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Bank of Hawaii (BOH) Q4 Earnings Miss Estimates, Revenues Up

Zacks Equity Research

Bank of Hawaii Corporation BOH reported a negative earnings surprise of 4.4% in fourth-quarter 2018. Earnings per share of $1.30 missed the Zacks Consensus Estimate of $1.36. However, the reported figure compares favorably with $1.01 earned in the prior-year quarter.

Though results were impacted by elevated expenses, investors’ optimism was reflected on rise in revenues and lower provisions. This led the share price to record a jump of 4.51%, following the earnings release. Further, strong capital position and higher loan balances were the supporting factors.

The company’s net income came in at $53.9 million, up 25.3% from $43 million reported a year ago.

For 2018, the company reported net income of $219.6 million or $5.23 per share compared with $184.7 million or $4.33 per share in 2017. However, results lagged the Zacks Consensus Estimate of $5.30.

Revenues Increase, Expenses Escalate, Loans & Deposits Improve

For 2018, Bank of Hawaii’s total revenues increased 3.2% year over year to $662.3 million. Further, the revenue figure surpassed the Zacks Consensus Estimate of $657.4 million.

The company’s total revenues increased 2.3% year over year to $167.3 million in the quarter. The revenue figure also outpaced the Zacks Consensus Estimate of $166.2 million.

The bank’s net interest income was recorded at $125.2 million, up 3% year over year. Net interest margin (NIM) expanded 12 basis points (bps) to 3.10% from the prior-year quarter.

Non-interest income was $42.1 million, slightly up year over year. This upsurge primarily resulted from rise in almost all components of income, partially mitigated by lower trust and asset management fees, along with reduced mortgage banking fees.

The bank’s adjusted non-interest expense flared up 1.9% year over year to $91.8 million. The upsurge reflects higher salaries and benefits, occupancy, equipment, as well as data-processing expenses.

Efficiency ratio came in at 57.75%, up from 57.49% recorded in the comparable quarter last year. Notably, a rise in the efficiency ratio reflects lower profitability.

As of Dec 31, 2018, total loans and leases balances climbed 2.1% from the end of the prior quarter to $10.4 billion, while total deposits edged up 1.2% to $15 billion.

Credit Quality: A Mixed Bag

As of Dec 31, 2018, allowance for loan and lease losses decreased slightly year over year to $106.7 million, while non-performing assets decreased 19.9% year over year to $12.9 million.

In addition, the company recorded provision for credit losses of $2 million in the reported quarter, down 53.5% year over year. However, net charge-offs were $4 million or 15 bps annualized of total average loans and leases outstanding, up from $3.8 million or 15 bps recorded in the prior-year quarter.

Strong Capital and Profitability Ratios

Bank of Hawaii remained well capitalized with strong profitability ratios during the Oct-Dec quarter.

As of Dec 31, 2018, Tier 1 capital ratio was 13.07% compared with 13.24% as of Dec 31, 2017. Total capital ratio was 14.21% compared with 14.46% witnessed in the same quarter last year. The ratio of tangible common equity to risk-weighted assets was 12.52% compared with 12.84% at the end of the year-ago quarter.

Return on average assets were up 26 bps year over year to 1.26%, while return on average shareholders' equity advanced 320 bps to 17.05%.

Capital Deployment

During the quarter under review, the company repurchased 325,400 shares of common stock at an average price of $76.63 and for a total cost of $24.9 million.


Rising loans and deposits, along with 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. Furthermore, the company’s profitability ratios indicate solid returns. Nevertheless, elevated expenses remain concerns.

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 #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Citizens Financial Group CFG delivered a positive earnings surprise of 4.3% in fourth-quarter 2018, riding on higher revenues. Adjusted earnings per share of 98 cents topped the Zacks Consensus Estimate of 94 cents. Also, the bottom line improved 38% from the prior-year quarter.

Signature Bank’s SBNY fourth-quarter 2018 earnings per share of $2.94 surpassed the Zacks Consensus Estimate of $2.79. Further, the bottom line compared favorably with $2.11 earned in the prior-year quarter.

People's United Financial Inc. PBCT reported fourth-quarter 2018 operating earnings of 36 cents per share, surpassing the Zacks Consensus Estimate of 34 cents. Also, the reported figure improved 16% year over year.

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