First Hawaiian, Inc. Q1 FY2026 earnings call

Community Support: Supported communities impacted by recent flooding in Hawaii and typhoons in Guam and Saipan. ### Economic Outlook: Statewide unemployment rate stable at 2.2% in Jan; visitor arrivals up 7.1% through Feb with spending up 14.8%; housing market stable with median home prices up. ### Financial Performance: Loans and deposits grew, return on average tangible assets 1.2%, return on average tangible equity 15.3%, effective tax rate 22.5%. Balance sheet solid, well capitalized and asset sensitive. Repurchased about 1.3 million shares at $32 million. Deposits had solid momentum with total deposits up $262 million, funding costs improved. Noninterest income and expense discussed. Credit performance strong with low risk.

Loans grew over $128 million in the quarter, up 3.6% annualized. CRE and C&I loans had good growth, partially offset by runoff in residential and payoffs in construction. Total deposits increased by $262 million, driven by public operating balances. Net interest income was $167.5 million, down $2.8 million from prior quarter. Net interest margin was 3.19%, down 2 basis points. Noninterest income was $52.8 million, down from prior quarter. Noninterest expense was $127.9 million. Credit risk remained low, criticized assets decreased 21 basis points, nonperforming assets and loans 90+ days past due were 30 basis points of total loans and leases, down 1 basis point. Quarter-to-date net charge-offs were $4.9 million, unchanged from prior quarter. Allowance for credit losses increased to $169 million with coverage ratio 1.17% of total loans and leases.

Loan Growth: Expect full-year loan growth in 3%-4% range. ### NIM: Revised full-year NIM outlook to 3.22%-3.23% due to no rate cuts this year; expect second-quarter NIM to be up 2-3 basis points from first quarter. ### Noninterest Income: Outlook remains about $220 million for the year. ### Expenses: Expect expenses to gradually increase throughout the year, forecast full-year expenses about $520 million.

Tourism and Economy Impact: Uncertainty on how recent global events might impact tourism and local economy. ### Market Volatility: Market underperformance affecting BOLI income and swap fee activity. ### Competition: Cyclical competition on pricing, larger banks taking bigger pieces of deals reducing available opportunities, and potential impact on funding and loan markets.

Q: On the outlook, drivers of 2-3 basis points sequential increase in NIM in 2Q and why full-year NIM moved higher.

A: Balance sheet repricing story with about $400 million of fixed-rate cash flows repriced at 155 basis point spread higher.

Q: On expense, outlook of $520 million and areas driving increase.

A: Broad based, including potential salary expense from hiring talented folks.

Q: On C&I growth drivers and Mainland expansion appetite.

A: C&I growth broad based with $71 million growth, hiring looking locally and potentially Mainland.

Q: On floor planning utilization and securities yields.

A: Floor planning growth mix of new dealer relationship and utilization; reinvesting cash flows from securities as they come off.

Q: On competitive side, comparing Mainland vs Hawaii and fee income trends.

A: Cyclical competition on price, wealth business growing, credit card fees stable with BOLI and swap fees being volatile.

Q: On funding side, competition and market share growth.

A: Day-in, day-out ground game with folks meeting customers on consumer, small business, and larger business side.

Q: On capital changes impact and share repurchase.

A: Proposed capital changes could add 1% CET1, share repurchase with $250 million allocation, used $34 million in Q1.

Q: On credit watching areas.

A: Watching certain portfolios carefully due to environment uncertainty and natural disasters but no broad signs of weakness.

Q: On margin and deposit base repricing.

A: Still some ability to work on CD pricing with recent decline in competitive environment, NIM guide inclusive of deposit side actions.

Q: On Mainland M&A interest.

A: No updates, still talking to people for good fit.

Q: On cash flows split between loans and securities and CD details.

A: $600 million cash flows from securities and $1 billion from loans in year; about $1 billion CDs due in 2Q, rolling over from 2.90% to 2.50% weighted average