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Bank of Hawaii (BOH) Q2 Earnings Top Estimates, Provisions Fall

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Bank of Hawaii Corporation (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.

Bank of Hawaii Corporation Price, Consensus and EPS Surprise

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 #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 - 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 - 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 - Free Report) second-quarter 2021 earnings of $3.78 per share. The bottom line comfortably outpaced the Zacks Consensus Estimate of $3.05.