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FIRST HAWAIIAN, INC.

FIRST HAWAIIAN, INC.FHB财报

Nasdaq · 金融 · 国有商业银行

First Hawaiian, Inc. is a bank holding company headquartered in Honolulu, Hawaiʻi. Its principal subsidiary, First Hawaiian Bank, founded in 1858, is Hawaiʻi’s oldest and largest financial institution headquartered in Honolulu at the First Hawaiian Center. The bank has 57 branches throughout Hawaiʻi, three in Guam and one in Saipan. It offers banking services to consumer and commercial customers, including deposit products, lending services and wealth management, insurance, private banking an...

What changed in FIRST HAWAIIAN, INC.'s 10-K — 2024 vs 2025

Top changes in FIRST HAWAIIAN, INC.'s 2025 10-K

410 paragraphs added · 468 removed · 355 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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As a bank holding company, FHI is subject to oversight by the Federal Reserve. In particular, the dividend policies and share repurchases of the Company are reviewed by the Federal Reserve and will be assessed against, among other things, the FHI’s ability to achieve the required capital ratios under applicable capital rules (including the applicable capital conservation buffer).
As a bank holding company, FHI is subject to oversight by the Federal Reserve. In particular, the dividend policies and share repurchases of the Company are reviewed by the Federal Reserve and will be assessed against, among other things, FHI’s ability to achieve the required capital ratios under applicable capital rules (including the applicable capital conservation buffer).
Our innovative talent development and employee learning courses are woven into our strategy and corporate culture. As of the date of this report, we offer 12 leadership development programs in total and over 20,000 professional development courses for employees through an Online Learning Center.
Our innovative talent development and employee learning courses are woven into our strategy and corporate culture. As of the date of this report, we offer 10 leadership development programs in total and over 20,000 professional development courses for employees through an Online Learning Center.
The Company will continue to monitor and take measures that it considers to be appropriate to protect the safety and health of its employees. Our Products and Services The Bank is a full-service community bank focused on building relationships with our customers.
The Company will continue to monitor and take measures that it considers to be appropriate to protect the safety and health of its employees. Our Products and Services The Bank is a community bank focused on building relationships with our customers.
Through ongoing employee development, fostering a diverse and inclusive workforce and a focus on health, safety and employee wellbeing, we strive to help our employees in all aspects of their lives. We believe our relationship with our employees to be generally good.
Through ongoing employee development, fostering an inclusive workforce and a focus on health, safety and employee wellbeing, we strive to help our employees in all aspects of their lives. We believe our relationship with our employees to be generally good.
In addition, if any IDI subsidiary of a financial holding company fails to maintain a CRA rating of at least “Satisfactory,” the financial holding company will be subject to restrictions on certain new activities and acquisitions. 4 Table of Contents FHB is a Federal Deposit Insurance Corporation (the “FDIC”) insured bank chartered under the laws of the State of Hawaii.
In addition, if any IDI subsidiary of a financial holding company fails to maintain a CRA rating of at least “Satisfactory,” the financial holding company will be subject to restrictions on certain new activities and acquisitions. FHB is a Federal Deposit Insurance Corporation (the “FDIC”) insured bank chartered under the laws of the State of Hawaii.
Health, Safety and Wellness We recognize that each employee’s benefit needs may differ and have designed our benefits program to be flexible. We offer healthcare options for employees aimed at reducing out-of-pocket costs. Additionally, the Bank utilizes plexiglass barriers and provides hand-sanitizing stations within our facilities.
Health, Safety and Wellness We recognize that each employee’s benefit needs may differ and have designed our benefits program to be flexible. We offer healthcare options for employees aimed at reducing out-of-pocket costs. Additionally, the Bank provides hand-sanitizing stations within our facilities.
The special assessments will be collected at an annual rate of approximately 13.4 basis points per year (3.36 basis points per quarter) over eight quarters in 2024 and 2025, with the first assessment period beginning January 1, 2024.
The special assessments were to be collected at an annual rate of approximately 13.4 basis points per year (3.36 basis points per quarter) over eight quarters in 2024 and 2025, with the first assessment period beginning January 1, 2024.
Financial Statements and Supplementary Data for more information. Human Capital Resources ​ As of December 31, 2024, we had over 2,000 employees, which included full time employees, part time employees and temporary employees, primarily located in our key markets of Hawaii, Guam and Saipan. As of December 31, 2024, the average tenure of employees at our Company is 11.8 years.
Financial Statements and Supplementary Data for more information. Human Capital Resources ​ As of December 31, 2025, we had over 2,000 employees, which included full time employees, part time employees and temporary employees, primarily located in our key markets of Hawaii, Guam and Saipan. As of December 31, 2025, the average tenure of employees at our Company is 11.7 years.
These three principles are incorporated into the proposed joint compensation regulations under the Dodd-Frank Act, discussed below. During 2016, the federal bank regulatory agencies and the SEC proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion of total assets.
These three principles are incorporated into the proposed joint compensation regulations under the Dodd-Frank Act, discussed below. During 2016, the federal bank regulatory agencies and the SEC proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion of total assets. These proposed rules have not been finalized.
ITEM 1. BUSINESS ​ General ​ First Hawaiian, Inc. (“FHI” or the “Parent”), a bank holding company, owns 100% of the outstanding common stock of First Hawaiian Bank (“FHB” or the “Bank”). References to “we,” “our,” “us,” or the “Company” refer to the Parent and its wholly-owned subsidiary, FHB, for purposes of discussion in this Annual Report on Form 10-K.
(“FHI” or the “Parent”), a bank holding company, owns 100% of the outstanding common stock of First Hawaiian Bank (“FHB” or the “Bank”). References to “we,” “our,” “us,” or the “Company” refer to the Parent and its wholly-owned subsidiary, FHB, for purposes of discussion in this Annual Report on Form 10-K.
These proposed rules have not been finalized. 15 Table of Contents In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including NASDAQ, to require policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding a required accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including NASDAQ, to require policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding a required accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
We operate our business through three operating segments: Retail Banking, Commercial Banking and Treasury and Other. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) – Analysis of Business Segments” and “Note 22. Reportable Operating Segments” in the notes to the consolidated financial statements included in Item 8.
We operate our business through two operating segments: Retail Banking and Commercial Banking. All other activities, including Treasury, are reported in Corporate/Other. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) – Analysis of Business Segments” and “Note 22. Reportable Operating Segments” in the notes to the consolidated financial statements included in Item 8.
As of December 31, 2024, the Bank met all capital ratio requirements to be well-capitalized with both a CET1 capital ratio and a Tier 1 capital ratio of 12.71%, total capital ratio of 13.90% and Tier 1 leverage ratio of 9.08%, in each case calculated under the Capital Rules. 9 Table of Contents The FDIA’s prompt corrective action provisions apply only to depository institutions such as the Bank, and not to bank holding companies.
As of December 31, 2025, the Bank met all capital ratio requirements to be well-capitalized with both a CET1 capital ratio and a Tier 1 capital ratio of 13.10%, total capital ratio of 14.35% and Tier 1 leverage ratio of 9.22%, in each case calculated under the Capital Rules. 9 Table of Contents The FDIA’s prompt corrective action provisions apply only to depository institutions such as the Bank, and not to bank holding companies.
As of December 31, 2024, the Company’s CET1 capital ratio and Tier 1 capital ratio were each 12.80%, its total capital ratio was 13.99%, and its Tier 1 leverage ratio was 9.14%, in each case calculated under the Capital Rules. For more information on the Company’s and the Bank’s capital ratios, see “Item 7.
As of December 31, 2025, the Company’s CET1 capital ratio and Tier 1 capital ratio were each 13.17%, its total capital ratio was 14.42%, and its Tier 1 leverage ratio was 9.27%, in each case calculated under the Capital Rules. For more information on the Company’s and the Bank’s capital ratios, see “Item 7.
However, the revised capital requirements of the proposed rule would not apply to FHI or the Bank because they have less than $100 billion in total consolidated assets and trading assets and liabilities below the threshold for market risk requirements.
However, the revised capital requirements of the proposed rule would not apply to FHI or the Bank because they have less than $100 billion in total consolidated assets and trading assets and liabilities below the threshold for market risk requirements. The federal banking regulators have indicated that they expect to issue a revised proposal in 2026.
On April 1, 2016, BNPP effected a series of reorganization transactions (“Reorganization Transactions”), as a part of which we amended our certificate of incorporation to change our name to First Hawaiian, Inc., with First Hawaiian Bank remaining our only direct wholly owned subsidiary. In February 2019, BNPP fully exited its ownership position in FHI common stock.
On April 1, 2016, BNPP effected a series of reorganization transactions (“Reorganization Transactions”), as a part of which we amended our certificate of incorporation to change our name to First Hawaiian, Inc., with First Hawaiian Bank remaining our only direct wholly owned subsidiary.
As of December 31, 2024, FHB is the largest full-service bank headquartered in Hawaii as measured by assets, loans and net income. As of December 31, 2024, we had $23.8 billion of assets, $14.4 billion of gross loans and leases and $2.6 billion of stockholders’ equity.
As of December 31, 2025, FHB is the largest bank headquartered in Hawaii as measured by loans and leases and net income. As of December 31, 2025, we had $14.3 billion of gross loans and leases and $2.8 billion of stockholders’ equity.
The FDIA establishes five capital categories (“well-capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized” and “critically undercapitalized”). The federal bank regulators are required to take certain mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to institutions that are undercapitalized, significantly undercapitalized or critically undercapitalized, with supervisory actions progressively becoming more severe as the institution’s capital category declines.
The federal bank regulators are required to take certain mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to institutions that are undercapitalized, significantly undercapitalized or critically undercapitalized, with supervisory actions progressively becoming more severe as the institution’s capital category declines.
In October 2023, the Federal Reserve proposed amendments to its rules on interchange fees. Interchange fees, or “swipe” fees, are charges that merchants pay to card-issuing banks, such as FHB, for processing electronic payment transactions.
In October 2023, the Federal Reserve proposed amendments to its rules on interchange fees. Interchange fees, or “swipe” fees, are charges that merchants pay to card-issuing banks, such as FHB, for processing electronic payment transactions. If adopted as proposed, the proposed rule would lower the maximum permissible interchange fee that issuers may collect.
We generated $230.1 million of net income or diluted earnings per share of $1.79 for the year ended December 31, 2024. Through the Bank, we operate a network of 48 branches in Hawaii (44 branches), Guam (3 branches) and Saipan (1 branch).
We generated $276.3 million of net income or diluted earnings per share of $2.20 for the year ended December 31, 2025. Through the Bank, we operate a network of 49 branches in Hawaii (45 branches), Guam (3 branches) and Saipan (1 branch).
The FDIC estimated in approving the rule that those assessed losses total approximately $16.3 billion. The rule provides that this loss estimate will be periodically adjusted, which will affect the amount of the special assessment. As of September 30, 2024, the FDIC’s total loss estimate was $24.1 billion, of which $18.9 billion will be recovered through the special assessment.
The FDIC estimated in approving the rule that those assessed losses total approximately $16.3 billion. The rule provides that this loss estimate will be periodically adjusted, which will affect the amount of the special assessment.
Subject to prior approval by the Commissioner of the Hawaii DFI and by the DCCA Insurance Division, the Bank may also permissibly engage in activities related to a trust business, activities relating to insurance and annuities and any activity permissible for a national banking association. 5 Table of Contents Hawaii law also imposes restrictions on the Bank’s activities and corporate governance requirements intended to ensure the safety and soundness of the Bank.
Subject to prior approval by the Commissioner of the Hawaii DFI and by the DCCA Insurance Division, the Bank may also permissibly engage in activities related to a trust business, activities relating to insurance and annuities and any activity permissible for a national banking association.
Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these requirements. 14 Table of Contents In August 2024, Financial Crimes Enforcement Network (“FinCEN”), which drafts and enforces regulations implementing the BSA and other anti-money laundering legislation, adopted a rule extending anti-money laundering obligations, including maintenance of an anti-money laundering program and filing certain reports with FinCEN, to registered investment advisers.
In August 2024, Financial Crimes Enforcement Network (“FinCEN”), which drafts and enforces regulations implementing the BSA and other anti-money laundering legislation, adopted a rule extending anti-money laundering obligations, including maintenance of an anti-money laundering program and filing certain reports with FinCEN, to registered investment advisers.
FHB is also registered as a municipal securities advisor with the Municipal Securities Rulemaking Board (“MSRB”) and the SEC and is subject to the disclosure and regulatory requirements of the MSRB and the SEC.
Bishop Street Capital Management Corporation is subject to the disclosure and regulatory requirements of the Investment Advisers Act of 1940, as administered by the SEC. FHB is also registered as a municipal securities advisor with the Municipal Securities Rulemaking Board (“MSRB”) and the SEC and is subject to the disclosure and regulatory requirements of the MSRB and the SEC.
FHB is also restricted under the Hawaii Code to investing in certain types of investments and is generally limited in the amount of money it can lend to a single borrower or invest in securities issued by a single issuer (in each case, 20% of FHB’s common stock and additional paid-in capital).
FHB is also restricted under the Hawaii Code to investing in certain types of investments and is generally limited in the amount of money it can lend to a single borrower or invest in securities issued by a single issuer (in each case, 20% of FHB’s common stock and additional paid-in capital). 5 Table of Contents Acquisitions by Bank Holding Companies The BHC Act, the Bank Merger Act, the Hawaii Code and other federal and state statutes regulate acquisitions of bank holding companies, banks and other FDIC-insured depository institutions.
The priorities include corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking, and proliferation financing. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. Office of Foreign Assets Control (“OFAC”) Regulation The U.S.
Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. 14 Table of Contents Office of Foreign Assets Control (“OFAC”) Regulation The U.S.
The final rule is currently enjoined as to the plaintiff trade associations while a federal court considers a lawsuit challenging the rule. 13 Table of Contents Financial Privacy and Cybersecurity The federal bank regulators have adopted rules under the Gramm-Leach-Bliley Act of 1999 limiting the ability of banks and other financial institutions to disclose non-public information about consumers to unaffiliated third parties.
Financial Privacy and Cybersecurity The federal bank regulators have adopted rules under the Gramm-Leach-Bliley Act of 1999 limiting the ability of banks and other financial institutions to disclose non-public information about consumers to unaffiliated third parties.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls victim to this type of cyberattack. The Bank has adopted an information security program that has been approved by its board of directors and reviewed by its regulators.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls victim to this type of cyberattack.
In addition, as the owner of a Hawaii-chartered bank, FHI is registered as a financial institution holding company under the Hawaii Code of Financial Institutions (the “Hawaii Code”) and is subject to the registration, reporting and examination requirements of the Hawaii Code, as well as supervision and examination by the Hawaii DFI.
In addition, as the owner of a Hawaii-chartered bank, FHI is registered as a financial institution holding company under the Hawaii Code of Financial Institutions (the “Hawaii Code”) and is subject to the registration, reporting and examination requirements of the Hawaii Code, as well as supervision and examination by the Hawaii DFI. 4 Table of Contents The Company offers certain insurance, investment and trust products through FHB and its subsidiary, Bishop Street Capital Management Corporation, a registered investment adviser with the SEC.
Competition We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets. We compete with commercial banks, savings banks, credit unions, non-bank financial services companies and other financial institutions operating within or near the areas we serve.
Competition We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets.
Compliance with these requirements is required beginning on January 1, 2026. In January 2021, the Anti-Money Laundering Act of 2020 (“AMLA”), which amends the BSA, was enacted. The AMLA is intended to comprehensively reform and modernize U.S. anti-money laundering laws.
In December 2025, FinCEN delayed the effective date of the rule to January 1, 2028 in part to allow FinCEN to review the rule. In January 2021, the Anti-Money Laundering Act of 2020 (“AMLA”), which amends the BSA, was enacted. The AMLA is intended to comprehensively reform and modernize U.S. anti-money laundering laws.
Supervision and Regulation We are subject to extensive regulation under federal and state banking laws that establish a comprehensive framework for our operations.
In February 2019, BNPP fully exited its ownership position in FHI common stock. 3 Table of Contents Supervision and Regulation We are subject to extensive regulation under federal and state banking laws that establish a comprehensive framework for our operations.
For example, the Hawaii Code requires that at least one of the directors of the Bank, as well as the Chief Executive Officer of the Bank, be residents of the State of Hawaii.
Hawaii law also imposes restrictions on the Bank’s activities and corporate governance requirements intended to ensure the safety and soundness of the Bank. For example, the Hawaii Code requires that at least one of the directors of the Bank, as well as the Chief Executive Officer of the Bank, be residents of the State of Hawaii.
In November 2021, the federal bank regulatory agencies issued a final rule regarding notification requirements for banking organizations related to significant computer security incidents.
The Bank has adopted an information security program that has been approved by its board of directors and reviewed by its regulators. 13 Table of Contents In November 2021, the federal bank regulatory agencies issued a final rule regarding notification requirements for banking organizations related to significant computer security incidents.
In June 2024, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate. 11 Table of Contents The Volcker Rule The Dodd-Frank Act and the implementing regulations of the federal regulators generally prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds (the “Volcker Rule”).
In December 2025, the FDIC reduced the rate at which the assessment is collected for the eighth quarter of the collection period, with an invoice payment date of March 30, 2026, from 3.36 basis points to 2.97 basis points. 11 Table of Contents The Volcker Rule The Dodd-Frank Act and the implementing regulations of the federal regulators generally prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds (the “Volcker Rule”).
State regulation of financial products and potential enforcement actions could also adversely affect the Company’s business, financial condition or results of operations.
The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards than established by federal law. State regulation of financial products and potential enforcement actions could also adversely affect the Company’s business, financial condition or results of operations.
The Federal Reserve has indicated that it expects to work with the other federal banking regulators in 2025 on a revised proposal. Prompt Corrective Action Framework The FDIA requires the federal bank regulators to take prompt corrective action in respect of depository institutions that fail to meet specified capital requirements.
Prompt Corrective Action Framework The FDIA requires the federal bank regulators to take prompt corrective action in respect of depository institutions that fail to meet specified capital requirements. The FDIA establishes five capital categories (“well-capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized” and “critically undercapitalized”).
Climate-Related and Other ESG Developments In recent years, federal, state and international lawmakers and regulators have increased their focus on financial institutions’ and other companies’ risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance (“ESG”) matters.
The Company’s clawback policy adopted in accordance with these listing standards is incorporated by reference to this annual report on Form 10-K as Exhibit 97.1. 15 Table of Contents Climate-Related and Other ESG Developments In recent years, certain lawmakers and regulators in and outside the United States have increased their focus on financial institutions’ and other companies’ risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance (“ESG”) matters.
In addition, the Company’s ability to continue to compete effectively also depends on its ability to attract new employees and retain and motivate existing employees, while managing compensation and other costs. 3 Table of Contents Organizational History and Structure In August 2016, FHI completed our initial public offering (“IPO”), and shares of FHI’s common stock began trading on the NASDAQ Global Select Market (“NASDAQ”) under the ticker symbol “FHB”.
Organizational History and Structure In August 2016, FHI completed our initial public offering (“IPO”), and shares of FHI’s common stock began trading on the NASDAQ Global Select Market (“NASDAQ”) under the ticker symbol “FHB”. Prior to our IPO, we were an indirect wholly owned subsidiary of BNP Paribas (“BNPP”), a global financial institution based in France.
Additionally, certain large banks headquartered on the U.S. mainland and large community banking institutions target the same customers we do.
We compete with commercial banks, savings banks, credit unions, non-bank financial services companies, insurance companies, other financial institutions, money market funds, hedge funds, and private equity and credit firms operating within or near the areas we serve. Additionally, certain large banks headquartered on the U.S. mainland and large community banking institutions target the same customers we do.
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Committed to Equal Opportunity By promoting a workforce that we believe is reflective of our customers and communities, we believe that we may better understand the financial needs of our customers and provide them with relevant financial service products.
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ITEM 1. BUSINESS ​ The disclosures set forth in this item are qualified by Item 1a. Risk Factors and the section captioned “Cautionary Note Regarding Forward-Looking Statements” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and other cautionary statements set forth elsewhere in this report. ​ General ​ First Hawaiian, Inc.
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First Hawaiian Bank is an equal opportunity and affirmative action employer, committed to provide equal employment opportunities to all employees and applicants for employment in accordance with applicable federal, state and local laws.
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Competition among providers of financial products and services continues to increase, with consumers and businesses having the opportunity to select from a growing variety of traditional and nontraditional alternatives, such as Private Credit/Direct lenders.
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As of the date of this report, the FHI Board of Directors includes four women, representing 40% of directors, and seven ethnically diverse individuals, representing 70% of directors. As of December 31, 2024, 62% of our employees were women, 57% of all management positions were held by women, and 87% of our workforce were ethnically diverse.
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In addition, the Company’s ability to continue to compete effectively also depends on its ability to attract new employees and retain and motivate existing employees, while managing compensation and other costs.
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Prior to our IPO, we were an indirect wholly owned subsidiary of BNP Paribas (“BNPP”), a global financial institution based in France.
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During 2025, the CFPB reduced its staff by over 80%. The reduction in force is the subject of litigation, and the staffing cuts are currently stayed pending the federal circuit court’s en banc rehearing of the case. The impact of these developments on banking organizations subject to CFPB regulation and supervision, including the Company, is uncertain.
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The Company offers certain insurance, investment and trust products through FHB and its subsidiary, Bishop Street Capital Management Corporation, a registered investment adviser with the SEC. Bishop Street Capital Management Corporation is subject to the disclosure and regulatory requirements of the Investment Advisers Act of 1940, as administered by the SEC.
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States and state attorneys general may increase regulatory, investigative and enforcement activity with respect to consumer protection, in response to changes in regulation, supervision and enforcement of consumer protection laws by federal regulators.
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Acquisitions by Bank Holding Companies The BHC Act, the Bank Merger Act, the Hawaii Code and other federal and state statutes regulate acquisitions of bank holding companies, banks and other FDIC-insured depository institutions.
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Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these requirements.
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Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC retains the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis.
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The priorities include corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking, and proliferation financing.
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The current interchange fee limitations establish a maximum possible fee for many types of debit interchange transactions that is equal to no more than 21 cents per transaction plus five basis points multiplied by the value of the transaction.
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For example, several states have enacted or proposed statutes or regulations addressing climate change and other ESG issues.
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The proposed changes would establish a maximum permissible interchange fee of no more than 14.4 cents per transaction plus four basis points multiplied by the value of the transaction. The current rules allow a debit card issuer to recover one cent per transaction for fraud prevention purposes if the issuer complies with certain fraud-related requirements.
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On the other hand, certain states have enacted or proposed “anti-ESG” statutes or regulations that prohibit financial institutions from denying or canceling products or services to a person, or otherwise discriminating against a person in making available products or services, on the basis of social credit scores and certain other factors.
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Under the proposed changes, the fraud prevention adjustment would be increased to 1.3 cents per transaction. The proposed rule would also establish an automatic update of the interchange fee cap every other year based on a survey of debit card issuers.
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Additionally, in August 2025, President Trump signed Executive Order 14331, “Guaranteeing Fair Banking Access for All Americans,” which states that it is the policy of the United States that no American should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views.
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On December 12, 2024, the CFPB finalized a rule that significantly reforms the regulatory framework governing overdraft practices applicable to banks that have more than $10 billion in assets, which will become effective on October 1, 2025. The rule modifies or eliminates several long-standing exclusions from requirements generally applicable to consumer credit that previously exempted certain overdraft practices.
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The Executive Order directs the Treasury Secretary and federal banking regulators to address politicized or unlawful debanking activities.
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The rule also generally requires banks to restructure many overdraft fees, overdraft lines of credit, and other overdraft practices as separate consumer credit accounts that would be subject to those requirements.
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These changes to the regulatory framework could result in FHB, among other things, facing higher compliance costs in charging overdraft fees, experiencing a decreased ability to recover amounts extended as overdraft protection, reducing the availability of overdraft protection, and/or charging lower overdraft fees. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards.
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In October 2023, the OCC, the Federal Reserve and the FDIC jointly issued a final rule to modernize the federal bank regulators’ regulations implementing the CRA. The final rule introduces new tests under which the performance of banks with over $2 billion in assets will be assessed.
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The new rule also includes data collection and reporting requirements, some of which are applicable only to banks with over $10 billion in assets, such as the Bank. Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027.
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The Company’s clawback policy adopted in accordance with these listing standards is incorporated by reference to this annual report on Form 10-K as Exhibit 97.1.
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For example, in March 2024, the SEC finalized a rule requiring public issuers to provide certain climate-related disclosures in their SEC filings beginning in 2026 with respect to fiscal year 2025 for large accelerated filers like us. The rule is currently stayed by the SEC pending the completion of judicial review of litigation challenging the rule.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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If our actual or perceived action or inaction in response to these climate change-related risks are, or are perceived to be, ineffective or insufficient, or if we participate in, or decide not to participate in, certain industries or activities perceived to be associated with causing or exacerbating climate change, we could be subject to enforcement and other supervisory or government actions, reputational damage, a loss of customer or investor confidence, difficulty retaining or attracting talented employees, or other harm. ​ We may be subject to unexpected income tax liabilities in connection with the Reorganization Transactions.
If our actual or perceived action or inaction in response to these climate change-related risks are, or are perceived to be, ineffective or insufficient, or if we participate in, or decide not to participate in, certain industries or activities perceived to be associated with causing or exacerbating climate-related risks, we could be subject to enforcement and other supervisory or government actions, reputational damage, a loss of customer or investor confidence, difficulty retaining or attracting talented employees, or other harm. ​ We may be subject to unexpected income tax liabilities in connection with the Reorganization Transactions.
BWHI is required to pay us for any unexpected income tax liabilities that arise in connection with the Reorganization Transactions.
BWHI is required to pay us for any unexpected income tax liabilities that arise in connection with the Reorganization Transactions.
Fintechs have and may continue to offer bank or bank-like products. For example, a number of fintechs have applied for, and in some cases received, bank or industrial loan charters. In addition, other fintechs have partnered with existing banks to allow them to offer deposit products to their customers.
Fintechs have and may continue to offer bank or bank-like products. For example, a number of fintechs have applied for, and in some cases received, bank or industrial loan charters. Other fintechs have partnered with existing banks to allow them to offer deposit products to their customers.
Our real estate loans consist primarily of residential loans, including home equity loans (representing 37% of our total loan and lease portfolio) and commercial and construction loans (representing 37% of our total loan and lease portfolio), with the significant majority of these loans concentrated in Hawaii.
Our real estate loans consist primarily of residential loans, including home equity loans (representing 37% of our total loan and lease portfolio) and commercial and construction loans (representing 38% of our total loan and lease portfolio), with the significant majority of these loans concentrated in Hawaii.
Our business, results of operations or competitive position may be adversely affected as a result. ​ 35 Table of Contents Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities. ​ Our business is subject to increased litigation and regulatory risks as a result of a number of factors, including the highly regulated nature of the financial services industry and the focus of civil government attorneys on banks and the financial services industry generally, and in particular practices and requirements, including foreclosure practices, applicable consumer protection laws, classification of held for sale assets and compliance with anti-money laundering statutes, the Bank Secrecy Act and sanctions administered by OFAC.
Our business, results of operations or competitive position may be adversely affected as a result. ​ Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities. ​ Our business is subject to increased litigation and regulatory risks as a result of a number of factors, including the highly regulated nature of the financial services industry and the focus of civil government attorneys on banks and the financial services industry generally, and in particular practices and requirements, including foreclosure practices, applicable consumer protection laws, classification of held for sale assets and compliance with anti-money laundering statutes, the Bank Secrecy Act and sanctions administered by OFAC.
As a result, these events may contribute to a deterioration in Hawaii’s general economic condition, which, as a result of our geographic concentration, could adversely impact us and our borrowers. ​ Commercial lending represents approximately 56% of our total loan and lease portfolio as of December 31, 2024, and we generally make loans to small to mid-sized businesses whose financial performance depends on the regional economy.
As a result, these events may contribute to a deterioration in Hawaii’s general economic condition, which, as a result of our geographic concentration, could adversely impact us and our borrowers. ​ Commercial lending represents approximately 56% of our total loan and lease portfolio as of December 31, 2025, and we generally make loans to small to mid-sized businesses whose financial performance depends on the regional economy.
A severe downturn in the economy generally, in our markets specifically or affecting the business and assets of individual customers would generate increased charge-offs and a need for higher reserves. While we believe that our ACL was adequate as of December 31, 2024, there is no assurance that it will be sufficient to cover all incurred credit losses.
A severe downturn in the economy generally, in our markets specifically or affecting the business and assets of individual customers would generate increased charge-offs and a need for higher reserves. While we believe that our ACL was adequate as of December 31, 2025, there is no assurance that it will be sufficient to cover all incurred credit losses.
Further, evolving cyber threats, including as a result of the increased use of artificial intelligence (“AI”) by cybercriminals may increase the frequency and severity of cybersecurity attacks against us or our service providers and others on whom we rely. 26 Table of Contents ​ We also face risks related to cyberattacks and other security breaches in connection with credit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties, including merchant acquiring banks, payment processors, payment card networks and our processors.
Further, evolving cyber threats, including as a result of the increased use of artificial intelligence (“AI”) by cybercriminals may increase the frequency and severity of cybersecurity attacks against us or our service providers and others on whom we rely. ​ We also face risks related to cyberattacks and other security breaches in connection with credit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties, including merchant acquiring banks, payment processors, payment card networks and our processors.
Some of our non-bank competitors are not subject to the same extensive regulations we are, and, as a result, may be able to compete more effectively for business. In particular, the activity of private creditors and other financial technology companies (“fintechs”) has grown significantly over recent years and is expected to continue to grow.
Some of our competitors are not subject to the same extensive regulations we are, and, as a result, may be able to compete more effectively for business. In particular, the activity of private creditors and other financial technology companies (“fintechs”) has grown significantly over recent years and is expected to continue to grow.
Additionally, we may not be able to ensure that our third-party vendors have appropriate controls in place to protect the confidentiality of the information they receive from us and our business, financial condition or results of operations could be adversely affected by a material breach of, or disruption to, the security of any of our or our vendors’ systems. ​ Because the investigation of any information security breach is inherently unpredictable and would require substantial time to complete, the Company may not be able to quickly remediate the consequences of any breach, which may increase the costs, and enhance the negative consequences associated with a breach.
Additionally, we may not be able to ensure that our third-party vendors have appropriate controls in place to protect the confidentiality of the information they receive from us and our business, financial condition or results of operations could be adversely affected by a material breach of, or disruption to, the security of any of our or our vendors’ systems. ​ 27 Table of Contents Because the investigation of any information security breach is inherently unpredictable and would require substantial time to complete, the Company may not be able to quickly remediate the consequences of any breach, which may increase the costs, and enhance the negative consequences associated with a breach.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us, which could have a material adverse effect on our business, financial condition or results of operations. ​ Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities. ​ We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us, which could have a material adverse effect on our business, financial condition or results of operations. ​ 36 Table of Contents Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities. ​ We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations. ​ 37 Table of Contents Differences in regulation can affect our ability to compete effectively. ​ The content and application of laws and regulations applicable to financial institutions vary according to the size of the institution, the jurisdictions in which the institution is organized and operates and other factors.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations. ​ Differences in regulation can affect our ability to compete effectively. ​ The content and application of laws and regulations applicable to financial institutions vary according to the size of the institution, the jurisdictions in which the institution is organized and operates and other factors.
Our techniques for managing the risks we face may not fully mitigate the risk exposure in all economic or market environments, including exposure to risks that we might fail to identify or anticipate. 25 Table of Contents ​ We are dependent on the use of data and modeling both in our management decision-making generally and in meeting regulatory expectations in particular. ​ The use of statistical and quantitative models and other quantitatively-based analyses is central to bank decision-making and regulatory compliance processes, and the employment of such analyses is becoming increasingly widespread in our operations.
Our techniques for managing the risks we face may not fully mitigate the risk exposure in all economic or market environments, including exposure to risks that we might fail to identify or anticipate. ​ We are dependent on the use of data and modeling both in our management decision-making generally and in meeting regulatory expectations in particular. ​ The use of statistical and quantitative models and other quantitatively-based analyses is central to bank decision-making and regulatory compliance processes, and the employment of such analyses is becoming increasingly widespread in our operations.
While it is not currently clear how and how quickly these trends may develop, any one or more of them could adversely affect the key role of dealers and their business models, profitability, and viability, and if this were to occur, our dealer-centric automotive finance businesses could suffer as well. ​ Our share of commercial wholesale financing remains at risk of decreasing in the future as a result of intense competition and other factors.
While it is not currently clear how and how quickly these trends may develop, any one or more of them could adversely affect the key role of dealers and their business models, profitability, and viability, and if this were to occur, our dealer-centric automotive finance businesses could suffer as well. ​ 32 Table of Contents Our share of commercial wholesale financing remains at risk of decreasing in the future as a result of intense competition and other factors.
General market fluctuations, industry factors and general economic and political conditions and events — such as economic slowdowns or recessions, interest rate changes or credit loss trends — could also cause our stock price to decrease regardless of operating results. ​ 41 Table of Contents Future sales and issuances of our common stock, including sales as part of our equity-based compensation plans, could result in dilution of the percentage ownership of our stockholders and could lower our stock price. ​ The market price of our common stock could decline as a result of sales of a large number of shares of our common stock or from the perception that such sales could occur.
General market fluctuations, industry factors and general economic and political conditions and events — such as economic slowdowns or recessions, interest rate changes or credit loss trends — could also cause our stock price to decrease regardless of operating results. ​ Future sales and issuances of our common stock, including sales as part of our equity-based compensation plans, could result in dilution of the percentage ownership of our stockholders and could lower our stock price. ​ The market price of our common stock could decline as a result of sales of a large number of shares of our common stock or from the perception that such sales could occur.
This could have a material adverse effect on our business, financial condition or results of operations. ​ The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition or results of operations. ​ As a financial institution, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure, loss or misuse of our information or our clients’ information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation.
This could have a material adverse effect on our business, financial condition or results of operations. ​ 26 Table of Contents The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition or results of operations. ​ As a financial institution, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure, loss or misuse of our information or our clients’ information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation.
For a discussion of the expected impact of accounting pronouncements recently issued but not adopted by us as of December 31, 2024, see “Note 1. Organization and Summary of Significant Accounting Policies – Recent Accounting Pronouncements” in the notes to the consolidated financial statements included in Item 8.
For a discussion of the expected impact of accounting pronouncements recently issued but not adopted by us as of December 31, 2025, see “Note 1. Organization and Summary of Significant Accounting Policies – Recent Accounting Pronouncements” in the notes to the consolidated financial statements included in Item 8.
Other provisions of federal, state or local tax law may establish similar liability for other matters, including laws governing tax qualified pension plans, as well as other contingent liabilities. ​ Risks Related to Our Common Stock ​ Our stock price may be volatile, and you could lose part or all of your investment as a result. ​ Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive.
Other provisions of federal, state or local tax law may establish similar liability for other matters, including laws governing tax qualified pension plans, as well as other contingent liabilities. ​ 40 Table of Contents Risks Related to Our Common Stock ​ Our stock price may be volatile, and you could lose part or all of your investment as a result. ​ Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive.
The loss of the services of any senior executive or other key personnel, the inability to recruit and retain qualified personnel in the future or the failure to develop and implement a viable succession plan, could have a material adverse effect on our business, financial condition or results of operations. ​ If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses. ​ In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to material risks, such as credit, operational, legal and reputational risks.
The loss of the services of any senior executive or other key personnel, the inability to recruit and retain qualified personnel in the future or the failure to develop and implement a viable succession plan, could have a material adverse effect on our business, financial condition or results of operations. ​ 25 Table of Contents If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses. ​ In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to material risks, such as credit, operational and legal risks.
Either of these results may adversely impact demand for our products and services or otherwise have a material adverse effect on our business, financial condition or results of operations. ​ Other Risks Affecting Our Business . ​ Severe weather, hurricanes, tsunamis, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business. ​ Severe weather, hurricanes, tsunamis, natural disasters, widespread disease or pandemics or other severe health emergencies, or concerns over the possibility of such an emergency, acts of war or terrorism or other adverse external events could have a significant impact on our business.
Either of these results may adversely impact demand for our products and services or otherwise have a material adverse effect on our business, financial condition or results of operations. ​ 38 Table of Contents Other Risks Affecting Our Business . ​ Severe weather, hurricanes, tsunamis, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business. ​ Severe weather, hurricanes, tsunamis, natural disasters, widespread disease or pandemics or other severe health emergencies, or concerns over the possibility of such an emergency, acts of war or terrorism or other adverse external events could have a significant impact on our business.
In addition to the following summary, you should consider the other information set forth in this “Risk Factors” section and the other information contained in this report before investing in our securities. ​ Market Risks • Our business may be adversely affected by conditions in the financial markets and economic conditions generally and in Hawaii, Guam and Saipan in particular. • Inflationary pressures could pose a risk to the economy and the financial performance of the Bank. • Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate. • Our business is subject to risk arising from conditions in the commercial real estate market. • Concentrated exposures to certain asset classes and individual obligors may unfavorably impact our operations. • Our business is subject to interest rate risk and fluctuations in interest rates may adversely affect our earnings. • The value of the investment securities we own may decline in the future. ​ Credit Risks • Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold. • We might underestimate the credit losses inherent in our loan and lease portfolio and have credit losses in excess of the amount we reserve for loan and lease losses. ​ Liquidity Risks • Loss of deposits could increase our funding costs. • Our liquidity is dependent on dividends from First Hawaiian Bank. ​ Operational Risks • Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation. • We may not be able to attract and retain key personnel and other skilled employees. • If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses. • We are dependent on the use of data and modeling both in our management decision-making generally and in meeting regulatory expectations in particular. • The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, other real estate owned (“OREO”) and repossessed personal property may not accurately describe the net value of the asset. • The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition or results of operations. • The development and use of AI present risks and challenges that may adversely impact our business. • Employee misconduct or mistakes could expose us to significant legal liability and reputational harm. • We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions. • Consumer protection initiatives related to the foreclosure process could materially affect our ability as a creditor to obtain remedies. • We are subject to a variety of risks in connection with any sale of loans we may conduct. • Our operations could be interrupted if certain external vendors on which we rely experience difficulty, terminate their services or fail to comply with banking laws and regulations. • We depend on the accuracy and completeness of information about customers and counterparties. • Our accounting estimates and risk management processes and controls rely on analytical and forecasting techniques and models and assumptions, and actual results may differ from these estimates. • Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition. ​ 17 Table of Contents Strategic Risks • Geographic concentration in our existing markets may unfavorably impact our operations. • We operate in a highly competitive industry and market area. • New lines of business, products, product enhancements or services may subject us to additional risks. • We have dealer-centric automotive finance businesses, and a change in the key role of dealers within the automotive industry or our ability to maintain or build relationships with them could have an adverse effect on our business, results of operations, financial condition, or prospects. • We continually encounter technological change. ​ Legal, Regulatory and Compliance Risks • The banking industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a significant adverse effect on our operations. • Fee revenues from overdraft protection programs constitute a portion of our noninterest income and may be subject to increased supervisory scrutiny. • We are required to act as a source of financial and managerial strength for our bank in times of stress. • We are subject to capital adequacy requirements and may be subject to more stringent capital requirements. • We may not pay dividends on our common stock in the future. • Rulemaking changes implemented by the CFPB have in the past resulted and may in the future result in higher regulatory and compliance costs that may adversely affect our results of operations. • Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities. • Increases in FDIC insurance premiums may adversely affect our earnings. • Non-compliance with the USA PATRIOT Act, the Bank Secrecy Act or other laws and regulations could result in fines or sanctions against us. • Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities. • Differences in regulation can affect our ability to compete effectively. • Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention. • We are subject to environmental liability risk associated with our bank branches and any real estate collateral we acquire upon foreclosure. • We may be subject to litigation risk pertaining to our fiduciary responsibilities. ​ Other Risks Affecting Our Business • Severe weather, hurricanes, tsunamis, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business. • Climate change could have a material negative impact on us and our customers. • We may be subject to unexpected income tax liabilities in connection with the Reorganization Transactions.
In addition to the following summary, you should consider the other information set forth in this “Risk Factors” section and the other information contained in this report before investing in our securities. ​ Market Risks • Our business may be adversely affected by conditions in the financial markets and economic conditions generally and in Hawaii, Guam and Saipan in particular. • Inflationary pressures could pose a risk to the economy and the financial performance of the Bank. • Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate. • Our business is subject to risk arising from conditions in the commercial real estate market. • Concentrated exposures to certain asset classes and individual obligors may unfavorably impact our operations. • Our business is subject to interest rate risk and fluctuations in interest rates may adversely affect our earnings. • The value of the investment securities we own may decline in the future. • Impairment of goodwill may adversely impact future results of operations. ​ Credit Risks • Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold. • We might underestimate the credit losses inherent in our loan and lease portfolio and have credit losses in excess of the amount we reserve for loan and lease losses. ​ Liquidity Risks • Loss of deposits could increase our funding costs. • Our liquidity is dependent on dividends from First Hawaiian Bank. ​ Operational Risks • Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation. • We may not be able to attract and retain key personnel and other skilled employees. • If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses. • We are dependent on the use of data and modeling both in our management decision-making generally and in meeting regulatory expectations in particular. • The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, other real estate owned (“OREO”) and repossessed personal property may not accurately describe the net value of the asset. • The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition or results of operations. • The development and use of AI present risks and challenges that may adversely impact our business. • Employee misconduct or mistakes could expose us to significant legal liability and reputational harm. • We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions. • Consumer protection initiatives related to the foreclosure process could materially affect our ability as a creditor to obtain remedies. • We are subject to a variety of risks in connection with any sale of loans we may conduct. • Our operations could be interrupted if certain external vendors on which we rely experience difficulty, terminate their services or fail to comply with banking laws and regulations. • We depend on the accuracy and completeness of information about customers and counterparties. • Our accounting estimates and risk management processes and controls rely on analytical and forecasting techniques and models and assumptions, and actual results may differ from these estimates. • Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition. ​ 17 Table of Contents Strategic Risks • Geographic concentration in our existing markets may unfavorably impact our operations. • We operate in a highly competitive industry and market area. • New lines of business, products, product enhancements or services may subject us to additional risks. • We have dealer-centric automotive finance businesses, and a change in the key role of dealers within the automotive industry or our ability to maintain or build relationships with them could have an adverse effect on our business, results of operations, financial condition, or prospects. • We continually encounter technological change. ​ Legal, Regulatory and Compliance Risks • The banking industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a significant adverse effect on our operations. • We are required to act as a source of financial and managerial strength for our bank in times of stress. • We are subject to capital adequacy requirements and may be subject to more stringent capital requirements. • We may not pay dividends on our common stock in the future. • Rulemaking changes implemented by the CFPB have in the past resulted and may in the future result in higher regulatory and compliance costs that may adversely affect our results of operations. • Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities. • Increases in FDIC insurance premiums may adversely affect our earnings. • Non-compliance with the USA PATRIOT Act, the Bank Secrecy Act or other laws and regulations could result in fines or sanctions against us. • Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities. • Differences in regulation can affect our ability to compete effectively. • Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention. • We are subject to environmental liability risk associated with our bank branches and any real estate collateral we acquire upon foreclosure. • We may be subject to litigation risk pertaining to our fiduciary responsibilities. ​ Other Risks Affecting Our Business • Severe weather, hurricanes, tsunamis, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business. • Climate-related physical and transition risks could have a material negative impact on us and our customers, and divergent and evolving laws and regulations and stakeholder expectations regarding climate-related matters may subject us to additional, different and potentially conflicting requirements and expectations and result in higher regulatory and compliance and other risks and costs. • We may be subject to unexpected income tax liabilities in connection with the Reorganization Transactions.
The level of the ACL reflects management’s continuing evaluation of specific credit risks, the quality of the loan and lease portfolio, the value of the underlying collateral, the level of non-accruing loans and leases, the unidentified losses inherent in the current loan and lease portfolio, and economic, political and regulatory conditions. ​ For our commercial loans, we perform an internal loan review and grade loans on an ongoing basis, and we estimate and establish reserves for credit risks and credit losses inherent in our credit exposure (including unfunded lending commitments).
The level of the ACL reflects management’s continuing evaluation of specific credit risks, the quality of the loan and lease portfolio, the value of the underlying collateral, the level of non-accruing loans and leases, the unidentified losses inherent in the current loan and lease portfolio, and economic, political and regulatory conditions. ​ 23 Table of Contents For our commercial loans, we perform an internal loan review and grade loans on an ongoing basis, and we estimate and establish reserves for credit risks and credit losses inherent in our credit exposure (including unfunded lending commitments).
In addition, to the extent the Company’s insurance covers aspects of any breach, such insurance may not be sufficient to cover all of the Company’s losses. ​ 27 Table of Contents The development and use of AI present risks and challenges that may adversely impact our business. ​ We and/or our third-party vendors, clients or counterparties have in the past developed or incorporated, and may in the future develop or incorporate AI technology in certain business processes, services or products.
In addition, to the extent the Company’s insurance covers aspects of any breach, such insurance may not be sufficient to cover all of the Company’s losses. ​ The development and use of AI present risks and challenges that may adversely impact our business. ​ We and/or our third-party vendors, clients or counterparties have in the past developed or incorporated, and may in the future develop or incorporate AI technology in certain business processes, services or products.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition or results of operations. ​ 38 Table of Contents We may be subject to litigation risk pertaining to our fiduciary responsibilities. ​ Some of the services we provide, such as trust and investment services, require us to act as fiduciaries for our customers and others.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition or results of operations. ​ We may be subject to litigation risk pertaining to our fiduciary responsibilities. ​ Some of the services we provide, such as trust and investment services, require us to act as fiduciaries for our customers and others.
The inability to receive dividends from the Bank could have a material adverse effect on our business, financial condition, liquidity or results of operations. ​ 24 Table of Contents Operational Risks ​ Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation. ​ As the parent company of Hawaii’s oldest and largest bank, we rely in part on our bank’s reputation for superior financial services to retain our customer relationships.
The inability to receive dividends from the Bank could have a material adverse effect on our business, financial condition, liquidity or results of operations. ​ Operational Risks ​ Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation. ​ As the parent company of Hawaii’s oldest and largest bank, we rely in part on our bank’s reputation for superior financial services to retain our customer relationships.
Our inability to manage our growth successfully or to continue to expand into new markets could have a material adverse effect on our business, financial condition or results of operations. ​ We operate in a highly competitive industry and market area. ​ We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets.
Our inability to manage our growth successfully or to continue to expand into new markets could have a material adverse effect on our business, financial condition or results of operations. ​ 31 Table of Contents We operate in a highly competitive industry and market area. ​ We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets.
In addition, a single event or issue may give rise to numerous and overlapping investigations and proceedings, including by multiple federal and state regulators and other governmental authorities. ​ In the normal course of business, from time to time, we may be named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our business activities.
In addition, a single event or issue may give rise to numerous and overlapping investigations and proceedings, including by multiple federal and state regulators and other governmental authorities. ​ 35 Table of Contents In the normal course of business, from time to time, we may be named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our business activities.
Any such withdrawals could result in higher funding costs for us as we lose a lower cost source of funding, and significant unanticipated withdrawals could materially and adversely affect our liquidity, financial condition, and results of operations. ​ Our liquidity is dependent on dividends from First Hawaiian Bank. ​ We are a legal entity separate and distinct from our banking and other subsidiaries.
Any such withdrawals could result in higher funding costs for us as we lose a lower cost source of funding, and significant unanticipated withdrawals could materially and adversely affect our liquidity, financial condition, and results of operations. ​ 24 Table of Contents Our liquidity is dependent on dividends from First Hawaiian Bank. ​ We are a legal entity separate and distinct from our banking and other subsidiaries.
Business — Supervision and Regulation — Deposit Insurance.” ​ 36 Table of Contents Non-compliance with the USA PATRIOT Act, the Bank Secrecy Act or other laws and regulations could result in fines or sanctions against us. ​ The USA PATRIOT Act of 2001 and the Bank Secrecy Act require financial institutions to design and implement programs to prevent financial institutions from being used for money laundering and terrorist activities.
Business — Supervision and Regulation — Deposit Insurance.” ​ Non-compliance with the USA PATRIOT Act, the Bank Secrecy Act or other laws and regulations could result in fines or sanctions against us. ​ The USA PATRIOT Act of 2001 and the Bank Secrecy Act require financial institutions to design and implement programs to prevent financial institutions from being used for money laundering and terrorist activities.
Furthermore, if we fail to offer interest in a sufficient amount to keep these deposits, our deposits may be reduced, which would require us to obtain funding in other ways or risk slowing our future asset growth. ​ The value of the investment securities we own may decline in the future. ​ As of December 31, 2024, we owned investment securities with a carrying value of $5.7 billion, which largely consisted of our positions in obligations of the U.S. government and government-sponsored enterprises.
Furthermore, if we fail to offer interest in a sufficient amount to keep these deposits, our deposits may be reduced, which would require us to obtain funding in other ways or risk slowing our future asset growth. ​ The value of the investment securities we own may decline in the future. ​ As of December 31, 2025, we owned investment securities with a carrying value of $5.6 billion, which largely consisted of our positions in obligations of the U.S. government and government-sponsored enterprises.
These adjustments could have a material adverse effect on our business, financial condition or results of operations. ​ 23 Table of Contents Liquidity Risks ​ Loss of deposits could increase our funding costs. ​ Like many banking companies, we rely on customer deposits to meet a considerable portion of our funding, and we continue to seek customer deposits to maintain this funding base.
These adjustments could have a material adverse effect on our business, financial condition or results of operations. ​ Liquidity Risks ​ Loss of deposits could increase our funding costs. ​ Like many banking companies, we rely on customer deposits to meet a considerable portion of our funding, and we continue to seek customer deposits to maintain this funding base.
There is also increased competition by out-of-market competitors through online and mobile channels. In addition, the emergence, adoption and evolution of new technologies that do not require intermediation, including distributed ledgers, as well as advances in automation, could significantly affect competition for financial services.
There is also increased competition by out-of-market competitors through online and mobile channels. 37 Table of Contents ​ In addition, the emergence, adoption and evolution of new technologies that do not require intermediation, including distributed ledgers, as well as advances in automation, could significantly affect competition for financial services.
Higher capital levels could also lower our return on equity. ​ We may not pay dividends on our common stock in the future. ​ Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments.
Higher capital levels could also lower our return on equity. ​ 34 Table of Contents We may not pay dividends on our common stock in the future. ​ Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments.
If this were to occur, our business, results of operations, financial condition, or prospects could be adversely affected. ​ 32 Table of Contents We continually encounter technological change. ​ The financial services industry is continually undergoing rapid technological change with frequent introductions of new, technology-driven products and services.
If this were to occur, our business, results of operations, financial condition, or prospects could be adversely affected. ​ We continually encounter technological change. ​ The financial services industry is continually undergoing rapid technological change with frequent introductions of new, technology-driven products and services.
These inflationary pressures could adversely impact our business, financial position and results of operations. ​ Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate. ​ As of December 31, 2024, our real estate loans represented approximately $10.7 billion, or 74% of our total loan and lease portfolio.
These inflationary pressures could adversely impact our business, financial position and results of operations. ​ Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate. ​ As of December 31, 2025, our real estate loans represented approximately $10.7 billion, or 75% of our total loan and lease portfolio.
Additionally, we have cultivated relationships with market leaders that result in relatively larger exposures to select single obligors than would be typical for an institution of our size in a larger operating market. For example, our top five dealer relationships represented approximately 39% of our outstanding dealer flooring commitments as of December 31, 2024.
Additionally, we have cultivated relationships with market leaders that result in relatively larger exposures to select single obligors than would be typical for an institution of our size in a larger operating market. For example, our top five dealer relationships represented approximately 40% of our outstanding dealer flooring commitments as of December 31, 2025.
Because of the uncertainty of estimates involved in these matters, we may be required to do one or more of the following: significantly increase the allowance for credit losses or sustain credit losses that are significantly higher than the reserve provided; reduce the carrying value of an asset measured at fair value; or significantly increase our accrued tax liability.
Because of the uncertainty of estimates involved in these matters, we may be required to do one or more of the following: significantly increase the allowance for credit losses or sustain credit losses that are significantly higher than the reserve provided; or reduce the carrying value of an asset measured at fair value.
Our failure to mitigate these risks effectively could have a material adverse effect on our business, financial condition or results of operations. 20 Table of Contents ​ Our business is subject to risk arising from conditions in the commercial real estate market. ​ As of December 31, 2024, our commercial real estate loans represented approximately $4.5 billion or 31% of our total loan and lease portfolio.
Our failure to mitigate these risks effectively could have a material adverse effect on our business, financial condition or results of operations. 20 Table of Contents ​ Our business is subject to risk arising from conditions in the commercial real estate market. ​ As of December 31, 2025, our commercial real estate loans represented approximately $4.6 billion or 32% of our total loan and lease portfolio.
We have not sought and will not seek any rulings from the IRS or state and local tax authorities regarding our expected tax treatment of the Reorganization Transactions. ​ 40 Table of Contents In addition, under the U.S.
We have not sought and will not seek any rulings from the IRS or state and local tax authorities regarding our expected tax treatment of the Reorganization Transactions. ​ In addition, under the U.S.
As our primary markets are located on islands in the Pacific Ocean, they may be particularly susceptible to certain of these risks or other risks resulting from climate change, including those relating to rising sea levels.
As our primary markets are located on islands in the Pacific Ocean, they may be particularly susceptible to certain of these risks or other climate-related risks, including those relating to rising sea levels.
New regulations or guidance, or the attitudes of regulators, shareholders and employees regarding climate change, may affect the activities in which the Company engages and the products that the Company offers.
New regulations or guidance, or the attitudes of regulators, shareholders and employees regarding climate-related matters, may affect the activities in which the Company engages and the products that the Company offers.
Our failure to comply with any applicable laws or regulations, or regulatory policies and interpretations of such laws and regulations, in some cases, even if such noncompliance was inadvertent, could result in sanctions by regulatory agencies, civil money penalties, related litigation by private plaintiffs, or damage to our reputation, all of which could have a material adverse effect our business, financial condition or results of operations. ​ 33 Table of Contents We expect that our business will remain subject to extensive regulation and supervision and that the level of scrutiny and the enforcement environment may fluctuate over time, based on numerous factors, including changes in the United States presidential administration or one or both houses of Congress and public sentiment regarding financial institutions (which can be influenced by scandals and other incidents that involve participants in the financial services industry).
Our failure to comply with any applicable laws or regulations, or regulatory policies and interpretations of such laws and regulations, in some cases, even if such noncompliance was inadvertent, could result in sanctions by regulatory agencies, civil money penalties, related litigation by private plaintiffs, or damage to our reputation, all of which could have a material adverse effect our business, financial condition or results of operations. ​ 33 Table of Contents We expect that our business will remain subject to extensive regulation and supervision and that the level of scrutiny and the enforcement environment may fluctuate over time, based on numerous factors, including changes in state and federal political bodies and public sentiment regarding financial institutions (which can be influenced by scandals and other incidents that involve participants in the financial services industry).
They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. These critical accounting policies include the allowance for credit losses, fair value measurements, pension and postretirement benefit obligations and income taxes.
They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. These critical accounting policies include the allowance for credit losses and fair value measurements.
Climate change presents multi-faceted risks, including (i) operational risk from the physical effects of climate events on our facilities and other assets as well as those of our customers; (ii) credit risk from borrowers with significant exposure to climate risk; (iii) legal, regulatory and compliance risks arising from the policy, legal and regulatory changes associated with the transition to a less carbon-dependent economy; and (iv) reputational risk from stakeholder concerns about our practices related to climate change, our carbon footprint and our decision to change or continue to maintain our business relationships with customers who operate in carbon-intensive industries, and from negative public opinion related to any of our actions or inaction in response to climate change and our climate change strategy. ​ 39 Table of Contents For instance, climate change exposes us and our customers to physical risk as its effects may lead to more frequent and more extreme weather events, such as prolonged droughts or flooding, tornados, hurricanes, wildfires and extreme seasonal weather; and longer-term shifts, such as increasing average temperatures, ozone depletion and rising sea levels.
Climate-related risks present multi-faceted risks, including (i) operational risk from the physical effects of climate events on our facilities and other assets as well as those of our customers; (ii) credit risk from borrowers with significant exposure to climate-related risks; (iii) legal, regulatory and compliance risks arising from the policy, legal and regulatory changes associated with the transition to a less carbon-dependent economy; and (iv) risk of harm to our brand from stakeholder concerns about our practices related to climate-related risks, our carbon footprint and our decision to change or continue to maintain our business relationships with customers who operate in carbon-intensive industries, and from negative public opinion related to any of our actual or perceived actions or inaction in response to climate-related risks and our climate strategy. ​ For instance, we and our customers are exposed to physical risk as its effects may lead to more frequent and more extreme weather events, such as prolonged droughts or flooding, tornados, hurricanes, wildfires and extreme seasonal weather; and longer-term shifts, such as increasing average temperatures, ozone depletion and rising sea levels.
These types of third-party relationships are subject to increasingly demanding regulatory requirements and attention by our federal bank regulators, as well as heightened supervisory expectations regarding our due diligence, ongoing monitoring and control over our third-party vendors and other ongoing third-party business relationships.
We also have substantial ongoing business relationships with other third parties. These types of third-party relationships are subject to increasingly demanding regulatory requirements and attention by our federal bank regulators, as well as heightened supervisory expectations regarding our due diligence, ongoing monitoring and control over our third-party vendors and other ongoing third-party business relationships.
Furthermore, we would be exposed to a great deal of uncertainty when recovering from such events, including the time it will take to rebuild physically and economically and the amounts of insurance coverage or government assistance available to our affected customers. ​ Climate change may also result in new and/or more stringent regulatory requirements for the Company, which could materially affect the Company’s results of operations by requiring the Company to take costly measures to comply with any new laws or regulations related to climate change that may be forthcoming.
Furthermore, we would be exposed to a great deal of uncertainty when recovering from such events, including the time it will take to rebuild physically and economically and the amounts of insurance coverage or government assistance available to our affected customers. ​ 39 Table of Contents The Company may also become subject to new and/or more stringent climate-related legal and regulatory requirements, which could materially affect the Company’s results of operations by requiring the Company to take costly measures to comply with any such laws or regulations.
Risks associated with climate change are continuing to evolve rapidly, making it difficult to assess the effects of climate change on the Company, and the Company expects that climate change-related risks will continue to evolve and increase over time.
Climate-related risks are continuing to evolve rapidly, making it difficult to assess the effects of such risks on the Company, and the Company expects that climate-related risks will continue to evolve and may increase over time.
We compete with commercial banks, savings banks, credit unions, non-bank financial services companies and other financial institutions operating within or near the areas we serve. Additionally, certain large banks headquartered on the U.S. mainland and large community banking institutions target the same customers we do.
We compete with commercial banks, savings banks, credit unions, non-bank financial services companies, insurance companies, other financial institutions, money market funds, hedge funds, and private equity and credit firms operating within or near the areas we serve. Additionally, certain large banks headquartered on the U.S. mainland and large community banking institutions target the same customers we do.
Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our business, financial condition or results of operations. ​ As of December 31, 2024, we had $7.0 billion of noninterest-bearing demand deposits and $13.3 billion of interest-bearing deposits.
Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our business, financial condition or results of operations. ​ As of December 31, 2025, we had $6.5 billion of noninterest-bearing demand deposits and $14.0 billion of interest-bearing deposits.
We accept deposits directly from consumer and commercial customers and, as of December 31, 2024, we had $20.3 billion in deposits.
We accept deposits directly from consumer and commercial customers and, as of December 31, 2025, we had $20.5 billion in deposits.
Recent political developments, including the new presidential administration in the U.S., have added additional uncertainty with respect to new laws or regulations or changes in the interpretations or enforcement of existing laws or regulations, including potential deregulation in some areas.
Changes in regulators and political bodies in the U.S. have added additional uncertainty with respect to new laws or regulations or changes in the interpretations or enforcement of existing laws or regulations, including potential deregulation in some areas.
If borrowers of variable rate loans are unable to afford higher interest payments, those borrowers may reduce or stop making payments, thereby causing us to incur losses and increased operational costs related to servicing a higher volume of delinquent loans.
Higher interest rates can also negatively affect the payment performance on loans that are linked to variable interest rates. If borrowers of variable rate loans are unable to afford higher interest payments, those borrowers may reduce or stop making payments, thereby causing us to incur losses and increased operational costs related to servicing a higher volume of delinquent loans.
Interest rates are volatile and highly sensitive to many factors that are beyond our control, such as economic conditions, inflationary trends, changes in government spending and debt issuances and policies of various governmental and regulatory agencies, and, in particular the monetary policy of the Federal Open Market Committee of the Federal Reserve System (the “FOMC”). ​ 21 Table of Contents Interest rates in the United States fell dramatically during the first quarter of 2020 and remained low through 2021, which adversely affected our net interest income.
Interest rates are volatile and highly sensitive to many factors that are beyond our control, such as economic conditions, inflationary trends, changes in government spending and debt issuances and policies of various governmental and regulatory agencies, and, in particular the monetary policy of the Federal Open Market Committee of the Federal Reserve System (the “FOMC”). ​ 21 Table of Contents Interest rates in the United States have been volatile in recent years.
Other regulation has reduced the regulatory burden of large bank holding companies, and raised the asset thresholds at which more onerous requirements apply, which could cause certain large bank holding companies with less than $250 billion in total consolidated assets, which were previously subject to more stringent enhanced prudential standards, to become more competitive or to pursue expansion more aggressively.
Regulatory changes may also make it easier for fintechs to partner with banks and offer deposit products. ​ Recent regulatory changes have reduced the regulatory burden of large bank holding companies, and raised the asset thresholds at which more onerous requirements apply, which could cause certain large bank holding companies with less than $250 billion in total consolidated assets, which were previously subject to more stringent enhanced prudential standards, to become more competitive or to pursue expansion more aggressively.
Given that we derive a portion of our income from leasing space in our principal office building and that a large concentration of our employees is located in our principal office building, depending on the intensity and longevity of the event, a catastrophic event impacting our Honolulu office building, including a terrorist attack, extreme weather event or other hostile or catastrophic event, could negatively affect our business and reputation and could have a material adverse effect on our business, financial condition or results of operations. ​ Climate change could have a material negative impact on us and our customers. ​ Our business, as well as the operations and activities of our customers, could be negatively impacted by climate change.
Given that we derive a portion of our income from leasing space in our principal office building and that a large concentration of our employees is located in our principal office building, depending on the intensity and longevity of the event, a catastrophic event impacting our Honolulu office building, including a terrorist attack, extreme weather event or other hostile or catastrophic event, could negatively affect our business and reputation and could have a material adverse effect on our business, financial condition or results of operations. ​ Climate-related physical and transition risks could have a material negative impact on us and our customers, and divergent and evolving laws and regulations and stakeholder expectations regarding climate-related matters may subject us to additional, different and potentially conflicting requirements and expectations and result in higher regulatory and compliance and other risks and costs. ​ Our business, as well as the operations and activities of our customers, could be negatively impacted by climate-related physical and transition risks.
Climate change presents both immediate and long-term risks to us and our customers and these risks are expected to increase over time.
Climate-related risks present both immediate and long-term risks to us and our customers and these risks may increase over time.
The recent change in U.S. presidential administration contributes to uncertainty concerning the future direction and spending of the U.S. government. ​ Other economic conditions that affect our financial performance include short-term and long-term interest rates, the prevailing yield curve, inflation and price levels (particularly for real estate), monetary policy, unemployment and the strength of the domestic economy as a whole.
Cuts to defense and other security spending could have an adverse impact on the economy in our markets. ​ Other economic conditions that affect our financial performance include short-term and long-term interest rates, the prevailing yield curve, inflation and price levels (particularly for real estate), monetary policy, unemployment and the strength of the domestic economy as a whole.
Higher commodity prices, labor shortages and supply chain disruptions, including those resulting from Russia’s ongoing invasion of Ukraine and the conflict in the Middle East, are also contributing to inflationary pressures, which could, in turn, adversely affect the U.S. economy, the demand for our products and creditworthiness of our borrowers.
Higher commodity prices, labor shortages and supply chain disruptions, have also contributed, and may in the future contribute, to inflationary pressures, which could, in turn, adversely affect the U.S. economy, the demand for our products and creditworthiness of our borrowers.
In recent years, commercial real estate markets have been experiencing substantial growth, and increased competitive pressures have contributed significantly to historically low capitalization rates and rising property values.
In recent years, commercial real estate markets have been experiencing substantial growth, and increased competitive pressures have contributed significantly to historically low capitalization rates and rising property values. Commercial real estate markets have been particularly impacted by a reduced demand for office space driven by the implications of hybrid work arrangements.
Evolving responses from federal and state governments and other regulators, and our customers or our third-party partners or vendors, to challenges such as climate change have impacted and could continue to impact the economic and political conditions under which we operate. ​ 19 Table of Contents In addition, federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government’s debt limit may increase the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States.
In addition, federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government’s debt limit may increase the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States.
However, higher interest rates can also lead to fewer originations of loans, less liquidity in the financial markets, and higher funding costs, each of which could adversely affect our revenues, liquidity and capital levels. Higher interest rates can also negatively affect the payment performance on loans that are linked to variable interest rates.
When interest rates rise, such as during 2022 and 2023, we can generally be expected to earn higher net interest income. However, higher interest rates can also lead to fewer originations of loans, less liquidity in the financial markets, and higher funding costs, each of which could adversely affect our revenues, liquidity and capital levels.
Our profitability depends upon our continued ability to compete successfully in our market area. ​ Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention. ​ We regularly use third-party vendors as part of our business. We also have substantial ongoing business relationships with other third parties.
Treasury Department and federal and state regulators to issue regulations on numerous topics to interpret and implement the statute, so the effect of the GENIUS Act will depend on what those regulations provide. ​ Our profitability depends upon our continued ability to compete successfully in our market area. ​ Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention. ​ We regularly use third-party vendors as part of our business.
We may not be able to compete successfully with other financial institutions in our markets, and we may have to pay higher interest rates to attract deposits, accept lower yields to attract loans and/or pay higher wages for new employees, which may result in lower net interest margins and reduced profitability. ​ 31 Table of Contents Many of our non-bank competitors are not subject to the same extensive regulations that govern our activities and may have greater flexibility in competing for business.
We may not be able to compete successfully with other firms competing in our markets, and we may have to pay higher interest rates to attract deposits, accept lower yields to attract loans and/or pay higher wages for new employees, which may result in lower net interest margins and reduced profitability. ​ New lines of business, products, product enhancements or services may subject us to additional risks. ​ From time to time, we may implement new lines of business or offer new products and product enhancements as well as new services within our existing lines of business.
Many of our investment securities are issued by the U.S. government and government agencies and sponsored entities.
Many of our investment securities are issued by the U.S. government and government agencies and sponsored entities. A prolonged or repeated shutdown of the U.S. federal government could adversely affect our business, financial condition, liquidity, and results of operations.
Additionally, significant unrealized losses could negatively impact market and/or customer perceptions of the Company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits. ​ 22 Table of Contents Credit Risks ​ Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold. ​ A number of our products expose us to credit risk.
Future evaluations of goodwill may result in the impairment and write-down of our goodwill balance which could have a material adverse impact on our earnings and adversely affect our operating results. ​ Credit Risks ​ Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold. ​ A number of our products expose us to credit risk.
Volatility and uncertainty related to inflation and the effects of inflation may enhance or contribute to some of the risks of our business. Higher cost could reduce our profit margins. Aggressive action by monetary authorities to combat inflation could lead to higher rates which could negatively affect economic growth.
Volatility and uncertainty related to inflation and the effects of inflation may enhance or contribute to some of the risks of our business, including through increasing costs, negatively affecting economic growth or impacting asset values or customer defaults. Higher rates could result in deposit outflows or higher deposit costs.
Once we register and issue these shares, their holders will be able to sell them in the public market, subject to applicable transfer restrictions. ​ We cannot predict the size of future issuances or sales of our common stock or the effect, if any, that future issuances or sales of shares of our common stock may have on the market price of our common stock.
We may increase the number of shares available for issuance pursuant to equity compensation plans from time to time, subject to stockholder approval. ​ We cannot predict the size of future issuances or sales of our common stock or the effect, if any, that future issuances or sales of shares of our common stock may have on the market price of our common stock.
A further downgrade, or downgrades by other rating agencies, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide. ​ Inflationary pressure could pose a risk to the economy and the financial performance of the Bank. ​ In recent periods, there have been significant changes in inflationary conditions due to, among other factors, global supply chain disruptions, changes in the labor market and geopolitical tensions.
In addition, disruptions to federal economic data releases or fiscal operations may create volatility in financial markets, affecting interest rates, liquidity conditions, and the valuation of securities in our investment portfolio. ​ Downgrades in sovereign credit ratings by other rating agencies, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide.
In addition, as supervisory expectations and industry practices regarding overdraft protection programs change, our continued offering of overdraft protection may result in negative public opinion and increased reputation risk. ​ 34 Table of Contents We are required to act as a source of financial and managerial strength for our bank in times of stress. ​ Under federal law, we are required to act as a source of financial and managerial strength to our bank, and to commit resources to support our bank if necessary.
Any of the foregoing could have a material adverse effect on our business, financial condition or results of operations. ​ We are required to act as a source of financial and managerial strength for our bank in times of stress. ​ Under federal law, we are required to act as a source of financial and managerial strength to our bank, and to commit resources to support our bank if necessary.
Commercial real estate markets have been particularly impacted by the economic disruption in recent years resulting from the COVID-19 pandemic and a reduced demand for office space driven by the implications of hybrid work arrangements. Accordingly, federal banking regulatory agencies have expressed concerns about weaknesses in the current commercial real estate market.
Accordingly, federal banking regulatory agencies have expressed concerns about weaknesses in the current commercial real estate market.
Removed
Cuts to defense and other security spending could have an adverse impact on the economy in our markets.
Added
Evolving responses from federal and state governments and other regulators, and our customers or our third-party partners or vendors, to challenges such as climate change have impacted and could continue to impact the economic and political conditions under which we operate. ​ 19 Table of Contents U.S. global trade policies, including the imposition of tariffs and uncertainty surrounding the resolution of trade disputes, or renewal of trade agreements, with various countries, may cause inflation to rise and ultimately affect interest rates.
Removed
As a result of uncertain domestic political conditions, including potential future federal government shutdowns, the possibility of the federal government defaulting on its obligations for a period of time due to debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose liquidity risks.
Added
A U.S. federal government shutdown may also impair the financial capacity of borrowers who depend on federal salaries, contracts, reimbursements, or benefit programs, including government employees, federal contractors, and recipients of government-funded services. Reduced or delayed income to these borrowers could increase delinquencies, reduce loan demand, negatively affect deposit inflows, and increase our credit risk exposure.
Removed
In connection with prior political disputes over U.S. fiscal and budgetary issues leading to the U.S. government shutdown in 2023, Fitch lowered its long term sovereign credit rating on the U.S. from AAA to AA+.
Added
Unfavorable changes related to these national economic and political conditions may also result in increased delinquencies and defaults among borrowers in light of economic uncertainty, which could require us to charge off a higher percentage of loans and increase the provision for credit losses, ultimately reducing our net income. ​ Inflationary pressures could pose a risk to the economy and the financial performance of the Bank. ​ In recent periods, there have been significant changes in inflationary conditions due to, among other factors, global supply chain disruptions, changes in the labor market and geopolitical tensions.
Removed
Higher rates could make less creditworthy customers less able to meet their payment obligations. Higher rates could also lead to reduced valuations on long duration financial assets and real estate and impact the value of collateral pledged for loans. Finally, higher rates could result in deposit outflows or higher deposit costs.
Added
Additionally, significant unrealized losses could negatively impact market and/or customer perceptions of the Company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits. 22 Table of Contents ​ Impairment of goodwill may adversely impact future results of operations. ​ Accounting standards require that we account for certain acquisitions using a method that could result in goodwill.
Removed
The Federal Reserve raised benchmark interest rates throughout 2022 and 2023 and held them at a high level in 2024 until it decreased the benchmark rate by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024.
Added
If the purchase price of the acquired company exceeds the fair value of the acquired net assets, the excess will be included in our consolidated balance sheet as goodwill. Goodwill was $995.5 million as of both December 31, 2025 and 2024. Our goodwill originated from the acquisition of the Company by BNPP in December of 2001.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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We also provide security awareness training for employees and contractors, maintain a cybersecurity insurance policy and invest in new security capabilities designed to address emerging threats. ​ In addition, the Company has a set of enterprise-wide policies, standards, and procedures concerning cybersecurity matters, which include an information security policy and program reviewed and approved by senior management and the Board of Directors.
We also provide security awareness training for employees and contractors, maintain a cybersecurity insurance policy and invest in new security capabilities designed to address emerging threats. ​ In addition, the Company has a set of enterprise-wide policies and procedures concerning cybersecurity matters, which include an information security policy and program reviewed and approved by senior management and the Board of Directors.
Policies and standards are subject to an internal review process and are approved by senior management. ​ The Company has strategically integrated cybersecurity risk management into our enterprise-wide risk management framework in alignment with the three lines of defense model to promote an enterprise-wide culture of cybersecurity risk management.
Policies are subject to an internal review process and are approved by senior management. ​ The Company has strategically integrated cybersecurity risk management into our enterprise-wide risk management framework in alignment with the three lines of defense model to promote an enterprise-wide culture of cybersecurity risk management.
The Risk Committee actively participates in strategic decisions related to cybersecurity, offering review and guidance on, among other things, program design, the Company’s cybersecurity risk profile and the effectiveness of its risk management strategies. ​ The Board Risk Committee reviews and receives regular briefings from the Chief Information Officer, Chief Information Security Officer (the “CISO”), Chief Technology Officer, Chief Operating Officer, Chief Risk Officer, Senior Vice President – Enterprise Information Security, Chief Audit Officer, and Chief Executive Officer on information security and technology risks, including discussions of the Company’s information security and cybersecurity risk management programs.
The Risk Committee actively participates in strategic decisions related to cybersecurity, offering review and guidance on, among other things, program design, the Company’s cybersecurity risk profile and the effectiveness of its risk management strategies. ​ The Board Risk Committee reviews and receives regular briefings from the Chief Risk Officer, Chief Administrative Officer (CAO), Senior Vice President – Enterprise Information Security, Senior Vice President – Technology Risk, and Chief Executive Officer on information security and technology risks, including discussions of the Company’s information security and cybersecurity risk management programs.
Additionally, technical standards and procedures related to incident response and use of Bank systems and devices are in place, as well as standards for critical security operational functions related to encryption, endpoint protection, vulnerability management, remote access, multifactor authentication, handling confidential information, use of internet, social media, email, and wireless devices.
Additionally, technical policies and procedures related to incident response and use of Bank systems and devices are in place, as well as policies for critical security operational functions related to encryption, endpoint protection, vulnerability management, remote access, multifactor authentication, handling confidential information, use of internet, social media, email, artificial intelligence (AI), and wireless devices.
The CISO facilitates communication across business lines to support effective and consistent information security risk identification and control infrastructure, maintaining an ongoing dialogue regarding emerging or potential cybersecurity risks, receiving updates on significant developments in the cybersecurity domain and ensuring that the Board’s oversight is proactive and responsive. ​ The CISO, Senior Vice President – Enterprise Information Security, and Vice President – Cyber Risk Governance regularly inform the Chief Executive Officer, the Chief Operating Officer, the Chief Risk Officer, the Chief Information Officer, the Chief Technology Officer, the Chief Compliance Officer, and the Chief Audit Officer of all concerns related to cybersecurity risks and incidents, including the status of projects to strengthen our information security systems, assessments of the information security program and the emerging threat landscape.
The CTO, CISO and CIO facilitate communication across business lines to support effective and consistent information security risk identification and control infrastructure, maintaining an ongoing dialogue regarding emerging or potential cybersecurity risks, receiving updates on significant developments in the cybersecurity domain and ensuring that the Board’s oversight is proactive and responsive. ​ Through various management committees (such as the Risk Committee and the Technology Committee), the CISO, Senior Vice President – Enterprise Information Security, and Senior Vice President – Technology Risk regularly inform the Chief Executive Officer, the Chief Risk Officer, the CAO, the Chief Compliance Officer, and the Chief Audit Officer of all concerns related to cybersecurity risks and incidents, including the status of projects to strengthen our information security systems, assessments of the information security program and the emerging threat landscape.
The Senior Vice President – Enterprise Information Security provides regular updates to senior management and the Board’s Risk Committee regarding the effectiveness of security controls and the state of the Company’s cybersecurity program and risk level. ​ 44 Table of Contents The Bank maintains a three lines of defense structure with the Cybersecurity Division as the primary security control owner, Enterprise Information Security providing review, assessment and challenge of risk management policies and processes, and an Internal Audit team providing independent review of the first and second lines of defense.
The Senior Vice President – Enterprise Information Security and Senior Vice President – Technology Risk provide regular updates to senior management and the Board’s Risk Committee regarding the effectiveness of security controls and the state of the Company’s cybersecurity, third-party and business continuity programs and risk level. ​ 44 Table of Contents The Bank maintains a three lines of defense structure, with the Enterprise Technology Management and Cybersecurity Division as the primary security control owner, the Chief Risk Officer’s oversight team (Enterprise Information Security and Technology Risk) providing review, assessment and challenge of risk management policies and processes, and an Internal Audit team providing independent review of the first and second lines of defense.
Additionally, we conduct multiple penetration tests annually and retain an external consultant to periodically evaluate the overall state of our program. ​ Overseeing Third-Party Risk ​ The Company has processes in place to oversee and manage risks associated with third-party service providers, including risks related to data breaches or other security incidents.
Additionally, we conduct annual penetration tests on our internal and cloud managed environments and retain an external consultant to periodically evaluate the overall maturity of our program. ​ Overseeing Third-Party Risk ​ The Company has processes in place to oversee and manage risks associated with third-party service providers, including risks related to data breaches or other security incidents.
The Board also receives regular reports on cybersecurity risks, vulnerabilities, incidents, staff security awareness training and overall progress to improve the Company’s cybersecurity risk profile. ​ Management’s Role in Managing Risk ​ Senior management is responsible for creating and recommending for approval to the Board of Directors risk appetite metrics related to cybersecurity, reflecting the aggregate levels and types of risk the Company is willing to accept in connection with the operation of our business and pursuit of our business objectives. ​ Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our CISO, our Vice President – Cyber Risk Governance and our Senior Vice President – Enterprise Information Security.
The Board also receives regular reports on cybersecurity risks, third-party programs, vulnerabilities, business continuity readiness, incidents, staff security awareness training and overall progress to improve the Company’s cybersecurity risk profile. ​ Management’s Role in Managing Risk ​ Senior management is responsible for creating and recommending for approval to the Board of Directors risk appetite metrics related to cybersecurity, reflecting the aggregate levels and types of risk the Company is willing to accept in connection with the operation of our business and pursuit of our business objectives. ​ Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our Chief Risk Officer and her oversight team.
The Senior Vice President – Enterprise Information Security has more than 30 years of experience at the Company and held various information technology and information security risk management roles, including serving as a bank information security officer, and has a bachelor’s degree and security certification. ​ The CISO is responsible for developing and implementing the Company’s cybersecurity and information security program, reporting on cybersecurity matters to the Board and senior management, ensuring compliance with standards, remediating known risks, overseeing incident detection and response and leading the employee cybersecurity awareness training program.
They include the Senior Vice President – Enterprise Information Security, who has more than 30 years of experience at the Company and has held various information technology and information security risk management roles, including serving as a bank information security officer, and holds a security certification through the Global Information Assurance Certification (GIAC).
Removed
The management team is highly experienced in cybersecurity matters. The CISO has over 20 years of experience in cybersecurity including working at a global bank and leading cybersecurity vendors, and holds Certified Information Systems Security Professional (“CISSP”) and Certified Information Privacy Professional certifications for security and privacy, respectively. The CISO has a bachelor’s, master’s, and law degrees.
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Also part of the oversight team is the Senior Vice President – Technology Risk, who has 23 years of executive leadership experience in global technology, cybersecurity, regulatory compliance, and operational resilience, including oversight of Technology Risk frameworks aligned with COBIT, COSO, NIST, PCI-DSS, and FFIEC standards, supported by advanced education and professional development and certifications in governance, risk, compliance, cybersecurity and anti-money laundering, reflecting deep experience managing complex risk environments within highly regulated institutions. ​ The Chief Information Security Officer (CISO) in conjunction with the CAO, Chief Technology Officer (CTO), and Chief Information Officer (CIO) are responsible for developing and implementing the Company’s cybersecurity, information security, and third-party programs, ensuring compliance with policies, remediating known risks, overseeing incident detection and response and leading the employee cybersecurity awareness training program.
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The Vice President – Cyber Risk Governance has advanced degrees and certifications related to cybersecurity and over 15 years of experience with the federal government in a similar role.
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The Vice President – Cyber Risk Governance is responsible for third party cybersecurity risk management and cybersecurity risk and controls governance.

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES ​ Our corporate headquarters and main branch are located at 999 Bishop Street, Honolulu, Hawaii 96813. Inclusive of our main branch, we operated 48 branch offices located on the islands of Oahu, Maui, Hawaii, Kauai, Guam and Saipan as of December 31, 2024.
ITEM 2. PROPERTIES ​ Our corporate headquarters and main branch are located at 999 Bishop Street, Honolulu, Hawaii 96813. Inclusive of our main branch, we operated 49 branch offices located on the islands of Oahu, Maui, Hawaii, Kauai, Guam and Saipan as of December 31, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Commitments and Contingent Liabilities” in the notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data. ​ ITEM 4. MINE SAFETY DISCLOSURES ​ Not applicable. ​ ​ 45 Table of Contents
Commitments and Contingent Liabilities” in the notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data. ​ ITEM 4. MINE SAFETY DISCLOSURES ​ Not applicable. ​ ​ 45 Table of Contents PART II ​

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Item 4. Mine Safety Disclosures 45 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 ​ Item 6. ​ Reserved 47 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 48 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91 Item 8.
Item 4. Mine Safety Disclosures 45 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 ​ Item 6. ​ Reserved 47 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 48 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 89 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The cumulative total return on each investment is as of December 31 of each subsequent five years and assumes reinvestment of dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2024 First Hawaiian, Inc.
The cumulative total return on each investment is as of December 31 of each subsequent five years and assumes reinvestment of dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ 2024 ​ 2025 First Hawaiian, Inc.
The graph assumes that $100 was invested at the closing price on December 31, 2019, in our common stock, the S&P 500 Index and the KRX.
The graph assumes that $100 was invested at the closing price on December 31, 2020, in our common stock, the S&P 500 Index and the KRX.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ FHI’s common stock is listed on the NASDAQ under the symbol “FHB” and is quoted daily in leading financial publications. ​ As of February 14, 2025, there were 22 common registered shareholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ FHI’s common stock is listed on the NASDAQ under the symbol “FHB” and is quoted daily in leading financial publications. ​ As of February 13, 2026, there were 19 common registered shareholders of record.
(2) On January 24, 2024, the Company announced a stock repurchase program for up to $40 million of its outstanding common stock during 2024. On December 31, 2024, the stock repurchase program for 2024 expired with nil remaining of the $40 million repurchase amount authorized.
(2) On December 31, 2025, the stock repurchase program for 2025 expired with nil remaining of the $100 million repurchase amount authorized. On January 28, 2026, the Company announced a stock repurchase program for up to $250 million of its outstanding common stock.
These holdings are considered to be held in “street name” through a bank, broker, or other intermediary and in the aggregate, are registered as a single shareholder of record. ​ Purchases of Equity Securities by the Issuer ​ The following table provides certain information with respect to our purchases of shares of the Company’s common stock during the three months ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Value of Shares ​ ​ Total Number ​ Average ​ as Part of Publicly ​ that May Yet Be ​ ​ of Shares ​ Price Paid ​ Announced Plans or ​ Purchased Under the Period ​ Purchased 1 ​ per Share ​ Programs 2 ​ Plans or Programs 2 October 1, 2024 through October 31, 2024 ​ - ​ $ - ​ - ​ $ 40,000,000 November 1, 2024 through November 30, 2024 ​ 735,063 ​ ​ 27.00 ​ 732,282 ​ ​ 20,222,090 December 1, 2024 through December 31, 2024 ​ 741,462 ​ ​ 27.28 ​ 741,294 ​ ​ - Total ​ 1,476,525 ​ $ 27.14 ​ 1,473,576 ​ ​ ​ (1) Includes 2,949 shares acquired from employees to satisfy income tax withholding requirements in connection with vested share awards during three months ended December 31, 2024.
These holdings are considered to be held in “street name” through a bank, broker, or other intermediary and in the aggregate, are registered as a single shareholder of record. ​ Purchases of Equity Securities by the Issuer ​ The following table provides certain information with respect to our purchases of shares of the Company’s common stock during the three months ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Value of Shares ​ ​ Total Number ​ Average ​ as Part of Publicly ​ that May Yet Be ​ ​ of Shares ​ Price Paid ​ Announced Plans or ​ Purchased Under the Period ​ Purchased 1 ​ per Share ​ Programs 2 ​ Plans or Programs 2 October 1, 2025 through October 31, 2025 ​ - ​ $ - ​ - ​ $ 25,959,135 November 1, 2025 through November 30, 2025 ​ 507,719 ​ ​ 24.55 ​ 506,000 ​ ​ 13,534,428 December 1, 2025 through December 31, 2025 ​ 534,167 ​ ​ 25.34 ​ 534,074 ​ ​ - Total ​ 1,041,886 ​ $ 24.96 ​ 1,040,074 ​ ​ ​ (1) Includes 1,812 shares acquired from employees to satisfy income tax withholding requirements in connection with vested share awards during the three months ended December 31, 2025.
Common Stock ​ $ 100 ​ $ 86 ​ $ 104 ​ $ 103 ​ $ 95 ​ $ 113 S&P 500 Index ​ ​ 100 ​ ​ 118 ​ ​ 152 ​ ​ 125 ​ ​ 158 ​ ​ 197 KBW Regional Banking Index ​ ​ 100 ​ ​ 91 ​ ​ 125 ​ ​ 116 ​ ​ 116 ​ ​ 131 ​ ​ The stock performance depicted in the graph above should not be relied upon as indicative of future performance. ​
Common Stock ​ $ 100 ​ $ 120 ​ $ 119 ​ $ 110 ​ $ 131 ​ $ 133 S&P 500 Index ​ ​ 100 ​ ​ 129 ​ ​ 105 ​ ​ 133 ​ ​ 166 ​ ​ 196 KBW Regional Banking Index ​ ​ 100 ​ ​ 137 ​ ​ 93 ​ ​ 100 ​ ​ 113 ​ ​ 107 ​ ​ The stock performance depicted in the graph above should not be relied upon as indicative of future performance. ​
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On January 29, 2025, the Company announced a stock repurchase program for up to $100 million of its outstanding common stock during 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Our return on average tangible assets was 1.00% for the year ended December 31, 2024, an increase of one basis point as compared to 2023, and our return on average tangible stockholders’ equity was 14.74% for the year ended December 31, 2024, a decrease of 265 basis points as compared to 2023, due to an increase in average stockholders’ equity, which resulted in part from a decrease in net unrealized losses in our investment securities portfolio, and lower net income.
Our return on average tangible assets was 1.00% for the year ended December 31, 2024, an increase of one basis point as compared to 2023, and our return on average tangible stockholders’ equity was 14.74% for the year ended December 31, 2024, a decrease of 265 basis points as compared to 2023, due to an increase in average tangible stockholders’ equity, which resulted in part from a decrease in net unrealized losses in our investment securities portfolio, and lower net income.
Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law. ​ Company Overview ​ FHI, a bank holding company, owns 100% of the outstanding common stock of FHB.
Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law. ​ Company Overview ​ FHI, a bank holding company, owns 100% of the outstanding common stock of FHB.
We believe that our existing cash, cash equivalents, investments, and cash expected to be generated from operations, are still sufficient to meet our cash requirements within the next 12 months and beyond. ​ 67 Table of Contents Potential Demands on Liquidity from Off-Balance Sheet Arrangements ​ We have off-balance sheet arrangements, such as variable interest entities, guarantees, and certain financial instruments with off-balance sheet risk, that may affect the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. ​ Variable Interest Entities ​ We hold interests in several unconsolidated variable interest entities (“VIEs”).
We believe that our existing cash, cash equivalents, investments, and cash expected to be generated from operations, are still sufficient to meet our cash requirements within the next 12 months and beyond. ​ 66 Table of Contents Potential Demands on Liquidity from Off-Balance Sheet Arrangements ​ We have off-balance sheet arrangements, such as variable interest entities, guarantees, and certain financial instruments with off-balance sheet risk, that may affect the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. ​ Variable Interest Entities ​ We hold interests in several unconsolidated variable interest entities (“VIEs”).
The increase in noninterest income was primarily due to increases in other services charges and fees and service charges on deposit accounts. The decrease in the Provision was primarily due to a decrease in our provision for credit losses for loans and leases allocated to the Retail Banking segment.
The increase in noninterest income was primarily due to increases in other service charges and fees and service charges on deposit accounts. The decrease in the Provision was primarily due to a decrease in our provision for credit losses for loans and leases allocated to the Retail Banking segment.
Financial Statements and Supplementary Data and the discussion in “Analysis of Financial Condition — Allowance for Credit Losses” of this MD&A for more information on our loan and lease portfolio. ​ 72 Table of Contents The Company’s loan and lease portfolio includes adjustable-rate loans, primarily tied to CME Term SOFR, Prime and SOFR, hybrid rate loans, for which the initial rate is fixed for a period from one year to as much as ten years, and fixed rate loans, for which the interest rate does not change through the life of the loan or the remaining life of the loan.
Financial Statements and Supplementary Data and the discussion in “Analysis of Financial Condition — Allowance for Credit Losses” of this MD&A for more information on our loan and lease portfolio. ​ 71 Table of Contents The Company’s loan and lease portfolio includes adjustable-rate loans, primarily tied to CME Term SOFR, Prime and SOFR, hybrid rate loans, for which the initial rate is fixed for a period from one year to as much as ten years, and fixed rate loans, for which the interest rate does not change through the life of the loan or the remaining life of the loan.
A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following: the geographic concentration of our business; current and future market and economic conditions generally or in Hawaii, Guam and Saipan in particular, including inflationary pressures and interest rate environment; our dependence on the real estate markets in which we operate; concentrated exposures to certain asset classes and individual obligors; the effect of changes in interest rates on our business, including our net interest income, net interest margin, the fair value of our investment securities, and our mortgage loan originations, mortgage servicing rights and mortgage loans held for sale; the future value of the investment securities that we own; the possibility of a deterioration in credit quality in our portfolio; the possibility we might underestimate the credit losses inherent in our loan and lease portfolio; our ability to attract and retain customer deposits; our inability to receive dividends from our Bank, pay dividends to our common stockholders and satisfy obligations as they become due; our access to sources of liquidity and capital to address our liquidity needs; our ability to attract and retain skilled employees or changes in our management personnel; our ability to maintain our Bank's reputation; the failure to properly use and protect our customer and employee information and data; the possibility of employee misconduct or mistakes; the actual or perceived soundness of other financial institutions; the effectiveness of our risk management and internal disclosure controls and procedures; our ability to keep pace with technological changes; any failure or interruption of our information and communications systems; our ability to effectively compete with other financial services companies and the effects of competition in the financial services industry on our business; our ability to identify and address cybersecurity risks; the occurrence of fraudulent activity or effect of a material breach of, or disruption to, the security of any of our or our vendors’ systems; our ability to successfully develop and commercialize new or enhanced products and services; changes in the demand for our products and services; risks associated with the sale of loans and with our use of appraisals in valuing and monitoring loans; the possibility that actual results may differ from estimates and forecasts; fluctuations in the fair value of our assets and liabilities and off-balance sheet exposures; the effects of the failure of any component of our business infrastructure provided by a third party; the potential for environmental liability; the risk of being subject to litigation and the outcome thereof; the impact of, and changes in, applicable laws, regulations and accounting standards and policies; possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations, including as a result of changes following the recent U.S. election; the effects of severe weather, geopolitical instability, including war, terrorist attacks, pandemics or other severe health emergencies and natural disasters and other external events; the potential impact of climate change; our ability to maintain consistent growth, earnings and profitability; the impact of any pandemic, epidemic or health-related crisis; our likelihood of success in, and the impact of, litigation or regulatory actions; our ability to continue to pay dividends on our common stock; contingent liabilities and unexpected tax liabilities that may be applicable to us as a result of the Reorganization Transactions; and damage to our reputation from any of the factors described above. ​ ​ 48 Table of Contents The foregoing factors should not be considered an exhaustive list and should be read together with the other cautionary statements set forth under “Item 1A.
A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following: the geographic concentration of our business; current and future market and economic conditions generally or in Hawaii, Guam and Saipan in particular, including inflationary pressures and interest rate environment; our dependence on the real estate markets in which we operate; concentrated exposures to certain asset classes and individual obligors; the effect of changes in interest rates on our business, including our net interest income, net interest margin, the fair value of our investment securities, and our mortgage loan originations, mortgage servicing rights and mortgage loans held for sale; the future value of the investment securities that we own; the possibility of a deterioration in credit quality in our portfolio; the possibility we might underestimate the credit losses inherent in our loan and lease portfolio; our ability to attract and retain customer deposits; our inability to receive dividends from our Bank, pay dividends to our common stockholders and satisfy obligations as they become due; our access to sources of liquidity and capital to address our liquidity needs; our ability to attract and retain skilled employees or changes in our management personnel; our ability to maintain our Bank's reputation; the failure to properly use and protect our customer and employee information and data; the possibility of employee misconduct or mistakes; the actual or perceived soundness of other financial institutions; the effectiveness of our risk management and internal disclosure controls and procedures; our ability to keep pace with technological changes; any failure or interruption of our information and communications systems; our ability to effectively compete with other financial services companies and the effects of competition in the financial services industry on our business; our ability to identify and address cybersecurity risks; the occurrence of fraudulent activity or effect of a material breach of, or disruption to, the security of any of our or our vendors’ systems; the development and use of AI; our ability to successfully develop and commercialize new or enhanced products and services; changes in the demand for our products and services; risks associated with the sale of loans and with our use of appraisals in valuing and monitoring loans; the possibility that actual results may differ from estimates and forecasts; fluctuations in the fair value of our assets and liabilities and off-balance sheet exposures; the effects of the failure of any component of our business infrastructure provided by a third-party; the potential for environmental liability; the risk of being subject to litigation and the outcome thereof; the impact of, and changes in, applicable laws, regulations and accounting standards and policies; possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations; the effects of severe weather, geopolitical instability, including war, terrorist attacks, pandemics or other severe health emergencies and natural disasters and other external events; the potential impact of climate change; our ability to maintain consistent growth, earnings and profitability; our likelihood of success in, and the impact of, litigation or regulatory actions; our ability to continue to pay dividends on our common stock; contingent liabilities and unexpected tax liabilities that may be applicable to us as a result of the Reorganization Transactions; and damage to our reputation from any of the factors described above. ​ 48 Table of Contents The foregoing factors should not be considered an exhaustive list and should be read together with the other cautionary statements set forth under “Item 1A.
Net charge-offs in our consumer portfolio segment include those related to credit card, automobile loans, installment loans and small business lines of credit and reflect the inherent risk associated with these loans. ​ Although we determine the amount of each component of the ACL separately, the ACL as a whole was considered appropriate by management as of December 31, 2024 and 2023.
Net charge-offs in our consumer portfolio segment include those related to credit card, automobile loans, installment loans and small business lines of credit and reflect the inherent risk associated with these loans. ​ Although we determine the amount of each component of the ACL separately, the ACL as a whole was considered appropriate by management as of December 31, 2025 and 2024.
The increase in noninterest expense was primarily due to a $9.8 million increase in salaries and employee benefits, a $8.8 million increase in equipment expense and a $2.2 million increase in card rewards program expense.
The increase in noninterest expense was primarily due to a $9.8 million increase in salaries and employee benefits expense, an $8.8 million increase in equipment expense and a $2.2 million increase in card rewards program expense.
Excluded from the table above is our pension benefit obligations. We comply with the minimum funding requirements, and we anticipate making future benefit contributions of $0.2 million related to the pension benefit plans during the year ending December 31, 2025. Additional information on these benefit plans can be found in “Note 14.
Excluded from the table above is our pension benefit obligations. We comply with the minimum funding requirements, and we anticipate making future benefit contributions of $0.2 million related to the pension benefit plans during the year ending December 31, 2026. Additional information on these benefit plans can be found in “Note 14.
However, as of December 31, 2024, management believes that this exposure is not material due to the historical level of repurchase requests and loss trends and thus has not established a liability for losses related to mortgage loan repurchases. As of December 31, 2024, 99% of our residential mortgage loans serviced for investors were current.
However, as of December 31, 2025, management believes that this exposure is not material due to the historical level of repurchase requests and loss trends and thus has not established a liability for losses related to mortgage loan repurchases. As of December 31, 2025, 99% of our residential mortgage loans serviced for investors were current.
Furthermore, as of December 31, 2024, the ACL was considered adequate based on our ongoing analysis of estimated expected credit losses, credit risk profiles, current economic outlook, coverage ratios and other relevant factors. The ACL anticipates cyclical losses consistent with a recession and includes a qualitative overlay for macroeconomic uncertainties.
Furthermore, as of December 31, 2025, the ACL was considered adequate based on our ongoing analysis of estimated expected credit losses, credit risk profiles, current economic outlook, coverage ratios and other relevant factors. The ACL anticipates cyclical losses consistent with a recession and includes a qualitative overlay for macroeconomic uncertainties.
Therefore, as of December 31, 2024 and 2023, we did not record an allowance for credit losses related to our held-to-maturity investment securities portfolio. ​ We are required to hold non-marketable equity securities, comprised of FHLB stock, as a condition of our membership in the FHLB system.
Therefore, as of December 31, 2025 and 2024, we did not record an allowance for credit losses related to our held-to-maturity investment securities portfolio. ​ We are required to hold non-marketable equity securities, comprised of FHLB stock, as a condition of our membership in the FHLB system.
Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset liability management strategies to manage our interest rate risk. ​ 88 Table of Contents Table 25 presents, for the twelve months subsequent to December 31, 2024 and 2023, an estimate of the changes in net interest income that would result from ramps (gradual changes) and shocks (immediate changes) in market interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario.
Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset liability management strategies to manage our interest rate risk. ​ Table 25 presents, for the twelve months subsequent to December 31, 2025 and 2024, an estimate of the changes in net interest income that would result from ramps (gradual changes) and shocks (immediate changes) in market interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario.
We evaluate the sensitivity by using a static forecast, where the balance sheets as of December 31, 2024 and 2023 are held constant. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income Sensitivity Profile - Estimated Percentage Change Over 12 Months ​ ​ Table 25 ​ ​ ​ Static Forecast ​ ​ Static Forecast ​ ​ ​ December 31, 2024 ​ December 31, 2023 ​ Gradual Change in Interest Rates (basis points) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ ​ ​ ​ 3.1 % ​ ​ ​ 3.8 % +100 ​ ​ ​ ​ 1.6 ​ ​ ​ ​ 1.9 ​ +50 ​ ​ ​ ​ 0.8 ​ ​ ​ ​ 1.0 ​ (50) ​ ​ ​ ​ (0.8) ​ ​ ​ ​ (1.0) ​ (100) ​ ​ ​ ​ (1.6) ​ ​ ​ ​ (2.1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Immediate Change in Interest Rates (basis points) ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ ​ ​ ​ 6.2 % ​ ​ ​ 7.3 % +100 ​ ​ ​ ​ 3.2 ​ ​ ​ ​ 3.6 ​ +50 ​ ​ ​ ​ 1.6 ​ ​ ​ ​ 1.8 ​ (50) ​ ​ ​ ​ (1.6) ​ ​ ​ ​ (2.0) ​ (100) ​ ​ ​ ​ (3.3) ​ ​ ​ ​ (4.0) ​ ​ The table above shows the effects of a simulation which estimates the effect of a gradual and immediate sustained parallel shift in the yield curve of −100, −50, +50, +100 and +200 basis points in market interest rates over a twelve-month period on our net interest income. ​ Currently, our interest rate profile, assuming a constant balance sheet, is such that we project net interest income will benefit from higher interest rates as our assets would reprice faster and to a greater degree than our liabilities, while in the case of lower interest rates, our assets would reprice downward and to a greater degree than our liabilities.
We evaluate the sensitivity by using a static forecast, where the balance sheets as of December 31, 2025 and 2024 are held constant. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income Sensitivity Profile - Estimated Percentage Change Over 12 Months ​ ​ Table 25 ​ ​ ​ Static Forecast ​ ​ Static Forecast ​ ​ ​ December 31, 2025 ​ December 31, 2024 ​ Gradual Change in Interest Rates (basis points) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ ​ ​ ​ 3.5 % ​ ​ ​ 3.1 % +100 ​ ​ ​ ​ 1.8 ​ ​ ​ ​ 1.6 ​ +50 ​ ​ ​ ​ 0.9 ​ ​ ​ ​ 0.8 ​ (50) ​ ​ ​ ​ (0.9) ​ ​ ​ ​ (0.8) ​ (100) ​ ​ ​ ​ (1.8) ​ ​ ​ ​ (1.6) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Immediate Change in Interest Rates (basis points) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ +200 ​ ​ ​ ​ 6.3 % ​ ​ ​ 6.2 % +100 ​ ​ ​ ​ 3.2 ​ ​ ​ ​ 3.2 ​ +50 ​ ​ ​ ​ 1.6 ​ ​ ​ ​ 1.6 ​ (50) ​ ​ ​ ​ (1.6) ​ ​ ​ ​ (1.6) ​ (100) ​ ​ ​ ​ (3.2) ​ ​ ​ ​ (3.3) ​ ​ The table above shows the effects of a simulation which estimates the effect of a gradual and immediate sustained parallel shift in the yield curve of −100, −50, +50, +100 and +200 basis points in market interest rates over a twelve-month period on our net interest income. ​ Currently, our interest rate profile, assuming a constant balance sheet, is such that we project net interest income will benefit from higher interest rates as our assets would reprice faster and to a greater degree than our liabilities, while in the case of lower interest rates, our assets would reprice downward and to a greater degree than our liabilities.
On an ongoing basis, properties are appraised as required by market conditions and applicable regulations. There was no OREO held as of December 31, 2024 and 2023. ​ Loans and Leases Past Due 90 Days or More and Still Accruing Interest.
On an ongoing basis, properties are appraised as required by market conditions and applicable regulations. There was no OREO held as of December 31, 2025 and 2024. ​ Loans and Leases Past Due 90 Days or More and Still Accruing Interest.
Financial Statement and Supplementary Data and “Analysis of Financial Condition — Allowance for Credit Losses for Loans and Leases & Reserve for Unfunded Commitments” for more information on the ACL. ​ 83 Table of Contents Fair Value Measurements ​ Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date.
Financial Statement and Supplementary Data and “Analysis of Financial Condition — Allowance for Credit Losses for Loans and Leases & Reserve for Unfunded Commitments” for more information on the ACL. ​ Fair Value Measurements ​ Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date.
We understand and evaluate our customers’ borrowing needs and capacity to repay, in conjunction with their character and history. ​ Management has identified three categories of loans that we use to develop our systematic methodology to determine the ACL: commercial, residential and consumer. ​ 86 Table of Contents Commercial lending is further categorized into four distinct classes based on characteristics relating to the borrower, transaction and collateral.
We understand and evaluate our customers’ borrowing needs and capacity to repay, in conjunction with their character and history. ​ Management has identified three categories of loans that we use to develop our systematic methodology to determine the ACL: commercial, residential and consumer. ​ Commercial lending is further categorized into four distinct classes based on characteristics relating to the borrower, transaction and collateral.
Financial Statements and Supplementary Data for more information on our pension and postretirement benefit plans. ​ 80 Table of Contents Capital ​ The Company and the Bank are subject to the Capital Rules, which implemented the Basel Committee on Banking Supervision’s December 2010 final capital framework for strengthening international capital standards, known as Basel III, and various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Financial Statements and Supplementary Data for more information on our pension and postretirement benefit plans. ​ Capital ​ The Company and the Bank are subject to the Capital Rules, which implemented the Basel Committee on Banking Supervision’s December 2010 final capital framework for strengthening international capital standards, known as Basel III, and various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Underwriting of new leasing arrangements typically includes analyzing customer cash flows, evaluating secondary sources of repayment, such as the value of the leased asset, the guarantors’ net cash flows as well as other credit enhancements provided by the lessee. ​ Residential lending is further categorized into the following classes: residential mortgages (loans secured by 1-4 family residential properties and home equity loans) and home equity lines of credit.
Underwriting of new leasing arrangements typically includes analyzing customer cash flows, evaluating secondary sources of repayment, such as the value of the leased asset, the guarantors’ net cash flows as well as other credit enhancements provided by the lessee. ​ 85 Table of Contents Residential lending is further categorized into the following classes: residential mortgages (loans secured by 1-4 family residential properties and home equity loans) and home equity lines of credit.
As of December 31, 2024 and 2023, we maintained our excess liquidity primarily in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities.
As of December 31, 2025 and 2024, we maintained our excess liquidity primarily in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities.
As of both December 31, 2024 and 2023, $2.3 million was classified in Level 3 of the fair value hierarchy. As of December 31, 2024 and 2023, the liability which was classified in Level 3 of the fair value hierarchy was related to the sale of our Visa Class B restricted shares in 2016.
As of both December 31, 2025 and 2024, $2.3 million was classified in Level 3 of the fair value hierarchy. As of December 31, 2025 and 2024, the liability which was classified in Level 3 of the fair value hierarchy was related to the sale of our Visa Class B restricted shares in 2016.
The amount of base case measurement and its sensitivity to shifts in the yield curve allow management to measure longer term repricing option risk in the balance sheet. ​ 89 Table of Contents Limitations of Market Risk Measures ​ The results of our simulation analyses are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted.
The amount of base case measurement and its sensitivity to shifts in the yield curve allow management to measure longer term repricing option risk in the balance sheet. ​ Limitations of Market Risk Measures ​ The results of our simulation analyses are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted.
We offer home equity lines of credit with variable rates; fixed rate lock options may be available post-closing. All lines are underwritten at 0.95% of the credit line amount. Our procedures for underwriting home equity lines of credit include an assessment of an applicant’s overall financial capacity and repayment ability.
We offer home equity lines of credit with variable rates; fixed rate lock options may be available post-closing. The qualifying debt payments for all lines are underwritten at 0.95% of the credit line amount. Our procedures for underwriting home equity lines of credit include an assessment of an applicant’s overall financial capacity and repayment ability.
The Company believes that its approach to interest rate risk has appropriately considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of such risks. ​ We also have longer term interest rate risk exposures which may not be appropriately measured by net interest income simulation analysis.
The Company believes that its approach to interest rate risk has appropriately considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of such risks. ​ 87 Table of Contents We also have longer term interest rate risk exposures which may not be appropriately measured by net interest income simulation analysis.
The decrease in net interest income, on a fully taxable-equivalent basis was primarily due to higher deposit funding costs and lower average balances in our investment securities portfolio, partially offset by higher rates on our earning assets driven by higher yields in our loan and lease portfolio, higher average balances on our interest-bearing deposits in other banks and lower borrowing costs. ​ ● The Provision was $14.8 million for the year ended December 31, 2024, a decrease of $11.9 million as compared to 2023.
The decrease in net interest income was primarily due to higher deposit funding costs and lower average balances in our investment securities portfolio, partially offset by higher rates on our earning assets driven by higher yields in our loan and lease portfolio, higher average balances on our interest-bearing deposits in other banks and lower borrowing costs. ​ ● The Provision was $14.8 million for the year ended December 31, 2024, a decrease of $11.9 million as compared to 2023.
For the year ended December 31, 2024, we had no repurchase requests related to loan servicing activities, nor were there any pending repurchase requests as of December 31, 2024. ​ 68 Table of Contents Although to date repurchase requests related to representation and warranty provisions and servicing activities have been limited, it is possible that requests to repurchase mortgage loans may increase in frequency as investors more aggressively pursue all means of recovering losses on their purchased loans.
For the year ended December 31, 2025, we had no repurchase requests related to loan servicing activities, nor were there any pending repurchase requests as of December 31, 2025. ​ 67 Table of Contents Although to date repurchase requests related to representation and warranty provisions and servicing activities have been limited, it is possible that requests to repurchase mortgage loans may increase in frequency as investors more aggressively pursue all means of recovering losses on their purchased loans.
As of December 31, 2024 and 2023, $1.9 billion or 8% and $2.3 billion or 9%, respectively, of our total assets consisted of financial assets recorded at fair value on a recurring basis and most of these financial assets consisted of available for sale investment securities measured using information from a third-party pricing service.
As of December 31, 2025 and 2024, $2.1 billion or 9% and $1.9 billion or 8%, respectively, of our total assets consisted of financial assets recorded at fair value on a recurring basis and most of these financial assets consisted of available for sale investment securities measured using information from a third-party pricing service.
FHB was founded in 1858 under the name Bishop & Company and was the first successful banking partnership in the Kingdom of Hawaii and the second oldest bank formed west of the Mississippi River. As of December 31, 2024, we were the largest full-service bank headquartered in Hawaii as measured by assets, loans and leases and net income.
FHB was founded in 1858 under the name Bishop & Company and was the first successful banking partnership in the Kingdom of Hawaii and the second oldest bank formed west of the Mississippi River. As of December 31, 2025, we were the largest full-service bank headquartered in Hawaii as measured by loans and leases and net income.
Organization and Summary of Significant Accounting Policies — Recent Accounting Pronouncements” in the notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data for more information. ​ Risk Governance and Quantitative and Qualitative Disclosures About Market Risk ​ Managing risk is an essential part of successfully operating our business.
Organization and Summary of Significant Accounting Policies — Recent Accounting Pronouncements” in the notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data for more information. ​ 84 Table of Contents Risk Governance and Quantitative and Qualitative Disclosures About Market Risk ​ Managing risk is an essential part of successfully operating our business.
Other factors such as changes in balance sheet composition or deposit rate behavior could result in a change in repricing sensitivity. ​ Under the static balance sheet forecast as of December 31, 2024, our net interest income sensitivity profile is slightly lower in higher interest rate scenarios compared to similar forecasts as of December 31, 2023.
Other factors such as changes in balance sheet composition or deposit rate behavior could result in a change in repricing sensitivity. ​ ​ Under the static balance sheet forecast as of December 31, 2025, our net interest income sensitivity profile is slightly higher in higher interest rate scenarios compared to similar forecasts as of December 31, 2024.
The monetary policies of the Federal Reserve can influence the overall growth of loans, investment securities and deposits and the level of interest rates earned on assets and paid for liabilities. ​ Market Risk Measurement ​ We primarily use net interest income simulation analysis to measure and analyze interest rate risk.
The monetary policies of the Federal Reserve can influence the overall growth of loans, investment securities and deposits and the level of interest rates earned on assets and paid for liabilities. ​ 86 Table of Contents Market Risk Measurement ​ We primarily use net interest income simulation analysis to measure and analyze interest rate risk.
We seek to maintain reasonable levels of risk in installment lending by following prudent underwriting guidelines which include an evaluation of personal credit history and cash flow. ​ Market Risk ​ Market risk is the potential of loss arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility.
We seek to maintain reasonable levels of risk in installment lending by following prudent underwriting guidelines which include an evaluation of personal credit history and ability to repay. ​ Market Risk ​ Market risk is the potential of loss arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility.
The Company performed its annual assessment of the criteria included in Accounting Standards Codification Topic 350, Intangibles – Goodwill and Other , and based on such assessment, the Company concluded that there was no impairment in our goodwill for the year ended December 31, 2024.
The Company performed its annual assessment of the criteria included in Accounting Standards Codification (“ASC”) Topic 350, Intangibles – Goodwill and Other , and based on such assessment, the Company concluded that there was no impairment in our goodwill for the year ended December 31, 2025.
In developing our fair value measurements, we maximize the use of observable inputs and minimize the use of unobservable inputs. ​ The fair value hierarchy defines Level 1 valuations as those based on quoted prices, unadjusted, for identical instruments traded in active markets.
In developing our fair value measurements, we maximize the use of observable inputs and minimize the use of unobservable inputs. ​ 83 Table of Contents The fair value hierarchy defines Level 1 valuations as those based on quoted prices, unadjusted, for identical instruments traded in active markets.
The FHLB borrowing capacity was secured by commercial real estate and residential real estate loan collateral as of both December 31, 2024 and 2023. ​ Pension and Postretirement Plan Obligations ​ We have a qualified noncontributory defined benefit pension plan, an unfunded supplemental executive retirement plan for certain key executives (“SERP”), a directors’ retirement plan, a non-qualified pension plan for eligible directors and a postretirement benefit plan providing life insurance and healthcare benefits that we offer to our directors and employees, as applicable.
The FHLB borrowing capacity was secured by commercial real estate and residential real estate loan collateral as of both December 31, 2025 and 2024. 79 Table of Contents ​ Pension and Postretirement Plan Obligations ​ We have a qualified noncontributory defined benefit pension plan, an unfunded supplemental executive retirement plan for certain key executives (“SERP”), a directors’ retirement plan, a non-qualified pension plan for eligible directors and a postretirement benefit plan providing life insurance and healthcare benefits that we offer to our directors and employees, as applicable.
Our Bank’s underwriting standards typically require LTV ratios of not more than 80%, although higher levels are permitted with accompanying mortgage insurance. First mortgage loans secured by residential properties generally carry a moderate level of credit risk, with an average loan size of approximately $394,000 as of December 31, 2024.
Our Bank’s underwriting standards typically require LTV ratios of not more than 80%, although higher levels are permitted with accompanying mortgage insurance. First mortgage loans secured by residential properties generally carry a moderate level of credit risk, with an average loan size of approximately $392,000 as of December 31, 2025.
The increase in net income for the Retail Banking segment was primarily due to a $48.7 million increase in net interest income, a $9.2 million decrease in noninterest expense, a $8.4 million increase in noninterest income and a $1.6 million decrease in the Provision, partially offset by a $12.4 million increase in the provision for income taxes.
The increase in net income for the Retail Banking segment was primarily due to a $47.2 million increase in net interest income, a $9.2 million decrease in noninterest expense, a $8.4 million increase in noninterest income and a $1.6 million decrease in the Provision, partially offset by a $12.1 million increase in the provision for income taxes.
Table 7 summarizes net income (loss) from our business segments for the years ended December 31, 2024, 2023 and 2022. Additional information about operating segment performance is presented in “Note 22. Reportable Operating Segments” in the notes to the consolidated financial statements included in Item 8.
Table 7 summarizes net income (loss) from our business segments and Corporate/Other for the years ended December 31, 2025, 2024 and 2023. Additional information about operating segment performance and Corporate/Other is presented in “Note 22. Reportable Operating Segments” in the notes to the consolidated financial statements included in Item 8.
As of December 31, 2024 and 2023, $8.4 million or less than 1% and $4.6 million or less than 1%, respectively, of our total liabilities, consisted of financial liabilities recorded at fair value on a recurring basis. As of December 31, 2024 and 2023, $6.1 million and $2.3 million, respectively, was classified in Level 2 of the fair value hierarchy.
As of December 31, 2025 and 2024, $14.6 million or less than 1% and $8.4 million or less than 1%, respectively, of our total liabilities, consisted of financial liabilities recorded at fair value on a recurring basis. As of December 31, 2025 and 2024, $12.3 million and $6.1 million, respectively, was classified in Level 2 of the fair value hierarchy.
The capital conservation buffer is composed entirely of CET1, on top of these minimum risk weighted asset ratios, effectively resulting in minimum ratios of (i) 7% CET1 to risk-weighted assets, (ii) 8.5% Tier 1 capital to risk-weighted assets, and (iii) 10.5% total capital to risk-weighted assets. ​ As of December 31, 2024, our capital levels remained characterized as “well capitalized” under the Capital Rules.
The capital conservation buffer is composed entirely of CET1, on top of these minimum risk weighted asset ratios, effectively resulting in minimum ratios of (i) 7% CET1 to risk-weighted assets, (ii) 8.5% Tier 1 capital to risk-weighted assets, and (iii) 10.5% total capital to risk-weighted assets. ​ 80 Table of Contents As of December 31, 2025, our capital levels remained characterized as “well capitalized” under the Capital Rules.
As of both December 31, 2024 and 2023, the unpaid principal balance of our portfolio of residential mortgage loans sold was $1.3 billion. The agreements under which we sell residential mortgage loans require delivery of various documents to the investor or its document custodian.
As of December 31, 2025 and 2024, the unpaid principal balance of our portfolio of residential mortgage loans sold was $1.1 billion and $1.3 billion, respectively. The agreements under which we sell residential mortgage loans require delivery of various documents to the investor or its document custodian.
Income, if any, on such loans and leases is recognized on a cash basis. (2) Interest income includes taxable-equivalent basis adjustments of $5.4 million, $5.6 million and $4.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Income, if any, on such loans and leases is recognized on a cash basis. (2) Interest income includes taxable-equivalent basis adjustments of $4.1 million, $5.4 million and $5.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The increase in net income for the Commercial Banking segment was primarily due to a $22.3 million decrease in noninterest expense, a $10.1 million increase in net interest income, a $5.8 million decrease in the Provision and a $4.1 million increase in noninterest income, partially offset by a $5.0 million increase in the provision for income taxes.
The decrease in net income for the Commercial Banking segment was primarily due to a $23.0 million decrease in net interest income, a $3.8 million increase in the Provision and a $1.1 million decrease in noninterest income, partially offset by a $10.6 million decrease in noninterest expense and a $4.4 million decrease in the provision for income taxes.
Our held-to-maturity investment securities are carried at amortized cost. ​ As of December 31, 2024, we maintained all of our investment securities in either the available-for-sale category (recorded at fair value) or the held-to-maturity category (recorded at amortized cost) in the consolidated balance sheets, with $3.1 billion invested in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac.
Our held-to-maturity investment securities are carried at amortized cost. ​ As of December 31, 2025, we maintained all of our investment securities in either the available-for-sale category (recorded at fair value) or the held-to-maturity category (recorded at amortized cost) in the consolidated balance sheets, with $2.9 billion invested in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac.
Unfunded commitments to fund these low-income housing tax credit investments were $98.7 million and $80.7 million as of December 31, 2024 and 2023, respectively. ​ Guarantees ​ We sell residential mortgage loans in the secondary market primarily to Fannie Mae or Freddie Mac.
Unfunded commitments to fund these low-income housing tax credit investments were $153.3 million and $98.7 million as of December 31, 2025 and 2024, respectively. ​ Guarantees ​ We sell residential mortgage loans in the secondary market primarily to Fannie Mae or Freddie Mac.
Our third-party pricing service may then affirm the original quoted price or may update the evaluation on a going forward basis. ​ 84 Table of Contents Based on the composition of our investment securities portfolio, we believe that we have developed appropriate internal controls and performed appropriate due diligence procedures to prevent or detect material misstatements by our third-party pricing service.
Our third-party pricing service may then affirm the original quoted price or may update the evaluation on a going forward basis. ​ Based on the composition of our investment securities portfolio, we believe that we have developed appropriate internal controls and performed appropriate due diligence procedures to prevent or detect material misstatements by our third-party pricing service. See “Note 21.
For the year ended December 31, 2024, the Provision included $17.5 million in provision for credit losses for loans and leases, compared to $24.9 million in provision for credit losses for loans and leases in 2023, and a negative $2.8 million in provision for credit losses for the reserve for unfunded commitments, compared to $1.8 million in provision for credit losses for the reserve for unfunded commitments in 2023.
For the year ended December 31, 2025, the Provision included $24.4 million in provision for credit losses for loans and leases, compared to $17.5 million in provision for credit losses for loans and leases in 2024, and $2.9 million in provision for credit losses for the reserve for unfunded commitments, compared to a negative $2.8 million in provision for credit losses for the reserve for unfunded commitments in 2024.
We have applied considerable judgments about the sufficiency and applicability of our internal data to provide an accurate view of historical loss information. For each of our portfolio segments we have examined between 8 and 12 years of historical data.
We have applied considerable judgments about the sufficiency and applicability of our internal data to provide an accurate view of historical loss information. For each of our portfolio segments we have examined between 14 and 18 years of historical data.
Future events, including volatility in domestic and global markets, geopolitical concerns, inflation concerns, global supply chain issues, and other factors affecting the economy, that could cause a significant decline in our expected future cash flows or a significant adverse change in our business or the business climate may necessitate taking charges in future reporting periods related to the impairment of our goodwill. ​ Other Assets ​ Other assets were $832.0 million as of December 31, 2024, a decrease of $13.7 million or 2% from December 31, 2023.
Future events, including volatility in domestic and global markets, geopolitical concerns, inflation concerns, global supply chain issues, and other factors affecting the economy, that could cause a significant decline in our expected future cash flows or a significant adverse change in our business or the business climate may necessitate taking charges in future reporting periods related to the impairment of our goodwill. ​ Other Assets ​ Other assets were $828.3 million as of December 31, 2025, a decrease of $3.7 million from December 31, 2024.
Decisions are primarily based on repayment ability via debt-to-income ratios, LTV ratios and an evaluation of credit history. ​ 87 Table of Contents Consumer lending is further categorized into the following classes of loans: credit cards, automobile loans and other consumer-related installment loans. Consumer loans are either unsecured or secured by the borrower’s personal assets.
Decisions are primarily based on repayment ability via debt-to-income ratios, LTV ratios and an evaluation of credit history. ​ Consumer lending is further categorized into the following classes of loans: credit cards, automobile loans and other consumer-related installment loans. Consumer loans are either unsecured or fully secured by the borrower’s personal assets, including cash.
(2) Maturities for mortgage-backed securities and collateralized mortgage obligations anticipate future prepayments. ​ The carrying value of our investment securities portfolio was $5.7 billion as of December 31, 2024, a decrease of $579.6 million or 9% compared to December 31, 2023.
(2) Maturities for mortgage-backed securities and collateralized mortgage obligations anticipate future prepayments. ​ The carrying value of our investment securities portfolio was $5.6 billion as of December 31, 2025, a decrease of $107.9 million or 2% compared to December 31, 2024.
The stock repurchase program may be suspended, terminated or modified at any time for any reason. ​ 81 Table of Contents In January 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share on our outstanding shares.
The stock repurchase program may be suspended, terminated or modified at any time for any reason. ​ In January 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share on our outstanding shares.
Changes in the level of non-accrual loans and leases typically represent increases for loans and leases that reach a specified past due status, offset by reductions for loans and leases that are charged-off, paid down, sold, transferred to held for sale classification, transferred to OREO or are no longer classified as non-accrual because they have returned to accrual status as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities. ​ Total NPAs were $20.7 million as of December 31, 2024, an increase of $2.1 million or 11% from December 31, 2023.
Changes in the level of non-accrual loans and leases typically represent increases for loans and leases that reach a specified past due status, offset by reductions for loans and leases that are charged-off, paid down, sold, transferred to held for sale classification, transferred to OREO or are no longer classified as non-accrual because they have returned to accrual status as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities. ​ Total NPAs were $41.0 million as of December 31, 2025, an increase of $20.3 million or 98% from December 31, 2024.
Our FHLB stock is accounted for at cost, which equals par or redemption value. As of December 31, 2024 and 2023, we held $21.4 million and $32.6 million in FHLB stock, respectively, which is recorded as a component of other assets in our consolidated balance sheets. ​ See “Note 3.
Our FHLB stock is accounted for at cost, which equals par or redemption value. As of December 31, 2025 and 2024, we held $10.1 million and $21.4 million in FHLB stock, respectively, which is recorded as a component of other assets in our consolidated balance sheets. ​ See “Note 3.
The accounting policies which we believe to be most critical in preparing our consolidated financial statements are those that are related to the determination of the ACL, fair value estimates, pension and postretirement benefit obligations and income taxes. ​ Allowance for Credit Losses ​ Management’s evaluation of the adequacy of the ACL is often the most critical of accounting estimates for a financial institution.
The accounting policies which we believe to be most critical in preparing our consolidated financial statements are those that are related to the determination of the ACL and fair value estimates. ​ Allowance for Credit Losses ​ Management’s evaluation of the adequacy of the ACL is often the most critical of accounting estimates for a financial institution.
Basic earnings per share was $1.80 for the year ended December 31, 2024, a decrease of $0.04 or 2% as compared to 2023. Diluted earnings per share was $1.79 for the year ended December 31, 2024, a decrease of $0.05 or 3% as compared to 2023.
Basic earnings per share was $1.80 for the year ended December 31, 2024, a decrease of $0.04 or 2% as compared to 2023.
Financial Statements and Supplementary Data for more information on the ACL. 78 Table of Contents ​ Goodwill ​ Goodwill was $995.5 million as of both December 31, 2024 and 2023. Our goodwill originated from the acquisition of the Company by BNPP in December of 2001.
Financial Statements and Supplementary Data for more information on the ACL. ​ Goodwill ​ Goodwill was $995.5 million as of both December 31, 2025 and 2024. Our goodwill originated from the acquisition of the Company by BNPP in December of 2001.
Residential real estate loans were $5.3 billion as of December 31, 2024, a decrease of $138.0 million or 3% from December 31, 2023. ​ Consumer loans consist primarily of open- and closed-end direct and indirect credit facilities for personal, automobile and household purchases as well as credit card loans.
Residential real estate loans were $5.3 billion as of December 31, 2025, a decrease of $45.1 million or 1% from December 31, 2024. ​ Consumer loans consist primarily of open- and closed-end direct and indirect credit facilities for personal, automobile and household purchases as well as credit card loans.
The decrease was primarily due to a $26.2 million net loss on the sale of investment securities and a $1.0 million decrease in other noninterest income, partially offset by a $8.6 million increase in other services charges and fees, a $2.5 million increase in bank-owned life insurance (“BOLI”) income and a $1.4 million increase in service charges on deposits accounts. ​ 54 Table of Contents ● Noninterest expense was $501.2 million for the year ended December 31, 2024, an increase of $0.1 million as compared to 2023.
The decrease was primarily due to a $26.2 million net loss on the sale of investment securities and a $1.0 million decrease in other noninterest income, partially offset by an $8.6 million increase in other services charges and fees, a $2.5 million increase in BOLI income and a $1.4 million increase in service charges on deposits accounts. ​ ● Noninterest expense was $501.2 million for the year ended December 31, 2024, an increase of $0.1 million as compared to 2023.
As of December 31, 2024 and 2023, cash and cash equivalents were $1.2 billion and $1.7 billion, respectively. Potential sources of liquidity also include investment securities in our available-for-sale portfolio and held-to-maturity portfolio. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $1.9 billion and $3.8 billion as of December 31, 2024, respectively.
As of December 31, 2025 and 2024, cash and cash equivalents were $1.5 billion and $1.2 billion, respectively. Potential sources of liquidity also include investment securities in our available-for-sale portfolio and held-to-maturity portfolio. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.1 billion and $3.5 billion as of December 31, 2025, respectively.
As of December 31, 2024 and 2023, the amount of deposits excluding public deposits that exceeded FDIC insurance limits were estimated to be $9.2 billion, or 45% of total deposits, and $9.1 billion, or 42% of total deposits, respectively. As of December 31, 2024 and 2023, deposits accounts above $250,000 were estimated to be $11.6 billion and $12.6 billion, respectively.
As of December 31, 2025 and 2024, the amount of deposits excluding public deposits that exceeded FDIC insurance limits were estimated to be $9.3 billion, or 45% of total deposits, and $9.2 billion, or 45% of total deposits, respectively. As of December 31, 2025 and 2024, deposits accounts above $250,000 were estimated to be $11.9 billion and $11.6 billion, respectively.
The balance as of December 31, 2024 included retirement benefits payable of $97.1 million for the Company’s underfunded plans, partially offset by pension plan assets for overfunded plans, recorded as a component of other assets on the consolidated balance sheets, of $11.1 million. ​ See “Note 14.
The balance as of December 31, 2025 included retirement benefits payable of $99.1 million for the Company’s underfunded plans, partially offset by pension plan assets for overfunded plans, recorded as a component of other assets on the consolidated balance sheets, of $12.1 million. ​ See “Note 14.
As of December 31, 2024, we have borrowing capacity of $2.8 billion from the FHLB and $3.0 billion from the FRB based on the amount of collateral pledged. ​ 66 Table of Contents Our core deposits have historically provided us with a long-term source of stable and relatively lower cost of funding.
As of December 31, 2025, we have borrowing capacity of $3.3 billion from the FHLB and $3.3 billion from the FRB based on the amount of collateral pledged. ​ 65 Table of Contents Our core deposits have historically provided us with a long-term source of stable and relatively lower cost of funding.
As of December 31, 2024, our available-for-sale investment securities portfolio was comprised of securities with a weighted average life of approximately 5.4 years and our held-to-maturity investment securities portfolio was comprised of securities with a weighted average life of approximately 7.6 years.
As of December 31, 2025, our available-for-sale investment securities portfolio was comprised of securities with a weighted average life of approximately 4.7 years and our held-to-maturity investment securities portfolio was comprised of securities with a weighted average life of approximately 7.3 years.
To calculate annual pension costs, we use the following key variables: (1) size of the employee population, length of service and estimated compensation increases; (2) actuarial assumptions and estimates; (3) expected long-term rate of return on plan assets; and (4) discount rate. ​ Pension and postretirement benefit plan obligations, net of pension plan assets, were $86.0 million as of December 31, 2024, a decrease of $6.7 million or 7% from December 31, 2023.
To calculate annual pension costs, we use the following key variables: (1) size of the employee population, length of service and estimated compensation increases; (2) actuarial assumptions and estimates; (3) expected long-term rate of return on plan assets; and (4) discount rate. ​ Pension and postretirement benefit plan obligations, net of pension plan assets, were $87.0 million as of December 31, 2025, an increase of $1.0 million or 1% from December 31, 2024.
Downgrading 1% of our commercial portfolio would increase the ACL at December 31, 2024 by approximately $1.3 million, and reducing FICO scores on the entire retail portfolio would increase the ACL at December 31, 2024 by approximately $3.7 million.
Downgrading 1% of our commercial portfolio would increase the ACL at December 31, 2025 by approximately $1.0 million, and reducing FICO scores on the entire retail portfolio would increase the ACL at December 31, 2025 by approximately $3.8 million.
This increase was primarily due to earnings for the year ended December 31, 2024 of $230.1 million and other comprehensive income, net of tax, of $66.2 million, primarily due to changes in our investment securities portfolio, partially offset by dividends declared and paid to the Company’s stockholders of $132.8 million and common stock repurchased of $40.0 million. ​ Analysis of Results of Operations ​ Net Interest Income ​ For the years ended December 31, 2024, 2023, and 2022, average balances, related income and expenses, on a fully taxable-equivalent basis, and resulting yields and rates are presented in Table 3.
This increase was primarily due to earnings for the year ended December 31, 2025 of $276.3 million and other comprehensive income, net of tax, of $95.9 million, primarily due to changes in our investment securities portfolio, partially offset by dividends declared and paid to the Company’s stockholders of $129.9 million and common stock repurchased of $100.0 million. ​ Analysis of Results of Operations ​ Net Interest Income ​ For the years ended December 31, 2025, 2024, and 2023, average balances, related income and expenses, on a fully taxable-equivalent basis, and resulting yields and rates are presented in Table 3.
For the year ended December 31, 2024, there was one residential mortgage loan repurchase totaling $0.6 million and there were no pending repurchase requests. ​ In addition to servicing loans in our portfolio, substantially all of the loans we sell to investors are sold with servicing rights retained. We also service loans originated by other mortgage loan originators.
For the year ended December 31, 2025, there were no residential mortgage loan repurchases and there were no pending repurchase requests. ​ In addition to servicing loans in our portfolio, substantially all of the loans we sell to investors are sold with servicing rights retained. We also service loans originated by other mortgage loan originators.
Commercial real estate loans were $4.5 billion as of December 31, 2024, an increase of $123.7 million or 3% from December 31, 2023. ​ Construction loans are for the purchase or construction of a property for which repayment will be generated by the property.
Commercial real estate loans were $4.6 billion as of December 31, 2025, an increase of $126.3 million or 3% from December 31, 2024. ​ Construction loans are for the purchase or construction of a property for which repayment will be generated by the property.
Net charge-offs in our consumer lending portfolio were $10.9 million for the year ended December 31, 2024 compared to net charge-offs of $10.0 million for 2023.
Net charge-offs in our consumer lending portfolio were $12.6 million for the year ended December 31, 2025, compared to net charge-offs of $10.9 million for 2024.
The sensitivity outcomes described above are primarily due to the impact of changes in deposit mix from December 31, 2023 and holding a smaller federal funds position as of December 31, 2024 as compared with December 31, 2023. ​ The comparisons above provide insight into the potential effects of changes in interest rates on net interest income.
The sensitivity outcomes described above are primarily due to the impact of holding a larger federal funds position as of December 31, 2025 as compared with December 31, 2024. ​ The comparisons above provide insight into the potential effects of changes in interest rates on net interest income.
(4) Net interest margin is net interest income, on a fully taxable-equivalent basis, divided by average total earning assets. ​ 57 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Analysis of Change in Net Interest Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Table 4 ​ ​ Year Ended December 31, 2024 ​ Year Ended December 31, 2023 ​ ​ Compared to December 31, 2023 ​ Compared to December 31, 2022 (dollars in millions) Volume Rate Total (1) Volume Rate Total (1) Change in Interest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-Bearing Deposits in Other Banks ​ $ 20.4 ​ $ 0.4 ​ $ 20.8 ​ $ (5.8) ​ $ 22.0 ​ $ 16.2 Available-for-Sale Investment Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ (20.4) ​ ​ 0.8 ​ ​ (19.6) ​ ​ (38.3) ​ ​ 28.9 ​ ​ (9.4) Non-Taxable ​ ​ (0.5) ​ ​ — ​ ​ (0.5) ​ ​ (6.9) ​ ​ 2.6 ​ ​ (4.3) Held-to-Maturity Investment Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ (4.1) ​ ​ — ​ ​ (4.1) ​ ​ 14.4 ​ ​ 0.8 ​ ​ 15.2 Non-Taxable ​ ​ (0.1) ​ ​ (0.2) ​ ​ (0.3) ​ ​ 3.9 ​ ​ (0.5) ​ ​ 3.4 Total Investment Securities ​ ​ (25.1) ​ ​ 0.6 ​ ​ (24.5) ​ ​ (26.9) ​ ​ 31.8 ​ ​ 4.9 Loans Held for Sale ​ ​ 0.1 ​ ​ — ​ ​ 0.1 ​ ​ — ​ ​ — ​ ​ — Loans and Leases ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ ​ (0.7) ​ ​ 8.3 ​ ​ 7.6 ​ ​ 6.8 ​ ​ 55.8 ​ ​ 62.6 Commercial real estate ​ ​ 3.3 ​ ​ 13.0 ​ ​ 16.3 ​ ​ 15.4 ​ ​ 97.4 ​ ​ 112.8 Construction ​ ​ 7.9 ​ ​ 3.5 ​ ​ 11.4 ​ ​ 5.9 ​ ​ 23.7 ​ ​ 29.6 Residential: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage ​ ​ (3.2) ​ ​ 10.2 ​ ​ 7.0 ​ ​ 3.7 ​ ​ 7.2 ​ ​ 10.9 Home equity line ​ ​ 1.1 ​ ​ 10.6 ​ ​ 11.7 ​ ​ 5.1 ​ ​ 7.7 ​ ​ 12.8 Consumer ​ ​ (8.2) ​ ​ 10.1 ​ ​ 1.9 ​ ​ (2.3) ​ ​ 8.5 ​ ​ 6.2 Lease financing ​ ​ 3.2 ​ ​ (1.0) ​ ​ 2.2 ​ ​ 2.8 ​ ​ 1.6 ​ ​ 4.4 Total Loans and Leases ​ ​ 3.4 ​ ​ 54.7 ​ ​ 58.1 ​ ​ 37.4 ​ ​ 201.9 ​ ​ 239.3 Other Earning Assets ​ ​ (0.9) ​ ​ 2.7 ​ ​ 1.8 ​ ​ 0.4 ​ ​ 0.3 ​ ​ 0.7 Total Change in Interest Income ​ ​ (2.1) ​ ​ 58.4 ​ ​ 56.3 ​ ​ 5.1 ​ ​ 256.0 ​ ​ 261.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Interest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-Bearing Deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings ​ ​ (1.6) ​ ​ 21.7 ​ ​ 20.1 ​ ​ (1.9) ​ ​ 54.2 ​ ​ 52.3 Money Market ​ ​ 4.5 ​ ​ 27.2 ​ ​ 31.7 ​ ​ (0.9) ​ ​ 70.4 ​ ​ 69.5 Time ​ ​ 10.0 ​ ​ 15.7 ​ ​ 25.7 ​ ​ 13.8 ​ ​ 73.4 ​ ​ 87.2 Total Interest-Bearing Deposits ​ ​ 12.9 ​ ​ 64.6 ​ ​ 77.5 ​ ​ 11.0 ​ ​ 198.0 ​ ​ 209.0 Federal Funds Purchased ​ ​ (0.4) ​ ​ (0.4) ​ ​ (0.8) ​ ​ 0.2 ​ ​ 0.1 ​ ​ 0.3 Other Short-Term Borrowings ​ ​ 7.7 ​ ​ (0.7) ​ ​ 7.0 ​ ​ 13.0 ​ ​ — ​ ​ 13.0 Long-Term Borrowings ​ ​ (6.3) ​ ​ (6.2) ​ ​ (12.5) ​ ​ 12.5 ​ ​ — ​ ​ 12.5 Other Interest-Bearing Liabilities ​ ​ (1.5) ​ ​ 0.1 ​ ​ (1.4) ​ ​ 3.0 ​ ​ — ​ ​ 3.0 Total Change in Interest Expense ​ ​ 12.4 ​ ​ 57.4 ​ ​ 69.8 ​ ​ 39.7 ​ ​ 198.1 ​ ​ 237.8 Change in Net Interest Income ​ $ (14.5) ​ $ 1.0 ​ $ (13.5) ​ $ (34.6) ​ $ 57.9 ​ $ 23.3 (1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns. ​ Net interest income, on a fully taxable-equivalent basis, was $628.2 million for the year ended December 31, 2024, a decrease of $13.5 million or 2% as compared to 2023.
(4) Net interest margin is net interest income, on a fully taxable-equivalent basis, divided by average total earning assets. ​ 56 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Analysis of Change in Net Interest Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Table 4 ​ ​ Year Ended December 31, 2025 ​ Year Ended December 31, 2024 ​ ​ Compared to December 31, 2024 ​ Compared to December 31, 2023 (dollars in millions) ​ Volume ​ Rate ​ Total (1) ​ Volume ​ Rate ​ Total (1) Change in Interest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-Bearing Deposits in Other Banks ​ $ 18.9 ​ $ (9.7) ​ $ 9.2 ​ $ 20.4 ​ $ 0.4 ​ $ 20.8 Available-for-Sale Investment Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ (4.3) ​ ​ 4.1 ​ ​ (0.2) ​ ​ (20.4) ​ ​ 0.8 ​ ​ (19.6) Non-Taxable ​ ​ — ​ ​ — ​ ​ — ​ ​ (0.5) ​ ​ — ​ ​ (0.5) Held-to-Maturity Investment Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ (4.4) ​ ​ — ​ ​ (4.4) ​ ​ (4.1) ​ ​ — ​ ​ (4.1) Non-Taxable ​ ​ (0.2) ​ ​ (1.3) ​ ​ (1.5) ​ ​ (0.1) ​ ​ (0.2) ​ ​ (0.3) Total Investment Securities ​ ​ (8.9) ​ ​ 2.8 ​ ​ (6.1) ​ ​ (25.1) ​ ​ 0.6 ​ ​ (24.5) Loans Held for Sale ​ ​ (0.1) ​ ​ — ​ ​ (0.1) ​ ​ 0.1 ​ ​ — ​ ​ 0.1 Loans and Leases ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ ​ 1.2 ​ ​ (15.5) ​ ​ (14.3) ​ ​ (0.7) ​ ​ 8.3 ​ ​ 7.6 Commercial real estate ​ ​ 10.4 ​ ​ (20.7) ​ ​ (10.3) ​ ​ 3.3 ​ ​ 13.0 ​ ​ 16.3 Construction ​ ​ (7.2) ​ ​ (7.4) ​ ​ (14.6) ​ ​ 7.9 ​ ​ 3.5 ​ ​ 11.4 Residential: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage ​ ​ (4.6) ​ ​ 3.8 ​ ​ (0.8) ​ ​ (3.2) ​ ​ 10.2 ​ ​ 7.0 Home equity line ​ ​ — ​ ​ 3.4 ​ ​ 3.4 ​ ​ 1.1 ​ ​ 10.6 ​ ​ 11.7 Consumer ​ ​ (2.4) ​ ​ 6.5 ​ ​ 4.1 ​ ​ (8.2) ​ ​ 10.1 ​ ​ 1.9 Lease financing ​ ​ 1.0 ​ ​ (0.2) ​ ​ 0.8 ​ ​ 3.2 ​ ​ (1.0) ​ ​ 2.2 Total Loans and Leases ​ ​ (1.6) ​ ​ (30.1) ​ ​ (31.7) ​ ​ 3.4 ​ ​ 54.7 ​ ​ 58.1 Other Earning Assets ​ ​ (1.1) ​ ​ (0.3) ​ ​ (1.4) ​ ​ (0.9) ​ ​ 2.7 ​ ​ 1.8 Total Change in Interest Income ​ ​ 7.2 ​ ​ (37.3) ​ ​ (30.1) ​ ​ (2.1) ​ ​ 58.4 ​ ​ 56.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Interest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-Bearing Deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings ​ ​ 4.2 ​ ​ (11.6) ​ ​ (7.4) ​ ​ (1.6) ​ ​ 21.7 ​ ​ 20.1 Money Market ​ ​ (3.4) ​ ​ (23.3) ​ ​ (26.7) ​ ​ 4.5 ​ ​ 27.2 ​ ​ 31.7 Time ​ ​ 1.2 ​ ​ (23.5) ​ ​ (22.3) ​ ​ 10.0 ​ ​ 15.7 ​ ​ 25.7 Total Interest-Bearing Deposits ​ ​ 2.0 ​ ​ (58.4) ​ ​ (56.4) ​ ​ 12.9 ​ ​ 64.6 ​ ​ 77.5 Federal Funds Purchased ​ ​ — ​ ​ — ​ ​ — ​ ​ (0.4) ​ ​ (0.4) ​ ​ (0.8) Other Short-Term Borrowings ​ ​ (10.7) ​ ​ (1.9) ​ ​ (12.6) ​ ​ 7.7 ​ ​ (0.7) ​ ​ 7.0 Long-Term Borrowings ​ ​ — ​ ​ — ​ ​ — ​ ​ (6.3) ​ ​ (6.2) ​ ​ (12.5) Other Interest-Bearing Liabilities ​ ​ (0.5) ​ ​ (0.2) ​ ​ (0.7) ​ ​ (1.5) ​ ​ 0.1 ​ ​ (1.4) Total Change in Interest Expense ​ ​ (9.2) ​ ​ (60.5) ​ ​ (69.7) ​ ​ 12.4 ​ ​ 57.4 ​ ​ 69.8 Change in Net Interest Income ​ $ 16.4 ​ $ 23.2 ​ $ 39.6 ​ $ (14.5) ​ $ 1.0 ​ $ (13.5) (1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns. ​ Net interest income, on a fully taxable-equivalent basis, was $667.8 million for the year ended December 31, 2025, an increase of $39.6 million or 6% as compared to 2024.
The reserve for unfunded commitments was $32.8 million as of December 31, 2024, compared to $35.6 million as of December 31, 2023.
The reserve for unfunded commitments was $35.7 million as of December 31, 2025, compared to $32.8 million as of December 31, 2024.
Our core deposits, defined as all deposits exclusive of time deposits exceeding $250,000, totaled $19.0 billion and $19.5 billion as of December 31, 2024 and 2023, which represented 93% and 91%, respectively, of our total deposits as of December 31, 2024 and 2023, respectively.
Our core deposits, defined as all deposits exclusive of time deposits exceeding $250,000, totaled $19.1 billion and $19.0 billion as of December 31, 2025 and 2024, respectively, which represented 93% of our total deposits as of both December 31, 2025 and 2024.
These evaluations may cause us to change the level of funds we deploy into investment securities and change the composition of our investment securities portfolio. ​ 70 Table of Contents Gross unrealized gains in our investment securities portfolio were $0.6 million and $0.2 million as of December 31, 2024 and 2023, respectively.
These evaluations may cause us to change the level of funds we deploy into investment securities and change the composition of our investment securities portfolio. ​ Gross unrealized gains in our investment securities portfolio were $7.1 million and $0.6 million as of December 31, 2025 and 2024, respectively.
For a reconciliation to the most directly comparable GAAP financial measures for return on average tangible assets and return on average tangible stockholders’ equity, see Table 2, GAAP to Non-GAAP Reconciliation. ​ Our results for the December 31, 2024 were highlighted by the following: ​ ● Net interest income was $622.7 million for the year ended December 31, 2024, a decrease of $13.4 million or 2% as compared to 2023.
For a reconciliation to the most directly comparable GAAP financial measures for return on average tangible assets and return on average tangible stockholders’ equity, see Table 2, GAAP to Non-GAAP Reconciliation. ​ Our results for the December 31, 2025 were highlighted by the following: ​ ● Net interest income was $663.7 million for the year ended December 31, 2025, an increase of $41.0 million or 7% as compared to 2024.
Additional information about the provision for income taxes is presented in “Note 15. Income Taxes” in the notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data. ​ Analysis of Business Segments ​ Our business segments are Retail Banking, Commercial Banking, and Treasury and Other.
Additional information about the provision for income taxes is presented in “Note 15. Income Taxes” in the notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data. ​ 62 Table of Contents Analysis of Business Segments ​ Our business segments are Retail Banking and Commercial Banking, with all other activities, including Treasury, reported in Corporate/Other.
The dividend is to be paid on February 28, 2025 to shareholders of record at the close of business on February 14, 2025. ​ Critical Accounting Policies ​ Our consolidated financial statements were prepared in accordance with GAAP and follow general practices within the industries in which we operate.
The dividend is to be paid on February 27, 2026 to shareholders of record at the close of business on February 13, 2026. ​ 81 Table of Contents Critical Accounting Policies ​ Our consolidated financial statements were prepared in accordance with GAAP and follow general practices within the industries in which we operate.
See “Note 21. Fair Value” in the notes to the consolidated financial statements included in Item 8.
Fair Value” in the notes to the consolidated financial statements included in Item 8.
Our loan portfolio is also impacted by changes in the SOFR. At December 31, 2024, the one-month and three-month CME Term SOFR interest rates were 4.33% and 4.31%, respectively. At December 31, 2023, the one-month and three-month CME Term SOFR interest rates were 5.35% and 5.33%, respectively.
Our loan portfolio is also impacted by changes in the SOFR. At December 31, 2025, the one-month and three-month CME Term SOFR interest rates were 3.70% and 3.66%, respectively. At December 31, 2024, the one-month and three-month CME Term SOFR interest rates were 4.33% and 4.31%, respectively.

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