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Bank of Hawaii (BOH) Q1 Earnings Beat Estimates, Revenues Up
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Bank of Hawaii Corporation (BOH - Free Report) delivered first-quarter 2020 positive earnings surprise of 35.9%. Earnings per share of 87 cents surpassed the Zacks Consensus Estimate of 64 cents. However, the bottom line compares unfavorably with $1.43 reported in the prior-year quarter.
Results reflect revenue growth on the back of a rise in non-interest income. Also, a strong capital position along with higher loan and deposit balances was a supporting factor. However, a substantial rise in provisions due to the adoption of the new accounting method was a headwind. Also, the contraction of the net interest margin (NIM) hurt results to some extent.
The company’s net income came in at $34.7 million, down 41% from the prior-year quarter.
Revenues Up, Loans & Deposits Rise
The company’s total revenues increased 2.1% year over year to $172.1 million in the quarter. Also, the figure surpassed the Zacks Consensus Estimate of $168.4 million.
The bank’s net interest income was $126 million, marginally up year over year. NIM shrunk 16 basis points (bps) to 2.96%.
Non-interest income came in at $46.1 million, up 5.7% year over year. This upsurge primarily resulted from a rise in components, including trust and asset management, and mortgage banking and service charges on deposit accounts.
The bank’s non-interest expenses rose 3.5% year over year to $96.3 million. This rise reflects higher net occupancy, data-processing and other expenses.
Efficiency ratio came in at 55.96% compared with 55.22% recorded in the year-ago quarter. Notably, a rise in the efficiency ratio reflects lower profitability.
As of Mar 31, total loans and leases balance grew 3.3% from the end of the prior quarter to $11.4 billion and total deposits improved 1.7% to $16.1 billion.
Credit Quality Deteriorated
As of Mar 31, 2020, allowance for loan and lease losses increased 30.3% year over year to $138.2 million and non-performing assets surged 14.9% to $20.6 million. In addition, the company recorded provision for credit losses of $33.6 million, significantly up from the prior-year quarter.
Also, net charge-offs were $3.74 million, up from $3.7 million recorded in the prior-year quarter.
Strong Capital and Profitability Ratios
As of Mar 31, 2020, Tier 1 capital ratio was 11.85% compared with 12.75%, as of Mar 31, 2019. Total capital ratio was 13.1%, down from 13.87%. The ratio of tangible common equity to risk-weighted assets was 11.85% compared with 12.28% recorded at the end of the year-ago quarter.
Return on average assets was down 61 bps year over year to 0.77%. Return on average shareholders' equity was 10.64% compared with 18.81%, as of Mar 31, 2019.
Share Repurchase Update
During the first quarter, Bank of Hawaii repurchased 156.4K shares of common stock, at an average price of $89.32 per share and for a total cost of $14 million. The company has $113.1 million left under the buyback authorization.
Conclusion
Rising loan and deposit balances are likely to continue supporting Bank of Hawaii’s top line. In addition, controlled expenses are likely to keep stoking the bank’s bottom-line growth. Furthermore, the company’s profitability ratios indicate solid returns. However, increasing provisions pose a key concern. Also, lower interest rates are likely to hurt NIM.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
M&T Bank Corporation (MTB - Free Report) has pulled off first-quarter 2020 positive earnings surprise of 26% on higher mortgage banking revenues. Net operating earnings per share of $1.95 surpassed the Zacks Consensus Estimate of $1.55. However, the bottom line compares unfavorably with $3.35 per share reported in the year-ago quarter.
TruistFinancial’s (TFC - Free Report) first-quarter 2020 adjusted earnings of 87 cents per share surpassed the Zacks Consensus Estimate of 54 cents. However, the bottom line declined 22.3% from the prior quarter.
Regions Financial Corporation (RF - Free Report) reported first-quarter 2020 adjusted earnings of 15 cents per share, missing the Zacks Consensus Estimate of 19 cents. The figure plummeted 59.5% year over year.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Bank of Hawaii (BOH) Q1 Earnings Beat Estimates, Revenues Up
Bank of Hawaii Corporation (BOH - Free Report) delivered first-quarter 2020 positive earnings surprise of 35.9%. Earnings per share of 87 cents surpassed the Zacks Consensus Estimate of 64 cents. However, the bottom line compares unfavorably with $1.43 reported in the prior-year quarter.
Results reflect revenue growth on the back of a rise in non-interest income. Also, a strong capital position along with higher loan and deposit balances was a supporting factor. However, a substantial rise in provisions due to the adoption of the new accounting method was a headwind. Also, the contraction of the net interest margin (NIM) hurt results to some extent.
The company’s net income came in at $34.7 million, down 41% from the prior-year quarter.
Revenues Up, Loans & Deposits Rise
The company’s total revenues increased 2.1% year over year to $172.1 million in the quarter. Also, the figure surpassed the Zacks Consensus Estimate of $168.4 million.
The bank’s net interest income was $126 million, marginally up year over year. NIM shrunk 16 basis points (bps) to 2.96%.
Non-interest income came in at $46.1 million, up 5.7% year over year. This upsurge primarily resulted from a rise in components, including trust and asset management, and mortgage banking and service charges on deposit accounts.
The bank’s non-interest expenses rose 3.5% year over year to $96.3 million. This rise reflects higher net occupancy, data-processing and other expenses.
Efficiency ratio came in at 55.96% compared with 55.22% recorded in the year-ago quarter. Notably, a rise in the efficiency ratio reflects lower profitability.
As of Mar 31, total loans and leases balance grew 3.3% from the end of the prior quarter to $11.4 billion and total deposits improved 1.7% to $16.1 billion.
Credit Quality Deteriorated
As of Mar 31, 2020, allowance for loan and lease losses increased 30.3% year over year to $138.2 million and non-performing assets surged 14.9% to $20.6 million. In addition, the company recorded provision for credit losses of $33.6 million, significantly up from the prior-year quarter.
Also, net charge-offs were $3.74 million, up from $3.7 million recorded in the prior-year quarter.
Strong Capital and Profitability Ratios
As of Mar 31, 2020, Tier 1 capital ratio was 11.85% compared with 12.75%, as of Mar 31, 2019. Total capital ratio was 13.1%, down from 13.87%. The ratio of tangible common equity to risk-weighted assets was 11.85% compared with 12.28% recorded at the end of the year-ago quarter.
Return on average assets was down 61 bps year over year to 0.77%. Return on average shareholders' equity was 10.64% compared with 18.81%, as of Mar 31, 2019.
Share Repurchase Update
During the first quarter, Bank of Hawaii repurchased 156.4K shares of common stock, at an average price of $89.32 per share and for a total cost of $14 million. The company has $113.1 million left under the buyback authorization.
Conclusion
Rising loan and deposit balances are likely to continue supporting Bank of Hawaii’s top line. In addition, controlled expenses are likely to keep stoking the bank’s bottom-line growth. Furthermore, the company’s profitability ratios indicate solid returns. However, increasing provisions pose a key concern. Also, lower interest rates are likely to hurt NIM.
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 #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
M&T Bank Corporation (MTB - Free Report) has pulled off first-quarter 2020 positive earnings surprise of 26% on higher mortgage banking revenues. Net operating earnings per share of $1.95 surpassed the Zacks Consensus Estimate of $1.55. However, the bottom line compares unfavorably with $3.35 per share reported in the year-ago quarter.
TruistFinancial’s (TFC - Free Report) first-quarter 2020 adjusted earnings of 87 cents per share surpassed the Zacks Consensus Estimate of 54 cents. However, the bottom line declined 22.3% from the prior quarter.
Regions Financial Corporation (RF - Free Report) reported first-quarter 2020 adjusted earnings of 15 cents per share, missing the Zacks Consensus Estimate of 19 cents. The figure plummeted 59.5% year over year.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>