First Hawaiian, Inc.NASDAQ: FHB

First Hawaiian, Inc. Reports Second Quarter 2023 Financial Results and Declares Dividend

· Issued by First Hawaiian, Inc. via GlobeNewswire

Key figures

  • Net income of $62.4 million , or $0.49 per diluted share
  • Total loans and leases increased $141.6 million versus prior quarter
  • Total deposits decreased $203.3 million versus prior quarter
  • Net interest margin decreased 20 basis points to 2.91%
  • Recorded a $5.0 million provision for credit losses

On 6ix: 6ix.com/news/first-hawaiian-inc-reports-second-quarter-2023-financial-results-and-declares

Watch First Hawaiian explain itFirst Hawaiian (NASDAQ:FHB) Q2 2023 Earnings Call · Replay · Jul 28, 2023 · From 2:54 · Second Quarter 2023 Financial Results

HONOLULU, July 28, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended June 30, 2023.

“I’m pleased to report that we had a solid second quarter in spite of a challenging interest rate environment,” said Bob Harrison, Chairman, President and CEO. “We grew loans and capital, credit quality remains excellent, and our profitability measures continue to be strong.”

On July 19, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 1, 2023, to stockholders of record at the close of business on August 21, 2023.

Second Quarter 2023 Highlights:

  • Net income of $62.4 million, or $0.49 per diluted share
  • Total loans and leases increased $141.6 million versus prior quarter
  • Total deposits decreased $203.3 million versus prior quarter
  • Net interest margin decreased 20 basis points to 2.91%
  • Recorded a $5.0 million provision for credit losses
  • Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet Total assets were $24.5 billion as of June 30, 2023, compared to $24.9 billion as of March 31, 2023.

Gross loans and leases were $14.4 billion as of June 30, 2023, an increase of $141.6 million, or 1.0%, from $14.2 billion as of March 31, 2023.

Total deposits were $21.1 billion as of June 30, 2023, a decrease of $203.3 million, or 1.0%, from $21.3 billion as of March 31, 2023.

Net Interest Income Net interest income for the second quarter of 2023 was $159.9 million, a decrease of $7.3 million, or 4.4%, compared to $167.2 million for the prior quarter.

The net interest margin was 2.91% in the second quarter of 2023, a decrease of 20 basis points compared to 3.11% in the prior quarter.

Provision Expense During the quarter ended June 30, 2023, we recorded a $5.0 million provision for credit losses. In the quarter ended March 31, 2023, we recorded a $8.8 million provision for credit losses.

Noninterest Income Noninterest income was $47.3 million in the second quarter of 2023, a decrease of $1.7 million compared to noninterest income of $49.0 million in the prior quarter.

Noninterest Expense Noninterest expense was $120.9 million in the second quarter of 2023, an increase of $2.3 million compared to noninterest expense of $118.6 million in the prior quarter.

The efficiency ratio was 58.0% and 54.5% for the quarters ended June 30, 2023 and March 31, 2023, respectively.

Taxes The effective tax rate was 23.3% and 24.8% for the quarters ended June 30, 2023 and March 31, 2023, respectively.

Asset Quality The allowance for credit losses was $148.6 million, or 1.03% of total loans and leases, as of June 30, 2023, compared to $147.1 million, or 1.03% of total loans and leases, as of March 31, 2023. The reserve for unfunded commitments was $36.2 million as of both June 30, 2023 and March 31, 2023.   Net charge-offs were $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended June 30, 2023, compared to net charge-offs of $3.2 million, or 0.09% of average loans and leases on an annualized basis, for the quarter ended March 31, 2023. Total non-performing assets were $13.2 million, or 0.09% of total loans and leases and other real estate owned, on June 30, 2023, compared to total non-performing assets of $13.8 million, or 0.10% of total loans and leases and other real estate owned, on March 31, 2023.

Capital Total stockholders' equity was $2.4 billion and $2.3 billion on June 30, 2023 and March 31, 2023, respectively.

The tier 1 leverage, common equity tier 1 and total capital ratios were 8.30%, 12.05% and 13.17%, respectively, on June 30, 2023, compared with 8.26%, 11.97%, and 13.09%, respectively, on March 31, 2023.

The Company did not repurchase any shares in the second 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, please register via the following link: https://register.vevent.com/register/BI348950fc095448439d48b25a0e9c5697, 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. 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, 2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

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 HighlightsTable 1
For the Three Months EndedFor the Six Months Ended
June 30,March 31,June 30,June 30,
(dollars in thousands, except per share data)20232023202220232022
Operating Results:
Net interest income$159,939$167,247$145,147$327,186$279,019
Provision for credit losses5,0008,8001,00013,800(4,747)
Noninterest income47,34849,02344,13796,37185,517
Noninterest expense120,881118,567109,175239,448213,217
Net income62,44266,81859,360129,260117,079
Basic earnings per share0.490.520.461.010.92
Diluted earnings per share0.490.520.461.010.91
Dividends declared per share0.260.260.260.520.52
Dividend payout ratio53.06%50.00%56.52%51.49%57.14%
Performance Ratios(1):
Net interest margin2.91%3.11%2.60%3.01%2.51%
Efficiency ratio57.96%54.46%57.33%56.17%58.15%
Return on average total assets1.01%1.10%0.94%1.06%0.94%
Return on average tangible assets (non-GAAP)(2)1.05%1.15%0.98%1.10%0.98%
Return on average total stockholders' equity10.68%11.78%10.52%11.23%9.82%
Return on average tangible stockholders' equity (non-GAAP)(2)18.57%20.78%18.79%19.65%16.76%
Average Balances:
Average loans and leases$14,283,222$14,079,337$13,058,558$14,181,842$12,939,745
Average earning assets22,186,31621,873,25922,520,60522,030,65222,492,066
Average assets24,821,48624,548,12425,250,17624,685,56025,165,783
Average deposits21,057,25921,468,62422,401,55821,261,80522,182,406
Average stockholders' equity2,344,2852,299,4222,262,6542,321,9772,404,471
Market Value Per Share:
Closing18.0120.6322.8018.0122.80
High21.0028.2828.4428.2831.16
Low15.0819.6821.4915.0821.49
As ofAs ofAs ofAs of
June 30,March 31,December 31,June 30,
(dollars in thousands, except per share data)2023202320222022
Balance Sheet Data:
Loans and leases$14,362,832$14,221,272$14,092,012$13,262,781
Total assets24,511,56624,884,20724,577,22325,377,533
Total deposits21,078,16621,281,50021,689,02922,601,454
Short-term borrowings—250,00075,000—
Long-term borrowings500,000500,000——
Total stockholders' equity2,359,7382,329,0122,269,0052,252,611
Per Share of Common Stock:
Book value$18.49$18.26$17.82$17.67
Tangible book value (non-GAAP)(2)10.6910.4510.009.86
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases0.09%0.10%0.08%0.06%
Allowance for credit losses for loans and leases / total loans and leases1.03%1.03%1.02%1.12%
Capital Ratios:
Common Equity Tier 1 Capital Ratio12.05%11.97%11.82%11.98%
Tier 1 Capital Ratio12.05%11.97%11.82%11.98%
Total Capital Ratio13.17%13.09%12.92%13.14%
Tier 1 Leverage Ratio8.30%8.26%8.11%7.54%
Total stockholders' equity to total assets9.63%9.36%9.23%8.88%
Tangible stockholders' equity to tangible assets (non-GAAP)(2)5.80%5.58%5.40%5.16%
Non-Financial Data:
Number of branches51515151
Number of ATMs296296294297
Number of Full-Time Equivalent Employees2,1262,1002,0632,021

_____________________

(1)   Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023.

(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 IncomeTable 2
For the Three Months EndedFor the Six Months Ended
June 30,March 31,June 30,June 30,
(dollars in thousands, except per share amounts)20232023202220232022
Interest income
Loans and lease financing$185,340$172,339$111,916$357,679$215,648
Available-for-sale investment securities18,09418,68816,64336,78248,750
Held-to-maturity investment securities18,28218,95718,28937,23918,289
Other7,4893,5612,89611,0503,678
Total interest income229,205213,545149,744442,750286,365
Interest expense
Deposits58,07143,2844,597101,3557,346
Short-term and long-term borrowings10,6562,563—13,219—
Other539451—990—
Total interest expense69,26646,2984,597115,5647,346
Net interest income159,939167,247145,147327,186279,019
Provision for credit losses5,0008,8001,00013,800(4,747)
Net interest income after provision for credit losses154,939158,447144,147313,386283,766
Noninterest income
Service charges on deposit accounts7,2467,2316,84314,47714,344
Credit and debit card fees15,46116,29817,05631,75931,906
Other service charges and fees9,0569,1629,01818,21818,672
Trust and investment services income9,4489,6148,75919,06217,642
Bank-owned life insurance3,2715,120(859)8,391(1,276)
Other2,8661,5983,3204,4644,229
Total noninterest income47,34849,02344,13796,37185,517
Noninterest expense
Salaries and employee benefits57,90456,03249,902113,93698,128
Contracted services and professional fees17,49816,31318,61733,81135,764
Occupancy7,5547,7827,33415,33614,744
Equipment11,0009,7367,75420,73613,731
Regulatory assessment and fees3,6763,8362,3017,5124,525
Advertising and marketing1,8911,9941,9943,8854,022
Card rewards program7,6818,0857,28515,76614,168
Other13,67714,78913,98828,46628,135
Total noninterest expense120,881118,567109,175239,448213,217
Income before provision for income taxes81,40688,90379,109170,309156,066
Provision for income taxes18,96422,08519,74941,04938,987
Net income$62,442$66,818$59,360$129,260$117,079
Basic earnings per share$0.49$0.52$0.46$1.01$0.92
Diluted earnings per share$0.49$0.52$0.46$1.01$0.91
Basic weighted-average outstanding shares127,591,371127,453,820127,672,244127,522,975127,614,564
Diluted weighted-average outstanding shares127,832,351128,033,812128,014,777127,901,225128,108,630
Consolidated Balance SheetsTable 3
June 30,March 31,December 31,June 30,
(dollars in thousands, except share amount)2023202320222022
Assets
Cash and due from banks$318,333$253,705$297,502$279,629
Interest-bearing deposits in other banks239,798611,887229,1221,254,047
Investment securities:
Available-for-sale, at fair value (amortized cost: $3,296,825 as of June 30, 2023, $3,427,708 as of March 31, 2023, $3,549,599 as of December 31, 2022 and $4,267,809 as of June 30, 2022)2,909,3723,054,2803,151,1333,967,746
Held-to-maturity, at amortized cost (fair value: $3,697,261 as of June 30, 2023, $3,824,478 as of March 31, 2023, $3,814,822 as of December 31, 2022 and $3,910,780 as of June 30, 2022)4,180,4084,261,3614,320,6394,093,215
Loans held for sale———180
Loans and leases14,362,83214,221,27214,092,01213,262,781
Less: allowance for credit losses148,581147,122143,900148,942
Net loans and leases14,214,25114,074,15013,948,11213,113,839
Premises and equipment, net277,817278,121280,355310,047
Other real estate owned and repossessed personal property—9191—
Accrued interest receivable80,71079,20078,19463,240
Bank-owned life insurance476,177473,255473,067470,542
Goodwill995,492995,492995,492995,492
Mortgage servicing rights6,0726,2996,5627,152
Other assets813,136796,366796,954822,404
Total assets$24,511,566$24,884,207$24,577,223$25,377,533
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing$12,911,539$12,579,155$12,824,383$12,990,571
Noninterest-bearing8,166,6278,702,3458,864,6469,610,883
Total deposits21,078,16621,281,50021,689,02922,601,454
Short-term borrowings—250,00075,000—
Long-term borrowings500,000500,000——
Retirement benefits payable100,671101,622102,577134,151
Other liabilities472,991422,073441,612389,317
Total liabilities22,151,82822,555,19522,308,21823,124,922
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,327,860 / 127,608,037 shares as of June 30, 2023, issued/outstanding: 141,291,086 / 127,573,680 shares as of March 31, 2023, issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022 and issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022)1,4131,4131,4101,409
Additional paid-in capital2,543,2262,540,6532,538,3362,533,407
Retained earnings799,045769,791736,544654,777
Accumulated other comprehensive loss, net(612,736)(611,679)(639,254)(571,457)
Treasury stock (13,719,823 shares as of June 30, 2023, 13,717,406 shares as of March 31, 2023, 13,600,591 shares as of December 31, 2022 and 13,492,821 shares as of June 30, 2022)(371,210)(371,166)(368,031)(365,525)
Total stockholders' equity2,359,7382,329,0122,269,0052,252,611
Total liabilities and stockholders' equity$24,511,566$24,884,207$24,577,223$25,377,533
Average Balances and Interest RatesTable 4
Three Months EndedThree Months EndedThree Months Ended
June 30, 2023March 31, 2023June 30, 2022
AverageIncome/Yield/AverageIncome/Yield/AverageIncome/Yield/
(dollars in millions)BalanceExpenseRateBalanceExpenseRateBalanceExpenseRate
Earning Assets
Interest-Bearing Deposits in Other Banks$569.3$7.25.07%$299.6$3.44.60%$1,297.3$2.80.85%
Available-for-Sale Investment Securities
Taxable2,978.618.02.423,081.418.42.393,946.416.61.68
Non-Taxable5.80.15.7431.10.45.558.40.15.26
Held-to-Maturity Investment Securities
Taxable3,618.715.31.693,683.815.71.703,533.615.01.70
Non-Taxable610.43.72.46612.24.12.74607.04.12.71
Total Investment Securities7,213.537.12.067,408.538.62.098,095.435.81.77
Loans Held for Sale0.5—5.870.1—5.530.3—5.06
Loans and Leases(1)
Commercial and industrial2,265.736.26.412,192.932.45.981,951.315.03.09
Commercial real estate4,183.664.96.224,105.758.35.763,808.930.73.23
Construction874.315.26.96873.914.76.83711.36.33.57
Residential:
Residential mortgage4,314.039.13.624,307.038.43.574,183.036.73.51
Home equity line1,119.39.23.311,074.98.73.27945.75.92.49
Consumer1,196.617.75.921,213.517.25.751,218.015.55.09
Lease financing329.73.64.43311.43.14.10240.42.13.53
Total Loans and Leases14,283.2185.95.2214,079.3172.84.9613,058.6112.23.44
Other Earning Assets119.80.30.9985.80.20.7669.00.10.79
Total Earning Assets(2)22,186.3230.54.1621,873.3215.03.9722,520.6150.92.68
Cash and Due from Banks257.9286.1300.8
Other Assets2,377.32,388.72,428.8
Total Assets$24,821.5$24,548.1$25,250.2
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings$6,099.4$16.11.05%$6,354.3$13.90.89%6,971.3$1.70.10%
Money Market3,809.819.62.073,853.514.31.504,127.41.40.14
Time2,877.822.43.122,515.615.12.441,671.41.50.36
Total Interest-Bearing Deposits12,787.058.11.8212,723.443.31.3812,770.14.60.14
Federal Funds Purchased2.9—5.0067.10.74.43———
Other Short-Term Borrowings362.94.75.1652.80.75.02———
Long-Term Borrowings500.06.04.78105.51.24.52———
Other Interest-Bearing Liabilities54.00.54.0042.80.44.27———
Total Interest-Bearing Liabilities13,706.869.32.0312,991.646.31.4512,770.14.60.14
Net Interest Income$161.2$168.7$146.3
Interest Rate Spread2.13%2.52%2.54%
Net Interest Margin2.91%3.11%2.60%
Noninterest-Bearing Demand Deposits8,270.38,745.29,631.4
Other Liabilities500.1511.9586.0
Stockholders' Equity2,344.32,299.42,262.7
Total Liabilities and Stockholders' Equity$24,821.5$24,548.1$25,250.2

______________________________

(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, $1.4 million and $1.2 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

Average Balances and Interest RatesTable 5
Six Months EndedSix Months Ended
June 30, 2023June 30, 2022
AverageIncome/Yield/AverageIncome/Yield/
(dollars in millions)BalanceExpenseRateBalanceExpenseRate
Earning Assets
Interest-Bearing Deposits in Other Banks$435.2$10.64.91%$1,218.3$3.30.55%
Available-for-Sale Investment Securities
Taxable3,029.736.42.415,862.745.71.56
Non-Taxable18.40.55.58320.83.92.41
Held-to-Maturity Investment Securities
Taxable3,651.130.91.701,776.615.01.69
Non-Taxable611.37.92.60305.24.12.71
Total Investment Securities7,310.575.72.088,265.368.71.66
Loans Held for Sale0.3—5.790.8—2.60
Loans and Leases(1)
Commercial and industrial2,229.568.66.201,962.129.73.05
Commercial real estate4,144.9123.25.993,721.056.43.06
Construction874.129.96.89738.912.13.30
Residential:
Residential mortgage4,310.577.53.594,147.271.53.45
Home equity line1,097.217.93.29918.811.32.48
Consumer1,205.034.85.841,218.331.15.14
Lease financing320.66.84.27233.44.03.48
Total Loans and Leases14,181.8358.75.0912,939.7216.13.36
Other Earning Assets102.90.50.9068.00.41.05
Total Earning Assets(2)22,030.7445.54.0722,492.1288.52.58
Cash and Due from Banks271.9296.5
Other Assets2,383.02,377.2
Total Assets$24,685.6$25,165.8
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings$6,226.2$30.00.97%$6,820.7$2.20.07%
Money Market3,831.533.91.784,088.32.00.09
Time2,697.737.52.801,709.83.20.38
Total Interest-Bearing Deposits12,755.4101.41.6012,618.87.40.12
Federal Funds Purchased34.80.84.45———
Other Short-Term Borrowings208.75.35.14———
Long-Term Borrowings303.87.14.73———
Other Interest-Bearing Liabilities48.51.04.12———
Total Interest-Bearing Liabilities13,351.2115.61.7512,618.87.40.12
Net Interest Income$329.9$281.1
Interest Rate Spread2.32%2.46%
Net Interest Margin3.01%2.51%
Noninterest-Bearing Demand Deposits8,506.49,563.6
Other Liabilities506.0578.9
Stockholders' Equity2,322.02,404.5
Total Liabilities and Stockholders' Equity$24,685.6$25,165.8

______________________________

(1)   Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2)   Interest income includes taxable-equivalent basis adjustments of $2.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively.

Analysis of Change in Net Interest IncomeTable 6
Three Months Ended June 30, 2023
Compared to March 31, 2023
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$3.4$0.4$3.8
Available-for-Sale Investment Securities
Taxable(0.6)0.2(0.4)
Non-Taxable(0.3)—(0.3)
Held-to-Maturity Investment Securities
Taxable(0.3)(0.1)(0.4)
Non-Taxable—(0.4)(0.4)
Total Investment Securities(1.2)(0.3)(1.5)
Loans and Leases
Commercial and industrial1.22.63.8
Commercial real estate1.35.36.6
Construction—0.50.5
Residential:
Residential mortgage0.10.60.7
Home equity line0.40.10.5
Consumer(0.2)0.70.5
Lease financing0.20.30.5
Total Loans and Leases3.010.113.1
Other Earning Assets0.1—0.1
Total Change in Interest Income5.310.215.5
Change in Interest Expense:
Interest-Bearing Deposits
Savings(0.5)2.72.2
Money Market(0.2)5.55.3
Time2.54.87.3
Total Interest-Bearing Deposits1.813.014.8
Federal Funds Purchased(0.8)0.1(0.7)
Other Short-Term Borrowings4.0—4.0
Long-Term Borrowings4.70.14.8
Other Interest-Bearing Liabilities0.1—0.1
Total Change in Interest Expense9.813.223.0
Change in Net Interest Income$(4.5)$(3.0)$(7.5)
Analysis of Change in Net Interest IncomeTable 7
Three Months Ended June 30, 2023
Compared to June 30, 2022
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$(2.3)$6.7$4.4
Available-for-Sale Investment Securities
Taxable(4.7)6.11.4
Held-to-Maturity Investment Securities
Taxable0.3—0.3
Non-Taxable—(0.4)(0.4)
Total Investment Securities(4.4)5.71.3
Loans and Leases
Commercial and industrial2.818.421.2
Commercial real estate3.330.934.2
Construction1.77.28.9
Residential:
Residential mortgage1.21.22.4
Home equity line1.22.13.3
Consumer(0.3)2.52.2
Lease financing0.90.61.5
Total Loans and Leases10.862.973.7
Other Earning Assets0.10.10.2
Total Change in Interest Income4.275.479.6
Change in Interest Expense:
Interest-Bearing Deposits
Savings(0.2)14.614.4
Money Market(0.1)18.318.2
Time1.819.120.9
Total Interest-Bearing Deposits1.552.053.5
Other Short-Term Borrowings4.7—4.7
Long-Term Borrowings6.0—6.0
Other Interest-Bearing Liabilities0.5—0.5
Total Change in Interest Expense12.752.064.7
Change in Net Interest Income$(8.5)$23.4$14.9
Analysis of Change in Net Interest IncomeTable 8
Six Months Ended June 30, 2023
Compared to June 30, 2022
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$(3.4)$10.7$7.3
Available-for-Sale Investment Securities
Taxable(27.6)18.3(9.3)
Non-Taxable(5.6)2.2(3.4)
Held-to-Maturity Investment Securities
Taxable15.80.115.9
Non-Taxable4.0(0.2)3.8
Total Investment Securities(13.4)20.47.0
Loans and Leases
Commercial and industrial4.534.438.9
Commercial real estate7.159.766.8
Construction2.515.317.8
Residential:
Residential mortgage3.03.06.0
Home equity line2.54.16.6
Consumer(0.4)4.13.7
Lease financing1.71.12.8
Total Loans and Leases20.9121.7142.6
Other Earning Assets0.2(0.1)0.1
Total Change in Interest Income4.3152.7157.0
Change in Interest Expense:
Interest-Bearing Deposits
Savings(0.2)28.027.8
Money Market(0.1)32.031.9
Time2.831.534.3
Total Interest-Bearing Deposits2.591.594.0
Federal Funds Purchased0.8—0.8
Other Short-Term Borrowings5.3—5.3
Long-Term Borrowings7.1—7.1
Other Interest-Bearing Liabilities1.0—1.0
Total Change in Interest Expense16.791.5108.2
Change in Net Interest Income$(12.4)$61.2$48.8
Loans and LeasesTable 9
June 30,March 31,December 31,June 30,
(dollars in thousands)2023202320222022
Commercial and industrial:
Commercial and industrial excluding Paycheck Protection Program loans$2,175,841$2,254,506$2,217,604$1,898,899
Paycheck Protection Program loans11,99013,82618,29343,233
Total commercial and industrial2,187,8312,268,3322,235,8971,942,132
Commercial real estate4,290,9484,106,2004,132,3093,956,828
Construction913,837913,959844,643727,771
Residential:
Residential mortgage4,317,5374,318,7424,302,7884,212,768
Home equity line1,138,1631,095,3651,055,351971,569
Total residential5,455,7005,414,1075,358,1395,184,337
Consumer1,182,1161,191,5521,222,9341,207,051
Lease financing332,400327,122298,090244,662
Total loans and leases$14,362,832$14,221,272$14,092,012$13,262,781
DepositsTable 10
June 30,March 31,December 31,June 30,
(dollars in thousands)2023202320222022
Demand$8,166,627$8,702,345$8,864,646$9,610,883
Savings5,835,9756,173,3986,382,9107,243,185
Money Market3,767,7923,818,3553,965,4234,079,706
Time3,307,7722,587,4022,476,0501,667,680
Total Deposits$21,078,166$21,281,500$21,689,029$22,601,454
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or MoreTable 11
June 30,March 31,December 31,June 30,
(dollars in thousands)2023202320222022
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial$1,024$1,158$1,215$682
Commercial real estate—727727727
Total Commercial Loans1,0241,8851,9421,409
Residential Loans:
Residential mortgage6,0976,8966,1666,450
Home equity line6,1074,9033,797—
Total Residential Loans12,20411,7999,9636,450
Total Non-Accrual Loans and Leases13,22813,68411,9057,859
Other Real Estate Owned—9191—
Total Non-Performing Assets$13,228$13,775$11,996$7,859
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial$599$461$291$2,230
Commercial real estate6191,346—176
Construction—102—352
Total Commercial Loans1,2181,9092912,758
Residential Loans:
Residential mortgage585858750
Home equity line———1,039
Total Residential Loans5858581,789
Consumer1,9752,5022,8851,218
Total Accruing Loans and Leases Past Due 90 Days or More$3,251$4,469$3,234$5,765
Total Loans and Leases$14,362,832$14,221,272$14,092,012$13,262,781
Allowance for Credit Losses and Reserve for Unfunded CommitmentsTable 12
For the Three Months EndedFor the Six Months Ended
June 30,March 31,June 30,June 30,June 30,
(dollars in thousands)20232023202220232022
Balance at Beginning of Period$183,321$177,735$179,238177,735187,584
Loans and Leases Charged-Off
Commercial and industrial(997)(791)(243)(1,788)(949)
Residential Loans:
Residential mortgage—(122)—(122)—
Home equity line(137)(135)(1,120)(272)(1,163)
Total Residential Loans(137)(257)(1,120)(394)(1,163)
Consumer(4,516)(4,782)(3,659)(9,298)(7,768)
Total Loans and Leases Charged-Off(5,650)(5,830)(5,022)(11,480)(9,880)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial292246301538354
Commercial real estate————14
Lease financing——60—60
Total Commercial Loans292246361538428
Residential Loans:
Residential mortgage302719257208
Home equity line59177191236219
Total Residential Loans89204383293427
Consumer1,7282,1661,9403,8944,088
Total Recoveries on Loans and Leases Previously Charged-Off2,1092,6162,6844,7254,943
Net Loans and Leases Charged-Off(3,541)(3,214)(2,338)(6,755)(4,937)
Provision for Credit Losses5,0008,8001,00013,800(4,747)
Balance at End of Period$184,780$183,321$177,900$184,780$177,900
Components:
Allowance for Credit Losses$148,581$147,122$148,942$148,581$148,942
Reserve for Unfunded Commitments36,19936,19928,95836,19928,958
Total Allowance for Credit Losses and Reserve for Unfunded Commitments$184,780$183,321$177,900$184,780$177,900
Average Loans and Leases Outstanding$14,283,222$14,079,337$13,058,558$14,181,842$12,939,745
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1)0.10%0.09%0.07%0.10%0.08%
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding1.03%1.03%1.12%1.03%1.12%
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases11.23x10.75x18.95x11.23x18.95x

_____________________________

(1)   Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023.

Loans and Leases by Year of Origination and Credit Quality IndicatorTable 13
Revolving
Loans
Converted
Term LoansRevolvingto Term
Amortized Cost Basis by Origination YearLoansLoans
AmortizedAmortized
(dollars in thousands)20232022202120202019PriorCost BasisCost BasisTotal
Commercial Lending
Commercial and Industrial
Risk rating:
Pass$33,877$299,913$385,159$38,769$157,794$165,747$952,182$15,003$2,048,444
Special Mention10331,1931548492,3971,4812,96718639,330
Substandard3525632609368191,10012,5391716,586
Other(1)11,74313,2846,3013,2752,6441,66844,556—83,471
Total Commercial and Industrial46,075344,953391,87443,829163,654169,9961,012,24415,2062,187,831
Current period gross charge-offs7260928921,527——1,788
Commercial Real Estate
Risk rating:
Pass212,159876,558655,847333,142564,8811,499,80572,447—4,214,839
Special Mention1,737156—5476,98312,38912,952—34,764
Substandard—5,141—171—35,8832—41,197
Other(1)—————148——148
Total Commercial Real Estate213,896881,855655,847333,860571,8641,548,22585,401—4,290,948
Current period gross charge-offs—————————
Construction
Risk rating:
Pass77,826182,679365,95976,72861,90682,5546,562—854,214
Special Mention————205———205
Other(1)6,60126,88215,7663,2612,1364,067705—59,418
Total Construction84,427209,561381,72579,98964,24786,6217,267—913,837
Current period gross charge-offs—————————
Lease Financing
Risk rating:
Pass69,48794,27621,16739,21535,96470,312——330,421
Special Mention——36560————425
Substandard———17171,376——1,554
Total Lease Financing69,48794,27621,53239,44635,97171,688——332,400
Current period gross charge-offs—————————
Total Commercial Lending$413,885$1,530,645$1,450,978$497,124$835,736$1,876,530$1,104,912$15,206$7,725,016
Current period gross charge-offs$72$60$9$28$92$1,527$—$—$1,788
Revolving
Loans
Converted
Term LoansRevolvingto Term
Amortized Cost Basis by Origination YearLoansLoans
(continued)AmortizedAmortized
(dollars in thousands)20232022202120202019PriorCost BasisCost BasisTotal
Residential Lending
Residential Mortgage
FICO:
740 and greater$138,593$530,776$1,030,287$544,330$236,821$1,036,361$—$—$3,517,168
680 - 73925,50081,562117,70174,44634,186135,766——469,161
620 - 6792,46811,21216,46310,7475,74338,132——84,765
550 - 619—3,3834,0582,47125412,362——22,528
Less than 550—1972,3721,581515,403——9,604
No Score(3)6,07519,49712,5526,3789,83756,201——110,540
Other(2)9,91618,07517,85712,9528,91528,4387,618—103,771
Total Residential Mortgage182,552664,7021,201,290652,905295,8071,312,6637,618—4,317,537
Current period gross charge-offs—————122——122
Home Equity Line
FICO:
740 and greater——————930,7411,668932,409
680 - 739——————151,4182,449153,867
620 - 679——————32,8971,37634,273
550 - 619——————9,4281,44810,876
Less than 550——————5,1273125,439
No Score(3)——————1,299—1,299
Total Home Equity Line——————1,130,9107,2531,138,163
Current period gross charge-offs——————25418272
Total Residential Lending$182,552$664,702$1,201,290$652,905$295,807$1,312,663$1,138,528$7,253$5,455,700
Current period gross charge-offs$—$—$—$—$—$122$254$18$394
Consumer Lending
FICO:
740 and greater70,561153,96093,78845,02234,09319,410117,437140534,411
680 - 73944,06484,90049,13623,89519,42411,35272,327431305,529
620 - 67914,64337,57619,4889,77111,0078,48233,692941135,600
550 - 6192,25510,9748,1355,6086,3145,20711,73074850,971
Less than 5504184,3584,4782,6952,9752,7654,24756022,496
No Score(3)1,4255862—61739,03516741,238
Other(2)361,2083,5363431,113185,634—91,871
Total Consumer Lending$133,402$293,562$178,563$87,334$74,932$47,234$364,102$2,987$1,182,116
Current period gross charge-offs$58$1,244$1,260$630$1,239$1,388$3,131$348$9,298
Total Loans and Leases$729,839$2,488,909$2,830,831$1,237,363$1,206,475$3,236,427$2,607,542$25,446$14,362,832
Current period gross charge-offs$130$1,304$1,269$658$1,331$3,037$3,385$366$11,480

_______________________________

(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 ReconciliationTable 14
For the Three Months EndedFor the Six Months Ended
June 30,March 31,June 30,June 30,
(dollars in thousands)20232023202220232022
Income Statement Data:
Net income$62,442$66,818$59,360$129,260$117,079
Average total stockholders' equity$2,344,285$2,299,422$2,262,654$2,321,977$2,404,471
Less: average goodwill995,492995,492995,492995,492995,492
Average tangible stockholders' equity$1,348,793$1,303,930$1,267,162$1,326,485$1,408,979
Average total assets$24,821,486$24,548,124$25,250,176$24,685,560$25,165,783
Less: average goodwill995,492995,492995,492995,492995,492
Average tangible assets$23,825,994$23,552,632$24,254,684$23,690,068$24,170,291
Return on average total stockholders' equity(1)10.68%11.78%10.52%11.23%9.82%
Return on average tangible stockholders' equity (non-GAAP)(1)18.57%20.78%18.79%19.65%16.76%
Return on average total assets(1)1.01%1.10%0.94%1.06%0.94%
Return on average tangible assets (non-GAAP)(1)1.05%1.15%0.98%1.10%0.98%
As ofAs ofAs ofAs of
June 30,March 31,December 31,June 30,
(dollars in thousands, except shares outstanding and per share amounts)2023202320222022
Balance Sheet Data:
Total stockholders' equity$2,359,738$2,329,012$2,269,005$2,252,611
Less: goodwill995,492995,492995,492995,492
Tangible stockholders' equity$1,364,246$1,333,520$1,273,513$1,257,119
Total assets$24,511,566$24,884,207$24,577,223$25,377,533
Less: goodwill995,492995,492995,492995,492
Tangible assets$23,516,074$23,888,715$23,581,731$24,382,041
Shares outstanding127,608,037127,573,680127,363,327127,451,087
Total stockholders' equity to total assets9.63%9.36%9.23%8.88%
Tangible stockholders' equity to tangible assets (non-GAAP)5.80%5.58%5.40%5.16%
Book value per share$18.49$18.26$17.82$17.67
Tangible book value per share (non-GAAP)$10.69$10.45$10.00$9.86

_____________________________

(1)   Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023.

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