Cuộc họp công bố kết quả kinh doanh Q3 2026 của Bank of Hawaii (BOH): NIM mở rộng quý thứ 10 liên tiếp

Tập đoàn Bank of Hawaii Corporation (NYSE: BOH) đã báo cáo kết quả kinh doanh quý 3/2026 tăng trưởng nhờ việc tái ấn định lãi suất của tài sản sinh lời giúp thúc đẩy thu nhập lãi thuần và biên lãi thuần. Các chỉ số tín dụng nhìn chung vẫn khả quan, mặc dù một khoản vay thương mại đã làm gia tăng tài sản nợ xấu.

Các điểm chính

• Lợi nhuận ròng đạt 64,3 triệu USD, tăng 1,4% so với quý trước và 20,5% so với cùng kỳ năm ngoái. EPS pha loãng đạt 1,49 USD, tăng 0,7% so với quý trước và 24,2% so với cùng kỳ năm ngoái.
• Thu nhập lãi thuần tăng 2,5 triệu USD lên 156,1 triệu USD, trong khi biên lãi thuần (NIM) mở rộng 4 điểm cơ bản lên 2,82%. Cả hai chỉ số này đều cải thiện trong quý thứ 10 liên tiếp.
• Tổng dư nợ cho vay tăng 85 triệu USD, tương đương 0,6%, dẫn đầu là khoản tăng 73 triệu USD từ các khoản vay thương mại. Ban lãnh đạo dự kiến tăng trưởng dư nợ cho vay tổng thể sẽ duy trì ở mức từ thấp đến trung bình một chữ số, chủ yếu nhờ hoạt động cho vay thương mại.
• Tiền gửi bình quân giảm 0,8%, phản ánh việc khách hàng sử dụng thanh khoản và việc chủ động sụt giảm khoảng 200 triệu USD nguồn vốn công có chi phí cao hơn. Ban lãnh đạo dự kiến tiền gửi sẽ tăng trưởng nhẹ trong quý 4.
• Tỷ lệ tài sản nợ xấu tăng từ 8 điểm cơ bản lên 30 điểm cơ bản do một khoản vay thương mại có thế chấp bằng bất động sản. Ban lãnh đạo dự kiến sẽ xử lý xong rủi ro này trong quý 4/2026 hoặc đầu năm 2027, đồng thời mức tổn thất dự kiến là không đáng kể và đã được trích lập dự phòng đầy đủ.
• Bank of Hawaii đã mua lại 20 triệu USD cổ phiếu phổ thông trong quý và có kế hoạch mua thêm 20 triệu USD nữa trong quý 4. Hội đồng quản trị sau đó đã tăng hạn mức ủy quyền mua lại thêm 200 triệu USD.

Dữ liệu tài chính cốt lõi

Hoạt động kinh doanh và vận hành

Cho vay thương mại là nguồn động lực chính thúc đẩy tăng trưởng bảng cân đối kế toán. Dư nợ cho vay thương mại tăng 73 triệu USD, tương đương 1,2%, nhờ hoạt động của khách hàng và danh mục dự án tiềm năng vững chắc. Cho vay tiêu dùng chỉ tăng nhẹ do lãi suất cao tiếp tục hạn chế nhu cầu mua nhà ở. Dù vậy, ban lãnh đạo đã báo cáo danh mục vay thế chấp nhà đất vẫn ổn định và nhận thấy nhu cầu tiềm năng từ những chủ sở hữu nhà không muốn tái tài trợ các khoản thế chấp ưu tiên có lãi suất thấp hơn.

Chất lượng tín dụng tiếp tục duy trì mạnh mẽ trên hầu hết các danh mục. Cho vay tiêu dùng đạt tổng cộng khoảng 8,1 tỷ USD, trong đó thế chấp nhà ở và cho vay thế chấp nhà đất chiếm 86%. Các khoản vay này có tỷ lệ cho vay trên giá trị tài sản đảm bảo (LTV) bình quân gia quyền là 49% và điểm FICO trung bình là 798.

Tổng dư nợ cho vay thương mại đạt 6,3 tỷ USD. Bất động sản thương mại (CRE) chiếm 4,5 tỷ USD, tương đương 31% tổng dư nợ cho vay, với tỷ lệ LTV bình quân gia quyền dưới 60% trên tất cả các danh mục CRE. Hơn 60% các khoản vay CRE sẽ đáo hạn vào năm 2030 hoặc muộn hơn, giúp hạn chế rủi ro tái tài trợ trong ngắn hạn. Chỉ 2,3% các khoản vay CRE có tỷ lệ LTV trên 80%.

Mảng quản lý tài sản tiếp tục mở rộng. Phí ủy thác và quản lý tài sản cộng với phí bảo hiểm nhân thọ trả tiền định kỳ và bảo hiểm đạt tổng cộng 45,2 triệu USD trong 9 tháng đầu năm 2026, tăng 11,5% so với cùng kỳ năm 2025. Ban lãnh đạo nhấn mạnh các cơ hội tiếp theo từ sự phối hợp giữa Ngân hàng Thương mại và Quản lý Tài sản, đặc biệt là trong quy hoạch thừa kế và chuyển giao quyền sở hữu.

Bank of Hawaii giữ lại hơn 34% thị phần tiền gửi ngân hàng. Tiền gửi không trả lãi chiếm khoảng 27% tổng tiền gửi, trong khi chi phí tiền gửi bình quân duy trì ở mức 1,27%.

Dự báo từ ban lãnh đạo

• Ban lãnh đạo dự kiến tiền gửi sẽ tăng trưởng nhẹ trong quý 4/2026 và tiếp tục tăng trưởng trong quý 1/2027, điều này sẽ làm giảm dần sự phụ thuộc vào các khoản vay ngắn hạn.
• Tăng trưởng cho vay tổng thể dự kiến duy trì ở mức từ thấp đến trung bình một chữ số, dẫn đầu bởi mảng cho vay thương mại.
• Thu nhập ngoài lãi đã chuẩn hóa trong quý 4/2026 dự báo đạt khoảng 44 triệu USD.
• Chi phí ngoài lãi đã chuẩn hóa trong quý 4/2026 dự kiến khoảng 112,5 triệu USD.
• Ban lãnh đạo coi mức tăng trưởng chi phí hàng năm từ 2,5% đến 3% là mức chuẩn hóa, mặc dù các khoản đầu tư chiến lược tiềm năng có thể ảnh hưởng đến chi tiêu năm 2027.
• Hệ số beta tổng tiền gửi dự kiến trong chu kỳ tăng lãi suất là khoảng 34%, nhưng ban lãnh đạo cho biết có thể mất vài quý để đạt tới mức đó.
• Hơn 50% chứng chỉ tiền gửi sẽ đáo hạn trong vòng ba tháng với lãi suất trung bình khoảng 2,90%. Ban lãnh đạo dự kiến chúng sẽ được gia hạn ở mức khoảng 3%, làm tăng nhẹ chi phí chứng chỉ tiền gửi.
• Công ty có kế hoạch mua lại thêm 20 triệu USD cổ phiếu phổ thông trong quý 4/2026. Các đợt mua lại trong tương lai sẽ được đánh giá theo từng quý.

Rủi ro và các điểm cần theo dõi

Cơ cấu tiền gửi là một yếu tố bất lợi trong quý thứ hai liên tiếp và gia tăng trong quý 3, làm triệt tiêu một phần lợi ích từ việc tái ấn định lãi suất tài sản sinh lời. Ban lãnh đạo dự báo áp lực đó sẽ hạ nhiệt trong quý 4.

Tiền gửi vào cuối quý giảm 411 triệu USD chủ yếu do số dư tiền gửi công và thương mại thấp hơn. Mặc dù một phần của sự sụt giảm này là chủ động, ngân hàng đã sử dụng các khoản vay ngắn hạn để bổ sung thanh khoản, với các khoản vay qua đêm bình quân đạt 120 triệu USD và vay ngắn hạn cuối quý đạt khoảng 345 triệu USD.

Theo ban lãnh đạo, sự gia tăng tài sản nợ xấu chỉ giới hạn ở một khách hàng doanh nghiệp duy nhất chứ không phải là sự yếu kém trên toàn bộ danh mục. Nếu loại trừ khoản vay đó, tài sản nợ xấu sẽ vẫn duy trì ở mức 8 điểm cơ bản.

Nền kinh tế Hawaii vẫn duy trì ổn định nhưng tăng trưởng chậm. Ban lãnh đạo dẫn chứng các dự báo tăng trưởng GDP thực tế ở mức một chữ số thấp cho năm 2026 và tăng trưởng 1,6% cho năm 2027, với tỷ lệ thất nghiệp ở mức 2,8%. Công ty tiếp tục theo dõi lạm phát, chi phí năng lượng, lãi suất, chi tiêu tiêu dùng, đầu tư doanh nghiệp và nhu cầu của du khách.

Điểm nổi bật trong phần Q&A với các nhà phân tích

Về độ nhạy của biên lãi thuần, ban lãnh đạo cho biết biên lãi thuần quý 3 sẽ đạt 2,83% nếu không tính khoản vay thương mại ngừng dồn tích lãi. Việc giảm bớt nguồn vốn công chi phí cao hơn sẽ mang lại lợi ích bổ sung khoảng 1 điểm cơ bản cho chi phí tiền gửi và biên lãi thuần. Đợt tăng lãi suất tháng 9 cũng dự kiến sẽ cộng thêm vài điểm cơ bản vào lợi suất tài sản sinh lời trong quý 4 khi các tài sản có lãi suất thả nổi phản ánh đợt tăng này trong trọn một quý.

Ban lãnh đạo đã xác định khoảng 10% trong số khoảng 2 tỷ USD danh mục tiền gửi công có tiềm năng được tái ấn định lãi suất hoặc rút bớt. Tuy nhiên, họ không dự kiến sẽ có thêm sự sụt giảm chiến lược nào trong quý 4/2026.

Về khoản vay thương mại bị nợ xấu, ban lãnh đạo cho biết bên vay đang tiến hành bán tài sản. Mọi khoản tổn thất dự kiến sẽ không đáng kể, đã được trích lập dự phòng đầy đủ và ít có khả năng làm tăng chi phí dự phòng trong tương lai.

Về việc hoàn trả vốn cho cổ đông, ban lãnh đạo cho biết hạn mức ủy quyền mua lại mở rộng mang lại sự linh hoạt khi lợi nhuận và vốn cải thiện. Công ty có ý định cân bằng giữa cổ tức và mua lại cổ phiếu với sự tích lũy vốn tự thân và các mức vốn quy định phù hợp.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good day, and welcome to the Bank of Hawaii Corporation Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this call may be recorded. I would now like to turn the call over to Chang Park, Director of Investor Relations. Please go ahead.

Chang Park

Good morning and good afternoon. Thank you for joining us today for our third quarter 2026 earnings conference call. Joining me today is our President and CEO, Jim Polk; CFO, Brad Satenberg; Chief Risk Officer, Brad Shairson; and Manager of Investor Relations, Patricia Lam.

Before we get started, I want to remind you that today's conference call will contain some forward-looking statements. And while we believe our assumptions are reasonable, the actual results may differ materially from those projected. During the call today, we'll be referencing a slide presentation as well as the earnings release. Both of these are available on our website, boh.com, under the Investor Relations link.

Now I would like to turn the call over to Jim.

James Polk

Thanks, Chang. Good morning and good afternoon, everybody, and thank you for joining us. Bank of Hawaii delivered another solid quarter, reflecting continued improvement in our financial performance, the underlying strength of our franchise and our disciplined balance sheet management. For the third quarter, we reported diluted earnings per share of $1.49 and net income of $64.3 million, up 0.7% and 1.4%, respectively, from the prior quarter and up 24.2% and 20.5% when compared to the third quarter of 2025. Return on average common equity was 15.4%.

Our results continue to benefit from the repricing of our earning assets, supported by the strength of our deposit franchise, sound credit quality and disciplined expense management. And while encouraged by our progress, our focus remains on sustaining this performance while strengthening the drivers of longer-term earnings growth.

Turning to our results. Net interest income increased to $156.1 million, and our net interest margin expanded by 4 basis points to 2.82%, marking our 10th consecutive quarter of expansion in both measures. The cumulative improvement in our margin has been an important contributor to our earnings growth, and we continue to see opportunities for additional repricing. At the same time, we recognize that sustaining earnings growth over the longer term will require a greater contribution from the organic deposit, loan and fee income growth.

And while we remain mindful of the evolving interest rate environment and competitive landscape, our focus continues to be on maintaining a stable, high-quality deposit franchise, preserving balance sheet flexibility and generating attractive risk-adjusted returns. Average deposits declined 0.8% for the quarter, largely reflecting the normal deployment of customer liquidity associated with completed real estate projects, distributions to owners and working capital needs. We also made a deliberate decision to reduce certain higher cost public deposits towards the quarter end, which impacted the end of quarter spot balance.

Despite the competitive environment, our average cost of deposits remained stable at 1.27%, while noninterest-bearing deposits continued to represent roughly 27% of total deposits. Customer activity and deposit pipelines remain healthy. And based on what we see today, we anticipate returning to modest deposit growth in the fourth quarter.

On the lending front, total loans increased by $85 million or 0.6% for the quarter, 2.4% annualized. Commercial loans increased by $73 million or 1.2%, supported by healthy customer activity and solid pipelines, while consumer lending grew marginally, reflecting the ongoing impact of higher interest rates, particularly in residential lending.

Looking ahead, we anticipate overall loan growth to continue in the low mid-single-digit range with commercial lending being the primary driver of growth. Credit quality remains a fundamental strength of Bank of Hawaii and our disciplined approach to underwriting and portfolio management continues to serve us well. Brad Shairson will provide additional commentary on this shortly.

I also want to highlight our continued progress in wealth management, where targeted investments over the past several years have been driving a meaningful improvement in results. For the 9 months ended 9/30/26, trust and asset management fees and annuity and insurance fees totaling $45.2 million increased by 11.5% over the same period in 2025. We are seeing the benefits of the investments we have made in Bankoh Advisors as well as in our trust and asset management businesses.

We also see opportunities through stronger coordination between Commercial Banking and Wealth Management, particularly through our Center for Family Businesses & Entrepreneurs. Helping business owners navigate wealth planning, succession and ownership transition represents an important opportunity to deepen relationships and generate additional fee income going forward. Beyond our quarterly results, we remain focused on strengthening organic growth across the franchise. Bank of Hawaii benefits from a leading deposit market share position, long-standing customer relationships and a trusted brand built over more than 125 years.

Today, we hold over 34% of the bank deposit market and have expanded our market share by 6.7% over the last 20 years. These are important advantages. However, we believe there is an opportunity to translate them into even stronger organic growth across the franchise. Our focus is on deepening existing relationships, capturing greater share of our customers' financial needs and becoming more effective at attracting new customers. Across Commercial Banking, Wealth Management and Retail Banking, we see opportunities to broaden relationships and better leverage the strength of our franchise.

Turning briefly to the local economy. Hawaii continues to demonstrate resilience, although growth remains modest. Current forecasts call for low single-digit real GDP growth in 2026, with growth projected at 1.6% for 2027. Unemployment remains low at 2.8%. Tourism results have been mixed as of late. Through August, visitor arrivals and spending were above prior year levels despite a softer weather-affected August, while military construction activity, public investment and military spending continue to provide meaningful support to the economy. With that said, we continue to monitor inflation, energy costs and interest rates, particularly their impact on consumer spending, business investment and visitor demand.

Overall, we view Hawaii as a stable but modest growth market. This reinforces the importance of expanding our customer relationships and market penetration rather than relying primarily on underlying economic growth. As I reflect on the quarter and our progress this year, I'm encouraged by the continued improvement in our financial performance and the strength of our franchise. Our near-term focus is on sustaining that momentum, while our longer-term opportunity is to translate our competitive advantages into stronger organic growth and greater operating efficiency. We will pursue these opportunities thoughtfully, maintaining the financial and risk management discipline that has long characterized Bank of Hawaii.

And with that, I'll turn the call over to Brad Shairson.

S. Shairson

Thanks, Jim. I'll begin with an overview of our credit portfolio and conclude with asset quality metrics. And as you'll see, our performance has remained strong, consistent with prior quarters. Turning to our lending philosophy. The Bank of Hawaii is dedicated to serving our local communities, lending primarily within our core markets where our expertise allows us to make informed and disciplined credit decisions. Our portfolio is built on long-tenured relationships with approximately 60% of both our commercial and consumer clients having been with the bank for more than 10 years.

Geographically, our loan book is concentrated in markets we know well. Approximately 91% of our loans are based in Hawaii with 5% in the Western Pacific and 4% on the Mainland, primarily supporting clients in our market that also have operations on the Mainland. Our loan portfolio remains well balanced between consumer and commercial exposure. Consumer loans represent 56% of total loans or approximately $8.1 billion.

Within the consumer portfolio, 86% consists of residential mortgage and home equity loans with a weighted average LTV of 49% and weighted average FICO score of 798. The remaining 14% of consumer loans are comprised of auto and personal lending. Credit quality in these segments also remained strong with average FICO scores of 730 for auto loans and 763 for personal loans.

Turning to commercial lending. The portfolio totals $6.3 billion, representing 44% of total loans. 73% is secured by real estate with a weighted average LTV of 55%. This reflects our ongoing emphasis on collateral protection. CRE remains the largest component of the commercial book, totaling $4.5 billion or 31% of total loans. And in Oahu, the state's largest CRE market, a combination of consistently low vacancy rates and flat inventory levels continues to support a stable real estate market.

Across industrial, office, retail and multifamily property types, vacancy rates remain below or close to their 10-year averages. Our CRE portfolio remains well diversified with no single property type exceeding 10% of total loans. Conservative underwriting practices continue to be applied consistently with weighted average LTVs below 60% across all CRE categories. In addition, diversification within each segment remains strong, supported by modest average loan sizes.

Scheduled maturities are also well balanced with more than 60% of CRE loans maturing in 2030 or later, reducing near-term refinancing risk. Given the recent rise in interest rates, I will also mention that interest rate sensitivity is an important consideration in our underwriting process. Where appropriate, we evaluate borrowers under stress rate scenarios to assess our ability to absorb higher debt service costs. This helps us understand repayment capacity, not only under current conditions, but also under a range of potential rate environments.

Looking at the distribution of LTVs, there isn't much tail risk in our CRE portfolio, just 2.3% of CRE loans have greater than an 80% LTV. C&I accounts for 11% of total loans totaling $1.7 billion. This portfolio is diversified across industries, characterized by modest average loan sizes, and there is very little leveraged lending.

Turning to asset quality. Overall credit performance remains strong and generally in line with the trends we've seen over the past several quarters. Delinquencies and net charge-offs remained at favorable levels during the quarter at 46 basis points and 9 basis points, respectively. In addition, criticized assets declined by 44 basis points from 2.81% to 2.37%. That said, you will notice an increase in our nonperforming assets to 30 basis points from 8 basis points. That increase was driven by a single commercial loan rather than broader weakness across the portfolio.

The loan is real estate secured, and we expect to exit this exposure either this quarter or early next quarter as the borrower finalizes the sale of this asset. Absent this one relationship, nonperforming would have been flat at 8 basis points to the previous quarter. And as an update on the allowance for credit losses on loans and leases, the ACL ended the quarter at $146.2 million. That's down $800,000 to linked quarter. The ratio of our ACL to outstandings ends down 1 basis point at 1.02%. This concludes my remarks.

I will now turn the call over to Brad Satenberg for a discussion of our financial performance.

Bradley Satenberg

Thanks, Brad. For the quarter, we reported net income of $64.3 million and a diluted EPS of $1.49, up $459,000 and $0.02 per share compared to the linked quarter. NII increased $2.5 million and NIM expanded 4 basis points to 2.82%, primarily benefiting from our fixed asset repricing, partially offset by an unfavorable deposit mix shift. This marked the second consecutive quarter where the mix shift was negative. And although it accelerated this quarter, I expect it to moderate in the fourth quarter and return to a range more in line with prior 4 quarters.

Excluding the impact from the nonaccrual loan that Brad Shairson mentioned during his comments, our NII would have increased by $3 million, while our NIM would have been 2.83%. The yield on earning assets increased 5 basis points during the quarter, primarily due to the fixed asset repricing. The September rate hike had a limited impact this quarter, but it should add several basis points to earning asset yields in the fourth quarter as our floating rate assets benefit from this increase for the full period.

The cost of interest-bearing liabilities was unchanged at 1.83% for the quarter. Deposit costs also held steady at 1.27%, while the end of quarter spot rate was 2 basis points higher at 1.29%, reflecting only a modest impact from the September rate hike. Deposit costs also benefited from the strategic runoff of approximately $200 million of high-cost public funds during the quarter. As discussed last quarter, I'm expecting that any additional rate hike will benefit NII and NIM for the first several quarters until our deposits fully reprice.

At the end of the quarter, our fixed-to-float ratio was 57%, down 1 percentage point from the prior quarter. $200 million of forward starting swaps became active during the quarter, and we finished the period with an active pay-fixed, receive-float swap portfolio of $1.6 billion with a weighted average fixed rate of 3.25% and an average life of 1.2 years. $1.1 billion of these swaps hedge our loan portfolio and $500 million hedge our securities.

Noninterest income was $42.7 million for the quarter compared to $43.3 million during the linked quarter. This quarter included a $600,000 charge related to a change in the Visa B conversion ratio, while the prior quarter included a similar $400,000 charge. Excluding these items, noninterest income declined $400,000, primarily reflecting lower gains on leased asset sales and a decline in trust-related tax services revenue from a seasonally stronger second quarter.

Higher deposit fees partially offset these declines. My forecast for the fourth quarter is that normalized noninterest income will be approximately $44 million. Noninterest expense was $112.3 million compared to $111.2 million in the linked quarter. The current quarter had no nonrecurring items, while the second quarter included a $500,000 benefit from the net forfeiture of unvested restricted stock units. Excluding that benefit, expenses increased approximately $600,000.

Fourth quarter normalized noninterest expense is expected to be approximately $112.5 million. During the quarter, we also recorded a provision for credit losses of $2.8 million, resulting in a coverage ratio of 1.02%. In addition, we reported a tax provision of $19.4 million during the quarter, resulting in an effective tax rate of 23.2%. The higher tax rate compared to the linked quarter was primarily due to additional valuation reserves set aside for certain LIHTC investments.

Turning to the balance sheet. Loans grew at an annualized rate of 2.4% during the quarter. Deposits declined $411 million from the linked quarter, primarily due to lower public funds and commercial deposits. As previously noted, the deposit runoff was intentional, while the commercial outflows were concentrated among a small number of larger customers, utilizing deposits to fund construction projects and normalized -- normal quarterly operating expenses. We used short-term borrowings to supplement our liquidity during the quarter with overnight borrowings averaging $120 million.

Our capital ratios remained above the well-capitalized regulatory thresholds during the quarter with Tier 1 capital and total risk-based capital of 14.4% and 15.4%, respectively. And consistent with the linked quarter, we paid dividends of $28 million on our common stock and $5.3 million on our preferreds. During the third quarter, we repurchased $20 million of common shares at an average price of approximately $78 per share. I am currently planning to repurchase an additional $20 million of stock in the fourth quarter.

At the end of the quarter, $69 million remained available under the repurchase plan. And subsequent to quarter end, the Board approved increasing the plan by an additional $200 million. Finally, the Board declared a dividend of $0.70 per common share that will be paid during the fourth quarter.

Now I'll turn the call back over to Jim.

James Polk

Thanks, Brad. We'd now be happy to answer whatever questions you may have.

Operator

[Operator Instructions] Our first question comes from Jeff Rulis with D.A. Davidson.

Phần hỏi đáp

Jeff Rulis

Maybe a follow-on on the margin, Brad Satenberg. Do you have an average for September? And I wanted to kind of nail down net of the nonaccrual impact as well as the public deposit runoff kind of came late, is that also an additional tailwind to the margin? So a few in there. Sorry about that.

Bradley Satenberg

Yes. No, good question. So September, just excluding the impact and that nonperforming asset was recorded in September. So excluding the impact from that nonperforming asset, the NIM would have been 2.83% in September. And then the public funds ran off throughout the quarter, but more towards the end. So that should be a modest tailwind, about 1 basis point or so on our cost of deposits and on our NIM going forward.

Jeff Rulis

Okay. And I guess any other interest in running off the public deposits further or expectations there?

Bradley Satenberg

We're always looking at the public funds. I do still think there's an opportunity there to run off additional deposits, but I don't expect it to be this quarter. I think we'll look at them on a case-by-case basis and see where the opportunities are. So I do think there's an opportunity, but I would not anticipate it this quarter.

Jeff Rulis

Got it. And then maybe one last one, just on the overall demand on the loan side and particularly if we see additional rate hikes, got the commercial outlook looks pretty strong, maybe not so much on the consumer. But any update on kind of demand that you're seeing as it relates to rate moves?

James Polk

I'll jump in on this one, Jeff. Obviously, I commented on the strength of the commercial pipeline. And I think the outlook as far as we can see at this point remains good. I feel comfortable around that. The interesting one is just consumer and resi is just challenged by the current rate environment.

What I am encouraged by is we were able to get some growth out of the home equity line portfolio. And I'm optimistic that as people with lower rate sort of first mortgages who don't want to do anything with that, we'll look more towards home equity lines to tap some of the equity in their homes. Our pipeline remains stable in that space and optimistic that we can get some growth out of that front.

Operator

Our next question comes from Matthew Clark with Piper Sandler.

Matthew Clark

Just on the margin, we got your spot rate. I heard you speak to the public funds, maybe a little bit of an incremental benefit there. But how should we think about the interest-bearing deposit beta through the cycle here? I think on the way down, you were around 44%.

Bradley Satenberg

I would say on the way up, I mean, our expectation on total deposits, the betas will be around 34%. Again, I think that will depend on the competitive market, which I think has been rational to this point as well as customer behavior. But I think to get to that 34% is going to take several quarters to achieve that beta.

Matthew Clark

Yes. Okay. And then you saw an increase in CDs. Can you update us on the CDs that are maturing this coming quarter and the kind of roll-off and roll-on rates at least as it relates to your expectations in terms of the promo and what you expect it to roll into?

Bradley Satenberg

Yes. I mean about 50%, a little bit over 50% of our CDs are going to mature or will mature within the next 3 months at a rate of about 2.90%. I expect it to roll on at an average rate of about 3% or so somewhere between -- there are new money promotions at 3%. And so I do expect us to see 3-month bump up slightly or the CD rate bump up slightly for this quarter.

Matthew Clark

Okay. And then just last one for me. On the borrowings, I know at least at the end of the -- end of the quarter, they were up a little more meaningfully. How should we think about -- assuming deposit growth resumes, how should we think about the $853 million of borrowings going forward?

Bradley Satenberg

Well, we did utilize short-term borrowings this past quarter. And at the end of the quarter, on a spot basis, it was about $345 million of short-term borrowings. My expectation is that deposit growth will return in the fourth quarter and the first quarter of next year and that our reliance on short-term borrowings will slowly be mitigated by that deposit growth.

Operator

Our next question comes from Jared Shaw with Barclays.

Jared David Shaw

I guess just on [ signature ] deposits, when we look at the total outflows and the DDA outflows, was that really all primarily public funds? What were some of the trends on the core side? And then when you talk about -- or you talked about stabilizing to growing deposits, should we expect total and DDA to see some tailwinds?

James Polk

Yes. So obviously, we talked about the public funds. That was an intentional move on our part. Within the commercial, it's really just a multitude of things that really normal activity that in combination with each other, put a little pressure on the quarter-end deposits. So a lot of that was related to just normal business activities, investment in real estate projects, as Brad pointed out, working capital requirements.

We had some distributions to business owners. We also had some funds that ran off related to completed condominium projects that we had expected some additional inflows from related projects to help offset that. We expect that to come in, in the future. But those are really the primary drivers. It was not one thing in specific because all regular customer activity just was a lot at the end of the quarter.

Jared David Shaw

Okay. And then on the nonperformer that moved over, it sounds good that it's going to be resolved or potentially resolved in the coming quarter or so. But is there any specific reserve? Or do you take any specific charge-off on that? Or how should we think about potential loss content?

S. Shairson

That's a good question. Thanks for the question. This is Brad Shairson. And what I can tell you about that NPA is that the loan matured during the third quarter and the borrower elected to pursue a sale of the property. So I'm not going to comment on the specific credit or property type while the sale is pending. But I'd just say it is an idiosyncratic credit situation rather than an indication of any broader stress within any particular portfolio segment.

And to get to the heart of your question, based on our current assessment, any loss associated with the sale is expected to be immaterial and had already been adequately reserved for. So as a result, we wouldn't expect the resolution of this credit to increase our future provision expense.

Jared David Shaw

Okay. And then just maybe a final one on the buyback. With the increased authorization and the $20 million per quarter seems like pace, what would cause you to accelerate the buyback above that $20 million per quarter level?

Bradley Satenberg

Yes. I mean, like you said, we plan to buy $20 million this quarter. We will reevaluate it going into 2027, what our plan is. We do think at the current level, it's a good opportunity to buy back the stock. We think it's undervalued. And we'll take it on a quarter-by-quarter basis, and we'll determine whether we want to accelerate that or not. But for now, $20 million this quarter. And again, going into next year, we'll reconsider it and we'll look at that.

Operator

Our next question comes from Andrew Liesch with StoneX Financial.

Andrew Liesch

Question on expenses. Your guidance at the beginning of the year was for about 2.5% to 3% growth. You're tracking pretty nicely below that today. I guess anything you can point to that drove that? And then if we look out back up into 2027, do you think we get back to a more normalized level of expense growth?

Bradley Satenberg

Well, I mean, the way I look at it is when you normalize last year to the prior year's expenses and compare it to where I think we're going to land or where I'm projecting us to land in 2026, the expense growth is just around 3%. And so we're always very, very careful. But I think we are right at that 3% level, and we're very meticulous with our expenses and very cautious with expense management.

Andrew Liesch

And I think like that's like a normal level of expense growth going forward then?

Bradley Satenberg

I would think so. I mean, obviously, we're in the middle of our budgeting for 2027, but I would think 2.5% to 3% is our normalized run rate. And then we will look at other strategic opportunities, and that may impact the expense growth for 2027. But again, we will be very careful of any time we're spending, we try to find opportunities to save as well. And so we try to keep that within a reasonable level of growth.

Operator

Our next question comes from Kelly Motta with KBW.

Kelly Motta

I'd like to circle back to the earlier question about the buyback, specifically as it relates to capital. I believe 9% Tier 1 leverage is kind of your goal here. TCE slipped a little with AOCI. Just can you remind us how you're thinking about just overall levels of capital and kind of guideposts around specific regulators of how active you could get?

James Polk

Well, I'll take a shot at it. I mean the way we've been viewing it is, obviously, we want to pay our dividends. We want to buy some shares back, and we want to allow for some organic accretion in the capital levels. I think we've been talking in the past about getting to 9% on that particular ratio. I think as we look forward, the increase in the authorization is really just to give us flexibility as we continue to improve earnings as we continue to look at the valuation of the stock and just to give us that sort of the opportunistic capability to buy when we feel that the time is right.

So we'll obviously make sure that we're managing to appropriate capital levels. But again, I think we've demonstrated the ability to be thoughtful with our distributions and to continue to allow our capital ratios to organically grow.

Kelly Motta

Got it. That's helpful. And then when I look at your slide on cash flow repricing, the quarterly impact on NII from cash flow repricing hasn't changed, but it looks like the cash flows you saw this quarter came down a bit. Just wondering with rates up, has that changed -- has there been any extension at all in the securities portfolio and change kind of expected cash flows here?

Bradley Satenberg

I don't think you're going to see a significant change in the cash flows. I think about it as the cash flows are going to be in the range of $550 million to $650 million. In the second quarter, it was a little bit higher because we had some maturities and payoffs.

Obviously, with rates bumping up and since pulling back, but the duration of our investment portfolio has increased modestly. But I would think from a cash flow perspective, we're not seeing a material change based upon where rates are today or where they were at the beginning of the quarter and where they ended the quarter at.

Kelly Motta

Got it. That's helpful. Kind of last one for me. I think you noted that you're going to be opportunistic again about potentially moving out some higher cost public deposits. It looks like they're about just over $2 billion at the end of the quarter. Can you size what amount of the book is kind of larger and more transactional might be potentially opportunistically moved out?

Bradley Satenberg

I'd say -- I mean, you're right. I mean the portfolio is about $2 billion. I would think when I look at the portfolio, I mean, a big portion of it is operating accounts. And so I don't anticipate us to strategically try to run off any of those operating account balances. But when I look at it, I would say about 10% of that portfolio still has an opportunity to either reprice or to be run off if we don't think the pricing is appropriate.

And again, I do not anticipate it this quarter. But I do think down the road, we will be relooking at that and continue to focus on opportunities to bring down our cost of deposits, and that's certainly one area that we'll be focused on.

Operator

I'm showing no further questions at this time. I'd like to turn the call over to Patricia Lam for closing remarks.

Patricia Lam

Thank you, everyone, for joining us today and for your continued interest in Bank of Hawaii. As always, please feel free to reach out to us if you have any additional questions.

Operator

Thank you for your participation. This does conclude the program. You may now disconnect. Good day.