A Look at First Hawaiian’s (FHB) Valuation Following Sector-Wide Credit Concerns

Recent loan disclosures from Zions Bancorp and Western Alliance Bancorp highlighted industry-wide credit issues, prompting a swift reaction among investors and pressuring shares of regional banks such as First Hawaiian (FHB) this week.

See our latest analysis for First Hawaiian.

Shares of First Hawaiian have been pressured alongside sector peers as investors digested news of heightened credit risks in regional banks. The stock closed at $23.23, slipping nearly 9% on a 90-day basis, highlighting fading near-term momentum. Still, when looking at the bigger picture, First Hawaiian’s five-year total shareholder return comes in at a strong 62% despite a modest 1-year total return of -1.4%. This demonstrates its longer-term resilience even as sentiment currently sours on the sector.

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With First Hawaiian trading at a notable discount to analyst price targets and demonstrating long-term resilience, investors must now ask whether this recent weakness is a buying opportunity or if the market is already pricing in the bank’s future growth.

Most Popular Narrative: 11.1% Undervalued

With the narrative’s fair value set at $26.13 compared to the last close of $23.23, the consensus suggests First Hawaiian may offer notable upside. Behind that target is a blend of local resilience and evolving growth themes, setting the stage for the outlook below.

The bank's robust deposit franchise, underpinned by a strong local brand and deep customer relationships, has allowed for stable deposit growth and maintained a high proportion of noninterest-bearing deposits. This positioning puts First Hawaiian in a favorable spot to benefit from net interest margin expansion as interest rates normalize.

Read the complete narrative.

Curious what sets this fair value apart? The narrative hints at an ambitious mix of top-line gains, margin shifts, and a future profit multiple not usually seen for regional banks. Discover which factors drive this compelling price story. Some of the projections might surprise you.

Result: Fair Value of $26.13 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in deposits or longer-term economic weakness in Hawaii could challenge First Hawaiian’s stability and affect the current growth outlook.

Find out about the key risks to this First Hawaiian narrative.

Build Your Own First Hawaiian Narrative

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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