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]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported strong Q2 2025 results driven by consecutive growth in net interest income and margin with stable credit quality Q2 2025 Key Performance Indicators | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Diluted EPS | $1.06 | $0.97 | $0.81 | | Net Income | $47.6 million | $43.9 million | $34.1 million | | Net Interest Income | $129.7 million | $125.8 million | $114.8 million | | Net Interest Margin | 2.39% | 2.32% | 2.15% | | Return on Avg. Common Equity | 12.50% | 11.80% | 10.41% | - The Board of Directors declared a quarterly cash dividend of **$0.70 per common share**[5](index=5&type=chunk)[21](index=21&type=chunk) - Management attributed strong performance to the **fifth consecutive quarterly expansion** of net interest income and margin[3](index=3&type=chunk) [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) The company's Q2 2025 performance featured rising net interest income, stable noninterest income, and controlled expenses [Net Interest Income and Margin](index=3&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income and margin grew due to asset repricing and a slowing shift in deposit costs Net Interest Income and Margin Performance | Metric | Q2 2025 | Change vs Q1 2025 | Change vs Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $129.7 M | +3.1% | +12.9% | | Net Interest Margin | 2.39% | +7 bps | +24 bps | - The increase in NII was mainly due to higher earning asset yields from reinvesting cash flows at higher rates[3](index=3&type=chunk) - The year-over-year increase was attributed to lower deposit rates and a slowdown in the deposit mix shift[3](index=3&type=chunk)[4](index=4&type=chunk) Average Yields and Rates (Q2 2025) | Metric | Rate | | :--- | :--- | | Avg. Yield on Loans & Leases | 4.80% | | Avg. Yield on Total Earning Assets | 4.01% | | Avg. Rate on Interest-Bearing Deposits | 2.16% | [Noninterest Income](index=3&type=section&id=Noninterest%20Income) Noninterest income rose slightly, influenced by a one-time gain from a BOLI recovery - Noninterest income for Q2 2025 was **$44.8 million**, up 1.7% QoQ and 6.4% YoY[7](index=7&type=chunk) - The quarter's results included a **$0.8 million gain** from a BOLI recovery[7](index=7&type=chunk) - The adjusted sequential decrease was driven by lower customer derivative activity and mortgage banking income[7](index=7&type=chunk) [Noninterest Expense](index=3&type=section&id=Noninterest%20Expense) Noninterest expense remained well-controlled, showing minimal increases from prior periods Noninterest Expense Changes | Period | Amount | Change | | :--- | :--- | :--- | | Q2 2025 | $110.8 M | - | | vs. Q1 2025 | - | +0.3% | | vs. Q2 2024 | - | +1.4% | - The slight increase from the linked quarter was primarily due to higher FDIC insurance costs[8](index=8&type=chunk) [Effective Tax Rate](index=3&type=section&id=Effective%20Tax%20Rate) The effective tax rate decreased from prior periods, primarily due to an increase in tax-exempt income Effective Tax Rate Comparison | Period | Rate | | :--- | :--- | | Q2 2025 | 21.19% | | Q1 2025 | 21.67% | | Q2 2024 | 24.77% | - The lower tax rate compared to both prior periods was primarily driven by an increase in tax-exempt income[9](index=9&type=chunk) [Asset Quality](index=3&type=section&id=Asset%20Quality) The company's overall asset quality remained strong and stable with a healthy allowance for credit losses Key Asset Quality Metrics (Q2 2025) | Metric | Value | Change from Q1 2025 | | :--- | :--- | :--- | | Provision for Credit Losses | $3.3 million | Unchanged | | Total Non-Performing Assets | $17.9 million | +$0.4 million | | NPA as % of Loans | 0.13% | +1 bp | | Net Loan & Lease Charge-offs | $2.6 million | -$1.8 million | | Allowance for Credit Losses | $148.5 million | +$0.8 million | | Allowance to Total Loans | 1.06% | +1 bp | [Balance Sheet Analysis](index=4&type=section&id=Balance%20Sheet) Total assets stood at $23.7 billion, with growth in the investment portfolio and a modest decline in loans and deposits [Assets, Loans, and Investments](index=4&type=section&id=Assets%2C%20Loans%2C%20and%20Investments) Total assets were $23.7 billion, with an increased investment portfolio offsetting a slight decline in total loans Key Balance Sheet Items (as of June 30, 2025) | Item | Balance | Change vs Q1 2025 | Change vs Q2 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $23.7 billion | -0.7% | +1.8% | | Investment Securities | $7.6 billion | +1.8% | +6.2% | | Total Loans and Leases | $14.0 billion | -0.8% | +1.2% | - The investment portfolio remains largely comprised of securities issued by U.S. government agencies[16](index=16&type=chunk) [Deposits](index=4&type=section&id=Deposits) Total deposits ended the quarter at $20.8 billion, with average balances remaining stable Deposit Balances | Metric | Value | Change vs Q1 2025 | Change vs Q2 2024 | | :--- | :--- | :--- | :--- | | Total Deposits (End of Period) | $20.8 billion | -1.0% | +1.9% | | Average Total Deposits (Quarter) | $20.7 billion | +0.1% | +1.7% | - Noninterest-bearing deposits made up **26.1% of total deposit balances**, flat from the linked quarter[18](index=18&type=chunk) [Capital and Shareholder Returns](index=4&type=section&id=Capital%20and%20Dividends) The company's capital position strengthened, and it continued its commitment to shareholder returns through dividends Key Capital Ratios (as of June 30, 2025) | Ratio | Value | Value at March 31, 2025 | | :--- | :--- | :--- | | Tier 1 Capital Ratio | 14.17% | 13.93% | | Tier 1 Leverage Ratio | 8.46% | 8.36% | - The Board of Directors declared a quarterly cash dividend of **$0.70 per share** on common stock[21](index=21&type=chunk) - No shares of common stock were repurchased in Q2 2025; the remaining buyback authority is **$126.0 million**[21](index=21&type=chunk) - Quarterly dividends were also declared for Series A and Series B Preferred Stock[22](index=22&type=chunk) [Business Segment Performance](index=22&type=section&id=Business%20Segments%20Selected%20Financial%20Information) The Commercial Banking segment was the largest contributor to net income, followed closely by Consumer Banking Net Income by Business Segment (Three Months Ended June 30) | Segment | Q2 2025 Net Income | Q2 2024 Net Income | | :--- | :--- | :--- | | Consumer Banking | $29.7 million | $31.3 million | | Commercial Banking | $30.7 million | $29.2 million | | Treasury and Other | ($12.8 million) | ($26.4 million) | | **Consolidated Total** | **$47.6 million** | **$34.1 million** | [Hawaii Economic Trends](index=26&type=section&id=Hawaii%20Economic%20Trends) Hawaii's economy showed mixed signals with positive tourism growth and a low unemployment rate but declining state revenues - Monthly visitor arrivals showed year-over-year growth in four of the first five months of 2025[54](index=54&type=chunk) - The statewide unemployment rate was **2.8%** as of June 30, 2025, down from 3.0% at year-end 2024[54](index=54&type=chunk) - On Oahu, the median single-family home price increased by **6.0%** year-over-year, while sales volume decreased by 2.1%[54](index=54&type=chunk) [Additional Information](index=5&type=section&id=Additional%20Information) The company will host a conference call to review results and advises investors to monitor its website for disclosures - A conference call to review financial results is scheduled for July 28, 2025, at 8:00 a.m. Hawai'i Time[23](index=23&type=chunk) - The company uses its investor relations website (ir.boh.com) and other channels for financial disclosures[24](index=24&type=chunk) - The release contains forward-looking statements, and actual results could differ materially from expectations[25](index=25&type=chunk) [Financial Tables](index=6&type=section&id=Financial%20Tables) This section contains detailed unaudited financial statements and supplementary data supporting the Q2 2025 results [Table 1: Financial Highlights](index=6&type=section&id=Table%201%20Financial%20Highlights) [Table 2: Reconciliation of Non-GAAP Financial Measures](index=8&type=section&id=Table%202%20Reconciliation%20of%20Non-GAAP%20Financial%20Measures) [Table 3: Consolidated Statements of Income](index=9&type=section&id=Table%203%20Consolidated%20Statements%20of%20Income) [Table 4: Consolidated Statements of Comprehensive Income](index=10&type=section&id=Table%204%20Consolidated%20Statements%20of%20Comprehensive%20Income) [Table 5: Consolidated Statements of Condition](index=11&type=section&id=Table%205%20Consolidated%20Statements%20of%20Condition) [Table 6: Consolidated Statements of Shareholders' Equity](index=12&type=section&id=Table%206%20Consolidated%20Statements%20of%20Shareholders'%20Equity) [Tables 7a-8c: Average Balances, Interest Rates, and Analysis of Change in Net Interest Income](index=13&type=section&id=Tables%207a-8c%20Net%20Interest%20Income%20Analysis) [Tables 9-12: Salaries, Loan/Deposit Portfolios, Non-Performing Assets, and Credit Reserves](index=18&type=section&id=Table%209-12%20Portfolio%20and%20Credit%20Quality%20Details) [Tables 13-14: Business Segments and Selected Quarterly Financial Data](index=22&type=section&id=Table%2013-14%20Segment%20and%20Quarterly%20Data)

Core Viewpoint - The market anticipates Bank of Hawaii (BOH) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected to be released on July 28, with a consensus estimate of $1.04 per share, reflecting a year-over-year increase of +20.9%. Revenues are projected to be $169.08 million, up 7.7% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial projections during this period [4]. Earnings Surprise Prediction - The Zacks Earnings ESP for Bank of Hawaii is +0.96%, suggesting analysts have recently become more optimistic about the company's earnings prospects. However, the stock holds a Zacks Rank of 4, complicating predictions of an earnings beat [12]. Historical Performance - In the last reported quarter, Bank of Hawaii exceeded the expected earnings of $0.89 per share, achieving $0.97, resulting in a surprise of +8.99%. Over the past four quarters, the company has beaten consensus EPS estimates three times [13][14]. Industry Comparison - Columbia Banking, another player in the Zacks Banks - West industry, is expected to report earnings of $0.66 per share for the same quarter, indicating a year-over-year decline of -1.5%. Its revenues are expected to be $492.4 million, up 4.3% from the previous year [18][19].

Group 1 - Bank of Hawaii Corporation 4.375% DEP PFD A (NYSE: BOH.PR.A) is highlighted as part of a series of discounted REIT preferred shares [1] - The article is produced by Pearl Gray, an independent market research firm that specializes in systematic analysis, focusing on Bonds, Preferreds, and REITs [1] - The primary sectors of interest for the firm are Financials and Real Estate, aiming to discover actionable total return ideas [1] Group 2 - The article does not provide any specific investment recommendations or financial advice [2][3] - There is a disclosure stating that the author has no positions in any of the mentioned companies and no plans to initiate any positions in the near future [2]

Core Viewpoint - Bank of Hawaii (BOH) shares have increased by approximately 4% over the past month, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Group 1: Earnings and Estimates - Estimates for Bank of Hawaii have trended upward over the past month, with a consensus estimate shift of 8.64% [2] - The stock has a Zacks Rank of 1 (Strong Buy), indicating expectations for above-average returns in the coming months [4] Group 2: VGM Scores - Bank of Hawaii has a subpar Growth Score of D, a Momentum Score of B, and a Value Score of D, placing it in the bottom 40% for the value investment strategy [3] - The overall aggregate VGM Score for Bank of Hawaii is F, which is significant for investors not focused on a single strategy [3] Group 3: Industry Performance - Bank of Hawaii is part of the Zacks Banks - West industry, where another player, Westamerica (WABC), has seen a 6.4% gain over the past month [5] - Westamerica reported revenues of $66.42 million for the last quarter, reflecting a year-over-year decline of 12.4%, with EPS of $1.16 compared to $1.37 a year ago [5] - For the current quarter, Westamerica is expected to post earnings of $1.11 per share, indicating a year-over-year change of -16.5%, with a Zacks Rank of 1 (Strong Buy) [6]

Core Viewpoint - Bank of Hawaii Corporation (BOH) is positioned to benefit from increasing loan and deposit balances, enhancing its balance sheet and net interest income (NII) growth, with analysts showing optimism in the stock's earnings potential for 2025 and 2026 [1][6]. Loan and Deposit Growth - BOH has experienced a compound annual growth rate (CAGR) of 6% in net loans and leases from 2018 to 2024, while its deposit base has seen a CAGR of 5.4% during the same period, continuing this upward trend into the first quarter of 2025 [2][3]. NII and NIM Performance - The company's NII increased by 10.4% in the first quarter of 2025, with a net interest margin (NIM) rise of 21 basis points to 2.32%. The NII has a seven-year CAGR of 1.4% ending in 2024, and is projected to grow by 9% in 2025 [4]. Earnings Strength - Despite a 6.3% decline in earnings over the past three to five years, BOH is expected to achieve a projected earnings per share (EPS) growth rate of 22.4% over the next three to five years, significantly outpacing the industry growth rate of 7.3% [5][6]. Earnings Estimates - The Zacks Consensus Estimate for BOH's earnings per share for 2025 is $4.32, reflecting a year-over-year growth estimate of 22.44%. For 2026, the estimate is $5.11, with a growth rate of 18.28% [7]. Capital Position - As of March 31, 2025, BOH's Tier 1 capital ratio and total capital ratio were 13.93% and 14.97%, respectively, indicating a strong capital position that supports its capital distribution efficiency [7]. Dividend and Share Repurchase - The company currently pays a dividend of $0.70 per share, with a payout ratio of 78%. A share repurchase program is in place, with $126 million available under the authorization as of March 31, 2025 [8]. Balance Sheet Strength - BOH has a strong balance sheet with liquidity of $935.2 million and total debt of $608.3 million as of March 31, 2025, suggesting it can manage its borrowings effectively even in adverse economic conditions [9]. Price Performance - BOH's shares have increased by 23.9% over the past year, outperforming the industry growth of 20.9% [10].

Core Viewpoint - Bank of Hawaii (BOH) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure on the stock [4]. Recent Performance and Projections - Bank of Hawaii is projected to earn $4.31 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 22.1% [8]. - Over the past three months, the Zacks Consensus Estimate for Bank of Hawaii has risen by 12.3% [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Bank of Hawaii to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Group 1: Usinas Siderurgicas de Minas Gerais (USNZY) - The company is Latin America's largest flat steel complex and ranks among the world's top twenty steel producers [1] - The Zacks Consensus Estimate for its current year earnings has increased by 50% over the last 60 days [1] - The company has a dividend yield of 4.7%, significantly higher than the industry average of 1.7% [1] Group 2: Bank of Hawaii (BOH) - The bank holding company provides a wide range of products and services in Hawaii, Guam, and other Pacific Islands [2] - The Zacks Consensus Estimate for its current year earnings has increased nearly 10% over the last 60 days [2] - The company has a dividend yield of 4%, which is above the industry average of 3.1% [2] Group 3: Epsilon Energy (EPSN) - The company focuses on on-shore oil and natural gas, engaging in the acquisition, development, gathering, and production of reserves [3] - The Zacks Consensus Estimate for its current year earnings has increased nearly 9.1% over the last 60 days [3] - The company has a dividend yield of 3.7%, compared to the industry average of 2.4% [3]