Bank of Hawaii Corporation Sees Continued Success in Q1 2025 with Strong Net Interest Income and Pristine Credit Quality
Bank of Hawaii Corporation recently reported a solid first quarter for 2025, marking the fourth consecutive quarter of significant growth. According to Peter Ho, Chairman and CEO, net interest income grew by just over 4.6% on a linked basis to $125.8 million. This was coupled with an improvement in net interest margin.
Ho also highlighted that period-end deposits and loans saw substantial annualized growth of 7.3% and 1.1%, respectively, while noninterest-bearing deposits remained stable during the quarter. The company's capital levels have improved significantly from a year ago, underscoring its financial health.
In discussing market conditions, Ho noted that Bank of Hawaii continues to hold the #1 position in market share as shown in the latest FDIC annual summary of deposits. Moreover, the company leads in deposit market share growth on both short-term and long-term bases. This success is attributed to prioritizing margin over volume, with deposit funding costs falling for a second straight quarter.
Notably, noninterest-bearing demand plus other low-yielding deposits have trended positively during this period. Economic conditions in Hawaii remained stable, with unemployment rates well below the national average and visitor market stability despite some impact from the Maui market. Residential Oahu real estate trends are also positive.
Brad Shairson, Chief Risk Officer, provided an overview of the company's credit portfolio, which has consistently performed strongly over recent quarters. The loan book is balanced between consumer and commercial loans, with consumer accounting for approximately half of total loans at $7.9 billion. Secured lending against real estate dominates this segment, where 86% of the consumer portfolio is comprised of residential mortgages or home equity loans.
The remaining 14% consists of auto and personal loans, which have weighted average FICO scores of 731 and 759, respectively. Shairson noted that the commercial loan book is well diversified across industries and carries a weighted average LTV of just 55%. He also highlighted that within Hawaiian real estate in Oahu, consistent vacancy rates and flat inventory levels support a stable market.
In conclusion, Bank of Hawaii Corporation's Q1 2025 performance showcases its continued success in managing net interest income while maintaining pristine credit quality. This is underpinned by strong capital levels, successful deposit management, and stable market conditions in Hawaii.
