FHB — First Hawaiian, Inc.

Summary of First Hawaiian, Inc. Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Interest Income: $171 million, up $3.5 million from the previous quarter.
• Net Interest Margin (NIM): 3.25%, an increase of 6 basis points from Q1.
• Total Loans: Grew by $137 million (3.6% annualized), driven by Commercial & Industrial (C&I) and Commercial Real Estate (CRE) loans.
• Total Deposits: Decreased by $623 million, primarily due to a decline in public deposits.
• Return on Average Tangible Assets: 1.28%.
• Return on Average Tangible Equity: 16.34%.
• Noninterest Income: $60.3 million, boosted by higher Bank-Owned Life Insurance (BOLI) income and an excise tax refund.
• Noninterest Expense: $130.4 million, including $4.2 million related to the TriCo transaction.

2. Strategic Updates and Business Highlights

• TriCo Bancshares Acquisition: The bank is excited about the acquisition, aiming to build a leading Pacific banking franchise. Integration expenses are expected to increase in the latter half of the year.
• Economic Environment: Hawaii's employment rate remains stable at 2.5%, with a 2.9% increase in visitor arrivals compared to last year, indicating a positive trend in tourism.
• Credit Quality: Remains solid, with a reduction in the allowance for credit losses due to a decrease in classified assets.

3. Forward Guidance and Outlook

• Loan Growth: Expected to be in the 3% to 4% range for the full year.
• NIM Outlook: Revised to 3.24% to 3.25%, with a forecast of approximately 3.27% for Q3.
• Noninterest Income: Expected to remain around $220 million for the year.
• Expenses: Anticipated to be between $515 million and $520 million for the year, excluding TriCo-related expenses.

4. Bad News, Challenges, or Points of Concern

• Deposit Decline: Total deposits fell significantly, primarily due to seasonal outflows of public deposits, raising concerns about liquidity management.
• Residential Loan Slowdown: Continued weakness in residential loans due to high interest rates, with payoffs exceeding production.
• Market Competition: While deposit pricing remains rational in Hawaii, there are concerns about potential increases in competition and costs if the Federal Reserve raises rates.

5. Notable Q&A Insights

• Deposit Trends: Management clarified that the decline in public deposits was expected and not indicative of losing customer relationships. Seasonal trends suggest a potential increase in deposits in the latter half of the year.
• Loan Pipeline: A robust pipeline exists for C&I and CRE loans, although residential lending remains weak.
• Cost Management: The bank plans to increase hiring and incur higher expenses in the second half due to ongoing projects and integration efforts related to the TriCo acquisition.
• BOLI Income: The increase in BOLI income was attributed to market sensitivity, reflecting the bank's investment strategy.

Overall, First Hawaiian, Inc. reported strong financial performance in Q2 2026, with solid credit quality and strategic growth initiatives, despite facing challenges related to deposit outflows and a slowdown in residential lending. The acquisition of TriCo Bancshares is a key focus moving forward, with expectations of increased expenses as integration progresses.