American Savings Bank of Hawaii Q3 2026 Earnings Results & Report

American Savings Bank of Hawaii EPS Results

• Actual EPS: $0.46
• Consensus EPS: $0.45
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

American Savings Bank of Hawaii Revenue Results

• Actual Revenue: $97.74 million
• Expected Revenue: $97.10 million
• Beat/Miss: Beat by +$640.00 thousand
• YoY Revenue Growth: N/A

American Savings Bank of Hawaii (NYSE:ASBH) was a Hawaii-based financial institution that provided retail and commercial banking services to individuals, families, businesses and organizations. Its offerings included deposit accounts, residential and commercial lending, consumer loans, business financing and related banking services.

The bank operated through a statewide network of branches and served customers throughout the Hawaiian Islands. It also provided mortgage banking and other financial services associated with homeownership and personal banking.

American Savings Bank of Hawaii was established in 1925 and became one of Hawaii’s longstanding banking institutions. The bank was later acquired by Hawaiian Electric Industries, Inc., and operated as American Savings Bank, F.S.B., a subsidiary of HEI. Historical information about the company’s leadership is limited.

American Savings Bank of Hawaii Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Third-quarter net income rose 6.7% sequentially to $29 million, or $0.45 per diluted share, with ROAA of 1.29% and tangible ROE of 16.68%. Higher net interest income, lower provision expense, and improved efficiency supported the results.
• Positive Sentiment: Net interest margin expanded four basis points sequentially to 3.61%, while deposit costs declined to 68 basis points. Management expects modest additional margin expansion as higher-yielding loans and securities replace runoff, although funding costs may inch higher if the Federal Reserve raises rates.
• Neutral Sentiment: Loan production opportunities remain healthy in commercial real estate and C&I, but the pipeline is less robust than earlier in the year and management expects residential balances to remain flat. Full-year loan production guidance remained at 2.2%, with disciplined pricing and underwriting amid a slower Hawaii economic outlook.
• Negative Sentiment: Credit metrics weakened, with non-performing loans increasing to 29 basis points from 19 basis points and annualized net charge-offs rising to 11 basis points. The deterioration was tied primarily to a partial charge-off on a commercial construction loan, though management said reserves remain appropriate.
• Positive Sentiment: Capital ratios strengthened, including a Tier 1 leverage ratio of 9.24% and total capital ratio of 14.76%, enabling the board to declare a quarterly dividend of $0.27 per share. Management is also evaluating potential capital returns, including a possible share repurchase, but has not made a decision.

Presentation

[Operator]

Hello, everyone. Thank you for joining us, and welcome to the American Savings Bank third quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jordan Hino, SVP and Director of Investor Relations. Jordan, please go ahead.

[Jordan Hino, SVP and Director of Investor Relations at American Savings Bank]

Thanks, Gabby. Aloha, and welcome to American Savings Bank's third quarter 2026 earnings call. With me today are Ann Teranishi, President and Chief Executive Officer, Dane Teruya, Executive Vice President and Chief Financial Officer, and Steven Nakahara, Executive Vice President and Chief Credit Officer. During today's call, we may refer to non-GAAP financial measures. Please see our statement on the use of non-GAAP financial measures and the related reconciliations in our earnings release and supplemental materials. We may also make forward-looking statements. These statements involve known and unknown risks and uncertainties, and actual results or performance could be materially different from those expressed or implied by the forward-looking statements. Please refer to our securities filings with the Office of the Comptroller of the Currency for a discussion of factors that could affect our results and other risk factors.

[Jordan Hino, SVP and Director of Investor Relations at American Savings Bank]

We undertake no obligation to update these forward-looking statements, except as required by law. With that, I'll turn the call over to Ann.

[Ann Teranishi, President and CEO at American Savings Bank]

Thank you, Jordan, and aloha, everyone. We appreciate you joining us for our first earnings call as a public company. As we mark this milestone, I want to begin by expressing my gratitude to the teammates who have shaped ASB and to our customers and community for their continued trust and support. We are proud of the straightforward, reliable business model we have built together, one that has served us well for more than 100 years and continues to drive our performance today. That strength was evident in our third quarter results. We delivered another quarter of strong earnings with net income of $29 million, or $0.45 per diluted share, return on average assets of 1.29%, and a return on average tangible common equity of 16.68%. Our results also included quarter-over-quarter margin expansion, improved efficiency, and stronger earnings and capital ratios.

[Ann Teranishi, President and CEO at American Savings Bank]

We remained focused on disciplined execution across the franchise. Average loan balances increased, and deposit costs decreased despite a rising rate environment. Turning to the local economy, infrastructure and military investment, together with rebuilding efforts on Maui, continue to support construction activity, while Hawaiʻi faces elevated oil prices and impacts from recent storms. We are monitoring key economic metrics, including visitor activity, employment, and housing trends. Visitor arrivals and spending increased year-to-date through August compared with the same period last year, despite declines in August. The civilian labor force and jobs expanded, while the unemployment rate increased from 2.6% in June to 2.8% in September. Statewide single-family home sales and median prices increased year-to-date through September, while condominium sales and median prices declined compared to the same period last year. Local economists continue to forecast growth in 2026, but have recently lowered their estimates.

[Ann Teranishi, President and CEO at American Savings Bank]

Against this backdrop, we remain focused on responsible growth while maintaining the strong underwriting standards that have served us well through economic cycles. We will also maintain a disciplined approach to capital allocation, including returning capital to shareholders. I'll now turn the call over to Dane for more detail on our financial results.

[Dane Teruya, EVP and CFO at American Savings Bank]

Thank you, Ann. Net income for the third quarter was $29 million, an increase of $1.8 million, or 6.7%, from the prior quarter. The increase reflected higher net interest income, lower provision expense, and an improved efficiency ratio. Net interest income was $76.4 million, up $1.2 million from the prior quarter, primarily reflecting higher average loan balances and improved earning asset yields, partially offset by lower average investment securities and interest-earning deposit balances. Net interest margin was 3.61%, 4 basis points higher than the prior quarter and 15 basis points higher than the prior year period. The quarter-over-quarter increase was driven primarily by higher investment securities, residential and consumer loan yields, together with continued runoff of higher-rate CDs. In the third quarter, we had $185.7 million of loan runoff at a yield of 5.79% versus $161 million of production at a yield of 6.23%.

[Dane Teruya, EVP and CFO at American Savings Bank]

The residential mortgage runoff was $54.9 million at a yield of 4.85%. Mortgage production was $63 million in the third quarter, with a production yield of 6.14%. Our balance sheet continues to be neutral to slightly asset-sensitive, which will support NIM expansion in this higher-for-longer interest rate environment. Our cost of deposits was 68 basis points, down 1 basis point from the prior quarter and 9 basis points lower than the prior year period, despite the rising interest rate environment. Non-interest income was $21 million, down $2.8 million from the prior quarter, primarily due to lower fair market value adjustments related to our BOLI portfolio. Excluding the fair market value impact, non-interest income increased $1.3 million, driven primarily by higher service charges on deposit accounts, income from investment services, and other income.

[Dane Teruya, EVP and CFO at American Savings Bank]

Non-interest expense was $59 million, down $2.1 million from the prior quarter, primarily due to lower fair market value adjustment related to our deferred compensation plan. Excluding that fair market value impact, non-interest expense increased $2 million from the prior quarter, primarily reflecting higher performance-based incentives. Our effective tax rate was 23% in the third quarter, compared to 21.6% in the second quarter. The increase in the effective tax rate primarily relates to limitations on deductions for compensation as a result of being a public company. We recognized $600,000 of income tax expense in the third quarter for these limitations. $400,000 of that was a catch-up for the first half of the year. Total assets were $8.9 billion at quarter end, down $112.2 million, or 1.2% from June 30th. The decrease primarily reflects a decrease in interest-bearing deposits at other financial institutions and modest declines in loans and investment securities.

[Dane Teruya, EVP and CFO at American Savings Bank]

Total deposits ended the quarter at $8.1 billion, down $137.6 million, or 1.7% from the prior quarter. Core deposits declined $92.1 million, primarily due to a decline in interest-bearing checking balances resulting from normal commercial customer activity. Non-interest-bearing deposits made up 31.5% of total deposits, 64 basis points higher than the prior period. Our Tier 1 leverage ratio increased to 9.24%, and our total capital ratio increased to 14.76%. With our ability to generate capital and our focus on returning capital to shareholders, the Board declared a quarterly dividend of $0.27 per common share, payable on November 20th to shareholders of record as of November 9th. Now I'll hand it over to Steven to cover provision and credit quality. Steven?

[Steven Nakahara, EVP and Chief Credit Officer at American Savings Bank]

Thanks, Dane. The allowance for credit losses on loans was $60.2 million at quarter end, or 97 basis points of total loans, compared with $61.5 million, or 99 basis points at June 30. Provision expense was $0.7 million in the third quarter, down $2.6 million from the linked quarter. In the second quarter, we recognized provision related to real estate secured loans to a commercial relationship and headwinds within the hospitality sector. We did not have a comparable provision in the third quarter. Non-performing loans were 29 basis points of total loans, compared with 19 basis points in the prior quarter. In the third quarter, we recognized a partial charge-off of a non-performing commercial construction loan. As a result, net charge-offs were $1.8 million, or 11 basis points on an annualized basis, compared to less than 1 basis point in the prior quarter.

[Steven Nakahara, EVP and Chief Credit Officer at American Savings Bank]

We believe we are appropriately reserved and continue to work closely with our customers while maintaining disciplined underwriting and portfolio monitoring. With that, I'll turn the call back to Ann.

[Ann Teranishi, President and CEO at American Savings Bank]

Thank you, Steven. Our third quarter performance demonstrates the strength of our straightforward, reliable business model and the continued focus of our teammates. As we begin this next chapter as a public company, we remain committed to disciplined growth, strong credit risk management, and delivering value for our customers, communities, and shareholders. We will open the call up for questions.

[Operator]

We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Jeff Rulis with D.A. Davidson. Your line is now open. Please go ahead.

[Jeff Rulis, Analyst at D.A. Davidson]

Thanks. Good morning, all. Maybe a little bit on the margin. Dane, you talked about the kind of the roll-off, roll-on dynamic on loans, but the cost of deposits down continues to be a remarkably low number. I guess, as we think about the margin and that kind of expectation for further climb, maybe if you could unpack the deposit side and your expectations for Expect to see any rate pressure on that front, seeing as the loan side seems pretty positive on the yield front?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. Hi, Jeff. The deposit side, the yield has been remaining relatively stable. I think, looking at the spot rate for the month of September, it is up 1 basis point versus what we reported on a quarterly basis. So we did reprice some of our deposits as a result of the Federal Reserve interest rate hike. What you will see is, it is slightly ticking up in the fourth quarter, but relatively only about a couple basis points up.

[Jeff Rulis, Analyst at D.A. Davidson]

Got it. As we roll into 2027, it is just that we are back to kind of that slow climb is still continues to be the expectation on the margin overall?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. That is correct. The interest rate environment is really the determining factor. So, if the Federal Reserve does raise interest rates, right now we are expecting one in the fourth quarter. There is also probably a couple that will occur in 2027. So with those interest rate moves, we will be resetting some of our higher, more rate-sensitive commercial products a little higher to reflect those changes. So, we would expect our cost of funds to inch higher as those rate changes become effective.

[Jeff Rulis, Analyst at D.A. Davidson]

Appreciate it, Dane. Then maybe just one other one on the expense side. It seems like kind of the items that are one-time in nature, if we think about the fair value adjustment on comp against maybe an offset of the IPO cost, I think that is about $1.4 million net of that. I guess a run rate going forward of $60.5 million is kind of in that range. Is that correct? Then kind of a growth rate from there, we just assume a kind of inflation growth off of that?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. So, in the third quarter, if you eliminate the fair market value related to our deferred comp plan, we think that would be a good run rate for the fourth quarter. So there was a tick up in our non-interest expense related primarily due to higher performance incentives. Then going forward, as we move through the year, there will be some inflationary impacts on that number.

[Jeff Rulis, Analyst at D.A. Davidson]

Appreciate it. I will step back. Thanks.

[Operator]

Your next question comes from the line of Matthew Clark with Piper Sandler. Your line is now open. Please go ahead.

[Matthew Clark, Analyst at Piper Sandler]

Yeah, good morning. Thanks for the questions. Just to round out the margin discussion, can you just update us on the cash flows coming off the single-family resi portfolio, which is where I think the opportunity is to reprice, and same thing on the HTM securities portfolio and the pickup in spread that we should anticipate there?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. The cash flow that came off in the third quarter was roughly about $55 million. The yield was about 4.85%. We are seeing a benefit of reinvesting that back into mortgage production, roughly about 125 basis points higher. And on the investment portfolio, we are seeing runoff within our HTM and AFS portfolio. In the third quarter, we got roughly about $74 million runoff. We are currently reinvesting that either back into loans or back into the investment portfolio at a spread of a little more than 175 basis points.

[Matthew Clark, Analyst at Piper Sandler]

Okay. That $74 million was a blend of AFS and HTM, obviously?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. That's correct.

[Matthew Clark, Analyst at Piper Sandler]

Okay. Got it. Okay. Just on the CD runoff, maybe speak to that trend. Is that somewhat deliberate? Is that a customer preference? What's the kind of the rate and duration on the new CDs? Just trying to get a sense for kind of the roll-off, roll-on rates.

[Dane Teruya, EVP and CFO at American Savings Bank]

Correct. We have some campaigns out there. I think in this environment, our customers' demand is to be a little shorter, so we have some promotional campaigns in the three-month and six-month range. What's rolling off has been a consistent trend over the past couple quarters, and you can see that in our numbers. I think in this environment, people are wanting to be a little bit more liquid and not lock in their money, and we think that trend will continue, but eventually will stabilize.

[Matthew Clark, Analyst at Piper Sandler]

Okay. Then just last one for me, on a potential buyback, I guess, how soon would you consider buying back stock? Should we just assume you kind of have to wait for the lockups to come off at a minimum?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah, that's a great question. We're currently working with the Board on how we optimize our capital, so we haven't made any determination on what we're going to be doing with that excess capital, but we're having active discussions with them on that. We'll come out with something a little later on on that topic.

[Matthew Clark, Analyst at Piper Sandler]

Okay, great. Thank you.

[Operator]

Your next question comes from the line of Andrew Terrell with Stephens. Your line is now open. Please go ahead.

[Andrew Terrell, Analyst at Stephens]

Hey, good morning. If I could just start on the deposits. If I look at the non-time certificate deposits down a bit, I know you guys call out some commercial normal seasonality. Are you able to quantify just what you view as kind of seasonal in nature, in terms of outflows and the deposits? Are you able to speak to maybe fourth quarter trends so far that you're seeing in the deposit book?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. Hi, Andrew. The deposit outflow in the third quarter was seasonal. We saw some of the deposits outflow from some of our customers just for normal commercial activity. What typically we see every year is there's a pickup in deposits in the fourth quarter, and we do expect that to occur this year. It's something that we continue to see in our market every single year. Those balances tend to hold through the first quarter and then eventually flow out thereafter. We do expect a pickup in the fourth quarter.

[Andrew Terrell, Analyst at Stephens]

Okay, great. I saw there's just a small lift in non-accrual loans this quarter. I caught the commentary on the partial charge-off. Can you speak to what drove the non-accrual lifts? Was there any interest reversal that came out of that impacted the loan yields or interest income this quarter?

[Steven Nakahara, EVP and Chief Credit Officer at American Savings Bank]

Yeah, Andrew, this is Steven. That increase in non-accrual was associated with the partial charge-off. It's the same CRE construction deal, so the residual balance on that is $4.1 million, and that represents the majority of that change in non-accruals. No material change on the interest income.

[Andrew Terrell, Analyst at Stephens]

Okay. Then last, if I back out the I think the tax rate you called out, $400,000, is maybe a catch-up to the first half of the year. If I back that out, it gets me like a 22% tax rate. Is that the right amount or right rate to think about going forward?

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. Hi, Andrew. I think the tax rate in the mid-22s to 23% level is an appropriate level going forward. For this year, we think that the effective tax rate will be closer to 22%, and that's just a reflection of our current earnings projection. But as we continue to earn more money, the tax rate may increase slightly.

[Andrew Terrell, Analyst at Stephens]

Okay. Thanks for the questions, and congrats on the IPO.

[Ann Teranishi, President and CEO at American Savings Bank]

Thanks, Andrew.

[Operator]

As a reminder, if you would like to ask a question, please press star one to raise your hand. Your next question comes from the line of Kelly Motta with KBW. Your line is now open. Please go ahead.

[Kelly Motta, Analyst at KBW]

Hey, good morning. Thanks for the question. Maybe I'd like to kick it back to loan growth. I believe you noted, Ann, in your prepared remarks that the growth expectations for Hawaii were revised down a little bit. Just wondering if you could give us an overview on the pipeline as it stands today and kind of overall outlook for net growth from here. Thanks.

[Ann Teranishi, President and CEO at American Savings Bank]

Yeah. I think with this rate environment, we are expecting the residential portfolio to stay flat with no major residential projects coming online, so production will really offset the runoff. We do continue to see opportunities in the CRE and C&I space. We had really great production in the first half, so we were successful at pulling some of that into June. Overall, our loan production for the year is still at 2.2%. The pipeline's looking pretty steady and healthy. Not as robust as earlier this year, which is, I think, consistent with what we would expect in the economic environment. We do expect some payoff activity this quarter. While we see good opportunities, we're really being disciplined in our approach on credit as well as pricing.

[Ann Teranishi, President and CEO at American Savings Bank]

I think in terms of business sentiment, I guess our business customers and the leaders that we speak with feel like things are going okay. They feel healthy, but with this economic environment, they're being pretty cautious and kind of a little bit more prudent in how they're thinking about business opportunities.

[Kelly Motta, Analyst at KBW]

Got it. Thank you. That's helpful. Turning to the other side of the balance sheet, it's not lost on me that you've had three now consecutive quarters of improvement in non-interest-bearing deposits, which has been a challenge for, I think, most banks. Maybe you could take a minute to discuss the success you've had with growing core accounts and the outlook there. Thanks.

[Ann Teranishi, President and CEO at American Savings Bank]

Yeah. Kelly, I'll start, and Dane may want to chime in. From a steady, granular, low-cost deposit base, we feel like we continue to have a terrific, steady deposit base. We serve the everyday people of Hawaiʻi, and they have been loyal to us over the years, and that is just a really important part of our deposit franchise. So, that's why we've been able to continue to have the low cost of deposits, and we expect for that to continue to happen.

[Dane Teruya, EVP and CFO at American Savings Bank]

Yeah. Kelly, I think the only thing I'd add is that that's our primary focus. We're really trying to build primary banking relationships. As the commercial teams go out and the retail teams go out, that's really the focus, is expanding our deposit base, and they've been pretty successful in bringing in some of the non-interest-bearing deposits.

[Kelly Motta, Analyst at KBW]

Got it. Thank you so much. Congrats again on the IPO and a nice quarter.

[Ann Teranishi, President and CEO at American Savings Bank]

Thanks a lot, Kelly.

[Operator]

There are no further questions at this time. I will now turn the call back to Jordan Hino for closing remarks.

[Jordan Hino, SVP and Director of Investor Relations at American Savings Bank]

Thank you, Gabby, and thank you, everyone, for joining us today. If you have any follow-up questions after the call, please contact investorrelations@asbhawaii.com. Thank you, and have a great weekend.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Analysts

• Jordan Hino, SVP and Director of Investor Relations at American Savings Bank
• Ann Teranishi, President and CEO at American Savings Bank
• Dane Teruya, EVP and CFO at American Savings Bank
• Steven Nakahara, EVP and Chief Credit Officer at American Savings Bank
• Jeff Rulis, Analyst at D.A. Davidson
• Matthew Clark, Analyst at Piper Sandler
• Andrew Terrell, Analyst at Stephens
• Kelly Motta, Analyst at KBW