Bank of Hawaii logged a -0.8% change Friday after announcing its Q3 results, and is now trading at a price of $52.06 per share. The company has offered a 5.3% dividend yield over the last 12 months.
Bank of Hawai'i Corporation reported diluted earnings per common share of $1.17 for the third quarter of 2023, compared to $1.12 in the previous quarter and $1.28 in the same quarter of 2022. Net income for the third quarter of 2023 was $47.9 million, up 4.0% from the previous quarter and down 9.3% from the same quarter of 2022. The return on average common equity for the third quarter of 2023 was 15.38%, compared to 14.95% in the previous quarter and 16.98% in the same quarter of 2022.
According to Peter Ho, Chairman, President, and CEO, "Bank of Hawai'i delivered another quarter of solid financial results. Total deposits were up 1.4% linked quarter, and average deposits were up by 2.4%, driven by growth in core relationship deposits. Our credit quality remained strong, with non-performing assets of 0.08% at quarter end and net charge offs of 0.06% in the quarter. Finally, one of our key priorities this quarter was to support our clients, employees, and community as we coped with the tragic situation in Maui. Taking care of our community has always been a fundamental priority and we will continue to support our community as we build a stronger Maui."
Financial highlights include: - Net interest income for the third quarter of 2023 was $120.9 million, a decrease of 2.7% from the previous quarter and a decrease of 14.6% from the same quarter of 2022. - Net interest margin was 2.13% in the third quarter of 2023, a decrease of 9 basis points from the previous quarter and 47 basis points from the same quarter of 2022. - The average yield on loans and leases was 4.34% in the third quarter of 2023, up 15 basis points from the prior quarter and up 85 basis points from the same quarter of 2022. - Noninterest income was $50.3 million in the third quarter of 2023, an increase of 16.4% from the previous quarter and an increase of 64.2% from the same period in 2022.
In terms of asset quality, the provision for credit losses for the third quarter of 2023 was $2.0 million, compared to $2.5 million in the previous quarter. Total nonperforming assets were $11.5 million at September 30, 2023, flat from June 30, 2023, and down $2.3 million from September 30, 2022.
On the balance sheet side, total assets were $23.5 billion at September 30, 2023, a decrease of 5.6% from June 30, 2023, and an increase of 1.8% from September 30, 2022. Total loans and leases were $13.9 billion at September 30, 2023, flat from June 30, 2023, and an increase of 4.5% from September 30, 2022. Total deposits were $20.8 billion at September 30, 2023, an increase of 1.4% from June 30, 2023, and a decrease of 0.4% from September 30, 2022.
The company's capital levels increased quarter over quarter, with a tier 1 capital ratio of 12.53% at September 30, 2023, compared to 12.21% at June 30, 2023, and 12.72% at September 30, 2022.
Overall, Bank of Hawai'i Corporation's financial results for the third quarter of 2023 showed steady performance with growth in deposits and solid credit quality.
Bank of Hawaii returned losses of -35.0% last year, with its stock price reaching a high of $82.87 and a low of $30.83. Over the same period, the stock underperformed the S&P 500 index by -47.0%. As of April 2023, the company's 50-day average price was $49.8. Bank of Hawaii Corporation operates as the bank holding company for Bank of Hawaii that provides various financial products and services in Hawaii, Guam, and other Pacific Islands. Based in Honolulu, HI, the mid-cap Finance company has 1,919 full time employees.
The Company Trades Below Its Net Current Asset Value:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $550,173 | $587,397 | $546,424 | $526,716 | $597,366 | $715,314 |
| Interest Income (k) | $486,352 | $497,715 | $496,322 | $497,290 | $540,558 | $542,696 |
| Operating Margins | 49.0% | 49.0% | 35.0% | 62.0% | 49.0% | 38.0% |
| Net Margins | 40.0% | 38.0% | 28.0% | 48.0% | 38.0% | 28.0% |
| Net Income (k) | $219,602 | $225,913 | $153,804 | $253,372 | $225,804 | $207,011 |
| Depreciation & Amort. (k) | -$14,389 | -$17,268 | -$20,205 | -$21,084 | -$21,377 | -$22,295 |
| Earnings Per Share | $5.23 | $5.56 | $3.86 | $6.25 | $5.48 | $5.04 |
| Diluted Shares (k) | 41,999 | 40,650 | 39,892 | 40,054 | 39,788 | 38,772 |
| Free Cash Flow (k) | $282,622 | $264,022 | $113,129 | $354,779 | $304,199 | $134,712 |
| Capital Expenditures | $35,300 | $53,900 | $33,287 | $22,372 | $28,761 | $20,530 |
| Net Current Assets (k) | $1,923,645 | $2,540,258 | -$124,086 | $4,205,098 | $2,500,108 | $2,329,852 |
Bank of Hawaii Is Overpriced:
Bank of Hawaii has a trailing twelve month P/E ratio of 10.1, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of $3.58, the company has a forward P/E ratio of 13.9. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -0.6%. On this basis, the company's PEG ratio is -16.46, which indicates that its shares are overpriced. Furthermore, Bank of Hawaii is likely overvalued compared to the book value of its equity, since its P/B ratio of 1.75 is higher than the sector average of 1.57.
Bank of Hawaii Has an Analyst Consensus that Shares Are Overpriced:
The 6 analysts following Bank of Hawaii have set target prices ranging from $31.0 to $53.0 per share, for an average of $45.33 with a hold rating. As of April 2023, the company is trading 9.9% away from its average target price, indicating that there is an analyst belief that shares are overpriced.
Bank of Hawaii has an unusually large proportion of its shares sold short because 24.0% of the company's shares are sold short. Institutions own 78.6% of the company's shares, and the insider ownership rate stands at 1.91%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 13% stake in the company is worth $271,901,369.
