Hawaiian banking company First Hawaiian (NASDAQ:FHB) reported Q2 CY2025 results topping the market’s revenue expectations , with sales up 6.3% year on year to $217.5 million. Its GAAP profit of $0.58 per share was 18.5% above analysts’ consensus estimates.
Net Interest Income: $163.6 million vs analyst estimates of $163.2 million (7% year-on-year growth, in line)
Net Interest Margin: 3.1% vs analyst estimates of 3.1% (19 basis point year-on-year increase, in line)
Revenue: $217.5 million vs analyst estimates of $213 million (6.3% year-on-year growth, 2.1% beat)
Efficiency Ratio: 57.2% vs analyst estimates of 58.7% (1.5 percentage point beat)
EPS (GAAP): $0.58 vs analyst estimates of $0.49 (18.5% beat)
Market Capitalization: $3.17 billion
“I’m happy to report that First Hawaiian Bank had an outstanding second quarter, and posted net income of $73.2 million, a 23.6% increase over the first quarter,” said Bob Harrison, Chairman, President, and CEO.
Dating back to 1858 as Hawaii’s oldest bank with deep roots in the Pacific island communities, First Hawaiian (NASDAQ:FHB) operates a full-service community bank providing deposit accounts, commercial and consumer loans, credit cards, and wealth management services across Hawaii, Guam, and Saipan.
From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.
Regrettably, First Hawaiian Bank’s revenue grew at a tepid 2.2% compounded annual growth rate over the last five years. This was below our standards and is a poor baseline for our analysis.
First Hawaiian Bank Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. First Hawaiian Bank’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.5% annually.
First Hawaiian Bank Year-On-Year Revenue Growth
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, First Hawaiian Bank reported year-on-year revenue growth of 6.3%, and its $217.5 million of revenue exceeded Wall Street’s estimates by 2.1%.
Net interest income made up 75.7% of the company’s total revenue during the last five years, meaning lending operations are First Hawaiian Bank’s largest source of revenue.
First Hawaiian Bank Quarterly Net Interest Income as % of Revenue
Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.
Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.
This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.
First Hawaiian Bank’s TBVPS was flat over the last five years. However, TBVPS growth has accelerated recently, growing by 12.9% annually over the last two years from $10.69 to $13.63 per share.
First Hawaiian Bank Quarterly Tangible Book Value per Share
Over the next 12 months, Consensus estimates call for First Hawaiian Bank’s TBVPS to grow by 8% to $14.72, decent growth rate.
We enjoyed seeing First Hawaiian Bank beat analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates despite in line net interest income. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $25.20 immediately after reporting.
