First Hawaiian(US:FHB)2025-08-04 20:03Part I Financial Information Item 1. Financial Statements 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 million23 Notes to Consolidated Financial Statements 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 quality4546 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 year55 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) 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 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 - 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 2024233 Results of Operations 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 income241 - Net interest margin for Q2 2025 was 3.11%, an increase of 19 basis points from the same period in 2024244 - The provision for credit losses increased to $4.5 million for Q2 2025, up from $1.8 million in Q2 2024244267 - Noninterest expense increased by 2% in Q2 2025 compared to Q2 2024, mainly due to higher salaries and employee benefits244278 Analysis of Financial Condition 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 FHLB303 - Core deposits totaled $18.8 billion, representing a stable funding base at 93% of total deposits304 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 2024345346 Risk Governance and Quantitative and Qualitative Disclosures About Market Risk 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 rates394401 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 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 report413 Item 4. Controls and Procedures 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, 2025413 - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025414 Part II Other Information Item 1. Legal Proceedings 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 condition415 Item 1A. Risk Factors 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, 2024416 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 2025419 Item 6. Exhibits 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 files423