UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 27, 2017

FIRST HAWAIIAN, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

 

(808) 525‑7000

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐   Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

 

☐   Pre-commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

 

☐   Pre-commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

 

 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

 

 

Item 2.02 Results of Operations and Financial Condition.

On July 27, 2017, First Hawaiian, Inc. (together with its consolidated subsidiary, “First Hawaiian”) reported its earnings for the quarter ended June 30, 2017. A copy of First Hawaiian’s press release containing this information is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

All information provided in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of First Hawaiian under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be filed on its behalf by the undersigned hereunto duly authorized.

 

EXHIBIT INDEX

 

EXHIBIT 99.1

 

For Immediate Release

First Hawaiian, Inc. Reports Second Quarter 2017 Financial Results and Declares Dividend

HONOLULU, Hawaii July 27, 2017—(Globe Newswire)—First Hawaiian, Inc. (NASDAQ:FHB), (the “Company”) today reported financial results for the quarter ended June 30, 2017.

Second Quarter Highlights

Net income for the quarter ended June 30, 2017 was $56.9 million, or $0.41 per diluted share, and core net income1 was $57.2 million, or $0.41 per diluted share

Board of Directors declared a dividend of $0.22 per share

“We are pleased with the bank’s continued strong performance in the second quarter. We had good growth, as loan and deposit balances finished the quarter at record levels, driving total assets to a record $20.4 billion at quarter end,” said Bob Harrison, Chairman and Chief Executive Officer. “Additionally, the local economy remained robust, and our asset quality remained excellent.”

On July 26, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share. The dividend will be payable on September 8, 2017 to stockholders of record at the close of business on August 28, 2017.

Earnings Highlights

Net income for the quarter ended June 30, 2017 was $56.9 million, or $0.41 per diluted share, compared to $56.7 million, or $0.41 per diluted share, for the quarter ended March 31, 2017, and $54.9 million, or $0.39 per diluted share, for the quarter ended June 30, 2016. Core net income for the quarter ended June 30, 2017 was $57.2 million, or $0.41 per diluted share, compared to $57.0 million, or $0.41 per diluted share, for the quarter ended March 31, 2017, and $54.9 million, or $0.39 per diluted share, for the quarter ended June 30, 2016.

Net interest income for the quarter ended June 30, 2017 was $131.3 million, an increase of $1.9 million compared to $129.3 million for the quarter ended March 31, 2017, and an increase of $10.8 million compared to $120.4 million for the quarter ended June 30, 2016. The increase in net interest income compared to the first quarter of 2017 was primarily due to higher average balances and yields on loans, partially offset by lower average balances and yields on investment securities, as well as higher deposit rates. The increase compared to the second quarter of 2016 was due to higher average balances of loans and investment securities and higher earning asset yields, partially offset by higher average deposit balances and rates.

Net interest margin was 3.02%, 3.00% and 2.88% for the quarters ended June 30, 2017, March 31, 2017, and June 30, 2016, respectively. Net interest margin increased during the second quarter of 2017 by two basis points, primarily due to higher earning asset yields, partially offset by higher costs related to time deposits. Premium amortization in the investment securities portfolio increased by $1.4 million over the first quarter of 2017. The 14 basis point increase compared to the second quarter of 2016 was due to higher yields on investments and interest bearing deposits, partially offset by higher deposit costs.

Results for the quarter ended June 30, 2017 included a provision for credit losses of $4.4 million compared to $4.5 million in the quarter ended March 31, 2017 and $1.9 million in the quarter ended June 30, 2016.

Noninterest income was $48.9 million in the quarter ended June 30, 2017, a decrease of $0.5 million compared to noninterest income of $49.4 million in the quarter ended March 31, 2017 and an increase of $2.5 million compared to noninterest income of $46.4 million in the quarter ended June 30, 2016. The decrease in noninterest income compared to the first quarter of 2017 was primarily due to $1.7 million lower bank owned life insurance (BOLI) income, and $1.0 million lower other service charges and fees due to lower sales of insurance and investment products, partially offset by $2.4 million higher other income from partner credit card incentives and recoveries. The increase in noninterest income compared to the second quarter of 2016 was primarily due to $3.6 million higher other income, partially offset by $0.9 million lower BOLI income and $0.8 million lower other service charges and fees.

1Core net income is a non-GAAP measure. For more information on this measure, including a reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14 at the end of this document.

Noninterest expense was $85.2 million for the quarter ended June 30, 2017, an increase of $0.9 million from $84.3 million in the quarter ended March 31, 2017, and an increase of $6.8 million from $78.5 million in the quarter ended June 30, 2016. The increase in noninterest expense compared to the first quarter of 2017 was primarily due to $2.1 million higher contracted services and professional fees, partially offset by $0.8 million lower advertising and marketing expense, $0.4 million lower other expense and $0.3 million lower occupancy expense. The increase in contracted services and professional fees was primarily due to system upgrades and product enhancements. The increase in noninterest expense compared to the second quarter of 2016 was primarily due to a $2.5 million increase in contracted services and professional fees, a $1.9 million increase in cards rewards program expense, a $1.3 million increase in salaries and employee benefits and a $0.9 million higher regulatory assessment. Cards rewards program expense in the second quarter of 2016 included a benefit due to the change in terms related to the expiration of our debit card reward points. The increase in regulatory assessments was largely due to the increase in the regulatory assessment rate that became effective July 1, 2016.

The efficiency ratio was 47.3%, 47.2% and 47.0% for the quarters ended June 30, 2017, March 31, 2017 and June 30, 2016, respectively.

The effective tax rate for the second quarter of 2017 was 37.1% compared with 36.9% in the previous quarter and 36.5% percent in the same quarter last year. The increase in the effective tax rate in the second quarter of 2017 compared to the prior quarter was primarily due to the lower level of BOLI income received in the second quarter of 2017, slightly offset by a $0.75 million release of tax reserves.

Balance Sheet Highlights

Total assets were $20.4 billion at June 30, 2017, compared to $19.8 billion at March 31, 2017 and $19.1 billion at June 30, 2016.

The investment securities portfolio was $5.1 billion at June 30, 2017, compared to $5.3 billion at March 31, 2017 and $4.6 billion at June 30, 2016. The portfolio remains largely comprised of securities issued by U.S. government agencies.

Total loans and leases were $12.1 billion at June 30, 2017, an increase of $280.9 million, or 2.4%, from $11.8 billion at March 31, 2017 and up $874.7 million, or 7.8%, from $11.2 billion at June 30, 2016. The growth in loans and leases compared to March 31, 2017 was due to growth across all categories. Compared to June 30, 2016, the growth in loans and leases was due to increases across all loan categories.

Total deposits were $17.5 billion at June 30, 2017, an increase of $514.1 million, or 3.0%, compared with $16.9 billion at March 31, 2017, and an increase of $1.3 billion, or 8.3%, compared to $16.1 billion at June 30, 2016.

Asset Quality

The Company’s asset quality remained solid during the second quarter of 2017. Total non-performing assets were $8.1 million, or 0.07% of total loans and leases, at June 30, 2017, a slight increase of $0.4 million from non-performing assets of $7.7 million, or 0.07% of total loans and leases, at March 31, 2017 and down $5.4 million from non-performing assets of $13.5 million, or 0.12% of total loans and leases, at June 30, 2016.

Net charge offs for the quarter ended June 30, 2017 were $3.4 million, or 0.11% of average loans and leases on an annualized basis, compared to $4.1 million, or 0.15% of average loans and leases on an annualized basis for the quarter ended March 31, 2017 and $2.7 million, or 0.10% of average loans and leases on an annualized basis for the quarter ended June 30, 2016.

The ratio of allowance for loan and lease losses to total loans and leases was 1.13% at June 30, 2017 compared to 1.15% at March 31, 2017 and 1.22% at June 30, 2016.

Capital

Total stockholders’ equity was $2.6 billion at June 30, 2017, compared to $2.5 billion at both March 31, 2017 and June 30, 2016.

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.70%, 12.73% and 13.81%, respectively, at June 30, 2017, compared with 8.52%, 12.78% and 13.87% at March 31, 2017 and 8.42%, 12.45% and 13.58% at June 30, 2016.

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: 51037675. 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 approximately two hours after the conclusion of the call until 8:00 p.m. (Eastern Time) on August 6, 2017. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 51037675.  

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 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, 2016.

Use of Non-GAAP Financial Measures

We present net interest income, noninterest income, noninterest expense, net income, earnings per share 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 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 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 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 closely related GAAP measures.