third quarter of 2026
Filed Oct 26, 2026Diluted Earnings Per Common Share of $1.49; Net Income of $64.3 Million; Net Interest Margin Increased to 2.82%; Share Repurchases of $20.2 Million
Third-quarter net income, diluted EPS and net interest income increased from the linked quarter, while net interest margin expanded for the tenth consecutive quarter. Loan balances increased and credit costs declined, though deposits declined, non-performing assets rose sharply because of one commercial mortgage, and other debt increased from the linked quarter.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest income, three months ended September 30, 2026GAAP | $156.1M | 1.6% | – |
| Provision for credit losses, three months ended September 30, 2026GAAP | $2.75M | down $0.9 million | – |
| Total noninterest income, three months ended September 30, 2026GAAP | $42.71M | decrease of 1.4% | – |
| Total noninterest expense, three months ended September 30, 2026GAAP | $112.3M | increase of 1.0% | – |
| Pre-provision net revenue, three months ended September 30, 2026other | $86.46M | – | – |
| Income before provision for income taxes, three months ended September 30, 2026GAAP | $83.71M | – | – |
| Provision for income taxes, three months ended September 30, 2026GAAP | $19.45M | – | – |
| Effective tax rate, three months ended September 30, 2026GAAP | 23.24% | – | – |
| Net income, three months ended September 30, 2026GAAP | $64.26M | up 0.7% | – |
| Net income available to common shareholders, three months ended September 30, 2026GAAP | $58.99M | – | – |
| Basic earnings per common share, three months ended September 30, 2026GAAP | $ 1.50 | – | – |
| Diluted earnings per common share, three months ended September 30, 2026GAAP | $ 1.49 | – | – |
| Net interest margin, three months ended September 30, 2026other | 2.82% | increase of 4 basis points | – |
| Return on average assets, three months ended September 30, 2026GAAP | 1.07 % | – | – |
| Return on average shareholders' equity, three months ended September 30, 2026GAAP | 13.66 | – | – |
| Return on average common equity, three months ended September 30, 2026GAAP | 15.38% | – | – |
| Efficiency ratio, three months ended September 30, 2026other | 56.50 | – | – |
| Average yield on total earning assets, three months ended September 30, 2026other | 4.13% | up 5 basis points | – |
| Average yield on loans and leases, three months ended September 30, 2026other | 4.82% | up 3 basis points | – |
| Average quarterly rate of interest-bearing deposits, three months ended September 30, 2026other | 1.72% | down 1 basis point | – |
| Average quarterly rate of total deposits, three months ended September 30, 2026other | 1.27% | unchanged | – |
| Total assets, September 30, 2026GAAP | $23.82B | – | – |
| Loans and leases, September 30, 2026GAAP | $14.37B | – | – |
| Total deposits, September 30, 2026GAAP | $20.48B | – | – |
| Other debt, September 30, 2026GAAP | $853.1M | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $442.0M | – | – |
| Total shareholders' equity, September 30, 2026GAAP | $1.83B | – | – |
| Non-performing assets, September 30, 2026GAAP | $43.41M | up $31.9 million | – |
| Non-performing assets to total loans and leases and foreclosed real estate, September 30, 2026GAAP | 0.30 % | increase of 22 basis points | – |
| Net loan and lease charge-offs, three months ended September 30, 2026GAAP | $3.31M | decreased by $0.1 million | – |
| Ratio of net loans and leases charged-off to average loans and leases outstanding, annualized, three months ended September 30, 2026GAAP | 0.09 % | decreased by 1 basis point | – |
| Allowance for credit losses - loans and leases, September 30, 2026GAAP | $146.2M | decrease of $0.8 million | – |
| Allowance to loans and leases outstanding, September 30, 2026GAAP | 1.02 % | decrease of 1 basis point | – |
| Tier 1 Capital Ratio, September 30, 2026other | 14.41% | – | – |
| Tier 1 Leverage Ratio, September 30, 2026other | 8.79% | – | – |
| Net interest income, nine months ended September 30, 2026GAAP | $460.6M | – | – |
| Net income, nine months ended September 30, 2026GAAP | $185.5M | – | – |
| Diluted earnings per common share, nine months ended September 30, 2026GAAP | $ 4.27 | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- The Company repurchased 256 thousand shares of common stock at a total cost of $20.2 million under the share repurchase program in the third quarter of 2026.
- Total remaining buyback authority under the share repurchase program was $68.7 million at September 30, 2026.
- Subsequent to quarter end, the Board of Directors increased the authorization under the share repurchase program by $200 million to $268.7 million.
- The Board of Directors declared a quarterly cash dividend of $0.70 per share on the Company’s outstanding common shares, payable on December 14, 2026 to shareholders of record at the close of business on November 30, 2026.
- The Board declared quarterly preferred dividends of $10.94 per share, equivalent to $0.2735 per depositary share, for Series A, and $20.00 per share, equivalent to $0.5000 per depositary share, for Series B.
What drove it
- Net interest income increased primarily because earning asset yield increased by 5 basis points as fixed-rate assets rolled off and were reinvested at higher rates.
- Net interest margin expanded on asset-yield improvement and deposit-cost dynamics.
- Loan balances increased from the prior quarter; commercial mortgage and commercial and industrial production drove commercial-loan growth from December 31, 2025.
- Noninterest income declined because of lower gains on leased asset sales and seasonally higher trust-related tax services revenue in the linked quarter, partly offset by stronger deposit fees.
- Noninterest expense increased primarily because of higher net equipment and net occupancy expenses.
Concerns
- Non-performing assets increased to $43.4 million at September 30, 2026 from $11.5 million at June 30, 2026, primarily because a single commercial mortgage was placed on non-accrual status.
- Total deposits were $20.5 billion at September 30, 2026, down 3.3% from December 31, 2025, driven by strategic runoff of public funds and lower commercial deposit balances.
- Noninterest-bearing deposits represented 26.5% of total deposit balances at September 30, 2026, down from 27.2% at December 31, 2025.
- The effective tax rate increased to 23.24% from 22.31% in the linked quarter, primarily due to an increase in valuation allowance related to low-income housing investments.
- Other debt increased to $ 853,098 (dollars in thousands) at September 30, 2026 from $ 508,124 (dollars in thousands) at June 30, 2026.
What to watch
- Whether fixed asset repricing and reinvestment at higher rates continue to support net interest margin.
- Deposit balances, the mix shift from noninterest-bearing and low-yielding deposits to higher-yielding interest-bearing accounts, and deposit pricing.
- The performance and resolution of the commercial mortgage placed on non-accrual status during the third quarter of 2026.
- Commercial mortgage and commercial and industrial loan production, which supported commercial-loan growth from December 31, 2025.
- Deployment of the $268.7 million share repurchase authorization following the $200 million increase subsequent to quarter end.
Balance sheet and cash flow
- Total assets were $23.8 billion at September 30, 2026, a decrease of 1.5% from December 31, 2025.
- The investment securities portfolio was $7.5 billion at September 30, 2026, a decrease of 3.3% from December 31, 2025.
- Total loans and leases were $14.4 billion at September 30, 2026, an increase of 2.1% from December 31, 2025.
- Total deposits were $20.5 billion at September 30, 2026, a decrease of 3.3% from December 31, 2025.
- Noninterest-bearing deposits made up 26.5% of total deposit balances at September 30, 2026, down from 27.2% at December 31, 2025.
- Average total deposits were $20.7 billion for the third quarter of 2026, down 1.5% from December 31, 2025.
- Other debt was $ 853,098 (dollars in thousands) at September 30, 2026.
Analysis
Bank of Hawai‘i reported a solid third quarter. Net income was $ 64,258 (dollars in thousands) and diluted earnings per common share were $ 1.49, compared with $ 63,799 (dollars in thousands) and $ 1.47 in the linked quarter. Net interest income increased to $ 156,054 (dollars in thousands) from $ 153,604 (dollars in thousands), while net interest margin expanded to 2.82% from 2.78%. Management attributed the increase to a 5-basis-point improvement in earning-asset yield as fixed-rate assets repriced and were reinvested at higher rates.
Balance-sheet trends show loan growth alongside funding runoff. Loans and leases were $ 14,371,336 (dollars in thousands) at September 30, 2026, compared with $ 14,286,625 (dollars in thousands) at June 30, 2026. Total deposits were $ 20,481,558 (dollars in thousands), compared with $ 20,892,775 (dollars in thousands) at June 30, 2026. Deposit mix continued to shift, with noninterest-bearing deposits accounting for 26.5% of total deposit balances at September 30, 2026, versus 27.2% at December 31, 2025. Other debt was $ 853,098 (dollars in thousands), compared with $ 508,124 (dollars in thousands) in the linked quarter.
Noninterest income was $ 42,706 (dollars in thousands), down from $ 43,299 (dollars in thousands) in the linked quarter, reflecting lower gains on leased asset sales and seasonally higher trust-related tax services revenue in the linked quarter. Total noninterest expense was $ 112,304 (dollars in thousands), up from $ 111,186 (dollars in thousands), primarily due to higher net equipment and net occupancy expenses. The efficiency ratio was 56.50 compared with 56.47 in the linked quarter. The effective tax rate increased to 23.24% from 22.31% because of an increase in valuation allowance related to low-income housing investments.
Credit quality remained a key focus. Provision for credit losses declined to $ 2,750 (dollars in thousands) from $ 3,600 (dollars in thousands), and net loan and lease charge-offs decreased to $ 3,314 (dollars in thousands) from $ 3,402 (dollars in thousands). However, non-performing assets increased to $ 43,412 (dollars in thousands) from $ 11,478 (dollars in thousands), and the non-performing-assets ratio increased to 0.30 % from 0.08 %. The company attributed this increase primarily to a single commercial mortgage being placed on non-accrual status, which it said was due to borrower-specific circumstances and not believed to represent broader loan-portfolio deterioration.
Capital remained above regulatory well-capitalized minimums, with a Tier 1 Capital Ratio of 14.41% and a Tier 1 Leverage Ratio of 8.79% at September 30, 2026. The company repurchased 256 thousand shares for $20.2 million during the quarter and subsequently received a $200 million increase in authorization, bringing total buyback authority to $268.7 million. The filing did not provide forward financial guidance, so the disclosed operating indicators, funding mix, margin progression and the single commercial mortgage non-accrual are the principal items to monitor.
Management, verbatim
Bank of Hawai‘i delivered another quarter of solid performance, supported by continued expense discipline.
Jim Polk, President and CEO
Net interest margin expanded for the tenth consecutive quarter, reflecting the ongoing benefit of asset repricing and the positive impact of deposit repricing actions.
Jim Polk, President and CEO
Not in the filing
stated, not guessed- Forward financial guidance was not provided.
- Previous-release outlook was not provided.
- Total revenue was not reported as a line item.
- Gross margin was not reported.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Formal reportable segment revenue was not reported.
- Non-GAAP earnings per share and non-GAAP net income were not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.