Bank of Hawaii Corporation (NYSE: BOH) 1st Quarter 2K19 Financial Results

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Bank of Hawaii Corporation (NYSE: BOH) recently stated diluted earnings per share of $1.43 for the 1st quarter of 2K19, a boost from diluted earnings per share of $1.30 in the previous quarter and $1.28 in the similar quarter last year. Net income for the 1st quarter of 2K19 was $58.8M, a boost of $4.9M difference with net income of $53.9M in the 4th quarter of 2K18 and up to $4.8M from net income of $54.0M in the 1st quarter of 2K18.

remained strong, and expenses were well controlled.”

The return on average assets for the 1st quarter of 2K19 was 1.38 percent, up from 1.26 percent throughout the previous quarter and 1.29 percent in the similar quarter last year. The return on average equity for the 1st quarter of 2K19 was 18.81 percent, up from 17.05 percent in the 4th quarter of 2K18 and 17.74 percent in the 1st quarter of 2K18.

Financial Highlights

Net interest income, on a taxable-equivalent basis, for the 1st quarter of 2K19 was $125.8M, a boost of $0.6M from net interest income of $125.2M in the 4th quarter of 2K18 and a raise of $5.5M from net interest income of $120.3M in the 1st quarter of 2K18.

The net interest margin was 3.12 percent for the 1st quarter of 2K19, up 2 basis points difference with the net interest margin of 3.10 percent in the previous quarter and up 12 basis points from the net interest margin of 3.00 percent for the 1st quarter last year. Analyses of the changes in net interest income are included in Tables 8a and 8b.

Results for the 1st quarter of 2K19 included a provision for credit losses of $3.0M difference with a provision for credit losses of $2.0M in the 4th quarter of 2K18 and $4.1M in the 1st quarter of 2K18. The lower provision for credit losses throughout the 4th quarter of 2K18 was mostly because of the release of credit loss reserves related to the sale of the credit card portfolio.

Noninterest income was $43.7M in the 1st quarter of 2K19, a raise of $1.6M difference with noninterest income of $42.1M in the 4th quarter of 2K18 and a decrease of $0.3M difference with noninterest income of $44.0M in the 1st quarter of 2K18.

Noninterest income in the 1st quarter of 2K19 included a $1.4M commission related to insurance products offered through a third-party administrator Noninterest income in the 1st quarter of 2K18 included $2.8M from a low-income housing investment sale. There were no noteworthy items in noninterest income throughout the 4th quarter of 2K18.

Noninterest expense was $93.1M in the 1st quarter of 2K19, a decrease of $2.8M difference with the noninterest expense of $95.9M in the 4th quarter of 2K18 and a decrease of $1.3M from the noninterest expense of $94.4M in the similar quarter last year. Noninterest expense in the 1st quarter of 2K19 included seasonal payroll expenses of about $2.7M. Noninterest expense in the 4th quarter of 2K18 included $3.0M in one-time noteworthy items related to a medical expense, an operational loss, and legal expenses. Noninterest expense in the 1st quarter of 2K18 included seasonal payroll expenses of about $2.5M in addition to a legal reserve of $2.0M. An analysis of noninterest expenses related to salaries and benefits is included in Table 9.

The efficiency ratio throughout the 1st quarter of 2K19 declined to 55.22 percent difference with 57.75 percent in the previous quarter and 57.91 percent in the similar quarter last year.

The effective tax rate for the 1st quarter of 2K19 was 18.85 percent difference with an effective tax rate of 20.92 percent in the previous quarter and 16.19 percent throughout the similar quarter last year.

The 1st quarter of 2K19 included tax benefits of $1.9M related to a commercial customer’s exercise of an early-buy-out option on a leveraged lease. There were no noteworthy items impacting the tax rate throughout the 4th quarter of 2K18. The tax rate throughout the 1st quarter of 2K18 was favorably influenced by a $2.0M adjustment to the Company’s low-income housing investments.

Asset Quality

The Company’s asset quality remained strong throughout the 1st quarter of 2K19. Total non-performing assets were $17.9M at March 31, 2K19, difference with non-performing assets of $12.9M at December 31, 2K18 and $15.7M at March 31, 2K18. As a percentage of total loans and leases, counting foreclosed real estate, non-performing assets were 0.17 percent at the end of the 1st quarter of 2K19, difference with 0.12 percent at the end of the 4th quarter of 2K18 and 0.16 percent at the end of the 1st quarter last year.

Accruing loans and leases past due 90 days or more were $6.1M at March 31, 2K19, difference with $6.6M at December 31, 2K18 and $8.2M at March 31, 2K18. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $48.6M at March 31, 2K19, down from $48.7M at December 31, 2K18 and $56.7M at March 31, 2K18. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.

Net loans and leases charged off throughout the 1st quarter of 2K19 were $3.7M or 0.14 percent annualized of total average loans and leases outstanding. Loan and lease charge-offs of $6.8M throughout the quarter were partially offset by recoveries of $3.2M.

Net charge-offs throughout the 4th quarter of 2K18 were $4.0M or 0.15 percent annualized of total average loans and leases outstanding and were comprised of $6.9M in charge-offs partially offset by recoveries of $2.9M. Net charge-offs throughout the 1st quarter of 2K18 were $3.5M or 0.15 percent annualized of total average loans and leases outstanding and were comprised of $6.0M in charge-offs partially offset by recoveries of $2.5M.

The allowance for loan and lease losses was $106.0M at March 31, 2K19, a decrease from $106.7M at December 31, 2K18 and $107.9M at March 31, 2K18. The ratio of the allowance for loan and lease losses to total loans and leases outstanding was 1.01 percent at March 31, 2K19 difference with 1.02 percent at December 31, 2K18 and 1.09 percent at March 31, 2K18. The reserve for unfunded commitments of $6.8M at March 31, 2K19 was unchanged from the prior quarter and the similar quarter last year. Details of loan and lease charge-offs, recoveries, and components of the total reserve for credit losses are summarized in Table 12.

Other Financial Highlights

Total assets were $17.4B at March 31, 2K19, up from total assets of $17.1B at December 31, 2K18 and $17.1B at March 31, 2K18. Average total assets were $17.2B throughout the 1st quarter of 2K19, a boost from average total assets of $17.0B throughout the previous quarter and the similar quarter last year.

The investment securities portfolio was $5.5B at March 31, 2K19 difference with $5.5B at December 31, 2K18 and $6.0B at March 31, 2K18. The portfolio at March 31, 2K19 remains mostly comprised of securities issued by U.S. government agencies and includes $3.7B in securities held to maturity and $1.9B in securities available for sale.

Total loans and leases were $10.5B at March 31, 2K19, a boost of $99.8M or 1.0 percent from total loans and leases of $10.4B at December 31, 2K18 and up to $632.0M or 6.4 percent from $9.9B at March 31, 2K18.

Average total loans and leases were $10.5B throughout the 1st quarter of 2K19, a boost of 1.4 percent from average loans and leases of $10.3B throughout the previous quarter and up 6.8 percent from $9.8B throughout the similar quarter last year.

The commercial portfolio was $4.0B at the end of the 1st quarter of 2K19, up $20.5M or 0.5 percent from commercial loans of $4.0B at the end of the 4th quarter of 2K18 and up $207.5M or 5.5 percent from commercial loans of $3.8B at the end of the 1st quarter last year. The formerly mentioned early buy out of a leveraged lease throughout the 1st quarter of 2K19 reduced the commercial loan portfolio by $15.0M in outstanding balances.

Consumer loans were $6.5B at March 31, 2K19, up $79.4M or 1.2 percent from consumer loans of $6.5B at the end of the 4th quarter of 2K18 and up $424.5M or 6.9 percent from $6.1B at the end of the 1st quarter last year. Loan and lease portfolio balances are summarized in Table 10.

Total deposits were $15.3B at March 31, 2K19, up $240.1M or 1.6 percent from total deposits of $15.0B at December 31, 2K18 and up $310.2M or 2.1 percent from total deposits of $15.0B at March 31, 2K18.

Average total deposits were $15.0B throughout the 1st quarter of 2K19, a boost of $191.9M difference with average total deposits of $14.8B throughout the previous quarter and a boost of $251.1M difference with average total deposits of $14.7B throughout the similar quarter last year. Consumer deposits raised to $7.9B at March 31, 2K19, up $218.1M or 2.8 percent from consumer deposits of $7.7B at the end of the 4th quarter of 2K18 and up $278.9M or 3.6 percent from $7.7B at the end of the 1st quarter last year.

Commercial deposits raised to $6.2B at March 31, 2K19, up $63.9M or 1.0 percent from commercial deposits of $6.1B at the end of the 4th quarter of 2K18 and up $264.8M or 4.5 percent from $5.9B at the end of the 1st quarter last year. Other deposits, counting public funds, were $1.2B at March 31, 2K19, down slightly from $1.2B at December 31, 2K18 and down from $1.4B at March 31, 2K18. Deposit balances are summarized in Tables 7 and 10.

Total shareholders’ equity was $1.3B at March 31, 2K19, up slightly from December 31, 2K18 and a boost from $1.2B at March 31, 2K18. The Tier 1 Capital Ratio was 12.75 percent at March 31, 2K19 difference with 13.07 percent at December 31, 2K18 and 13.37 percent at March 31, 2K18. The Tier 1 Leverage Ratio at March 31, 2K19 was 7.46 percent difference with 7.60 percent at December 31, 2K18 and 7.46 percent at March 31, 2K18.

Throughout the 1st quarter of 2K19, the Company repurchased 513.4 thousand shares of common stock at a total cost of $39.9M under its share repurchase program. The average cost was $77.79 per share repurchased. From the starting of the share repurchase program initiated throughout July 2001 through March 31, 2K19, the Company has repurchased 55.8M shares and returned over $2.2B to shareholders at an average cost of $39.50 per share. Remaining buyback authority under the share repurchase program was $121.8M at March 31, 2K19. From April 1 through April 18, 2K19 the Company repurchased an additional 114.0 thousand shares of common stock at an average cost of $80.79 per share.

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