First Hawaiian reported a strong fourth quarter, with net interest income of $170.3 million and net interest margin expanding by 2 basis points sequentially to 3.21%. Return on average tangible equity reached 15.8% for the quarter and 16.3% for the full year. CEO Bob Harrison noted Hawaii’s unemployment rate fell to 2.2% in November versus 4.5% nationally, while visitor spending through November topped $19.6 billion, up 6% year-over-year. Visitor arrivals were down 0.2% year-to-date, driven by fewer Canadian tourists, but arrivals from Japan rose 2.8%. Housing market indicators showed Oahu’s median single-family home price at $1.1 million (up 4.3%) and the median condo price at $512,000 (down 5.2%).

Total loans increased by $183 million in the quarter, representing 5.2% annualized growth, led by draws on existing commercial and industrial lines and a new auto dealer relationship. Commercial real estate balances were flat outside of conversions from construction loans, which declined as projects moved to stabilization. Retail and commercial deposits grew by $233 million, offsetting a $447 million reduction in public operating deposits, for a net deposit increase of $214 million. The total cost of deposits fell by 9 basis points to 1.29%, non-interest-bearing deposits comprised 32% of the mix, and the deposit spot rate in December was 1.24%.

First Hawaiian maintained strong credit performance, with net charge-offs of $5 million (14 basis points of loans) and an annualized net charge-off rate of 11 basis points. Classified assets declined by 7 basis points, while special mention assets rose by 16 basis points. Non-performing assets and 90-day past-due loans represented 31 basis points of total loans, up 5 basis points due primarily to a single relationship. The bank recorded a $7.7 million provision, raising the allowance for credit losses by $3.2 million to $168.5 million, or 118 basis points of loans, which management deemed conservatively reserved.

During the quarter, the company repurchased approximately 1 million shares, deploying the remaining $26 million of its $100 million authorization, and secured a new open-ended $250 million buyback plan. Common equity Tier 1 capital stood above 13%, exceeding the 12% target. For 2026, management projects loan growth of 3%–4% driven by commercial real estate and industrial portfolios, net interest margin of 3.16%–3.18%, non-interest income of approximately $220 million, and expenses around $520 million. Deposit beta assumptions for rate cuts range from 30% to 35%, and discussions on M&A focus on institutions west of the Rockies with $2 billion–$15 billion in assets.