Bank of Hawaii (BOH) Q3 Earnings Beat Estimates, Revenues Up

Bank of Hawaii Corporation BOH reported third-quarter 2021 earnings per share of $1.52, surpassing the Zacks Consensus Estimate of $1.34. Shares of the company rallied 1.2%, following the earnings release. Also, the bottom line compares favorably with the 95 cents reported in the prior-year quarter.

Revenue growth on higher interest income was a tailwind. Net benefit for credit losses, on improvement in economic conditions, was a key positive factor. In addition, higher loan and deposit balances supported the company to some extent.

However, rise in expenses and contraction of the net interest margin (NIM) was a major drag.

The company’s net income came in at $62.1 million, up 64% from the prior-year quarter figure.

Revenues Climb, Expenses Flare Up, Loans & Deposits Rise

The company’s total revenues inched up 1.4% year over year to $168.2 million in the third quarter. Also, the top line surpassed the Zacks Consensus Estimate of $167.6 million.

The bank’s net interest income was $126.8 million, up 2% year over year. The NIM shrunk 35 basis points (bps) to 2.32% on low rates and higher levels of liquidity.

Non-interest income came in at $41.4 million, down marginally year over year. This decline primarily resulted from a fall in annuity and insurance, mortgage banking, and other non-interest income, along with a rise in net investment securities losses.

The bank’s non-interest expenses flared up 7% year over year to $96.5 million. This upswing mainly reflects a rise in all components, except net occupancy and net equipment costs.

Efficiency ratio was 57.38% compared with the 54.22% recorded in the year-ago period. Notably, a rise in the efficiency ratio reflects lower profitability.

As of Sep 30, 2021, total loans and leases balance increased slightly from the end of the prior quarter to $12.1 billion, while total deposits improved 1.6% to $20.5 billion.

Credit Quality: A Mixed Bag

As of Sep 30, 2021, non-performing assets increased substantially year over year to $20.6 million. Moreover, net charge-offs of $1.2 million increased $2.7 million year on year.

However, the company recorded net benefit for credit losses of $10.4 million against provisions of $28.6 million in the year-ago quarter. In addition, allowance for credit losses decreased 17.5% year over year to $167.9 million.

Capital and Profitability Ratios

As of Sep 30, 2021, Tier 1 capital ratio was 13.47% compared with 12.09%, as of Sep 30, 2020. Total capital ratio was 14.72%, up from 13.35%. Yet, the ratio of tangible common equity to risk weighted assets was 11.46% compared with the 12.02% reported at the end of the year-ago quarter.

Return on average assets expanded 31 bps year over year to 1.07%. Return on average shareholders' equity was 17.08% compared with 11.01%, as of Sep 30, 2020.


Rising loan and deposit balances are likely to continue supporting Bank of Hawaii’s top line. In addition, declining provisions are anticipated to keep aiding the bank’s bottom-line growth.

Nevertheless, rising expenses pose a key concern. Also, lower interest rates might hurt its NIM.

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, Bank of Hawaii 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 of America’s BAC third-quarter 2021 earnings of $1.03 per share handily beat the Zacks Consensus Estimate of 77 cents. The bottom line compared favorably with the 37 cents earned in the prior-year quarter.

PNC Financial PNC pulled off a third-quarter earnings surprise of 42.4% on substantial reserve release. The adjusted earnings per share of $4.50 exceeded the Zacks Consensus Estimate of $3.16.

Large reserve releases, solid investment banking performance and modest rise in loan demand drove JPMorgan’s JPM third-quarter 2021 earnings of $3.78 per share. The bottom line comfortably outpaced the Zacks Consensus Estimate of $3.05.

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