Market Overview

First Hawaiian, Inc. Reports Second Quarter 2018 Financial Results and Declares Dividend

Share:
  • Net income of $69.1 million, ($0.50 per diluted share), up 1.6% versus the prior quarter and up 21.4% versus the prior year
  • 1.38% return on average total assets and 1.45% return on average tangible assets1
  • 11.23% return on average total stockholders equity and 18.83% return on average tangible stockholders equity1
  • 48.0% efficiency ratio
  • The Board of Directors declared a dividend of $0.24 per share
  • BNP Paribas reduced ownership below 50%
  • First Hawaiian repurchased ~3 million shares at a total cost of ~$81.8 million

HONOLULU, July 26, 2018 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (the "Company") today reported financial results for its second quarter ended June 30, 2018.

"We are very pleased with our solid performance in the second quarter," said Bob Harrison, Chairman and Chief Executive Officer.  "We had strong earnings driven by good loan growth, continued margin expansion, and excellent asset quality.  Our profitability metrics continued to improve and our capital ratios remained strong.  Additionally, during the quarter, BNP Paribas reduced its ownership in First Hawaiian below 50% with a successful offering of 16.8 million shares in connection with which we concurrently repurchased approximately 3 million shares."

On July 25, 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.24 per share.  The dividend will be payable on September 7, 2018 to stockholders of record at the close of business on August 27, 2018.

Earnings Highlights

Net income for the quarter ended June 30, 2018 was $69.1 million, or $0.50 per diluted share, compared to $68.0 million, or $0.49 per diluted share, for the quarter ended March 31, 2018, and $56.9 million, or $0.41 per diluted share, for the quarter ended June 30, 2017.  Core net income1 for the quarter ended June 30, 2018 was $69.7 million, or $0.50 per diluted share, compared to $68.3 million, or $0.49 per diluted share, for the quarter ended March 31, 2018, and $57.2 million, or $0.41 per diluted share, for the quarter ended June 30, 2017.

Net interest income for the quarter ended June 30, 2018 was $141.4 million, an increase of $1.7 million compared to $139.7 million for the quarter ended March 31, 2018, and an increase of $10.1 million compared to $131.3 million for the quarter ended June 30, 2017.  The increase in net interest income compared to the first quarter of 2018 was due to higher average balances and yields on loans, lower average balances of time deposits and higher yields on interest bearing deposits in other banks, partially offset by higher rates on interest bearing deposits, lower average balances and yields on investment securities, and lower average balances of interest bearing deposits in other banks.  The increase in net interest income compared to the second quarter of 2017 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 margin ("NIM") was 3.18%, 3.13% and 3.02%, for the quarters ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively.  The 5 basis point increase in NIM versus the prior quarter was due to higher overall yields on earnings assets, partially offset by higher deposit costs, an additional day in the quarter and a lower premium amortization adjustment. 

Results for the quarter ended June 30, 2018 included a provision for loan and lease losses of $6.0 million compared to $6.0 million in the quarter ended March 31, 2018 and $4.4 million in the quarter ended June 30, 2017.    

Noninterest income was $49.8 million in the quarter ended June 30, 2018, an increase of $1.1 million compared to noninterest income of $48.7 million in the quarter ended March 31, 2018 and a decrease of $0.8 million compared to noninterest income of $50.6 million in the quarter ended June 30, 2017.  The increase in noninterest income compared to the first quarter of 2018 was primarily due to $1.4 million higher credit and debit card fees and $0.4 million higher income from bank-owned life insurance (BOLI), partially offset by $0.5 million lower trust and investment services income and $0.2 million lower service charges on deposit accounts.  The decrease in noninterest income compared to the second quarter of 2017 was primarily due to $1.5 million lower service charges on deposit accounts, $1.3 million lower other income, and $0.5 million lower BOLI income, partially offset by $1.5 million higher other service charges and fees, $0.9 million higher credit and debit card fees and $0.2 million higher trust and investment services income.

Noninterest expense was $91.9 million for the quarter ended June 30, 2018, an increase of $1.3 million from $90.6 million in the quarter ended March 31, 2018, and an increase of $4.9 million from $86.9 million in the quarter ended June 30, 2017.  Noninterest expense in the second quarter of 2018 included a $0.7 million expense related to a decrease in the conversion rate of the Visa Class B restricted shares we sold in 2016.  The increase in noninterest expense compared to the first quarter of 2018 was primarily due to $0.7 million higher contract services and professional fees, $0.6 million higher card rewards program expenses, $0.4 million higher occupancy expenses, and $0.3 million higher regulatory assessments and fees, partially offset by $0.5 million lower salaries and employee benefits and $0.3 million lower equipment expenses.  The increase in noninterest expense compared to the second quarter of 2017 was primarily due to $1.5 million higher occupancy expenses, a $1.3 million increase in salaries and benefits, $0.9 million higher other expenses, $0.6 million higher contracted services and professional fees, and $0.5 million higher card rewards program expenses.

The efficiency ratio was 48.0%, 48.1% and 47.8% for the quarters ended June 30, 2018, March 31, 2018 and June 30, 2017, respectively.

The effective tax rate was 26.0% for the first and second quarters of 2018 and 37.1% in the second quarter last year.  The lower effective tax rate in the second quarter of 2018 compared to the same quarter last year was due to the lower corporate tax rate resulting from the Tax Cuts and Jobs Act. 

Balance Sheet Highlights

Total assets were $20.5 billion at June 30, 2018, compared to $20.2 billion at March 31, 2018 and $20.4 billion at June 30, 2017.

The investment securities portfolio was $4.8 billion at June 30, 2018, compared to $5.1 billion at March 31, 2018 and $5.1 billion at June 30, 2017.  The portfolio remains largely comprised of securities issued by U.S. government agencies.

Total loans and leases were $12.6 billion at June 30, 2018, up 1.4%, from $12.5 billion at March 31, 2018 and up 4.8% from $12.1 billion at June 30, 2017.

The growth in loans and leases in the second quarter of 2018 compared to the first quarter of 2018 was led by increases in commercial real estate loans of $99.0 million, residential real estate loans of $80.1 million, construction loans of $60.0 million and consumer loans of $36.1 million.  Commercial and industrial loans (C&I) declined by $103.1 million, primarily due to declines in dealer flooring balances as dealers more carefully managed their inventory levels as well as some increased competition by the captive finance companies.  Compared to June 30, 2017, the growth in loans and leases was due to increases in residential real estate loans of $314.2 million, commercial real estate loans of $292.0 million, consumer loans of $104.6 million and construction loans of $98.3 million.  C&I loans declined by $214.9 million, primarily due to declines in dealer flooring balances, as dealers more carefully managed their inventory levels paydowns as well as some increased competition by the captive finance companies, and payoffs and paydowns in commercial loans and  in the shared national credit portfolio.

Total deposits were $17.4 billion at June 30, 2018, virtually unchanged from $17.4 billion at March 31, 2018, and a decrease of $0.1 billion, compared to $17.5 billion at June 30, 2017. 

Asset Quality

The Company's asset quality remained excellent during the second quarter of 2018. Total non-performing assets were $13.8 million, or 0.11% of total loans and leases and other real estate owned, at June 30, 2018, compared to non-performing assets of $12.1 million, or 0.10% of total loans and leases and other real estate owned, at March 31, 2018 and non­-performing assets of $8.1 million, or 0.07% of total loans and leases and other real estate owned, at June 30, 2017.

Net charge offs for the quarter ended June 30, 2018 were $4.0 million, or 0.13% of average loans and leases on an annualized basis, compared to $4.6 million, or 0.15% of average loans and leases on an annualized basis for the quarter ended March 31, 2018 and $3.4 million, or 0.11% of average loans and leases on an annualized basis for the quarter ended June 30, 2017.

The ratio of the allowance for loan and lease losses to total loans and leases was 1.11% at June 30, 2018 and March 31, 2018 and 1.13% at June 30, 2017. 

Capital

During the second quarter of 2018, the Company repurchased approximately 2.968 million shares of FHI common stock from a wholly owned subsidiary of BNP Paribas at a total cost of approximately $81.8 million.

Total stockholders' equity was $2.5 billion at June 30, 2018, compared to $2.5 billion at March 31, 2018 and $2.6 billion at June 30, 2017.   

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.61%, 12.19% and 13.23%, respectively, at June 30, 2018, compared with 8.71%, 12.73% and 13.77% at March 31, 2018 and 8.70%, 12.73% and 13.81% at June 30, 2017. 

First Hawaiian, Inc. 

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

Conference Call Information

First Hawaiian will host a conference call to discuss the Company's results today at 5:00 p.m. Eastern Time, 11:00 a.m. Hawaii Time.  To access the call, participants should dial (844) 452-2942 (US/Canada), or (574) 990-9846 (International) ten minutes prior to the start of the call and enter the conference ID:  3937469.  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 August 5, 2018.  Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID:  3937469.

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, 2017.

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

__________________________________
1 A non-GAAP measure. For more information on these measures, including 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.

                                 
Financial Highlights                         Table 1  
    For the Three Months Ended   For the Six Months Ended   
    June 30,    March 31,   June 30,    June 30,   
(dollars in thousands, except per share data)   2018   2018   2017   2018   2017  
Operating Results:                                
Net interest income   $ 141,403   $ 139,672   $ 131,254   $ 281,075   $ 260,599  
Provision for loan and lease losses       6,020     5,950     4,400       11,970     8,900  
Noninterest income(1)       49,797     48,700     50,558       98,497     101,617  
Noninterest expense(1)       91,865     90,587     86,929     182,452     172,920  
Net income       69,053     67,958     56,895     137,011     113,635  
Basic earnings per share       0.50     0.49     0.41       0.99     0.81  
Diluted earnings per share       0.50     0.49     0.41       0.99     0.81  
Dividends declared per share       0.24     0.24     0.22       0.48     0.44  
Dividend payout ratio       48.00 %   48.98 %   53.66 %     48.48 %   54.32 %
Supplemental Income Statement Data (non-GAAP):                                
Core net interest income   $ 141,403   $ 139,672   $ 131,254   $ 281,075   $ 260,599  
Core noninterest income(1)       49,797     48,700     50,558       98,497     101,617  
Core noninterest expense(1)       90,951     90,180     86,472     181,131     172,079  
Core net income       69,720     68,259     57,181     137,979     114,163  
Core basic earnings per share       0.51     0.49     0.41       0.99     0.82  
Core diluted earnings per share       0.50     0.49     0.41       0.99     0.82  
Performance Ratio:                                
Net interest margin       3.18   3.13 %   3.02 %     3.16   3.01 %
Core net interest margin (non-GAAP)       3.18   3.13 %   3.02 %     3.16   3.01 %
Efficiency ratio(1)       48.04   48.08 %   47.81 %     48.06   47.74 %
Core efficiency ratio (non-GAAP)(1)       47.56   47.86 %   47.56 %     47.71   47.50 %
Return on average total assets       1.38   1.35 %   1.16 %     1.36   1.16 %
Core return on average total assets (non-GAAP)       1.39   1.36 %   1.16 %     1.37   1.17 %
Return on average tangible assets       1.45   1.42 %   1.22 %     1.43   1.22 %
Core return on average tangible assets (non-GAAP)(2)       1.46   1.43 %   1.23 %     1.44   1.23 %
Return on average total stockholders' equity       11.23   11.02 %   9.03 %     11.13   9.13 %
Core return on average total stockholders' equity (non-GAAP)       11.34   11.07 %   9.07 %     11.20   9.18 %
Return on average tangible stockholders' equity (non-GAAP)       18.83   18.32 %   14.89 %     18.57   15.14 %
Core return on average tangible stockholders' equity (non-GAAP)(3)       19.01   18.40 %   14.96 %     18.70   15.22 %
Average Balances:                                
Average loans and leases   $ 12,552,610   $ 12,296,678   $ 11,903,255   $ 12,425,351   $ 11,743,835  
Average earning assets     17,817,943     18,088,280     17,453,655     17,952,365     17,453,094  
Average assets     20,121,504     20,407,718     19,692,222     20,263,820     19,730,651  
Average deposits     17,199,368     17,504,054     16,782,887     17,350,869     16,841,296  
Average shareholders' equity     2,466,392     2,500,299     2,528,388     2,483,252     2,508,564  
Market Value Per Share:                                
Closing     29.02     27.83     30.62       29.02     30.62  
High     31.28     32.36     31.34       32.36     35.32  
Low     27.09     26.92     26.96       26.92     26.96  
                                 

 

                           
     As of     As of     As of     As of   
     June 30,      March 31,     December 31,      June 30,    
    2018   2018   2017   2017  
Balance Sheet Data:                          
Loans and leases   $ 12,637,686   $ 12,464,165   $ 12,277,369   $ 12,062,392  
Total assets     20,479,719     20,242,942     20,549,461     20,373,974  
Total deposits     17,395,538     17,362,422     17,612,122     17,452,262  
Long-term debt       200,034     34     34     41  
Total stockholders' equity       2,459,175     2,520,862     2,532,551     2,552,602  
                           
Per Share of Common Stock:                          
Book value   $   18.00   $ 18.06   $ 18.14   $ 18.29  
Tangible book value (non-GAAP)       10.71     10.93     11.01     11.16  
                           
Asset Quality Ratios:                          
Non-accrual loans and leases / total loans and leases       0.11   0.10 %   0.08 %   0.06 %
Allowance for loan and lease losses / total loans and leases     1.11   1.11 %   1.12 %   1.13 %
                           
Capital Ratios:                          
Common Equity Tier 1 Capital Ratio         12.19   12.73 %   12.45 %   12.73 %
Tier 1 Capital Ratio       12.19   12.73 %   12.45 %   12.73 %
Total Capital Ratio       13.23   13.77 %   13.50 %   13.81 %
Tier 1 Leverage Ratio       8.61   8.71 %   8.52 %   8.70 %
Total stockholders' equity to total assets       12.01   12.45 %   12.32 %   12.53 %
Tangible stockholders' equity to tangible assets (non-GAAP)       7.51   7.93 %   7.86 %   8.04 %
                           
Non-Financial Data:                          
Number of branches       61     61     62     62  
Number of ATMs       303     310     310     312  
Number of Full-Time Equivalent Employees       2,189     2,213     2,220     2,191  
                           

 

                                 
Consolidated Statements of Income   Table 2  
    Three Months Ended   For the Six Months Ended   
    June 30,    March 31,   June 30,    June 30,   
(dollars in thousands, except per share amounts)   2018   2018   2017   2018   2017  
Interest income                                
Loans and lease financing   $ 130,283   $ 123,551   $ 114,179   $   253,834   $ 223,445  
Available-for-sale securities       27,397     28,993     25,059       56,390     51,488  
Other       1,339     2,392     781       3,731     2,007  
Total interest income     159,019     154,936     140,019       313,955     276,940  
Interest expense                                
Deposits       17,355     15,264     8,760       32,619     16,330  
Short-term borrowings and long-term debt       261         5       261     11  
Total interest expense       17,616     15,264     8,765       32,880     16,341  
Net interest income     141,403     139,672     131,254       281,075     260,599  
Provision for loan and lease losses       6,020     5,950     4,400       11,970     8,900  
Net interest income after provision for loan and lease losses     135,383     133,722     126,854       269,105     251,699  
Noninterest income                                
Service charges on deposit accounts       7,721     7,955     9,238       15,676     18,619  
Credit and debit card fees       16,929     15,497     16,019       32,426     32,324  
Other service charges and fees       9,633     9,342     8,110       18,975     17,207  
Trust and investment services income       7,711     8,231     7,526       15,942     14,864  
Bank-owned life insurance       2,395     2,044     2,927       4,439     7,505  
Other       5,408     5,631     6,738       11,039     11,098  
Total noninterest income       49,797     48,700     50,558       98,497     101,617  
Noninterest expense                                
Salaries and employee benefits       41,636     42,160     40,364       83,796     80,772  
Contracted services and professional fees       13,005     12,287     12,388       25,292     22,696  
Occupancy       6,908     6,484     5,435       13,392     11,144  
Equipment       4,335     4,588     4,527       8,923     8,724  
Regulatory assessment and fees       4,225     3,973     3,750       8,198     7,524  
Advertising and marketing       1,115     951     1,222       2,066     3,250  
Card rewards program       6,359     5,718     5,894       12,077     11,669  
Other       14,282     14,426     13,349       28,708     27,141  
Total noninterest expense       91,865     90,587     86,929       182,452     172,920  
Income before provision for income taxes       93,315     91,835     90,483       185,150     180,396  
Provision for income taxes       24,262     23,877     33,588       48,139     66,761  
Net income   $   69,053   $ 67,958   $ 56,895   $   137,011   $ 113,635  
Basic earnings per share   $   0.50   $ 0.49   $ 0.41   $   0.99   $ 0.81  
Diluted earnings per share   $   0.50   $ 0.49   $ 0.41   $   0.99   $ 0.81  
Dividends declared per share   $   0.24   $ 0.24   $ 0.22   $   0.48   $ 0.44  
Basic weighted-average outstanding shares     137,907,063     139,600,712     139,546,615     138,749,209     139,546,174  
Diluted weighted-average outstanding shares     138,065,879     139,732,100     139,646,117     138,891,955     139,644,557  
                                 

 

       
Consolidated Balance Sheets   Table 3  
    June 30,    March 31,   December 31,    June 30,   
(dollars in thousands)   2018
  2018
  2017
  2017
 
Assets                          
Cash and due from banks   $   332,102     $ 283,135     $ 367,084     $ 355,752    
Interest-bearing deposits in other banks       611,698       409,357       667,560       872,013    
Investment securities       4,842,551       5,076,766       5,234,658       5,126,869    
Loans held for sale       2,037       397       556          
Loans and leases     12,637,686       12,464,165       12,277,369       12,062,392    
Less: allowance for loan and lease losses       140,601       138,574       137,253       136,883    
Net loans and leases     12,497,085       12,325,591       12,140,116       11,925,509    
                           
Premises and equipment, net       287,746       288,565       289,215       292,959    
Other real estate owned and repossessed personal property       325             329       329    
Accrued interest receivable       48,528       47,499       47,987       39,739    
Bank-owned life insurance       442,449       440,054       438,010       432,726    
Goodwill       995,492       995,492       995,492       995,492    
Mortgage servicing rights       17,660       18,659       13,196       14,877    
Other assets       402,046       357,427       355,258       317,709    
Total assets   $ 20,479,719     $ 20,242,942     $ 20,549,461     $ 20,373,974    
Liabilities and Stockholders' Equity                          
Deposits:                          
Interest-bearing   $ 11,430,455     $ 11,312,288     $ 11,485,269     $ 11,580,664    
Noninterest-bearing       5,965,083       6,050,134       6,126,853       5,871,598    
Total deposits     17,395,538       17,362,422       17,612,122       17,452,262    
Long-term debt       200,034       34       34       41    
Retirement benefits payable       135,139       134,684       134,218       134,400    
Other liabilities       289,833       224,940       270,536       234,669    
Total liabilities     18,020,544       17,722,080       18,016,910       17,821,372    
                           
Stockholders' equity                          
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,620,801 / 136,642,060 shares as of June 30, 2018, issued/outstanding: 139,611,795 / 139,601,123 shares as of March 31, 2018, issued/outstanding: 139,599,454 / 139,588,782 shares as of December 31, 2017 and issued and outstanding: 139,546,615 shares as of June 30, 2017)     1,396       1,396       1,396       1,395    
Additional paid-in capital      2,492,656       2,490,910       2,488,643       2,488,091    
Retained earnings       229,615       193,522       139,177       130,767    
Accumulated other comprehensive loss, net       (182,410 )     (164,684 )     (96,383 )     (67,651 )  
Treasury stock (2,978,741 shares as of June 30, 2018, 10,672 as of both March 31, 2018 and December 31, 2017 and nil as of June 30, 2017)       (82,082 )     (282 )     (282 )        
Total stockholders' equity       2,459,175       2,520,862       2,532,551       2,552,602    
Total liabilities and stockholders' equity   $ 20,479,719     $ 20,242,942     $ 20,549,461     $ 20,373,974    
                           

 

                                                 
Average Balances and Interest Rates                                              Table 4   
    Three Months Ended    Three Months Ended    Three Months Ended   
    June 30, 2018   March 31, 2018   June 30, 2017  
     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   $   281.2   $   1.2     1.74 $ 616.8   $ 2.3   1.53 % $ 312.8   $ 0.8   1.00 %
Available-for-Sale Investment Securities       4,961.2       27.4     2.21     5,160.3     29.0   2.28     5,208.8     25.0   1.93  
Loans Held for Sale       1.9           3.44     0.1       2.99            
Loans and Leases (1)                                                  
Commercial and industrial       3,177.4       30.5     3.84     3,104.4     27.7   3.62     3,279.2     25.7   3.15  
Real estate - commercial       2,883.0       28.9     4.02     2,799.9     26.5   3.83     2,638.3     23.8   3.62  
Real estate - construction       620.7       6.2     4.03     621.2     5.7   3.74     509.7     4.3   3.41  
Real estate - residential       4,087.2       41.9     4.11     4,009.8     41.1   4.15     3,782.1     38.6   4.09  
Consumer       1,624.6       21.7     5.35     1,599.6     21.3   5.41     1,525.8     20.6   5.40  
Lease financing       159.7       1.1     2.83     161.8     1.2   3.10     168.1     1.2   2.84  
Total Loans and Leases       12,552.6       130.3     4.16     12,296.7     123.5   4.07     11,903.2     114.2   3.85  
Other Earning Assets       21.0       0.1     2.21     14.4     0.1   1.68     10.8       0.99  
Total Earning Assets (2)       17,817.9       159.0     3.58     18,088.3     154.9   3.47     17,435.6     140.0   3.22  
Cash and Due from Banks       317.7               318.9               319.4            
Other Assets       1,985.9               2,000.5               1,937.2            
Total Assets   $   20,121.5             $ 20,407.7             $ 19,692.2            
                                                   
Interest-Bearing Liabilities                                                  
Interest-Bearing Deposits                                                  
Savings   $   4,573.0   $   2.4     0.21 $ 4,543.1   $ 1.7   0.15 % $ 4,488.8   $ 0.7   0.07 %
Money Market       2,725.9       2.7     0.40     2,710.9     1.7   0.26     2,618.6     0.8   0.12  
Time       4,003.5       12.2     1.22     4,252.3     11.8   1.13     3,887.5     7.2   0.75  
Total Interest-Bearing Deposits       11,302.4       17.3     0.62     11,506.3     15.2   0.54     10,994.9     8.7   0.32  
Short-Term Borrowings       42.7       0.2     1.85               1.7       0.89  
Long-Term Debt (3)       6.6       0.1     3.79                      
Total Interest-Bearing Liabilities       11,351.7       17.6     0.62     11,506.3     15.2   0.54     10,996.6     8.7   0.32  
Net Interest Income         $   141.4             $ 139.7             $ 131.3      
Interest Rate Spread                 2.96             2.93 %             2.90 %
Net Interest Margin                 3.18             3.13 %             3.02 %
Noninterest-Bearing Demand Deposits       5,897.0               5,997.8               5,788.0            
Other Liabilities       406.4               403.3               379.2            
Stockholders' Equity       2,466.4               2,500.3               2,528.4            
Total Liabilities and Stockholders' Equity   $   20,121.5             $ 20,407.7             $ 19,692.2            
                                                   

 

                                   
Average Balances and Interest Rates                                Table 5   
    Six Months Ended    Six Months Ended   
    June 30, 2018   June 30, 2017  
     Average     Income/     Yield/     Average     Income/     Yield/   
(dollars in millions)    Balance     Expense     Rate     Balance     Expense     Rate   
Earning Assets                                  
Interest-Bearing Deposits in Other Banks   $   448.0   $   3.6     1.60 $ 475.6   $ 2.0   0.85 %
Available-for-Sale Investment Securities       5,060.2       56.4     2.25     5,222.6     51.5   1.99  
Loans Held for Sale       1.1           3.40            
Loans and Leases (1)                                  
Commercial and industrial       3,141.0       58.2     3.74     3,256.5     50.0   3.10  
Real estate - commercial       2,841.7       55.3     3.93     2,560.2     46.0   3.62  
Real estate - construction       620.8       12.0     3.89     485.1     8.0   3.34  
Real estate - residential       4,048.9       82.9     4.13     3,753.1     76.3   4.10  
Consumer       1,612.3       43.0     5.38     1,519.7     40.8   5.42  
Lease financing       160.7       2.4     2.97     169.3     2.3   2.80  
Total Loans and Leases       12,425.4       253.8     4.12     11,743.9     223.4   3.84  
Other Earning Assets       17.7       0.2     2.00     11.0       0.88  
Total Earning Assets (2)       17,952.4       314.0     3.53     17,453.1     276.9   3.20  
Cash and Due from Banks       318.3               322.0            
Other Assets       1,993.1               1,955.6            
Total Assets   $   20,263.8             $ 19,730.7            
                                   
Interest-Bearing Liabilities                                  
Interest-Bearing Deposits                                  
Savings   $   4,558.2   $   4.1     0.18 $ 4,497.5   $ 1.4   0.06 %
Money Market       2,718.4       4.5     0.33     2,556.8     1.3   0.10  
Time       4,127.2       24.0     1.17     3,936.4     13.6   0.70  
Total Interest-Bearing Deposits       11,403.8       32.6     0.58     10,990.7     16.3   0.30  
Short-Term Borrowings       21.5       0.2     1.85     2.8       0.65  
Long-Term Debt (3)       3.3       0.1     3.81            
Total Interest-Bearing Liabilities       11,428.6       32.9     0.58     10,993.5     16.3   0.30  
Net Interest Income         $   281.1             $ 260.6      
Interest Rate Spread                 2.95             2.90 %
Net Interest Margin                 3.16             3.01 %
Noninterest-Bearing Demand Deposits       5,947.1               5,850.6            
Other Liabilities       404.8               378.0            
Stockholders' Equity       2,483.3               2,508.6            
Total Liabilities and Stockholders' Equity   $   20,263.8             $ 19,730.7            
                                   

 

                   
Analysis of Change in Net Interest Income                  Table 6 
    Three Months Ended June 30, 2018
    Compared to March 31, 2018
(dollars in millions)    Volume     Rate    Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $   (1.4 )   $   0.4     $   (1.0 )
Available-for-Sale Investment Securities       (1.1 )       (0.5 )       (1.6 )
Loans and Leases                  
Commercial and industrial       0.7         2.1         2.8  
Real estate - commercial       0.8         1.6         2.4  
Real estate - construction               0.5         0.5  
Real estate - residential       0.8                 0.8  
Consumer       0.3                 0.3  
Lease financing               (0.1 )       (0.1 )
Total Loans and Leases       2.6         4.1         6.7  
Total Change in Interest Income       0.1         4.0         4.1  
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings               0.7         0.7  
Money Market               1.0         1.0  
Time       (0.7 )       1.1         0.4  
Total Interest-Bearing Deposits       (0.7 )       2.8         2.1  
Short-Term Borrowings       0.2                 0.2  
Long-Term Debt       0.1                 0.1  
Total Change in Interest Expense       (0.4 )       2.8         2.4  
Change in Net Interest Income   $   0.5     $   1.2     $   1.7  
                   

 

                   
Analysis of Change in Net Interest Income                  Table 7 
    Three Months Ended June 30, 2018
    Compared to June 30, 2017
(dollars in millions)    Volume     Rate    Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $   (0.1 )   $   0.6     $   0.5  
Available-for-Sale Investment Securities       (1.2 )       3.5         2.3  
Loans and Leases                  
Commercial and industrial       (0.8 )       5.6         4.8  
Real estate - commercial       2.3         2.8         5.1  
Real estate - construction       1.0         0.9         1.9  
Real estate - residential       3.2         0.1         3.3  
Consumer       1.3         (0.2 )       1.1  
Lease financing       (0.1 )               (0.1 )
Total Loans and Leases       6.9         9.2         16.1  
Other Earning Assets               0.1         0.1  
Total Change in Interest Income       5.6         13.4         19.0  
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings               1.6         1.6  
Money Market               2.0         2.0  
Time       0.2         4.8         5.0  
Total Interest-Bearing Deposits       0.2         8.4         8.6  
Short-Term Borrowings       0.2                 0.2  
Long-Term Debt       0.1                 0.1  
Total Change in Interest Expense       0.5         8.4         8.9  
Change in Net Interest Income   $   5.1     $   5.0     $   10.1  
                   

 

                   
Analysis of Change in Net Interest Income                  Table 8 
    Six Months Ended June 30, 2018
    Compared to June 30, 2017
(dollars in millions)    Volume     Rate    Total
Change in Interest Income:                  
Interest-Bearing Deposits in Other Banks   $ (0.1 )   $   1.7     $  1.6
Available-for-Sale Investment Securities     (1.7 )       6.6        4.9
Loans and Leases                  
Commercial and industrial     (1.8 )     10.0        8.2
Real estate - commercial       5.3         4.0        9.3
Real estate - construction       2.5         1.5        4.0
Real estate - residential       6.1         0.6        6.7
Consumer       2.5       (0.3 )      2.2
Lease financing     (0.1 )       0.1        
Total Loans and Leases     14.5       15.9       30.4
Other Earning Assets               0.1       0.1
Total Change in Interest Income     12.7       24.3       37.0
                   
Change in Interest Expense:                  
Interest-Bearing Deposits                  
Savings               2.7        2.7
Money Market       0.1         3.1        3.2
Time       0.7         9.7       10.4
Total Interest-Bearing Deposits       0.8       15.5       16.3
Short-Term Borrowings       0.1                0.1
Long-Term Debt       0.1                0.1
Total Change in Interest Expense       1.0       15.5       16.5
Change in Net Interest Income   $ 11.7     $   8.8     $ 20.5
                   

 

                         
Loans and Leases                       Table 9
    June 30,    March 31,   December 31,    June 30, 
(dollars in thousands)   2018   2018   2017   2017
Commercial and industrial   $   3,116,145   $ 3,219,210   $ 3,135,266   $ 3,331,092
Real estate:                        
Commercial       2,837,520     2,738,557     2,667,597     2,545,479
Construction       654,084     594,266     632,911     555,794
Residential       4,236,083     4,156,003     4,090,053     3,921,881
Total real estate       7,727,687     7,488,826     7,390,561     7,023,154
Consumer       1,632,088     1,595,989     1,586,476     1,527,470
Lease financing       161,766     160,140     165,066     180,676
Total loans and leases   $   12,637,686   $ 12,464,165   $ 12,277,369   $ 12,062,392
                         

 

                         
Deposits                       Table 10
    June 30,    March 31,   December 31,    June 30, 
(dollars in thousands)   2018   2018   2017   2017
Demand   $   5,965,083   $   6,050,134   $   6,126,853   $   5,871,598
Savings       4,772,922       4,614,668       4,509,419       4,568,600
Money Market       2,768,190       2,631,894       2,801,968       2,944,005
Time       3,889,343       4,065,726       4,173,882       4,068,059
Total Deposits   $   17,395,538   $   17,362,422   $   17,612,122   $   17,452,262
                         

 

                         
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More                       Table 11
    June 30,    March 31,   December 31,    June 30, 
(dollars in thousands)   2018   2018   2017   2017
Non-Performing Assets                        
Non-Accrual Loans and Leases                        
Commercial Loans:                        
Commercial and industrial   $   1,821   $ 1,888   $ 2,932   $ 2,155
Real estate - commercial       2,844     2,885     1,786    
Real estate - construction       2,238     2,001        
Total Commercial Loans       6,903     6,774     4,718     2,155
Residential       6,541     5,349     5,107     5,569
Total Non-Accrual Loans and Leases       13,444     12,123     9,825     7,724
Other Real Estate Owned       325         329     329
Total Non-Performing Assets   $   13,769   $ 12,123   $ 10,154   $ 8,053
                         
Accruing Loans and Leases Past Due 90 Days or More                        
Commercial Loans:                        
Commercial and industrial   $   163   $ 83   $ 220   $ 1,275
Real estate - commercial               1,400     350
Real estate - construction           343        
Total Commercial Loans       163     426     1,620     1,625
Residential       1,581     1,469     1,360     1,543
Consumer       1,451     1,744     1,394     1,873
Total Accruing Loans and Leases Past Due 90 Days or More   $   3,195   $ 3,639   $ 4,374   $ 5,041
                         
Restructured Loans on Accrual Status and Not Past Due 90 Days or More       32,277     33,429     34,130     38,886
 Total Loans and Leases    $   12,637,686   $ 12,464,165   $ 12,277,369   $ 12,062,392
                         

 

                                 
Allowance for Loan and Lease Losses                             Table 12  
    For the Three Months Ended    For the Six Months Ended   
    June 30,    March 31,   June 30,    June 30,    June 30,   
(dollars in thousands)   2018
  2018
  2017
  2018
  2017
 
Balance at Beginning of Period   $   138,574     $ 137,253     $ 135,847     $   137,253     $ 135,494    
Loans and Leases Charged-Off                                
Commercial Loans:                                
Commercial and industrial             (475 )     (75 )       (475 )     (930 )  
Lease financing                   (146 )             (146 )  
Total Commercial Loans             (475 )     (221 )       (475 )     (1,076 )  
Residential       (34 )                   (34 )     (22 )  
Consumer       (6,290 )     (6,625 )     (5,251 )       (12,915 )     (10,823 )  
Total Loans and Leases Charged-Off       (6,324 )     (7,100 )     (5,472 )       (13,424 )     (11,921 )  
Recoveries on Loans and Leases Previously Charged-Off                                
Commercial Loans:                                
Commercial and industrial       39       64       129         103       243    
Real estate - commercial       32       122       55         154       132    
Total Commercial Loans       71       186       184         257       375    
Residential       60       182       150         242       471    
Consumer       2,200       2,103       1,774         4,303       3,564    
Total Recoveries on Loans and Leases Previously Charged-Off       2,331       2,471       2,108         4,802       4,410    
Net Loans and Leases Charged-Off       (3,993 )     (4,629 )     (3,364 )       (8,622 )     (7,511 )  
Provision for Loan and Lease Losses       6,020       5,950       4,400         11,970       8,900    
Balance at End of Period   $   140,601     $ 138,574     $ 136,883     $   140,601     $ 136,883    
Average Loans and Leases Outstanding   $   12,552,610     $ 12,296,678     $ 11,903,255     $   12,425,351     $ 11,743,835    
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding       0.13 %     0.15 %     0.11 %       0.14 %     0.13 %  
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding       1.11 %     1.11 %     1.13 %       1.11 %     1.13 %  
                                 

 

                         
GAAP to Non-GAAP Reconciliation                     Table 13  
    For the Three Months Ended    For the Six Months Ended   
    June 30,    March 31,   June 30,    June 30,   
(dollars in thousands, except per share amounts)   2018    2018   2017   2018    2017  
Income Statement Data:                                
Net income   $   69,053   $ 67,958   $ 56,895   $   137,011   $ 113,635  
                                 
Average total stockholders' equity   $ 2,466,392   $ 2,500,299   $ 2,528,388   $ 2,483,252   $ 2,508,564  
Less: average goodwill       995,492     995,492     995,492       995,492     995,492  
Average tangible stockholders' equity   $ 1,470,900   $ 1,504,807   $ 1,532,896   $ 1,487,760   $ 1,513,072  
                                 
Average total assets   $ 20,121,504   $ 20,407,718   $ 19,692,222   $ 20,263,820   $ 19,730,651  
Less: average goodwill       995,492     995,492     995,492      995,492     995,492  
Average tangible assets   $ 19,126,012   $ 19,412,226   $ 18,696,730   $ 19,268,328   $ 18,735,159  
                                 
Return on average total stockholders' equity(1)       11.23   11.02 %   9.03 %     11.13   9.13 %
Return on average tangible stockholders' equity (non-GAAP)(1)       18.83   18.32 %   14.89 %     18.57   15.14 %
                                 
Return on average total assets(1)       1.38   1.35 %   1.16 %     1.36   1.16 %
Return on average tangible assets (non-GAAP)(1)       1.45   1.42 %   1.22 %     1.43   1.22 %
                                 
Average stockholders' equity to average assets       12.26   12.25 %   12.84 %     12.25   12.71 %
Tangible average stockholders' equity to tangible average assets (non-GAAP)       7.69   7.75 %   8.20 %     7.72   8.08 %
                                 
           As of     As of     As of     As of   
          June 30,    March 31,   December 31,    June 30,   
          2018   2018   2017   2017  
Balance Sheet Data:                                
Total stockholders' equity         $   2,459,175   $ 2,520,862   $ 2,532,551   $ 2,552,602  
Less: goodwill             995,492     995,492     995,492     995,492  
Tangible stockholders' equity         $   1,463,683   $ 1,525,370   $ 1,537,059   $ 1,557,110  
                                 
Total assets         $ 20,479,719   $ 20,242,942   $ 20,549,461   $ 20,373,974  
Less: goodwill             995,492     995,492     995,492     995,492  
Tangible assets         $ 19,484,227   $ 19,247,450   $ 19,553,969   $ 19,378,482  
                                 
Shares outstanding           136,642,060     139,601,123     139,588,782     139,546,615  
                                 
Total stockholders' equity to total assets             12.01   12.45 %   12.32 %   12.53 %
Tangible stockholders' equity to tangible assets (non-GAAP)             7.51   7.93 %   7.86 %   8.04 %
                                 
Book value per share         $   18.00   $ 18.06   $ 18.14   $ 18.29  
Tangible book value per share (non-GAAP)         $   10.71   $ 10.93   $ 11.01   $ 11.16  
                                 

 

                               
GAAP to Non-GAAP Reconciliation                             Table 14
    For the Three Months Ended   For the Six Months Ended 
    June 30,    March 31,   June 30,    June 30, 
(dollars in thousands, except per share amounts)   2018
  2018
  2017
   2018
  2017
Net interest income   $   141,403     $ 139,672     $ 131,254     $   281,075     $ 260,599  
Core net interest income (non-GAAP)   $   141,403     $ 139,672     $ 131,254     $   281,075     $ 260,599  
                               
Noninterest income   $   49,797     $ 48,700     $ 50,558     $   98,497     $ 101,617  
Core noninterest income (non-GAAP)   $   49,797     $ 48,700     $ 50,558     $   98,497     $ 101,617  
                               
Noninterest expense   $   91,865     $ 90,587     $ 86,929     $   182,452     $ 172,920  
One-time items(1)       (914 )     (407 )     (457 )       (1,321 )     (841 )
Core noninterest expense (non-GAAP)   $   90,951     $ 90,180     $ 86,472     $   181,131     $ 172,079  
                               
Net income   $   69,053     $ 67,958     $ 56,895     $   137,011     $ 113,635  
One-time items(1)       914       407       457         1,321       841  
Tax adjustments(2)       (247 )     (106 )     (171 )       (353 )     (313 )
Total core adjustments       667       301       286         968       528  
Core net income (non-GAAP)   $   69,720     $ 68,259     $ 57,181     $   137,979     $ 114,163  
Core basic earnings per share (non-GAAP)   $   0.51     $ 0.49     $ 0.41     $   0.99     $ 0.82  
Core diluted earnings per share (non-GAAP)   $   0.50     $ 0.49     $ 0.41     $   0.99     $ 0.82  
                               
Basic earnings per share   $   0.50     $ 0.49     $ 0.41     $   0.99     $ 0.81  
Diluted earnings per share   $   0.50     $ 0.49     $ 0.41     $   0.99     $ 0.81  
                               

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