Oct 26, 2026 earnings call — Margin expansion and deposit strategy
Bank of Hawaii reported diluted EPS of $1.49 and net income of $64.3 million for Q3.
Revenue $0.2B (est $0.2B) · EPS $1.49 (est $1.51)
Key quotes
"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."
"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."
"As an update on the allowance for credit losses on loans and leases, the ACL ended the quarter at $146.2 million."
Analyst Q&A 6
net interest margin and deposit runoff
Q (Jeff Rulis · D.A. Davidson): He asked what September NIM was excluding the nonaccrual, whether public deposit runoff helped margins, and if more public deposits might run off. He also asked about loan demand if rates rise.
A: Excluding the nonperforming asset, NIM would have been 2.83% in September. Public funds ran off more toward the end of the quarter and should be a modest tailwind of about 1 basis point on deposit cost and NIM. They see opportunity to run off additional public deposits but do not expect it this quarter; commercial loan demand looks strong while consumer and residential demand is challenged, with some growth in home equity lines.
"So excluding the impact from that nonperforming asset, the NIM would have been 2.83% in September." — Bradley Satenberg (CFO)
deposit beta, CD rollovers, borrowings
Q (Matthew Clark · Piper Sandler): He asked what interest-bearing deposit beta should be through the cycle. He also asked about CD maturities and expected roll-on rates, and how to think about $853 million of borrowings if deposit growth resumes.
A: They expect deposit betas on the way up to be around 34%, and it will take several quarters to reach that level. A little over 50% of CDs will mature within the next 3 months at about 2.90%, and they expect roll-ons around 3% with current promotions. They used short-term borrowings this quarter; spot short-term borrowings were about $345 million at quarter end, and they expect deposit growth to return in the fourth quarter and first quarter of next year which should reduce reliance on borrowings.
"I would say on the way up, I mean, our expectation on total deposits, the betas will be around 34%." — Bradley Satenberg (CFO)
deposit outflows, nonperformer, buybacks
Q (Jared David Shaw · Barclays): He asked whether the DDA outflows were mainly public funds and what core deposit trends to expect, and whether total and DDA should stabilize or grow. He also asked about reserves or potential loss from the nonperformer and what might accelerate the buyback above $20 million per quarter.
A: Management said the public funds runoff was intentional and commercial outflows were from normal business activity like real estate investment, working capital, owner distributions, and completed condo project payouts; they expect some inflows later. The nonperforming loan matured and the borrower is pursuing a sale; management called it idiosyncratic and said any loss is expected to be immaterial and already reserved for, so they don't expect higher provision expense. On buybacks, they plan to buy $20 million this quarter, will reevaluate going into 2027, and may accelerate on a quarter-by-quarter basis.
"based on our current assessment, any loss associated with the sale is expected to be immaterial and had already been adequately reserved for." — S. Shairson
expense growth and 2027 outlook
Q (Andrew Liesch · StoneX Financial): He asked what drove expense results versus the year's guidance and whether expense growth will return to a normal level in 2027. He wanted to know the normalized run rate going forward.
A: They said normalized expense growth is around 3% and they are very meticulous and cautious with expenses. For 2027, they expect a 2.5% to 3% normalized run rate but noted strategic opportunities could affect that and they remain careful about spending.
"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." — Bradley Satenberg (CFO)
capital levels and public deposits strategy
Q (Kelly Motta · KBW): She asked how management is thinking about overall capital, the 9% Tier 1 leverage goal, and regulator guideposts for buybacks. She also asked about securities cash flow changes and how much of public deposits could be run off.
A: They said they want to pay dividends, buy back shares opportunistically, and allow organic capital growth while managing to appropriate capital levels and the 9% target. Cash flows from the investment portfolio are expected to be in the range of $550 million to $650 million; duration increased modestly but cash flows are not materially changed. The public funds portfolio is about $2 billion, mostly operating accounts they won't run off; roughly 10% of that portfolio could be repriced or run off over time, but not anticipated this quarter.
"I think about it as the cash flows are going to be in the range of $550 million to $650 million." — Bradley Satenberg (CFO)
closing remarks
Q (Patricia Lam): No analyst question; operator closed Q&A and turned to management for wrap-up.
A: Management thanked everyone for joining and for their continued interest in Bank of Hawaii. They invited investors to reach out with any additional questions.