What happened?

Shares of hawaiian banking company First Hawaiian (NASDAQ: FHB) fell 3.7% in the afternoon session after the company reported third-quarter financial results, with diluted earnings per share below Wall Street estimates. According to the company’s press release, First Hawaiian earned 52 cents a share, 7 cents below the 59-cent consensus. Net income was $63.7 million, down from $73.4 million in the prior quarter and $73.8 million a year earlier. Revenue of $230.23 million was just above the $229.2 million consensus and up 1.7% from a year earlier. The core bank was steadier than the earnings line: net interest income was $174.1 million, in line with the $174.3 million estimate, and the net interest margin expanded 5 basis points to 3.30%.

The miss came from credit and one-time costs. The provision for credit losses rose to $20.3 million from $5.6 million, including a $12.5 million partial charge-off on a single commercial real estate loan and other commercial real estate downgrades. Net charge-offs were $21.9 million, or 0.60% of average loans, compared with $4.1 million, or 0.11%, in the prior quarter. Expenses jumped to $160.0 million from $130.4 million, including $6.7 million of merger costs and a $24.3 million charge to settle tax liabilities from the 2016 reorganization. A related $31.0 million tax benefit left the effective tax rate negative. Loans fell $115 million, while deposits rose $50 million to $20.2 billion. The board declared a quarterly dividend of 26 cents a share.

After the initial drop, the shares shed some of the losses and rose to $25.27, down 3.3% from the previous close.

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What is the market telling us

First Hawaiian Bank’s shares are not very volatile and have only had 1 move greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 4% on the news that it announced plans to acquire TriCo Bancshares in an all-stock transaction. Under the terms of the agreement, TriCo shareholders will receive 2.095 First Hawaiian shares for each TriCo share they own. In all-stock deals, it is common for the acquiring company's stock to fall due to the dilution of existing shareholders' ownership from the issuance of new shares. The stock of the company being acquired, in this case TriCo Bancshares, typically rises, which it did by 7%. Upon completion, First Hawaiian shareholders are expected to own approximately 65% of the combined company.

First Hawaiian Bank is down 1.6% since the beginning of the year, and at $25.27 per share, it is trading 16.7% below its 52-week high of $30.34 from July 2026. Investors who bought $1,000 worth of First Hawaiian Bank’s shares 5 years ago would now be looking at only $869.78.

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