Upgrade to SI Premium - Free Trial

First Hawaiian, Inc. Reports Fourth Quarter 2019 Financial Results and Declares Dividend

January 28, 2020 4:06 PM

HONOLULU, Jan. 28, 2020 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ: FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended December 31, 2019.

“I’m pleased to report that we ended 2019 with a strong fourth quarter. We generated great loan growth, significantly reduced deposit costs, and maintained excellent credit quality,” said Bob Harrison, Chairman, President and Chief Executive Officer. “This was a good finish to an exciting year, and we are well positioned going into 2020.”

On January 22, 2020 the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on March 6, 2020 to stockholders of record at the close of business on February 28, 2020.

Fourth Quarter 2019 Highlights:

Balance Sheet
Total assets were $20.2 billion as of December 31, 2019, compared to $20.6 billion as of September 30, 2019.

Gross loans and leases were $13.2 billion as of December 31, 2019, an increase of $368 million, or 2.9%, from $12.8 billion as of September 30, 2019.

Total deposits were $16.4 billion as of December 31, 2019, a decrease of $412 million, or 2.4%, from $16.9 billion as of September 30, 2019, primarily reflecting the withdrawal of a $400 million commercial deposit that was deposited at the end of the third quarter and withdrawn early in the fourth quarter, and a $266 million reduction in public deposits.

Net Interest Income
Net interest income for the fourth quarter of 2019 was $139.6 million, a decrease of $3.5 million, or 2.4%, compared to $143.1 million for the prior quarter. The decrease in net interest income compared to the third quarter of 2019 was primarily due to lower yields on loans and lower investment and loan balances, partially offset by lower deposit rates and balances. Average loan balances in the fourth quarter were lower than the prior quarter as a result of the sale of $409 million of shared national credits in the third quarter.

Net interest margin (“NIM”) was 3.15% in the fourth quarter of 2019, a decrease of four basis points compared to 3.19% in the third quarter of 2019.

Provision Expense
Results for the quarter ended December 31, 2019 included a provision for credit losses of $4.3 million. No provision for credit losses was taken in the quarter ended September 30, 2019.

Noninterest Income
Noninterest income was $46.7 million in the fourth quarter of 2019, a decrease of $3.3 million compared to noninterest income of $50.0 million in the third quarter of 2019.

Noninterest Expense
Noninterest expense was $91.1 million in the fourth quarter of 2019, a decrease of $2.4 million from $93.5 million in the third quarter of 2019.

The efficiency ratio was 48.9% and 48.4% for the quarters ended December 31, 2019 and September 30, 2019, respectively.

Taxes
The effective tax rate was 25.5% for both the quarters ended December 31, 2019 and September 30, 2019.

Asset Quality
The allowance for loan and lease losses was $130.5 million, or 0.99% of total loans and leases, as of December 31, 2019, compared to $133.0 million, or 1.04% of total loans and leases, as of September 30, 2019. Net charge-offs were $6.7 million, or 0.20% of average loans and leases on an annualized basis for the quarter ended December 31, 2019, compared to $5.6 million, or 0.17% of average loans and leases on an annualized basis for the quarter ended September 30, 2019. Total non-performing assets were $5.8 million, or 0.04% of total loans and leases and other real estate owned, at December 31, 2019, compared to non-performing assets of $4.3 million, or 0.03% of total loans and leases and other real estate owned, at September 30, 2019.

Capital
Total stockholders' equity was $2.6 billion at December 31, 2019, compared to $2.7 billion at September 30, 2019.

The tier 1 leverage, common equity tier 1 and total capital ratios were 8.79%, 11.88% and 12.81%, respectively, at December 31, 2019, compared with 8.68%, 12.15% and 13.11%, respectively, at September 30, 2019.

The Company repurchased 1.3 million shares of common stock at a total cost of $37.4 million under the stock repurchase program in the fourth quarter. The average cost was $27.92 per share repurchased. For the full year 2019, the Company repurchased 5.1 million shares at a total cost of $136.2 million.

The Company’s Board of Directors approved a stock repurchase program for up to $80 million of its outstanding common stock during 2020.

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

Conference Call Information
First Hawaiian will host a conference call to discuss the Company’s results today at 5:00 p.m. Eastern Time, 12:00 p.m. Hawaii Time. To access the call, participants should dial (844) 452-2942 (US/Canada), or (574) 990-9846 (International) ten minutes prior to the start of the call and enter the conference ID: 7588548. A live webcast of the conference call, including a slide presentation, will be available at the following link: www.fhb.com/earnings. The archive of the webcast will be available at the same location. A telephonic replay of the conference call will be available two hours after the conclusion of the call until 8:30 p.m. (Eastern Time) on February 4, 2020. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 7588548.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2018 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.

Use of Non-GAAP Financial Measures
We present net interest income, noninterest income, noninterest expense, net income, earnings per share (basic and diluted) and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measures exclude from the corresponding GAAP measure the impact of certain items that we do not believe are representative of our financial results. We believe that the presentation of these non-GAAP financial measures helps identify underlying trends in our business from period to period that could otherwise be distorted by the effect of certain expenses, gains and other items included in our operating results. We believe that these core measures provide useful information about our operating results and enhance the overall understanding of our past performance and future performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition.

Core net interest margin, core efficiency ratio, core return on average total assets and core return on average total stockholders’ equity are non-GAAP financial measures. We compute our core net interest margin as the ratio of core net interest income to average earning assets. We compute our core efficiency ratio as the ratio of core noninterest expense to the sum of core net interest income and core noninterest income. We compute our core return on average total assets as the ratio of core net income to average total assets. We compute our core return on average total stockholders’ equity as the ratio of core net income to average total stockholders’ equity.

Return on average tangible stockholders’ equity, core return on average tangible stockholders’ equity, return on average tangible assets, core return on average tangible assets and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our core return on average tangible stockholders’ equity as the ratio of core net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. We compute our core return on average tangible assets as the ratio of core net income to average tangible assets. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. We believe that these measurements are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP.

Tables 13 and 14 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

Investor Relations Contact:
Kevin Haseyama, CFA
(808) 525-6268
[email protected]		Media Contact:
Susan Kam
(808) 525-6254
[email protected]

1 Core measurements are non-GAAP financial measures. Core excludes certain gains, expenses and one-time items. See Tables 13 and 14 at the end of this document for reconciliations of core measurements, including core net income, core noninterest income, core efficiency ratio and core earnings per diluted share to the comparable GAAP measurements.

2 Return on Average Tangible Assets (“ROATA”) and Return on Average Tangible Common Equity (“ROATCE”) are non-GAAP financial measures. A reconciliation of average tangible assets and average tangible stockholders’ equity to the comparable GAAP measurements is provided in Table 13 at the end of this document.

Financial Highlights Table 1
For the Three Months Ended For the Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands, except per share data) 2019 2019 2018 2019 2018
Operating Results:
Net interest income $139,619 $143,081 $143,985 $573,402 $566,318
Provision for loan and lease losses 4,250 — 5,750 13,800 22,180
Noninterest income 46,708 49,980 33,091 192,533 178,993
Noninterest expense 91,058 93,466 89,354 370,437 364,953
Net income 67,836 74,199 59,995 284,392 264,394
Basic earnings per share 0.52 0.56 0.44 2.14 1.93
Diluted earnings per share 0.52 0.56 0.44 2.13 1.93
Dividends declared per share 0.26 0.26 0.24 1.04 0.96
Dividend payout ratio 50.00% 46.43% 54.55% 48.83% 49.74%
Supplemental Income Statement Data (non-GAAP):
Core net interest income $139,619 $143,081 $143,985 $573,402 $566,318
Core noninterest income 51,331 49,980 57,176 199,748 203,078
Core noninterest expense 91,010 91,222 88,919 367,623 358,561
Core net income 71,250 75,871 77,914 291,785 286,711
Core basic earnings per share 0.55 0.57 0.58 2.19 2.09
Core diluted earnings per share 0.54 0.57 0.58 2.19 2.09
Performance Ratio(1):
Net interest margin 3.15% 3.19% 3.23% 3.20% 3.16%
Core net interest margin (non-GAAP) 3.15% 3.19% 3.23% 3.20% 3.16%
Efficiency ratio 48.86% 48.41% 50.45% 48.36% 48.96%
Core efficiency ratio (non-GAAP) 47.65% 47.25% 44.19% 47.55% 46.59%
Return on average total assets 1.34% 1.45% 1.19% 1.40% 1.31%
Core return on average total assets (non-GAAP) 1.41% 1.48% 1.54% 1.44% 1.42%
Return on average tangible assets (non-GAAP) 1.41% 1.52% 1.25% 1.47% 1.37%
Core return on average tangible assets (non-GAAP)(2) 1.48% 1.56% 1.62% 1.51% 1.49%
Return on average total stockholders' equity 10.21% 11.12% 9.77% 10.90% 10.76%
Core return on average total stockholders' equity (non-GAAP) 10.72% 11.37% 12.68% 11.18% 11.67%
Return on average tangible stockholders' equity (non-GAAP) 16.40% 17.81% 16.51% 17.62% 18.08%
Core return on average tangible stockholders’ equity (non-GAAP) 17.22% 18.21% 21.44% 18.08% 19.61%
Average Balances:
Average loans and leases $12,940,956 $13,032,349 $12,829,635 $13,063,716 $12,570,182
Average earning assets 17,649,343 17,862,564 17,701,301 17,892,440 17,911,545
Average assets 20,089,601 20,332,457 20,069,988 20,325,697 20,247,135
Average deposits 16,355,254 16,573,796 16,608,611 16,613,379 17,115,380
Average stockholders' equity 2,636,651 2,648,428 2,437,504 2,609,432 2,457,771
Market Value Per Share:
Closing 28.85 26.70 22.51 28.85 22.51
High 29.47 27.84 27.49 29.47 32.36
Low 25.48 24.25 21.19 22.13 21.19


As of As of As of
December 31, September 30, December 31,
2019 2019 2018
Balance Sheet Data:
Loans and leases$13,211,650 $12,843,396 $13,076,191
Total assets 20,166,734 20,598,220 20,695,678
Total deposits 16,444,994 16,857,246 17,150,068
Short-term borrowings 400,000 400,000 —
Long-term borrowings 200,019 200,018 600,026
Total stockholders' equity 2,640,258 2,654,558 2,524,839
Per Share of Common Stock:
Book value$20.32 $20.22 $18.72
Tangible book value (non-GAAP)(4) 12.66 12.64 11.34
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases 0.04% 0.03% 0.05%
Allowance for loan and lease losses / total loans and leases 0.99% 1.04% 1.08%
Capital Ratios:
Common Equity Tier 1 Capital Ratio 11.88% 12.15 11.97
Tier 1 Capital Ratio 11.88% 12.15 11.97
Total Capital Ratio 12.81% 13.11 12.99
Tier 1 Leverage Ratio 8.79% 8.68 8.72
Total stockholders' equity to total assets 13.09% 12.89% 12.20%
Tangible stockholders' equity to tangible assets (non-GAAP) 8.58% 8.46% 7.76%
Non-Financial Data:
Number of branches 58 58 60
Number of ATMs 301 293 295
Number of Full-Time Equivalent Employees 2,092 2,099 2,155

(1) Except for the efficiency ratio and the core efficiency ratio, amounts are annualized for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018.
(2) Core return on average tangible assets is a non-GAAP financial measure. We compute our core return on average tangible assets as the ratio of core net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.
(3) Core return on average tangible stockholders’ equity is a non-GAAP financial measure. We compute our core return on average tangible stockholders’ equity as the ratio of core net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.
(4) Tangible book value is a non-GAAP financial measure. We compute our tangible book value as the ratio of tangible stockholders’ equity to shares outstanding. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 13, GAAP to Non-GAAP Reconciliation.

Consolidated Statements of Income Table 2
Three Months Ended For the Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands, except per share amounts) 2019 2019 2018 2019 2018
Interest income
Loans and lease financing $138,033 $144,691 $140,649 $574,013 $529,877
Available-for-sale securities 20,979 22,256 25,537 92,505 107,123
Other 3,120 3,234 1,858 12,174 9,051
Total interest income 162,132 170,181 168,044 678,692 646,051
Interest expense
Deposits 18,222 22,753 20,152 87,865 72,976
Short-term and long-term borrowings 4,291 4,347 3,907 17,425 6,757
Total interest expense 22,513 27,100 24,059 105,290 79,733
Net interest income 139,619 143,081 143,985 573,402 566,318
Provision for loan and lease losses 4,250 — 5,750 13,800 22,180
Net interest income after provision for loan and lease losses 135,369 143,081 138,235 559,602 544,138
Noninterest income
Service charges on deposit accounts 9,041 8,554 8,427 33,778 32,036
Credit and debit card fees 16,626 16,839 16,755 66,749 65,716
Other service charges and fees 8,818 8,903 9,763 36,253 38,316
Trust and investment services income 8,855 8,698 7,895 35,102 31,324
Bank-owned life insurance 2,533 5,743 1,086 15,479 9,217
Investment securities losses, net (123) — — (2,715) —
Other-than-temporary impairment (OTTI) losses on available-for-sale debt securities — — (24,085) — (24,085)
Other 958 1,243 13,250 7,887 26,469
Total noninterest income 46,708 49,980 33,091 192,533 178,993
Noninterest expense
Salaries and employee benefits 41,098 44,955 41,407 173,098 167,162
Contracted services and professional fees 13,724 14,649 13,005 56,321 49,775
Occupancy 7,231 7,250 7,181 28,753 27,330
Equipment 4,491 4,024 4,610 17,343 17,714
Regulatory assessment and fees 1,802 1,992 2,053 7,390 14,217
Advertising and marketing 1,317 1,647 1,687 6,910 4,813
Card rewards program 8,635 6,930 6,978 29,961 24,860
Other 12,760 12,019 12,433 50,661 59,082
Total noninterest expense 91,058 93,466 89,354 370,437 364,953
Income before provision for income taxes 91,019 99,595 81,972 381,698 358,178
Provision for income taxes 23,183 25,396 21,977 97,306 93,784
Net income $67,836 $74,199 $59,995 $284,392 $264,394
Basic earnings per share $0.52 $0.56 $0.44 $2.14 $1.93
Diluted earnings per share $0.52 $0.56 $0.44 $2.13 $1.93
Basic weighted-average outstanding shares 130,463,102 132,583,902 134,874,277 133,076,489 136,945,134
Diluted weighted-average outstanding shares 130,845,645 132,877,769 135,100,162 133,387,157 137,111,420


Consolidated Balance Sheets Table 3
December 31, September 30, December 31,
(dollars in thousands) 2019 2019 2018
Assets
Cash and due from banks $360,375 $358,863 $396,836
Interest-bearing deposits in other banks 333,642 985,154 606,801
Investment securities 4,075,644 4,157,082 4,498,342
Loans held for sale 904 1,594 432
Loans and leases 13,211,650 12,843,396 13,076,191
Less: allowance for loan and lease losses 130,530 132,964 141,718
Net loans and leases 13,081,120 12,710,432 12,934,473
Premises and equipment, net 316,885 315,309 304,996
Other real estate owned and repossessed personal property 319 82 751
Accrued interest receivable 45,239 44,671 48,920
Bank-owned life insurance 453,873 453,410 446,076
Goodwill 995,492 995,492 995,492
Mortgage servicing rights 12,668 13,630 16,155
Other assets 490,573 562,501 446,404
Total assets $20,166,734 $20,598,220 $20,695,678
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing $10,564,922 $11,136,424 $11,142,127
Noninterest-bearing 5,880,072 5,720,822 6,007,941
Total deposits 16,444,994 16,857,246 17,150,068
Short-term borrowings 400,000 400,000 —
Long-term borrowings 200,019 200,018 600,026
Retirement benefits payable 138,222 128,442 127,909
Other liabilities 343,241 357,956 292,836
Total liabilities 17,526,476 17,943,662 18,170,839
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,917,150 / 129,928,479 shares as of December 31, 2019, issued/outstanding: 139,908,699 / 131,260,900 shares as of September 30, 2019 and issued/outstanding: 139,656,674 / 134,874,302 shares as of December 31, 2018) 1,399 1,399 1,397
Additional paid-in capital 2,503,677 2,501,324 2,495,853
Retained earnings 437,072 403,317 291,919
Accumulated other comprehensive loss, net (31,749) (18,774) (132,195)
Treasury stock (9,988,671 shares as of December 31, 2019, 8,647,799 shares as of September 30, 2019 and 4,782,372 shares as of December 31, 2018) (270,141) (232,708) (132,135)
Total stockholders' equity 2,640,258 2,654,558 2,524,839
Total liabilities and stockholders' equity $20,166,734 $20,598,220 $20,695,678


Average Balances and Interest Rates Table 4
Three Months Ended Three Months Ended Three Months Ended
December 31, 2019 September 30, 2019 December 31, 2018
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 $548.5 $2.3 1.68% $447.8 $2.3 2.02%$290.0 $1.5 2.04%
Available-for-Sale Investment Securities 4,092.2 21.0 2.05 4,296.3 22.3 2.07 4,521.3 25.5 2.24
Loans Held for Sale 1.5 — 2.55 1.4 — 2.36 0.3 — 3.51
Loans and Leases(1)
Commercial and industrial 2,668.5 25.3 3.76 2,885.9 30.0 4.12 3,120.9 32.7 4.16
Commercial real estate 3,325.8 35.9 4.28 3,294.7 37.3 4.49 3,013.0 32.4 4.27
Construction 497.8 5.4 4.36 477.2 5.6 4.67 623.9 7.1 4.51
Residential:
Residential mortgages 3,720.2 38.5 4.14 3,644.9 38.6 4.23 3,351.8 36.0 4.26
Home equity lines 905.6 8.2 3.58 912.8 8.6 3.74 904.5 8.7 3.78
Consumer 1,635.2 23.3 5.66 1,651.4 23.3 5.61 1,657.9 22.7 5.44
Lease financing 187.8 1.4 2.94 165.4 1.3 3.14 157.6 1.1 2.70
Total Loans and Leases 12,940.9 138.0 4.24 13,032.3 144.7 4.41 12,829.6 140.7 4.35
Other Earning Assets 66.2 0.8 4.76 84.8 0.9 4.47 60.1 0.4 2.42
Total Earning Assets(2) 17,649.3 162.1 3.66 17,862.6 170.2 3.79 17,701.3 168.1 3.77
Cash and Due from Banks 316.5 341.7 339.7
Other Assets 2,123.8 2,128.2 2,029.0
Total Assets $20,089.6 $20,332.5 $20,070.0
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $4,943.2 $3.8 0.31% $4,891.5 $4.6 0.37% 4,708.4 $3.6 0.30%
Money Market 3,117.6 5.6 0.72 3,067.4 7.1 0.92 3,021.9 6.1 0.80
Time 2,538.4 8.8 1.37 2,872.6 11.1 1.54 3,026.2 10.5 1.37
Total Interest-Bearing Deposits 10,599.2 18.2 0.68 10,831.5 22.8 0.83 10,756.5 20.2 0.74
Short-Term Borrowings 400.1 2.9 2.87 370.0 2.6 2.84 112.9 0.6 2.26
Long-Term Borrowings 200.0 1.4 2.76 239.1 1.7 2.82 452.2 3.3 2.86
Total Interest-Bearing Liabilities 11,199.3 22.5 0.80 11,440.6 27.1 0.94 11,321.6 24.1 0.84
Net Interest Income $139.6 $143.1 $144.0
Interest Rate Spread 2.86% 2.85% 2.93%
Net Interest Margin 3.15% 3.19% 3.23%
Noninterest-Bearing Demand Deposits 5,756.0 5,742.3 5,852.1
Other Liabilities 497.6 501.2 458.8
Stockholders' Equity 2,636.7 2,648.4 2,437.5
Total Liabilities and Stockholders' Equity $20,089.6 $20,332.5 $20,070.0

(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.

Average Balances and Interest Rates Table 5
Year Ended Year Ended
December 31, 2019 December 31, 2018
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $437.8 $9.3 2.11% $460.8 $8.3 1.81%
Available-for-Sale Investment Securities 4,310.2 92.5 2.15 4,843.0 107.1 2.21
Loans Held for Sale 1.0 — 2.53 1.0 — 3.60
Loans and Leases(1)
Commercial and industrial 2,987.3 122.8 4.11 3,105.4 121.9 3.93
Commercial real estate 3,176.6 143.9 4.53 2,918.5 118.7 4.07
Construction 547.7 25.5 4.65 623.6 25.8 4.13
Residential:
Residential mortgages 3,626.0 150.9 4.16 3,254.9 138.4 4.25
Home equity lines 910.7 34.1 3.74 874.2 32.2 3.68
Consumer 1,652.8 91.8 5.56 1,633.2 88.2 5.40
Lease financing 162.6 5.0 3.08 160.4 4.7 2.91
Total Loans and Leases 13,063.7 574.0 4.39 12,570.2 529.9 4.22
Other Earning Assets 79.8 2.9 3.66 36.5 0.7 1.93
Total Earning Assets(2) 17,892.5 678.7 3.79 17,911.5 646.0 3.61
Cash and Due from Banks 340.1 328.3
Other Assets 2,093.1 2,007.3
Total Assets $20,325.7 $20,247.1
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $4,840.6 $16.6 0.34% $4,638.6 $11.0 0.24%
Money Market 3,123.5 27.8 0.89 2,833.4 15.2 0.53
Time 2,882.9 43.5 1.51 3,743.5 46.8 1.25
Total Interest-Bearing Deposits 10,847.0 87.9 0.81 11,215.5 73.0 0.65
Short-Term Borrowings 209.8 5.9 2.82 39.9 0.8 2.13
Long-Term Borrowings 406.6 11.5 2.83 206.0 5.9 2.87
Total Interest-Bearing Liabilities 11,463.4 105.3 0.92 11,461.4 79.7 0.70
Net Interest Income $573.4 $566.3
Interest Rate Spread 2.87% 2.91%
Net Interest Margin 3.20% 3.16%
Noninterest-Bearing Demand Deposits 5,766.4 5,899.9
Other Liabilities 486.5 428.0
Stockholders' Equity 2,609.4 2,457.8
Total Liabilities and Stockholders' Equity $20,325.7 $20,247.1

(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) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.

Analysis of Change in Net Interest Income Table 6
Three Months Ended December 31, 2019
Compared to September 30, 2019
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $0.4 $(0.4) $—
Available-for-Sale Investment Securities (1.1) (0.2) (1.3)
Loans and Leases
Commercial and industrial (2.2) (2.5) (4.7)
Commercial real estate 0.4 (1.8) (1.4)
Construction 0.2 (0.4) (0.2)
Residential:
Residential mortgage 0.8 (0.9) (0.1)
Home equity line (0.1) (0.3) (0.4)
Consumer (0.2) 0.2 —
Lease financing 0.2 (0.1) 0.1
Total Loans and Leases (0.9) (5.8) (6.7)
Other Earning Assets (0.2) 0.1 (0.1)
Total Change in Interest Income (1.8) (6.3) (8.1)
Change in Interest Expense:
Interest-Bearing Deposits
Savings — (0.8) (0.8)
Money Market 0.1 (1.6) (1.5)
Time (1.2) (1.1) (2.3)
Total Interest-Bearing Deposits (1.1) (3.5) (4.6)
Short-Term Borrowings 0.2 0.1 0.3
Long-Term Borrowings (0.3) — (0.3)
Total Change in Interest Expense (1.2) (3.4) (4.6)
Change in Net Interest Income $(0.6) $(2.9) $(3.5)


Analysis of Change in Net Interest Income Table 7
Three Months Ended December 31, 2019
Compared to December 31, 2018
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $1.1 $(0.3) $0.8
Available-for-Sale Investment Securities (2.4) (2.1) (4.5)
Loans and Leases
Commercial and industrial (4.5) (2.9) (7.4)
Commercial real estate 3.4 0.1 3.5
Construction (1.4) (0.3) (1.7)
Residential:
Residential mortgage 3.6 (1.1) 2.5
Home equity line — (0.5) (0.5)
Consumer (0.2) 0.8 0.6
Lease financing 0.2 0.1 0.3
Total Loans and Leases 1.1 (3.8) (2.7)
Other Earning Assets — 0.4 0.4
Total Change in Interest Income (0.2) (5.8) (6.0)
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 0.1 0.2
Money Market 0.2 (0.7) (0.5)
Time (1.7) — (1.7)
Total Interest-Bearing Deposits (1.4) (0.6) (2.0)
Short-Term Borrowings 2.1 0.2 2.3
Long-Term Borrowings (1.8) (0.1) (1.9)
Total Change in Interest Expense (1.1) (0.5) (1.6)
Change in Net Interest Income $0.9 $(5.3) $(4.4)


Analysis of Change in Net Interest Income Table 8
Year Ended December 31, 2019
Compared to December 31, 2018
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $(0.4) $1.4 $1.0
Available-for-Sale Investment Securities (11.7) (2.9) (14.6)
Loans and Leases
Commercial and industrial (4.7) 5.6 0.9
Commercial real estate 11.0 14.2 25.2
Construction (3.3) 3.0 (0.3)
Residential:
Residential mortgage 15.6 (3.1) 12.5
Home equity line 1.4 0.5 1.9
Consumer 1.0 2.6 3.6
Lease financing — 0.3 0.3
Total Loans and Leases 21.0 23.1 44.1
Other Earning Assets 1.3 0.9 2.2
Total Change in Interest Income 10.2 22.5 32.7
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.5 5.1 5.6
Money Market 1.7 10.9 12.6
Time (11.9) 8.6 (3.3)
Total Interest-Bearing Deposits (9.7) 24.6 14.9
Short-Term Borrowings 4.7 0.4 5.1
Long-Term Borrowings 5.7 (0.1) 5.6
Total Change in Interest Expense 0.7 24.9 25.6
Change in Net Interest Income $9.5 $(2.4) $7.1


Loans and Leases Table 9
December 31, September 30, December 31,
(dollars in thousands) 2019 2019 2018
Commercial and industrial $2,743,242 $2,654,077 $3,208,760
Commercial real estate 3,463,953 3,309,389 2,990,783
Construction 519,241 486,977 626,757
Residential:
Residential mortgage 3,768,936 3,671,424 3,527,101
Home equity line 893,239 916,106 912,517
Total residential 4,662,175 4,587,530 4,439,618
Consumer 1,620,556 1,637,549 1,662,504
Lease financing 202,483 167,874 147,769
Total loans and leases $13,211,650 $12,843,396 $13,076,191


Deposits Table 10
December 31, September 30, December 31,
(dollars in thousands) 2019 2019 2018
Demand $5,880,072 $5,720,822 $6,007,941
Savings 4,998,933 4,899,468 4,853,285
Money Market 3,055,832 3,529,363 3,196,678
Time 2,510,157 2,707,593 3,092,164
Total Deposits $ 16,444,994 $16,857,246 $17,150,068


Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11
December 31, September 30, December 31,
(dollars in thousands) 2019 2019
 2018
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial $32
 $12 $274
Commercial real estate 30 33 1,658
Total Commercial Loans 62 45 1,932
Residential Loans:
Residential mortgage 5,406 3,959 4,611
Total Residential Loans 5,406 3,959 4,611
Consumer — 200 —
Total Non-Accrual Loans and Leases 5,468 4,204 6,543
Other Real Estate Owned 319 82 751
Total Non-Performing Assets $5,787
 $4,286 $7,294
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial $1,429
 $750 $141
Construction 2,367 — —
Commercial real estate 1,013 — —
Total Commercial Loans 4,809 750 141
Residential Loans:
Residential mortgage 74 139 32
Home equity line 2,995 3,192 2,842
Total Residential Loans 3,069 3,331 2,874
Consumer 4,272 3,076 3,373
Total Accruing Loans and Leases Past Due 90 Days or More $12,150 $7,157 $6,388
Restructured Loans on Accrual Status and Not Past Due 90 Days or More 14,493 22,350 24,033
Total Loans and Leases $13,211,650 $12,843,396 $13,076,191


Allowance for Loan and Lease Losses Table 12
For the Three Months Ended
 For the Year Ended
December 31, September 30, December 31, December 31, December 31,
(dollars in thousands) 2019 2019 2018 2019 2018
Balance at Beginning of Period $132,964 $138,535 $141,250 $141,718 $137,253
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial (204) (514) — (2,718) (778)
Lease financing — — — (24) —
Total Commercial Loans (204) (514) — (2,742) (778)
Residential (431) (7) (6) (438) (165)
Consumer (8,689) (8,015) (8,015) (32,807) (26,630)
Total Loans and Leases Charged-Off (9,324) (8,536) (8,021) (35,987) (27,573)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial 107 241 78 410 232
Commercial real estate 170 30 41 263 216
Total Commercial Loans 277 271 119 673 448
Residential 107 425 256 967 940
Consumer 2,256 2,269 2,364 9,359 8,470
Total Recoveries on Loans and Leases Previously Charged-Off 2,640 2,965 2,739 10,999 9,858
Net Loans and Leases Charged-Off(6,684) (5,571) (5,282) (24,988) (17,715)
Provision for Loan and Lease Losses 4,250 — 5,750 13,800 22,180
Balance at End of Period$130,530 $132,964 $141,718 $130,530 $141,718
Average Loans and Leases Outstanding $12,940,956 $13,032,349 $12,829,635 $13,063,716 $12,570,182
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) 0.20
% 0.17% 0.16% 0.19% 0.14%
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 0.99
% 1.04% 1.08% 0.99% 1.08%

(1) Annualized for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018.

GAAP to Non-GAAP Reconciliation Table 13
For the Three Months Ended For the Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands, except per share amounts) 2019 2019 2018 2019 2018
Income Statement Data:
Net income $67,836 $74,199 $59,995 $284,392 $264,394
Core net income $71,250 $75,871 $77,914 $291,785 $286,711
Average total stockholders' equity $2,636,651 $2,648,428 $2,437,504 $2,609,432 $2,457,771
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible stockholders' equity $1,641,159 $1,652,936 $1,442,012 $1,613,940 $1,462,279
Average total assets $20,089,601 $20,332,457 $20,069,988 $20,325,697 $20,247,135
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible assets $19,094,109 $19,336,965 $19,074,496 $19,330,205 $19,251,643
Return on average total stockholders' equity(1) 10.21% 11.12% 9.77% 10.90% 10.76%
Core return on average total stockholders' equity (non-GAAP)(1) 10.72% 11.37% 12.68% 11.18% 11.67%
Return on average tangible stockholders' equity (non-GAAP)(1) 16.40% 17.81% 16.51% 17.62% 18.08%
Core return on average tangible stockholders' equity (non-GAAP)(1) 17.22% 18.21% 21.44% 18.08% 19.61%
Return on average total assets(1) 1.34% 1.45% 1.19% 1.40% 1.31%
Core return on average total assets (non-GAAP)(1) 1.41% 1.48% 1.54% 1.44% 1.42%
Return on average tangible assets (non-GAAP)(1) 1.41% 1.52% 1.25% 1.47% 1.37%
Core return on average tangible assets (non-GAAP)(1) 1.48% 1.56% 1.62% 1.51% 1.49%
As of As of As of
December 31, September 30, December 31,
2019 2019 2018
Balance Sheet Data:
Total stockholders' equity $2,640,258 $2,654,558 $2,524,839
Less: goodwill 995,492 995,492 995,492
Tangible stockholders' equity $1,644,766 $1,659,066 $1,529,347
Total assets $20,166,734 $20,598,220 $20,695,678
Less: goodwill 995,492 995,492 995,492
Tangible assets $19,171,242 $19,602,728 $19,700,186
Shares outstanding 129,928,479 131,260,900 134,874,302
Total stockholders' equity to total assets 13.09% 12.89% 12.20%
Tangible stockholders' equity to tangible assets (non-GAAP) 8.58% 8.46% 7.76%
Book value per share $20.32 $20.22 $18.72
Tangible book value per share (non-GAAP) $12.66 $12.64 $11.34

(1) Annualized for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018.

GAAP to Non-GAAP Reconciliation Table 14
For the Three Months Ended For the Year Ended
December 31, September 30, December 31, December 31,
(dollars in thousands, except per share amounts) 2019 2019 2018 2019 2018
Net interest income $139,619 $143,081 $143,985 $573,402 $566,318
Core net interest income (non-GAAP) $139,619 $143,081 $143,985 $573,402 $566,318
Noninterest income $46,708 $49,980 $33,091 $192,533 $178,993
Loss on sale of securities 123 — — 2,715 —
Costs associated with the sale of stock 4,500 — — 4,500 —
OTTI losses on available-for-sale debt securities — — 24,085 — 24,085
Core noninterest income (non-GAAP) $51,331 $49,980 $57,176 $199,748 $203,078
Noninterest expense $91,058 $93,466 $89,354 $370,437 $364,953
Loss on litigation settlement(1) — — — — (4,125)
One-time items(2) (48) (2,244) (435) (2,814) (2,267)
Core noninterest expense (non-GAAP) $91,010 $91,222 $88,919 $367,623 $358,561
Net income $67,836 $74,199 $59,995 $284,392 $264,394
Loss on sale of securities 123 — — 2,715 —
Costs associated with the sale of stock 4,500 — — 4,500 —
OTTI losses on available-for-sale debt securities — — 24,085 — 24,085
Loss on litigation settlement(1) — — — — 4,125
One-time noninterest expense items(2) 48 2,244 435 2,814 2,267
Tax adjustments(3) (1,257) (572) (6,601) (2,636) (8,160)
Total core adjustments 3,414 1,672 17,919 7,393 22,317
Core net income (non-GAAP) $71,250 $75,871 $77,914 $291,785 $286,711
Basic earnings per share $0.52 $0.56 $0.44 $2.14 $1.93
Diluted earnings per share $0.52 $0.56 $0.44 $2.13 $1.93
Efficiency ratio 48.86 % 48.41 % 50.45 % 48.36 % 48.96 %
Core basic earnings per share (non-GAAP) $0.55 $0.57 $0.58 $2.19 $2.09
Core diluted earnings per share (non-GAAP) $0.54 $0.57 $0.58 $2.19 $2.09
Core efficiency ratio (non-GAAP) 47.65 % 47.25 % 44.19 % 47.55 % 46.59 %

(1) The Company reached an agreement in principle to resolve a putative class action lawsuit alleging that the Bank improperly charged certain overdraft fees. In connection with the settlement agreement, the Company recorded an expense of approximately $4.1 million during the year ended December 31, 2018.
(2) One-time items for all periods shown included nonrecurring offering costs. Additionally, one-time items for the three months ended September 30, 2019 and the twelve months ended December 31, 2019 included costs related to a nonrecurring payment to a former executive of the Company pursuant to the Bank’s Executive Change-in-Control Retention Plan and the loss on our funding swap as a result of a 2019 decrease in the conversion rate of our Visa Class B restricted shares sold in 2016. One-time items for the year ended December 31, 2018 included the loss on our funding swap as a result of a 2018 decrease in the conversion rate of our Visa Class B restricted shares sold in 2016.
(3) Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period.

Categories

Globe Newswire Press Releases

Next Articles