Net income of $67.8 million, or $0.52 per diluted share, core net income1 of $71.3 million or $0.54 per diluted share1Board of Directors declared a quarterly dividend of $0.26 per shareHONOLULU, Jan. 29, 2020 (GLOBE NEWSWIRE) — In a release issued under the same headline yesterday by First Hawaiian, Inc. (NASDAQ:FHB), please note that in the third paragraph of the release, the record date for its next quarterly dividend should be February 24, 2020, not February 28, 2020 as previously stated. The corrected release follows:First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended December 31, 2019.“I’m pleased to report that we ended 2019 with a strong fourth quarter. We generated great loan growth, significantly reduced deposit costs, and maintained excellent credit quality,” said Bob Harrison, Chairman, President and Chief Executive Officer. “This was a good finish to an exciting year, and we are well positioned going into 2020.”On January 22, 2020 the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on March 6, 2020 to stockholders of record at the close of business on February 24, 2020.Fourth Quarter 2019 Highlights:Profitability measures were excellent with Return on Assets of 1.34%, core Return on Average Tangible Assets1,2 of 1.48%, Return on Equity of 10.21%, and core Return on Average Tangible Common Equity1,2 of 17.22%;Grew loans and leases by $368 million, or 2.9%;Cost of deposits fell 10 basis points to 44 basis points;Reported efficiency ratio was 48.9% and core efficiency ratio1 was 47.7%;Continued excellent credit quality. The ratio of non-performing assets to total loans and leases and other real estate owned was 0.04% at the end of the fourth quarter.Balance Sheet
Total assets were $20.2 billion as of December 31, 2019, compared to $20.6 billion as of September 30, 2019.Gross loans and leases were $13.2 billion as of December 31, 2019, an increase of $368 million, or 2.9%, from $12.8 billion as of September 30, 2019. Total deposits were $16.4 billion as of December 31, 2019, a decrease of $412 million, or 2.4%, from $16.9 billion as of September 30, 2019, primarily reflecting the withdrawal of a $400 million commercial deposit that was deposited at the end of the third quarter and withdrawn early in the fourth quarter, and a $266 million reduction in public deposits.Net Interest Income
Net interest income for the fourth quarter of 2019 was $139.6 million, a decrease of $3.5 million, or 2.4%, compared to $143.1 million for the prior quarter. The decrease in net interest income compared to the third quarter of 2019 was primarily due to lower yields on loans and lower investment and loan balances, partially offset by lower deposit rates and balances. Average loan balances in the fourth quarter were lower than the prior quarter as a result of the sale of $409 million of shared national credits in the third quarter.Net interest margin (“NIM”) was 3.15% in the fourth quarter of 2019, a decrease of four basis points compared to 3.19% in the third quarter of 2019. Provision Expense
Results for the quarter ended December 31, 2019 included a provision for credit losses of $4.3 million. No provision for credit losses was taken in the quarter ended September 30, 2019. Noninterest Income
Noninterest income was $46.7 million in the fourth quarter of 2019, a decrease of $3.3 million compared to noninterest income of $50.0 million in the third quarter of 2019. Noninterest Expense
Noninterest expense was $91.1 million in the fourth quarter of 2019, a decrease of $2.4 million from $93.5 million in the third quarter of 2019. The efficiency ratio was 48.9% and 48.4% for the quarters ended December 31, 2019 and September 30, 2019, respectively.Taxes
The effective tax rate was 25.5% for both the quarters ended December 31, 2019 and September 30, 2019.Asset Quality
The allowance for loan and lease losses was $130.5 million, or 0.99% of total loans and leases, as of December 31, 2019, compared to $133.0 million, or 1.04% of total loans and leases, as of September 30, 2019. Net charge-offs were $6.7 million, or 0.20% of average loans and leases on an annualized basis for the quarter ended December 31, 2019, compared to $5.6 million, or 0.17% of average loans and leases on an annualized basis for the quarter ended September 30, 2019. Total non-performing assets were $5.8 million, or 0.04% of total loans and leases and other real estate owned, at December 31, 2019, compared to non-performing assets of $4.3 million, or 0.03% of total loans and leases and other real estate owned, at September 30, 2019. Capital
Total stockholders’ equity was $2.6 billion at December 31, 2019, compared to $2.7 billion at September 30, 2019. The tier 1 leverage, common equity tier 1 and total capital ratios were 8.79%, 11.88% and 12.81%, respectively, at December 31, 2019, compared with 8.68%, 12.15% and 13.11%, respectively, at September 30, 2019.The Company repurchased 1.3 million shares of common stock at a total cost of $37.4 million under the stock repurchase program in the fourth quarter. The average cost was $27.92 per share repurchased. For the full year 2019, the Company repurchased 5.1 million shares at a total cost of $136.2 million. The Company’s Board of Directors approved a stock repurchase program for up to $80 million of its outstanding common stock during 2020.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: 7588548. 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, 2020. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 7588548.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, 2018 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.Use of Non-GAAP Financial Measures
We present net interest income, noninterest income, noninterest expense, net income, earnings per share (basic and diluted) 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 efficiency ratio, 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 efficiency ratio as the ratio of core noninterest expense to the sum of core net interest income and core noninterest income. 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 total 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 directly comparable GAAP measures.1 Core measurements are non-GAAP financial measures. Core excludes certain gains, expenses and one-time items. See Tables 13 and 14 at the end of this document for reconciliations of core measurements, including core net income, core noninterest income, core efficiency ratio and core earnings per diluted share to the comparable GAAP measurements.2 Return on Average Tangible Assets (“ROATA”) and Return on Average Tangible Common Equity (“ROATCE”) are non-GAAP financial measures. A reconciliation of average tangible assets and average tangible stockholders’ equity to the comparable GAAP measurements is provided in Table 13 at the end of this document.
(1) Except for the efficiency ratio and the core efficiency ratio, amounts are annualized for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018.
(2) Core return on average tangible assets is a non-GAAP financial measure. We compute our core return on average tangible assets as the ratio of core 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. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.
(3) Core return on average tangible stockholders’ equity is a non-GAAP financial measure. 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. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.
(4) Tangible book value is a non-GAAP financial measure. We compute our tangible book value as the ratio of tangible stockholders’ equity to shares outstanding. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.
(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.
(1) Annualized for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018.(1) Annualized for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018.(1) The Company reached an agreement in principle to resolve a putative class action lawsuit alleging that the Bank improperly charged certain overdraft fees. In connection with the settlement agreement, the Company recorded an expense of approximately $4.1 million during the year ended December 31, 2018.
(2) One-time items for all periods shown included nonrecurring offering costs. Additionally, one-time items for the three months ended September 30, 2019 and the twelve months ended December 31, 2019 included costs related to a nonrecurring payment to a former executive of the Company pursuant to the Bank’s Executive Change-in-Control Retention Plan and the loss on our funding swap as a result of a 2019 decrease in the conversion rate of our Visa Class B restricted shares sold in 2016. One-time items for the year ended December 31, 2018 included the loss on our funding swap as a result of a 2018 decrease in the conversion rate of our Visa Class B restricted shares sold in 2016.
(3) Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period.
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