Bank of Hawai‘i (BOH) Reports Mixed Q2 2024 with $0.81 EPS
Bank of Hawai‘i Corporation (NYSE: BOH) reported its second-quarter financial results for 2024, showcasing a mixed performance.
The company achieved diluted earnings per common share (EPS) of $0.81, reflecting a decrease from $0.87 in the previous quarter and $1.12 in the same quarter of 2023. Net income for the quarter stood at $34.1 million, marking a 6.3% decline from the prior quarter and a significant 26.0% drop from the same period last year. The return on average common equity was 10.41%, down from 11.20% in the previous quarter and 14.95% in the second quarter of 2023.
Despite these declines, the bank’s net interest margin saw a slight improvement, rising by four basis points to 2.15% from the previous quarter. However, this still represented a seven basis point decrease compared to the same quarter in 2023.
The bank’s credit quality remained robust, with non-performing assets at 0.11% and net charge-offs at 0.10% during the quarter. Additionally, average deposits fell by 0.9%, and average loans saw a modest decline, reflecting a cautious lending environment.
The bank also faced a $2.6 million non-recurring charge due to an industry-wide FDIC Special Assessment, which negatively impacted the diluted EPS by $0.05. This one-time charge was a notable factor in the quarterly performance, highlighting the challenges faced by the banking sector in maintaining profitability amidst regulatory changes.
BOH Falls Short on EPS and Revenue Expectations in Q2
When comparing the current performance against market expectations, Bank of Hawai‘i Corporation fell short. Analysts had predicted an EPS of $0.87 and revenue of $157.23 million for the quarter.
The actual EPS of $0.81 missed the mark by $0.06, and the total revenue of $156.93 million was lower than anticipated. This shortfall can be partially attributed to the FDIC Special Assessment, which was an unforeseen expense that affected the overall earnings.
Net interest income for the quarter was $114.8 million, which was an increase of 0.8% from the previous quarter but a decrease of 7.6% from the same quarter in 2023. This figure indicates that while the bank managed to improve its net interest income slightly on a sequential basis, it struggled to match the revenue levels seen in the previous year. The net interest margin’s slight increase to 2.15% was a positive sign, yet it still fell short when compared to the same period last year.
The decline in average deposits and loans further emphasizes the cautious approach taken by the bank amidst an uncertain economic environment. The modest improvements in net interest margin and core noninterest income were not sufficient to offset the overall decline in financial performance, highlighting the challenges faced by the bank in meeting market expectations.
Guidance
Chairman and CEO Peter Ho emphasized the bank’s strong financial footing, noting the successful closure of a preferred stock offering in late June, which raised $165 million. This move is expected to bolster the bank’s capital levels, providing a buffer against potential future challenges and enabling continued investment in growth opportunities.
The bank’s focus on maintaining exceptional credit quality and managing expenses will be crucial in navigating the current economic landscape. The slight increase in net interest margin is a positive indicator, suggesting that the bank may continue to benefit from cashflows repricing. However, the decline in average deposits and loans indicates that the bank will need to carefully manage its lending practices and deposit base to sustain growth.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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