Financial Analysis

17. Commitments and Contingent Liabilities Contingencies Various legal proceedings are pending or threatened against the Company. After consultation with legal counsel, management does not expect that the aggregate liability, if any, resulting from these proceedings would have a material effect on the Companys consolidated financial position, results of operations or cash flows. Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and commercial letters of credit which are not reflected in the consolidated financial statements. Unfunded Commitments to Extend Credit A commitment to extend credit is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specified purpose. Commitments are reported net of participations sold to other institutions. Such commitments have fixed expiration dates and generally require a fee. The extension of a commitment gives rise to credit risk. The actual liquidity requirements or credit risk that the Company will experience is expected to be lower than the contractual amount of commitments to extend credit because a significant portion of those commitments are expected to expire without being drawn upon. Certain commitments are subject to loan agreements containing covenants re …

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Year Ended December 31, 2025 Retail Commercial Corporate/ Consolidated (dollars in thousands) Banking Banking Other Total Net interest income (expense) (1) $ 517,255 $ 177,017 $ (30,530) $ 663,742 Service charges on deposit accounts 26,523 4,719 394 31,636 Credit and debit card fees 55,626 3,874 59,500 Other service charges and fees 39,306 2,546 2,267 44,119 Trust and investment services income 37,039 (98) 36,941 Other 917 7,109 4,257 12,283 Not in scope of Topic 606 (1) 7,791 8,320 16,456 32,567 Total noninterest income 111,576 78,320 27,150 217,046 Total revenue $ 628,831 $ 255,337 $ (3,380) $ 880,788 Year Ended December 31, 2024 Retail Commercial Corporate/ Consolidated (dollars in thousands) Banking Banking Other Total Net interest income (expense) (1) $ 492,408 $ 200,038 $ (69,708) $ 622,738 Service charges on deposit accounts 26,916 3,795 379 31,090 Credit and debit card fees 58,115 3,986 62,101 Other service charges and fees 32,182 2,511 2,318 37,011 Trust and investment services income 38,306 38,306 Other 739 9,023 7,070 16,832 Not in scope of Topic 606 (1) 7,878 5,998 (13,413) 463 Total noninterest income 106,021 79,442 340 185,803 Total revenue $ 598,429 $ 279,480 $ (69,368) $ 808,541 Year Ended December 31, 2023 Retail Commercial Corporate/ Consolidated (dollars in thousands) Banking Banking Other Total Net interest income (1) $ 445,182 $ 188,532 $ 2,413 $ 636,127 Service charges on deposit accounts 26,432 2,786 429 29,647 Credit and debit card fees 56,651 4,853 61 …

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20. Stock-Based Compensation The Company has several stock-based compensation plans that allow for grants of restricted stock, restricted shares, performance share units, performance shares and restricted stock units to its employees and non-employee directors. The Companys stock-based compensation plans are administered by the Compensation Committee of the Board of Directors. For the years ended December 31, 2025, 2024 and 2023, stock-based compensation expense was $15.9 million, $11.9 million and $9.6 million, respectively, and the related income tax benefit was $3.5 million, $2.5 million and $2.3 million, respectively. For the years ended December 31, 2025, 2024 and 2023, all common stock issuances in connection with stock-based compensation arrangements were issued from unissued shares. As of December 31, 2025, total shares authorized under the Companys stock-based compensation plans for employees were 10.3 million shares, of which 4.7 million shares were available for future grants. As of December 31, 2025, total shares authorized under the 2016 Non-Employee Director Plan were 268,941 shares, of which 77,680 shares were available for future grants. Restricted Share Awards Restricted share awards (RSAs) provide grantees with rights to shares of common stock contingent upon completion of a service period. RSAs generally vest, and any restrictions will lapse, over a period of three years in equal annual installments on each of the first, second and third anniversaries of th …

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21. Fair Value The Company determines the fair values of its financial instruments based on the requirements established in ASC 820, Fair Value Measurements , which provides a framework for measuring fair value under GAAP and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 defines fair value as the exit price, the price that would be received for an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. Fair Value Hierarchy ASC 820 establishes three levels of fair values based on the markets in which the assets or liabilities are traded and the reliability of the assumptions used to determine fair value. The levels are: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Companys …

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15. Income Taxes For the years ended December 31, 2025, 2024 and 2023, income from continuing operations before income tax expense and the provision (benefit) for income taxes from continuing operations were comprised of the following: Year Ended December 31, (dollars in thousands) 2025 2024 2023 Income from continuing operations before income tax expense Federal $ 309,133 $ 292,602 $ 309,174 Foreign (1) 45,110 Total income from continuing operations before income tax expense $ 354,243 $ 292,602 $ 309,174 Income tax expense (benefit) from continuing operations Current tax expense: Federal $ 57,235 $ 57,006 $ 66,123 State and local 20,163 16,754 21,724 Foreign 916 Total current 78,314 73,760 87,847 Deferred tax expense (benefit): Federal 4,861 (4,756) (8,387) State and local (5,198) (6,531) (5,269) Foreign Total deferred (337) (11,287) (13,656) Total income tax expense: Federal 62,096 52,250 57,736 State and local 14,965 10,223 16,455 Foreign 916 Total provision for income taxes $ 77,977 $ 62,473 $ 74,191 (1) Foreign income from continuing operations includes income from the Companys Guam and Saipan operations. The Company files Federal and state income tax returns for its subsidiaries. The Companys subsidiary also files income tax returns in Guam, Saipan and certain other state jurisdictions. The Company had a current income tax receivable due from various jurisdictions of $35.0 million and $25.5 million as of December 31, 2025 and 2024, respectively, for its share of consoli …

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13. Leases The Company, as lessee, is obligated under a number of noncancelable operating leases primarily for branch premises and related real estate. Terms of such leases extend for periods up to 38 years, many of which provide for periodic adjustment of rent payments based on changes in various economic indicators. Renewal options are included in the Companys lease liabilities and related right-of-use assets to the extent that the Company is reasonably certain to exercise such options. For all of the Companys short-term leases (i.e., leases with an initial term of 12 months or less), the Company recognizes lease expense on a straight-line basis over the lease term. Variable lease payments are recognized in the period in which the obligation for those payments is incurred. The Companys branch premises leases typically require that the Company is responsible to pay for variable lease expense, primarily maintenance expense, as well as real property taxes, property insurance and sales taxes. Maintenance expense is paid to maintain common areas and covers costs including landscaping, cleaning and general maintenance. Such variable costs are typically re-evaluated by the landlord on an annual basis and are charged to the Company based on the portion of the total building premises that is occupied by the Company. The Company subleases certain premises and real estate to third parties. The sublease portfolio consists of operating leases for space connected with three of the Compan …

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Recent Accounting Pronouncements The following ASUs have been issued by the FASB and are applicable to the Company in future reporting periods. In November 2024, the FASB issued ASU No. 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period which include, for example, employee compensation, depreciation, and intangible asset amortization. In addition, certain expense amounts already required to be disclosed under current GAAP will need to be presented within the same disclosure as the other disaggregation requirements prescribed by this ASU. Public entities will also be required to disclose: (1) a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and (2) the total amount of selling expenses and, in annual reporting periods, an entitys definition of selling expenses. The FASB also issued ASU No. 2025-01 in January 2025 to clarify that the effective date of ASU No. 2024-03 for public entities is for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Further, ASU No. 2024-03 is applied prospectively to financial statements …

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14. Benefit Plans Qualified Pension Plan The Companys employees participate in the Employees Retirement Plan of First Hawaiian, Inc. (the FHI ERP). The FHI ERP is a frozen plan whereby there are no further benefit accruals for the Companys employees. However, employees retain rights to participant benefits accrued as of the date of the plan freeze. No contributions to the pension trust are expected to be made during 2026 for the Companys participants in the FHI ERP. However, should contributions be required in accordance with the funding rules under the Employee Retirement Income Security Act of 1974 (ERISA), including the impact of the Pension Protection Act of 2006, the Company would make those required contributions. Nonqualified Pension and Other Postretirement Benefit Plans The Company also sponsors an unfunded supplemental executive retirement plan for certain key executives (SERP). In addition, the Company sponsors a directors retirement plan (Directors Plan), a non-qualified pension plan for eligible FHI and FHB directors that qualify for retirement benefits based on their years of service as a director. Both the SERP and the Directors Plan were frozen as of January 1, 2005 to new participants. In March 2019, the Companys board of directors approved an amendment to the SERP to freeze the SERP, which became effective on July 1, 2019. As a result of the amendment, since the effective date, there have not been any, and there will be no, new accruals of benefits, includin …

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2. Transactions with Related Parties In the normal course of business, the Company makes loans to executive officers and directors of the Company and its subsidiary. These loans are made on terms no less favorable to the Company than those prevailing at the time for comparable transactions with unrelated persons or, in the case of certain residential real estate loans, on terms that are widely available to employees of the Company who are not directors or executive officers. Changes in the loans to such executive officers and directors during 2025, 2024 and 2023 were as follows: Year Ended December 31, (dollars in thousands) 2025 2024 2023 Balance at beginning of year $ 54,860 $ 53,032 $ 57,247 New loans made 28,072 7,621 5,884 Repayments (1,065) (5,793) (10,099) Balance at end of year $ 81,867 $ 54,860 $ 53,032 …

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18. Revenue from Contracts with Customers In accordance with Topic 606, Revenue from Contracts with Customers , revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services that are promised within each contract and identifies those that contain performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. …

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22. Reportable Operating Segments The Companys reportable segments are based on the manner in which management organizes the business for making operating decisions and assessing performance. These segments reflect how discrete financial information is currently evaluated by the chief operating decision maker and how performance is assessed and resources are allocated. The Companys internal management process measures the performance of these business segments. This process, which is not necessarily comparable with similar information for any other financial institution, uses various techniques to assign balance sheet and income statement amounts to the business segments, including allocations of income, expense, the provision for credit losses and capital. This process is dynamic and requires certain allocations based on judgment and other subjective factors. Unlike financial accounting, there is no comprehensive authoritative guidance for management accounting that is equivalent to GAAP. During the quarter ended December 31, 2025, the Company realigned its internal organizational and management reporting structure. As a result of this change, the Company reduced its reportable operating segments from three to two. The Companys reportable segments are now Retail Banking and Commercial Banking. Activities previously reported within the Treasury and Other segment are now included in Corporate/Other, as Treasury exists to support the Companys operating segments. The change in r …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing