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First Hawaiian, Inc. Reports Fourth Quarter and Full Year 2017 Financial Results and Increases Dividend by 9.1%

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HONOLULU, Jan. 25, 2018 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (the "Company") today reported financial results for its fourth quarter and full year ended December 31, 2017.

Highlights

  • Net income for the quarter ended December 31, 2017 and the full year 2017 was $11.7 million, or $0.08 per diluted share, and $183.7 million, or $1.32 per diluted share, respectively. 
  • Core net income1 for the quarter ended December 31, 2017 and the full year 2017, which primarily excludes the impact of a one-time charge to provision for income taxes of $47.6 million due to the revaluation of certain tax-related assets at the projected lower corporate tax rate resulting from the Tax Cuts and Jobs Act, was $59.2 million, or $0.42 per diluted share, and $230.4 million, or $1.65 per diluted share, respectively.
  • The Board of Directors increased the quarterly dividend by 9.1% to $0.24 per share.

"2017 was another successful year for First Hawaiian, and we were able to cap it off with a strong fourth quarter," said Bob Harrison, Chairman and Chief Executive Officer.  "We were also pleased to see the benefits from key strategic initiatives.  In residential lending, we are starting to see initial results from the shift in our mortgage lending model, and our commitment to small business lending was recognized by the Small Business Administration ("SBA"), as we were named Hawaii's 2017 SBA Lender of the Year – Category 1 and 2017 SBA 504 Lender of the Year."

On January 24, 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.24 per share, an increase of $0.02 per share from the dividend paid in December 2017.  The dividend will be payable on March 9, 2018 to shareholders of record at the close of business on February 26, 2018.

Earnings Highlights

Net income for the quarter ended December 31, 2017 was $11.7 million, or $0.08 per diluted share, compared to $58.4 million, or $0.42 per diluted share, for the quarter ended September 30, 2017, and $56.6 million, or $0.41 per diluted share, for the quarter ended December 31, 2016.  Core net income for the quarter ended December 31, 2017 was $59.2 million, or $0.42 per diluted share, compared to $57.0 million, or $0.41 per diluted share, for the quarter ended September 30, 2017, and $56.0 million, or $0.40 per diluted share, for the quarter ended December 31, 2016. Net income for the full year 2017 was $183.7 million, or $1.32 per diluted share, compared to $230.2 million, or $1.65 per diluted share, for the full year 2016.  Core net income for the full year 2017 was $230.4 million, or $1.65 per diluted share, compared to $217.1 million, or $1.56 per diluted share for the full year 2016.

Net interest income for the quarter ended December 31, 2017 was $134.9 million, an increase of $1.6 million compared to $133.3 million for the quarter ended September 30, 2017, and an increase of $3.6 million compared to $131.3 million for the quarter ended December 31, 2016.  The increase in net interest income compared to the third quarter of 2017 was due to higher average balances of loans and investment securities and higher yields on investment securities, partially offset by higher rates on deposits. The increase in net interest income compared to the fourth quarter of 2016 was due to higher average balances of loans and higher yields on loans, interest-bearing deposits in other banks, and investment securities, partially offset by higher rates on deposits.  Net interest income for the full year 2017 was $528.8 million compared to $491.7 million for 2016.  The increase in net interest income was primarily attributable to higher average balances and yields on loans and investment securities, partially offset by higher rates on deposits.

Net interest margin ("NIM") was 2.99%, 2.96% and 2.99%, for the quarters ended December 31, 2017, September 30, 2017, and December 31, 2016, respectively.  The increase in NIM as compared to the prior quarter was due to increased overall yields on earnings assets, offset by higher deposit costs. 

Results for the quarter ended December 31, 2017 included a provision for credit losses of $5.1 million compared to $4.5 million in the quarter ended September 30, 2017 and $3.9 million in the quarter ended December 31, 2016.  The provision for credit losses for the full year of 2017 was $18.5 million, compared to $8.6 million in 2016. 

Noninterest income was $54.3 million in the quarter ended December 31, 2017, an increase of $4.6 million compared to noninterest income of $49.7 million in the quarter ended September 30, 2017 and an increase of $3.3 million compared to noninterest income of $51.0 million in the quarter ended December 31, 2016.    The increase in noninterest income compared to the third quarter was due to $6.2 million higher other noninterest income, primarily due to a $4.3 million gain on sale of a bank property, compared to a $2.7 million gain on sale of a bank property in the third quarter, and $3.7 million related to intercompany taxes.   The increase in noninterest income compared to the fourth quarter of 2016 was primarily due to $5.1 million higher other noninterest income, primarily offset by $1.5 million lower investment securities gains.  Noninterest income for full year 2017 was $205.6 million compared to $226.0 million for 2016.  The $20.4 million lower noninterest income in 2017 compared to 2016 was primarily due to $27.3 lower investment securities gains, partially offset by higher other noninterest income.  Investment securities gains in 2016 included a gain of $22.7 million from the sale of Visa Class B shares. 

Noninterest expense was $89.9 million for the quarter ended December 31, 2017, an increase of $5.1 million from $84.8 million in the quarter ended September 30, 2017, and an increase of $5.4 million from $84.5 million in the quarter ended December 31, 2016.  The increase in noninterest expense compared to the third quarter of 2017 was primarily due to $5.6 million higher salaries and employee benefits and $0.8 million higher cards rewards program expenses, partially offset by $1.1 million lower advertising and marketing expenses and $1.1 million lower other expenses.  Salaries and benefits in the fourth quarter included a $3.7 million expense due to the $1,500 bonuses awarded to virtually all employees following the passage of the Tax Cuts and Jobs Act, higher compensation for tellers due to the previously disclosed salary adjustment and higher compensation due to the change in mortgage origination model.  The increase in noninterest expense compared to the fourth quarter of 2016 was primarily due to a $6.7 million increase in salaries and benefits, offset by lower expenses in other noninterest expense categories.  Noninterest expense for full year 2017 was $347.6 million compared to $337.3 million in 2016, an increase of $10.3 million, primarily due to $6.1 million higher salaries and employee benefits and higher expenses in other noninterest expense categories.

The efficiency ratio was 47.5%, 46.3% and 46.4% for the quarters ended December 31, 2017, September 30, 2017 and December 31, 2016, respectively.  The efficiency ratio for full year 2017 was 47.3% compared to 47.0% in 2016.

The provision for taxes in the fourth quarter of 2017 included a $47.6 million charge due to the revaluation of certain tax-related assets at the projected lower corporate tax rate resulting from the Tax Cuts and Jobs Act.  Excluding the one-time charge, the effective tax rate for the fourth quarter of 2017 was 37.1% compared with 37.7% in the previous quarter and 39.8% percent in the same quarter last year.  Excluding the one-time charge in the fourth quarter of 2017, the effective tax rate for the full year 2017 was 37.2% compared with 38.1% in 2016.

Subsequent to the issuance of the Company's interim condensed consolidated financial statements as of September 30, 2017, the Company's management determined that certain expenses were misclassified in prior periods.  As a result, certain noninterest income and noninterest expense amounts have been revised from the amounts previously reported to correct the misclassifications. There was no change to net income or earnings per share as previously reported as a result of correcting these misclassifications. A full explanation of the adjustments can be found in the footnote to Table 1.

__________________
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 $20.5 billion at December 31, 2017, compared to $20.6 billion at September 30, 2017 and $19.7 billion at December 31, 2016.

The investment securities portfolio was $5.2 billion at December 31, 2017, compared to $5.3 billion at September 30, 2017 and $5.1 billion at December 31, 2016.  The portfolio remains largely comprised of securities issued by U. S. government agencies.

Total loans and leases were $12.3 billion at December 31, 2017, up 1.1% from $12.1 billion at September 30, 2017 and up 6.6% from $11.5 billion at December 31, 2016.

The growth in loans and leases in the most recent quarter was due to increases in residential real estate loans of $88.6 million, commercial real estate loans of $41.9 million, construction loans of $34.1 million and consumer loans of $24.3 million.  Commercial and industrial loans declined by $55.0 million.  The decline in commercial and industrial loans was due to pay downs in the shared national credit portfolio.  Compared to December 31, 2016, the growth in loans and leases was due to increases in commercial real estate loans of $324.1 million, residential real estate loans of $293.6 million, construction loans of $182.9 million and consumer loans of $75.7 million.  Commercial and industrial loans declined by $104.3 million.

Total deposits were $17.6 billion at December 31, 2017, unchanged from $17.6 billion at September 30, 2017, and an increase of $0.8 billion, or 4.9%, compared to $16.8 billion at December 31, 2016. 

Asset Quality

The Company's asset quality remained excellent during the fourth quarter of 2017. Total non-performing assets were $10.2 million, or 0.08% of total loans and leases and other real estate owned, at December 31, 2017, compared to non-performing assets of $8.4 million, or 0.07% of total loans and leases and other real estate owned, at September 30, 2017 and non­-performing assets of $9.8 million, or 0.08% of total loans and leases and other real estate owned, at December 31, 2016.

Net charge offs for the quarter ended December 31, 2017 were $5.2 million, or 0.17% of average loans and leases on an annualized basis, compared to $4.1 million, or 0.13% of average loans and leases on an annualized basis for the quarter ended September 30, 2017 and $3.4 million, or 0.12% of average loans and leases on an annualized basis for the quarter ended December 31, 2016.  Net charge-offs for the full year 2017 were $16.7 million, or 0.14% of average loans and leases, compared to net charge-offs of $8.6 million, or 0.08% of average loans and leases, in 2016.

The ratio of the allowance for loan and lease losses to total loans and leases was 1.12% at December 31, 2017 compared to 1.13% at September 30, 2017 and 1.18% at December 31, 2016. 

Capital

Total stockholders' equity was $2.5 billion at December 31, 2017, compared to $2.6 billion at September 30, 2017 and $2.5 billion at December 31, 2016.   

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.52%, 12.45% and 13.50%, respectively, at December 31, 2017, compared with 8.66%, 12.71% and 13.77% at September 30, 2017 and 8.36%, 12.75% and 13.85% at December 31, 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, 12:00 p.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:  6158609.  A live webcast of the conference call, including a slide presentation, will be available at the following link:  www.fhb.com/earnings.  The archive of the webcast will be available at the same location.  A telephonic replay of the conference call will be available two hours after the conclusion of the call until 8:30 p.m. (Eastern Time) on February 4, 2018.  Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID:  6158609.

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 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.

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

 

                                 
                                 
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)   2017   2017   2016   2017   2016  
Operating Results:                                
Net interest income   $   134,886   $ 133,319   $ 131,250   $   528,804   $ 491,672  
Provision for loan and lease losses       5,100     4,500     3,900       18,500     8,600  
Noninterest income(1)       54,324     49,664     50,984       205,605     226,037  
Noninterest expense(1)       89,850     84,784     84,466       347,554     337,280  
Net income       11,684     58,363     56,552       183,682     230,178  
Basic earnings per share       0.08     0.42     0.41       1.32     1.65  
Diluted earnings per share       0.08     0.42     0.41       1.32     1.65  
Dividends declared per share       0.22     0.22     0.20       0.88     0.62  
Dividend payout ratio       275.00 %   52.38 %   49.35 %     66.67 %   37.27 %
                                 
Supplemental Income Statement Data (non-GAAP):                                
Core net interest income   $   134,886   $ 133,319   $ 131,250   $   528,804   $ 491,672  
Core noninterest income(1)       50,069     46,997     49,468       198,683     198,793  
Core noninterest expense(1)       85,777     84,241     83,883       342,097     331,060  
Core net income       59,163     57,040     56,001       230,366     217,111  
Core basic earnings per share       0.42     0.41     0.40       1.65     1.56  
Core diluted earnings per share       0.42     0.41     0.40       1.65     1.56  
Performance Ratio:                                
Net interest margin       2.99 2.96 %   2.99 %     2.99 2.88 %
Core net interest margin (non-GAAP)       2.99 2.96 %   2.99 %     2.99 2.88 %
Efficiency ratio(1)       47.47 46.33 %   46.35 %     47.32 46.99 %
Core efficiency ratio (non-GAAP)(1)       46.36 46.72 %   46.41 %     47.02 47.94 %
Return on average total assets       0.23 1.15 %   1.14 %     0.92 1.19 %
Core return on average total assets (non-GAAP)       1.16 1.13 %   1.13 %     1.16 1.12 %
Return on average tangible assets       0.24 1.21 %   1.20 %     0.97 1.26 %
Core return on average tangible assets (non-GAAP)       1.22 1.18 %   1.19 %     1.22 1.18 %
Return on average total stockholders' equity       1.80 9.03 %   8.97 %     7.24 8.96 %
Core return on average total stockholders' equity (non-GAAP)       9.13 8.82 %   8.88 %     9.08 8.45 %
Return on average tangible stockholders' equity (non-GAAP)       2.94 14.76 %   14.88 %     11.91 14.64 %
Core return on average tangible stockholders' equity (non-GAAP)       14.90 14.42 %   14.73 %     14.93 13.80 %
Average Balances:                                
Average loans and leases   $   12,169,167   $ 12,115,001   $ 11,531,684   $   11,944,596   $ 11,175,213  
Average earning assets       17,904,956     17,867,021     17,482,648       17,680,885     17,093,114  
Average assets       20,193,919     20,109,090     19,778,918       19,942,807     19,334,653  
Average deposits       17,211,872     17,165,355     16,861,525       17,016,382     16,275,811  
Average shareholders' equity       2,570,704     2,564,563     2,507,514       2,538,341     2,568,219  
Market Value Per Share:                                
Closing       29.18     30.29     34.82       29.18     34.82  
High       30.85     31.48     35.47       35.32     35.47  
Low       27.34     26.30     25.80       26.30     24.25  
                                 

 

                         
       As of     As of     As of     
       December 31,      September 30,     December 31,      
      2017   2017   2016    
Balance Sheet Data:                        
Loans and leases     $   12,277,369   $ 12,149,711   $ 11,520,378    
Total assets         20,549,461     20,565,627     19,661,829    
Total deposits         17,612,122     17,595,483     16,794,532    
Total stockholders' equity         2,532,551     2,581,858     2,476,485    
                         
Per Share of Common Stock:                        
Book value     $   18.14   $ 18.50   $ 17.75    
Tangible book value (non-GAAP)         11.01     11.36     10.61    
                         
Asset Quality Ratios:                        
Non-accrual loans and leases / total loans and leases         0.08 0.06 %   0.08 %  
Allowance for loan and lease losses / total loans and leases       1.12 1.13 %   1.18 %  
                         
Capital Ratios:                        
Common Equity Tier 1 Capital Ratio           12.45   12.71 %   12.75 %  
Tier 1 Capital Ratio         12.45 12.71 %   12.75 %  
Total Capital Ratio         13.50 13.77 %   13.85 %  
Tier 1 Leverage Ratio         8.52 8.66 %   8.36 %  
Total stockholders' equity to total assets         12.32 12.55 %   12.60 %  
                       
Tangible stockholders' equity to tangible assets (non-GAAP)         7.86 8.11 %   7.93 %  
                         
Non-Financial Data:                        
Number of branches         62     62     62    
Number of ATMs         310     312     311    
Number of Full-Time Equivalent Employees         2,220     2,184     2,179    
                         

 

                                 
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)   2017   2017   2016   2017   2016  
Interest income                                
Loans and lease financing   $   120,244   $ 118,986   $ 111,461   $   462,675   $ 428,419  
Available-for-sale securities       26,589     24,195     25,884       102,272     83,019  
Other       1,725     2,089     968       5,821     7,082  
Total interest income       148,558     145,270     138,313       570,768     518,520  
Interest expense                                
Deposits       13,665     11,949     7,048       41,944     26,650  
Short-term borrowings and long-term debt       7     2     15       20     198  
Total interest expense       13,672     11,951     7,063       41,964     26,848  
Net interest income       134,886     133,319     131,250       528,804     491,672  
Provision for loan and lease losses       5,100     4,500     3,900       18,500     8,600  
Net interest income after provision for loan and lease losses       129,786     128,819     127,350       510,304     483,072  
Noninterest income                                
Service charges on deposit accounts       8,259     8,929     9,208       35,807     37,392  
Credit and debit card fees       15,599     16,126     16,482       64,049     65,262  
Other service charges and fees       8,346     8,510     8,446       34,063     35,355  
Trust and investment services income       7,949     7,672     7,204       30,485     29,440  
Bank-owned life insurance       2,659     3,119     1,758       13,283     15,021  
Investment securities gains, net               1,516           27,277  
Other       11,512     5,308     6,370       27,918     16,290  
Total noninterest income       54,324     49,664     50,984       205,605     226,037  
Noninterest expense                                
Salaries and employee benefits       47,215     41,579     40,471       175,351     169,233  
Contracted services and professional fees       11,481     10,834     12,221       45,011     45,345  
Occupancy       6,103     6,238     5,501       23,485     21,606  
Equipment       4,349     4,174     4,777       17,247     16,912  
Regulatory assessment and fees       3,715     3,668     4,103       14,907     12,972  
Advertising and marketing       936     2,005     1,309       6,191     6,127  
Card rewards program       6,256     5,438     6,357       23,363     22,459  
Other       9,795     10,848     9,727       41,999     42,626  
Total noninterest expense       89,850     84,784     84,466       347,554     337,280  
Income before provision for income taxes       94,260     93,699     93,868       368,355     371,829  
Provision for income taxes       82,576     35,336     37,316       184,673     141,651  
Net income   $   11,684   $ 58,363   $ 56,552   $   183,682   $ 230,178  
Basic earnings per share   $   0.08   $ 0.42   $ 0.41   $   1.32   $ 1.65  
Diluted earnings per share   $   0.08   $ 0.42   $ 0.41   $   1.32   $ 1.65  
Dividends declared per share   $   0.22   $ 0.22   $ 0.20   $   0.88   $ 0.62  
Basic weighted-average outstanding shares       139,588,782     139,556,532     139,530,654       139,560,305     139,487,762  
Diluted weighted-average outstanding shares       139,698,674     139,696,330     139,546,875       139,656,993     139,492,608  
                                 

 

                   
Consolidated Balance Sheets   Table 3  
    December 31,    September 30,   December 31,   
(dollars in thousands)   2017     2017     2016    
Assets                    
Cash and due from banks   $   367,084     $ 321,319     $ 253,827    
Interest-bearing deposits in other banks       667,560       793,046       798,231    
Investment securities       5,234,658       5,314,973       5,077,514    
Loans held for sale       556                
Loans and leases       12,277,369       12,149,711       11,520,378    
Less: allowance for loan and lease losses       137,253       137,327       135,494    
Net loans and leases      12,140,116       12,012,384       11,384,884    
                     
Premises and equipment, net       289,215       289,689       300,788    
Other real estate owned and repossessed personal property       329       564       329    
Accrued interest receivable       47,987       44,728       41,971    
Bank-owned life insurance       438,010       435,607       429,209    
Goodwill       995,492       995,492       995,492    
Other intangible assets       13,196       13,980       16,809    
Other assets       355,258       343,845       362,775    
Total assets   $  20,549,461     $ 20,565,627     $ 19,661,829    
                     
Liabilities and Stockholders' Equity                    
Deposits:                    
Interest-bearing   $   11,485,269     $ 11,687,849     $ 10,801,915    
Noninterest-bearing       6,126,853       5,907,634       5,992,617    
Total deposits      17,612,122       17,595,483       16,794,532    
Short-term borrowings                   9,151    
Long-term debt       34       34       41    
Retirement benefits payable       134,218       135,092       132,904    
Other liabilities       270,536       253,160       248,716    
Total liabilities      18,016,910       17,983,769       17,185,344    
                     
Stockholders' equity                    
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,599,454 / 139,588,782 shares as of December 31, 2017, issued and outstanding: 139,586,282 shares as of September 30, 2017 and issued and outstanding: 139,530,654 shares as of December 31, 2016)       1,396       1,396       1,395    
Additional paid-in capital       2,488,643       2,489,273       2,484,251    
Retained earnings       139,177       158,303       78,850    
Accumulated other comprehensive loss, net       (96,383 )     (67,114 )     (88,011 )  
Treasury stock (10,672 shares as of December 31, 2017 and nil as of both September 30, 2017 and December 31, 2016)       (282 )              
Total stockholders' equity       2,532,551       2,581,858       2,476,485    
Total liabilities and stockholders' equity   $  20,549,461     $ 20,565,627     $ 19,661,829    
                     

 

                                                   
Average Balances and Interest Rates                                              Table 4  
    Three Months Ended    Three Months Ended    Three Months Ended   
    December 31, 2017   September 30, 2017   December 31, 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   $   479.4   $   1.6     1.31 $ 597.5   $ 2.0   1.30 % $ 673.7   $ 0.9   0.57 %
Available-for-Sale Investment Securities       5,236.8       26.6     2.01     5,124.9     24.2   1.88     5,277.2     25.9   1.95  
Loans Held for Sale       0.1           3.57     0.1       3.62            
Loans and Leases (1)                                                  
Commercial and industrial       3,130.3       26.3     3.34     3,276.4     27.3   3.31     3,314.3     25.7   3.09  
Real estate - commercial       2,755.1       25.6     3.68     2,696.4     25.1   3.69     2,431.4     23.1   3.78  
Real estate - construction       605.5       5.5     3.57     570.6     5.1   3.54     470.7     3.8   3.21  
Real estate - residential       3,933.9       40.3     4.07     3,846.8     39.2   4.04     3,636.9     37.0   4.04  
Consumer       1,575.1       21.3     5.36     1,546.9     21.0   5.39     1,493.9     20.6   5.49  
Lease financing       169.3       1.3     2.94     177.9     1.3   2.91     184.5     1.3   2.75  
Total Loans and Leases       12,169.2       120.3     3.92     12,115.0     119.0   3.90     11,531.7     111.5   3.85  
Other Earning Assets       19.5       0.1     2.98     29.5     0.1   1.22            
Total Earning Assets (2)       17,905.0       148.6     3.29     17,867.0     145.3   3.23     17,482.6     138.3   3.15  
Cash and Due from Banks       317.5               324.0               312.5            
Other Assets       1,971.4               1,918.1               1,983.8            
Total Assets   $   20,193.9             $ 20,109.1             $ 19,778.9            
                                                   
Interest-Bearing Liabilities                                                  
Interest-Bearing Deposits                                                  
Savings   $   4,401.0   $   1.3     0.12 $ 4,505.1   $ 1.1   0.10 % $ 4,446.1   $ 0.6   0.06 %
Money Market       2,582.1       1.1     0.17     2,607.7     0.9   0.13     2,680.4     0.7   0.10  
Time       4,299.7       11.3     1.04     4,208.0     10.0   0.94     3,923.1     5.7   0.58  
Total Interest-Bearing Deposits       11,282.8       13.7     0.48     11,320.8     12.0   0.42     11,049.6     7.0   0.25  
Short-Term Borrowings       2.3           1.11     0.8       0.91     11.1       0.49  
Total Interest-Bearing Liabilities       11,285.1       13.7     0.48     11,321.6     12.0   0.42     11,060.7     7.0   0.25  
Net Interest Income         $   134.9             $ 133.3             $ 131.3      
Interest Rate Spread                 2.81             2.81 %             2.90 %
Net Interest Margin                 2.99             2.96 %             2.99 %
Noninterest-Bearing Demand Deposits       5,929.1               5,844.6               5,811.9            
Other Liabilities       409.0               378.3               398.8            
Stockholders' Equity       2,570.7               2,564.6               2,507.5            
Total Liabilities and Stockholders' Equity   $   20,193.9             $ 20,109.1             $ 19,778.9            
                                                   

 

                                     
Average Balances and Interest Rates                                  Table 5   
    Year Ended    Year Ended   
    December 31, 2017   December 31, 2016  
     Average     Income/       Yield/     Average     Income/     Yield/   
(dollars in millions)    Balance     Expense       Rate     Balance     Expense     Rate   
Earning Assets                                    
Interest-Bearing Deposits in Other Banks   $   507.3   $   5.5       1.09 $ 1,368.9   $ 7.1   0.52 %
Available-for-Sale Investment Securities       5,201.5       102.3       1.97     4,549.0     83.0   1.82  
Loans and Leases (1)                                    
Commercial and industrial       3,230.2       103.6       3.21     3,229.5     96.0   2.97  
Real estate - commercial       2,643.6       96.7       3.66     2,313.0     86.0   3.72  
Real estate - construction       537.8       18.6       3.45     436.4     14.2   3.26  
Real estate - residential       3,821.5       155.8       4.08     3,553.6     145.9   4.10  
Consumer       1,540.0       83.1       5.40     1,454.4     80.9   5.56  
Lease financing       171.5       4.9       2.87     188.3     5.4   2.86  
Total Loans and Leases       11,944.6       462.7       3.87     11,175.2     428.4   3.83  
Other Earning Assets       27.5       0.3       1.04            
Total Earning Assets (2)       17,680.9       570.8       3.23     17,093.1     518.5   3.03  
Cash and Due from Banks       321.4                 289.9            
Other Assets       1,940.5                 1,951.7            
Total Assets   $   19,942.8               $ 19,334.7            
                                     
Interest-Bearing Liabilities                                    
Interest-Bearing Deposits                                    
Savings   $   4,475.2   $   3.9       0.09 $ 4,390.3   $ 2.6   0.06 %
Money Market       2,576.0       3.3       0.13     2,478.4     2.3   0.09  
Time       4,096.4       34.8       0.85     3,817.6     21.7   0.57  
Total Interest-Bearing Deposits       11,147.6       42.0       0.38     10,686.3     26.6   0.25  
Short-Term Borrowings       2.2             0.80     113.6     0.2   0.17  
Total Interest-Bearing Liabilities       11,149.8       42.0       0.38     10,799.9     26.8   0.25  
Net Interest Income         $   528.8               $ 491.7      
Interest Rate Spread                   2.85             2.78 %
Net Interest Margin                   2.99             2.88 %
Noninterest-Bearing Demand Deposits       5,868.8                 5,589.5            
Other Liabilities       385.9                 377.1            
Stockholders' Equity       2,538.3                 2,568.2            
Total Liabilities and Stockholders' Equity   $   19,942.8               $ 19,334.7            
                                     

 

                   
Analysis of Change in Net Interest Income                  Table 6 
    Three Months Ended December 31, 2017
    Compared to September 30, 2017
(dollars in millions)    Volume     Rate    Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $   (0.4 )   $       $   (0.4 )
Available-for-Sale Investment Securities       0.6         1.8         2.4  
Loans and Leases                  
Commercial and industrial       (1.2 )       0.2         (1.0 )
Real estate - commercial       0.5                 0.5  
Real estate - construction       0.4                 0.4  
Real estate - residential       0.9         0.2         1.1  
Consumer       0.4         (0.1 )       0.3  
Total Loans and Leases       1.0         0.3         1.3  
Other Earning Assets       (0.1 )       0.1          
Total Change in Interest Income       1.1         2.2         3.3  
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings               0.2         0.2  
Money Market               0.2         0.2  
Time       0.2         1.1         1.3  
Total Interest-Bearing Deposits       0.2         1.5         1.7  
Total Change in Interest Expense       0.2         1.5         1.7  
Change in Net Interest Income   $   0.9     $   0.7     $   1.6  
                   

 

                   
Analysis of Change in Net Interest Income                  Table 7 
    Three Months Ended December 31, 2017
    Compared to December 31, 2016
(dollars in millions)    Volume     Rate    Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $   (0.4 )   $   1.0     $   0.6
Available-for-Sale Investment Securities       (0.2 )       0.9         0.7
Loans and Leases                  
Commercial and industrial       (1.5 )       2.1         0.6
Real estate - commercial       3.0         (0.6 )       2.4
Real estate - construction       1.2         0.5         1.7
Real estate - residential       3.0         0.4         3.4
Consumer       1.1         (0.4 )       0.7
Lease financing       (0.1 )       0.1        
Total Loans and Leases       6.7         2.1         8.8
Other Earning Assets       0.1                 0.1
Total Change in Interest Income       6.2         4.0         10.2
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings               0.6         0.6
Money Market               0.4         0.4
Time       0.6         5.0         5.6
Total Interest-Bearing Deposits       0.6         6.0         6.6
Total Change in Interest Expense       0.6         6.0         6.6
Change in Net Interest Income   $   5.6     $   (2.0 )   $   3.6
                   

 

                   
Analysis of Change in Net Interest Income                  Table 8 
    Year Ended December 31, 2017
    Compared to December 31, 2016
(dollars in millions)    Volume     Rate    Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $   (6.3 )   $   4.7     $   (1.6 )
Available-for-Sale Investment Securities       12.5         6.8         19.3  
Loans and Leases                  
Commercial and industrial               7.6         7.6  
Real estate - commercial       12.1         (1.5 )       10.6  
Real estate - construction       3.5         0.9         4.4  
Real estate - residential       10.9         (1.0 )       9.9  
Consumer       4.7         (2.5 )       2.2  
Lease financing       (0.5 )               (0.5 )
Total Loans and Leases       30.7         3.5         34.2  
Other Earning Assets       0.3                 0.3  
Total Change in Interest Income       37.2         15.0         52.2  
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings               1.2         1.2  
Money Market       0.1         0.9         1.0  
Time       1.7         11.4         13.1  
Total Interest-Bearing Deposits       1.8         13.5         15.3  
Short-Term Borrowings       (0.4 )       0.2         (0.2 )
Total Change in Interest Expense       1.4         13.7         15.1  
Change in Net Interest Income   $   35.8     $   1.3     $   37.1  
                   

 

                     
Loans and Leases                   Table 9
      December 31,    September 30,   December 31, 
(dollars in thousands)     2017   2017   2016
Commercial and industrial     $   3,135,266   $ 3,190,237   $ 3,239,600
Real estate:                    
Commercial         2,667,597     2,625,688     2,343,495
Construction         632,911     598,763     450,012
Residential         4,090,053     4,001,478     3,796,459
Total real estate         7,390,561     7,225,929     6,589,966
Consumer         1,586,476     1,562,172     1,510,772
Lease financing         165,066     171,373     180,040
Total loans and leases     $   12,277,369   $ 12,149,711   $ 11,520,378
                     

 

                     
Deposits                   Table 10
      December 31,    September 30,   December 31, 
(dollars in thousands)     2017   2017   2016
Demand     $   6,126,853   $ 5,907,634   $ 5,992,617
Savings         4,509,419     4,411,411     4,609,306
Money Market         2,801,968     2,631,311     2,454,013
Time         4,173,882     4,645,127     3,738,596
Total Deposits     $   17,612,122   $ 17,595,483   $ 16,794,532
                     

 

                     
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)     2017   2017   2016
Non-Performing Assets                    
Non-Accrual Loans and Leases                    
Commercial Loans:                    
Commercial and industrial     $   2,932   $ 2,312   $ 2,730
Lease financing                 153
Total Commercial Loans         4,718     2,312     2,883
Residential         5,107     5,562     6,547
Total Non-Accrual Loans and Leases         9,825     7,874     9,430
Other Real Estate Owned         329     564     329
Total Non-Performing Assets     $   10,154   $ 8,438   $ 9,759
                     
Accruing Loans and Leases Past Due 90 Days or More                    
Commercial Loans:                    
Commercial and industrial     $   220   $ 1,751   $ 449
Real estate - commercial         1,400     3,247    
Lease financing                 83
Total Commercial Loans         1,620     4,998     532
Residential         1,360     1,055     866
Consumer         1,394     1,894     1,870
Total Accruing Loans and Leases Past Due 90 Days or More     $   4,374   $ 7,947   $ 3,268
                     
Restructured Loans on Accrual Status and Not Past Due 90 Days or More         34,130     36,728     44,496
 Total Loans and Leases     $   12,277,369   $ 12,149,711   $ 11,520,378
                     

 

                             
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)   2017     2017       2016       2017       2016    
Balance at Beginning of Period   $   137,327     $   136,883       $ 135,025       $   135,494       $ 135,484    
Loans and Leases Charged-Off                                        
Commercial Loans:                                        
Commercial and industrial       (181 )       (408 )                 (1,519 )       (348 )  
Lease financing               (1 )                 (147 )          
Total Commercial Loans       (181 )       (409 )                 (1,666 )       (348 )  
Residential       (93 )       (293 )       (3 )         (408 )       (799 )  
Consumer       (6,765 )       (6,263 )       (5,412 )         (23,851 )       (18,791 )  
Total Loans and Leases Charged-Off       (7,039 )       (6,965 )       (5,415 )         (25,925 )       (19,938 )  
Recoveries on Loans and Leases Previously Charged-Off                                        
Commercial Loans:                                        
Commercial and industrial       19         582         23           844         251    
Real estate - commercial       128         336         41           596         3,329    
Lease financing                       1                   2    
Total Commercial Loans       147         918         65           1,440         3,582    
Residential       77         139         242           687         1,358    
Consumer       1,641         1,852         1,677           7,057         6,408    
Total Recoveries on Loans and Leases Previously Charged-Off       1,865         2,909         1,984           9,184         11,348    
Net Loans and Leases Charged-Off       (5,174 )       (4,056 )       (3,431 )         (16,741 )       (8,590 )  
Provision for Credit Losses       5,100         4,500         3,900           18,500         8,600    
Balance at End of Period   $   137,253     $   137,327       $ 135,494       $   137,253       $ 135,494    
Average Loans and Leases Outstanding   $   12,169,167     $   12,115,001       $ 11,531,684       $   11,944,596       $ 11,175,213    
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding       0.17   %     0.13   %     0.12   %       0.14   %     0.08   %
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding       1.12   %     1.13   %     1.18   %       1.12   %     1.18   %
                                         

 

                                 
GAAP to Non-GAAP Reconciliation                     Table 13  
    For the Three Months Ended    For the Year Ended   
    December 31,    September 30,   December 31,    December 31,   
(dollars in thousands, except per share amounts)   2017    2017   2016   2017    2016  
Income Statement Data:                                
Net income   $   11,684   $ 58,363   $ 56,552   $   183,682   $ 230,178  
                                 
Average total stockholders' equity   $   2,570,704   $ 2,564,563   $ 2,507,514   $   2,538,341   $ 2,568,219  
Less: average goodwill       995,492     995,492     995,492       995,492     995,492  
Average tangible stockholders' equity   $   1,575,212   $ 1,569,071   $ 1,512,022   $   1,542,849   $ 1,572,727  
                                 
Average total assets   $   20,193,919   $ 20,109,090   $ 19,778,918   $   19,942,807   $ 19,334,653  
Less: average goodwill       995,492     995,492     995,492       995,492     995,492  
Average tangible assets   $   19,198,427   $ 19,113,598   $ 18,783,426   $   18,947,315   $ 18,339,161  
                                 
Return on average total stockholders' equity(1)       1.80   9.03 %   8.97 %     7.24   8.96 %
Return on average tangible stockholders' equity (non-GAAP)(1)       2.94   14.76 %   14.88 %     11.91   14.64 %
                                 
Return on average total assets(1)       0.23   1.15 %   1.14 %     0.92   1.19 %
Return on average tangible assets (non-GAAP)(1)       0.24   1.21 %   1.20 %     0.97   1.26 %
                                 
Average stockholders' equity to average assets       12.73   12.75 %   12.68 %     12.73   13.28 %
Tangible average stockholders' equity to tangible average assets (non-GAAP)       8.20   8.21 %   8.05 %     8.14   8.58 %
                                 

 

                   
       As of     As of     As of   
      December 31,    September 30,   December 31,   
      2017   2017   2016  
Balance Sheet Data:                      
Total stockholders' equity     $   2,532,551   $ 2,581,858   $ 2,476,485  
Less: goodwill         995,492     995,492     995,492  
Tangible stockholders' equity     $   1,537,059   $ 1,586,366   $ 1,480,993  
                       
Total assets     $   20,549,461   $ 20,565,627   $ 19,661,829  
Less: goodwill         995,492     995,492     995,492  
Tangible assets     $   19,553,969   $ 19,570,135   $ 18,666,337  
                       
Shares outstanding         139,588,782     139,586,282     139,530,654  
                       
Total stockholders' equity to total assets         12.32   12.55 %   12.60 %
Tangible stockholders' equity to tangible assets (non-GAAP)       7.86   8.11 %   7.93 %
                       
Book value per share     $   18.14   $ 18.50   $ 17.75  
Tangible book value per share (non-GAAP)     $   11.01   $ 11.36   $ 10.61  
                       

 

                               
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 amounts)   2017     2017     2016      2017     2016  
Net interest income   $   134,886     $ 133,319     $ 131,250     $   528,804     $ 491,672  
Core net interest income (non-GAAP)   $   134,886     $ 133,319     $ 131,250     $   528,804     $ 491,672  
                               
Noninterest income   $   54,324     $ 49,664     $ 50,984     $   205,605     $ 226,037  
Gains on sale of real estate       (4,255 )     (2,667 )             (6,922 )      
Gains on sale of securities                   (1,516 )             (4,566 )
Gains on sale of stock (Visa/MasterCard)                                 (22,678 )
Core noninterest income (non-GAAP)   $   50,069     $ 46,997     $ 49,468     $   198,683     $ 198,793  
                               
Noninterest expense   $   89,850     $ 84,784     $ 84,466     $   347,554     $ 337,280  
One-time items(1)       (4,073 )     (543 )     (583 )       (5,457 )     (6,220 )
Core noninterest expense (non-GAAP)   $   85,777     $ 84,241     $ 83,883     $   342,097     $ 331,060  
                               
Net income   $   11,684     $ 58,363     $ 56,552     $   183,682     $ 230,178  
Gains on sale of real estate       (4,255 )     (2,667 )             (6,922 )      
Gains on sale of securities                   (1,516 )             (4,566 )
Gains on sale of stock (Visa/MasterCard)                                 (22,678 )
One-time items(1)       4,073       543       583         5,457       6,220  
Tax reform bill       47,598                     47,598        
Tax adjustments(2)       63       801       382         551       7,957  
Total core adjustments       47,479       (1,323 )     (551 )       46,684       (13,067 )
Core net income (non-GAAP)   $   59,163     $ 57,040     $ 56,001     $   230,366     $ 217,111  
Core basic earnings per share (non-GAAP)   $   0.42     $ 0.41     $ 0.40     $   1.65     $ 1.56  
Core diluted earnings per share (non-GAAP)   $   0.42     $ 0.41     $ 0.40     $   1.65     $ 1.56  
                               

 

 

 

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