Bank of Hawaii Corporation (BOH, Financial) will release its second quarter 2014 earnings after the bell on Monday, July 28, 2014. The bank will hold its earnings and quarterly conference at 12 p.m. Hawaii Time, 6:00 p.m. Eastern time. You can attend the live conference by visiting the bank’s website at www.boh.com, or by calling the toll-free number at 1 (800) 708-4540 and entering the passcode Bank of Hawaii.
Bank of Hawaii, founded in 1897, is the largest independent financial institution in Hawaii. The bank provides financial services to customers in Hawaii, the Pacific Islands, and on the US mainland.
Analysts Expect:
- EPS ranging from $0.88 to $0.93 with a target of $0.89
- Revenue ranging from $138 million to $142 million with a target of $140 million
Revenue/EPS Recap
For Q1 2014, Bank of Hawaii reported revenue of $138M, which was a 1.2 percent increase over the $136M reported for Q1 2013. Revenue has increased about $1M per quarter over the past four consecutive quarters. Due to the high price of Hawaiian land and property, the housing market was hit hard by the mortgage meltdown crisis. Since then, the bank has resolved its bad loans through loan restructuring programs and by writing off uncollectable loans. The bank wrote off $1.3M of bad mortgage loans in Q1 2014, as compared to $3.205M written off in Q4 2013. In addition, the bank restructured $45.6M of mortgage loans and modified another $22M of residential loans to help homeowners retain their homes.
| Revenue | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
| Estimate | $138.9M | $139.59M | $136.90M | $137.41M |
| Actual | $138.0M | $137.40M | $136.00M | $135.38M |
| Difference | -$900,000 | -$2.19M | -$900,000 | -$2.03M |
Bank of Hawaii has beaten analyst estimates for the past three quarters. Analysts expect the actual EPS to exceed the estimates for Q2 2014.
| EPS | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
| Estimate | $0.86 | $0.87 | $0.84 | $0.83 |
| Actual | $0.87 | $0.88 | $0.85 | $0.85 |
| Difference | +0.01 | +0.01 | +0.01 | +0.02 |
Credit Rating
Moody’s rates Bank of Hawaii’s financial strength as ‘B’ and the bank is not on the watch list for a potential ratings downgrade. The ‘B’ rating indicates that the bank is intrinsically sound and should not need assistance from third parties such as the owners or government agencies to continue operating. The bank was upgraded from ‘C+’ to ‘B’ on Jan. 21, 2005 and has remained at the ‘B’ rating ever since. Bank of Hawaii’s baseline credit assessment is ‘aa3’ which indicates that it is financially strong with a very low credit risk.
Competitors
Bank of Hawaii’s primary competitors are Bank of America, Corp., (?BOA), JP Morgan Chase & Co., (?JPM) and Central Pacific Financial Corp. (?CPF). Although Bank of America and Chase are better capitalized, Bank of Hawaii has the highest profit margin of its competitors and has the second highest EPS. Bank of Hawaii retains its customers by providing excellent customer service, offering competitive loan rates and keeping the ‘Aloha’ spirit alive.
| Â | BOH | BOA | JPM | CPF |
| Share Price | $56.95 | $15.59 | $59.01 | $18.07 |
| Market Cap | $2.5B | $164.0B | $223.3B | $649.5M |
| Revenue (TTM) | $585.5M | $99.2B | $102.2B | $192.9M |
| Profit Margin (TTM) | 26.15% | 6.98% | 14.92% | 20.46% |
| P/E (TTM) | 16.5 | 24.7 | 15.2 | 18.8 |
| EPS (TTM) | $3.45 | $0.63 | 3.87 | $0.96 |
Technical Considerations
Analysts are neutral on Bank of Hawaii. The stock has been channeling between $54.26 and $59.34 since May 6, 2014. However, technical indicators point to a possible breakout to the upside. The MACD and RSI are heading back into positive territory. The stock is looking to break through the EMA as the price continues to rebound. Bank of Hawaii presents a buying opportunity should the actual earnings beat the estimates for the fifth consecutive quarter.
