0000036377false00000363772021-04-232021-04-23

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 23, 2021

FIRST HAWAIIAN, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

001-14585

99-0156159

(Commission File Number)

(IRS Employer Identification No.)

999 Bishop St., 29th Floor

Honolulu, Hawaii

96813

(Address of Principal Executive Offices)

(Zip Code)

(808) 525-7000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

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

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

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

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

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

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

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

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered:

Common Stock, par value $0.01 per share

FHB

NASDAQ Global Select Market

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

Emerging growth company

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

Item 2.02 Results of Operations and Financial Condition.

On April 23, 2021, First Hawaiian, Inc. (together with its consolidated subsidiary, “First Hawaiian”) reported its earnings for the quarter ended March 31, 2021. A copy of First Hawaiian’s press release containing this information is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

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

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits

Exhibit No.

Description

99.1

Press release of First Hawaiian, Inc. dated April 23, 2021 containing financial information for its quarter ended March 31, 2021.

104

Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

2

SIGNATURE

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

Pril

FIRST HAWAIIAN, INC.

Date: April 23, 2021

By:

/s/ Robert S. Harrison

Robert S. Harrison

Chairman of the Board, President and Chief Executive Officer

(Principal Executive Officer)

3

EXHIBIT 99.1

Graphic

For Immediate Release

First Hawaiian, Inc. Reports First Quarter 2021 Financial Results and Declares Dividend

HONOLULU, Hawaii April 23, 2021--(Globe Newswire)--First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended March 31, 2021.

“We had a good first quarter as our teams continued supporting local businesses by originating $459 million of PPP loans. We also experienced strong deposit growth and maintained excellent credit quality,” said Bob Harrison, Chairman, President and CEO. “We are optimistic about the local economy, as the state’s vaccine rollout is well underway and we are seeing a steady increase in visitor arrivals, all positive signs for Hawaii’s economy.”

On April 21, 2021 the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on June 4, 2021 to stockholders of record at the close of business on May 24, 2021.

First Quarter 2021 Highlights:

Net income of $57.7 million, or $0.44 per diluted share
Total loans and leases increased $21.2 million versus prior quarter
Total deposits increased $906.0 million, or 4.7%, versus prior quarter
Did not record a provision for credit losses
Board of Directors declared a quarterly dividend of $0.26 per share
Repurchased $9.5 million of stock under share repurchase program

Balance Sheet

Total assets were $23.5 billion as of March 31, 2021, compared to $22.7 billion as of December 31, 2020.

Gross loans and leases were $13.3 billion as of March 31, 2021, unchanged from $13.3 billion as of December 31, 2020.

Total deposits were $20.1 billion as of March 31, 2021, an increase of $906.0 million, or 4.7%, from $19.2 billion as of December 31, 2020.

Net Interest Income

Net interest income for the first quarter of 2021 was $129.2 million, a decrease of $6.1 million, or 4.5%, compared to $135.2 million for the prior quarter.

The NIM was 2.55% in the first quarter of 2021, a decrease of 16 basis points compared to 2.71% in the fourth quarter of 2020.

Provision Expense

During the quarter ended March 31, 2021, the Bank did not record a provision for credit losses. In the quarter ended December 31, 2020, the total provision for credit losses was $20.0 million.

Noninterest Income

Noninterest income was $43.9 million in the first quarter of 2021, a decrease of $9.7 million compared to noninterest income of $53.6 million in the fourth quarter of 2020.

Noninterest Expense

Noninterest expense was $96.3 million in the first quarter of 2021, an increase of $8.2 million compared to noninterest expense of $88.1 million in the fourth quarter of 2020.

The efficiency ratio was 55.5% and 46.6% for the quarters ended March 31, 2021 and December 31, 2020, respectively.

Taxes

The effective tax rate was 24.8% for the quarter ended March 31, 2021 and 23.5% for the quarter ended December 31, 2020.


Asset Quality

The allowance for credit losses was $200.4 million, or 1.51% of total loans and leases, as of March 31, 2021, compared to $208.5 million, or 1.57% of total loans and leases, as of December 31, 2020. The reserve for unfunded commitments was $34.1 million as of March 31, 2021 compared to $30.6 million as of December 31, 2020. Net charge-offs were $4.6 million, or 0.14% of average loans and leases on an annualized basis for the quarter ended March 31, 2021, compared to net charge-offs of $1.4 million, or 0.04% of average loans and leases on an annualized basis for the quarter ended December 31, 2020. Total non-performing assets were $9.1 million, or 0.07% of total loans and leases and other real estate owned, at both March 31, 2021 and December 31, 2020.

Capital

Total stockholders’ equity was $2.7 billion at both March 31, 2021 and December 31, 2020.

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.90%, 12.82% and 14.07%, respectively, at March 31, 2021, compared with 8.00%, 12.47% and 13.73%, respectively, at December 31, 2020.

The Company repurchased 0.3 million shares of common stock at a total cost of $9.5 million under the stock repurchase program in the first quarter. The average cost was $28.70 per share repurchased. Remaining buyback authority under the stock repurchase program was $65.5 million at March 31, 2021.

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. 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: 4277629. A live webcast of the conference call, including a slide presentation, will be available at the following link: www.fhb.com/earnings. The archive of the webcast will be available at the same location. A telephonic replay of the conference call will be available two hours after the conclusion of the call until 4:30 p.m. (Eastern Time) on April 30, 2021. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 4277629.

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, 2020.


Use of Non-GAAP Financial Measures

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

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

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

Tables 12 and 13 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

Investor Relations Contact:

Media Contact:

Kevin Haseyama, CFA

Susan Kam

(808) 525-6268

(808) 525-6254

khaseyama@fhb.com

skam@fhb.com


Financial Highlights

Table 1

For the Three Months Ended

March 31, 

December 31, 

March 31, 

(dollars in thousands, except per share data)

    

2021

    

2020

    

2020

    

Operating Results:

Net interest income

$

129,158

$

135,227

$

138,683

Provision for credit losses

20,000

41,200

Noninterest income

43,868

53,598

49,228

Noninterest expense

96,306

88,127

96,466

Net income

57,693

61,739

38,865

Basic earnings per share

0.44

0.48

0.30

Diluted earnings per share

0.44

0.47

0.30

Dividends declared per share

0.26

0.26

0.26

Dividend payout ratio

59.09

%

55.32

%

86.67

%

Supplemental Income Statement Data (non-GAAP):

Core net interest income

$

129,158

$

135,227

$

138,683

Core noninterest income

43,868

58,438

49,143

Core noninterest expense

96,306

88,127

96,466

Core net income

57,693

65,288

38,803

Core basic earnings per share

0.44

0.50

0.30

Core diluted earnings per share

0.44

0.50

0.30

Performance Ratio(1):

Net interest margin

2.55

%  

2.71

%  

3.12

%  

Core net interest margin (non-GAAP)

2.55

%  

2.71

%  

3.12

%  

Efficiency ratio

55.53

%  

46.59

%  

51.33

%  

Core efficiency ratio (non-GAAP)

55.53

%  

45.43

%  

51.35

%  

Return on average total assets

1.02

%  

1.09

%  

0.77

%  

Core return on average total assets (non-GAAP)

1.02

%  

1.16

%  

0.77

%  

Return on average tangible assets (non-GAAP)

1.07

%  

1.14

%  

0.81

%  

Core return on average tangible assets (non-GAAP)(2)

1.07

%  

1.21

%  

0.81

%  

Return on average total stockholders' equity

8.58

%  

8.99

%  

5.87

%  

Core return on average total stockholders' equity (non-GAAP)

8.58

%  

9.51

%  

5.87

%  

Return on average tangible stockholders' equity (non-GAAP)

13.51

%  

14.14

%  

9.39

%  

Core return on average tangible stockholders’ equity (non-GAAP)(3)

13.51

%  

14.95

%  

9.37

%  

Average Balances:

Average loans and leases

$

13,242,270

$

13,366,980

$

13,191,426

Average earning assets

20,476,149

19,977,933

17,814,189

Average assets

22,944,699

22,468,040

20,313,304

Average deposits

19,503,067

19,020,800

16,543,305

Average stockholders' equity

2,727,701

2,732,271

2,660,811

Market Value Per Share:

Closing

27.37

23.58

16.53

High

30.80

23.90

31.25

Low

23.14

14.16

15.42


As of

As of

As of

March 31, 

December 31, 

March 31, 

(dollars in thousands, except per share data)

2021

2020

 

2020

Balance Sheet Data:

Loans and leases

$

13,300,289

$

13,279,097

$

13,380,270

Total assets

23,497,596

22,662,831

20,755,891

Total deposits

20,133,681

19,227,723

17,020,002

Short-term borrowings

400,000

Long-term borrowings

200,010

200,010

200,019

Total stockholders' equity

2,683,630

2,744,104

2,664,685

Per Share of Common Stock:

Book value

$

20.68

$

21.12

$

20.52

Tangible book value (non-GAAP)(4)

13.01

13.46

12.86

Asset Quality Ratios:

Non-accrual loans and leases / total loans and leases

0.07

%  

0.07

%

0.05

%  

Allowance for credit losses for loans and leases / total loans and leases

1.51

%  

1.57

%

1.24

%  

Capital Ratios:

Common Equity Tier 1 Capital Ratio

  

12.82

%  

  

12.47

%

11.65

%  

Tier 1 Capital Ratio

12.82

%  

12.47

%

11.65

%  

Total Capital Ratio

14.07

%  

13.73

%

12.90

%  

Tier 1 Leverage Ratio

7.90

%  

8.00

%

8.63

%  

Total stockholders' equity to total assets

11.42

%  

12.11

%

12.84

%  

Tangible stockholders' equity to tangible assets (non-GAAP)

7.50

%  

8.07

%

8.45

%  

Non-Financial Data:

Number of branches

54

54

58

Number of ATMs

297

297

304

Number of Full-Time Equivalent Employees

2,090

2,103

2,103


(1)Except for the efficiency ratio and the core efficiency ratio, amounts are annualized for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020.
(2)Core return on average tangible assets is a non-GAAP financial measure. We compute our core return on average tangible assets as the ratio of core net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 12, GAAP to Non-GAAP Reconciliation.
(3)Core return on average tangible stockholders’ equity is a non-GAAP financial measure. We compute our core return on average tangible stockholders’ equity as the ratio of core net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 12, GAAP to Non-GAAP Reconciliation.
(4)Tangible book value is a non-GAAP financial measure. We compute our tangible book value as the ratio of tangible stockholders’ equity to shares outstanding. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 12, GAAP to Non-GAAP Reconciliation.


Consolidated Statements of Income

Table 2

For the Three Months Ended

March 31, 

December 31, 

March 31, 

(dollars in thousands, except per share amounts)

    

2021

    

2020

    

2020

Interest income

Loans and lease financing

$

110,939

$

118,314

$

134,971

Available-for-sale securities

23,146

22,752

21,210

Other

491

615

2,351

Total interest income

134,576

141,681

158,532

Interest expense

Deposits

4,056

5,061

15,600

Short-term and long-term borrowings

1,362

1,393

4,249

Total interest expense

5,418

6,454

19,849

Net interest income

129,158

135,227

138,683

Provision for credit losses

20,000

41,200

Net interest income after provision for credit losses

129,158

115,227

97,483

Noninterest income

Service charges on deposit accounts

6,718

6,769

8,950

Credit and debit card fees

14,551

15,583

14,949

Other service charges and fees

8,846

8,404

8,539

Trust and investment services income

8,492

8,733

9,591

Bank-owned life insurance

2,389

4,159

2,260

Investment securities (losses) gains, net

(12)

85

Other

2,872

9,962

4,854

Total noninterest income

43,868

53,598

49,228

Noninterest expense

Salaries and employee benefits

43,936

42,687

44,829

Contracted services and professional fees

17,188

13,940

16,055

Occupancy

7,170

7,355

7,243

Equipment

5,491

5,225

4,708

Regulatory assessment and fees

2,034

2,168

1,946

Advertising and marketing

1,591

1,096

1,823

Card rewards program

4,835

4,890

7,015

Other

14,061

10,766

12,847

Total noninterest expense

96,306

88,127

96,466

Income before provision for income taxes

76,720

80,698

50,245

Provision for income taxes

19,027

18,959

11,380

Net income

$

57,693

$

61,739

$

38,865

Basic earnings per share

$

0.44

$

0.48

$

0.30

Diluted earnings per share

$

0.44

$

0.47

$

0.30

Basic weighted-average outstanding shares

129,933,104

129,912,104

129,895,706

Diluted weighted-average outstanding shares

130,589,878

130,314,381

130,351,585


Consolidated Balance Sheets

Table 3

March 31, 

December 31, 

March 31, 

(dollars in thousands)

    

2021

    

2020

    

2020

Assets

Cash and due from banks

$

278,994

$

303,373

$

353,908

Interest-bearing deposits in other banks

983,816

737,571

698,924

Investment securities, at fair value (amortized cost: $6,708,431 as of March 31, 2021, $5,985,031 as of December 31, 2020 and $4,014,397 as of March 31, 2020)

6,692,479

6,071,415

4,058,457

Loans held for sale

9,390

11,579

8,180

Loans and leases

13,300,289

13,279,097

13,380,270

Less: allowance for credit losses

200,366

208,454

166,013

Net loans and leases

13,099,923

13,070,643

13,214,257

Premises and equipment, net

319,949

322,401

321,254

Other real estate owned and repossessed personal property

238

Accrued interest receivable

69,879

69,626

43,552

Bank-owned life insurance

468,927

466,537

455,226

Goodwill

995,492

995,492

995,492

Mortgage servicing rights

10,869

10,731

11,979

Other assets

567,878

603,463

594,424

Total assets

$

23,497,596

$

22,662,831

$

20,755,891

Liabilities and Stockholders' Equity

Deposits:

Interest-bearing

$

11,958,606

$

11,705,609

$

11,274,463

Noninterest-bearing

8,175,075

7,522,114

5,745,539

Total deposits

20,133,681

19,227,723

17,020,002

Short-term borrowings

400,000

Long-term borrowings

200,010

200,010

200,019

Retirement benefits payable

143,736

143,373

138,396

Other liabilities

336,539

347,621

332,789

Total liabilities

20,813,966

19,918,727

18,091,206

Stockholders' equity

Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,455,180 / 129,749,890 shares as of March 31, 2021, issued/outstanding: 140,191,133 / 129,912,272 shares as of December 31, 2020 and issued/outstanding: 140,092,172 / 129,827,968 shares as of March 31, 2020)

1,405

1,402

1,401

Additional paid-in capital

2,517,048

2,514,014

2,506,477

Retained earnings

497,418

473,974

429,323

Accumulated other comprehensive (loss) income, net

(43,435)

31,604

4,129

Treasury stock (10,705,290 shares as of March 31, 2021, 10,278,861 shares as of December 31, 2020 and 10,264,204 shares as of March 31, 2020)

(288,806)

(276,890)

(276,645)

Total stockholders' equity

2,683,630

2,744,104

2,664,685

Total liabilities and stockholders' equity

$

23,497,596

$

22,662,831

$

20,755,891


Average Balances and Interest Rates

Table 4

Three Months Ended

Three Months Ended

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

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

$

938.7

$

0.2

0.10

%  

$

688.1

$

0.2

0.10

%  

$

516.8

$

1.6

1.25

%

Available-for-Sale Investment Securities

Taxable

5,949.9

22.1

1.49

5,632.9

22.0

1.56

4,033.2

21.2

2.10

Non-Taxable

278.0

1.3

1.80

220.0

0.9

1.74

Total Available-for-Sale Investment Securities

6,227.9

23.4

1.50

5,852.9

22.9

1.57

4,033.2

21.2

2.10

Loans Held for Sale

9.2

0.1

2.46

16.2

0.1

2.00

15.8

0.1

1.70

Loans and Leases(1)

Commercial and industrial

3,026.7

20.4

2.74

3,077.6

22.6

2.93

2,776.2

24.6

3.56

Commercial real estate

3,385.2

24.9

2.98

3,407.2

26.2

3.06

3,433.2

34.6

4.05

Construction

746.8

5.8

3.16

703.1

5.6

3.14

538.5

5.7

4.27

Residential:

Residential mortgage

3,696.1

34.7

3.76

3,679.6

37.1

4.03

3,721.2

37.7

4.05

Home equity line

822.0

5.7

2.80

856.8

6.1

2.81

887.4

7.7

3.50

Consumer

1,323.7

17.7

5.43

1,394.5

19.0

5.43

1,611.7

23.0

5.75

Lease financing

241.8

1.8

3.02

248.2

1.8

2.89

223.2

1.6

2.85

Total Loans and Leases

13,242.3

111.0

3.39

13,367.0

118.4

3.53

13,191.4

134.9

4.11

Other Earning Assets

58.0

0.3

1.79

53.7

0.4

3.26

57.0

0.7

5.30

Total Earning Assets(2)

20,476.1

135.0

2.66

19,977.9

142.0

2.83

17,814.2

158.5

3.57

Cash and Due from Banks

294.0

289.2

327.4

Other Assets

2,174.6

2,200.9

2,171.7

Total Assets

$

22,944.7

$

22,468.0

$

20,313.3

Interest-Bearing Liabilities

Interest-Bearing Deposits

Savings

$

5,975.1

$

0.6

0.04

%  

$

5,786.4

$

0.5

0.03

%  

5,090.4

$

3.3

0.26

%

Money Market

3,530.0

0.4

0.05

3,440.9

0.4

0.05

3,064.8

4.6

0.61

Time

2,288.5

3.0

0.53

2,461.3

4.2

0.67

2,534.7

7.7

1.23

Total Interest-Bearing Deposits

11,793.6

4.0

0.14

11,688.6

5.1

0.17

10,689.9

15.6

0.59

Short-Term Borrowings

401.7

2.8

2.88

Long-Term Borrowings

200.0

1.4

2.76

200.0

1.4

2.77

200.0

1.4

2.77

Total Interest-Bearing Liabilities

11,993.6

5.4

0.18

11,888.6

6.5

0.22

11,291.6

19.8

0.71

Net Interest Income

$

129.6

$

135.5

$

138.7

Interest Rate Spread

2.48

%  

2.61

%  

2.86

%

Net Interest Margin

2.55

%  

2.71

%  

3.12

%

Noninterest-Bearing Demand Deposits

7,709.5

7,332.2

5,853.4

Other Liabilities

513.9

514.9

507.5

Stockholders' Equity

2,727.7

2,732.3

2,660.8

Total Liabilities and Stockholders' Equity

$

22,944.7

$

22,468.0

$

20,313.3


(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 $0.4 million, $0.3 million and nil for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively.


Analysis of Change in Net Interest Income

Table 5

Three Months Ended March 31, 2021

Compared to December 31, 2020

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

    

    

    

Available-for-Sale Investment Securities

Taxable

$

1.2

$

(1.1)

$

0.1

Non-Taxable

0.3

0.1

0.4

Total Available-for-Sale Investment Securities

1.5

(1.0)

0.5

Loans and Leases

Commercial and industrial

(0.5)

(1.7)

(2.2)

Commercial real estate

(0.2)

(1.1)

(1.3)

Construction

0.2

0.2

Residential:

Residential mortgage

0.2

(2.6)

(2.4)

Home equity line

(0.4)

(0.4)

Consumer

(1.3)

(1.3)

Lease financing

(0.1)

0.1

Total Loans and Leases

(2.1)

(5.3)

(7.4)

Other Earning Assets

0.1

(0.2)

(0.1)

Total Change in Interest Income

(0.5)

(6.5)

(7.0)

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.1

0.1

Time

(0.3)

(0.9)

(1.2)

Total Interest-Bearing Deposits

(0.3)

(0.8)

(1.1)

Total Change in Interest Expense

(0.3)

(0.8)

(1.1)

Change in Net Interest Income

$

(0.2)

$

(5.7)

$

(5.9)


Analysis of Change in Net Interest Income

Table 6

Three Months Ended March 31, 2021

Compared to March 31, 2020

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

    

    

    

Interest-Bearing Deposits in Other Banks

$

0.7

$

(2.1)

$

(1.4)

Available-for-Sale Investment Securities

Taxable

8.2

(7.3)

0.9

Non-Taxable

1.3

1.3

Total Available-for-Sale Investment Securities

9.5

(7.3)

2.2

Loans and Leases

Commercial and industrial

2.0

(6.2)

(4.2)

Commercial real estate

(0.5)

(9.2)

(9.7)

Construction

1.8

(1.7)

0.1

Residential:

Residential mortgage

(0.3)

(2.7)

(3.0)

Home equity line

(0.5)

(1.5)

(2.0)

Consumer

(4.0)

(1.3)

(5.3)

Lease financing

0.1

0.1

0.2

Total Loans and Leases

(1.4)

(22.5)

(23.9)

Other Earning Assets

0.1

(0.5)

(0.4)

Total Change in Interest Income

8.9

(32.4)

(23.5)

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.5

(3.2)

(2.7)

Money Market

0.6

(4.8)

(4.2)

Time

(0.7)

(4.0)

(4.7)

Total Interest-Bearing Deposits

0.4

(12.0)

(11.6)

Short-Term Borrowings

(1.4)

(1.4)

(2.8)

Total Change in Interest Expense

(1.0)

(13.4)

(14.4)

Change in Net Interest Income

$

9.9

$

(19.0)

$

(9.1)


Loans and Leases

Table 7

March 31, 

December 31, 

March 31, 

(dollars in thousands)

    

2021

    

2020

    

2020

Commercial and industrial:

Commercial and industrial excluding Paycheck Protection Program loans

$

1,962,672

$

2,218,266

$

3,025,345

Paycheck Protection Program loans

1,158,764

801,241

Total commercial and industrial

3,121,436

3,019,507

3,025,345

Commercial real estate

3,396,233

3,392,676

3,413,014

Construction

739,271

735,819

572,062

Residential:

Residential mortgage

3,715,676

3,690,218

3,673,455

Home equity line

805,746

841,624

891,698

Total residential

4,521,422

4,531,842

4,565,153

Consumer

1,283,779

1,353,842

1,568,073

Lease financing

238,148

245,411

236,623

Total loans and leases

$

13,300,289

$

13,279,097

$

13,380,270


Deposits

Table 8

March 31, 

December 31, 

March 31, 

(dollars in thousands)

    

2021

    

2020

    

2020

Demand

$

8,175,075

$

7,522,114

$

5,745,539

Savings

6,141,161

6,020,075

5,213,471

Money Market

3,642,604

3,337,236

3,148,694

Time

2,174,841

2,348,298

2,912,298

Total Deposits

$

20,133,681

$

19,227,723

$

17,020,002


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)

    

2021

    

2020

    

2020

Non-Performing Assets

Non-Accrual Loans and Leases

Commercial Loans:

Commercial and industrial

$

593

$

518

$

32

Commercial real estate

937

80

Construction

579

2,043

2,422

Total Commercial Loans

2,109

2,641

2,454

Residential Loans:

Residential mortgage

6,999

6,441

4,472

Total Residential Loans

6,999

6,441

4,472

Total Non-Accrual Loans and Leases

9,108

9,082

6,926

Other Real Estate Owned

238

Total Non-Performing Assets

$

9,108

$

9,082

$

7,164

Accruing Loans and Leases Past Due 90 Days or More

Commercial Loans:

Commercial and industrial

$

1,365

$

2,108

$

4,007

Commercial real estate

1,054

882

757

Construction

89

93

148

Total Commercial Loans

2,508

3,083

4,912

Residential Loans:

Residential mortgage

82

Home equity line

4,975

4,818

2,566

Total Residential Loans

4,975

4,818

2,648

Consumer

2,024

3,266

3,353

Total Accruing Loans and Leases Past Due 90 Days or More

$

9,507

$

11,167

$

10,913

Restructured Loans on Accrual Status and Not Past Due 90 Days or More

$

39,831

$

16,684

$

17,823

Total Loans and Leases

$

13,300,289

$

13,279,097

$

13,380,270


Allowance for Credit Losses

Table 10

For the Three Months Ended

March 31, 

December 31, 

March 31, 

(dollars in thousands)

    

2021

    

2020

    

2020

    

Balance at Beginning of Period

$

208,454

$

195,876

$

130,530

Adjustment to Adopt ASC Topic 326

770

After Adoption of ASC Topic 326

208,454

195,876

131,300

Loans and Leases Charged-Off

Commercial Loans:

Commercial and industrial

(963)

(799)

(201)

Commercial real estate

(66)

(30)

Total Commercial Loans

(1,029)

(829)

(201)

Residential Loans:

Residential mortgage

(98)

Home equity line

(46)

(8)

Total Residential Loans

(98)

(46)

(8)

Consumer

(6,541)

(7,049)

(8,597)

Total Loans and Leases Charged-Off

(7,668)

(7,924)

(8,806)

Recoveries on Loans and Leases Previously Charged-Off

Commercial Loans:

Commercial and industrial

215

2,986

220

Commercial real estate

3

615

Construction

166

30

110

Total Commercial Loans

384

3,631

330

Residential Loans:

Residential mortgage

17

37

135

Home equity line

24

21

122

Total Residential Loans

41

58

257

Consumer

2,655

2,812

2,083

Total Recoveries on Loans and Leases Previously Charged-Off

3,080

6,501

2,670

Net Loans and Leases Charged-Off

(4,588)

(1,423)

(6,136)

Provision for Credit Losses - Loans and Leases

(3,500)

14,001

40,849

Balance at End of Period

$

200,366

$

208,454

$

166,013

Average Loans and Leases Outstanding

$

13,242,270

$

13,366,980

$

13,191,426

Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1)

0.14

%  

0.04

%  

0.19

%  

Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding

1.51

%  

1.57

%  

1.24

%  


(1)Annualized for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020.


Loans and Leases by Year of Origination and Credit Quality Indicator

Table 11

Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Loans

Amortized

Amortized

(dollars in thousands)

2021

2020

2019

2018

2017

Prior

Cost Basis

Cost Basis

Total

Commercial Lending

Commercial and Industrial

Risk rating:

Pass

$

495,898

$

781,914

$

315,190

$

152,290

$

51,136

$

218,781

$

785,046

$

27,922

$

2,828,177

Special Mention

17,608

10,957

19,751

1,930

5,373

66,867

607

123,093

Substandard

23,098

2,808

16,913

584

12,048

28,361

1,367

85,179

Other (1)

3,252

9,848

11,793

7,889

4,362

1,496

46,347

84,987

Total Commercial and Industrial

499,150

832,468

340,748

196,843

58,012

237,698

926,621

29,896

3,121,436

Commercial Real Estate

Risk rating:

Pass

41,958

346,445

613,930

556,954

454,433

1,104,669

51,280

8

3,169,677

Special Mention

1,491

58,763

14,518

33,401

64,971

173,144

Substandard

346

14,751

3,740

26,082

8,004

52,923

Other (1)

489

489

Total Commercial Real Estate

41,958

348,282

672,693

586,223

491,574

1,196,211

59,284

8

3,396,233

Construction

Risk rating:

Pass

32,201

73,512

260,522

162,052

58,537

63,624

24,043

674,491

Special Mention

507

706

4,429

9,172

14,814

Substandard

536

1,478

2,014

Other (1)

5,410

16,755

9,924

7,588

3,655

4,040

580

47,952

Total Construction

37,611

90,267

270,953

170,882

66,621

78,314

24,623

739,271

Lease Financing

Risk rating:

Pass

6,487

73,461

58,375

12,521

16,410

60,734

227,988

Special Mention

566

334

843

286

1,223

599

3,851

Substandard

2,714

1,673

293

1,107

522

6,309

Total Lease Financing

7,053

76,509

60,891

13,100

18,740

61,855

238,148

Total Commercial Lending

$

585,772

$

1,347,526

$

1,345,285

$

967,048

$

634,947

$

1,574,078

$

1,010,528

$

29,904

$

7,495,088


Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Loans

(continued)

Amortized

Amortized

(dollars in thousands)

2021

2020

2019

2018

2017

Prior

Cost Basis

Cost Basis

Total

Residential Lending

Residential Mortgage

FICO:

740 and greater

$

269,847

$

698,143

$

355,459

$

261,304

$

320,423

$

1,031,922

$

$

$

2,937,098

680 - 739

32,425

83,210

51,384

41,764

48,039

168,279

425,101

620 - 679

4,220

15,727

7,626

11,214

9,310

49,018

97,115

550 - 619

1,945

2,810

2,906

14,044

21,705

Less than 550

854

602

2,914

2,673

7,043

No Score (3)

4,599

12,498

17,761

21,197

19,972

55,404

131,431

Other (2)

5,767

20,213

13,584

13,754

20,607

21,516

580

162

96,183

Total Residential Mortgage

316,858

829,791

448,613

352,645

424,171

1,342,856

580

162

3,715,676

Home Equity Line

FICO:

740 and greater

589,662

2,108

591,770

680 - 739

149,384

3,537

152,921

620 - 679

37,325

1,432

38,757

550 - 619

12,870

1,419

14,289

Less than 550

3,641

359

4,000

No Score (3)

4,009

4,009

Total Home Equity Line

796,891

8,855

805,746

Total Residential Lending

316,858

829,791

448,613

352,645

424,171

1,342,856

797,471

9,017

4,521,422

Consumer Lending

FICO:

740 and greater

37,038

105,809

109,925

86,146

44,909

22,098

107,725

266

513,916

680 - 739

19,163

79,376

82,058

58,077

31,081

16,370

72,053

774

358,952

620 - 679

6,167

38,079

44,459

30,055

21,453

11,715

33,935

1,213

187,076

550 - 619

337

8,215

18,414

15,800

13,267

8,437

11,582

1,364

77,416

Less than 550

88

2,644

8,907

7,785

5,711

3,445

4,181

719

33,480

No Score (3)

955

354

99

57

99

7

32,161

411

34,143

Other (2)

376

1,774

66

2,183

6,748

67,649

78,796

Total Consumer Lending

63,748

234,853

265,636

197,986

118,703

68,820

329,286

4,747

1,283,779

Total Loans and Leases

$

966,378

$

2,412,170

$

2,059,534

$

1,517,679

$

1,177,821

$

2,985,754

$

2,137,285

$

43,668

$

13,300,289


(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 12

For the Three Months Ended

March 31, 

December 31, 

March 31, 

(dollars in thousands, except per share amounts)

    

2021

    

2020

    

2020

    

Income Statement Data:

Net income

$

57,693

$

61,739

$

38,865

Core net income

$

57,693

$

65,288

$

38,803

Average total stockholders' equity

$

2,727,701

$

2,732,271

$

2,660,811

Less: average goodwill

995,492

995,492

995,492

Average tangible stockholders' equity

$

1,732,209

$

1,736,779

$

1,665,319

Average total assets

$

22,944,699

$

22,468,040

$

20,313,304

Less: average goodwill

995,492

995,492

995,492

Average tangible assets

$

21,949,207

$

21,472,548

$

19,317,812

Return on average total stockholders' equity(1)

8.58

%  

8.99

%  

5.87

%  

Core return on average total stockholders' equity (non-GAAP)(1)

8.58

%  

9.51

%  

5.87

%  

Return on average tangible stockholders' equity (non-GAAP)(1)

13.51

%  

14.14

%  

9.39

%  

Core return on average tangible stockholders' equity (non-GAAP)(1)

13.51

%  

14.95

%  

9.37

%  

Return on average total assets(1)

1.02

%  

1.09

%  

0.77

%  

Core return on average total assets (non-GAAP)(1)

1.02

%  

1.16

%  

0.77

%  

Return on average tangible assets (non-GAAP)(1)

1.07

%  

1.14

%  

0.81

%  

Core return on average tangible assets (non-GAAP)(1)

1.07

%  

1.21

%  

0.81

%  

As of

As of

As of

March 31, 

December 31, 

March 31, 

    

2021

    

2020

    

2020

Balance Sheet Data:

Total stockholders' equity

$

2,683,630

$

2,744,104

$

2,664,685

Less: goodwill

995,492

995,492

995,492

Tangible stockholders' equity

$

1,688,138

$

1,748,612

$

1,669,193

Total assets

$

23,497,596

$

22,662,831

$

20,755,891

Less: goodwill

995,492

995,492

995,492

Tangible assets

$

22,502,104

$

21,667,339

$

19,760,399

Shares outstanding

129,749,890

129,912,272

129,827,968

Total stockholders' equity to total assets

11.42

%  

12.11

%  

12.84

%

Tangible stockholders' equity to tangible assets (non-GAAP)

7.50

%  

8.07

%  

8.45

%

Book value per share

$

20.68

$

21.12

$

20.52

Tangible book value per share (non-GAAP)

$

13.01

$

13.46

$

12.86


(1)Annualized for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020.


GAAP to Non-GAAP Reconciliation

Table 13

For the Three Months Ended

March 31, 

December 31, 

March 31, 

(dollars in thousands, except per share amounts)

    

2021

    

2020

    

2020

    

Net interest income

$

129,158

$

135,227

$

138,683

Core net interest income (non-GAAP)

$

129,158

$

135,227

$

138,683

Noninterest income

$

43,868

$

53,598

$

49,228

Losses (gains) on sale of securities

12

(85)

Costs associated with the sale of stock(1)

4,828

Core noninterest income (non-GAAP)

$

43,868

$

58,438

$

49,143

Noninterest expense

$

96,306

$

88,127

$

96,466

Core noninterest expense (non-GAAP)

$

96,306

$

88,127

$

96,466

Net income

$

57,693

$

61,739

$

38,865

Losses (gains) on sale of securities

12

(85)

Costs associated with the sale of stock(1)

4,828

Tax adjustments(2)

(1,291)

23

Total core adjustments

3,549

(62)

Core net income (non-GAAP)

$

57,693

$

65,288

$

38,803

Basic earnings per share

$

0.44

$

0.48

$

0.30

Diluted earnings per share

$

0.44

$

0.47

$

0.30

Efficiency ratio

55.53

%

46.59

%

51.33

%

Core basic earnings per share (non-GAAP)

$

0.44

$

0.50

$

0.30

Core diluted earnings per share (non-GAAP)

$

0.44

$

0.50

$

0.30

Core efficiency ratio (non-GAAP)

55.53

%

45.43

%

51.35

%


(1)Costs associated with the sale of stock for the three months ended December 31, 2020 related to changes in the valuation of the funding swap entered into with the buyer of our Visa Class B restricted shares sold in 2016.
(2)Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period.