Executive Summary

Q2 2025 delivered continued profitability momentum: diluted EPS rose to $1.06 from $0.97 in Q1 and $0.81 in Q2 2024; net income increased to $47.6M (+8.3% QoQ, +39.8% YoY) as NII and NIM expanded for the fifth straight quarter to $129.7M and 2.39% respectively .
Versus S&P Global consensus, EPS was essentially in line at $1.06 vs $1.056*; revenue missed with actual $171.2M* vs $177.9M*, driven by deposit mix headwinds offset by asset-yield accretion (company-reported total revenue was $174.5M) . Values retrieved from S&P Global.
Credit quality remained “pristine”: net charge-offs fell to 7 bps (from 13 bps in Q1), NPAs were stable at 0.13% of loans+OREO, and ACL/loans remained ~1.06% .
Guidance/tone: management sees NIM at ~2.50% by year-end, expects CD repricing to add 15–25 bps and deposit beta to trend toward ~35%; noninterest income guided to $44–$45M per quarter and FY tax rate to 21–22% .
Potential stock catalysts: visible NIM reversion path, disciplined expense control (2–3% growth maintained), stable deposits, and sector-leading capital ratios (Tier 1 14.17%) support medium-term margin and earnings trajectories .

What Went Well and What Went Wrong

What Went Well

Fifth consecutive quarter of NII and NIM expansion: NII rose +$3.9M QoQ to $129.7M; NIM increased +7 bps to 2.39% as fixed assets rolled off into higher yields (roll-off ~4.0% to roll-on ~6.3%), contributing ~+$3.2M to NII .
Credit metrics improved: net charge-offs fell to $2.6M (7 bps annualized), criticized loans decreased to 2.06% of loans, and NPAs were a low 0.13%; consumer and CRE portfolios remain conservatively underwritten with weighted average LTVs ~48–56% .
Capital robust and rising: Tier 1 capital ratio climbed to 14.17% (from 13.93% in Q1), CET1 11.81%, leverage 8.46%, with $126M in buyback capacity; dividend of $0.70 per share declared .

Quote: “Earnings per share advanced for the fourth consecutive quarter. Net interest income and net interest margin expanded for the fifth consecutive quarter as our margin reversion continues…” — Peter Ho (CEO) .

What Went Wrong

Revenue shortfall vs consensus: S&P Global revenue actual $171.2M* came in below $177.9M* consensus despite company-reported total revenue of $174.5M; noninterest income adjusted declined QoQ due to lower customer derivatives and mortgage banking . Values retrieved from S&P Global.
Commercial production softness: management cited “disappointing” commercial loan production and unusual prepayments in C&I, leading to modest declines QoQ; pipelines are building but timing uncertain amid macro/tariff uncertainty .
Deposits down sequentially: period-end deposits declined 1.0% QoQ to $20.8B, and average NIBD remains competitive to grow; while costs stabilized (total deposits 1.60%), deposit mix shift still created a -$0.5M NII headwind QoQ .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025	Q2 2024
Net Interest Income ($USD Millions)	$120.178	$125.807	$129.683	$114.846
Total Noninterest Income ($USD Millions)	$43.047	$44.058	$44.795	$42.087
Total Revenue ($USD Millions)	$163.225	$169.865	$174.478	$156.933
Provision for Credit Losses ($USD Millions)	$3.750	$3.250	$3.250	$2.400
Total Noninterest Expense ($USD Millions)	$107.931	$110.459	$110.783	$109.226
Net Income ($USD Millions)	$39.162	$43.985	$47.637	$34.083
Diluted EPS ($)	$0.85	$0.97	$1.06	$0.81
Net Interest Margin %	2.19%	2.32%	2.39%	2.15%
Efficiency Ratio %	66.12%	65.03%	63.49%	69.60%

Segment breakdown (Q2 2025):

Metric ($USD Millions)	Consumer Banking	Commercial Banking	Treasury & Other	Total
Net Interest Income	$95.339	$53.949	$(19.605)	$129.683
Noninterest Income	$33.981	$6.164	$4.650	$44.795
Noninterest Expense	$86.803	$18.874	$5.106	$110.783
Net Income (Loss)	$29.737	$30.694	$(12.794)	$47.637
Total Assets	$8,228.766	$6,139.748	$9,341.238	$23,709.752

Key KPIs:

KPI	Q2 2024	Q1 2025	Q2 2025
Average Rate – Interest-Bearing Deposits (%)	2.46%	2.16%	2.16%
Average Rate – Total Deposits (%)	1.81%	1.60%	1.60%
Average Yield – Loans & Leases (%)	4.76%	4.72%	4.80%
Average Yield – Total Earning Assets (%)	3.99%	3.95%	4.01%
ROA (%)	0.59%	0.75%	0.81%
ROCE (Return on Avg Common Equity) (%)	10.41%	11.80%	12.50%
Net Charge-Offs (annualized) (%)	0.10%	0.13%	0.07%
NPAs / Loans+OREO (%)	0.11%	0.12%	0.13%
CET1 (%)	11.56%	11.58%	11.81%
Tier 1 Capital (%)	13.96%	13.93%	14.17%
Dividend per Common Share ($)	$0.70	$0.70	$0.70

Actual vs S&P Global consensus (Q2 2025):

Metric	Consensus*	Actual	Result
EPS (Primary) ($)	1.056*	1.06	In line / slight beat
Revenue ($USD Millions)	177.9*	171.2*	Miss

Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin target	FY 2025 (year-end)	—	~2.50% achievable by year-end	New (explicit target)
CD repricing impact	2H 2025	—	15–25 bps improvement expected on CD repricing	New
Deposit beta	2H 2025	—	Trending toward ~35% absent rate cuts	New
Noninterest income run rate	Q3–Q4 2025	—	$44–$45M per quarter	New
Effective tax rate	FY 2025	—	21–22%	New
Expense growth	FY 2025	2–3%	2–3% maintained; step-down in 2H expected	Maintained
Share repurchases	Ongoing	$126M capacity; cautious	Holding pattern pending macro and securities position	Maintained cautious stance
Common dividend	Q3 2025	$0.70	$0.70 declared	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Margin trajectory	NIM expanded to 2.19% in Q4; to 2.32% in Q1; cashflow repricing +$2.8M/+ $3.7M respectively	NIM 2.39%; fixed asset repricing +$3.2M; path to ~2.50% by year-end	Improving
Deposit costs/mix	Total deposit cost fell to 1.77% in Q4; 1.60% in Q1; mix shift headwind moderating	Total deposit cost flat at 1.60%; mix shift -$0.5M QoQ NII impact	Stabilizing costs; mix shift easing
Securities/ALM	Shift toward floating-rate AFS; active swaps; forward swaps $300M by Q4	~$270–$275M securities added; ~55% floating; $2.2B active swaps; $600M forward swaps	Growing portfolio; balanced fixed/floating
Credit quality	NCOs ~10–11 bps; NPAs ~0.14% in Q4	NCOs 7 bps; NPAs 0.13%; criticized 2.06% with 78% secured (54% LTV)	Strong/pristine
Commercial loan production	CRE/C&I growth in Q4; Q1 construction contribution	“Disappointing” quarter; unusual prepayments; pipelines building	Near-term softness; cautious
Macro (tourism/unemployment)	Hawaii unemployment ~2.9–3.0%; tourism improving	Visitor arrivals and spend up; HI unemployment ~2.8%	Supportive regional backdrop
Capital returns	Dividend maintained; buyback capacity $126M	Dividend maintained; buyback on hold near-term	Shareholder-friendly, prudent pacing

Management Commentary

Strategy and performance: “Our net interest income and net interest margin expanded for the fifth consecutive quarter… credit quality remained excellent, and we continued to maintain our disciplined approach to expense management.” — Peter Ho (CEO) .
Margin outlook: “I do think 2.50% [NIM] is an achievable number… after the CD repricing this quarter… our beta is going to be north of 30%… towards 35%.” — Brad Satenberg (CFO) .
NII drivers: “Fixed asset repricing… contributed approximately $3.2M to our NII… deposit mix shift had a $500K negative impact.” — Brad Satenberg (CFO) .
Expenses/tax: “Noninterest income will be between $44M and $45M… We now expect our tax rate for the full year to be between 21% and 22%… expense growth remains 2%-3%.” — Brad Satenberg (CFO) .
Commercial lending tone: “It was an off quarter… unusual prepayments… pipelines continue to build… move back into a modest level of growth as we move towards the end of the year.” — Jim Polk (President & CBO) .

Q&A Highlights

NIM path and deposit beta: Management reaffirmed the NIM trajectory to ~2.50% by year-end, citing CD repricing benefits and a deposit beta trending toward ~35% absent rate cuts .
Securities portfolio: Expect continued growth with ~55% floating purchases; incremental deployment of liquidity to AFS securities .
C&I trends and pipelines: A weak quarter due to uncertainty and elevated prepayments; pipelines building with expectations of modest growth into year-end .
Expenses outlook: 2–3% full-year increase maintained; step-down in 2H as severance and seasonal items fade, alongside ongoing discipline .
Capital priorities: Buybacks on hold near-term; opportunistic securities repositioning possible when income gains allow .

Estimates Context

Q2 2025 S&P Global consensus vs actual: EPS 1.056* vs 1.06 (in line), revenue $177.9M* vs $171.2M* (miss). Company-reported total revenue was $174.5M (NII + noninterest income) . Values retrieved from S&P Global.
Forward (next quarter) snapshot: Q3 2025 consensus EPS 1.176*; revenue $181.3M*; target price consensus $72.67* with 5 EPS estimates and 3 revenue estimates informing Q2 figures [GetEstimates above]. Values retrieved from S&P Global.

Key Takeaways for Investors

Visible NIM reversion continues (fixed asset repricing +$3.2M; NIM 2.39%) with management’s credible path to ~2.50% by year-end—supportive for near-term EPS resilience despite modest loan growth .
Deposit costs are stabilizing (total deposits 1.60%), and CD maturities (51% within 3 months at 3.61% WAR) offer repricing leverage in 2H—tailwind for funding costs and margins .
Credit remains a differentiator: low NCOs (7 bps), limited tail risk in CRE (only ~1.3% >80% LTV), granular exposures—reduces downside risk to earnings quality .
Expense discipline intact (2–3% full-year growth); noninterest income guide $44–$45M per quarter and ETR 21–22% provide better visibility for 2H models .
Commercial production should recover from an “off quarter” as pipelines convert; watch macro/tariff clarity and local demand for timing of acceleration .
Capital strength (Tier 1 14.17%, CET1 11.81%) and dividend continuity ($0.70/share) underpin shareholder returns; buyback optionality remains ($126M authorization) .
Near-term trading: focus on NIM trajectory updates, CD repricing outcomes, and deposit beta progression; medium-term thesis hinges on steady asset yield accretion, disciplined funding, and benign credit.

BANK OF HAWAII CORP (BOH)·Q2 2025 Earnings Summary