Bank of Hawaii's Margin Is 'Nearing Bottom': Analysts Explore Disappointing Q1 Results, Outlook

Bank of Hawaii Corp BOH reported disappointing revenues and earnings for the first quarter.

Here are some key analyst takeaways from the most recent first-quarter earnings report:

• Keefe, Bruyette & Woods analyst Kelly Motta reiterated an Underperform rating, while raising the price target from $55 to $58.
• Piper Sandler analyst Andrew Liesch maintained a Neutral rating, while cutting the price target from $65 to $60.

Check out other analyst stock ratings.

Keefe, Bruyette & Woods: Bank of Hawaii missed its NII (net interest income) margin guidance for the first quarter (Q1).

It contracted sequentially by 2 basis points (bps) amid "a higher-for-longer environment," Motta said. That the contraction came against the guidance of an expansion of 2 to 4 bps.

"Softer NII was offset by well-controlled expenses and strength in fees to drive a PPNR beat, and asset quality remains among the best in the group," the analyst wrote. "Management continues to evaluate expenses, which they now project to grow 1-2% in 2024E (BETTER than 2-2.5% previously).”

Piper Sandler: Although Bank of Hawaii's net interest margin contracted by 2bps to 2.11%, missing expectations, "we think the margin is nearing a bottom," Liesch said. While management indicated that deposit costs were rising by around 11 bps per month through most 2023, "this trend has slowed to roughly 2 bps/month since last November," he added.

"Of note, Bank of Hawaii has $3.0 billion of cash flows from maturing loans and securities annually that it can redeploy into higher yielding assets, and this dynamic is expected to generate approximately $5 million of additional interest income per quarter, all else equal," the analyst further wrote.

BOH Price Action: Shares of Bank of Hawaii had risen by 0.15% to $58.50 at the time of publication on Tuesday.

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