Since February 2026, Bank of Hawaii has been in a holding pattern, posting a small return of 4.5% while floating around $80.88. The stock also fell short of the S&P 500’s 11.8% gain during that period.
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Why Is Bank of Hawaii Not Exciting?
We’re passing on Bank of Hawaii for now. Here are three reasons we avoid BOH, plus one stock we’d rather own.
1. Net Interest Income Points to Soft Demand
Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.
Bank of Hawaii’s net interest income has grown at a 3.8% annualized rate over the last five years, much worse than the broader banking industry and in line with its total revenue. Its growth was driven by both an increase in its outstanding loans and net interest margin, which represents how much a bank earns in relation to its outstanding loan book.
2. Low Net Interest Margin Reveals Weak Loan Book Profitability
The net interest margin (NIM) is a key profitability indicator that measures the difference between what a bank earns on its loans and what it pays on its deposits. This metric measures how efficiently it can generate income from its core lending activities.
Over the past two years, we can see that Bank of Hawaii’s net interest margin averaged a poor 2.5%, reflecting its high servicing and capital costs.
3. EPS Growth Has Stalled
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Bank of Hawaii’s flat EPS over the last five years was below its 3% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Bank of Hawaii isn’t a terrible business, but it isn’t one of our picks. With its shares underperforming the market lately, the stock trades at 2× forward P/B (or $80.88 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We’re pretty confident there are superior stocks to buy right now. We’d recommend looking at a top digital advertising platform riding the creator economy.
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