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FIRST HAWAIIAN, INC.

FHB
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Business Summary

First Hawaiian, Inc. operates in the highly competitive financial services industry, facing significant competition from commercial banks, savings banks, credit unions, non-bank financial services companies, insurance companies, money market funds, hedge funds, private equity and credit firms, and large banks headquartered on the U.S. mainland. The company's primary markets are Hawaii, Guam, and Saipan, and its performance is highly dependent on the business environment in these markets, which depend mainly on tourism, U.S. military and defense products and services, real estate, government, and other service-based industries.

First Hawaiian Bank is the largest bank headquartered in Hawaii as measured by loans and leases and net income. The company competes with commercial banks, savings banks, credit unions, non-bank financial services companies, insurance companies, other financial institutions, money market funds, hedge funds, and private equity and credit firms. Additionally, certain large banks headquartered on the U.S. mainland and large community banking institutions target the same customers. The company's ability to compete effectively also depends on its ability to attract new employees and retain and motivate existing employees.

First Hawaiian generates revenue through a diversified range of banking services to consumer and commercial customers, including deposit products, lending services, and wealth management and trust services. The company offers a variety of deposit products including checking and savings accounts, and provides commercial banking services such as commercial and industrial lending, auto dealer flooring, commercial real estate and construction lending. Consumer lending services focus on residential real estate lending, indirect auto financing, and other consumer loans. The wealth management business provides trust services, private banking, and investment management services. The company also offers consumer and commercial credit cards and merchant processing.

The company operates through two operating segments: Retail Banking and Commercial Banking, with all other activities, including Treasury, reported in Corporate/Other. Retail Banking provides a variety of deposit accounts and lending services to commercial and consumer customers, as well as credit card products, wealth management services and merchant processing services. Commercial Banking provides comprehensive commercial lending services including commercial and industrial lending, auto dealer flooring, commercial real estate lending and construction lending. The wealth management business offers individuals investment and financial planning services, insurance protection, trust and estate services and private banking.

As of December 31, 2025, First Hawaiian had $14.3 billion of gross loans and leases and $2.8 billion of stockholders' equity. The company generated $276.3 million of net income or diluted earnings per share of $2.20 for the year ended December 31, 2025. Through the Bank, the company operates a network of 49 branches in Hawaii (45 branches ), Guam (3 branches ) and Saipan (1 branch ). As of December 31, 2025, the company had over 2,000 employees , and the average tenure of employees is 11.7 years . Goodwill was $995.5 million as of both December 31, 2025 and 2024.

During the year ended December 31, 2025, the company repurchased $100.0 million of its common stock under a stock repurchase program that expired on December 31, 2025. On January 28, 2026, the company announced a new stock repurchase program for up to $250 million of its outstanding common stock. The company declared and paid dividends of $1.04 per share for the year, resulting in a dividend payout ratio of 47.27% . The company also paid state and local income taxes of approximately $95.4 million in June 2016 in connection with the Reorganization Transactions.

Net income was $276.3 million for the year ended December 31, 2025, an increase of $46.1 million or 20% as compared to 2024. Basic earnings per share was $2.21 for 2025, an increase of $0.41 or 23% as compared to 2024. Diluted earnings per share was $2.20 for 2025, an increase of $0.41 or 23% as compared to 2024. The increase in net income was primarily due to a $41.0 million increase in net interest income, a $31.2 million increase in noninterest income and a $1.8 million decrease in noninterest expense, partially offset by a $15.5 million increase in the provision for income taxes and a $12.5 million increase in the provision for credit losses. Net interest margin was 3.15% for 2025, an increase of 20 basis points as compared to 2024. The efficiency ratio was 56.43% for 2025 as compared to 61.57% in 2024. Return on average total assets was 1.16% for 2025, and return on average total stockholders' equity was 10.26% .

Business Outlook

The company's growth is heavily dependent on the economic conditions in Hawaii, Guam, and Saipan. The company notes that under applicable laws, it may not be permitted to acquire any bank in Hawaii because it controls more than 30% of the total amount of deposits in the Hawaii market, so any further growth in the Hawaii market will most likely have to occur organically rather than by acquisition. The company seeks to develop comprehensive, long-term banking relationships by offering a diverse array of products and services, cross-selling those products and services and delivering high quality customer service.

The company faces significant competitive pressures on loan rates and terms for high-quality credits, and may have to pay higher interest rates to attract deposits, accept lower yields to attract loans and/or pay higher wages for new employees, which may result in lower net interest margins and reduced profitability. The company also faces risks from new lines of business, products, product enhancements or services, which may subject it to additional risks.

The company's noninterest expense was $499.3 million for the year ended December 31, 2025, a decrease of $1.8 million as compared to 2024. The decrease was primarily due to an $8.6 million decrease in other noninterest expenses and a $7.0 million decrease in regulatory assessment and fees, partially offset by a $10.3 million increase in salaries and employee benefits expense, a $2.4 million increase in equipment expense and a $1.3 million increase in occupancy expense.

The company depends on relationships with third-party service providers that provide services, primarily information technology services, that are critical to its operations. The company utilizes third-party core banking services and receives credit card and debit card services, internet banking services, various information services and services complementary to its banking products from various third-party service providers. The company expects that new technologies and business processes applicable to the consumer credit industry will continue to emerge.

The company's capital allocation strategy includes share repurchases and dividends. On December 31, 2025, the stock repurchase program for 2025 expired with nil remaining of the $100 million repurchase amount authorized. On January 28, 2026, the Company announced a stock repurchase program for up to $250 million of its outstanding common stock. The company declared and paid dividends of $1.04 per share for the year ended December 31, 2025. The company does not disclose specific R&D spending or capital expenditure plans in the filing.

The company's business is significantly dependent on the real estate markets in which it operates, as a significant percentage of its loan portfolio is secured by real estate. As of December 31, 2025, real estate loans represented approximately $10.7 billion , or 75% of the total loan and lease portfolio. The company's commercial real estate loans represented approximately $4.6 billion or 32% of the total loan and lease portfolio. The company also faces risks from concentrated exposures to certain asset classes and individual obligors, with its top five dealer relationships representing approximately 40% of its outstanding dealer flooring commitments as of December 31, 2025.

The company faces significant risks from geographic concentration in its existing markets, as a substantial majority of its business is with customers located within Hawaii. The company's operations are heavily concentrated in Hawaii, as well as in Guam and Saipan. The company also faces risks from severe weather, hurricanes, tsunamis, natural disasters, pandemics, acts of war or terrorism or other external events, which could significantly impact its business. Additionally, climate-related physical and transition risks could have a material negative impact on the company and its customers.

Risk Factors

The company's business is significantly dependent on the real estate markets in which it operates, as real estate loans represented approximately $10.7 billion , or 75% of the total loan and lease portfolio as of December 31, 2025, with the significant majority concentrated in Hawaii. The company also faces significant risk from geographic concentration, as a substantial majority of its business is with customers located within Hawaii, and under applicable laws, it may not be permitted to acquire any bank in Hawaii because it controls more than 30% of the total amount of deposits in the Hawaii market. Additionally, the company has concentrated exposures to certain asset classes, with its top five dealer relationships representing approximately 40% of its outstanding dealer flooring commitments as of December 31, 2025. The company is also subject to the risk that it might underestimate credit losses inherent in its loan and lease portfolio, and the allowance for credit losses was $168.5 million as of December 31, 2025, representing 1.18% of total loans and leases.

Management Priorities

Management's message emphasizes the company's position as the largest bank headquartered in Hawaii as measured by loans and leases and net income, and highlights the company's long history, having been founded in 1858. The key themes include the company's focus on developing comprehensive, long-term banking relationships, its service culture, and its emphasis on repeat positive customer experiences. The strategic priorities for the period ahead include managing the geographic concentration of its business, navigating the highly competitive financial services industry, and addressing the risks associated with its significant real estate loan portfolio.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — General
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  9. [9] Item 1, Business — Human Capital Resources
  10. [10] Item 1, Business — Human Capital Resources
  11. [11] Item 1A, Risk Factors — Impairment of goodwill
  12. [12] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities by the Issuer
  13. [13] Item 5, Market for Registrant's Common Equity — Purchases of Equity Securities by the Issuer
  14. [14] Item 7, MD&A — Selected Financial Data, Table 1
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  16. [16] Item 1A, Risk Factors — Unexpected income tax liabilities
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  47. [47] Item 1A, Risk Factors — Business is significantly dependent on real estate markets
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  49. [49] Item 1A, Risk Factors — Business is subject to risk from commercial real estate market
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  51. [51] Item 1A, Risk Factors — Concentrated exposures to certain asset classes
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  53. [53] Item 1A, Risk Factors — Business is significantly dependent on real estate markets
  54. [54] Item 1A, Risk Factors — Geographic concentration in our existing markets
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Analysis on 6/21/2026