Core Viewpoint - Bank of Hawaii (BOH) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings picture, which is a strong predictor of near-term stock price movements [2][4]. - Rising earnings estimates for Bank of Hawaii suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7]. - The upgrade of Bank of Hawaii to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9][10]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Bank of Hawaii is expected to earn $4.34 per share, with no year-over-year change, but the Zacks Consensus Estimate has increased by 4% over the past three months [8].

Group 1 - Bank of Hawaii (BOH) has experienced significant selling pressure, resulting in a 13.8% decline in stock price over the past four weeks, but analysts expect better earnings than previously predicted [1] - The Relative Strength Index (RSI) for BOH is currently at 27.52, indicating that the stock is in oversold territory and may be poised for a rebound [5] - There has been a consensus among sell-side analysts to raise earnings estimates for BOH, with a 0.1% increase in the consensus EPS estimate over the last 30 days, suggesting potential price appreciation [7] Group 2 - BOH holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8]

Core Viewpoint - Bank of Hawaii (NYSE: BOH) has experienced a period of underperformance, lagging behind the broader regional bank sector by approximately fifteen points in recent months [1] Company Performance - The shares of Bank of Hawaii have been soft over the past few months, indicating challenges in maintaining strong market performance [1] Investment Strategy - The investment approach favored is long-term and buy-and-hold, focusing on stocks that can deliver sustainable high-quality earnings, particularly in the dividend and income sectors [1]

Core Viewpoint - Bank of Hawaii Corporation (BOH) reported strong second-quarter 2025 adjusted earnings per share (EPS) of $1.06, exceeding expectations and showing significant year-over-year growth from 81 cents [1][9] Financial Performance - BOH's net income on a GAAP basis reached $47.6 million, reflecting a 39.8% increase year over year [2] - Quarterly revenues rose by 11.2% year over year to $174.5 million, surpassing the Zacks Consensus Estimate by 3.2% [3] - Net interest income (NII) was $129.6 million, up 12.9% year over year, with a net interest margin (NIM) increase of 24 basis points to 2.39% [3] - Non-interest income increased to $44.8 million, a 6.4% rise year over year, driven by higher fees and service charges [4] Expense Management - Non-interest expenses rose by 1.4% to $110.8 million, primarily due to increased salaries and benefits [5] - The efficiency ratio improved to 63.49%, down from 69.60% in the previous year, indicating enhanced profitability [5] Asset Quality and Credit Metrics - Total loans and leases decreased nearly 1% to $14 billion, while total deposits also fell nearly 1% to $20.8 billion [6] - Non-performing assets increased by 17.8% year over year to $17.9 million, while net loans and lease charge-offs decreased to $2.6 million [7] - Provision for credit losses rose by 35.4% year over year to $3.3 million [7] Capital Position - As of June 30, 2025, the Tier 1 capital ratio improved to 14.17%, and the total capital ratio rose to 15.23% [10] - The ratio of tangible common equity to risk-weighted assets increased to 9.62% [10] Profitability Ratios - Return on average assets was 0.81%, up from 0.59% in the prior-year quarter, while return on average shareholders' equity improved to 11.21% from 9.53% [11] Share Repurchase Program - In the reported quarter, BOH did not repurchase any shares, with a remaining buyback authority of $126 million as of June 30, 2025 [12] Overall Assessment - The rise in NII and fee income supports top-line growth, while a solid capital position is a positive factor [13] - However, lower loan and deposit balances, rising expenses, and deteriorating asset quality present near-term concerns [13]

Part I - Financial Information [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for Bank of Hawaii Corporation for the periods ended June 30, 2025, and 2024, including detailed notes on accounting policies and financial data [Consolidated Statements of Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Condition) Total assets increased to **$23.71 billion** as of June 30, 2025, driven by available-for-sale investment securities, while total deposits grew to **$20.80 billion** and shareholders' equity rose to **$1.74 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$23,709,752** | **$23,601,114** | | Net Loans and Leases | $13,853,635 | $13,927,452 | | Total Investment Securities (AFS & HTM) | $7,552,857 | $7,308,071 | | **Total Liabilities** | **$21,966,645** | **$21,933,340** | | Total Deposits | $20,798,914 | $20,633,037 | | **Total Shareholders' Equity** | **$1,743,107** | **$1,667,774** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q2 2025 increased 40% to **$47.6 million**, with diluted EPS rising to **$1.06**, primarily due to a 13% increase in net interest income from lower interest expense Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $129,683 | $114,846 | | Provision for Credit Losses | $3,250 | $2,400 | | Noninterest Income | $44,795 | $42,087 | | Noninterest Expense | $110,783 | $109,226 | | **Net Income** | **$47,637** | **$34,083** | | **Diluted EPS** | **$1.06** | **$0.81** | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Interest Income | $255,490 | $228,784 | | Provision for Credit Losses | $6,500 | $4,400 | | Noninterest Income | $88,853 | $84,372 | | Noninterest Expense | $221,242 | $215,085 | | **Net Income** | **$91,622** | **$70,474** | | **Diluted EPS** | **$2.03** | **$1.68** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$100.0 million** for the six months ended June 30, 2025, with a net increase in cash and cash equivalents of **$5.1 million** driven by financing activities offsetting investing outflows Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $100,000 | $101,064 | | Net Cash (Used in) Provided by Investing Activities | $(142,716) | $421,566 | | Net Cash Provided by (Used in) Financing Activities | $47,828 | $(598,236) | | **Net Change in Cash and Cash Equivalents** | **$5,112** | **$(75,606)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 financial results, highlighting a **40% year-over-year increase** in net income to **$47.6 million**, stable balance sheet, sound credit quality, and well-capitalized ratios, while noting caution on Hawai'i's economic outlook [Earnings Summary](index=48&type=section&id=Earnings%20Summary) The company reported strong Q2 2025 results with net income of **$47.6 million**, up **40% YoY**, and diluted EPS of **$1.06**, driven by a **13% increase** in net interest income and a **24 basis point expansion** in net interest margin to **2.39%** - Net income for Q2 2025 was **$47.6 million**, a **40% increase YoY**, with diluted EPS of **$1.06**[136](index=136&type=chunk) - Net interest margin for Q2 2025 was **2.39%**, an increase of **24 basis points** from Q2 2024[138](index=138&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.70 per common share**[139](index=139&type=chunk) [Analysis of Financial Condition](index=58&type=section&id=Analysis%20of%20Financial%20Condition) As of June 30, 2025, total assets stood at **$23.7 billion**, with the investment securities portfolio growing to **$7.6 billion**, while total loans and leases decreased slightly by **0.5%** to **$14.0 billion**, and total deposits increased by **0.8%** to **$20.8 billion** Loan and Lease Portfolio Balances (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Commercial | $6,104,126 | $6,125,409 | (0.3)% | | Total Consumer | $7,898,052 | $7,950,571 | (0.7)% | | **Total Loans and Leases** | **$14,002,178** | **$14,075,980** | **(0.5)%** | Deposit Balances (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Consumer | $10,429,271 | $10,397,777 | 0.3% | | Commercial | $8,243,898 | $8,299,590 | (0.7)% | | Public and Other | $2,125,745 | $1,935,670 | 9.8% | | **Total Deposits** | **$20,798,914** | **$20,633,037** | **0.8%** | - Adjusted uninsured deposits stood at **$7.69 billion** as of June 30, 2025, down slightly from **$7.73 billion** at year-end 2024[182](index=182&type=chunk) [Corporate Risk Profile](index=64&type=section&id=Corporate%20Risk%20Profile) The company maintains a robust risk management framework with strong credit quality, non-performing assets at **$17.9 million**, a stable Allowance for Credit Losses at **$148.5 million**, strong liquidity with a **132%** ratio of readily available liquidity to adjusted uninsured deposits, and capital levels well above regulatory requirements Non-Performing Assets (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-Accrual Loans and Leases | $17,539 | $16,643 | | Foreclosed Real Estate | $342 | $2,657 | | **Total Non-Performing Assets** | **$17,881** | **$19,300** | | Ratio of NPAs to Total Loans and F.R.E. | 0.13% | 0.14% | Regulatory Capital Ratios | Ratio | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Common Equity Tier 1 Capital Ratio | 11.81% | 11.59% | | Tier 1 Capital Ratio | 14.17% | 13.95% | | Total Capital Ratio | 15.23% | 15.00% | | Tier 1 Leverage Ratio | 8.46% | 8.31% | - The ratio of readily available liquidity to adjusted uninsured deposits was **132%** at June 30, 2025, an improvement from **116%** at December 31, 2024[226](index=226&type=chunk) - The company's Net Interest Income (NII) sensitivity profile as of June 30, 2025, indicates that a **+200 basis point** parallel rate shock would increase NII by **3.6% ($20.7 million)**, while a **-200 basis point** shock would decrease NII by **3.3% ($18.9 million)**[219](index=219&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section directs the reader to the 'Market Risk' section within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, for detailed information on the company's market risk exposures and management strategies - The report refers to the 'Market Risk' section of the MD&A for quantitative and qualitative disclosures about market risk[245](index=245&type=chunk) [Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes identified in internal control over financial reporting during Q2 2025 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[246](index=246&type=chunk) - There were no changes during the quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[247](index=247&type=chunk) Part II - Other Information [Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no pending legal proceedings against it that are likely to have a material adverse effect on its financial position or results of operations - There are no pending legal proceedings expected to have a material adverse effect on the Company's financial position or results[248](index=248&type=chunk) [Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, and its Q1 2025 Form 10-Q - No material changes are reported from the risk factors previously disclosed in the 2024 Form 10-K and Q1 2025 Form 10-Q[249](index=249&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of its stock during the quarter, repurchasing **4,264 shares** at an average price of **$67.10 per share** for tax withholdings, with **$126.0 million** remaining under the share repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1 - 30, 2025 | 159 | $65.92 | | May 1 - 31, 2025 | 4,105 | $67.15 | | June 1 - 30, 2025 | — | — | | **Total** | **4,264** | **$67.10** | - The repurchased shares were acquired from employees in connection with income tax withholdings related to the vesting of restricted stock[250](index=250&type=chunk) - The remaining buyback authority under the share repurchase program was approximately **$126.0 million** as of the end of the quarter[250](index=250&type=chunk)

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Financial Data and Key Metrics Changes - Earnings per share increased to $1.60, up $0.09 from the previous quarter, marking the fourth consecutive quarter of growth [16] - Net income for the quarter was $47.6 million, an increase of $3.7 million compared to the linked quarter [16] - Net interest income (NII) and net interest margin (NIM) expanded for the fifth consecutive quarter, with NII increasing by $3.9 million and NIM by seven basis points [17] Business Line Data and Key Metrics Changes - The loan portfolio is balanced between consumer (56% or $7.9 billion) and commercial loans (44% or $6.1 billion) [10] - Consumer loans are predominantly secured against real estate, with a weighted average loan-to-value (LTV) of 48% and a combined average FICO score of 800 [10] - Commercial real estate loans represent $4 billion, or 29% of total loans, with a weighted average LTV of 55% [11] Market Data and Key Metrics Changes - Employment in Hawaii continues to outperform the broader U.S. economy, with visitor expenditures up 6.5% year-to-date and arrivals up 2.8% through May [8] - Residential real estate prices in Hawaii remain stable, with single-family home prices rising modestly while condo prices decreased by 0.5% year-to-date [9] Company Strategy and Development Direction - The company maintains a unique business model focused on the Hawaii market, where it holds a strong market position with over 90% of FDIC reported deposits [6] - The strategy includes a focus on deposit remixing from lower-yield deposits to higher-yield deposits while maintaining overall deposit levels [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continuing to expand NIM, projecting a potential NIM of 2.50 by year-end [29] - The company is closely monitoring the economic environment and is cautious about commercial loan performance, which was flat on a linked basis [40][41] Other Important Information - The allowance for credit losses on loans and leases ended the quarter at $148.5 million, up $800,000 from the linked quarter [15] - Non-interest income increased to $44.8 million, including a one-time gain of approximately $800,000 related to a BOLI recovery [21] Q&A Session Summary Question: Margin path and cost of funds - Management believes a NIM of 2.50 is achievable and expects continued improvement in the cost of deposits [29][30] Question: Balance sheet growth and securities - The company anticipates continued growth in the securities portfolio, with cash flows from fixed assets being reinvested [31][34] Question: Commercial and industrial loan trends - Management noted a disappointing quarter for commercial loans, with hopes for improvement as market clarity increases [40][41] Question: Deposit composition and growth - Management is focused on building demand deposits, which are high-margin products, but acknowledges the competitive landscape [45][46] Question: Expense growth expectations - The company expects a 2% to 3% increase in expenses for the year, with a potential step back in the second half [52] Question: Capital priorities and buybacks - Management plans to maintain its position on buybacks until there is more clarity on the economy [54] Question: Cash flows from securities and loans - Expected cash flows from the securities book are projected to be around $550 million [58]

Financial Data and Key Metrics Changes - Earnings per share increased for the fourth consecutive quarter, reaching $1.60, up by $0.09 compared to the linked quarter [16] - Net interest income (NII) expanded by $3.9 million, marking the fifth consecutive quarter of growth, while net interest margin (NIM) increased by seven basis points [17][18] - Capital ratios improved, with Tier one capital at 14.2% and total risk-based capital at 15.2% [24] Business Line Data and Key Metrics Changes - The loan portfolio is balanced between consumer (56% or $7.9 billion) and commercial loans (44% or $6.1 billion), with a significant portion secured by real estate [11][12] - Consumer loans predominantly consist of residential mortgages and home equity, with a weighted average loan-to-value (LTV) of 48% [11] - Commercial real estate loans account for $4 billion, representing 29% of total loans, with low vacancy rates supporting a stable market [12] Market Data and Key Metrics Changes - Hawaii's employment continues to outperform the broader U.S. economy, with visitor expenditures up 6.5% year-to-date and arrivals up 2.8% through May [8] - Residential real estate prices in Hawaii are stable, with single-family home prices rising modestly and condo prices down 0.5% year-to-date [8] Company Strategy and Development Direction - The company maintains a unique business model focused on the local market, leveraging a strong brand position to effectively price deposits [6][7] - The strategy includes a focus on deposit remixing from lower yielding to higher yielding deposits while maintaining overall deposit levels [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a net interest margin of 2.50% by year-end, with expectations for continued growth in NII and NIM [32] - The company anticipates modest loan growth and plans to continue growing its securities portfolio [34] Other Important Information - Non-interest income increased to $44.8 million, with a one-time gain of approximately $800,000 related to a BOLI recovery [22] - Non-interest expense was $110.8 million, with a severance charge of $1.4 million included in this quarter [22] Q&A Session Summary Question: Margin path expectations - Management believes a net interest margin of 2.50% is achievable, with no obstacles anticipated [32] Question: Balance sheet growth and securities - The company expects to continue growing its securities portfolio, investing excess liquidity into it [34] Question: Trends in commercial and industrial loans - Commercial loan performance was disappointing, with a flat linked quarter, but management sees potential for improvement as market clarity increases [44] Question: Deposit dynamics and DDA growth - Management is focused on building demand deposits, which are high-margin products, but acknowledges the competitive landscape [48] Question: Expense growth expectations - The company expects a 2% to 3% increase in expenses for the year, with a potential step back in the second half [52] Question: Capital priorities and buybacks - The company plans to maintain its buyback position until there is more clarity on the economy [54] Question: Expected cash flows from securities and loans - Expected cash flows from the securities book are projected to be around $550 million [58]

Financial Performance - Bank of Hawai'i Corporation reported diluted earnings per common share of $1.06 [6] - Net income reached $47.6 million [6] - The net interest margin (NIM) expanded for the fifth consecutive quarter, reaching 2.39% from 2.32% [6] - Return on average common equity increased to 12.50% from 11.80% [6] Balance Sheet & Capital - The average cost of total deposits was 1.60% [6] - The Tier 1 capital ratio stood at 14.17%, and the total capital ratio was 15.23% [6] - The company experienced a $3.2 million positive impact to net interest income (NII) from cashflow repricing in 2Q25 [73] - Total quarterly impact to NII from deposit mix shift and repricing in 2Q25 was $(0.5) million [75] Credit Quality & Loan Portfolio - The net charge-off rate was low at 0.07% [6] - Non-performing assets represented 0.13% of the total [6] - 80% of the loan portfolio is real estate-secured, with a combined weighted average loan-to-value (WALTV) of 51% [6]

Core Viewpoint - Bank of Hawaii (BOH) reported quarterly earnings of $1.06 per share, exceeding the Zacks Consensus Estimate of $1.04 per share, and showing an increase from $0.86 per share a year ago, indicating a positive earnings surprise of +1.92% [1] Financial Performance - The company achieved revenues of $174.48 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.19%, compared to $156.93 million in the same quarter last year [2] - Over the last four quarters, Bank of Hawaii has exceeded consensus EPS estimates three times and has also topped consensus revenue estimates three times [2] Stock Performance and Outlook - Bank of Hawaii shares have declined approximately 7.8% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] Estimate Revisions and Rankings - Prior to the earnings release, the estimate revisions trend for Bank of Hawaii was unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $1.01 on revenues of $170.98 million, and for the current fiscal year, it is $4.31 on revenues of $685.22 million [7] Industry Context - The Banks - West industry, to which Bank of Hawaii belongs, is currently in the top 36% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]