Bank of Hawaii (BOH) Stock Rises 6.6% on Q2 Earnings Beat

Bank of Hawaii Corporation BOH reported second-quarter 2023 earnings per share of $1.12, beating the Zacks Consensus Estimate of $1.11 by a penny. The bottom line declined 18.8% from the year-ago quarter’s number.

Investors have been bullish on the stock, as the share price gained 6.6% in yesterday’s trading session on higher fee income and decent loan demand. However, a fall in net interest income (NII) and a rise in operating expenses and provisions was a significant drag.

The company’s net income came in at $46.1 million, down 19% year over year. Our estimate for net income was $44.6 million.

Revenues Decline & Expenses Rise

BOH’s total revenues fell 4.3% year over year to $167.6 million in the second quarter, missing the Zacks Consensus Estimate of $170.52 million.

The bank’s NII was $124.3 million, down 6.4% year over year, primarily due to higher funding costs, partially offset by higher earning asset yields. Our estimate for the metric was $129.6 million. Net interest margin decreased 25 basis points (bps) to 2.22%.

Non-interest income came in at $43.3 million, up 2.6% year over year. The rise primarily resulted from an increase in service charges on deposit accounts, annuity and insurance, bank-owned life insurance and other income. Our estimate for the same was $40.7 million.

Non-interest expenses increased 1.1% to $104 million. The upswing mainly resulted from a rise in net occupancy, net equipment, professional fees and FDIC insurance expenses. Our estimate for non-interest expenses was $104.7 million.

The efficiency ratio was 62.07% compared with 58.80% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.

As of Jun 30, 2023, total loans and leases balance and total deposits marginally increased from the prior-quarter end to $13.9 billion and $20.5 billion, respectively. Our estimates for total loans and leases and total deposits were $13.7 billion and $21.4 billion, respectively.

Credit Quality: Mixed Bag

As of Jun 30, 2023, non-performing assets and allowance for credit losses decreased 25.9% and 2.1% year over year to $11.5 million and $145.4 million, respectively.

The company recorded a provision for credit losses of $2.5 million against a benefit of $2.5 million in the year-ago quarter. Moreover, $1.38 million was recorded in net loans and lease charge-offs compared with $0.63 million in the prior-year quarter.

Capital and Profitability Ratios Deteriorate

As of Jun 30, 2023, the Tier 1 capital ratio was 12.21%, down from 13.01% as of Jun 30, 2022. The total capital ratio was 13.24%, down from 14.14%. The ratio of tangible common equity to risk-weighted assets was 7.97%, down from 8.72% reported at the end of the year-ago quarter.

Return on average assets shrunk 23 bps year over year to 0.77%. Return on average shareholders' equity was 13.55% compared with 16.40% as of Jun 30, 2022.

Share Repurchase Update

During the reported quarter, Bank of Hawaii did not repurchase any shares.


The company’s strong balance-sheet position, higher interest rates and a rise in non-interest income will continue to support financials. However, persistently increasing operating expenses and rising provisions are near-term concerns.

Bank of Hawaii Corporation Price, Consensus and EPS Surprise

Bank of Hawaii Corporation Price, Consensus and EPS Surprise
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

Bank OZK’s OZK second-quarter 2023 earnings per share of $1.47 missed the Zacks Consensus Estimate by a penny. However, the bottom line reflected a rise of 33.6% from the year-earlier quarter.

Results were positively impacted by an improvement in NII, driven by higher rates and loan balances. However, rising expenses and a rise in provision for credit losses on a challenging economic backdrop were concerns for OZK.

East West Bancorp’s EWBC earnings per share of $2.20 in the quarter met the Zacks Consensus Estimate. The bottom line jumped 21.5% from the prior-year quarter.

EWBC's results were primarily aided by higher NII and reflected an improvement in profitability ratios. The company also witnessed a rise in loan and deposit balances during the quarter. However, an increase in non-interest expenses and higher provisions were the undermining factors.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report

East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report

Bank OZK (OZK) : Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research