First Hawaiian CRE Charge-Off Lifts Provision

The Tip Desk · October 24, 2026 · 3 min read

The Hawaii bank booked a $20.3 million credit-loss provision, including a $12.5 million partial charge-off on a single commercial real estate loan, as net interest income reached $174.1 million.

First Hawaiian, Inc. (FHB), the Honolulu-based bank holding company, recorded a $20.3 million provision for credit losses in the third quarter of 2026, up from $5.6 million in the second quarter, after a $12.5 million partial charge-off on a single commercial real estate loan and other CRE downgrades.

Net charge-offs were $21.9 million, or 0.60% of average loans and leases on an annualized basis, versus $4.1 million, or 0.11%, in the prior quarter. The allowance for credit losses fell to $164.4 million, or 1.14% of loans, from $168.1 million, or 1.15%, as the charge-off and provision outpaced reserve build. Non-performing assets rose to $46.0 million, or 0.32% of loans and other real estate owned, from $39.5 million, or 0.27%.

Net interest income was $174.1 million, up $3.1 million from $171.0 million in the second quarter. The net interest margin widened 5 basis points to 3.30% from 3.25%. Interest-bearing deposit costs declined to a 1.72% average rate from 1.75%, while the loan yield held at 5.30%.

Gross loans and leases decreased $115.1 million to $14.5 billion after a $136.5 million increase in the second quarter. Average loans were essentially unchanged at $14.50 billion. Total deposits increased $50.4 million to $20.2 billion after a $623.2 million decline in the prior quarter. Average deposits were $20.41 billion. Chairman, President and Chief Executive Officer Bob Harrison said deposit growth in a competitive market reflected customer relationships and that the balance sheet is well positioned to benefit from rising interest rates.

Noninterest income was $56.1 million, down $4.2 million from $60.3 million. Bank-owned life insurance fell to $4.7 million from $7.1 million and other income to $2.4 million from $6.0 million. Credit and debit card fees were $15.7 million and other service charges and fees $15.4 million.

Noninterest expense rose $29.6 million to $160.0 million, including $24.3 million from an agreement to settle tax liabilities resulting from the 2016 corporate reorganization and $6.7 million of merger-related costs. The efficiency ratio widened to 69.2% from 56.2%. The effective tax rate was -27.8% after a $31.0 million income tax benefit from the same settlement, versus 22.9% in the second quarter.

Net income was $63.7 million, or $0.52 a share, compared with $73.4 million, or $0.60 a share, in the second quarter.

Common equity tier 1 capital rose to 13.50% from 13.27% and total capital to 14.74% from 14.52%. The company did not repurchase shares in the quarter. The board declared a quarterly cash dividend of $0.26 a share, payable November 27, 2026.

Harrison said the company is preparing for the Tri Counties Bank acquisition and is focused on growth opportunities ahead. First Hawaiian and TriCo Bancshares agreed in July to an all-stock combination expected to create a franchise of about $34 billion of assets, with closing targeted by the end of 2026 subject to regulatory and shareholder approvals.