First Hawaiian, Inc.NASDAQ: FHB

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

· Issued by First Hawaiian, Inc. via GlobeNewswire

Key figures

  • Net income of $58.2 million , or $0.46 per diluted share
  • Total loans and leases decreased $30.5 million versus prior quarter
  • Total deposits increased $433.3 million versus prior quarter
  • Net interest margin decreased 5 basis points to 2.86%
  • Recorded a $7.5 million provision for credit losses

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

Watch First Hawaiian explain itFirst Hawaiian (NASDAQ:FHB) Q3 2023 Earnings Call · Replay · Oct 27, 2023 · From 4:40 · Financial Performance Overview

HONOLULU, Oct. 27, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended September 30, 2023.

“I’m pleased to report that we delivered strong results in the third quarter.  Our loan balances were stable, we grew consumer and commercial deposits, and credit quality remained excellent,” said Bob Harrison, Chairman, President, and CEO.  “It was during this time that the world saw the devastating impacts of the wildfires on Maui.  Our priority during the quarter was to help our customers, colleagues and the community through this tragedy, and we are committed to helping Maui recover and rebuild stronger than ever.”

On October 18, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on December 1, 2023, to stockholders of record at the close of business on November 20, 2023.

Third Quarter 2023 Highlights:

  • Net income of $58.2 million, or $0.46 per diluted share
  • Total loans and leases decreased $30.5 million versus prior quarter
  • Total deposits increased $433.3 million versus prior quarter
  • Net interest margin decreased 5 basis points to 2.86%
  • Recorded a $7.5 million provision for credit losses
  • Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet

Total assets were $24.9 billion as of September 30, 2023, compared to $24.5 billion as of June 30, 2023.

Gross loans and leases were $14.3 billion as of September 30, 2023, a slight decrease of $30.5 million, or 0.2%, from $14.4 billion as of June 30, 2023.

Total deposits were $21.5 billion as of September 30, 2023, an increase of $433.3 million, or 2.1%, from $21.1 billion as of June 30, 2023.

Net Interest Income

Net interest income for the third quarter of 2023 was $157.1 million, a decrease of $2.8 million, or 1.7%, compared to $159.9 million for the prior quarter.

The net interest margin was 2.86% in the third quarter of 2023, a decrease of 5 basis points compared to 2.91% in the prior quarter.

Provision Expense

During the quarter ended September 30, 2023, we recorded a $7.5 million provision for credit losses. In the quarter ended June 30, 2023, we recorded a $5.0 million provision for credit losses.

Noninterest Income

Noninterest income was $46.1 million in the third quarter of 2023, a decrease of $1.3 million compared to noninterest income of $47.3 million in the prior quarter.

Noninterest Expense

Noninterest expense was $119.4 million in the third quarter of 2023, a decrease of $1.5 million compared to noninterest expense of $120.9 million in the prior quarter.

The efficiency ratio was 58.3% and 58.0% for the quarters ended September 30, 2023 and June 30, 2023, respectively.

Taxes

The effective tax rate was 23.8% and 23.3% for the quarters ended September 30, 2023 and June 30, 2023, respectively.

Asset Quality

The allowance for credit losses was $154.8 million, or 1.08% of total loans and leases, as of September 30, 2023, compared to $148.6 million, or 1.03% of total loans and leases, as of June 30, 2023. The reserve for unfunded commitments was $37.8 million as of September 30, 2023 compared to $36.2 million as of June 30, 2023. Net recoveries were $0.3 million, or 0.01% of average loans and leases on an annualized basis, for the quarter ended September 30, 2023, compared to net charge-offs of $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended June 30, 2023. Total non-performing assets were $14.6 million, or 0.10% of total loans and leases and other real estate owned, on September 30, 2023, compared to total non-performing assets of $13.2 million, or 0.09% of total loans and leases and other real estate owned, on June 30, 2023.

Capital

Total stockholders' equity was $2.4 billion on September 30, 2023 and June 30, 2023.

The tier 1 leverage, common equity tier 1 and total capital ratios were 8.45%, 12.21% and 13.38%, respectively, on September 30, 2023, compared with 8.30%, 12.05% and 13.17%, respectively, on June 30, 2023.

The Company did not repurchase any shares in the third quarter.

First Hawaiian, Inc.

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

Conference Call Information

First Hawaiian will host a conference call to discuss the Company’s results today at 1:00 p.m. Eastern Time, 7:00 a.m. Hawaii Time.

To access the call by phone, please register via the following link:   https://register.vevent.com/register/BIb8dec5c067a34a9783388cdb9da26a39, 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 quarters ended March 31, 2023 and June 30, 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 Nine Months Ended
September 30,June 30,September 30,September 30,
(dollars in thousands, except per share data)20232023202220232022
Operating Results:
Net interest income$157,148$159,939$162,736$484,334$441,755
Provision for credit losses7,5005,0003,18321,300(1,564)
Noninterest income46,09747,34845,857142,468131,374
Noninterest expense119,383120,881113,332358,831326,549
Net income58,22162,44269,018187,481186,097
Basic earnings per share0.460.490.541.471.46
Diluted earnings per share0.460.490.541.471.45
Dividends declared per share0.260.260.260.780.78
Dividend payout ratio56.52%53.06%48.15%53.06%53.79%
Performance Ratios(1):
Net interest margin2.86%2.91%2.93%2.96%2.65%
Efficiency ratio58.31%57.96%53.98%56.86%56.63%
Return on average total assets0.93%1.01%1.10%1.01%0.99%
Return on average tangible assets (non-GAAP)(2)0.97%1.05%1.14%1.06%1.03%
Return on average total stockholders' equity9.76%10.68%12.08%10.72%10.55%
Return on average tangible stockholders' equity (non-GAAP)(2)16.84%18.57%21.53%18.68%18.26%
Average Balances:
Average loans and leases$14,349,402$14,283,222$13,491,428$14,238,309$13,125,660
Average earning assets22,060,48022,186,31622,258,06622,040,70422,413,209
Average assets24,727,89324,821,48624,957,04224,699,82625,095,438
Average deposits21,212,10221,057,25922,148,03921,245,05522,170,824
Average stockholders' equity2,367,4222,344,2852,267,1522,337,2922,358,195
Market Value Per Share:
Closing18.0518.0124.6318.0524.63
High22.5921.0028.1428.2831.16
Low17.4115.0821.2115.0821.21
As ofAs ofAs ofAs of
September 30,June 30,December 31,September 30,
(dollars in thousands, except per share data)2023202320222022
Balance Sheet Data:
Loans and leases$14,332,335$14,362,832$14,092,012$13,700,374
Total assets24,912,52424,511,56624,577,22324,870,272
Total deposits21,511,48921,078,16621,689,02922,091,738
Short-term borrowings500,000—75,000—
Long-term borrowings—500,000——
Total stockholders' equity2,351,0092,359,7382,269,0052,200,651
Per Share of Common Stock:
Book value$18.42$18.49$17.82$17.28
Tangible book value (non-GAAP)(2)10.6210.6910.009.46
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases0.10%0.09%0.08%0.06%
Allowance for credit losses for loans and leases / total loans and leases1.08%1.03%1.02%1.08%
Capital Ratios:
Common Equity Tier 1 Capital Ratio12.21%12.05%11.82%11.79%
Tier 1 Capital Ratio12.21%12.05%11.82%11.79%
Total Capital Ratio13.38%13.17%12.92%12.92%
Tier 1 Leverage Ratio8.45%8.30%8.11%7.78%
Total stockholders' equity to total assets9.44%9.63%9.23%8.85%
Tangible stockholders' equity to tangible assets (non-GAAP)(2)5.67%5.80%5.40%5.05%
Non-Financial Data:
Number of branches50515151
Number of ATMs294296294303
Number of Full-Time Equivalent Employees2,0872,1262,0632,042
(1)Except for the efficiency ratio, amounts are annualized for the three and nine months ended September 30, 2023 and 2022 and three months ended June 30, 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 Nine Months Ended
September 30,June 30,September 30,September 30,
(dollars in thousands, except per share amounts)20232023202220232022
Interest income
Loans and lease financing$194,098$185,340$134,646$551,777$350,294
Available-for-sale investment securities18,42618,09419,64455,20868,394
Held-to-maturity investment securities18,27118,28217,95055,51036,239
Other9,0047,4894,15020,0547,828
Total interest income239,799229,205176,390682,549462,755
Interest expense
Deposits74,65158,07113,653176,00620,999
Short-term and long-term borrowings6,83810,656120,0571
Other1,162539—2,152—
Total interest expense82,65169,26613,654198,21521,000
Net interest income157,148159,939162,736484,334441,755
Provision for credit losses7,5005,0003,18321,300(1,564)
Net interest income after provision for credit losses149,648154,939159,553463,034443,319
Noninterest income
Service charges on deposit accounts7,5247,2467,08922,00121,433
Credit and debit card fees15,74815,46117,74647,50749,652
Other service charges and fees9,5469,0569,17927,76427,851
Trust and investment services income9,7429,4489,80028,80427,442
Bank-owned life insurance1,8723,271(341)10,263(1,617)
Other1,6652,8662,3846,1296,613
Total noninterest income46,09747,34845,857142,468131,374
Noninterest expense
Salaries and employee benefits55,93757,90451,372169,873149,500
Contracted services and professional fees16,39317,49816,62550,20452,389
Occupancy6,7117,5548,11522,04722,859
Equipment11,82611,00010,79132,56224,522
Regulatory assessment and fees4,1493,6762,48711,6617,012
Advertising and marketing2,2891,8911,9026,1745,924
Card rewards program8,3587,6818,14124,12422,309
Other13,72013,67713,89942,18642,034
Total noninterest expense119,383120,881113,332358,831326,549
Income before provision for income taxes76,36281,40692,078246,671248,144
Provision for income taxes18,14118,96423,06059,19062,047
Net income$58,221$62,442$69,018$187,481$186,097
Basic earnings per share$0.46$0.49$0.54$1.47$1.46
Diluted earnings per share$0.46$0.49$0.54$1.47$1.45
Basic weighted-average outstanding shares127,609,860127,591,371127,377,713127,552,255127,534,746
Diluted weighted-average outstanding shares127,936,440127,832,351127,796,617127,897,829127,996,672
Consolidated Balance SheetsTable 3
September 30,June 30,December 31,September 30,
(dollars in thousands, except share amount)2023202320222022
Assets
Cash and due from banks$246,028$318,333$297,502$291,360
Interest-bearing deposits in other banks967,400239,798229,122657,574
Investment securities:
Available-for-sale, at fair value (amortized cost: $3,172,031 as of September 30, 2023, $3,296,825 as of June 30, 2023, $3,549,599 as of December 31, 2022 and $3,673,396 as of September 30, 2022)2,722,7042,909,3723,151,1333,289,160
Held-to-maturity, at amortized cost (fair value: $3,433,029 as of September 30, 2023, $3,697,261 as of June 30, 2023, $3,814,822 as of December 31, 2022 and $3,960,713 as of September 30, 2022)4,104,1144,180,4084,320,6394,406,143
Loans held for sale———361
Loans and leases14,332,33514,362,83214,092,01213,700,374
Less: allowance for credit losses154,795148,581143,900148,163
Net loans and leases14,177,54014,214,25113,948,11213,552,211
Premises and equipment, net277,805277,817280,355299,179
Other real estate owned and repossessed personal property——91139
Accrued interest receivable84,32780,71078,19468,545
Bank-owned life insurance477,698476,177473,067470,202
Goodwill995,492995,492995,492995,492
Mortgage servicing rights5,8556,0726,5626,866
Other assets853,561813,136796,954833,040
Total assets$24,912,524$24,511,566$24,577,223$24,870,272
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing$13,612,493$12,911,539$12,824,383$12,774,645
Noninterest-bearing7,898,9968,166,6278,864,6469,317,093
Total deposits21,511,48921,078,16621,689,02922,091,738
Short-term borrowings500,000—75,000—
Long-term borrowings—500,000——
Retirement benefits payable99,685100,671102,577133,981
Other liabilities450,341472,991441,612443,902
Total liabilities22,561,51522,151,82822,308,21822,669,621
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,330,663 / 127,609,934 shares as of September 30, 2023, issued/outstanding: 141,327,860 / 127,608,037 shares as of June 30, 2023, issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022 and issued/outstanding: 140,958,520 / 127,357,680 shares as of September 30, 2022)1,4131,4131,4101,410
Additional paid-in capital2,545,6592,543,2262,538,3362,535,601
Retained earnings823,895799,045736,544690,433
Accumulated other comprehensive loss, net(648,731)(612,736)(639,254)(658,756)
Treasury stock (13,720,729 shares as of September 30, 2023, 13,719,823 shares as of June 30, 2023, 13,600,591 shares as of December 31, 2022 and 13,600,840 shares as of September 30, 2022)(371,227)(371,210)(368,031)(368,037)
Total stockholders' equity2,351,0092,359,7382,269,0052,200,651
Total liabilities and stockholders' equity$24,912,524$24,511,566$24,577,223$24,870,272
Average Balances and Interest RatesTable 4
Three Months EndedThree Months EndedThree Months Ended
September 30, 2023June 30, 2023September 30, 2022
AverageIncome/Yield/AverageIncome/Yield/AverageIncome/Yield/
(dollars in millions)BalanceExpenseRateBalanceExpenseRateBalanceExpenseRate
Earning Assets
Interest-Bearing Deposits in Other Banks$608.6$8.25.36%$569.3$7.25.07%$724.0$4.02.20%
Available-for-Sale Investment Securities
Taxable2,834.618.42.592,978.618.02.423,733.819.22.05
Non-Taxable2.3—5.485.80.15.7445.10.65.16
Held-to-Maturity Investment Securities
Taxable3,544.115.01.703,618.715.31.693,573.614.61.64
Non-Taxable604.34.12.66610.43.72.46613.64.22.72
Total Investment Securities6,985.337.52.147,213.537.12.067,966.138.61.93
Loans Held for Sale0.4—6.630.5—5.870.7—3.62
Loans and Leases(1)
Commercial and industrial2,123.535.76.662,265.736.26.412,025.520.74.05
Commercial real estate4,381.871.46.474,183.664.96.224,016.742.34.18
Construction873.715.57.05874.315.26.96737.48.64.63
Residential:
Residential mortgage4,316.340.13.724,314.039.13.624,224.036.43.45
Home equity line1,154.010.13.451,119.39.23.31991.17.22.87
Consumer1,172.818.36.191,196.617.75.921,218.017.15.57
Lease financing327.33.74.48329.73.64.43278.72.73.81
Total Loans and Leases14,349.4194.85.3914,283.2185.95.2213,491.4135.03.98
Other Earning Assets116.80.82.64119.80.30.9975.90.10.69
Total Earning Assets(2)22,060.5241.34.3522,186.3230.54.1622,258.1177.73.18
Cash and Due from Banks276.0257.9277.0
Other Assets2,391.42,377.32,421.9
Total Assets$24,727.9$24,821.5$24,957.0
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings$5,982.5$19.21.27%$6,099.4$16.11.05%6,871.5$6.70.39%
Money Market3,907.224.72.513,809.819.62.074,086.14.80.47
Time3,362.730.83.632,877.822.43.121,720.52.10.48
Total Interest-Bearing Deposits13,252.474.72.2312,787.058.11.8212,678.113.60.43
Federal Funds Purchased———2.9—5.000.2—1.67
Other Short-Term Borrowings113.11.55.17362.94.75.16———
Long-Term Borrowings440.25.34.83500.06.04.78———
Other Interest-Bearing Liabilities89.11.25.1754.00.54.00———
Total Interest-Bearing Liabilities13,894.882.72.3613,706.869.32.0312,678.313.60.43
Net Interest Income$158.6$161.2$164.1
Interest Rate Spread1.99%2.13%2.75%
Net Interest Margin2.86%2.91%2.93%
Noninterest-Bearing Demand Deposits7,959.78,270.39,469.9
Other Liabilities506.0500.1541.6
Stockholders' Equity2,367.42,344.32,267.2
Total Liabilities and Stockholders' Equity$24,727.9$24,821.5$24,957.0
(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)Interest income includes taxable-equivalent basis adjustments of $1.5 million, $1.3 million and $1.3 million for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022, respectively.
Average Balances and Interest RatesTable 5
Nine Months EndedNine Months Ended
September 30, 2023September 30, 2022
AverageIncome/Yield/AverageIncome/Yield/
(dollars in millions)BalanceExpenseRateBalanceExpenseRate
Earning Assets
Interest-Bearing Deposits in Other Banks$493.6$18.85.10%$1,051.7$7.30.93%
Available-for-Sale Investment Securities
Taxable2,964.054.82.475,145.364.91.68
Non-Taxable13.00.55.57227.94.42.59
Held-to-Maturity Investment Securities
Taxable3,615.046.01.702,382.229.71.66
Non-Taxable608.911.92.62409.18.32.71
Total Investment Securities7,200.9113.22.108,164.5107.31.75
Loans Held for Sale0.3—6.110.7—2.92
Loans and Leases(1)
Commercial and industrial2,193.8104.36.351,983.550.33.39
Commercial real estate4,224.7194.66.163,820.698.83.46
Construction874.045.46.95738.420.73.74
Residential:
Residential mortgage4,312.4117.63.644,173.1108.03.45
Home equity line1,116.427.93.35943.218.52.62
Consumer1,194.153.25.951,218.248.15.29
Lease financing322.910.54.34248.76.73.60
Total Loans and Leases14,238.3553.55.1913,125.7351.13.57
Other Earning Assets107.61.31.5370.60.50.92
Total Earning Assets(2)22,040.7686.84.1622,413.2466.22.78
Cash and Due from Banks273.3289.9
Other Assets2,385.82,392.3
Total Assets$24,699.8$25,095.4
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings$6,144.1$49.11.07%$6,837.8$8.90.17%
Money Market3,857.058.62.034,087.66.80.22
Time2,921.868.33.121,713.45.30.41
Total Interest-Bearing Deposits12,922.9176.01.8212,638.821.00.22
Federal Funds Purchased23.00.84.450.1—1.67
Other Short-Term Borrowings176.56.85.15———
Long-Term Borrowings349.812.54.78———
Other Interest-Bearing Liabilities62.12.14.63———
Total Interest-Bearing Liabilities13,534.3198.21.9612,638.921.00.22
Net Interest Income$488.6$445.2
Interest Rate Spread2.20%2.56%
Net Interest Margin2.96%2.65%
Noninterest-Bearing Demand Deposits8,322.29,532.0
Other Liabilities506.0566.3
Stockholders' Equity2,337.32,358.2
Total Liabilities and Stockholders' Equity$24,699.8$25,095.4
(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 $4.2 million and $3.5 million for the nine months ended September 30, 2023 and 2022, respectively.
Analysis of Change in Net Interest IncomeTable 6
Three Months Ended September 30, 2023
Compared to June 30, 2023
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$0.6$0.4$1.0
Available-for-Sale Investment Securities
Taxable(0.9)1.30.4
Non-Taxable(0.1)—(0.1)
Held-to-Maturity Investment Securities
Taxable(0.3)—(0.3)
Non-Taxable—0.40.4
Total Investment Securities(1.3)1.70.4
Loans and Leases
Commercial and industrial(2.1)1.6(0.5)
Commercial real estate3.53.06.5
Construction—0.30.3
Residential:
Residential mortgage—1.01.0
Home equity line0.40.50.9
Consumer(0.3)0.90.6
Lease financing—0.10.1
Total Loans and Leases1.57.48.9
Other Earning Assets—0.50.5
Total Change in Interest Income0.810.010.8
Change in Interest Expense:
Interest-Bearing Deposits
Savings(0.3)3.43.1
Money Market0.54.65.1
Time4.34.18.4
Total Interest-Bearing Deposits4.512.116.6
Other Short-Term Borrowings(3.2)—(3.2)
Long-Term Borrowings(0.7)—(0.7)
Other Interest-Bearing Liabilities0.50.20.7
Total Change in Interest Expense1.112.313.4
Change in Net Interest Income$(0.3)$(2.3)$(2.6)
Analysis of Change in Net Interest IncomeTable 7
Three Months Ended September 30, 2023
Compared to September 30, 2022
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$(0.7)$4.9$4.2
Available-for-Sale Investment Securities
Taxable(5.2)4.4(0.8)
Non-Taxable(0.6)—(0.6)
Held-to-Maturity Investment Securities
Taxable(0.1)0.50.4
Non-Taxable—(0.1)(0.1)
Total Investment Securities(5.9)4.8(1.1)
Loans and Leases
Commercial and industrial1.014.015.0
Commercial real estate4.125.029.1
Construction1.85.16.9
Residential:
Residential mortgage0.82.93.7
Home equity line1.31.62.9
Consumer(0.6)1.81.2
Lease financing0.50.51.0
Total Loans and Leases8.950.959.8
Other Earning Assets0.10.60.7
Total Change in Interest Income2.461.263.6
Change in Interest Expense:
Interest-Bearing Deposits
Savings(1.0)13.512.5
Money Market(0.2)20.119.9
Time3.725.028.7
Total Interest-Bearing Deposits2.558.661.1
Other Short-Term Borrowings1.5—1.5
Long-Term Borrowings5.3—5.3
Other Interest-Bearing Liabilities1.2—1.2
Total Change in Interest Expense10.558.669.1
Change in Net Interest Income$(8.1)$2.6$(5.5)
Analysis of Change in Net Interest IncomeTable 8
Nine Months Ended September 30, 2023
Compared to September 30, 2022
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$(5.7)$17.2$11.5
Available-for-Sale Investment Securities
Taxable(33.6)23.5(10.1)
Non-Taxable(6.3)2.4(3.9)
Held-to-Maturity Investment Securities
Taxable15.60.716.3
Non-Taxable3.9(0.3)3.6
Total Investment Securities(20.4)26.35.9
Loans and Leases
Commercial and industrial5.948.154.0
Commercial real estate11.484.495.8
Construction4.320.424.7
Residential:
Residential mortgage3.66.09.6
Home equity line3.75.79.4
Consumer(0.9)6.05.1
Lease financing2.31.53.8
Total Loans and Leases30.3172.1202.4
Other Earning Assets0.30.50.8
Total Change in Interest Income4.5216.1220.6
Change in Interest Expense:
Interest-Bearing Deposits
Savings(1.0)41.240.2
Money Market(0.4)52.251.8
Time6.156.963.0
Total Interest-Bearing Deposits4.7150.3155.0
Federal Funds Purchased0.8—0.8
Other Short-Term Borrowings6.8—6.8
Long-Term Borrowings12.5—12.5
Other Interest-Bearing Liabilities2.1—2.1
Total Change in Interest Expense26.9150.3177.2
Change in Net Interest Income$(22.4)$65.8$43.4
Loans and LeasesTable 9
September 30,June 30,December 31,September 30,
(dollars in thousands)2023202320222022
Commercial and industrial:
Commercial and industrial excluding Paycheck Protection Program loans$2,091,379$2,175,841$2,217,604$2,017,095
Paycheck Protection Program loans10,06311,99018,29326,712
Total commercial and industrial2,101,4422,187,8312,235,8972,043,807
Commercial real estate4,387,7514,290,9484,132,3094,103,310
Construction885,112913,837844,643765,862
Residential:
Residential mortgage4,303,9244,317,5374,302,7884,252,041
Home equity line1,167,3881,138,1631,055,3511,010,631
Total residential5,471,3125,455,7005,358,1395,262,672
Consumer1,154,2031,182,1161,222,9341,218,885
Lease financing332,515332,400298,090305,838
Total loans and leases$14,332,335$14,362,832$14,092,012$13,700,374
DepositsTable 10
September 30,June 30,December 31,September 30,
(dollars in thousands)2023202320222022
Demand$7,898,996$8,166,627$8,864,646$9,317,093
Savings6,028,3085,835,9756,382,9106,724,783
Money Market3,923,0543,767,7923,965,4234,150,940
Time3,661,1313,307,7722,476,0501,898,922
Total Deposits$21,511,489$21,078,166$21,689,029$22,091,738
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or MoreTable 11
September 30,June 30,December 31,September 30,
(dollars in thousands)2023202320222022
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial$988$1,024$1,215$1,528
Commercial real estate——727727
Total Commercial Loans9881,0241,9422,255
Residential Loans:
Residential mortgage7,4356,0976,1666,028
Home equity line6,2006,1073,797—
Total Residential Loans13,63512,2049,9636,028
Total Non-Accrual Loans and Leases14,62313,22811,9058,283
Other Real Estate Owned——91139
Total Non-Performing Assets$14,623$13,228$11,996$8,422
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial$289$599$291$1,445
Commercial real estate170619——
Construction———390
Total Commercial Loans4591,2182911,835
Residential Loans:
Residential mortgage1,4305858—
Home equity line———1,832
Total Residential Loans1,43058581,832
Consumer1,6811,9752,8851,976
Total Accruing Loans and Leases Past Due 90 Days or More$3,570$3,251$3,234$5,643
Total Loans and Leases$14,332,335$14,362,832$14,092,012$13,700,374
Allowance for Credit Losses and Reserve for Unfunded CommitmentsTable 12
For the Three Months EndedFor the Nine Months Ended
September 30,June 30,September 30,September 30,September 30,
(dollars in thousands)20232023202220232022
Balance at Beginning of Period$184,780$183,321$177,900177,735187,584
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial(784)(997)(328)(2,572)(1,277)
Commercial real estate——(750)—(750)
Total Commercial Loans(784)(997)(1,078)(2,572)(2,027)
Residential Loans:
Residential mortgage——(1)(122)(1)
Home equity line—(137)—(272)(1,163)
Total Residential Loans—(137)(1)(394)(1,164)
Consumer(3,665)(4,516)(3,986)(12,963)(11,754)
Total Loans and Leases Charged-Off(4,449)(5,650)(5,065)(15,929)(14,945)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial2,6372922403,175594
Commercial real estate————14
Lease financing————60
Total Commercial Loans2,6372922403,175668
Residential Loans:
Residential mortgage533037110245
Home equity line30359356539575
Total Residential Loans35689393649820
Consumer1,7461,7281,6535,6405,741
Total Recoveries on Loans and Leases Previously Charged-Off4,7392,1092,2869,4647,229
Net Loans and Leases Recovered (Charged-Off)290(3,541)(2,779)(6,465)(7,716)
Provision for Credit Losses7,5005,0003,18321,300(1,564)
Balance at End of Period$192,570$184,780$178,304$192,570$178,304
Components:
Allowance for Credit Losses$154,795$148,581$148,163$154,795$148,163
Reserve for Unfunded Commitments37,77536,19930,14137,77530,141
Total Allowance for Credit Losses and Reserve for Unfunded Commitments$192,570$184,780$178,304$192,570$178,304
Average Loans and Leases Outstanding$14,349,402$14,283,222$13,491,428$14,238,309$13,125,660
Ratio of Net Loans and Leases (Recovered) Charged-Off to Average Loans and Leases Outstanding(1)(0.01)%0.10%0.08%0.06%0.08%
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding1.08%1.03%1.08%1.08%1.08%
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases10.59x11.23x17.89x10.59x17.89x
(1)Annualized for the three and nine months ended September 30, 2023 and 2022 and three months ended June 30, 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$55,062$294,558$368,460$35,603$150,195$147,197$906,094$3,427$1,960,596
Special Mention131,427957301,1251,5692,6778737,711
Substandard2175322458471,8391,03413,947—18,661
Other (1)13,43812,4245,5752,8562,2261,51346,442—84,474
Total Commercial and Industrial68,718338,941374,37540,036155,385151,313969,1603,5142,101,442
Current period gross charge-offs1306974281082,163——2,572
Commercial Real Estate
Risk rating:
Pass288,996881,117665,048329,663559,2871,508,43060,613—4,293,154
Special Mention2,3227,64341,3045436,93513,03912,483—84,269
Substandard—5,1102,004170—2,599300—10,183
Other (1)—————145——145
Total Commercial Real Estate291,318893,870708,356330,376566,2221,524,21373,396—4,387,751
Current period gross charge-offs—————————
Construction
Risk rating:
Pass129,160209,227335,43359,16464,16828,9163,826—829,894
Special Mention————197669——866
Other (1)10,19424,82510,3132,2602,1153,932713—54,352
Total Construction139,354234,052345,74661,42466,48033,5174,539—885,112
Current period gross charge-offs—————————
Lease Financing
Risk rating:
Pass83,25588,36719,86935,58334,82869,043——330,945
Special Mention——34138————379
Substandard747440——4———1,191
Total Lease Financing84,00288,80720,21035,62134,83269,043——332,515
Current period gross charge-offs—————————
Total Commercial Lending$583,392$1,555,670$1,448,687$467,457$822,919$1,778,086$1,047,095$3,514$7,706,820
Current period gross charge-offs$130$69$74$28$108$2,163$—$—$2,572
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$195,053$527,072$1,018,441$536,878$231,038$1,012,924$—$—$3,521,406
680 - 73929,00678,642116,24773,20932,906131,547——461,557
620 - 6792,84711,15315,83010,6785,70536,289——82,502
550 - 6192693,3434,0372,45824911,724——22,080
Less than 550—1962,3621,573505,373——9,554
No Score (3)5,58919,40211,7296,3439,75753,515——106,335
Other (2)10,51817,07917,68212,8408,73326,1717,467—100,490
Total Residential Mortgage243,282656,8871,186,328643,979288,4381,277,5437,467—4,303,924
Current period gross charge-offs—————122——122
Home Equity Line
FICO:
740 and greater——————961,9741,503963,477
680 - 739——————148,6292,382151,011
620 - 679——————34,3331,32635,659
550 - 619——————9,09994810,047
Less than 550——————5,2572645,521
No Score (3)——————1,673—1,673
Total Home Equity Line——————1,160,9656,4231,167,388
Current period gross charge-offs——————25418272
Total Residential Lending$243,282$656,887$1,186,328$643,979$288,438$1,277,543$1,168,432$6,423$5,471,312
Current period gross charge-offs$—$—$—$—$—$122$254$18$394
Consumer Lending
FICO:
740 and greater85,839139,75384,74139,39027,79013,589116,342153507,597
680 - 73960,18479,62843,94820,53116,1928,57774,428416303,904
620 - 67921,79732,63218,0948,6509,2146,19133,543892131,013
550 - 6193,74510,4227,8984,9535,5974,06912,45668449,824
Less than 5507745,6294,5193,1753,0482,4594,56756024,731
No Score (3)1,455297——51341,85215043,772
Other (2)—1,1881,0073401,086189,740—93,362
Total Consumer Lending$173,794$269,549$160,207$77,039$62,932$34,899$372,928$2,855$1,154,203
Current period gross charge-offs$152$1,710$1,723$880$1,500$1,995$4,541$462$12,963
Total Loans and Leases$1,000,468$2,482,106$2,795,222$1,188,475$1,174,289$3,090,528$2,588,455$12,792$14,332,335
Current period gross charge-offs$282$1,779$1,797$908$1,608$4,280$4,795$480$15,929
(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 Nine Months Ended
September 30,June 30,September 30,September 30,
(dollars in thousands)20232023202220232022
Income Statement Data:
Net income$58,221$62,442$69,018$187,481$186,097
Average total stockholders' equity$2,367,422$2,344,285$2,267,152$2,337,292$2,358,195
Less: average goodwill995,492995,492995,492995,492995,492
Average tangible stockholders' equity$1,371,930$1,348,793$1,271,660$1,341,800$1,362,703
Average total assets$24,727,893$24,821,486$24,957,042$24,699,826$25,095,438
Less: average goodwill995,492995,492995,492995,492995,492
Average tangible assets$23,732,401$23,825,994$23,961,550$23,704,334$24,099,946
Return on average total stockholders' equity(1)9.76%10.68%12.08%10.72%10.55%
Return on average tangible stockholders' equity (non-GAAP)(1)16.84%18.57%21.53%18.68%18.26%
Return on average total assets(1)0.93%1.01%1.10%1.01%0.99%
Return on average tangible assets (non-GAAP)(1)0.97%1.05%1.14%1.06%1.03%
As ofAs ofAs ofAs of
September 30,June 30,December 31,September 30,
(dollars in thousands, except per share amounts)2023202320222022
Balance Sheet Data:
Total stockholders' equity$2,351,009$2,359,738$2,269,005$2,200,651
Less: goodwill995,492995,492995,492995,492
Tangible stockholders' equity$1,355,517$1,364,246$1,273,513$1,205,159
Total assets$24,912,524$24,511,566$24,577,223$24,870,272
Less: goodwill995,492995,492995,492995,492
Tangible assets$23,917,032$23,516,074$23,581,731$23,874,780
Shares outstanding127,609,934127,608,037127,363,327127,357,680
Total stockholders' equity to total assets9.44%9.63%9.23%8.85%
Tangible stockholders' equity to tangible assets (non-GAAP)5.67%5.80%5.40%5.05%
Book value per share$18.42$18.49$17.82$17.28
Tangible book value per share (non-GAAP)$10.62$10.69$10.00$9.46
(1)Annualized for the three and nine months ended September 30, 2023 and 2022 and three months ended June 30, 2023.

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