Bank of Hawaii officials told financial analysts that Hawaii’s economy and its own business is holding pretty stead, but they expressed concern about the potential impact of state furloughs.

The comments came during a presentation of the bank’s presentation of its latest quarterly earnings to a group of financial analysts.

There are often gems of information tucked away in these earnings calls.

Peter Ho, president and chief banking officer, said “there’s a good amount of chatter and concern around what is happening with public workers here in the state.”

There’s furloughs through various sectors of government here. So for now I think that we feel pretty good about where we see employment and income levels but are a bit cautious looking forward to see what is happening on the furlough side.

On the commercial side, we’ve seen drops for most of our clients in the low-single-digit level off the top line. Fortunately for us that’s not optimal for most of our clients but certainly sustainable or survivable. So I think that short of kind of dropping another rung here, the commercial side of the economy should fair reasonably well. On the consumer side, again things have been reasonably stable but we are cautious, kind of looking forward to see the impact of the furloughs at the state level.

CEO Allan Landon said there’s also worry about under-employment.

So many of our folks work in more than on job and it’s difficult to measure the impact of the reduced hours that comes from people. That’s kind of the equivalent of the furlough — they keep their job but their income levels go down 8%, 9% I think that’s kind of the prevailing thing we’ve been talking about.

But Kent Lucien, chief financial officer, noted increased savings by both business and consumers.

Based on end-of-quarter balances, deposit growth was again strong this quarter in all segments, primarily in saving deposits. Consumer deposits were up $29 million, commercial deposits were up $174 million, and public and other deposits increased $28 million. Our funds sold balance was $401 million at the end of the quarter.

Mary Sellers, chief risk officer, reported a $9.5 million increase in “non-performing assets” or loan defaults, a 24% jump over the last 3-month period.

The increase was largely in two commercial construction loans, a residential project on the neighbor island, which we discussed last quarter, and a self-storage facility on Oahu, which has not achieved expected occupancy levels.

I wonder which of the shiny new self-storage operations has defaulted on its loan?

Loans past due more than 90 days also jumped 28% during the quarter, “primarily due to a $3 million commercial construction loan for a neighbor island residential project with a current loan to value of 33%,” Sellers said.

She added:

To date, delinquencies and losses in our residential mortgage portfolio have been driven by land loans and loans on the neighbor islands, primarily second home and investor properties.

What comes through is a mixed picture of the economy, with a few big developers and 2nd-home buyers in trouble, home prices down but doing better than the mainland, employment a cause for concern, but overall much of the state facing conditions that are “not optimal…but certainly sustainable or survivable.” I guess that sums it up.