Bank of Hawaii Corporation
) inched up 1.3% since it reported yet another strong quarter on
Jan 27. Fourth-quarter 2013 earnings per share came in at 88
cents, beating the Zacks Consensus Estimate of 86 cents. However,
this was below the prior-year quarter figure of 90 cents. With
this, the company delivered positive earnings surprises in three
of the last four quarters.
For full-year 2013, Bank of Hawaii's earnings per share of $3.38
missed the Zacks Consensus Estimate marginally. Also, it came in
below the prior-year figure of $3.67.
Bank of Hawaii's impressive results were driven by increased net
interest income and lower expenses. Further, loan and deposit
balances improved in the reported quarter. However, a fall in
revenues due to decline in non-interest income was the downside.
The company's net income of $39.1 million in the reported quarter
reflects a decline of 3.1% from the year-ago quarter. Also, for
2013, it was $150.5 million, down 9.4% year over year.
Performance in Detail
Bank of Hawaii's total revenue declined 4.4% year over year to
$147.0 million. However, it surpassed the Zacks Consensus
Estimate of $140 million.
For full-year 2013, total revenue stood at $584.7 million, down
5.8% year over year. However, it outpaced the Zacks Consensus
Estimate by 4.5%.
Bank of Hawaii's net interest income was recorded at $92.1
million, up 2.0% year over year. However, net interest margin
(NIM) declined 2 basis points (bps) to 2.85% from the prior-year
Non-interest income was $45.3 million, down 14.5% year over year.
The fall was primarily driven by a 75% decline in
The bank's non-interest expense was down 1.2% year over year to
$82.4 million. The decline primarily resulted from lower
personnel expenses as well as net occupancy costs.
As of Dec 31, 2013, total loan and lease balances rose 4.1% from
the end of the prior-year quarter to $6.1 billion while total
deposits were $11.9 billion, up 3.3% year over year.
BANK OF HAWAII (BOH): Free Stock Analysis
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Credit quality exhibited partial improvement in the quarter. As
of Dec 31, 2013, allowance for loan and lease losses fell 10.4%
year over year to $115.5 million while nonperforming assets
increased 6.9% to $39.7 million from the prior-year quarter.
In the reported quarter, the company did not record provision for
credit losses. Notably, this was the sixth consecutive quarter
with no provision for credit losses.
Capital and Profitability Ratios
Capital ratios remained strong while profitability ratios
deteriorated in the quarter. The ratio of tangible common
equity to risk-weighted assets was 15.49% compared with 17.24% at
the end of the year-ago quarter. The Tier 1 leverage ratio was
7.07%, up from 6.83% in the year-ago quarter.
Return on average assets declined 7 bps year over year to 1.12%
while return on average shareholders' equity was down 11 bps to
Capital Deployment Update
In the quarter, the company repurchased around 86,300 shares of
common stock at an average price of $57.87 per share. From Jan 2,
2014 to Jan 24, 2014, the company further repurchased 56,000
shares of common stock at an average price of $58.95 per share.
Though Bank of Hawaii started with a dismal performance in the
first quarter of 2013, results of the following quarters reflect
a decent performance. We believe a continuously improving
commercial segment, organic growth and expense management will
benefit the company's bottom line in the near term. Additionally,
the bank's capital deployment activities are likely to raise
investors' confidence in the stock.
However, the low interest rate environment, stringent regulatory
conditions and absence of credible improvement in the mortgage
market will probably keep the net interest margin under pressure
in the coming quarters.
Bank of Hawaii Corporation currently carries a Zacks Rank #2
Performance of Other West Banks
SVB Financial Group
) fourth-quarter 2013 earnings beat the Zacks Consensus Estimate,
Westamerica Bancorp. (
) missed the Zacks Consensus Estimate in their latest