Business Context and Reporting Period
Company: First Hawaiian, Inc. (FHB)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and six months ended June 30, 2026
Business Overview: FHI is a bank holding company owning 100% of First Hawaiian Bank. Operations are divided into Retail Banking and Commercial Banking segments, with Treasury and support functions in Corporate/Other. The company operates primarily in Hawaii, with additional presence in Guam, Saipan, and the U.S. Mainland.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Net Income | $73.4 million | $141.2 million |
| Diluted EPS | $0.60 | $1.15 |
| Net Interest Income | $171.0 million | $338.5 million |
| Net Interest Margin (NIM) | 3.25% | 3.22% |
| Noninterest Income | $60.3 million | $113.1 million |
| Noninterest Expense | $130.4 million | $258.3 million |
| Efficiency Ratio | 56.17% | 56.95% |
| Total Assets | $23.6 billion | $23.6 billion |
| Total Loans and Leases | $14.6 billion | $14.6 billion |
| Total Deposits | $20.2 billion | $20.2 billion |
| Allowance for Credit Losses (ACL) | $168.1 million | $168.1 million |
| Stockholders' Equity | $2.8 billion | $2.8 billion |
Material Changes vs. Prior Comparable Period
- Net Income: Increased $0.1 million (0.2%) for the quarter and $8.7 million (6.6%) for the six months compared to the same periods in 2025.
- Net Interest Income: Increased $7.4 million (quarter) and $14.4 million (six months) driven by lower deposit funding costs, partially offset by lower loan yields due to falling SOFR rates.
- Provision for Credit Losses: Increased $1.1 million for the quarter but decreased $4.4 million for the six months compared to 2025.
- Noninterest Income: Increased $6.3 million (quarter) and $8.7 million (six months), primarily due to higher Bank-Owned Life Insurance (BOLI) income, excise tax refunds, and other service charges.
- Noninterest Expense: Increased $5.5 million (quarter) and $9.8 million (six months), largely due to higher salaries and employee benefits and contracted services.
- Loan Portfolio: Total loans increased $264.8 million (1.9%) from year-end 2025, driven by growth in commercial real estate and commercial/industrial loans.
- Deposits: Total deposits decreased $361.5 million (1.8%) from year-end 2025, primarily due to declines in savings and demand deposits.
Guidance, Outlook, and Material Events
- Pending Merger: On July 12, 2026, FHI entered into a definitive agreement to acquire TriCo Bancshares in an all-stock transaction valued at approximately $2 billion. TriCo shareholders will receive 2.095 shares of FHI stock for each TriCo share. The transaction is expected to close at the end of 2026, subject to regulatory and shareholder approvals.
- Dividends: The Board declared a quarterly cash dividend of $0.26 per share, payable August 28, 2026.
- Stock Repurchases: Under a $250 million program announced in January 2026, the company repurchased 1.3 million shares for $32.0 million during the first six months of 2026.
- Capital Position: The company remains "well-capitalized" with a Common Equity Tier 1 (CET1) ratio of 13.27% as of June 30, 2026.
- Tax Settlement: A settlement regarding uncertain tax liabilities from a 2016 reorganization was approved in July 2026. FHI expects to receive approximately $90.2 million, with related expense and tax impacts to be recognized in the third quarter of 2026.
Investor Verification Checklist
- Merger Approval Status: Monitor progress on regulatory approvals (Federal Reserve, FDIC, state regulators) and shareholder votes required to close the TriCo acquisition.
- Interest Rate Sensitivity: Verify the impact of the Federal Reserve's interest rate trajectory on Net Interest Margin, given the company's asset-liability mix and reliance on SOFR-based loans.
- Credit Quality Trends: Review the increase in non-accrual residential mortgage loans ($18.7 million) and the stability of the Allowance for Credit Losses (1.15% of loans) amidst potential economic headwinds.
- Deposit Stability: Assess the sustainability of deposit balances following a $361 million decline year-to-date and the composition of uninsured deposits (48% of total).
- Third-Quarter Tax Impact: Confirm the recognition of the $90.2 million tax settlement proceeds and the associated $24.3 million expense and $31.0 million tax benefit in Q3 2026 results.