First Hawaiian, Inc. (FHB): Business Model Canvas [11-2024 Updated]

Discover how First Hawaiian, Inc. (FHB) effectively navigates the banking landscape with its innovative Business Model Canvas. This strategic tool outlines FHB's key partnerships, activities, resources, and value propositions tailored specifically for their diverse customer segments. From their extensive branch network to personalized banking experiences, learn how FHB stands out in the competitive financial services market in Hawaii and beyond. Dive deeper to explore the intricate components that drive their success.

First Hawaiian, Inc. (FHB) - Business Model: Key Partnerships

Collaborations with local businesses in Hawaii

First Hawaiian, Inc. actively collaborates with local businesses across Hawaii to enhance its service offerings and community engagement. As of September 30, 2024, FHB reported total loans and leases of $14.2 billion, with a significant portion allocated to commercial and industrial loans that support local enterprises. Specifically, commercial and industrial loans amounted to $2.1 billion, reflecting a focus on fostering local economic growth and stability.

Partnerships with financial technology firms

FHB has established strategic partnerships with financial technology firms to enhance its digital banking capabilities. These collaborations aim to improve customer experience and streamline banking processes. Notably, FHB's investment in technology-related services has increased, with contracted services and professional fees totaling $14.6 million for the three months ended September 30, 2024, indicating a focus on leveraging technology to drive operational efficiencies.

Engagement with government and regulatory bodies

FHB maintains a proactive engagement with government and regulatory bodies to ensure compliance and to navigate the regulatory landscape effectively. As of September 30, 2024, regulatory assessment and fees amounted to $3.4 million for the quarter, reflecting the bank's commitment to adhere to regulatory requirements. This engagement is crucial for managing risks and ensuring sustainable operations amidst evolving regulatory frameworks.

First Hawaiian, Inc. (FHB) - Business Model: Key Activities

Offering a diverse range of banking services

First Hawaiian, Inc. (FHB) provides a comprehensive suite of banking services to its customers, including:

• Residential mortgage loans: $4.2 billion as of September 30, 2024.
• Commercial real estate loans: $4.3 billion as of September 30, 2024.
• Commercial and industrial loans: $2.1 billion as of September 30, 2024.
• Consumer loans: $1.0 billion as of September 30, 2024.
• Lease financing: $432.8 million as of September 30, 2024.

FHB's total loans and leases amounted to $14.2 billion as of September 30, 2024, reflecting a nominal decrease of 1% from December 31, 2023 .

Managing risk through credit assessments

Risk management is a critical activity for FHB, particularly through credit assessments. The Allowance for Credit Losses (ACL) was $163.7 million as of September 30, 2024, which is 1.15% of total loans and leases outstanding, an increase of 5% from December 31, 2023 . The provision for credit losses for the nine months ended September 30, 2024, was $15.5 million, down from $21.3 million for the same period in 2023 . This indicates a focus on maintaining a healthy risk profile while adapting to changing market conditions.

Conducting market analysis for strategic decisions

FHB conducts thorough market analyses to inform its strategic decisions. As of September 30, 2024, the bank reported total assets of $23.8 billion, a decrease of 4.6% from December 31, 2023 . The total deposits were $20.2 billion, reflecting a 5% decrease from December 31, 2023. This decline was primarily attributed to a decrease in demand deposit balances by $783.5 million and savings deposit balances by $549.1 million .

FHB's investment portfolio, valued at $5.9 billion as of September 30, 2024, declined by 6% from the previous year, indicating active management in response to market conditions .

Key Metrics	September 30, 2024	December 31, 2023
Total Loans and Leases	$14.2 billion	$14.4 billion
Allowance for Credit Losses	$163.7 million	$156.5 million
Total Assets	$23.8 billion	$24.9 billion
Total Deposits	$20.2 billion	$21.3 billion
Investment Portfolio	$5.9 billion	$6.3 billion

First Hawaiian, Inc. (FHB) - Business Model: Key Resources

Extensive branch network in Hawaii, Guam, and Saipan

First Hawaiian, Inc. operates a robust branch network comprising 51 branches across Hawaii, Guam, and Saipan as of 2024. This extensive presence enables the bank to serve its customer base effectively and maintain a strong foothold in the local markets.

Experienced management and skilled workforce

First Hawaiian has a seasoned management team with significant industry experience. The bank's leadership is complemented by a skilled workforce, which plays a crucial role in driving operational efficiency and customer satisfaction.

The total number of employees stands at approximately 1,200, ensuring adequate support for its operations and customer service initiatives.

Strong capital base and liquidity position

As of September 30, 2024, First Hawaiian reported a total stockholders' equity of $2.648 billion, reflecting a robust capital base. The Common Equity Tier 1 (CET1) capital ratio was 13.03%, which is well above regulatory requirements, indicating a strong liquidity position. Total assets were reported at $23.78 billion, while total deposits amounted to $20.23 billion.

Financial Metric	Value (as of September 30, 2024)
Total Stockholders' Equity	$2.648 billion
Common Equity Tier 1 (CET1) Ratio	13.03%
Total Assets	$23.78 billion
Total Deposits	$20.23 billion
Number of Branches	51
Number of Employees	1,200

First Hawaiian, Inc. maintains a stable liquidity position, with cash and cash equivalents totaling $1.072 billion, and an investment securities portfolio valued at $5.9 billion as of September 30, 2024. The bank continues to adapt to market conditions while leveraging its key resources to create and deliver value to its customers effectively.

First Hawaiian, Inc. (FHB) - Business Model: Value Propositions

Tailored banking solutions for local consumers and businesses

First Hawaiian, Inc. offers personalized banking solutions that cater specifically to the needs of local consumers and businesses. The bank provides a range of financial products, including residential and commercial mortgage loans, home equity lines of credit, and small business loans. As of September 30, 2024, total loans and leases amounted to $14.24 billion, with significant portions allocated to residential mortgages ($4.19 billion) and commercial real estate loans ($4.27 billion).

Commitment to community engagement and support

First Hawaiian, Inc. emphasizes its commitment to community engagement through various initiatives that support local development and economic growth. The bank's community involvement is reflected in its corporate social responsibility programs, which include financial literacy programs and partnerships with local organizations. This engagement not only enhances the bank's community presence but also strengthens customer loyalty and trust.

Competitive interest rates and diverse product offerings

First Hawaiian, Inc. provides competitive interest rates across its financial products, which are crucial for attracting and retaining customers. The net interest margin stood at 2.93% for the nine months ended September 30, 2024, reflecting the bank's effective management of interest income and expenses. The bank's diverse offerings include:

• Checking and savings accounts with competitive rates
• Various loan products tailored for different customer segments
• Investment services designed to meet the financial goals of individual and corporate clients

The following table summarizes First Hawaiian's key financial metrics as of September 30, 2024:

Metric	Value
Total Assets	$23.78 billion
Total Deposits	$20.23 billion
Total Stockholders' Equity	$2.65 billion
Net Interest Income	$464 million
Return on Average Total Assets	0.99%
Return on Average Stockholders' Equity	9.37%

First Hawaiian, Inc. (FHB) - Business Model: Customer Relationships

Personalized banking experiences through local branches

First Hawaiian, Inc. (FHB) emphasizes personalized banking through its network of local branches. As of September 30, 2024, FHB operated 57 branches across Hawaii, Guam, and the Northern Mariana Islands, which allows them to maintain close relationships with their customers.

In 2024, FHB reported a net interest income of $463.9 million for the nine months ended September 30, a decrease of 4% compared to the same period in 2023, highlighting the challenges in maintaining profitability while focusing on personalized services .

Strong focus on customer service and satisfaction

FHB has a strong commitment to customer service, reflected in its customer satisfaction ratings. The bank's return on average assets was 1.02% for the three months ended September 30, 2024, indicating effective asset management while focusing on customer needs .

Service charges on deposit accounts amounted to $23.1 million for the nine months ended September 30, 2024, representing a 5% increase from the previous year, indicating enhanced customer engagement through value-added services.

Additionally, the bank's net income was $177.6 million for the nine months ended September 30, 2024, down from $187.5 million for the same period in 2023, reflecting the bank's ongoing investment in customer service initiatives.

Use of digital platforms for convenience and accessibility

FHB has invested significantly in digital banking platforms to enhance customer convenience. As of September 30, 2024, the bank's total deposits were $20.2 billion, a decrease of 5% from December 31, 2023, partly due to digital offerings attracting a more tech-savvy customer base .

The bank reported a total noninterest income of $156.4 million for the nine months ended September 30, 2024, an increase of 10% year-over-year, driven by growth in digital service fees .

Metric	Value as of September 30, 2024	Change from 2023
Branches	57	—
Net Interest Income	$463.9 million	Decrease of 4%
Service Charges on Deposit Accounts	$23.1 million	Increase of 5%
Net Income	$177.6 million	Decrease from $187.5 million
Total Deposits	$20.2 billion	Decrease of 5%
Total Noninterest Income	$156.4 million	Increase of 10%

First Hawaiian, Inc. (FHB) - Business Model: Channels

Branch locations throughout Hawaii and neighboring regions

First Hawaiian, Inc. operates a network of 48 banking locations across Hawaii, Guam, and Saipan. As of September 30, 2024, the bank reported total deposits of $20.2 billion, a decline of $1.1 billion or 5% from December 31, 2023. The bank's branch locations serve as critical touchpoints for customer engagement, offering a variety of services including personal banking, commercial banking, and wealth management.

Online banking and mobile applications

First Hawaiian Bank emphasizes digital banking through its online platform and mobile applications. In 2024, the bank continued to enhance its digital offerings, aiming to increase the efficiency of customer transactions and improve user experience. The bank's total net interest income was $156.7 million for the three months ended September 30, 2024. The mobile app features include account management, fund transfers, and bill payments, contributing to a growing base of digitally engaged customers.

Customer service through phone and digital communication

First Hawaiian Bank provides customer service through multiple channels, including phone and digital communication. The bank reported net income of $177.6 million for the nine months ended September 30, 2024. Customer service representatives are available to assist clients with inquiries related to banking services, loan applications, and account management, ensuring a comprehensive support system that enhances customer satisfaction.

Channel	Description	Current Statistics (2024)
Branch Locations	Physical banking locations providing a range of services	48 locations across Hawaii, Guam, and Saipan
Total Deposits	Aggregate customer deposits held by the bank	$20.2 billion as of September 30, 2024
Digital Banking	Online and mobile banking services	Increased efficiency in transactions; net interest income of $156.7 million for Q3 2024
Customer Service	Support through phone and digital channels	Net income of $177.6 million for the nine months ended September 30, 2024

First Hawaiian, Inc. (FHB) - Business Model: Customer Segments

Individual consumers seeking personal banking services

First Hawaiian, Inc. (FHB) offers a variety of financial products tailored for individual consumers. As of September 30, 2024, the Retail Banking segment generated a net income of $172.4 million for the nine months ended, which is a significant increase of 36% compared to the same period in 2023. The primary products include:

• Residential mortgage loans totaling approximately $5.3 billion, a decrease of 2% from December 31, 2023.
• Home equity lines of credit amounting to $1.2 billion.
• Consumer loans, which were reported at $1.0 billion, reflecting a decrease of 7%.
• Automobile loans and leases as part of their consumer lending offerings.

Small to medium-sized enterprises in need of financing

FHB serves small and medium-sized enterprises (SMEs) through a dedicated Commercial Banking segment. The net income for this segment reached $91.7 million for the nine months ended September 30, 2024, representing a 27% increase from the previous year. Key offerings include:

• Commercial and industrial loans totaling $2.1 billion, which saw a nominal decrease of 3%.
• Commercial real estate loans of $4.3 billion, a decrease of 2%.
• Small business loans and leases, which are crucial for financing operational expenses and expansion.
• Business deposit products, including checking and savings accounts tailored for SMEs.

Commercial clients requiring specialized banking solutions

For larger commercial clients, FHB provides specialized banking solutions that cater to complex financial needs. The Commercial Banking segment's net income was $34.1 million for the three months ended September 30, 2024, up 22% from the prior year. The offerings include:

• Commercial lease financing and secured/unsecured lines of credit.
• Corporate banking products, which encompass investment banking services and treasury management.
• Automobile dealer financing, which supports the automotive sector.
• Credit cards and additional financial services tailored for large corporations.

Customer Segment	Net Income (9 Months Ended Sept 30, 2024)	Loan/Deposit Products	Growth Rate
Individual Consumers	$172.4 million	Residential Mortgages: $5.3 billion Consumer Loans: $1.0 billion	36%
Small to Medium-sized Enterprises	$91.7 million	Commercial Loans: $2.1 billion Commercial Real Estate Loans: $4.3 billion	27%
Commercial Clients	$34.1 million	Corporate Banking Products Lease Financing	22%

First Hawaiian, Inc. (FHB) - Business Model: Cost Structure

Operational costs for maintaining branch network

Total occupancy expenses for the nine months ended September 30, 2024, were $21.3 million, a decrease of $0.8 million or 4% from the same period in 2023.

Employee salaries and benefits

Salaries and employee benefits expense for the nine months ended September 30, 2024, were $176.6 million, an increase of $6.7 million or 4% compared to the same period in 2023.

Breakdown of salaries and employee benefits for the three months ended September 30, 2024:

Expense Type	Amount (in thousands)
Salaries and employee benefits	$59,563
Contracted services and professional fees	$14,634
Occupancy	$6,945
Equipment	$13,078
Regulatory assessment and fees	$3,412
Advertising and marketing	$1,813
Card rewards program	$8,678
Other	$18,024
Total Noninterest Expense	$126,147

Investment in technology and customer service enhancements

Equipment expenses for the nine months ended September 30, 2024, totaled $39.7 million, reflecting a $7.1 million increase or 22% from the same period in 2023. This increase was primarily due to technology-related amortization and licensing and maintenance fees.

Contracted services and professional fees amounted to $46.4 million for the nine months ended September 30, 2024, a decrease of $3.8 million or 7% compared to the same period in 2023. This decline was attributed mainly to reductions in outside services related to marketing and customer services.

First Hawaiian, Inc. (FHB) - Business Model: Revenue Streams

Interest income from loans and leases

For the nine months ended September 30, 2024, net interest income was $464.0 million, representing a decrease of $20.3 million or 4% compared to the same period in 2023. The net interest margin was 2.93%, down three basis points from the prior year. The decline in net interest income primarily resulted from higher deposit funding costs and lower average balances in the investment securities portfolio, though this was partially offset by higher yields in the loan and lease portfolio.

Total loans and leases as of September 30, 2024, amounted to $14.2 billion, a slight decrease of $112.1 million or 1% from December 31, 2023. The yield on the loan and lease portfolio was 5.68% for the nine months ended September 30, 2024.

Loan Type	Amount ($ million)
Commercial and industrial loans	2,100
Commercial real estate loans	4,300
Residential mortgage loans	4,187
Home equity lines	1,160
Consumer loans	1,030
Lease financing	433

Noninterest income from fees and service charges

Noninterest income for the nine months ended September 30, 2024, totaled $156.4 million, an increase of $14.0 million or 10% compared to the same period in 2023. This increase was driven by several factors including:

• A $5.0 million increase in other service charges and fees.
• A $3.9 million increase in other noninterest income.
• A $2.1 million increase in credit and debit card fees.
• A $1.9 million increase in bank-owned life insurance (BOLI) income.
• A $1.1 million increase in service charges on deposit accounts.

For the three months ended September 30, 2024, total noninterest income was $53.3 million, reflecting a year-over-year increase of 16%.

Noninterest Income Source	Amount ($ million) Q3 2024	Change from Q3 2023 ($ million)
Service charges on deposit accounts	7.8	0.3
Credit and debit card fees	17.5	1.8
Other service charges and fees	11.8	2.2
Trust and investment services income	9.1	(0.7)
Bank-owned life insurance	4.5	2.6
Other	2.6	0.9

Investment income from securities and other financial instruments

The carrying value of First Hawaiian’s investment securities portfolio was $5.9 billion as of September 30, 2024, down 6% from December 31, 2023. The average balance of the investment securities portfolio during this period was $6.1 billion, a decrease of 16% from the same period in 2023.

Investment income from securities was impacted by the prevailing interest rate environment, with the yield on investments reflecting changes in market conditions. The net interest margin for the nine months ended September 30, 2024, was reported at 2.93%, a decrease from the prior year.

Updated on 16 Nov 2024

Resources:

1. First Hawaiian, Inc. (FHB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Hawaiian, Inc. (FHB)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View First Hawaiian, Inc. (FHB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.