• Net income of $72.4 million, or $0.54 per diluted share, core net income¹ of $72.6 million or $0.54 per diluted share¹
• Repurchased 1.5 million shares at a cost of $40 million
• Board of Directors declared a quarterly dividend of $0.26 per share

HONOLULU, July 25, 2019 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its second quarter ended June 30, 2019.

“I’m pleased to report that the company turned in another solid performance in the second quarter, highlighted by strong earnings driven by excellent credit quality, higher net interest margin, and continued prudent expense management,” said Bob Harrison, Chairman and Chief Executive Officer.  “We also began executing our share repurchase program and returned $40 million of capital to shareholders.”

On July 24, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share.  The dividend will be payable on September 6, 2019 to stockholders of record at the close of business on August 26, 2019.

In addition, Eric Yeaman, President and Chief Operating Officer of the Company and the Bank, announced that he is resigning from his positions with the Company and the Bank, as well as his position as a director of the Bank, effective August 12, 2019.  “Eric’s leadership has been a key driver of our bank’s success over the last four years.  His experience managing public companies played an integral role in helping First Hawaiian navigate through the IPO process and transitioning the company to independence.  He has made a lasting impact on the organization, formed deep relationships with our teams and our customers, and will be missed.  We wish him continued success in the years ahead.”

Second Quarter 2019 Highlights (Comparisons Are To First Quarter 2019):

• Profitability measures were excellent with ROA of 1.42%, core ROATA^1,2 of 1.50%, ROE of 11.13%, and core ROATCE^1,2 of 18.03%;
   
• Loans and leases grew $67.2 million, or 0.5%, primarily in residential mortgage loans, commercial real estate loans and leases;
   
• Net interest margin (“NIM”) increased 2 basis points to 3.25%;
   
• Reported efficiency ratio was 48.0% and core efficiency ratio¹ was 47.9%;
   
• Continued excellent credit quality. The ratio of non-performing assets to total loans and leases and other real estate owned was 0.03% at the end of the second quarter;
   
• Through June 30, repurchased 1.5 million shares at total cost of $40 million;
   
• On July 24, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share, equal to an annual dividend yield of 3.94% based on the share price as of the close of business on that date.

Balance Sheet

Total assets were $20.5 billion as of June 30, 2019, compared to $20.4 billion as of March 31, 2019.

Gross loans and leases were $13.3 billion as of June 30, 2019, an increase of $67.2 million, or 0.5%, from $13.2 billion as of March 31, 2019.  The increase was primarily due to growth in residential mortgage loans, commercial real estate loans, and leases, partially offset by declines in construction and commercial and industrial (“C&I”) loans.

Total deposits were $16.8 billion as of June 30, 2019, unchanged from $16.8 billion as of March 31, 2019.

Net Interest Income

Net interest income for the second quarter of 2019 was $145.6 million, an increase of $0.5 million, or 0.4%, compared to $145.1 million for the prior quarter.  Net interest income in both the first and second quarters included a negative $1.8 million premium adjustment. The increase in net interest income compared to the first quarter of 2019 was primarily due to higher average balances of loans and leases, partially offset by higher rates on deposit accounts and lower average cash balances.

NIM was 3.25% in the second quarter of 2019, an increase of two basis points compared to 3.23% in the first quarter of 2019.  The negative $1.8 million premium adjustments in the first and second quarters had a negative four basis point impact on the reported NIM in each quarter.   

Provision Expense

Results for the quarter ended June 30, 2019 included a provision for credit losses of $3.9 million compared to $5.7 million in the quarter ended March 31, 2019.    

Noninterest Income

Noninterest income was $48.8 million in the second quarter of 2019, an increase of $1.7 million compared to noninterest income of $47.1 million in the first quarter of 2019. Noninterest income in the first quarter included $2.6 million of investment securities losses associated with the investment portfolio restructuring.      

Noninterest Expense

Noninterest expense was $93.3 million in the second quarter of 2019, an increase of $0.7 million from $92.6 million in the first quarter of 2019.  The increase in noninterest expense was primarily due to nonrecurring items, mostly offset by lower salaries and benefits expenses.

The efficiency ratio was 48.0% and 48.2% for the quarters ended June 30, 2019 and March 31, 2019, respectively.  Core efficiency ratio¹ was 47.9% and 47.4% for the quarters ended June 30, 2019 and March 31, 2019, respectively.

Taxes

The effective tax rate was 25.5% for the quarters ended June 30, 2019 and March 31, 2019.

Asset Quality

The allowance for loan and lease losses was $138.5 million, or 1.04% of total loans and leases, as of June 30, 2019, compared to $141.5 million, or 1.07% of total loans and leases, as of March 31, 2019.  Net charge-offs were $6.9 million, or 0.21% of average loans and leases on an annualized basis for the quarter ended June 30, 2019, compared to $5.9 million, or 0.18% of average loans and leases on an annualized basis for the quarter ended March 31, 2019.  Total non-performing assets were $3.9 million, or 0.03% of total loans and leases and other real estate owned, at June 30, 2019, compared to non-performing assets of $4.4 million, or 0.03% of total loans and leases and other real estate owned, at March 31, 2019. 

Capital

Total stockholders' equity was $2.7 billion at June 30, 2019, compared to $2.6 billion at March 31, 2019.   

The tier 1 leverage, common equity tier 1 and total capital ratios were 8.75%, 11.84% and 12.81%, respectively, at June 30, 2019, compared with 8.71%, 12.05% and 13.06% at March 31, 2019.

During the second quarter of 2019, the Company repurchased 1.5 million shares of common stock at a total cost of $40 million under its share repurchase program. The average cost was $26.49 per share repurchased. Remaining buyback authority under the share repurchase program was $60 million at June 30, 2019.

First Hawaiian, Inc. 

First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii.  Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii’s oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services.  Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit the Company’s website, www.fhb.com.

Conference Call Information

First Hawaiian will host a conference call to discuss the Company’s results today at 5:00 p.m. Eastern Time, 11:00 a.m. Hawaii Time.  To access the call, participants should dial (844) 452-2942 (US/Canada), or (574) 990-9846 (International) ten minutes prior to the start of the call and enter the conference ID:  9479196.  A live webcast of the conference call, including a slide presentation, will be available at the following link:  www.fhb.com/earnings.  The archive of the webcast will be available at the same location.  A telephonic replay of the conference call will be available two hours after the conclusion of the call until 8:30 p.m. (Eastern Time) on August 1, 2019.  Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID:  9479196.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance.  These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature.  These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control.  Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict.  Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.  For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2018.

Use of Non-GAAP Financial Measures

We present net interest income, noninterest income, noninterest expense, net income, earnings per share (basic and diluted) and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure.  These core measures exclude from the corresponding GAAP measure the impact of certain items that we do not believe are representative of our financial results.  We believe that the presentation of these non-GAAP financial measures helps identify underlying trends in our business from period to period that could otherwise be distorted by the effect of certain expenses, gains and other items included in our operating results. We believe that these core measures provide useful information about our operating results and enhance the overall understanding of our past performance and future performance.  Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. 

Core net interest margin, core efficiency ratio, core return on average total assets and core return on average total stockholders’ equity are non-GAAP financial measures.  We compute our core net interest margin as the ratio of core net interest income to average earning assets.  We compute our core efficiency ratio as the ratio of core noninterest expense to the sum of core net interest income and core noninterest income.  We compute our core return on average total assets as the ratio of core net income to average total assets.  We compute our core return on average total stockholders’ equity as the ratio of core net income to average total stockholders’ equity. 

Return on average tangible stockholders’ equity, core return on average tangible stockholders’ equity, return on average tangible assets, core return on average tangible assets and tangible stockholders’ equity to tangible assets are non-GAAP financial measures.  We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity.  We compute our core return on average tangible stockholders’ equity as the ratio of core net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity.  We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets.  We compute our core return on average tangible assets as the ratio of core net income to average tangible assets. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. We believe that these measurements are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions.  Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP.

Tables 13 and 14 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

¹ Core measurements are non-GAAP financial measures.  Core excludes certain gains, expenses and one-time items.  See Tables 13 and 14 at the end of this document for reconciliations of core measurements, including core net income, core noninterest income, core efficiency ratio and core earnings per diluted share to the comparable GAAP measurements.

² Return on Average Tangible Assets (“ROATA”) and Return on Average Tangible Common Equity (“ROATCE”) are non-GAAP financial measures.  A reconciliation of average tangible assets and average tangible stockholders’ equity to the comparable GAAP measurements is provided in Tables 13 at the end of this document.