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

Bank of Hawaii Corp (NYSE: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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