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Bank of Hawaii Corporation BOH 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. COBZ, BofI Holding, Inc. BOFI and First Hawaiian, Inc. FHB are slated to report their Q2 figures on Jul 26.
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Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report
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