Yahoo Finance Bank of Hawaii (BOH) Q1 Earnings Miss, Expenses Fall Y/Y
Bank of Hawaii Corporation BOH reported first-quarter 2024 earnings per share (EPS) of 87 cents, missing the Zacks Consensus Estimate of 92 cents. The bottom line compared unfavorably with $1.14 earned in the year-ago quarter.
BOH's quarterly results were affected by a decline in net interest income (NII), along with a drop in loans and deposit balances. Nonetheless, an improvement in non-interest income and a decline in expenses acted as a tailwind.
The company’s net income came in at $36.4 million, down 22.3% year over year. Our estimate for the metric was pegged at $37.1 million.
Revenues Decline, Expenses Fall
BOH’s total revenues fell 11.6% year over year to $156.2 million in the first quarter. The top line also missed the Zacks Consensus Estimate of $160.79 million.
NII was $113.9 million, down 16.2% year over year, primarily due to increased funding costs, partially offset by higher earning asset yields. Net interest margin (NIM) decreased 36 basis points to 2.11%. Our estimate for NII and NIM was pinned at $117.8 million and 2.23%, respectively.
Non-interest income came in at $42.3 million, up 3.8% year over year. This included $0.6 million worth of negative adjustment related to a change in Visa B conversion ratio. Adjusted for this item, the metric increased 2.4% year over year. Our estimate for the same was pinned at $42.5 million.
Non-interest expenses decreased 5.4% to $105.9 million. It included seasonal payroll expenses of approximately $2.2 million and separation expenses of $0.5 million. Adjusted for these items, the metric for the first quarter of 2024 was $103.2 million, down 1.6% from adjusted noninterest expense recorded in the year-ago quarter. Our estimate for the metric was $107.3 million.
The efficiency ratio was 67.76%, which increased from 63.34% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2024, total loans and leases balance decreased nearly 1% from the previous quarter’s end to $13.9 billion. Total deposits decreased 1.8% sequentially to $20.7 billion. Our estimates for total loans and leases, and total deposits were $13.7 billion and $20.7 billion, respectively.
Credit Quality: A Mixed Bag
As of Mar 31, 2024, non-performing assets were $11.8 million, up nearly 1% year over year.
Net loans and lease charge-offs were $2.3 million, down $0.4 million from the year-ago quarter's level.
Provision for credit losses was $2 million, which remained flat from the year-ago quarter. Our estimate for the metric was pegged at $3.8 million.
The allowance for credit losses increased 2.8% to $147.7 million.
Capital Ratios Improve
As of Mar 31, 2024, the Tier 1 capital ratio was 12.74%, which increased from 12.10% as of Mar 31, 2023. The total capital ratio was 13.81%, which rose from 13.13%.
The ratio of tangible common equity to risk-weighted assets was 8.70%, which increased from 7.97% at the end of the year-ago quarter.
Profitability Ratios Deteriorate
Return on average assets was 0.63% at the end of the first quarter of 2024, which declined from 0.80% reported in the prior-year quarter. Return on average shareholders' equity was 10.34%, down from 14.25% as of Mar 31, 2023.
Share Repurchase Update
During the reported quarter, Bank of Hawaii did not repurchase any shares.
Conclusion
Bank of Hawaii was affected by a decline in NII and a decrease in loans and deposit balances. However, an increase in non-interest income, coupled with lower expenses and strong capital ratios, will support its financials.
Bank of Hawaii Corporation Price, Consensus and EPS Surprise
Bank of Hawaii Corporation price-consensus-eps-surprise-chart | Bank of Hawaii Corporation Quote
Currently, BOH carries a Zacks Rank #3 (Hold). 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 reported first-quarter 2024 earnings per share of 62 cents (excluding non-recurring items), which beat the Zacks Consensus Estimate of 59 cents. However, earnings compared unfavorably with 70 cents reported in the year-ago quarter.
TCBI's results benefitted from an increase in non-interest income and higher loan and deposit balances. Additionally, strong capital position and lower provisions were other positives. However, a decline in NII and an increase in expenses were the undermining factors.
Citizens Financial Group CFG reported first-quarter 2024 EPS of 65 cents, missing the Zacks Consensus Estimate of 75 cents. The bottom line declined from $1 in the year-ago quarter.
Underlying EPS for the first quarter of 2024 was 79 cents, down from $1.10 reported in the year-ago quarter.
CFG’s results were adversely affected by lower NII and a rise in provisions and operating expenses. However, an increase in non-interest income and lower allowance for credit losses offered some support.
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