hand to cover it. This gives Bank of Hawaii a Texas Ratio of 4.68% which is excellent. Any bank with a Texas Ratio near or greater than 100% is considered at risk.
The Texas Ratio for Bank of Hawaii held steady from 4.29% as of December 31, 2012 to 4.68% as of December 31, 2013, resulting in a negative change of 9.16%. This indicates that the balance sheet and financial strength for Bank of Hawaii has held steady in recent periods.
In the past year, Bank of Hawaii has increased its total deposits by $414.1 million, resulting in 3.58% growth for the year. A strong track record of growth is an indicator of consumer confidence and the bank's ability to strengthen its balance sheet. The growth Bank of Hawaii has shown is excellent.
Both FDIC and NCUA consider capitalization levels of banks and credit unions to be of high importance. Higher capitalization allows for a greater buffer when cover loans that may fail in the future. Bank of Hawaii has $14.11 billion in assets with $1.06 billion in equity, resulting in a capitalization level of 7.49%, which is below average.
|FDIC Certificate #||18053|
|Assets and Liabilities|
|Equity Capital||$940.73 million|
|Loan Loss Allowance||$115.45 million|
|Unbacked Noncurrent Loans||$46.23 million|
|Real Estate Owned||$3.21 million|
|Historic Data - December 2012|
|Equity Capital||$977.59 million|
|Loan Loss Allowance||$128.86 million|
|Unbacked Noncurrent Loans||$46.23 million|
|Real Estate Owned||$3.89 million|
|Profit Margin - Quarterly|
|Net Interest Margin||2.86%|
|Return on Assets||1.1%|
|Return on Equity||15.96%|
|Interest Income||$409.03 million|
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|0.15%||$100k||-||Bankohana Bonus Rate Savings Plus - Combined Variable|
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|0.07%||$100k||-||Bankohana Bonus Rate Savings - Regular Variable|
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