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First Hawaiian, Inc. Reports Third Quarter 2016 Financial Results and Declares Dividend

HONOLULU, Oct. 27, 2016 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (the “Company”) today reported financial results for its third quarter ended September 30, 2016.

Third Quarter Highlights

  • Net income for the quarter ended September 30, 2016 was $53.2 million, or $0.38 per diluted share, and core net income1 was $55.2 million, or $0.40 per diluted share

  • Loan and lease balances grew by $208.9 million, or 1.9%, and total deposits grew by $843.4 million, or 5.2%, during the quarter

  • Reflecting a continued strong capital position, at September 30, 2016, tier 1 leverage, common equity tier 1, and total capital ratios were 8.41%, 12.48%, and 13.59%, respectively

  • The efficiency ratio was 48.3%, reflecting strong cost controls

  • Total non-performing assets were $10.2 million, or 0.09% of total loans and leases, at September 30, 2016. Net charge-offs were $3.4 million during the quarter, or 0.12% of average loans and leases, on an annualized basis

  • Return on average total assets was 1.10% and core return on average total assets2 was 1.14%

  • Return on average tangible stockholders’ equity3 was 14.02% and core return on average tangible stockholders’ equity4 was 14.53%

  • First Hawaiian Bank received an overall rating of “Outstanding” from the FDIC for its performance under the Community Reinvestment Act for the eighth consecutive evaluation period beginning in 1995

“The third quarter was an exciting time for the Company. We successfully launched and priced our initial public offering, becoming the largest publicly traded company headquartered in Hawaii, and the bank continued to perform well,” said Bob Harrison, Chairman and Chief Executive Officer. “Loan and deposit growth in the third quarter was solid, our credit quality remained excellent, and our financial performance was strong. As we move forward as a public company, our focus will remain on providing the best service to our customers, caring for our employees and the community, and continuing to create value for our shareholders.”

On October 26, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share on the outstanding shares of the Company’s common stock. The dividend will be payable on December 9, 2016 to shareholders of record at the close of business on November 28, 2016.

Earnings Highlights

Net income for the quarter ended September 30, 2016 was $53.2 million, or $0.38 per diluted share, compared to net income of $54.9 million, or $0.39 per diluted share, for the quarter ended June 30, 2016, and $54.9 million, or $0.39 per diluted share, for the quarter ended September 30, 2015. Our core net income for the quarter ended September 30, 2016 was $55.2 million, or $0.40 per diluted share, compared to net income of $54.9 million, or $0.39 per diluted share, in the quarter ended June 30, 2016, and $49.6 million, or $0.36 per diluted share, for the quarter ended September 30, 2015.

Net interest income for the quarter ended September 30, 2016 was $122.7 million, an increase of $2.3 million compared with net interest income of $120.4 million for the quarter ended June 30, 2016, and an increase of $9.1 million compared with net interest income of $113.6 million for the quarter ended September 30, 2015. The increase in net interest income compared to the second quarter of 2016was attributable to higher interest income on investments and loans due to higher average balances, partially offset by slightly lower yields. The increase in net interest income compared to the third quarter of 2015 was driven by higher interest income on loans due to higher average balances, and higher interest income on investments due to higher average balances and yields, partially offset by lower yields on loans and higher interest expenses on deposits due to an increase in rates paid and higher average balances.

Net interest margin was 2.87%, 2.88% and 2.72%, respectively, for the quarters ended September 30, 2016, June 30, 2016, and September 30, 2015. The 1 basis point decrease compared to the second quarter of 2016 was due to lower yields on loans and investments, primarily due to higher premium amortization. The 15 basis point increase compared to the third quarter of 2015 was due to the increase in investment portfolio yields resulting from the investment in longer duration assets, partially offset by lower yields on loans and higher rates paid on deposits.

Results for the quarter ended September 30, 2016 included a provision for credit losses of $2.1 million compared to $1.9 million in the quarter ended June 30, 2016 and $2.6 million in the quarter ended September 30, 2015.

Noninterest income was $48.7 million in the quarter ended September 30, 2016, an increase of $2.3 million compared to noninterest income of $46.4 million in the quarter ended June 30, 2016 and a decrease of $7.8 million compared to noninterest income of $56.5 million in the quarter ended September 30, 2015. The increase in noninterest income in the third quarter of 2016 compared to the second quarter of 2016 was primarily due to higher bank-owned life insurance (“BOLI”) income, partially offset by lower swap fee income. BOLI income in the third quarter of 2016 included gains of $3.5 million from death benefits. Other noninterest income in the second quarter of 2016 included $1.7 million in upfront fees from customer swaps. Noninterest income in the third quarter of 2015 included $4.2 million of gains from the sale of investments and MasterCard stock and $7.2 million from a vendor signing bonus, recoveries from various bank operations, recovery of a previously written-down security, and higher gains on sale of mortgage loans.

Noninterest expense was $82.8 million for the quarter ended September 30, 2016, an increase of $4.3 million from $78.5 million in the quarter ended June 30, 2016, and an increase of $3.4 million from $79.4 million in the quarter ended September 30, 2015. The increase in noninterest expense compared to the second quarter of 2016 was driven by a $1.8 million increase in cards rewards expenses, a $0.7 million increase in FDIC insurance assessment fees, $0.6 million of additional expenses due to the conversion to EMV, chip-enabled cards, and a $0.7 million increase in professional fees. Cards rewards expenses in the second quarter of 2016 included a benefit due to the change in terms related to the expiration of our debit card reward points. The increase in noninterest expense compared to the third quarter of 2015 was primarily due to a $1.1 million increase in regulatory assessment fees, an increase of $1.0 million in cards rewards expenses, $0.6 million of card replacement expenses, and an increase of $0.8 million in occupancy expenses.

The reported efficiency ratio was 48.3%, 47.0% and 46.7% for the quarters ended September 30, 2016, June 30, 2016 and September 30, 2015, respectively.

The effective tax rate for the third quarter of 2016 was 38.4% compared with 36.5% in the previous quarter and 37.7% percent in the same quarter last year.

Balance Sheet Highlights

Total assets were $19.9 billion at September 30, 2016, up from $19.1 billion at June 30, 2016 and $18.9 billion at September 30, 2015.

The investment securities portfolio was $5.4 billion at September 30, 2016, up from $4.6 billion at June 30, 2016 and $4.7 billion at September 30, 2015. The growth in the most recent quarter was a result of the continued execution of our plan to invest excess liquidity into higher yielding investment securities in 2016. The portfolio remains largely comprised of securities issued by U. S. government agencies

Total loans and leases were $11.4 billion at September 30, 2016, up 1.9% from $11.2 billion at June 30, 2016 and up 9.0% from $10.5 billion at September 30, 2015.

The growth in loans and leases in the most recent quarter was due to increases in commercial real estate loans of $130.1 million, construction loans of $50.6 million, residential real estate loans (including home equity) of $33.1 million, and consumer loans of $17.1 million. Commercial and industrial loans declined by $23.2 million. Compared to September 30, 2015, the growth in loans and leases in the most recent quarter was due to increases in commercial and industrial loans of $327.1 million, commercial real estate loans of $161.4 million, construction loans of $154.3 million, residential real estate loans (including home equity) of $174.7 million, and consumer loans of $146.0 million.

Total deposits increased to $17.0 billion at September 30, 2016, an increase of $843.4 million, or 5.2%, compared with $16.1 billion at June 30, 2016, and an increase of $1.5 billion, or 9.6%, compared to $15.5 billion at September 30, 2015.

Asset Quality

The Company's asset quality remained strong during the third quarter of 2016. Total non-performing assets declined to $10.2 million, or 0.09% of total loans and leases, at September 30, 2016, down $3.3 million from non-performing assets of $13.5 million, or 0.12% of total loans and leases, at June 30, 2016 and down $10.5 million from non­performing assets of $20.7 million, or 0.20% of total loans and leases, at September 30, 2015.

Net charge offs for the quarter ended September 30, 2016 were $3.4 million, or 0.12% of average loans and leases on an annualized basis, compared to $2.7 million, or 0.10% of average loans and leases on an annualized basis for the quarter ended June 30, 2016 and $3.4 million, or 0.13% of average loans and leases on an annualized basis for the quarter ended September 30, 2015. The ratio of allowance for loan and lease losses to total loans and leases decreased to 1.18% at September 30, 2016 from 1.22% at June 30, 2016 and 1.30% at September 30, 2015.

Capital

Total stockholders' equity was $2.5 billion at September 30, 2016, compared to $2.5 billion at June 30, 2016 and $2.7 billion at September 30, 2015. During the quarter ended September 30, 2016, we paid a dividend prior to the Company’s initial public offering of $27.9 million, based on our net income for the quarter ended June 30, 2016.

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.41%, 12.48%, and 13.59%, respectively, at September 30, 2016, compared with 8.42%, 12.45%, and 13.58% at June 30, 2016 and 10.06%, 15.69% and 16.89% at September 30, 2015.

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1 Core net income is a non-GAAP measure. For more information on this measure, including a reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14 at the end of this document.

2 Core return on average total assets is a non-GAAP measure. For more information on this measure, including a reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14 at the end of this document.

3 Return on average tangible stockholders’ equity is a non-GAAP financial measure. For more information on this measure, including a reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14 at the end of this document.

4 Core return on average tangible stockholders’ equity is a non-GAAP measure. For more information on this measure, including a reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14 at the end of this document.

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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 Company’s website, www.fhb.com.

Conference Call Information

First Hawaiian will host a conference call to discuss the Company’s results today at 11:00 a.m. (Hawaii Time), 5:00 p.m. (Eastern 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: 87133120. A live webcast of the conference call, including a slide presentation, will be available at the following link: http://edge.media-server.com/m/p/gz9jx3b6/lan/en. The archive of the webcast will be available at the same location. A telephonic replay of the conference call will be available two hours after the conclusion of the call until 8:00 p.m. (Eastern Time) on November 3, 2016. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 87133120.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our prospectus dated August 3, 2016, filed with the SEC in accordance with Rule 424(b) of the Securities Act of 1933.

Use of Non-GAAP Financial Measures

We present net interest income, noninterest income, noninterest expense, net income, earnings per share and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measures exclude from the corresponding GAAP measure the impact of certain items that we do not believe are representative of our financial results. We believe that the presentation of these non-GAAP 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. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP.

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

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

Tables 13 and 14 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most closely related GAAP measures.


Financial Highlights Table 1
For the Three Months Ended For the Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands except per share data) 2016 2016 2015 2016 2015
Operating Results:
Net interest income $ 122,683 $120,427 $113,550 $ 360,422 $345,103
Provision for loan and lease losses 2,100 1,900 2,550 4,700 7,400
Noninterest income 48,690 46,371 56,502 168,580 164,215
Noninterest expense 82,804 78,473 79,377 246,341 239,307
Net income 53,235 54,860 54,889 173,626 163,569
Basic earnings per share 0.38 0.39 0.39 1.24 1.17
Diluted earnings per share 0.38 0.39 0.39 1.24 1.17
Dividends declared per share 0.20 0.22 N/A 0.42 N/A
Dividend payout ratio 52.39 % 54.68% N/A 33.34 % N/A
Supplemental Income Statement Data (non-GAAP):
Core net interest income $ 122,683 $120,427 $113,550 $ 360,422 $340,267
Core noninterest income 48,690 46,371 47,981 142,852 141,615
Core noninterest expense 79,714 78,473 79,377 240,704 239,307
Core net income 55,177 54,860 49,582 161,110 146,481
Core basic earnings per share $ 0.40 $0.39 $0.36 $ 1.16 $1.05
Core diluted earnings per share $ 0.40 $0.39 $0.36 $ 1.16 $1.05
Performance Ratio:
Net interest margin 2.87 % 2.88% 2.72% 2.84% 2.80%
Core net interest margin (non-GAAP) 2.87 % 2.88% 2.72% 2.84% 2.76%
Efficiency ratio 48.31 % 47.04% 46.67% 46.56 % 46.98%
Core efficiency ratio (non-GAAP) 46.51 % 47.04% 49.14% 47.82 % 49.66%
Return on average total assets 1.10 % 1.16% 1.16% 1.21 % 1.17%
Core return on average total assets (non-GAAP) 1.14 % 1.16% 1.05% 1.12 % 1.05%
Return on average tangible assets (non-GAAP) 1.16 % 1.23% 1.23% 1.28 % 1.24%
Core return on average tangible assets (non-GAAP) 1.20 % 1.23% 1.11% 1.18 % 1.11%
Return on average total stockholders' equity 8.45 % 8.86% 7.94% 8.96 % 8.01%
Core return on average total stockholders' equity (non-GAAP) 8.76 % 8.86% 7.17% 8.31 % 7.18%
Return on average tangible stockholders' equity (non-GAAP) 14.02 % 14.75% 12.46% 14.56 % 12.62%
Core return on average tangible stockholders’ equity (non-GAAP) 14.53 % 14.75% 11.25% 13.51 % 11.30%
Average Balances:
Average loans and leases $ 11,261,710 $11,074,430 $10,335,331 $ 11,055,522 $10,197,275
Average earning assets 17,028,930 16,797,108 16,559,195 16,962,355 16,475,712
Average assets 19,314,668 18,950,020 18,739,906 19,185,484 18,643,308
Average deposits 16,392,125 15,895,214 15,285,753 16,079,148 15,158,901
Average shareholders' equity 2,506,099 2,491,138 2,743,469 2,588,602 2,728,767
Per Share of Common Stock:
Book value $ 18.09 $17.93 $19.68 $ 18.10 $19.68
Tangible book value (non-GAAP) 10.96 10.80 12.54 10.96 12.54
Market Value
Closing 26.86 N/A N/A 26.86 N/A
High 27.97 N/A N/A 27.97 N/A
Low 24.25 N/A N/A 24.25 N/A

As of As of As of As of
September 30, June 30, December 31, September 30,
2016 2016 2015 2015
Balance Sheet Data:
Loans and leases $11,396,555 $11,187,695 $10,722,030 $10,454,482
Total assets 19,892,693 19,052,593 19,352,681 18,870,760
Total deposits 16,965,527 16,122,104 16,061,924 15,482,559
Total stockholders' equity 2,523,963 2,501,008 2,736,941 2,744,340
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases 0.08% 0.12% 0.16% 0.18%
Allowance for loan and lease losses / total loans and leases 1.18% 1.22% 1.26% 1.30%
Capital Ratios:
Common Equity Tier 1 Capital Ratio 12.48% 12.45% 15.31% 15.69%
Tier 1 Capital Ratio 12.48% 12.45% 15.31% 15.69%
Total Capital Ratio 13.59% 13.58% 16.48% 16.89%
Tier 1 Leverage Ratio 8.41% 8.42% 9.84% 10.06%
Total stockholders' equity to total assets 12.69% 13.13% 14.14% 14.54%
Tangible stockholders' equity to tangible assets 8.09% 8.34% 9.49% 9.78%
Non-Financial Data:
Number of branches 62 62 62 62
Number of ATMs 312 312 311 309
Number of Full-Time Equivalent Employees 2,197 2,199 2,157 2,160

Consolidated Statements of Income Table 2
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(dollars in thousands except per share amounts) 2016 2016 2015 2016 2015
Interest income
Loans and lease financing $ 106,900 $105,701 $100,234 $ 316,958 $303,594
Available-for-sale securities 21,123 19,453 17,750 57,135 55,066
Other 1,311 1,907 1,120 6,114 3,079
Total interest income 129,334 127,061 119,104 380,207 361,739
Interest expense
Deposits 6,632 6,541 5,504 19,602 16,470
Short-term borrowings and long-term debt 19 93 50 183 166
Total interest expense 6,651 6,634 5,554 19,785 16,636
Net interest income 122,683 120,427 113,550 360,422 345,103
Provision for loan and lease losses 2,100 1,900 2,550 4,700 7,400
Net interest income after provision for loan and lease losses 120,583 118,527 111,000 355,722 337,703
Noninterest income
Service charges on deposit accounts 9,575 9,395 10,441 28,759 30,656
Credit and debit card fees 14,103 13,810 13,858 41,732 41,633
Other service charges and fees 8,768 8,914 9,916 26,909 29,651
Trust and investment services income 7,508 7,323 7,372 22,236 22,610
Bank-owned life insurance 7,115 3,792 1,898 13,263 7,297
Investment securities gains, net 30 3 4,131 25,761 14,993
Other 1,591 3,134 8,886 9,920 17,375
Total noninterest income 48,690 46,371 56,502 168,580 164,215
Noninterest expense
Salaries and employee benefits 42,106 41,955 42,696 128,762 126,990
Contracted services and professional fees 10,430 9,939 10,964 33,124 32,196
Occupancy 4,870 4,809 4,077 14,991 14,326
Equipment 4,192 4,116 3,885 12,135 10,986
Regulatory assessment and fees 3,546 2,846 2,404 8,869 7,124
Advertising and marketing 1,769 1,425 1,199 4,818 4,028
Card rewards program 4,512 2,729 3,503 10,743 11,914
Other 11,379 10,654 10,649 32,899 31,743
Total noninterest expense 82,804 78,473 79,377 246,341 239,307
Income before provision for income taxes 86,469 86,425 88,125 277,961 262,611
Provision for income taxes 33,234 31,565 33,236 104,335 99,042
Net income $ 53,235 $54,860 $54,889 $ 173,626 $163,569
Basic earnings per share $ 0.38 $0.39 $0.39 $ 1.24 $1.17
Diluted earnings per share $ 0.38 $0.39 $0.39 $ 1.24 $1.17
Dividends declared per share $ 0.20 $0.22 $ $ 0.42 $
Basic weighted-average outstanding shares 139,500,542 139,459,620 139,459,620 139,473,360 139,459,620
Diluted weighted-average outstanding shares 139,503,558 139,459,620 139,459,620 139,474,373 139,459,620

Consolidated Balance Sheets Table 3
September 30, June 30, December 31, September 30,
(dollars in thousands) 2016 2016 2015 2015
Assets
Cash and due from banks $ 371,622 $ 356,148 $ 300,096 $ 291,538
Interest-bearing deposits in other banks 804,198 975,866 2,350,099 1,573,587
Investment securities 5,363,696 4,601,267 4,027,265 4,686,980
Loans held for sale 4,662
Loans and leases 11,396,555 11,187,695 10,722,030 10,454,482
Less: allowance for loan and lease losses 135,025 136,360 135,484 135,447
Net loans and leases 11,261,530 11,051,335 10,586,546 10,319,035
Premises and equipment, net 302,059 303,715 305,104 307,585
Other real estate owned and repossessed personal property 854 205 154 1,881
Accrued interest receivable 37,107 35,734 34,215 33,160
Bank-owned life insurance 432,031 429,673 424,545 421,867
Goodwill 995,492 995,492 995,492 995,492
Other intangible assets 17,554 19,064 21,435 22,347
Other assets 306,550 284,094 307,730 212,626
Total assets $ 19,892,693 $ 19,052,593 $ 19,352,681 $ 18,870,760
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing $ 11,164,989 $ 10,620,377 $ 10,730,095 $ 10,380,370
Noninterest-bearing 5,800,538 5,501,727 5,331,829 5,102,189
Total deposits 16,965,527 16,122,104 16,061,924 15,482,559
Short-term borrowings 9,151 34,951 216,151 304,151
Long-term debt 41 48 48 48
Retirement benefits payable 139,567 137,982 133,910 146,233
Other liabilities 254,444 256,500 203,707 193,429
Total liabilities 17,368,730 16,551,585 16,615,740 16,126,420
Stockholders' equity
Net investment 2,788,200 2,779,166
Common stock ($0.01 par value; authorized 300,000,000 shares; issued and outstanding 139,530,654 shares as of September 30, 2016 and 139,459,620 shares as of June 30, 2016, December 31, 2015 and September 30, 2015) 1,395 1,395
Additional paid-in capital 2,482,679 2,479,980
Retained earnings 50,204 24,860
Accumulated other comprehensive loss, net (10,315) (5,227) (51,259) (34,826)
Total stockholders' equity 2,523,963 2,501,008 2,736,941 2,744,340
Total liabilities and stockholders' equity $ 19,892,693 $ 19,052,593 $ 19,352,681 $ 18,870,760

Average Balances and Interest Rates Table 4
Three Months Ended Three Months Ended Three Months Ended
September 30, 2016 June 30, 2016 September 30, 2015
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $1,023.6 $1.3 0.51%$1,516.6 $1.9 0.51%$1,649.2 $1.1 0.27%
Available-for-Sale Investment Securities 4,743.7 21.1 1.77 4,206.1 19.4 1.86 4,574.7 17.8 1.54
Loans Held for Sale 4.3 3.59
Loans and Leases (1)
Commercial and industrial 3,248.1 23.7 2.90 3,257.4 23.7 2.93 2,884.0 20.8 2.86
Real estate - commercial 2,338.2 21.3 3.63 2,241.8 20.7 3.71 2,126.4 20.1 3.76
Real estate - construction 448.9 3.7 3.29 421.9 3.4 3.27 369.6 3.1 3.37
Real estate - residential 3,571.3 36.4 4.06 3,522.8 36.5 4.16 3,422.6 35.3 4.09
Consumer 1,467.0 20.5 5.55 1,442.0 20.0 5.58 1,313.7 19.3 5.83
Lease financing 188.2 1.3 2.84 188.5 1.4 2.91 214.7 1.6 2.89
Total Loans and Leases 11,261.7 106.9 3.78 11,074.4 105.7 3.84 10,331.0 100.2 3.85
Total Earning Assets (2) 17,029.0 129.3 3.02 16,797.1 127.0 3.04 16,559.2 119.1 2.85
Cash and Due from Banks 357.1 303.7 281.9
Other Assets 1,928.6 1,849.2 1,898.8
Total Assets $19,314.7 $18,950.0 $18,739.9
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $4,416.4 $0.6 0.06%$4,347.8 $0.6 0.06%$4,222.6 $0.5 0.04%
Money Market 2,549.3 0.6 0.10 2,281.9 0.5 0.09 2,367.6 0.5 0.09
Time 3,776.6 5.4 0.57 3,745.3 5.4 0.58 3,605.0 4.5 0.50
Total Interest-Bearing Deposits 10,742.3 6.6 0.25 10,375.0 6.5 0.25 10,195.2 5.5 0.21
Short-Term Borrowings 18.5 0.42 202.9 0.1 0.18 364.9 0.05
Total Interest-Bearing Liabilities 10,760.8 6.6 0.25 10,577.9 6.6 0.25 10,560.1 5.5 0.21
Net Interest Income $122.7 $120.4 $113.6
Interest Rate Spread 2.77% 2.79% 2.64%
Net Interest Margin 2.87% 2.88% 2.72%
Noninterest-Bearing Demand Deposits 5,649.8 5,520.3 5,090.6
Other Liabilities 398.0 360.7 345.8
Stockholders' Equity 2,506.1 2,491.1 2,743.4
Total Liabilities and Stockholders' Equity $19,314.7 $18,950.0 $18,739.9
(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.

Average Balances and Interest Rates Table 5
Nine Months Ended Nine Months Ended
September 30, 2016 September 30, 2015
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 1,602.3 $ 6.1 0.51 % $1,564.3 $3.1 0.26%
Available-for-Sale Investment Securities 4,304.5 57.1 1.77 4,714.1 55.0 1.56
Loans Held for Sale 5.9 0.1 3.33
Loans and Leases (1)
Commercial and industrial 3,200.6 70.3 2.93 2,819.1 62.1 2.95
Real estate - commercial 2,273.3 62.9 3.70 2,130.4 60.9 3.82
Real estate - construction 425.0 10.4 3.27 382.4 9.7 3.38
Real estate - residential 3,525.5 108.9 4.13 3,359.9 108.8 4.33
Consumer 1,441.6 60.4 5.59 1,278.3 57.2 5.98
Lease financing 189.5 4.1 2.90 221.2 4.8 2.88
Total Loans and Leases 11,055.5 317.0 3.83 10,191.3 303.5 3.98
Total Earning Assets (2) 16,962.3 380.2 2.99 16,475.6 361.7 2.94
Cash and Due from Banks 320.1 285.0
Other Assets 1,903.1 1,882.7
Total Assets $19,185.5 $18,643.3
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $ 4,371.6 $ 1.9 0.06 % $4,129.6 $1.1 0.04%
Money Market 2,410.6 1.7 0.09 2,321.7 1.6 0.09
Time 3,782.2 16.0 0.57 3,724.1 13.7 0.49
Total Interest-Bearing Deposits 10,564.4 19.6 0.25 10,175.4 16.4 0.22
Short-Term Borrowings 148.0 0.2 0.16 410.4 0.2 0.05
Total Interest-Bearing Liabilities 10,712.4 19.8 0.25 10,585.8 16.6 0.21
Net Interest Income $ 360.4 $345.1
Interest Rate Spread 2.74 % 2.73%
Net Interest Margin 2.84% 2.80%
Noninterest-Bearing Demand Deposits 5,514.8 4,983.5
Other Liabilities 369.7 345.2
Stockholders' Equity 2,588.6 2,728.8
Total Liabilities and stockholders' Equity $ 19,185.5 $18,643.3
(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) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.

Analysis of Change in Net Interest Income Table 6
Three Months Ended September 30, 2016
Compared to June 30, 2016
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ (0.6) $ $ (0.6)
Available-for-Sale Investment Securities 2.5 (0.8) 1.7
Loans Held for Sale
Loans and Leases
Commercial and industrial (0.1) (0.1)
Real estate - commercial 0.9 (0.2) 0.7
Real estate - construction 0.2 0.1 0.3
Real estate - residential 0.5 (0.6) (0.1)
Consumer 0.3 0.2 0.5
Lease financing (0.1) (0.1)
Total Loans and Leases 1.9 (0.7) 1.2
Total Change in Interest Income 3.8 (1.5) 2.3
Change in Interest Expense:
Interest-Bearing Deposits
Savings
Money Market 0.1 0.1
Time 0.1 (0.1)
Total Interest-Bearing Deposits 0.2 (0.1) 0.1
Short-term Borrowings (0.1) (0.1)
Total Change in Interest Expense 0.1 (0.1)
Change in Net Interest Income $ 3.7 $ (1.4) $ 2.3

Analysis of Change in Net Interest Income Table 7
Three Months Ended September 30, 2016
Compared to September 30, 2015
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ (0.5) $ 0.7 $ 0.2
Available-for-Sale Investment Securities 0.6 2.7 3.3
Loans Held for Sale
Loans and Leases
Commercial and industrial 2.7 0.2 2.9
Real estate - commercial 1.9 (0.7) 1.2
Real estate - construction 0.7 (0.1) 0.6
Real estate - residential 1.5 (0.4) 1.1
Consumer 2.2 (1.0) 1.2
Lease financing (0.2) (0.1) (0.3)
Total Loans and Leases 8.8 (2.1) 6.7
Total Change in Interest Income 8.9 1.3 10.2
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 0.1
Money Market 0.1 0.1
Time 0.2 0.7 0.9
Total Interest-Bearing Deposits 0.3 0.8 1.1
Short-term Borrowings (0.1) 0.1
Total Change in Interest Expense 0.2 0.9 1.1
Change in Net Interest Income $ 8.7 $ 0.4 $ 9.1

Analysis of Change in Net Interest Income Table 8
Nine Months Ended September 30, 2016
Compared to September 30, 2015
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ 0.1 $ 2.9 $ 3.0
Available-for-Sale Investment Securities (5.0) 7.1 2.1
Loans Held for Sale (0.1) (0.1)
Loans and Leases
Commercial and industrial 8.4 (0.2) 8.2
Real estate - commercial 4.0 (2.0) 2.0
Real estate - construction 1.0 (0.3) 0.7
Real estate - residential 5.3 (5.2) 0.1
Consumer 7.0 (3.8) 3.2
Lease financing (0.7) (0.7)
Total Loans and Leases 25.0 (11.5) 13.5
Total Change in Interest Income 20.0 (1.5) 18.5
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 0.7 0.8
Money Market 0.1 0.1
Time 0.2 2.1 2.3
Total Interest-Bearing Deposits 0.4 2.8 3.2
Short-Term Borrowings (0.2) 0.2
Total Change in Interest Expense 0.2 3.0 3.2
Change in Net Interest Income $ 19.8 $ (4.5) $ 15.3

Loans and Leases Table 9
September 30, June 30, December 31, September 30,
(dollars in thousands) 2016 2016 2015 2015
Commercial and industrial $ 3,265,291 $3,288,503 $3,057,455 $2,938,227
Real estate:
Commercial 2,311,874 2,181,732 2,164,448 2,150,483
Construction 475,333 424,743 367,460 321,005
Residential 3,687,660 3,654,525 3,532,427 3,512,998
Total real estate 6,474,867 6,261,000 6,064,335 5,984,486
Consumer 1,469,220 1,452,088 1,401,561 1,323,236
Lease financing 187,177 186,104 198,679 208,533
Total loans and leases $ 11,396,555 $11,187,695 $10,722,030 $10,454,482

Deposits Table 10
September 30, June 30, December 31, September 30,
(dollars in thousands) 2016 2016 2015 2015
Demand $ 5,800,538 $5,501,727 $5,331,829 $5,102,189
Savings 4,341,714 4,366,333 4,354,140 4,213,988
Money Market 2,818,132 2,472,220 2,565,955 2,480,751
Time 4,005,143 3,781,824 3,810,000 3,685,631
Total Deposits $ 16,965,527 $16,122,104 $16,061,924 $15,482,559

Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11
September 30, June 30, December 31, September 30,
(dollars in thousands) 2016 2016 2015 2015
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial $ 2,933 $3,598 $3,958 $3,807
Real estate - commercial 138 150
Real estate - construction 324 1,246
Lease financing 163 173 181 187
Total Commercial Loans 3,096 4,095 4,277 5,390
Residential 6,274 9,231 12,344 13,433
Total Non-Accrual Loans and Leases 9,370 13,326 16,621 18,823
Other Real Estate Owned 854 205 154 1,881
Total Non-Performing Assets $ 10,224 $13,531 $16,775 $20,704
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial $ 177 $ $2,496 $2,496
Real estate - commercial 161
Real estate - construction 247
Lease financing 174 128
Total Commercial Loans 177 2,831 2,871
Residential 1,638 1,334 737 1,510
Consumer 2,036 1,568 1,454 1,756
Total Accruing Loans and Leases Past Due 90 Days or More $ 3,851 $2,902 $5,022 $6,137
Restructured Loans on Accrual Status and Not Past Due 90 Days or More 46,453 47,955 28,351 32,343
Total Loans and Leases $ 11,396,555 $11,187,695 $10,722,030 $10,454,482

Allowance for Loan and Lease Losses Table 12
For the three months ended For the nine months ended
September 30, June 30, September 30, September 30, September 30,
(dollars in thousands) 2016 2016 2015 2016 2015
Balance at Beginning of Period $ 136,360 $ 137,154 $ 136,338 $ 135,484 $ 134,799
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial (210) (52) (461) (348) (765)
Total Commercial Loans (210) (52) (461) (348) (765)
Residential (268) (456) (484) (796) (561)
Consumer (4,878) (4,295) (4,871) (13,379) (13,481)
Total Loans and Leases Charged-Off (5,356) (4,803) (5,816) (14,523) (14,807)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial 6 19 178 228 884
Real estate - commercial 42 47 58 3,288 298
Lease financing 1 1 1 2
Total Commercial Loans 48 67 237 3,517 1,184
Residential 350 460 608 1,116 2,098
Consumer 1,523 1,582 1,530 4,731 4,773
Total Recoveries on Loans and Leases Previously Charged-Off 1,921 2,109 2,375 9,364 8,055
Net Loans and Leases Charged-Off (3,435) (2,694) (3,441) (5,159) (6,752)
Provision for Credit Losses 2,100 1,900 2,550 4,700 7,400
Balance at End of Period $ 135,025 $ 136,360 $ 135,447 $ 135,025 $ 135,447
Average Loans and Leases Outstanding $ 11,261,710 $ 11,074,430 $ 10,335,331 $ 11,055,522 $ 10,197,275
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding 0.12 % 0.10 % 0.13 % 0.06 % 0.09 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.18 % 1.22 % 1.30 % 1.18 % 1.30 %

GAAP to Non-GAAP Reconciliation Table 13
As of and for the three months ended As of and for the nine months ended
September 30, June 30, September 30, September 30, September 30,
(dollars in thousands, except per share data) 2016 2016 2015 2016 2015
Net income $ 53,235 $54,860 $54,889 $ 173,626 $163,569
Average total stockholders' equity $ 2,506,099 $2,491,138 $2,743,469 $ 2,588,602 $2,728,767
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible stockholders' equity $ 1,510,607 $1,495,646 $1,747,977 $ 1,593,110 $1,733,275
Total stockholders' equity $ 2,523,963 $2,501,008 $2,744,340 $ 2,523,963 $2,744,340
Less: goodwill 995,492 995,492 995,492 995,492 995,492
Tangible stockholders' equity $ 1,528,471 $1,505,516 $1,748,848 $ 1,528,471 $1,748,848
Average total assets $ 19,314,668 $18,950,020 $18,739,906 $ 19,185,484 $18,643,308
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible assets $ 18,319,176 $17,954,528 $17,744,414 $ 18,189,992 $17,647,816
Total assets $ 19,892,693 $19,052,593 $18,870,760 $ 19,892,693 $18,870,760
Less: goodwill 995,492 995,492 995,492 995,492 995,492
Tangible assets $ 18,897,201 $18,057,101 $17,875,268 $ 18,897,201 $17,875,268
Basic weighted-average shares outstanding 139,500,542 139,459,620 139,459,620 139,473,360 139,459,620
Diluted weighted-average shares outstanding 139,503,558 139,459,620 139,459,620 139,474,373 139,459,620
Return on average total stockholders' equity(a) 8.45 % 8.86% 7.94% 8.96 % 8.01%
Return on average tangible stockholders' equity (non-GAAP)(a) 14.02 % 14.75% 12.46% 14.56 % 12.62%
Return on average total assets(a) 1.10 % 1.16% 1.16% 1.21 % 1.17%
Return on average tangible assets (non-GAAP)(a) 1.16 % 1.23% 1.23% 1.28 % 1.24%
Total stockholders' equity to total assets 12.69 % 13.13% 14.54% 12.69 % 14.54%
Tangible stockholders' equity to tangible assets (non-GAAP) 8.09 % 8.34% 9.78% 8.09 % 9.78%
Average stockholders' equity to average assets 12.98 % 13.15% 14.64% 13.49 % 14.64%
Tangible average stockholders' equity to tangible average assets (non-GAAP) 8.25 % 8.33% 9.85% 8.76 % 9.82%
Book value per share $ 18.09 $17.93 $19.68 $ 18.10 $19.68
Tangible book value per share (non-GAAP) $ 10.96 $10.80 $12.54 $ 10.96 $12.54
(a) Annualized for the three and nine months ended September 30, 2016 and 2015.

GAAP to Non-GAAP Reconciliation Table 14
As of and for the three months ended As of and for the nine months ended
September 30, June 30, September 30, September 30, September 30,
(dollars in thousands, except per share data) 2016 2016 2015 2016 2015
Net interest income $ 122,683 $120,427 $ 113,550 $ 360,422 $ 345,103
Early loan termination(a) (4,836)
Core net interest income (non-GAAP) $ 122,683 $120,427 $ 113,550 $ 360,422 $ 340,267
Noninterest income $ 48,690 $46,371 $ 56,502 $ 168,580 $ 164,215
Gain on sale of securities (2,379) (3,050) (12,474)
Gain on sale of stock (Visa/MasterCard) (1,752) (22,678) (2,519)
Gain on sale of other assets (1,444) (2,127)
Other adjustments(a),(b) (2,946) (5,480)
Core noninterest income (non-GAAP) $ 48,690 $46,371 $ 47,981 $ 142,852 $ 141,615
Noninterest expense $ 82,804 $78,473 $ 79,377 $ 246,341 $ 239,307
One-time items(c) (3,090) (5,637)
Core noninterest expense (non-GAAP) $ 79,714 $78,473 $ 79,377 240,704 $ 239,307
Net income $ 53,235 $54,860 $ 54,889 $ 173,626 $ 163,569
Early loan termination (4,836)
Gain on sale of securities (2,379) (3,050) (12,474)
Gain on sale of stock (Visa/MasterCard) (1,752) (22,678) (2,519)
Gain on sale of other assets (1,444) (2,127)
Other adjustments(b) (2,946) (5,480)
One-time items(c) 3,090 5,637
Tax adjustments (d) (1,148) 3,214 7,575 10,348
Total core adjustments 1,942 (5,307) (12,516) (17,088)
Core net income (non-GAAP) $ 55,177 $54,860 $ 49,582 $ 161,110 $ 146,481
Core basic earnings per share (non-GAAP) $ 0.40 $0.39 $ 0.36 $ 1.16 $ 1.05
Core diluted earnings per share (non-GAAP) $ 0.40 $0.39 $ 0.36 $ 1.16 $ 1.05
(a) Adjustments that are not material to our financial results have not been presented for certain periods.
(b) Other adjustments include a one-time MasterCard signing bonus and a recovery of an investment that was previously written down.
(c) One-time items include initial public offering related costs.
(d) Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period.

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

Source:First Hawaiian, Inc.