First Hawaiian Inc. Reports Strong Q1 2026 Financial Performance Amid Economic Challenges

Despite facing challenges such as high consumer prices, housing affordability issues, and a steady out-migration of its population, Hawaii's economy is forecasted to grow by 1.7% in 2026. This is lower than the national average of 2.2%. As of February 28, 2026, the unemployment rate in Hawaii stood at a remarkable 2.3%, significantly better than the national average of 4.4%. Although the tourism sector remains stable, international visitor arrivals have yet to return to pre-pandemic levels, indicating mixed signals for the local economy.

In the first three months of 2026, First Hawaiian Inc. reported a net income of $67.8 million, a notable 14% increase compared to the same period in 2025. The basic and diluted earnings per share both stood at $0.55, marking a 17% increase year-over-year. This growth was primarily driven by a $7.0 million increase in net interest income, a $5.5 million decrease in the provision for credit losses, and a $2.3 million rise in noninterest income, despite facing a $4.3 million increase in noninterest expenses and a $2.0 million rise in the provision for income taxes.

The return on average total assets was 1.14%, and the return on average total stockholders’ equity was 9.86%, reflecting improved operational efficiency with an efficiency ratio of 57.77%, an improvement from 58.22% in the prior year.

The Retail Banking segment contributed a net income of $60.1 million for the quarter, which is a 5% increase from the previous year. This growth was fueled by higher net interest income and a decrease in the provision for credit losses, although rising noninterest expenses posed challenges.

The Commercial Banking segment reported a net income of $31.4 million, reflecting a 2% increase from the same period in 2025. This growth resulted mainly from a decrease in the provision for credit losses and an uptick in noninterest income, even as net interest income declined.

The bank's provision for credit losses stood at $5.0 million, a significant decrease of 52% from the previous year. The allowance for credit losses (ACL) was $169.3 million, representing 1.17% of total outstanding loans and leases. However, net charge-offs for the period were $4.9 million, compared to $3.8 million in Q1 2025, indicating a modest increase in credit risk.

FHI's total deposits rose to $20.8 billion as of March 31, 2026, marking an increase of $261.7 million from December 31, 2025. Core deposits, considered a stable funding source, totaled $19.3 billion, representing 93% of total deposits. The bank maintained strong liquidity levels, with cash and cash equivalents amounting to $1.7 billion.

In January 2026, FHI initiated a stock repurchase program for up to $250 million of its common stock. During Q1 2026, the company repurchased 1,307,738 shares at a total cost of $32.0 million. Furthermore, a quarterly cash dividend of $0.26 per share was declared in April 2026, to be paid on May 29, 2026.

As of March 31, 2026, the carrying value of FHI's investment securities portfolio was $5.6 billion, down by 1% from the previous quarter. The portfolio included a substantial amount of collateralized mortgage obligations and mortgage-backed securities, with no credit losses recorded for the available-for-sale portfolio during the reporting period.

First Hawaiian Inc.'s Q1 2026 results underscore its strong financial performance despite economic headwinds. The strategic adjustments in its operational structure, alongside a focus on liquidity and capital adequacy, position the bank for sustainable growth. The proactive measures in managing credit risk and enhancing shareholder returns through stock repurchases and dividends reflect FHI's commitment to maintaining its leadership in the banking sector. The outlook remains cautiously optimistic, as the company navigates through the evolving economic landscape of Hawaii.