Bank of Hawaii Corporation (NYSE:BOH) has announced the issuance and sale of 6,600,000 depositary shares, each representing a 1/40th interest in its new 8.000% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B. This event, reported on Friday, followed the company's filing of a Certificate of Designations with the Delaware Secretary of State on Monday, establishing the terms for the new preferred stock.
The depositary shares were sold in a public offering under the company's existing shelf registration statement and were backed by an underwriting agreement with BofA Securities, Inc., J.P. Morgan Securities LLC, Keefe, Bruyette & Woods, Inc., and Wells Fargo (NYSE:WFC) Securities, LLC.
Holders of the new depositary shares will have rights and preferences proportional to the Series B Preferred Stock, including dividend, voting, redemption, and liquidation rights. The introduction of the Series B Preferred Stock imposes restrictions on the company's ability to pay dividends or repurchase its common stock or any other preferred stock ranking equal or junior to the Series B Preferred Stock, should the company fail to declare and pay dividends for the preceding period.
The Series B Preferred Stock carries a liquidation preference of $1,000 per share. In conjunction with the issuance, a Deposit Agreement was executed between Bank of Hawaii Corporation, Computershare Inc., and Computershare Trust Company, N.A., which governs the issuance of the depositary receipts.
The Certificate of Designations, which details the rights and preferences of the Series B Preferred Stock, is incorporated by reference into the company's SEC filings, providing investors with full access to the terms of the securities.
This financial maneuver comes as part of Bank of Hawaii Corporation's broader capital management strategy. The company's common stock and the depositary shares for its Series A preferred stock are both listed on the New York Stock Exchange under the symbols BOH and BOH.PRA, respectively.
The information in this article is based on a press release statement from the Securities and Exchange Commission filing.
In other recent news, Bank of Hawaii has been the focus of several key financial developments. The bank recently announced a $165 million preferred equity raise with an 8% coupon, which Jefferies predicts will increase Bank of Hawaii's Tier 1 and Total capital ratios by 120 basis points. However, the equity raise is also expected to impact earnings per share, with an estimated 9% reduction in the first quarter of 2024 run rate.
Analysts from Keefe, Bruyette & Woods and Piper Sandler have adjusted their outlooks for the bank. Keefe, Bruyette & Woods raised the stock price target to $58 from $55, maintaining an Underperform rating due to a miss on margin guidance. Conversely, Piper Sandler reduced its price target to $60 from $65, retaining a Neutral rating, following an analysis anticipating narrower net interest margins and a reduced size of earning assets.
Bank of Hawaii's Q1 2024 performance showed stability with an improved net interest margin and solid credit quality, despite a slight decline in net interest income. Non-interest income remained consistent at $42.3 million, and net income for the quarter was reported at $36.4 million with earnings per share of $0.87. These are among the recent developments that continue to shape the financial landscape for Bank of Hawaii.
InvestingPro Insights
As Bank of Hawaii Corporation (NYSE:BOH) navigates its capital management strategy with the new issuance of depositary shares, investors keeping a close eye on the company's financial metrics will find the latest data from InvestingPro insightful. The company's Market Cap stands at a solid $2.21 billion, with a Price/Earnings (P/E) Ratio of 14.28, reflecting investor sentiment on its earnings potential.
Notably, the company has shown a commitment to shareholder returns, maintaining dividend payments for an impressive 53 consecutive years, and currently offers a dividend yield of 4.96%. This dedication to consistent dividends is particularly significant for income-focused investors, especially in the context of the new preferred stock issuance.
Still, it is important to note that analysts have recently revised their earnings downwards for the upcoming period, signaling potential challenges ahead. Furthermore, the company's gross profit margins have been identified as weak, which could be a point of concern for those analyzing the company's operational efficiency. Yet, with analysts predicting profitability for the year and a history of profitability over the last twelve months, Bank of Hawaii Corporation appears to be navigating these challenges with resilience.
For investors seeking a deeper dive into the company's performance and future outlook, there are additional InvestingPro Tips available, offering comprehensive analysis and guidance. Remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more expert insights to inform your investment decisions.
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