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

You're looking for a clear, actionable breakdown of Bank of Hawaii Corporation's (BOH) position right now, heading into the end of 2025. The direct takeaway is that BOH is a rock-solid, well-capitalized regional bank successfully executing a margin expansion strategy, but it must address its tepid loan growth and geographic concentration risk. Here's the quick math: they just delivered a Q3 2025 diluted EPS of $1.20, beating consensus, while maintaining a Tier 1 Capital Ratio of 14.34%. That's defintely a fortress balance sheet. Still, you need to map the risks, so let's get into the SWOT.

Bank of Hawaii Corporation (BOH) - SWOT Analysis: Strengths

You're looking for a clear picture of what makes Bank of Hawaii Corporation (BOH) a stable, high-performing regional bank, and the answer lies in its fortress balance sheet and its near-monopoly in a unique market. The bank's Q3 2025 results show a consistent pattern of financial outperformance and exceptional credit quality, which is the core of its strength.

The bank's strategic position in the Hawai'i market is defintely a key differentiator, but the recent financial figures prove that this advantage is being translated into tangible shareholder value and capital resilience. They are simply executing well on a great geographic advantage.

Q3 2025 Diluted EPS of $1.20, Beating Analyst Expectations

Bank of Hawaii delivered diluted earnings per common share (EPS) of $1.20 for the third quarter of 2025, a strong beat against analyst consensus estimates of around $1.17 to $1.19. This performance represents a significant year-over-year increase of 29% from the $0.93 reported in Q3 2024. The net income for the quarter was $53.3 million. This solid earnings power is a direct strength, giving the bank flexibility for dividends and strategic investments.

Here's the quick math on the quarterly performance:

• Diluted EPS: $1.20 (vs. $1.06 in Q2 2025).
• Net Income: $53.3 million (up 12.0% from Q2 2025).
• Return on Average Common Equity (ROACE): 13.59%.

Tier 1 Capital Ratio of 14.34%, Well Above Regulatory Minimums

The bank maintains a fortress balance sheet, which is a critical strength in a volatile economic environment. As of September 30, 2025, the Tier 1 Capital Ratio stood at a robust 14.34%. This is significantly above the regulatory 'well-capitalized' minimum of 8.0%, demonstrating a deep cushion of loss-absorbing capital. This capital strength allows the bank to support its quarterly cash dividend of $0.70 per common share.

Sixth Consecutive Quarter of Net Interest Margin (NIM) Expansion to 2.46%

The bank is successfully navigating the interest rate cycle, evidenced by its Net Interest Margin (NIM) expanding to 2.46% in Q3 2025. This marks the sixth straight quarter of NIM expansion, a testament to effective balance sheet management. The increase was driven by repricing fixed-rate assets at higher current rates, with management noting they remixed $594 million in fixed-rate assets from a roll-off rate of 4.1% into a roll-on rate of 6.3%.

Exceptional Credit Quality; Non-Performing Assets are Just 0.12% of Total Loans

Credit quality remains pristine, which is a hallmark of Bank of Hawaii's conservative risk profile. The ratio of non-performing assets (NPAs) to total loans and leases was just 0.12% as of September 30, 2025. This is an exceptionally low figure, indicating minimal credit risk in the loan portfolio. Total non-performing assets amounted to only $16.9 million, a decrease of $2.9 million year-over-year.

What this estimate hides is the high quality of the underlying assets: approximately 80% of the loan portfolio is secured by real estate, with a weighted average Loan-to-Value (LTV) of just 51%. That's a massive buffer against potential losses.

Dominant, Entrenched Deposit Market Share in the Core Hawai'i Market

The bank holds a dominant position in its core market, which translates into a stable, low-cost funding base. As of the June 30, 2025 FDIC Summary of Deposits, Bank of Hawaii advanced its number one deposit market share position in Hawai'i by 40 basis points, securing a market share of approximately 34%. This entrenched position means less competition for deposits, which keeps funding costs low.

The strength of their brand and market penetration is clear:

This market leadership is a structural advantage that will continue to support profitability for years to come.

Bank of Hawaii Corporation (BOH) - SWOT Analysis: Weaknesses

You're looking for the cracks in Bank of Hawaii Corporation's (BOH) foundation, and you're defintely right to focus on loan growth and funding mix. While the bank is a solid, well-capitalized institution, its weaknesses center on a modest pace of balance sheet expansion and an increasing cost of deposits that pressures future earnings.

The core issue is that BOH's loan portfolio isn't growing fast enough to capitalize fully on its strong position in the Hawaiian market. Plus, the shift in its deposit base makes its net interest income (NII) highly sensitive to the Federal Reserve's next move on interest rates.

Loan growth is modest; total loans were only $14.0 billion in Q3 2025.

The bank's overall loan growth remains tepid. As of September 30, 2025, total loans and leases stood at $14.0 billion. That number only edged up by 0.1% from the prior quarter (Q2 2025), which is a very modest pace for a bank looking to drive significant asset-side returns.

Here's the quick math: While commercial loans saw a healthier year-over-year increase of 2.8%, the total portfolio's growth was dragged down by other segments, leading to a year-over-year increase of just 0.7% for the entire loan book. Slow loan production means the bank is not maximizing the deployment of its available capital and liquidity, which is a real opportunity cost in a high-rate environment.

High reliance on net interest income (NII) makes earnings sensitive to future rate cuts.

Bank of Hawaii Corporation is heavily dependent on its Net Interest Income (NII)-the profit from lending versus the cost of funding. In the third quarter of 2025, NII was $136.7 million. When you compare this to the total quarterly revenue of $182.6 million (NII plus noninterest income), NII represents approximately 74.8% of the top line.

This high reliance is a double-edged sword. It's great when the net interest margin (NIM) is expanding-BOH saw its NIM rise to 2.46% in Q3 2025-but it creates a major risk when the interest rate cycle turns. If the Fed starts cutting rates, BOH's earnings will feel the impact almost immediately because a large majority of its revenue is tied to interest rate spreads. One clean one-liner: The rate cycle is a huge earnings lever here.

Noninterest-bearing deposits dropped to 25.6% of the total deposit base.

The quality of the deposit base is slipping, which means the cost of funding is rising. Noninterest-bearing deposits (NIBs), which are essentially free money for the bank, dropped to 25.6% of total deposits as of September 30, 2025.

To be fair, this is a trend across the industry, but the drop from 25.8% a year ago shows that depositors are continuing to shift their funds into higher-yielding, interest-bearing accounts. This shift directly increases the bank's cost of funds, putting a squeeze on the NIM over the long term, even as the bank has managed to keep its average cost of total deposits low at 1.59% in Q3 2025.

The table below shows the key deposit metrics for context:

Consumer loan portfolios, specifically auto and home equity, are seeing year-over-year declines.

The consumer lending side is a clear drag on the overall loan growth figures. Total consumer loans were $7.9 billion at the end of Q3 2025. More importantly, this represents a 0.8% decrease compared to the same period in 2024. This decline isn't a surprise, but it's a weakness because it signals a contraction in key, high-yield segments.

The decline is concentrated in two major areas:

• Automobile Portfolio: Amortization and paydowns outpaced new production.
• Home Equity Portfolio: This segment saw a year-over-year decline, likely due to a combination of higher interest rates making new lines of credit less attractive and borrowers paying down existing balances.

The only reason the total consumer loan portfolio didn't drop more sharply was a moderate increase in the residential mortgage portfolio's production. Still, the contraction in auto and home equity shows a struggle to maintain volume in consumer credit, which is a key part of the bank's local market strategy.

Bank of Hawaii Corporation (BOH) - SWOT Analysis: Opportunities

Repricing Fixed-Rate Assets and Loans Is a Major NIM Driver

You're seeing the benefits of a higher interest rate environment finally flow through the balance sheet, which is a huge opportunity for Bank of Hawaii Corporation's Net Interest Margin (NIM). This isn't theoretical; it's a structural tailwind. The bank achieved its sixth consecutive quarter of NIM expansion in Q3 2025, reaching 2.46%. This growth came directly from cash flows from older, lower-rate fixed-rate assets rolling off and being reinvested at today's higher rates.

In the third quarter of 2025 alone, this fixed asset repricing added $3.3 million to Net Interest Income (NII). Specifically, the bank remixed $594 million in fixed rate loans and investments, rolling them off at an average rate of 4.1% and rolling them back on at a much higher average rate of 6.3%. That's a 220 basis point spread capture on half a billion dollars of assets. Management projects this trend to continue, estimating a potential 25 basis point (bps) pickup in NIM per year moving forward.

Reducing the Cost of Funds Through CD Repricing

The other side of the NIM coin is the cost of funding, and here, Bank of Hawaii Corporation has a massive, near-term opportunity. You have a large chunk of high-cost Certificates of Deposit (CDs) maturing soon, and the current market rates allow for a profitable re-pricing. Honesty, this is a clean shot at a lower cost of funds.

Over 51% of the bank's Certificates of Deposit (CDs) are set to mature in the near future, and these carry a relatively high average rate of 3.61%. The current environment, even with the Federal Reserve's recent rate cuts in late 2024 and 2025, means the bank can re-price a significant portion of these deposits at lower rates, which directly reduces your interest expense. For context, the bank's new money special for a 12-month CD was recently offered at 3.05% for large deposits, a clear indicator of the re-pricing power. This successful re-pricing of the CD book was already a contributor to the NIM expansion in Q3 2025.

Strategic Focus on Expanding Wealth Management Services

Diversifying revenue away from pure interest income is always a smart move, and the push into wealth management is a key opportunity for noninterest income growth. The bank is strategically expanding its services, particularly targeting the mass affluent and high-net-worth clients in its core market.

To execute this, Bank of Hawaii Corporation recently launched a modernized broker-dealer platform called Bankoh Advisors, which is a new partnership with Cetera. This platform is designed to offer meaningful enhancements in technology, client experience, and investment product offerings over its predecessor. This initiative should drive higher trust and asset management earnings, which were already a positive factor in the Q3 2025 noninterest income.

Utilize Remaining Share Buyback Authority

You have a clear, actionable lever to enhance shareholder returns right now. The company has a remaining share buyback authority of $126.0 million as of September 30, 2025. No shares were repurchased in the third quarter of 2025, meaning this full amount is available for deployment.

Given the bank's strong capital levels, which remain well above regulatory well-capitalized minimums, utilizing this authority is a prudent capital management action. It signals confidence to the market, reduces the share count, and boosts earnings per share (EPS). This is a defintely a low-hanging fruit for capital return.

• Enhance EPS through a reduced share count.
• Signal management confidence to investors.
• Deploy $126.0 million in capital to boost shareholder returns.

Bank of Hawaii Corporation (BOH) - SWOT Analysis: Threats

Intense competition from both national banks and agile financial technology (fintech) companies.

You operate in a concentrated but increasingly contested market, which puts constant pressure on deposit pricing and technology spending. While Bank of Hawaii Corporation holds a dominant local position with a 34.13% deposit market share (as of November 2024), its chief rival, First Hawaiian Bank, is right behind at 32.54%. This tight competition limits your ability to raise service fees or significantly cut deposit rates without risking customer flight.

The bigger, long-term threat comes from national players and financial technology (fintech) firms. A national bank like Wells Fargo & Company, with its vast resources, competes on product breadth and digital sophistication. More critically, a firm like J.P. Morgan could outspend BOH's entire market capitalization on its online platform alone, underscoring the scale disadvantage.

Fintech is a silent competitor, especially in payments and digital wallets, which reached $1.95 trillion in transaction value in the U.S. in 2024. The global fintech market is projected to be worth $394.88 billion in 2025, growing at a Compound Annual Growth Rate (CAGR) of 16.2%. That's a growth rate you cannot ignore.

Economic downturn or major shock in the core Pacific Island market (Hawaii, Guam).

Your geographic concentration in Hawaii and the West Pacific is a double-edged sword: it's a strength in good times but a major risk during a localized economic shock. Hawaii's economy is projected to see real Gross Domestic Product (GDP) increase by a modest 1.3% in 2025, but any unforeseen drop in tourism or military spending could quickly reverse this.

A key indicator to watch is the labor market, where the unemployment rate is forecasted to reach 3.3% by Q4 2025. While low, this slight uptick, coupled with BOH's significant exposure to the Hawaiian real estate market, means even a minor recessionary pressure could impact loan quality. Guam's economy is currently buoyed by major construction, including the Camp Blaz Marine Corps base, but this is a finite, project-based tailwind that will eventually dissipate.

Potential for future interest rate cuts could sharply reverse the current NIM expansion trend.

Honesty, your Net Interest Margin (NIM)-the difference between interest earned on assets and interest paid on liabilities-has been a star performer, expanding for six consecutive quarters to 2.46% in Q3 2025. This was driven by lower interest-bearing deposit rates, which averaged 2.14% in Q3 2025. The threat, however, is a swift Federal Reserve pivot to rate cuts.

While management projects continued NIM expansion of 25 basis points annually, the risk is that the yield on your earning assets (like loans and securities) will reprice lower faster than your cost of deposits. This is a classic asset-liability management challenge. The good news is you have a large chunk of high-cost deposits maturing soon, which presents a critical repricing opportunity that must be managed perfectly.

• Q3 2025 NIM: 2.46% (Sixth consecutive quarterly expansion).
• Average Interest-Bearing Deposit Rate (Q3 2025): 2.14%.
• Near-Term Repricing Opportunity: 51% of Certificates of Deposit (CDs) will mature in the next three months at an average rate of 3.61%.

Increased regulatory scrutiny and compliance costs for regional banks post-2023 banking events.

The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 have fundamentally changed the regulatory landscape for regional banks, increasing both scrutiny and cost. Your total assets of $23.9 billion (as of March 31, 2025) place you firmly under the microscope of regulators like the Consumer Financial Protection Bureau (CFPB), which oversees institutions with over $10.0 billion in assets.

The most concrete, immediate cost is the Federal Deposit Insurance Corporation (FDIC) special assessment to replenish the Deposit Insurance Fund (DIF). BOH's initial share of this assessment was $14.7 million, later adjusted to $16.6 million (accrued in 2024). This is being paid in eight quarterly installments starting in June 2024, representing an unavoidable, ongoing expense for the entire 2025 fiscal year.

Plus, new rules like the CFPB's Section 1071 (Small Business Data Collection) and the final rule on Automated Valuation Models (AVMs), effective October 1, 2025, require significant investment in new compliance technology and staff training. This is a non-interest expense drag on earnings.

The next step is to monitor the Q4 2025 guidance on deposit cost deceleration, since that CD repricing opportunity is critical.