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Bank of Hawaii (BOH) Q1 Earnings Miss, Up 1.7% on Loan Growth
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Bank of Hawaii Corporation (BOH - Free Report) reported first-quarter 2023 earnings per share of $1.14, missing the Zacks Consensus Estimate of $1.23. The bottom line declined 13.6% from the year-ago quarter’s number. Our estimate for the same was $1.16.
Investors have been bullish on the stock, as the share price gained 1.7% in yesterday’s trading session on higher revenue growth and decent loan demand. However, a rise in expenses and provisions was a significant drag.
The company’s net income came in at $46.8 million, down 14.6% year over year. Our estimate for net income was $47.8 million.
Revenues & Expenses Rise
BOH’s total revenues grew 4.7% year over year to $176.7 million in the first quarter, missing the Zacks Consensus Estimate of $177.7 million. Our estimate for the same was $177.9 million.
The bank’s net interest income was $136 million, up 8.5% primarily due to a rise in earning asset yields and loan growth, partially offset by higher funding costs. Our estimate for the metric was $142.2 million. Net interest margin expanded 13 basis points (bps) to 2.47%.
Non-interest income came in at $40.7 million, down 6.5%. The decline primarily resulted from a fall in trust and asset management income, as well as mortgage banking income. Our estimate for the same was $35.7 million.
Non-interest expenses increased 7.7% to $111.9 million. The upswing mainly resulted from a rise in salaries and benefit expenses, FDIC insurance expenses and software license fees. Our estimate for non-interest expenses was $118.4 million.
The efficiency ratio was 63.34% compared with 61.53% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2023, total loans and leases balance increased 1.3% from the prior -quarter end to $13.8 billion, while total deposits decreased 0.6% to $20.5 billion.
Credit Quality: a Mixed Bag
As of Mar 31, 2023, non-performing assets and allowance for credit losses decreased 39.3% and 5.6% year over year to $12.1 million and $143.6 million, respectively.
The company recorded a provision for credit losses of $2 million against a benefit of $5.5 million in the year-ago quarter. Moreover, $2.66 million was recorded in net loans and lease charge-offs compared with $1.48 million in the prior-year quarter.
Capital and Profitability Ratios Deteriorate
As of Mar 31, 2023, the Tier 1 capital ratio was 12.10%, down from 13.22% as of Mar 31, 2022. The total capital ratio was 13.13%, down from 14.41%. The ratio of tangible common equity to risk-weighted assets was 7.97%, down from 9.77% reported at the end of the year-ago quarter.
Return on average assets shrunk 17 bps year over year to 0.80%. Return on average shareholders' equity was 14.25% compared with 14.18% as of Mar 31, 2022.
Share Repurchase Update
During the reported quarter, Bank of Hawaii repurchased 150,000 shares for $9.9 million.
Conclusion
The company’s strong balance-sheet position, higher interest rates and a rise in net interest income will continue to support financials. However, persistently increasing operating expenses and rising provisions are near-term concerns.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2023 earnings per share of 95 cents surpassed the Zacks Consensus Estimate of 92 cents. The bottom line increased 3.3% from the prior-year quarter.
CBSH’s results benefited from an increase in net interest income, driven by a rise in loan balance and higher interest rates. Also, non-interest income grew during the quarter. However, a rise in non-interest expenses and provisions was a major setback. The company witnessed a decline in deposit balance during the quarter.
Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2023 earnings of $1.45 per share met the Zacks Consensus Estimate. The bottom line rose 3.6% from the prior-year quarter.
HWC’s results benefited from higher net interest income, a rise in loan balance and increasing interest rates. However, lower non-interest income, higher expenses and a rise in provisions were concerning.
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Bank of Hawaii (BOH) Q1 Earnings Miss, Up 1.7% on Loan Growth
Bank of Hawaii Corporation (BOH - Free Report) reported first-quarter 2023 earnings per share of $1.14, missing the Zacks Consensus Estimate of $1.23. The bottom line declined 13.6% from the year-ago quarter’s number. Our estimate for the same was $1.16.
Investors have been bullish on the stock, as the share price gained 1.7% in yesterday’s trading session on higher revenue growth and decent loan demand. However, a rise in expenses and provisions was a significant drag.
The company’s net income came in at $46.8 million, down 14.6% year over year. Our estimate for net income was $47.8 million.
Revenues & Expenses Rise
BOH’s total revenues grew 4.7% year over year to $176.7 million in the first quarter, missing the Zacks Consensus Estimate of $177.7 million. Our estimate for the same was $177.9 million.
The bank’s net interest income was $136 million, up 8.5% primarily due to a rise in earning asset yields and loan growth, partially offset by higher funding costs. Our estimate for the metric was $142.2 million. Net interest margin expanded 13 basis points (bps) to 2.47%.
Non-interest income came in at $40.7 million, down 6.5%. The decline primarily resulted from a fall in trust and asset management income, as well as mortgage banking income. Our estimate for the same was $35.7 million.
Non-interest expenses increased 7.7% to $111.9 million. The upswing mainly resulted from a rise in salaries and benefit expenses, FDIC insurance expenses and software license fees. Our estimate for non-interest expenses was $118.4 million.
The efficiency ratio was 63.34% compared with 61.53% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2023, total loans and leases balance increased 1.3% from the prior -quarter end to $13.8 billion, while total deposits decreased 0.6% to $20.5 billion.
Credit Quality: a Mixed Bag
As of Mar 31, 2023, non-performing assets and allowance for credit losses decreased 39.3% and 5.6% year over year to $12.1 million and $143.6 million, respectively.
The company recorded a provision for credit losses of $2 million against a benefit of $5.5 million in the year-ago quarter. Moreover, $2.66 million was recorded in net loans and lease charge-offs compared with $1.48 million in the prior-year quarter.
Capital and Profitability Ratios Deteriorate
As of Mar 31, 2023, the Tier 1 capital ratio was 12.10%, down from 13.22% as of Mar 31, 2022. The total capital ratio was 13.13%, down from 14.41%. The ratio of tangible common equity to risk-weighted assets was 7.97%, down from 9.77% reported at the end of the year-ago quarter.
Return on average assets shrunk 17 bps year over year to 0.80%. Return on average shareholders' equity was 14.25% compared with 14.18% as of Mar 31, 2022.
Share Repurchase Update
During the reported quarter, Bank of Hawaii repurchased 150,000 shares for $9.9 million.
Conclusion
The company’s strong balance-sheet position, higher interest rates and a rise in net interest income will continue to support financials. However, persistently increasing operating expenses and rising provisions are near-term concerns.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
Bank of Hawaii Corporation price-consensus-eps-surprise-chart | Bank of Hawaii Corporation Quote
Currently, BOH 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
Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2023 earnings per share of 95 cents surpassed the Zacks Consensus Estimate of 92 cents. The bottom line increased 3.3% from the prior-year quarter.
CBSH’s results benefited from an increase in net interest income, driven by a rise in loan balance and higher interest rates. Also, non-interest income grew during the quarter. However, a rise in non-interest expenses and provisions was a major setback. The company witnessed a decline in deposit balance during the quarter.
Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2023 earnings of $1.45 per share met the Zacks Consensus Estimate. The bottom line rose 3.6% from the prior-year quarter.
HWC’s results benefited from higher net interest income, a rise in loan balance and increasing interest rates. However, lower non-interest income, higher expenses and a rise in provisions were concerning.