Yahoo Finance Bank of Hawaii Corp (BOH) (Q1 2024) Earnings Call Transcript Highlights: Navigating Through ...
Net Interest Income: $113.9 million, a decrease of $1.8 million from the previous quarter.
Net Interest Margin: Declined by two basis points from the previous quarter.
Noninterest Income: Remained steady at $42.3 million.
Operating Expenses: Total expenses were $105.9 million, with core expenses adjusted to $103.2 million.
Net Income: $36.4 million for the quarter.
Earnings Per Share: $0.87, reflecting an increase from the previous period.
Provision for Credit Losses: Recorded at $2 million for the quarter.
Effective Tax Rate: 24.7% for the quarter.
Dividends: Paid $28 million to common shareholders and $2 million in preferred stock dividends.
Loan Portfolio: Consumer side at $8.1 billion and commercial side at $5.8 billion.
Loan Growth: Averaged about 6.5% per year from end of 2019 to end of last year.
Capital Levels: Continued organic growth in capital, maintaining healthy excesses above regulatory minimums.
Release Date: April 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Hi, good morning. Thanks for taking the questions on maybe first, just starting with margin on as we as we do look at the securities cash flows continuing to come down, I guess at the same time, cash came down this quarter. Should we with the expectation that there's still a little bit of a tail on deposit costs? How should we be thinking about the trajectory of margin over the next few quarters? A: Dean Shigemura, CFO, explained that while asset repricing from cash flows is expected to add about $5 million in total, the deposit remix and repricing due to a higher-for-longer interest rate environment will continue but at a much lower rate than previously experienced. Peter Ho, CEO, added that deposit costs have significantly flattened, particularly from late 2023, and although there's a decrease in the rate of increase, it's uncertain whether this will drop to zero. The net interest margin for the quarter will depend on the accretion from fixed asset cash flow against funding costs.
Q: Thanks very much. And then shifting, I guess to two to capital. You continue to grow capital really strong levels there. And you mentioned the buyback authorization. What's the general feeling with and buying back stock here. And I guess at what point is capital getting too high given the broader growth profile, I'm saying in that call it longer-term 6% range. A: Peter Ho discussed the cautious approach towards capital, considering both operational and regulatory perspectives. He mentioned that there is still significant uncertainty regarding regulatory capital requirements and that maintaining higher capital levels is currently seen as favorable by shareholders compared to stock repurchases.
Q: Thanks. Good morning. Peter, just to maybe follow on it it follows that you talked about deposit costs sort of by month, two basis points interested in the spot rates on both interest bearing and total deposit costs. How do those compare to that full quarter averages? A: Peter Ho provided specific figures for March, noting that total average deposit cost was 177 basis points and average interest-bearing deposit cost was 242 basis points, indicating a relatively flat trend compared to the quarterly average.
Q: Thanks. Good morning, everyone. I'm just curious what you guys are seeing on deposit trend. It sounds like you had some public funds. We've invented some Lino related fire relief efforts, deposits leave on, but you think you've reached a point of stabilization and mixing grow deposits from here or I guess what are you hearing at the individual client level? A: Peter Ho explained the fluctuations in deposit levels from Q3 to Q1, attributing the spike in Q4 to temporary inflows related to insurance and aid, which then normalized in Q1. He anticipates that the $20.5 billion mark will be durable going forward and noted a significant slowdown in the shift from noninterest-bearing to interest-bearing deposits.
Q: Good morning. Thanks. Thanks for the question. Go back to the margin. Looking at slide 40 34 with the call it $800 million of loans and investment portfolio and flows coming coming on. And in Q1, I was surprised to see earning asset yields only increased four basis points this quarter. I was just wondering if there was anything unusual or any kind of puts and takes to think about as we think about and the dynamics of the repricing of your book as we look ahead and the higher for longer environment? A: Dean Shigemura addressed concerns about the modest increase in earning asset yields, explaining that the yield on the investment portfolio was impacted by securities that repriced from fixed to float, and the overall yields were also affected by a decrease in loan balances.
Q: I appreciate it, and thanks for the color, Peter. A: Peter Ho concluded the discussion by emphasizing the bank's proactive engagement with clients across all loan types, noting the lack of stress in the office sector and the ongoing conversions from office to multifamily, which he views as positive given the housing constraints.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
