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Bank of Hawaii (BOH) Down 3.4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Bank of Hawaii (BOH - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bank of Hawaii due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Bank of Hawaii Q1 Earnings Beat Estimates, Provisions Down
Bank of Hawaii 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, decline in revenues on lower fee income and interest income was a headwind. 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.
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.
Outlook
Non-interest revenues are expected to be between $42 million and $43 million in 2021.
For 2021, non-interest expenses are anticipated to remain flat or increase 1%. For the first quarter, expenses are expected to include seasonal payroll expenses between $2 million and $3 million.
Effective tax rate is estimated to be around 23%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Bank of Hawaii has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Bank of Hawaii has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Bank of Hawaii (BOH) Down 3.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Bank of Hawaii (BOH - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bank of Hawaii due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Bank of Hawaii Q1 Earnings Beat Estimates, Provisions Down
Bank of Hawaii 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, decline in revenues on lower fee income and interest income was a headwind. 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.
Outlook
Non-interest revenues are expected to be between $42 million and $43 million in 2021.
For 2021, non-interest expenses are anticipated to remain flat or increase 1%. For the first quarter, expenses are expected to include seasonal payroll expenses between $2 million and $3 million.
Effective tax rate is estimated to be around 23%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Bank of Hawaii has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Bank of Hawaii has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.