Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net interest income increased versus the prior quarter, driven by declining deposit costs and investment portfolio restructuring.
- Retail deposits increased by $105 million, indicating strong customer relationships and growth.
- Credit quality remained excellent with low credit risk and stable metrics.
- The bank maintained a strong balance sheet with ample liquidity and capital, supporting customer needs.
- First Hawaiian Inc (FHB, Financial) repurchased approximately 974,000 shares, reflecting confidence in the company's financial position.
Negative Points
- Total loans declined by $115 million, primarily due to commercial real estate loan payoffs.
- Total deposits declined slightly, with commercial deposits falling by $167 million.
- Increased macroeconomic uncertainty led to a $10.5 million provision for credit losses.
- The company faces uncertainties related to international arrivals and consumer confidence, impacting the local economy.
- The competitive landscape for deposits remains challenging, with limited room to further reduce deposit costs.
Q & A Highlights
Q: Can you provide insights into the loan pipeline and the factors affecting the decline in commercial real estate loans?
A: Robert Harrison, CEO: Average loans for the quarter were up over Q4, with the decline primarily due to normal fluctuations such as dealer paydowns and some payoffs. The pipeline remains strong, but market uncertainty is increasing. We anticipate opportunities for growth, although the back half of the year remains uncertain.
Q: How is the competitive landscape affecting deposit costs, and what leverage do you have to reduce these costs further?
A: James Moses, CFO: We expect to continue reducing deposit costs as rates decline, although the pace may decelerate. Our focus on full relationships and operating accounts limits further reductions. Retail deposits increased by $100 million, indicating strong customer relationships.
Q: What is the outlook for expenses this year, and are there any significant projects or investments planned?
A: James Moses, CFO: We plan to invest in our business and people, with expenses expected to ramp up over the year. We are committed to staying within our guidance, and any additional projects will depend on the certainty of the outlook. Previous large tech investments allow us to maintain current guidance.
Q: How are tariffs and potential higher pricing for imported cars affecting the dealer floor plan business?
A: Robert Harrison, CEO: Our dealers are adept at adjusting to market changes, as seen during COVID. While there is uncertainty regarding tariffs, we are comfortable with the credit quality of our dealers. The impact on balances will depend on how tariffs are implemented and manufacturers' responses.
Q: What are your expectations for loan growth in the second quarter and the full year?
A: Robert Harrison, CEO: We maintain our guidance for low to mid-single-digit growth for the full year, despite uncertainties. The second quarter's growth is harder to predict due to market conditions, but there are deals in the pipeline. We remain optimistic about achieving our targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
