Group 1 - Bank of Hawaii Corporation 4.375% DEP PFD A (NYSE: BOH.PR.A) is highlighted as part of a series of discounted REIT preferred shares [1] - The article is produced by Pearl Gray, an independent market research firm that specializes in systematic analysis, focusing on Bonds, Preferreds, and REITs [1] - The primary sectors of interest for the firm are Financials and Real Estate, aiming to discover actionable total return ideas [1] Group 2 - The article does not provide any specific investment recommendations or financial advice [2][3] - There is a disclosure stating that the author has no positions in any of the mentioned companies and no plans to initiate any positions in the near future [2]

Core Viewpoint - Bank of Hawaii (BOH) shares have increased by approximately 4% over the past month, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Group 1: Earnings and Estimates - Estimates for Bank of Hawaii have trended upward over the past month, with a consensus estimate shift of 8.64% [2] - The stock has a Zacks Rank of 1 (Strong Buy), indicating expectations for above-average returns in the coming months [4] Group 2: VGM Scores - Bank of Hawaii has a subpar Growth Score of D, a Momentum Score of B, and a Value Score of D, placing it in the bottom 40% for the value investment strategy [3] - The overall aggregate VGM Score for Bank of Hawaii is F, which is significant for investors not focused on a single strategy [3] Group 3: Industry Performance - Bank of Hawaii is part of the Zacks Banks - West industry, where another player, Westamerica (WABC), has seen a 6.4% gain over the past month [5] - Westamerica reported revenues of $66.42 million for the last quarter, reflecting a year-over-year decline of 12.4%, with EPS of $1.16 compared to $1.37 a year ago [5] - For the current quarter, Westamerica is expected to post earnings of $1.11 per share, indicating a year-over-year change of -16.5%, with a Zacks Rank of 1 (Strong Buy) [6]

Core Viewpoint - Bank of Hawaii Corporation (BOH) is positioned to benefit from increasing loan and deposit balances, enhancing its balance sheet and net interest income (NII) growth, with analysts showing optimism in the stock's earnings potential for 2025 and 2026 [1][6]. Loan and Deposit Growth - BOH has experienced a compound annual growth rate (CAGR) of 6% in net loans and leases from 2018 to 2024, while its deposit base has seen a CAGR of 5.4% during the same period, continuing this upward trend into the first quarter of 2025 [2][3]. NII and NIM Performance - The company's NII increased by 10.4% in the first quarter of 2025, with a net interest margin (NIM) rise of 21 basis points to 2.32%. The NII has a seven-year CAGR of 1.4% ending in 2024, and is projected to grow by 9% in 2025 [4]. Earnings Strength - Despite a 6.3% decline in earnings over the past three to five years, BOH is expected to achieve a projected earnings per share (EPS) growth rate of 22.4% over the next three to five years, significantly outpacing the industry growth rate of 7.3% [5][6]. Earnings Estimates - The Zacks Consensus Estimate for BOH's earnings per share for 2025 is $4.32, reflecting a year-over-year growth estimate of 22.44%. For 2026, the estimate is $5.11, with a growth rate of 18.28% [7]. Capital Position - As of March 31, 2025, BOH's Tier 1 capital ratio and total capital ratio were 13.93% and 14.97%, respectively, indicating a strong capital position that supports its capital distribution efficiency [7]. Dividend and Share Repurchase - The company currently pays a dividend of $0.70 per share, with a payout ratio of 78%. A share repurchase program is in place, with $126 million available under the authorization as of March 31, 2025 [8]. Balance Sheet Strength - BOH has a strong balance sheet with liquidity of $935.2 million and total debt of $608.3 million as of March 31, 2025, suggesting it can manage its borrowings effectively even in adverse economic conditions [9]. Price Performance - BOH's shares have increased by 23.9% over the past year, outperforming the industry growth of 20.9% [10].

Core Viewpoint - Bank of Hawaii (BOH) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure on the stock [4]. Recent Performance and Projections - Bank of Hawaii is projected to earn $4.31 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 22.1% [8]. - Over the past three months, the Zacks Consensus Estimate for Bank of Hawaii has risen by 12.3% [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Bank of Hawaii to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Group 1: Usinas Siderurgicas de Minas Gerais (USNZY) - The company is Latin America's largest flat steel complex and ranks among the world's top twenty steel producers [1] - The Zacks Consensus Estimate for its current year earnings has increased by 50% over the last 60 days [1] - The company has a dividend yield of 4.7%, significantly higher than the industry average of 1.7% [1] Group 2: Bank of Hawaii (BOH) - The bank holding company provides a wide range of products and services in Hawaii, Guam, and other Pacific Islands [2] - The Zacks Consensus Estimate for its current year earnings has increased nearly 10% over the last 60 days [2] - The company has a dividend yield of 4%, which is above the industry average of 3.1% [2] Group 3: Epsilon Energy (EPSN) - The company focuses on on-shore oil and natural gas, engaging in the acquisition, development, gathering, and production of reserves [3] - The Zacks Consensus Estimate for its current year earnings has increased nearly 9.1% over the last 60 days [3] - The company has a dividend yield of 3.7%, compared to the industry average of 2.4% [3]

Core Viewpoint - Bank of Hawaii (BOH) is experiencing solid improvement in earnings estimates, which is likely to positively impact its stock price momentum [1][2]. Earnings Estimates - Analysts are increasingly optimistic about Bank of Hawaii's earnings prospects, leading to higher estimates that should reflect in the stock price [2]. - For the current quarter, the expected earnings per share (EPS) is $1.02, representing an increase of +18.6% from the previous year [6]. - The consensus estimate for the full year is projected at $4.16 per share, indicating a year-over-year change of +17.85% [7]. Estimate Revisions - Over the past 30 days, one estimate has been revised upward for the current quarter, with no negative revisions, resulting in a 6.28% increase in the Zacks Consensus Estimate [6]. - For the current year, three estimates have moved up with no negative revisions, contributing to a positive trend in consensus estimates [7]. Zacks Rank - Bank of Hawaii currently holds a Zacks Rank 2 (Buy), reflecting favorable estimate revisions and a strong potential for outperformance compared to the S&P 500 [8]. - The Zacks Rank system has a proven track record, with Zacks 1 Ranked stocks averaging an annual return of +25% since 2008 [3]. Stock Performance - Bank of Hawaii shares have increased by 13% over the past four weeks, indicating investor confidence in its earnings growth prospects [9].

Financial Performance - Net income for Q1 2025 was $44.0 million, an increase of $7.6 million or 21% compared to Q1 2024[136] - Diluted earnings per common share for Q1 2025 was $0.97, an increase of $0.10 or 11% compared to Q1 2024[136] - Net interest income for Q1 2025 was $125.8 million, an increase of 10% compared to the same period last year[138] - Noninterest income was $44.1 million in Q1 2025, an increase of 4% compared to the same period last year[138] - The return on average common equity for Q1 2025 was 11.80%, compared with 11.20% in Q1 2024[136] - The effective tax rate for Q1 2025 was 21.67%, down from 24.76% in the same period last year[138] Assets and Liabilities - Total assets were $23.9 billion as of March 31, 2025, an increase of 1.2% from December 31, 2024[138] - Total loans and leases were $14.1 billion as of March 31, 2025, an increase of 0.3% from December 31, 2024[138] - Total deposits were $21.0 billion as of March 31, 2025, compared to $20.6 billion as of December 31, 2024[138] - Average balance of earning assets increased by $286.3 million, or 1%, to $22,023.9 million for the three months ended March 31, 2025 compared to the same period last year[144] - Average balance of interest-bearing liabilities increased by $322.9 million, or 2%, to $16,010.1 million for the three months ended March 31, 2025 compared to the same period last year[145] Income and Expense - Total noninterest expense increased by $4.6 million or 4% in Q1 2025 compared to Q1 2024, reaching $110.5 million[152] - Total salaries and benefits expense rose by $4.7 million or 8% in Q1 2025, primarily due to increases in incentive compensation and medical, dental, and life insurance expenses[152] - Net interest income increased by $12.7 million, driven by a change in interest income of $4.8 million and a decrease in interest expense of $7.9 million[142] Credit Quality - Nonperforming assets and accruing loans and leases past due 90 days or more were monitored closely to manage credit risk effectively[183] - The provision for credit losses in Consumer Banking increased by $1 million or 44% due to higher net charge-offs in auto and installment loans[180] - Total Non-Performing Assets decreased to $17.451 million as of March 31, 2025, down from $19.300 million as of December 31, 2024, representing a reduction of $1.849 million or 9.6%[186] - The Allowance for Credit Losses was $147.707 million as of March 31, 2025, or 1.05% of total loans and leases outstanding, compared to $148.528 million or 1.06% as of December 31, 2024[192] Dividends and Shareholder Returns - The Company declared a quarterly cash dividend of $0.70 per share on outstanding common shares, payable on June 13, 2025[138] - No shares of common stock were repurchased in Q1 2025, with a total of 58.2 million shares repurchased since the program's inception, returning $2.4 billion to shareholders[224] Operational Risk Management - The Company has established an Operational Risk Committee (ORC) to oversee and assess significant operational risks, including cybersecurity risks[228] - The Company continuously strengthens its internal controls to minimize operational risks, although there is no assurance that operational losses will not occur[229] - Management's oversight of operational risk is crucial for achieving the Company's goals and objectives[229] Liquidity and Capital - Shareholders' equity increased by $37.2 million (2%) to $1.7 billion as of March 31, 2025, driven by net income of $44.0 million and other comprehensive income of $25.0 million[223] - The ratio of readily available liquidity to uninsured deposits improved to 129% as of March 31, 2025, up from 116% at December 31, 2024, due to increased cash and cash equivalents and borrowing capacity[213] - Total regulatory capital as of March 31, 2025, was $2,144,280 thousand, with a Common Equity Tier 1 Capital Ratio of 11.58%[221]

Core Viewpoint - Bank of Hawaii Corporation (BOH) reported strong first-quarter 2025 results, with adjusted earnings per share (EPS) of 97 cents, exceeding the Zacks Consensus Estimate of 89 cents and up from 87 cents in the prior year [1] Financial Performance - The company's net income (GAAP basis) was $43.9 million, reflecting a year-over-year increase of 20.9% [2] - Quarterly revenues rose 8.8% year over year to $169.9 million, surpassing the Zacks Consensus Estimate by 1.3% [3] - Net interest income (NII) reached $125.8 million, up 10.4% year over year, with net interest margin (NIM) increasing by 21 basis points to 2.32% [3] - Non-interest income was $44.1 million, a 4.2% increase year over year, driven by growth in trust and asset management income, service charges, and insurance income [4] Expense and Efficiency - Non-interest expenses increased by 4.3% to $110.5 million, primarily due to higher salaries and benefits, partially offset by lower FDIC insurance and professional fees [5] - The efficiency ratio improved to 65.03%, down from 67.76% in the previous year, indicating enhanced profitability [5] Loans and Deposits - Total loans and leases as of March 31, 2025, were $14.1 billion, slightly above the prior quarter's end [6] - Total deposits increased by 1.8% sequentially to $21 billion [6] Credit Quality - Non-performing assets rose to $17.5 million, a 47.4% increase year over year [7] - Net loans and lease charge-offs were $4.4 million, up $2.3 million from the previous year [7] - Provision for credit losses increased by 62.5% year over year to $3.3 million [7] Capital Ratios - The Tier 1 capital ratio improved to 13.93%, up from 12.74% a year ago [9] - The total capital ratio rose to 14.97%, compared to 13.81% in the prior year [9] - The ratio of tangible common equity to risk-weighted assets increased to 9.28% from 8.70% [9] Profitability Ratios - Return on average assets was 0.75%, up from 0.63% in the prior year [10] - Return on average shareholders' equity improved to 10.65%, compared to 10.34% as of March 31, 2024 [10] Share Repurchase - In the reported quarter, Bank of Hawaii did not repurchase any shares, with a remaining buyback authority of $126 million as of March 31, 2025 [11] Overall Assessment - The rise in NII and fee income supports top-line growth, alongside a solid capital position and increased loan and deposit balances. However, weak credit quality and rising expenses present near-term concerns [12]

Financial Performance - Diluted earnings per common share were $0.97, with a net income of $44.0 million[7] - Net interest margin expanded for the fourth consecutive quarter, reaching 2.32% from 2.19%[7] - Return on average common equity was 11.80%[7] - Total revenue increased to $169.9 million, compared to $156.2 million in 1Q 2024[96] Balance Sheet & Credit Quality - Total deposits increased by 7.3% annualized, and total loans and leases increased by 1.1% annualized[7] - Tier 1 capital ratio stood at 13.93%, and the total capital ratio was 14.97%[7] - Net charge-off rate remained low at 0.13%, with non-performing assets at 0.12%[7] - 79% of the loan portfolio is real estate-secured, with a combined weighted average LTV of 51%[7] Market Position - Bank of Hawai'i holds a 33.5% market share of bank deposits in Hawai'i[9]

Financial Data and Key Metrics Changes - Bank of Hawaii reported net interest income of $120.2 million, an increase of $2.6 million or 2.2% from the previous quarter [24] - Net interest margin (NIM) expanded to 2.19%, with a further improvement to 2.26% by December [24][25] - Non-interest income totaled $43 million, adjusted to $45.4 million after excluding a one-time charge related to Visa Class B shares [34] - Net income for the fourth quarter was $39.2 million, with earnings per common share at $0.85 [38] Business Line Data and Key Metrics Changes - Average deposits grew by 1.3% to $20.8 billion, while average loans increased by 1.1% to $14 billion [8] - The loan portfolio is balanced with consumer loans representing 56% and commercial loans 44% [14] - The consumer portfolio is predominantly secured against real estate, with 85% being residential mortgage or home equity [15] Market Data and Key Metrics Changes - Bank of Hawaii holds the number one position in market share in Hawaii, with stable economic conditions and unemployment below the national average [10][11] - The visitor market remains stable, although impacted by the Maui market [12] Company Strategy and Development Direction - The company focuses on maintaining strong credit performance through long-standing relationships, with 60% of clients having been with the bank for over 10 years [13] - There is an emphasis on enhancing revenue through strategic investments in commercial and wealth management areas [68][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in loan growth, particularly in the commercial sector, while consumer loan growth is expected to remain stable [50][92] - The company anticipates continued improvement in net interest income driven by asset repricing and deposit growth [94] Other Important Information - The company maintained a tier one capital ratio of 13.95% and a total capital ratio of 15% [40] - The board declared a dividend of 70 cents per common share for the first quarter of 2025 [41] Q&A Session Summary Question: Is the December margin of 2.26 a good starting point for the first quarter? - Management confirmed that the December margin is a clean number and a good starting point for the first quarter [47] Question: What is the outlook for loan growth and the impact of M&A activity? - Management indicated reasonable loan growth expectations, particularly in commercial loans, with no significant changes in competition anticipated [50][51] Question: What is the current allocation of the $2 billion in swaps between the securities and loan portfolios? - The allocation is approximately $600 million against the securities portfolio and $1.3 billion against the loan portfolio [76] Question: What initiatives are included in the revenue-enhancing strategies? - The initiatives are directed at commercial and wealth areas, aimed at enhancing the earning stream [68] Question: What is the current offering rate for CDs and expected repricing? - The current offering rate is around 3%, with expectations for repricing as rates adjust [83][84]