First Hawaiian Bank Reports Strong Start to 2026 with Steady Loan Growth, Stable Deposit Base, and Improved Funding Costs
First Hawaiian Bank (FHB) kicked off the year on a strong note, as reported in its Q1 2026 earnings conference call. Despite recent global events impacting tourism and local economies, the bank demonstrated resilience with steady loan growth, stable deposit base, and improved funding costs.
In his opening remarks, Robert Harrison, Chairman, President, and CEO of FHB, expressed support for communities affected by the Kona low storms and Typhoon Sinlaku in Guam and Saipan. The company has been actively providing relief and support to help customers and those impacted in the relative communities.
The statewide unemployment rate remained relatively stable at 2.2% in January, compared to the national rate of 4.3% for the same month. Total visitor arrivals were up 7.1% through February, primarily due to more visitors from the U.S. mainland and Japan. Year-to-date spending reached $4.2 billion, a 14.8% increase from last year's levels.
Turning to the bank's performance, FHB reported strong loan growth, with total loans increasing by $128 million in the quarter, representing a 3.6% annualized growth rate. Good growth was seen in Commercial and Industrial (C&I) and Construction and Real Estate (CRE) loans, partially offset by runoff in residential loan portfolios.
The company also experienced solid deposit momentum, with total deposits increasing by $262 million driven primarily by growth in public operating balances. Retail and commercial deposits were modestly higher, with a notable absence of seasonal outflows, which the bank views as a positive signal. Public deposits grew by $244 million, reflecting higher operating account balances.
FHB's non-interest-bearing deposit ratio remained healthy at 31%, reinforcing the strength and stability of its core funding base. The total cost of deposits declined 7 basis points to 1.22%, indicating improved funding costs.
Net interest income for the quarter was $167.5 million, down $2.8 million from the prior quarter due to the full quarter impact of the December rate cut. Net interest margin was 3.19%, a decline of 2 basis points sequentially. The bank expects balance sheet repricing to continue throughout the year.
Non-interest income totaled $52.8 million for the quarter, with a decline from last quarter primarily attributed to lower BOLI income and swap fee activity. FHB views this as timing-related rather than structural. Non-interest expense was $127 million.
