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Performance was driven by a stable Hawaii economy, characterized by a 2.2% unemployment rate and a 7.1% year-over-year increase in visitor arrivals through February.

Loan growth of 3.6% on an annualized basis was fueled by CRE and C&I expansion, specifically through new dealer floor plan relationships and draws on existing lines, though this was partially offset by runoff in the residential loan portfolio and payoffs in the construction loan portfolio.

Net interest margin experienced a slight sequential decline of two basis points, reflecting the full-quarter impact of the December rate cut.

Deposit momentum remained positive as the bank avoided typical seasonal outflows, supported by a healthy 31% noninterest-bearing deposit ratio.

Management attributes the 15.3% return on average tangible equity to a well-capitalized balance sheet and disciplined expense management.

Credit quality remains a core strength, with criticized assets decreasing by 21 basis points and no broad signs of weakness observed in consumer or commercial books.

Full-year NIM guidance was revised upward to 3.22%โ€“3.23% based on the shift to a 'no rate cut' market expectation for the remainder of 2026.

The bank expects to benefit from approximately $400 million in fixed-rate cash flows repricing each quarter at a weighted average spread of 155 basis points higher.

Loan growth is projected to remain in the 3% to 4% range for the full year, supported by opportunities in dealer flooring and commercial real estate.

Expenses are forecasted to reach $520 million for the year, with a planned gradual increase driven by strategic hiring of revenue-producing talent.

Management remains asset-sensitive, noting that while rate cuts would cause immediate NIM compression, subsequent repricing dynamics would drive recovery.

The bank is actively monitoring potential economic impacts from recent Konololo storms and Typhoon Sinlaku within its Hawaii and Guam footprints.

Share repurchases totaled 1.3 million shares at a cost of $32 million in Q1, part of a broader $250 million capital allocation authorization.

Management indicated that proposed capital changes could potentially add approximately 1% to the CET1 ratio, though no strategy shifts are planned until rules are finalized.

Lower noninterest income in Q1 was attributed to timing-related volatility in BOLI and swap fees rather than structural business declines.

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Management expects Q2 NIM to increase by two to three basis points, primarily driven by the repricing of fixed-rate loans and securities.

Approximately $1 billion in CDs are maturing in Q2 at a 2.90% rate, with expectations to roll over at a lower weighted average of roughly 2.50%.

Competition in Hawaii remains consistently high due to low loan-to-deposit ratios across local banks, while Mainland competition is intensifying as larger banks increase hold levels.

Management noted a slight downward cycle in Mainland spreads, particularly in multifamily construction compared to eighteen months ago.

The bank has no plans to expand the size of the securities portfolio or engage in restructuring; instead, it will focus on reinvesting cash flows as they mature.

Annual securities cash flows are expected to be $600 million, with Q1 reinvestment yields averaging around 4.90%.

Management remains open to Mainland M&A but emphasized that they are prioritizing a 'good fit' and have not changed their acquisition profile.

Hiring efforts are focused on revenue-driving roles, with a preference for local talent but a willingness to recruit from the Mainland if necessary.

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