First Hawaiian(US:FHB)2025-10-24 18:00Financial Data and Key Metrics Changes - Net income increased compared to the second quarter, driven by higher net interest and non-interest income, partially offset by a higher effective tax rate of 23.2% in the third quarter [7][8] - Total loans declined by $223 million in the quarter, primarily in commercial and industrial (C&I) loans [9][10] - Average deposits increased by approximately $500 million in the third quarter, with commercial deposits rising by $135 million [11][12] Business Line Data and Key Metrics Changes - Non-interest income was $57.1 million in the quarter, benefiting from higher BOLI income and swap income [14] - The total cost of deposits fell by one basis point, with non-interest bearing deposits making up 33% of total deposits [13] Market Data and Key Metrics Changes - The state unemployment rate was 2.7% in August, lower than the national rate of 4.3% [5] - Year-to-date visitor spending was $4.6 billion, up 4.5% compared to the same period last year [6] Company Strategy and Development Direction - The company aims to maintain strong loan growth and is considering pool purchases in areas where it has expertise, such as residential loans in Hawaii [24][25] - The company is focused on strengthening relationships in the community to drive core deposit growth [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the local economy's resilience despite potential hardships from a federal government shutdown [76][78] - The company expects to see strong loan production in the fourth quarter, with a focus on maintaining a solid credit performance [10][15] Other Important Information - The company repurchased approximately 965,000 shares at a total cost of $24 million, with $26 million remaining under the approved stock repurchase plan for 2025 [8][9] - The allowance for credit losses decreased to $165.3 million, with coverage remaining at 117 basis points of total loans and leases [16] Q&A Session Summary Question: Growth outlook and pipeline - Management noted that the third quarter saw significant paydowns in dealer floor plans but remains bullish on the business, expecting strong production in the pipeline for the fourth quarter [22][23] Question: Core deposit growth - Management highlighted success in core deposit growth driven by retail and commercial teams, with expectations for seasonal increases in deposits [26][27] Question: Managing deposit costs amid Fed cuts - Management indicated that the ability to manage deposit costs will depend on the timing and magnitude of Fed rate cuts, with expectations for continued margin expansion [31][39] Question: Capital priorities and M&A strategy - The company remains open to M&A opportunities, particularly in the Mainland, while focusing on maintaining a strong loan portfolio [46][74] Question: Impact of federal spending and local economy - Management expressed confidence in the long-term stability of federal spending in Hawaii, particularly in defense, despite current challenges [81][82]