Bank of Hawaii Q1 Earnings Top Estimates, NII & Fee Income Rise Y/Y

Core Viewpoint - Bank of Hawaii Corporation (BOH) reported strong first-quarter 2025 results, with adjusted earnings per share (EPS) of 97 cents, exceeding the Zacks Consensus Estimate of 89 cents and up from 87 cents in the prior year [1] Financial Performance - The company's net income (GAAP basis) was $43.9 million, reflecting a year-over-year increase of 20.9% [2] - Quarterly revenues rose 8.8% year over year to$ 169.9 million, surpassing the Zacks Consensus Estimate by 1.3% [3] - Net interest income (NII) reached $125.8 million, up 10.4% year over year, with net interest margin (NIM) increasing by 21 basis points to 2.32% [3] - Non-interest income was$ 44.1 million, a 4.2% increase year over year, driven by growth in trust and asset management income, service charges, and insurance income [4] Expense and Efficiency - Non-interest expenses increased by 4.3% to $110.5 million, primarily due to higher salaries and benefits, partially offset by lower FDIC insurance and professional fees [5] - The efficiency ratio improved to 65.03%, down from 67.76% in the previous year, indicating enhanced profitability [5] Loans and Deposits - Total loans and leases as of March 31, 2025, were$ 14.1 billion, slightly above the prior quarter's end [6] - Total deposits increased by 1.8% sequentially to $21 billion [6] Credit Quality - Non-performing assets rose to$ 17.5 million, a 47.4% increase year over year [7] - Net loans and lease charge-offs were $4.4 million, up$ 2.3 million from the previous year [7] - Provision for credit losses increased by 62.5% year over year to $3.3 million [7] Capital Ratios - The Tier 1 capital ratio improved to 13.93%, up from 12.74% a year ago [9] - The total capital ratio rose to 14.97%, compared to 13.81% in the prior year [9] - The ratio of tangible common equity to risk-weighted assets increased to 9.28% from 8.70% [9] Profitability Ratios - Return on average assets was 0.75%, up from 0.63% in the prior year [10] - Return on average shareholders' equity improved to 10.65%, compared to 10.34% as of March 31, 2024 [10] Share Repurchase - In the reported quarter, Bank of Hawaii did not repurchase any shares, with a remaining buyback authority of$ 126 million as of March 31, 2025 [11] Overall Assessment - The rise in NII and fee income supports top-line growth, alongside a solid capital position and increased loan and deposit balances. However, weak credit quality and rising expenses present near-term concerns [12]