What Happened?

A number of stocks fell in the morning session after a surprisingly weak July jobs report and the announcement of sweeping new tariffs fueled fears of an economic slowdown and an impending interest rate cut. 

The U.S. economy added just 73,000 jobs in July, the weakest gain in over two years, while the unemployment rate rose to 4.2%. This dismal data significantly increased market expectations for a Federal Reserve interest rate cut, with traders now pricing in an 80% probability of a cut in September. Lower interest rates typically harm bank profitability by compressing their net interest margins—the difference between what they earn on loans and pay on deposits. Compounding these worries, the announcement of new tariffs on imports from 92 countries has sparked fears of a global trade war, which could further dampen economic growth and disrupt supply chains, creating a challenging environment for the banking industry.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company OceanFirst Financial (NASDAQ: OCFC) fell 3%. Is now the time to buy OceanFirst Financial? Access our full analysis report here, it’s free.
• Regional Banks company National Bank Holdings (NYSE: NBHC) fell 3.1%. Is now the time to buy National Bank Holdings? Access our full analysis report here, it’s free.
• Regional Banks company First Merchants (NASDAQ: FRME) fell 3%. Is now the time to buy First Merchants? Access our full analysis report here, it’s free.
• Regional Banks company First Interstate BancSystem (NASDAQ: FIBK) fell 3%. Is now the time to buy First Interstate BancSystem? Access our full analysis report here, it’s free.
• Regional Banks company First Hawaiian Bank (NASDAQ: FHB) fell 3.1%. Is now the time to buy First Hawaiian Bank? Access our full analysis report here, it’s free.

Zooming In On First Hawaiian Bank (FHB)

First Hawaiian Bank’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 3.3% on the news that the company reported strong second-quarter financial results that surpassed Wall Street's expectations for both earnings and revenue. 

The Honolulu-based bank posted a net income of $73.2 million, or $0.58 per share, which comfortably beat the average analyst estimate of $0.49 per share. Revenue for the period also topped forecasts. This performance was driven by a rise in net interest income to $163.6 million, supported by an expanded net interest margin of 3.11%. The bank also saw growth in noninterest income and improved its efficiency ratio, indicating solid operational management. Further boosting investor confidence, the company declared a quarterly dividend of $0.26 per share and revealed it had repurchased 1.04 million shares.

First Hawaiian Bank is down 7.4% since the beginning of the year, and at $23.67 per share, it is trading 16.4% below its 52-week high of $28.30 from November 2024. Investors who bought $1,000 worth of First Hawaiian Bank’s shares 5 years ago would now be looking at an investment worth $1,387.

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