First Hawaiian's Q4 2024: Contradictions in Loan Growth, Deposit Dynamics, and Fee Income

These are the key contradictions discussed in First Hawaiian's latest 2024Q4 earnings call, specifically including: Loan Growth Expectations, Deposit Growth Dynamics, Loan Growth and Deposit Trends, and Fee Income Expectations:



Loan and Deposit Growth:
- First Hawaiian reported loan growth of $167 million, or 1.2%, in Q4, driven by increases in CRE and C&I, particularly from Hawaiian companies.
- The deposit performance was strong, with a $324 million increase in total retail and commercial deposits, including $175 million in demand deposits.
- This growth was driven by proactive pricing actions and successful deposit gathering, especially in demand deposits.

Net Interest Income (NII) and Margin Expansion:
- Net interest income increased by $2.1 million to $158.8 million in Q4, with a linked quarter increase of 8 basis points in net interest margin to 3.03%.
- The NII growth was attributed to an 8 basis points NIM expansion driven by favorable deposit mix changes and rate outperformance.
- The company expects ongoing NIM expansion throughout 2025, driven by fixed rate paydowns and maturities in the loan book and cash flows from securities.

Credit Quality and Risk Management:
- First Hawaiian maintained strong credit quality, with net charge-offs year-to-date at $13.6 million and a net charge-off rate of 10 basis points.
- Credit risk remains low, with no broad signs of weakness across consumer or commercial books, and stable classified assets.
- The bank is closely monitoring its CRE exposure, and credit performance remains strong, with a provision release in the Maui portfolio.

Share Repurchase and Capital Allocation:
- The company repurchased 1.5 million shares in Q4, utilizing its entire $40 million stock authorization for 2024, with authorization for $100 million in 2025.
- Share repurchases are expected to be opportunistic, depending on loan growth and debt reduction opportunities.
- The securities restructuring, which improved portfolio yield by 309 basis points, is expected to increase net interest income by $8.6 million in 2025.