First Hawaiian Inc

First Hawaiian reported second-quarter revenue of $231.27 million, a 6.3% increase from a year ago, while earnings per share came in at $0.60, unchanged from the consensus estimate. The revenue figure exceeded the Zacks Consensus Estimate of $227.91 million by 1.48%. Net interest margin was 3.3%, slightly above the 3.2% analyst forecast, and total noninterest income reached $60.28 million, surpassing the $54.58 million estimate. The efficiency ratio stood at 56.2%, just above the 56.1% projection, while average earning assets of $21.19 billion fell short of the $21.45 billion estimate. The company holds a Zacks Rank of 1, indicating a Strong Buy.

Shares of several regional banks rose sharply in afternoon trading after softer-than-expected inflation data reduced expectations for further Federal Reserve interest rate hikes. Lake City Bank gained 3.5%, First Hawaiian Bank rose 3.3%, First Financial Bankshares added 3.1%, and both First Financial Bancorp and Customers Bancorp climbed 3.7%. The moves followed a June CPI reading of 3.5% and lower-than-expected producer prices, which bolstered investor confidence that inflationary pressures may be easing. A more stable rate environment is generally favorable for regional banks, potentially alleviating funding pressures and supporting lending activity, while strong second-quarter earnings from major financial institutions offered a bullish read-through for smaller lenders.

First Hawaiian has agreed to acquire TriCo Bancshares in an all-stock transaction valued at about US$2b. TriCo shareholders will receive 2.095 First Hawaiian shares for each TriCo share. The deal follows strong momentum for TriCo, with a 43.90% one-year total shareholder return. TriCo closed at $60.07, trading at a price-to-earnings ratio of 14.9x, above the US Banks industry average of 12.2x but below a peer group average of 28.3x. A discounted cash flow model estimates fair value at $77.87 per share, suggesting the stock is undervalued.