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BO

BANK OF HAWAII CORP (BOH)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 EPS was $0.85 (vs $0.93 in Q3 and $0.72 in Q4 2023), with net income of $39.2M; management noted EPS would have been ~$0.90 excluding a $2.4M one-time Visa Class B conversion ratio charge in noninterest income. NIM expanded to 2.19% (December at 2.26%), marking a third straight quarter of improvement .
  • Net interest income rose to $120.2M (+2.2% q/q, +3.8% y/y) as deposit costs fell 10 bps (total deposits to 1.77%) and deposit remix headwinds moderated; average loans and deposits both increased q/q .
  • Credit quality remained strong: NPAs were 0.14%, net charge-offs 10 bps annualized, and ACL/loans at 1.06%; criticized loans fell to ~2.1% post quarter-end, with CRE tail risk (LTV>80%) at ~2% of CRE .
  • Capital intact and dividends maintained: Tier 1 13.95%, CET1 11.59%; the Board declared a $0.70 common dividend and paid preferred dividends; buybacks remain paused pending clearer visibility on credit, the economy, and rates .
  • Forward setup: management expects NII/NIM to continue to increase on asset cash-flow repricing, deposit cost declines, and swap positioning; 2025 core expenses guided up 1–2% plus ~1% for revenue initiatives; noninterest income guided to $44–45M in Q1 2025 .

What Went Well and What Went Wrong

What Went Well

  • “Credit quality remained pristine,” with NPAs at 0.14% and net charge-offs at 10 bps; criticized loans improved to ~2.1% from 2.42% last quarter (post quarter-end payoff) .
  • NIM and NII expanded for the third consecutive quarter; December NIM reached 2.26%, and management sees further improvement from cash-flow repricing and deposit cost declines .
  • Commercial lending pipelines remained active; Q4 was “the strongest production quarter” since 2002, with a good mix across C&I and CRE to core clients .

What Went Wrong

  • EPS declined q/q to $0.85, partly due to a $2.4M nonrecurring charge linked to Visa Class B conversion ratio; reported noninterest income fell 4.6% q/q .
  • Loan and earning asset yields ticked down sequentially (loan yield -9 bps q/q; EAs -9 bps) with the initial negative impact from the September Fed cut; Q4 NIM initially dipped in October before recovering .
  • End-of-period deposits decreased 1.6% q/q and 2.0% y/y; NIBD mix remained below prior-year levels (26.3% vs 28.8% LY), though improving vs Q3 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024Q4 2024 vs Estimates
Total Revenue ($MM)$158.1 $162.7 $163.2 N/A – SPGI consensus unavailable
Net Interest Income ($MM)$115.8 $117.6 $120.2 N/A – SPGI consensus unavailable
Diluted EPS ($)$0.72 $0.93 $0.85 N/A – SPGI consensus unavailable
Net Income ($MM)$30.4 $40.4 $39.2 N/A – SPGI consensus unavailable
Net Interest Margin (%)2.13 2.18 2.19 N/A – SPGI consensus unavailable

Segment results (Net Income, $MM)

SegmentQ4 2023Q4 2024
Consumer Banking$27.8 $32.4
Commercial Banking$28.8 $31.6
Treasury and Other$(26.2) $(24.9)
Consolidated$30.4 $39.2

Key KPIs

KPIQ4 2023Q3 2024Q4 2024
Loans ($MM, EOP)$13,965.0 $13,918.6 $14,076.0
Deposits ($MM, EOP)$21,055.0 $20,978.3 $20,633.0
Avg Deposits ($MM)$20,704.1 $20,484.4 $20,756.7
NIBD as % of Deposits28.8% 25.8% 26.3%
NPAs / Loans+OREO0.08% 0.14% 0.14%
Net Charge-offs (annualized)0.05% 0.11% 0.10%
ACL / Loans1.05% 1.06% 1.06%
CET1 Ratio11.33% 11.66% 11.59%
Tier 1 Ratio12.56% 14.05% 13.95%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Noninterest Income ($MM)Q1 2025—$44–$45 in Q1; improving through 2025New quantitative guide
Core ExpensesFY 2025—+1–2% y/y; +~1% incremental for revenue initiatives (total +2–3%)New guidance
Effective Tax RateFY 2025~24.25% for 2024 (implied) ~24%Maintained ~24%
NIM/NII Trajectory2025“Gently increase” (Q3 framing) Continue to increase on cash-flow repricing, deposit cost declines, swapsMaintained/improved conviction
Time Deposit Repricing202570% within 6 months; 88% within 12 months (Q3) 71% in 6 months; 95% in 12 monthsSlightly more favorable
Common DividendNext Payable$0.70 (Q3 declared) $0.70 payable Mar 14, 2025Maintained
Buybacks—PausedPaused pending clearer macro/credit/ratesMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
NIM/NII trajectoryQ2: NIM +4 bps to 2.15% on cash-flow repricing; Q3: NIM +3 bps to 2.18%; “gently increasing” outlook Third consecutive increase; December NIM 2.26%; path to further gains citedImproving
Deposit costs/mixQ2/Q3: remix headwind moderating; costs rising more slowly Total deposit cost down 10 bps q/q to 1.77%; further declines expected; active rate reductions underwayImproving
Credit qualityQ2/Q3: very strong; modest NPA lift; criticized ratio improved post 3Q Remains pristine: NPAs 0.14%, NCOs 10 bps; criticized ~2.1%Stable/strong
CRE and office exposureQ3: diversified; fixed maturities; limited tail risk Office renewals expected “no issue”; 39% of office maturing by 2027; CRE >80% LTV only ~2%Stable
Balance sheet hedgingQ3: swap notional adjusted; forward swaps at 3.03% Active swap repositioning; $2B active, ~$700M AFS/$1.3B loans; forward swaps remain (3.03%)Maintained
Loan growthQ3: commercial leading, consumer lagging; pipelines building Strong Q4 production (best since 2002); mid-single-digit loan growth aim for 2025Improving
Capital & buybacksQ3: capital improved; buybacks paused Tier 1 13.95%; buybacks remain paused pending visibilityStable
Hawaii macro/tourismQ3: unemployment 2.9%; Maui headwind; stable housing Conditions stable; Oahu real estate trends positiveStable

Management Commentary

  • Peter Ho, CEO: “Bank of Hawaii posted yet another solid quarter… Net interest income and net interest margin both improved, this for the third consecutive quarter… Credit quality remained pristine” .
  • Dean Shigemura, CFO: “NIM improved to 2.26% by December… deposit rates had fallen by 24 bps by the end of the quarter and further reductions are expected in the first quarter” .
  • Dean Shigemura, CFO: “Expenses were $107.9 million… The increase was primarily due to higher medical costs that are not expected to repeat… expenses projected to increase 2% to 3% [in 2025]” .
  • James Polk, President & CBO: “Q4… was the strongest production quarter we’ve had since 2002… a good mix of C&I and CRE to core clients” .
  • Peter Ho, CEO: On buybacks: “We’re likely to hold off on the buyback for the foreseeable future” pending clearer visibility on credit, economy, and rates .

Q&A Highlights

  • NIM path: December NIM of 2.26% is a “clean” starting point; management sees continued asset cash-flow repricing and deposit cost benefits; asked about reaching ~2.5% by end-2025, CEO said trend is “reasonably accurate” if things go right .
  • Deposit pricing: Active reductions already underway in early 2025; time deposits set to reprice (71% in 6 months; 95% in 12 months); current CD offering around ~3% (directional) .
  • CRE/office maturities: Management expects no issues with office renewals; cited stable credit overall; ~39% office maturities by 2027 .
  • Capital allocation: Buybacks remain paused; capital expected to build via retained earnings absent shocks .
  • Funding: No FHLB maturities in 2025; earliest in 2026 at ~4.13%; company may prepay/reposition if optimal .

Estimates Context

  • Attempted to retrieve S&P Global (SPGI) consensus for Q4 2024 EPS and revenue, but access was unavailable due to a daily request limit; therefore, we could not provide a numerical comparison vs consensus for Q4 2024 or FY 2024. As a result, beat/miss vs consensus is not assessed in this recap [SPGI access error].
  • Qualitatively, management highlighted sequential NIM/NII improvement and a cleaner December exit rate, alongside deposit cost declines and controlled expenses (ex one-time medical), factors that typically support upward estimate revisions for NII/NIM trajectories into 2025 .

Key Takeaways for Investors

  • Positive NIM momentum: Third straight quarterly NIM increase, December at 2.26%, with multiple tailwinds (cash-flow repricing, CD roll-down, swap positioning) pointing to further gains; supports upward bias to NII/NIM expectations near term .
  • Credit a differentiator: NPAs 0.14%, NCOs 10 bps, and limited CRE tail risk provide downside protection and capital flexibility; mitigates headline risk vs regional peers .
  • Deposit dynamics improving: Total deposit costs fell 10 bps q/q; management is actively reducing rates and expects additional relief as sizable CDs reprice in 2025 .
  • Commercial growth pipeline solid: Strongest production since 2002 in Q4, with diversified mix; mid-single-digit loan growth targeted for 2025 adds to NII upside if realized .
  • Expense discipline intact: 2025 core expense growth guided to +1–2% plus ~1% for revenue initiatives; Q4 medical cost spike was nonrecurring—improves operating leverage potential if NII accelerates .
  • Capital remains robust; dividends sustained: Tier 1 at 13.95% and CET1 at 11.59%; common dividend maintained at $0.70; buybacks on hold pending better macro/credit visibility—reduces capital deployment risk .
  • Trading setup: With improving NIM exit rate, benign credit, and deposit cost tailwinds, the narrative skews constructive into 1H25; absent consensus comparisons, watch for estimate revisions tied to NIM/NII commentary and realized CD roll-down benefits .
Note on estimates: SPGI consensus data for BOH Q4 2024 was unavailable at query time due to a daily access limit; no beat/miss assessment is provided.

Supporting Detail and Tables (additional)

Revenue and EPS bridge commentary:

  • Total revenue rose to $163.2M in Q4 (+$0.5M q/q; +$5.2M y/y), driven by higher NII; noninterest income included a $2.4M one-time Visa-related charge .
  • EPS of $0.85 compared with $0.93 in Q3 and $0.72 in Q4 2023; management cited ~$0.05 EPS headwind from the Visa item (implied ~$0.90 ex-item) .

Balance sheet and margin drivers:

  • Average EAs yield fell 9 bps q/q to 3.97% (still +12 bps y/y); average cost of interest-bearing deposits fell 15 bps q/q to 2.37%; total deposit cost down 10 bps to 1.77% .
  • Net interest income rose 2.2% q/q to $120.2M; NIM up to 2.19% (+1 bp q/q; +6 bps y/y) .

All citations:

  • Q4 press release and 8-K (financials, tables, and KPIs):
  • Q4 earnings call transcript (prepared remarks and Q&A):
  • Prior quarters for context: Q3 press release/transcript – –; Q2 press release –