8-K: Bank of Hawaii Corporation Reports Third Quarter 2024 Results, Net Income Up 18.4% Sequentially

Bank of Hawaii Corporation announced a diluted earnings per common share of $0.93 for the third quarter of 2024, with net income reaching $40.4 million.

Summary

• Bank of Hawaii Corporation reported a diluted earnings per common share of $0.93 for the third quarter of 2024.
• Net income for the quarter was $40.4 million, an increase of 18.4% from the previous quarter but a decrease of 15.8% compared to the same period last year.
• The return on average common equity was 11.50%, up from 10.41% in the linked quarter but down from 15.38% year-over-year.
• Net interest income was $117.6 million, a 2.4% increase from the linked quarter and a 2.7% decrease year-over-year.
• The net interest margin was 2.18%, a 3 basis point increase from the linked quarter and a 5 basis point increase from the same period last year.
• Noninterest income was $45.1 million, a 7.2% increase from the linked quarter but a 10.4% decrease year-over-year, although adjusted noninterest income increased by 9.9% year-over-year.
• Noninterest expense was $107.1 million, a 2.0% decrease from the linked quarter and a 1.4% increase year-over-year, with adjusted noninterest expense increasing by 1.7% from the linked quarter and 3.9% year-over-year.
• Total assets reached $23.8 billion, a 2.1% increase from the linked quarter and a 1.1% increase year-over-year.
• Total deposits were $21.0 billion, a 2.8% increase from the linked quarter and a 0.8% increase year-over-year.
• The Tier 1 Capital Ratio was 14.05% and the Tier 1 Leverage Ratio was 8.38% at the end of the quarter.
• The Board of Directors declared a quarterly cash dividend of $0.70 per share.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to improved sequential results and strong capital ratios, but the year-over-year declines in net income and noninterest income temper the overall outlook.

Positives

• Net income increased by 18.4% compared to the previous quarter.
• Net interest income and noninterest income both improved from the linked quarter.
• The company reported controlled expenses and steady loan and deposit performance.
• Asset quality remained strong during the third quarter of 2024.
• Capital levels increased quarter over quarter and remain well above regulatory minimums.
• The company has $10.6 billion in readily available liquidity compared to $8.8 billion in uninsured/uncollateralized deposits.
• The company has a diversified, lower risk loan portfolio with 79% of the loan portfolio real-estate secured with combined weighted average LTV of 51%.

Negatives

• Net income decreased by 15.8% compared to the same period last year.
• Noninterest income decreased by 10.4% compared to the same period last year, although adjusted noninterest income increased by 9.9%.
• Noninterest expense increased by 1.4% compared to the same period last year, with adjusted noninterest expense increasing by 3.9%.
• Net loan and lease charge-offs increased by $1.8 million or 5 basis points annualized on total average loans and leases outstanding compared to the same period last year.
• Non-performing assets increased by $8.3 million from the same period last year.
• The return on average common equity decreased from 15.38% in the same period last year to 11.50%.

Risks

• The company's performance is subject to risks and uncertainties that could cause results to be materially different from expectations.
• Changes in interest rates and economic conditions could impact the company's financial results.
• The company's forward-looking statements are not guarantees of future performance.
• The company's net interest income is sensitive to changes in interest rates, with a potential negative impact from a decrease in the federal funds rate.
• The company's non-performing assets have increased compared to previous periods.

Future Outlook

The document contains forward-looking statements regarding the company's financial results, operations, and business prospects, but cautions against undue reliance on these statements due to inherent risks and uncertainties. The company does not commit to updating these statements.

Management Comments

• For the third quarter 2024, we are pleased to report improved net interest income and noninterest income, alongside controlled expenses and steady loan and deposit performance.
• Credit remained excellent, said Peter Ho, Chairman and CEO.

Industry Context

The results reflect the current economic environment with rising interest rates impacting funding costs and asset yields. The bank's performance is also influenced by the local Hawaii economy, including tourism and real estate trends.

Comparison to Industry Standards

• The bank's net interest margin of 2.18% is within the range of regional banks, but specific comparisons would require a peer group analysis.
• The return on average common equity of 11.50% is a good result, but it is down from 15.38% in the same period last year, indicating some pressure on profitability.
• The bank's capital ratios are strong, exceeding regulatory requirements, which is a positive sign compared to industry benchmarks.
• The bank's loan portfolio is heavily secured by real estate, which is a common practice for regional banks, but the specific LTV ratios and credit quality metrics should be compared to peers.
• The bank's deposit base is described as stable and long-tenured, which is a competitive advantage in the current environment, but the cost of funds should be compared to industry averages.

Stakeholder Impact

• Shareholders will receive a quarterly dividend of $0.70 per share.
• Employees may be impacted by changes in expenses and operational adjustments.
• Customers will continue to be served by the bank's operations.
• The bank's performance may impact suppliers and creditors.

Next Steps

• The company will hold a conference call to review the financial results.
• Investors should monitor the company's investor relations website and other channels for updates.

Key Dates

Keywords

financial results, net income, earnings per share, net interest income, net interest margin, noninterest income, noninterest expense, asset quality, capital ratios, dividends, loans, deposits, bank of hawaii