Q1 2026 First Hawaiian Inc Earnings Call

April 24, 2026

Anthony Elian: 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 Haseyama, Investor Relations Manager.

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 Haseyama, Investor Relations Manager.

Speaker #2: 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.

Speaker #2: Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press *11 on your telephone and wait for your name to be announced.

Speaker #2: To withdraw your question, please press *11 again. I would now like to hand the conference over to your speaker today, Kevin Haseyama, Investor Relations Manager.

Speaker #3: 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 Lea Nakamura, Chief Risk Officer.

Kevin Haseyama: Thank you, Josh. Thank you everyone for joining us as we review our financial results for Q1 2026. With me today are Robert Harrison, Chairman, President, and CEO, James Moses, Vice Chair and Chief Financial Officer, and Lea Nakamura, Executive Vice President and 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 one 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 to the most directly comparable GAAP measurements. Now I'll turn the call over to Bob.

Speaker #3: 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.

Speaker #3: 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 to the most directly comparable GAAP measurements.

Speaker #3: And now, I'll turn the call over to Bob.

Speaker #4: 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 Sinloku in Guam and Saipan.

Bob Harrison: 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 respective 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.

Speaker #4: 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 relevant communities.

Speaker #4: Moving on to Anaatla, 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.

Speaker #4: Through February, total visitor arrivals were up 7.1% compared to last year, primarily due to more visitors from the U.S. mainland and Japan. Year-to-date spending through February was $4.2 billion, up 14.8% compared to 2025 levels for the same period.

Speaker #4: 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 remained stable, with the median single-family home sales price on O'ahu in March at $1.2 million, up 3.4% from the prior year, and the median condo sales price on O'ahu in March was $510,000, up 2% from the prior year.

Bob Harrison: 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 prior year. The median condo sales price on Oahu in March was $510,000, up 2% from the prior year. Turning to slide two. 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 Q1. The effective tax rate for Q1 was 22.5%. Turning to slide three.

Speaker #4: 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 was 1.2%, and return on average tangible equity was 15.3% for the first quarter.

Speaker #4: The effective tax rate for the first quarter was 22.5%. Turning to Slide 3, the balance sheet remained solid as we continue to be well-capitalized with ample liquidity, and we remain asset-sensitive and well-positioned to benefit from a higher-for-longer rate scenario.

Bob Harrison: 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 four. Total loans grew over $128 million in the quarter, up 3.6% on an annualized basis. We had good growth in CRE and C&I 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.

Speaker #4: 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.

Speaker #4: We had good growth in CRE and C&I loans, partially offset by runoff in the residential loan portfolio and payoffs in the construction loan portfolio. Some of the growth in the CRE portfolio and decline in the construction portfolio

Speaker #1: …were due to completed construction projects converting to permanent financing. Now, I'll turn it over to Jamie.

Speaker #2: Thanks, Bob. Turning to slide five. We delivered solid, solid deposit momentum in the quarter, with total deposits increasing by $262 million.

Jamie Moses: Thanks, Bob. Turning to slide 5. We delivered solid deposit momentum in the 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 typical seasonal outflows we have seen at the 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 total cost of deposits declining 7 basis points to 1.22%. Our non-interest-bearing deposit ratio remained healthy at 31%, reinforcing the strength and stability of our core funding base. On slide 6, net interest income for the quarter was $167 and a half million dollars, down $2.8 million from the prior quarter.

Jamie Moses: Thanks, Bob. Turning to slide five. We delivered solid deposit momentum in the 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 typical seasonal outflows we have seen at the 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 total cost of deposits declining 7 basis points to 1.22%. Our non-interest-bearing deposit ratio remained healthy at 31%, reinforcing the strength and stability of our core funding base. On slide six, net interest income for the quarter was $167.5 million, down $2.8 million from the prior quarter.

Speaker #2: Million dollars , driven primarily by growth in public operating balances , retail and commercial deposits were modestly higher . And importantly , did not experience the typical seasonal outflows we have seen at the start of prior years , which we view as a positive signal Public deposits increased 244 million , reflecting higher operating account balances .

Speaker #2: We continued to see meaningful improvement in funding costs , with the total cost of deposits declining seven basis points to 1.22% . Our non-interest bearing deposit ratio remained healthy at 31% , reinforcing the strength and stability of our core funding base .

Speaker #2: On slide six, net interest income for the quarter was $167.5 million, down $2.8 million from the prior quarter. Net interest margin was 3.19%, a decline of two basis points.

Jamie Moses: Net interest margin was 3.19%, a decline of two 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 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 quarter. Our expense profile remains well controlled and aligned with our full-year outlook. With that, I'll turn it over to Lea to review our credit performance.

Lea Nakamura: Thank you, Jamie. Moving to slide eight, the bank continued to maintain its strong credit performance and healthy credit metrics in Q1. 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 non-performing assets and loans 90 days or more past due were 30 basis points of total loans and leases, down one 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 Q4. The bank recorded a $5 million provision in Q1.

Speaker #3: Healthy credit metrics in the first quarter , credit risk remains low , stable , and well within our expectations Overall , we're not observing any broad signs of weakness across either .

Speaker #3: 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 one basis point from the prior quarter, resulting from a decrease in dealer flooring.

Speaker #3: 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 .

Speaker #3: The bank recorded a $5 million provision in the first quarter. The 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.

Lea Nakamura: The 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. We believe that we are conservatively reserved and ready for a wide range of outcomes.

Speaker #3: We believe that we are conservatively reserved and ready for a wide range of outcomes.

Speaker #1: Thanks , Lee . Turning to slide nine . 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 .

Bob Harrison: 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 Q2 NIM to be up 2 to 3 basis points from Q1. Our outlook for non-interest income remains about $220 million for the year. Finally, we expect expenses to gradually increase throughout the year, and we continue to forecast full year expenses will be about $520 million. That concludes our prepared remarks, and now we'd be happy to take your questions.

Speaker #1: 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 the first quarter.

Speaker #1: Our outlook for non-interest income remains about $220 million for the year. And finally, we expect expenses to gradually increase throughout the year.

Speaker #1: And we continue to forecast full-year expenses will be about $520 million. That concludes our prepared remarks. And now we'd be happy to take your questions.

Speaker #4: Thank you . As a reminder 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 , one moment for questions Our first question comes from Anthony Elion with J.P.

Operator: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. One moment for questions. Our first question comes from Anthony Elian with J.P. Morgan. You may proceed.

Speaker #4: Morgan . You may proceed

Speaker #5: Great, thanks, Jamie. On the outlook, the drivers of the 2 to 3 basis points sequential increase in NIM in Q2...

Anthony Elian: Great. Thanks. Jamie, on the outlook, the drivers of the 2 to 3 basis points sequential increase in NIM in Q2, could you help us unpack that a little bit? What's driving that in the range for full year moving higher? And is that entirely coming from no rate cuts this year?

Speaker #5: Q, could you help us unpack that a little bit? What's driving that? The range for full year moving higher? And is that entirely coming from...

Speaker #5: No rate cuts this year

Speaker #2: Hi , Tony . Good morning . I the right answer to that is the balance sheet repricing story that that we've had and seen for for the last year or two .

Jamie Moses: Hi, Tony. Good morning. The right answer to that is the balance sheet repricing story that we've had and seen for the last year or two. Again, just to remind everybody, we have about $400 million of fixed rate cash flows that come off every quarter, that get repriced at about a 155 basis point spread higher on a weighted average basis between loans and securities. Tony, that's really the driver as we go forward, right? We still are an asset sensitive balance sheet. We will see a decline in NIM if there is a rate cut in any given quarter. The balance sheet repricing dynamics after that will sort of drive the NIM higher as we go forward.

Speaker #2: So again just to remind everybody we have about 400 million of fixed rate cash flows that come off every quarter that get repriced , you know , at about a 155 basis point spread higher on a weighted average basis between loans and securities .

Speaker #2: And so , that's really the driver as we go forward , right . So , you know , we still are an asset sensitive balance sheet .

Speaker #2: So, we will see a decline in NIM if there is a rate cut in any given quarter. But then the balance sheet repricing dynamics after that will sort of drive the NIM higher as we go forward.

Speaker #5: Thank you . And then on expense so you reiterated the outlook of 520 for the full year . But I think one Q came in a little bit lower than what we were expecting , which would imply a pretty good pickup over the course of the year .

Anthony Elian: Thank you. Then on expense. You reiterated the outlook of $520 for the full year, but I think Q1 came in a little bit lower than what we were expecting, which would imply a pretty good pickup over the course of the year. Is that the right way to think about it? What are the areas driving the increase in expense? Thank you.

Speaker #5: Is that the right way to think about it? And what are the areas driving the increase in expense? Thank you.

Speaker #2: Yeah . I mean , it's going to be kind of broad based . Tony , in terms of the areas , hopefully we'll get we'll get some more salary expense in there .

Jamie Moses: Yeah. It's going to be kind of broad-based, Tony, in terms of the areas. Hopefully, we'll get some more salary expense in there, right? As we've talked about, we're looking to hire talented folks to come over and drive revenues for us. Hopefully, that's where we'll see much of that pickup. Generally broad-based, and I think you are thinking about it correctly in terms of a little pickup and a ramp as we get throughout the year.

Speaker #2: Right . As we've talked about , we're , you know , looking to , to hire folks , folks , talented folks to , to come over and drive revenues for us .

Speaker #2: So hopefully that's where we'll see much of that pick up . But generally broad based . And I , and I think you are thinking about it correctly in terms of a little pickup and a ramp as we get throughout the year

Speaker #5: Thank you .

Anthony Elian: Thank you.

Speaker #4: Thank you. Our next question comes from Jared Shore with Barclays. You may proceed.

Operator: Thank you. Our next question comes from Jared Shaw with Barclays. You may proceed.

Speaker #6: Hi, thanks. Good morning.

Jared Shaw: Hi. Thanks. Good morning.

Speaker #1: Good

Bob Harrison: Morning.

Speaker #6: You know , when you when you look at the the growth CNI growth has been has been pretty good . Any specific drivers sort of underpinning that .

Jared Shaw: When you look at the growth, C&I growth has been pretty good. Any specific drivers sort of underpinning that, and can you update us on your appetite for mainland expansion? Any of the hires, Jamie, that you're talking about, should we think are coming maybe off island?

Speaker #6: And can you update us on your appetite for mainland expansion? Any of the hires, Jimmy, that you're talking about, should we think are coming maybe off island?

Speaker #1: Yeah . Jared , let me this is Bob . Let me start with the loan outlook . You know , really the 71 million in CNI growth for the quarter .

Bob Harrison: Yeah, Jared. This is Bob. Let me start with the loan outlook. Really, the $71 million in C&I growth for the quarter. About $24 million of that was dealer floor plan, and the rest were draws on existing lines of credit, both local companies and mainland companies. It was really pretty broad-based. Good growth in dealer flooring, which we appreciate. We look at that for the rest of the year as being an opportunity, along with commercial real estate to continue to grow. On the hiring, yeah, we're looking for people all over. Of course, we would strongly prefer to hire here locally, but if we are unable to do so. Depending on that, we would look to the mainland.

Speaker #1: About $24 million of that was dealer floor plan, and the rest were draws on existing lines of credit, both the local companies and mainland companies.

Speaker #1: So it was really pretty broad based . Good growth in dealer flooring , which we appreciate . So we look at that for the rest of the year as being an opportunity , along with commercial real estate , to continue to grow on the hiring .

Speaker #1: Yeah , we're looking for people all over . Of course we would strongly prefer to hire here locally , but if we are unable to do so , depending on that , we would look to to the mainland

Speaker #6: On the on the floor planning . Are you seeing utilization ? Get back to to more normal levels ? I know it was pretty low for a while .

Jared Shaw: On the floor planning, are you seeing utilization get back to more normal levels? I know it was pretty low for a while. Is that growth coming from expanding the network?

Speaker #6: Or is that growth coming from expanding the network?

Speaker #1: We added a new dealer relationship during the quarter, but that wasn't all of it. I think it was a little bit of utilization.

Bob Harrison: We added a new dealer relationship during the quarter, but that wasn't all of it. I think it was a little bit of utilization. A mix of both.

Speaker #1: So a mix of both

Speaker #6: Okay . And then maybe separately , the securities yields are still , you know , pretty low . And with the capital , the extra capital you have , would you consider sort of just putting on more of a classical leverage play here or utilize some of the extra deposit growth on , on securities and sort of pre-fund some of that , that cash flow that's going to be coming off , or should we really just think that you're going to be , you know , reinvesting cash flows as they as they happen

Jared Shaw: Okay. Maybe separately, the securities yields are still pretty low and with the extra capital you have, would you consider sort of just putting on more of a classical leverage play here or utilize some of the extra deposit growth on securities and sort of pre-fund some of that cash flow that's going to be coming off? Or should we really just think that you're going to be reinvesting cash flows as they happen?

Speaker #2: Yeah . Jared , I think , I think the , the answer to that is we're the latter piece of that . We're just going to be reinvesting cash flows as , as they come off , no plans to do any sort of restructuring or anything at the moment .

Jamie Moses: Yeah, Jared, I think the answer to that is the latter piece of that. We're just going to be reinvesting cash flows as they come off. No plans to do any sort of restructuring or anything at the moment. Again, at the moment, no plans to expand the size of the securities portfolio either. For now it's just going to be that, just cash flows coming off and we'll reinvest them.

Speaker #2: And again , at the moment . No , no plans to expand the size of the securities portfolio either . So , you know , for now , it's just going to be that , you know , just cash flows coming off .

Speaker #2: And we'll reinvest them

Speaker #6: Great . Thank you

Jared Shaw: Great. Thank you.

Speaker #4: Thank you. Our next question comes from David Fischer with Raymond James. You may proceed.

Operator: Thank you. Our next question comes from David Feaster with Raymond James. You may proceed.

Speaker #7: Hey good morning everybody

David Feaster: Hey, good morning, everybody.

Speaker #1: Morning . Hey .

Bob Harrison: Morning.

Jamie Moses: Hey, Dave.

Speaker #2: Dave .

Speaker #7: I wanted to to to touch on maybe the competitive side . You kind of got a unique perspective , just kind of curious .

David Feaster: I wanted to touch on maybe the competitive side. You kind of got a unique perspective. Just kind of curious, maybe if you could touch on the competitive dynamics, both comparing and contrasting the mainland versus Hawaii. Are you starting to see competition shift from just pricing to more pushing on structures and standards? Just kind of curious what you're seeing on that front.

Speaker #7: Maybe if you could touch on the competitive dynamics , both , you know , comparing and contrasting the mainland versus Hawaii . Are you starting to see competition shift from just pricing to , you know , more , more pushing on structures and standards ?

Speaker #7: Just kind of curious what you're seeing on that front.

Speaker #1: Yeah . Dave . This Bob . Maybe I'll start off on that . The , you , the competitive nature , we really haven't seen .

Bob Harrison: Yeah, David. Maybe I'll start off on that. The competitive nature, it's always been a little bit more competitive. Put it this way, cyclically competitive on pricing. Now we're getting a little bit more competitive on price, both primarily on the mainland, but a little bit here. It's always been a bit more competitive on price in Hawaii, given the various banks' low loan-to-deposit ratios. Everybody's got liquidity they're looking to put to work here in Hawaii. That's always been an issue here. We are seeing it kind of cycle down slightly in our mainland markets. A little bit of that is, say, multifamily construction was higher on a spread a year and a half ago than it is today. I think that kind of speaks to that.

Speaker #1: It's always been a little bit more competitive , but put it this way , cyclically competitive on pricing . So now we're getting a little bit more competitive on price .

Speaker #1: Both primarily on the mainland but a little bit here . It's always been a bit more competitive on price in Hawaii , given the various banks low loan to deposit ratios .

Speaker #1: Everybody's got liquidity . They're looking to put to work here in Hawaii . So that's always been an issue . Here . We are seeing it kind of cycle down slightly in in our mainland markets .

Speaker #1: A little bit of that is, say, multifamily construction. That was higher on a spread a year and a half ago than it is today.

Speaker #1: So, I think that kind of speaks to that. The other thing we're seeing is the larger banks are taking bigger pieces of deals, and so there's less available.

Bob Harrison: The other thing we're seeing are the larger banks are taking bigger pieces of deals, and so there's less available. There is a little bit more competition for deals themselves as some of the larger banks are increasing their hold levels. Does that address your question?

Speaker #1: So, there is a little bit more competition for deals themselves, as some of the larger banks are increasing their hold levels. Does that address your question?

Speaker #7: Yeah . No that's helpful . And then , you know , appreciate the you know , you guys reiterated the the fee income guide .

David Feaster: Yeah. No, that's helpful. Appreciate you guys reiterated the fee income guide. I was just hoping you could walk through some of the business lines, kind of some of the underlying trends, and some of the puts and takes that you're seeing there.

Speaker #7: I was just hoping you could walk through some of the business lines and kind of some of the underlying trends and some of the puts and takes that you're seeing, seeing there.

Bob Harrison: Maybe I'll start on the wealth side. We're continuing to see really good interactions between our customers and our wealth advisors. That business has continued to grow year after year for many years now. I think that's been a nice opportunity. The fees associated with our credit card business have been pretty stable. There's movement quarter to quarter. A little stronger in Q4, a little less in Q1. That's pretty standard as far as what we would expect in that business. Jamie, anything you would add to that?

Speaker #1: Maybe I'll start on the wealth side. We're continuing to see really good interactions between our customers and our wealth advisors, so that business has continued to grow year after year for many years now.

Speaker #1: And so I think that's been a nice opportunity. The fees associated with our credit card business have been pretty stable.

Speaker #1: You know , there's movement quarter to quarter , a little stronger in Q4 , a little less in Q1 , but that's pretty , pretty standard as far as what we would expect in that business .

Speaker #1: Jamie, anything you would add to that?

Speaker #2: Yeah, I guess the only thing to add is there's a portion of our BOLI that is market driven. And so that can be somewhat volatile.

Jamie Moses: Yeah, I guess the only thing to add is there's a portion of our BOLI that is market driven, and so that can be somewhat volatile, and we saw that a little bit here at the end of the Q1 with the market kind of underperforming, let's call it. Less fees are related to that. Swap fee income in our loan book can kind of also be sort of cyclical, just depending on what kind of lending we're doing in a particular quarter and what our customers want. I think combine those couple things with all of what Bob Harrison mentioned, I think is where you get to on the fee guide.

Speaker #2: And we saw that a little bit here at the at the end of the first quarter with the market kind of underperforming , let's call it , you know .

Speaker #2: And so we , you know , less fees are related to that and then swap fee income , you know , our loan book can kind of also be sort of cyclical , just depending on , you know , what kind of lending we're doing in a particular quarter .

Speaker #2: And you know , what our customers want . So , you know , I think combine those couple things with all of what Bob mentioned , I think is where you get to on the on the fee guide .

Speaker #7: Okay . And then maybe just touching on , on the funding side , I mean , you've had a lot of success this quarter was great .

David Feaster: Okay. Maybe just touching on the funding side. You've had a lot of success. This quarter was great. A lot of benefit from public funds this quarter. I was hoping you could touch on maybe some competition on the funding side and just how you think about gaining share, and driving market share growth on the deposit front, and what's going to be the key drivers of that. Do you see more opportunity on the commercial or the retail side? Just kind of curious some of the funding trends you're seeing.

Speaker #7: A lot of benefit from public funds this quarter. I was hoping you could touch on maybe some competition on the funding side and just how you think about gaining share and driving market share growth on the deposit front, and what's going to be the key drivers of that. Do you see more opportunity on the commercial or the retail side?

Speaker #7: Just kind of curious, some of the funding trends you're seeing.

Speaker #1: Yeah . For that and , and most of well , virtually all of our deposits are here in market in our , you know , geographically is just a day in , day out getting out there and meeting with customers and prospects and trying to show them the different products and services we offer and see how we can , you know , make that work for them .

Bob Harrison: Yeah, for that. Well, virtually all of our deposits' share of the market in our geography is just a day in, day out, getting out there and meeting with customers and prospects and trying to show them the different products and services we offer and see how we can make that work for them. It really is a ground game, I would call it, more than anything else. There's not a lot of magic to it where it would change quarter over quarter. Certainly our folks are out there and trying to meet with customers both on the consumer, small business, and the larger business side.

Speaker #1: So it really is a ground game . I would call it more than anything else . There's no there's there's not a lot of magic to it where it would change quarter over quarter , but certainly our folks are out there and trying to meet with customers , both on the consumer small business .

Speaker #1: The larger business side

Speaker #7: All right . Thank you

Jamie Moses: All right. Thank you.

David Feaster: All right. Thank you.

Speaker #4: Thank you. Our next question comes from Kelly Motta with KBW. You may proceed.

Operator: Thank you. Our next question comes from Kelly Motta with KBW. You may proceed.

Speaker #8: Hey . Good morning . Thanks for the question . You know , maybe on capital really , really solid here . I apologize if it was asked already , but have you guys done any work on the proposed capital changes and the potential impact to , to your ratios here ?

Kelly Motta: Hey, good morning. Thanks for the question. Maybe on capital, really solid here. I apologize if it was asked already, but have you guys done any work on the proposed capital changes and the potential impact to your ratios here?

Speaker #2: Yeah , we've done we've done a little bit of work on it . We think that it could possibly add maybe like 1% Cet1 to , to our capital levels .

Jamie Moses: Yeah. We've done a little bit of work on it. We think that it could possibly add maybe 1% CET1 to our capital levels. Again, it's proposed, and we're not going to change our capital allocation strategy or our plans based on that. If it goes through the way it is, we think it's about a 1% add.

Speaker #2: But again , you know , proposed and , you know , we're not going to , we're not going to change our capital allocation strategy or our plans based on that .

Speaker #2: But if it goes through the way it is, we think it's about a 1% add.

Speaker #8: Got it . That's really helpful . And then otherwise , I mean , you've been very consistent here with the share repurchase . It seems like that's probably even even with the growth having picked up probably a good expectation , but wanted to hear your thoughts on how you're thinking about that .

Kelly Motta: Got it. That's really helpful. Otherwise, you've been very consistent here with the share repurchase. It seems like that's probably, even with the growth having picked up, probably a good expectation. Wanted to hear your thoughts on how you're thinking about that. Thank you.

Speaker #8: Thank you .

Speaker #2: Yeah , yeah . Kelly , I think I think you summarized it pretty well for us . Maybe we could maybe we can hire you to , to do that to that again .

Jamie Moses: Yeah. Kelly, I think you summarized it pretty well for us. Maybe we can hire you to do that again. Yeah. No, I think you nailed it. Yeah.

Speaker #2: Yeah . No , I think I think you nailed it . Yeah .

Speaker #1: Yeah . And you know , so we have the 200 million allocation and we use 34 million in in Q1 . And so it's not it's not set for timing wise .

Bob Harrison: Yeah. We have the $200 million allocation, and we used $34 million in Q1, and it's not set for timing-wise. It's not set for a particular year. We're just looking at what makes sense in going forward.

Speaker #1: It's not set for a particular year, and so we're just looking at what makes sense and going forward.

Speaker #2: Yeah . And just to be clear , the , the , the amount of the authorization was 250 million .

Jamie Moses: Yeah, just to be clear, the amount of the authorization was $250 million.

Speaker #1: Oh .

Bob Harrison: Oh.

Kelly Motta: Got it. That's really helpful. Otherwise, credit looks good. Anything you're watching or pulling away from? Thanks.

Speaker #8: Got it . That's , that's , that's really helpful . And then otherwise , I mean , credit looks pristine . Anything to any , anything you're watching or pulling away from .

Speaker #8: Thanks .

Speaker #3: I don't think anything we're pulling away from just given the uncertainty in the environment , the volatility , the recent naturally natural disaster events that have happened in our footprint , we're just , you know , watching certain portfolios very carefully .

Lea Nakamura: I don't think anything we're pulling away from, just given the uncertainty in the environment, the volatility, the recent natural disaster events that have happened in our footprint. We're just watching certain portfolios very carefully, but we haven't really seen anything so far.

Speaker #3: But we haven't really seen anything so far.

Speaker #8: Got it. Thank you so much for the time. I'll step back.

Kelly Motta: Got it. Thank you so much for the time. I'll step back.

Speaker #4: Thank you. Our next question comes from Andrew Terrell with Stephens. You may proceed.

Operator: Thank you. Our next question comes from Andrew Terrell with Stephens. You may proceed.

Speaker #9: Hey . Good morning

Andrew Terrell: Hey, good morning.

Speaker #2: Good morning .

Jamie Moses: Morning.

Bob Harrison: Morning.

Speaker #9: Why don't I go back a little bit on the margin ? You know , I , I hear you on the the near term guide and kind of full year guide the majority of what underpins that is , is some of the fixed repricing .

Andrew Terrell: wanted to go back a little bit on the margin. I hear you on the near-term guide and kind of full-year guide. The majority of what underpins that is some of the fixed repricing. Can you just talk about, is there any level of benefit you'd expect or work to do on the deposit base as you move throughout the year? Just to have some rate cuts, do you feel like you've kind of fully exhausted the ability to reprice lower? Any other tweaks you can look to make on the funding side?

Speaker #9: You just talk about is there , is there any level of benefit you'd expect or work to do on the deposit base ? You know , as you as you move throughout the year , just absent rate cuts , do you feel like you've kind of fully exhausted the ability to reprice lower ?

Speaker #9: Any other tweaks you could look to make on the funding side?

Speaker #10: So there's still .

Jamie Moses: There's still some ability to work on that, in particular with CD pricing, kind of what sort of rolls over every quarter. We've seen a pretty significant decline in sort of the competitive environment around those from, say, a year or so ago. We could still see some benefit from that perspective. The March deposit number, Andrew, was 120. A little bit lower than what we had in the quarter. Maybe there's still like you can see the sort of dynamics of the CD repricing around that. I wouldn't expect it to go too much lower with rates staying the same in totality in terms of deposit costs. The guide for the year on the NIM is inclusive of any sort of rate actions we might take on the deposit side as well as the repricing story.

Speaker #2: Some ability to , to work on that . In particular with CD pricing , you know , kind of what sort of rolls over every quarter .

Speaker #2: You know, we've seen a pretty significant decline in sort of the competitive environment around those from, say, a year or so ago.

Speaker #2: So we could still see some benefit from from that perspective , the , the March deposit number , Andrew was , was 120 .

Speaker #2: So a little bit lower than what we had in the quarter . So , you know , maybe there is , there's still like , you can see that the , the sort of dynamics of , of the CD repricing around that .

Speaker #2: So I wouldn't—I wouldn't expect it to go too much lower with rates staying the same, in totality, in terms of deposit costs.

Speaker #2: But the , the guide for the year on the Nim is inclusive of , you know , any sort of rate actions we might take on the deposit side , as well as the repricing story .

Speaker #9: Yep , yep . Okay . And then , you know , last quarter , you talked about , I think you gave , I forget the specific dollar amount of the fixed cash flows for the year , but roll off yield 4% , new asset yield 5.5% .

Andrew Terrell: Yep. Okay. Last quarter you talked about, I think you gave, I forget the specific dollar amount of the fixed cash flows for the year, but roll-off yield 4%, new asset yield 5.5%. There's obviously been a lot of rate volatility throughout Q1, and not asking for a total crystal ball, but do you feel like 5.5% blended new asset yield is still kind of a fair assumption based on what you're seeing for loan origination yields and where you're buying securities at today?

Speaker #9: There's obviously been a lot of rate volatility throughout the first quarter . And not asking for total crystal ball . But do you feel like , you know , 5.5% blended new asset yield is , you know , still kind of fair assumption based on what you're seeing for , you know , loan origination yields and where you're buying securities at today .

Speaker #10: Yeah, yeah, I think so.

Jamie Moses: Yeah, I think so. It's going to depend quarter to quarter based on what type of lending activity we do in any given quarter, right? If activity is primarily in lower spread things, then it might be a little bit lower than that. For the year, I think 150 is a good number and that $400 million per quarter of cash flows coming off and repricing still is a good number.

Speaker #2: I mean , it's going to depend quarter to quarter based on , you know , what type of lending activity we do in any given quarter , right ?

Speaker #2: If it's , you know , if activity is primarily in , you know , lower spread things , then it might be a little bit lower than that .

Speaker #2: But , you know , for the year , I think 150 is a , is a good number in that 400 million per quarter of cash flows coming off .

Speaker #2: And repricing still is a good number.

Speaker #9: Got it . Okay . Thanks . And if I could ask just one one last one . You know , I think we we started talking more about mainland M&A interest last year .

Andrew Terrell: Got it. Okay, thanks. If I could ask just one last one. I think we started talking more about mainland M&A interest last year some with you guys, and I just wondered if anything's changed there. Could you maybe rehash any willingness or kind of appetite or your view of the M&A market as it stands right now?

Speaker #9: Some with you guys and you know , I just wondered if anything's changed there . Could you maybe , you know , rehash any , any willingness or kind of appetite or your view of the M&A market as it stands right now ?

Speaker #1: Yeah , this spot no updates . You know , we're still talking to people . See if there's things that might make sense .

Bob Harrison: Yeah. This is Bob. No updates. We're still talking to people, see if there's things that might make sense, but we haven't really changed our profile or what we're looking for. We're really looking for a good fit first and foremost, and then take it from there.

Speaker #1: But we haven't really changed our profile or , or what we're looking for . We're really looking for a good fit . First and foremost .

Speaker #1: And then take it from there.

Speaker #9: Great. Thank you for taking the questions.

Andrew Terrell: Great. Thank you for taking the questions.

Speaker #4: Thank you. And as a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Matthew Clark with Piper Sandler.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Matthew Clark with Piper Sandler. You may proceed.

Speaker #4: You may proceed .

Speaker #11: Hey , good morning Just a couple follow ups here on the cash flows , the on the asset side , can you . I know it's 400 million a quarter , but can you give us a split between , you know , loans and securities on average ?

Matthew Clark: Hey, good morning.

Jamie Moses: Morning.

Matthew Clark: Just a couple follow-ups here on the cash flows on the asset side. I know it's $400 million a quarter, but can you give us a split between loans and securities on average? We can guesstimate the rates, but I'm just trying to forecast those individual yields.

Speaker #11: And , you know , those those you know , we can guesstimate the rates , but I'm just trying to forecast those individual yields .

Speaker #10: Yeah, yeah. So.

Jamie Moses: Yeah. I guess the right way to think about it is, for the year, we expected $600 million of cash flows coming off the securities portfolio. That leaves $1 billion in cash flows from the loans. That spread of 155 or 150 that we talked about is inclusive of the roll-off and roll-on yield. In the quarter, we added in the securities portfolio in the 490 range of yield, and a little bit higher than that, 620 or so on our loan yields. Yeah, I think that gets you what you need there, Matthew.

Speaker #2: You know, I guess the right way to think about it is, for the year, we expected $600 million of cash flows coming off the securities portfolio.

Speaker #2: So that leaves a billion in cash flows from from the loans . And that spread of . 155 . 150 that we talked about is inclusive of the other roll off and roll on yields .

Speaker #2: So in the quarter , we added in the securities portfolio , you know , in the in the 490 range of yield and a little bit higher than that , you know , 620 or so on our on our on our loan yields .

Speaker #2: So yeah , that's , I think , I think that gets you what you need there . Matthew .

Speaker #11: Okay , great And then just drill into the CDs . Same kind of question . How much do you have coming do here in two .

Matthew Clark: Okay, great. Just to drill into the CDs. Same kind of question. How much do you have coming due here in Q2 and roll-off and roll-on rates?

Speaker #11: Q and roll-off and roll-on rates.

Speaker #10: Yeah . So Q2 .

Jamie Moses: Yeah. Q2, we're going to have about $1 billion come due. That's currently somewhere in the neighborhood of a 290 or so CD rate. I think that'll roll over something like in a 250 weighted average range or something like that.

Speaker #2: We're going to have about $1 billion come due. That's currently somewhere in the neighborhood of, like, a 2.90% or so CD rate.

Speaker #2: And then, you know, I think that'll roll over something like in, like, a 250 weighted average range or something like that.

Speaker #11: Okay. Perfect. Thank you.

Matthew Clark: Okay, perfect. Thank you.

Jamie Moses: Hard to tell for sure because some folks roll into promos and some folks roll into rack rates. Don't know for sure around that. Again, I think if you back into the margin guidance that we've given, you can kind of get your way, what you need on the CD side of things.

Speaker #2: Hard to tell for sure because some folks roll into promos and some folks roll into, into rack rates. Don't know for sure around that.

Speaker #2: But , you know , again , I think , I think if you back into the , the margin guidance that we've given , you can kind of get your way , what you need on the CD side of things

Speaker #11: Yeah . Okay . Yeah , kind of . I'm kind of getting to a Nim that's a little bit above what your forecasting for two .

Matthew Clark: Yeah. Okay. I'm kind of getting to a NIM that's a little bit above what you're forecasting for Q2, so thank you.

Speaker #11: Q so thank you

Speaker #4: Thank you. I would now like to turn the call back over to Kevin Haseyama for any closing remarks.

Operator: Thank you. I would now like to turn the call back over to Kevin Haseyama for any closing remarks.

Speaker #12: We appreciate your interest in First Hawaiian, Inc. And please feel free to contact me if you have any additional questions. Thanks again for joining us, and have a good weekend.

Kevin Haseyama: We appreciate your interest in First Hawaiian, and please feel free to contact me if you have any additional questions. Thanks again for joining us, and have a good weekend.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Q1 2026 First Hawaiian Inc Earnings Call

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