Bank of Hawaii Corporation BOH reported fourth-quarter 2023 earnings per share (EPS) of 72 cents, missing the Zacks Consensus Estimate of 89 cents. The bottom line compared unfavorably with $1.50 earned in the year-ago quarter.

The EPS for the reported quarter included an FDIC Special Assessment charge of 29 cents. Excluding this, adjusted EPS would have been $1.01.

BOH's quarterly results were affected by a decline in net interest income (NII) and a rise in provisions and expenses. However, improvement in non-interest income, together with increased loan and deposit balance, acted as a tailwind.

The company's net income came in at $30.4 million, down 50.4% year over year. Our estimate for the metric was pegged at $31.1 million.

In 2023, earnings per share were $4.14, which declined 24.5% from the previous year and missed the Zacks Consensus Estimate of $4.28. Net income (GAAP) was $171.2 million, down 24.2%.

Revenues Decline, Expenses Rise

BOH's total revenues fell 13.1% year over year to $158.1 million in the fourth quarter. The top line also missed the Zacks Consensus Estimate of $161.03 million.

In 2023, total revenues were $674 million, down 3.5% year over year. However, the top line surpassed the Zacks Consensus Estimate of $673.2 million.

NII was $115.8 million, down 17.7% year over year, primarily due to higher funding costs, partially offset by higher earning asset yields. Net interest margin (NIM) decreased 47 basis points (bps) to 2.13%. Our estimate for NII and NIM was pinned at $116.5 million and 2.16%, respectively.

Non-interest income came in at $42.3 million, up 2.7% year over year. Our estimate for the same was $41.5 million.

Non-interest expenses increased 12.9% to $116 million. It included the FDIC Special Assessment charge of $14.7 million, which was partly offset by $1.7 million in expense reductions. Adjusted core non-interest expense was $102.9 million. Our estimate for the metric was $102.6 million.

The efficiency ratio was 73.36%, which increased from 56.46% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.

As of Dec 31, 2023, total loans and leases balance increased marginally from the prior-quarter end to $14 billion. Total deposits increased 1.2% sequentially to $21.1 billion. Our estimates for total loans and leases, and total deposits were $13.8 billion and $20.6 billion, respectively.

Credit Quality: Mixed Bag

As of Dec 31, 2023, non-performing assets were $11.7 million, down 7.1% year over year.

Net loans and lease charge-offs were $1.7 million, down 7.1% from the prior-year quarter.

Provision for credit losses was $2.5 million, which jumped substantially from $0.2 million in the year-ago quarter. Our estimate for the metric was $14.2 million.

The allowance for credit losses increased 1.4% to $146.4 million.