Board-Ready Executive Summary
Executive Assessment
Calculating scenario analysisβ¦
β
PHS
Portfolio Health Score
Composite: NIM coverage ratio, default rate vs. break-even threshold, and approval discipline.
Scenario Controls
Live Scenario Inputs β Hawaii Commercial CRE
Advanced Assumptions
2025 Data Sources & Rationale:
Β· NIM 4.10% β FDIC Q1 2025: community bank NIM = 3.46% (4th consecutive quarterly increase); commercial CRE carries ~65bp premium above portfolio average β FDIC Q1 2025 Press Release Β· ICBA Q1 2025
Β· Loss Severity 38% β Federal Reserve/NBER: banks recover ~70% of CRE loan balances on default (avg loss ~30%); Hawaii CRE collateral premium raises this to 38% β NBER Working Paper W31970 Β· FDIC/SSRN CRE LGD Study
Β· Default Rate 1.2% β MBA Q2 2025: bank/thrift CRE delinquency = 1.29%; Hawaii below national avg given land scarcity, low unemployment (2.5% Hawaii Island, Dec 2025), stable economy β MBA Q2 2025 Β· Colliers Hawaii 2025
Β· Avg Loan $3.5M β FHB CRE portfolio $4.41B (Q1 2025 10-Q); BOH investor materials show avg CRE exposure: multi-family $3.1M, retail $2.5M, industrial $13.6M, construction $4.1M. FHB is Hawaii's largest CRE lender with deals ranging $500Kβ$50M+ β FHB Q1 2025 10-Q Β· BOH Q1 2025 Investor Materials
Β· Hawaii CRE Context β "Capital-available but capital-protected" market; relationship-driven; limited land supply; Honolulu SFH median $1.15M (Q1 2025); Hawaii Island unemployment 2.5% (Colliers Dec 2025) β Brevitas Hawaii CRE 2025 Β· Honolulu Board of Realtors Q1 2025
Β· NIM 4.10% β FDIC Q1 2025: community bank NIM = 3.46% (4th consecutive quarterly increase); commercial CRE carries ~65bp premium above portfolio average β FDIC Q1 2025 Press Release Β· ICBA Q1 2025
Β· Loss Severity 38% β Federal Reserve/NBER: banks recover ~70% of CRE loan balances on default (avg loss ~30%); Hawaii CRE collateral premium raises this to 38% β NBER Working Paper W31970 Β· FDIC/SSRN CRE LGD Study
Β· Default Rate 1.2% β MBA Q2 2025: bank/thrift CRE delinquency = 1.29%; Hawaii below national avg given land scarcity, low unemployment (2.5% Hawaii Island, Dec 2025), stable economy β MBA Q2 2025 Β· Colliers Hawaii 2025
Β· Avg Loan $3.5M β FHB CRE portfolio $4.41B (Q1 2025 10-Q); BOH investor materials show avg CRE exposure: multi-family $3.1M, retail $2.5M, industrial $13.6M, construction $4.1M. FHB is Hawaii's largest CRE lender with deals ranging $500Kβ$50M+ β FHB Q1 2025 10-Q Β· BOH Q1 2025 Investor Materials
Β· Hawaii CRE Context β "Capital-available but capital-protected" market; relationship-driven; limited land supply; Honolulu SFH median $1.15M (Q1 2025); Hawaii Island unemployment 2.5% (Colliers Dec 2025) β Brevitas Hawaii CRE 2025 Β· Honolulu Board of Realtors Q1 2025
Do Nothing vs. Proposed Scenario
Approval Rate vs. Risk-Adjusted Return
Tradeoff Curve β Hawaii Commercial CRE
Under-lending
Optimal band
Risk zone
Risk Snapshot β Stress Testing
Downside Analysis & Break-Even Threshold
Base NPV
β
Current assumptions
Stress NPV
β
+25% default rate
Break-Even Default
β
NIM Γ· Loss Severity*
NCO Coverage
β
NIM vs. expected loss
βEvaluatingβ¦
*Break-even = NIM Γ· Loss Severity (pre-expense approximation). True break-even is lower after operating costs and provisioning. Use as directional upper bound.
Sensitivity Analysis
Primary Lever β NPV Impact (10% Change in Each Variable)
Calculating sensitivityβ¦
Credit Committee Brief
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