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Bank of Hawaii’s Q2 results tops estimates

Bank of HawaiiYet another bank in the US has posted better than anticipated fiscal 2016 second-quarter results.

Having pleased with the quarterly earnings of the Bank of Hawaii Corp (BOH), the traders at NYSE took little time to propel the stock price by about 3% (based on Tuesday’s closing price of $70.10) in two days.

Since Jan 26, 2016, the stock has appreciated about 27.5% and is just 3.5% below the 12-month high of $72.77.

With notable quarterly earnings, we believe that the share price would certainly hit new yearly highs in this nearby future.

The $3 billion dollar bank holding company revealed that its FY16 second-quarter revenue has increased to $150.1 million, compared to $143.71 million in the similar quarter of FY15. The net interest income grew about 6% y-o- y to $103.55 million. The noninterest income increased about 1% y-o- y to $46.52 million. Bank of Hawaii’s total revenue was higher than the Street’s estimate of $149 million.

During the quarter, the Honolulu-based bank’s net income climbed about 8% to $44.25 million, from $41.15 million in the quarter ended June 2015. The earnings per share for the quarter rose to $1.03, up $0.08 on a year-over- year basis. The second-quarter revenue was higher than the analysts’ estimates of $0.94 per share.

Bank of Hawaii

The loan and lease balances at the end of second-quarter were $8.3 billion, up 12.2% on a y-o- y basis. The deposits climbed to $13.6 billion, compared to $13.1 billion last year.

During the quarter, the return on average assets stood at 1.14%, against 1.1% in the prior year’s similar quarter. Likewise, the Q2 2016 return on average equity increased to 15.56%, from 15.33% in 2015.

Finally, the second-quarter efficiency ratio of the bank declined to 57.35%, from 58.16% in the second-quarter of fiscal 2015. It should be noted that a decline in the efficiency ratio indicates higher operational efficiency (higher earnings with lower expenses).

Thus, a trader can anticipate the shares of Bank of Hawaii to remain bullish in the third-quarter of fiscal 2016.

After consolidating at 68 levels for more than three months, the stock has now started moving upwards. The RSI has entered into the bullish zone, thereby indicating a probable appreciation in the price. A break above $72 would take the stock into uncharted territory. We anticipate resistance to build at 80 levels.

Bank of Hawaii Stock Price: July 28th 2016

Thus, considering the negligible resistance on the upside, we believe that entering into a long trade by purchasing a one touch call option is the best thing to do in the current situation. A target price of not more than $78 and an expiry period of at least one month would complement the trade setup nicely.

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