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Bank of Hawaii (BOH) Stock Down 3% as Q4 Earnings Lag Estimates
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Bank of Hawaii Corporation (BOH - Free Report) reported fourth-quarter 2020 earnings per share of $1.06, which lagged the Zacks Consensus Estimate of $1.11. Also, the bottom line compares unfavorably with $1.45 reported in the prior-year quarter.
Results were affected by a decline in revenues on lower fee income and interest income. Also, contraction of the net interest margin (NIM) was a major drag. Further, substantial rise in provisions was a headwind, causing investors’ disappointment that led to share price decline of 3%, following the release. Nevertheless, higher loans and deposit balances supported the results to some extent.
The company’s net income came in at $42.3 million, down 27.2% from the prior-year quarter’s figure.
In full-year 2020, Bank of Hawaii reported net income of $153.8 million or $3.86 per share compared with $225.9 million or $5.56 in 2019.
In 2020, the company reported revenues of $680.7 million, which surpassed with the consensus estimate of $671.2 million. However, the figure declined marginally year over year.
The company’s total revenues declined 4% year over year to $164.8 million in the fourth quarter. Also, the top line lagged the Zacks Consensus Estimate of $165.8 million.
The bank’s net interest income was $119.5 million, down 3.5% year over year. Net interest margin (NIM) shrunk 34 basis points (bps) to 2.67% on low rates and elevated levels of liquidity.
Non-interest income came in at $45.3 million, down 5.1% year over year. This downswing primarily resulted from a decline in service charges on deposit accounts, fees, exchange, and other service charges along with annuity and insurance income.
The bank’s non-interest expenses rose 6% year over year to $98.7 million. This rise mainly reflects higher net occupancy and equipment costs.
Efficiency ratio was 59.88% compared with the 49.95% recorded in the year-ago quarter. Notably, a rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2020, total loans and leases balance increased 1.2% from the end of the prior quarter to $11.9 billion and total deposits improved 2.7% to $18.2 billion.
Credit Quality: A Mixed Bag
As of Dec 31, 2020, allowance for credit losses jumped significantly year over year to $216.3 million. In addition, the company recorded provision for credit losses of $15.2 million, significantly up from $4.8 million.
However, non-performing assets declined 8.1% to $18.5 million. Also, net recoveries were $0.3 million against net charge-offs of $3.7 million recorded in the prior-year quarter.
Capital and Profitability Ratios
As of Dec 31, 2020, Tier 1 capital ratio was 12.06% compared with 12.18%, as of Dec 31, 2019. Total capital ratio was 13.31%, up from 13.28%. The ratio of tangible common equity to risk-weighted assets was 11.89% compared with the 11.85% reported at the end of the year-ago quarter.
Return on average assets was down 46 bps year over year to 0.83%. Return on average shareholders' equity was 12.26% compared with 17.84%, as of Dec 31, 2019.
Conclusion
Rising loans and deposit balances are likely to continue supporting Bank of Hawaii’s top line. In addition, controlled expenses are anticipated to keep stoking the bank’s bottom-line growth. Nevertheless, rising provisions pose a key concern. Also, lower interest rates are likely to hurt its NIM.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
People's United Financial delivered fourth-quarter 2020 operating earnings of 35 cents per share, beating the Zacks Consensus Estimate of 32 cents. The reported figure, however, comes in below the prior-year quarter figure of 37 cents.
Regions Financial (RF - Free Report) reported fourth-quarter 2020 adjusted earnings of 62 cents per share, surpassing the Zacks Consensus Estimate of 42 cents on impressive top-line strength. Also, results compare favorably with the prior-year figure of 40 cents.
Texas Capital Bancshares (TCBI - Free Report) reported adjusted earnings per share of $1.14 in fourth-quarter 2020, inching past the Zacks Consensus Estimate of $1.13. However, results compare unfavorably with the prior-year quarter’s $1.23.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Bank of Hawaii (BOH) Stock Down 3% as Q4 Earnings Lag Estimates
Bank of Hawaii Corporation (BOH - Free Report) reported fourth-quarter 2020 earnings per share of $1.06, which lagged the Zacks Consensus Estimate of $1.11. Also, the bottom line compares unfavorably with $1.45 reported in the prior-year quarter.
Results were affected by a decline in revenues on lower fee income and interest income. Also, contraction of the net interest margin (NIM) was a major drag. Further, substantial rise in provisions was a headwind, causing investors’ disappointment that led to share price decline of 3%, following the release. Nevertheless, higher loans and deposit balances supported the results to some extent.
The company’s net income came in at $42.3 million, down 27.2% from the prior-year quarter’s figure.
In full-year 2020, Bank of Hawaii reported net income of $153.8 million or $3.86 per share compared with $225.9 million or $5.56 in 2019.
Revenues Fall, Expenses Climb, Loans & Deposits Rise
In 2020, the company reported revenues of $680.7 million, which surpassed with the consensus estimate of $671.2 million. However, the figure declined marginally year over year.
The company’s total revenues declined 4% year over year to $164.8 million in the fourth quarter. Also, the top line lagged the Zacks Consensus Estimate of $165.8 million.
The bank’s net interest income was $119.5 million, down 3.5% year over year. Net interest margin (NIM) shrunk 34 basis points (bps) to 2.67% on low rates and elevated levels of liquidity.
Non-interest income came in at $45.3 million, down 5.1% year over year. This downswing primarily resulted from a decline in service charges on deposit accounts, fees, exchange, and other service charges along with annuity and insurance income.
The bank’s non-interest expenses rose 6% year over year to $98.7 million. This rise mainly reflects higher net occupancy and equipment costs.
Efficiency ratio was 59.88% compared with the 49.95% recorded in the year-ago quarter. Notably, a rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2020, total loans and leases balance increased 1.2% from the end of the prior quarter to $11.9 billion and total deposits improved 2.7% to $18.2 billion.
Credit Quality: A Mixed Bag
As of Dec 31, 2020, allowance for credit losses jumped significantly year over year to $216.3 million. In addition, the company recorded provision for credit losses of $15.2 million, significantly up from $4.8 million.
However, non-performing assets declined 8.1% to $18.5 million. Also, net recoveries were $0.3 million against net charge-offs of $3.7 million recorded in the prior-year quarter.
Capital and Profitability Ratios
As of Dec 31, 2020, Tier 1 capital ratio was 12.06% compared with 12.18%, as of Dec 31, 2019. Total capital ratio was 13.31%, up from 13.28%. The ratio of tangible common equity to risk-weighted assets was 11.89% compared with the 11.85% reported at the end of the year-ago quarter.
Return on average assets was down 46 bps year over year to 0.83%. Return on average shareholders' equity was 12.26% compared with 17.84%, as of Dec 31, 2019.
Conclusion
Rising loans and deposit balances are likely to continue supporting Bank of Hawaii’s top line. In addition, controlled expenses are anticipated to keep stoking the bank’s bottom-line growth. Nevertheless, rising provisions pose a key concern. Also, lower interest rates are likely to hurt its NIM.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
Bank of Hawaii Corporation price-consensus-eps-surprise-chart | Bank of Hawaii Corporation Quote
Currently, Bank of Hawaii carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
People's United Financial delivered fourth-quarter 2020 operating earnings of 35 cents per share, beating the Zacks Consensus Estimate of 32 cents. The reported figure, however, comes in below the prior-year quarter figure of 37 cents.
Regions Financial (RF - Free Report) reported fourth-quarter 2020 adjusted earnings of 62 cents per share, surpassing the Zacks Consensus Estimate of 42 cents on impressive top-line strength. Also, results compare favorably with the prior-year figure of 40 cents.
Texas Capital Bancshares (TCBI - Free Report) reported adjusted earnings per share of $1.14 in fourth-quarter 2020, inching past the Zacks Consensus Estimate of $1.13. However, results compare unfavorably with the prior-year quarter’s $1.23.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>