Bank of Hawaii: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 26, 2026, Bank of Hawaii (NYSE:BOH) reported net income of $64.3 million as earning asset repricing expanded profit margins. For long-term investors, the bank's ability to expand margins while controlling deposit costs underpins sustainable earnings growth.

Three things management said stand out.

1. Asset Repricing Drives Tenth Consecutive Margin Expansion

Fixed-rate loans and investment securities are maturing and reearning higher market yields, driving revenue higher without requiring more risk. This dynamic expanded net interest income (NII) -- generally the profit earned from interest on loans minus interest paid on deposits -- to $156.1 million. Net interest margin (NIM), which measures net interest income as a percentage of total earning assets, expanded for the 10th consecutive 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.
-- Bradley Satenberg, CFO

2. Strategic Public Deposit Runoff Protects Interest Margins

Management deliberately shed $200 million of expensive public sector deposits near the end of the quarter rather than paying peak rates to hold them. This targeted runoff reduced interest expense while keeping average deposit costs flat at 1.3%. Noninterest-bearing checking accounts remained stable at roughly 27% of total deposits, preserving low-cost funding.

Deposit costs also benefited from the strategic runoff of approximately $200 million of high-cost public funds during the quarter.
-- Bradley Satenberg, CFO

3. Commercial Loans Drive Growth While Credit Remains Stable

Commercial lending expanded by $73 million during the quarter, offsetting muted consumer loan demand. A single commercial borrower entering default pushed nonperforming assets -- nonaccrual loans plus foreclosed real estate -- higher, but management expects an immaterial loss upon resolving the collateral.

Absent this one relationship, nonperforming would have been flat at 8 basis points to the previous quarter.
-- Brad Shairson, Chief Risk Officer

Looking Ahead

Earnings momentum is building across the franchise as fixed-rate assets reprice into higher interest rates. The bank relies on its 34% deposit market share to anchor customer funding, while controlling operating expenses and expanding commercial lending.

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.
-- James Polk, President and CEO

Cross-selling services between commercial banking and wealth management offers a path to higher fee income. Strategic coordination targets business succession planning to build multi-generational client relationships.

Helping business owners navigate wealth planning, succession and ownership transition represents an important opportunity to deepen relationships and generate additional fee income going forward.
-- James Polk, President and CEO

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