Overview of Bank of Hawaii’s Financial Performance

Bank of Hawaii, a regional financial services company serving Hawaii, Guam, and other Pacific Islands, reported strong financial results for the third quarter of 2025. Net income for the quarter was $53.3 million, a 32% increase compared to the same period in 2024. Diluted earnings per share was $1.20, up 29% year-over-year.

The company’s return on average common equity was 13.59% in the third quarter, up from 11.50% a year earlier. Net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and borrowings, increased 16% compared to the third quarter of 2024. The net interest margin, a key measure of profitability, expanded by 28 basis points to 2.46%.

The provision for credit losses, which represents the amount set aside to cover potential loan defaults, decreased to $2.5 million from $3.0 million in the prior-year quarter. Noninterest income, which includes fees and other non-interest sources of revenue, grew 2% year-over-year. Noninterest expense increased 5%, primarily due to higher salaries, benefits, and data processing costs.

Trends in Revenue and Profit

Bank of Hawaii’s net interest income growth was driven by an increase in the average balance of earning assets, such as loans and investments, as well as higher yields on those assets. The company was able to grow its loan and investment portfolios while also benefiting from the rising interest rate environment.

On the expense side, the increase in noninterest expense was largely due to higher personnel costs, including salaries, incentive compensation, and employee benefits. The company also saw higher data processing fees related to its online banking platform and debit card transactions. However, these expense increases were offset by the decline in the provision for credit losses, which contributed to the overall improvement in profitability.

The company’s effective tax rate decreased to 21.3% in the third quarter of 2025, down from 23.3% a year earlier, primarily due to a decrease in tax expense from discrete items and an increase in tax-exempt investment income.

Strengths and Weaknesses

One of Bank of Hawaii’s key strengths is its strong presence and brand recognition in its core markets of Hawaii, Guam, and other Pacific Islands. This has allowed the company to maintain a stable deposit base and generate consistent loan growth, particularly in commercial real estate and residential mortgages. The company’s prudent risk management practices, as evidenced by its low levels of non-performing assets and net charge-offs, are also a significant strength.

However, the company’s reliance on the Hawaii economy, which can be sensitive to changes in tourism and federal government spending, represents a potential weakness. The company is also exposed to interest rate risk, as changes in interest rates can impact the value of its investment securities portfolio and the profitability of its lending activities.

Outlook and Future Prospects

Looking ahead, Bank of Hawaii remains cautiously optimistic about the economic outlook for its markets. While tourism has softened, the sector continues to be a vital contributor to Hawaii’s recovery. Construction activity remains strong, and the state’s unemployment rate is lower than the national average.

The company is focused on maintaining its strong market position, delivering exceptional customer service, and prudently managing its balance sheet and risk profile. It will continue to invest in technology and innovation to enhance its product and service offerings, while also remaining disciplined in its approach to credit underwriting and capital management.

Overall, Bank of Hawaii’s solid financial performance, strong market position, and prudent risk management strategies position the company well to navigate the current economic environment and capitalize on future growth opportunities in its core markets.