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

1Key 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%.

2Strategic 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.

3Forward 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.

4Bad 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.

5Notable 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.