Sun. Sep 24th, 2023
    Understanding the Value of NYSE:BOH^A Bank of Hawaii Corporation Depositary Shares

    The Bank of Hawaii Corporation, a regional commercial bank, is a significant player in the financial sector, listed on the NYSE under the ticker symbol BOH. However, a lesser-known but equally important aspect of its financial structure is the Bank of Hawaii Corporation Depositary Shares, each representing a 1/40th interest in a share of 4.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock Series A, listed under the ticker symbol NYSE:BOH^A.

    These depositary shares are essentially fractions of a preferred stock, offering investors an opportunity to partake in the bank’s financial success without having to invest in a full share. The 1/40th interest in a share of 4.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock Series A means that each depositary share is entitled to a proportional fraction of the dividends, voting rights, and liquidation proceeds of a full preferred share.

    The fixed rate of 4.375% is a significant feature of these depositary shares. This rate indicates the annual dividend that the preferred stock pays out, expressed as a percentage of its par value. The term ‘fixed rate’ means that this dividend rate does not change over time, providing a predictable income stream for investors. This is particularly attractive to income-focused investors who prefer steady returns over the potential for high, but uncertain, capital gains.

    The non-cumulative aspect of these shares is another critical factor to consider. In the context of preferred shares, non-cumulative means that if the bank chooses not to pay a dividend in any given period, those missed dividends are not accumulated to be paid out in the future. This characteristic can be a double-edged sword. On one hand, it can limit the downside risk for the bank during tough financial times. On the other hand, it can lead to less predictable income for investors, as their dividends are not guaranteed.

    The term ‘perpetual’ refers to the fact that these preferred shares have no maturity date. This means that the bank is not obligated to redeem these shares at a specific time in the future. Instead, they can remain outstanding indefinitely, providing a continuous source of capital for the bank. For investors, this can mean a steady, long-term income stream, as long as the bank continues to pay dividends.

    The Series A designation simply refers to the fact that these are the first series of preferred shares that the bank has issued. This is a common practice among corporations, as it allows them to issue multiple series of preferred shares, each with its own unique terms and conditions.

    In conclusion, the NYSE:BOH^A Bank of Hawaii Corporation Depositary Shares offer a unique investment opportunity. They provide a way for investors to gain exposure to the financial success of the Bank of Hawaii Corporation, while also offering a steady, albeit not guaranteed, income stream. However, like all investments, they come with their own set of risks and rewards, and potential investors should carefully consider these factors before investing.