BOH-PA — Bank of Hawaii Corporation

Bank of Hawaii Corporation (BOH-PA) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: $63.8 million, up 11% from the prior quarter.
• Diluted Earnings Per Share (EPS): $1.47, an increase of 13% quarter-over-quarter.
• Return on Average Common Equity: Improved to 15.5%.
• Net Interest Income (NII): Increased to $153.6 million, marking the ninth consecutive quarter of growth.
• Net Interest Margin (NIM): Expanded by four basis points to 2.78%.
• Total Loans: Grew by $94 million, or approximately 2.6% annualized.
• Average Cost of Deposits: Stable at 1.27%.
• Credit Quality: Strong, with net charge-offs at $3.4 million (10 basis points annualized) and non-performing assets at 0.08%.

2. Strategic Updates and Business Highlights

• Continued focus on wealth management, enhancing coordination across various banking sectors.
• The opening of the Center for Family Business & Entrepreneurs in April is aimed at expanding client services in succession planning and business valuation.
• Ongoing investment in technology and community support, alongside disciplined execution of strategic priorities.
• The bank maintains a strong deposit franchise, with non-interest-bearing deposits constituting approximately 27% of total deposits.

3. Forward Guidance and Outlook

• The bank anticipates a net interest margin approaching 2.9% by year-end 2026, factoring in a projected 25 basis point rate hike in September.
• Full-year loan growth is expected to remain in the lower mid-single-digit range.
• Non-interest income is forecasted to be approximately $43 million for Q3 2026.
• The bank plans to repurchase an additional $20 million of common shares in Q3, with $89 million remaining under the current buyback plan.

4. Bad News, Challenges, or Points of Concern

• Average deposits declined modestly in Q2, consistent with seasonal trends.
• Competitive pressures in the deposit market may limit opportunities for reducing deposit costs.
• The criticized asset ratio increased to 2.81%, driven by a single borrower relationship, although the loans remain secured by real estate.
• Potential risks from elevated interest rates affecting consumer lending growth, particularly in residential mortgages.

5. Notable Q&A Insights

• Management expressed confidence in the sustainability of wealth management growth, attributing recent fee increases to both market performance and production.
• The bank is experiencing increased competition for deposits, which may necessitate upward adjustments in promotional rates for CDs.
• There was a discussion on the strategic reduction of high-cost public deposits, with expectations of a 10%-15% runoff in the upcoming quarter.
• Overall, management remains optimistic about maintaining stable loan growth and NIM, despite challenges in the current economic environment.

This summary encapsulates the key points from the earnings call, providing a balanced view of Bank of Hawaii's performance, strategic direction, and outlook amid existing challenges.