First Hawaiian, Inc. Reports Third Quarter 2021 Financial Results and Declares Dividend

HONOLULU, Oct. 22, 2021 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended September 30, 2021.

“We are pleased with the bank’s solid performance in the third quarter. It was also a milestone quarter, as total assets exceeded $25 billion at quarter-end for the first time in our history,” said Bob Harrison, Chairman, President and CEO. “We had good growth in deposit balances, credit quality remained excellent, and we are seeing an increase in loan activity.”

On October 20, 2021 the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on December 3, 2021 to stockholders of record at the close of business on November 22, 2021.

Third Quarter 2021 Highlights:

• Net income of $64.3 million, or $0.50 per diluted share
• Total loans and leases decreased $269.4 million versus prior quarter, reflecting a $308.0 million decline in PPP loans
• Total deposits increased $1.3 billion versus prior quarter
• Recorded a $4.0 million negative provision for credit losses
• Board of Directors declared a quarterly dividend of $0.26 per share
• Repurchased $21.6 million of stock under share repurchase program

Balance SheetTotal assets were $25.5 billion as of September 30, 2021, compared to $24.2 billion as of June 30, 2021.

Gross loans and leases were $12.8 billion as of September 30, 2021, a decrease of $269.4 million, or 2.1%, from $13.1 billion as of June 30, 2021.

Total deposits were $22.1 billion as of September 30, 2021, an increase of $1.3 billion, or 6.2%, from $20.8 billion as of June 30, 2021.

Net Interest IncomeNet interest income for the third quarter of 2021 was $132.6 million, an increase of $1.1 million, or 0.8%, compared to $131.5 million for the prior quarter.

The net interest margin (NIM) was 2.36% in the third quarter of 2021, a decrease of 10 basis points compared to 2.46% in the second quarter of 2021.

Provision ExpenseDuring the quarter ended September 30, 2021, we recorded a $4.0 million negative provision for credit losses. In the quarter ended June 30, 2021 we recorded a $35.0 million negative provision for credit losses.

Noninterest IncomeNoninterest income was $50.1 million in the third quarter of 2021, an increase of $0.7 million compared to noninterest income of $49.4 million in the second quarter of 2021.

Noninterest ExpenseNoninterest expense was $101.0 million in the third quarter of 2021, an increase of $1.6 million compared to noninterest expense of $99.4 million in the second quarter of 2021.

The efficiency ratio was 55.1% and 54.7% for the quarters ended September 30, 2021 and June 30, 2021, respectively.

TaxesThe effective tax rate was 25.0% for the quarter ended September 30, 2021 and 25.5% for the quarter ended June 30, 2021.

Asset QualityThe allowance for credit losses was $161.2 million, or 1.26% of total loans and leases, as of September 30, 2021, compared to $169.1 million, or 1.29% of total loans and leases, as of June 30, 2021. The reserve for unfunded commitments was $32.5 million as of September 30, 2021 compared to $29.2 million as of June 30, 2021. Net charge-offs were $0.6 million, or 0.02% of average loans and leases on an annualized basis, for the quarter ended September 30, 2021, compared to net charge-offs of $1.1 million, or 0.03% of average loans and leases on an annualized basis, for the quarter ended June 30, 2021. Total non-performing assets were $8.6 million, or 0.07% of total loans and leases and other real estate owned, at September 30, 2021, compared to total non-performing assets of $8.9 million, or 0.07% of total loans and leases and other real estate owned at June 30, 2021.

CapitalTotal stockholders' equity was $2.7 billion at both September 30, 2021 and June 30, 2021.

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.39%, 12.63% and 13.88%, respectively, at September 30, 2021, compared with 7.68%, 12.76% and 14.01%, respectively, at June 30, 2021.

The Company repurchased 0.8 million shares of common stock at a total cost of $21.6 million under the stock repurchase program in the third quarter. The average cost was $27.76 per share repurchased. Remaining buyback authority under the stock repurchase program was $21.5 million at September 30, 2021.

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 InformationFirst 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, 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: 2438538. 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 4:30 p.m. (Eastern Time) on October 29, 2021. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 2438538.

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, 2020 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.

Use of Non-GAAP Financial MeasuresWe 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 14 and 15 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

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