First Hawaiian Q1 Earnings Call Highlights

Key Points

• First Hawaiian reported a "strong start" to 2026 with loan and deposit growth, stable credit metrics (ROA tange 1.2%, ROE tange 15.3%), and repurchased about $32–34 million of stock in Q1 against a roughly $250 million repurchase authorization.
• Balance-sheet momentum included total loans up about $128 million (3.6% annualized) and deposits up $262 million—driven by public operating balances—with easing funding costs (deposit cost down to 1.22%) and roughly $1 billion of CDs maturing in Q2 at ~2.90% expected to roll into lower rates.
• Management updated its outlook: loan growth 3–4% for the year, full-year NIM 3.22%–3.23% (Q2 NIM +2–3 bps vs Q1), ~$220 million in non-interest income and ~$520 million in non-interest expense, noting the bank is asset-sensitive and positioned to benefit from a higher-for-longer rate environment.

First Hawaiian NASDAQ: FHB executives said the company opened 2026 with loan and deposit growth, stable credit performance, and continued capital returns, while updating key elements of its outlook to reflect shifting interest-rate expectations.

Management highlights and Hawaii economic backdrop

Chairman, President, and CEO Robert Harrison began by noting the company’s support for communities affected by recent flooding in Hawaii from Kona low storms and Typhoon Sinlaku in Guam and Saipan, saying First Hawaiian is “actively providing relief and support to help our customers and those affected.”

Harrison pointed to a relatively stable local economy, citing a statewide unemployment rate of 2.2% in January versus 4.3% nationally. He also said total visitor arrivals through February increased 7.1% year over year, “primarily due to more visitors from the U.S. mainland and Japan,” while year-to-date spending through February was $4.2 billion, up 14.8% from the same period in 2025.

Still, Harrison cautioned that “it’s too soon to know how tourism and the local economy might be impacted by the recent global events.” He described the housing market as stable, with Oahu’s median single-family home sales price in March at $1.2 million (up 3.4% year over year) and the median condo price at $510,000 (up 2%).

Quarterly performance: profitability, capital, and share repurchases

Harrison said the company had a “strong start to the year,” with loan and deposit growth, solid credit quality, and strong capitalization. He reported a return on average tangible assets of 1.2% and return on average tangible equity of 15.3% for the first quarter, along with an effective tax rate of 22.5%.

He added that the bank remains “asset sensitive and well-positioned to benefit from a higher for-longer rate scenario.” During the quarter, First Hawaiian repurchased about 1.3 million shares for $32 million.

During the Q&A, Harrison and CFO James Moses discussed the company’s repurchase pace and authorization. Harrison said, “We have the $200 million allocation, and we used $34 million in Q1,” adding that the timing is not set to a particular year and would be based on what makes sense going forward. Moses clarified that “the amount of the authorization was $250 million.”

Balance sheet trends: loan growth and deposit momentum

Total loans increased more than $128 million in the quarter, up 3.6% on an annualized basis, driven by commercial real estate (CRE) and commercial and industrial (C&I) growth, according to Harrison. That growth was “partially offset by runoff in [the] residential loan portfolio and payoffs in the construction loan portfolio.” He noted that some of the shift between CRE and construction reflected construction projects converting into permanent financing.

Asked about the quarter’s C&I growth, Harrison said C&I rose $71 million, including about $24 million of dealer floor plan activity, with the remainder largely “draws on existing lines of credit, both local companies and mainland companies.” He called the growth “pretty broad-based.” He also said the bank added a new dealer relationship during the quarter and saw “a little bit of utilization” improvement in floor plan lines.

On deposits, Moses said total deposits rose $262 million, primarily from growth in public operating balances. Public deposits increased $244 million, while retail and commercial deposits were “modestly higher” and did not show the typical seasonal outflows seen in prior years, which Moses said the company viewed as a positive signal.

Moses also pointed to easing funding costs: the total cost of deposits declined 7 basis points to 1.22%, and the non-interest-bearing deposit ratio held at 31%. In response to an analyst question about additional potential benefit from deposit repricing, Moses said there is still “some ability to work on” pricing, particularly in certificates of deposit (CDs) rolling over each quarter, but he “wouldn’t expect it to go too much lower with rates staying the same in totality.”

Moses later provided detail on CD maturities, saying about $1 billion will come due in the second quarter at an average rate around 2.90%, which he expected to roll into “a 250 weighted average range or something like that,” while noting outcomes can vary depending on whether customers choose promotional or rack rates.

Net interest income, margin drivers, and securities strategy

Net interest income totaled $167.5 million, down $2.8 million from the prior quarter, Moses said. Net interest margin (NIM) was 3.19%, down 2 basis points sequentially, reflecting “the full quarter impact of the December rate cut.”

Looking forward, Moses said the “balance sheet repricing story” remains the key driver, reiterating that approximately $400 million of fixed-rate cash flows roll off each quarter and are repriced at about a 155-basis-point higher spread on a weighted average basis across loans and securities. He said the bank remains asset sensitive and would see pressure in NIM if a rate cut occurs in a quarter, but repricing dynamics thereafter would tend to lift margin.

On reinvestment, Moses told analysts the bank plans to reinvest securities cash flows “as they come off,” with “no plans to do any sort of restructuring” and “no plans to expand the size of the securities portfolio either.” He said that during the quarter, additions to the securities portfolio were around a 4.90% yield, while loan yields were around 6.20%.

Fees, expenses, and credit quality

Non-interest income was $52.8 million, and Moses attributed the linked-quarter decline primarily to lower bank-owned life insurance (BOLI) income and swap fee activity, which he characterized as “timing related rather than structural.” Harrison said wealth management continues to show “really good interactions” between customers and advisors and has grown year after year. He also described credit card fees as stable, with typical seasonal patterns (stronger in the fourth quarter and lower in the first quarter).

Non-interest expense was $127.9 million, and Moses said there were no material unusual or non-recurring items. While First Hawaiian reiterated its full-year expense outlook, Moses told analysts to expect a “broad-based” ramp through the year, including higher salary expense tied to hiring “talented folks” to help drive revenue.

Chief Risk Officer Lea Nakamura said the company maintained “strong credit performance and healthy credit metrics” and that credit risk remains “low, stable, and well within our expectations.” She said the bank is not seeing broad-based weakness across consumer or commercial portfolios. Criticized assets fell 21 basis points, and non-performing assets plus loans 90 days or more past due were 30 basis points of total loans and leases, down 1 basis point from the prior quarter due to a decrease in dealer flooring non-accruals.

Net charge-offs were $4.9 million, or 14 basis points of average loans and leases, unchanged from the fourth quarter. The bank recorded a $5 million provision, and the allowance for credit losses rose by just under $1 million to $169 million, representing 1.17% of total loans and leases. Nakamura said the company believes it is “conservatively reserved and ready for a wide range of outcomes,” adding later that the bank is watching certain portfolios closely given uncertainty, volatility, and recent natural disaster events, but “haven’t really seen anything so far.”

Updated outlook

• Loan growth: 3%–4% for the full year
• Net interest margin: revised to 3.22%–3.23% for the full year; second-quarter NIM expected to be up 2–3 basis points from the first quarter
• Non-interest income: about $220 million for the year
• Non-interest expense: about $520 million for the year, with gradual increases through 2026

Harrison said the company also continues to evaluate opportunities for talent recruitment and potential strategic activity. Asked about the company’s appetite for mainland hiring, he said First Hawaiian would “strongly prefer to hire here locally,” but would look to the mainland if needed. On mainland M&A discussions, Harrison said there were “no updates,” adding the company is still talking to parties and remains focused on finding “a good fit first and foremost.”

About First Hawaiian NASDAQ: FHB

First Hawaiian, Inc is the oldest and largest bank in Hawaii, operating as the bank holding company for First Hawaiian Bank. Established in 1858, the company offers a full suite of financial services to individual, business and institutional clients. Its product portfolio includes consumer and commercial lending, deposit accounts, treasury and cash management, foreign exchange and trade finance, as well as wealth management and trust services.

First Hawaiian serves customers through an extensive network of branches, ATMs and digital channels across the Hawaiian Islands, Guam, Saipan and American Samoa.

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