If you’re an investor who likes to get in on the ground floor, you’ve probably noticed that IPO pickings have been slim of late. But you may also be surprised that one of the year’s most promising initial public offerings hails from Hawaii. BNP Paribas, the major French bank, is planning to take its First Hawaiian Bank subsidiary public in a deal that is projected to value the bank as high as $5 billion.
First Hawaiian is in many ways your typical community bank. It has a little less than $19 billion in assets and operates 57 branches across the state, focusing on the sort of consumer and small-business banking services that are increasingly distinguishing the nation’s small banks from the too-big-to-fail crowd.
So what’s so great about the First Hawaiian Bank IPO – a bank that is little known outside of Hawaii? Turns out, a number of things:
- Community banks in general are a promising sector. While not all small community banks are created equal, there are many gems in this sector, which has long been overlooked as a sideshow to the main banking event on Wall Street. But while many Wall Street banks took big gambles and suffered big losses, community banks as a group have maintained a more traditional and conservative approach to banking. It’s a slow-and-steady approach that in recent years has picked up steam from a slew of acquisitions in the sector.
- Community banks in Hawaii are especially well poised. First Hawaiian is not only the oldest and largest bank in the state of Hawaii, it also faces minimal competition from major bank chains. That’s because big banks have been slow to put down roots in Hawaii. First Hawaiian, together with its main rival, Bank of Hawaii, controls most of the banking business in the state. Think of this market as a particularly large community with minimal competition. It’s a good position for a bank to be in, and the First Hawaiian Bank IPO should reflect that strength.
- Hawaii’s robust tourism industry is a consistent boon to the economy. Hawaii has varied economic growth year to year, but its status as a consistently popular tourist destination provides an ongoing source of stimulus – not just to the tourism industry but to other sectors like construction. Tourism is a big job creator for the state, which has an unemployment rate that’s significantly below the national average.
If you’re looking for a promising investment in financial services, or if you’re still searching for a good IPO, the First Hawaiian Bank IPO definitely deserves a closer look.
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