First Hawaiian, Inc. Reports Second Quarter 2022 Financial Results and Declares Dividend

Rhea-AI Summary

First Hawaiian, Inc. (NASDAQ:FHB) reported strong second-quarter results for 2022, with net income of $59.4 million, or $0.46 per diluted share. Total loans and leases rose by $371 million, and deposits increased by $331 million quarter-over-quarter. Net interest income also grew to $145.1 million, marking an 8.4% increase from the previous quarter. The company declared a quarterly cash dividend of $0.26 per share, payable September 2, 2022. Additionally, asset quality remained stable, with non-performing assets decreasing to 0.06% of total loans.

Positive

• Net income increased to $59.4 million, or $0.46 per diluted share.
• Total loans and leases grew by $371 million, or 2.9%, quarter-over-quarter.
• Total deposits increased by $331 million, or 1.5%, quarter-over-quarter.
• Net interest income rose to $145.1 million, an increase of $11.3 million, or 8.4%.

Negative

• Noninterest expense increased by $5.1 million to $109.2 million.

HONOLULU, July 29, 2022 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended June 30, 2022.

“I’m pleased to report that we had a very strong second quarter as the bank continued to perform well,” said Bob Harrison, Chairman, President and CEO. “We had good loan and deposit growth, credit quality remained excellent, and we successfully converted to our new core operating system.”

On July 27, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 2, 2022, to stockholders of record at the close of business on August 22, 2022.  

Second Quarter 2022 Highlights:

• Net income of $59.4 million, or $0.46 per diluted share
• Total loans and leases increased $371.0 million versus prior quarter.
• Total deposits increased $331.0 million versus prior quarter
• Net interest margin increased 18 basis points to 2.60%
• Recorded a $1.0 million provision for credit losses
• Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet

Total assets were $25.4 billion as of June 30, 2022, compared to $25.0 billion as of March 31, 2022.

Gross loans and leases were $13.3 billion as of June 30, 2022, an increase of $371.0 million, or 2.9%, from $12.9 billion as of March 31, 2022.

Total deposits were $22.6 billion as of June 30, 2022, an increase of $331.0 million, or 1.5%, from $22.3 billion as of March 31, 2022.  

Net Interest Income

Net interest income for the second quarter of 2022 was $145.1 million, an increase of $11.3 million, or 8.4%, compared to $133.9 million for the prior quarter.  

The net interest margin was 2.60% in the second quarter of 2022, an increase of 18 basis points compared to 2.42% in the prior quarter.

Provision Expense

During the quarter ended June 30, 2022, we recorded a $1.0 million provision for credit losses. In the quarter ended March 31, 2022, we recorded a $5.7 million negative provision for credit losses.

Noninterest Income

Noninterest income was $44.1 million in the second quarter of 2022, an increase of $2.7 million compared to noninterest income of $41.4 million in the prior quarter.     

Noninterest Expense

Noninterest expense was $109.2 million in the second quarter of 2022, an increase of $5.1 million compared to noninterest expense of $104.0 million in the prior quarter.

The efficiency ratio was 57.3% and 59.0% for the quarters ended June 30, 2022 and March 31, 2022, respectively.

Taxes

The effective tax rate was 25.0% for the quarters ended June 30, 2022 and March 31, 2022.

Asset Quality

The allowance for credit losses was $148.9 million, or 1.12% of total loans and leases, as of June 30, 2022, compared to $150.3 million, or 1.17% of total loans and leases, as of March 31, 2022. The reserve for unfunded commitments was $29.0 million as of June 30, 2022 and March 31, 2022. Net charge-offs were $2.3 million, or 0.07% of average loans and leases on an annualized basis, for the quarter ended June 30, 2022, compared to net charge-offs of $2.6 million, or 0.08% of average loans and leases on an annualized basis, for the quarter ended March 31, 2022. Total non-performing assets were $7.9 million, or 0.06% of total loans and leases and other real estate owned, on June 30, 2022, compared to total non-performing assets of $8.6 million, or 0.07% of total loans and leases and other real estate owned, on March 31, 2022.

Capital

Total stockholders' equity was $2.3 billion on June 30, 2022 and March 31, 2022.    

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.54%, 11.98%, and 13.14%, respectively, on June 30, 2022, compared with 7.50%, 12.27% and 13.48%, respectively, on March 31, 2022.

The Company repurchased 0.3 million shares of common stock at a total cost of $7.0 million under the stock repurchase program in the second quarter. The average cost was $24.09 per share repurchased. Remaining buyback authority under the stock repurchase program was $68.0 million on June 30, 2022.

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 1:00 p.m. Eastern Time, 7:00 a.m. Hawaii Time.

Please note that the process for accessing the conference call has changed. Participants will need to click on the registration link provided below, register for the conference call, and then you will receive the dial-in number and a personalized PIN code.

To access the call by phone, please register via the following link: https://register.vevent.com/register/BI2ebfe69a17064bc89a14e15354a8e329, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time.

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.

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. Further, statements about the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there can be no assurance that actual results will not prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements, including (without limitation) the risks and uncertainties associated with the ongoing impacts of COVID-19, the domestic and global economic environment and capital market conditions and other risk factors. For a discussion of some of these 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, 2021 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

Use of Non-GAAP Financial Measures
Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy.

Table 14 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

Investor Relations Contact: Kevin Haseyama, CFA (808) 525-6268 khaseyama@fhb.com

Media Contact: Lindsay Chambers (808) 525-6254 lchambers@fhb.com

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)		2022			2022				2021				2022				2021
Operating Results:
Net interest income		$	145,147		$	133,872			$	131,481			$	279,019			$	260,639
Provision for credit losses			1,000			(5,747	)			(35,000	)			(4,747	)			(35,000	)
Noninterest income			44,137			41,380				49,371				85,517				93,239
Noninterest expense			109,175			104,042				99,388				213,217				195,694
Net income			59,360			57,719				86,741				117,079				144,434
Basic earnings per share			0.46			0.45				0.67				0.92				1.11
Diluted earnings per share			0.46			0.45				0.67				0.91				1.11
Dividends declared per share			0.26			0.26				0.26				0.52				0.52
Dividend payout ratio			56.52	%		57.78		%		38.81		%		57.14		%		46.85		%
Performance Ratios(1):
Net interest margin			2.60	%		2.42		%		2.46		%		2.51		%		2.50		%
Efficiency ratio			57.33	%		59.04		%		54.74		%		58.15		%		55.12		%
Return on average total assets			0.94	%		0.93		%		1.45		%		0.94		%		1.24		%
Return on average tangible assets (non-GAAP)(2)			0.98	%		0.97		%		1.51		%		0.98		%		1.30		%
Return on average total stockholders' equity			10.52	%		9.19		%		12.92		%		9.82		%		10.75		%
Return on average tangible stockholders' equity (non-GAAP)(2)			18.79	%		15.08		%		20.51		%		16.76		%		16.99		%
Average Balances:
Average loans and leases		$	13,058,558		$	12,819,612			$	13,205,086			$	12,939,745			$	13,223,575
Average earning assets			22,520,605			22,463,209				21,539,264				22,492,066				21,010,643
Average assets			25,250,176			25,080,453				24,015,065				25,165,783				23,482,839
Average deposits			22,401,558			21,960,819				20,638,015				22,182,406				20,073,676
Average stockholders' equity			2,262,654			2,547,865				2,691,966				2,404,471				2,709,735
Market Value Per Share:
Closing			22.80			27.89				28.34				22.80				28.34
High			28.44			31.16				29.85				31.16				30.80
Low			21.49			26.93				24.75				21.49				23.14

		As of			As of			As of			As of
		June 30,			March 31,			December 31,			June 30,
(dollars in thousands, except per share data)		2022			2022			2021			2021
Balance Sheet Data:
Loans and leases		$	13,262,781		$	12,891,743		$	12,961,999		$	13,103,785
Total assets			25,377,533			25,042,720			24,992,410			24,246,328
Total deposits			22,601,454			22,270,430			21,816,146			20,835,115
Long-term borrowings			—			—			—			200,000
Total stockholders' equity			2,252,611			2,285,149			2,656,912			2,731,341
Per Share of Common Stock:
Book value		$	17.67		$	17.90		$	20.84		$	21.17
Tangible book value (non-GAAP)(2)			9.86			10.10			13.03			13.45
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases			0.06	%		0.07	%		0.05	%		0.07	%
Allowance for credit losses for loans and leases / total loans and leases			1.12	%		1.17	%		1.21	%		1.29	%
Capital Ratios:
Common Equity Tier 1 Capital Ratio			11.98	%		12.27	%		12.24	%		12.76	%
Tier 1 Capital Ratio			11.98	%		12.27	%		12.24	%		12.76	%
Total Capital Ratio			13.14	%		13.48	%		13.49	%		14.01	%
Tier 1 Leverage Ratio			7.54	%		7.50	%		7.24	%		7.68	%
Total stockholders' equity to total assets			8.88	%		9.13	%		10.63	%		11.26	%
Tangible stockholders' equity to tangible assets (non-GAAP)(2)			5.16	%		5.36	%		6.92	%		7.47	%
Non-Financial Data:
Number of branches			51			51			54			54
Number of ATMs			297			298			299			294
Number of Full-Time Equivalent Employees			2,021			2,022			2,036			2,087

---

(1)		Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022.
(2)		Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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 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 tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. 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. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation.

Consolidated Statements of Income		Table 2
		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)		2022				2022				2021				2022				2021
Interest income
Loans and lease financing		$	111,916			$	103,732			$	110,919			$	215,648			$	221,858
Available-for-sale investment securities			16,643				32,107				24,637				48,750				47,783
Held-to-maturity investment securities			18,289				—				—				18,289				—
Other			2,896				782				666				3,678				1,157
Total interest income			149,744				136,621				136,222				286,365				270,798
Interest expense
Deposits			4,597				2,749				3,363				7,346				7,419
Short-term and long-term borrowings			—				—				1,378				—				2,740
Total interest expense			4,597				2,749				4,741				7,346				10,159
Net interest income			145,147				133,872				131,481				279,019				260,639
Provision for credit losses			1,000				(5,747	)			(35,000	)			(4,747	)			(35,000	)
Net interest income after provision for credit losses			144,147				139,619				166,481				283,766				295,639
Noninterest income
Service charges on deposit accounts			6,843				7,501				6,632				14,344				13,350
Credit and debit card fees			17,056				14,850				16,746				31,906				31,297
Other service charges and fees			9,018				9,654				10,303				18,672				19,149
Trust and investment services income			8,759				8,883				8,707				17,642				17,199
Bank-owned life insurance			(859	)			(417	)			3,104				(1,276	)			5,493
Investment securities (losses) gains, net			—				—				102				—				102
Other			3,320				909				3,777				4,229				6,649
Total noninterest income			44,137				41,380				49,371				85,517				93,239
Noninterest expense
Salaries and employee benefits			49,902				48,226				45,982				98,128				89,918
Contracted services and professional fees			18,617				17,147				16,516				35,764				33,704
Occupancy			7,334				7,410				7,314				14,744				14,484
Equipment			7,754				5,977				6,362				13,731				11,853
Regulatory assessment and fees			2,301				2,224				1,826				4,525				3,860
Advertising and marketing			1,994				2,028				1,469				4,022				3,060
Card rewards program			7,285				6,883				6,262				14,168				11,097
Other			13,988				14,147				13,657				28,135				27,718
Total noninterest expense			109,175				104,042				99,388				213,217				195,694
Income before provision for income taxes			79,109				76,957				116,464				156,066				193,184
Provision for income taxes			19,749				19,238				29,723				38,987				48,750
Net income		$	59,360			$	57,719			$	86,741			$	117,079			$	144,434
Basic earnings per share		$	0.46			$	0.45			$	0.67			$	0.92			$	1.11
Diluted earnings per share		$	0.46			$	0.45			$	0.67			$	0.91			$	1.11
Basic weighted-average outstanding shares			127,672,244				127,556,242				129,392,339				127,614,564				129,661,228
Diluted weighted-average outstanding shares			128,014,777				128,121,126				129,828,847				128,108,630				130,164,762

Consolidated Balance Sheets		Table 3
		June 30,				March 31,				December 31,				June 30,
(dollars in thousands)		2022				2022				2021				2021
Assets
Cash and due from banks		$	279,629			$	274,022			$	246,716			$	347,861
Interest-bearing deposits in other banks			1,254,047				1,352,138				1,011,753				1,558,437
Investment securities:
Available-for-sale, at fair value (amortized cost: $4,267,809 as of June 30, 2022, $8,733,170 as of March 31, 2022, $8,560,733 as of December 31, 2021 and $6,951,153 as of June 30, 2021)			3,967,746				8,062,384				8,428,032				6,953,930
Held-to-maturity, at amortized cost (fair value: $3,910,780 as of June 30, 2022 and nil as of March 31, 2022, December 31, 2021 and June 30, 2021)			4,093,215				—				—				—
Loans held for sale			180				—				538				1,241
Loans and leases			13,262,781				12,891,743				12,961,999				13,103,785
Less: allowance for credit losses			148,942				150,280				157,262				169,148
Net loans and leases			13,113,839				12,741,463				12,804,737				12,934,637
Premises and equipment, net			310,047				315,766				318,448				319,452
Other real estate owned and repossessed personal property			—				—				175				—
Accrued interest receivable			63,240				61,561				63,158				66,734
Bank-owned life insurance			470,542				471,401				471,819				466,402
Goodwill			995,492				995,492				995,492				995,492
Mortgage servicing rights			7,152				7,650				8,302				10,007
Other assets			822,404				760,843				643,240				592,135
Total assets		$	25,377,533			$	25,042,720			$	24,992,410			$	24,246,328
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing		$	12,990,571			$	12,504,821			$	12,422,283			$	12,245,193
Noninterest-bearing			9,610,883				9,765,609				9,393,863				8,589,922
Total deposits			22,601,454				22,270,430				21,816,146				20,835,115
Long-term borrowings			—				—				—				200,000
Retirement benefits payable			134,151				134,323				134,491				144,101
Other liabilities			389,317				352,818				384,861				335,771
Total liabilities			23,124,922				22,757,571				22,335,498				21,514,987
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022, issued/outstanding: 140,875,595 / 127,686,307 shares as of March 31, 2022, issued/outstanding: 140,581,715 / 127,502,472 shares as of December 31, 2021 and issued/outstanding: 140,542,398 / 129,019,871 shares as of June 30, 2021)			1,409				1,409				1,406				1,405
Additional paid-in capital			2,533,407				2,530,795				2,527,663				2,520,790
Retained earnings			654,777				628,642				604,534				550,511
Accumulated other comprehensive loss, net			(571,457	)			(517,502	)			(121,693	)			(29,702	)
Treasury stock (13,492,821 shares as of June 30, 2022, 13,189,288 shares as of March 31, 2022, 13,079,243 shares as of December 31, 2021 and 11,522,527 shares as of June 30, 2021)			(365,525	)			(358,195	)			(354,998	)			(311,663	)
Total stockholders' equity			2,252,611				2,285,149				2,656,912				2,731,341
Total liabilities and stockholders' equity		$	25,377,533			$	25,042,720			$	24,992,410			$	24,246,328

Average Balances and Interest Rates																								Table 4
		Three Months Ended								Three Months Ended								Three Months Ended
		June 30, 2022								March 31, 2022								June 30, 2021
		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		$	1,297.3		$	2.8		0.85	%	$	1,138.3		$	0.6		0.20	%	$	1,503.0		$	0.4		0.10	%
Available-for-Sale Investment Securities
Taxable			3,946.4			16.6		1.68			7,800.3			29.2		1.50			6,298.3			22.5		1.43
Non-Taxable			8.4			0.1		5.26			636.7			3.6		2.32			468.4			2.7		2.30
Held-to-Maturity Investment Securities
Taxable			3,533.6			15.0		1.70			—			—		—			—			—		—
Non-Taxable			607.0			4.1		2.71			—			—		—			—			—		—
Total Investment Securities			8,095.4			35.8		1.77			8,437.0			32.8		1.56			6,766.7			25.2		1.49
Loans Held for Sale			0.3			—		5.06			1.2			—		2.02			2.0			—		1.44
Loans and Leases(1)
Commercial and industrial			1,951.3			15.0		3.09			1,973.1			14.6		3.01			2,882.1			21.1		2.94
Commercial real estate			3,808.9			30.7		3.23			3,632.2			25.8		2.88			3,419.7			25.3		2.97
Construction			711.3			6.3		3.57			766.9			5.7		3.03			800.9			6.3		3.15
Residential:
Residential mortgage			4,183.0			36.7		3.51			4,111.0			34.8		3.38			3,765.4			34.0		3.62
Home equity line			945.7			5.9		2.49			891.6			5.5		2.48			812.6			5.5		2.72
Consumer			1,218.0			15.5		5.09			1,218.6			15.6		5.19			1,277.9			16.9		5.32
Lease financing			240.4			2.1		3.53			226.2			1.9		3.42			246.5			1.9		3.06
Total Loans and Leases			13,058.6			112.2		3.44			12,819.6			103.9		3.27			13,205.1			111.0		3.37
Other Earning Assets			69.0			0.1		0.79			67.1			0.2		1.31			62.5			0.3		1.91
Total Earning Assets(2)			22,520.6			150.9		2.68			22,463.2			137.5		2.47			21,539.3			136.9		2.55
Cash and Due from Banks			300.8								292.1								290.7
Other Assets			2,428.8								2,325.2								2,185.1
Total Assets		$	25,250.2							$	25,080.5							$	24,015.1
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings		$	6,971.3		$	1.7		0.10	%	$	6,668.4		$	0.5		0.03	%		6,361.8		$	0.5		0.03	%
Money Market			4,127.4			1.4		0.14			4,048.9			0.5		0.05			3,783.1			0.5		0.06
Time			1,671.4			1.5		0.36			1,748.5			1.7		0.39			2,034.5			2.3		0.45
Total Interest-Bearing Deposits			12,770.1			4.6		0.14			12,465.8			2.7		0.09			12,179.4			3.3		0.11
Long-Term Borrowings			—			—		—			—			—		—			200.0			1.4		2.76
Total Interest-Bearing Liabilities			12,770.1			4.6		0.14			12,465.8			2.7		0.09			12,379.4			4.7		0.15
Net Interest Income					$	146.3							$	134.8							$	132.2
Interest Rate Spread								2.54	%							2.38	%							2.40	%
Net Interest Margin								2.60	%							2.42	%							2.46	%
Noninterest-Bearing Demand Deposits			9,631.4								9,495.0								8,458.6
Other Liabilities			586.0								571.8								485.1
Stockholders' Equity			2,262.7								2,547.9								2,692.0
Total Liabilities and Stockholders' Equity		$	25,250.2							$	25,080.5							$	24,015.1

---

(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)		Interest income includes taxable-equivalent basis adjustments of $1.2 million, $1.0 million and $0.7 million for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively.

Average Balances and Interest Rates																Table 5
		Six Months Ended								Six Months Ended
		June 30, 2022								June 30, 2021
		Average			Income/			Yield/		Average			Income/			Yield/
(dollars in millions)		Balance			Expense			Rate		Balance			Expense			Rate
Earning Assets
Interest-Bearing Deposits in Other Banks		$	1,218.3		$	3.3		0.55	%	$	1,222.4		$	0.6		0.10	%
Available-for-Sale Investment Securities
Taxable			5,862.7			45.7		1.56			6,125.1			44.6		1.46
Non-Taxable			320.8			3.9		2.41			373.7			4.0		2.11
Held-to-Maturity Investment Securities
Taxable			1,776.6			15.0		1.69			—			—		—
Non-Taxable			305.2			4.1		2.71			—			—		—
Total Investment Securities			8,265.3			68.7		1.66			6,498.8			48.6		1.49
Loans Held for Sale			0.8			—		2.60			5.6			0.1		2.28
Loans and Leases(1)
Commercial and industrial			1,962.1			29.7		3.05			2,954.0			41.5		2.84
Commercial real estate			3,721.0			56.4		3.06			3,402.6			50.2		2.98
Construction			738.9			12.1		3.30			774.0			12.1		3.16
Residential:
Residential mortgage			4,147.2			71.5		3.45			3,730.9			68.7		3.68
Home equity line			918.8			11.3		2.48			817.3			11.2		2.76
Consumer			1,218.3			31.1		5.14			1,300.7			34.7		5.37
Lease financing			233.4			4.0		3.48			244.1			3.7		3.04
Total Loans and Leases			12,939.7			216.1		3.36			13,223.6			222.1		3.38
Other Earning Assets			68.0			0.4		1.05			60.2			0.5		1.85
Total Earning Assets(2)			22,492.1			288.5		2.58			21,010.6			271.9		2.60
Cash and Due from Banks			296.5								292.3
Other Assets			2,377.2								2,179.9
Total Assets		$	25,165.8							$	23,482.8
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings		$	6,820.7		$	2.2		0.07	%	$	6,169.5		$	1.1		0.04	%
Money Market			4,088.3			2.0		0.09			3,657.3			1.0		0.05
Time			1,709.8			3.2		0.38			2,160.8			5.3		0.49
Total Interest-Bearing Deposits			12,618.8			7.4		0.12			11,987.6			7.4		0.12
Long-Term Borrowings			—			—		—			200.0			2.7		2.76
Total Interest-Bearing Liabilities			12,618.8			7.4		0.12			12,187.6			10.1		0.17
Net Interest Income					$	281.1							$	261.8
Interest Rate Spread								2.46	%							2.43	%
Net Interest Margin								2.51	%							2.50	%
Noninterest-Bearing Demand Deposits			9,563.6								8,086.1
Other Liabilities			578.9								499.4
Stockholders' Equity			2,404.5								2,709.7
Total Liabilities and Stockholders' Equity		$	25,165.8							$	23,482.8

---

(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)		Interest income includes taxable-equivalent basis adjustments of $2.1 million and $1.1 million for the six months ended June 30, 2022 and 2021, respectively.

Analysis of Change in Net Interest Income											Table 6
		Three Months Ended June 30, 2022
		Compared to March 31, 2022
(dollars in millions)		Volume				Rate				Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks		$	0.1			$	2.1			$	2.2
Available-for-Sale Investment Securities
Taxable			(15.8	)			3.2				(12.6	)
Non-Taxable			(5.6	)			2.1				(3.5	)
Held-to-Maturity Investment Securities
Taxable			15.0				—				15.0
Non-Taxable			4.1				—				4.1
Total Investment Securities			(2.3	)			5.3				3.0
Loans and Leases
Commercial and industrial			(0.1	)			0.5				0.4
Commercial real estate			1.4				3.5				4.9
Construction			(0.4	)			1.0				0.6
Residential:
Residential mortgage			0.6				1.3				1.9
Home equity line			0.4				—				0.4
Consumer			—				(0.1	)			(0.1	)
Lease financing			0.1				0.1				0.2
Total Loans and Leases			2.0				6.3				8.3
Other Earning Assets			—				(0.1	)			(0.1	)
Total Change in Interest Income			(0.2	)			13.6				13.4
Change in Interest Expense:
Interest-Bearing Deposits
Savings			0.1				1.1				1.2
Money Market			—				0.9				0.9
Time			(0.1	)			(0.1	)			(0.2	)
Total Interest-Bearing Deposits			—				1.9				1.9
Total Change in Interest Expense			—				1.9				1.9
Change in Net Interest Income		$	(0.2	)		$	11.7			$	11.5

Analysis of Change in Net Interest Income											Table 7
		Three Months Ended June 30, 2022
		Compared to June 30, 2021
(dollars in millions)		Volume				Rate				Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks		$	—			$	2.4			$	2.4
Available-for-Sale Investment Securities
Taxable			(9.4	)			3.5				(5.9	)
Non-Taxable			(4.1	)			1.5				(2.6	)
Held-to-Maturity Investment Securities
Taxable			15.0				—				15.0
Non-Taxable			4.1				—				4.1
Total Investment Securities			5.6				5.0				10.6
Loans and Leases
Commercial and industrial			(7.1	)			1.0				(6.1	)
Commercial real estate			3.0				2.4				5.4
Construction			(0.8	)			0.8				—
Residential:
Residential mortgage			3.7				(1.0	)			2.7
Home equity line			0.9				(0.5	)			0.4
Consumer			(0.7	)			(0.7	)			(1.4	)
Lease financing			(0.1	)			0.3				0.2
Total Loans and Leases			(1.1	)			2.3				1.2
Other Earning Assets			—				(0.2	)			(0.2	)
Total Change in Interest Income			4.5				9.5				14.0
Change in Interest Expense:
Interest-Bearing Deposits
Savings			0.1				1.1				1.2
Money Market			0.1				0.8				0.9
Time			(0.4	)			(0.4	)			(0.8	)
Total Interest-Bearing Deposits			(0.2	)			1.5				1.3
Long-Term Borrowings			(0.7	)			(0.7	)			(1.4	)
Total Change in Interest Expense			(0.9	)			0.8				(0.1	)
Change in Net Interest Income		$	5.4			$	8.7			$	14.1

Analysis of Change in Net Interest Income											Table 8
		Six Months Ended June 30, 2022
		Compared to June 30, 2021
(dollars in millions)		Volume				Rate				Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks		$	—			$	2.7			$	2.7
Available-for-Sale Investment Securities
Taxable			(1.9	)			3.0				1.1
Non-Taxable			(0.6	)			0.5				(0.1	)
Held-to-Maturity Investment Securities
Taxable			15.0				—				15.0
Non-Taxable			4.1				—				4.1
Total Investment Securities			16.6				3.5				20.1
Loans Held for Sale			(0.1	)			—				(0.1	)
Loans and Leases
Commercial and industrial			(14.7	)			2.9				(11.8	)
Commercial real estate			4.8				1.4				6.2
Construction			(0.5	)			0.5				—
Residential:
Residential mortgage			7.2				(4.4	)			2.8
Home equity line			1.3				(1.2	)			0.1
Consumer			(2.1	)			(1.5	)			(3.6	)
Lease financing			(0.2	)			0.5				0.3
Total Loans and Leases			(4.2	)			(1.8	)			(6.0	)
Other Earning Assets			0.1				(0.2	)			(0.1	)
Total Change in Interest Income			12.4				4.2				16.6
Change in Interest Expense:
Interest-Bearing Deposits
Savings			0.1				1.0				1.1
Money Market			0.2				0.8				1.0
Time			(1.0	)			(1.1	)			(2.1	)
Total Interest-Bearing Deposits			(0.7	)			0.7				—
Long-Term Borrowings			(1.4	)			(1.3	)			(2.7	)
Total Change in Interest Expense			(2.1	)			(0.6	)			(2.7	)
Change in Net Interest Income		$	14.5			$	4.8			$	19.3

Loans and Leases												Table 9
		June 30,			March 31,			December 31,			June 30,
(dollars in thousands)		2022			2022			2021			2021
Commercial and industrial:
Commercial and industrial excluding Paycheck Protection Program loans		$	1,898,899		$	1,817,346		$	1,870,657		$	1,753,444
Paycheck Protection Program loans			43,233			106,188			216,442			811,103
Total commercial and industrial			1,942,132			1,923,534			2,087,099			2,564,547
Commercial real estate			3,956,828			3,759,980			3,639,623			3,528,068
Construction			727,771			708,300			813,969			853,865
Residential:
Residential mortgage			4,212,768			4,153,824			4,083,367			3,821,407
Home equity line			971,569			918,101			876,608			825,368
Total residential			5,184,337			5,071,925			4,959,975			4,646,775
Consumer			1,207,051			1,204,834			1,229,939			1,267,559
Lease financing			244,662			223,170			231,394			242,971
Total loans and leases		$	13,262,781		$	12,891,743		$	12,961,999		$	13,103,785

Deposits												Table 10
		June 30,			March 31,			December 31,			June 30,
(dollars in thousands)		2022			2022			2021			2021
Demand		$	9,610,883		$	9,765,609		$	9,393,863		$	8,589,922
Savings			7,243,185			6,812,758			6,612,775			6,421,053
Money Market			4,079,706			3,990,225			4,033,070			3,920,477
Time			1,667,680			1,701,838			1,776,438			1,903,663
Total Deposits		$	22,601,454		$	22,270,430		$	21,816,146		$	20,835,115

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)		2022			2022			2021			2021
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial		$	682		$	707		$	718		$	828
Commercial real estate			727			727			727			937
Lease financing			—			75			—			—
Total Commercial Loans			1,409			1,509			1,445			1,765
Residential Loans:
Residential mortgage			6,450			7,092			5,637			7,140
Total Residential Loans			6,450			7,092			5,637			7,140
Total Non-Accrual Loans and Leases			7,859			8,601			7,082			8,905
Other Real Estate Owned			—			—			175			—
Total Non-Performing Assets		$	7,859		$	8,601		$	7,257		$	8,905
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial		$	2,230		$	591		$	740		$	494
Commercial real estate			176			—			—			—
Construction			352			—			—			60
Total Commercial Loans			2,758			591			740			554
Residential Loans:
Residential mortgage			750			13			987			—
Home equity line			1,039			2,252			3,681			4,680
Total Residential Loans			1,789			2,265			4,668			4,680
Consumer			1,218			1,588			1,800			1,134
Total Accruing Loans and Leases Past Due 90 Days or More		$	5,765		$	4,444		$	7,208		$	6,368
Restructured Loans on Accrual Status and Not Past Due 90 Days or More		$	29,440		$	32,590		$	34,893		$	36,668
Total Loans and Leases		$	13,262,781		$	12,891,743		$	12,961,999		$	13,103,785

Allowance for Credit Losses and Reserve for Unfunded Commitments																			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)		2022				2022				2021				2022				2021
Balance at Beginning of Period		$	179,238			$	187,584			$	234,469				187,584				239,057
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial			(243	)			(706	)			(330	)			(949	)			(1,293	)
Commercial real estate			—				—				—				—				(66	)
Total Commercial Loans			(243	)			(706	)			(330	)			(949	)			(1,359	)
Residential Loans:
Residential mortgage			—				—				—				—				(98	)
Home equity line			(1,120	)			(43	)			—				(1,163	)			—
Total Residential Loans			(1,120	)			(43	)			—				(1,163	)			(98	)
Consumer			(3,659	)			(4,109	)			(3,917	)			(7,768	)			(10,458	)
Total Loans and Leases Charged-Off			(5,022	)			(4,858	)			(4,247	)			(9,880	)			(11,915	)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial			301				53				287				354				502
Commercial real estate			—				14				12				14				15
Construction			—				—				—				—				166
Lease financing			60				—				—				60				—
Total Commercial Loans			361				67				299				428				683
Residential Loans:
Residential mortgage			192				16				14				208				31
Home equity line			191				28				38				219				62
Total Residential Loans			383				44				52				427				93
Consumer			1,940				2,148				2,797				4,088				5,452
Total Recoveries on Loans and Leases Previously Charged-Off			2,684				2,259				3,148				4,943				6,228
Net Loans and Leases Charged-Off			(2,338	)			(2,599	)			(1,099	)			(4,937	)			(5,687	)
Provision for Credit Losses			1,000				(5,747	)			(35,000	)			(4,747	)			(35,000	)
Balance at End of Period		$	177,900			$	179,238			$	198,370			$	177,900			$	198,370
Components:
Allowance for Credit Losses		$	148,942			$	150,280			$	169,148			$	148,942			$	169,148
Reserve for Unfunded Commitments			28,958				28,958				29,222				28,958				29,222
Total Allowance for Credit Losses and Reserve for Unfunded Commitments		$	177,900			$	179,238			$	198,370			$	177,900			$	198,370
Average Loans and Leases Outstanding		$	13,058,558			$	12,819,612			$	13,205,086			$	12,939,745			$	13,223,575
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1)			0.07		%		0.08		%		0.03		%		0.08		%		0.09		%
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding			1.12		%		1.17		%		1.29		%		1.12		%		1.29		%
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases			18.95x				17.47x				18.99x				18.95x				18.99x

---

(1)

Annualized for the three and six months ended June 30, 2022 and 2021, and three months ended March 31, 2022.

Loans and Leases by Year of Origination and Credit Quality Indicator																											Table 13
																							Revolving
																							Loans
																							Converted
		Term Loans																		Revolving			to Term
		Amortized Cost Basis by Origination Year																		Loans			Loans
																				Amortized			Amortized
(dollars in thousands)		2022			2021			2020			2019			2018			Prior			Cost Basis			Cost Basis			Total
Commercial Lending
Commercial and Industrial
Risk rating:
Pass		$	216,303		$	421,981		$	66,601		$	182,175		$	60,586		$	156,647		$	697,256		$	19,128		$	1,820,677
Special Mention			2,816			316			1,628			2,822			748			5,295			1,073			841			15,539
Substandard			—			320			1,103			1,605			1,019			879			16,214			114			21,254
Other (1)			12,807			9,613			11,531			5,366			3,075			1,576			40,694			—			84,662
Total Commercial and Industrial			231,926			432,230			80,863			191,968			65,428			164,397			755,237			20,083			1,942,132
Commercial Real Estate
Risk rating:
Pass			516,062			695,446			338,391			516,210			459,372			1,270,438			84,174			—			3,880,093
Special Mention			—			—			562			47,781			—			11,140			695			—			60,178
Substandard			—			—			180			—			1,742			14,476			3			—			16,401
Other (1)			—			—			—			—			—			156			—			—			156
Total Commercial Real Estate			516,062			695,446			339,133			563,991			461,114			1,296,210			84,872			—			3,956,828
Construction
Risk rating:
Pass			39,575			193,588			127,677			85,471			115,881			88,509			14,965			—			665,666
Special Mention			—			—			—			236			—			350			—			—			586
Substandard			—			—			—			—			351			498			—			—			849
Other (1)			13,228			29,529			6,049			2,849			3,913			4,151			951			—			60,670
Total Construction			52,803			223,117			133,726			88,556			120,145			93,508			15,916			—			727,771
Lease Financing
Risk rating:
Pass			41,656			26,813			49,889			43,989			7,801			68,457			—			—			238,605
Special Mention			—			457			2,642			1,358			11			17			—			—			4,485
Substandard			—			—			195			16			14			1,347			—			—			1,572
Total Lease Financing			41,656			27,270			52,726			45,363			7,826			69,821			—			—			244,662
Total Commercial Lending		$	842,447		$	1,378,063		$	606,448		$	889,878		$	654,513		$	1,623,936		$	856,025		$	20,083		$	6,871,393

																							Revolving
																							Loans
																							Converted
		Term Loans																		Revolving			to Term
		Amortized Cost Basis by Origination Year																		Loans			Loans
(continued)																				Amortized			Amortized
(dollars in thousands)		2022			2021			2020			2019			2018			Prior			Cost Basis			Cost Basis			Total
Residential Lending
Residential Mortgage
FICO:
740 and greater		$	352,342		$	1,069,214		$	587,478		$	252,428		$	178,752		$	974,057		$	—		$	—		$	3,414,271
680 - 739			46,224			124,306			79,422			45,117			21,882			144,226			—			—			461,177
620 - 679			5,305			19,143			14,291			5,405			3,892			38,470			—			—			86,506
550 - 619			169			1,943			294			226			2,073			8,017			—			—			12,722
Less than 550			2,085			1,242			60			—			340			4,656			—			—			8,383
No Score (3)			10,652			14,868			7,544			13,471			16,488			54,373			—			—			117,396
Other (2)			20,365			19,445			15,580			9,552			9,757			31,304			4,999			1,311			112,313
Total Residential Mortgage			437,142			1,250,161			704,669			326,199			233,184			1,255,103			4,999			1,311			4,212,768
Home Equity Line
FICO:
740 and greater			—			—			—			—			—			—			748,148			2,227			750,375
680 - 739			—			—			—			—			—			—			157,042			3,106			160,148
620 - 679			—			—			—			—			—			—			40,070			2,454			42,524
550 - 619			—			—			—			—			—			—			9,202			1,601			10,803
Less than 550			—			—			—			—			—			—			1,159			491			1,650
No Score (3)			—			—			—			—			—			—			6,069			—			6,069
Total Home Equity Line			—			—			—			—			—			—			961,690			9,879			971,569
Total Residential Lending			437,142			1,250,161			704,669			326,199			233,184			1,255,103			966,689			11,190			5,184,337
Consumer Lending
FICO:
740 and greater			115,911			132,565			66,828			59,155			38,001			17,426			117,266			203			547,355
680 - 739			53,590			80,240			45,783			41,393			23,562			13,947			67,636			566			326,717
620 - 679			11,760			35,430			17,746			22,180			13,928			11,374			30,079			1,018			143,515
550 - 619			1,000			6,548			6,576			10,400			7,652			6,801			10,044			1,026			50,047
Less than 550			379			1,758			2,973			5,022			2,547			2,525			3,047			483			18,734
No Score (3)			1,087			402			9			52			31			45			37,536			303			39,465
Other (2)			1,675			4,218			358			1,674			—			2,152			71,141			—			81,218
Total Consumer Lending			185,402			261,161			140,273			139,876			85,721			54,270			336,749			3,599			1,207,051
Total Loans and Leases		$	1,464,991		$	2,889,385		$	1,451,390		$	1,355,953		$	973,418		$	2,933,309		$	2,159,463		$	34,872		$	13,262,781

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(1)		Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score.
(2)		Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating.
(3)		No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.

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)		2022			2022			2021			2022			2021
Income Statement Data:
Net income		$	59,360		$	57,719		$	86,741		$	117,079		$	144,434
Average total stockholders' equity		$	2,262,654		$	2,547,865		$	2,691,966		$	2,404,471		$	2,709,735
Less: average goodwill			995,492			995,492			995,492			995,492			995,492
Average tangible stockholders' equity		$	1,267,162		$	1,552,373		$	1,696,474		$	1,408,979		$	1,714,243
Average total assets		$	25,250,176		$	25,080,453		$	24,015,065		$	25,165,783		$	23,482,839
Less: average goodwill			995,492			995,492			995,492			995,492			995,492
Average tangible assets		$	24,254,684		$	24,084,961		$	23,019,573		$	24,170,291		$	22,487,347
Return on average total stockholders' equity(1)			10.52	%		9.19	%		12.92	%		9.82	%		10.75	%
Return on average tangible stockholders' equity (non-GAAP)(1)			18.79	%		15.08	%		20.51	%		16.76	%		16.99	%
Return on average total assets(1)			0.94	%		0.93	%		1.45	%		0.94	%		1.24	%
Return on average tangible assets (non-GAAP)(1)			0.98	%		0.97	%		1.51	%		0.98	%		1.30	%

		As of			As of			As of			As of
		June 30,			March 31,			December 31,			June 30,
(dollars in thousands, except per share amounts)		2022			2022			2021			2021
Balance Sheet Data:
Total stockholders' equity		$	2,252,611		$	2,285,149		$	2,656,912		$	2,731,341
Less: goodwill			995,492			995,492			995,492			995,492
Tangible stockholders' equity		$	1,257,119		$	1,289,657		$	1,661,420		$	1,735,849
Total assets		$	25,377,533		$	25,042,720		$	24,992,410		$	24,246,328
Less: goodwill			995,492			995,492			995,492			995,492
Tangible assets		$	24,382,041		$	24,047,228		$	23,996,918		$	23,250,836
Shares outstanding			127,451,087			127,686,307			127,502,472			129,019,871
Total stockholders' equity to total assets			8.88	%		9.13	%		10.63	%		11.26	%
Tangible stockholders' equity to tangible assets (non-GAAP)			5.16	%		5.36	%		6.92	%		7.47	%
Book value per share		$	17.67		$	17.90		$	20.84		$	21.17
Tangible book value per share (non-GAAP)		$	9.86		$	10.10		$	13.03		$	13.45

---

(1)

Annualized for the three and six months ended June 30, 2022 and 2021, and three months ended March 31, 2022.

 

 

FAQ

What were First Hawaiian's earnings for the second quarter of 2022?

First Hawaiian reported net income of $59.4 million, or $0.46 per diluted share for Q2 2022.

How much did First Hawaiian's total loans increase in Q2 2022?

Total loans and leases increased by $371 million, or 2.9%, compared to the previous quarter.

What is the dividend declared by First Hawaiian for Q2 2022?

First Hawaiian declared a quarterly cash dividend of $0.26 per share, payable on September 2, 2022.

What was the net interest margin for First Hawaiian in Q2 2022?

The net interest margin for Q2 2022 was 2.60%, an increase of 18 basis points from the prior quarter.

How has First Hawaiian's asset quality changed in Q2 2022?

Non-performing assets decreased to 0.06% of total loans and leases as of June 30, 2022.