Bank of Hawai'i Corporation first quarter 2025 financial report April 21, 2025 disclosure forward-looking statements this presentation, and other statements made by the Company in connection with it, may contain forward-looking statements concerning, among other things, forecasts of our financial results and condition, expectations for our operations and business prospects, and our assumptions used in those forecasts and expectations. we have not committed to update forward-looking statements to reflect lat ...

Financial Data and Key Metrics Changes - Bank of Hawaii reported net interest income of $120.2 million, an increase of $2.6 million or 2.2% from the previous quarter [24] - Net interest margin (NIM) expanded to 2.19%, with a further improvement to 2.26% by December [24][25] - Non-interest income totaled $43 million, adjusted to $45.4 million after excluding a one-time charge related to Visa Class B shares [34] - Net income for the fourth quarter was $39.2 million, with earnings per common share at $0.85 [38] Business Line Data and Key Metrics Changes - Average deposits grew by 1.3% to $20.8 billion, while average loans increased by 1.1% to $14 billion [8] - The loan portfolio is balanced with consumer loans representing 56% and commercial loans 44% [14] - The consumer portfolio is predominantly secured against real estate, with 85% being residential mortgage or home equity [15] Market Data and Key Metrics Changes - Bank of Hawaii holds the number one position in market share in Hawaii, with stable economic conditions and unemployment below the national average [10][11] - The visitor market remains stable, although impacted by the Maui market [12] Company Strategy and Development Direction - The company focuses on maintaining strong credit performance through long-standing relationships, with 60% of clients having been with the bank for over 10 years [13] - There is an emphasis on enhancing revenue through strategic investments in commercial and wealth management areas [68][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in loan growth, particularly in the commercial sector, while consumer loan growth is expected to remain stable [50][92] - The company anticipates continued improvement in net interest income driven by asset repricing and deposit growth [94] Other Important Information - The company maintained a tier one capital ratio of 13.95% and a total capital ratio of 15% [40] - The board declared a dividend of 70 cents per common share for the first quarter of 2025 [41] Q&A Session Summary Question: Is the December margin of 2.26 a good starting point for the first quarter? - Management confirmed that the December margin is a clean number and a good starting point for the first quarter [47] Question: What is the outlook for loan growth and the impact of M&A activity? - Management indicated reasonable loan growth expectations, particularly in commercial loans, with no significant changes in competition anticipated [50][51] Question: What is the current allocation of the $2 billion in swaps between the securities and loan portfolios? - The allocation is approximately $600 million against the securities portfolio and $1.3 billion against the loan portfolio [76] Question: What initiatives are included in the revenue-enhancing strategies? - The initiatives are directed at commercial and wealth areas, aimed at enhancing the earning stream [68] Question: What is the current offering rate for CDs and expected repricing? - The current offering rate is around 3%, with expectations for repricing as rates adjust [83][84]

Financial Performance - Diluted earnings per common share for Q1 2025 were $0.97, up 14.1% from the linked quarter and up 11.5% from the same period last year[3] - Net income for Q1 2025 was $44.0 million, representing a 12.3% increase from the linked quarter and a 20.9% increase year-over-year[3] - Basic earnings per common share increased to $0.98 in Q1 2025, up from $0.86 in Q4 2024 and $0.87 in Q1 2024[32] - Net income for Q1 2025 reached $43,985,000, representing a 12.5% increase from $39,162,000 in Q4 2024 and a 20.9% increase from $36,391,000 in Q1 2024[32] - Net income for the three months ended March 31, 2025, was $43.985 million, compared to $36.391 million for the same period in 2024, representing an increase of 20.5%[46] Income and Expenses - Net interest income for Q1 2025 was $125.8 million, an increase of 4.7% from the linked quarter and 10.4% from the same period last year[4] - Noninterest income was $44.1 million in Q1 2025, a 2.3% increase from the linked quarter and a 4.2% increase year-over-year[8] - Total noninterest income for Q1 2025 was $44,058,000, a slight increase from $43,047,000 in Q4 2024 and $42,285,000 in Q1 2024[32] - Total noninterest expense rose to $110,459,000 in Q1 2025, compared to $107,931,000 in Q4 2024 and $105,859,000 in Q1 2024[32] - The efficiency ratio improved to 65.03% in Q1 2025 from 66.12% in Q4 2024 and 67.76% in Q1 2024[30] Assets and Liabilities - Total assets reached $23.9 billion at March 31, 2025, up 1.2% from December 31, 2024, and up 2.0% from March 31, 2024[16] - Total assets as of March 31, 2025, were $23,885,056,000, an increase from $23,601,114,000 in Q4 2024 and $23,420,860,000 in Q1 2024[30] - Total liabilities stood at $22,180,121 thousand, an increase from $21,933,340 thousand, representing a growth of 1.1%[34] - Shareholders' equity increased to $1,704,935 thousand, up from $1,667,774 thousand, marking a growth of 2.2%[35] Loans and Deposits - Total loans and leases were $14.1 billion at March 31, 2025, an increase of 0.3% from the linked quarter and 1.9% year-over-year[18] - Total deposits amounted to $21.0 billion at March 31, 2025, reflecting a 1.8% increase from December 31, 2024, and a 1.6% increase from March 31, 2024[19] - Total loans and leases increased to $14,115,323 thousand as of March 31, 2025, up from $14,075,980 thousand at December 31, 2024, representing a growth of 0.28%[41] - Total deposits rose to $21,008,217 thousand as of March 31, 2025, compared to $20,633,037 thousand at December 31, 2024, marking an increase of 1.82%[42] Capital Ratios - The Tier 1 Capital Ratio was 13.93% at March 31, 2025, slightly down from 13.95% at December 31, 2024, but up from 12.74% a year ago[21] - The common equity tier 1 capital ratio was 11.58% as of March 31, 2025, slightly down from 11.59% in Q4 2024 but up from 11.50% in Q1 2024[31] Credit Quality - Non-performing assets decreased to $17,451,000 in Q1 2025 from $19,300,000 in Q4 2024, but increased from $11,838,000 in Q1 2024[30] - The ratio of non-performing assets to total assets was 0.07% as of March 31, 2025, unchanged from the previous quarter[44] - The allowance for credit losses decreased to $147,707 thousand from $148,528 thousand, reflecting a reduction of 0.5%[34] - Total provision for credit losses for the first quarter of 2025 was $3.250 million, a decrease from $3.750 million in the previous quarter[45] Market Conditions - The unemployment rate in Hawaii was 2.9% as of March 31, 2025, down from 3.0% in December 2024, indicating a positive trend in the labor market[48]

Core Insights - Bank of Hawaii (BOH) reported revenue of $169.87 million for the quarter ended March 2025, reflecting an 8.7% increase year-over-year, with EPS at $0.97 compared to $0.87 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $167.66 million by 1.32%, and the EPS also surpassed the consensus estimate of $0.89 by 8.99% [1] Financial Performance Metrics - Total Non-Performing Assets were reported at $17.45 million, slightly below the average estimate of $17.86 million [4] - Total Non-Accrual Loans and Leases stood at $16.09 million, above the average estimate of $15.20 million [4] - Net Interest Margin was reported at 2.3%, matching the average estimate [4] - Average Balance of Total Interest Earning Assets was $22.02 billion, below the average estimate of $22.31 billion [4] - Net Charge-offs to Average Loans were at 0.1%, consistent with the average estimate [4] - Efficiency Ratio was reported at 65%, better than the average estimate of 67% [4] - Net Interest Income (FTE) was $127.30 million, exceeding the average estimate of $124.33 million [4] - Annuity and Insurance revenue was $1.56 million, above the average estimate of $1.48 million [4] - Bank-Owned Life Insurance revenue was $3.61 million, slightly below the average estimate of $3.68 million [4] - Trust and Asset Management revenue was $11.74 million, below the average estimate of $12.09 million [4] - Mortgage Banking revenue was $0.99 million, below the average estimate of $1.11 million [4] - Net Interest Income was reported at $125.81 million, exceeding the average estimate of $123.01 million [4] Stock Performance - Shares of Bank of Hawaii have returned -5% over the past month, compared to a -5.6% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - Bank of Hawaii (BOH) reported quarterly earnings of $0.97 per share, exceeding the Zacks Consensus Estimate of $0.89 per share, and up from $0.87 per share a year ago, representing an earnings surprise of 8.99% [1] - The company posted revenues of $169.87 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.32%, compared to year-ago revenues of $156.22 million [2] Group 2: Stock Performance and Outlook - Bank of Hawaii shares have declined approximately 8.8% since the beginning of the year, while the S&P 500 has decreased by 10.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.96 on revenues of $170.3 million, and for the current fiscal year, it is $3.91 on revenues of $687.39 million [7] Group 3: Industry Context - The Zacks Industry Rank for Banks - West is currently in the top 36% of over 250 Zacks industries, indicating that the industry is performing relatively well [8]

Core Viewpoint - Bank of Hawaii (BOH) is anticipated to report a year-over-year increase in earnings driven by higher revenues for the quarter ended March 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The earnings report is scheduled for release on April 21, 2025, and could lead to a stock price increase if the reported figures exceed expectations, while missing estimates may result in a decline [2]. - The consensus estimate for BOH's quarterly earnings is $0.89 per share, reflecting a year-over-year change of +2.3%, with expected revenues of $167.66 million, up 7.3% from the previous year [3]. 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]. - The Most Accurate Estimate for BOH is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.83%, suggesting a bearish outlook from analysts [10]. Earnings Surprise Prediction - The Zacks Earnings ESP model compares the Most Accurate Estimate to the Zacks Consensus Estimate, with a positive Earnings ESP indicating a higher likelihood of an earnings beat, particularly when combined with a strong Zacks Rank [6][8]. - BOH currently holds a Zacks Rank of 3, making it challenging to predict a consensus EPS beat [11]. Historical Performance - In the last reported quarter, BOH was expected to post earnings of $0.87 per share but delivered $0.85, resulting in a surprise of -2.30% [12]. - Over the past four quarters, BOH has surpassed consensus EPS estimates two times [13]. Conclusion - While BOH does not appear to be a strong candidate for an earnings beat, investors should consider other factors when deciding on their investment strategy ahead of the earnings release [16].

Group 1 - The individual has nearly two decades of experience in the logistics sector and almost a decade in stock investing and macroeconomic analysis, focusing on ASEAN and NYSE/NASDAQ stocks, particularly in banks, telecommunications, logistics, and hotels [1] - Since 2014, the individual has been trading on the Philippine stock market, initially investing in blue-chip companies and later diversifying across various industries and market capitalizations [1] - In 2020, the individual entered the US market after gaining experience through a relative's trading account, leading to the decision to open their own account and write for Seeking Alpha to share knowledge [1] Group 2 - The individual holds investments in US banks, hotels, shipping, and logistics companies, utilizing analyses from Seeking Alpha to compare with the Philippine market [1]

Group 1 - The macro environment for the Bank of Hawaii (BOH) has improved significantly since the last update, with interest rate cuts positively impacting the bank's performance [1] - The bank's previous balance sheet dynamics have been a concern, but recent changes indicate a more favorable outlook [1] Group 2 - The investment strategy focuses on a long-term, buy-and-hold approach, particularly favoring stocks that can deliver sustainable high-quality earnings [1] - The emphasis is on dividend and income stocks, with a specific interest in US and Canadian equities as well as UK names [1]

Group 1 - The stock of Bank of Hawaii (BOH) is experiencing significant attention due to high implied volatility in the options market, particularly the Apr 17, 2025 $55.00 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Bank of Hawaii's stock price, potentially due to an upcoming event [2] - Bank of Hawaii currently holds a Zacks Rank 1 (Strong Buy) in the Banks-West industry, which is in the top 11% of the Zacks Industry Rank, indicating strong analyst sentiment [3] Group 2 - Over the past 60 days, two analysts have raised their earnings estimates for Bank of Hawaii for the current quarter, resulting in a consensus estimate increase from 80 cents per share to 89 cents per share [3] - The high implied volatility may indicate a trading opportunity, as options traders often seek to sell premium on options with high implied volatility, hoping the stock does not move as much as expected by expiration [4]

Group 1: Urban Outfitters, Inc. (URBN) - Urban Outfitters has a Zacks Rank 1 and the Zacks Consensus Estimate for its current year earnings increased by 8.1% over the last 60 days [1] - The company's shares gained 9.9% over the last three months, while the S&P 500 declined by 5.3% [1] - Urban Outfitters possesses a Momentum Score of A [1] Group 2: Matson, Inc. (MATX) - Matson has a Zacks Rank 1 and the Zacks Consensus Estimate for its current year earnings increased by 14.4% over the last 60 days [2] - The company's shares gained 6.2% over the last six months, compared to the S&P 500's advance of 4.8% [2] - Matson possesses a Momentum Score of A [2] Group 3: Bank of Hawaii Corporation (BOH) - Bank of Hawaii has a Zacks Rank 1 and the Zacks Consensus Estimate for its current year earnings increased by 14.9% over the last 60 days [3] - The company's shares gained 8.5% over the last six months, while the S&P 500 advanced by 4.8% [3] - Bank of Hawaii possesses a Momentum Score of A [3]