First Hawaiian (FHB) Q1 2026 Earnings Transcript

FHB is in a rare “slow-burn re-rating” setup: earnings power is being lifted more by balance-sheet mechanics than by balance growth. The next two quarters should benefit from a favorable mix of fixed-asset roll-offs and CD repricing, which means margin expansion can continue even if loan growth only lands in the middle of management’s range. That makes the stock less about headline loan growth and more about the durability of asset sensitivity with a deposit franchise that still has room to cheapen funding.

The key second-order effect is that the bank’s excess capital and buyback capacity are being underappreciated relative to the quality of the core deposit base. If the proposed capital rule really adds ~1% CET1, FHB’s operating flexibility improves rather than degrades, because it would likely preserve repurchases longer and reduce the need for balance-sheet conservatism. In other words, the rule change may be a sentiment overhang on the sector, but for a bank with stable credit and low funding volatility, it can actually increase optionality.

The main risk is not credit—it's a macro inflection that flattens the repricing tailwind before deposit costs have fully reset. The valuation can also get ahead of itself if investors extrapolate the NIM guide without giving enough weight to the gradual pickup in expenses later this year. A tourism or Hawaii housing slowdown would matter only if it bleeds into operating balances and C&I utilization; until then, the near-term catalyst remains margin accretion, not loan acceleration.