First Hawaiian (FHB) risk factors, FY2024 10-K

Market Risks

1. 01Our business may be adversely affected by conditions in the financial markets and economic conditions generally and in Hawaii, Guam and Saipan in particular
2. 02Inflationary pressure could pose a risk to the economy and the financial performance of the Bank
3. 03Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate
4. 04Our business is subject to risk arising from conditions in the commercial real estate market
5. 05Concentrated exposures to certain asset classes and individual obligors may unfavorably impact our operations
6. 06Our business is subject to interest rate risk and fluctuations in interest rates may adversely affect our earnings
7. 07The value of the investment securities we own may decline in the future
8. 08Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold
9. 09We might underestimate the credit losses inherent in our loan and lease portfolio and have credit losses in excess of the amount we reserve for loan and lease losses
10. 10Loss of deposits could increase our funding costs
11. 11Our liquidity is dependent on dividends from First Hawaiian Bank

Operational Risks

1. 12Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation
2. 13We may not be able to attract and retain key personnel and other skilled employees
3. 14If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses
4. 15We are dependent on the use of data and modeling both in our management decision-making generally and in meeting regulatory expectations in particular
5. 16The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, OREO and repossessed personal property may not accurately describe the net value of the asset
6. 17The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition or results of operations
7. 18The development and use of AI present risks and challenges that may adversely impact our business
8. 19Employee misconduct or mistakes could expose us to significant legal liability and reputational harm
9. 20We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions
10. 21Consumer protection initiatives related to the foreclosure process could materially affect our ability as a creditor to obtain remedies
11. 22We are subject to a variety of risks in connection with any sale of loans we may conduct
12. 23Our operations could be interrupted if certain external vendors on which we rely experience difficulty, terminate their services or fail to comply with banking laws and regulations
13. 24We depend on the accuracy and completeness of information about customers and counterparties
14. 25Our accounting estimates and risk management processes and controls rely on analytical and forecasting techniques and models and assumptions, and actual results may differ from these estimates
15. 26Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition

Strategic Risks

1. 27Geographic concentration in our existing markets may unfavorably impact our operations
2. 28We operate in a highly competitive industry and market area
3. 29New lines of business, products, product enhancements or services may subject us to additional risks
4. 30We have dealer-centric automotive finance businesses, and a change in the key role of dealers within the automotive industry or our ability to maintain or build relationships with them could have an adverse effect on our business, results of operations, financial condition, or prospects
5. 31We continually encounter technological change

Legal, Regulatory and Compliance Risks

1. 32The banking industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a significant adverse effect on our operations
2. 33Fee revenues from overdraft protection programs constitute a portion of our noninterest income and may be subject to increased supervisory scrutiny
3. 34We are required to act as a source of financial and managerial strength for our bank in times of stress
4. 35We are subject to capital adequacy requirements and may be subject to more stringent capital requirements
5. 36We may not pay dividends on our common stock in the future
6. 37Rulemaking changes implemented by the CFPB have in the past resulted and may in the future result in higher regulatory and compliance costs that may adversely affect our results of operations
7. 38Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities
8. 39Increases in FDIC insurance premiums may adversely affect our earnings
9. 40Non-compliance with the USA PATRIOT Act, the Bank Secrecy Act or other laws and regulations could result in fines or sanctions against us
10. 41Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities
11. 42Differences in regulation can affect our ability to compete effectively
12. 43Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention
13. 44We are subject to environmental liability risk associated with our bank branches and any real estate collateral we acquire upon foreclosure
14. 45We may be subject to litigation risk pertaining to our fiduciary responsibilities
15. 46Severe weather, hurricanes, tsunamis, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business
16. 47Climate change could have a material negative impact on us and our customers

Risks Related to Our Common Stock

1. 48Our stock price may be volatile, and you could lose part or all of your investment as a result
2. 49Future sales and issuances of our common stock, including sales as part of our equity-based compensation plans, could result in dilution of the percentage ownership of our stockholders and could lower our stock price
3. 50Certain banking laws and certain provisions of our certificate of incorporation may have an anti-takeover effect