First Hawaiian (FHB) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $61.5 million, or $0.48 per diluted share, flat sequentially and up 6% year-over-year, with stable earnings and strong credit quality.

• Net interest income rose to $156.7 million, up $3.9 million from the prior quarter, with margin expanding to 2.95%.

• Noninterest income increased to $53.3 million, driven by higher card fees, BOLI income, and service charges.

• Expenses were well controlled, with a $3.8 million tax reserve release offsetting higher noninterest expense; efficiency ratio was 59.8%.

• The Board declared a $0.26 per share dividend, payable November 29, 2024.

Financial highlights

• Net interest margin improved to 2.95%, up 3 basis points sequentially.

• Noninterest expense increased to $126.1 million, mainly from higher salaries, equipment, and other costs.

• Allowance for credit losses was $163.7 million, or 1.15% of total loans and leases.

• Efficiency ratio was 59.77% for Q3 2024.

• Return on average assets was 1.02%; return on average tangible common equity was 15.35%.

Outlook and guidance

• Net interest margin expected to decline modestly in Q4, settling around 2.9%.

• Full-year loan growth projected to be relatively flat due to Q3 payoffs, but the Q4 pipeline remains strong.

• Expense growth rate expected to normalize and align with industry averages, lower than the 5.5-6% seen in recent years.

• Management expects continued resilience in Hawaii's economy but notes uncertainty from Maui wildfires and macroeconomic factors.

• Share repurchases to resume in Q4, with a $40 million authorization for 2024, though no shares were repurchased as of September 30, 2024.