Bank of Hawaii (BOH)

Regional banking institution Bank of Hawaii (NYSE:BOH) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 13.3% year on year to $189.6 million. Its GAAP profit of $1.39 per share was 5.5% above analysts’ consensus estimates.

Company Overview

Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE:BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Bank of Hawaii's competitors include other regional banks operating in the Pacific Islands such as First Hawaiian Bank (NASDAQ: FHB), Central Pacific Financial (NYSE: CPF), and American Savings Bank, as well as national banks with presence in the region like Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC).

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Regrettably, Bank of Hawaii’s revenue grew at a weak 1.4% compounded annual growth rate over the last five years. This was below our standards and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Bank of Hawaii’s annualized revenue growth of 4.2% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Bank of Hawaii reported year-on-year revenue growth of 13.3%, and its $189.6 million of revenue exceeded Wall Street’s estimates by 2.3%.

Net interest income made up 74.2% of the company’s total revenue during the last five years, meaning lending operations are Bank of Hawaii’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Bank of Hawaii’s efficiency ratio has increased by 7.5 percentage points, going from 58.4% to 60.9%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Bank of Hawaii’s efficiency ratio came in at 57.8% this quarter, beating analysts’ expectations by 125 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects Bank of Hawaii to rein in some of its expenses as it anticipates an efficiency ratio of 58%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Bank of Hawaii’s EPS grew at a weak 3.7% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 1.4% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Bank of Hawaii, its two-year annual EPS growth of 5.5% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, Bank of Hawaii reported EPS of $1.39, up from $0.85 in the same quarter last year. This print beat analysts’ estimates by 5.5%. Over the next 12 months, Wall Street expects Bank of Hawaii’s full-year EPS of $4.62 to grow 17.4%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Bank of Hawaii’s TBVPS grew at a sluggish 2.1% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 10.8% annually over the last two years from $30.25 to $37.12 per share.

Over the next 12 months, Consensus estimates call for Bank of Hawaii’s TBVPS to grow by 6.7% to $39.62, lousy growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Bank of Hawaii has averaged a Tier 1 capital ratio of 11.7%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Bank of Hawaii has averaged an ROE of 13.5%, healthy for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Bank of Hawaii.

It was encouraging to see Bank of Hawaii beat analysts’ net interest income expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $71.49 immediately after reporting.

Updated: January 26, 2026 at 7:01 AM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Bank of Hawaii, you should also grasp the company’s longer-term business quality and valuation.

We see the value of companies driving economic growth, but in the case of Bank of Hawaii, we’re out. To begin with, its revenue growth was weak over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal.. On top of that, its net interest income growth was weak over the last five years.

Bank of Hawaii’s P/B ratio based on the next 12 months is 1.7x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $74 on the company (compared to the current share price of $71.49).