Bank of Hawai‘i Q2 EPS Surges 31% on Net Interest Income Growth, Margin Expansion to 2.39%

Bank of Hawai‘i Corporation (NYSE: BOH) delivered a second-quarter 2025 performance that outpaced expectations on earnings per share (EPS) despite a modest revenue shortfall. The bank reported diluted EPS of $1.06, exceeding the FactSet consensus of $1.04 and a 31% increase year-over-year [1]. This result was driven by a 3.1% quarterly rise in net interest income to $129.7 million and a net interest margin expansion to 2.39%, up from 2.32% in Q1 2025 and 2.15% in Q2 2024 [1]. Total revenue reached $169.08 million, narrowly below the $177 million FactSet estimate [2], primarily due to a 4% year-over-year decline in noninterest income, which includes fees and wealth management services [1].

The bank’s net income surged to $47.6 million, reflecting an 8.3% quarter-on-quarter increase and a 39.8% year-on-year jump [1]. This growth was underpinned by disciplined expense management, with operating expenses rising 2.3% to accommodate technology investments and regulatory compliance [3]. Asset quality remained robust, with a 0.34% nonperforming loan ratio, down from 0.41% in the prior quarter [3]. Total non-performing assets increased to $17.9 million, though the ratio to total loans and leases stayed stable, indicating effective risk management [1].

Capital strength continued to bolster the bank’s resilience. The Tier 1 Capital Ratio improved to 14.17% as of June 30, 2025, from 13.93% in Q1, supported by retained earnings and reduced risk-weighted assets [1]. The Tier 1 Leverage Ratio also rose to 8.46% [1], while total assets stood at $23.7 billion, slightly lower than the previous quarter due to declines in cash equivalents and loans, partially offset by higher investment securities [1]. In contrast, another source cited total assets at $31.7 billion, up 1.5% from Q1, with customer deposits reaching $18.3 billion, a 2.1% increase [3].

Looking ahead, BOH maintained its quarterly dividend at $0.70 per common share, aligning with Q1, and declared payments for preferred stock series in August and September 2025 [1]. Analysts noted that the EPS beat underscores the bank’s ability to navigate a challenging interest rate environment, with margin expansion and strong net interest income growth positioning BOH to outperform regional peers if sustained [3]. However, the revenue shortfall in noninterest income highlights vulnerabilities in fee-based services, which may require strategic adjustments to counter flat loan growth [3]. Management emphasized digital banking expansion and branch network optimization as priorities for long-term profitability [1].

The company’s balance sheet and capital ratios remain well above regulatory thresholds, providing a solid foundation for future initiatives. While headwinds in non-interest income persist, the focus on cost discipline and asset quality suggests BOH is well-positioned to capitalize on opportunities amid macroeconomic uncertainty.

Source: [1] [Bank of Hawaii Q2 Earnings, Revenue Rise; Dividend Maintained] https://www.marketscreener.com/news/bank-of-hawaii-q2-earnings-revenue-rise-dividend-maintained-ce7c5fd8dd88f420

[2] [Earnings Flash (BOH) Bank of Hawai'i Corporation Reports Q2 Revenue] https://www.marketscreener.com/news/earnings-flash-boh-bank-of-hawai-i-corporation-reports-q2-revenue-174-5m-vs-factset-est-of-177-ce7c5fd8da81f025

[3] [Bank of Hawaii (BOH) Q2 Earnings Report Preview] https://finviz.com/news/116553/bank-of-hawaii-boh-q2-earnings-report-preview-what-to-look-for