BOH-PA — Bank of Hawaii Corporation

Bank of Hawaii Corporation (BOH-PA) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: $57.4 million, down $3.5 million from the previous quarter.
• Earnings Per Share (EPS): $1.30, a decrease of $0.09 compared to the linked quarter.
• Net Interest Income (NII): Increased by $5.6 million, benefiting from fixed asset repricing.
• Net Interest Margin (NIM): Expanded by 13 basis points to 2.9%, marking the eighth consecutive quarter of growth.
• Cost of Deposits: Declined to 1.26%, a 17 basis point reduction from the previous quarter.
• Noninterest Income: $41.3 million, down from $44.3 million in the linked quarter.
• Noninterest Expense: Increased to $116.1 million, influenced by seasonal payroll taxes and nonrecurring charges.
• Capital Ratios: Tier 1 capital at 14.4% and total risk-based capital at 15.4%, both above regulatory thresholds.

2. Strategic Updates and Business Highlights

• The new CEO emphasized continuity in the bank's commitment to community and operational discipline.
• Continued focus on wealth management expansion through Bankoh Advisors and new initiatives for family-owned businesses.
• The bank is actively managing its credit portfolio, with 93% of loans based in Hawaii, reflecting strong local relationships.
• The bank is monitoring the impact of recent storms on its operations and credit quality.

3. Forward Guidance and Outlook

• The bank aims to achieve a NIM of approximately 2.9% by year-end 2026, with potential for further expansion if conditions allow.
• Expected noninterest expense for Q2 is around $112 million, factoring in annual merit increases.
• Loan growth is projected to remain in the low single digits, contingent on economic stability and consumer confidence.
• The bank plans to repurchase an additional $15 million to $20 million of stock in Q2, with a remaining $106 million under the current repurchase plan.

4. Bad News, Challenges, or Points of Concern

• Declining EPS and Net Income: The decrease in EPS and net income raises concerns about profitability amidst rising expenses.
• Noninterest Income Decline: Lower loan and deposit fee income, along with reduced earnings in wealth management, indicate challenges in generating noninterest revenue.
• Economic Headwinds: Potential impacts from geopolitical tensions, rising energy costs, and inflation could affect consumer confidence and tourism, a key driver for Hawaii's economy.
• Credit Quality Monitoring: An increase in delinquencies to 40 basis points and flat criticized loans at 2.12% of total loans suggest ongoing vigilance is required in credit management.

5. Notable Q&A Insights

• Management indicated that while consumer loan growth has been moderate, they are implementing initiatives to stabilize home equity and indirect lending.
• Discussions around capital management revealed a focus on maintaining dividends while prioritizing share repurchases.
• The bank's response to regulatory changes regarding capital requirements is still evolving, with potential improvements anticipated.
• The outlook for tourism remains cautiously optimistic, but management is closely monitoring external factors that could impact spending and travel demand.

This summary encapsulates the key takeaways from the earnings call, highlighting both the strengths and challenges faced by Bank of Hawaii Corporation in the current economic landscape.