Bank of Hawaii Corp (BOH), Mid/Small Cap AI Pick of the Week

June 27, 2024

Weekly AI Pick from the S&P 400 or S&P 600

Company Overview

Bank of Hawaii Corporation (BOH) is a Delaware-incorporated bank holding company headquartered in Honolulu, Hawaii, serving regions including Hawaii, Guam, and other Pacific Islands. The company offers a wide array of financial products and services through its subsidiaries, which encompass securities brokerage, investment advisory services, and credit insurance. BOH operates through three primary business segments: Consumer Banking, Commercial Banking, and Treasury and Other. The competitive landscape includes both traditional and non-traditional financial service providers, and the company is subject to comprehensive federal and state regulatory oversight.

Significant regulatory frameworks impacting BOH include the Dodd-Frank Act of 2010, which introduced stringent capital and liquidity requirements, consumer protections, and restrictions on traditional banking activities. The 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act amended several of these provisions. Additionally, new capital rules adopted in 2013, aligned with Basel III standards and Dodd-Frank requirements, aim to strengthen the capital positions of U.S. banks. The FDIC oversees deposit insurance, with premiums based on risk and asset size, including special assessments due to recent bank failures. The Volcker Rule restricts proprietary trading and limits involvement with hedge funds and private equity funds, though it has not significantly affected BOH’s financials. Federal banking agencies impose guidelines for risk management, and the Community Reinvestment Act (CRA) mandates that banks meet the credit needs of their communities, with BOH earning an "outstanding" rating.

BOH also adheres to consumer protection and anti-money laundering laws, ensuring transparent and fair consumer interactions and robust policies against illicit activities. Emphasis on human capital management includes promoting diversity, inclusion, and continuous employee development, with a significant portion of the workforce being minorities and women. Recent employee engagement initiatives like "Recruit Connect" and "Manager Connect" aim to enhance internal connections and management development. The company has introduced innovative benefits such as mortgage discounts, student loan assistance, and well-being sessions to attract and retain a healthy workforce. Health and safety are prioritized to maintain operational continuity. Recent executive team changes, including new appointments to roles like Chief Strategy Officer and Chief Administrative Officer, reflect ongoing leadership development within the company.

By the Numbers

Annual 10-K Report Summary for Fiscal Year 2023:

• Net income: $171.2 million (a decrease of 24% from the previous year)
• Diluted earnings per share: Decreased by 24%
• Net interest income: $499.0 million (a decrease of $43.5 million from the previous year)