First Hawaiian, Inc. Reports Third Quarter 2024 Financial Results and Declares Dividend
HONOLULU, Oct. 25, 2024 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), ("First Hawaiian" or the "Company") today reported financial results for its quarter ended September 30, 2024.
"I'm happy to report that we had a very good third quarter," said Bob Harrison, Chairman, President, and CEO. "Net interest income and noninterest income increased over the prior quarter, expenses were well controlled and credit quality remained excellent. I'm also pleased to report that during the third quarter, Moody's reviewed and reaffirmed all of First Hawaiian Bank's long-term credit and deposit ratings."
On October 23, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on November 29, 2024, to stockholders of record at the close of business on November 18, 2024.
Third Quarter 2024 Highlights:
Net income of $61.5 million, or $0.48 per diluted share
Total loans and leases decreased $118.5 million versus the prior quarter
Total deposits decreased $91.1 million versus the prior quarter
Net interest margin increased 3 basis points to 2.95%
Recorded a $7.4 million provision for credit losses
Board of Directors declared a quarterly dividend of $0.26 per share
Balance Sheet
Total assets were $23.8 billion as of September 30, 2024, a decrease of $211.5 million, or 0.9%, from $24.0 billion as of June 30, 2024.
Gross loans and leases were $14.2 billion as of September 30, 2024, a decrease of $118.5 million, or 0.8%, from $14.4 billion as of June 30, 2024.
Total deposits were $20.2 billion as of September 30, 2024, a decrease of $91.1 million, or 0.4%, from $20.3 billion as of June 30, 2024.
Net Interest Income
Net interest income for the third quarter of 2024 was $156.7 million, an increase of $3.9 million, or 2.5%, compared to $152.9 million for the prior quarter.
The net interest margin was 2.95% in the third quarter of 2024, an increase of 3 basis points compared to 2.92% in the prior quarter.
Provision Expense
During the quarter ended September 30, 2024, we recorded a $7.4 million provision for credit losses. In the quarter ended June 30, 2024, we recorded a $1.8 million provision for credit losses.
Noninterest Income
Noninterest income was $53.3 million in the third quarter of 2024, an increase of $1.5 million compared to noninterest income of $51.8 million in the prior quarter.
Noninterest Expense
Noninterest expense was $126.1 million in the third quarter of 2024, an increase of $4.1 million compared to noninterest expense of $122.1 million in the prior quarter.
The efficiency ratio was 59.8% and 59.2% for the quarters ended September 30, 2024 and June 30, 2024, respectively.
Taxes
The effective tax rate was 19.6% and 23.3% for the quarters ended September 30, 2024 and June 30, 2024, respectively.
Asset Quality
The allowance for credit losses was $163.7 million, or 1.15% of total loans and leases, as of September 30, 2024, compared to $160.5 million, or 1.12% of total loans and leases, as of June 30, 2024. The reserve for unfunded commitments was $33.7 million as of September 30, 2024 compared to $33.4 million as of June 30, 2024. Net charge-offs were $3.9 million, or 0.11% of average loans and leases on an annualized basis, for the quarter ended September 30, 2024, compared to net charge-offs of $2.5 million, or 0.07% of average loans and leases on an annualized basis, for the quarter ended June 30, 2024. Total non-performing assets were $17.8 million, or 0.13% of total loans and leases and other real estate owned, as of September 30, 2024, compared to $18.0 million, or 0.13% of total loans and leases and other real estate owned, as of June 30, 2024.
Capital
Total stockholders' equity increased $97.7 million in the third quarter, and stood at $2.6 billion on September 30, 2024 and June 30, 2024.
The tier 1 leverage, common equity tier 1 and total capital ratios were 9.14%, 13.03% and 14.25%, respectively, on September 30, 2024, compared with 9.03%, 12.73% and 13.92%, respectively, on June 30, 2024.
The Company did not repurchase any shares in the third quarter.
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.
To access the call by phone, participants will need to click on the following registration link: https://register.vevent.com/register/BIec8273f35cc340bcb13d27eae17d127b, register for the conference call, and then you will receive the dial-in number and a personalized PIN code. 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 StatementsThis 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, 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 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, 2023 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024.
Use of Non-GAAP Financial MeasuresReturn 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)
Media Contact:Lindsay Chambers(808)
Financial Highlights
Table 1
For the Three Months Ended
For the Nine Months Ended
September 30,
June 30,
September 30,
September 30,
(dollars in thousands, except per share data)
2024
2024
2023
2024
2023
Operating Results:
Net interest income
$
156,707
$
152,851
$
157,148
$
463,985
$
484,334
Provision for credit losses
7,400
1,800
7,500
15,500
21,300
Noninterest income
53,288
51,768
46,097
156,427
142,468
Noninterest expense
126,147
122,086
119,383
377,046
358,831
Net income
61,492
61,921
58,221
177,633
187,481
Basic earnings per share
0.48
0.48
0.46
1.39
1.47
Diluted earnings per share
0.48
0.48
0.46
1.38
1.47
Dividends declared per share
0.26
0.26
0.26
0.78
0.78
Dividend payout ratio
54.17
%
54.17
%
56.52
%
56.52
%
53.06
%
Performance Ratios(1):
Net interest margin
2.95
%
2.92
%
2.86
%
2.93
%
2.96
%
Efficiency ratio
59.77
%
59.22
%
58.31
%
60.38
%
56.86
%
Return on average total assets
1.02
%
1.04
%
0.93
%
0.99
%
1.01
%
Return on average tangible assets (non-GAAP)(2)
1.06
%
1.08
%
0.97
%
1.03
%
1.06
%
Return on average total stockholders' equity
9.45
%
9.91
%
9.76
%
9.37
%
10.72
%
Return on average tangible stockholders' equity (non-GAAP)(2)
15.35
%
16.42
%
16.84
%
15.43
%
18.68
%
Average Balances:
Average loans and leases
$
14,304,806
$
14,358,049
$
14,349,402
$
14,325,065
$
14,238,309
Average earning assets
21,328,882
21,247,707
22,060,480
21,352,739
22,040,704
Average assets
24,046,696
23,958,913
24,727,893
24,064,208
24,699,826
Average deposits
20,367,805
20,308,028
21,212,102
20,415,746
21,245,055
Average stockholders' equity
2,588,806
2,512,471
2,367,422
2,532,911
2,337,292
Market Value Per Share:
Closing
23.15
20.76
18.05
23.15
18.05
High
26.18
22.68
22.59
26.18
28.28
Low
20.28
19.48
17.41
19.48
15.08
As of
As of
As of
As of
September 30,
June 30,
December 31,
September 30,
(dollars in thousands, except per share data)
2024
2024
2023
2023
Balance Sheet Data:
Loans and leases
$
14,241,370
$
14,359,899
$
14,353,497
$
14,332,335
Total assets
23,780,285
23,991,791
24,926,474
24,912,524
Total deposits
20,227,702
20,318,832
21,332,657
21,511,489
Short-term borrowings
250,000
500,000
500,000
500,000
Total stockholders' equity
2,648,034
2,550,312
2,486,066
2,351,009
Per Share of Common Stock:
Book value
$
20.71
$
19.94
$
19.48
$
18.42
Tangible book value (non-GAAP)(2)
12.92
12.16
11.68
10.62
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases
0.13
%
0.13
%
0.13
%
0.10
%
Allowance for credit losses for loans and leases / total loans and leases
1.15
%
1.12
%
1.09
%
1.08
%
Capital Ratios:
Common Equity Tier 1 Capital Ratio
13.03
%
12.73
%
12.39
%
12.21
%
Tier 1 Capital Ratio
13.03
%
12.73
%
12.39
%
12.21
%
Total Capital Ratio
14.25
%
13.92
%
13.57
%
13.38
%
Tier 1 Leverage Ratio
9.14
%
9.03
%
8.64
%
8.45
%
Total stockholders' equity to total assets
11.14
%
10.63
%
9.97
%
9.44
%
Tangible stockholders' equity to tangible assets (non-GAAP)(2)
7.25
%
6.76
%
6.23
%
5.67
%
Non-Financial Data:
Number of branches
48
48
50
50
Number of ATMs
273
272
275
294
Number of Full-Time Equivalent Employees
2,022
2,032
2,089
2,087
(1) Except for the efficiency ratio, amounts are annualized for the three and nine months ended September 30, 2024 and 2023 and three months ended June 30, 2024.
(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 Nine Months Ended
September 30,
June 30,
September 30,
September 30,
(dollars in thousands, except per share amounts)
2024
2024
2023
2024
2023
Interest income
Loans and lease financing
$
205,682
$
202,068
$
194,098
$
607,594
$
551,777
Available-for-sale investment securities
12,850
14,143
18,426
41,539
55,208
Held-to-maturity investment securities
16,937
17,575
18,271
52,305
55,510
Other
14,527
11,148
9,004
38,444
20,054
Total interest income
249,996
244,934
239,799
739,882
682,549
Interest expense
Deposits
87,500
85,609
74,651
257,252
176,006
Short-term and long-term borrowings
5,397
5,953
6,838
17,303
20,057
Other
392
521
1,162
1,342
2,152
Total interest expense
93,289
92,083
82,651
275,897
198,215
Net interest income
156,707
152,851
157,148
463,985
484,334
Provision for credit losses
7,400
1,800
7,500
15,500
21,300
Net interest income after provision for credit losses
149,307
151,051
149,648
448,485
463,034
Noninterest income
Service charges on deposit accounts
7,783
7,793
7,524
23,122
22,001
Credit and debit card fees
17,533
15,861
15,748
49,567
47,507
Other service charges and fees
11,790
11,036
9,546
32,730
27,764
Trust and investment services income
9,077
9,426
9,742
28,857
28,804
Bank-owned life insurance
4,502
3,360
1,872
12,148
10,263
Other
2,603
4,292
1,665
10,003
6,129
Total noninterest income
53,288
51,768
46,097
156,427
142,468
Noninterest expense
Salaries and employee benefits
59,563
57,737
55,937
176,562
169,873
Contracted services and professional fees
14,634
16,067
16,393
46,440
50,204
Occupancy
6,945
7,377
6,711
21,263
22,047
Equipment
13,078
13,196
11,826
39,687
32,562
Regulatory assessment and fees
3,412
3,814
4,149
15,346
11,661
Advertising and marketing
1,813
1,765
2,289
6,190
6,174
Card rewards program
8,678
8,719
8,358
25,905
24,124
Other
18,024
13,411
13,720
45,653
42,186
Total noninterest expense
126,147
122,086
119,383
377,046
358,831
Income before provision for income taxes
76,448
80,733
76,362
227,866
246,671
Provision for income taxes
14,956
18,812
18,141
50,233
59,190
Net income
$
61,492
$
61,921
$
58,221
$
177,633
$
187,481
Basic earnings per share
$
0.48
$
0.48
$
0.46
$
1.39
$
1.47
Diluted earnings per share
$
0.48
$
0.48
$
0.46
$
1.38
$
1.47
Basic weighted-average outstanding shares
127,886,167
127,867,853
127,609,860
127,820,737
127,552,255
Diluted weighted-average outstanding shares
128,504,035
128,262,594
127,936,440
128,362,433
127,897,829
Consolidated Balance Sheets
Table 3
September 30,
June 30,
December 31,
September 30,
(dollars in thousands, except share amount)
2024
2024
2023
2023
Assets
Cash and due from banks
$
252,209
$
290,501
$
185,015
$
246,028
Interest-bearing deposits in other banks
820,603
824,258
1,554,882
967,400
Investment securities:
Available-for-sale, at fair value (amortized cost: $2,290,781 as of September 30, 2024, $2,379,004 as of June 30, 2024, $2,558,675 as of December 31, 2023 and $3,172,031 as of September 30, 2023)
2,055,959
2,067,956
2,255,336
2,722,704
Held-to-maturity, at amortized cost (fair value: $3,475,143 as of September 30, 2024, $3,401,006 as of June 30, 2024, $3,574,856 as of December 31, 2023 and $3,433,029 as of September 30, 2023)
3,853,697
3,917,175
4,041,449
4,104,114
Loans held for sale
,
2,820
190
—
Loans and leases
14,241,370
14,359,899
14,353,497
14,332,335
Less: allowance for credit losses
163,700
160,517
156,533
154,795
Net loans and leases
14,077,670
14,199,382
14,196,964
14,177,540
Premises and equipment, net
287,036
283,762
281,461
277,805
Accrued interest receivable
81,875
82,512
84,417
84,327
Bank-owned life insurance
490,135
486,261
479,907
477,698
Goodwill
995,492
995,492
995,492
995,492
Mortgage servicing rights
5,236
5,395
5,699
5,855
Other assets
860,373
836,277
845,662
853,561
Total assets
$
23,780,285
$
23,991,791
$
24,926,474
$
24,912,524
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing
$
13,427,674
$
13,461,365
$
13,749,095
$
13,612,493
Noninterest-bearing
6,800,028
6,857,467
7,583,562
7,898,996
Total deposits
20,227,702
20,318,832
21,332,657
21,511,489
Short-term borrowings
250,000
500,000
500,000
500,000
Retirement benefits payable
100,448
101,304
103,285
99,685
Other liabilities
554,101
521,343
504,466
450,341
Total liabilities
21,132,251
21,441,479
22,440,408
22,561,515
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,735,601 / 127,886,167 shares as of September 30, 2024, issued/outstanding: 141,728,446 / 127,879,012 shares as of June 30, 2024, issued/outstanding: 141,340,539 / 127,618,761 shares as of December 31, 2023 and issued/outstanding: 141,330,663 / 127,609,934 shares as of September 30, 2023)
1,417
1,417
1,413
1,413
Additional paid-in capital
2,558,158
2,554,795
2,548,250
2,545,659
Retained earnings
915,062
887,176
837,859
823,895
Accumulated other comprehensive loss, net
(452,658
)
(519,132
)
(530,210
)
(648,731
)
Treasury stock (13,849,434 shares as of September 30, 2024, 13,849,434 shares as of June 30, 2024, 13,721,778 shares as of December 31, 2023 and 13,720,729 shares as of September 30, 2023)
(373,945
)
(373,944
)
(371,246
)
(371,227
)
Total stockholders' equity
2,648,034
2,550,312
2,486,066
2,351,009
Total liabilities and stockholders' equity
$
23,780,285
$
23,991,791
$
24,926,474
$
24,912,524
Average Balances and Interest Rates
Table 4
Three Months Ended
Three Months Ended
Three Months Ended
September 30, 2024
June 30, 2024
September 30, 2023
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
$
1,020.4
$
13.9
5.40
%
$
773.4
$
10.5
5.45
%
$
608.6
$
8.2
5.36
%
Available-for-Sale Investment Securities
Taxable
2,062.6
12.8
2.48
2,100.7
14.1
2.69
2,834.6
18.4
2.59
Non-Taxable
1.5
,
5.06
1.5
—
5.76
2.3
—
5.48
Held-to-Maturity Investment Securities
Taxable
3,288.2
13.8
1.67
3,358.2
14.4
1.71
3,544.1
15.0
1.70
Non-Taxable
602.3
3.7
2.46
602.9
4.0
2.64
604.3
4.1
2.66
Total Investment Securities
5,954.6
30.3
2.03
6,063.3
32.5
2.15
6,985.3
37.5
2.14
Loans Held for Sale
2.2
,
5.64
1.0
—
6.58
0.4
—
6.63
Loans and Leases(1)
Commercial and industrial
2,165.3
38.0
6.98
2,201.6
38.1
6.96
2,123.5
35.7
6.66
Commercial real estate
4,278.3
71.6
6.67
4,305.6
71.5
6.68
4,381.8
71.4
6.47
Construction
1,040.7
20.3
7.74
984.8
18.5
7.57
873.7
15.5
7.05
Residential:
Residential mortgage
4,204.5
40.4
3.84
4,229.4
40.1
3.80
4,316.3
40.1
3.72
Home equity line
1,158.5
13.2
4.52
1,164.2
12.6
4.35
1,154.0
10.1
3.45
Consumer
1,035.3
18.7
7.19
1,054.1
17.7
6.74
1,172.8
18.3
6.19
Lease financing
422.2
4.0
3.72
418.3
4.3
4.09
327.3
3.7
4.48
Total Loans and Leases
14,304.8
206.2
5.74
14,358.0
202.8
5.67
14,349.4
194.8
5.39
Other Earning Assets
46.9
0.7
5.83
52.0
0.7
5.25
116.8
0.8
2.64
Total Earning Assets(2)
21,328.9
251.1
4.69
21,247.7
246.5
4.66
22,060.5
241.3
4.35
Cash and Due from Banks
242.3
240.4
276.0
Other Assets
2,475.5
2,470.8
2,391.4
Total Assets
$
24,046.7
$
23,958.9
$
24,727.9
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings
$
5,963.1
$
23.6
1.57
%
$
6,000.4
$
23.4
1.57
%
$
5,982.5
$
19.2
1.27
%
Money Market
4,179.5
31.9
3.04
4,076.7
30.6
3.02
3,907.2
24.7
2.51
Time
3,327.3
32.0
3.83
3,284.3
31.6
3.87
3,362.7
30.8
3.63
Total Interest-Bearing Deposits
13,469.9
87.5
2.58
13,361.4
85.6
2.58
13,252.4
74.7
2.23
Other Short-Term Borrowings
451.1
5.4
4.76
500.0
6.0
4.79
113.1
1.5
5.17
Long-Term Borrowings
,
,
,
—
—
—
440.2
5.3
4.83
Other Interest-Bearing Liabilities
22.4
0.4
6.97
38.2
0.5
5.48
89.1
1.2
5.17
