It has been about a month since the last earnings report for Bank of Hawaii (BOH). Shares have lost about 6.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bank of Hawaii due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Bank of Hawaii Q2 Earnings Top Estimates, Expenses Up

Bank of Hawaii reported second-quarter 2024 adjusted earnings per share of 86 cents, beating the Zacks Consensus Estimate of 85 cents. The bottom line compared unfavorably with $1.12 earned in the year-ago quarter.

The company's quarterly results benefited from an increase in NIM, driven by higher earnings asset yields. Also, lower provision acted as a tailwind. A decline in NII, along with a drop in loans and deposit balances and higher expenses, were undermining factors.

The company’s net income (GAAP basis) came in at $34.1 million, down 26% year over year. Our estimate for the metric was pegged at $35.2 million.

Revenues Decrease, Expenses Increase

The total revenues fell 6.4% year over year to $156.9 million in the second quarter. The top line also missed the Zacks Consensus Estimate of $157 million.

NII was $114.8 million, down 7.6% year over year, primarily due to increased funding costs, partially offset by higher earning asset yields. NIM increased 4 basis points to 2.15%. 

Non-interest income came in at $42.1 million, down 2.7% year over year. This included $1.5 million from the sale of a low-income housing tax credit investment. Adjusted for this item, the metric inched up 0.9% year over year.  

Non-interest expenses increased 5% to $109.2 million. It included an industry-wide FDIC Special Assessment of $2.6 million and separation expenses of $0.8 million. Adjusted for these items, the metric for the second quarter was $105.9 million, up 1.8% from adjusted non-interest expenses recorded in the year-ago quarter. 

The efficiency ratio was 69.60%, up from 62.07% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.

As of Jun 30, 2024, total loans and leases balance declined marginally from the previous quarter’s end to $13.8 billion. Total deposits moved down 1.3% sequentially to $20.4 billion.

Credit Quality: Mixed Bag

As of Jun 30, 2024, non-performing assets were $15.2 million, up 32.3% year over year.  Net loans and lease charge-offs were $3.4 million, up $2 million from the year-ago quarter's level. 

Provision for credit losses was $2.4 million, down 4% from the year-ago quarter’s tally.  The allowance for credit losses inched up 1.5% to $147.5 million.