Bank of Hawaii Raises NIM by 13bp, Reprices $643M Loans, Cuts Deposit Costs
Bank of Hawaii’s net interest margin rose 13 basis points as it repriced $643 million of loans to 5.6%, and deposit costs fell 17 basis points with a 36% beta. It forecasts $112 million of expense growth including stock and severance and will favor buybacks over dividend increases while pausing loan growth.
1. Net Interest Margin and Asset Repricing
Bank of Hawaii achieved a 13 basis point increase in net interest margin in Q1 by mechanically repricing $643 million of fixed-rate loans and investments from a 4% roll-off yield to a 5.6% roll-on yield, marking the eighth consecutive quarter of NIM growth.
2. Expense Guidance and Shareholder Returns
Management set full-year expense growth at $112 million, inclusive of stock compensation and severance, and signaled that additional shareholder returns will be delivered through share buybacks rather than dividend hikes, reflecting a conservative capital deployment stance.
3. Deposit Costs and Market Position
Total deposit costs declined by 17 basis points this quarter, achieving a cost beta of 36% as the bank actively repriced its CD portfolio, while its dominant position in Hawaii’s concentrated market supports attractive funding economics.
4. Loan Growth Outlook
The company has paused setting new loan-growth targets, citing uncertainty in home equity lines and indirect lending segments, and requires clearer macroeconomic visibility before raising full-year loan growth expectations.