First Hawaiian (NASDAQ:FHB) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.
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Summary
First Hawaiian Inc reported a strong start to 2026 with growth in loans and deposits and solid credit quality.
The company maintained a return on average tangible assets of 1.2% and return on average tangible equity of 15.3% in Q1.
There was a repurchase of approximately 1.3 million shares at a cost of $32 million.
Total loans increased by $128 million, driven by growth in commercial real estate and commercial and industrial loans.
Net interest income was $167.5 million with a net interest margin of 3.19%, expected to increase slightly in the next quarter.
Non-interest income declined due to lower BOLI income and swap fee activity, viewed as timing-related.
The bank maintained strong credit performance with a $5 million provision for credit losses and an increase in allowance for credit losses.
First Hawaiian Inc expects full-year loan growth between 3% to 4% and non-interest income around $220 million.
The company emphasizes community support following recent natural disasters in Hawaii and Guam.
Management highlights a stable employment rate and steady growth in tourism and the housing market.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to the first Hawaiian Inc. Q1 2026 earnings conference call. At this time all participants are in a listen only mode. Please be advised that today’s conference is being recorded. After the speaker’s presentation, there will be a question and answer session. To ask a question, please press Star one one on your telephone and wait for your name to be announced. To withdraw your question, please press Star one one again. I would now like to hand the conference over to your speaker today, Kevin Hasayama, Investor Relations Manager.
Kevin Hasayama (Investor Relations Manager)
thank you Josh and thank you everyone for joining us as we review our financial results for the first quarter of 2026. With me today are Bob Harrison, Chairman, President and CEO, Jamie Moses, Chief Financial Officer and Lee Nakamura, Chief Risk Officer. We have prepared a slide presentation that we will refer to in our remarks today. The presentation is available for downloading and viewing on our website at fhb.com in the Investor Relations section. During today’s call we will be making forward looking statements, so Please refer to Slide 1 for our safe harbor statement. We may also discuss certain non GAAP financial measures. The appendix to this presentation contains reconciliations of these non GAAP financial measurements through the most directly comparable GAAP measurements. And now I’ll turn the call over to Bob thank you everyone for joining us today. I wanted to start by sharing our support for the communities impacted by the recent flooding in Hawaii from the Kona Low storms and Typhoon Sinlaku in Guam and Saipan. It’s really important for us to support our communities and we are actively providing relief and support to help our customers and those affected in the relative communities. Moving on to an outlook, the statewide unemployment rate remained relatively stable at 2.2% in January. That compares to the national rate at 4.3% for the same month through February. Total visitor arrivals were up 7.1% compared to last year, primarily due to more visitors from the US Mainland and Japan. Year to date spending through February was $4.2 billion, up 14.8% compared to 2025 levels for the same period. At this point, it’s too soon to know how tourism and the local economy might be impacted by the recent global events. The housing market remains stable with the median single family home sales price on Oahu in March at $1.2 million, up 3.4% from the and the medium condo sales price on Oahu in March was $510,000, up 2% from the prior year. Turning to Slide 2, we had a strong start to the year. Loans and Deposits grew, credit quality remained solid and we remained well capitalized. Our return on average tangible assets of 1.2% and return on average tangible equity of 15.3% for the first quarter. The effective tax rate for the first quarter was 22.5%. Turning to Slide 3, the balance sheet remains solid as we continue to be well capitalized with ample liquidity. We remain asset sensitive and well positioned to benefit from a higher for longer rate scenario. During the quarter we repurchased about 1.3 million shares at a cost of $32 million. Turning to slide 4, total loans grew over 128 million in the quarter, up 3.6% on an annualized basis. We had good growth in CRE and CNI loans, partially offset by runoff in residential loan portfolio and payoffs in the construction loan portfolio. Some of the growth in the CRE portfolio and decline in construction portfolio were due to completed construction projects converting to permanent financing. Now I’ll turn it over to Jamie.
Bob Harrison (Chairman, President, and CEO)
Thanks, Bob. Turning to Slide 5, we delivered solid deposit momentum in the prior year and quarter with total deposits increasing by 262 million, driven primarily by growth in public operating balances. Retail and commercial deposits were modestly higher and importantly did not experience the prior year and typical seasonal outflows we have seen at the prior year and start of prior years which we view as a positive signal. Public deposits increased $244 million reflecting higher operating account balances. We continue to see meaningful improvement in funding costs with the first quarter total cost of deposits declining 7 basis points to 1.22%. Our non interest bearing deposit ratio remained healthy at 31%, reinforcing the first quarter strength and stability of our core funding base. On slide 6, net interest income for the first quarter was $167.5 million, down $2.8 million from last quarter. Net interest margin was 3.19%, a decline of 2 basis points sequentially. This reflects the full quarter impact of the December rate cut. As we look ahead, we expect the balance sheet repricing story to continue throughout the year. Turning to slide 7, non interest income totaled $52.8 million for the first quarter. The decline from last quarter was primarily attributed to lower BOLI income and swap fee activity which we view as timing related rather than structural. Non interest expense was $127.9 million and there were no material, unusual or non recurring items in the first quarter. Our expense profile remains well controlled and aligned with our full year outlook. With that, I’ll turn it over to Lee to review our credit performance.
Jamie Moses (Chief Financial Officer)
Thank you, Jamie. Moving to Slide 8, the bank continued to maintain its Strong credit performance and healthy credit metrics in the first quarter quarter credit risk remains low, stable and well within our expectations. Overall, we’re not observing any broad signs of weakness across either the consumer or commercial books Criticized assets decreased by 21 basis points and nonperforming assets and loans 90 days or more past due were 30 basis points of total loans and leases down 1 basis point from the prior quarter resulting from a decrease in dealer flooring non accruals quarter to date. 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. In the first quarter. The allowance for credit losses increased by just under $1,000,000 to $169,000,000. With a coverage ratio of 1.17% of total loans and leases. We believe that we are conservatively reserved and ready for a wide range of outcomes.
Lee Nakamura (Chief Risk Officer)
Thanks, lee. Turning to slide 9, we have updated our outlook for key performance drivers. We continue to expect full year loan growth to be in the 3% to 4% range. With the markets now expecting no rate cuts this year, we have revised our full year NIM outlook to be in the 3.22 to 3.23 range. We expect second quarter NIM to be up 2 to 3 basis points from …
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