First Hawaiian Inc (FHB) Q1 2026 Earnings Call Highlights: Strong Loan and Deposit Growth ...

This article first appeared on GuruFocus.

Return on Average Tangible Assets: 1.2% for Q1 2026. Return on Average Tangible Equity: 15.3% for Q1 2026. Effective Tax Rate: 22.5% for Q1 2026. Share Repurchase: 1.3 million shares at a cost of $32 million during the quarter. Total Loan Growth: $128 million in Q1 2026, up 3.6% on an annualized basis. Total Deposits Increase: $262 million in Q1 2026. Net Interest Income: $167.5 million for Q1 2026, down $2.8 million from the prior quarter. Net Interest Margin: 3.19%, a decline of 2 basis points sequentially. Noninterest Income: $52.8 million for Q1 2026. Noninterest Expense: $127.9 million for Q1 2026. Net Charge-Offs: $4.9 million, or 14 basis points of average loans and leases, unchanged from the fourth quarter. Allowance for Credit Losses: Increased by just under $1 million to $169 million, with a coverage ratio of 1.17% of total loans and leases.

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Release Date: April 24, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

First Hawaiian Inc (NASDAQ:FHB) reported a strong start to the year with growth in loans and deposits, maintaining solid credit quality and capitalization. The company achieved a return on average tangible assets of 1.2% and a return on average tangible equity of 15.3% for the first quarter. Total loans grew by over $128 million in the quarter, with significant growth in Commercial Real Estate (CRE) and Commercial & Industrial (C&I) loans. Total deposits increased by $262 million, driven by growth in public operating balances, with a healthy non-interest-bearing deposit ratio of 31%. The bank maintained strong credit performance with low credit risk, a decrease in criticized assets, and stable net charge-offs.

Negative Points

Net interest income for the quarter was down $2.8 million from the prior quarter, with a slight decline in net interest margin. Noninterest income decreased due to lower BOLI income and swap fee activity, which are considered timing-related. The company expects expenses to gradually increase throughout the year, with a forecast of full-year expenses around $520 million. The competitive environment remains challenging, particularly in pricing, both on the mainland and in Hawaii. There is uncertainty regarding the impact of recent global events on tourism and the local economy, which could affect future performance.

Q & A Highlights

Q: Jamie, could you explain the drivers behind the 2- to 3-basis-point sequential increase in NIM for Q2 and the full-year outlook? Is this entirely due to no rate cuts this year? A: James Moses, CFO: The increase is primarily driven by the balance sheet repricing story we've seen over the past year or two. We have about $400 million of fixed-rate cash flows repricing at a higher spread each quarter. This dynamic will continue to drive NIM higher, assuming no rate cuts.

Story Continues

Q: On expenses, you reiterated a full-year outlook of $520 million, but Q1 was lower than expected. What areas are driving the increase in expenses? A: James Moses, CFO: The increase will be broad-based, with a focus on hiring talented individuals to drive revenue. We expect a gradual ramp-up in expenses throughout the year.

Q: Can you discuss the drivers of C&I loan growth and your appetite for mainland expansion? A: Robert Harrison, CEO: C&I growth was driven by dealer floor plan and draws on existing lines of credit. We are open to hiring locally and on the mainland if necessary. We added a new dealer relationship, contributing to growth.

Q: Are you considering leveraging extra capital for securities or prefunding cash flows, or will you reinvest cash flows as they occur? A: James Moses, CFO: We plan to reinvest cash flows as they come off, with no current plans for restructuring or expanding the securities portfolio.

Q: How do you view the competitive dynamics in Hawaii versus the mainland, and are you seeing shifts in competition from pricing to structures and standards? A: Robert Harrison, CEO: Competition remains cyclical, with pricing being more competitive in Hawaii due to low loan-to-deposit ratios. On the mainland, we see larger banks taking bigger deal pieces, increasing competition.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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