Bank of Hawai‘i Q3 2026 Earnings Rise as Net Interest Margin Expands

Bank of Hawai‘i Corporation (NYSE: BOH) reported higher third-quarter 2026 earnings as net interest income and net interest margin increased for a 10th consecutive quarter, outweighing lower noninterest income. Preliminary net income rose to $64.3 million from $53.3 million a year earlier, while diluted earnings per common share increased to $1.49 from $1.20.

Net interest income reached $156.1 million, up from $153.6 million in the second quarter and $136.7 million a year earlier. Net interest margin expanded to 2.82%, compared with 2.78% in the linked quarter and 2.46% in the third quarter of 2025. The cost of total deposits held at 1.27%, below the 1.78% median shown for the KBW Regional Banking Index.

Total revenue increased to $198.8 million from $182.6 million a year earlier. Noninterest income was $42.7 million, down from $43.3 million in the prior quarter and $46.0 million a year ago. The year-earlier period included about $3.0 million of fee income from merchant services, a business sold in the fourth quarter of 2025.

Noninterest expense was $112.3 million, little changed from $112.4 million a year earlier. Operating income rose to $86.5 million from $70.3 million, while the provision for credit losses increased to $2.8 million from $2.5 million. Return on average assets was 1.07%, and return on average common equity was 15.38%.

Loans Grow as Deposits Decline

Loans and leases ended the quarter at $14.37 billion, up 0.6% from the second quarter and 2.5% year over year. Commercial loans totaled about $6.3 billion, an increase of 3.7% from a year earlier, while consumer loans rose 1.6% to approximately $8.1 billion. On a year-to-date annualized basis, commercial loans increased 5.1% and total loans and leases grew 2.7%.

Total deposits declined 2.0% sequentially and 2.8% from a year earlier to $20.48 billion. Noninterest-bearing balances accounted for 26.5% of deposits. Bank of Hawai‘i reported a 34.3% share of its deposit market in 2026, up from 27.6% in 2006, based on FDIC data presented by the company.

The bank estimated that cash-flow repricing contributed $2.9 million to quarterly net interest income in the third quarter, assuming maturing and prepaid assets were reinvested under the conditions specified in the presentation. Deposit repricing and mix shifts had a negative $1.4 million quarterly impact.

The presentation also modeled the effect of a 25-basis-point increase in the federal funds rate. Rate-sensitive earning assets would add an estimated $4.1 million to quarterly net interest income, while deposit costs would reduce it by $3.1 million in the short term and $4.4 million over the longer term. These estimates exclude the rate impact on short-term borrowings and depend on the company’s deposit-beta assumptions.

Wealth Fees Increase

Third-quarter trust and asset-management fees rose to $13.4 million from $12.6 million a year earlier, while annuity and insurance fees increased to $2.1 million from $1.1 million. Combined wealth-related revenue reached $15.5 million, up 13.5% year over year.

For the first nine months of 2026, trust and asset-management fees were $39.6 million and annuity and insurance fees were $5.6 million. Their combined total of $45.2 million was 11.5% higher than in the comparable 2025 period.

Credit Metrics Remain Low, Though Some Indicators Rise

The annualized net charge-off rate was 0.09%, compared with 0.10% in the second quarter. The allowance for credit losses equaled 1.02% of outstanding loans and leases.

Real estate secured 80% of the loan portfolio, with a weighted-average loan-to-value ratio of 51%. Commercial real estate represented 31% of total loans, or $4.5 billion, and carried a weighted-average LTV of 55%. Only $101 million, or 2.3% of the CRE portfolio, had an LTV above 80%, and half of scheduled CRE maturities fall in 2031 or later.

Other credit indicators were less uniform. Delinquencies increased to 0.46% of period-end loans from 0.41% in the second quarter and 0.29% a year earlier. Nonperforming assets rose to 0.30% of loans plus other real estate owned, compared with 0.08% in the prior quarter. Criticized loans declined sequentially to 2.37% of period-end loans from 2.81%, but remained above 2.05% a year ago. The company said 93% of criticized balances were secured by real estate, with a weighted-average LTV of 61%.

Capital Supports Increased Buyback Authorization

Bank of Hawai‘i reported a preliminary common equity Tier 1 ratio of 12.10%, a Tier 1 capital ratio of 14.41% and a total capital ratio of 15.43% at September 30. The bank repurchased $20.2 million of common shares during the quarter and increased its repurchase authorization by $200 million, bringing the available program to $268.7 million.

Readily available liquidity totaled $10.2 billion, compared with $7.5 billion of uninsured and uncollateralized deposits. Uninsured and uncollateralized balances represented 37% of total deposits, while 10% were uninsured but collateralized.

The company cautioned that its forward-looking statements depend on assumptions regarding financial conditions, operations and business prospects, and it has not committed to update those statements for subsequent events or circumstances.