Bank of Hawaii(US:BOH)2026-01-26 19:02Financial Data and Key Metrics Changes - Fully diluted earnings per share was $1.39, 63% higher year-over-year and 16% higher quarter-over-quarter [3] - Net interest margin improved for the seventh consecutive quarter, up 15 basis points to 2.61% [3] - Return on common equity improved to 15% [3] - Net income for the quarter was $60.9 million, an increase of $7.6 million compared to the linked quarter [11] Business Line Data and Key Metrics Changes - Loans and deposits both grew modestly in the quarter, with non-interest-bearing demand deposits growing 6.6% on a linked basis [3] - Consumer loans represent 57% of total loans, approximately $8 billion, with 86% consisting of residential mortgage and home equity loans [7] - Commercial lending portfolio totals $6.1 billion, representing 43% of total loans, with 73% secured by real estate [7] Market Data and Key Metrics Changes - Bank of Hawaii's market share growth continued in 2025, advancing another 40 basis points [4] - The bank is the clear deposit market share leader in Hawaii [4] - Approximately 93% of loans are based in Hawaii, with 4% in the Western Pacific and 3% on the mainland [6] Company Strategy and Development Direction - The company aims to achieve a net interest margin of near 290 by the end of 2026, driven by fixed asset repricing and improving deposit remix [5] - The bank's unique business model leverages its core Hawaii market and dominant brand position to create superior risk-adjusted returns [4] - The company is focused on enhancing its digital service, marketing, and commerce capabilities to maintain its competitive advantage [4] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth of non-interest-bearing deposits, although they expect growth to moderate from the 6% increase seen in Q4 [24] - The outlook for loan growth in 2026 is projected to be mid-single digits, with expectations for improved pipelines in both consumer and commercial lending [29][54] - Management noted that credit quality remains pristine, with a positive economic outlook for Hawaii supporting a reduction in the allowance for credit losses [39] Other Important Information - Noninterest income was $44.3 million during the quarter, impacted by a gain on the sale of the merchant services portfolio and a loss from investment portfolio repositioning [15] - The company resumed its stock repurchase program, purchasing approximately $5 million of common shares at an average price of $65 per share [19] - Capital ratios remained above regulatory thresholds, with Tier 1 capital at 14.5% and total risk-based capital at 15.5% [19] Q&A Session Summary Question: Can you provide insight on non-interest-bearing deposit growth? - Management indicated that the 6% growth in non-interest-bearing deposits may not continue at the same rate, attributing some growth to seasonality and balanced contributions from business segments [24] Question: What is the outlook for loan growth? - Management expressed a positive outlook for loan pipelines, expecting mid-single-digit growth in 2026, with contributions from both consumer and commercial sectors [29][54] Question: What is the status of special mention and classified balances? - Special mention at the end of Q4 was $63.4 million, down from the previous year, with total classified at $298.5 million [38] Question: Can you elaborate on margin expectations? - Management confirmed that the margin target of near 290 is based on year-end projections, not just Q4 averages, and highlighted the importance of fixed asset repricing [33] Question: What is the strategy for capital return and buybacks? - Management plans to increase stock repurchases to the $15 million-$20 million range per quarter, contingent on growth remaining stable [67]