First Hawaiian navigates margin pressure with robust deposit and loan expansion

First Hawaiian (NASDAQ:FHB) delivered a resilient performance for the first quarter of 2026, as the islands' largest lender leveraged strong organic growth in its deposit base and lending portfolio to offset a slight tightening in interest margins.

The Honolulu-based bank reported first-quarter net income of $67.8 million, or $0.55 per diluted share.

The results highlight the continued stability of the Hawaiian economy, with total assets reaching $24.3 billion as of March 31, 2026.

Despite a highly competitive landscape for funding, the bank added $261.7 million in total deposits during the quarter, bringing its total deposit base to $20.8 billion.

Lending activity also remained a bright spot, with gross loans increasing by $128.3 million sequentially to $14.4 billion.

The growth was primarily driven by a recovery in commercial and industrial activity across the state.

However, the bank was not entirely immune to broader industry pressures; net interest margin (NIM) compressed by 2 basis points to 3.19%, reflecting the rising cost of maintaining a high-quality deposit franchise in a "higher-for-longer" rate environment.

Efficiency remains a focus for management as the efficiency ratio rose to 57.8%, up from the previous quarter, largely due to ongoing investments in digital infrastructure and personnel.

On the credit front, the bank remained conservative, recording a $5 million provision for credit losses, while maintaining an overall healthy asset quality profile.