Bank of Hawai’i Corporation (NYSE: BOH) reported strong financial results for the second quarter of 2025, with an increase in earnings per share and net income. The bank continued to perform well, reflecting improvements in net interest income, an expanded net interest margin, and stable asset quality.

Financial Highlights: Improved Profitability and Interest Income

Bank of Hawai’i Corporation’s diluted earnings per common share were $1.06 in the second quarter of 2025, up from $0.97 in the linked quarter and $0.81 in the same period last year. Net income for the second quarter reached $47.6 million, an 8.3% increase from the linked quarter and a 39.8% increase compared to the same period in 2024. The return on average common equity for the second quarter of 2025 was 12.50%, compared with 11.80% in the linked quarter and 10.41% in the same period last year.

Net interest income totaled $129.7 million in the second quarter of 2025, a 3.1% increase from the linked quarter and a 12.9% increase compared to the same period last year. This increase was primarily driven by higher earning asset yields, as cash flows from fixed-rate assets rolling off at lower interest rates were reinvested at higher current rates (fixed asset repricing). The net interest margin expanded to 2.39% in the second quarter of 2025, an increase of 7 basis points from the linked quarter and 24 basis points from the same period last year.

Operational Performance and Asset Quality

Noninterest income was $44.8 million in the second quarter, a 1.7% increase from the linked quarter and a 6.4% increase from the same period in 2024. The increase from last year was primarily due to increases in other income, service charges on deposit accounts, fees, exchange, and other service charges, bank-owned life insurance income, and a decrease in investment securities losses. Noninterest expense was $110.8 million in the second quarter, a slight increase of 0.3% from the linked quarter and 1.4% from the same period last year. This increase was primarily due to higher FDIC insurance costs, partially offset by lower salaries and benefits.

The bank’s overall asset quality remained strong during the second quarter of 2025. Provision for credit losses was $3.3 million in the second quarter, unchanged from the linked quarter. Total non-performing assets stood at $17.9 million as of June 30, 2025, a slight increase of $0.4 million from March 31, 2025. The bank’s average deposit balances grew, while average loan balances held steady. The average yield on loans and leases was 4.80% in the second quarter of 2025, up 8 basis points from the linked quarter. The effective tax rate for the second quarter of 2025 was 21.19%, lower than 21.67% in the linked quarter and 24.77% in the same period last year. The lower effective tax rate in the current quarter was primarily due to an increase in tax-exempt income.

Balance Sheet, Capital, and Dividends

Total assets of the bank were $23.7 billion as of June 30, 2025, a 0.7% decrease from March 31, 2025, but a 1.8% increase from June 30, 2024. The investment securities portfolio totaled $7.6 billion, a 1.8% increase from March 31, 2025, and a 6.2% increase compared to June 30, 2024. This portfolio remains largely comprised of securities issued by U.S. government agencies and U.S. government-sponsored enterprises.

Total loans and leases stood at $14.0 billion as of June 30, 2025, a 0.8% decrease from March 31, 2025, but a 1.2% increase from June 30, 2024. Total deposits amounted to $20.8 billion as of June 30, 2025, a slight decrease of 1.0% from March 31, 2025, but a 1.9% increase from June 30, 2024. Noninterest-bearing deposits comprised 26.1% of total deposit balances as of June 30, 2025, flat from March 31, 2025. Average total deposits for the second quarter of 2025 were $20.7 billion, up 0.1% from the linked quarter and 1.7% from the same period last year. These figures highlight the bank’s ability to maintain a stable deposit base, even if a portion of it carries a higher interest rate. Furthermore, there was a slowing of the shift from noninterest-bearing and lower-interest-bearing deposits to higher-interest-bearing deposit accounts.

The bank’s capital levels remain well above regulatory well-capitalized minimums. The Tier 1 Capital Ratio was 14.17% as of June 30, 2025, up from 13.93% at March 31, 2025. This increase was due to retained earnings growth and decreases in risk-weighted assets. The company’s Board of Directors declared a quarterly cash dividend of $0.70 per share on the company’s outstanding common shares, payable on September 15, 2025, to shareholders of record on August 29, 2025. As of June 30, 2025, the remaining buyback authority under the share repurchase program was $126.0 million.

Outlook and Conclusion

“Bank of Hawai’i continued to perform well during the second quarter of 2025,” said Peter Ho, Chairman and CEO. “Our net interest income and net interest margin expanded for the fifth consecutive quarter. Average deposit balances grew while average loan balances held steady. Our credit quality remained excellent, and we continued to maintain our disciplined approach to expense management”. The reports reflect the bank’s financial resilience, its ability to manage expenses efficiently, and to increase its interest income in the current interest rate environment.