First Hawaiian (NASDAQ:FHB) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.

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Summary

First Hawaiian Inc reported a strong start to 2026 with growth in loans and deposits and solid credit quality.

The company maintained a return on average tangible assets of 1.2% and return on average tangible equity of 15.3% in Q1.

There was a repurchase of approximately 1.3 million shares at a cost of $32 million.

Total loans increased by $128 million, driven by growth in commercial real estate and commercial and industrial loans.

Net interest income was $167.5 million with a net interest margin of 3.19%, expected to increase slightly in the next quarter.

Non-interest income declined due to lower BOLI income and swap fee activity, viewed as timing-related.

The bank maintained strong credit performance with a $5 million provision for credit losses and an increase in allowance for credit losses.

First Hawaiian Inc expects full-year loan growth between 3% to 4% and non-interest income around $220 million.

The company emphasizes community support following recent natural disasters in Hawaii and Guam.

Management highlights a stable employment rate and steady growth in tourism and the housing market.

Full Transcript

OPERATOR

Kevin Hasayama (Investor Relations Manager)

Bob Harrison (Chairman, President, and CEO)

Jamie Moses (Chief Financial Officer)

Lee Nakamura (Chief Risk Officer)

Bob Harrison (Chairman, President, and CEO)

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

Anthony Elian (Equity Analyst at JP Morgan)

Great. Thanks Jamie. On the outlook, the drivers of the 2 to 3 basis point sequential increase in NIM and 2Q. 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 no rate cuts this year?

Jamie Moses (Chief Financial Officer)

Anthony Elian (Equity Analyst at JP Morgan)

Thank you. And then on expense, you reiterated the outlook of 520 million for the full year, but I think 1Q 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 and what are the areas driving the increase in expense? Thank you.

Jamie Moses (Chief Financial Officer)

OPERATOR

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

Jared Shaw (Equity Analyst at Barclays)

Jamie Moses (Chief Financial Officer)

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. And again, at the moment, 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 and we’ll reinvest them.

OPERATOR

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

David Feaster (Equity Analyst at Raymond James)

Hey, good morning, everybody. Morning. Hey, Dave. I wanted to touch on maybe the competitive side.

Bob Harrison (Chairman, President, and CEO)

David Feaster (Equity Analyst at Raymond James)

Jamie Moses (Chief Financial Officer)

David Feaster (Equity Analyst at Raymond James)

Okay. And then maybe just touching on the funding side. I mean, you’ve had a lot of success. You know, 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, driving market share growth on the deposit front and what’s going to be

Bob Harrison (Chairman, President, and CEO)

the key drivers of that is do you see more opportunity on the commercial or the retail side?

OPERATOR

Kelly Motto (Equity Analyst at KBW)

Hey, good morning. Thanks for the question. You know, Mickey, on capital, really solid here. I apologize if it was Asked already. But have you guys done any work on the proposed capital changes, the potential impact to your ratios here?

Jamie Moses (Chief Financial Officer)

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

Kelly Motto (Equity Analyst at KBW)

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 with the growth having picked up, probably a good expectation. But wanted to hear your thoughts on how you’re thinking about that. Thank you.

Bob Harrison (Chairman, President, and CEO)

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. Yeah. So we have the 200 million allocation and we used 34 million in Q1. And so it’s not set for timing wise, it’s not set for a particular year. And so we’re just looking at what makes sense and going forward, just to

Kelly Motto (Equity Analyst at KBW)

Andrew Terrell (Equity Analyst at Stevens)

Our next question comes from Andrew Terrell with Stevens. You may proceed. Hey, good morning. Morning. 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. Just talk about is there any level of benefit you’d expect or work to do on the deposit base

Jamie Moses (Chief Financial Officer)

Andrew Terrell (Equity Analyst at Stevens)

Jamie Moses (Chief Financial Officer)

Yeah, I think so. I mean it’s going to depend quarter to quarter based on what type of lending activity we do in any given quarter. Right. If it’s, you know, if activity is primarily in lower spread things, then it might be a little bit lower than that. But 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.

Andrew Terrell (Equity Analyst at Stevens)

Got it. Okay, thanks. And if I could ask just one last one, I think we started talking more about mainland M and 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 and A market as it stands right now?

Bob Harrison (Chairman, President, and CEO)

Yeah, this is Bob. No updates. You know, 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. Really looking for a good fit first and foremost and then take it from there. Great.

Andrew Terrell (Equity Analyst at Stevens)

Thank you for taking the questions.

OPERATOR

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. You may proceed.

Matthew Clark (Equity Analyst at Piper Sandler)

Hey, good morning. 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, you know, loans and securities on Average.

Jamie Moses (Chief Financial Officer)

Matthew Clark (Equity Analyst at Piper Sandler)

Okay, great. And then just drill into the CDs. Same kind of question, you know, how much do you have coming due here in 2Q and roll off and roll on rates?

Jamie Moses (Chief Financial Officer)

Yeah. So Q2, we’re going to have about a billion dollars come due that’s currently somewhere in the neighborhood of like a 290 or so CD rate. And then, you know, I think that’ll roll over something like in like a 250 weighted average range or something like that.

Matthew Clark (Equity Analyst at Piper Sandler)

Okay, perfect. Thank you.

Jamie Moses (Chief Financial Officer)

Hard to tell for sure because some folks roll into promos and some folks roll into RAC rates. So don’t know for sure around that. But you know, again. Right. I think, 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.

Matthew Clark (Equity Analyst at Piper Sandler)

Yeah. Okay. Yeah, kind of. I’m kind of getting to a nim that’s a little bit above what you’re forecasting for 2Q so. Thank you.

OPERATOR

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

Kevin Hasayama (Investor Relations Manager)

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.