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Bank of Hawaii (BOH) Stock Rise as Q1 Earnings Beat Estimate

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Bank of Hawaii Corporation (BOH - Free Report) shares rallied 0.9% following better-than-expected first-quarter earnings results. The company reported first-quarter 2022 earnings per share of $1.32, surpassing the Zacks Consensus Estimate of $1.22. Yet, the bottom line declined from $1.50 in the year-ago quarter.

Revenue growth on higher interest income was a tailwind. In addition, higher loan balances supported the company to some extent. However, a rise in expenses and the contraction of the net interest margin (“NIM”) were significant drags.

The company’s net income was $54.8 million, down from the prior-year quarter’s $59.9 million.

Revenues & Expenses Rise, Loans Increase & Deposits Decrease

The company’s total revenues improved 3.2% year over year to $168.8 million in the first quarter. However, the top line missed the Zacks Consensus Estimate of $169.4 million.

The bank’s net interest income was $125.3 million, up 3.9% year over year. The NIM shrunk 9 basis points (bps) to 2.34%.

Non-interest income was $43.6 million, down 1.4% year over year. This decline primarily resulted from a fall in mortgage banking, and fees, exchange and other service charges.

The bank’s non-interest expenses increased 5.1% year over year to $103.9 million. The upswing mainly reflects a rise in salaries and benefits, net occupancy, and net equipment costs.

Efficiency ratio was 61.53 % compared with 60.45% recorded in the year-ago period. Notably, a rise in the efficiency ratio reflects lower profitability.

As of Mar 31, 2022, total loans and leases balance rose 2.3 % from the end of the prior quarter to $12.5 billion, while total deposits increased 1.8% to $20.7 billion.

Credit Quality: A Mixed Bag

As of Mar 31, 2022, non-performing assets increased 11.7% year over year to around $20 million. Moreover, net loans and lease charge-offs were $1.5 million, decreasing $1.4 million from the prior-year quarter.

Nonetheless, the company recorded a provision for credit losses of $5.5 million, lower than the prior year’s $14.3 million. In addition, the allowance for credit losses decreased 24% year over year to $152 million.

Capital Ratios Mixed, Profitability Falls

As of Mar 31, 2022, Tier 1 capital ratio was 13.22%, improving from 12.35% as of Mar 31, 2021. Total capital ratio was 14.41%, up from 13.61%. Yet, the ratio of tangible common equity to risk-weighted assets was 9.77%, down from 11.78% in the year-ago quarter.

Return on average assets declined year over year to 0.97% from 1.15%. Return on average shareholders' equity was 14.18% compared with 17.65% as of Mar 31, 2021.

Conclusion

Rising loans amid an improving economy are likely to continue supporting Bank of Hawaii’s top line. In addition, increasing net interest income is anticipated to keep aiding the bank’s top-line growth. Nevertheless, rising expenses limit bottom-line growth. Also, NIM declines pose a concern.

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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

First Horizon National Corporation’s (FHN - Free Report) first-quarter 2022 adjusted earnings per share of 38 cents beat the Zacks Consensus Estimate of 34 cents. However, the figure declined 25% year over year. Results excluded after-tax impacts of 4 cents per share from notable items related to the IBERIABANK Corporation and TD-Bank merger transactions.

First Horizon’s results reflect higher loan balance, provision benefits and declining expenses. However, declines in NII and fee income affected revenues. Also, pressure on margin due to low interest rates was a spoilsport for FHN.

M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $2.73 in first-quarter 2022, surpassing the Zacks Consensus Estimate of $2.26. However, MTB’s bottom line compares unfavorably with the $3.41 per share reported in the year-ago period.

A rise in non-interest income and a strong capital position were tailwinds for M&T Bank. However, a fall in NII, net interest margin and a rise in expenses were the key undermining factors.

Cadence Bank (CADE - Free Report) reported first-quarter 2022 adjusted earnings per share of 65 cents, beating the Zacks Consensus Estimate of 60 cents. However, the bottom line compares unfavorably with 78 cents reported in the year-ago quarter.

Higher revenues were aided by an increase in net interest revenues. Moreover, higher deposit balances and loans strengthened its balance sheet. Nevertheless, shrinking net interest margins, weak capital ratios and elevated expenses were major drags.