On January 22, 2024, Bank of Hawaii Corp (BOH, Financial) released its 8-K filing, detailing its financial results for the fourth quarter and full year of 2023. The report reveals a challenging period for the bank, with a notable decline in net income and earnings per share (EPS) compared to the previous year. Bank of Hawaii Corp, a leading financial institution offering a wide array of services in Hawaii, Guam, and other Pacific Islands, has faced headwinds in the economic environment that have impacted its performance.
Financial Performance Overview
For the full year of 2023, Bank of Hawaii Corp reported a diluted EPS of $4.14, a decrease from $5.48 in 2022. The net income for the year stood at $171.2 million, marking a 24.2% decline from the previous year. The fourth quarter of 2023 was particularly challenging, with a diluted EPS of $0.72 and net income of $30.4 million, representing decreases of 50.4% and 36.5%, respectively, from the fourth quarter of 2022. An industry-wide FDIC Special Assessment resulted in a $14.7 million charge in the fourth quarter, significantly impacting the bank's earnings.
Despite these challenges, Peter Ho, Chairman, President, and CEO of Bank of Hawaii Corp, highlighted the resilience of the bank's brand and business model. He noted, "Total deposits were up 2.1% from the prior year and our credit quality remained excellent with non-performing assets of 0.08% at quarter end and net charge offs of 0.05% in the quarter."
Income Statement and Balance Sheet Highlights
Bank of Hawaii Corp's net interest income for the fourth quarter of 2023 was $115.8 million, a decrease from the same quarter in 2022, primarily due to higher funding costs. The net interest margin remained unchanged from the previous quarter at 2.13%, but decreased by 47 basis points from the same quarter of 2022. The average yield on loans and leases increased, reflecting the higher rate environment.
Noninterest income saw a slight increase of 2.7% from the same period in 2022, while noninterest expense rose by 12.9% due to the FDIC Special Assessment and other factors. The effective tax rate for the fourth quarter was 23.25%, influenced by discrete tax items.
On the balance sheet, total assets increased modestly by 0.8% from the previous quarter and 0.5% from the end of 2022. Loans and leases grew by 2.3% year-over-year, and total deposits increased by 2.1%. The bank's capital levels remained robust, with the Tier 1 Capital Ratio at 12.56% at the end of 2023.
Asset Quality and Capital Strength
Asset quality at Bank of Hawaii Corp continued to be a strong point, with non-performing assets representing only 0.08% of total loans and leases. The allowance for credit losses on loans and leases was $146.4 million at the end of the quarter, indicating the bank's preparedness for potential credit losses.
The bank's capital position remains strong, with the Tier 1 Capital Ratio increasing quarter over quarter. No shares of common stock were repurchased in the fourth quarter, and the Board of Directors declared a quarterly cash dividend of $0.70 per share on the company's outstanding common shares.
Conclusion
Bank of Hawaii Corp's fourth quarter and full-year 2023 results reflect the challenges posed by the economic environment, including higher funding costs and special assessments. However, the bank's asset quality and capital ratios demonstrate its underlying strength and resilience. As Bank of Hawaii Corp navigates through these challenges, it remains well-positioned to deliver strong results in the future.
For a detailed look at Bank of Hawaii Corp's financial results, investors can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Bank of Hawaii Corp for further details.
