Last Update 10 Dec 25

BOH: Unique Deposits And Asset Repricing Will Shape Earnings Outlook Ahead

Analysts have modestly raised their price target on Bank of Hawaii to $75 from $68, citing expectations that the bank's unique Hawaii deposit base, along with tailwinds from fixed rate asset repricing, will support stronger net interest margin performance and higher earnings.

Analyst Commentary

Recent Street commentary reflects a more constructive stance on Bank of Hawaii, with price targets moving higher as analysts reassess both earnings power and the resilience of the bank's funding base.

Bullish Takeaways

Bullish analysts highlight the unique, relatively insulated deposit base in Hawaii as a key competitive advantage that supports stable funding costs and underpins higher valuation multiples.
Tailwinds from fixed rate asset repricing and securities repositioning are expected to lift net interest margin, driving better than previously modeled earnings growth over the near to medium term.
Upward revisions to earnings estimates and price targets signal improving confidence in execution, particularly in managing interest rate risk and repositioning the balance sheet.
The move from a more cautious to a neutral stance is viewed as a sign that downside risks to profitability and capital are better understood and increasingly reflected in the stock.

Bearish Takeaways

Bearish analysts remain cautious on valuation, noting that despite price target increases, the shares may still face limits to multiple expansion given slower structural growth in the regional economy.
There is concern that net interest margin improvements could prove cyclical, with less room for upside if rate cuts arrive sooner than expected or competitive pressures on deposits intensify.
Execution risk around further balance sheet repositioning, including managing securities and swap portfolios, is seen as a potential source of earnings volatility.
Some analysts continue to flag that, while trends are improving, returns on equity may remain only modestly above the cost of capital, constraining long term re rating potential.

What's in the News

Completed a long-running share repurchase program, retiring a total of 10,791,354 shares, or 24.77% of shares outstanding, for $695.67 million under the buyback authorized in July 2011 (company filing).
No additional share repurchases were executed between July 1, 2025 and September 30, 2025, leaving capital deployment skewed toward balance sheet strength rather than incremental buybacks in the most recent quarter (company filing).
Reported third quarter 2025 net loan and lease charge-offs of $2.6 million, or 7 basis points annualized of total average loans and leases, unchanged from the prior quarter and reflecting stable credit performance (company results).
Third quarter 2025 net loan and lease charge-offs decreased by $1.3 million year over year, improving by 4 basis points annualized on total average loans and leases outstanding (company results).

Valuation Changes

Fair Value Estimate remains unchanged at $72.67, indicating no material revision to intrinsic value despite the higher analyst price target.
Discount Rate has edged down slightly from 6.96% to 6.96%, reflecting a marginally lower perceived risk profile or cost of equity.
Revenue Growth is effectively unchanged at about 9.80%, suggesting stable expectations for top line expansion.
Net Profit Margin remained steady at approximately 30.93%, indicating no meaningful shift in modeled profitability levels.
Future P/E was held essentially flat at 12.50x, signaling that valuation multiples used in the framework are consistent with prior assumptions.

Strong local market position and resilient demand support stable loan growth, high asset quality, and low credit losses, preserving profitability.
Expansion in digital banking and wealth services diversifies revenue and improves efficiency, underpinning long-term earnings and customer relationships.
A heavy reliance on Hawaiian real estate lending and local deposits increases risk exposure, while digital investment and competitive pressures threaten margins and future earnings stability.

Catalysts

About Bank of Hawaii

Operates as the bank holding company for Bank of Hawaii that provides various financial products and services in Hawaii, Guam, and other Pacific Islands.What are the underlying business or industry changes driving this perspective?

Bank of Hawaii continues to benefit from population and business migration trends supporting resilient housing demand in Hawaii, driving stable loan growth and keeping credit losses low-positive for future revenue and net earnings.
Deepening customer relationships and expansion in wealth management and trust services are leveraging the aging and increasingly affluent population, resulting in steady growth of non-interest (fee) income and greater revenue diversification.
Ongoing digital transformation and sustained investments in digital banking platforms are expected to enhance operational efficiency, improve customer acquisition and retention, and support controlled expense growth, boosting long-term net margins.
Stable and "sticky" deposit base, aided by the bank's fortress local market position, is enabling effective deposit repricing and lowering the cost of funds, which supports continued improvement in net interest margin (NIM) and net interest income.
Balanced, high-quality loan portfolio-largely secured by local real estate with low average loan-to-value and high FICO scores-positions Bank of Hawaii for superior asset quality and lower provision expense, preserving profitability and capital ratios over time.

Bank of Hawaii Earnings and Revenue Growth

Bank of Hawaii Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Bank of Hawaii's revenue will grow by 9.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 23.1% today to 29.6% in 3 years time.
Analysts expect earnings to reach $251.7 million (and earnings per share of $5.7) by about September 2028, up from $151.9 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.3x on those 2028 earnings, down from 17.8x today. This future PE is greater than the current PE for the US Banks industry at 11.9x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Bank of Hawaii Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Bank of Hawaii's heavy concentration in Hawaii (93% of loans) limits geographic diversification and increases exposure to local economic downturns, natural disasters, climate-related events, and shifts in migration patterns; this heightens concentration risk and could negatively impact future revenue growth and asset quality.
The bank's loan book is highly reliant on real estate-related lending (commercial and consumer), making it vulnerable to adverse changes in local property values or demand; should real estate markets soften due to demographic shifts, climate risk, or rising costs, net interest income and credit quality could deteriorate, pressuring earnings.
Modest to flat commercial loan growth and softness in construction and C&I observed this quarter suggest that structural challenges or external uncertainties (such as tariffs or global economic headwinds) may constrain business lending and future loan pipeline, which could cap balance sheet and revenue expansion.
Ongoing investment in digital transformation to remain competitive with fintechs and larger banks is necessary, but cost control measures (restructuring, severance) and the stated intent to continue capital investment pose the risk of margin compression if expense growth outpaces revenue, potentially reducing long-term net margins.
Deposit growth is expected to remain flat, with increased competition for high-margin demand deposits and continued deposit remix toward higher-cost funds; if funding costs rise faster than asset yields or the bank cannot grow lower-cost deposits, net interest margin expansion could stall or reverse, negatively impacting earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $70.5 for Bank of Hawaii based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $850.6 million, earnings will come to $251.7 million, and it would be trading on a PE ratio of 13.3x, assuming you use a discount rate of 6.8%.
Given the current share price of $68.12, the analyst price target of $70.5 is 3.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Hawaii Housing And Wealth Trends Will Transform Future Banking