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Bank of Hawaii (BOH) Q2 Earnings In Line, Provisions Down

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Bank of Hawaii Corporation (BOH - Free Report) reported second-quarter 2018 earnings per share of $1.30, in line with the Zacks Consensus Estimate. The reported figure compared favorably with $1.05 earned in the prior-year quarter.

Results were driven by increased net interest income and lower provisions, partially offset by decline in non-interest income and rise in non-interest expenses. Strong capital position and higher loan balances were the supporting factors.

The company’s net income came in at $54.7 million, up 22.5% from $44.7 million reported a year ago.

Revenues Increase, Expenses Escalate, Loans Rise

Bank of Hawaii’s total revenues increased 2.7% year over year to $162.4 million. However, the revenue figure missed the Zacks Consensus Estimate of $164.8 million.

The bank’s net interest income was recorded at $120.5 million, up 7.3% year over year. Net interest margin (NIM) expanded 12 basis points (bps) to 3.04% from the prior-year quarter.

Non-interest income was $41.3 million, down 8.7% year over year. This fall primarily resulted from a 42.9% plunge in mortgage-banking revenues, as well as loss in investment securities.

The bank’s non-interest expense flared up 3% to $90.8 million from $88.2 million in the year-earlier quarter. The upsurge primarily resulted from higher salaries and benefits, as well as data-processing expenses.

Efficiency ratio came in at 56.12%, up from 55.99% recorded in the comparable quarter last year. Notably, a rise in the efficiency ratio reflects lower profitability.

As of Jun 30, 2018, total loans and leases balances inched up 1.4% from the end of the prior-year quarter to $10.1 billion, while total deposits decreased marginally to $14.9 billion.

Credit Quality: A Mixed Bag

As of Jun 30, 2018, allowance for loan and lease losses increased 0.8% year over year to $108.2 million, while non-performing assets decreased 6% year over year to $15.2 million.

Further, the company recorded provision for credit losses of $3.5 million in the reported quarter, down 17.7% year over year. However, net charge-offs were $3.3 million or 13 bps annualized of total average loans and leases outstanding, expanding from $3 million or 13 bps recorded in the prior-year quarter.

Strong Capital and Profitability Ratios

Bank of Hawaii remained well capitalized and its profitability ratios improved during the April-June quarter.

As of Jun 30, 2018, Tier 1 capital ratio was 13.27% compared with 13.34% as of Jun 30, 2017. Total capital ratio was 14.47% compared with 14.58% witnessed in the same quarter last year. The ratio of tangible common equity to risk-weighted assets was 12.68% compared with 13.01% at the end of the year-ago quarter.

Return on average assets were up 21 bps year over year to 1.30%, while return on average shareholders' equity advanced 281 bps to 17.68%.


Rising loans and expanding net interest margin remain key positives for Bank of Hawaii. In addition, lower tax rates are expected to continue supporting the bank’s bottom-line growth. Further, the company’s profitability ratios indicate an uptrend in its returns. Nevertheless, lower non-interest income and elevated expenses remain a concern.

Bank of Hawaii Corporation Price, Consensus and EPS Surprise

Bank of Hawaii Corporation Price, Consensus and EPS Surprise | Bank of Hawaii Corporation Quote

Currently, Bank of Hawaii carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other stocks belonging to the same industry, CoBiz Financial Inc. , BofI Holding, Inc. and First Hawaiian, Inc. (FHB - Free Report) are slated to report their Q2 figures on Jul 26.

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