Bank of Hawaii Extends Net Interest Margin Expansion

The Tip Desk · October 26, 2026 · 4 min read

The margin reached 2.82% in the third quarter as net interest income rose 1.6% to $156.1 million and the board later added $200 million of buyback authority.

Bank of Hawai‘i Corporation (BOH) reported net interest margin of 2.82% for the third quarter of 2026, a 4-basis-point increase from the linked quarter and the tenth consecutive period of expansion.

The independent regional financial services company said a 5-basis-point rise in earning-asset yield, as fixed-rate assets rolled off and were reinvested at higher rates, more than offset a shift from noninterest-bearing deposits and low-yielding interest-bearing accounts to higher-yielding interest-bearing deposits. Net interest income was $156.1 million, up 1.6% from the linked quarter, a slower sequential increase than the 1.7% rise to $153.6 million in the second quarter.

The average yield on total earning assets was 4.13%. The average yield on loans and leases was 4.82%, up 3 basis points after a 4-basis-point increase in the prior quarter. Loan originations, including floating-rate loans, were priced at a 5.89% weighted average rate. The average rate on interest-bearing deposits was 1.72%, down 1 basis point after a 1-basis-point rise in the linked quarter. The average rate of total deposits, including noninterest-bearing balances, was unchanged at 1.27%.

President and CEO Jim Polk said the margin expansion reflected the ongoing benefit of asset repricing and the positive impact of deposit repricing actions. He said loan balances increased from the prior quarter, the funding profile remained resilient, and credit quality stayed healthy.

Average loans and leases were $14.31 billion. Period-end loans and leases were $14.37 billion. Commercial loans were $6.3 billion at September 30, 2026, up 3.8% from December 31, 2025, which the company attributed primarily to commercial mortgage and commercial and industrial production. Consumer loans were $8.1 billion, up 0.7% from year-end 2025.

Average deposits were $20.66 billion. Period-end deposits were $20.48 billion, down 3.3% from December 31, 2025, which the company said was driven primarily by the strategic runoff of public funds and lower commercial deposit balances. Noninterest-bearing deposits were 26.5% of the mix at quarter-end, down from 27.2% at year-end 2025.

Noninterest income was $42.7 million, down 1.4% from the linked quarter, or down 0.9% after Visa Class B conversion charges of $0.6 million in the quarter and $0.4 million in the linked quarter. The company said the decline was primarily due to lower gains on leased-asset sales and seasonally higher trust-related tax services revenue in the linked quarter, partially offset by stronger deposit fees. Noninterest expense was $112.3 million, up 1.0% from the linked quarter, or up 0.5% after a $0.5 million restricted-stock forfeiture benefit in the linked quarter. The company said the increase was primarily due to higher net equipment and net occupancy expenses.

The provision for credit losses was $2.8 million, down $0.9 million from the linked quarter. Net loan and lease charge-offs were $3.3 million, or 9 basis points annualized of average loans and leases. The allowance for credit losses on loans and leases was $146.2 million, or 1.02% of loans outstanding.

Non-performing assets were $43.4 million at September 30, 2026, up $31.9 million from June 30, 2026, and 0.30% of total loans and leases and foreclosed real estate, up 22 basis points. The company said the increase was primarily due to a single commercial mortgage placed on non-accrual status because of borrower-specific circumstances and is not believed to represent broader credit deterioration.

Diluted earnings per common share were $1.49, compared with $1.47 in the linked quarter. Net income was $64.3 million. Return on average common equity was 15.38%.

The company repurchased 256 thousand shares for $20.2 million in the quarter, leaving $68.7 million of remaining authority. Subsequent to quarter-end, the board increased the authorization by $200 million to $268.7 million. The common equity Tier 1 capital ratio was 12.10% and the Tier 1 leverage ratio was 8.79% at September 30, 2026. The board declared a quarterly cash dividend of $0.70 a share.