First Hawaiian (FHB – Research Report), the Financial sector company, was revisited by a Wall Street analyst today. Analyst Brandon Berman from Bank of America Securities remains neutral on the stock and has a $17.00 price target.
Brandon Berman has given a Sell rating to First Hawaiian’s stock due to multiple reasons.
One of the main concerns was the increase in criticized assets, which was driven by a single credit, likely within the multifamily portfolio. Although First Hawaiian has traditionally had lower loss rates than the industry, it was one of the few companies to highlight issues related to this asset class. This is indicative of a growing apprehension around multifamily risks, which are starting to be included in commercial real estate concerns. Additionally, the allowance for credit losses (ACL) is 2.5 times the consensus 2024/25 net charge-off (NCO) estimate, which is higher than the peer median.
Furthermore, while the net interest margin (NIM) guidance for the fourth quarter of 2024 and potential expansion thereafter aligned with expectations, the outlook for loan growth appears to be slower. Despite certain balance sheet dynamics and slower than expected deposit cost increases, the NIM compressed less than expected. However, a continued shift of non-interest-bearing deposits into interest-bearing accounts is expected to drive deposit costs higher. On the earnings front, First Hawaiian reported better than expected earnings per share (EPS) for the third quarter of 2023 but Berman sees no reason to adjust the 2024 expense forecast. The EPS for 2024 is maintained at $1.72, with a price objective of $17, reflecting a 25% premium as compared to mid-cap peers. This suggests better relative risk/reward opportunities elsewhere.
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First Hawaiian (FHB) Company Description:
First Hawaiian, Inc. is a bank holding company, which engages in the provision of banking services to consumer and commercial customers, including deposit products, lending services, and wealth management and trust services through its subsidiary First Hawaiian Bank. It operates through the following business segments: Retail Banking, Commercial Banking, and Treasury and Other. The Retail Banking segment offers residential and commercial mortgage loans, home equity lines of credit, automobile loans and leases, personal lines of credit, installment loans, and small business loans and leases; deposits such as checking, savings and time deposit accounts to consumers, small businesses and certain commercial customers. The Commercial Banking segment provides corporate banking, residential and commercial real estate loans, commercial lease financing, auto dealer financing, deposit products and credit cards that they provide primarily to middle market and large companies in Hawaii, Guam, Saipan, and California. The Treasury and Other segment relates to treasury business, which consists of corporate asset and liability management activities, including interest rate risk management; as well as organizational units such as technology, operations, credit and risk management, human resources, finance, administration, marketing, and corporate and regulatory administration. The company was founded in 1858 and is headquartered in Honolulu, HI.
Read More on FHB:
- First Hawaiian reports Q3 EPS 46c, consensus 43c
- First Hawaiian, Inc. Reports Third Quarter 2023 Financial Results and Declares Dividend
- First Hawaiian Inc (FHB) Q3 Earnings Cheat Sheet
- First Hawaiian to Report Third Quarter 2023 Financial Results on October 27, 2023
- First Hawaiian price target lowered to $17 from $20 at Wells Fargo
