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First Hawaiian, Inc. Reports Second Quarter 2017 Financial Results and Declares Dividend

HONOLULU, July 27, 2017 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (the “Company”) today reported financial results for the quarter ended June 30, 2017.

Second Quarter Highlights

  • Net income for the quarter ended June 30, 2017 was $56.9 million, or $0.41 per diluted share, and core net income1 was $57.2 million, or $0.41 per diluted share

  • Board of Directors declared a dividend of $0.22 per share

“We are pleased with the bank’s continued strong performance in the second quarter. We had good growth, as loan and deposit balances finished the quarter at record levels, driving total assets to a record $20.4 billion at quarter end,” said Bob Harrison, Chairman and Chief Executive Officer. “Additionally, the local economy remained robust, and our asset quality remained excellent.”

On July 26, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share. The dividend will be payable on September 8, 2017 to stockholders of record at the close of business on August 28, 2017.

Earnings Highlights

Net income for the quarter ended June 30, 2017 was $56.9 million, or $0.41 per diluted share, compared to $56.7 million, or $0.41 per diluted share, for the quarter ended March 31, 2017, and $54.9 million, or $0.39 per diluted share, for the quarter ended June 30, 2016. Core net income for the quarter ended June 30, 2017 was $57.2 million, or $0.41 per diluted share, compared to $57.0 million, or $0.41 per diluted share, for the quarter ended March 31, 2017, and $54.9 million, or $0.39 per diluted share, for the quarter ended June 30, 2016.

Net interest income for the quarter ended June 30, 2017 was $131.3 million, an increase of $1.9 million compared to $129.3 million for the quarter ended March 31, 2017, and an increase of $10.8 million compared to $120.4 million for the quarter ended June 30, 2016. The increase in net interest income compared to the first quarter of 2017 was primarily due to higher average balances and yields on loans, partially offset by lower average balances and yields on investment securities, as well as higher deposit rates. The increase compared to the second quarter of 2016 was due to higher average balances of loans and investment securities and higher earning asset yields, partially offset by higher average deposit balances and rates.

Net interest margin was 3.02%, 3.00% and 2.88% for the quarters ended June 30, 2017, March 31, 2017, and June 30, 2016, respectively. Net interest margin increased during the second quarter of 2017 by two basis points, primarily due to higher earning asset yields, partially offset by higher costs related to time deposits. Premium amortization in the investment securities portfolio increased by $1.4 million over the first quarter of 2017. The 14 basis point increase compared to the second quarter of 2016 was due to higher yields on investments and interest bearing deposits, partially offset by higher deposit costs.

Results for the quarter ended June 30, 2017 included a provision for credit losses of $4.4 million compared to $4.5 million in the quarter ended March 31, 2017 and $1.9 million in the quarter ended June 30, 2016.

Noninterest income was $48.9 million in the quarter ended June 30, 2017, a decrease of $0.5 million compared to noninterest income of $49.4 million in the quarter ended March 31, 2017 and an increase of $2.5 million compared to noninterest income of $46.4 million in the quarter ended June 30, 2016. The decrease in noninterest income compared to the first quarter of 2017 was primarily due to $1.7 million lower bank owned life insurance (BOLI) income, and $1 million lower other service charges and fees due to lower sales of insurance and investment products, partially offset by $2.4 million higher other income from partner credit card incentives and recoveries. The increase in noninterest income compared to the second quarter of 2016 was primarily due to $3.6 million higher other income, partially offset by $0.9 million lower BOLI income and $0.8 million lower other service charges and fees.

Noninterest expense was $85.2 million for the quarter ended June 30, 2017, an increase of $0.9 million from $84.3 million in the quarter ended March 31, 2017, and an increase of $6.8 million from $78.5 million in the quarter ended June 30, 2016. The increase in noninterest expense compared to the first quarter of 2017 was primarily due to $2.1 million higher contracted services and professional fees, partially offset by $0.8 million lower advertising and marketing expense, $0.4 million lower other expense and $0.3 million lower occupancy expense. The increase in contracted services and professional fees was primarily due to system upgrades and product enhancements. The increase in noninterest expense compared to the second quarter of 2016 was primarily due to a $2.5 million increase in contracted services and professional fees, a $1.9 million increase in cards rewards program expense, a $1.3 million increase in salaries and employee benefits, and a $0.9 million higher regulatory assessment. Cards rewards program expense 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 regulatory assessments was largely due to the increase in the regulatory assessment rate that became effective July 1, 2016.

The efficiency ratio was 47.3%, 47.2% and 47.0% for the quarters ended June 30, 2017, March 31, 2017 and June 30, 2016, respectively.

The effective tax rate for the second quarter of 2017 was 37.1% compared with 36.9% in the previous quarter and 36.5% percent in the same quarter last year. The increase in the effective tax rate in the second quarter of 2017 compared to the prior quarter was primarily due to the lower level of BOLI income received in the second quarter of 2017, slightly offset by a $0.75 million release of tax reserves.

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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.

Balance Sheet Highlights

Total assets were $20.4 billion at June 30, 2017, compared to $19.8 billion at March 31, 2017 and $19.1 billion at June 30, 2016.

The investment securities portfolio was $5.1 billion at June 30, 2017, compared to $5.3 billion at March 31, 2017 and $4.6 billion at June 30, 2016. The portfolio remains largely comprised of securities issued by U.S. government agencies.

Total loans and leases were $12.1 billion at June 30, 2017, an increase of $280.9 million, or 2.4%, from $11.8 billion at March 31, 2017 and up $874.7 million, or 7.8%, from $11.2 billion at June 30, 2016. The growth in loans and leases compared to March 31, 2017 was due to growth across all categories. Compared to June 30, 2016, the growth in loans and leases was due to increases across all loan categories.

Total deposits were $17.5 billion at June 30, 2017, an increase of $514.1 million, or 3.0%, compared with $16.9 billion at March 31, 2017, and an increase of $1.3 billion, or 8.3%, compared to $16.1 billion at June 30, 2016.

Asset Quality

The Company's asset quality remained solid during the second quarter of 2017. Total non-performing assets were $8.1 million, or 0.07% of total loans and leases, at June 30, 2017, a slight increase of $0.4 million from non-performing assets of $7.7 million, or 0.07% of total loans and leases, at March 31, 2017 and down $5.4 million from non­performing assets of $13.5 million, or 0.12% of total loans and leases, at June 30, 2016.

Net charge offs for the quarter ended June 30, 2017 were $3.4 million, or 0.11% of average loans and leases on an annualized basis, compared to $4.1 million, or 0.15% of average loans and leases on an annualized basis for the quarter ended March 31, 2017 and $2.7 million, or 0.10% of average loans and leases on an annualized basis for the quarter ended June 30, 2016.

The ratio of allowance for loan and lease losses to total loans and leases was 1.13% at June 30, 2017 compared to 1.15% at March 31, 2017 and 1.22% at June 30, 2016.

Capital

Total stockholders' equity was $2.6 billion at June 30, 2017, compared to $2.5 billion at both March 31, 2017 and June 30, 2016.

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.70%, 12.73% and 13.81%, respectively, at June 30, 2017, compared with 8.52%, 12.78% and 13.87% at March 31, 2017 and 8.42%, 12.45%, and 13.58% at June 30, 2016.

First Hawaiian, Inc.

First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii. Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii’s oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit the Company’s website, www.fhb.com.

Conference Call Information

First Hawaiian will host a conference call to discuss the Company’s results today at 5:00 p.m. Eastern Time, 11:00 a.m. Hawaii Time. To access the call, participants should dial (844) 452-2942 (US/Canada), or (574) 990-9846 (International) ten minutes prior to the start of the call and enter the conference ID: 51037675. A live webcast of the conference call, including a slide presentation, will be available at the following link: www.fhb.com/earnings. The archive of the webcast will be available at the same location. A telephonic replay of the conference call will be available approximately two hours after the conclusion of the call until 8:00 p.m. (Eastern Time) on August 6, 2017. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 51037675.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. For a discussion of the risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2016.

Use of Non-GAAP Financial Measures

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

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

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

Tables 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 Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share data) 2017 2017 2016 2017 2016
Operating Results:
Net interest income $ 131,254 $ 129,345 $ 120,427 $ 260,599 $ 237,739
Provision for loan and lease losses 4,400 4,500 1,900 8,900 2,600
Noninterest income 48,870 49,407 46,371 98,277 119,890
Noninterest expense 85,241 84,339 78,473 169,580 163,537
Net income 56,895 56,740 54,860 113,635 120,391
Basic earnings per share 0.41 0.41 0.39 0.81 0.86
Diluted earnings per share 0.41 0.41 0.39 0.81 0.86
Dividends declared per share 0.22 0.22 0.22 0.44 0.22
Dividend payout ratio 53.66 % 53.66% 54.68% 54.32 % 25.58%
Supplemental Income Statement Data (non-GAAP):
Core net interest income $ 131,254 $ 129,345 $ 120,427 $ 260,599 $ 237,739
Core noninterest income 48,870 49,407 46,371 98,277 94,162
Core noninterest expense 84,784 83,955 78,473 168,739 160,990
Core net income 57,181 56,982 54,860 114,163 105,933
Core basic earnings per share $ 0.41 $ 0.41 $ 0.39 $ 0.82 $ 0.76
Core diluted earnings per share $ 0.41 $ 0.41 $ 0.39 $ 0.82 $ 0.76
Performance Ratio:
Net interest margin 3.02 % 3.00% 2.88% 3.01 % 2.82%
Core net interest margin (non-GAAP) 3.02 % 3.00% 2.88% 3.01 % 2.82%
Efficiency ratio 47.32 % 47.18% 47.04% 47.25 % 45.72%
Core efficiency ratio (non-GAAP) 47.07 % 46.96% 47.04% 47.02 % 48.50%
Return on average total assets 1.16 % 1.16% 1.16% 1.16 % 1.27%
Core return on average total assets (non-GAAP) 1.16 % 1.17% 1.16% 1.17 % 1.11%
Return on average tangible assets 1.22 % 1.23% 1.23% 1.22 % 1.34%
Core return on average tangible assets (non-GAAP) 1.23 % 1.23% 1.23% 1.23 % 1.18%
Return on average total stockholders' equity 9.03 % 9.25% 8.86% 9.13 % 9.20%
Core return on average total stockholders' equity (non-GAAP) 9.07 % 9.29% 8.86% 9.18 % 8.10%
Return on average tangible stockholders' equity (non-GAAP) 14.89 % 15.41% 14.75% 15.14 % 14.81%
Core return on average tangible stockholders’ equity (non-GAAP) 14.96 % 15.48% 14.75% 15.22 % 13.03%
Average Balances:
Average loans and leases $ 11,903,255 $ 11,582,645 $ 11,074,430 $ 11,743,835 $ 10,951,295
Average earning assets 17,453,655 17,470,726 16,797,108 17,453,094 16,928,677
Average assets 19,692,222 19,769,508 18,950,020 19,730,651 19,120,180
Average deposits 16,782,887 16,900,354 15,895,214 16,841,296 15,920,939
Average shareholders' equity 2,528,388 2,488,519 2,491,138 2,508,564 2,630,307
Market Value Per Share:
Closing 30.62 29.92 N/A 30.62 N/A
High 31.34 34.85 N/A 35.32 N/A
Low 26.96 29.13 N/A 26.96 N/A


As of As of As of As of
June 30, March 31, December 31, June 30,
2017 2017 2016 2016
Balance Sheet Data:
Loans and leases $ 12,062,392 $ 11,781,496 $ 11,520,378 $ 11,187,695
Total assets 20,373,974 19,792,785 19,661,829 19,052,593
Total deposits 17,452,262 16,938,178 16,794,532 16,122,104
Total stockholders' equity 2,552,602 2,505,994 2,476,485 2,501,008
Per Share of Common Stock:
Book value $ 18.29 $ 17.96 $ 17.75 $ 17.93
Tangible book value 11.16 10.82 10.61 10.80
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases 0.06 % 0.06% 0.08% 0.12%
Allowance for loan and lease losses / total loans and leases 1.13 % 1.15% 1.18% 1.22%
Capital Ratios:
Common Equity Tier 1 Capital Ratio 12.73 % 12.78% 12.75% 12.45%
Tier 1 Capital Ratio 12.73 % 12.78% 12.75% 12.45%
Total Capital Ratio 13.81 % 13.87% 13.85% 13.58%
Tier 1 Leverage Ratio 8.70 % 8.52% 8.36% 8.42%
Total stockholders' equity to total assets 12.53 % 12.66% 12.60% 13.13%
Tangible stockholders' equity to tangible assets (non-GAAP) 8.04 % 8.04% 7.93% 8.34%
Non-Financial Data:
Number of branches 62 62 62 62
Number of ATMs 312 311 311 312
Number of Full-Time Equivalent Employees 2,191 2,195 2,179 2,199


Consolidated Statements of Income Table 2
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts) 2017 2017 2016 2017 2016
Interest income
Loans and lease financing $ 114,179 $ 109,266 $ 105,701 $ 223,445 $ 210,058
Available-for-sale securities 25,059 26,429 19,453 51,488 36,012
Other 781 1,226 1,907 2,007 4,803
Total interest income 140,019 136,921 127,061 276,940 250,873
Interest expense
Deposits 8,760 7,570 6,541 16,330 12,970
Short-term borrowings and long-term debt 5 6 93 11 164
Total interest expense 8,765 7,576 6,634 16,341 13,134
Net interest income 131,254 129,345 120,427 260,599 237,739
Provision for loan and lease losses 4,400 4,500 1,900 8,900 2,600
Net interest income after provision for loan and lease losses 126,854 124,845 118,527 251,699 235,139
Noninterest income
Service charges on deposit accounts 9,412 9,555 9,395 18,967 19,184
Credit and debit card fees 14,157 14,479 13,810 28,636 27,629
Other service charges and fees 8,110 9,097 8,914 17,207 18,141
Trust and investment services income 7,526 7,338 7,323 14,864 14,728
Bank-owned life insurance 2,927 4,578 3,792 7,505 6,148
Investment securities gains, net 3 25,731
Other 6,738 4,360 3,134 11,098 8,329
Total noninterest income 48,870 49,407 46,371 98,277 119,890
Noninterest expense
Salaries and employee benefits 43,257 43,300 41,955 86,557 86,656
Contracted services and professional fees 12,388 10,308 9,939 22,696 22,694
Occupancy 5,023 5,321 4,809 10,344 10,121
Equipment 4,527 4,197 4,116 8,724 7,943
Regulatory assessment and fees 3,750 3,774 2,846 7,524 5,323
Advertising and marketing 1,222 2,028 1,425 3,250 3,049
Card rewards program 4,618 4,511 2,729 9,129 6,231
Other 10,456 10,900 10,654 21,356 21,520
Total noninterest expense 85,241 84,339 78,473 169,580 163,537
Income before provision for income taxes 90,483 89,913 86,425 180,396 191,492
Provision for income taxes 33,588 33,173 31,565 66,761 71,101
Net income $ 56,895 $ 56,740 $ 54,860 $ 113,635 $ 120,391
Basic earnings per share $ 0.41 $ 0.41 $ 0.39 $ 0.81 $ 0.86
Diluted earnings per share $ 0.41 $ 0.41 $ 0.39 $ 0.81 $ 0.86
Dividends declared per share $ 0.22 $ 0.22 $ 0.22 $ 0.44 $ 0.22
Basic weighted-average outstanding shares 139,546,615 139,545,728 139,459,620 139,546,174 139,459,620
Diluted weighted-average outstanding shares 139,646,117 139,637,410 139,459,620 139,644,557 139,459,620


Consolidated Balance Sheets Table 3
June 30, March 31, December 31, June 30,
(dollars in thousands) 2017 2017 2016 2016
Assets
Cash and due from banks $ 355,752 $ 249,953 $ 253,827 $ 356,148
Interest-bearing deposits in other banks 872,013 527,659 798,231 975,866
Investment securities 5,126,869 5,260,262 5,077,514 4,601,267
Loans and leases 12,062,392 11,781,496 11,520,378 11,187,695
Less: allowance for loan and lease losses 136,883 135,847 135,494 136,360
Net loans and leases 11,925,509 11,645,649 11,384,884 11,051,335
Premises and equipment, net 292,959 295,608 300,788 303,715
Other real estate owned and repossessed personal property 329 329 329 205
Accrued interest receivable 39,739 39,386 41,971 35,734
Bank-owned life insurance 432,726 429,800 429,209 429,673
Goodwill 995,492 995,492 995,492 995,492
Other intangible assets 14,877 15,800 16,809 19,064
Other assets 317,709 332,847 362,775 284,094
Total assets $ 20,373,974 $ 19,792,785 $ 19,661,829 $ 19,052,593
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing $ 11,580,664 $ 10,917,631 $ 10,801,915 $ 10,620,377
Noninterest-bearing 5,871,598 6,020,547 5,992,617 5,501,727
Total deposits 17,452,262 16,938,178 16,794,532 16,122,104
Short-term borrowings 9,151 34,951
Long-term debt 41 41 41 48
Retirement benefits payable 134,400 133,819 132,904 137,982
Other liabilities 234,669 214,753 248,716 256,500
Total liabilities 17,821,372 17,286,791 17,185,344 16,551,585
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued and outstanding 139,546,615 shares
as of June 30, 2017, 139,546,615 shares as of March 31, 2017, 139,530,654 shares as of December 31,
2016 and 139,459,620 shares as of June 30, 2016)
1,395 1,395 1,395 1,395
Additional paid-in capital 2,488,091 2,486,596 2,484,251 2,479,980
Retained earnings 130,767 104,695 78,850 24,860
Accumulated other comprehensive loss, net (67,651) (86,692) (88,011) (5,227)
Total stockholders' equity 2,552,602 2,505,994 2,476,485 2,501,008
Total liabilities and stockholders' equity $ 20,373,974 $ 19,792,785 $ 19,661,829 $ 19,052,593


Average Balances and Interest Rates Table 4
Three Months Ended Three Months Ended Three Months Ended
June 30, 2017 March 31, 2017 June 30, 2016
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 312.8 $ 0.8 1.00 % $ 640.2 $ 1.2 0.78% $ 1,516.6 $ 1.9 0.51%
Available-for-Sale Investment Securities 5,208.8 25.0 1.93 5,236.6 26.4 2.05 4,206.1 19.4 1.86
Loans and Leases (1)
Commercial and industrial 3,279.2 25.7 3.15 3,233.6 24.3 3.04 3,257.4 23.7 2.93
Real estate - commercial 2,638.3 23.8 3.62 2,481.2 22.2 3.63 2,241.8 20.7 3.71
Real estate - construction 509.7 4.3 3.41 460.3 3.7 3.25 421.9 3.4 3.27
Real estate - residential 3,782.1 38.6 4.09 3,723.7 37.6 4.10 3,522.8 36.5 4.16
Consumer 1,525.8 20.6 5.40 1,513.4 20.3 5.43 1,442.0 20.0 5.58
Lease financing 168.1 1.2 2.84 170.5 1.2 2.77 188.5 1.4 2.91
Total Loans and Leases 11,903.2 114.2 3.85 11,582.7 109.3 3.83 11,074.4 105.7 3.84
Other Earning Assets 10.8 0.99 11.2 0.77
Total Earning Assets (2) 17,435.6 140.0 3.22 17,470.7 136.9 3.18 16,797.1 127.0 3.04
Cash and Due from Banks 319.4 324.7 303.7
Other Assets 1,937.2 1,974.1 1,849.2
Total Assets $ 19,692.2 $ 19,769.5 $ 18,950.0
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $ 4,488.8 $ 0.7 0.07 % $ 4,506.4 $ 0.7 0.06% $ 4,347.8 $ 0.6 0.06%
Money Market 2,618.6 0.8 0.12 2,494.3 0.6 0.09 2,281.9 0.5 0.09
Time 3,887.5 7.2 0.75 3,985.8 6.3 0.65 3,745.3 5.4 0.58
Total Interest-Bearing Deposits 10,994.9 8.7 0.32 10,986.5 7.6 0.28 10,375.0 6.5 0.25
Short-Term Borrowings 1.7 0.89 3.9 0.54 202.9 0.1 0.18
Total Interest-Bearing Liabilities 10,996.6 8.7 0.32 10,990.4 7.6 0.28 10,577.9 6.6 0.25
Net Interest Income $ 131.3 $ 129.3 $ 120.4
Interest Rate Spread 2.90 % 2.90% 2.79%
Net Interest Margin 3.02 % 3.00% 2.88%
Noninterest-Bearing Demand Deposits 5,788.0 5,913.9 5,520.3
Other Liabilities 379.2 376.7 360.7
Stockholders' Equity 2,528.4 2,488.5 2,491.1
Total Liabilities and Stockholders' Equity$ 19,692.2 $ 19,769.5 $ 18,950.0


Average Balances and Interest Rates Table 5
Six Months Ended Six Months Ended
June 30, 2017 June 30, 2016
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 475.6 $ 2.0 0.85 % $ 1,894.9 $ 4.8 0.51%
Available-for-Sale Investment Securities 5,222.6 51.5 1.99 4,082.5 36.0 1.77
Loans and Leases (1)
Commercial and industrial 3,256.5 50.0 3.10 3,176.5 46.7 2.95
Real estate - commercial 2,560.2 46.0 3.62 2,240.5 41.6 3.73
Real estate - construction 485.1 8.0 3.34 413.2 6.7 3.26
Real estate - residential 3,753.1 76.3 4.10 3,502.2 72.5 4.16
Consumer 1,519.7 40.8 5.42 1,428.7 39.9 5.61
Lease financing 169.3 2.3 2.80 190.2 2.7 2.92
Total Loans and Leases 11,743.9 223.4 3.84 10,951.3 210.1 3.86
Other Earning Assets 11.0 0.88
Total Earning Assets (2) 17,453.1 276.9 3.20 16,928.7 250.9 2.98
Cash and Due from Banks 322.0 301.3
Other Assets 1,955.6 1,890.2
Total Assets $ 19,730.7 $ 19,120.2
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $ 4,497.5 $ 1.4 0.06 % $ 4,348.9 $ 1.3 0.06%
Money Market 2,556.8 1.3 0.10 2,340.5 1.1 0.09
Time 3,936.4 13.6 0.70 3,785.0 10.6 0.56
Total Interest-Bearing Deposits 10,990.7 16.3 0.30 10,474.4 13.0 0.25
Short-Term Borrowings 2.8 0.65 213.5 0.2 0.15
Total Interest-Bearing Liabilities 10,993.5 16.3 0.30 10,687.9 13.2 0.25
Net Interest Income $ 260.6 $ 237.7
Interest Rate Spread 2.90 % 2.73%
Net Interest Margin 3.01 % 2.82%
Noninterest-Bearing Demand Deposits 5,850.6 5,446.5
Other Liabilities 378.0 355.5
Stockholders' Equity 2,508.6 2,630.3
Total Liabilities and Stockholders' Equity $ 19,730.7 $ 19,120.2


Analysis of Change in Net Interest Income Table 6
Three Months Ended June 30, 2017
Compared to March 31, 2017
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ (0.7) $ 0.3 $ (0.4)
Available-for-Sale Investment Securities (0.2) (1.2) (1.4)
Loans and Leases
Commercial and industrial 0.3 1.1 1.4
Real estate - commercial 1.4 0.2 1.6
Real estate - construction 0.4 0.2 0.6
Real estate - residential 0.6 0.4 1.0
Consumer 0.2 0.1 0.3
Total Loans and Leases 2.9 2.0 4.9
Total Change in Interest Income 2.0 1.1 3.1
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 0.1
Money Market 0.2 0.2
Time (0.2) 1.1 0.9
Total Interest-Bearing Deposits (0.2) 1.4 1.2
Total Change in Interest Expense (0.2) 1.4 1.2
Change in Net Interest Income $ 2.2 $ (0.3) $ 1.9


Analysis of Change in Net Interest Income Table 7
Three Months Ended June 30, 2017
Compared to June 30, 2016
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ (2.2) $ 1.1 $ (1.1)
Available-for-Sale Investment Securities 4.8 0.8 5.6
Loans and Leases
Commercial and industrial 0.2 1.8 2.0
Real estate - commercial 3.6 (0.5) 3.1
Real estate - construction 0.7 0.2 0.9
Real estate - residential 2.6 (0.5) 2.1
Consumer 1.2 (0.6) 0.6
Lease financing (0.2) (0.2)
Total Loans and Leases 8.1 0.4 8.5
Total Change in Interest Income 10.7 2.3 13.0
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 0.1
Money Market 0.1 0.2 0.3
Time 0.2 1.6 1.8
Total Interest-Bearing Deposits 0.3 1.9 2.2
Short-term Borrowings (0.2) 0.1 (0.1)
Total Change in Interest Expense 0.1 2.0 2.1
Change in Net Interest Income $ 10.6 $ 0.3 $ 10.9


Analysis of Change in Net Interest Income Table 8
Six Months Ended June 30, 2017
Compared to June 30, 2016
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ (4.9) $ 2.1 $ (2.8)
Available-for-Sale Investment Securities 10.9 4.6 15.5
Loans and Leases
Commercial and industrial 1.2 2.1 3.3
Real estate - commercial 5.8 (1.4) 4.4
Real estate - construction 1.2 0.1 1.3
Real estate - residential 5.1 (1.3) 3.8
Consumer 2.5 (1.6) 0.9
Lease financing (0.3) (0.3)
Total Loans and Leases 15.5 (2.1) 13.4
Total Change in Interest Income 21.5 4.6 26.1
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 0.1
Money Market 0.1 0.2 0.3
Time 0.4 2.6 3.0
Total Interest-Bearing Deposits 0.5 2.9 3.4
Short-Term Borrowings (0.3) 0.1 (0.2)
Total Change in Interest Expense 0.2 3.0 3.2
Change in Net Interest Income $ 21.3 $ 1.6 $ 22.9


Loans and Leases Table 9
June 30, March 31, December 31, June 30,
(dollars in thousands) 2017 2017 2016 2016
Commercial and industrial $ 3,331,092 $ 3,243,508 $ 3,239,600 $ 3,288,503
Real estate:
Commercial 2,545,479 2,532,253 2,343,495 2,181,732
Construction 555,794 469,741 450,012 424,743
Residential 3,921,881 3,864,509 3,796,459 3,654,525
Total real estate 7,023,154 6,866,503 6,589,966 6,261,000
Consumer 1,527,470 1,503,129 1,510,772 1,452,088
Lease financing 180,676 168,356 180,040 186,104
Total loans and leases $ 12,062,392 $ 11,781,496 $ 11,520,378 $ 11,187,695


Deposits Table 10
June 30, March 31, December 31, June 30,
(dollars in thousands) 2017 2017 2016 2016
Demand $ 5,871,598 $ 6,020,547 $ 5,992,617 $ 5,501,727
Savings 4,568,600 4,503,663 4,609,306 4,366,333
Money Market 2,944,005 2,496,642 2,454,013 2,472,220
Time 4,068,059 3,917,326 3,738,596 3,781,824
Total Deposits $ 17,452,262 $ 16,938,178 $ 16,794,532 $ 16,122,104


Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11
June 30, March 31, December 31, June 30,
(dollars in thousands) 2017 2017 2016 2016
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial $ 2,155 $ 2,154 $ 2,730 $ 3,598
Real estate - construction 324
Lease financing 153 153 173
Total Commercial Loans 2,155 2,307 2,883 4,095
Residential 5,569 5,023 6,547 9,231
Total Non-Accrual Loans and Leases 7,724 7,330 9,430 13,326
Other Real Estate Owned 329 329 329 205
Total Non-Performing Assets $ 8,053 $ 7,659 $ 9,759 $ 13,531
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial $ 1,275 $ 309 $ 449 $
Real estate - construction 350
Lease financing 84 83
Total Commercial Loans 1,625 393 532
Residential 1,543 1,437 866 1,334
Consumer 1,873 1,718 1,870 1,568
Total Accruing Loans and Leases Past Due 90 Days or More $ 5,041 $ 3,548 $ 3,268 $ 2,902
Restructured Loans on Accrual Status and Not Past Due 90 Days or More 38,886 50,758 44,496 47,955
Total Loans and Leases $ 12,062,392 $ 11,781,496 $ 11,520,378 $ 11,187,695


Allowance for Loan and Lease Losses Table 12
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(dollars in thousands) 2017 2017 2016 2017 2016
Balance at Beginning of Period $ 135,847 $ 135,494 $ 137,154 $ 135,494 $ 135,484
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial (75) (855) (52) (930) (138)
Lease financing (146) (146)
Total Commercial Loans (221) (855) (52) (1,076) (138)
Residential (22) (456) (22) (528)
Consumer (5,251) (5,572) (4,295) (10,823) (8,501)
Total Loans and Leases Charged-Off (5,472) (6,449) (4,803) (11,921) (9,167)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial 129 114 19 243 222
Real estate - commercial 55 77 47 132 3,246
Lease financing 1 1
Total Commercial Loans 184 191 67 375 3,469
Residential 150 321 460 471 766
Consumer 1,774 1,790 1,582 3,564 3,208
Total Recoveries on Loans and Leases Previously Charged-Off 2,108 2,302 2,109 4,410 7,443
Net Loans and Leases Charged-Off (3,364) (4,147) (2,694) (7,511) (1,724)
Provision for Credit Losses 4,400 4,500 1,900 8,900 2,600
Balance at End of Period $ 136,883 $ 135,847 $ 136,360 $ 136,883 $ 136,360
Average Loans and Leases Outstanding $ 11,903,255 $ 11,582,645 $ 11,074,430 $ 11,743,835 $ 10,951,295
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding 0.11 % 0.15 % 0.10 % 0.13 % 0.03 %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.13 % 1.15 % 1.22 % 1.13 % 1.22 %


GAAP to Non-GAAP Reconciliation Table 13
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts) 2017 2017 2016 2017 2016
Income Statement Data:
Net income $ 56,895 $ 56,740 $ 54,860 $ 113,635 $ 120,391
Average total stockholders' equity $ 2,528,388 $ 2,488,519 $ 2,491,138 $ 2,508,564 $ 2,630,307
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible stockholders' equity $ 1,532,896 $ 1,493,027 $ 1,495,646 $ 1,513,072 $ 1,634,815
Average total assets $ 19,692,222 $ 19,769,508 $ 18,950,020 $ 19,730,651 $ 19,120,180
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible assets $ 18,696,730 $ 18,774,016 $ 17,954,528 $ 18,735,159 $ 18,124,688
Return on average total stockholders' equity(a) 9.03 % 9.25% 8.86% 9.13 % 9.20%
Return on average tangible stockholders' equity (non-GAAP)(a) 14.89 % 15.41% 14.75% 15.14 % 14.81%
Return on average total assets(a) 1.16 % 1.16% 1.16% 1.16 % 1.27%
Return on average tangible assets (non-GAAP)(a) 1.22 % 1.23% 1.23% 1.22 % 1.34%
Average stockholders' equity to average assets 12.84 % 12.59% 13.15% 12.71 % 13.76%
Tangible average stockholders' equity to tangible average assets (non-GAAP) 8.20 % 7.95% 8.33% 8.08 % 9.02%


As of As of As of As of
June 30, March 31, December 31, June 30,
2017 2017 2016 2016
Balance Sheet Data:
Total stockholders' equity $ 2,552,602 $ 2,505,994 $ 2,476,485 $ 2,501,008
Less: goodwill 995,492 995,492 995,492 995,492
Tangible stockholders' equity $ 1,557,110 $ 1,510,502 $ 1,480,993 $ 1,505,516
Total assets $ 20,373,974 $ 19,792,785 $ 19,661,829 $ 19,052,593
Less: goodwill 995,492 995,492 995,492 995,492
Tangible assets $ 19,378,482 $ 18,797,293 $ 18,666,337 $ 18,057,101
Shares outstanding 139,546,615 139,546,615 139,530,654 139,459,620
Total stockholders' equity to total assets 12.53 % 12.66% 12.60% 13.13%
Tangible stockholders' equity to tangible assets (non-GAAP) 8.04 % 8.04% 7.93% 8.34%
Book value per share $ 18.29 $ 17.96 $ 17.75 $ 17.93
Tangible book value per share (non-GAAP) $ 11.16 $10.82 $ 10.61 $ 10.80


GAAP to Non-GAAP Reconciliation Table 14
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts) 2017 2017 2016 2017 2016
Net interest income $ 131,254 $ 129,345 $ 120,427 $ 260,599 $ 237,739
Core net interest income (non-GAAP) $ 131,254 $ 129,345 $ 120,427 $ 260,599 $ 237,739
Noninterest income $ 48,870 $ 49,407 $ 46,371 $ 98,277 $ 119,890
Loss (gain) on sale of securities (3,050)
Gain on sale of stock (Visa/MasterCard) (22,678)
Core noninterest income (non-GAAP) $ 48,870 $ 49,407 $ 46,371 $ 98,277 $ 94,162
Noninterest expense $ 85,241 $ 84,339 $ 78,473 $ 169,580 $ 163,537
One-time items(a) (457) (384) (841) (2,547)
Core noninterest expense (non-GAAP) $ 84,784 $ 83,955 $ 78,473 $ 168,739 $ 160,990
Net income $ 56,895 $ 56,740 $ 54,860 $ 113,635 $ 120,391
Gain on sale of securities (3,050)
Gain on sale of stock (Visa/MasterCard) (22,678)
One-time items(a) 457 384 841 2,547
Tax adjustments(b) (171) (142) (313) 8,723
Total core adjustments 286 242 528 (14,458)
Core net income (non-GAAP) $ 57,181 $ 56,982 $ 54,860 $ 114,163 $ 105,933
Core basic earnings per share (non-GAAP) $ 0.41 $ 0.41 $ 0.39 $ 0.82 $ 0.76
Core diluted earnings per share (non-GAAP) $ 0.41 $ 0.41 $ 0.39 $ 0.82 $ 0.76

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.