Yahoo Finance Bank of Hawaii Corporation First Quarter 2022 Financial Results
Diluted Earnings Per Common Share $1.32
Net Income $54.8 Million
Board of Directors Declares Dividend of $0.70 Per Common Share
HONOLULU, April 25, 2022--(BUSINESS WIRE)--Bank of Hawaii Corporation (NYSE: BOH) today reported diluted earnings per common share of $1.32 for the first quarter of 2022, compared with diluted earnings per common share of $1.55 in the previous quarter and $1.50 in the same quarter last year. Net income for the first quarter of 2022 was $54.8 million, down 14.1% from the fourth quarter of 2021 and down 8.5% from the first quarter of 2021.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220425005225/en/
"Bank of Hawaii had a good start to 2022 with solid operating performance," said Peter Ho, Chairman, President, and CEO. "We saw good continuing momentum in core loan and deposit growth and expansion in core net interest margin. Asset quality continued its stable trend, and capital and liquidity remain strong."
Financial Highlights
The return on average assets for the first quarter of 2022 was 0.97% compared with 1.12% in the previous quarter and 1.15% in the same quarter of 2021. The return on average common equity for the first quarter of 2022 was 15.44% compared with 17.40% in the previous quarter and 17.65% in the same quarter of 2021.
The decrease from prior quarter was primarily driven by lower provision release and seasonal payroll expenses.
The decrease from prior year was primarily driven by lower provision release.
Net interest income for the first quarter of 2022 was $125.3 million, a decrease of 0.9% from the fourth quarter of 2021 and an increase of 3.9% from the first quarter of 2021. Net interest margin was 2.34% in the first quarter of 2022, unchanged compared to the previous quarter and a decrease of 9 basis points from the same quarter of 2021.
One-time significant items in the fourth quarter of 2021 included a negative $0.9 million adjustment to net interest income for deferred mortgage loan fees related to prior quarters of 2021. The adjustment had a negative impact of 2 basis points on the net interest margin.
The provision for credit losses for the first quarter of 2022 was a net benefit of $5.5 million compared with a net benefit of $9.7 million in the previous quarter and a net benefit of $14.3 million in the same quarter of 2021.
Noninterest income was $43.6 million in the first quarter of 2022, an increase of 2.3% from the previous quarter and an increase of 1.4% from the same quarter of 2021.
Noninterest expense was $103.9 million in the first quarter of 2022, an increase of 2.2% from the previous quarter and an increase of 5.1% from the same quarter of 2021.
Noninterest expense in the first quarter of 2022 included seasonal payroll expenses of approximately $3.7 million.
One-time significant items in the fourth quarter of 2021 included $1.2 million related to an increase in vacation carryover limits.
Noninterest expense in the first quarter of 2021 included seasonal payroll expenses of approximately $2.1 million, charges related to the rollout of contactless cards of $1.9 million, and separation expenses of $1.8 million.
The effective tax rate for the first quarter of 2022 was 22.15% compared with 17.08% in the previous quarter and 24.09% during the same quarter of 2021.
The fourth quarter of 2021 included a $3.6 million benefit due to larger than expected tax credits from 2020 and a reduction in the valuation allowance related to low-income housing partnerships.
Asset Quality
The Company’s overall asset quality continued to remain strong during the first quarter of 2022.
Total non-performing assets were $20.0 million at March 31, 2022, up by $1.0 million from December 31, 2021 and up $2.1 million from March 31, 2021. Non-performing assets as a percentage of total loans and leases and foreclosed real estate were 0.16% at the end of the quarter, an increase of 1 basis point from the end of both the prior quarter and same quarter of 2021.
Net loan and lease charge-offs during the first quarter of 2022 were $1.5 million or 0.05% annualized of total average loans and leases outstanding.
Net loan and lease charge-offs for the first quarter of 2022 were comprised of charge-offs of $3.9 million partially offset by recoveries of $2.4 million.
Compared to the prior quarter, net loan and lease charge-offs increased by $0.8 million or 3 basis points annualized on total average loans and leases outstanding.
Compared to the same quarter of 2021, net loan and lease charge-offs decreased by $1.4 million or 5 basis points annualized on total average loans and leases outstanding.
The allowance for credit losses on loans and leases was $152.0 million at March 31, 2022, a decrease of $5.8 million from December 31, 2021 and $46.3 million from March 31, 2021. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.21% at the end of the quarter, down 8 basis points from the end of the prior quarter and down 42 basis points from the end of the same quarter of 2021.
Balance Sheet
Total assets were $23.0 billion at March 31, 2022, an increase of 0.9% from December 31, 2021 and an increase of 4.8% from March 31, 2021.
The investment securities portfolio was $8.7 billion at March 31, 2022, a decrease of 2.5% from December 31, 2021 and an increase of 16.8% from March 31, 2021.
The investment portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises.
The increase from March 31, 2021 was primarily due to growth in deposits that outpaced loan growth.
Total loans and leases were $12.5 billion at March 31, 2022, an increase of 2.3% from December 31, 2021 and an increase of 3.3% from March 31, 2021.
Total loans and leases excluding PPP loans were $12.5 billion at March 31, 2022, an increase of 2.9% from December 31, 2021 and an increase of 9.4% from March 31, 2021.
Total deposits reached a new record high of $20.7 billion at March 31, 2022, an increase of 1.7% from December 31, 2021 and an increase of 5.9% from March 31, 2021.
Capital and Dividends
The Tier 1 Capital Ratio was 13.22% at March 31, 2022 compared with 13.56% at December 31, 2021 and 12.35% at March 31, 2021.
The increase from the same period in 2021 was driven by the issuance of $180 million of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A in the second quarter of 2021.
The Tier 1 Leverage Ratio was 7.30% at March 31, 2022 compared with 7.32% at December 31, 2021 and 6.61% at March 31, 2021.
The increase from the same period in 2021 was driven by the aforementioned issuance of preferred stock in the second quarter of 2021.
The Company repurchased 116.8 thousand shares of common stock at a total cost of $10.0 million under its share repurchase program in the first quarter of 2022 at an average cost of $85.34 per share repurchased.
Total remaining buyback authority under the share repurchase program was $75.8 million at March 31, 2022.
The Company’s Board of Directors declared a quarterly cash dividend of $0.70 per share on the Company’s outstanding common shares. The dividend will be payable on June 14, 2022 to shareholders of record at the close of business on May 31, 2022.
On April 5, 2022, the Board of Directors declared the quarterly dividend payment of $10.94 per share, equivalent to $0.2735 per depositary share, on its preferred stock. The depositary shares representing the Series A Preferred Stock are traded on the NYSE under the symbol "BOH.PRA." The dividend will be payable on May 2, 2022 to shareholders of record of the preferred stock at the close of business on April 18, 2022.
Conference Call Information
The Company will review its first quarter financial results today at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The live call, including a slide presentation, will be accessible on the investor relations link of Bank of Hawaii Corporation's website, www.boh.com.
The webcast link is https://edge.media-server.com/mmc/p/5x73dqat.
The toll-free number for the teleconference is 1 (844) 543-5235 in the United States and Canada and 1 (703) 318-2209 for other international callers. Use the pass code "Bank of Hawaii" to access the call.
A replay of the conference call will be available for one week beginning approximately 11:00 a.m. Hawaii Time on Monday, April 25, 2022. The replay number is 1 (855) 859-2056 in the United States and Canada and 1 (404) 537-3406 from other international locations. Enter the conference ID 4637209 when prompted. In addition, the replay will be available on the Company's website, www.boh.com.
Forward-Looking Statements
This news release, and other statements made by the Company in connection with it may contain "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties that could cause results to be materially different from expectations. Forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations are examples of certain of these forward-looking statements. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations because of a variety of factors. More information about these factors is contained in Bank of Hawaii Corporation's Annual Report on Form 10-K for the year ended December 31, 2021 which was filed with the U.S. Securities and Exchange Commission. These forward-looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.
Bank of Hawaii Corporation is an independent regional financial services company serving businesses, consumers, and governments in Hawaii and the West Pacific. The Company's principal subsidiary, Bank of Hawai'i, was founded in 1897. For more information about Bank of Hawaii Corporation, see the Company’s web site, www.boh.com.
Bank of Hawaii Corporation and Subsidiaries | ||||||||||||
Financial Highlights | Table 1 | |||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
(dollars in thousands, except per share amounts) | 2022 | 2021 | 2021 | |||||||||
For the Period: | ||||||||||||
Operating Results | ||||||||||||
Net Interest Income | $ | 125,263 | $ | 126,388 | $ | 120,569 | ||||||
Provision for Credit Losses | (5,500 | ) | (9,700 | ) | (14,300 | ) | ||||||
Total Noninterest Income | 43,551 | 42,574 | 42,970 | |||||||||
Total Noninterest Expense | 103,874 | 101,678 | 98,865 | |||||||||
Net Income | 54,834 | 63,837 | 59,949 | |||||||||
Basic Earnings Per Common Share | 1.33 | 1.56 | 1.51 | |||||||||
Diluted Earnings Per Common Share | 1.32 | 1.55 | 1.50 | |||||||||
Dividends Declared Per Common Share | 0.70 | 0.70 | 0.67 | |||||||||
Performance Ratios | ||||||||||||
Return on Average Assets | 0.97 | % | 1.12 | % | 1.15 | % | ||||||
Return on Average Shareholders' Equity | 14.18 | 15.92 | 17.65 | |||||||||
Return on Average Common Equity | 15.44 | 17.40 | 17.65 | |||||||||
Efficiency Ratio 1 | 61.53 | 60.18 | 60.45 | |||||||||
Net Interest Margin 2 | 2.34 | 2.34 | 2.43 | |||||||||
Dividend Payout Ratio 3 | 52.63 | 44.87 | 44.37 | |||||||||
Average Shareholders' Equity to Average Assets | 6.87 | 7.02 | 6.51 | |||||||||
Average Balances | ||||||||||||
Average Loans and Leases | $ | 12,290,402 | $ | 12,086,705 | $ | 11,952,587 | ||||||
Average Assets | 22,847,488 | 22,666,280 | 21,150,670 | |||||||||
Average Deposits | 20,426,076 | 20,222,470 | 18,665,222 | |||||||||
Average Shareholders' Equity | 1,568,725 | 1,590,600 | 1,377,272 | |||||||||
Per Share of Common Stock | ||||||||||||
Book Value | $ | 31.50 | $ | 35.57 | $ | 33.67 | ||||||
Tangible Book Value | 30.71 | 34.78 | 32.89 | |||||||||
Market Value | ||||||||||||
Closing | 83.92 | 83.76 | 89.49 | |||||||||
High | 92.38 | 88.96 | 99.10 | |||||||||
Low | 79.60 | 78.73 | 75.65 | |||||||||
March 31, | December 31, | March 31, | ||||||||||
2022 | 2021 | 2021 | ||||||||||
As of Period End: | ||||||||||||
Balance Sheet Totals | ||||||||||||
Loans and Leases | $ | 12,544,492 | $ | 12,259,076 | $ | 12,140,703 | ||||||
Total Assets | 23,000,317 | 22,784,941 | 21,947,271 | |||||||||
Total Deposits | 20,716,287 | 20,360,108 | 19,556,651 | |||||||||
Other Debt | 10,367 | 10,391 | 60,459 | |||||||||
Total Shareholders' Equity | 1,448,885 | 1,611,611 | 1,360,221 | |||||||||
Asset Quality | ||||||||||||
Non-Performing Assets | $ | 19,979 | $ | 18,966 | $ | 17,883 | ||||||
Allowance for Credit Losses - Loans and Leases | 152,028 | 157,821 | 198,343 | |||||||||
Allowance to Loans and Leases Outstanding 4 | 1.21 | % | 1.29 | % | 1.63 | % | ||||||
Capital Ratios 5 | ||||||||||||
Common Equity Tier 1 Capital Ratio | 11.83 | % | 12.12 | % | 12.35 | % | ||||||
Tier 1 Capital Ratio | 13.22 | 13.56 | 12.35 | |||||||||
Total Capital Ratio | 14.41 | 14.81 | 13.61 | |||||||||
Tier 1 Leverage Ratio | 7.30 | 7.32 | 6.61 | |||||||||
Total Shareholders' Equity to Total Assets | 6.30 | 7.07 | 6.20 | |||||||||
Tangible Common Equity to Tangible Assets 6 | 5.39 | 6.15 | 6.06 | |||||||||
Tangible Common Equity to Risk-Weighted Assets 6 | 9.77 | 11.44 | 11.78 | |||||||||
Non-Financial Data | ||||||||||||
Full-Time Equivalent Employees | 2,084 | 2,056 | 2,058 | |||||||||
Branches | 54 | 54 | 63 | |||||||||
ATMs | 307 | 307 | 361 | |||||||||
1 Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and total noninterest income). | ||||||||||||
2 Net interest margin is defined as net interest income, on a taxable-equivalent basis, as a percentage of average earning assets. | ||||||||||||
3 Dividend payout ratio is defined as dividends declared per common share divided by basic earnings per common share. | ||||||||||||
4 The numerator comprises the Allowance for Credit Losses - Loans and Leases. | ||||||||||||
5 Regulatory capital ratios as of March 31, 2022 are preliminary. | ||||||||||||
6 Tangible common equity to tangible assets and tangible common equity to risk-weighted assets are Non-GAAP financial measures. Tangible common equity is defined by the Company as common shareholders' equity minus goodwill. See Table 2 "Reconciliation of Non-GAAP Financial Measures". | ||||||||||||
Bank of Hawaii Corporation and Subsidiaries | ||||||||||||||
Reconciliation of Non-GAAP Financial Measures | Table 2 | |||||||||||||
March 31, | December 31, | March 31, | ||||||||||||
(dollars in thousands) | 2022 | 2021 | 2021 | |||||||||||
Total Shareholders' Equity | $ | 1,448,885 | $ | 1,611,611 | $ | 1,360,221 | ||||||||
Less: Preferred Stock | 180,000 | 180,000 | - | |||||||||||
Goodwill | 31,517 | 31,517 | 31,517 | |||||||||||
Tangible Common Equity | $ | 1,237,368 | $ | 1,400,094 | $ | 1,328,704 | ||||||||
Total Assets | 23,000,317 | 22,784,941 | 21,947,271 | |||||||||||
Less: Goodwill | 31,517 | 31,517 | 31,517 | |||||||||||
Tangible Assets | $ | 22,968,800 | $ | 22,753,424 | $ | 21,915,754 | ||||||||
Risk-Weighted Assets, determined in accordance | ||||||||||||||
with prescribed regulatory requirements 1 | $ | 12,663,646 | $ | 12,236,805 | $ | 11,275,565 | ||||||||
Total Shareholders' Equity to Total Assets | 6.30 | % | 7.07 | % | 6.20 | % | ||||||||
Tangible Common Equity to Tangible Assets (Non-GAAP) | 5.39 | % | 6.15 | % | 6.06 | % | ||||||||
Tier 1 Capital Ratio 1 | 13.22 | % | 13.56 | % | 12.35 | % | ||||||||
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) 1 | 9.77 | % | 11.44 | % | 11.78 | % | ||||||||
1 Regulatory capital ratios as of March 31, 2022 are preliminary. | ||||||||||||||
Bank of Hawaii Corporation and Subsidiaries | ||||||||||||
Consolidated Statements of Income | Table 3 | |||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
(dollars in thousands, except per share amounts) | 2022 | 2021 | 2021 | |||||||||
Interest Income | ||||||||||||
Interest and Fees on Loans and Leases | $ | 94,439 | $ | 97,853 | $ | 99,299 | ||||||
Income on Investment Securities | ||||||||||||
Available-for-Sale | 17,100 | 15,850 | 15,837 | |||||||||
Held-to-Maturity | 18,701 | 18,325 | 13,300 | |||||||||
Deposits | 4 | ... | ||||||||||
