BOH Q2 Earnings Beat on Strong NII, Stock Dips on Lower Fee Income

BOH’s results benefited from higher net interest income (NII), margin expansion, solid loan growth and strong credit quality. However, lower fee income and a decline in deposit balances remained headwinds.

The company’s net income (GAAP basis) came in at $63.8 million, up 34% year over year.

Bank of Hawaii’s Quarterly Revenues & Expenses Rise

BOH’s quarterly revenues increased 13% year over year to $196.9 million. The top line missed the Zacks Consensus Estimate of $198.3 million.

NII was $153.6 million, up 18% year over year. Net interest margin (NIM) increased 39 basis points to 2.78%. Our estimate for NII and NIM was $154.8 million and 2.80%, respectively.

Non-interest income was $43.3 million, down 3% year over year. The decline was mainly due to lower fees, exchange and other service charges and higher net investment securities losses, partially offset by higher trust and asset management fees, annuity and insurance income and bank-owned life insurance income. Our estimate for the metric was $42.1 million.

Non-interest expenses rose marginally year over year to $111.2 million. Higher salaries and benefits, occupancy, equipment, professional fees and FDIC insurance costs were largely offset by lower other expenses. Our estimate for the metric was $112.9 million.

The efficiency ratio was 56.47%, down from 63.49% in the year-ago period. A lower efficiency ratio indicates improved profitability.

BOH’s Loans Increase, Deposits Decline

As of June 30, 2026, total loans and leases increased nearly 1% from the prior quarter to $14.3 billion. Our estimate for total loans and leases was $13.9 billion.

Total deposits decreased marginally on a sequential basis to $20.9 billion. Our estimate for total deposits was $21.1 billion.

Bank of Hawaii’s Credit Quality: Mixed Bag

As of June 30, 2026, non-performing assets were $11.5 million, down 36% year over year. Our estimate for the metric was $13.9 million.

Net loan and lease charge-offs were $3.4 million, up from $2.6 million in the year-ago quarter. Our estimate for the metric was $1.1 million.

Provision for credit losses was $3.6 million, up from $3.3 million a year earlier. Our estimate for the metric was $2.7 million.

The allowance for credit losses declined 1% year over year to $147 million. Our estimate for the metric was $148.6 million.

BOH’s Capital Ratios Improve

As of June 30, 2026, the Tier 1 capital ratio was 14.45%, up from 14.17% as of June 30, 2025. The total capital ratio increased to 15.48% from 15.23% a year ago.

The ratio of tangible common equity to risk-weighted assets was 10.38%, up from 9.62% at the end of the year-ago quarter.

Bank of Hawaii’s Profitability Ratios Improve

Return on average assets was 1.07% at the end of the second quarter of 2026, up from 0.81% in the prior-year quarter. Return on average shareholders' equity improved to 13.74% from 11.21% a year ago.

BOH's Share Repurchase Update

In the reported quarter, Bank of Hawaii repurchased 216 thousand shares of common stock at a total cost of $17 million. As of June 30, 2026, the total remaining buyback authority under the share repurchase program was $88.9 million.

Our View on Bank of Hawaii

Higher NII, continued margin expansion, healthy loan growth and a strong capital position are expected to support BOH's financial performance. Nonetheless, muted fee income growth, elevated expenses and deposit pressure are likely to remain challenges.

Currently, BOH carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Regions Financial Corporation RF has posted adjusted second-quarter 2026 earnings of 68 cents per share, beating the Zacks Consensus Estimate of 64 cents. Also, this compares favorably with earnings of 60 cents in the year-ago quarter.

Increases in net interest income, wealth management income, service charges and lower provisions supported RF’s results. However, higher non-interest expenses and securities losses played spoilsport.

The PNC Financial Services Group, Inc. PNC delivered adjusted earnings per share of $4.85 in the second quarter of 2026, beating the Zacks Consensus Estimate of $4.51 and up from $3.85 a year ago.

PNC’s results reflected higher net interest income, strong fee income growth, an improvement in the net interest margin and solid loan growth. However, higher expenses and a decline in the deposit balance were headwinds.

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