# Bank of Hawaii’s SWOT analysis: stock faces headwinds despite improving margins

Bank of Hawaii Corporation (NYSE:BOH) continues to navigate a challenging financial landscape as multiple analysts maintain an "Underweight" stance on the regional banking institution. Despite positive industry trends and improving financial metrics, the bank faces persistent skepticism regarding its relative performance potential compared to peers.

Financial Performance and Outlook

Bank of Hawaii has shown some encouraging signs in its financial performance throughout 2025. The company’s earnings trajectory appears positive based on analyst projections, with earnings per share (EPS) estimates for the first fiscal year reaching 4.70 as of October 2025, up from 4.58 in April 2025. Similarly, second fiscal year EPS projections have increased to 5.46 from 5.35 during the same period.

Net interest margin (NIM) improvements have become a notable bright spot for the institution. Analysts note that NIM tailwinds are affecting both sides of the balance sheet, contributing to an earnings beat and the subsequent upward revision of estimates. This development suggests the bank has been effectively managing its interest income and expenses in the current rate environment.

The company appears to be benefiting from strategic repositioning of its securities portfolio. Analysts indicate that this approach, combined with reduced headwinds from swaps, has positively impacted the bank’s net interest income (NII). These financial improvements have occurred while the company has largely maintained its broader guidance, indicating a degree of stability in its overall outlook.

Leadership Transition

A significant development for Bank of Hawaii is the announced departure of Vice Chair and CFO Dean Shigemura from his CFO role, effective June 30, 2025. Shigemura, a long-standing executive who has been with the institution since 1999 and served as CFO since January 2017, will transition to an internal consultant position for one year following his departure from the CFO role.

This leadership change represents a potential inflection point for the bank’s financial strategy. Shigemura’s extensive experience with the institution has spanned multiple economic cycles and banking industry transformations. The transition period as an internal consultant may help ensure continuity of financial operations and strategic initiatives, though the bank will need to manage this change carefully to maintain investor confidence.

Industry Context

The regional banking sector presents a complex picture in 2025. Analysts maintain a positive industry view, suggesting favorable conditions for banking operations broadly. This positive sector outlook makes the consistent "Underweight" ratings for Bank of Hawaii particularly notable, as they indicate expectations of relative underperformance despite the supportive industry environment.

As a regional bank focused primarily on the Hawaiian market, BOH faces unique geographical considerations that differentiate it from mainland competitors. The Hawaiian economy has its own distinct drivers, including tourism, military presence, and international trade relationships with Pacific Rim countries. These factors can create both opportunities and challenges that may not be fully captured in broader industry analyses.

Bear Case

How might the CFO transition impact Bank of Hawaii’s financial strategy?

The upcoming departure of CFO Dean Shigemura introduces an element of uncertainty into Bank of Hawaii’s financial leadership. With nearly a decade as CFO and over 25 years at the institution, Shigemura represents significant institutional knowledge and strategic continuity. His transition to a consultant role may help mitigate disruption, but any leadership change carries execution risk.

The timing of this transition comes as the bank implements its securities repositioning strategy and manages its swap positions. These technical financial maneuvers require experienced oversight, and a change in financial leadership during their implementation could potentially lead to execution challenges or strategic shifts. Investors may remain cautious until the new CFO demonstrates effective management of these initiatives.

Why do analysts maintain an "Underweight" rating despite improving metrics?

The persistent "Underweight" ratings from multiple analysts through 2025 suggest underlying concerns about Bank of Hawaii’s competitive positioning and growth potential relative to peers. This skepticism has remained consistent even as the bank has shown improvements in key metrics like NIM and projected EPS.

Analysts may be factoring in structural limitations to the bank’s growth potential given its geographic concentration in Hawaii. The island state has natural constraints on population growth and economic expansion compared to faster-growing mainland regions. Additionally, the bank may face efficiency challenges or have less favorable cost structures compared to competitors, limiting its ability to translate improved margins into market-beating performance.

The gap between the current stock price (around $64-$65) and analyst price targets ($67-$68) also suggests limited upside potential compared to other investment opportunities in the sector. This modest premium may not provide sufficient compensation for perceived risks, leading to the continued cautious stance.

Bull Case

How could improving NIM and NII trends drive future performance?

Bank of Hawaii’s improving net interest margin represents a fundamental strength that could potentially drive better-than-expected performance. As these margin improvements flow through to the bottom line, the bank could see accelerating earnings growth that might eventually lead to analyst upgrades.

The strategic repositioning of securities and reduced swap headwinds demonstrate proactive management of the balance sheet. If these initiatives continue to yield positive results, the bank could outperform the relatively modest expectations currently built into analyst models. Successful execution could lead to expanded margins, improved return on equity, and potentially higher valuations over time.

The consistent upward revisions in EPS estimates between April and October 2025 also suggest positive momentum that could continue. If this trend persists, the gap between current performance and analyst expectations may narrow, potentially leading to rating improvements.

What advantages might Bank of Hawaii’s regional focus provide?

While geographic concentration presents certain limitations, it also offers potential advantages. Bank of Hawaii’s deep understanding of its regional market could provide competitive differentiation and customer loyalty that national banks struggle to match. The Hawaiian economy has unique characteristics that may require specialized knowledge to navigate effectively.

The bank’s established presence in Hawaii could serve as a defensive moat against competition, potentially allowing for premium pricing on products and services. This regional dominance may provide stability even during broader economic fluctuations, particularly if Hawaii’s economy demonstrates resilience different from mainland trends.

Additionally, Hawaii’s strategic location as a gateway between the United States and Asia-Pacific markets could present unique opportunities for banking services related to international trade and investment. If Bank of Hawaii can effectively capitalize on these cross-border flows, it might develop growth vectors not fully appreciated in current analyst assessments.

SWOT Analysis

Strengths

• Improving net interest margin (NIM) affecting both sides of the balance sheet
• Increasing EPS projections from April to October 2025
• Strategic securities repositioning showing positive results
• Reduced headwinds from swaps
• Long-standing presence in Hawaiian market

Weaknesses

• Consistently rated "Underweight" by multiple analysts
• Executive leadership transition with CFO stepping down
• Stock trading below analyst price targets
• Potential geographic growth limitations
• Possible efficiency or cost structure challenges relative to peers

Opportunities

• Positive industry outlook for banking sector
• Potential for continued margin expansion
• Possible benefits from unique Hawaiian market positioning
• Strategic value of transition period with departing CFO serving as consultant
• Potential for exceeding modest analyst expectations

Threats

• Risk of underperformance relative to banking sector peers
• Execution challenges during CFO transition
• Geographic concentration in Hawaiian market
• Potential for increased competitive pressure
• Possible regional economic headwinds specific to Hawaii

Analysts Targets

• Barclays Capital Inc. - "Underweight" rating, $68.00 price target (October 28, 2025)
• Piper Sandler - "Underweight" rating, $68.00 price target (April 21, 2025)
• Barclays Capital Inc. - "Underweight" rating, $67.00 price target (April 22, 2025)

This analysis is based on information available as of October 30, 2025, with analyst reports dating from April to October 2025.

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