FIRST HAWAIIAN, INC. Q4 FY2024 earnings call

• Local Economy Overview: Hawaii economy expanded slowly. Unemployment rate stable at 3%, visitor arrivals/spending down, housing market stable. Heartfelt concern for LA wildfire impact, but Pasadena employees safe. - Q4 Results Highlights: Strong quarter driven by loan/deposit growth, NIM expansion, excellent credit, solid non-interest income, and controlled expenses. $1 million contribution to First Hawaiian Foundation. - Balance Sheet: Sold $290M securities, reinvested, yield up 309 bps, expected to increase NII by $8.6M in 2025. Recognized $26.2M pre-tax loss from transaction. - Deposit Performance: Total retail and commercial deposits up, cost of deposits down 17 bps. Demand deposits up $175M, non-interest bearing to total deposits ratio steady at 34%. - Credit Quality: Strong, low charge-offs. CRE exposure ~31% of loans, LTDs manageable, criticized loans small.

Loans: In the fourth quarter, loans grew $167 million or 1.2% from the prior quarter. CRE and C&I drove growth, but construction loan payoffs offset some. Deposits: Total retail and commercial deposits increased by $324 million, with retail deposits up $113 million and commercial deposits up $211 million. Retail and commercial demand deposits increased by $175 million. Net Interest Income: Net interest income was $158.8 million, a linked quarter increase of $2.1 million. The margin increased eight basis points linked quarter to 3.03%.

• NIM expected to be 3.06% in Q1 2025 and expand throughout 2025. - Non-interest income run rate expected to average around $51 million per quarter in 2025. - Expenses expected to increase about 2% in 2025. - Loan growth expected low to mid-single digits in 2025, with payoffs in CRE and construction portfolios as a headwind.

• Potential headwind from payoffs in CRE and construction portfolios affecting loan growth. - Uncertainty around interest rate cuts and their impact on deposit betas and NIM expansion. - Competitive dynamics in Hawaii and their potential impact on deposit growth and market share.

Q: Andrew Liesch asks about loan pipeline and cadence of growth, and C&I growth specifics.

A: Bob Harrison says loan growth is hard to predict quarter-by-quarter, dealer business growth seen, consumer residential portfolios with runoff, C&I growth broad-based.

Q: David Feaster inquires about deposit growth, demand trends, new origination yields.

A: Jamie Moses talks about deposit growth from community efforts, Bob Harrison mentions demand trends and new origination yields being affected by construction loan payoffs.

Q: Jared Shaw asks about deposit betas and securities portfolio yield.

A: Jamie Moses discusses deposit betas potentially declining with rate cuts, and securities portfolio yield details from restructuring.

Q: Kelly Motta asks about balance sheet size, margin guidance, and competitive dynamics.

A: Jamie Moses talks about balance sheet size dependent on deposit growth, margin guidance of 3.06% in Q1 and ~3 bps expansion per quarter, Bob Harrison mentions no immediate competitive changes seen.

Q: Anthony Elian asks about NIM outlook with no rate cuts and fee income guidance.

A: Jamie Moses says no rate cuts would add basis points to NIM, and fee income guidance due to normalization of past fees.

Q: Andrew Terrell asks about securities restructuring and share buybacks.

A: Jamie Moses says securities repositioning is under consideration, and share buybacks are opportunistic.