5. Bank of Hawaii
Bank of Hawaii
of Honolulu closed at $44.05 Monday, returning 3% during 2012, with a three-year total return of 15% and a five-year return of 6%.
The shares traded for twice their tangible book value, according to Thomson Reuters Bank Insight, and for 12.6 times the consensus 2013 earnings estimate of $3.49 a share, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $3.49.
Based on Monday's close and a quarterly payout of 45 cents, the shares had a dividend yield of 4.09%.
For the first quarter of 2010 through the third quarter of 2012, Bank of Hawaii's return on average tangible common equity was 17.60%, according to data supplied by Thomson Reuters Bank Insight.
Among 12 sell-side analysts polled by Thomson Reuters, only two rate Bank of Hawaii a "Buy," while six analysts have neutral ratings and four analysts rate the shares "Underperform" or "Sell." While there's no question that Bank of Hawaii has been a strong and consistent performer, analysts with 12-month investment horizons are concerned about "limited growth prospects and relatively weak NIM defense," according to Jefferies analyst Casey Haire.
Bank of Hawaii earned $41.2 million during the third quarter, or 92 cents a share, increasing from $40.7 million, or 90 cents a share, in the second quarter, but declining from $43.3 million, or 92 cents a share, in the third quarter of 2011. Earnings increased sequentially mainly because the company's mortgage banking revenue increased to $11.7 million from $7.6 million. During the third quarter of 2011, mortgage banking income totaled $5.5 million.
The return on average tangible common equity for the third quarter was 16.78%, according to Thomson Reuters Bank Insight.
Earnings were down from a year earlier because the increase in mortgage income was partially offset by a decline in income from fees and service charges, and also because of a decline in net interest income, as the net interest margin (NIM) narrowed to 2.98% in the third quarter from 3.09% a year earlier.
Haire on Oct. 23 lowered his 2013 EPS estimate for Bank of Hawaii by a nickel to $3.50, citing "a weaker [net interest income] trajectory," but also saying that "negative revisions would have been greater if not for decent momentum in mortgage banking and ongoing efficiency initiatives, which should keep operating leverage metrics respectable near-term."
The analyst rates Bank of Hawaii a "Hold," with a $46 price target.
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