Bank of Hawaii Corporation ( BOH Quick Quote BOH - Free Report) reported second-quarter 2021 earnings per share of $1.68, surpassing the Zacks Consensus Estimate of $1.31. Also, the bottom line compares favorably with the 98 cents reported in the prior-year quarter.
Fall in revenues on lower fee income and interest income was a headwind, which disappointed investors, causing a share-price decline of 1.35% following the release. Also, contraction of the net interest margin (NIM) was a major drag.
However, fall in provisions, on improvement in economic conditions, was a key positive factor. In addition, higher deposit balances supported the company to some extent.
The company’s net income came in at $67.5 million, up 73.5% from the prior-year quarter figure.
Revenues Fall, Expenses Flare Up, Deposits Rise
The company’s total revenues declined 5.7% year over year to $167.9 million in the second quarter. Nonetheless, the top line surpassed the Zacks Consensus Estimate by 1.5%.
The bank’s net interest income was $123.5 million, down 2.5% year over year. The NIM shrunk 46 basis points (bps) to 2.37% on low rates and higher levels of liquidity.
Non-interest income came in at $44.4 million, down 13.5% year over year. This decline primarily resulted from a fall in mortgage banking and net investment securities gain.
The bank’s non-interest expenses flared up 8.6% year over year to $96.5 million. This upswing mainly reflects a rise in all components except net occupancy costs.
Efficiency ratio was 57.47% compared with the 49.95% recorded in the year-ago quarter. Notably, a rise in the efficiency ratio reflects lower profitability.
As of Jun 30, 2021, total loans and leases balance decreased slightly from the end of the prior quarter to $12 billion, while total deposits improved 3.1% to $20.2 billion.
Credit Quality: A Mixed Bag
As of Jun 30, 2021, non-performing assets slid 16.3% to $19 million. Moreover, net charge-offs of $1.1 million compare favorably with the $5.1 million recorded in the prior-year quarter. In addition, the company recorded negative provision for credit losses of $16.1 million against provisions of $40.4 million in the year-ago quarter.
However, allowance for credit losses jumped 4% year over year to $180.4 million.
Capital and Profitability Ratios
As of Jun 30, 2021, Tier 1 capital ratio was 13.87% compared with 12.04%, as of Jun 30, 2020. Total capital ratio was 15.13%, up from 13.29%. The ratio of tangible common equity to risk weighted assets was 11.85% compared with the 12.07% reported at the end of the year-ago quarter.
Return on average assets expanded 41 bps year over year to 1.23%. Return on average shareholders' equity was 19.6% compared with 11.58%, as of Jun 30, 2020.
Rising 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. Besides, lower interest rates might hurt its NIM.
Currently, Bank of Hawaii carries a Zacks Rank #4 (Sell).
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Performance of Other Banks Bank of America’s ( BAC Quick Quote BAC - Free Report) second-quarter 2021 earnings of $1.03 per share handily beat the Zacks Consensus Estimate of 77 cents. The bottom line compared favorably with the 37 cents earned in the prior-year quarter. PNC Financial ( PNC Quick Quote PNC - Free Report) delivered second-quarter 2021 earnings surprise of 42.4% onsubstantialreserve release. Adjusted earnings per share of $4.50 surpassed the ZacksConsensusEstimate of $3.16.
Large reserve releases, solid investment banking performance and modest rise in loan demand drove
JPMorgan’s ( JPM Quick Quote JPM - Free Report) second-quarter 2021 earnings of $3.78 per share. The bottom line comfortably outpaced the Zacks Consensus Estimate of $3.05.