Core Viewpoint - First Hawaiian (FHB) reported quarterly earnings of $0.59 per share, exceeding the Zacks Consensus Estimate of $0.52 per share, and showing an increase from $0.48 per share a year ago, indicating a positive earnings surprise of +13.46% [1][2] Financial Performance - The company achieved revenues of $226.39 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.71%, compared to $209.99 million in the same quarter last year [2] - Over the last four quarters, First Hawaiian has consistently surpassed consensus EPS estimates four times and revenue estimates three times [2] Stock Performance - First Hawaiian shares have declined approximately 8.8% since the beginning of the year, contrasting with the S&P 500's gain of 14.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.51 on revenues of $220.02 million, and for the current fiscal year, it is $2.05 on revenues of $867.54 million [7] - The trend of earnings estimate revisions prior to the earnings release was mixed, which may influence future stock performance [6] Industry Context - The Banks - West industry, to which First Hawaiian belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, Sierra Bancorp (BSRR), is expected to report quarterly earnings of $0.79 per share, reflecting a year-over-year increase of +6.8% [9]

Financial Performance - Net income for Q3 2025 was $73.8 million, or $0.59 per diluted share, compared to $73.2 million in the previous quarter[9]. - Net income for the three months ended September 30, 2025, was $73,840 thousand, up from $73,247 thousand in the prior quarter, reflecting a growth of 0.8%[21]. - Net income for Q3 2025 was $73,840,000, an increase from $61,492,000 in Q3 2024, representing a year-over-year growth of 20.5%[39]. - Average total stockholders' equity increased to $2,710,273,000 in Q3 2025 from $2,588,806,000 in Q3 2024, reflecting a growth of 4.7%[39]. - Return on average total stockholders' equity for Q3 2025 was 10.81%, compared to 9.45% in Q3 2024, indicating an improvement of 14.3%[39]. - Basic earnings per share for the three months ended September 30, 2025, was $0.59, compared to $0.58 in the prior quarter, reflecting a growth of 1.7%[21]. Asset and Deposit Growth - Total assets increased to $24.1 billion as of September 30, 2025, up from $23.8 billion at June 30, 2025[3]. - Total assets increased to $24,098,728 thousand as of September 30, 2025, up from $23,837,147 thousand as of June 30, 2025, representing a growth of 1.1%[19]. - Total deposits increased by $498.1 million to $20.7 billion compared to the prior quarter[3]. - Total deposits reached $20,729,557 thousand as of September 30, 2025, an increase from $20,231,419 thousand as of June 30, 2025, marking a rise of 2.5%[19]. - Total deposits as of September 30, 2025, reached $20,729,557, a slight decrease from $20,723,131 on June 30, 2025[33]. Income and Revenue - Net interest income for Q3 2025 was $169.3 million, a 3.5% increase from $163.6 million in the prior quarter[4]. - Noninterest income rose to $57.1 million in Q3 2025, up $3.1 million from $54.0 million in the previous quarter[6]. - Net interest income for the three months ended September 30, 2025, was $169,331 thousand, compared to $163,583 thousand for the previous quarter, an increase of 4.3%[21]. - Noninterest income for the three months ended September 30, 2025, was $57,060 thousand, compared to $53,958 thousand in the previous quarter, an increase of 5.2%[21]. - Net interest income increased by $28.4 million from $468.1 million in the nine months ended September 30, 2024, to $496.5 million in 2025[26]. Credit Quality and Losses - The allowance for credit losses was $165.3 million, representing 1.17% of total loans and leases as of September 30, 2025[10]. - The provision for credit losses was $4,500 thousand for the three months ended September 30, 2025, unchanged from the previous quarter[21]. - Non-performing assets totaled $30,933, an increase from $28,591 as of June 30, 2025, indicating a rise in credit risk[34]. - The ratio of net loans and leases charged-off to average loans and leases outstanding was 0.12% for the three months ended September 30, 2025[35]. - The total accruing loans and leases past due 90 days or more increased to $5,889 from $4,438 in the previous quarter, indicating potential future credit issues[34]. Capital Ratios and Efficiency - The tier 1 leverage ratio increased to 9.16% as of September 30, 2025, compared to 9.12% at June 30, 2025[11]. - The Common Equity Tier 1 Capital Ratio stood at 13.24% as of September 30, 2025, compared to 13.03% as of June 30, 2025, indicating improved capital strength[19]. - The efficiency ratio improved to 55.3% in Q3 2025, down from 57.2% in the previous quarter[7]. - Total stockholders' equity increased to $2,733,921 thousand as of September 30, 2025, from $2,694,545 thousand as of June 30, 2025, a rise of 1.5%[19]. Loan and Lease Performance - Total loans and leases amounted to $14,269.0 million with an average yield of 5.47% for the nine months ended September 30, 2025, compared to $14,325.1 million and 5.68% for the same period in 2024[26]. - Total loans and leases reached $14,129.3 million, a slight decrease from $14,351.8 million in the previous period[32]. - Commercial and industrial loans amounted to $2,027.5 million, down from $2,370.2 million, reflecting a decrease of 14.5%[32]. - Residential mortgage loans totaled $4,077.9 million, a decrease from $4,946.4 million, indicating a decline of 17.6%[32]. - Consumer loans reached $1,013.6 million, down from $1,125.1 million, reflecting a decrease of 9.9%[32].

Core Insights - First Hawaiian, Inc. reported strong financial results for the third quarter of 2025, highlighting market-leading performance and effective teamwork [2][3]. Financial Performance - Net income for the third quarter was $73.8 million, or $0.59 per diluted share, compared to $73.2 million, or $0.58 per diluted share in the previous quarter [12][24]. - Net interest income increased to $169.3 million, up $5.7 million or 3.5% from the prior quarter [5][20]. - Noninterest income rose to $57.1 million, an increase of $3.1 million compared to the previous quarter [7][20]. - Noninterest expense was $125.7 million, a slight increase of $0.8 million from the prior quarter [8][20]. Balance Sheet Highlights - Total assets reached $24.1 billion, up from $23.8 billion at the end of the previous quarter [4][20]. - Total deposits increased by $498.1 million to $20.7 billion [4][20]. - Gross loans and leases decreased by $222.5 million to $14.1 billion [4][20]. Asset Quality - The allowance for credit losses was $165.3 million, representing 1.17% of total loans and leases, unchanged from the previous quarter [10][20]. - Net charge-offs for the quarter were $4.2 million, or 0.12% of average loans and leases, compared to $3.3 million or 0.09% in the prior quarter [10][20]. Capital and Dividends - Total stockholders' equity remained stable at $2.7 billion [11][20]. - The Board of Directors declared a quarterly cash dividend of $0.26 per share, payable on November 28, 2025 [2][12]. Efficiency and Ratios - The efficiency ratio improved to 55.3% from 57.2% in the previous quarter [8][20]. - The net interest margin increased by 8 basis points to 3.19% [5][20]. - The effective tax rate for the quarter was 23.2%, up from 16.9% in the previous quarter [9][20]. Shareholder Actions - The company repurchased 964 thousand shares of common stock at a total cost of $24.0 million during the third quarter [13][20].

Core Insights - First Hawaiian (FHB) is anticipated to report a year-over-year increase in earnings due to higher revenues for the quarter ended September 2025, with a consensus outlook suggesting a positive earnings picture [1][3] - The upcoming earnings report is expected to be released on October 24, and the stock price may react significantly based on whether the actual results meet or exceed expectations [2] Earnings Estimates - The consensus EPS estimate for First Hawaiian is $0.52 per share, reflecting an 8.3% increase year-over-year [3] - Expected revenues for the quarter are projected at $218.28 million, which is a 4% increase from the previous year [3] Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4] - The Most Accurate Estimate for First Hawaiian matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [11] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with a positive ESP being a strong predictor of an earnings beat [8][9] - First Hawaiian's current Zacks Rank is 3, which complicates the prediction of an earnings beat [11] Historical Performance - In the last reported quarter, First Hawaiian exceeded the expected earnings of $0.49 per share by delivering $0.58, resulting in a surprise of +18.37% [12] - Over the past four quarters, the company has consistently beaten consensus EPS estimates [13] Industry Context - In the Zacks Banks - West industry, Heritage Commerce (HTBK) is expected to report earnings of $0.21 per share for the same quarter, indicating a year-over-year change of +23.5% [17] - Heritage Commerce's revenue is projected at $48.61 million, up 15.3% from the previous year, with a recent EPS estimate revision of 1.6% [18]

Core Viewpoint - First Hawaiian, Inc. plans to release its third quarter 2025 financial results on October 24, 2025, before the market opens, followed by a conference call to discuss the results [1] Group 1: Financial Results Announcement - The third quarter 2025 financial results will be released on October 24, 2025, before market opening [1] - A conference call to discuss the results is scheduled for the same day at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) [1] Group 2: Conference Call Access - Participants can access the call by registering through a provided link to receive a dial-in number and personalized PIN code [2] - It is recommended that participants dial in fifteen minutes prior to the scheduled start time to avoid delays [2] Group 3: Webcast Information - A live webcast of the conference call, including a slide presentation, will be available on the company's website [3] - An archive of the webcast will also be accessible at the same location [3] Group 4: Company Overview - First Hawaiian, Inc. is a bank holding company headquartered in Honolulu, Hawaii, and is the oldest and largest financial institution in Hawaii [4] - The company offers a wide range of banking services, including deposit products, loans, wealth management, insurance, and more [4] - Customers can access their accounts through various channels, including ATMs, online, and mobile banking [4]

Core Viewpoint - First Hawaiian (FHB) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are crucial for predicting near-term stock price movements [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure that affects stock prices [4]. Company-Specific Insights - The upgrade for First Hawaiian reflects an improvement in its underlying business, which is expected to drive the stock price higher as investors respond positively to this trend [5]. - Over the past three months, the Zacks Consensus Estimate for First Hawaiian has increased by 4.2%, with expected earnings of $2.05 per share for the fiscal year ending December 2025, indicating no year-over-year change [8]. Zacks Rating System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a "Strong Buy" or "Buy" rating, suggesting superior earnings estimate revisions [9][10]. - The Zacks Rank 2 upgrade positions First Hawaiian among the top 20% of Zacks-covered stocks, indicating potential for market-beating returns in the near term [10].

Financial Performance - First Hawaiian (NASDAQ: FHB) has reported strong financial results, with a net interest margin expansion contributing to overall performance [1] - The company has achieved approximately 23% EPS growth since the last update post-Q1, driven by cost control, modest bad debt provisioning, and share buybacks [1] Investment Strategy - The investment approach emphasizes a long-term, buy-and-hold strategy, focusing on stocks that can sustainably deliver high-quality earnings [1]

Part I Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reports increased net income for Q2 and the first half of 2025, with stable total assets and a continued stock repurchase program Consolidated Statements of Income Highlights (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income | $163,583 thousand | $152,851 thousand | | Provision for Credit Losses | $4,500 thousand | $1,800 thousand | | Noninterest Income | $53,958 thousand | $51,768 thousand | | Noninterest Expense | $124,939 thousand | $122,086 thousand | | Net Income | $73,247 thousand | $61,921 thousand | | Diluted EPS | $0.58 | $0.48 | Consolidated Balance Sheet Highlights (As of June 30, 2025) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $23,837,147 thousand | $23,828,186 thousand | | Net Loans and Leases | $14,184,044 thousand | $14,247,865 thousand | | Total Deposits | $20,231,419 thousand | $20,322,216 thousand | | Total Stockholders' Equity | $2,694,545 thousand | $2,617,486 thousand | - For the six months ended June 30, 2025, net cash provided by operating activities was **$173.1 million**, while net cash used in financing activities was **$211.6 million**[23](index=23&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the investment portfolio's unrealized losses, the loan portfolio's composition, and the company's strong regulatory capital ratios Investment Securities Portfolio (June 30, 2025) | Security Type | Amortized Cost | Fair Value | | :--- | :--- | :--- | | Available-for-Sale | $2,097,906 thousand | $1,891,654 thousand | | Held-to-Maturity | $3,658,814 thousand | $3,230,698 thousand | - Unrealized losses on available-for-sale securities were **$208.2 million** as of June 30, 2025, primarily attributed to changes in interest rates and not credit quality[45](index=45&type=chunk)[46](index=46&type=chunk) Loan and Lease Portfolio Composition (June 30, 2025) | Loan Category | Amount (in thousands) | | :--- | :--- | | Commercial and industrial | $2,370,210 | | Commercial real estate | $4,411,585 | | Construction | $884,306 | | Residential | $5,247,703 | | Consumer | $1,011,125 | | Lease financing | $426,940 | | **Total** | **$14,351,869** | - The Allowance for Credit Losses (ACL) for loans and leases increased to **$167.8 million** at June 30, 2025, from $160.4 million at the beginning of the year[55](index=55&type=chunk) Regulatory Capital Ratios (First Hawaiian, Inc.) | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 13.03% | 12.80% | | Tier 1 Capital | 13.03% | 12.80% | | Total Capital | 14.28% | 13.99% | | Leverage Ratio | 9.12% | 9.14% | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=68&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the 18% net income growth in Q2 2025, driven by an expanded net interest margin, alongside stable economic conditions and strong capital [Economic Conditions and Company Overview](index=70&type=section&id=Economic%20Conditions%20and%20Company%20Overview) The company's performance is linked to Hawaii's economy, which shows a low unemployment rate but challenges in tourism and housing markets - Hawaii's statewide seasonally adjusted unemployment rate was **2.8%** at June 30, 2025, compared to the national rate of 4.1%[231](index=231&type=chunk) - The median price of a single-family home on Oahu increased by **6.0% to $1,150,000** in the first six months of 2025 compared to the same period in 2024[233](index=233&type=chunk) [Results of Operations](index=73&type=section&id=Results%20of%20Operations) Q2 2025 net income increased 18% year-over-year, driven by a 19 basis point expansion in the net interest margin - Net income for Q2 2025 was **$73.2 million**, an 18% increase from Q2 2024, driven by higher net interest income[241](index=241&type=chunk) - Net interest margin for Q2 2025 was **3.11%**, an increase of 19 basis points from the same period in 2024[244](index=244&type=chunk) - The provision for credit losses increased to **$4.5 million** for Q2 2025, up from $1.8 million in Q2 2024[244](index=244&type=chunk)[267](index=267&type=chunk) - Noninterest expense increased by **2%** in Q2 2025 compared to Q2 2024, mainly due to higher salaries and employee benefits[244](index=244&type=chunk)[278](index=278&type=chunk) [Analysis of Financial Condition](index=99&type=section&id=Analysis%20of%20Financial%20Condition) The company maintained stable total assets of $23.8 billion, with a slight decline in loans and deposits but an increase in stockholders' equity - The company has significant liquidity sources, including **$1.4 billion in cash** and borrowing capacity of **$2.7 billion from the FHLB**[303](index=303&type=chunk) - Core deposits totaled **$18.8 billion**, representing a stable funding base at 93% of total deposits[304](index=304&type=chunk) Loan Portfolio Composition (June 30, 2025) | Loan Category | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | Commercial and industrial | $2,370,210 | 16.5% | | Commercial real estate | $4,411,585 | 30.7% | | Residential | $5,247,703 | 36.6% | | Other | $2,322,271 | 16.2% | | **Total** | **$14,351,869** | **100%** | - Non-performing assets (NPAs) increased to **$28.6 million (0.20% of total loans)** at June 30, 2025, up from $20.7 million at year-end 2024[345](index=345&type=chunk)[346](index=346&type=chunk) [Risk Governance and Quantitative and Qualitative Disclosures About Market Risk](index=125&type=section&id=Risk%20Governance%20and%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages key risks, with its asset-sensitive balance sheet positioned to benefit from rising interest rates - The company's primary market risk is interest rate risk, and its balance sheet is positioned to **benefit from rising interest rates**[394](index=394&type=chunk)[401](index=401&type=chunk) Net Interest Income Sensitivity Profile (Static Forecast, 12 Months) | Gradual Change in Interest Rates (bps) | Estimated % Change in NII (as of June 30, 2025) | | :--- | :--- | | +200 | 3.6% | | +100 | 1.8% | | -100 | (1.8)% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=134&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section cross-references the market risk disclosures presented within the Management's Discussion and Analysis - The company's disclosures about market risk are provided in the MD&A section of this report[413](index=413&type=chunk) [Item 4. Controls and Procedures](index=134&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed the effectiveness of disclosure controls and procedures with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[413](index=413&type=chunk) - **No material changes** to internal control over financial reporting occurred during the quarter ended June 30, 2025[414](index=414&type=chunk) Part II Other Information [Item 1. Legal Proceedings](index=134&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no ongoing litigation expected to have a material adverse effect on its financial condition - The company is not party to any legal proceedings expected to have a **material adverse effect** on its business or financial condition[415](index=415&type=chunk) [Item 1A. Risk Factors](index=134&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have been identified - **No material changes** to risk factors were reported since the filing of the Annual Report on Form 10-K for the year ended December 31, 2024[416](index=416&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=135&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased approximately 1.04 million shares for $25.0 million in Q2 2025 under its authorized program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | May 2025 | 637,521 | $24.10 | | June 2025 | 405,207 | $23.82 | | **Total Q2** | **1,042,728** | **$23.99** | - As of June 30, 2025, **$50.0 million remained available** for repurchase under the $100 million stock repurchase program authorized for 2025[419](index=419&type=chunk) [Item 6. Exhibits](index=136&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including CEO/CFO certifications and XBRL data files - The report includes exhibits such as the 2025 Omnibus Incentive Compensation Plan, CEO/CFO certifications, and XBRL data files[423](index=423&type=chunk)

Financial Data and Key Metrics Changes - The company's net income increased over 23% compared to the prior quarter, driven by higher net interest and noninterest income, good expense control, and lower provision expense [7] - Total loans increased by approximately $59 million or 0.4% from the prior quarter, with the largest increase in the C and I portfolio [8] - Total deposits increased slightly in the second quarter, with public deposits growing by $166 million, offsetting declines in commercial and retail deposits [10] - Net interest income was $163.6 million, up $3.1 million from the prior quarter, with a net interest margin (NIM) of 3.11%, an increase of three basis points [11] Business Line Data and Key Metrics Changes - The C and I portfolio saw a $125 million increase in dealer floorplan balances, while payoffs from completed construction projects offset some growth [9] - Retail deposits decreased by $23 million, and commercial deposits fell by $127 million due to normal operational fluctuations [10] - Noninterest income was $54 million in the quarter, with expectations for recurring noninterest income to be around $51 million per quarter [12] Market Data and Key Metrics Changes - The statewide seasonally adjusted unemployment rate was 2.8% in June, compared to the national rate of 4.1% [5] - Visitor arrivals were up 2.8% compared to last year, with year-to-date spending at $9 billion, an increase of 6.5% compared to 2024 [6] Company Strategy and Development Direction - The company plans to maintain its investment portfolio balance and has resumed reinvesting cash flows from the investment portfolio [7] - Capital priorities include organic growth, maintaining a stable dividend, and share repurchases, with $50 million remaining under the approved 2025 stock repurchase plan [7][26] Management Comments on Operating Environment and Future Outlook - Management noted that while there is uncertainty regarding tariffs affecting car dealers, tourism spending has remained strong, particularly from the U.S. mainland [24] - The company expects full-year loan growth to be in the low single digits, adjusting guidance due to the performance of construction loans [22] Other Important Information - The bank recorded a $4.5 million provision for credit losses in the second quarter, with classified assets increasing by $31.6 million [13][15] - The allowance for credit losses increased to $167.8 million, with coverage remaining flat at 1.17% of total loans and leases [15] Q&A Session Summary Question: What is the outlook for C and I growth and demand from CRE borrowers? - Most C and I growth came from dealer floor plans, with a current balance of $786 million, up $125 million from the previous quarter. There is uncertainty regarding future balances due to tariffs [20][21] Question: How are capital priorities evolving? - Capital priorities remain focused on organic growth, stable dividends, and share repurchases, with more repurchase authority expected to be utilized in the back half of the year [26] Question: What is the impact of the tax law change on the tax rate outlook? - The effective tax rate outlook for the rest of the year is 23.2%, slightly higher than the previous estimate of 23% [45] Question: What is the outlook for loan growth and competition in the market? - Loan growth is expected to be lower than initially anticipated, with competition primarily from institutional buyers for completed construction loans [52][73]

Financial Data and Key Metrics Changes - The company's net income increased over 23% compared to the prior quarter, driven by higher net interest and noninterest income, good expense control, and lower provision expense [6] - Total loans increased by approximately $59 million or 0.4% from the prior quarter, with the largest increase in the C and I portfolio [7] - Net interest income was $163.6 million, up $3.1 million from the prior quarter, with a net interest margin (NIM) of 3.11%, an increase of three basis points [11] Business Line Data and Key Metrics Changes - The C and I portfolio saw a significant increase of $125 million in dealer floorplan balances, while payoffs from completed construction projects offset some of this growth [7] - Total deposits increased slightly, with public deposits growing by $166 million, while commercial and retail deposits declined [10] - Noninterest income was $54 million in the quarter, with expectations for recurring noninterest income to be around $51 million per quarter [12] Market Data and Key Metrics Changes - The statewide seasonally adjusted unemployment rate was 2.8% in June, compared to the national rate of 4.1% [4] - Visitor arrivals were up 2.8% compared to last year, with year-to-date spending reaching $9 billion, an increase of 6.5% compared to 2024 [5] Company Strategy and Development Direction - The company plans to maintain its investment portfolio balance and has resumed reinvesting cash flows from the investment portfolio [6] - Capital priorities include organic growth, maintaining a stable dividend, and share repurchases, with a focus on deploying capital effectively in the back half of the year [26] Management's Comments on Operating Environment and Future Outlook - Management expects full-year loan growth to be in the low single digits, reflecting a cautious outlook due to uncertainties in the market [8] - The company is not observing broad signs of weakness in credit performance, with credit risk remaining low and stable [13] Other Important Information - The company recorded a $4.5 million provision for credit losses in the second quarter, with the allowance for credit losses increasing to $167.8 million [15] - The effective tax rate outlook for the rest of the year is projected at 23.2%, slightly higher than the previous estimate [47] Q&A Session Summary Question: How is the pipeline in terms of C and I? - Most of the C and I growth came from dealer floor plans, which have normalized, and there is uncertainty regarding future balances due to tariffs [20] Question: Have tariffs impacted tourism spending? - Tariffs have created uncertainty for car dealers but have not significantly impacted tourism spending, which has increased [24] Question: What are the capital priorities moving forward? - Capital priorities include organic growth, maintaining dividends, and share repurchases, with a focus on deploying repurchase authority in the back half of the year [26] Question: What is the outlook for M&A? - The company is open to considering M&A opportunities but currently has no specific targets [34] Question: What impacted loan yields in the second quarter? - The mix of loans, with higher margin loans being paid off and replaced by lower margin loans, affected loan yields [37] Question: What is the outlook for fee income in the third quarter? - Fee income is expected to be in the range of $51 million to $52 million for the third quarter [40] Question: What is driving the increase in residential mortgage non-performers? - The consumer at the lower end is getting stretched, leading to an increase in non-performing loans, but the company is not concerned about loss content [64] Question: How does the company view the increase in commercial criticized assets? - Most criticized assets are expected to cure themselves, and the company remains confident in its credit portfolio [71]