First Hawaiian Bank currently trades at $24.16 per share and has shown little upside over the past six months, posting a small loss of 2.7%.

Is there a buying opportunity in First Hawaiian Bank, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Do We Think First Hawaiian Bank Will Underperform?

We're cautious about First Hawaiian Bank. Here are three reasons there are better opportunities than FHB and a stock we'd rather own.

1. Net Interest Income Points to Soft Demand

Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.

First Hawaiian Bank’s net interest income has grown at a 4.4% annualized rate over the last five years, much worse than the broader banking industry and in line with its total revenue. Its growth was driven by an increase in its net interest margin, which represents how much a bank earns in relation to its outstanding loans, as its loan book shrank throughout that period.

2. Projected Net Interest Income Growth Is Slim

Forecasted net interest income by Wall Street analysts signals a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect First Hawaiian Bank’s net interest income to rise by 2.4%, close to its 2.1% annualized growth for the past two years.

3. TBVPS Growth Demonstrates Strong Asset Foundation

In the banking industry, tangible book value per share (TBVPS) provides the clearest picture of shareholder value, as it focuses on concrete assets while excluding intangible items that may not hold value during challenging times.

Although First Hawaiian Bank’s TBVPS increased by a meager 1.5% annually over the last five years, the good news is that its growth has recently accelerated as TBVPS grew at a decent 11.4% annual clip over the past two years (from $11.60 to $14.39 per share).

Final Judgment

First Hawaiian Bank doesn’t pass our quality test. That said, the stock currently trades at 1× forward P/B (or $24.16 per share). This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment. We’d suggest looking at the Amazon and PayPal of Latin America.

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