Here's Why You Should Add Bank of Hawaii Stock to Your Portfolio Now

Bank of Hawaii Corporation BOH is well-placed to benefit from rising loan and deposit balances, which will strengthen its balance sheet. Rising net interest income (NII) is an added advantage.

The Zacks Consensus Estimate for BOH’s 2025 and 2026 has been revised upward over the past seven days. The positive revision of the earnings estimate indicates that analysts are bullish on the stock’s earnings prospects and growth potential.

Estimate Revision Trend

Mentioned below are few factors that make BOH an attractive investment option now.

Rising Loans and Deposits: The company continues to grow organically as its net loans and leases witnessed a compound annual growth rate (CAGR) of 6% during the 2018-2024 period, while the deposit base saw a CAGR of 5.4% during the same period. In the first quarter of 2025, the rising trend of both metrics continued. 

Further, the company’s diversified and long-duration deposit base, along with diversified and lower-risk loan assets, will allow it to maintain a robust balance sheet.  Going forward, we expect that total loans and total deposits will increase 1.2% and 7.8%, respectively, in 2025.

NII Growth: The Federal Reserve reduced interest rates by 100 basis points in 2024. Given this, the company’s NII witnessed a 10.4% increase in the first quarter of 2025. Also, its NIM increased 21 basis points to 2.32%. Further, the company's NII has grown, seeing a seven-year CAGR (ended 2024) of 1.4%. 
 
Going forward, NII and NIM are expected to continue to increase driven by continued asset repricing, slowing deposit remix and relatively lower Fed funds rates. Our model anticipates NII to rise 9% in 2025.

Earnings Strength: Though the company's earnings witnessed a decline of 6.3% over the past three to five years, it is expected to display an upswing in the near term with a three-to-five-year projected earnings per share (EPS) growth rate of 22.4% compared with the industry’s growth rate of 7.3%. Also, BOH surpassed estimates in three of the trailing four quarters and missed once, with an average earnings surprise of 5.67%. 

Furthermore, for 2025 and 2026, BOH’s earnings are projected to increase year over year.

Earnings Estimates

Strong Capital Position: As of March 31, 2025, the Tier 1 capital ratio and total capital ratio were 13.93% and 14.97%, respectively, which increased from the year-ago quarter. This indicates a strong capital position, which enables the company to maintain its capital distribution plan efficiency.

The company pays a common stock dividend of 70 cents per share presently. Its dividend payout ratio is 78% of earnings. It also has a share repurchase plan in place. The share repurchase program began in July 2001 with an approval to buy back $70 million worth of common stock. The board of directors increased the share repurchase program by $130 million in January 2019. The company did not repurchase any shares in the first quarter of 2025.  As of March 31, 2025, $126 million was available under the buyback authorization.

Impressive Balance Sheet Position: The bank exhibits a strong balance sheet position, backed by an impressive liquidity profile. As of March 31, 2025, its liquidity amounted to $935.2 million. Total debt (comprising securities sold under agreements to repurchase, as well as other debt) aggregated $608.3 million as of the same date. Given substantial liquidity, we believe that Bank of Hawaii is not likely to face problems repaying its borrowings in the near term, even if the economic situation worsens.

BOH’s Price Performance & Zacks Rank

Bank of Hawaii’s shares have gained 23.9% in the past year compared with the industry’s 20.9% growth.

Price Performance

 The company currently sports a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

A couple of other stocks from the finance space worth a look are Northrim BanCorp NRIM and WaFd, Inc. WAFD. NRIM sports a Zacks Rank of 1 while WAFD carries a Zacks Rank #2 (Buy), respectively, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for NRIM’s current-year earnings has been revised upward over the past seven days. NRIM’s shares have risen 65.2% in the past year.

WAFD’s current-year earnings have remained unchanged over the past seven days. WAFD stock has risen 2.6% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research