BOH: Net Interest Margin Outlook And Deposit Environment Will Shape Earnings Prospects

Analysts have increased their price target for Bank of Hawaii from $70.50 to $72.67. They cite improved profit margins and expectations for enhanced net interest margin performance, supported by favorable market and balance sheet dynamics.

Analyst Commentary

Recent updates from analysts indicate both optimism and caution regarding Bank of Hawaii’s outlook and valuation. Attention centers on the bank’s net interest margin performance and unique regional dynamics that may affect its profitability and growth trajectory.

Bullish Takeaways

• Bullish analysts highlight that the favorable deposit environment in Hawaii creates a supportive backdrop for balance sheet stability and funding costs.
• Tailwinds from repricing fixed-rate assets are expected to help drive net interest margin outperformance in the near to medium term.
• Improved profitability expectations, supported by securities repositioning and reduced headwinds from swaps, have led to upward earnings estimate revisions.
• Recent price target increases reflect growing confidence that Bank of Hawaii’s net interest income will continue to improve, which could potentially justify a higher valuation.

Bearish Takeaways

• Bearish analysts maintain a cautious stance on execution risks, noting that ongoing profitability could be challenged if market conditions shift.
• Concerns remain about the sustainability of net interest margin gains given the bank’s exposure to fixed-rate assets and broader rate dynamics.
• Some skepticism persists regarding whether improved performance is fully reflected in current share prices, highlighting the need for continued balance sheet strength.

What's in the News

• Bank of Hawaii reported net loan and lease charge-offs totaling $2.6 million for the third quarter ended September 30, 2025. This amount, representing 7 basis points annualized of total average loans and leases, was consistent with the prior quarter. It also marked a decrease of $1.3 million from the same period last year. (Key Developments)
• During the quarter from July 1, 2025 to September 30, 2025, Bank of Hawaii completed its share repurchase program. The company bought back over 10.7 million shares, which represents nearly 25% of its outstanding shares since the program's inception in 2011. No shares were repurchased during the most recent quarter. (Key Developments)

Valuation Changes

• Consensus Analyst Price Target has increased from $70.50 to $72.67. This reflects a modest upward revision in the bank’s fair value estimate.
• Discount Rate has risen slightly from 6.78% to 6.96%, indicating a higher implied risk or required rate of return.
• Revenue Growth expectations have climbed from 8.99% to 9.80%. This suggests analysts anticipate stronger top-line performance.
• Net Profit Margin is up from 29.59% to 30.93%, pointing to improved overall profitability projections.
• Future P/E ratio has declined from 13.30x to 12.50x, reflecting lower expected price-to-earnings multiples going forward.