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First Hawaiian Reports Q3 Net Income Surge, Expects Loan Stability

FHB's net income soared in Q3. Despite loan decline, the bank expects stability and strong performance for the rest of the year.

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First Hawaiian Reports Q3 Net Income Surge, Expects Loan Stability

First Hawaiian, Inc. (FHB) has reported a significant increase in net income for the third quarter of 2025, driven by higher net interest and noninterest income. The bank's total deposits grew, and credit risk remained low, despite a decline in total loans.

Net interest income for the quarter was $169.3 million, up $5.7 million from the prior quarter, with a net interest margin of 3.19%, an increase of 8 basis points. This growth was partially offset by a higher effective tax rate, which returned to a more normalized 23.2% after a prior quarter benefit from a change in California tax law. CEO Robert Harrison attributed the increase to this normalization.

Total deposits increased about $500 million in the third quarter, with a $135 million rise in commercial deposits and a $430 million increase in public deposits, but a $43 million decline in retail deposits. The company expects loan balances and total deposits to be roughly flat at the end of the year, with anticipated seasonal increases in retail and commercial deposits offset by outflows in public deposits.

Noninterest income reached $57.1 million, with management setting a normalized quarterly run rate of $54 million. The normalized run rate for noninterest income is expected to be about $54 million per quarter, and full-year expenses are now anticipated to come in below the previously forecasted $506 million. Credit risk remains low and stable, with quarter-to-date net charge-offs of $4.2 million and year-to-date net charge-offs of $11.3 million.

Total loans declined by $223 million, primarily in C&I, due to a $146 million drop in dealer flooring and $130 million in paydowns by Hawaii corporate borrowers. However, the company projects 'strong originations so far in the fourth quarter and expect to end the year about flat to year-end 2024'.

First Hawaiian, Inc. has shown strong financial performance in the third quarter of 2025, with increased net interest and noninterest income. Despite a decline in total loans, the bank expects loan balances and total deposits to remain stable by the end of the year. With low credit risk and a normalized effective tax rate, the bank is well-positioned for the remainder of the year.

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