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Bank of Hawaii (BOH) Q3 Earnings Miss Estimates, Costs Up

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Bank of Hawaii Corporation (BOH - Free Report) reported a negative earnings surprise of 6.5% in third-quarter 2019. Earnings per share of $1.29 lagged the Zacks Consensus Estimate of $1.38. Further, the reported figure compares unfavorably with $1.36 earned in the prior-year quarter.

Results were negatively impacted by elevated expenses and provisions. Also, lower net interest margin was on the downside. Yet, higher revenues were a positive factor. Further, strong capital position, along with higher loan balances, was the supporting factor.

The company’s net income came in at $52.1 million, down 8.4% from the $56.9 million reported in the prior-year quarter.

Revenues Increase, Expenses Escalate, Loans Improve

The company’s total revenues increased 3.6% year over year to $171.7 million in the quarter. The revenue figure also beat the Zacks Consensus Estimate of $168.8 million.

The bank’s net interest income was recorded at $125.2 million, up around 1% year over year. Net interest margin (NIM) shrunk 6 basis points (bps) to 3.01%, year on year.

Non-interest income came in at $46.5 million, up 12% year over year. This upsurge primarily resulted from rise in almost all components of income.

The bank’s non-interest expense flared up 10.8% year over year to $100.3 million, including legal reserve. This upsurge reflects higher salaries and benefits, occupancy, equipment, as well as data-processing and other expenses.

Efficiency ratio came in at 58.55%, up from the 55.07% recorded in the comparable quarter last year. Notably, a rise in the efficiency ratio reflects lower profitability.

As of Sep 30, 2019, total loans and leases balances inched up 1.1% from the end of the prior quarter to $10.9 billion, while total deposits edged down 1% to $15.3 billion.

Credit Quality: A Mixed Bag

As of Sep 30, 2019, allowance for loan and lease losses increased slightly year over year to $108.9 million, while non-performing assets surged 56.5% year over year to $21.6 million.

In addition, the company recorded provision for credit losses of $4.3 million in the reported quarter, up 13.2% year over year. Further, net charge-offs were $3 million or 11 bps annualized of total average loans and leases outstanding, down from the $3.3 million or 13 bps recorded in the prior-year quarter.

Strong Capital and Profitability Ratios

Bank of Hawaii was well capitalized with robust profitability ratios during the July-September quarter.

As of Sep 30, 2019, Tier 1 capital ratio was 12.33% compared with 13.2% as of Sep 30, 2018. Total capital ratio was 13.44% compared with 14.38% witnessed in the comparable period last year. The ratio of tangible common equity to risk-weighted assets was 12.10% compared with 12.56% recorded at the end of the year-ago quarter.

Return on average assets were down 16 basis points year over year to 1.17%, while return on average shareholders' equity contracted 204 bps to 16.02%.

Capital Deployment

During the third quarter, the company repurchased 0.4 million shares of common stock, at an average price of $83.07 and for a total cost of $29.9 million.


Rising loans aiding revenues remain key positives for Bank of Hawaii. In addition, controlled expenses will likely keep stoking the bank’s bottom-line growth. Furthermore, the company’s profitability ratios indicate solid returns. Nevertheless, elevated provisions are concerns.

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

Texas Capital Bancshares Inc. (TCBI - Free Report) posted earnings per share of $1.70 in third-quarter 2019, outpacing the Zacks Consensus Estimate of $1.49. Results compared favorably with the prior-year quarter’s $1.65 as well.

PNC Financial (PNC - Free Report) recorded positive earnings surprise of 5% in the third quarter. Earnings per share of $2.94 surpassed the Zacks Consensus Estimate of $2.80. Further, the bottom line reflected a 4.3% jump from the prior-year quarter’s reported figure.

Goldman Sachs (GS - Free Report) reported a negative earnings surprise of 4.8% for the September-end results. The company reported earnings per share of $4.79, missing the Zacks Consensus Estimate of $5.03. Also, the bottom-line figure compared unfavorably with earnings of $6.28 per share recorded in the year-earlier quarter.

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