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Bank of Hawaii (BOH) Q3 Earnings Top Estimates, Revenues Up
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Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2018 earnings per share of $1.36, beating the Zacks Consensus Estimate of $1.34. The reported figure compares favorably with $1.08 earned in the prior-year quarter.
Though results were driven by increased net interest income and lower provisions, investors’ concern were reflected on decline in non-interest income and rise in non-interest expenses. This led the share price to record a drop of 1.73%, following the earnings release. However, strong capital position and higher loan balances were the supporting factors.
The company’s net income came in at $56.9 million, up 24% from $45.9 million reported a year ago.
Bank of Hawaii’s total revenues increased 3.7% year over year to $164.5 million. However, the revenue figure missed the Zacks Consensus Estimate of $165.7 million.
The bank’s net interest income was recorded at $123 million, up 5.8% year over year. Net interest margin (NIM) expanded 15 basis points (bps) to 3.07% from the prior-year quarter.
Non-interest income was $41.5 million, down 2.1% year over year. This downside primarily resulted from a 39.3% plunge in mortgage-banking revenues, as well as loss in investment securities.
The bank’s non-interest expense flared up 2.1% year over year to $90.5 million. The upsurge reflected higher salaries and benefits, occupancy, equipment, as well as data-processing expenses.
Efficiency ratio came in at 55.07%, down from 55.82% recorded in the comparable quarter last year. Notably, a fall in the efficiency ratio reflects higher profitability.
As of Sep 30, 2018, total loans and leases balances climbed 6.3% from the end of the prior-year quarter to $10.2 billion, while total deposits edged down 1.3% to $14.8 billion.
Credit Quality: A Mixed Bag
As of Sep 30, 2018, allowance for loan and lease losses increased 1.7% year over year to $108.7 million, while non-performing assets decreased 18.8% year over year to $13.8 million.
Further, the company recorded provision for credit losses of $3.8 million in the reported quarter, down 5% year over year. Net charge-offs were $3.3 million or 13 bps annualized of total average loans and leases outstanding, down from $3.5 million or 15 bps recorded in the prior-year quarter.
Strong Capital and Profitability Ratios
Bank of Hawaii remained well capitalized and its profitability ratios improved during the Jul-Sep quarter.
As of Sep 30, 2018, Tier 1 capital ratio was 13.19% compared with 13.27% as of Sep 30, 2017. Total capital ratio was 14.38% compared with 14.51% witnessed in the same quarter last year. The ratio of tangible common equity to risk-weighted assets was 12.55% compared with 12.96% at the end of the year-ago quarter.
Return on average assets were up 26 bps year over year to 1.33%, while return on average shareholders' equity advanced 317 bps to 18.06%.
Capital Deployment
During the quarter under review, the company repurchased 296,500 shares of common stock at an average price of $83.04 and for a total cost of $24.6 million.
Conclusion
Rising loans and expanding net interest margin remain key positives for Bank of Hawaii. In addition, lower tax rates are expected to continue supporting the bank’s bottom-line growth. Furthermore, the company’s profitability ratios indicate an uptrend in its returns. Nevertheless, lower non-interest income and elevated expenses remain concerns.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
Among other stocks belonging to the same industry, CPB Inc. (CPF - Free Report) is slated to report Sep-end quarter results on Oct 24, while SVB Financial Group and First Hawaiian, Inc. (FHB - Free Report) are expected to report on Oct 25.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Bank of Hawaii (BOH) Q3 Earnings Top Estimates, Revenues Up
Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2018 earnings per share of $1.36, beating the Zacks Consensus Estimate of $1.34. The reported figure compares favorably with $1.08 earned in the prior-year quarter.
Though results were driven by increased net interest income and lower provisions, investors’ concern were reflected on decline in non-interest income and rise in non-interest expenses. This led the share price to record a drop of 1.73%, following the earnings release. However, strong capital position and higher loan balances were the supporting factors.
The company’s net income came in at $56.9 million, up 24% from $45.9 million reported a year ago.
Revenues Increase, Expenses Escalate, Loans Improve
Bank of Hawaii’s total revenues increased 3.7% year over year to $164.5 million. However, the revenue figure missed the Zacks Consensus Estimate of $165.7 million.
The bank’s net interest income was recorded at $123 million, up 5.8% year over year. Net interest margin (NIM) expanded 15 basis points (bps) to 3.07% from the prior-year quarter.
Non-interest income was $41.5 million, down 2.1% year over year. This downside primarily resulted from a 39.3% plunge in mortgage-banking revenues, as well as loss in investment securities.
The bank’s non-interest expense flared up 2.1% year over year to $90.5 million. The upsurge reflected higher salaries and benefits, occupancy, equipment, as well as data-processing expenses.
Efficiency ratio came in at 55.07%, down from 55.82% recorded in the comparable quarter last year. Notably, a fall in the efficiency ratio reflects higher profitability.
As of Sep 30, 2018, total loans and leases balances climbed 6.3% from the end of the prior-year quarter to $10.2 billion, while total deposits edged down 1.3% to $14.8 billion.
Credit Quality: A Mixed Bag
As of Sep 30, 2018, allowance for loan and lease losses increased 1.7% year over year to $108.7 million, while non-performing assets decreased 18.8% year over year to $13.8 million.
Further, the company recorded provision for credit losses of $3.8 million in the reported quarter, down 5% year over year. Net charge-offs were $3.3 million or 13 bps annualized of total average loans and leases outstanding, down from $3.5 million or 15 bps recorded in the prior-year quarter.
Strong Capital and Profitability Ratios
Bank of Hawaii remained well capitalized and its profitability ratios improved during the Jul-Sep quarter.
As of Sep 30, 2018, Tier 1 capital ratio was 13.19% compared with 13.27% as of Sep 30, 2017. Total capital ratio was 14.38% compared with 14.51% witnessed in the same quarter last year. The ratio of tangible common equity to risk-weighted assets was 12.55% compared with 12.96% at the end of the year-ago quarter.
Return on average assets were up 26 bps year over year to 1.33%, while return on average shareholders' equity advanced 317 bps to 18.06%.
Capital Deployment
During the quarter under review, the company repurchased 296,500 shares of common stock at an average price of $83.04 and for a total cost of $24.6 million.
Conclusion
Rising loans and expanding net interest margin remain key positives for Bank of Hawaii. In addition, lower tax rates are expected to continue supporting the bank’s bottom-line growth. Furthermore, the company’s profitability ratios indicate an uptrend in its returns. Nevertheless, lower non-interest income and elevated expenses remain concerns.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
Bank of Hawaii Corporation Price, Consensus and EPS Surprise | Bank of Hawaii Corporation Quote
Currently, Bank of Hawaii carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other stocks belonging to the same industry, CPB Inc. (CPF - Free Report) is slated to report Sep-end quarter results on Oct 24, while SVB Financial Group and First Hawaiian, Inc. (FHB - Free Report) are expected to report on Oct 25.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>