Bank of Hawaii(US:BOH)2021-04-26 20:35Financial Data and Key Metrics Changes - Net income for Q1 2021 was $59.9 million or $1.50 per share, an increase from $42.3 million in Q4 2020 and $34.7 million in Q1 2020 [18] - Total deposits increased by $1.3 billion or 7.4% linked quarter and $3.5 billion or 22% year-over-year [15] - Net interest income for Q1 2021 was $120.6 million, up from $119.5 million in Q4 2020 but down from $126 million in Q1 2020 [18] - Return on assets was 1.15%, return on equity was 17.65%, and efficiency ratio was 60.45% [25] Business Line Data and Key Metrics Changes - Total loans increased by $201 million or 1.7% linked quarter and $788 million or 6.9% year-over-year [17] - Noninterest income totaled $43 million in Q1 2021, down from $45.3 million in Q4 2020 and $46.1 million in Q1 2020 [19] - Mortgage banking revenue is expected to decrease due to higher interest rates, but this will be offset by increasing deposit fees and other service charges [20] Market Data and Key Metrics Changes - Unemployment in Hawaii decreased to about 9% as of Q1 2021, down from 10.9% in December 2020 [7] - The real estate market in Hawaii showed strong performance, with single-family home prices up 17.3% year-to-date [11] - Visitor arrivals to Hawaii are beginning to pick up, with expectations of reaching 2/3 of historic levels by year-end [13] Company Strategy and Development Direction - The company is focusing on digital banking efforts to enhance customer experience and service delivery [34] - Investments in digital platforms and e-commerce are expected to create operating leverage and improve efficiency [39] - The company plans to maintain a strong capital position while exploring options for share repurchases in the future [43] Management Comments on Operating Environment and Future Outlook - Management noted that conditions in Hawaii are improving, particularly in tourism and real estate markets [5] - The company anticipates stronger commercial loan growth in the second half of the year as economic conditions improve [50] - Management expressed optimism about the recovery of the hospitality sector and its impact on fee revenue [47] Other Important Information - The effective tax rate for Q1 2021 was 24.09%, with expectations of approximately 24% for the year [24] - The company maintained strong risk-based capital levels, with CET1 and Tier 1 capital ratios increasing to 12.35% [27] - The Board declared a dividend of $0.67 per share for Q2 2021 [27] Q&A Session Summary Question: Capital management and balance sheet - Management acknowledged the pressure on capital due to significant deposit growth and is exploring options to manage the balance sheet effectively [42][44] Question: Expense guidance clarification - The expense guidance of $385 million includes onetime items and reflects a positive outlook for the year [46] Question: Expectations for inbound tourism and fee revenue - Management expects a faster rebound in tourism than previously anticipated, which will positively impact fee revenue and loan growth [48][50] Question: PPP balances and forgiveness - The company originated approximately $260 million in new PPP loans in 2021, with expectations for forgiveness to accelerate in the coming quarters [52][60] Question: M&A strategy - Management reiterated a commitment to organic growth rather than pursuing M&A opportunities, despite having a strong stock currency [73]