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First Hawaiian, Inc. Reports Second Quarter 2022 Financial Results and Declares Dividend
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First Hawaiian, Inc. Reports Second Quarter 2022 Financial Results and Declares Dividend

July 29, 2022 at 8:00 AM EDT

HONOLULU, July 29, 2022 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended June 30, 2022.

“I’m pleased to report that we had a very strong second quarter as the bank continued to perform well,” said Bob Harrison, Chairman, President and CEO. “We had good loan and deposit growth, credit quality remained excellent, and we successfully converted to our new core operating system.”

On July 27, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 2, 2022, to stockholders of record at the close of business on August 22, 2022.  

Second Quarter 2022 Highlights:

  • Net income of $59.4 million, or $0.46 per diluted share
  • Total loans and leases increased $371.0 million versus prior quarter.
  • Total deposits increased $331.0 million versus prior quarter
  • Net interest margin increased 18 basis points to 2.60%
  • Recorded a $1.0 million provision for credit losses
  • Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet

Total assets were $25.4 billion as of June 30, 2022, compared to $25.0 billion as of March 31, 2022.

Gross loans and leases were $13.3 billion as of June 30, 2022, an increase of $371.0 million, or 2.9%, from $12.9 billion as of March 31, 2022.

Total deposits were $22.6 billion as of June 30, 2022, an increase of $331.0 million, or 1.5%, from $22.3 billion as of March 31, 2022.  

Net Interest Income

Net interest income for the second quarter of 2022 was $145.1 million, an increase of $11.3 million, or 8.4%, compared to $133.9 million for the prior quarter.  

The net interest margin was 2.60% in the second quarter of 2022, an increase of 18 basis points compared to 2.42% in the prior quarter.

Provision Expense

During the quarter ended June 30, 2022, we recorded a $1.0 million provision for credit losses. In the quarter ended March 31, 2022, we recorded a $5.7 million negative provision for credit losses.

Noninterest Income

Noninterest income was $44.1 million in the second quarter of 2022, an increase of $2.7 million compared to noninterest income of $41.4 million in the prior quarter.     

Noninterest Expense

Noninterest expense was $109.2 million in the second quarter of 2022, an increase of $5.1 million compared to noninterest expense of $104.0 million in the prior quarter.

The efficiency ratio was 57.3% and 59.0% for the quarters ended June 30, 2022 and March 31, 2022, respectively.

Taxes

The effective tax rate was 25.0% for the quarters ended June 30, 2022 and March 31, 2022.

Asset Quality

The allowance for credit losses was $148.9 million, or 1.12% of total loans and leases, as of June 30, 2022, compared to $150.3 million, or 1.17% of total loans and leases, as of March 31, 2022. The reserve for unfunded commitments was $29.0 million as of June 30, 2022 and March 31, 2022. Net charge-offs were $2.3 million, or 0.07% of average loans and leases on an annualized basis, for the quarter ended June 30, 2022, compared to net charge-offs of $2.6 million, or 0.08% of average loans and leases on an annualized basis, for the quarter ended March 31, 2022. Total non-performing assets were $7.9 million, or 0.06% of total loans and leases and other real estate owned, on June 30, 2022, compared to total non-performing assets of $8.6 million, or 0.07% of total loans and leases and other real estate owned, on March 31, 2022.

Capital

Total stockholders' equity was $2.3 billion on June 30, 2022 and March 31, 2022.    

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.54%, 11.98%, and 13.14%, respectively, on June 30, 2022, compared with 7.50%, 12.27% and 13.48%, respectively, on March 31, 2022.

The Company repurchased 0.3 million shares of common stock at a total cost of $7.0 million under the stock repurchase program in the second quarter. The average cost was $24.09 per share repurchased. Remaining buyback authority under the stock repurchase program was $68.0 million on June 30, 2022.

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 1:00 p.m. Eastern Time, 7:00 a.m. Hawaii Time.

Please note that the process for accessing the conference call has changed. Participants will need to click on the registration link provided below, register for the conference call, and then you will receive the dial-in number and a personalized PIN code.

To access the call by phone, please register via the following link: https://register.vevent.com/register/BI2ebfe69a17064bc89a14e15354a8e329, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time.

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.

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. Further, statements about the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there can be no assurance that actual results will not prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements, including (without limitation) the risks and uncertainties associated with the ongoing impacts of COVID-19, the domestic and global economic environment and capital market conditions and other risk factors. For a discussion of some of these 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, 2021 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

Use of Non-GAAP Financial Measures
Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy.

Table 14 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

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

 Media Contact:
Lindsay Chambers
(808) 525-6254
lchambers@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)   2022      2022
      2021
   2022
      2021
  
Operating Results:                                
Net interest income   $ 145,147   $ 133,872     $ 131,481     $ 279,019     $ 260,639    
Provision for credit losses     1,000     (5,747 )     (35,000 )     (4,747 )     (35,000 )  
Noninterest income     44,137     41,380       49,371       85,517       93,239    
Noninterest expense     109,175     104,042       99,388       213,217       195,694    
Net income     59,360     57,719       86,741       117,079       144,434    
Basic earnings per share     0.46     0.45       0.67       0.92       1.11    
Diluted earnings per share     0.46     0.45       0.67       0.91       1.11    
Dividends declared per share     0.26     0.26       0.26       0.52       0.52    
Dividend payout ratio     56.52 %   57.78   %   38.81   %   57.14   %   46.85   %
Performance Ratios(1):                                
Net interest margin     2.60 %     2.42   %   2.46   %   2.51   %     2.50   %
Efficiency ratio     57.33 %     59.04   %   54.74   %   58.15   %     55.12   %
Return on average total assets     0.94 %     0.93   %   1.45   %   0.94   %     1.24   %
Return on average tangible assets (non-GAAP)(2)     0.98 %     0.97   %   1.51   %   0.98   %     1.30   %
Return on average total stockholders' equity     10.52 %     9.19   %   12.92   %   9.82   %     10.75   %
Return on average tangible stockholders' equity (non-GAAP)(2)     18.79 %     15.08   %   20.51   %   16.76   %     16.99   %
Average Balances:                                
Average loans and leases   $ 13,058,558   $ 12,819,612     $ 13,205,086     $ 12,939,745     $ 13,223,575    
Average earning assets     22,520,605     22,463,209       21,539,264       22,492,066       21,010,643    
Average assets     25,250,176     25,080,453       24,015,065       25,165,783       23,482,839    
Average deposits     22,401,558     21,960,819       20,638,015       22,182,406       20,073,676    
Average stockholders' equity     2,262,654     2,547,865       2,691,966       2,404,471       2,709,735    
Market Value Per Share:                                
Closing     22.80     27.89       28.34       22.80       28.34    
High     28.44     31.16       29.85       31.16       30.80    
Low     21.49     26.93       24.75       21.49       23.14    



                           
    As of   As of   As of   As of  
    June 30,    March 31,    December 31,    June 30,   
(dollars in thousands, except per share data)   2022   2022   2021   2021  
Balance Sheet Data:                          
Loans and leases   $ 13,262,781   $ 12,891,743   $ 12,961,999   $ 13,103,785  
Total assets     25,377,533     25,042,720     24,992,410     24,246,328  
Total deposits     22,601,454     22,270,430     21,816,146     20,835,115  
Long-term borrowings     —     —     —     200,000  
Total stockholders' equity     2,252,611     2,285,149     2,656,912     2,731,341  
                           
Per Share of Common Stock:                          
Book value   $ 17.67   $ 17.90   $ 20.84   $ 21.17  
Tangible book value (non-GAAP)(2)     9.86     10.10     13.03     13.45  
                           
Asset Quality Ratios:                          
Non-accrual loans and leases / total loans and leases     0.06 %     0.07 %   0.05 %   0.07 %
Allowance for credit losses for loans and leases / total loans and leases     1.12 %     1.17 %   1.21 %   1.29 %
                           
Capital Ratios:                          
Common Equity Tier 1 Capital Ratio      11.98 %     12.27 %   12.24 %   12.76 %
Tier 1 Capital Ratio     11.98 %     12.27 %   12.24 %   12.76 %
Total Capital Ratio     13.14 %     13.48 %   13.49 %   14.01 %
Tier 1 Leverage Ratio     7.54 %     7.50 %   7.24 %   7.68 %
Total stockholders' equity to total assets     8.88 %     9.13 %   10.63 %   11.26 %
Tangible stockholders' equity to tangible assets (non-GAAP)(2)     5.16 %     5.36 %   6.92 %   7.47 %
                           
Non-Financial Data:                          
Number of branches     51     51     54     54  
Number of ATMs     297     298     299     294  
Number of Full-Time Equivalent Employees     2,021     2,022     2,036     2,087  


(1)   Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022.
     
(2)   Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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 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 tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. 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. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation.



                               
Consolidated Statements of Income   Table 2
    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)   2022   2022   2021   2022   2021
Interest income                              
Loans and lease financing   $ 111,916     $ 103,732     $ 110,919     $ 215,648     $ 221,858  
Available-for-sale investment securities     16,643       32,107       24,637       48,750       47,783  
Held-to-maturity investment securities     18,289       —       —       18,289       —  
Other     2,896       782       666       3,678       1,157  
Total interest income     149,744       136,621       136,222       286,365       270,798  
Interest expense                              
Deposits     4,597       2,749       3,363       7,346       7,419  
Short-term and long-term borrowings     —       —       1,378       —       2,740  
Total interest expense     4,597       2,749       4,741       7,346       10,159  
Net interest income     145,147       133,872       131,481       279,019       260,639  
Provision for credit losses     1,000       (5,747 )     (35,000 )     (4,747 )     (35,000 )
Net interest income after provision for credit losses     144,147       139,619       166,481       283,766       295,639  
Noninterest income                              
Service charges on deposit accounts     6,843       7,501       6,632       14,344       13,350  
Credit and debit card fees     17,056       14,850       16,746       31,906       31,297  
Other service charges and fees     9,018       9,654       10,303       18,672       19,149  
Trust and investment services income     8,759       8,883       8,707       17,642       17,199  
Bank-owned life insurance     (859 )     (417 )     3,104       (1,276 )     5,493  
Investment securities (losses) gains, net     —       —       102       —       102  
Other     3,320       909       3,777       4,229       6,649  
Total noninterest income     44,137       41,380       49,371       85,517       93,239  
Noninterest expense                              
Salaries and employee benefits     49,902       48,226       45,982       98,128       89,918  
Contracted services and professional fees     18,617       17,147       16,516       35,764       33,704  
Occupancy     7,334       7,410       7,314       14,744       14,484  
Equipment     7,754       5,977       6,362       13,731       11,853  
Regulatory assessment and fees     2,301       2,224       1,826       4,525       3,860  
Advertising and marketing     1,994       2,028       1,469       4,022       3,060  
Card rewards program     7,285       6,883       6,262       14,168       11,097  
Other     13,988       14,147       13,657       28,135       27,718  
Total noninterest expense     109,175       104,042       99,388       213,217       195,694  
Income before provision for income taxes     79,109       76,957       116,464       156,066       193,184  
Provision for income taxes     19,749       19,238       29,723       38,987       48,750  
Net income   $ 59,360     $ 57,719     $ 86,741     $ 117,079     $ 144,434  
Basic earnings per share   $ 0.46     $ 0.45     $ 0.67     $ 0.92     $ 1.11  
Diluted earnings per share   $ 0.46     $ 0.45     $ 0.67     $ 0.91     $ 1.11  
Basic weighted-average outstanding shares     127,672,244       127,556,242       129,392,339       127,614,564       129,661,228  
Diluted weighted-average outstanding shares     128,014,777       128,121,126       129,828,847       128,108,630       130,164,762  



                         
Consolidated Balance Sheets   Table 3
    June 30,    March 31,    December 31,    June 30, 
(dollars in thousands)   2022     2022     2021     2021  
Assets                        
Cash and due from banks   $ 279,629     $ 274,022     $ 246,716     $ 347,861  
Interest-bearing deposits in other banks     1,254,047       1,352,138       1,011,753       1,558,437  
Investment securities:                        
Available-for-sale, at fair value (amortized cost: $4,267,809 as of June 30, 2022, $8,733,170 as of March 31, 2022, $8,560,733 as of December 31, 2021 and $6,951,153 as of June 30, 2021)     3,967,746       8,062,384       8,428,032       6,953,930  
Held-to-maturity, at amortized cost (fair value: $3,910,780 as of June 30, 2022 and nil as of March 31, 2022, December 31, 2021 and June 30, 2021)     4,093,215       —       —       —  
Loans held for sale     180       —       538       1,241  
Loans and leases     13,262,781       12,891,743       12,961,999       13,103,785  
Less: allowance for credit losses     148,942       150,280       157,262       169,148  
Net loans and leases     13,113,839       12,741,463       12,804,737       12,934,637  
                         
Premises and equipment, net     310,047       315,766       318,448       319,452  
Other real estate owned and repossessed personal property     —       —       175       —  
Accrued interest receivable     63,240       61,561       63,158       66,734  
Bank-owned life insurance     470,542       471,401       471,819       466,402  
Goodwill     995,492       995,492       995,492       995,492  
Mortgage servicing rights     7,152       7,650       8,302       10,007  
Other assets     822,404       760,843       643,240       592,135  
Total assets   $ 25,377,533     $ 25,042,720     $ 24,992,410     $ 24,246,328  
Liabilities and Stockholders' Equity                        
Deposits:                        
Interest-bearing   $ 12,990,571     $ 12,504,821     $ 12,422,283     $ 12,245,193  
Noninterest-bearing     9,610,883       9,765,609       9,393,863       8,589,922  
Total deposits     22,601,454       22,270,430       21,816,146       20,835,115  
Long-term borrowings     —       —       —       200,000  
Retirement benefits payable     134,151       134,323       134,491       144,101  
Other liabilities     389,317       352,818       384,861       335,771  
Total liabilities     23,124,922       22,757,571       22,335,498       21,514,987  
                         
Stockholders' equity                        
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022, issued/outstanding: 140,875,595 / 127,686,307 shares as of March 31, 2022, issued/outstanding: 140,581,715 / 127,502,472 shares as of December 31, 2021 and issued/outstanding: 140,542,398 / 129,019,871 shares as of June 30, 2021)     1,409       1,409       1,406       1,405  
Additional paid-in capital     2,533,407       2,530,795       2,527,663       2,520,790  
Retained earnings     654,777       628,642       604,534       550,511  
Accumulated other comprehensive loss, net     (571,457 )     (517,502 )     (121,693 )     (29,702 )
Treasury stock (13,492,821 shares as of June 30, 2022, 13,189,288 shares as of March 31, 2022, 13,079,243 shares as of December 31, 2021 and 11,522,527 shares as of June 30, 2021)     (365,525 )     (358,195 )     (354,998 )     (311,663 )
Total stockholders' equity     2,252,611       2,285,149       2,656,912       2,731,341  
Total liabilities and stockholders' equity   $ 25,377,533     $ 25,042,720     $ 24,992,410     $ 24,246,328  



                                                   
Average Balances and Interest Rates                                               Table 4
    Three Months Ended   Three Months Ended   Three Months Ended  
    June 30, 2022   March 31, 2022   June 30, 2021  
    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   $ 1,297.3   $ 2.8   0.85 %   $ 1,138.3   $ 0.6   0.20 % $ 1,503.0   $ 0.4   0.10 %
Available-for-Sale Investment Securities                                                  
Taxable     3,946.4     16.6   1.68     7,800.3     29.2   1.50     6,298.3     22.5   1.43  
Non-Taxable     8.4     0.1   5.26     636.7     3.6   2.32     468.4     2.7   2.30  
Held-to-Maturity Investment Securities                                                  
Taxable     3,533.6     15.0   1.70     —     —   —     —     —   —  
Non-Taxable     607.0     4.1   2.71     —     —   —     —     —   —  
Total Investment Securities     8,095.4     35.8   1.77     8,437.0     32.8   1.56     6,766.7     25.2   1.49  
Loans Held for Sale     0.3     —   5.06     1.2     —   2.02     2.0     —   1.44  
Loans and Leases(1)                                                  
Commercial and industrial     1,951.3     15.0   3.09     1,973.1     14.6   3.01     2,882.1     21.1   2.94  
Commercial real estate     3,808.9     30.7   3.23     3,632.2     25.8   2.88     3,419.7     25.3   2.97  
Construction     711.3     6.3   3.57     766.9     5.7   3.03     800.9     6.3   3.15  
Residential:                                                  
Residential mortgage     4,183.0     36.7   3.51     4,111.0     34.8   3.38     3,765.4     34.0   3.62  
Home equity line     945.7     5.9   2.49     891.6     5.5   2.48     812.6     5.5   2.72  
Consumer     1,218.0     15.5   5.09     1,218.6     15.6   5.19     1,277.9     16.9   5.32  
Lease financing     240.4     2.1   3.53     226.2     1.9   3.42     246.5     1.9   3.06  
Total Loans and Leases     13,058.6     112.2   3.44     12,819.6     103.9   3.27     13,205.1     111.0   3.37  
Other Earning Assets     69.0     0.1   0.79     67.1     0.2   1.31     62.5     0.3   1.91  
Total Earning Assets(2)     22,520.6     150.9   2.68     22,463.2     137.5   2.47     21,539.3     136.9   2.55  
Cash and Due from Banks     300.8               292.1               290.7            
Other Assets     2,428.8               2,325.2               2,185.1            
Total Assets   $ 25,250.2             $ 25,080.5             $ 24,015.1            
                                                   
Interest-Bearing Liabilities                                                  
Interest-Bearing Deposits                                                  
Savings   $ 6,971.3   $ 1.7   0.10 %   $ 6,668.4   $ 0.5   0.03 %   6,361.8   $ 0.5   0.03 %
Money Market     4,127.4     1.4   0.14     4,048.9     0.5   0.05     3,783.1     0.5   0.06  
Time     1,671.4     1.5   0.36     1,748.5     1.7   0.39     2,034.5     2.3   0.45  
Total Interest-Bearing Deposits     12,770.1     4.6   0.14     12,465.8     2.7   0.09     12,179.4     3.3   0.11  
Long-Term Borrowings     —     —   —     —     —   —     200.0     1.4   2.76  
Total Interest-Bearing Liabilities     12,770.1     4.6   0.14     12,465.8     2.7   0.09     12,379.4     4.7   0.15  
Net Interest Income         $ 146.3             $ 134.8             $ 132.2      
Interest Rate Spread               2.54 %               2.38 %             2.40 %
Net Interest Margin               2.60 %               2.42 %             2.46 %
Noninterest-Bearing Demand Deposits     9,631.4               9,495.0               8,458.6            
Other Liabilities     586.0               571.8               485.1            
Stockholders' Equity     2,262.7               2,547.9               2,692.0            
Total Liabilities and Stockholders' Equity   $ 25,250.2             $ 25,080.5             $ 24,015.1            


(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)   Interest income includes taxable-equivalent basis adjustments of $1.2 million, $1.0 million and $0.7 million for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively.



                                   
Average Balances and Interest Rates                               Table 5
    Six Months Ended   Six Months Ended  
    June 30, 2022   June 30, 2021  
    Average   Income/   Yield/   Average   Income/   Yield/  
(dollars in millions)   Balance   Expense   Rate   Balance   Expense   Rate  
Earning Assets                                  
Interest-Bearing Deposits in Other Banks   $ 1,218.3   $ 3.3   0.55 %   $ 1,222.4   $ 0.6   0.10 %
Available-for-Sale Investment Securities                                  
Taxable     5,862.7     45.7   1.56     6,125.1     44.6   1.46  
Non-Taxable     320.8     3.9   2.41     373.7     4.0   2.11  
Held-to-Maturity Investment Securities                                  
Taxable     1,776.6     15.0   1.69     —     —   —  
Non-Taxable     305.2     4.1   2.71     —     —   —  
Total Investment Securities     8,265.3     68.7   1.66     6,498.8     48.6   1.49  
Loans Held for Sale     0.8     —   2.60     5.6     0.1   2.28  
Loans and Leases(1)                                  
Commercial and industrial     1,962.1     29.7   3.05     2,954.0     41.5   2.84  
Commercial real estate     3,721.0     56.4   3.06     3,402.6     50.2   2.98  
Construction     738.9     12.1   3.30     774.0     12.1   3.16  
Residential:                                  
Residential mortgage     4,147.2     71.5   3.45     3,730.9     68.7   3.68  
Home equity line     918.8     11.3   2.48     817.3     11.2   2.76  
Consumer     1,218.3     31.1   5.14     1,300.7     34.7   5.37  
Lease financing     233.4     4.0   3.48     244.1     3.7   3.04  
Total Loans and Leases     12,939.7     216.1   3.36     13,223.6     222.1   3.38  
Other Earning Assets     68.0     0.4   1.05     60.2     0.5   1.85  
Total Earning Assets(2)     22,492.1     288.5   2.58     21,010.6     271.9   2.60  
Cash and Due from Banks     296.5               292.3            
Other Assets     2,377.2               2,179.9            
Total Assets   $ 25,165.8             $ 23,482.8            
                                   
Interest-Bearing Liabilities                                  
Interest-Bearing Deposits                                  
Savings   $ 6,820.7   $ 2.2   0.07 %   $ 6,169.5   $ 1.1   0.04 %
Money Market     4,088.3     2.0   0.09     3,657.3     1.0   0.05  
Time     1,709.8     3.2   0.38     2,160.8     5.3   0.49  
Total Interest-Bearing Deposits     12,618.8     7.4   0.12     11,987.6     7.4   0.12  
Long-Term Borrowings     —     —   —     200.0     2.7   2.76  
Total Interest-Bearing Liabilities     12,618.8     7.4   0.12     12,187.6     10.1   0.17  
Net Interest Income         $ 281.1             $ 261.8      
Interest Rate Spread               2.46 %               2.43 %
Net Interest Margin               2.51 %               2.50 %
Noninterest-Bearing Demand Deposits     9,563.6               8,086.1            
Other Liabilities     578.9               499.4            
Stockholders' Equity     2,404.5               2,709.7            
Total Liabilities and Stockholders' Equity   $ 25,165.8             $ 23,482.8            


(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)   Interest income includes taxable-equivalent basis adjustments of $2.1 million and $1.1 million for the six months ended June 30, 2022 and 2021, respectively.



                   
Analysis of Change in Net Interest Income                 Table 6
    Three Months Ended June 30, 2022
    Compared to March 31, 2022
(dollars in millions)   Volume   Rate   Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $ 0.1     $ 2.1     $ 2.2  
Available-for-Sale Investment Securities                  
Taxable     (15.8 )     3.2       (12.6 )
Non-Taxable     (5.6 )     2.1       (3.5 )
Held-to-Maturity Investment Securities                  
Taxable     15.0       —       15.0  
Non-Taxable     4.1       —       4.1  
Total Investment Securities     (2.3 )     5.3       3.0  
Loans and Leases                  
Commercial and industrial     (0.1 )     0.5       0.4  
Commercial real estate     1.4       3.5       4.9  
Construction     (0.4 )     1.0       0.6  
Residential:                  
Residential mortgage     0.6       1.3       1.9  
Home equity line     0.4       —       0.4  
Consumer     —       (0.1 )     (0.1 )
Lease financing     0.1       0.1       0.2  
Total Loans and Leases     2.0       6.3       8.3  
Other Earning Assets     —       (0.1 )     (0.1 )
Total Change in Interest Income     (0.2 )     13.6       13.4  
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings     0.1       1.1       1.2  
Money Market     —       0.9       0.9  
Time     (0.1 )     (0.1 )     (0.2 )
Total Interest-Bearing Deposits     —       1.9       1.9  
Total Change in Interest Expense     —       1.9       1.9  
Change in Net Interest Income   $ (0.2 )   $ 11.7     $ 11.5  



                   
Analysis of Change in Net Interest Income                 Table 7
    Three Months Ended June 30, 2022
    Compared to June 30, 2021
(dollars in millions)   Volume   Rate   Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $ —     $ 2.4     $ 2.4  
Available-for-Sale Investment Securities                  
Taxable     (9.4 )     3.5       (5.9 )
Non-Taxable     (4.1 )     1.5       (2.6 )
Held-to-Maturity Investment Securities                  
Taxable     15.0       —       15.0  
Non-Taxable     4.1       —       4.1  
Total Investment Securities     5.6       5.0       10.6  
Loans and Leases                  
Commercial and industrial     (7.1 )     1.0       (6.1 )
Commercial real estate     3.0       2.4       5.4  
Construction     (0.8 )     0.8       —  
Residential:                  
Residential mortgage     3.7       (1.0 )     2.7  
Home equity line     0.9       (0.5 )     0.4  
Consumer     (0.7 )     (0.7 )     (1.4 )
Lease financing     (0.1 )     0.3       0.2  
Total Loans and Leases     (1.1 )     2.3       1.2  
Other Earning Assets     —       (0.2 )     (0.2 )
Total Change in Interest Income     4.5       9.5       14.0  
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings     0.1       1.1       1.2  
Money Market     0.1       0.8       0.9  
Time     (0.4 )     (0.4 )     (0.8 )
Total Interest-Bearing Deposits     (0.2 )     1.5       1.3  
Long-Term Borrowings     (0.7 )     (0.7 )     (1.4 )
Total Change in Interest Expense     (0.9 )     0.8       (0.1 )
Change in Net Interest Income   $ 5.4     $ 8.7     $ 14.1  



                   
Analysis of Change in Net Interest Income                 Table 8
    Six Months Ended June 30, 2022
    Compared to June 30, 2021
(dollars in millions)   Volume   Rate   Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $ —     $ 2.7     $ 2.7  
Available-for-Sale Investment Securities                  
Taxable     (1.9 )     3.0       1.1  
Non-Taxable     (0.6 )     0.5       (0.1 )
Held-to-Maturity Investment Securities                  
Taxable     15.0       —       15.0  
Non-Taxable     4.1       —       4.1  
Total Investment Securities     16.6       3.5       20.1  
Loans Held for Sale     (0.1 )     —       (0.1 )
Loans and Leases                  
Commercial and industrial     (14.7 )     2.9       (11.8 )
Commercial real estate     4.8       1.4       6.2  
Construction     (0.5 )     0.5       —  
Residential:                  
Residential mortgage     7.2       (4.4 )     2.8  
Home equity line     1.3       (1.2 )     0.1  
Consumer     (2.1 )     (1.5 )     (3.6 )
Lease financing     (0.2 )     0.5       0.3  
Total Loans and Leases     (4.2 )     (1.8 )     (6.0 )
Other Earning Assets     0.1       (0.2 )     (0.1 )
Total Change in Interest Income     12.4       4.2       16.6  
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings     0.1       1.0       1.1  
Money Market     0.2       0.8       1.0  
Time     (1.0 )     (1.1 )     (2.1 )
Total Interest-Bearing Deposits     (0.7 )     0.7       —  
Long-Term Borrowings     (1.4 )     (1.3 )     (2.7 )
Total Change in Interest Expense     (2.1 )     (0.6 )     (2.7 )
Change in Net Interest Income   $ 14.5     $ 4.8     $ 19.3  



                         
Loans and Leases                       Table 9
    June 30,    March 31,    December 31,    June 30, 
(dollars in thousands)   2022      2022      2021      2021
Commercial and industrial:                        
Commercial and industrial excluding Paycheck Protection Program loans   $ 1,898,899   $ 1,817,346   $ 1,870,657   $ 1,753,444
Paycheck Protection Program loans     43,233     106,188     216,442     811,103
Total commercial and industrial     1,942,132     1,923,534     2,087,099     2,564,547
Commercial real estate     3,956,828     3,759,980     3,639,623     3,528,068
Construction     727,771     708,300     813,969     853,865
Residential:                        
Residential mortgage     4,212,768     4,153,824     4,083,367     3,821,407
Home equity line     971,569     918,101     876,608     825,368
Total residential     5,184,337     5,071,925     4,959,975     4,646,775
Consumer     1,207,051     1,204,834     1,229,939     1,267,559
Lease financing     244,662     223,170     231,394     242,971
Total loans and leases   $ 13,262,781   $ 12,891,743   $ 12,961,999   $ 13,103,785



                         
Deposits                       Table 10
    June 30,    March 31,    December 31,    June 30, 
(dollars in thousands)   2022      2022      2021      2021
Demand   $ 9,610,883   $ 9,765,609   $ 9,393,863   $ 8,589,922
Savings     7,243,185     6,812,758     6,612,775     6,421,053
Money Market     4,079,706     3,990,225     4,033,070     3,920,477
Time     1,667,680     1,701,838     1,776,438     1,903,663
Total Deposits   $ 22,601,454   $ 22,270,430   $ 21,816,146   $ 20,835,115



                         
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)   2022      2022      2021      2021
Non-Performing Assets                        
Non-Accrual Loans and Leases                        
Commercial Loans:                        
Commercial and industrial   $ 682   $ 707   $ 718   $ 828
Commercial real estate     727     727     727     937
Lease financing     —     75     —     —
Total Commercial Loans     1,409     1,509     1,445     1,765
Residential Loans:                        
Residential mortgage     6,450     7,092     5,637     7,140
Total Residential Loans     6,450     7,092     5,637     7,140
Total Non-Accrual Loans and Leases     7,859     8,601     7,082     8,905
Other Real Estate Owned     —     —     175     —
Total Non-Performing Assets   $ 7,859   $ 8,601   $ 7,257   $ 8,905
                         
Accruing Loans and Leases Past Due 90 Days or More                        
Commercial Loans:                        
Commercial and industrial   $ 2,230   $ 591   $ 740   $ 494
Commercial real estate     176     —     —     —
Construction     352     —     —     60
Total Commercial Loans     2,758     591     740     554
Residential Loans:                        
Residential mortgage     750     13     987     —
Home equity line     1,039     2,252     3,681     4,680
Total Residential Loans     1,789     2,265     4,668     4,680
Consumer     1,218     1,588     1,800     1,134
Total Accruing Loans and Leases Past Due 90 Days or More   $ 5,765   $ 4,444   $ 7,208   $ 6,368
                         
Restructured Loans on Accrual Status and Not Past Due 90 Days or More   $ 29,440   $ 32,590   $ 34,893   $ 36,668
Total Loans and Leases   $ 13,262,781   $ 12,891,743   $ 12,961,999   $ 13,103,785



                                 
Allowance for Credit Losses and Reserve for Unfunded Commitments
   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)   2022
   2022
      2021
      2022
   2021
  
Balance at Beginning of Period   $ 179,238     $ 187,584     $ 234,469       187,584       239,057    
Loans and Leases Charged-Off                                
Commercial Loans:                                
Commercial and industrial     (243 )     (706 )     (330 )     (949 )     (1,293 )  
Commercial real estate     —       —       —       —       (66 )  
Total Commercial Loans     (243 )     (706 )     (330 )     (949 )     (1,359 )  
Residential Loans:                                
Residential mortgage     —       —       —       —       (98 )  
Home equity line     (1,120 )     (43 )     —       (1,163 )     —    
Total Residential Loans     (1,120 )     (43 )     —       (1,163 )     (98 )  
Consumer     (3,659 )     (4,109 )     (3,917 )     (7,768 )     (10,458 )  
Total Loans and Leases Charged-Off     (5,022 )     (4,858 )     (4,247 )     (9,880 )     (11,915 )  
Recoveries on Loans and Leases Previously Charged-Off                                
Commercial Loans:                                
Commercial and industrial     301       53       287       354       502    
Commercial real estate     —       14       12       14       15    
Construction     —       —       —       —       166    
Lease financing     60       —       —       60       —    
Total Commercial Loans     361       67       299       428       683    
Residential Loans:                                
Residential mortgage     192       16       14       208       31    
Home equity line     191       28       38       219       62    
Total Residential Loans     383       44       52       427       93    
Consumer     1,940       2,148       2,797       4,088       5,452    
Total Recoveries on Loans and Leases Previously Charged-Off     2,684       2,259       3,148       4,943       6,228    
Net Loans and Leases Charged-Off     (2,338 )     (2,599 )     (1,099 )     (4,937 )     (5,687 )  
Provision for Credit Losses     1,000       (5,747 )     (35,000 )     (4,747 )     (35,000 )  
Balance at End of Period   $ 177,900     $ 179,238     $ 198,370     $ 177,900     $ 198,370    
Components:                                
Allowance for Credit Losses   $ 148,942     $ 150,280     $ 169,148     $ 148,942     $ 169,148    
Reserve for Unfunded Commitments     28,958       28,958       29,222       28,958       29,222    
Total Allowance for Credit Losses and Reserve for Unfunded Commitments   $ 177,900     $ 179,238     $ 198,370     $ 177,900     $ 198,370    
Average Loans and Leases Outstanding   $ 13,058,558     $ 12,819,612     $ 13,205,086     $ 12,939,745     $ 13,223,575    
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1)     0.07   %     0.08   %   0.03   %   0.08   %     0.09   %
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding     1.12   %     1.17   %   1.29   %   1.12   %     1.29   %
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases     18.95x     17.47x     18.99x     18.95x     18.99x  


(1)   Annualized for the three and six months ended June 30, 2022 and 2021, and three months ended March 31, 2022.



                                                       
Loans and Leases by Year of Origination and Credit Quality Indicator     Table 13
                                              Revolving      
                                              Loans      
                                              Converted      
    Term Loans   Revolving   to Term      
    Amortized Cost Basis by Origination Year   Loans   Loans      
                                        Amortized   Amortized      
(dollars in thousands)   2022   2021   2020   2019   2018   Prior   Cost Basis   Cost Basis   Total
Commercial Lending                                                      
Commercial and Industrial                                                      
Risk rating:                                                      
Pass   $ 216,303   $ 421,981   $ 66,601   $ 182,175   $ 60,586   $ 156,647   $ 697,256   $ 19,128   $ 1,820,677
Special Mention     2,816     316     1,628     2,822     748     5,295     1,073     841     15,539
Substandard     —     320     1,103     1,605     1,019     879     16,214     114     21,254
Other (1)     12,807     9,613     11,531     5,366     3,075     1,576     40,694     —     84,662
Total Commercial and Industrial     231,926     432,230     80,863     191,968     65,428     164,397     755,237     20,083     1,942,132
                                                       
Commercial Real Estate                                                      
Risk rating:                                                      
Pass     516,062     695,446     338,391     516,210     459,372     1,270,438     84,174     —     3,880,093
Special Mention     —     —     562     47,781     —     11,140     695     —     60,178
Substandard     —     —     180     —     1,742     14,476     3     —     16,401
Other (1)     —     —     —     —     —     156     —     —     156
Total Commercial Real Estate     516,062     695,446     339,133     563,991     461,114     1,296,210     84,872     —     3,956,828
                                                       
Construction                                                      
Risk rating:                                                      
Pass     39,575     193,588     127,677     85,471     115,881     88,509     14,965     —     665,666
Special Mention     —     —     —     236     —     350     —     —     586
Substandard     —     —     —     —     351     498     —     —     849
Other (1)     13,228     29,529     6,049     2,849     3,913     4,151     951     —     60,670
Total Construction     52,803     223,117     133,726     88,556     120,145     93,508     15,916     —     727,771
                                                       
Lease Financing                                                      
Risk rating:                                                      
Pass     41,656     26,813     49,889     43,989     7,801     68,457     —     —     238,605
Special Mention     —     457     2,642     1,358     11     17     —     —     4,485
Substandard     —     —     195     16     14     1,347     —     —     1,572
Total Lease Financing     41,656     27,270     52,726     45,363     7,826     69,821     —     —     244,662
                                                       
Total Commercial Lending   $ 842,447   $ 1,378,063   $ 606,448   $ 889,878   $ 654,513   $ 1,623,936   $ 856,025   $ 20,083   $ 6,871,393


                                                       
                                              Revolving      
                                              Loans      
                                              Converted      
    Term Loans   Revolving   to Term      
    Amortized Cost Basis by Origination Year   Loans   Loans      
(continued)                                       Amortized   Amortized      
(dollars in thousands)   2022   2021   2020   2019   2018   Prior   Cost Basis   Cost Basis   Total
Residential Lending                                                      
Residential Mortgage                                                      
FICO:                                                      
740 and greater   $ 352,342   $ 1,069,214   $ 587,478   $ 252,428   $ 178,752   $ 974,057   $ —   $ —   $ 3,414,271
680 - 739     46,224     124,306     79,422     45,117     21,882     144,226     —     —     461,177
620 - 679     5,305     19,143     14,291     5,405     3,892     38,470     —     —     86,506
550 - 619     169     1,943     294     226     2,073     8,017     —     —     12,722
Less than 550     2,085     1,242     60     —     340     4,656     —     —     8,383
No Score (3)     10,652     14,868     7,544     13,471     16,488     54,373     —     —     117,396
Other (2)     20,365     19,445     15,580     9,552     9,757     31,304     4,999     1,311     112,313
Total Residential Mortgage     437,142     1,250,161     704,669     326,199     233,184     1,255,103     4,999     1,311     4,212,768
                                                       
Home Equity Line                                                      
FICO:                                                      
740 and greater     —     —     —     —     —     —     748,148     2,227     750,375
680 - 739     —     —     —     —     —     —     157,042     3,106     160,148
620 - 679     —     —     —     —     —     —     40,070     2,454     42,524
550 - 619     —     —     —     —     —     —     9,202     1,601     10,803
Less than 550     —     —     —     —     —     —     1,159     491     1,650
No Score (3)     —     —     —     —     —     —     6,069     —     6,069
Total Home Equity Line     —     —     —     —     —     —     961,690     9,879     971,569
Total Residential Lending     437,142     1,250,161     704,669     326,199     233,184     1,255,103     966,689     11,190     5,184,337
                                                       
Consumer Lending                                                      
FICO:                                                      
740 and greater     115,911     132,565     66,828     59,155     38,001     17,426     117,266     203     547,355
680 - 739     53,590     80,240     45,783     41,393     23,562     13,947     67,636     566     326,717
620 - 679     11,760     35,430     17,746     22,180     13,928     11,374     30,079     1,018     143,515
550 - 619     1,000     6,548     6,576     10,400     7,652     6,801     10,044     1,026     50,047
Less than 550     379     1,758     2,973     5,022     2,547     2,525     3,047     483     18,734
No Score (3)     1,087     402     9     52     31     45     37,536     303     39,465
Other (2)     1,675     4,218     358     1,674     —     2,152     71,141     —     81,218
Total Consumer Lending     185,402     261,161     140,273     139,876     85,721     54,270     336,749     3,599     1,207,051
                                                       
Total Loans and Leases   $ 1,464,991   $ 2,889,385   $ 1,451,390   $ 1,355,953   $ 973,418   $ 2,933,309   $ 2,159,463   $ 34,872   $ 13,262,781


(1)    Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score.
     
(2)   Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating.
     
(3)    No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.



                                 
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)   2022       2022      2021      2022       2021  
Income Statement Data:                                
Net income   $ 59,360   $ 57,719   $ 86,741   $ 117,079   $ 144,434  
                                 
Average total stockholders' equity   $ 2,262,654   $ 2,547,865   $ 2,691,966   $ 2,404,471   $ 2,709,735  
Less: average goodwill     995,492     995,492     995,492     995,492     995,492  
Average tangible stockholders' equity   $ 1,267,162   $ 1,552,373   $ 1,696,474   $ 1,408,979   $ 1,714,243  
                                 
Average total assets   $ 25,250,176   $ 25,080,453   $ 24,015,065   $ 25,165,783   $ 23,482,839  
Less: average goodwill     995,492     995,492     995,492     995,492     995,492  
Average tangible assets   $ 24,254,684   $ 24,084,961   $ 23,019,573   $ 24,170,291   $ 22,487,347  
                                 
Return on average total stockholders' equity(1)     10.52 %     9.19 %   12.92 %   9.82 %     10.75 %
Return on average tangible stockholders' equity (non-GAAP)(1)     18.79 %     15.08 %   20.51 %   16.76 %     16.99 %
                                 
Return on average total assets(1)     0.94 %     0.93 %   1.45 %   0.94 %     1.24 %
Return on average tangible assets (non-GAAP)(1)     0.98 %     0.97 %   1.51 %   0.98 %     1.30 %
                                 


                           
                     
    As of   As of   As of   As of  
    June 30,    March 31,    December 31,    June 30,   
(dollars in thousands, except per share amounts)   2022      2022      2021      2021  
Balance Sheet Data:                          
Total stockholders' equity   $ 2,252,611   $ 2,285,149   $ 2,656,912   $ 2,731,341  
Less: goodwill     995,492     995,492     995,492     995,492  
Tangible stockholders' equity   $ 1,257,119   $ 1,289,657   $ 1,661,420   $ 1,735,849  
                           
Total assets   $ 25,377,533   $ 25,042,720   $ 24,992,410   $ 24,246,328  
Less: goodwill     995,492     995,492     995,492     995,492  
Tangible assets   $ 24,382,041   $ 24,047,228   $ 23,996,918   $ 23,250,836  
                           
Shares outstanding     127,451,087     127,686,307     127,502,472     129,019,871  
                           
Total stockholders' equity to total assets     8.88 %     9.13 %   10.63 %   11.26 %
Tangible stockholders' equity to tangible assets (non-GAAP)     5.16 %     5.36 %   6.92 %   7.47 %
                           
Book value per share   $ 17.67   $ 17.90   $ 20.84   $ 21.17  
Tangible book value per share (non-GAAP)   $ 9.86   $ 10.10   $ 13.03   $ 13.45  


(1)     Annualized for the three and six months ended June 30, 2022 and 2021, and three months ended March 31, 2022.



 

 


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Source: First Hawaiian, Inc.