First Hawaiian Bank

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First Hawaiian, Inc. Reports First Quarter 2017 Financial Results and Declares Dividend
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HONOLULU, April 27, 2017 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (the “Company”) today reported financial results for the quarter ended March 31, 2017.

First Quarter Highlights

  • Net income for the quarter ended March 31, 2017 was $56.7 million, or $0.41 per diluted share, and core net income1 was $57.0 million, or $0.41 per diluted share
  • Board of Directors declared a dividend of $0.22 per share
  • Successful follow-on stock offering completed in February 2017.  BNP Paribas sold 28.75 million shares, reducing its ownership level to 62%

“We are pleased to start 2017 with a solid first quarter.  Loans and leases grew to a record $11.8 billion, we maintained our expense discipline and our credit quality remained excellent,” said Bob Harrison, Chairman and Chief Executive Officer.  “BNP Paribas also continued to reduce their ownership interest in First Hawaiian with a successful follow-on stock offering of 28.75 million shares.  This reduced BNP Paribas’ ownership in First Hawaiian, Inc. to 62%.”

On April 26, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share.  The dividend will be payable on June 9, 2017 to stockholders of record at the close of business on May 30, 2017.

Earnings Highlights

Net income for the quarter ended March 31, 2017 was $56.7 million, or $0.41 per diluted share, compared to $56.6 million, or $0.41 per diluted share, for the quarter ended December 31, 2016, and $65.5 million, or $0.47 per diluted share, for the quarter ended March 31, 2016.  Results from the quarter ended March 31, 2016 included $25.7 million ($16.0 million net of tax) gains from securities sales.  Core net income for the quarter ended March 31, 2017 was $57.0 million, or $0.41 per diluted share, compared to $56.0 million, or $0.40 per diluted share, for the quarter ended December 31, 2016, and $51.1 million, or $0.37 per diluted share, for the quarter ended March 31, 2016.

Net interest income for the quarter ended March 31, 2017 was $129.3 million, a decrease of $2.0 million compared to $131.3 million for the quarter ended December 31, 2016, and an increase of $12.0 million compared to $117.3 million for the quarter ended March 31, 2016The decrease in net interest income compared to the fourth quarter of 2016 was primarily due to lower yields on loans and higher average deposit balances and rates, partially offset by higher yields on investment securities and interest bearing deposits.  Loan yields in the fourth quarter of 2016 were favorably impacted by $2.1 million of loan prepayment fees.  The increase compared to the first quarter of 2016 was due to higher average balances of loans and investments and higher yields on investment securities and interest bearing deposits, partially offset by lower yields on loans and higher average deposit balances and rates.

Net interest margin was 3.00%, 2.99% and 2.77% for the quarters ended March 31, 2017, December 31, 2016, and March 31, 2016, respectively.  Excluding the $2.1 million in loan prepayment fees in the quarter ended December 31, 2016, net interest margin increased during the first quarter of 2017 by six basis points, primarily due to higher earning asset yields, partially offset by higher costs related to time deposits.  The 23 basis point increase compared to the first quarter of 2016 was due to higher yields on investments and interest bearing deposits, partially offset by lower loan yields and higher deposit costs.   

Results for the quarter ended March 31, 2017 included a provision for credit losses of $4.5 million compared to $3.9 million in the quarter ended December 31, 2016 and $0.7 million in the quarter ended March 31, 2016.  The first quarter of 2016 included a recovery of $3.1 million on a previously charged-off commercial real estate loan.

Noninterest income was $49.4 million in the quarter ended March 31, 2017, an increase of $0.4 million compared to noninterest income of $49.0 million in the quarter ended December 31, 2016 and a decrease of $24.1 million compared to noninterest income of $73.5 million in the quarter ended March 31, 2016.  The first quarter of 2017 included gains of $1.3 million from death benefits from bank-owned life insurance (BOLI).  The fourth quarter of 2016 included $1.5 million of net gains from the sale of securities.  The first quarter of 2016 included a $22.7 million net gain on the sale of Visa Class B restricted shares, and $3.1 million of net gains on the sales of securities. 

Noninterest expense was $84.3 million for the quarter ended March 31, 2017, an increase of $1.8 million from $82.5 million in the quarter ended December 31, 2016, and a decrease of $0.7 million from $85.1 million in the quarter ended March 31, 2016.  The increase in noninterest expense compared to the fourth quarter of 2016 was primarily due to $2.8 million higher salaries and employee benefits expense and $1.2 million higher other expense, partially offset by $1.9 million lower contracted services and professional fees and $0.6 million lower equipment expense.  The increase in salaries and employee benefits expense was largely due to annual merit increases, increased overtime expenses and higher payroll taxes.  Contracted services and professional fees in the fourth quarter of 2016 were elevated as a result expenses related to system upgrades and product enhancements.  The decrease in noninterest expense compared to the first quarter of 2016 was primarily due to a $2.4 million decrease in contracted services and professional fees, and a $1.4 million decrease in salaries and employee benefits, partially offset by $1.3 million higher regulatory assessment and fees, and $1.0 million higher cards reward expenses.  Contracted services and professional fees in the first quarter of 2016 included $2.5 million of fees related to the initial public offering.  The decrease in salaries and employee benefits compared to the first quarter of 2016 was primarily due to an increase in deferred loan origination costs in the first quarter of 2017.  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 47.2%, 45.8% and 44.6% for the quarters ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively. 

The effective tax rate for the first quarter of 2017 was 36.9% compared with 39.8% in the previous quarter and 37.6% percent in the same quarter last year.  The decrease in the effective tax rate in the first quarter of 2017 compared to the prior quarters was primarily due to the higher level of BOLI income received in the first quarter of 2017.

Balance Sheet Highlights

Total assets were $19.8 billion at March 31, 2017, compared to $19.7 billion at December 31, 2016 and $19.1 billion at March 31, 2016.

The investment securities portfolio was $5.3 billion at March 31, 2017, compared to $5.1 billion at December 31, 2016 and $3.9 billion at March 31, 2016.  The portfolio remains largely comprised of securities issued by  U.S. government agencies.

Total loans and leases were $11.8 billion at March 31, 2017, an increase of $261.1 million, or 2.3%, from $11.5 billion at December 31, 2016 and up $818.9 million, or 7.5%, from $11.0 billion at March 31, 2016.  The growth in loans and leases compared to December 31, 2016 was largely due to strong growth in the commercial real estate and residential loan segments of the portfolio.  Compared to March 31, 2016, the growth in loans and leases was due to increases across all loan categories.

Total deposits were $16.9 billion at March 31, 2017, an increase of $143.6 million, or 0.9%, compared with $16.8 billion at December 31, 2016, and an increase of $883.7 million, or 5.5%, compared to $16.1 billion at March 31, 2016. 

Asset Quality

The Company's asset quality remained solid during the first quarter of 2017. Total non-performing assets declined to $7.7 million, or 0.07% of total loans and leases, at March 31, 2017, down $2.1 million from non-performing assets of $9.8 million, or 0.08% of total loans and leases, at December 31, 2016 and down $6.9 million from non­performing assets of $14.6 million, or 0.13% of total loans and leases, at March 31, 2016.

Net charge offs for the quarter ended March 31, 2017 were $4.1 million, or 0.15% of average loans and leases on an annualized basis, compared to $3.4 million, or 0.12% of average loans and leases on an annualized basis for the quarter ended December 31, 2016 and a net recovery of $1.0 million, or (0.04)% of average loans and leases on an annualized basis for the quarter ended March 31, 2016. 

The ratio of allowance for loan and lease losses to total loans and leases was 1.15% at March 31, 2017 compared to 1.18% at December 31, 2016 and 1.25% at March 31, 2016. 

Capital

Total stockholders' equity was $2.5 billion at March 31, 2017, December 31, 2016 and March 31, 2016.   

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.52%, 12.78% and 13.87%, respectively, at March 31, 2017, compared with 8.36%, 12.75% and 13.85% at December 31, 2016 and 8.18%, 12.55%, 13.71% at March 31, 2016.

___________________
1 Core 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 11 and 12 at the end of this document.

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:  5236509.  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 May 7, 2017.  Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID:  5236509.

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 11 and 12 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most closely related GAAP measures. 

Financial Highlights                 Table 1  
      For the Three Months Ended  
      March 31,    December 31,   March 31,   
(dollars in thousands, except per share data)     2017   2016   2016  
Operating Results:                      
Net interest income     $   129,345   $ 131,250   $ 117,312  
Provision for loan and lease losses         4,500     3,900     700  
Noninterest income         49,407     49,021     73,519  
Noninterest expense         84,339     82,503     85,064  
Net income         56,740     56,552     65,531  
Basic earnings per share         0.41     0.41     0.47  
Diluted earnings per share         0.41     0.41     0.47  
Dividends declared per share         0.22     0.20     N/A  
Dividend payout ratio         53.66 %   49.35 %   N/A  
Supplemental Income Statement Data (non-GAAP):                      
Core net interest income     $   129,345   $ 131,250   $ 117,312  
Core noninterest income         49,407     47,505     47,791  
Core noninterest expense         83,955     81,920     82,517  
Core net income         56,982     56,001     51,073  
Core basic earnings per share     $   0.41   $ 0.40   $ 0.37  
Core diluted earnings per share     $   0.41   $ 0.40   $ 0.37  
Performance Ratio:                      
Net interest margin         3.00 2.99 %   2.77 %
Core net interest margin (non-GAAP)         3.00 2.99 %   2.77 %
Efficiency ratio         47.18 45.76 %   44.57 %
Core efficiency ratio (non-GAAP)         46.96 45.82 %   49.98 %
Return on average total assets         1.16 1.14 %   1.37 %
Core return on average total assets (non-GAAP)         1.17 1.13 %   1.06 %
Return on average tangible assets         1.23 1.20 %   1.44 %
Core return on average tangible assets (non-GAAP)         1.23 1.19 %   1.12 %
Return on average total stockholders' equity         9.25 8.97 %   9.52 %
Core return on average total stockholders' equity (non-GAAP)         9.29 8.88 %   7.42 %
Return on average tangible stockholders' equity (non-GAAP)         15.41 14.88 %   14.86 %
Core return on average tangible stockholders’ equity (non-GAAP)         15.48 14.73 %   11.58 %
Average Balances:                      
Average loans and leases     $   11,582,645   $ 11,531,684   $ 10,828,160  
Average earning assets         17,470,726     17,482,648     17,060,214  
Average assets         19,769,508     19,778,918     19,290,342  
Average deposits         16,900,354     16,861,525     15,946,664  
Average shareholders' equity         2,488,519     2,507,514     2,769,476  
Market Value Per Share:                      
Closing         29.92     34.82     N/A  
High         34.85     35.47     N/A  
Low         29.13     25.80     N/A  

 

       As of     As of     As of     
       March 31,      December 31,     March 31,      
      2017   2016   2016    
Balance Sheet Data:                        
Loans and leases     $ 11,781,496   $ 11,520,378   $ 10,962,638    
Total assets       19,792,785     19,661,829     19,087,504    
Total deposits       16,938,178     16,794,532     16,054,451    
Total stockholders' equity         2,505,994     2,476,485     2,471,734    
                         
Per Share of Common Stock:                        
Book value     $   17.96   $ 17.75   $ 17.72    
Tangible book value         10.82     10.61     10.59    
                         
Asset Quality Ratios:                        
Non-accrual loans and leases / total loans and leases         0.06 0.08 %   0.13 %  
Allowance for loan and lease losses / total loans and leases                       1.15 1.18 %   1.25 %  
                         
Capital Ratios:                        
Common Equity Tier 1 Capital Ratio           12.78   12.75 %   12.55 %  
Tier 1 Capital Ratio         12.78 12.75 %   12.55 %  
Total Capital Ratio         13.87 13.85 %   13.71 %  
Tier 1 Leverage Ratio         8.52 8.36 %   8.18 %  
Total stockholders' equity to total assets         12.66 12.60 %   12.95 %  
Tangible stockholders' equity to tangible assets (non-GAAP)         8.04 7.93 %   8.16 %  
                         
Non-Financial Data:                        
Number of branches         62     62     62    
Number of ATMs         311     311     311    
Number of Full-Time Equivalent Employees         2,195     2,179     2,186    
                         

 

Consolidated Statements of Income   Table 2  
    Three Months Ended  
    March 31,    December 31,   March 31,   
(dollars in thousands, except per share amounts)   2017   2016   2016  
Interest income                    
Loans and lease financing   $   109,266   $ 111,461   $ 104,357  
Available-for-sale securities       26,429     25,884     16,559  
Other       1,226     968     2,896  
Total interest income       136,921     138,313     123,812  
Interest expense                    
Deposits       7,570     7,048     6,429  
Short-term borrowings and long-term debt       6     15     71  
Total interest expense       7,576     7,063     6,500  
Net interest income       129,345     131,250     117,312  
Provision for loan and lease losses       4,500     3,900     700  
Net interest income after provision for loan and lease losses       124,845     127,350     116,612  
Noninterest income                    
Service charges on deposit accounts       9,555     9,388     9,789  
Credit and debit card fees       14,479     14,339     13,819  
Other service charges and fees       9,097     8,446     9,227  
Trust and investment services income       7,338     7,204     7,405  
Bank-owned life insurance       4,578     1,758     2,356  
Investment securities gains, net           1,516     25,728  
Other       4,360     6,370     5,195  
Total noninterest income       49,407     49,021     73,519  
Noninterest expense                    
Salaries and employee benefits       43,300     40,471     44,701  
Contracted services and professional fees       10,308     12,221     12,755  
Occupancy       5,321     5,125     5,312  
Equipment       4,197     4,777     3,827  
Regulatory assessment and fees       3,774     4,103     2,477  
Advertising and marketing       2,028     1,309     1,624  
Card rewards program       4,511     4,770     3,502  
Other       10,900     9,727     10,866  
Total noninterest expense       84,339     82,503     85,064  
Income before provision for income taxes       89,913     93,868     105,067  
Provision for income taxes       33,173     37,316     39,536  
Net income   $   56,740   $ 56,552   $ 65,531  
Basic earnings per share   $   0.41   $ 0.41   $ 0.47  
Diluted earnings per share   $   0.41   $ 0.41   $ 0.47  
Dividends declared per share   $   0.22   $ 0.20   $  
Basic weighted-average outstanding shares       139,545,728     139,530,654     139,459,620  
Diluted weighted-average outstanding shares       139,637,410     139,546,875     139,459,620  
                     

 

Consolidated Balance Sheets   Table 3  
    March 31,    December 31,   March 31,   
(dollars in thousands)   2017     2016     2016    
Assets                    
Cash and due from banks   $   249,953     $ 253,827     $ 300,183    
Interest-bearing deposits in other banks       527,659       798,231       2,048,875    
Investment securities       5,260,262       5,077,514       3,864,940    
Loans and leases     11,781,496       11,520,378       10,962,638    
Less: allowance for loan and lease losses       135,847       135,494       137,154    
Net loans and leases     11,645,649       11,384,884       10,825,484    
                     
Premises and equipment, net       295,608       300,788       304,704    
Other real estate owned and repossessed personal property       329       329       205    
Accrued interest receivable       39,386       41,971       33,473    
Bank-owned life insurance       429,800       429,209       426,446    
Goodwill       995,492       995,492       995,492    
Other intangible assets       15,800       16,809       20,214    
Other assets       332,847       362,775       267,488    
Total assets   $ 19,792,785     $ 19,661,829     $ 19,087,504    
Liabilities and Stockholders' Equity                    
Deposits:                    
Interest-bearing   $ 10,917,631     $ 10,801,915     $ 10,639,094    
Noninterest-bearing       6,020,547       5,992,617       5,415,357    
Total deposits     16,938,178       16,794,532       16,054,451    
Short-term borrowings             9,151       215,451    
Long-term debt       41       41       48    
Retirement benefits payable       133,819       132,904       135,584    
Other liabilities       214,753       248,716       210,236    
Total liabilities     17,286,791       17,185,344       16,615,770    
                     
Stockholders' equity                    
Net investment                   2,490,107    
Common stock ($0.01 par value; authorized 300,000,000 shares; issued and outstanding 139,546,615 shares as of March 31, 2017, 139,530,654 shares as of December 31, 2016 and 139,459,620 shares as of March 31, 2016)       1,395       1,395          
Additional paid-in capital       2,486,596       2,484,251          
Retained earnings       104,695       78,850          
Accumulated other comprehensive loss, net       (86,692 )     (88,011 )     (18,373 )  
Total stockholders' equity       2,505,994       2,476,485       2,471,734    
Total liabilities and stockholders' equity   $ 19,792,785     $ 19,661,829     $ 19,087,504    
                     

 

Average Balances and Interest Rates                                              Table 4     
    Three Months Ended    Three Months Ended    Three Months Ended     
    March 31, 2017   December 31, 2016   March 31, 2016    
     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   $   640.2   $   1.2     0.78 $ 673.7   $ 0.9   0.57 % $ 2,273.2   $ 2.9   0.51 %  
Available-for-Sale Investment Securities       5,236.6       26.4     2.05     5,277.2     25.9   1.95     3,958.9     16.6   1.68    
Loans and Leases (1)                                                    
Commercial and industrial       3,233.6       24.3     3.04     3,314.3     25.7   3.09     3,095.6     22.9   2.98    
Real estate - commercial       2,481.2       22.2     3.63     2,431.4     23.1   3.78     2,158.7     20.9   3.89    
Real estate - construction       460.3       3.7     3.25     470.7     3.8   3.21     405.9     3.3   3.24    
Real estate - residential       3,723.7       37.6     4.10     3,636.9     37.0   4.04     3,560.6     36.0   4.07    
Consumer       1,513.4       20.3     5.43     1,493.9     20.6   5.49     1,415.3     19.8   5.65    
Lease financing       170.5       1.2     2.77     184.5     1.3   2.75     192.0     1.4   2.94    
Total Loans and Leases      11,582.7      109.3     3.83     11,531.7     111.5   3.85     10,828.1     104.3   3.88    
Other Earning Assets       11.2           0.77                        
Total Earning Assets (2)      17,470.7      136.9     3.18     17,482.6     138.3   3.15     17,060.2     123.8   2.92    
Cash and Due from Banks       324.7               312.5               299.0              
Other Assets       1,974.1               1,983.8               1,931.1              
Total Assets   $  19,769.5             $ 19,778.9             $ 19,290.3              
                                                     
Interest-Bearing Liabilities                                                    
Interest-Bearing Deposits                                                    
Savings   $   4,506.4   $   0.7     0.06 $ 4,446.1   $ 0.6   0.06 % $ 4,350.0   $ 0.7   0.06 %  
Money Market       2,494.3       0.6     0.09     2,680.4     0.7   0.10     2,399.1     0.5   0.09    
Time       3,985.8       6.3     0.65     3,923.1     5.7   0.58     3,824.8     5.2   0.55    
Total Interest-Bearing Deposits      10,986.5       7.6     0.28     11,049.6     7.0   0.25     10,573.9     6.4   0.24    
Short-Term Borrowings       3.9           0.54     11.1       0.49     223.9     0.1   0.13    
Total Interest-Bearing Liabilities      10,990.4       7.6     0.28     11,060.7     7.0   0.25     10,797.8     6.5   0.24    
Net Interest Income         $  129.3             $ 131.3             $ 117.3        
Interest Rate Spread                 2.90             2.90 %             2.68 %  
Net Interest Margin                 3.00             2.99 %             2.77 %  
Noninterest-Bearing Demand Deposits       5,913.9               5,811.9               5,372.8              
Other Liabilities       376.7               398.8               350.2              
Stockholders' Equity       2,488.5               2,507.5               2,769.5              
Total Liabilities and Stockholders' Equity $  19,769.5             $ 19,778.9             $ 19,290.3              
                                                     

 

Analysis of Change in Net Interest Income                  Table 5   
    Three Months Ended March 31, 2017  
    Compared to December 31, 2016  
(dollars in millions)    Volume     Rate    Total  
Change in Interest Income:                    
Interest-Bearing Deposits in Other Banks   $       $   0.3     $   0.3    
Available-for-Sale Investment Securities       (0.2 )       0.7         0.5    
Loans and Leases                    
Commercial and industrial       (0.6 )       (0.8 )       (1.4 )  
Real estate - commercial       0.5         (1.4 )       (0.9 )  
Real estate - construction       (0.1 )               (0.1 )  
Real estate - residential       0.8         (0.2 )       0.6    
Consumer       0.3         (0.6 )       (0.3 )  
Lease financing       (0.1 )               (0.1 )  
Total Loans and Leases       0.8         (3.0 )       (2.2 )  
Total Change in Interest Income       0.6         (2.0 )       (1.4 )  
                     
Change in Interest Expense:                    
Interest-Bearing Deposits                    
Money Market               (0.1 )       (0.1 )  
Time       0.1         0.5         0.6    
Total Interest-Bearing Deposits       0.1         0.4         0.5    
Total Change in Interest Expense       0.1         0.4         0.5    
Change in Net Interest Income   $   0.5     $   (2.4 )   $   (1.9 )  
                     

 

Analysis of Change in Net Interest Income                  Table 6   
    Three Months Ended March 31, 2017  
    Compared to March 31, 2016  
(dollars in millions)    Volume     Rate    Total  
Change in Interest Income:                    
Interest-Bearing Deposits in Other Banks   $   (2.7 )   $   1.0     $   (1.7 )  
Available-for-Sale Investment Securities       6.0         3.8         9.8    
Loans and Leases                    
Commercial and industrial       1.0         0.4         1.4    
Real estate - commercial       3.0         (1.7 )       1.3    
Real estate - construction       0.4                 0.4    
Real estate - residential       1.6                 1.6    
Consumer       1.4         (0.9 )       0.5    
Lease financing       (0.1 )       (0.1 )       (0.2 )  
Total Loans and Leases       7.3         (2.3 )       5.0    
Total Change in Interest Income       10.6         2.5         13.1    
                     
Change in Interest Expense:                    
Interest-Bearing Deposits                    
Money Market       0.1                 0.1    
Time       0.2         0.9         1.1    
Total Interest-Bearing Deposits       0.3         0.9         1.2    
Short-term Borrowings       (0.1 )               (0.1 )  
Total Change in Interest Expense       0.2         0.9         1.1    
Change in Net Interest Income   $   10.4     $   1.6     $   12.0    
                     

 

Loans and Leases                   Table 7  
      March 31,    December 31,   March 31,   
(dollars in thousands)     2017   2016   2016  
Commercial and industrial     $   3,243,508   $ 3,239,600   $ 3,197,173  
Real estate:                      
Commercial         2,532,253     2,343,495     2,147,132  
Construction         469,741     450,012     421,107  
Residential         3,864,509     3,796,459     3,586,862  
Total real estate         6,866,503     6,589,966     6,155,101  
Consumer         1,503,129     1,510,772     1,419,326  
Lease financing         168,356     180,040     191,038  
Total loans and leases     $   11,781,496   $ 11,520,378   $ 10,962,638  
                       

 

Deposits                   Table 8  
      March 31,    December 31,   March 31,   
(dollars in thousands)     2017   2016   2016  
Demand     $   6,020,547   $ 5,992,617   $ 5,415,357  
Savings         4,503,663     4,609,306     4,382,643  
Money Market         2,496,642     2,454,013     2,280,653  
Time         3,917,326     3,738,596     3,975,798  
Total Deposits     $   16,938,178   $ 16,794,532   $ 16,054,451  
                       

 

Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More                   Table 9
      March 31,    December 31,   March 31, 
(dollars in thousands)     2017   2016   2016
Non-Performing Assets                    
Non-Accrual Loans and Leases                    
Commercial Loans:                    
Commercial and industrial     $   2,154   $ 2,730   $ 3,774
Lease financing         153     153     178
Total Commercial Loans         2,307     2,883     3,952
Residential         5,023     6,547     10,481
Total Non-Accrual Loans and Leases         7,330     9,430     14,433
Other Real Estate Owned         329     329     205
Total Non-Performing Assets     $   7,659   $ 9,759   $ 14,638
                     
Accruing Loans and Leases Past Due 90 Days or More                    
Commercial Loans:                    
Commercial and industrial     $   309   $ 449   $ 198
Lease financing         84     83    
Total Commercial Loans         393     532     198
Residential         1,437     866     2,103
Consumer         1,718     1,870     1,813
Total Accruing Loans and Leases Past Due 90 Days or More     $   3,548   $ 3,268   $ 4,114
                     
Restructured Loans on Accrual Status and Not Past Due 90 Days or More         50,758     44,496     44,829
Total Loans and Leases      $ 11,781,496   $ 11,520,378   $ 10,962,638
                     

 

Allowance for Loan and Lease Losses                 Table 10      
    For the Three Months Ended      
    March 31,    December 31,   March 31,       
(dollars in thousands)   2017     2016     2016        
Balance at Beginning of Period   $   135,494     $ 135,025     $ 135,484        
Loans and Leases Charged-Off                        
Commercial Loans:                        
Commercial and industrial       (855 )           (86 )      
Total Commercial Loans       (855 )           (86 )      
Residential       (22 )     (3 )     (72 )      
Consumer       (5,572 )     (5,412 )     (4,206 )      
Total Loans and Leases Charged-Off       (6,449 )     (5,415 )     (4,364 )      
Recoveries on Loans and Leases Previously Charged-Off                        
Commercial Loans:                        
Commercial and industrial       114       23       203        
Real estate - commercial       77       41       3,199        
Lease financing             1              
Total Commercial Loans       191       65       3,402        
Residential       321       242       306        
Consumer       1,790       1,677       1,626        
Total Recoveries on Loans and Leases Previously Charged-Off       2,302       1,984       5,334        
Net Loans and Leases (Charged-Off) Recovered       (4,147 )     (3,431 )     970        
Provision for Credit Losses       4,500       3,900       700        
Balance at End of Period   $   135,847     $ 135,494     $ 137,154        
Average Loans and Leases Outstanding   $ 11,582,645     $ 11,531,684     $ 10,828,160        
Ratio of Net Loans and Leases Charged-Off (Recovered) to Average Loans and Leases Outstanding       0.15   0.12   % (0.04 ) %  
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding       1.15   1.18   % 1.25   %  
                         

 

GAAP to Non-GAAP Reconciliation             Table 11    
    As of and for the Three Months Ended    
    March 31,    December 31,   March 31,     
(dollars in thousands, except per share amounts)   2017   2016   2016    
Net income   $   56,740   $   56,552   $   65,531    
                       
Average total stockholders' equity   $   2,488,519   $   2,507,514   $   2,769,476    
Less: average goodwill       995,492       995,492       995,492    
Average tangible stockholders' equity   $   1,493,027   $   1,512,022   $   1,773,984    
                       
Total stockholders' equity   $   2,505,994   $   2,476,485   $   2,471,734    
Less: goodwill       995,492       995,492       995,492    
Tangible stockholders' equity   $   1,510,502   $   1,480,993   $   1,476,242    
                       
Average total assets   $   19,769,508   $   19,778,918   $   19,290,342    
Less: average goodwill       995,492       995,492       995,492    
Average tangible assets   $   18,774,016   $   18,783,426   $   18,294,850    
                       
Total assets   $   19,792,785   $   19,661,829   $   19,087,504    
Less: goodwill       995,492       995,492       995,492    
Tangible assets   $   18,797,293   $   18,666,337   $   18,092,012    
                       
Shares outstanding       139,546,615       139,530,654       139,459,620    
                       
Return on average total stockholders' equity(a)       9.25     8.97     9.52  
Return on average tangible stockholders' equity (non-GAAP)(a)       15.41     14.88     14.86  
                       
Return on average total assets(a)       1.16     1.14     1.37  
Return on average tangible assets (non-GAAP)(a)       1.23     1.20     1.44  
                       
Total stockholders' equity to total assets       12.66     12.60     12.95  
Tangible stockholders' equity to tangible assets (non-GAAP)       8.04     7.93     8.16  
                       
Average stockholders' equity to average assets       12.59     12.68     14.36  
Tangible average stockholders' equity to tangible average assets (non-GAAP)       7.95     8.05     9.70  
                       
Book value per share   $   17.96   $   17.75   $   17.72    
Tangible book value per share (non-GAAP)   $   10.82   $   10.61   $   10.59    
                       

 

GAAP to Non-GAAP Reconciliation   Table 12  
    For the Three Months Ended  
    March 31,    December 31,   March 31,   
(dollars in thousands, except per share amounts)   2017     2016     2016    
Net interest income   $   129,345     $ 131,250     $ 117,312    
Core net interest income (non-GAAP)   $   129,345     $ 131,250     $ 117,312    
                     
Noninterest income   $   49,407     $ 49,021     $ 73,519    
Loss (gain) on sale of securities             (1,516 )     (3,050 )  
Gain on sale of stock (Visa/MasterCard)                   (22,678 )  
Core noninterest income (non-GAAP)   $   49,407     $ 47,505     $ 47,791    
                     
Noninterest expense   $   84,339     $ 82,503     $ 85,064    
One-time items(a)       (384 )     (583 )     (2,547 )  
Core noninterest expense (non-GAAP)   $   83,955     $ 81,920     $ 82,517    
                     
Net income   $   56,740     $ 56,552     $ 65,531    
Loss (gain) on sale of securities             (1,516 )     (3,050 )  
Gain on sale of stock (Visa/MasterCard)                   (22,678 )  
One-time items(a)       384       583       2,547    
Tax adjustments(b)       (142 )     382       8,723    
Total core adjustments       242       (551 )     (14,458 )  
Core net income (non-GAAP)   $   56,982     $ 56,001     $ 51,073    
Core basic earnings per share (non-GAAP)   $   0.41     $ 0.40     $ 0.37    
Core diluted earnings per share (non-GAAP)   $   0.41     $ 0.40     $ 0.37    
                     

 

Investor Relations Contact:
Kevin Haseyama, CFA
(808) 525-6268
khaseyama@fhb.com

Media Contact:
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(808) 525-6254
skam@fhb.com

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