Bank of Hawaii Corporation ( BOH Quick Quote BOH - Free Report) reported first-quarter 2021 earnings per share of $1.50, which surpassed the Zacks Consensus Estimate of $1.18. Also, the bottom line compared favorably with 87 cents reported in the prior-year quarter.
Substantial fall in provisions, on improvement in economic conditions, was a key positive factor. Also, higher loans and deposit balances supported the results to some extent.
Nevertheless, fall in revenues on lower fee income and interest income was a headwind, which caused investors’ disappointment, leading to share price decline of 1.2% following the release. Also, contraction of the net interest margin (NIM) was a major drag.
The company’s net income came in at $59.9 million, up 72.6% from the prior-year quarter figure.
Revenues Fall, Expenses Climb, Loans & Deposits Rise
The company’s total revenues declined 5% year over year to $163.5 million in the first quarter. Also, the top line lagged the Zacks Consensus Estimate of $165.2 million.
The bank’s net interest income was $120.8 million, down 4.4% year over year. NIM shrunk 53 basis points (bps) to 2.43% on low rates and elevated levels of liquidity.
Non-interest income came in at $43 million, down 6.7% year over year. This downswing primarily resulted from a decline in customer derivative program income and lower service charges on deposit accounts.
The bank’s non-interest expenses rose 2.7% year over year to $98.9 million. This rise mainly reflects seasonal payroll expenses and data processing costs.
Efficiency ratio was 60.45% compared with the 55.96% recorded in the year-ago quarter. Notably, a rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2021, total loans and leases balance increased 1.7% from the end of the prior quarter to $12.1 billion, and total deposits improved 7.7% to $19.6 billion.
Credit Quality: A Mixed Bag
As of Mar 31, 2021, non-performing assets declined 13.1% to $17.9 million. Also, net charge-offs of $2.9 million compared favorably with $3.7 million recorded in the prior-year quarter. In addition, the company recorded negative provision for credit losses of $14.3 million against provisions of $33.6 million in year-ago quarter.
However, allowance for credit losses jumped 43.6% year over year to $198.3 million.
Capital and Profitability Ratios
As of Mar 31, 2021, Tier 1 capital ratio was 12.35% compared with 11.81%, as of Mar 31, 2020. Total capital ratio was 13.61%, up from 13.06%. The ratio of tangible common equity to risk-weighted assets was 11.78% compared with the 11.85% reported at the end of the year-ago quarter.
Return on average assets was up 38 bps year over year to 1.15%. Return on average shareholders' equity was 17.65% compared with 10.64%, as of Mar 31, 2020.
Rising loans and deposit balances are likely to continue supporting Bank of Hawaii’s top line. In addition, declining provisions are anticipated to keep stoking the bank’s bottom-line growth. Nevertheless, rising expenses pose a key concern. Also, lower interest rates are likely to hurt its NIM.
Currently, Bank of Hawaii sports a Zacks Rank #1 (Strong Buy). You can see
. the complete list of today’s Zacks #1 Rank stocks here Performance of Other Banks Regions Financial ( RF Quick Quote RF - Free Report) reported first-quarter 2021 earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate of 48 cents on impressive top-line strength. Also, the bottom line compared favorably with the prior-year figure of 14 cents. Huntington Bancshares’ ( HBAN Quick Quote HBAN - Free Report) first-quarter 2021 earnings per share of 48 cents surpassed the Zacks Consensus Estimate of 33 cents. Also, the bottom line increased substantially from 3 cents reported in the prior-year quarter. Texas Capital Bancshares ( TCBI Quick Quote TCBI - Free Report) reported adjusted earnings per share of $1.33 in first-quarter 2021, inching past the Zacks Consensus Estimate of $1.11. Also, results compare favorably with the prior-year quarter’s loss of $0.38 per share. Time to Invest in Legal Marijuana
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