Bank of Hawaii (NYSE:BOH) is a prominent bank with a strong presence in its geographic area and is currently undervalued. Its Price/TBV per Share ratio is only 1.80x, lower than the 10-year average of 2.55x.
The bank boasts a stable deposit base, with a high level of trust among its clients. A significant portion of its deposits come from long-standing relationships, giving it a competitive edge in a market dominated by only a few players.
However, the bank faces challenges, such as unrealized losses and a non-diversified business model that leaves it vulnerable to economic downturns, like the impact of the Maui wildfires on local deposits.
Despite stagnant loan growth, Bank of Hawaii maintains a high-quality loan portfolio and a low cost of deposits, which offsets the deposit stall. The bank’s profitability could improve with reinvestment opportunities and a reduction in deposit costs.
The bank’s dividend has been resilient but not consistently growing. While the current dividend yield is attractive at around 5%, future growth may be limited.
In terms of valuation, BOH is undervalued based on its Price/TBV per Share and P/E ratios. Its fair value per share is estimated to be higher than the current market price.
Risks for the bank include unrealized losses, dependence on Hawaii’s economy, and a more restrictive monetary policy than expected. These factors could impact the bank’s financial stability and stock performance.
In conclusion, despite its challenges, Bank of Hawaii presents opportunities for growth and remains a buy due to its strong fundamentals and undervaluation.