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BO

BANK OF HAWAII CORP (BOH)·Q1 2025 Earnings Summary

Executive Summary

  • Solid start to 2025 with EPS $0.97 (+14% q/q, +11% y/y) on continued NIM expansion and disciplined costs; credit quality remained “pristine.” NIM rose 13 bps q/q to 2.32% as deposit costs fell and mix pressure eased .
  • Versus S&P Global consensus, EPS beat ($0.97 vs $0.89*) while total revenue was modestly below ($166.6M* vs $169.3M*), as stronger NII was partly offset by lower other revenues; six EPS and three revenue estimates contributed to the consensus.*
  • Management reiterated a credible path to ~2.50% exit NIM by YE25, contingent on holding low-cost deposits and curve shape; deposit costs are expected to decline further as 74% of time deposits reprice within six months .
  • Key potential stock catalysts: visible NIM trajectory, falling deposit costs, stable credit, and expense discipline (core OpEx +2–3% for 2025 on a normalized 2024 base) while maintaining capital strength (Tier 1 13.93%) .

Note: Asterisked values are from S&P Global consensus/actuals via GetEstimates.

What Went Well and What Went Wrong

  • What Went Well

    • “Fourth consecutive quarter” of NIM and NII improvement on lower deposit costs and asset cash flow repricing; NIM 2.32% (+13 bps q/q) and NII $125.8M (+4.7% q/q) .
    • Deposits and loans grew at quarter-end (deposits +1.8% q/q to $21.0B; loans +0.3% q/q to $14.1B) with NIBD stable; average total deposit cost declined 17 bps q/q to 1.60% .
    • Asset quality remained strong: NPAs 0.12% (down 2 bps q/q) and NCOs 13 bps annualized; ACL/loans 1.05% .

  • What Went Wrong

    • Total noninterest expense rose 2.3% q/q (seasonal payroll taxes/benefits, medical costs), partially offset by $2.3M FDIC special assessment reimbursement .
    • Noninterest income was relatively flat sequentially after adjusting for Visa Class B impacts and softer trust/derivatives activity; management expects $44–$45M per quarter amid market volatility .
    • Net charge-offs ticked up 3 bps q/q, driven by a single ~$1.1M loan charge-off; still low but a reminder of idiosyncratic risk .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Revenue ($M)$156.2 $163.2 $169.9
Net Interest Income ($M)$113.9 $120.2 $125.8
Noninterest Income ($M)$42.3 $43.0 $44.1
Provision for Credit Losses ($M)$2.0 $3.8 $3.3
Noninterest Expense ($M)$105.9 $107.9 $110.5
Net Income ($M)$36.4 $39.2 $44.0
Diluted EPS ($)$0.87 $0.85 $0.97
Net Interest Margin (%)2.11% 2.19% 2.32%
Efficiency Ratio (%)67.76% 66.12% 65.03%

Estimates vs Actuals (S&P Global)

MetricConsensus*Actual*SurpriseBeat/Miss
Diluted EPS ($)0.89090.9700+0.0791Beat
Total Revenue ($M)169.27166.62-2.65Miss
# of EPS / Revenue Estimates6 / 3———

Values with asterisks retrieved from S&P Global.

Segment Results (Net Income)

Segment ($M)Q1 2024Q1 2025
Consumer Banking32.8 29.5
Commercial Banking29.6 31.7
Treasury & Other(26.1) (17.2)
Consolidated36.4 44.0

Key KPIs

KPIQ4 2024Q1 2025
Avg cost of total deposits1.77% 1.60%
Avg rate on interest-bearing deposits2.37% 2.16%
Avg yield on loans4.73% 4.72%
NPA ratio (Loans+OREO)0.14% 0.12%
NCOs (annualized)0.10% 0.13%
ACL / Loans1.06% 1.05%
Tier 1 Capital Ratio13.95% 13.93%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Noninterest income ($ per quarter)2025n/a~$44–$45M per quarter expected given volatility New
Core expense growthFY 2025+2% to +3% vs normalized 2024 ($426M)Reiterated +2–3%; Q2 similar to Q1, lower 2H as initiatives ramp Maintained
Effective tax rateRemainder of 2025n/a~22.5% New
NIM exit targetYE 2025“2.50% attainable” discussed priorPath to ~2.50% YE25 if low-cost deposits stable; curve matters Maintained qualitative
Time deposit repricingNext 6 monthsn/a~74% of CDs mature in 6 months; new CDs ~3.3–3.4% avg rate New detail
Common dividendQ2 2025$0.70Declared $0.70 per share (payable Jun 13; record May 30) Maintained

Earnings Call Themes & Trends

TopicQ3 2024 MentionsQ4 2024 MentionsQ1 2025 CurrentTrend
NIM trajectory & driversNIM 2.18%; cashflow repricing +$3.6M; deposit mix headwind $(2.6)M NIM 2.19%; cashflow repricing +$2.8M; deposit costs down NIM 2.32%; cashflow repricing +$3.7M; mix headwind $(0.3)M Improving
Deposit costs/mixAvg cost TD 4.17%; total 1.87% Avg cost IBD 2.37%; total 1.77% Total 1.60%; IBD 2.16%; further declines expected Declining
Loan growth outlookLow-single digits; pipelines stable Modest q/q growth Low-single digit guide reiterated; pipelines solid; some caution Stable with caution
Credit quality/CRENPAs 0.14%; ACL/loans 1.06% NPAs 0.14%; ACL/loans 1.06% NPAs 0.12%; ACL/loans 1.05%; low LTVs; minimal tail risk Strong/stable
Macro/tourism/tariffsStable, Maui impact waning Stable Hawaii labor/real estate Domestic strong; some early Canadian softness on tariff sentiment; flattish visitor outlook Mixed but steady

Management Commentary

  • Peter Ho, CEO: “Bank of Hawaii posted yet another solid quarter… Net interest income and net interest margin both improved meaningfully… fourth consecutive quarter.”
  • Dean Shigemura, CFO: “Deposit costs decreased by 17 basis points… NIM expanded to 2.32%… 74% of total time deposits are scheduled to mature in the next 6 months.”
  • Bradley Shairson, CRO: “Credit metrics remained stable… criticized loans dropped… and 75% of those criticized assets are real estate secured with a 54% LTV.”

Q&A Highlights

  • NIM path: Management still sees a path to ~2.50% exit margin by YE25, contingent on retaining low-cost deposits and curve shape; rate cuts could be accretive depending on timing .
  • Deposit costs: Average total deposit cost for March ~1.6%; time deposit repricing running ~3.3–3.4% new vs 30–40 bps below maturing rates .
  • Swaps/hedging: Added $200M of active and $200M of forward swaps in early Q2; active swaps now $2.2B avg fixed 3.97% and forward $500M avg 3.09% .
  • Loan growth: Low single-digit growth outlook maintained; commercial pipeline healthy; consumer applications (mortgage/HELOC) improved, with caution on macro .
  • Credit: NCO uptick driven by a single ~$1.1M loan charge-off; otherwise consumer NCOs down q/q .
  • Expenses: FY25 OpEx +2–3% (vs normalized FY24 $426M) reiterated; Q2 similar to Q1, then lower in 2H as initiatives execute; $2.3M FDIC special assessment reimbursement in Q1 .

Estimates Context

  • Q1 2025 EPS of $0.97 beat S&P Global consensus of $0.89 by ~$0.08; total revenue of $166.6M was modestly below $169.3M consensus; 6 EPS and 3 revenue estimates [GetEstimates].*
  • Implications: Consensus EPS likely nudges higher on a clearer NIM trajectory and deposit cost tailwinds; revenue models may calibrate noninterest income to $44–$45M/quarter and reflect slightly lower asset yields with mix dynamics .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • NIM inflecting: Four straight quarters of NIM expansion with a credible path toward ~2.50% exit by YE25; deposit costs still falling and mix headwinds moderating .
  • Deposit franchise strength: Unique, concentrated market and long-tenured relationships underpin stable funding and below-peer deposit costs .
  • Credit is a differentiator: Low NPAs (0.12%), conservative LTVs (consumer ~48%, CRE ~55%), and diversified C&I with minimal leverage exposure .
  • Expense discipline with targeted growth: FY25 OpEx +2–3% with investment in wealth/mobile/data analytics; cadence softer in 2H25 as initiatives deliver .
  • Capital and liquidity: Tier 1 13.93%, leverage 8.36%; common dividend maintained at $0.70; buyback capacity intact ($126M) though no repurchases .
  • Trading setup: Upside if NIM continues to stair-step higher and deposit costs reprice down faster than modeled; risks include curve shifts, macro softness (tourism/tariffs), and any resurgence in deposit remixing .
  • Model updates: Raise NIM trajectory, modestly raise EPS near term; keep conservative noninterest income run-rate at $44–$45M and maintain low losses given credit performance .

Citations:
Press release/8-K and financials: .
Q4/Q3 comparatives: .
Earnings call transcript: .

S&P Global disclaimer: Values marked with an asterisk were retrieved from S&P Global.