1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from . . . . to . . . . . . . .
Commission file number 0-7949
FIRST HAWAIIAN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 99-0156159
(State of incorporation) (I.R.S. Employer
Identification No.)
1132 BISHOP STREET, HONOLULU, HAWAII 96813
(Address of principal executive offices) (Zip Code)
(808) 525-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by
Section 13 or l5(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No
------- -------
The number of shares outstanding of each of the issuer's classes of common
stock as of July 29, 1996 was:
Class Outstanding
--------------------------------- ------------------
Common Stock, $5 Par Value 31,127,897 Shares
2
Part I. FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at June 30, 1996, December 31, 1995
and June 30, 1995 2
Consolidated Statements of Income for the quarter and six months ended
June 30, 1996 and 1995 3
Consolidated Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 4
Consolidated Statements of Changes in Stockholders' Equity for the
quarter and six months ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 19
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
EXHIBIT INDEX
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3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS (Unaudited)
First Hawaiian, Inc. and Subsidiaries
JUNE 30, December 31, June 30,
1996 1995 1995
------------ ------------- -------------
(in thousands)
ASSETS
Interest-bearing deposits in other banks $ 174,130 $ 244,570 $ 11,770
Federal funds sold and securities purchased
under agreements to resell 201,840 169,803 180,000
Investment securities:
Available-for-sale 1,269,854 1,175,293 156,560
Held-to-maturity (fair value of $1,186,636) -- -- 1,186,214
Loans:
Loans 5,658,838 5,259,545 5,253,682
Less allowance for loan losses 84,531 78,733 61,200
------------ ------------ ------------
Net loans 5,574,307 5,180,812 5,192,482
------------ ------------ ------------
Total earning assets 7,220,131 6,770,478 6,727,026
Cash and due from banks 261,353 304,051 264,456
Premises and equipment 260,679 241,987 242,439
Customers' acceptance liability 712 1,995 1,701
Core deposit premium 35,007 16,665 12,902
Goodwill 88,542 75,309 77,106
Other assets 181,438 154,024 145,071
------------ ------------ ------------
TOTAL ASSETS $ 8,047,862 $ 7,564,509 $ 7,470,701
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 928,544 $ 913,228 $ 825,597
Interest-bearing demand 1,252,308 1,073,136 1,107,981
Savings 1,154,894 1,147,997 1,119,705
Time 2,314,335 1,927,011 1,714,216
Foreign 222,958 296,941 413,559
------------ ------------ ------------
Total deposits 5,873,039 5,358,313 5,181,058
Short-term borrowings 992,573 1,083,179 1,174,543
Acceptances outstanding 712 1,995 1,701
Other liabilities 239,159 232,733 224,014
Long-term debt 275,750 238,752 243,771
------------ ------------ ------------
TOTAL LIABILITIES 7,381,233 6,914,972 6,825,087
------------ ------------ ------------
Stockholders' equity:
Preferred stock -- -- --
Common stock 162,713 162,713 162,713
Surplus 133,933 133,925 133,927
Retained earnings 408,560 385,976 365,119
Unrealized valuation adjustment 202 5,489 329
Treasury stock (38,779) (38,566) (16,474)
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 666,629 649,537 645,614
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,047,862 $ 7,564,509 $ 7,470,701
============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
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4
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
First Hawaiian, Inc. and Subsidiaries
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- ------------------------------
1996 1995 1996 1995
------------ ----------- ------------ -------------
(in thousands, except shares and per share data)
INTEREST INCOME
Interest and fees on loans $ 112,732 $ 122,322 $ 222,984 $ 240,978
Lease financing income 2,502 2,408 5,339 6,000
Interest on investment securities:
Taxable interest income 17,459 10,440 34,257 21,800
Exempt from Federal income taxes 773 1,509 1,633 3,163
Other interest income 5,140 4,966 10,172 8,298
------------ ----------- ------------ ------------
Total interest income 138,606 141,645 274,385 280,239
------------ ----------- ------------ ------------
INTEREST EXPENSE
Deposits 42,955 45,956 85,004 88,105
Short-term borrowings 13,202 20,875 27,036 41,388
Long-term debt 4,391 3,397 8,267 6,576
------------ ----------- ------------ ------------
Total interest expense 60,548 70,228 120,307 136,069
------------ ----------- ------------ ------------
Net interest income 78,058 71,417 154,078 144,170
Provision for loan losses 5,191 3,341 8,513 6,681
------------ ----------- ------------ ------------
Net interest income after provision for
loan losses 72,867 68,076 145,565 137,489
------------ ----------- ------------ ------------
NONINTEREST INCOME
Trust income 5,829 5,624 12,326 11,978
Service charges on deposit accounts 6,211 5,874 12,197 12,180
Other service charges and fees 10,081 8,510 19,898 16,764
Securities gains, net 7 -- 27 1
Other 5,282 1,692 6,930 3,760
------------ ----------- ------------ ------------
Total noninterest income 27,410 21,700 51,378 44,683
------------ ----------- ------------ ------------
NONINTEREST EXPENSES
Salaries and wages 24,947 22,857 49,141 46,084
Employee benefits 8,778 5,612 17,956 12,846
Occupancy expense 6,372 6,499 12,817 12,925
Equipment expense 5,641 5,823 11,122 12,209
Other 22,208 19,544 44,316 39,616
------------ ----------- ------------ ------------
Total noninterest expenses 67,946 60,335 135,352 123,680
------------ ----------- ------------ ------------
Income before income taxes 32,331 29,441 61,591 58,492
Income taxes 11,587 10,573 20,644 20,854
------------ ----------- ------------ ------------
NET INCOME $ 20,744 $ 18,868 $ 40,947 $ 37,638
============ =========== ============ ============
PER SHARE DATA
NET INCOME $ .67 $ .59 $ 1.32 $ 1.18
============ =========== ============ ============
CASH DIVIDENDS $ .295 $ .295 $ .59 $ .59
============ =========== ============ ============
AVERAGE SHARES OUTSTANDING 31,127,822 31,988,345 31,124,513 32,004,804
============ =========== ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
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5
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
First Hawaiian, Inc. and Subsidiaries
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------
1996 1995
---------------- ---------------
(in thousands)
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD $ 304,051 $ 262,894
---------------- ---------------
Cash flows from operating activities:
Net income 40,947 37,638
Provision for loan losses 8,513 6,681
Depreciation and amortization 15,298 13,328
Income taxes 12,213 8,850
Increase in interest receivable (3,254) (3,207)
Increase (decrease) in interest payable (7,006) 8,217
Decrease in prepaid expenses 1,594 446
Other (22,985) (22,352)
---------------- --------------
Net cash provided by operating activities 45,320 49,601
---------------- --------------
Cash flows from investing activities:
Net decrease (increase) in interest-bearing deposits
in other banks 70,440 (100)
Net increase in Federal funds sold and securities
purchased under agreements to resell (32,037) --
Purchase of available-for-sale investment securities (466,457) (11,743)
Proceeds from sale of available-for-sale
investment securities 5,009 5,000
Proceeds from maturity of available-for-sale
investment securities 358,109 2,175
Purchase of held-to-maturity investment securities -- (51,831)
Proceeds from maturity of held-to-maturity
investment securities -- 348,129
Net decrease (increase) in loans to customers 10,501 (213,473)
Net cash provided by Pacific Northwest acquisition 218,966 --
Capital expenditures (13,765) (6,094)
Other 5,208 3,216
---------------- --------------
Net cash provided by investing activities 155,974 75,279
---------------- --------------
Cash flows from financing activities:
Net increase (decrease) in deposits (171,816) 28,845
Net decrease in short-term borrowings (90,606) (155,273)
Proceeds from long-term debt 53,000 24,447
Payments on long-term debt (16,002) (7)
Cash dividends paid (18,363) (18,864)
Repurchased common stock (205) (2,466)
---------------- --------------
Net cash used in financing activities (243,992) (123,318)
---------------- --------------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 261,353 $ 264,456
================ ===============
Supplemental disclosures:
Interest paid $ 127,313 $ 127,852
================ ===============
Net income taxes paid $ 8,431 $ 12,004
================ ===============
Supplemental schedule of noncash investing
and financing activities:
Loans exchanged for mortgage backed securities $ -- $ 486,625
================ ===============
The Company purchased 31 branches in the Pacific Northwest. In conjunction with
the acquisition, liabilities were assumed as follows:
Fair value of assets acquired $ 431,352
Cash received 218,966
-------
Liabilities assumed $ 650,318
=======
The accompanying notes are an integral part of these consolidated financial
statements.
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CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
First Hawaiian, Inc. and Subsidiaries
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ---------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
(in thousands)
BALANCE, BEGINNING OF PERIOD $ 657,229 $ 637,961 $ 649,537 $ 627,944
Net income 20,744 18,868 40,947 37,638
Issuance (purchase) of treasury stock, net 8 (2,311) (213) (2,466)
Incentive plan for key executives -- -- 8 --
Unrealized valuation adjustment (2,169) 526 (5,287) 1,362
Cash dividends (9,183) (9,430) (18,363) (18,864)
------------ ------------ ------------ ------------
BALANCE, END OF PERIOD $ 666,629 $ 645,614 $ 666,629 $ 645,614
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
First Hawaiian, Inc. and Subsidiaries
1. BASIS OF PRESENTATION
The consolidated financial statements of the Company include the accounts
of First Hawaiian, Inc. and its wholly-owned subsidiaries - First Hawaiian Bank
and its wholly-owned subsidiaries; Pioneer Federal Savings Bank and its
wholly-owned subsidiary; First Hawaiian Creditcorp, Inc.; Pacific One Bank;
First Hawaiian Leasing, Inc.; and FHI International, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.
Certain amounts in the consolidated financial statements for 1995 have been
reclassified to conform with the 1996 presentation. Such reclassifications had
no effect on the consolidated net income as previously reported.
In the opinion of management, all adjustments (which included only normal
recurring adjustments) necessary for a fair presentation are reflected in the
consolidated financial statements.
2. ACCOUNTING CHANGES
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 122, "Accounting for Mortgage Servicing
Rights." SFAS 122 amends SFAS No. 65, "Accounting for Certain Mortgage Banking
Activities," to require that mortgage banking enterprises recognize as separate
assets rights to service mortgage loans for others. SFAS No. 122 also requires
that mortgage banking enterprises assess capitalized mortgage servicing rights
based on the fair value of those rights on a disaggregated basis. The adoption
of this standard did not have a material effect on the consolidated financial
statements of the Company.
Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," and SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures." SFAS No. 114
requires that impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate, or at the
loan's observable market price, or at the fair value of the collateral if the
loan is collateral dependent. The adoption of SFAS No. 114 did not result in
additional provisions for loan losses primarily because the majority of impaired
loan valuations continue to be based on the fair value of the collateral.
The provision for loan losses charged to expense is based upon the
Company's historical loss experience and estimates of future loan losses in the
current loan portfolio, including the evaluation of impaired loans in accordance
with SFAS No. 114. A loan is considered to be impaired when, based upon current
information and events, it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the loan.
Impairment is primarily measured based on the fair value of the collateral.
Impairment losses are included in the provision for loan losses. SFAS No. 114
does not apply to large groups of smaller balance homogeneous loans that are
collectively evaluated for impairment, except for those loans restructured under
a troubled debt structuring. Loans collectively evaluated for impairment
include certain smaller balance commercial loans, consumer loans and residential
real estate loans, and are not included in the data that follows.
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CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
First Hawaiian, Inc. and Subsidiaries (Unaudited)
The following table summarizes impaired loan information as of June 30, 1996:
(in thousands)
Impaired loans $ 74,233
Impaired loans with related allowance for
loan losses calculated under SFAS No. 114 $ 55,132
Interest payments on impaired loans are applied to principal.
3. BUSINESS COMBINATION
On May 31, 1996, the Company acquired 31 branches in Oregon,
Washington and Idaho (the "Pacific Northwest Acquisition"), which were being
divested by U.S. Bancorp and West One Bancorp as a result of their merger, at
a purchase price of $36 million. The branch acquisitions included the purchase
of loans of $400 million and assumption of deposits of $687 million. Of the 31
branches acquired by the Company, the 26 Oregon and Idaho branches will be
operated as Pacific One Bank, a wholly-owned subsidiary of the Company. The
five branches acquired in Washington will operate as Pacific One Bank, FSB and
will be branches of Pioneer Federal Savings Bank, another wholly-owned
subsidiary of the Company. The Pacific Northwest Acquisition was accounted for
using the purchase method of accounting and the results of its operations were
included in the Consolidated Statements of Income from the date of acquisition.
6
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
NET INCOME
The Company recorded consolidated net income for the first six months of 1996
of $40,947,000, an increase of $3,309,000, or 8.8%, over the first six months
of 1995. For the second quarter of 1996, the consolidated net income of
$20,744,000 represented an increase of 9.9% over the same quarter in 1995. The
improved operating results for the Company reflects the slow, but steady
recovery of the Hawaii economy and a reduction in the Federal Deposit Insurance
Corporation deposit insurance premium.
On a per share basis, consolidated net income for the six months and quarter
ended June 30, 1996 were $1.32 and $.67, respectively, representing increases of
11.9% and 13.6%, respectively, over the same periods in 1995. The
proportionately greater increase in earnings per share was attributable to the
fewer average number of shares outstanding in 1996 as compared to 1995, as a
result of the Company's stock repurchase plan which authorized the total
repurchase of up to 1.6 million shares (of which 1.1 million shares were
repurchased as of June 30, 1996), or five percent of the Company's approximately
31 million shares outstanding.
On an annualized basis, the Company's return on average total assets for the
first six months of 1996 was 1.10%, an increase of 11.1% over the same period
in 1995, and return on average stockholders' equity was 12.52%, or an increase
of 5.3%, over the same period in 1995. The increase in return on average total
assets was primarily attributable to the increase in net income. The increase
in return on average shareholders' equity was due to the increase in net income
and the stock repurchase plan previously discussed.
NET INTEREST INCOME
Net interest income, on a fully taxable equivalent basis, increased $7,997,000,
or 5.4%, to $155,201,000 for the first six months of 1996 from $147,204,000 for
the same period in 1995. Net interest income increased $5,732,000, or 7.9%, to
$78,595,000 for the second quarter of 1996 from $72,863,000 for the same period
in 1995. The increases in net interest income for the first six months and
second quarter of 1996 over the same periods in 1995, were primarily due to
increases in the net interest margin, partially offset by decreases in average
earning assets.
The net interest margin was 4.59% for the first six months and second quarter of
1995, up 34 basis points (1% equals 100 basis points) and 42 basis points,
respectively, over the same periods in 1995. Both the yield on average earning
assets and rate paid on funding sources decreased during the first six months
and second quarter of 1996 as compared with the same periods in 1995 due to a
lower interest rate environment. However, the 38 basis point decrease in the
rate paid on funding sources outpaced the decrease in the yield on average
earning assets of 4 basis points for the first six months of 1996 as compared to
the same period in 1995, resulting in a favorable impact on the net interest
margin. In addition, the increases in noninterest-bearing demand deposits
during the first six months and second quarter of 1996 over the same periods in
1995 also contributed to the increase in the net interest margin. The
disproportionate decrease in the rate paid on funding sources was attributable
in part to the positive impact of interest rate swaps designed to minimize the
effect on the net interest margin from declining interest rates. For the first
six months of 1996, the net interest rate swap expense on deposit accounts
decreased $4,699,000 compared to the same period in 1995.
Average earning assets decreased by $173,526,000, or 2.5%, and $127,168,000, or
1.8%, for the first six months and second quarter of 1996, respectively, as
compared to the same periods in 1995. In addition, in the second quarter of
1995, the Company securitized approximately $490,000,000 of adjustable rate
mortgage loans with the Federal National Mortgage Association ("FNMA") in an
effort to increase its funding capacity and liquidity. The securities backed by
these loans are held by the Company and were reclassified to the investment
securities portfolio. Excluding the aforementioned Pacific Northwest
acquisition and loan securitization, the investment securities portfolio
reflected decreases of $329,780,000, or 32.6%, and $264,459,000 or 28.1%, for
the first six months and second quarter of 1996, respectively, compared to the
same periods in 1995. The investment securities portfolio was allowed to
run-off as securities matured since the securitized loans provided the necessary
collateral for public deposits and reverse repurchase agreements. In addition,
the increases in the overall yield on the investment securities portfolio,
compared to the first six months and second quarter of 1995, were primarily
attributable to the
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upward repricing of the securitized adjustable rate mortgage loans as a result
of the increases in prevailing interest rates during the second half of 1995.
Excluding the effect of the Pacific Northwest acquisition and loan
securitization, average loans for the first six months and second quarter of
1996 reflected slight decreases of .5% and 1.7%, respectively, compared to the
same periods in 1995. The Company continues its efforts to diversify the loan
portfolio, both geographically and by industry. Also, the mix of average
earning assets continues to change (excluding the effect of the Pacific
Northwest acquisition and loan securitization), with higher-yielding average
loans representing 84.3% of average earning assets for the first six months and
second quarter of 1996, as compared to 81.4% and 81.8%, respectively, for the
same periods in 1995.
Average interest-bearing deposits and liabilities decreased by $226,820,000, or
3.8%, and $189,662,000, or 3.2%, for the first six months and second quarter of
1996, respectively, compared to the same periods in 1995. These decreases
were due primarily to the repayment of short-term borrowings from proceeds
received from the run-off of the investment securities portfolio. These
decreases were offset by increases in average deposits resulting primarily from
the previously mentioned Pacific Northwest acquisition and deposits acquired
from a depository financial services loan company in the fourth quarter of
1995. In addition, the Company issued $50 million of long-term subordinated
debt during the second quarter of 1996 to fund the Pacific Northwest
acquisition.
As a result of depositors seeking higher yields, the mix of average
interest-bearing deposits and liabilities changed with higher-yielding average
time deposits representing 48.4% and 49.0% of average interest-bearing deposits
and liabilities for the first six months and second quarter of 1996,
respectively, as compared to 44.8% and 46.5%, respectively, for the same
periods in 1995.
8
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The following table sets forth consolidated average balance sheets, an analysis
of interest income/expense, and average yield/rate for each major category of
interest-earning assets and interest-bearing liabilities for the periods
indicated on a taxable equivalent basis. The tax equivalent adjustment is made
for items exempt from Federal income taxes (assuming a 35% tax rate for 1996
and 1995) to make them comparable with taxable items before any income taxes
are applied.
QUARTER ENDED JUNE 30,
-----------------------------------------------------------------
1996 1995
------------------------------- -------------------------------
INTEREST Interest
AVERAGE INCOME/ YIELD/ Average Income/ Yield/
ASSETS BALANCE EXPENSE RATE (1) Balance Expense Rate (1)
--------- --------- -------- --------- ---------- --------
(dollars in thousands)
Earning assets:
Interest-bearing deposits
in other banks $ 200,787 $ 2,755 5.52% $ 17,686 $ 264 5.97%
Federal funds sold and
securities purchased
under agreements to
resell 173,394 2,385 5.53 312,632 4,701 6.03
Investment securities 1,157,550 18,633 6.47 953,268 13,234 5.57
Loans (2),(3) 5,352,206 115,369 8.67 5,727,519 124,892 8.77
---------- -------- ---------- --------
Total earning assets 6,883,937 139,142 8.13 7,011,105 143,091 8.19
-------- --------
Nonearning assets 672,224 671,145
---------- ----------
Total assets $7,556,161 $7,682,250
========== ==========
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------------
1996 1995
-------------------------------- -------------------------------
INTEREST Interest
AVERAGE INCOME/ YIELD/ Average Income/ Yield/
ASSETS BALANCE EXPENSE RATE (1) Balance Expense Rate (1)
--------- --------- -------- --------- --------- --------
(dollars in thousands)
Earning assets:
Interest-bearing deposits
in other banks $ 204,168 $ 5,653 5.57% $ 14,093 $ 418 5.97%
Federal funds sold and
securities purchased
under agreements to
resell 164,399 4,519 5.53 272,244 7,881 5.84
Investment securities 1,145,829 36,736 6.45 1,016,748 27,675 5.49
Loans (2),(3) 5,292,443 228,600 8.69 5,677,280 247,299 8.78
---------- -------- ---------- --------
Total earning assets 6,806,839 275,508 8.14 6,980,365 283,273 8.18
-------- --------
Nonearning assets 645,151 660,625
---------- ----------
Total assets $7,451,990 $7,640,990
========== ==========
(1) Annualized.
(2) Nonaccruing loans have been included in the computations of average loan
balances.
(3) Interest income for loans included loan fees of $6,183 and $11,801 for the
quarter and six months ended June 30, 1996, respectively, and $6,091 and
$12,006 for the quarter and six months ended June 30, 1995, respectively.
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QUARTER ENDED JUNE 30,
-------------------------------------------------------------------
1996 1995
------------------------------- --------------------------------
INTEREST Interest
LIABILITIES AND AVERAGE INCOME/ YIELD/ Average Income/ Yield/
STOCKHOLDERS' EQUITY BALANCE EXPENSE RATE (1) Balance Expense Rate (1)
---------- --------- -------- ------- ------- --------
(dollars in thousands)
Interest-bearing
deposits and
liabilities:
Deposits $ 4,549,312 $ 42,955 3.80% $ 4,417,055 $ 45,956 4.18%
Short-term
borrowings 976,131 13,201 5.44 1,341,108 20,875 6.24
Long-term debt 280,498 4,391 6.30 237,440 3,397 5.74
----------- --------- ------------ ---------
Total interest-
bearing deposits
and liabilities 5,805,941 60,547 4.19 5,995,603 70,228 4.70
--------- ---- ------- ----
Interest rate
spread 3.94% 3.49%
==== ====
Noninterest-bearing
demand deposits 872,528 826,791
Other liabilities 215,405 213,468
----------- ------------
Total liabilities 6,893,874 7,035,862
Stockholders'
equity 662,287 646,388
----------- ------------
Total liabilities and
stockholders' equity $ 7,556,161 $ 7,682,250
=========== ============
Net interest income
and margin on
earning assets 78,595 4.59% 72,863 4.17%
==== ====
Tax equivalent adjustment 537 1,446
--------- ---------
Net interest income $ 78,058 $ 71,417
========= =========
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------------
1996 1995
------------------------------- --------------------------------
LIABILITIES AND AVERAGE INCOME/ YIELD/ Average Income/ Yield/
STOCKHOLDERS' BALANCE EXPENSE RATE (1) Balance Expense Rate (1)
EQUITY --------- --------- -------- ---------- --------- --------
(dollars in thousands)
Interest-bearing
deposits and
liabilities:
Deposits $ 4,470,853 $ 85,004 3.82% $ 4,371,111 $ 88,105 4.06%
Short-term borrowings 1,010,700 27,036 5.38 1,370,252 41,388 6.09
Long-term debt 263,658 8,267 6.31 230,668 6,576 5.75
------------ --------- ------------ ---------
Total interest-
bearing deposits
and liabilities 5,745,211 120,307 4.21 5,972,031 136,069 4.59
------------ ------- ------------ -------
Interest rate 3.93% 3.59%
spread ==== ====
Noninterest-bearing
demand deposits 851,740 828,221
Other liabilities 197,236 202,243
------------ -------------
Total liabilities 6,794,187 7,002,495
Stockholders'
equity 657,803 638,495
------------ ------------
Total liabilities and
stockholders' equity $ 7,451,990 $ 7,640,990
============ ============
Net interest income
and margin on
earning assets 155,201 4.59% 147,204 4.25%
==== ====
Tax equivalent adjustment 1,123 3,031
------- ---------
Net interest income $ 154,078 $ 144,173
========= =========
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INVESTMENT SECURITIES
The following table presents the amortized cost and fair values of
available-for-sale investment securities as of the dates indicated:
June 30, December 31, June 30,
1996 1995 1995
------------- ------------- -------------
(in thousands)
Amortized cost $ 1,269,525 $ 1,166,178 $ 156,015
Unrealized gains 4,098 9,920 696
Unrealized losses (3,769) (805) (151)
------------- ------------- ------------
Fair value $ 1,269,854 $ 1,175,293 $ 156,560
============= ============= ============
Book and fair values of held-to-maturity investment securities at June 30,
1995, were as follows:
(in thousands)
Book value $ 1,186,214
Unrealized gains 3,630
Unrealized losses (3,208)
-----------
Fair value $ 1,186,636
===========
In December 1995, the Company made a one-time reclassification of its investment
securities portfolio from held-to-maturity to available-for-sale as allowed by
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities."
Gross realized gains and losses for the six months ended June 30, 1996 and 1995
were as follows:
1996 1995
---- ----
(in thousands)
Realized gains $ 37 $ 4
Realized losses (10) (3)
--------- ---------
Securities gains, net $ 27 $ 1
========= =========
Gains and losses realized on the sales of investment securities are determined
using the specific identification method.
11
13
LOANS
The following table sets forth the loan portfolio by major categories and loan
mix at June 30, 1996, December 31, 1995 and June 30, 1995:
JUNE 30, 1996 December 31, 1995 June 30, 1995
------------------- ------------------- ------------------
AMOUNT % Amount % Amount %
----------- ------- ----------- ------- ---------- -------
(dollars in thousands)
Commercial, financial and
agricultural $1,375,920 24.3% $1,315,736 25.0 % $1,439,730 27.4%
Real estate:
Commercial 1,162,909 20.5 996,715 18.9 952,797 18.1
Construction 211,842 3.7 256,943 4.9 283,310 5.4
Residential:
Insured, guaranteed or
conventional 1,418,345 25.1 1,334,063 25.4 1,286,529 24.5
Home equity credit lines 416,875 7.4 432,229 8.2 393,080 7.5
--------- ----- ---------- ---- --------- -----
Total real estate loans 3,209,971 56.7 3,019,950 57.4 2,915,716 55.5
--------- ----- ---------- ---- --------- -----
Consumer 593,316 10.5 473,909 9.0 475,367 9.0
Lease financing 232,614 4.1 241,721 4.6 225,836 4.3
Foreign 247,017 4.4 208,229 4.0 197,033 3.8
--------- ----- ---------- ----- --------- -----
Total loans 5,658,838 100.0% 5,259,545 100.0 % 5,253,682 100.0%
--------- ----- ---------- ----- --------- -----
Less allowance for loan losses 84,531 78,733 61,200
--------- ---------- ----------
Total net loans $5,574,307 $5,180,812 $5,192,482
========== ========== ==========
The loan portfolio is the largest component of earning assets and accounts for
the greatest portion of total interest income. At June 30, 1996, total loans
were $5,658,838,000, an increase of 7.6% from December 31, 1995. This increase
was due to the Pacific Northwest acquisition. Excluding the impact of the
Pacific Northwest acquisition, total loans would have reflected a slight
decrease as compared to June 30, 1995 and December 31, 1995.
Total loans at June 30, 1996, represented 70.3% of total assets, 78.4% of total
earning assets and 96.4% of total deposits compared to 69.5% of total assets,
77.7% of total earning assets and 98.2% of total deposits at December 31, 1995
and 70.3% of total assets, 78.1% of total earning assets and 101.4% of total
deposits at June 30, 1995.
Loan concentrations are considered to exist when there are amounts loaned to
multiple borrowers engaged in similar activities which would cause them to be
similarly impacted by economic or other conditions. At June 30, 1996,
commercial real estate loans totalled $1,162,909,000, or 20.5%, of total loans.
The Company has selectively participated as a lender on commercial properties
on the mainland United States, principally on the west coast. Such loans
totalled $59,817,000 at June 30, 1996, an increase of 2.4% from December 31,
1995. At June 30, 1996, the largest concentration of commercial real estate
loans to a single borrower was $34,524,000.
12
14
NONPERFORMING ASSETS
A summary of nonperforming assets at June 30, 1996, December 31, 1995 and June
30, 1995 follows:
June 30, December 31, June 30,
1996 1995 1995
---------- ------------ ----------
(dollars in thousands)
Nonperforming loans:
Nonaccrual:
Commercial, financial and agricultural $ 19,573 $ 16,229 $ 19,581
Real estate:
Commercial 23,578 40,664 39,249
Construction 7,444 9,697 2,260
Residential:
Insured, guaranteed, or conventional 10,241 12,238 7,716
Home equity credit lines 173 496 470
--------- ---------- ---------
Total real estate loans 41,436 63,095 49,695
--------- ---------- ---------
Consumer 357 390 893
Lease financing 21 19 318
--------- ---------- ---------
Total nonaccrual loans 61,387 79,733 70,487
Renegotiated:
Commercial, financial and agricultural 617 682 --
Real estate - commercial 2,500 2,500 2,500
--------- ---------- ---------
Total nonperforming loans 64,504 82,915 72,987
Other real estate owned 14,720 9,312 9,711
--------- ---------- ---------
Total nonperforming assets $ 79,224 $ 92,227 $ 82,698
========= ========== =========
Loans past due 90 days or more
and still accruing interest $ 24,875 $ 28,790 $ 34,929
========= ========== =========
Nonperforming assets to total loans
and other real estate owned (end of period):
Excluding 90 days past due accruing loans 1.40% 1.75% 1.57%
Including 90 days past due accruing loans 1.83% 2.30% 2.23%
Nonperforming assets to total assets
(end of period):
Excluding 90 days past due accruing loans .98% 1.22% 1.11%
Including 90 days past due accruing loans 1.29% 1.60% 1.57%
13
15
NONPERFORMING ASSETS, Continued
Nonperforming assets decreased from $92,227,000 at December 31, 1995 to
$79,224,000 at June 30, 1996.
The decrease in the nonaccrual real estate - commercial category and
corresponding increase in the other real estate owned category were primarily
due to the foreclosure of two real estate - commercial loans with carrying
values totalling $7,295,000. The increase in other real estate owned was
partially offset by the sale of a property with a carrying value of $4,167,000.
In addition, paydowns on two nonaccrual real estate - commercial loans
totalling $14,553,000 contributed to the decrease in nonperforming assets.
These decreases were partially offset by the addition of a real estate -
commercial loan totalling $6,050,000.
Loans past due 90 days or more and still accruing interest totalled $24,875,000
at June 30, 1996, a decrease of 13.6% from December 31, 1995. The decrease was
primarily due to various loans totalling $7,687,000 which were placed on
nonaccrual status and two real estate - residential loans and one real estate -
commercial loan totalling $3,656,000 which were either paid current or in full
at June 30, 1996. These decreases were partially offset by the addition of
various loans, principally real estate - commercial loans, totalling
$9,424,000. All of the loans which are past due 90 days or more and still
accruing interest are in management's judgment adequately collateralized and in
the process of collection.
In recent years, the level of the Company's nonperforming assets and
charge-offs has been adversely affected by the prolonged economic downturn in
Hawaii and related weakness in the local real estate market. Although the
Company believes that the Hawaii economy continues to show signs of
improvement, and certain local real estate sectors evidence signs of having
stabilized, the recovery of the Hawaii economy has been slow and the effects of
the economic downturn may continue to affect the level of nonperforming assets
and related charge-offs in future periods.
14
16
DEPOSITS
The following table sets forth the average balances and the average rates paid
on deposits for the periods indicated:
QUARTER ENDED JUNE 30,
-----------------------------------------------------
1996 1995
----------------------- -----------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE (1) BALANCE RATE (1)
--------- --------- --------- ---------
(dollars in thousands)
Interest-bearing demand $ 1,172,203 2.71% $ 1,143,182 2.70%
Savings 1,149,066 2.08 1,220,087 3.11
Time 2,228,043 5.25 2,053,786 5.63
------------ ------------
Total interest-bearing deposits 4,549,312 3.80 4,417,055 4.18
Noninterest-bearing demand 872,528 - 826,791 -
------------ ------------
Total deposits $ 5,421,840 3.19% $ 5,243,846 3.52%
============ ============
SIX MONTHS ENDED JUNE 30,
----------------------------------------------------
1996 1995
---------------------- ----------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE (1) BALANCE RATE (1)
--------- --------- --------- ---------
(dollars in thousands)
Interest-bearing demand $ 1,148,673 2.66% $ 1,163,996 2.69%
Savings 1,156,531 2.11 1,247,378 3.16
Time 2,165,649 5.36 1,959,737 5.45
------------ ------------
Total interest-bearing deposits 4,470,853 3.82 4,371,111 4.06
Noninterest-bearing demand 851,740 - 828,221 -
------------ ------------
Total deposits $ 5,322,593 3.21% $ 5,199,332 3.42%
============ ============
Average interest-bearing deposits increased $99,742,000, or 2.3%, and
$132,257,000, or 3.0%, over the first six months and second quarter of 1995.
The increase in average interest-bearing deposits was due to the Pacific
Northwest acquisition, the purchase of deposits from a depository financial
services loan company in the fourth quarter of 1995 and various deposit product
programs initiated by the Company in the latter part of 1995 and 1996. With
the acquisitions and assumption of deposits and depositors seeking higher
yields through the aforementioned deposit product programs, the mix of average
interest-bearing deposits changed, with higher yielding average time
certificate of deposits representing 48.4% and 49.0% of average
interest-bearing deposits in the first six months and second quarter of 1996,
respectively, as compared to 44.8% and 46.5% in the same periods in 1995.
(1) Annualized.
15
17
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The following table sets forth the activity in the allowance for loan losses
for the periods indicated:
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- -----------------------------
1996 1995 1996 1995
------------ ----------- ------------ -----------
(dollars in thousands)
Loans outstanding (end of period) $ 5,658,838 $ 5,253,682 $ 5,658,838 $ 5,253,682
============ =========== ============ ===========
Average loans outstanding $ 5,352,206 $ 5,727,519 $ 5,292,443 $ 5,677,280
============ =========== ============ ===========
Allowance for loan losses summary:
Balance at beginning of period $ 79,585 $ 61,236 $ 78,733 $ 61,250
------------ ----------- ------------ -----------
Allowance due to Pacific Northwest acquisition 6,200 -- 6,200 --
Loans charged off:
Commercial, financial and agricultural 1,978 922 2,396 1,755
Real estate:
Commercial 1,240 460 1,286 1,056
Construction -- 1 -- 828
Residential 980 398 1,190 515
Consumer 3,149 2,048 5,611 3,530
Foreign 15 -- 77 --
------------ ----------- ------------ -----------
Total loans charged off 7,362 3,829 10,560 7,684
------------ ----------- ------------ -----------
Recoveries on loans charged off:
Commercial, financial and agricultural 503 43 583 69
Real estate:
Commercial 6 1 7 2
Construction -- 1 -- 6
Residential 84 -- 137 17
Consumer 319 405 903 855
Lease financing -- 2 2 4
Foreign 5 -- 13 --
------------ ----------- ------------ -----------
Total recoveries on loans
charged off 917 452 1,645 953
------------ ----------- ------------ -----------
Net charge-offs (6,445) (3,377) (8,915) (6,731)
Provision charged to expense 5,191 3,341 8,513 6,681
------------ ----------- ------------ -----------
Balance at end of period $ 84,531 $ 61,200 $ 84,531 $ 61,200
============ =========== ============ ===========
Net loans charged off to average loans .48%(1) .24%(1) .34%(1) .24%(1)
Net loans charged off to allowance for
loan losses 30.67%(1) 22.13%(1) 21.21%(1) 22.18%(1)
Allowance for loan losses to total
loans (end of period) 1.49% 1.16% 1.49% 1.16%
Allowance for loan losses to nonperforming
loans (end of period):
Excluding 90 days past due
accruing loans 1.31x .84x 1.31X .84x
Including 90 days past due
accruing loans .95X .57x .95X .57x
(1) Annualized.
16
18
PROVISION AND ALLOWANCE FOR LOAN LOSSES, CONTINUED
For the first six months of 1996, the provision for loan losses was $8,513,000,
an increase of $1,832,000, or 27.4%, over the same period in 1995. The
provision for loan losses was $5,191,000 for the second quarter of 1996, an
increase of $1,850,000, or 55.4%, over the same period in 1995. The increase
in the provision for loan losses for the first six months and second quarter of
1996 is consistent with the increase in net charge-offs for the same periods.
Net charge-offs for the first six months of 1996 were $8,915,000, an increase of
$2,184,000, or 32.4%, over the same period in 1995. Net charge-offs for the
second quarter of 1996 were $6,445,000 compared to $3,377,000 for the same
period a year ago. The increases were primarily due to increased charge-offs in
all categories of consumer loans which include direct loans, indirect dealer
loans, and credit cards.
The allowance for loan losses increased to 131% of nonperforming loans at June
30, 1996 (excluding 90 days past due accruing loans) from 95% at December 31,
1995, reflecting the decrease in nonperforming loans and increase in the
allowance for loan losses in the first six months of 1996.
In management's judgment, the allowance for loan losses is adequate to absorb
potential losses currently inherent in the portfolio, however, changes in
prevailing economic conditions in the Company's markets could result in changes
in the level of nonperforming assets and charge-offs in the future and,
accordingly, changes in the allowance for loan losses.
NONINTEREST INCOME
Noninterest income of Pacific One Bank is included in the Company's results of
operations since May 31, 1996.
Exclusive of securities transactions, noninterest income totalled $51,351,000
and $27,403,000 for the first six months and second quarter of 1996,
respectively, an increase of 14.9% and 26.3%, respectively, over the same
periods in 1995.
Trust and Investment Division income increased $348,000, or 2.9%, and $205,000,
or 3.6%, for the first six months and second quarter of 1996, respectively,
over the same periods in 1995.
Service charges on deposit accounts for the first six months of 1996 increased
slightly over the same period in the prior year, and increased $337,000, or
5.7%, in the second quarter of 1996 over the same period a year ago.
Other service charges and fees increased $3,134,000, or 18.7%, and $1,571,000,
or 18.5%, for the first six months and second quarter of 1996, respectively,
over the same periods in 1995. These increases were primarily the result of
higher merchant discount and mortgage brokerage fees and income earned from
annuity and mutual fund sales.
Other noninterest income increased $3,170,000, or 84.3%, and $3,590,000, or
212.2%, for the first six months and second quarter of 1996, respectively, over
the same periods in 1995. These increases were attributable to a gain on sale
of other real estate owned of $3,029,000 in the second quarter of 1996.
17
19
NONINTEREST EXPENSES
Noninterest expenses of Pacific One Bank are included in the Company's results
of operations since May 31, 1996.
Noninterest expenses totalled $135,352,000 for the first six months of 1996, an
increase of 9.4% over the first six months of 1995. Noninterest expenses
totalled $67,946,000 for the second quarter of 1996, an increase of $7,611,000,
or 12.6%, over the same period a year ago.
Total personnel expenses (salaries and wages and employee benefits) increased
$8,167,000 and $5,256,000, or 13.9% and 18.5%, for the first six months and
second quarter of 1996, respectively, over the same periods in 1995. The
increase was primarily due to an increase in costs associated with the
curtailment of a noncontributory pension plan in the fourth quarter of 1995,
which was replaced with a 401(k) match and money purchase plan effective
January 1, 1996. Also, higher salaries and wages reflecting normal merit
increases in 1996 and lower expenses related to various employee benefit and
incentive accounts in 1995 contributed to the increases.
Occupancy expense for the first six months and second quarter of 1996 decreased
$108,000, or .8%, and $127,000, or 2.0%, respectively, compared to the same
periods in 1995.
Equipment expense decreased $1,087,000, or 8.9%, for the first six months of
1996 compared to the same period in 1995, as a result of lower depreciation on
furniture and equipment and service contract expenses in 1996. For the second
quarter, equipment expense decreased $182,000, or 3.1%, compared to the same
period in 1995.
Exclusive of a pre-tax loss of $1,925,000 (after-tax gain of $399,000 due to a
net tax benefit of $2,344,000 resulting from the reversal of the related tax
liabilities) recognized on the sale of a certain leveraged lease in the first
quarter of 1996, other noninterest expenses for the first six months and second
quarter increased $2,775,000, or 7.0%, and $2,664,000, or 13.6%, respectively
over the same periods in 1995. These increases were primarily due to higher
interchange settlement fees, outside services, legal fees (primarily related to
foreclosed property) and nonrecurring losses in connection with a certain
credit card fraud. These increases were partially offset by: (1) a decrease
in the Federal Deposit Insurance Corporation deposit insurance assessment rate
from 23 cents to zero per $100 of insured deposits; and (2) the write-off of
the residual values of $620,000 related to the early termination of certain
leveraged leases in June 1995.
18
20
INCOME TAXES
The Company's effective income tax rate (exclusive of the tax equivalent
adjustment) for the first six months and second quarter of 1996 was 33.5% and
35.8%, respectively, as compared to 35.7% and 35.9%, respectively, for the same
periods in 1995. The decrease in the effective income tax rate for the six
month period ended June 30, 1996, was primarily due to the reversal of deferred
tax liabilities (reflecting a change in the State tax laws) related to the
aforementioned leveraged lease sale.
LIQUIDITY AND CAPITAL
Stockholders' equity was $666,629,000 at June 30, 1996, a 2.6% increase from
$649,537,000 at December 31, 1995. Average stockholders' equity represented
8.8% of average total assets for the second quarter of 1996 compared to 8.4% in
the same quarter last year. There was no significant change in the Company's
liquidity position during the second quarter of 1996.
The following tables present the Company's regulatory capital position at June
30, 1996:
RISK-BASED CAPITAL RATIOS
AMOUNT RATIO
----------- --------
(dollars in thousands)
Tier 1 Capital $ 555,083 8.34%
Tier 1 Capital minimum requirement (1) 266,285 4.00
----------- ------
Excess $ 288,798 4.34%
=========== ======
Total Capital $ 788,313 11.84%
Total Capital minimum requirement (1) 532,570 8.00
----------- ------
Excess $ 255,743 3.84%
=========== ======
Risk-weighted assets $ 6,657,127
===========
LEVERAGE RATIO
AMOUNT RATIO
----------- --------
(dollars in thousands)
Tier 1 Capital to average quarterly total assets
(net of certain intangibles)
Tier 1 Leverage Ratio $ 555,083 7.46%
Minimum leverage requirement (2) 223,345 3.00
----------- ------
Excess $ 331,738 4.46%
=========== ======
Average quarterly total assets (net of certain intangibles) $ 7,444,817
===========
(1) Risk-based capital guidelines as established by the Federal Reserve
Board for bank holding companies require minimum Tier 1 and Total
capital ratios of 4% and 8%, respectively.
(2) The Federal Reserve Board has stated that the Leverage Ratio of 3% is
the minimum requirement for the most highly rated banking
organizations which are not experiencing or anticipating significant
growth. Other banking organizations are expected to maintain leverage
ratios of at least one to two percent higher.
19
21
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of stockholders held on April 18, 1996, the
stockholders voted on the following matters:
(a) Fix the total number of Directors at fifteen: for -
29,067,239 (99.1%), against - 114,013 (.4%), abstained -
157,738 (.5%) and unvoted - 10,007 (-%).
(b) Election of five directors for a term of three years expiring
in 1999, or until their successors are elected and qualified:
Votes
------------------------------------------------------
Name For Withheld
---- --- --------
Walter A. Dods, Jr. 29,229,039 (99.6%) 119,954 (.4%)
Paul Mullin Ganley 29,224,790 (99.6%) 124,203 (.4%)
Dr. Richard T. Mamiya 29,229,918 (99.6%) 119,073 (.4%)
Dr. Fujio Matsuda 29,227,731 (99.6%) 121,261 (.4%)
George P. Shea, Jr. 29,229,524 (99.6%) 119,469 (.4%)
There were no abstentions or unvoted shares.
(c) Amendment to the Corporation's Certificate of Incorporation to
increase the number of shares of authorized stock by
authorizing 50,000,000 shares of a new class of preferred
stock, par value $5.00 per share: for - 24,850,183 (84.7%),
against - 4,498,814 (15.3%).
(d) Election of Coopers & Lybrand as the Auditor of the Company to
serve for the ensuing year: for - 29,155,971 (99.3%), against
- 49,272 (.2%), abstained - 143,744 (.5%) and unvoted - 10
(-%).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 12 Statement regarding computation of ratios.
Exhibit 27 Financial data schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended June 30, 1996.
20
22
SIGNATURES
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, thereunto duly authorized.
FIRST HAWAIIAN, INC.
(Registrant)
Date August 12, 1996 By /s/ HOWARD H. KARR
---------------------- --------------------------------------
HOWARD H. KARR
EXECUTIVE VICE PRESIDENT AND TREASURER
(PRINCIPAL FINANCIAL OFFICER)
21
23
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
12 Statement regarding computation of ratios. 23
27 Financial data schedule 24
1
EXHIBIT 12. STATEMENT RE: COMPUTATION OF RATIOS
First Hawaiian, Inc. and Subsidiaries
Computation of Consolidated Ratios of Earnings to Fixed Charges
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
1996 1995 1996 1995
----------- ---------- ---------- ----------
(dollars in thousands)
Income before income taxes $ 32,331 $ 29,441 $ 61,591 $ 58,492
----------- ---------- ---------- ----------
Fixed charges:(1)
Interest expense 60,548 70,228 120,307 136,069
Rental expense 1,174 1,295 2,376 2,506
----------- ---------- ---------- ----------
61,722 71,523 122,683 138,575
Less interest on deposits 42,955 45,956 85,004 88,105
----------- ---------- ---------- ----------
Net fixed charges 18,767 25,567 37,679 50,470
----------- ---------- ---------- ----------
Earnings, excluding
interest on deposits $ 51,098 $ 55,008 $ 99,270 $ 108,962
=========== ========== ========== ==========
Earnings, including
interest on deposits $ 94,053 $ 100,964 $ 184,274 $ 197,067
=========== ========== ========== ==========
Ratio of earnings to
fixed charges:
Excluding interest on deposits 2.72X 2.15x 2.63X 2.16x
Including interest on deposits 1.52X 1.41x 1.50X 1.42x
(1) For purposes of computing the above ratios, earnings represent income
before income taxes plus fixed charges. Fixed charges, excluding
interest on deposits, include interest (other than on deposits), whether
expensed or capitalized, and that portion of rental expense (generally
one third) deemed representative of the interest factor. Fixed charges,
including interest on deposits, include all interest, whether expensed
or capitalized, and that portion of rental expense (generally one third)
deemed representative of the interest factor.
9
6-MOS
DEC-31-1996
JAN-01-1996
JUN-30-1996
261,353
174,130
201,840
0
1,269,854
0
0
5,658,838
84,531
8,047,862
5,873,039
992,573
239,159
275,750
0
0
162,713
503,916
8,047,862
228,323
35,890
10,172
274,385
85,004
120,307
154,078
8,513
27
135,352
61,591
40,947
0
0
40,947
1.32
1.32
8.14
61,387
24,875
3,117
0
78,733
10,560
1,645
84,531
35,205
1,175
48,151
