SEC Filing - First Hawaiian, Inc.

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fhb_Current_Folio_8K

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 25, 2019

FIRST HAWAIIAN, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware
(State or Other Jurisdiction of Incorporation)


001‑14585		99‑0156159
(Commission File Number)		(IRS Employer Identification No.)


999 Bishop St., 29th Floor
Honolulu, Hawaii		96813
(Address of Principal Executive Offices)		(Zip Code)

(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))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock, par value $0.01 per share	FHB	NASDAQ Global Select Market

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 25, 2019, First Hawaiian, Inc. (together with its consolidated subsidiary, “First Hawaiian”) reported its earnings for the quarter ended June 30, 2019. 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


Exhibit No.		Description

99.1		Press release of First Hawaiian, Inc. dated July 25, 2019 containing financial information for its quarter ended June 30, 2019.

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.

Pril
	FIRST HAWAIIAN, INC.

Date: July 25, 2019	By:	/s/ Robert S. Harrison
		Robert S. Harrison
		Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)

fnb_Ex_99_1

EXHIBIT 99.1

For Immediate Release

First Hawaiian, Inc. Reports Second Quarter 2019 Financial Results and Declares Dividend

Net income of $72.4 million, or $0.54 per diluted share, core net income 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, Hawaii 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 ROATA1,2 of 1.50%, ROE of 11.13% and core ROATCE1,2 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.

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 efficiency ratio and core earnings per diluted share to the comparable GAAP measurements.

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

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.


Investor Relations Contact:	Media Contact:
Kevin Haseyama, CFA	Susan Kam
(808) 525-6268	(808) 525-6254
khaseyama@fhb.com	skam@fhb.com


Financial Highlights													Table 1
	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,
(dollars in thousands, except per share data)	2019			2019			2018			2019			2018
Operating Results:
Net interest income	$	145,613		$	145,089		$	141,403		$	290,702		$	281,075
Provision for loan and lease losses		3,870			5,680			6,020			9,550			11,970
Noninterest income		48,773			47,072			49,797			95,845			98,497
Noninterest expense		93,290			92,623			91,865			185,913			182,452
Net income		72,433			69,924			69,053			142,357			137,011
Basic earnings per share		0.54			0.52			0.50			1.06			0.99
Diluted earnings per share		0.54			0.52			0.50			1.06			0.99
Dividends declared per share		0.26			0.26			0.24			0.52			0.48
Dividend payout ratio		48.15	%		50.00	%		48.00	%		49.06	%		48.48	%
Supplemental Income Statement Data (non-GAAP):
Core net interest income	$	145,613		$	145,089		$	141,403		$	290,702		$	281,075
Core noninterest income		48,752			49,685			49,797			98,437			98,497
Core noninterest expense		93,029			92,362			90,951			185,391			181,131
Core net income		72,612			72,052			69,720			144,664			137,979
Core basic earnings per share		0.54			0.53			0.51			1.07			0.99
Core diluted earnings per share		0.54			0.53			0.50			1.07			0.99
Performance Ratio:
Net interest margin		3.25	%		3.23	%		3.18	%		3.24	%		3.16	%
Core net interest margin (non-GAAP)		3.25	%		3.23	%		3.18	%		3.24	%		3.16	%
Efficiency ratio		47.99	%		48.20	%		48.04	%		48.09	%		48.06	%
Core efficiency ratio (non-GAAP)		47.86	%		47.42	%		47.56	%		47.64	%		47.71	%
Return on average total assets		1.42	%		1.38	%		1.38	%		1.40	%		1.36	%
Core return on average total assets (non-GAAP)		1.43	%		1.43	%		1.39	%		1.43	%		1.37	%
Return on average tangible assets (non-GAAP)		1.50	%		1.45	%		1.45	%		1.48	%		1.43	%
Core return on average tangible assets (non-GAAP)(1)		1.50	%		1.50	%		1.46	%		1.50	%		1.44	%
Return on average total stockholders' equity		11.13	%		11.16	%		11.23	%		11.15	%		11.13	%
Core return on average total stockholders' equity (non-GAAP)		11.16	%		11.50	%		11.34	%		11.33	%		11.20	%
Return on average tangible stockholders' equity (non-GAAP)		17.99	%		18.35	%		18.83	%		18.17	%		18.57	%
Core return on average tangible stockholders’ equity (non-GAAP)(2)		18.03	%		18.91	%		19.01	%		18.46	%		18.70	%
Average Balances:
Average loans and leases	$	13,209,655		$	13,073,708		$	12,552,610		$	13,142,057		$	12,425,351
Average earning assets		17,971,615			18,091,424			17,817,943			18,031,189			17,952,365
Average assets		20,390,273			20,494,837			20,121,504			20,442,266			20,263,820
Average deposits		16,664,837			16,865,673			17,199,368			16,764,700			17,350,869
Average stockholders' equity		2,610,565			2,540,600			2,466,392			2,575,775			2,483,252
Market Value Per Share:
Closing		25.87			26.05			29.02			25.87			29.02
High		28.20			27.67			31.28			28.20			32.36
Low		24.83			22.13			27.09			22.13			26.92


	As of			As of			As of			As of
	June 30,			March 31,			December 31,			June 30,
	2019			2019			2018			2018
Balance Sheet Data:
Loans and leases	$	13,264,609		$	13,197,454		$	13,076,191		$	12,637,686
Total assets		20,526,367			20,441,136			20,695,678			20,479,719
Total deposits		16,792,078			16,795,244			17,150,068			17,395,538
Short-term borrowings		200,000			—			—			—
Long-term borrowings		400,028			600,028			600,026			200,034
Total stockholders' equity		2,659,441			2,613,202			2,524,839			2,459,175

Per Share of Common Stock:
Book value	$	19.92		$	19.36		$	18.72		$	18.00
Tangible book value (non-GAAP)(3)		12.46			11.98			11.34			10.71

Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases		0.03	%		0.03	%		0.05	%		0.11	%
Allowance for loan and lease losses / total loans and leases		1.04	%		1.07	%		1.08	%		1.11	%

Capital Ratios:
Common Equity Tier 1 Capital Ratio		11.84	%		12.05	%		11.97	%		12.19	%
Tier 1 Capital Ratio		11.84	%		12.05	%		11.97	%		12.19	%
Total Capital Ratio		12.81	%		13.06	%		12.99	%		13.23	%
Tier 1 Leverage Ratio		8.75	%		8.71	%		8.72	%		8.61	%
Total stockholders' equity to total assets		12.96	%		12.78	%		12.20	%		12.01	%
Tangible stockholders' equity to tangible assets (non-GAAP)		8.52	%		8.32	%		7.76	%		7.51	%

Non-Financial Data:
Number of branches		59			60			60			61
Number of ATMs		292			296			295			303
Number of Full-Time Equivalent Employees		2,123			2,130			2,155			2,189

⁽¹⁾

Core return on average tangible assets is a non-GAAP financial measure. We compute our core return on average tangible assets as the ratio of core 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. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.

⁽²⁾

Core return on average tangible stockholders’ equity is a non-GAAP financial measure. 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. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.

⁽³⁾

Tangible book value is a non-GAAP financial measure. We compute our tangible book value as the ratio of tangible stockholders’ equity to shares outstanding. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.


Consolidated Statements of Income	Table 2
	Three Months Ended						For the Six Months Ended
	June 30,		March 31,		June 30,		June 30,
(dollars in thousands, except per share amounts)	2019		2019		2018		2019		2018
Interest income
Loans and lease financing	$	146,883	$	144,406	$	130,283	$	291,289	$	253,834
Available-for-sale securities		24,784		24,486		27,397		49,270		56,390
Other		2,151		3,669		1,339		5,820		3,731
Total interest income		173,818		172,561		159,019		346,379		313,955
Interest expense
Deposits		23,693		23,197		17,355		46,890		32,619
Short-term and long-term borrowings		4,512		4,275		261		8,787		261
Total interest expense		28,205		27,472		17,616		55,677		32,880
Net interest income		145,613		145,089		141,403		290,702		281,075
Provision for loan and lease losses		3,870		5,680		6,020		9,550		11,970
Net interest income after provision for loan and lease losses		141,743		139,409		135,383		281,152		269,105
Noninterest income
Service charges on deposit accounts		8,123		8,060		7,721		16,183		15,676
Credit and debit card fees		16,629		16,655		16,929		33,284		32,426
Other service charges and fees		9,403		9,129		9,633		18,532		18,975
Trust and investment services income		8,931		8,618		7,711		17,549		15,942
Bank-owned life insurance		3,390		3,813		2,395		7,203		4,439
Investment securities gains (losses), net		21		(2,613)		—		(2,592)		—
Other		2,276		3,410		5,408		5,686		11,039
Total noninterest income		48,773		47,072		49,797		95,845		98,497
Noninterest expense
Salaries and employee benefits		42,185		44,860		41,636		87,045		83,796
Contracted services and professional fees		14,303		13,645		13,005		27,948		25,292
Occupancy		7,286		6,986		6,908		14,272		13,392
Equipment		4,544		4,284		4,335		8,828		8,923
Regulatory assessment and fees		2,149		1,447		4,225		3,596		8,198
Advertising and marketing		1,980		1,966		1,115		3,946		2,066
Card rewards program		7,664		6,732		6,359		14,396		12,077
Other		13,179		12,703		14,282		25,882		28,708
Total noninterest expense		93,290		92,623		91,865		185,913		182,452
Income before provision for income taxes		97,226		93,858		93,315		191,084		185,150
Provision for income taxes		24,793		23,934		24,262		48,727		48,139
Net income	$	72,433	$	69,924	$	69,053	$	142,357	$	137,011
Basic earnings per share	$	0.54	$	0.52	$	0.50	$	1.06	$	0.99
Diluted earnings per share	$	0.54	$	0.52	$	0.50	$	1.06	$	0.99
Basic weighted-average outstanding shares		134,420,380		134,879,336		137,907,063		134,655,217		138,749,209
Diluted weighted-average outstanding shares		134,652,008		135,198,345		138,065,879		134,924,331		138,891,955


Consolidated Balance Sheets	Table 3
	June 30,		March 31,		December 31,		June 30,
(dollars in thousands)	2019		2019		2018		2018
Assets
Cash and due from banks	$	423,802	$	336,555	$	396,836	$	332,102
Interest-bearing deposits in other banks		259,713		281,312		606,801		611,698
Investment securities		4,395,476		4,485,660		4,498,342		4,842,551
Loans held for sale		215		—		432		2,037
Loans and leases		13,264,609		13,197,454		13,076,191		12,637,686
Less: allowance for loan and lease losses		138,535		141,546		141,718		140,601
Net loans and leases		13,126,074		13,055,908		12,934,473		12,497,085

Premises and equipment, net		313,200		310,902		304,996		287,746
Other real estate owned and repossessed personal property		—		124		751		325
Accrued interest receivable		49,205		49,489		48,920		48,528
Bank-owned life insurance		450,722		447,936		446,076		442,449
Goodwill		995,492		995,492		995,492		995,492
Mortgage servicing rights		14,573		15,399		16,155		17,660
Other assets		497,895		462,359		446,404		402,046
Total assets	$	20,526,367	$	20,441,136	$	20,695,678	$	20,479,719
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing	$	11,028,921	$	10,951,764	$	11,142,127	$	11,430,455
Noninterest-bearing		5,763,157		5,843,480		6,007,941		5,965,083
Total deposits		16,792,078		16,795,244		17,150,068		17,395,538
Short-term borrowings		200,000		—		—		—
Long-term borrowings		400,028		600,028		600,026		200,034
Retirement benefits payable		128,610		127,845		127,909		135,139
Other liabilities		346,210		304,817		292,836		289,833
Total liabilities		17,866,926		17,827,934		18,170,839		18,020,544

Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,857,673 / 133,508,212 shares as of June 30, 2019, issued/outstanding: 139,851,508 / 135,012,015 shares as of March 31, 2019, issued/outstanding: 139,656,674 / 134,874,302 shares as of December 31, 2018 and issued/outstanding: 139,620,801 / 136,642,060 shares as of June 30, 2018)		1,399		1,399		1,397		1,396
Additional paid-in capital		2,499,946		2,497,770		2,495,853		2,492,656
Retained earnings		363,748		326,451		291,919		229,615
Accumulated other comprehensive loss, net		(31,984)		(78,754)		(132,195)		(182,410)
Treasury stock (6,349,461 shares as of June 30, 2019, 4,839,493 shares as of March 31, 2019, 4,782,372 shares as of December 31, 2018 and 2,978,741 shares as of June 30, 2018)		(173,668)		(133,664)		(132,135)		(82,082)
Total stockholders' equity		2,659,441		2,613,202		2,524,839		2,459,175
Total liabilities and stockholders' equity	$	20,526,367	$	20,441,136	$	20,695,678	$	20,479,719


Average Balances and Interest Rates																	Table 4
	Three Months Ended						Three Months Ended						Three Months Ended
	June 30, 2019						March 31, 2019						June 30, 2018
	Average		Income/		Yield/		Average		Income/		Yield/		Average		Income/			Yield/
(dollars in millions)	Balance		Expense		Rate		Balance		Expense		Rate		Balance		Expense			Rate
Earning Assets
Interest-Bearing Deposits in Other Banks	$	247.2	$	1.4	2.35	%	$	507.3	$	3.2	2.56	%	$	281.2	$	1.2		1.74	%
Available-for-Sale Investment Securities		4,438.1		24.8	2.23			4,417.8		24.5	2.22			4,961.2		27.4		2.21
Loans Held for Sale		0.7		—	2.76			0.3		—	2.79			1.9		—		3.44
Loans and Leases(1)
Commercial and industrial		3,235.0		34.3	4.26			3,166.4		33.2	4.25			3,177.4		30.5		3.84
Commercial real estate		3,094.4		36.0	4.67			3,005.2		35.4	4.77			2,883.0		28.9		4.02
Construction		583.6		6.9	4.73			636.7		7.5	4.77			620.7		6.2		4.03
Residential:
Residential mortgages		3,581.2		37.2	4.16			3,535.2		36.0	4.07			3,228.5		34.1		4.24
Home equity lines		908.5		8.6	3.79			915.7		8.7	3.85			858.7		7.8		3.62
Consumer		1,657.7		22.7	5.48			1,667.3		22.5	5.48			1,624.6		21.7		5.35
Lease financing		149.3		1.2	3.31			147.2		1.1	2.99			159.7		1.1		2.83
Total Loans and Leases		13,209.7		146.9	4.46			13,073.7		144.4	4.46			12,552.6		130.3		4.16
Other Earning Assets		76.0		0.7	3.71			92.3		0.5	2.06			21.0		0.1		2.21
Total Earning Assets(2)		17,971.7		173.8	3.88			18,091.4		172.6	3.85			17,817.9		159.0		3.58
Cash and Due from Banks		342.6						360.3						317.7
Other Assets		2,076.0						2,043.1						1,985.9
Total Assets	$	20,390.3					$	20,494.8					$	20,121.5

Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings	$	4,712.2	$	4.0	0.34	%	$	4,815.8	$	4.2	0.36	%		4,573.0	$	2.4		0.21	%
Money Market		3,126.7		7.4	0.95			3,181.3		7.7	0.98			2,725.9		2.7		0.40
Time		3,084.6		12.3	1.60			3,041.8		11.3	1.51			4,003.5		12.2		1.22
Total Interest-Bearing Deposits		10,923.5		23.7	0.87			11,038.9		23.2	0.85			11,302.4		17.3		0.62
Short-Term Borrowings		50.4		0.3	2.25			12.8		0.1	2.45			42.7		0.2		1.85
Long-Term Borrowings		593.5		4.2	2.86			600.0		4.2	2.84			6.6		0.1		3.79
Total Interest-Bearing Liabilities		11,567.4		28.2	0.98			11,651.7		27.5	0.96			11,351.7		17.6		0.62
Net Interest Income			$	145.6					$	145.1					$	141.4
Interest Rate Spread					2.90	%					2.89	%						2.96	%
Net Interest Margin					3.25	%					3.23	%						3.18	%
Noninterest-Bearing Demand Deposits		5,741.3						5,826.8						5,897.0
Other Liabilities		471.0						475.7						406.4
Stockholders' Equity		2,610.6						2,540.6						2,466.4
Total Liabilities and Stockholders' Equity	$	20,390.3					$	20,494.8					$	20,121.5

⁽¹⁾

Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

⁽²⁾

For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.


Average Balances and Interest Rates											Table 5
	Six Months Ended						Six Months Ended
	June 30, 2019						June 30, 2018
	Average		Income/		Yield/		Average		Income/		Yield/
(dollars in millions)	Balance		Expense		Rate		Balance		Expense		Rate
Earning Assets
Interest-Bearing Deposits in Other Banks	$	376.5	$	4.6	2.49	%	$	448.0	$	3.6	1.60	%
Available-for-Sale Investment Securities		4,428.0		49.3	2.23			5,060.2		56.4	2.25
Loans Held for Sale		0.5		—	2.76			1.1		—	3.40
Loans and Leases(1)
Commercial and industrial		3,200.9		67.5	4.25			3,141.0		58.2	3.74
Commercial real estate		3,044.9		70.7	4.68			2,841.7		55.3	3.93
Construction		610.2		14.4	4.75			620.8		12.0	3.89
Residential:
Residential mortgages		3,563.2		73.9	4.14			3,188.2		67.5	4.27
Home equity lines		912.1		17.3	3.82			860.7		15.4	3.61
Consumer		1,662.5		45.2	5.48			1,612.3		43.0	5.38
Lease financing		148.3		2.3	3.15			160.7		2.4	2.97
Total Loans and Leases		13,142.1		291.3	4.46			12,425.4		253.8	4.12
Other Earning Assets		84.1		1.2	2.81			17.7		0.2	2.00
Total Earning Assets(2)		18,031.2		346.4	3.86			17,952.4		314.0	3.53
Cash and Due from Banks		351.4						318.3
Other Assets		2,059.7						1,993.1
Total Assets	$	20,442.3					$	20,263.8

Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings	$	4,762.6	$	8.2	0.35	%	$	4,558.2	$	4.1	0.18	%
Money Market		3,155.0		15.0	0.96			2,718.4		4.5	0.33
Time		3,063.3		23.7	1.56			4,127.2		24.0	1.17
Total Interest-Bearing Deposits		10,980.9		46.9	0.86			11,403.8		32.6	0.58
Short-Term Borrowings		31.7		0.4	2.29			21.5		0.2	1.85
Long-Term Borrowings		596.7		8.4	2.85			3.3		0.1	3.81
Total Interest-Bearing Liabilities		11,609.3		55.7	0.97			11,428.6		32.9	0.58
Net Interest Income			$	290.7					$	281.1
Interest Rate Spread					2.89	%					2.95	%
Net Interest Margin					3.24	%					3.16	%
Noninterest-Bearing Demand Deposits		5,783.8						5,947.1
Other Liabilities		473.4						404.8
Stockholders' Equity		2,575.8						2,483.3
Total Liabilities and Stockholders' Equity	$	20,442.3					$	20,263.8

⁽¹⁾

Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

⁽²⁾

For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.


Analysis of Change in Net Interest Income						Table 6
	Three Months Ended June 30, 2019
	Compared to March 31, 2019
(dollars in millions)	Volume		Rate		Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks	$	(1.5)	$	(0.2)	$	(1.7)
Available-for-Sale Investment Securities		0.2		0.1		0.3
Loans and Leases
Commercial and industrial		1.0		0.1		1.1
Commercial real estate		1.3		(0.6)		0.7
Construction		(0.6)		—		(0.6)
Residential:
Residential mortgage		0.4		0.7		1.1
Home equity line		—		(0.1)		(0.1)
Consumer		0.1		—		0.1
Lease financing		—		0.1		0.1
Total Loans and Leases		2.2		0.2		2.4
Other Earning Assets		(0.1)		0.3		0.2
Total Change in Interest Income		0.8		0.4		1.2

Change in Interest Expense:
Interest-Bearing Deposits
Savings		(0.1)		(0.1)		(0.2)
Money Market		(0.1)		(0.2)		(0.3)
Time		0.2		0.8		1.0
Total Interest-Bearing Deposits		—		0.5		0.5
Short-Term Borrowings		0.2		—		0.2
Total Change in Interest Expense		0.2		0.5		0.7
Change in Net Interest Income	$	0.6	$	(0.1)	$	0.5


Analysis of Change in Net Interest Income						Table 7
	Three Months Ended June 30, 2019
	Compared to June 30, 2018
(dollars in millions)	Volume		Rate		Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks	$	(0.2)	$	0.4	$	0.2
Available-for-Sale Investment Securities		(2.9)		0.3		(2.6)
Loans and Leases
Commercial and industrial		0.6		3.3		3.9
Commercial real estate		2.2		4.9		7.1
Construction		(0.4)		1.0		0.6
Residential:
Residential mortgage		3.6		(0.5)		3.1
Home equity line		0.5		0.4		0.9
Consumer		0.4		0.5		0.9
Lease financing		(0.1)		0.2		0.1
Total Loans and Leases		6.8		9.8		16.6
Other Earning Assets		0.5		0.1		0.6
Total Change in Interest Income		4.2		10.6		14.8

Change in Interest Expense:
Interest-Bearing Deposits
Savings		0.1		1.5		1.6
Money Market		0.5		4.1		4.6
Time		(3.2)		3.3		0.1
Total Interest-Bearing Deposits		(2.6)		8.9		6.3
Short-Term Borrowings		—		0.1		0.1
Long-Term Borrowings		4.2		—		4.2
Total Change in Interest Expense		1.6		9.0		10.6
Change in Net Interest Income	$	2.6	$	1.6	$	4.2


Analysis of Change in Net Interest Income						Table 8
	Six Months Ended June 30, 2019
	Compared to June 30, 2018
(dollars in millions)	Volume		Rate		Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks	$	(0.6)	$	1.7	$	1.1
Available-for-Sale Investment Securities		(6.7)		(0.4)		(7.1)
Loans and Leases
Commercial and industrial		1.1		8.2		9.3
Commercial real estate		4.2		11.2		15.4
Construction		(0.2)		2.6		2.4
Residential:
Residential mortgage		8.3		(2.0)		6.3
Home equity line		1.0		0.9		1.9
Consumer		1.3		0.8		2.1
Lease financing		(0.2)		0.2		—
Total Loans and Leases		15.5		21.9		37.4
Other Earning Assets		0.9		0.1		1.0
Total Change in Interest Income		9.1		23.3		32.4

Change in Interest Expense:
Interest-Bearing Deposits
Savings		0.2		4.0		4.2
Money Market		0.8		9.7		10.5
Time		(7.1)		6.7		(0.4)
Total Interest-Bearing Deposits		(6.1)		20.4		14.3
Short-Term Borrowings		0.1		—		0.1
Long-Term Borrowings		8.4		—		8.4
Total Change in Interest Expense		2.4		20.4		22.8
Change in Net Interest Income	$	6.7	$	2.9	$	9.6


Loans and Leases								Table 9
	June 30,		March 31,		December 31,		June 30,
(dollars in thousands)	2019		2019		2018		2018
Commercial and industrial	$	3,177,844	$	3,203,770	$	3,208,760	$	3,116,145
Commercial real estate		3,194,219		3,147,304		2,990,783		2,837,520
Construction		549,578		595,491		626,757		654,084
Residential:
Residential mortgage		3,618,433		3,543,964		3,527,101		3,383,130
Home equity line		908,452		907,829		912,517		852,953
Total residential		4,526,885		4,451,793		4,439,618		4,236,083
Consumer		1,650,713		1,653,109		1,662,504		1,632,088
Lease financing		165,370		145,987		147,769		161,766
Total loans and leases	$	13,264,609	$	13,197,454	$	13,076,191	$	12,637,686


Deposits								Table 10
	June 30,		March 31,		December 31,		June 30,
(dollars in thousands)	2019		2019		2018		2018
Demand	$	5,763,157	$	5,843,480	$	6,007,941	$	5,965,083
Savings		4,908,000		4,884,418		4,853,285		4,772,922
Money Market		3,050,843		3,156,056		3,196,678		2,768,190
Time		3,070,078		2,911,290		3,092,164		3,889,343
Total Deposits	$	16,792,078	$	16,795,244	$	17,150,068	$	17,395,538


Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More								Table 11
	June 30,		March 31,		December 31,		June 30,
(dollars in thousands)	2019		2019		2018		2018
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial	$	119	$	190	$	274	$	1,821
Commercial real estate		—		—		1,658		2,844
Construction		—		—		—		2,238
Total Commercial Loans		119		190		1,932		6,903
Residential Loans:
Residential mortgage		3,771		4,090		4,611		6,541
Total Residential Loans		3,771		4,090		4,611		6,541
Total Non-Accrual Loans and Leases		3,890		4,280		6,543		13,444
Other Real Estate Owned		—		124		751		325
Total Non-Performing Assets	$	3,890	$	4,404	$	7,294	$	13,769

Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial	$	807	$	350	$	141	$	163
Construction		—		89		—		—
Total Commercial Loans		807		439		141		163
Residential Loans:
Residential mortgage		—		—		32		339
Home equity line		1,635		2,448		2,842		1,242
Total Residential Loans		1,635		2,448		2,874		1,581
Consumer		3,295		3,538		3,373		1,451
Total Accruing Loans and Leases Past Due 90 Days or More	$	5,737	$	6,425	$	6,388	$	3,195

Restructured Loans on Accrual Status and Not Past Due 90 Days or More		23,466		25,229		24,033		32,277
Total Loans and Leases	$	13,264,609	$	13,197,454	$	13,076,191	$	12,637,686


Allowance for Loan and Lease Losses														Table 12
	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(dollars in thousands)	2019			2019			2018			2019			2018
Balance at Beginning of Period	$	141,546		$	141,718		$	138,574		$	141,718		$	137,253
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial		(2,000)			—			—			(2,000)			(475)
Lease financing		—			(24)			—			(24)			—
Total Commercial Loans		(2,000)			(24)			—			(2,024)			(475)
Residential		—			—			(34)			—			(34)
Consumer		(7,505)			(8,598)			(6,290)			(16,103)			(12,915)
Total Loans and Leases Charged-Off		(9,505)			(8,622)			(6,324)			(18,127)			(13,424)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial		25			37			39			62			103
Commercial real estate		32			31			32			63			154
Total Commercial Loans		57			68			71			125			257
Residential		185			250			60			435			242
Consumer		2,382			2,452			2,200			4,834			4,303
Total Recoveries on Loans and Leases Previously Charged-Off		2,624			2,770			2,331			5,394			4,802
Net Loans and Leases Charged-Off		(6,881)			(5,852)			(3,993)			(12,733)			(8,622)
Provision for Loan and Lease Losses		3,870			5,680			6,020			9,550			11,970
Balance at End of Period	$	138,535		$	141,546		$	140,601		$	138,535		$	140,601
Average Loans and Leases Outstanding	$	13,209,655		$	13,073,708		$	12,552,610		$	13,142,057		$	12,425,351
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding		0.21	%		0.18	%		0.13	%		0.20	%		0.14	%
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding		1.04	%		1.07	%		1.11	%		1.04	%		1.11	%


GAAP to Non-GAAP Reconciliation												Table 13
	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,
(dollars in thousands, except per share amounts)	2019			2019			2018			2019			2018
Income Statement Data:
Net income	$	72,433		$	69,924		$	69,053		$	142,357		$	137,011

Average total stockholders' equity	$	2,610,565		$	2,540,600		$	2,466,392		$	2,575,775		$	2,483,252
Less: average goodwill		995,492			995,492			995,492			995,492			995,492
Average tangible stockholders' equity	$	1,615,073		$	1,545,108		$	1,470,900		$	1,580,283		$	1,487,760

Average total assets	$	20,390,273		$	20,494,837		$	20,121,504		$	20,442,266		$	20,263,820
Less: average goodwill		995,492			995,492			995,492			995,492			995,492
Average tangible assets	$	19,394,781		$	19,499,345		$	19,126,012		$	19,446,774		$	19,268,328

Return on average total stockholders' equity(1)		11.13	%		11.16	%		11.23	%		11.15	%		11.13	%
Return on average tangible stockholders' equity (non-GAAP)(1)		17.99	%		18.35	%		18.83	%		18.17	%		18.57	%

Return on average total assets(1)		1.42	%		1.38	%		1.38	%		1.40	%		1.36	%
Return on average tangible assets (non-GAAP)(1)		1.50	%		1.45	%		1.45	%		1.48	%		1.43	%

Average stockholders' equity to average assets		12.80	%		12.40	%		12.26	%		12.60	%		12.25	%
Average tangible stockholders' equity to average tangible assets (non-GAAP)		8.33	%		7.92	%		7.69	%		8.13	%		7.72	%



	As of			As of			As of			As of
	June 30,			March 31,			December 31,			June 30,
	2019			2019			2018			2018
Balance Sheet Data:
Total stockholders' equity	$	2,659,441		$	2,613,202		$	2,524,839		$	2,459,175
Less: goodwill		995,492			995,492			995,492			995,492
Tangible stockholders' equity	$	1,663,949		$	1,617,710		$	1,529,347		$	1,463,683

Total assets	$	20,526,367		$	20,441,136		$	20,695,678		$	20,479,719
Less: goodwill		995,492			995,492			995,492			995,492
Tangible assets	$	19,530,875		$	19,445,644		$	19,700,186		$	19,484,227

Shares outstanding		133,508,212			135,012,015			134,874,302			136,642,060

Total stockholders' equity to total assets		12.96	%		12.78	%		12.20	%		12.01	%
Tangible stockholders' equity to tangible assets (non-GAAP)		8.52	%		8.32	%		7.76	%		7.51	%

Book value per share	$	19.92		$	19.36		$	18.72		$	18.00
Tangible book value per share (non-GAAP)	$	12.46		$	11.98		$	11.34		$	10.71

⁽¹⁾

Annualized for the three and six months ended June 30, 2019 and 2018 and the three months ended March 31, 2019.


GAAP to Non-GAAP Reconciliation														Table 14
	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,
(dollars in thousands, except per share amounts)	2019			2019			2018			2019			2018
Net interest income	$	145,613		$	145,089		$	141,403		$	290,702		$	281,075
Core net interest income (non-GAAP)	$	145,613		$	145,089		$	141,403		$	290,702		$	281,075

Noninterest income	$	48,773		$	47,072		$	49,797		$	95,845		$	98,497
(Gain) loss on sale of securities		(21)			2,613			—			2,592			—
Core noninterest income (non-GAAP)	$	48,752		$	49,685		$	49,797		$	98,437		$	98,497

Noninterest expense	$	93,290		$	92,623		$	91,865		$	185,913		$	182,452
One-time items(1)		(261)			(261)			(914)			(522)			(1,321)
Core noninterest expense (non-GAAP)	$	93,029		$	92,362		$	90,951		$	185,391		$	181,131

Net income	$	72,433		$	69,924		$	69,053		$	142,357		$	137,011
(Gain) loss on sale of securities		(21)			2,613			—			2,592			—
One-time noninterest expense items(1)		261			261			914			522			1,321
Tax adjustments(2)		(61)			(746)			(247)			(807)			(353)
Total core adjustments		179			2,128			667			2,307			968
Core net income (non-GAAP)	$	72,612		$	72,052		$	69,720		$	144,664		$	137,979
Core basic earnings per share (non-GAAP)	$	0.54		$	0.53		$	0.51		$	1.07		$	0.99
Core diluted earnings per share (non-GAAP)	$	0.54		$	0.53		$	0.50		$	1.07		$	0.99
Core efficiency ratio (non-GAAP)		47.86	%		47.42	%		47.56	%		47.64	%		47.71	%

Basic earnings per share	$	0.54		$	0.52		$	0.50		$	1.06		$	0.99
Diluted earnings per share	$	0.54		$	0.52		$	0.50		$	1.06		$	0.99
Efficiency ratio		47.99	%		48.20	%		48.04	%		48.09	%		48.06	%

⁽¹⁾

One-time items included nonrecurring offering costs, public company transition related costs and the loss on our funding swap as a result of a decrease in the conversion rate of our Visa Class B restricted shares sold in 2016.

⁽²⁾

Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period.