First Hawaiian Q2 Earnings Call Highlights

Loan growth and margin improved in Q2 2026, with total loans up $137 million and net interest margin rising six basis points to 3.25%. Management also lifted its full-year margin outlook to 3.24%–3.25% on expectations for one rate increase later this year. Deposits fell sharply by $623 million, mainly because of expected public-deposit outflows, but executives said retail and commercial balances were broadly stable and should improve seasonally in the second half. The bank’s noninterest-bearing deposit ratio remained 32%, and deposit costs edged lower. First Hawaiian is focused on its TriCo Bancshares deal, expected to close near year-end, and does not expect share buybacks while the transaction is under regulatory review. Management reaffirmed a target of 25% cost savings from the combination and said credit quality remained strong. First Hawaiian executives said the bank delivered loan growth, wider net interest margin and continued solid credit quality in the second quarter of 2026, while preparing for its proposed combination with TriCo Bancshares. Chairman, President and CEO Bob Harrison said the company was “very excited” about the TriCo transaction, which is expected to close near the end of the year. He said First Hawaiian is focused on the work required to complete the deal and does not have additional information beyond what was presented during its July 23 investor call. Hawaii economy and loan growth Harrison pointed to relatively stable economic conditions in Hawaii. The statewide employment rate was 2.5% in May, compared with a national unemployment rate of 4.3%. Total visitor arrivals through May rose 2.9% from a year earlier, driven primarily by visitors from the U.S. mainland and Japan, while year-to-date visitor spending reached $9.7 billion, up 7.5% from 2025 levels. Hawaii housing prices also remained firm. The median Oahu single-family home sales price was $1.2 million in June, up 10.4% year over year, while the median condo price was $528,000, up 3.5%. Total loans increased $137 million during the quarter, representing annualized growth of about 3.6%. Growth was led by commercial and industrial, or C&I, lending and commercial real estate lending. C&I balances increased $98 million, primarily because of dealer-flooring growth and expansion in the company’s Hawaii corporate portfolio. Completed construction projects resulted in the conversion of $95 million in construction loan balances into commercial real estate loans. Construction loan payoffs and lower residential balances partly offset the broader growth, as residential payoffs exceeded new production. Harrison said management continues to see a “very robust pipeline” in C&I and commercial real estate, with construction activity representing a meaningful portion of commercial real estate opportunities. The bank also is working with some new customer relationships, he said. Residential lending, however, is expected to remain slow because of the interest-rate environment. Deposits, margin and earnings outlook Total deposits declined $623 million in the second quarter, largely due to expected public-deposit outflows. Chief Financial Officer Jamie Moses said retail deposits were essentially flat, while commercial deposits fell about $156 million because of seasonal volatility. Public deposits declined $467 million, mainly in operating accounts, and public time deposits decreased by $115 million. The remaining public time-deposit balance was $9 million. Moses said the declines did not reflect lost customer relationships. Municipal partners found other ways to invest certain balances off the bank’s balance sheet, he said, while First Hawaiian expects retail and commercial deposits to increase in the seco...