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

HONOLULU, Oct. 28, 2022 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ: FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended September 30, 2022.

“I’m pleased to report that we had a very strong third quarter, as net income increased by over 16% from the prior quarter,” said Bob Harrison, Chairman, President and CEO. “We had robust loan growth and credit quality remained excellent.”

On October 26, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on December 2, 2022, to stockholders of record at the close of business on November 21, 2022.

Third Quarter 2022 Highlights:

• Net income of $69.0 million, or $0.54 per diluted share
• Total loans and leases increased $437.6 million versus prior quarter
• Total deposits decreased $509.7 million versus prior quarter
• Net interest margin increased 33 basis points to 2.93%
• Recorded a $3.2 million provision for credit losses
• Board of Directors declared a quarterly dividend of $0.26 per share

Balance SheetTotal assets were $24.9 billion as of September 30, 2022, compared to $25.4 billion as of June 30, 2022.

Gross loans and leases were $13.7 billion as of September 30, 2022, an increase of $437.6 million, or 3.3%, from $13.3 billion as of June 30, 2022.

Total deposits were $22.1 billion as of September 30, 2022, a decrease of $509.7 million, or 2.3%, from $22.6 billion as of June 30, 2022.

Net Interest IncomeNet interest income for the third quarter of 2022 was $162.7 million, an increase of $17.6 million, or 12.1%, compared to $145.1 million for the prior quarter.

The net interest margin was 2.93% in the third quarter of 2022, an increase of 33 basis points compared to 2.60% in the prior quarter.

Provision ExpenseDuring the quarter ended September 30, 2022, we recorded a $3.2 million provision for credit losses. In the quarter ended June 30, 2022, we recorded a $1.0 million provision for credit losses.

Noninterest IncomeNoninterest income was $45.9 million in the third quarter of 2022, an increase of $1.7 million compared to noninterest income of $44.1 million in the prior quarter.

Noninterest ExpenseNoninterest expense was $113.3 million in the third quarter of 2022, an increase of $4.2 million compared to noninterest expense of $109.2 million in the prior quarter.

The efficiency ratio was 54.0% and 57.3% for the quarters ended September 30, 2022 and June 30, 2022, respectively.

TaxesThe effective tax rate was 25.0% for the quarters ended September 30, 2022 and June 30, 2022.

Asset QualityThe allowance for credit losses was $148.2 million, or 1.08% of total loans and leases, as of September 30, 2022, compared to $148.9 million, or 1.12% of total loans and leases, as of June 30, 2022. The reserve for unfunded commitments was $30.1 million as of September 30, 2022, compared to $29.0 million as of June 30, 2022. Net charge-offs were $2.8 million, or 0.08% of average loans and leases on an annualized basis, for the quarter ended September 30, 2022, compared to net charge-offs of $2.3 million, or 0.07% of average loans and leases on an annualized basis, for the quarter ended June 30, 2022. Total non-performing assets were $8.4 million, or 0.06% of total loans and leases and other real estate owned, on September 30, 2022, compared to total non-performing assets of $7.9 million, or 0.06% of total loans and leases and other real estate owned, on June 30, 2022.

CapitalTotal stockholders’ equity was $2.2 billion on September 30, 2022 compared to $2.3 billion on June 30, 2022.

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.78%, 11.79%, and 12.92%, respectively, on September 30, 2022, compared with 7.54%, 11.98%, and 13.14%, respectively, on June 30, 2022.

The Company repurchased 0.1 million shares of common stock at a total cost of $2.5 million under the stock repurchase program in the third quarter. The average cost was $23.24 per share repurchased. Remaining buyback authority under the stock repurchase program was $65.5 million on September 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/BIefa7fae07c09405291195a9acfdb68b6, 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 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. 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 Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022.

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) 525-6268[email protected]

Media Contact:Lindsay Chambers(808) 525-6254[email protected]

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)		2022			2022			2021				2022				2021
Operating Results:
Net interest income		$	162,736		$	145,147		$	132,593			$	441,755			$	393,232
Provision for credit losses			3,183			1,000			(4,000	)			(1,564	)			(39,000	)
Noninterest income			45,857			44,137			50,104				131,374				143,343
Noninterest expense			113,332			109,175			101,036				326,549				296,730
Net income			69,018			59,360			64,279				186,097				208,713
Basic earnings per share			0.54			0.46			0.50				1.46				1.61
Diluted earnings per share			0.54			0.46			0.50				1.45				1.61
Dividends declared per share			0.26			0.26			0.26				0.78				0.78
Dividend payout ratio			48.15	%		56.52	%		52.00	%			53.79	%			48.45	%
Performance Ratios(1):
Net interest margin			2.93	%		2.60	%		2.36	%			2.65	%			2.45	%
Efficiency ratio			53.98	%		57.33	%		55.07	%			56.63	%			55.10	%
Return on average total assets			1.10	%		0.94	%		1.02	%			0.99	%			1.16	%
Return on average tangible assets (non-GAAP)(2)			1.14	%		0.98	%		1.06	%			1.03	%			1.21	%
Return on average total stockholders’ equity			12.08	%		10.52	%		9.31	%			10.55	%			10.26	%
Return on average tangible stockholders’ equity (non-GAAP)(2)			21.53	%		18.79	%		14.63	%			18.26	%			16.19	%
Average Balances:
Average loans and leases		$	13,491,428		$	13,058,558		$	12,881,885			$	13,125,660			$	13,108,427
Average earning assets			22,258,066			22,520,605			22,533,174				22,413,209				21,523,731
Average assets			24,957,042			25,250,176			25,058,085				25,095,438				24,013,691
Average deposits			22,148,039			22,401,558			21,621,836				22,170,824				20,595,400
Average stockholders’ equity			2,267,152			2,262,654			2,738,540				2,358,195				2,719,442
Market Value Per Share:
Closing			24.63			22.71			29.35				24.63				29.35
High			28.14			28.44			30.06				31.16				30.80
Low			21.21			21.49			25.75				21.21				23.14

		As of			As of			As of			As of
		September 30,			June 30,			December 31,			September 30,
(dollars in thousands, except per share data)		2022			2022			2021			2021
Balance Sheet Data:
Loans and leases		$	13,700,374		$	13,262,781		$	12,961,999		$	12,834,339
Total assets			24,870,272			25,377,533			24,992,410			25,548,322
Total deposits			22,091,738			22,601,454			21,816,146			22,120,003
Long-term borrowings			—			—			—			200,000
Total stockholders’ equity			2,200,651			2,252,611			2,656,912			2,711,734
Per Share of Common Stock:
Book value		$	17.28		$	17.67		$	20.84		$	21.14
Tangible book value (non-GAAP)(2)			9.46			9.86			13.03			13.38
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases			0.06	%		0.06	%		0.05	%		0.07	%
Allowance for credit losses for loans and leases / total loans and leases			1.08	%		1.12	%		1.21	%		1.26	%
Capital Ratios:
Common Equity Tier 1 Capital Ratio			11.79	%		11.98	%		12.24	%		12.63	%
Tier 1 Capital Ratio			11.79	%		11.98	%		12.24	%		12.63	%
Total Capital Ratio			12.92	%		13.14	%		13.49	%		13.88	%
Tier 1 Leverage Ratio			7.78	%		7.54	%		7.24	%		7.39	%
Total stockholders’ equity to total assets			8.85	%		8.88	%		10.63	%		10.61	%
Tangible stockholders’ equity to tangible assets (non-GAAP)(2)			5.05	%		5.16	%		6.92	%		6.99	%
Non-Financial Data:
Number of branches			51			51			54			54
Number of ATMs			303			297			299			298
Number of Full-Time Equivalent Employees			2,042			2,021			2,036			2,025

(1)  Except for the efficiency ratio, amounts are annualized for the three and nine months ended September 30, 2022 and 2021 and the three months ended June 30, 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 Nine Months Ended
		September 30,				June 30,				September 30,				September 30,
(dollars in thousands, except per share amounts)		2022				2022				2021				2022				2021
Interest income
Loans and lease financing		$	134,646			$	111,916			$	110,765			$	350,294			$	332,623
Available-for-sale investment securities			19,644				16,643				25,234				68,394				73,017
Held-to-maturity investment securities			17,950				18,289				—				36,239				—
Other			4,150				2,896				1,205				7,828				2,362
Total interest income			176,390				149,744				137,204				462,755				408,002
Interest expense
Deposits			13,653				4,597				3,218				20,999				10,637
Short-term and long-term borrowings			1				—				1,393				1				4,133
Total interest expense			13,654				4,597				4,611				21,000				14,770
Net interest income			162,736				145,147				132,593				441,755				393,232
Provision for credit losses			3,183				1,000				(4,000	)			(1,564	)			(39,000	)
Net interest income after provision for credit losses			159,553				144,147				136,593				443,319				432,232
Noninterest income
Service charges on deposit accounts			7,089				6,843				6,989				21,433				20,339
Credit and debit card fees			17,746				17,056				16,017				49,652				47,314
Other service charges and fees			9,179				9,018				10,233				27,851				29,382
Trust and investment services income			9,800				8,759				8,625				27,442				25,824
Bank-owned life insurance			(341	)			(859	)			4,841				(1,617	)			10,334
Investment securities gains, net			—				—				—				—				102
Other			2,384				3,320				3,399				6,613				10,048
Total noninterest income			45,857				44,137				50,104				131,374				143,343
Noninterest expense
Salaries and employee benefits			51,372				49,902				46,484				149,500				136,402
Contracted services and professional fees			16,625				18,617				15,042				52,389				48,746
Occupancy			8,115				7,334				6,790				22,859				21,274
Equipment			10,791				7,754				6,549				24,522				18,402
Regulatory assessment and fees			2,487				2,301				1,828				7,012				5,688
Advertising and marketing			1,902				1,994				1,469				5,924				4,529
Card rewards program			8,141				7,285				6,676				22,309				17,773
Other			13,899				13,988				16,198				42,034				43,916
Total noninterest expense			113,332				109,175				101,036				326,549				296,730
Income before provision for income taxes			92,078				79,109				85,661				248,144				278,845
Provision for income taxes			23,060				19,749				21,382				62,047				70,132
Net income		$	69,018			$	59,360			$	64,279			$	186,097			$	208,713
Basic earnings per share		$	0.54			$	0.46			$	0.50			$	1.46			$	1.61
Diluted earnings per share		$	0.54			$	0.46			$	0.50			$	1.45			$	1.61
Basic weighted-average outstanding shares			127,377,713				127,672,244				128,660,038				127,534,746				129,323,973
Diluted weighted-average outstanding shares			127,796,617				128,014,777				129,210,448				127,996,672				129,895,311

Consolidated Balance Sheets		Table 3
		September 30,				June 30,				December 31,				September 30,
(dollars in thousands)		2022				2022				2021				2021
Assets
Cash and due from banks		$	291,360			$	279,629			$	246,716			$	268,467
Interest-bearing deposits in other banks			657,574				1,254,047				1,011,753				2,130,615
Investment securities:
Available-for-sale, at fair value (amortized cost: $3,673,396 as of September 30, 2022, $4,267,809 as of June 30, 2022, $8,560,733 as of December 31, 2021 and $7,994,266 as of September 30, 2021)			3,289,160				3,967,746				8,428,032				7,953,727
Held-to-maturity, at amortized cost (fair value: $3,960,713 as of September 30, 2022, $3,910,780 as of June 30, 2022 and nil as of December 31, 2021 and September 30, 2021)			4,406,143				4,093,215				—				—
Loans held for sale			361				180				538				2,052
Loans and leases			13,700,374				13,262,781				12,961,999				12,834,339
Less: allowance for credit losses			148,163				148,942				157,262				161,246
Net loans and leases			13,552,211				13,113,839				12,804,737				12,673,093
Premises and equipment, net			299,179				310,047				318,448				317,272
Other real estate owned and repossessed personal property			139				—				175				—
Accrued interest receivable			68,545				63,240				63,158				64,855
Bank-owned life insurance			470,202				470,542				471,819				468,968
Goodwill			995,492				995,492				995,492				995,492
Mortgage servicing rights			6,866				7,152				8,302				9,107
Other assets			833,040				822,404				643,240				664,674
Total assets		$	24,870,272			$	25,377,533			$	24,992,410			$	25,548,322
Liabilities and Stockholders’ Equity
Deposits:
Interest-bearing		$	12,774,645			$	12,990,571			$	12,422,283			$	13,246,579
Noninterest-bearing			9,317,093				9,610,883				9,393,863				8,873,424
Total deposits			22,091,738				22,601,454				21,816,146				22,120,003
Long-term borrowings			—				—				—				200,000
Retirement benefits payable			133,981				134,151				134,491				144,400
Other liabilities			443,902				389,317				384,861				372,185
Total liabilities			22,669,621				23,124,922				22,335,498				22,836,588
Stockholders’ equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,958,520 / 127,357,680 shares as of September 30, 2022, issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022, issued/outstanding: 140,581,715 / 127,502,472 shares as of December 31, 2021 and issued/outstanding: 140,563,799 / 128,255,570 shares as of September 30, 2021)			1,410				1,409				1,406				1,406
Additional paid-in capital			2,535,601				2,533,407				2,527,663				2,524,168
Retained earnings			690,433				654,777				604,534				581,094
Accumulated other comprehensive loss, net			(658,756	)			(571,457	)			(121,693	)			(61,463	)
Treasury stock (13,600,840 shares as of September 30, 2022, 13,492,821 shares as of June 30, 2022, 13,079,243 shares as of December 31, 2021 and 12,308,229 shares as of September 30, 2021)			(368,037	)			(365,525	)			(354,998	)			(333,471	)
Total stockholders’ equity			2,200,651				2,252,611				2,656,912				2,711,734
Total liabilities and stockholders’ equity		$	24,870,272			$	25,377,533			$	24,992,410			$	25,548,322

Average Balances and Interest Rates																								Table 4
		Three Months Ended								Three Months Ended								Three Months Ended
		September 30, 2022								June 30, 2022								September 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		$	724.0		$	4.0		2.20	%	$	1,297.3		$	2.8		0.85	%	$	2,356.4		$	0.9		0.16	%
Available-for-Sale Investment Securities
Taxable			3,733.8			19.2		2.05			3,946.4			16.6		1.68			6,654.6			22.9		1.37
Non-Taxable			45.1			0.6		5.16			8.4			0.1		5.26			561.1			2.9		2.11
Held-to-Maturity Investment Securities
Taxable			3,573.6			14.6		1.64			3,533.6			15.0		1.70			—			—		—
Non-Taxable			613.6			4.2		2.72			607.0			4.1		2.71			—			—		—
Total Investment Securities			7,966.1			38.6		1.93			8,095.4			35.8		1.77			7,215.7			25.8		1.43
Loans Held for Sale			0.7			—		3.62			0.3			—		5.06			2.2			—		2.39
Loans and Leases(1)
Commercial and industrial			2,025.5			20.7		4.05			1,951.3			15.0		3.09			2,367.2			19.7		3.29
Commercial real estate			4,016.7			42.3		4.18			3,808.9			30.7		3.23			3,447.0			25.4		2.92
Construction			737.4			8.6		4.63			711.3			6.3		3.57			862.4			7.0		3.24
Residential:
Residential mortgage			4,224.0			36.4		3.45			4,183.0			36.7		3.51			3,866.1			34.6		3.58
Home equity line			991.1			7.2		2.87			945.7			5.9		2.49			837.7			5.5		2.62
Consumer			1,218.0			17.1		5.57			1,218.0			15.5		5.09			1,260.2			16.8		5.28
Lease financing			278.7			2.7		3.81			240.4			2.1		3.53			241.3			2.0		3.23
Total Loans and Leases			13,491.4			135.0		3.98			13,058.6			112.2		3.44			12,881.9			111.0		3.43
Other Earning Assets			75.9			0.1		0.69			69.0			0.1		0.79			77.0			0.3		1.34
Total Earning Assets(2)			22,258.1			177.7		3.18			22,520.6			150.9		2.68			22,533.2			138.0		2.44
Cash and Due from Banks			277.0								300.8								290.5
Other Assets			2,421.9								2,428.8								2,234.4
Total Assets		$	24,957.0							$	25,250.2							$	25,058.1
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings		$	6,871.5		$	6.7		0.39	%	$	6,971.3		$	1.7		0.10	%		6,886.0		$	0.6		0.03	%
Money Market			4,086.1			4.8		0.47			4,127.4			1.4		0.14			3,957.1			0.5		0.05
Time			1,720.5			2.1		0.48			1,671.4			1.5		0.36			1,884.4			2.1		0.45
Total Interest-Bearing Deposits			12,678.1			13.6		0.43			12,770.1			4.6		0.14			12,727.5			3.2		0.10
Federal Funds Purchased			0.2			—		1.67			—			—		—			—			—		—
Long-Term Borrowings			—			—		—			—			—		—			200.0			1.4		2.76
Total Interest-Bearing Liabilities			12,678.3			13.6		0.43			12,770.1			4.6		0.14			12,927.5			4.6		0.14
Net Interest Income					$	164.1							$	146.3							$	133.4
Interest Rate Spread								2.75	%							2.54	%							2.30	%
Net Interest Margin								2.93	%							2.60	%							2.36	%
Noninterest-Bearing Demand Deposits			9,469.9								9,631.4								8,894.3
Other Liabilities			541.6								586.0								497.7
Stockholders’ Equity			2,267.2								2,262.7								2,738.6
Total Liabilities and Stockholders’ Equity		$	24,957.0							$	25,250.2							$	25,058.1

(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 $1.3 million, $1.2 million and $0.8 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively.

Average Balances and Interest Rates																Table 5
		Nine Months Ended								Nine Months Ended
		September 30, 2022								September 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		$	1,051.7		$	7.3		0.93	%	$	1,604.6		$	1.5		0.13	%
Available-for-Sale Investment Securities
Taxable			5,145.3			64.9		1.68			6,303.5			67.5		1.43
Non-Taxable			227.9			4.4		2.59			436.9			6.9		2.11
Held-to-Maturity Investment Securities
Taxable			2,382.2			29.7		1.66			—			—		—
Non-Taxable			409.1			8.3		2.71			—			—		—
Total Investment Securities			8,164.5			107.3		1.75			6,740.4			74.4		1.47
Loans Held for Sale			0.7			—		2.92			4.4			0.1		2.31
Loans and Leases(1)
Commercial and industrial			1,983.5			50.3		3.39			2,756.2			61.2		2.97
Commercial real estate			3,820.6			98.8		3.46			3,417.5			75.6		2.96
Construction			738.4			20.7		3.74			803.8			19.2		3.19
Residential:
Residential mortgage			4,173.1			108.0		3.45			3,776.5			103.3		3.65
Home equity line			943.2			18.5		2.62			824.1			16.7		2.71
Consumer			1,218.2			48.1		5.29			1,287.1			51.4		5.34
Lease financing			248.7			6.7		3.60			243.2			5.7		3.10
Total Loans and Leases			13,125.7			351.1		3.57			13,108.4			333.1		3.39
Other Earning Assets			70.6			0.5		0.92			65.9			0.8		1.65
Total Earning Assets(2)			22,413.2			466.2		2.78			21,523.7			409.9		2.54
Cash and Due from Banks			289.9								291.7
Other Assets			2,392.3								2,198.3
Total Assets		$	25,095.4							$	24,013.7
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings		$	6,837.8		$	8.9		0.17	%	$	6,410.9		$	1.7		0.04	%
Money Market			4,087.6			6.8		0.22			3,758.3			1.5		0.05
Time			1,713.4			5.3		0.41			2,067.7			7.4		0.48
Total Interest-Bearing Deposits			12,638.8			21.0		0.22			12,236.9			10.6		0.12
Federal Funds Purchased			0.1			—		1.67			—			—		—
Long-Term Borrowings			—			—		—			200.0			4.2		2.76
Total Interest-Bearing Liabilities			12,638.9			21.0		0.22			12,436.9			14.8		0.16
Net Interest Income					$	445.2							$	395.1
Interest Rate Spread								2.56	%							2.38	%
Net Interest Margin								2.65	%							2.45	%
Noninterest-Bearing Demand Deposits			9,532.0								8,358.5
Other Liabilities			566.3								498.9
Stockholders’ Equity			2,358.2								2,719.4
Total Liabilities and Stockholders’ Equity		$	25,095.4							$	24,013.7

(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 $3.5 million and $1.9 million for the nine months ended September 30, 2022 and 2021, respectively.

Analysis of Change in Net Interest Income											Table 6
		Three Months Ended September 30, 2022
		Compared to June 30, 2022
(dollars in millions)		Volume				Rate				Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks		$	(1.7	)		$	2.9			$	1.2
Available-for-Sale Investment Securities
Taxable			(0.9	)			3.5				2.6
Non-Taxable			0.5				—				0.5
Held-to-Maturity Investment Securities
Taxable			0.2				(0.6	)			(0.4	)
Non-Taxable			0.1				—				0.1
Total Investment Securities			(0.1	)			2.9				2.8
Loans and Leases
Commercial and industrial			0.6				5.1				5.7
Commercial real estate			1.8				9.8				11.6
Construction			0.3				2.0				2.3
Residential:
Residential mortgage			0.3				(0.6	)			(0.3	)
Home equity line			0.3				1.0				1.3
Consumer			—				1.6				1.6
Lease financing			0.4				0.2				0.6
Total Loans and Leases			3.7				19.1				22.8
Total Change in Interest Income			1.9				24.9				26.8
Change in Interest Expense:
Interest-Bearing Deposits
Savings			—				5.0				5.0
Money Market			—				3.4				3.4
Time			—				0.6				0.6
Total Interest-Bearing Deposits			—				9.0				9.0
Total Change in Interest Expense			—				9.0				9.0
Change in Net Interest Income		$	1.9			$	15.9			$	17.8

Analysis of Change in Net Interest Income											Table 7
		Three Months Ended September 30, 2022
		Compared to September 30, 2021
(dollars in millions)		Volume				Rate				Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks		$	(1.1	)		$	4.2			$	3.1
Available-for-Sale Investment Securities
Taxable			(12.4	)			8.7				(3.7	)
Non-Taxable			(4.2	)			1.9				(2.3	)
Held-to-Maturity Investment Securities
Taxable			14.6				—				14.6
Non-Taxable			4.2				—				4.2
Total Investment Securities			2.2				10.6				12.8
Loans and Leases
Commercial and industrial			(3.0	)			4.1				1.1
Commercial real estate			4.7				12.2				16.9
Construction			(1.1	)			2.6				1.5
Residential:
Residential mortgage			3.1				(1.3	)			1.8
Home equity line			1.1				0.6				1.7
Consumer			(0.6	)			0.9				0.3
Lease financing			0.3				0.4				0.7
Total Loans and Leases			4.5				19.5				24.0
Other Earning Assets			—				(0.2	)			(0.2	)
Total Change in Interest Income			5.6				34.1				39.7
Change in Interest Expense:
Interest-Bearing Deposits
Savings			—				6.1				6.1
Money Market			—				4.3				4.3
Time			(0.2	)			0.2				—
Total Interest-Bearing Deposits			(0.2	)			10.6				10.4
Long-Term Borrowings			(0.7	)			(0.7	)			(1.4	)
Total Change in Interest Expense			(0.9	)			9.9				9.0
Change in Net Interest Income		$	6.5			$	24.2			$	30.7

Analysis of Change in Net Interest Income											Table 8
		Nine Months Ended September 30, 2022
		Compared to September 30, 2021
(dollars in millions)		Volume				Rate				Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks		$	(0.7	)		$	6.5			$	5.8
Available-for-Sale Investment Securities
Taxable			(13.4	)			10.8				(2.6	)
Non-Taxable			(3.8	)			1.3				(2.5	)
Held-to-Maturity Investment Securities
Taxable			29.7				—				29.7
Non-Taxable			8.3				—				8.3
Total Investment Securities			20.8				12.1				32.9
Loans Held for Sale			(0.1	)			—				(0.1	)
Loans and Leases
Commercial and industrial			(18.8	)			7.9				(10.9	)
Commercial real estate			9.5				13.7				23.2
Construction			(1.6	)			3.1				1.5
Residential:
Residential mortgage			10.5				(5.8	)			4.7
Home equity line			2.3				(0.5	)			1.8
Consumer			(2.8	)			(0.5	)			(3.3	)
Lease financing			0.1				0.9				1.0
Total Loans and Leases			(0.8	)			18.8				18.0
Other Earning Assets			0.1				(0.4	)			(0.3	)
Total Change in Interest Income			19.3				37.0				56.3
Change in Interest Expense:
Interest-Bearing Deposits
Savings			0.1				7.1				7.2
Money Market			0.1				5.2				5.3
Time			(1.1	)			(1.0	)			(2.1	)
Total Interest-Bearing Deposits			(0.9	)			11.3				10.4
Long-Term Borrowings			(2.1	)			(2.1	)			(4.2	)
Total Change in Interest Expense			(3.0	)			9.2				6.2
Change in Net Interest Income		$	22.3			$	27.8			$	50.1

Loans and Leases												Table 9
		September 30,			June 30,			December 31,			September 30,
(dollars in thousands)		2022			2022			2021			2021
Commercial and industrial:
Commercial and industrial excluding Paycheck Protection Program loans		$	2,017,095		$	1,898,899		$	1,870,657		$	1,692,315
Paycheck Protection Program loans			26,712			43,233			216,442			503,069
Total commercial and industrial			2,043,807			1,942,132			2,087,099			2,195,384
Commercial real estate			4,103,310			3,956,828			3,639,623			3,569,768
Construction			765,862			727,771			813,969			826,078
Residential:
Residential mortgage			4,252,041			4,212,768			4,083,367			3,914,632
Home equity line			1,010,631			971,569			876,608			852,074
Total residential			5,262,672			5,184,337			4,959,975			4,766,706
Consumer			1,218,885			1,207,051			1,229,939			1,238,714
Lease financing			305,838			244,662			231,394			237,689
Total loans and leases		$	13,700,374		$	13,262,781		$	12,961,999		$	12,834,339

Deposits												Table 10
		September 30,			June 30,			December 31,			September 30,
(dollars in thousands)		2022			2022			2021			2021
Demand		$	9,317,093		$	9,610,883		$	9,393,863		$	8,873,424
Savings			6,724,783			7,243,185			6,612,775			7,347,079
Money Market			4,150,940			4,079,706			4,033,070			4,019,250
Time			1,898,922			1,667,680			1,776,438			1,880,250
Total Deposits		$	22,091,738		$	22,601,454		$	21,816,146		$	22,120,003

Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More												Table 11
		September 30,			June 30,			December 31,			September 30,
(dollars in thousands)		2022			2022			2021			2021
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial		$	1,528		$	682		$	718		$	746
Commercial real estate			727			727			727			745
Total Commercial Loans			2,255			1,409			1,445			1,491
Residential Loans:
Residential mortgage			6,028			6,450			5,637			7,137
Total Residential Loans			6,028			6,450			5,637			7,137
Total Non-Accrual Loans and Leases			8,283			7,859			7,082			8,628
Other Real Estate Owned			139			—			175			—
Total Non-Performing Assets		$	8,422		$	7,859		$	7,257		$	8,628
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial		$	1,445		$	2,230		$	740		$	439
Commercial real estate			—			176			—			—
Construction			390			352			—			—
Total Commercial Loans			1,835			2,758			740			439
Residential Loans:
Residential mortgage			—			750			987			100
Home equity line			1,832			1,039			3,681			3,871
Total Residential Loans			1,832			1,789			4,668			3,971
Consumer			1,976			1,218			1,800			1,376
Total Accruing Loans and Leases Past Due 90 Days or More		$	5,643		$	5,765		$	7,208		$	5,786
Restructured Loans on Accrual Status and Not Past Due 90 Days or More		$	27,342		$	29,440		$	34,893		$	36,234
Total Loans and Leases		$	13,700,374		$	13,262,781		$	12,961,999		$	12,834,339

Allowance for Credit Losses and Reserve for Unfunded Commitments																			Table 12
		For the Three Months Ended												For the Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
(dollars in thousands)		2022				2022				2021				2022				2021
Balance at Beginning of Period		$	177,900			$	179,238			$	198,370				187,584				239,057
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial			(328	)			(243	)			(224	)			(1,277	)			(1,517	)
Commercial real estate			(750	)			—				—				(750	)			(66	)
Total Commercial Loans			(1,078	)			(243	)			(224	)			(2,027	)			(1,583	)
Residential Loans:
Residential mortgage			(1	)			—				—				(1	)			(98	)
Home equity line			—				(1,120	)			(235	)			(1,163	)			(235	)
Total Residential Loans			(1	)			(1,120	)			(235	)			(1,164	)			(333	)
Consumer			(3,986	)			(3,659	)			(2,926	)			(11,754	)			(13,384	)
Total Loans and Leases Charged-Off			(5,065	)			(5,022	)			(3,385	)			(14,945	)			(15,300	)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial			240				301				121				594				623
Commercial real estate			—				—				15				14				30
Construction			—				—				—				—				166
Lease financing			—				60				—				60				—
Total Commercial Loans			240				361				136				668				819
Residential Loans:
Residential mortgage			37				192				215				245				246
Home equity line			356				191				27				575				89
Total Residential Loans			393				383				242				820				335
Consumer			1,653				1,940				2,405				5,741				7,857
Total Recoveries on Loans and Leases Previously Charged-Off			2,286				2,684				2,783				7,229				9,011
Net Loans and Leases Charged-Off			(2,779	)			(2,338	)			(602	)			(7,716	)			(6,289	)
Provision for Credit Losses			3,183				1,000				(4,000	)			(1,564	)			(39,000	)
Balance at End of Period		$	178,304			$	177,900			$	193,768			$	178,304			$	193,768
Components:
Allowance for Credit Losses		$	148,163			$	148,942			$	161,246			$	148,163			$	161,246
Reserve for Unfunded Commitments			30,141				28,958				32,522				30,141				32,522
Total Allowance for Credit Losses and Reserve for Unfunded Commitments		$	178,304			$	177,900			$	193,768			$	178,304			$	193,768
Average Loans and Leases Outstanding		$	13,491,428			$	13,058,558			$	12,881,885			$	13,125,660			$	13,108,427
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1)			0.08	%			0.07	%			0.02	%			0.08	%			0.06	%
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding			1.08	%			1.12	%			1.26	%			1.08	%			1.26	%
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases			17.89	x			18.95	x			18.69	x			17.89	x			18.69	x

(1)  Annualized for the three and nine months ended September 30, 2022 and 2021, and three months ended June 30, 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		$	310,400		$	425,853		$	55,272		$	177,670		$	55,923		$	151,156		$	709,823		$	15,997		$	1,902,094
Special Mention			2,179			274			1,492			2,562			209			1,776			31,747			467			40,706
Substandard			655			719			872			1,383			956			1,196			14,728			89			20,598
Other (1)			12,817			8,707			10,095			4,664			2,355			1,358			40,413			—			80,409
Total Commercial and Industrial			326,051			435,553			67,731			186,279			59,443			155,486			796,711			16,553			2,043,807
Commercial Real Estate
Risk rating:
Pass			700,785			696,763			355,992			548,364			449,754			1,242,315			66,075			—			4,060,048
Special Mention			183			—			559			14,965			515			9,549			687			—			26,458
Substandard			—			—			176			—			1,724			14,749			2			—			16,651
Other (1)			—			—			—			—			—			153			—			—			153
Total Commercial Real Estate			700,968			696,763			356,727			563,329			451,993			1,266,766			66,764			—			4,103,310
Construction
Risk rating:
Pass			83,233			225,116			84,312			92,856			116,344			86,722			13,443			—			702,026
Special Mention			—			—			—			229			—			—			—			—			229
Substandard			—			—			—			—			346			494			—			—			840
Other (1)			22,424			25,610			4,258			2,247			3,908			3,367			953			—			62,767
Total Construction			105,657			250,726			88,570			95,332			120,598			90,583			14,396			—			765,862
Lease Financing
Risk rating:
Pass			110,563			25,450			46,635			42,307			6,904			68,028			—			—			299,887
Special Mention			—			434			2,591			1,342			9			—			—			—			4,376
Substandard			—			—			196			14			13			1,352			—			—			1,575
Total Lease Financing			110,563			25,884			49,422			43,663			6,926			69,380			—			—			305,838
Total Commercial Lending		$	1,243,239		$	1,408,926		$	562,450		$	888,603		$	638,960		$	1,582,215		$	877,871		$	16,553		$	7,218,817

																							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			CostBasis			CostBasis			Total
Residential Lending
Residential Mortgage
FICO:
740 and greater		$	474,234		$	1,056,814		$	577,378		$	244,169		$	169,100		$	941,705		$	—		$	—		$	3,463,400
680 - 739			54,037			122,420			77,660			44,519			21,581			137,573			—			—			457,790
620 - 679			7,749			19,021			13,776			4,801			3,868			35,926			—			—			85,141
550 - 619			168			1,930			292			225			2,060			7,225			—			—			11,900
Less than 550			2,053			1,236			59			—			339			4,621			—			—			8,308
No Score (3)			16,029			14,771			6,874			13,004			16,023			50,871			—			—			117,572
Other (2)			19,155			18,827			15,436			9,398			9,229			29,468			5,861			556			107,930
Total Residential Mortgage			573,425			1,235,019			691,475			316,116			222,200			1,207,389			5,861			556			4,252,041
Home Equity Line
FICO:
740 and greater			—			—			—			—			—			—			781,307			1,961			783,268
680 - 739			—			—			—			—			—			—			164,166			2,650			166,816
620 - 679			—			—			—			—			—			—			42,043			2,124			44,167
550 - 619			—			—			—			—			—			—			8,719			1,375			10,094
Less than 550			—			—			—			—			—			—			1,157			487			1,644
No Score (3)			—			—			—			—			—			—			4,642			—			4,642
Total Home Equity Line			—			—			—			—			—			—			1,002,034			8,597			1,010,631
Total Residential Lending			573,425			1,235,019			691,475			316,116			222,200			1,207,389			1,007,895			9,153			5,262,672
Consumer Lending
FICO:
740 and greater			167,566			120,725			59,620			50,907			30,750			12,114			116,628			195			558,505
680 - 739			80,920			72,861			41,177			36,236			19,242			10,311			68,968			569			330,284
620 - 679			19,673			32,216			15,779			19,379			11,622			8,584			30,441			1,033			138,727
550 - 619			2,159			5,975			5,859			9,266			6,476			5,188			9,803			983			45,709
Less than 550			520			1,557			2,631			4,311			2,106			1,991			2,923			379			16,418
No Score (3)			2,122			337			1			50			28			35			38,831			237			41,641
Other (2)			1,645			4,197			358			1,393			—			2,153			77,855			—			87,601
Total Consumer Lending			274,605			237,868			125,425			121,542			70,224			40,376			345,449			3,396			1,218,885
Total Loans and Leases		$	2,091,269		$	2,881,813		$	1,379,350		$	1,326,261		$	931,384		$	2,829,980		$	2,231,215		$	29,102		$	13,700,374

(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 Nine Months Ended
		September 30,			June 30,			September 30,			September 30,
(dollars in thousands, except per share amounts)		2022			2022			2021			2022			2021
Income Statement Data:
Net income		$	69,018		$	59,360		$	64,279		$	186,097		$	208,713
Average total stockholders’ equity		$	2,267,152		$	2,262,654		$	2,738,540		$	2,358,195		$	2,719,442
Less: average goodwill			995,492			995,492			995,492			995,492			995,492
Average tangible stockholders’ equity		$	1,271,660		$	1,267,162		$	1,743,048		$	1,362,703		$	1,723,950
Average total assets		$	24,957,042		$	25,250,176		$	25,058,085		$	25,095,438		$	24,013,691
Less: average goodwill			995,492			995,492			995,492			995,492			995,492
Average tangible assets		$	23,961,550		$	24,254,684		$	24,062,593		$	24,099,946		$	23,018,199
Return on average total stockholders’ equity(1)			12.08	%		10.52	%		9.31	%		10.55	%		10.26	%
Return on average tangible stockholders’ equity (non-GAAP)(1)			21.53	%		18.79	%		14.63	%		18.26	%		16.19	%
Return on average total assets(1)			1.10	%		0.94	%		1.02	%		0.99	%		1.16	%
Return on average tangible assets (non-GAAP)(1)			1.14	%		0.98	%		1.06	%		1.03	%		1.21	%

		As of			As of			As of			As of
		September 30,			June 30,			December 31,			September 30,
(dollars in thousands, except per share amounts)		2022			2022			2021			2021
Balance Sheet Data:
Total stockholders’ equity		$	2,200,651		$	2,252,611		$	2,656,912		$	2,711,734
Less: goodwill			995,492			995,492			995,492			995,492
Tangible stockholders’ equity		$	1,205,159		$	1,257,119		$	1,661,420		$	1,716,242
Total assets		$	24,870,272		$	25,377,533		$	24,992,410		$	25,548,322
Less: goodwill			995,492			995,492			995,492			995,492
Tangible assets		$	23,874,780		$	24,382,041		$	23,996,918		$	24,552,830
Shares outstanding			127,357,680			127,451,087			127,502,472			128,255,570
Total stockholders’ equity to total assets			8.85	%		8.88	%		10.63	%		10.61	%
Tangible stockholders’ equity to tangible assets (non-GAAP)			5.05	%		5.16	%		6.92	%		6.99	%
Book value per share		$	17.28		$	17.67		$	20.84		$	21.14
Tangible book value per share (non-GAAP)		$	9.46		$	9.86		$	13.03		$	13.38

(1)  Annualized for the three and nine months ended September 30, 2022 and 2021, and three months ended June 30, 2022.

Source: First Hawaiian, Inc.