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First Hawaiian, Inc. Reports Fourth Quarter and Full Year 2016 Financial Results and Declares Dividend

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HONOLULU, Jan. 24, 2017 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ: FHB), (the "Company") today reported financial results for its fourth quarter and full year ended December 31, 2016.

Highlights

  • Net income for the quarter ended December 31, 2016 was $56.6 million, or $0.41 per diluted share, and core net income1 was $56.0 million, or $0.40 per diluted share
  • Net income for the full year 2016 was $230.2 million, or $1.65 per diluted share, and core net income1 was $217.1 million, or $1.56 per diluted share
  • Board of Directors increased quarterly dividend by 10% to $0.22 per share

"2016 was a milestone year for First Hawaiian, and we capped off the year with a solid fourth quarter in which we grew total loans and leases to a record $11.5 billion," said Bob Harrison, Chairman and Chief Executive Officer.  "We are pleased with our performance in 2016, as we maintained our strategic and disciplined approach to growing loans and deposits, while maintaining excellent credit quality and sustaining superior financial performance."

On January 23, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.22 per share, an increase of $0.02 per share from the dividend paid in December 2016.  The dividend will be payable on March 10, 2017 to shareholders of record at the close of business on February 27, 2017.

Earnings Highlights

Net income for the quarter ended December 31, 2016 was $56.6 million, or $0.41 per diluted share, compared to $53.2 million, or $0.38 per diluted share, for the quarter ended September 30, 2016, and $50.2 million, or $0.36 per diluted share, for the quarter ended December 31, 2015.  Core net income for the quarter ended December 31, 2016 was $56.0 million, or $0.40 per diluted share, compared to $55.2 million, or $0.40 per diluted share, for the quarter ended September 30, 2016, and $49.8 million, or $0.36 per diluted share, for the quarter ended December 31, 2015. Net income for the full year 2016 was $230.2 million, or $1.65 per diluted share, compared to $213.8 million, or $1.53 per diluted share, for the full year 2015.  Core net income for the full year 2016 was $217.1 million, or $1.56 per diluted share, compared to $196.3 million, or $1.41 per diluted share for the full year 2015.

Net interest income for the quarter ended December 31, 2016 was $131.3 million, an increase of $8.6 million compared to $122.7 million for the quarter ended September 30, 2016, and an increase of $15.0 million compared to $116.2 million for the quarter ended December 31, 2015.  The increases in net interest income compared to the third quarter of 2016 and the fourth quarter of 2015 were due to higher average balances of loans and investment securities and higher yields on investment securities, partially offset by higher average deposit balances. Net interest income for the full year 2016 was $491.7 million compared to $461.3 million for 2015.  The increase in net interest income was primarily attributable to higher average balances of loans and higher yields on investment securities, partially offset by lower yields on loans, lower average balances of investment securities and higher average deposit balances.

Net interest margin was 2.99%, 2.87% and 2.71%, respectively, for the quarters ended December 31, 2016, September 30, 2016, and December 31, 2015.  The 12 basis point increase compared to the third quarter of 2016 was due to higher investment portfolio yields, lower premium amortization, and higher loan prepayments, slightly offset by lower loan yields.  The 28 basis point increase compared to the fourth quarter of 2015 was due to overall higher earning asset yields.  The net interest margin for the full year of 2016 was 2.88%, compared to 2.78% for 2015.  The 10 basis point increase in net interest margin was primarily due to higher yields on investments and interest-bearing deposits in other banks, partially offset by lower yields on loans. 

Results for the quarter ended December 31, 2016 included a provision for credit losses of $3.9 million compared to $2.1 million in the quarter ended September 30, 2016 and $2.5 million in the quarter ended December 31, 2015.  The provision for credit losses for the full year of 2016 was $8.6 million, compared to $9.9 million in 2015. 

Noninterest income was $49.0 million in the quarter ended December 31, 2016, an increase of $0.3 million compared to noninterest income of $48.7 million in the quarter ended September 30, 2016 and an increase of $1.8 million compared to noninterest income of $47.2 million in the quarter ended December 31, 2015.  The fourth quarter of 2016 included $1.5 million of net gains on the sales of securities and $3.0 million of swap fee income.  The third quarter of 2016 included gains of $3.5 million from death benefits and $0.7 million of swap fee income.  The fourth quarter of 2015 included $2.7 million of net losses on the sale of securities.  Noninterest income for full year 2016 was $217.6 million compared to $211.4 million for 2015.  The $6.2 million higher noninterest income in 2016 compared to 2015 was due to higher securities gains of $15.0 million and higher BOLI income of $5.0 million, primarily offset by lower service charges and fee income of $6.0 million and higher miscellaneous other income of $7.2 million in 2015.

Noninterest expense was $82.5 million for the quarter ended December 31, 2016, a decrease of $0.3 million from $82.8 million in the quarter ended September 30, 2016, and an increase of $2.2 million from $80.3 million in the quarter ended December 31, 2015.  The slight decrease in noninterest expense compared to the third quarter of 2016 was due to $1.6 million lower salaries and employee benefits expense and $1.7 million lower other expense, largely offset by $1.8 million higher contracted services and professional fees, $0.6 million more in equipment costs and $0.6 million higher regulatory fees.  Salaries and employee benefits expense in the third quarter of 2016 included $1.9 million of expenses related to shares granted in connection with our initial public offering.  The increase in noninterest expense compared to the fourth quarter of 2015 was primarily due to a $2.5 million increase in occupancy expenses, a $1.8 million increase in contracted services and professional fees, $1.7 million higher regulatory assessment and fees, partially offset by $2.8 million lower salaries and employee benefits and $1.0 million lower cards rewards expenses.  Noninterest expense for full year 2016 was $328.8 million compared to $319.6 million in 2015, an increase of $9.2 million, primarily due to $3.5 million higher regulatory assessment and fees, $3.1 million in higher occupancy expenses, and $2.7 million in higher contract services.

The efficiency ratio was 45.8%, 48.3% and 49.1% for the quarters ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively.  The efficiency ratio for full year 2016 was 46.4% compared to 47.5% in 2015.

The effective tax rate for the fourth quarter of 2016 was 39.8% compared with 38.4% in the previous quarter and 37.7% percent in the same quarter last year.  The effective tax rate for the full year 2016 was 38.1% compared with 37.7% in 2015.

Balance Sheet Highlights

Total assets were $19.7 billion at December 31, 2016, compared to $19.9 billion at September 30, 2016 and $19.4 billion at December 31, 2015.

The investment securities portfolio was $5.1 billion at December 31, 2016, compared to $5.4 billion at September 30, 2016 and $4.0 billion at December 31, 2015.  The portfolio remains largely comprised of securities issued by U. S. government agencies.

Total loans and leases were $11.5 billion at December 31, 2016, up 1.1% from $11.4 billion at September 30, 2016 and up 7.4% from $10.7 billion at December 31, 2015.

The growth in loans and leases in the most recent quarter was due to increases in residential real estate loans of $108.8 million, consumer loans of $41.6 million, and commercial real estate loans of $31.6 million.  Commercial and industrial loans declined by $25.7 million and construction loan balances declined by $25.3 million.  The decline in commercial and industrial loans was due to several large pay downs in the shared national credit portfolio, and the decline in construction loans resulted from the scheduled completion and pay down of residential construction projects. Compared to December 31, 2015, the growth in loans and leases was due to increases in residential real estate loans of $264.0 million, commercial and industrial loans of $182.1 million, commercial real estate loans of $179.0 million, consumer loans of $109.2 million, and construction loans of $82.6 million.

Total deposits were $16.8 billion at December 31, 2016, a decrease of $0.2 billion, or 1.0%, compared with $17.0 billion at September 30, 2016, and an increase of $0.7 billion, or 4.6%, compared to $16.1 billion at December 31, 2015.  The decline in deposit balances compared to September 30, 2016 was due to the previously anticipated withdrawal of $440 million of construction-related escrow deposits in the fourth quarter, offset by approximately $270 million of growth.

Asset Quality

The Company's asset quality remained stable during the fourth quarter of 2016. Total non-performing assets declined to $9.8 million, or 0.08% of total loans and leases, at December 31, 2016, down $0.4 million from non-performing assets of $10.2 million, or 0.09% of total loans and leases, at September 30, 2016 and down $7.0 million from non­performing assets of $16.8 million, or 0.16% of total loans and leases, at December 31, 2015.

Net charge offs for the quarter ended December 31, 2016 were $3.4 million, or 0.12% of average loans and leases on an annualized basis, compared to $3.4 million, or 0.12% of average loans and leases on an annualized basis for the quarter ended September 30, 2016 and $2.5 million, or 0.09% of average loans and leases on an annualized basis for the quarter ended December 31, 2015.  Net charge-offs for the full year 2016 were $8.6 million, or 0.08% of average loans and leases, compared to net charge-off of $9.2 million, or 0.09% of average loans and leases in 2015.

The ratio of allowance for loan and lease losses to total loans and leases was 1.18% at December 31, 2016 compared to 1.18% at September 30, 2016 and 1.26% at December 31, 2015. 

Capital

Total stockholders' equity was $2.5 billion at December 31, 2016, compared to $2.5 billion at September 30, 2016 and $2.7 billion at December 31, 2015.   

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.36%, 12.75% and 13.85%, respectively, at December 31, 2016, compared with 8.41%, 12.48%, and 13.59% at September 30, 2016 and 9.84%, 15.31%, 16.48% at December 31, 2015.

_________________

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.

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. Eastern Time, 6:00 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:  49108216.  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/ntjdo6zf/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 2:00 p.m. (Eastern Time) on February 3, 2017.  Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID:  49108216.

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 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 Year Ended     
    December 31,    September 30,   December 31,    December 31,     
(dollars in thousands except per share data)   2016   2016   2015   2016   2015    
Operating Results:                                  
Net interest income   $   131,250   $ 122,683   $ 116,222   $   491,672   $ 461,325    
Provision for loan and lease losses       3,900     2,100     2,500       8,600     9,900    
Noninterest income       49,021     48,690     47,188       217,601     211,403    
Noninterest expense       82,503     82,804     80,294       328,844     319,601    
Net income       56,552     53,235     50,211       230,178     213,780    
Basic earnings per share       0.41     0.38     0.36       1.65     1.53    
Diluted earnings per share       0.41     0.38     0.36       1.65     1.53    
Dividends declared per share       0.20     0.20     N/A       0.62     N/A    
Dividend payout ratio       49.35 %   52.39 %   N/A       37.27 %   N/A    
Supplemental Income Statement Data (non-GAAP):                                  
Core net interest income   $   131,250   $ 122,683   $ 116,222   $   491,672   $ 456,489    
Core noninterest income       47,505     48,690     46,582       190,357     188,197    
Core noninterest expense       81,920     79,714     80,294       322,624     319,601    
Core net income       56,001     55,177     49,834       217,111     196,315    
Core basic earnings per share   $   0.40   $ 0.40   $ 0.36   $   1.56   $ 1.41    
Core diluted earnings per share   $   0.40   $ 0.40   $ 0.36   $   1.56   $ 1.41    
Performance Ratio:                                  
Net interest margin       2.99   2.87 %   2.71 %     2.88   2.78 %  
Core net interest margin (non-GAAP)       2.99   2.87 %   2.71 %     2.88   2.75 %  
Efficiency ratio       45.76   48.31 %   49.13 %     46.36   47.50 %  
Core efficiency ratio (non-GAAP)       45.82   46.51 %   49.32 %     47.30   49.57 %  
Return on average total assets       1.14   1.10 %   1.04 %     1.19   1.14 %  
Core return on average total assets (non-GAAP)       1.13   1.14 %   1.03 %     1.12   1.05 %  
Return on average tangible assets       1.20   1.16 %   1.09 %     1.26   1.20 %  
Core return on average tangible assets (non-GAAP)       1.19   1.20 %   1.09 %     1.18   1.10 %  
Return on average total stockholders' equity       8.97   8.45 %   7.23 %     8.96   7.81 %  
Core return on average total stockholders' equity (non-GAAP)       8.88   8.76 %   7.17 %     8.45   7.18 %  
Return on average tangible stockholders' equity       14.88   14.02 %   11.31 %     14.64   12.28 %  
Core return on average tangible stockholders' equity (non-GAAP)       14.73   14.53 %   11.22 %     13.80   11.28 %  
Average Balances:                                  
Average loans and leases   $   11,531,684   $ 11,261,710   $ 10,613,863   $   11,175,213   $ 10,297,834    
Average earning assets       17,482,648     17,028,930     17,047,767       17,093,114     16,619,854    
Average assets       19,778,918     19,314,668     19,208,603       19,334,653     18,785,701    
Average deposits       16,861,525     16,392,125     15,795,021       16,275,811     15,319,238    
Average shareholders' equity       2,507,514     2,506,099     2,756,977       2,568,219     2,735,786    
Per Share of Common Stock:                                  
Book value   $   17.75   $ 18.09   $ 19.63   $   17.75   $ 19.63    
Tangible book value       10.61     10.96     12.49       10.62     12.49    
Market Value                                  
Closing       34.82     26.86     N/A       34.82     N/A    
High       35.47     27.97     N/A       35.47     N/A    
Low       25.80     24.25     N/A       24.25     N/A    
                                   

 

       As of     As of     As of     
       December 31,      September 30,     December 31,      
      2016   2016   2015    
Balance Sheet Data:                        
Loans and leases     $   11,520,378   $   11,396,555   $   10,722,030    
Total assets         19,661,829       19,892,693       19,352,681    
Total deposits         16,794,532       16,965,527       16,061,924    
Total stockholders' equity         2,476,485       2,523,963       2,736,941    
                         
Asset Quality Ratios:                        
Non-accrual loans and leases / total loans and leases         0.08     0.08 %     0.16  
Allowance for loan and lease losses / total loans and leases         1.18     1.18 %     1.26  
                         
Capital Ratios:                        
Common Equity Tier 1 Capital Ratio           12.75     12.48 %     15.31  
Tier 1 Capital Ratio         12.75     12.48 %     15.31  
Total Capital Ratio         13.85     13.59 %     16.48  
Tier 1 Leverage Ratio         8.36     8.41 %     9.84  
Total stockholders' equity to total assets         12.60     12.69 %     14.14  
Tangible stockholders' equity to tangible assets         7.93     8.09 %     9.49  
                         
Non-Financial Data:                        
Number of branches         62       62       62    
Number of ATMs         311       312       311    
Number of Full-Time Equivalent Employees         2,179       2,197       2,157    

 

Consolidated Statements of Income                             Table 2  
    Three Months Ended   For the Year Ended   
    December 31,    September 30,   December 31,    December 31,   
(dollars in thousands except per share amounts)   2016   2016   2015     2016   2015  
Interest income                                
Loans and lease financing   $   111,461   $ 106,900   $ 102,108     $   428,419   $ 405,702  
Available-for-sale securities       25,884     21,123     18,549         83,019     73,615  
Other       968     1,311     1,450         7,082     4,529  
Total interest income       138,313     129,334     122,107         518,520     483,846  
Interest expense                                
Deposits       7,048     6,632     5,844         26,650     22,314  
Short-term borrowings and long-term debt       15     19     41         198     207  
Total interest expense       7,063     6,651     5,885         26,848     22,521  
Net interest income       131,250     122,683     116,222         491,672     461,325  
Provision for loan and lease losses       3,900     2,100     2,500         8,600     9,900  
Net interest income after provision for loan and lease losses       127,350     120,583     113,722         483,072     451,425  
Noninterest income                                
Service charges on deposit accounts       9,388     9,575     10,194         38,147     40,850  
Credit and debit card fees       14,339     14,103     14,783         56,071     56,416  
Other service charges and fees       8,446     8,768     8,990         35,355     38,641  
Trust and investment services income       7,204     7,508     7,061         29,440     29,671  
Bank-owned life insurance       1,758     7,115     2,679         15,021     9,976  
Investment securities gains, net       1,516     30     (2,672 )       27,277     12,321  
Other       6,370     1,591     6,153         16,290     23,528  
Total noninterest income       49,021     48,690     47,188         217,601     211,403  
Noninterest expense                                
Salaries and employee benefits       40,471     42,106     43,243         169,233     170,233  
Contracted services and professional fees       12,221     10,430     10,467         45,345     42,663  
Occupancy       5,125     4,870     2,649         20,116     16,975  
Equipment       4,777     4,192     4,850         16,912     15,836  
Regulatory assessment and fees       4,103     3,546     2,366         12,972     9,490  
Advertising and marketing       1,309     1,769     1,444         6,127     5,472  
Card rewards program       4,770     4,512     5,773         15,513     17,687  
Other       9,727     11,379     9,502         42,626     41,245  
Total noninterest expense       82,503     82,804     80,294         328,844     319,601  
Income before provision for income taxes       93,868     86,469     80,616         371,829     343,227  
Provision for income taxes       37,316     33,234     30,405         141,651     129,447  
Net income   $   56,552   $ 53,235   $ 50,211     $   230,178   $ 213,780  
Basic earnings per share   $   0.41   $ 0.38   $ 0.36     $   1.65   $ 1.53  
Diluted earnings per share   $   0.41   $ 0.38   $ 0.36     $   1.65   $ 1.53  
Dividends declared per share   $   0.20   $ 0.20   $     $   0.62   $  
Basic weighted-average outstanding shares       139,530,654     139,500,542     139,459,620         139,487,762     139,459,620  
Diluted weighted-average outstanding shares       139,546,875     139,503,558     139,459,620         139,492,608     139,459,620  
                                 

 

Consolidated Balance Sheets                 Table 3  
    December 31,    September 30,   December 31,   
(dollars in thousands)   2016     2016     2015    
Assets                    
Cash and due from banks   $   253,827     $ 371,622     $ 300,096    
Interest-bearing deposits in other banks       798,231       804,198       2,350,099    
Investment securities       5,077,514       5,363,696       4,027,265    
Loans and leases     11,520,378       11,396,555       10,722,030    
Less: allowance for loan and lease losses       135,494       135,025       135,484    
Net loans and leases     11,384,884       11,261,530       10,586,546    
                     
Premises and equipment, net       300,788       302,059       305,104    
Other real estate owned and repossessed personal property       329       854       154    
Accrued interest receivable       41,971       37,107       34,215    
Bank-owned life insurance       429,209       432,031       424,545    
Goodwill       995,492       995,492       995,492    
Other intangible assets       16,809       17,554       21,435    
Other assets       362,775       306,550       307,730    
Total assets   $ 19,661,829     $ 19,892,693     $ 19,352,681    
Liabilities and Stockholders' Equity                    
Deposits:                    
Interest-bearing   $ 10,801,915     $ 11,164,989     $ 10,730,095    
Noninterest-bearing       5,992,617       5,800,538       5,331,829    
Total deposits     16,794,532       16,965,527       16,061,924    
Short-term borrowings       9,151       9,151       216,151    
Long-term debt       41       41       48    
Retirement benefits payable       132,904       139,567       133,910    
Other liabilities       248,716       254,444       203,707    
Total liabilities     17,185,344       17,368,730       16,615,740    
                     
Stockholders' equity                    
Net investment                   2,788,200    
Common stock ($0.01 par value; authorized 300,000,000 shares; issued and outstanding 139,530,654 shares as of both December 31, 2016 and September 30, 2016 and 139,459,620 shares as of December 31, 2015)       1,395       1,395          
Additional paid-in capital       2,484,251       2,482,679          
Retained earnings       78,850       50,204          
Accumulated other comprehensive loss, net       (88,011 )     (10,315 )     (51,259 )  
Total stockholders' equity       2,476,485       2,523,963       2,736,941    
Total liabilities and stockholders' equity   $ 19,661,829     $ 19,892,693     $ 19,352,681    
                     

 

Average Balances and Interest Rates                                            Table 4       
    Three Months Ended    Three Months Ended    Three Months Ended       
    December 31, 2016   September 30, 2016   December 31, 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   $   673.7   $   0.9     0.57 $ 1,023.6   $ 1.3   0.51 % $ 1,911.8   $ 1.5   0.30 %    
Available-for-Sale Investment Securities       5,277.2       25.9     1.95     4,743.7     21.1   1.77     4,519.5     18.5   1.63      
Loans Held for Sale                               2.6       3.48      
Loans and Leases (1)                                                      
Commercial and industrial       3,314.3       25.7     3.09     3,248.1     23.7   2.90     3,019.6     21.8   2.86      
Real estate - commercial       2,431.4       23.1     3.78     2,338.2     21.3   3.63     2,232.6     20.8   3.69      
Real estate - construction       470.7       3.8     3.21     448.9     3.7   3.29     341.5     2.7   3.11      
Real estate - residential       3,636.9       37.0     4.04     3,571.3     36.4   4.06     3,452.9     35.9   4.12      
Consumer       1,493.9       20.6     5.49     1,467.0     20.5   5.55     1,362.1     19.4   5.66      
Lease financing       184.5       1.3     2.75     188.2     1.3   2.84     205.2     1.5   3.00      
Total Loans and Leases       11,531.7       111.5     3.85     11,261.7     106.9   3.78     10,613.9     102.1   3.82      
Total Earning Assets (2)       17,482.6       138.3     3.15     17,029.0     129.3   3.02     17,047.8     122.1   2.84      
Cash and Due from Banks       312.5               357.1               282.4                
Other Assets       1,983.8               1,928.6               1,878.4                
Total Assets   $   19,778.9             $ 19,314.7             $ 19,208.6                
                                                       
Interest-Bearing Liabilities                                                      
Interest-Bearing Deposits                                                      
Savings   $   4,446.1   $   0.6     0.06 $ 4,416.4   $ 0.6   0.06 % $ 4,297.9   $ 0.6   0.05 %    
Money Market       2,680.4       0.7     0.10     2,549.3     0.6   0.10     2,572.0     0.6   0.09      
Time       3,923.1       5.7     0.58     3,776.6     5.4   0.57     3,748.5     4.7   0.50      
Total Interest-Bearing Deposits       11,049.6       7.0     0.25     10,742.3     6.6   0.25     10,618.4     5.9   0.22      
Short-Term Borrowings       11.1           0.49     18.5       0.42     296.4       0.05      
Total Interest-Bearing Liabilities       11,060.7       7.0     0.25     10,760.8     6.6   0.25     10,914.8     5.9   0.21      
Net Interest Income         $   131.3             $ 122.7             $ 116.2          
Interest Rate Spread                 2.90             2.77 %           2.63 %    
Net Interest Margin                 2.99             2.87 %           2.71 %    
Noninterest-Bearing Demand Deposits       5,811.9               5,649.8               5,176.6                
Other Liabilities       398.8               398.0               360.2                
Stockholders' Equity       2,507.5               2,506.1               2,757.0                
Total Liabilities and Stockholders' Equity   $   19,778.9             $ 19,314.7             $ 19,208.6                
                                                       
(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       
    Year Ended    Year Ended       
    December 31, 2016   December 31, 2015      
     Average     Income/       Yield/     Average     Income/     Yield/       
(dollars in millions)    Balance     Expense       Rate     Balance     Expense     Rate       
                                         
Earning Assets                                        
Interest-Bearing Deposits in Other Banks   $   1,368.9   $   7.1       0.52 $   1,651.9   $   4.5     0.27 %    
Available-for-Sale Investment Securities       4,549.0       83.0       1.82       4,665.0       73.6     1.58      
Loans Held for Sale                         5.1       0.2     3.92      
Loans and Leases (1)                                        
Commercial and industrial       3,229.5       96.0       2.97       2,869.8       83.9     2.92      
Real estate - commercial       2,313.0       86.0       3.72       2,156.2       81.6     3.78      
Real estate - construction       436.4       14.2       3.26       371.9       12.4     3.33      
Real estate - residential       3,553.6       145.9       4.10       3,383.6       144.7     4.28      
Consumer       1,454.4       80.9       5.56       1,299.2       76.6     5.90      
Lease financing       188.3       5.4       2.86       217.1       6.3     2.90      
Total Loans and Leases       11,175.2       428.4       3.83       10,297.8       405.5     3.94      
Total Earning Assets (2)       17,093.1       518.5       3.03       16,619.8       483.8     2.91      
Cash and Due from Banks       289.9                   284.3                
Other Assets       1,951.7                   1,881.6                
Total Assets   $   19,334.7               $   18,785.7                
                                         
Interest-Bearing Liabilities                                        
Interest-Bearing Deposits                                        
Savings   $   4,390.3   $   2.6       0.06 $   4,172.1   $   1.7     0.04 %    
Money Market       2,478.4       2.3       0.09       2,384.8       2.2     0.09      
Time       3,817.6       21.7       0.57       3,730.2       18.4     0.49      
Total Interest-Bearing Deposits       10,686.3       26.6       0.25       10,287.1       22.3     0.22      
Short-Term Borrowings       113.6       0.2       0.17       381.6       0.2     0.05      
Total Interest-Bearing Liabilities       10,799.9       26.8       0.25       10,668.7       22.5     0.21      
Net Interest Income         $   491.7               $   461.3          
Interest Rate Spread                   2.78               2.70 %    
Net Interest Margin                   2.88               2.78 %    
Noninterest-Bearing Demand Deposits       5,589.5                   5,032.1                
Other Liabilities       377.1                   349.1                
Stockholders' Equity       2,568.2                   2,735.8                
Total Liabilities and stockholders' Equity   $   19,334.7               $   18,785.7                
                                         
(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 December 31, 2016  
    Compared to September 30, 2016  
(dollars in millions)    Volume     Rate    Total  
                     
Change in Interest Income:                    
Interest-Bearing Deposits in Other Banks   $   (0.5 )   $   0.1     $   (0.4 )  
Available-for-Sale Investment Securities       2.5         2.3         4.8    
Loans Held for Sale                          
Loans and Leases                    
Commercial and industrial       0.5         1.5         2.0    
Real estate - commercial       0.9         0.9         1.8    
Real estate - construction       0.2         (0.1 )       0.1    
Real estate - residential       0.7         (0.1 )       0.6    
Consumer       0.3         (0.2 )       0.1    
Lease financing                          
Total Loans and Leases       2.6         2.0         4.6    
Total Change in Interest Income       4.6         4.4         9.0    
                     
Change in Interest Expense:                    
Interest-Bearing Deposits                    
Savings                          
Money Market       0.1                 0.1    
Time       0.2         0.1         0.3    
Total Interest-Bearing Deposits       0.3         0.1         0.4    
Short-term Borrowings                          
Total Change in Interest Expense       0.3         0.1         0.4    
Change in Net Interest Income   $   4.3     $   4.3     $   8.6    
                     

 

Analysis of Change in Net Interest Income                  Table 7   
    Three Months Ended December 31, 2016  
    Compared to December 31, 2015  
(dollars in millions)    Volume     Rate    Total  
                     
Change in Interest Income:                    
Interest-Bearing Deposits in Other Banks   $   (1.4 )   $   0.9     $   (0.5 )  
                     
Available-for-Sale Investment Securities       3.4         3.9         7.3    
Loans Held for Sale                          
Loans and Leases                    
Commercial and industrial       2.2         1.7         3.9    
Real estate - commercial       1.9         0.4         2.3    
Real estate - construction       1.0         0.1         1.1    
Real estate - residential       1.9         (0.8 )       1.1    
Consumer       1.8         (0.6 )       1.2    
Lease financing       (0.1 )       (0.1 )       (0.2 )  
Total Loans and Leases       8.7         0.7         9.4    
Total Change in Interest Income       10.7         5.5         16.2    
                     
Change in Interest Expense:                    
Interest-Bearing Deposits                    
Savings                          
Money Market               0.1         0.1    
Time       0.2         0.9         1.1    
Total Interest-Bearing Deposits       0.2         1.0         1.2    
Short-term Borrowings       (0.1 )       0.1            
Total Change in Interest Expense       0.1         1.1         1.2    
Change in Net Interest Income   $   10.6     $   4.4     $   15.0    
                     

 

Analysis of Change in Net Interest Income                  Table 8   
    Year Ended December 31, 2016  
    Compared to December 31, 2015  
(dollars in millions)    Volume     Rate    Total  
                     
Change in Interest Income:                    
Interest-Bearing Deposits in Other Banks   $   (0.8 )   $   3.3     $   2.5    
                     
Available-for-Sale Investment Securities       (1.9 )       11.3         9.4    
Loans Held for Sale       (0.2 )               (0.2 )  
Loans and Leases                    
Commercial and industrial       10.7         1.4         12.1    
Real estate - commercial       5.9         (1.5 )       4.4    
Real estate - construction       2.1         (0.3 )       1.8    
Real estate - residential       7.1         (5.9 )       1.2    
Consumer       8.8         (4.5 )       4.3    
Lease financing       (0.8 )       (0.1 )       (0.9 )  
Total Loans and Leases       33.8         (10.9 )       22.9    
Total Change in Interest Income       30.9         3.7         34.6    
                     
Change in Interest Expense:                    
Interest-Bearing Deposits                    
Savings       0.1         0.8         0.9    
Money Market       0.1                 0.1    
Time       0.4         2.9         3.3    
Total Interest-Bearing Deposits       0.6         3.7         4.3    
Short-Term Borrowings       (0.2 )       0.2            
Total Change in Interest Expense       0.4         3.9         4.3    
Change in Net Interest Income   $   30.5     $   (0.2 )   $   30.3    
                     

 

Loans and Leases                   Table 9  
      December 31,    September 30,   December 31,   
(dollars in thousands)     2016   2016   2015  
Commercial and industrial     $   3,239,600   $ 3,265,291   $ 3,057,455  
Real estate:                      
Commercial         2,343,495     2,311,874     2,164,448  
Construction         450,012     475,333     367,460  
Residential         3,796,459     3,687,660     3,532,427  
Total real estate         6,589,966     6,474,867     6,064,335  
Consumer         1,510,772     1,469,220     1,401,561  
Lease financing         180,040     187,177     198,679  
Total loans and leases     $   11,520,378   $ 11,396,555   $ 10,722,030  
                       

 

Deposits                   Table 10  
      December 31,    September 30,   December 31,   
(dollars in thousands)     2016   2016   2015  
Demand     $   5,992,617   $ 5,800,538   $ 5,331,829  
Savings         4,609,306     4,341,714     4,354,140  
Money Market         2,454,013     2,818,132     2,565,955  
Time         3,738,596     4,005,143     3,810,000  
Total Deposits     $   16,794,532   $ 16,965,527   $ 16,061,924  
                       

 

Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More                   Table 11
      December 31,    September 30,   December 31, 
(dollars in thousands)     2016   2016   2015
Non-Performing Assets                    
Non-Accrual Loans and Leases                    
Commercial Loans:                     
Commercial and industrial     $   2,730   $   2,933   $   3,958
Real estate - commercial               —       138
Lease financing         153       163       181
Total Commercial Loans         2,883       3,096       4,277
Residential         6,547       6,274       12,344
Total Non-Accrual Loans and Leases         9,430       9,370       16,621
Other Real Estate Owned         329       854       154
Total Non-Performing Assets     $   9,759   $   10,224   $   16,775
                     
Accruing Loans and Leases Past Due 90 Days or More                    
Commercial Loans:                    
Commercial and industrial     $   449   $   177   $   2,496
Real estate - commercial               —       161
Lease financing         83       —       174
Total Commercial Loans         532       177       2,831
Residential         866       1,638       737
Consumer         1,870       2,036       1,454
Total Accruing Loans and Leases Past Due 90 Days or More     $   3,268   $   3,851   $   5,022
                     
Restructured Loans on Accrual Status and Not Past Due 90 Days or More         44,496       46,453       28,351
Total Loans and Leases      $   11,520,378   $   11,396,555   $   10,722,030
                     

 

Allowance for Loan and Lease Losses                             Table 12    
    For the Three Months Ended   For the Year Ended    
    December 31,    September 30,   December 31,    December 31,    December 31,     
(dollars in thousands)   2016     2016     2015     2016     2015      
Balance at Beginning of Period   $   135,025     $ 136,360     $ 135,447     $   135,484     $ 134,799      
Loans and Leases Charged-Off                                  
Commercial Loans:                                  
Commercial and industrial             (210 )     (101 )       (348 )     (866 )    
Total Commercial Loans             (210 )     (101 )       (348 )     (866 )    
Residential       (3 )     (268 )     (57 )       (799 )     (618 )    
Consumer       (5,412 )     (4,878 )     (4,831 )       (18,791 )     (18,312 )    
Total Loans and Leases Charged-Off       (5,415 )     (5,356 )     (4,989 )       (19,938 )     (19,796 )    
Recoveries on Loans and Leases Previously Charged-Off                                  
Commercial Loans:                                  
Commercial and industrial       23       6       56         251       940      
Real estate - commercial       41       42       817         3,329       1,115      
Lease financing       1             1         2       3      
Total Commercial Loans       65       48       874         3,582       2,058      
Residential       242       350       100         1,358       2,198      
Consumer       1,677       1,523       1,552         6,408       6,325      
Total Recoveries on Loans and Leases Previously Charged-Off       1,984       1,921       2,526         11,348       10,581      
Net Loans and Leases Charged-Off       (3,431 )     (3,435 )     (2,463 )       (8,590 )     (9,215 )    
Provision for Credit Losses       3,900       2,100       2,500         8,600       9,900      
Balance at End of Period   $   135,494     $ 135,025     $ 135,484     $   135,494     $ 135,484      
Average Loans and Leases Outstanding   $   11,531,684     $ 11,261,710     $ 10,613,863     $   11,175,213     $ 10,297,834      
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding       0.12   %   0.12   %   0.09   %     0.08     0.09   %  
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding       1.18     1.18   %   1.26   %     1.18   %   1.26   %  

 

GAAP to Non-GAAP Reconciliation                         Table 13    
    As of and for the Three Months Ended   As of and for the Year Ended     
    December 31,    September 30,   December 31,    December 31,     
(dollars in thousands, except per share data)   2016   2016   2015   2016   2015    
Net income   $   56,552   $ 53,235   $ 50,211   $   230,178   $ 213,780    
                                   
Average total stockholders' equity   $   2,507,514   $ 2,506,099   $ 2,756,977   $   2,568,219   $ 2,735,786    
Less: average goodwill       995,492     995,492     995,492       995,492     995,492    
Average tangible stockholders' equity   $   1,512,022   $ 1,510,607   $ 1,761,485   $   1,572,727   $ 1,740,294    
                                   
Total stockholders' equity   $   2,476,485   $ 2,523,963   $ 2,736,941   $   2,476,485   $ 2,736,941    
Less: goodwill       995,492     995,492     995,492       995,492     995,492    
Tangible stockholders' equity   $   1,480,993   $ 1,528,471   $ 1,741,449   $   1,480,993   $ 1,741,449    
                                   
Average total assets   $   19,778,918   $ 19,314,668   $ 19,208,603   $   19,334,653   $ 18,785,701    
Less: average goodwill       995,492     995,492     995,492       995,492     995,492    
Average tangible assets   $   18,783,426   $ 18,319,176   $ 18,213,111   $   18,339,161   $ 17,790,209    
                                   
Total assets   $   19,661,829   $ 19,892,693   $ 19,352,681   $   19,661,829   $ 19,352,681    
Less: goodwill       995,492     995,492     995,492       995,492     995,492    
Tangible assets   $   18,666,337   $ 18,897,201   $ 18,357,189   $   18,666,337   $ 18,357,189    
                                   
Basic weighted-average shares outstanding       139,530,654     139,500,542     139,459,620       139,487,762     139,459,620    
Diluted weighted-average shares outstanding       139,546,875     139,503,558     139,459,620       139,492,608     139,459,620    
                                   
Return on average total stockholders' equity(a)       8.97 %   8.45 %   7.23 %     8.96 %   7.81 %  
Return on average tangible stockholders' equity (non-GAAP)(a)       14.88 %   14.02 %   11.31 %     14.64 %   12.28 %  
                                   
Return on average total assets(a)       1.14 %   1.10 %   1.04 %     1.19 %   1.14  
Return on average tangible assets (non-GAAP)(a)       1.20 %   1.16 %   1.09 %     1.26 %   1.20  
                                   
Total stockholders' equity to total assets       12.60 %   12.69 %   14.14 %     12.60 %   14.14 %  
Tangible stockholders' equity to tangible assets (non-GAAP)       7.93 %   8.09 %   9.49 %     7.93 %   9.49 %  
                                   
Average stockholders' equity to average assets       12.68   12.98 %   14.35 %     13.28 %   14.56  
Tangible average stockholders' equity to tangible average assets (non-GAAP)     8.05   8.25 %   9.67 %     8.58 %   9.78  
                                   
Book value per share   $   17.75   $ 18.09   $ 19.63   $   17.75   $ 19.63    
Tangible book value per share (non-GAAP)   $   10.61   $ 10.96   $ 12.49   $   10.62   $ 12.49    
                                   
(a)  Annualized for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015.                      

 

GAAP to Non-GAAP Reconciliation                         Table 14  
    For the Three Months Ended   For the Year Ended   
    December 31,    September 30,   December 31,    December 31,   
(dollars in thousands, except per share data)   2016     2016     2015     2016     2015    
Net interest income   $   131,250     $ 122,683     $ 116,222     $   491,672     $ 461,325    
Early loan termination(a)                                 (4,836 )  
Core net interest income (non-GAAP)   $   131,250     $ 122,683     $ 116,222     $   491,672     $ 456,489    
                                 
Noninterest income   $   49,021     $ 48,690     $ 47,188     $   217,601     $ 211,403    
Gain on sale of securities       (1,516 )           4,737         (4,566 )     (7,737 )  
Gain on sale of stock (Visa/MasterCard)                   (2,065 )       (22,678 )     (4,584 )  
Gain on sale of other assets                   (1,287 )             (3,414 )  
Other adjustments(a),(b)                   (1,991 )             (7,471 )  
Core noninterest income (non-GAAP)   $   47,505     $ 48,690     $ 46,582     $   190,357     $ 188,197    
                                 
Noninterest expense   $   82,503     $ 82,804     $ 80,294     $   328,844     $ 319,601    
One-time items(c)       (583 )     (3,090 )             (6,220 )        
Core noninterest expense (non-GAAP)   $   81,920     $ 79,714     $ 80,294     $   322,624     $ 319,601    
                                 
Net income   $   56,552     $ 53,235     $ 50,211     $   230,178     $ 213,780    
Early loan termination                                 (4,836 )  
Gain on sale of securities       (1,516 )           4,737         (4,566 )     (7,737 )  
Gain on sale of stock (Visa/MasterCard)                   (2,065 )       (22,678 )     (4,584 )  
Gain on sale of other assets                   (1,287 )             (3,414 )  
Other adjustments(b)                   (1,991 )             (7,471 )  
One-time items(c)       583       3,090               6,220          
Tax adjustments (d)       382       (1,148 )     229         7,957       10,577    
Total core adjustments       (551 )     1,942       (377 )       (13,067 )     (17,465 )  
Core net income (non-GAAP)   $   56,001     $ 55,177     $ 49,834     $   217,111     $ 196,315    
Core basic earnings per share (non-GAAP)   $   0.40     $ 0.40     $ 0.36     $   1.56     $ 1.41    
Core diluted earnings per share (non-GAAP)   $   0.40     $ 0.40     $ 0.36     $   1.56     $ 1.41    
                                 
(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

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