Bank of Hawaii Corporation (BOH): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for a clear-eyed assessment of Bank of Hawaii Corporation's competitive position, so let's break down the five forces using their latest 2025 performance data. Honestly, the local battle is fierce: competitive rivalry among the four banks controlling over 90% of deposits is very high, even though Bank of Hawaii managed to advance its share by 40 basis points in the first half of 2025. But here's the good news for incumbents: the threat of new entrants is low, thanks to huge regulatory hurdles and BOH's solid 14.17% Tier 1 capital ratio against its $24.0 billion in assets. Keep reading to see how supplier costs and customer demands are creating pressure points you need to watch.

Bank of Hawaii Corporation (BOH) - Porter's Five Forces: Bargaining power of suppliers

When looking at Bank of Hawaii Corporation (BOH)'s suppliers, we primarily consider providers of capital (depositors), specialized labor, and core technology infrastructure. The power these groups wield directly impacts BOH's cost structure and operational flexibility.

Depositors, who supply the bank with its primary source of funding, hold a moderate level of bargaining power, which is heavily influenced by the interest rate environment and deposit structure. As of the second quarter of 2025, the average cost of total deposits for Bank of Hawaii Corporation (BOH) stood at 1.60%. This figure reflects the current competitive landscape for funding. You can see how this cost compares to the rates on maturing funds in the table below.

That concentration of near-term maturities is key. Honestly, the fact that 74% of total time deposits are scheduled to mature within the next six months creates significant repricing pressure for Bank of Hawaii Corporation (BOH). While management anticipates these repricing events will lead to lower funding costs, the immediate need to retain or replace this capital gives depositors leverage in negotiations over the next few reporting periods.

The power of specialized labor suppliers is a distinct factor, particularly within the unique economic geography of Hawaii. For Bank of Hawaii Corporation (BOH), this is most acute in areas requiring niche skills.

• Specialized labor, such as wealth management expertise, is a constrained resource in the Hawaii market.
• Recruiting and retaining top-tier talent in these areas requires premium compensation structures.
• This scarcity directly impacts the cost and scalability of high-value, non-branch-based services.

Next, consider the core technology providers. For a modern financial institution, the reliance on platforms for core processing and cloud services-like Azure cloud integration-introduces high structural switching costs. Once Bank of Hawaii Corporation (BOH) builds its systems and processes around a specific core technology provider, the expense, time, and operational risk associated with migrating to a competitor become substantial barriers. This effectively locks in the supplier relationship for the medium term, granting that supplier greater pricing power.

The bargaining power of these technology suppliers is therefore elevated due to the high cost of changing systems.

Bank of Hawaii Corporation (BOH) - Porter's Five Forces: Bargaining power of customers

You're looking at Bank of Hawaii Corporation's customer leverage, and it's a mixed bag, honestly. The power of the deposit customer base is definitely moderated by the bank's strong local franchise, but the shift in where that money sits creates pressure on profitability.

The pressure from the deposit mix shift-that movement from noninterest-bearing or low-yield accounts into higher-yielding ones-is a real factor impacting the Net Interest Margin (NIM). For instance, in the first quarter of 2025, the negative impact on Net Interest Income (NII) from this mix shift was $500,000. Still, management noted the headwind from this remix slowed significantly compared to prior periods. By the third quarter of 2025, Bank of Hawaii Corporation reported its NIM expanded to 2.46% from 2.39% in the second quarter, marking the sixth straight quarter of improvement. Management signaled confidence, projecting a sustained NIM expansion of about 25 basis points annually moving into 2026.

Here's a quick look at how the deposit cost structure is evolving against the margin performance:

For commercial customers, the competitive landscape for acquiring new business deposits puts leverage in their hands. We see rivals actively courting this segment with cash incentives. For example, Central Pacific Bank was offering a $1,200 cash bonus for new Business Exceptional accounts if the customer deposited $75,000 in new funds during September and October 2025. They also had a lower tier offer of $400 for $25,000 in new money. This kind of direct cash outlay forces Bank of Hawaii Corporation to be keenly aware of its pricing and service value proposition for mid-to-large companies.

On the retail side, customer power is structurally limited by the market's oligopolistic nature. The reality is that four locally headquartered banks control over 90% of the market's FDIC reported deposits. This concentration inherently limits the retail customer's ability to shop around easily for better terms, which helps Bank of Hawaii Corporation maintain a strong cost advantage. The bank itself has been successful in this environment, advancing its #1 deposit market share in Hawaii by 40 basis points as of 6/30/2025. As of Q3 2025, Bank of Hawaii held a 34% deposit market share.

The high-net-worth (HNW) segment operates under a different dynamic, which increases their leverage despite the overall market concentration. Bank of Hawaii Corporation strategically focuses on this group through its Consumer Banking segment, offering specialized services. These clients aren't looking for standard checking accounts; they demand more sophisticated offerings. The leverage comes from their need for non-standard solutions, which translates to:

• Private and international client banking services.
• Trust services for individuals and families.
• Investment management advisory.
• A recently revamped wealth management platform, Bankoh Advisors.

These specialized demands mean the bank must dedicate high-value resources to retain them, effectively increasing their individual bargaining power over service customization.

Bank of Hawaii Corporation (BOH) - Porter's Five Forces: Competitive rivalry

You're looking at a market where the incumbents know each other's playbook, which means rivalry is defintely high. This is not a fragmented industry; it's a tight oligopoly, meaning every customer acquisition is a hard-fought battle.

The rivalry among the four local banks that dominate the deposit market is very high. These key players control the vast majority of the local funding base. Bank of Hawaii Corporation holds a leading, but contested, deposit market share, advancing it by 40 basis points in the first half of 2025. This small gain shows the pressure; holding the top spot requires constant effort against well-capitalized rivals.

Here's a quick look at how the top local banks stacked up in terms of deposit market share as of the second quarter of 2025, which gives you a clear picture of the contest:

Direct competition happens through targeted promotions designed to poach high-value commercial relationships. For instance, Central Pacific Bank launched a direct incentive for business clients. They offered a cash bonus of up to $1,200 when opening or upgrading to their Business Exceptional Checking account during the September 2 to October 31, 2025 window. This isn't just about a few dollars; it's about locking in the primary operating account for a business.

The bonus structure was tiered to attract different levels of new capital:

• Cash Bonus of up to $1,200 with a minimum of $75,000 in new money deposit.
• Cash Bonus of $400 with a minimum of $25,000 in new money deposit.

The market is geographically concentrated, intensifying competition for every customer because there are few places for a customer to go outside the core group. This concentration means that a gain by one bank is almost always a direct loss for another.

• Top five local competitors controlled over 96% of the bank deposit market as of 2024.
• Bank of Hawaii Corporation's total deposits were $21.1 billion at September 30, 2025.
• Noninterest-bearing deposits made up 25.6% of Bank of Hawaii Corporation's total deposit balances at September 30, 2025.

Bank of Hawaii Corporation (BOH) - Porter's Five Forces: Threat of substitutes

You're looking at how easily Bank of Hawaii Corporation customers can switch to a different provider for core banking services. Honestly, the threat of pure substitution is somewhat tempered by the local market structure, but digital alternatives are definitely gaining ground.

Mainland-based FinTechs and digital-only banks present a moderate threat, primarily on the cost-of-service front. While Bank of Hawaii Corporation reported average deposits increasing at a 7% annualized rate in Q3 2025, and total deposits stood at $21.1 billion, these digital players chip away at the lower-cost deposit base. To be fair, the volume of home equity lines of credit expanded for the fourteenth consecutive quarter, driven largely by fintechs and other nonbanks as of November 2025, showing where substitution is actively happening in lending. Still, Bank of Hawaii Corporation's Net Interest Margin (NIM) expanded to 2.46% in Q3 2025, partly due to effective management of its own deposit costs, which remain well below peers.

Credit unions and non-bank lenders offer specific alternatives for loans and deposits. For instance, the Hawaii State Federal Credit Union saw its loan balances double from $509 million in June 2014 to over $1 billion by 2019, showing a clear growth trajectory for member-owned alternatives. Credit unions, driven by a service mission rather than profit, often translate this into lower fees and competitive loan rates for their members. This is a direct substitute for specific lending products.

The unique, high-touch nature of the Hawaii market and local brand loyalty act as a significant barrier to complete substitution. Bank of Hawaii Corporation maintained its number one deposit market share position in Hawaii, advancing it by 40 basis points as of June 30, 2025. Since 2005, Bank of Hawaii has grown its market share by 600 basis points, outpacing every other competitor in the local market. Furthermore, unaided brand awareness for Bank of Hawaii in Hawaii stands at 82%.

Wealth management services face substitution from large national brokerage and advisory firms. Bank of Hawaii Corporation is actively addressing this by teaming with Cetera to modernize its broker-dealer platform, now called Bankoh Advisors. This is critical because the bank currently holds only 3% of the total Hawaii wealth management market, which was valued at $321 billion as of 2023. The plan includes expanding the number of advisors by more than 50% by 2028.

Here's a quick look at the competitive landscape metrics as of late 2025:

The competitive dynamics in deposits and lending show clear pressure points:

• Fintechs are capturing growth in the home equity line of credit market.
• Credit union loan portfolios, like Hawaii State FCU's, have seen rapid expansion.
• Bank of Hawaii Corporation's deposit base is resilient, growing at a 7% annualized rate.
• The bank's commercial loan market share is 40% of the $13.5 billion total commercial loan market in Hawaii.
• The wealth management division is investing to close a 29 percentage point gap to its local market potential.

Bank of Hawaii Corporation (BOH) - Porter's Five Forces: Threat of new entrants

You're assessing the competitive landscape for Bank of Hawaii Corporation, and when looking at new entrants, the barriers are definitely high. Honestly, for any new bank to seriously challenge Bank of Hawaii Corporation in its home market, they'd need a war chest and regulatory patience. The threat level here is quite low, primarily because the industry is so heavily regulated, and the capital needed to even start is substantial.

Consider the sheer scale of Bank of Hawaii Corporation. As of June 30, 2025, the company reported total assets of $23.7 billion. Launching a bank of that size requires massive initial capitalization, which is a significant hurdle right out of the gate. Plus, the regulatory environment for banking in the US, especially for an established institution, means any new competitor faces intense scrutiny from day one. This isn't like launching a new software app; the compliance costs and time to approval are enormous deterrents.

Also, think about the physical reality of operating in Hawaii. It's an island state, geographically isolated. A new entrant needs a physical branch network to compete effectively for deposits and local business, which means high real estate costs and logistical challenges that incumbents like Bank of Hawaii Corporation have already solved. It's a high fixed-cost barrier to entry that keeps many potential competitors on the mainland.

The incumbent position is another fortress wall. Bank of Hawaii Corporation operates in a market where four locally headquartered banks control over 90% of the FDIC-reported deposits. That concentration means a new player has to fight for a very small slice of the existing pie, and they have to do it against established brands that customers trust with their hard-earned savings. Gaining the necessary scale quickly is nearly impossible when the top players already command such a dominant share.

To be fair, Bank of Hawaii Corporation's own financial strength helps keep the door shut. Strong capital ratios signal stability and resilience to regulators and customers alike. As of Q2 2025, the company maintained a Tier 1 capital ratio of 14.17%, which is well above the regulatory well-capitalized minimums. This robust position acts as a clear signal that Bank of Hawaii Corporation is not an easy target.

Here's a quick look at the key structural elements that suppress new entry:

• Significant regulatory and licensing requirements.
• High minimum capital thresholds for operation.
• Geographic isolation increases physical infrastructure costs.
• Incumbent deposit market share exceeds 90%.
• Bank of Hawaii Corporation's strong capital position.

We can map these deterrents to see the pressure level:

The need to overcome these structural and financial barriers means that any new entrant would likely be a very large, well-capitalized entity, or one focusing on a niche digital-only model that bypasses the physical network barrier-but even digital banks still face the same core regulatory hurdles.