Bank of Hawaii Posts Strong Q1 2025 Earnings Amid Rising Expenses
Bank of Hawaii Corporation (BOH) reported first-quarter 2025 adjusted earnings per share (EPS) of 97 cents, exceeding the Zacks Consensus Estimate of 89 cents. This performance also improved from 87 cents in the same quarter last year.
The bank’s results were supported by an increase in net interest income (NII) and robust growth in fee income. Additionally, a rise in loans and deposits contributed positively. However, higher expenses and a decline in asset quality presented challenges.
The company’s net income on a GAAP basis reached $43.9 million, reflecting a year-over-year increase of 20.9%.
Quarterly Revenue and Expense Overview
BOH’s quarterly revenues climbed 8.8% year over year to $169.9 million, surpassing the Zacks Consensus Estimate by 1.3%.
Net interest income totaled $125.8 million, marking a 10.4% year-over-year increase. The net interest margin (NIM) rose by 21 basis points to 2.32%. Earlier estimates for NII and NIM were $123 million and 2.21%, respectively.
Non-interest income reached $44.1 million, up 4.2% from the previous year, driven by increases in trust and asset management income, service charges on deposit accounts, and bank-owned life insurance income. Our estimate for this metric had been $44.8 million.
However, non-interest expenses increased by 4.3% to $110.5 million, primarily due to higher salaries and benefits along with other expenditures, although these were partly offset by lower FDIC insurance and professional fees. The projected figure for these expenses was $114.1 million.
Notably, the efficiency ratio improved to 65.03%, down from 67.76% a year earlier, indicating enhanced profitability.
Growth in Loans and Deposits
As of March 31, 2025, total loans and leases slightly increased to $14.1 billion, exceeding our estimate of $13.7 billion.
Total deposits rose 1.8% from the prior quarter to reach $21 billion, although this fell short of our estimate of $22.1 billion.
Credit Quality Concerns Emerge
By the end of March 2025, non-performing assets surged to $17.5 million, a 47.4% increase year over year. Our estimate for this figure was $14.9 million.
Net charge-offs from loans and leases stood at $4.4 million, up $2.3 million compared to the previous year, exceeding our forecast of $3.5 million.
The provision for credit losses was $3.3 million, marking a substantial increase of 62.5% year over year. This was higher than our estimate of $2.4 million.
Additionally, the allowance for credit losses rose slightly to $147.7 million, compared to our estimate of $147.4 million.
Improvement in Capital Ratios
As of March 31, 2025, the Tier 1 capital ratio improved to 13.93%, up from 12.74% at the same date last year. The total capital ratio also rose to 14.97%, increasing from 13.81% year over year.
Furthermore, the ratio of tangible common equity to risk-weighted assets was recorded at 9.28%, an improvement from 8.70% a year earlier.
Profitability Ratios on the Rise
Return on average assets improved to 0.75% in the first quarter of 2025, up from 0.63% in the same quarter last year. Meanwhile, return on average shareholders’ equity rose to 10.65%, an increase from 10.34% a year prior.
Share Repurchase Status
In the most recent quarter, Bank of Hawaii did not repurchase any shares. As of March 31, 2025, the total remaining share repurchase authority stood at $126 million.
Outlook for Bank of Hawaii
Encouragingly, a rise in net interest income and fee income is likely to support further top-line growth. The bank’s robust capital position and increases in loan and deposit balances are also positive indicators. However, ongoing concerns regarding weak credit quality and rising expenses may pose challenges in the near term.
Bank of Hawaii Corporation Price, Consensus, and EPS Surprise
Bank of Hawaii Corporation price-consensus-eps-surprise-chart | Bank of Hawaii Corporation Quote
Presently, BOH has a Zacks Rank #3 (Hold). You can view the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Bank Performance Comparisons
Synovus Financial Corp. (SNV) reported first-quarter 2025 adjusted EPS of $1.30, exceeding the Zacks Consensus Estimate of $1.11 per share. This marks an increase from 79 cents per share a year ago. (Refer to the Earnings Calendar for more detailed market updates.)
SNV’s results were bolstered by significant growth in net interest income, along with reduced expenses and provisions for credit losses. Additionally, strengthening loan balances provided a positive impact. However, a fall in non-interest revenues was a notable drawback.
First Horizon Corporation (FHN) achieved first-quarter 2025 adjusted EPS of 42 cents, surpassing the Zacks Consensus Estimate of 40 cents. This is an improvement from the 35 cents per share recorded in the same quarter last year.
FHN’s results benefited from a slight increase in net interest income and reduced expenses. Additionally, lower provisions for credit losses were advantageous. However, a decline in fee income and a weakening capital position formed significant hurdles.
5 Stocks Set to Double
Each of these stocks was carefully selected by a Zacks expert as the top pick to potentially gain +100% or more in 2024. While not every recommendation succeeds, previous selections have witnessed remarkable rises of +143.0%, +175.9%, +498.3%, and +673.0%.
Many of the stocks mentioned are currently under the radar of Wall Street, presenting an excellent opportunity to invest early.
Today, Discover These 5 Potential Home Runs >>
Synovus Financial Corp. (SNV): Free Stock Analysis Report
First Horizon Corporation (FHN): Free Stock Analysis Report
Bank of Hawaii Corporation (BOH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
