First Hawaiian shares fell 3.0% after earnings, with credit deterioration likely weighing on investors: net charge-offs reached 60 basis points, and criticized assets rose 72 basis points, largely due to CRE downgrades. NII and margin improved, but the quarter also included a sizable office-loan charge-off and higher provision expense.
- Net interest income was $174.1 million, up $3.1 million from the prior quarter; net interest margin increased 5 basis points to 3.30%.
- Deposits grew about $50 million and the total cost of deposits fell 3 basis points; the noninterest-bearing deposit ratio was 32%.
- Net charge-offs were $21.9 million, or 60 basis points of loans and leases, including a $12.5 million partial charge-off on a participated Seattle office loan. Year-to-date annualized net charge-offs were 29 basis points.
- Criticized assets increased 72 basis points, primarily from four non-office CRE loan downgrades. Provision was $20.3 million, and the allowance for credit losses declined $4 million to $164 million.
- Total loans fell $115 million, mainly due to unexpected CRE payoffs, lower dealer floor-plan balances and residential-loan runoff. The bank said it still expects the acquisition to close this quarter.
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