Dj Dir Lucien Gifts 2000 Of Bank Of Hawaii Corp >Boh

Investors interested in Banks - West stocks are likely familiar with Zions (ZION) and Bank of Hawaii (BOH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Zions has a Zacks Rank of #2 (Buy), while Bank of Hawaii has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ZION likely has seen a stronger improvement to its earnings outlook than BOH has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ZION currently has a forward P/E ratio of 10.79, while BOH has a forward P/E of 20.82. We also note that ZION has a PEG ratio of 4.63. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BOH currently has a PEG ratio of 4.81.

Another notable valuation metric for ZION is its P/B ratio of 1.29. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BOH has a P/B of 2.20.

These metrics, and several others, help ZION earn a Value grade of B, while BOH has been given a Value grade of C.

ZION stands above BOH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ZION is the superior value option right now.

Zacks Investment Research

Investors in Bank of Hawaii Corporation BOH need to pay close attention to the stock based on moves in the options market lately. That is because the Jan. 17, 2025 $30.00 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Bank of Hawaii shares, but what is the fundamental picture for the company? Currently, Bank of Hawaii is a Zacks Rank #3 (Hold) in the Banks - West industry that ranks in the Bottom 45% of our Zacks Industry Rank. Over the last 60 days, one analyst has increased the earnings estimate for the current quarter, while none have dropped their estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from 86 cents per share to 88 cents in that period.

Given the way analysts feel about Bank of Hawaii right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

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Zacks Investment Research

UMB Financial Corp. UMBF reported third-quarter 2024 operating earnings per share of $2.25, which beat the Zacks Consensus Estimate of $2.16. Also, the bottom line compared favorably with the $2.02 earned in the year-ago quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Results benefited from higher net interest income (NII) and fee income. Rising loan and deposit balances were other positives. However, higher expenses, increased provisions and worsening credit quality acted as spoilsport.

The results included a reduction of $31.7 million related to the pre-tax FDIC special assessment expense. After considering these charges, the GAAP net income for UMBF was $109.6 million for the third quarter, up 13.6% year over year.

UMB Financial’s Quarterly Revenues & Costs Rise

Quarterly revenues were $406.1 million, up 14.2% year over year. Also, the top line beat the Zacks Consensus Estimate of $398.8 million.

NII on an FTE basis was $254 million, which increased 11% from the prior-year quarter. On an FTE basis, Net interest margin (NIM) was 2.46%, up from 2.43% reported in the prior-year quarter.

Non-interest income was $158.7 million, up 19.1% year over year. The rise was primarily driven by an increase in almost all components of fee income, except for service charges on deposit accounts.

Non-interest expenses were $252.5 million, up 9.1% year over year. The rise was primarily driven by higher salaries and employee benefits, processing fees expense due to increased software subscription costs and legal and consulting expense related to the announced acquisition of Heartland Financial USA, Inc. These were partially offset by a decrease of $1.5 million in regulatory fees expense and a decline of $1.9 million in operational losses, recorded in other expense. The operating non-interest expense was $251.5 million.

The efficiency ratio increased to 61.69%, down from the prior-year quarter’s 64.51%. A decline in the efficiency ratio indicates an increase in profitability.

UMB Financial’s Loans & Deposits Increase

As of Sept. 30, 2024, average loans and leases were $24.4 billion, up 2.4% sequentially. Also, average deposits increased 2.8% to $35.3 billion.

UMB Financial’s Credit Quality Deteriorates

The ratio of net charge-offs to average loans was 0.14% in the reported quarter, up from 0.08% in the prior-year quarter.

Also, total non-accrual and restructured loans were $19.3 million, up 13.2% year over year.

The provision for credit losses was $18 million for the third quarter of 2024, up significantly from $5 million reported in the prior-year quarter.

UMB Financial’s Capital Ratios Improve

As of Sept. 30, 2024, the Tier 1 risk-based capital ratio was 11.22%, which rose from 10.77% as of Sept. 30, 2023. The Tier 1 leverage ratio was 8.58%, which increased from 8.55% as of Sept. 30, 2023. The total risk-based capital ratio was 13.14%, which grew from 12.68% in the year-ago quarter.

UMB Financial’s Profitability Ratios: Mixed Bag

Return on average assets at the quarter’s end was 1.01%, which increased from the year-ago quarter’s 0.97%.

The operating return on average equity was 12.71%, down from 13.50% reported in the year-ago quarter.

Our Take on UMBF

UMB Financial benefits from revenue strength aided by rising loan and deposit balances, along with diversified fee income. However, an elevated expense base is likely to impede the bottom-line growth in the near term.

UMB Financial Corporation Price, Consensus and EPS Surprise

UMB Financial Corporation price-consensus-eps-surprise-chart | UMB Financial Corporation Quote

UMB Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Bank of Hawaii Corporation BOH reported third-quarter 2024 adjusted earnings per share of 93 cents, beating the Zacks Consensus Estimate of 81 cents. The bottom line compared unfavorably with $1.17 earned in the year-ago quarter.

BOH's quarterly results benefited from an increase in deposits balance and NIM. A decline in NII, along with a drop in loans balances and higher expenses, were undermining factors. A surge in provisions was another major headwind.

Texas Capital Bancshares, Inc. TCBI reported third-quarter 2024 adjusted earnings per share of $1.62, which beat the Zacks Consensus Estimate of 97 cents. Moreover, earnings compared favorably with $1.18 reported in the year-ago quarter.

TCBI's results benefited from an increase in NII, fee income and higher loan and deposit balances. However, an increase in expenses was the undermining factor.

Zacks Investment Research

Bank of Hawaii Corporation BOH reported third-quarter 2024 adjusted earnings per share of 93 cents, beating the Zacks Consensus Estimate of 81 cents. The bottom line compared unfavorably with $1.17 earned in the year-ago quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

BOH's quarterly results benefited from an increase in deposits balance and net interest margin (NIM). A decline in net interest income (NII), along with a drop in loans balances and higher expenses, were undermining factors. A surge in provisions was another major headwind.

The company’s net income (GAAP basis) came in at $40.4 million, down 15.8% year over year. Our estimate for the metric was pegged at $33.7 million.

BOH’s Revenues Decrease, Expenses Increase

BOH’s total revenues fell 5% year over year to $162.7 million in the third quarter. However, the top line beat the Zacks Consensus Estimate of $160.3 million.

NII was $117.6 million, down 2.7% year over year. NIM increased 5 basis points to 2.18%. Our estimate for NII and NIM was pegged at $116.5 million and 2.16%, respectively.

Non-interest income came in at $45.1 million, down 10.4% year over year. This included a $14.7 million gain from the early termination of private repurchase agreements, partially offset by a $4.6 million net loss related to investment securities sales. Adjusted for these items, noninterest income increased 9.9% year over year. The rise primaily stemmed from increase in trust and asset management income, and fees, exchange, and other service charges. Our estimate for the same was pinned at $43.5 million.

Non-interest expenses increased 1.4% to $107.1 million. It included a separation expense of $2.1 million and extraordinary expenses related to the Maui wildfires of $0.4 million. Adjusted for these items, noninterest expense increased 3.9% from adjusted non-interest expenses recorded in the year-ago quarter. We projected the metric to be $113.3 million.

The efficiency ratio was 65.81%, up from 61.66% recorded in the year-ago period. A rise in the efficiency ratio reflects lower profitability.

BOH’s Loans Decline, Deposits Increase

As of Sept. 30, 2024, total loans and leases balance dropped marginally from the year-ago quarter’s end to $13.9 billion.

Total deposits moved up 2.8% year over year to $21 billion. Our estimates for total loans and leases and total deposits were $13.8 billion and $20.8 billion, respectively.

BOH’s Credit Quality Deteriorates

As of Sept. 30, 2024, non-performing assets were $19.8 million, which jumped 71.7% year over year. Our estimate for the metric was pegged at $12.8 million.

Net loans and lease charge-offs were $3.8 million, up $1.8 million from the year-ago quarter's level. Our estimate for the metric was pegged at $3.5 million.

Provision for credit losses was $3 million, up 50% from the year-ago quarter’s tally. Our estimate for the metric was pegged at $2.2 million.

The allowance for credit losses inched up 1.4% to $147.3 million. Our estimate for the metric was pegged at $146.2 million.

BOH’s Capital Ratios Improve

As of Sept. 30, 2024, the Tier 1 capital ratio was 14.05%, up from 12.53% as of Sept. 30, 2023. The total capital ratio was 15.11%, which rose from 13.56% in the year-ago period.

The ratio of tangible common equity to risk-weighted assets was 9.17%, which increased from 8.1% at the end of the year-ago quarter.

BOH’s Profitability Ratios Deteriorate

Return on average assets was 0.69% at the end of third-quarter 2024, which declined from 0.78% reported in the prior-year quarter. Return on average shareholders' equity was 9.9%, down from 13.92% as of Sept. 30, 2023.

BOH's Share Repurchase Update

During the reported quarter, the Bank of Hawaii did not repurchase any shares. As of Sept. 30, 2024, the total remaining buyback authority under the share repurchase program was $126.0 million.

Our View on BOH

Persistently rising expenses are likely to hurt Bank of Hawaii’s bottom-line growth. Further, declining fee income limits top-line expansion. A fall in loan balances was another headwind. However, strong capital ratios and rising deposit balance will support its financials.

Bank of Hawaii Corporation Price, Consensus and EPS Surprise

Bank of Hawaii Corporation price-consensus-eps-surprise-chart | Bank of Hawaii Corporation Quote

Currently, BOH carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

WaFd, Inc.’s WAFD fourth-quarter fiscal 2024 (ended Sept. 30) earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 68 cents. Also, the bottom line declined 1.4% year over year.

The results reflected a rise in NII and non-interest income, driven by the acquisition of Luther Burbank Corporation in February. This supported WAFD’s top line. Higher loan balances and nil provisions were other positives. However, a rise in expenses acted as a spoilsport.

Hancock Whitney Corp.’s HWC third-quarter 2024 earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.31. The bottom line compared favorably with $1.12 per share registered in the year-ago quarter.

HWC’s results were aided by an increase in non-interest income and NII. Lower expenses and provisions were positives. However, the decline in total loans and deposits affected the results to some extent.

Zacks Investment Research