FIRST HAWAIIAN, INC. — Call Transcript 2026

Good day, and thank you for standing by. Welcome to the First Hawaiian, Inc. Q1 2026 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Kevin Haseyama, Investor Relations Manager. Thank you, Josh, and thank you everyone for joining us as we review our financial results for the first quarter of 2026. With me today are Robert Harrison, Chairman, President, and CEO, James Moses, Chief Financial Officer, and Lea Nakamura, Chief Risk Officer. We have prepared a slide presentation that we will refer to in our remarks today. The presentation is available for downloading and viewing on our website at fhb.com in the investor relations section. During today's call, we will be making forward-looking statements, so please refer to Slide one for our safe harbor statement. We may also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements. Now I'll turn the call over to Bob. Thank you everyone for joining us today. I wanted to start by sharing our support for the communities impacted by the recent flooding in Hawaii from the Kona low storms and Typhoon Sinlaku in Guam and Saipan. It's really important for us to support our communities, and we are actively providing relief and support to help our customers and those affected in the relative communities. Moving on to an outlook. The statewide unemployment rate remained relatively stable at 2.2% in January. That compares to the national rate at 4.3% for the same month. Through February, total visitor arrivals were up 7.1% compared to last year, primarily due to more visitors from the U.S. mainland and Japan. Year-to-date spending through February was $4.2 billion, up 14.8% compared to 2025 levels for the same period. At this point, it's too soon to know how tourism and the local economy might be impacted by the recent global events. The housing market remains stable, with the median single-family home sales price on Oahu in March at $1.2 million, up 3.4% from the prior year. The median condo sales price on Oahu in March was $510,000, up 2% from the prior year. Turning to Slide two. We had a strong start to the year. Loans and deposits grew, credit quality remained solid, and we remained well capitalized. Our return on average tangible assets of 1.2% and return on average tangible equity of 15.3% for the first quarter. The effective tax rate for the first quarter was 22.5%. Turning to Slide three. The balance sheet remains solid as we continue to be well capitalized with ample liquidity. We remain asset sensitive and well-positioned to benefit from a higher for-longer rate scenario. During the quarter, we repurchased about 1.3 million shares at a cost of $32 million. Turning to Slide four. Total loans grew over 128 million in the quarter, up 3.6% on an annualized basis. We had good growth in CRE and C&I loans, partially offset by runoff in residential loan portfolio and payoffs in the construction loan portfolio. Some of the growth in the CRE portfolio and decline in construction portfolio were due to completed construction projects converting to permanent financing. Now I'll turn it over to Jamie. Thanks, Bob. Turning to Slide five. We delivered solid deposit momentum in the quarter, with total deposits increasing by $262 million, driven primarily by growth in public operating balances. Retail and commercial deposits were modestly higher and, importantly, did not experience the typical seasonal outflows we have seen at the start of prior years, which we view as a positive signal. Public deposits increased $244 million, reflecting higher operating account balances. We continue to see meaningful improvement in funding costs, with the total cost of deposits declining 7 basis points to 1.22%. Our non-interest-bearing deposit ratio remained healthy at 31%, reinforcing the strength and stability of our core funding base. On Slide six, net interest income for the quarter was $167 and a half million, down $2.8 million from the prior quarter. Net interest margin was 3.19%, a decline of 2 basis points sequentially. This reflects the full quarter impact of the December rate cut. As we look ahead, we expect the balance sheet repricing story to continue throughout the year. Turning to Slide seven. Non-interest income totaled $52.8 million for the quarter. The decline from last quarter was primarily attributed to lower BOLI income and swap fee activity, which we view as timing related rather than structural. Non-interest expense was $127.9 million, and there were no material, unusual or non-recurring items in the quarter. Our expense profile remains well controlled and aligned with our full-year outlook. With that, I'll turn it over to Lea to review our credit performance. Thank you, Jamie. Moving to Slide eight, the bank continued to maintain its strong credit performance and healthy credit metrics in the first quarter. Credit risk remains low, stable, and well within our expectations. Overall, we're not observing any broad signs of weakness across either the consumer or commercial books. Criticized assets decreased by 21 basis points, and non-performing assets and loans 90 days or more past due were 30 basis points of total loans and leases, down one basis point from the prior quarter, resulting from a decrease in dealer flooring non-accruals. Quarter to date net charge-offs were $4.9 million, or 14 basis points of average loans and leases, unchanged from the fourth quarter. The bank recorded a $5 million provision in the first quarter. The allowance for credit losses increased by just under $1 million to $169 million, with a coverage ratio of 1.17% of total loans and leases. We believe that we are conservatively reserved and ready for a wide range of outcomes. Thanks, Lea. Turning to Slide nine, we have updated our outlook for key performance drivers. We continue to expect full-year loan growth to be in the 3%-4% range. With the markets now expecting no rate cuts this year, we have revised our full-year NIM outlook to be in the 3.22%-3.23% range. We expect second quarter NIM to be up two to three basis points from the first quarter. Our outlook for non-interest income remains about $220 million for the year. Finally, we expect expenses to gradually increase throughout the year, and we continue to forecast full-year expenses will be about $520 million. That concludes our prepared remarks, and now we'd be happy to take your questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Anthony Elian with JPMorgan. You may proceed. Great. Thanks. Jamie, on the outlook, the drivers of the two to three basis points sequential increase in NIM in 2Q, could you help us unpack that a little bit? What's driving that in the range for full-year moving higher, and is that entirely coming from no rate cuts this year? Hi, Tony. Good morning. The right answer to that is the balance sheet repricing story that we've had and seen for the last year or two. Again, just to remind everybody, we have about $400 million of fixed rate cash flows that come off every quarter, that get repriced at about a 155 basis point spread higher on a weighted average basis between loans and securities. Tony, that's really the driver as we go forward, right? We still are an asset sensitive balance sheet. We will see a decline in NIM if there is a rate cut in any given quarter. The balance sheet repricing dynamics after that will sort of drive the NIM higher as we go forward. Thank you. On expense, so you reiterated the outlook of $520 for the full-year, but I think 1Q came in a little bit lower than what we were expecting, which would imply a pretty good pickup over the course of the year. Is that the right way to think about it, and what are the areas driving the increase in expense? Thank you. Yeah. It's going to be kind of broad-based, Tony, in terms of the areas. Hopefully we'll get some more salary expense in there. As we've talked about, we're looking to hire talented folks to come over and drive revenues for us. So hopefully that's where we'll see much of that pickup. Generally broad-based, and I think you are thinking about it correctly in terms of a little pickup and a ramp as we get throughout the year. Thank you. Thank you. Our next question comes from Jared Shaw with Barclays. You may proceed. Hey, thanks. Good morning. Morning. When you look at the growth, C&I growth has been pretty good. Any specific drivers sort of underpinning that, and can you update us on your appetite for mainland expansion and any of the hires, Jamie, that you're talking about, should we think are coming maybe off island? Yeah, Jared, let me start with the loan outlook. Really, the $71 million in C&I growth for the quarter. About $24 million of that was dealer floor plan, and the rest were draws on existing lines of credit, both local companies and mainland companies. It was really pretty broad-based. Good growth in dealer flooring, which we appreciate. We look at that for the rest of the year as being an opportunity along with commercial real estate to continue to grow. On the hiring, yeah, we're looking for people all over. Of course, we would strongly prefer to hire here locally, but if we are unable to do so, depending on that, we would look to the mainland. On the floor planning, are you seeing utilization get back to more normal levels? I know it was pretty low for a while. Or is that growth coming from expanding the network? We added a new dealer relationship during the quarter, but that wasn't all of it. I think it was a little bit of utilization. A mix of both. Okay. Maybe separately, the securities yields are still pretty low and with the extra capital you have, would you consider sort of just putting on more of a cost of leverage? play here or utilize some of the extra deposit growth on securities and sort of pre-fund some of that cash flow that's going to be coming off? Or should we really just think that you're going to be reinvesting cash flows as they happen? Yeah, Jared, I think the answer to that is the latter piece of that. We're just going to be reinvesting cash flows as they come off. No plans to do any sort of restructuring or anything at the moment. Again, at the moment, no plans to expand the size of the securities portfolio either. For now, it's just going to be that. Just cash flows coming off and we'll reinvest them. Great. Thank you. Thank you. Our next question comes from David Feaster with Raymond James. You may proceed. Hey, good morning, everybody. Morning, David. I wanted to touch on maybe the competitive side. You kind of got a unique perspective. Just kind of curious, maybe if you could touch on the competitive dynamics both comparing and contrasting the mainland versus Hawaii. Are you starting to see competition shift from just pricing to more pushing on structures and standards? Just kind of curious if what you're seeing on that front? Yeah. David, maybe I'll start off on that. Yeah, the competitive nature, it's always been a little bit more competitive. Put it this way, cyclically competitive on pricing. Now we're getting a little bit more competitive on price, both primarily on the mainland, but a little bit here. It's always been a bit more competitive on price in Hawaii, given the various banks' low loan-to-deposit ratios. Everybody's got liquidity they're looking to put to work here in Hawaii. That's always been an issue here. We are seeing it kind of cycle down slightly in our mainland markets. A little bit of that is, say, multifamily construction was higher on a spread a year and a half ago than it is today. I think that kind of speaks to that. The other thing we're seeing are the larger banks are taking bigger pieces of deals, and so there's less available. There is a little bit more competition for deals themselves as some of the larger banks are increasing their hold levels. Does that address your question? Yeah. No, that's helpful. Appreciate you guys reiterated the fee income guide. I was just hoping you could walk through some of the business lines, kind of some of the underlying trends, and some of the puts and takes that you're seeing there. Maybe I'll start on the wealth side. We're continuing to see really good interactions between our customers and our wealth advisors. That business has continued to grow year-after-year for many years now, and so I think that's been a nice opportunity. The fees associated with our credit card business have been pretty stable. There's movement quarter to quarter, a little stronger in Q4, a little less in Q1, but that's pretty standard as far as what we would expect in that business. Jamie, anything you would add to that? Yeah, I guess the only thing to add is there's a portion of our BOLI that is market driven, and so that can be somewhat volatile, and we saw that a little bit here at the end of the first quarter with the market kind of underperforming, let's call it. We took less fees related to that. Swap fee income in our loan book can kind of also be sort of cyclical just depending on what kind of lending we're doing in a particular quarter and what our customers want. I think combine those couple things with all of what Bob mentioned, I think is where you get to on the fee guide. Okay. Maybe just touching on the funding side, you've had a lot of success. This quarter was great. A lot of benefit from public funds this quarter. I was hoping you could touch on maybe some competition on the funding side and just how you think about gaining share, and driving market share growth on the deposit front, and what's going to be the key drivers of that. Do you see more opportunity on the commercial or the retail side? Just kind of curious some of the funding trends you're seeing? Yeah, for that and most of it, well, firstly, all of our deposits are here in market in our geography, it's just a day in, day out, getting out there and meeting with customers and prospects and trying to sell them the different products and services we offer and see how we can make that work for them. It really is a ground game, I would call it, more than anything else. There's not a lot of magic to it where it would change quarter-over-quarter. Certainly our folks are out there and trying to meet with customers both on the consumer, small business, the larger business side. All right. Thank you. Thank you. Our next question comes from Kelly Motta with KBW. You may proceed. Hey, good morning. Thanks for the question. Maybe on capital, really solid here. I apologize if it was asked already, but have you guys done any work on the proposed capital changes and the potential impact to your ratios here? Yeah, we've done a little bit of work on it. We think that it could possibly add maybe 1% CET1 to our capital levels. Again, it's proposed, and we're not going to change our capital allocation strategy or our plans based on that. If it goes through the way it is, we think it's about a 1% add. Got it. That's really helpful. Otherwise, I mean, you've been very consistent here with the share repurchase. It seems like that's probably, even with the growth having picked up, probably a good expectation. Wanted to hear your thoughts on how you're thinking about that. Thank you. Yeah. Yeah, Kelly, I think you summarized it pretty well for us. Maybe we can hire you to do that again. Yeah. No, I think you nailed it. Yeah. Yeah. We have the $200 million allocation, and we used $34 million in Q1, and timing-wise, it's not set for a particular year. We're just looking at what makes sense going forward. Yeah. Just to be clear, the amount of the authorization was $250 million. Oh. Got it. That's really helpful. Otherwise, any credit loss provisions, anything, you know, anything you're watching or pulling away from? Thanks. I don't think anything we're pulling away from. Just given the uncertainty in the environment, the volatility, the recent natural disaster events that have happened in our footprint. We're just watching certain portfolios very carefully, but we haven't really seen anything so far. Got it. Thank you so much for the time. I'll step back. Thank you. Our next question comes from Andrew Terrell with Stephens. You may proceed. Hey, good morning. Morning. Morning. I want to go back a little bit on the margin. I hear you on the near-term guide and kind of full-year guide. The majority of what underpins that is some of the fixed-rate pricing. Can you just talk about it? Is there any level of benefit you'd expect or work to do on the deposit base as you move throughout the year? Just to have some rate cuts, do you feel like you've kind of fully exhausted the ability to reprice lower? Any other tweaks you can look to make on the funding side? There's still some ability to work on that, in particular with CD pricing, kind of what sort of rolls over every quarter. We've seen a pretty significant decline in sort of the competitive environment around those from, say, a year or so ago. We could still see some benefit from that perspective. The March deposit number, Andrew, was 1.20%, so a little bit lower than what we had in the quarter. Maybe there's still like you can see the sort of dynamics of the CD repricing around that. I wouldn't expect it to go too much lower with rates staying the same in totality in terms of deposit costs. The guide for the year on the NIM is inclusive of any sort of rate actions we might take on the deposit side as well as the repricing story. Yep. Yep. Okay. Then last quarter you talked about, I think you gave, I forget the specific dollar amount of the fixed cash flows for the year, but roll-off yield 4%, new asset yield 5.5%. There's obviously been a lot of rate volatility throughout the first quarter, and I'm not asking for total crystal ball, but do you feel like 5.5% blended new asset yield is still kind of fair assumption based on what you're seeing for loan origination yields and where you're buying securities at today? Yeah. I think so. I mean, it's going to depend quarter to quarter based on what type of lending activity we do in any given quarter, right? If activity is primarily in lower spread things, then it might be a little bit lower than that. For the year, I think 150 is a good number, and that $400 million per quarter of cash flows coming off and repricing still is a good number. Got it. Okay. Thanks. If I could ask just one last one. I think we started talking more about Mainland M&A interest last year, some with you guys, and I just wondered if anything's changed there? If you maybe rehash any willingness or kind of appetite or your view of the M&A market as it stands right now? Yeah. At this spot, no updates. We're still talking to people, see if there's things that might make sense, but we haven't really changed our profile or what we're looking for. We're really looking for a good fit first and foremost, and then take it from there. Great. Thank you for taking the questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Matthew Clark with Piper Sandler. You may proceed. Hey, good morning. Morning. Just a couple follow-ups here on the cash flows on the asset side. I know it's $400 million a quarter, but can you give us a split between loans and securities on average? We can guesstimate the rates, but I'm just trying to forecast those individual yields. Yeah. I guess the right way to think about it is for the year we expected $600 million of cash flows coming off the securities portfolio. That leaves $1 billion in cash flows from the loans. That spread of 150 that we talked about is inclusive of the roll-off and roll-on yield. In the quarter we added in the securities portfolio in the 4.90 range of yield. A little bit higher than that, 6.20 or so on our loan yields. Yeah, I think that gives you what you need there, Matthew. Okay, great. Just to drill into the CDs. Same kind of question. How much do you have coming due here in 2Q and roll-off and roll-on rates? Yeah. Q2, we're going to have about $1 billion come due. That's currently somewhere in the neighborhood of like a 290 or so CD rate. I think that'll roll over something like in a 250 weighted average range or something like that. Okay, perfect. Thank you. Hard to tell for sure because some folks roll into promos and some folks roll into rack rates. Don't know for sure around that. Again, I think if you back into the margin guidance that we've given, you can kind of get to what you need on the CD side of things. Yeah. Okay. Yeah, kind of getting to an opinion that's a little bit above what you're forecasting for 2Q, so thank you. Thank you. I would now like to turn the call back over to Kevin Haseyama for any closing remarks. We appreciate your interest in First Hawaiian, and please feel free to contact me if you have any additional questions. Thanks again for joining us, and have a good weekend. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Speaker 10: Good day, and thank you for standing by. Welcome to the First Hawaiian, Inc. Q1 2026 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Kevin Haseyama, Investor Relations Manager. Good day, and thank you for standing by. good day and thank you for standing by Welcome to the First Hawaiian, Inc. Q1 2026 earnings conference call. welcome to the first hawaiian inc q1 2026 earnings conference call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode Please be advised that today's conference is being recorded. please be advised that today's conference is being recorded After the speaker's presentation, there will be a question- and- answer session. after the speaker's presentation there will be a question- and- answer session To ask a question, please press star one one on your telephone and wait for your name to be announced. to ask a question please press star one one on your telephone and wait for your name to be announced To withdraw your question, please press star one one again. to withdraw your question please press star one one again I would now like to hand the conference over to your speaker today, Kevin Haseyama, Investor Relations Manager. i would now like to hand the conference over to your speaker today kevin haseyama investor relations manager

Speaker 7: Thank you, Josh, and thank you everyone for joining us as we review our financial results for the first quarter of 2026. With me today are Robert Harrison, Chairman, President, and CEO, James Moses, Chief Financial Officer, and Lea Nakamura, Chief Risk Officer. We have prepared a slide presentation that we will refer to in our remarks today. The presentation is available for downloading and viewing on our website at fhb.com in the investor relations section. During today's call, we will be making forward-looking statements, so please refer to Slide one for our safe harbor statement. We may also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements. Now I'll turn the call over to Bob. Thank you, Josh, and thank you everyone for joining us as we review our financial results for the first quarter of 2026. thank you josh and thank you everyone for joining us as we review our financial results for the first quarter of 2026 With me today are Robert Harrison, Chairman, President, and CEO, James Moses, Chief Financial Officer, and Lea Nakamura, Chief Risk Officer. with me today are robert harrison chairman president and ceo james moses chief financial officer and lea nakamura chief risk officer We have prepared a slide presentation that we will refer to in our remarks today. we have prepared a slide presentation that we will refer to in our remarks today The presentation is available for downloading and viewing on our website at fhb.com in the investor relations section. the presentation is available for downloading and viewing on our website at fhb.com in the investor relations section During today's call, we will be making forward-looking statements, so please refer to Slide one for our safe harbor statement. during today's call we will be making forward-looking statements so please refer to slide one for our safe harbor statement We may also discuss certain non-GAAP financial measures. we may also discuss certain non-gaap financial measures The appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements. the appendix to this presentation contains reconciliations of these non-gaap financial measurements to the most directly comparable gaap measurements Now I'll turn the call over to Bob. now i'll turn the call over to bob

Speaker 11: Thank you everyone for joining us today. I wanted to start by sharing our support for the communities impacted by the recent flooding in Hawaii from the Kona low storms and Typhoon Sinlaku in Guam and Saipan. It's really important for us to support our communities, and we are actively providing relief and support to help our customers and those affected in the relative communities. Moving on to an outlook. The statewide unemployment rate remained relatively stable at 2.2% in January. That compares to the national rate at 4.3% for the same month. Through February, total visitor arrivals were up 7.1% compared to last year, primarily due to more visitors from the U.S. mainland and Japan. Year-to-date spending through February was $4.2 billion, up 14.8% compared to 2025 levels for the same period. Thank you everyone for joining us today. thank you everyone for joining us today I wanted to start by sharing our support for the communities impacted by the recent flooding in Hawaii from the Kona low storms and Typhoon Sinlaku in Guam and Saipan. i wanted to start by sharing our support for the communities impacted by the recent flooding in hawaii from the kona low storms and typhoon sinlaku in guam and saipan It's really important for us to support our communities, and we are actively providing relief and support to help our customers and those affected in the relative communities. it's really important for us to support our communities and we are actively providing relief and support to help our customers and those affected in the relative communities Moving on to an outlook. moving on to an outlook The statewide unemployment rate remained relatively stable at 2.2% in January. the statewide unemployment rate remained relatively stable at 2.2% in january That compares to the national rate at 4.3% for the same month. that compares to the national rate at 4.3% for the same month Through February, total visitor arrivals were up 7.1% compared to last year, primarily due to more visitors from the U.S. mainland and Japan. through february total visitor arrivals were up 7.1% compared to last year primarily due to more visitors from the u.s mainland and japan Year-to-date spending through February was $4.2 billion, up 14.8% compared to 2025 levels for the same period. year-to-date spending through february was $4.2 billion up 14.8% compared to 2025 levels for the same period At this point, it's too soon to know how tourism and the local economy might be impacted by the recent global events. The housing market remains stable, with the median single-family home sales price on Oahu in March at $1.2 million, up 3.4% from the prior year. The median condo sales price on Oahu in March was $510,000, up 2% from the prior year. Turning to Slide two. We had a strong start to the year. Loans and deposits grew, credit quality remained solid, and we remained well capitalized. Our return on average tangible assets of 1.2% and return on average tangible equity of 15.3% for the first quarter. The effective tax rate for the first quarter was 22.5%. Turning to Slide three. At this point, it's too soon to know how tourism and the local economy might be impacted by the recent global events. at this point it's too soon to know how tourism and the local economy might be impacted by the recent global events The housing market remains stable, with the median single-family home sales price on Oahu in March at $1.2 million, up 3.4% from the prior year. the housing market remains stable with the median single-family home sales price on oahu in march at $1.2 million up 3.4% from the prior year The median condo sales price on Oahu in March was $510,000, up 2% from the prior year. the median condo sales price on oahu in march was $510,000 up 2% from the prior year Turning to Slide two. turning to slide two We had a strong start to the year. we had a strong start to the year Loans and deposits grew, credit quality remained solid, and we remained well capitalized. loans and deposits grew credit quality remained solid and we remained well capitalized Our return on average tangible assets of 1.2% and return on average tangible equity of 15.3% for the first quarter. our return on average tangible assets of 1.2% and return on average tangible equity of 15.3% for the first quarter The effective tax rate for the first quarter was 22.5%. the effective tax rate for the first quarter was 22.5% Turning to Slide three. turning to slide three The balance sheet remains solid as we continue to be well capitalized with ample liquidity. We remain asset sensitive and well-positioned to benefit from a higher for-longer rate scenario. During the quarter, we repurchased about 1.3 million shares at a cost of $32 million. Turning to Slide four. Total loans grew over 128 million in the quarter, up 3.6% on an annualized basis. We had good growth in CRE and C&I loans, partially offset by runoff in residential loan portfolio and payoffs in the construction loan portfolio. Some of the growth in the CRE portfolio and decline in construction portfolio were due to completed construction projects converting to permanent financing. Now I'll turn it over to Jamie. The balance sheet remains solid as we continue to be well capitalized with ample liquidity. the balance sheet remains solid as we continue to be well capitalized with ample liquidity We remain asset sensitive and well-positioned to benefit from a higher for-longer rate scenario. we remain asset sensitive and well-positioned to benefit from a higher for-longer rate scenario During the quarter, we repurchased about 1.3 million shares at a cost of $32 million. during the quarter we repurchased about 1.3 million shares at a cost of $32 million Turning to Slide four. turning to slide four Total loans grew over 128 million in the quarter, up 3.6% on an annualized basis. total loans grew over 128 million in the quarter up 3.6% on an annualized basis We had good growth in CRE and C&I loans, partially offset by runoff in residential loan portfolio and payoffs in the construction loan portfolio. we had good growth in cre and c&i loans partially offset by runoff in residential loan portfolio and payoffs in the construction loan portfolio Some of the growth in the CRE portfolio and decline in construction portfolio were due to completed construction projects converting to permanent financing. some of the growth in the cre portfolio and decline in construction portfolio were due to completed construction projects converting to permanent financing Now I'll turn it over to Jamie. now i'll turn it over to jamie

Speaker 4: Thanks, Bob. Turning to Slide five. We delivered solid deposit momentum in the quarter, with total deposits increasing by $262 million, driven primarily by growth in public operating balances. Retail and commercial deposits were modestly higher and, importantly, did not experience the typical seasonal outflows we have seen at the start of prior years, which we view as a positive signal. Public deposits increased $244 million, reflecting higher operating account balances. We continue to see meaningful improvement in funding costs, with the total cost of deposits declining 7 basis points to 1.22%. Our non-interest-bearing deposit ratio remained healthy at 31%, reinforcing the strength and stability of our core funding base. On Slide six, net interest income for the quarter was $167 and a half million, down $2.8 million from the prior quarter. Thanks, Bob. thanks bob Turning to Slide five . turning to slide five We delivered solid deposit momentum in the quarter, with total deposits increasing by $262 million, driven primarily by growth in public operating balances. we delivered solid deposit momentum in the quarter with total deposits increasing by $262 million driven primarily by growth in public operating balances Retail and commercial deposits were modestly higher and, importantly, did not experience the typical seasonal outflows we have seen at the start of prior years, which we view as a positive signal. retail and commercial deposits were modestly higher and importantly did not experience the typical seasonal outflows we have seen at the start of prior years which we view as a positive signal Public deposits increased $244 million, reflecting higher operating account balances. public deposits increased $244 million reflecting higher operating account balances We continue to see meaningful improvement in funding costs, with the total cost of deposits declining 7 basis points to 1.22%. we continue to see meaningful improvement in funding costs with the total cost of deposits declining 7 basis points to 1.22% Our non-interest-bearing deposit ratio remained healthy at 31%, reinforcing the strength and stability of our core funding base. our non-interest-bearing deposit ratio remained healthy at 31% reinforcing the strength and stability of our core funding base On Slide six , net interest income for the quarter was $167 and a half million, down $2.8 million from the prior quarter. on slide six net interest income for the quarter was $167 and a half million down $2.8 million from the prior quarter Net interest margin was 3.19%, a decline of 2 basis points sequentially. This reflects the full quarter impact of the December rate cut. As we look ahead, we expect the balance sheet repricing story to continue throughout the year. Turning to Slide seven. Non-interest income totaled $52.8 million for the quarter. The decline from last quarter was primarily attributed to lower BOLI income and swap fee activity, which we view as timing related rather than structural. Non-interest expense was $127.9 million, and there were no material, unusual or non-recurring items in the quarter. Our expense profile remains well controlled and aligned with our full-year outlook. With that, I'll turn it over to Lea to review our credit performance. Net interest margin was 3.19%, a decline of 2 basis points sequentially. net interest margin was 3.19% a decline of 2 basis points sequentially This reflects the full quarter impact of the December rate cut. this reflects the full quarter impact of the december rate cut As we look ahead, we expect the balance sheet repricing story to continue throughout the year. as we look ahead we expect the balance sheet repricing story to continue throughout the year Turning to Slide seven . turning to slide seven Non-interest income totaled $52.8 million for the quarter. non-interest income totaled $52.8 million for the quarter The decline from last quarter was primarily attributed to lower BOLI income and swap fee activity, which we view as timing related rather than structural. the decline from last quarter was primarily attributed to lower boli income and swap fee activity which we view as timing related rather than structural Non-interest expense was $127.9 million, and there were no material, unusual or non-recurring items in the quarter. non-interest expense was $127.9 million and there were no material unusual or non-recurring items in the quarter Our expense profile remains well controlled and aligned with our full-year outlook. our expense profile remains well controlled and aligned with our full-year outlook With that, I'll turn it over to Lea to review our credit performance. with that i'll turn it over to lea to review our credit performance

Speaker 8: Thank you, Jamie. Thank you, Jamie. thank you jamie Moving to Slide eight, the bank continued to maintain its strong credit performance and healthy credit metrics in the first quarter. Credit risk remains low, stable, and well within our expectations. Overall, we're not observing any broad signs of weakness across either the consumer or commercial books. Criticized assets decreased by 21 basis points, and non-performing assets and loans 90 days or more past due were 30 basis points of total loans and leases, down one basis point from the prior quarter, resulting from a decrease in dealer flooring non-accruals. Quarter to date net charge-offs were $4.9 million, or 14 basis points of average loans and leases, unchanged from the fourth quarter. The bank recorded a $5 million provision in the first quarter. The allowance for credit losses increased by just under $1 million to $169 million, with a coverage ratio of 1.17% of total loans and leases. Moving to Slide eight, the bank continued to maintain its strong credit performance and healthy credit metrics in the first quarter. moving to slide eight the bank continued to maintain its strong credit performance and healthy credit metrics in the first quarter Credit risk remains low, stable, and well within our expectations. credit risk remains low stable and well within our expectations Overall, we're not observing any broad signs of weakness across either the consumer or commercial books. overall we're not observing any broad signs of weakness across either the consumer or commercial books Criticized assets decreased by 21 basis points, and non-performing assets and loans 90 days or more past due were 30 basis points of total loans and leases, down one basis point from the prior quarter, resulting from a decrease in dealer flooring non-accruals. criticized assets decreased by 21 basis points and non-performing assets and loans 90 days or more past due were 30 basis points of total loans and leases down one basis point from the prior quarter resulting from a decrease in dealer flooring non-accruals Quarter to date net charge-offs were $4.9 million, or 14 basis points of average loans and leases, unchanged from the fourth quarter. quarter to date net charge-offs were $4.9 million or 14 basis points of average loans and leases unchanged from the fourth quarter The bank recorded a $5 million provision in the first quarter. the bank recorded a $5 million provision in the first quarter The allowance for credit losses increased by just under $1 million to $169 million, with a coverage ratio of 1.17% of total loans and leases. the allowance for credit losses increased by just under $1 million to $169 million with a coverage ratio of 1.17% of total loans and leases We believe that we are conservatively reserved and ready for a wide range of outcomes. We believe that we are conservatively reserved and ready for a wide range of outcomes. we believe that we are conservatively reserved and ready for a wide range of outcomes

Speaker 11: Thanks, Lea. Turning to Slide nine, we have updated our outlook for key performance drivers. We continue to expect full-year loan growth to be in the 3%-4% range. With the markets now expecting no rate cuts this year, we have revised our full-year NIM outlook to be in the 3.22%-3.23% range. We expect second quarter NIM to be up two to three basis points from the first quarter. Our outlook for non-interest income remains about $220 million for the year. Finally, we expect expenses to gradually increase throughout the year, and we continue to forecast full-year expenses will be about $520 million. That concludes our prepared remarks, and now we'd be happy to take your questions. Thanks, Lea. thanks lea Turning to Slide nine, we have updated our outlook for key performance drivers. turning to slide nine we have updated our outlook for key performance drivers We continue to expect full-year loan growth to be in the 3%-4% range. we continue to expect full-year loan growth to be in the 3%-4% range With the markets now expecting no rate cuts this year, we have revised our full-year NIM outlook to be in the 3.22%-3.23% range. with the markets now expecting no rate cuts this year we have revised our full-year nim outlook to be in the 3.22%-3.23% range We expect second quarter NIM to be up two to three basis points from the first quarter. we expect second quarter nim to be up two to three basis points from the first quarter Our outlook for non-interest income remains about $220 million for the year. our outlook for non-interest income remains about $220 million for the year Finally, we expect expenses to gradually increase throughout the year, and we continue to forecast full- year expenses will be about $520 million. finally we expect expenses to gradually increase throughout the year and we continue to forecast full- year expenses will be about $520 million That concludes our prepared remarks, and now we'd be happy to take your questions. that concludes our prepared remarks and now we'd be happy to take your questions

Speaker 10: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Anthony Elian with JPMorgan. You may proceed. Thank you. thank you As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. as a reminder to ask a question please press star one one on your telephone and wait for your name to be announced To withdraw your question, please press star one one again. to withdraw your question please press star one one again One moment for questions. one moment for questions Our first question comes from Anthony Elian with JPMorgan. our first question comes from anthony elian with jpmorgan You may proceed. you may proceed

Speaker 2: Great. Thanks. Jamie, on the outlook, the drivers of the two to three basis points sequential increase in NIM in 2Q, could you help us unpack that a little bit? What's driving that in the range for full-year moving higher, and is that entirely coming from no rate cuts this year? Great. great Thanks. thanks Jamie, on the outlook, the drivers of the two to three basis points sequential increase in NIM in 2Q, could you help us unpack that a little bit? jamie on the outlook the drivers of the two to three basis points sequential increase in nim in 2q could you help us unpack that a little bit What's driving that in the range for full-year moving higher, and is that entirely coming from no rate cuts this year? what's driving that in the range for full-year moving higher and is that entirely coming from no rate cuts this year

Speaker 4: Hi, Tony. Good morning. The right answer to that is the balance sheet repricing story that we've had and seen for the last year or two. Again, just to remind everybody, we have about $400 million of fixed rate cash flows that come off every quarter, that get repriced at about a 155 basis point spread higher on a weighted average basis between loans and securities. Tony, that's really the driver as we go forward, right? We still are an asset sensitive balance sheet. We will see a decline in NIM if there is a rate cut in any given quarter. The balance sheet repricing dynamics after that will sort of drive the NIM higher as we go forward. Hi, Tony. hi tony Good morning. good morning The right answer to that is the balance sheet repricing story that we've had and seen for the last year or two. the right answer to that is the balance sheet repricing story that we've had and seen for the last year or two Again, just to remind everybody, we have about $400 million of fixed rate cash flows that come off every quarter, that get repriced at about a 155 basis point spread higher on a weighted average basis between loans and securities. again just to remind everybody we have about $400 million of fixed rate cash flows that come off every quarter that get repriced at about a 155 basis point spread higher on a weighted average basis between loans and securities Tony, that's really the driver as we go forward, right? tony that's really the driver as we go forward right We still are an asset sensitive balance sheet. we still are an asset sensitive balance sheet We will see a decline in NIM if there is a rate cut in any given quarter. we will see a decline in nim if there is a rate cut in any given quarter The balance sheet repricing dynamics after that will sort of drive the NIM higher as we go forward. the balance sheet repricing dynamics after that will sort of drive the nim higher as we go forward

Speaker 2: Thank you. On expense, so you reiterated the outlook of $520 for the full-year, but I think 1Q came in a little bit lower than what we were expecting, which would imply a pretty good pickup over the course of the year. Is that the right way to think about it, and what are the areas driving the increase in expense? Thank you. Thank you. thank you On expense, so you reiterated the outlook of $520 for the full-year, but I think 1Q came in a little bit lower than what we were expecting, which would imply a pretty good pickup over the course of the year. on expense so you reiterated the outlook of $520 for the full-year but i think 1q came in a little bit lower than what we were expecting which would imply a pretty good pickup over the course of the year Is that the right way to think about it, and what are the areas driving the increase in expense? is that the right way to think about it and what are the areas driving the increase in expense Thank you. thank you

Speaker 4: Yeah. It's going to be kind of broad-based, Tony, in terms of the areas. Hopefully we'll get some more salary expense in there. As we've talked about, we're looking to hire talented folks to come over and drive revenues for us. So hopefully that's where we'll see much of that pickup. Generally broad-based, and I think you are thinking about it correctly in terms of a little pickup and a ramp as we get throughout the year. Yeah. yeah It's going to be kind of broad-based, Tony, in terms of the areas. it's going to be kind of broad-based tony in terms of the areas Hopefully we'll get some more salary expense in there. hopefully we'll get some more salary expense in there As we've talked about, we're looking to hire talented folks to come over and drive revenues for us. as we've talked about we're looking to hire talented folks to come over and drive revenues for us So hopefully that's where we'll see much of that pickup. so hopefully that's where we'll see much of that pickup Generally broad-based, and I think you are thinking about it correctly in terms of a little pickup and a ramp as we get throughout the year. generally broad-based and i think you are thinking about it correctly in terms of a little pickup and a ramp as we get throughout the year

Speaker 2: Thank you. Thank you. thank you

Speaker 10: Thank you. Our next question comes from Jared Shaw with Barclays. You may proceed. Thank you. thank you Our next question comes from Jared Shaw with Barclays. our next question comes from jared shaw with barclays You may proceed. you may proceed

Speaker 5: Hey, thanks. Good morning. Hey, thanks. hey thanks Good morning. good morning

Speaker 11: Morning. Morning. morning

Speaker 5: When you look at the growth, C&I growth has been pretty good. Any specific drivers sort of underpinning that, and can you update us on your appetite for mainland expansion and any of the hires, Jamie, that you're talking about, should we think are coming maybe off island? When you look at the growth, C&I growth has been pretty good. when you look at the growth c&i growth has been pretty good Any specific drivers sort of underpinning that, and can you update us on your appetite for mainland expansion and any of the hires, Jamie, that you're talking about, should we think are coming maybe off island? any specific drivers sort of underpinning that and can you update us on your appetite for mainland expansion and any of the hires jamie that you're talking about should we think are coming maybe off island

Speaker 11: Yeah, Jared, let me start with the loan outlook. Really, the $71 million in C&I growth for the quarter. About $24 million of that was dealer floor plan, and the rest were draws on existing lines of credit, both local companies and mainland companies. It was really pretty broad-based. Good growth in dealer flooring, which we appreciate. We look at that for the rest of the year as being an opportunity along with commercial real estate to continue to grow. On the hiring, yeah, we're looking for people all over. Of course, we would strongly prefer to hire here locally, but if we are unable to do so, depending on that, we would look to the mainland. Yeah, Jared, let me start with the loan outlook. yeah jared let me start with the loan outlook Really, the $71 million in C&I growth for the quarter. really the $71 million in c&i growth for the quarter About $24 million of that was dealer floor plan, and the rest were draws on existing lines of credit, both local companies and mainland companies. about $24 million of that was dealer floor plan and the rest were draws on existing lines of credit both local companies and mainland companies It was really pretty broad-based. it was really pretty broad-based Good growth in dealer flooring, which we appreciate. good growth in dealer flooring which we appreciate We look at that for the rest of the year as being an opportunity along with commercial real estate to continue to grow. we look at that for the rest of the year as being an opportunity along with commercial real estate to continue to grow On the hiring, yeah, we're looking for people all over. on the hiring yeah we're looking for people all over Of course, we would strongly prefer to hire here locally, but if we are unable to do so, depending on that, we would look to the mainland. of course we would strongly prefer to hire here locally but if we are unable to do so depending on that we would look to the mainland

Speaker 5: On the floor planning, are you seeing utilization get back to more normal levels? I know it was pretty low for a while. Or is that growth coming from expanding the network? On the floor planning, are you seeing utilization get back to more normal levels? on the floor planning are you seeing utilization get back to more normal levels I know it was pretty low for a while. i know it was pretty low for a while Or is that growth coming from expanding the network? or is that growth coming from expanding the network

Speaker 11: We added a new dealer relationship during the quarter, but that wasn't all of it. I think it was a little bit of utilization. A mix of both. We added a new dealer relationship during the quarter, but that wasn't all of it. we added a new dealer relationship during the quarter but that wasn't all of it I think it was a little bit of utilization. i think it was a little bit of utilization A mix of both. a mix of both

Speaker 5: Okay. Maybe separately, the securities yields are still pretty low and with the extra capital you have, would you consider sort of just putting on more of a cost of leverage? Okay. okay Maybe separately, the securities yields are still pretty low and with the extra capital you have, would you consider sort of just putting on more of a cost of leverage? maybe separately the securities yields are still pretty low and with the extra capital you have would you consider sort of just putting on more of a cost of leverage play here or utilize some of the extra deposit growth on securities and sort of pre-fund some of that cash flow that's going to be coming off? Or should we really just think that you're going to be reinvesting cash flows as they happen? play here or utilize some of the extra deposit growth on securities and sort of pre-fund some of that cash flow that's going to be coming off? play here or utilize some of the extra deposit growth on securities and sort of pre-fund some of that cash flow that's going to be coming off Or should we really just think that you're going to be reinvesting cash flows as they happen? or should we really just think that you're going to be reinvesting cash flows as they happen

Speaker 4: Yeah, Jared, I think the answer to that is the latter piece of that. We're just going to be reinvesting cash flows as they come off. No plans to do any sort of restructuring or anything at the moment. Again, at the moment, no plans to expand the size of the securities portfolio either. For now, it's just going to be that. Just cash flows coming off and we'll reinvest them. Yeah, Jared, I think the answer to that is the latter piece of that. yeah jared i think the answer to that is the latter piece of that We're just going to be reinvesting cash flows as they come off. we're just going to be reinvesting cash flows as they come off No plans to do any sort of restructuring or anything at the moment. no plans to do any sort of restructuring or anything at the moment Again, at the moment, no plans to expand the size of the securities portfolio either. again at the moment no plans to expand the size of the securities portfolio either For now, it's just going to be that. for now it's just going to be that Just cash flows coming off and we'll reinvest them. just cash flows coming off and we'll reinvest them

Speaker 5: Great. Thank you. Great. great Thank you. thank you

Speaker 10: Thank you. Our next question comes from David Feaster with Raymond James. You may proceed. Thank you. thank you Our next question comes from David Feaster with Raymond James. our next question comes from david feaster with raymond james You may proceed. you may proceed

Speaker 3: Hey, good morning, everybody. Hey, good morning, everybody. hey good morning everybody

Speaker 4: Morning, David. Morning, David. morning david

Speaker 3: I wanted to touch on maybe the competitive side. You kind of got a unique perspective. Just kind of curious, maybe if you could touch on the competitive dynamics both comparing and contrasting the mainland versus Hawaii. Are you starting to see competition shift from just pricing to more pushing on structures and standards? Just kind of curious if what you're seeing on that front? I wanted to touch on maybe the competitive side. i wanted to touch on maybe the competitive side You kind of got a unique perspective. you kind of got a unique perspective Just kind of curious, maybe if you could touch on the competitive dynamics both comparing and contrasting the mainland versus Hawaii. just kind of curious maybe if you could touch on the competitive dynamics both comparing and contrasting the mainland versus hawaii Are you starting to see competition shift from just pricing to more pushing on structures and standards? are you starting to see competition shift from just pricing to more pushing on structures and standards Just kind of curious if what you're seeing on that front? just kind of curious if what you're seeing on that front

Speaker 11: Yeah. David, maybe I'll start off on that. Yeah, the competitive nature, it's always been a little bit more competitive. Put it this way, cyclically competitive on pricing. Now we're getting a little bit more competitive on price, both primarily on the mainland, but a little bit here. It's always been a bit more competitive on price in Hawaii, given the various banks' low loan-to-deposit ratios. Everybody's got liquidity they're looking to put to work here in Hawaii. That's always been an issue here. We are seeing it kind of cycle down slightly in our mainland markets. A little bit of that is, say, multifamily construction was higher on a spread a year and a half ago than it is today. I think that kind of speaks to that. Yeah. yeah David, maybe I'll start off on that. david maybe i'll start off on that Yeah, the competitive nature, it's always been a little bit more competitive. yeah the competitive nature it's always been a little bit more competitive Put it this way, cyclically competitive on pricing. put it this way cyclically competitive on pricing Now we're getting a little bit more competitive on price, both primarily on the mainland, but a little bit here. now we're getting a little bit more competitive on price both primarily on the mainland but a little bit here It's always been a bit more competitive on price in Hawaii, given the various banks' low loan-to-deposit ratios. it's always been a bit more competitive on price in hawaii given the various banks' low loan-to-deposit ratios Everybody's got liquidity they're looking to put to work here in Hawaii. everybody's got liquidity they're looking to put to work here in hawaii That's always been an issue here. that's always been an issue here We are seeing it kind of cycle down slightly in our mainland markets. we are seeing it kind of cycle down slightly in our mainland markets A little bit of that is, say, multifamily construction was higher on a spread a year and a half ago than it is today. a little bit of that is say multifamily construction was higher on a spread a year and a half ago than it is today I think that kind of speaks to that. i think that kind of speaks to that The other thing we're seeing are the larger banks are taking bigger pieces of deals, and so there's less available. There is a little bit more competition for deals themselves as some of the larger banks are increasing their hold levels. Does that address your question? The other thing we're seeing are the larger banks are taking bigger pieces of deals, and so there's less available. the other thing we're seeing are the larger banks are taking bigger pieces of deals and so there's less available There is a little bit more competition for deals themselves as some of the larger banks are increasing their hold levels. there is a little bit more competition for deals themselves as some of the larger banks are increasing their hold levels Does that address your question? does that address your question

Speaker 3: Yeah. No, that's helpful. Appreciate you guys reiterated the fee income guide. I was just hoping you could walk through some of the business lines, kind of some of the underlying trends, and some of the puts and takes that you're seeing there. Yeah. yeah No, that's helpful. no that's helpful Appreciate you guys reiterated the fee income guide. appreciate you guys reiterated the fee income guide I was just hoping you could walk through some of the business lines, kind of some of the underlying trends, and some of the puts and takes that you're seeing there. i was just hoping you could walk through some of the business lines kind of some of the underlying trends and some of the puts and takes that you're seeing there

Speaker 11: Maybe I'll start on the wealth side. We're continuing to see really good interactions between our customers and our wealth advisors. That business has continued to grow year-after-year for many years now, and so I think that's been a nice opportunity. The fees associated with our credit card business have been pretty stable. There's movement quarter to quarter, a little stronger in Q4, a little less in Q1, but that's pretty standard as far as what we would expect in that business. Jamie, anything you would add to that? Maybe I'll start on the wealth side. maybe i'll start on the wealth side We're continuing to see really good interactions between our customers and our wealth advisors. we're continuing to see really good interactions between our customers and our wealth advisors That business has continued to grow year-a fter- year for many years now, and so I think that's been a nice opportunity. that business has continued to grow year-a fter- year for many years now and so i think that's been a nice opportunity The fees associated with our credit card business have been pretty stable. the fees associated with our credit card business have been pretty stable There's movement quarter to quarter, a little stronger in Q4, a little less in Q1, but that's pretty standard as far as what we would expect in that business. there's movement quarter to quarter a little stronger in q4 a little less in q1 but that's pretty standard as far as what we would expect in that business Jamie, anything you would add to that? jamie anything you would add to that

Speaker 4: Yeah, I guess the only thing to add is there's a portion of our BOLI that is market driven, and so that can be somewhat volatile, and we saw that a little bit here at the end of the first quarter with the market kind of underperforming, let's call it. We took less fees related to that. Swap fee income in our loan book can kind of also be sort of cyclical just depending on what kind of lending we're doing in a particular quarter and what our customers want. I think combine those couple things with all of what Bob mentioned, I think is where you get to on the fee guide. Yeah, I guess the only thing to add is there's a portion of our BOLI that is market driven, and so that can be somewhat volatile, and we saw that a little bit here at the end of the first quarter with the market kind of underperforming, let's call it. yeah i guess the only thing to add is there's a portion of our boli that is market driven and so that can be somewhat volatile and we saw that a little bit here at the end of the first quarter with the market kind of underperforming let's call it We took less fees related to that. we took less fees related to that Swap fee income in our loan book can kind of also be sort of cyclical just depending on what kind of lending we're doing in a particular quarter and what our customers want. swap fee income in our loan book can kind of also be sort of cyclical just depending on what kind of lending we're doing in a particular quarter and what our customers want I think combine those couple things with all of what Bob mentioned, I think is where you get to on the fee guide. i think combine those couple things with all of what bob mentioned i think is where you get to on the fee guide

Speaker 3: Okay. Maybe just touching on the funding side, you've had a lot of success. This quarter was great. A lot of benefit from public funds this quarter. I was hoping you could touch on maybe some competition on the funding side and just how you think about gaining share, and driving market share growth on the deposit front, and what's going to be the key drivers of that. Do you see more opportunity on the commercial or the retail side? Just kind of curious some of the funding trends you're seeing? Okay. okay Maybe just touching on the funding side, you've had a lot of success. maybe just touching on the funding side you've had a lot of success This quarter was great. this quarter was great A lot of benefit from public funds this quarter. a lot of benefit from public funds this quarter I was hoping you could touch on maybe some competition on the funding side and just how you think about gaining share, and driving market share growth on the deposit front, and what's going to be the key drivers of that. i was hoping you could touch on maybe some competition on the funding side and just how you think about gaining share and driving market share growth on the deposit front and what's going to be the key drivers of that Do you see more opportunity on the commercial or the retail side? do you see more opportunity on the commercial or the retail side Just kind of curious some of the funding trends you're seeing? just kind of curious some of the funding trends you're seeing

Speaker 11: Yeah, for that and most of it, well, firstly, all of our deposits are here in market in our geography, it's just a day in, day out, getting out there and meeting with customers and prospects and trying to sell them the different products and services we offer and see how we can make that work for them. It really is a ground game, I would call it, more than anything else. There's not a lot of magic to it where it would change quarter-over-quarter. Certainly our folks are out there and trying to meet with customers both on the consumer, small business, the larger business side. Yeah, for that and most of it, well, firstly, all of our deposits are here in market in our geography, it's just a day in, day out, getting out there and meeting with customers and prospects and trying to sell them the different products and services we offer and see how we can make that work for them. yeah for that and most of it well firstly all of our deposits are here in market in our geography it's just a day in day out getting out there and meeting with customers and prospects and trying to sell them the different products and services we offer and see how we can make that work for them It really is a ground game, I would call it, more than anything else. it really is a ground game i would call it more than anything else There's not a lot of magic to it where it would change quarter- over- quarter. there's not a lot of magic to it where it would change quarter- over- quarter Certainly our folks are out there and trying to meet with customers both on the consumer, small business, the larger business side. certainly our folks are out there and trying to meet with customers both on the consumer small business the larger business side

Speaker 3: All right. Thank you. All right. all right Thank you. thank you

Speaker 10: Thank you. Our next question comes from Kelly Motta with KBW. You may proceed. Thank you. thank you Our next question comes from Kelly Motta with KBW. our next question comes from kelly motta with kbw You may proceed. you may proceed

Speaker 6: Hey, good morning. Thanks for the question. Maybe on capital, really solid here. I apologize if it was asked already, but have you guys done any work on the proposed capital changes and the potential impact to your ratios here? Hey, good morning. hey good morning Thanks for the question. thanks for the question Maybe on capital, really solid here. maybe on capital really solid here I apologize if it was asked already, but have you guys done any work on the proposed capital changes and the potential impact to your ratios here? i apologize if it was asked already but have you guys done any work on the proposed capital changes and the potential impact to your ratios here

Speaker 4: Yeah, we've done a little bit of work on it. We think that it could possibly add maybe 1% CET1 to our capital levels. Again, it's proposed, and we're not going to change our capital allocation strategy or our plans based on that. If it goes through the way it is, we think it's about a 1% add. Yeah, we've done a little bit of work on it. yeah we've done a little bit of work on it We think that it could possibly add maybe 1% CET1 to our capital levels. we think that it could possibly add maybe 1% cet1 to our capital levels Again, it's proposed, and we're not going to change our capital allocation strategy or our plans based on that. again it's proposed and we're not going to change our capital allocation strategy or our plans based on that If it goes through the way it is, we think it's about a 1% add. if it goes through the way it is we think it's about a 1% add

Speaker 6: Got it. That's really helpful. Otherwise, I mean, you've been very consistent here with the share repurchase. It seems like that's probably, even with the growth having picked up, probably a good expectation. Wanted to hear your thoughts on how you're thinking about that. Thank you. Got it. got it That's really helpful. that's really helpful Otherwise, I mean, you've been very consistent here with the share repurchase. otherwise i mean you've been very consistent here with the share repurchase It seems like that's probably, even with the growth having picked up, probably a good expectation. it seems like that's probably even with the growth having picked up probably a good expectation Wanted to hear your thoughts on how you're thinking about that. wanted to hear your thoughts on how you're thinking about that Thank you. thank you

Speaker 4: Yeah. Yeah, Kelly, I think you summarized it pretty well for us. Maybe we can hire you to do that again. Yeah. No, I think you nailed it. Yeah. Yeah. yeah Yeah, Kelly, I think you summarized it pretty well for us. yeah kelly i think you summarized it pretty well for us Maybe we can hire you to do that again. maybe we can hire you to do that again Yeah. yeah No, I think you nailed it. no i think you nailed it Yeah. yeah

Speaker 11: Yeah. We have the $200 million allocation, and we used $34 million in Q1, and timing-wise, it's not set for a particular year. We're just looking at what makes sense going forward. Yeah. yeah We have the $200 million allocation, and we used $34 million in Q1, and timing-wise, it's not set for a particular year. we have the $200 million allocation and we used $34 million in q1 and timing-wise it's not set for a particular year We're just looking at what makes sense going forward. we're just looking at what makes sense going forward

Speaker 4: Yeah. Just to be clear, the amount of the authorization was $250 million. Yeah. yeah Just to be clear, the amount of the authorization was $250 million. just to be clear the amount of the authorization was $250 million

Speaker 6: Oh. Oh. oh Got it. That's really helpful. Otherwise, any credit loss provisions, anything, you know, anything you're watching or pulling away from? Thanks. Got it. got it That's really helpful. that's really helpful Otherwise, any credit loss provisions, anything, you know, anything you're watching or pulling away from? otherwise any credit loss provisions anything you know anything you're watching or pulling away from Thanks. thanks

Speaker 8: I don't think anything we're pulling away from. Just given the uncertainty in the environment, the volatility, the recent natural disaster events that have happened in our footprint. We're just watching certain portfolios very carefully, but we haven't really seen anything so far. I don't think anything we're pulling away from. i don't think anything we're pulling away from Just given the uncertainty in the environment, the volatility, the recent natural disaster events that have happened in our footprint. just given the uncertainty in the environment the volatility the recent natural disaster events that have happened in our footprint We're just watching certain portfolios very carefully, but we haven't really seen anything so far. we're just watching certain portfolios very carefully but we haven't really seen anything so far

Speaker 6: Got it. Thank you so much for the time. I'll step back. Got it. got it Thank you so much for the time. thank you so much for the time I'll step back. i'll step back

Speaker 10: Thank you. Our next question comes from Andrew Terrell with Stephens. You may proceed. Thank you. thank you Our next question comes from Andrew Terrell with Stephens. our next question comes from andrew terrell with stephens You may proceed. you may proceed

Speaker 1: Hey, good morning. Hey, good morning. hey good morning

Speaker 7: Morning. Morning. morning

Speaker 11: Morning. Morning. morning

Speaker 1: I want to go back a little bit on the margin. I hear you on the near-term guide and kind of full-year guide. The majority of what underpins that is some of the fixed-rate pricing. Can you just talk about it? Is there any level of benefit you'd expect or work to do on the deposit base as you move throughout the year? Just to have some rate cuts, do you feel like you've kind of fully exhausted the ability to reprice lower? Any other tweaks you can look to make on the funding side? I want to go back a little bit on the margin. i want to go back a little bit on the margin I hear you on the near-term guide and kind of full-year guide. i hear you on the near-term guide and kind of full-year guide The majority of what underpins that is some of the fixed-rate pricing. the majority of what underpins that is some of the fixed-rate pricing Can you just talk about it? can you just talk about it Is there any level of benefit you'd expect or work to do on the deposit base as you move throughout the year? is there any level of benefit you'd expect or work to do on the deposit base as you move throughout the year Just to have some rate cuts, do you feel like you've kind of fully exhausted the ability to reprice lower? just to have some rate cuts do you feel like you've kind of fully exhausted the ability to reprice lower Any other tweaks you can look to make on the funding side? any other tweaks you can look to make on the funding side

Speaker 4: There's still some ability to work on that, in particular with CD pricing, kind of what sort of rolls over every quarter. We've seen a pretty significant decline in sort of the competitive environment around those from, say, a year or so ago. We could still see some benefit from that perspective. The March deposit number, Andrew, was 1.20%, so a little bit lower than what we had in the quarter. Maybe there's still like you can see the sort of dynamics of the CD repricing around that. I wouldn't expect it to go too much lower with rates staying the same in totality in terms of deposit costs. The guide for the year on the NIM is inclusive of any sort of rate actions we might take on the deposit side as well as the repricing story. There's still some ability to work on that, in particular with CD pricing, kind of what sort of rolls over every quarter. there's still some ability to work on that in particular with cd pricing kind of what sort of rolls over every quarter We've seen a pretty significant decline in sort of the competitive environment around those from, say, a year or so ago. we've seen a pretty significant decline in sort of the competitive environment around those from say a year or so ago We could still see some benefit from that perspective. we could still see some benefit from that perspective The March deposit number, Andrew, was 1.20%, so a little bit lower than what we had in the quarter. the march deposit number andrew was 1.20% so a little bit lower than what we had in the quarter Maybe there's still like you can see the sort of dynamics of the CD repricing around that. maybe there's still like you can see the sort of dynamics of the cd repricing around that I wouldn't expect it to go too much lower with rates staying the same in totality in terms of deposit costs. i wouldn't expect it to go too much lower with rates staying the same in totality in terms of deposit costs The guide for the year on the NIM is inclusive of any sort of rate actions we might take on the deposit side as well as the repricing story. the guide for the year on the nim is inclusive of any sort of rate actions we might take on the deposit side as well as the repricing story

Speaker 1: Yep. Yep. Okay. Then last quarter you talked about, I think you gave, I forget the specific dollar amount of the fixed cash flows for the year, but roll-off yield 4%, new asset yield 5.5%. There's obviously been a lot of rate volatility throughout the first quarter, and I'm not asking for total crystal ball, but do you feel like 5.5% blended new asset yield is still kind of fair assumption based on what you're seeing for loan origination yields and where you're buying securities at today? Yep. yep Yep. yep Okay. okay Then last quarter you talked about, I think you gave, I forget the specific dollar amount of the fixed cash flows for the year, but roll-off yield 4%, new asset yield 5.5%. then last quarter you talked about i think you gave i forget the specific dollar amount of the fixed cash flows for the year but roll-off yield 4% new asset yield 5.5% There's obviously been a lot of rate volatility throughout the first quarter, and I'm not asking for total crystal ball, but do you feel like 5.5% blended new asset yield is still kind of fair assumption based on what you're seeing for loan origination yields and where you're buying securities at today? there's obviously been a lot of rate volatility throughout the first quarter and i'm not asking for total crystal ball but do you feel like 5.5% blended new asset yield is still kind of fair assumption based on what you're seeing for loan origination yields and where you're buying securities at today

Speaker 4: Yeah. I think so. I mean, it's going to depend quarter to quarter based on what type of lending activity we do in any given quarter, right? If activity is primarily in lower spread things, then it might be a little bit lower than that. For the year, I think 150 is a good number, and that $400 million per quarter of cash flows coming off and repricing still is a good number. Yeah. yeah I think so. i think so I mean, it's going to depend quarter to quarter based on what type of lending activity we do in any given quarter, right? i mean it's going to depend quarter to quarter based on what type of lending activity we do in any given quarter right If activity is primarily in lower spread things, then it might be a little bit lower than that. if activity is primarily in lower spread things then it might be a little bit lower than that For the year, I think 150 is a good number, and that $400 million per quarter of cash flows coming off and repricing still is a good number. for the year i think 150 is a good number and that $400 million per quarter of cash flows coming off and repricing still is a good number

Speaker 1: Got it. Okay. Thanks. If I could ask just one last one. I think we started talking more about Mainland M&A interest last year, some with you guys, and I just wondered if anything's changed there? If you maybe rehash any willingness or kind of appetite or your view of the M&A market as it stands right now? Got it. got it Okay. okay Thanks. thanks If I could ask just one last one. if i could ask just one last one I think we started talking more about Mainland M&A interest last year, some with you guys, and I just wondered if anything's changed there? i think we started talking more about mainland m&a interest last year some with you guys and i just wondered if anything's changed there If you maybe rehash any willingness or kind of appetite or your view of the M&A market as it stands right now? if you maybe rehash any willingness or kind of appetite or your view of the m&a market as it stands right now

Speaker 11: Yeah. At this spot, no updates. We're still talking to people, see if there's things that might make sense, but we haven't really changed our profile or what we're looking for. We're really looking for a good fit first and foremost, and then take it from there. Yeah. yeah At this spot, no updates. at this spot no updates We're still talking to people, see if there's things that might make sense, but we haven't really changed our profile or what we're looking for. we're still talking to people see if there's things that might make sense but we haven't really changed our profile or what we're looking for We're really looking for a good fit first and foremost, and then take it from there. we're really looking for a good fit first and foremost and then take it from there

Speaker 1: Great. Thank you for taking the questions. Great. great Thank you for taking the questions. thank you for taking the questions

Speaker 10: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Matthew Clark with Piper Sandler. You may proceed. Thank you. thank you As a reminder, to ask a question, please press star one one on your telephone. as a reminder to ask a question please press star one one on your telephone Our next question comes from Matthew Clark with Piper Sandler. our next question comes from matthew clark with piper sandler You may proceed. you may proceed

Speaker 9: Hey, good morning. Hey, good morning. hey good morning

Speaker 11: Morning. Morning. morning

Speaker 9: Just a couple follow-ups here on the cash flows on the asset side. I know it's $400 million a quarter, but can you give us a split between loans and securities on average? We can guesstimate the rates, but I'm just trying to forecast those individual yields. Just a couple follow-ups here on the cash flows on the asset side. just a couple follow-ups here on the cash flows on the asset side I know it's $400 million a quarter, but can you give us a split between loans and securities on average? i know it's $400 million a quarter but can you give us a split between loans and securities on average We can guesstimate the rates, but I'm just trying to forecast those individual yields. we can guesstimate the rates but i'm just trying to forecast those individual yields

Speaker 4: Yeah. I guess the right way to think about it is for the year we expected $600 million of cash flows coming off the securities portfolio. That leaves $1 billion in cash flows from the loans. That spread of 150 that we talked about is inclusive of the roll-off and roll-on yield. In the quarter we added in the securities portfolio in the 4.90 range of yield. A little bit higher than that, 6.20 or so on our loan yields. Yeah, I think that gives you what you need there, Matthew. Yeah. yeah I guess the right way to think about it is for the year we expected $600 million of cash flows coming off the securities portfolio. i guess the right way to think about it is for the year we expected $600 million of cash flows coming off the securities portfolio That leaves $1 billion in cash flows from the loans. that leaves $1 billion in cash flows from the loans That spread of 150 that we talked about is inclusive of the roll-off and roll-on yield. that spread of 150 that we talked about is inclusive of the roll-off and roll-on yield In the quarter we added in the securities portfolio in the 4.90 range of yield. in the quarter we added in the securities portfolio in the 4.90 range of yield A little bit higher than that, 6.20 or so on our loan yields. a little bit higher than that 6.20 or so on our loan yields Yeah, I think that gives you what you need there, Matthew. yeah i think that gives you what you need there matthew

Speaker 9: Okay, great. Just to drill into the CDs. Same kind of question. How much do you have coming due here in 2Q and roll-off and roll-on rates? Okay, great. okay great Just to drill into the CDs. just to drill into the cds Same kind of question. same kind of question How much do you have coming due here in 2Q and roll-off and roll-on rates? how much do you have coming due here in 2q and roll-off and roll-on rates

Speaker 4: Yeah. Q2, we're going to have about $1 billion come due. That's currently somewhere in the neighborhood of like a 290 or so CD rate. I think that'll roll over something like in a 250 weighted average range or something like that. Yeah. yeah Q2, we're going to have about $1 billion come due. q2 we're going to have about $1 billion come due That's currently somewhere in the neighborhood of like a 290 or so CD rate. that's currently somewhere in the neighborhood of like a 290 or so cd rate I think that'll roll over something like in a 250 weighted average range or something like that. i think that'll roll over something like in a 250 weighted average range or something like that

Speaker 9: Okay, perfect. Thank you. Okay, perfect. okay perfect Thank you. thank you

Speaker 4: Hard to tell for sure because some folks roll into promos and some folks roll into rack rates. Don't know for sure around that. Again, I think if you back into the margin guidance that we've given, you can kind of get to what you need on the CD side of things. Hard to tell for sure because some folks roll into promos and some folks roll into rack rates. hard to tell for sure because some folks roll into promos and some folks roll into rack rates Don't know for sure around that. don't know for sure around that Again, I think if you back into the margin guidance that we've given, you can kind of get to what you need on the CD side of things. again i think if you back into the margin guidance that we've given you can kind of get to what you need on the cd side of things

Speaker 9: Yeah. Okay. Yeah, kind of getting to an opinion that's a little bit above what you're forecasting for 2Q, so thank you. Yeah. yeah Okay. okay Yeah, kind of getting to an opinion that's a little bit above what you're forecasting for 2Q, so thank you. yeah kind of getting to an opinion that's a little bit above what you're forecasting for 2q so thank you

Speaker 10: Thank you. I would now like to turn the call back over to Kevin Haseyama for any closing remarks. Thank you. thank you I would now like to turn the call back over to Kevin Haseyama for any closing remarks. i would now like to turn the call back over to kevin haseyama for any closing remarks

Speaker 7: We appreciate your interest in First Hawaiian, and please feel free to contact me if you have any additional questions. Thanks again for joining us, and have a good weekend. We appreciate your interest in First Hawaiian, and please feel free to contact me if you have any additional questions. we appreciate your interest in first hawaiian and please feel free to contact me if you have any additional questions Thanks again for joining us, and have a good weekend. thanks again for joining us and have a good weekend

Speaker 10: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect. Thank you. thank you This concludes the conference. this concludes the conference Thank you for your participation. thank you for your participation You may now disconnect. you may now disconnect