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FH

FIRST HAWAIIAN, INC. (FHB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid operational performance: net income $59.2M and diluted EPS $0.47, with net interest margin expanding 5 bps to 3.08% and efficiency ratio improving to 58.2% .
  • EPS modestly beat Wall Street consensus ($0.47 vs $0.464*), while “Revenue” (S&P Global definition) missed ($200.5M vs $210.5M*); management emphasized lower deposit costs and Q4 portfolio restructuring as primary NIM drivers .
  • Guidance: management expects Q2 2025 NIM near 3.10% and reiterated full‑year noninterest expense guidance (~$510M), with a 23% tax rate framework; uncertainty elevated due to macro factors and tariffs .
  • Capital returns: $25M buyback (~974K shares, avg price $25.66) and declared $0.26 quarterly dividend; programmatic repurchases likely near $25M/quarter, opportunistically increased if price dislocates .

Estimates marked with * retrieved from S&P Global

What Went Well and What Went Wrong

What Went Well

  • NIM expanded 5 bps QoQ to 3.08% on lower deposit costs and the Q4 investment portfolio restructuring; management: “declining deposit costs… and investment portfolio restructuring helped drive a 5 basis point increase in NIM” .
  • Retail deposit growth of $105M offset seasonal/commercial volatility; NIB deposit ratio remained a strong 34%, supporting funding mix quality .
  • Credit quality remained excellent: ACL coverage increased to 1.17% of loans, NPA held at 0.14%, annualized net charge‑offs 0.11%; CRO: “Credit risk remains low, stable and well within our expectations” .

What Went Wrong

  • “Revenue” (S&P Global definition) missed consensus ($200.5M vs $210.5M*), with floating‑rate loan yield headwinds noted despite lower deposit costs .
  • Total loans and leases declined $115.2M QoQ, driven by scheduled/early CRE payoffs and dealer floor plan seasonality; growth was visible intra‑quarter but timing remains uncertain .
  • Provision for credit losses increased to $10.5M (vs $(0.8)M in Q4), reflecting a more pessimistic macro forecast in CECL; elevated uncertainty around tariffs and consumer resilience flagged by management .

Financial Results

Core P&L and Margins vs Prior Year and Prior Quarter

MetricQ1 2024Q4 2024Q1 2025
Net Interest Income ($M)$154.4 $158.8 $160.5
Noninterest Income ($M)$51.4 $29.4 $50.5
Provision for Credit Losses ($M)$6.3 $(0.8) $10.5
Net Income ($M)$54.2 $52.5 $59.2
Diluted EPS ($)$0.42 $0.41 $0.47
Net Interest Margin (%)2.91% 3.03% 3.08%
Efficiency Ratio (%)62.15% 65.51% 58.22%

Actual vs Wall Street Consensus (S&P Global)

MetricActualConsensusSurprise
Primary EPS ($)0.47 0.464*+$0.006; +1.2% (Beat)
Revenue ($M, S&P definition)200.5*210.5*-$10.0; -4.8% (Miss)
# of EPS Estimates—7*—
# of Revenue Estimates—4*—

Estimates marked with * retrieved from S&P Global

Segment and Balance Composition

Loans & Leases ($M)Q1 2024Q4 2024Q1 2025
Commercial & Industrial$2,189.9 $2,247.4 $2,261.4
Commercial Real Estate$4,301.3 $4,464.0 $4,367.4
Construction$972.5 $918.3 $954.1
Residential Mortgage$4,242.5 $4,168.2 $4,129.5
Home Equity Line$1,165.8 $1,151.7 $1,144.9
Consumer$1,054.2 $1,024.0 $998.3
Lease Financing$394.0 $434.7 $437.4
Total Loans & Leases$14,320.2 $14,408.3 $14,293.0
Deposits ($M)Q1 2024Q4 2024Q1 2025
Demand (NIB + IB Checking)$7,048.6 $6,975.1 $6,885.6
Savings$6,277.7 $6,021.4 $6,110.8
Money Market$4,059.2 $4,027.3 $3,865.2
Time$3,284.0 $3,298.4 $3,354.3
Total Deposits$20,669.5 $20,322.2 $20,215.8

KPIs and Asset Quality

KPIQ1 2024Q4 2024Q1 2025
ROA (%)0.90% 0.88% 1.01%
ROE (%)8.73% 7.94% 9.09%
CET1 Ratio (%)12.55% 12.80% 12.93%
Tier 1 Leverage (%)8.80% 9.14% 9.01%
NPA / Loans & OREO (%)0.14% 0.14% 0.14%
ACL / Loans (%)1.12% 1.11% 1.17%
Net Charge-Offs ($M)$3.8 $3.4 $3.8
NIB Deposit Ratio (%)——34%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (%)Q2 2025—“Increase a few bps to ~3.10” Raised (near-term)
Noninterest Expense ($M)FY 2025~$510 ~$510 Maintained
Tax Rate (%)FY 2025—23% Set/Confirmed
Share Repurchases ($M)2025 (program)$100 program adopted $25 in Q1; “programmatic,” ~$25/quarter likely Active; pace maintained
Dividend ($/share)Q2 2025 payable May 30$0.26 $0.26 declared Apr 22 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
NIM trajectory2.95% in Q3; 3.03% in Q4; improvements tied to deposit remixing 3.08%; guided ~3.10% for Q2 Improving with near-term tailwind
Deposit costs & mixDeposit beta moderating; stable growth, seasonal volatility Total cost fell 11 bps; retail +$105M; NIB 34%; spot cost ~1.41% Costs easing; mix supportive
Loan growth & CREQ3/Q4: loans mixed; CRE paydowns and construction pipeline variability Loans down $115M QoQ on CRE payoffs; pipeline strong, timing uncertain Near-term softness; watch pipeline conversion
Investment portfolioQ4 restructuring: $290M sold; $26.2M loss; reinvest at higher yield Benefits to NIM realized in Q1 Structural NII tailwind
Tariffs & macroElevated watchlist; consumer & small biz sensitivity Monitoring floor plan ($661M) and construction materials; tourism bookings uncertainty Risk monitoring intensified
Credit qualityExcellent; ACL ~1.15%, NPA ~0.13%-0.14% ACL 1.17%, NPA 0.14%, NCO 0.11% annualized; provision $10.5M on CECL forecast Conservative reserving; stable metrics
Technology spendHeavy prior years; ongoing data/analytics projects Maintain spend within guidance; no large-scale programs Steady, ROI-focused

Management Commentary

  • CEO: “First Hawaiian Bank started 2025 with a solid quarter. Retail deposits continued to grow, net interest income rose… expenses were well managed, and credit quality remained strong.”
  • CFO: “Net interest income was $160.5 million… increased NIM was a result of lower deposit costs and the benefit from the Q4 investment portfolio restructuring.”
  • CRO: “Credit risk remains low, stable and well within our expectations… we believe that we are conservatively reserved and ready for a wide range of outcomes.”

Q&A Highlights

  • Deposits and pricing: Management sees continued opportunity to reduce deposit costs with further rate cuts; CD repricing adds 20–30 bps benefit spread on rollovers .
  • NIM outlook: Q2 NIM ~3.10% includes a forecast June rate cut; ability to offset subsequent cuts depends on loan growth and deposit repricing cadence .
  • Buybacks: Programmatic approach, likely ~$25M per quarter, with flexibility to accelerate on dislocations; $25M executed in Q1 .
  • Loans/CRE: Q1 decline due to scheduled/early CRE payoffs and dealer seasonality; pipeline remains strong though timing uncertain, with mini‑perm possible amid takeout market constraints .
  • Tariffs exposure: Floor plan credit quality sound; balances trajectory depends on tariff specifics; construction costs a watchpoint; tourism bookings uncertain .

Estimates Context

  • EPS beat: $0.47 actual vs $0.464* consensus; beat driven by lower deposit costs and realized benefits from Q4 portfolio restructuring, partially offset by lower floating-rate loan yields .
  • Revenue miss: $200.5M* actual vs $210.5M* consensus; miss likely reflects S&P’s revenue construct vs bank-reported NII + noninterest income and floating-rate yield pressure .
  • Potential estimate revisions: NIM guidance to 3.10% and expense discipline ($510M) may support upward EPS revisions, while “Revenue” estimates may be recalibrated to bank model dynamics and CECL provisioning cadence .

Estimates marked with * retrieved from S&P Global

Key Takeaways for Investors

  • NIM expansion and deposit cost tailwinds are intact; Q4 portfolio actions continue to accrete to NII—supporting the near‑term earnings trajectory .
  • EPS beat vs consensus contrasts with an S&P‑defined revenue miss; focus on bank‑specific earnings drivers (NII, deposit beta, CD repricing) to frame forward EPS risk/reward .
  • Conservative reserving amid macro uncertainty enhances balance‑sheet resiliency; credit metrics remain strong with NPA stable at 0.14% .
  • Capital returns are consistent: $0.26 dividend and programmatic ~$25M/quarter buybacks provide support, with flexibility to accelerate in volatility .
  • Watch catalysts: tariff headlines (auto and construction inputs), tourism bookings, and the rate path (June cut baseline) for NIM/EPS sensitivity .
  • Loan growth timing is the swing factor for NIM resilience post‑rate cuts; a stronger pipeline conversion could offset margin compression risks .
  • Medium‑term thesis: deposit franchise strength (34% NIB) plus disciplined expense management positions FHB to compound tangible returns as rate normalization and portfolio repositioning play through .

Sources

  • Q1 2025 8‑K and press release: financials, dividend, capital, asset quality
  • Q1 2025 earnings call transcript: prepared remarks and Q&A ; –.
  • Q4 2024 and Q3 2024 press releases: prior-quarter trend and context ; .

Estimates marked with * retrieved from S&P Global