Bank of Hawaii Q3 Earnings Beat, Provisions & Expenses Rise Y/Y

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Bank of Hawaii Corporation BOH reported third-quarter 2024 adjusted earnings per share of 93 cents, beating the Zacks Consensus Estimate of 81 cents. The bottom line compared unfavorably with $1.17 earned in the year-ago quarter.

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BOH's quarterly results benefited from an increase in deposits balance and net interest margin (NIM). A decline in net interest income (NII), along with a drop in loans balances and higher expenses, were undermining factors. A surge in provisions was another major headwind. 

The company’s net income (GAAP basis) came in at $40.4 million, down 15.8% year over year. Our estimate for the metric was pegged at $33.7 million.

BOH’s Revenues Decrease, Expenses Increase

BOH’s total revenues fell 5% year over year to $162.7 million in the third quarter. However, the top line beat the Zacks Consensus Estimate of $160.3 million.

NII was $117.6 million, down 2.7% year over year. NIM increased 5 basis points to 2.18%. Our estimate for NII and NIM was pegged at $116.5 million and 2.16%, respectively.

Non-interest income came in at $45.1 million, down 10.4% year over year. This included a $14.7 million gain from the early termination of private repurchase agreements, partially offset by a $4.6 million net loss related to investment securities sales. Adjusted for these items, noninterest income increased 9.9% year over year. The rise primaily stemmed from increase in trust and asset management income, and fees, exchange, and other service charges. Our estimate for the same was pinned at $43.5 million.

Non-interest expenses increased 1.4% to $107.1 million. It included a separation expense of $2.1 million and extraordinary expenses related to the Maui wildfires of $0.4 million. Adjusted for these items, noninterest expense increased 3.9% from adjusted non-interest expenses recorded in the year-ago quarter. We projected the metric to be $113.3 million.

The efficiency ratio was 65.81%, up from 61.66% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.

BOH’s Loans Decline, Deposits Increase

As of Sept. 30, 2024, total loans and leases balance dropped marginally from the year-ago quarter’s end to $13.9 billion.

Total deposits moved up 2.8% year over year to $21 billion. Our estimates for total loans and leases and total deposits were $13.8 billion and $20.8 billion, respectively.

BOH’s Credit Quality Deteriorates

As of Sept. 30, 2024, non-performing assets were $19.8 million, which jumped 71.7% year over year. Our estimate for the metric was pegged at $12.8 million. 

Net loans and lease charge-offs were $3.8 million, up $1.8 million from the year-ago quarter's level. Our estimate for the metric was pegged at $3.5 million. 

Provision for credit losses was $3 million, up 50% from the year-ago quarter’s tally. Our estimate for the metric was pegged at $2.2 million.

The allowance for credit losses inched up 1.4% to $147.3 million. Our estimate for the metric was pegged at $146.2 million.

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