Why First Hawaiian’s TriCo deal is back in focus

First Hawaiian (FHB) is back in the spotlight after agreeing to acquire TriCo Bancshares in an all stock deal valued at about US$2.01b, a transaction that would create a US$34b asset bank.

The deal terms, including an 18% premium for TriCo shareholders and an exchange ratio of 2.095 First Hawaiian shares per TriCo share, give investors clear numbers to compare with First Hawaiian’s recent share performance.

At a share price of US$28.75, First Hawaiian has posted a 9.61% 90 day share price return and a 12.0% year to date share price return. The 1 year total shareholder return of 18.72% and 3 year total shareholder return of 52.64% indicate that momentum has been building as investors react to the TriCo deal and earlier updates about earnings power and valuation.

If this kind of deal making has you thinking about what else might be setting up for future growth, it could be a good time to broaden your search with 18 top founder-led companies

First Hawaiian is clearly trying to build a larger, more diversified bank with the TriCo deal, but a stronger platform does not automatically make the stock a good entry point today. So how does the current price compare with its fundamentals?

Most Popular Narrative: 3.8% Undervalued

First Hawaiian’s most followed valuation narrative puts fair value at about $29.89 per share, slightly above the recent $28.75 close. This is where the story behind those assumptions really matters.

The ongoing expansion in Hawaii's population and consistently rising tourism spending are supporting stable to growing demand for loans and banking services, which should lead to gradually increasing loan balances and higher fee-based revenue over time.

Strategic investments and progress in digital banking adoption are enabling First Hawaiian to maintain expense discipline, streamline operations, and attract and retain younger customers, which will likely support margin improvement and cost-to-income ratio reduction.

Want to see what sits underneath that modest discount to fair value? The narrative leans heavily on steady revenue expansion, firm margins, and a different earnings multiple than today. The key is how those three moving parts interact over the next few years.

Result: Fair Value of $29.89 (UNDERVALUED)

However, the First Hawaiian story can change quickly if deposit outflows persist or if Hawaii's regional economy slows, which could put pressure on funding costs and asset quality.

Another View: Multiples Paint a Tougher Picture

While one narrative puts First Hawaiian at about a 3.8% discount to fair value, its current P/E of 12.3x is slightly above the US Banks industry at 12.2x and peers at 10.8x, and also above a fair ratio of 11.8x. That premium leaves less room if expectations are already priced in, so how comfortable are you paying up for this story?

To see how this pricing gap lines up with the underlying earnings profile and sector comparisons, take a closer look at the valuation breakdown in the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If the mixed messages on First Hawaiian have you undecided, this is the moment to move quickly, review the data, and closely examine the positives that investors are watching through the 3 key rewards

Looking for more investment ideas beyond First Hawaiian?

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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.