Why Is Bank of Hawaii (BOH) Down 0% Since Last Earnings Report?
It has been about a month since the last earnings report for Bank of Hawaii (BOH). Shares have lost about 0% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bank of Hawaii due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Bank of Hawaii Q4 Earnings Beat on Higher Revenues
Bank of Hawaii reported fourth-quarter 2022 earnings per share of $1.50, surpassing the Zacks Consensus Estimate of $1.45. The bottom line, however, declined 3.2% from the year-ago quarter’s number.
Revenue growth on higher net interest income and decent loan demand acted as tailwinds. However, a rise in expenses and provisions was a significant drag.
The company’s net income came in at $61.3 million, down 4.1% year over year.
For 2022, earnings per share of $5.48 missed the Zacks Consensus Estimate of $5.62 and decreased 12.3% from 2021. Net income of $225.8 million was down 10.9%.
Revenues & Expenses Rise
The company’s total revenues grew 7.7% year over year to $181.9 million in the fourth quarter surpassing the Zacks Consensus Estimate of $181.1 million.
In 2022, total revenues increased 4.4% to $698.1 million. However, the top line lagged the Zacks Consensus Estimate of $701.6 million.
The bank’s net interest income was $140.7 million, up 11.4%. Net interest margin expanded 26 basis points (bps) to 2.60% on a higher rate environment and strong loan growth.
Non-interest income came in at $41.2 million, down 3.3%. The decline primarily resulted from a fall in trust and asset management, mortgage banking and fee, exchange, and other service charges.
Non-interest expenses increased 1% to $102.7 million. The upswing mainly reflected a rise in all components, except salaries and benefits, and data processing.
The efficiency ratio was 56.46% compared with 60.18% recorded in the year-ago period. A decrease in the efficiency ratio reflects increased profitability.
As of Dec 31, 2022, total loans and leases balance increased 2.4% from the prior quarter end to $13.6 billion, while total deposits decreased 1.3% to $20.6 billion.
Credit Quality: A Mixed Bag
As of Dec 31, 2022, non-performing assets and allowance for credit losses decreased 33.3% and 8.5% year over year to $12.6 million and $144.4 million, respectively.
The company recorded provision for credit losses of $0.2 million against a benefit of $9.7 million in the year-ago quarter. Moreover, $3.2 million were recorded in net loans and lease charge-offs against a recovery of $1.4 million in the prior-year quarter.
Capital and Profitability Ratios Deteriorate
As of Dec 31, 2022, the Tier 1 capital ratio was 12.15%, down from 13.56% as of Dec 31, 2021. The total capital ratio was 13.17%, down from 14.81%. The ratio of tangible common equity to risk-weighted assets was 7.76%, down from 11.44% reported at the end of the year-ago quarter.
Return on average assets shrunk 7 bps year over year to 1.05%. Return on average shareholders' equity was 18.91% compared with 15.92% as of Dec 31, 2021.
Share Repurchase Update
In the reported quarter, Bank of Hawaii repurchased 192,300 shares at an average price of $77.77.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Bank of Hawaii has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Bank of Hawaii has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Bank of Hawaii belongs to the Zacks Banks - West industry. Another stock from the same industry, Westamerica (WABC), has gained 1.3% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Westamerica reported revenues of $79.19 million in the last reported quarter, representing a year-over-year change of +48.4%. EPS of $1.46 for the same period compares with $0.81 a year ago.
For the current quarter, Westamerica is expected to post earnings of $1.50 per share, indicating a change of +78.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Westamerica has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report
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