First Hawaiian, Inc. Reports Second Quarter 2020 Financial Results and Declares Dividend

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First Hawaiian, Inc.
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HONOLULU, July 24, 2020 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (First Hawaiian or the Company) today reported financial results for its quarter ended June 30, 2020.

I am very proud of our teams extraordinary efforts to manage through the pandemics disruption with agility and resilience while ensuring the health and safety of their co-workers, customers and community, said Bob Harrison, Chairman, President and CEO.  During this difficult time for our local economy, we focused our efforts on creating stability by offering relief assistance to customers and support to the community.  Our teams leveraged technology investments to develop an online application portal that enabled us to secure over $940 million in PPP loans for 6,000 small business customers.  We also successfully launched the Aloha for Hawaii Fund, which supported the restaurant industry, and donated $1 million to non-profits for COVID-19 relief.  Another $1 million was donated to the Stronger Together Fund to support the 2020 public high school graduates as they transition to the next phase of their lives.

On July 22, 2020 the Companys Board of Directors declared a quarterly cash dividend of $0.26 per share.  The dividend will be payable on September 4, 2020 to stockholders of record at the close of business on August 24, 2020. 

Second Quarter 2020 Highlights:

  • Net income of $20.0 million, or $0.15 per diluted share

  • Total Loans and Leases increased $383.8 million, or 2.9%, versus prior quarter

  • Deposits balances increased $2.3 billion, or 13.8% versus the prior quarter

  • Net interest margin (NIM) was 2.58% 

  • Recorded a $55.4 million provision for credit losses

  • Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet
Total assets were $23.0 billion as of June 30, 2020, compared to $20.8 billion as of March 31, 2020.

Gross loans and leases were $13.8 billion as of June 30, 2020, an increase of $383.8 million, or 2.9%, from $13.4 billion as of March 31, 2020.  Loan growth was driven by Paycheck Protection Program (PPP) loans, partially offset by declines in other commercial loans, including shared national credits (SNCs) and dealer flooring loans.

Total deposits were $19.4 billion as of June 30, 2020, an increase of $2.3 billion, or 13.8%, from $17.0 billion as of March 31, 2020.  The increase in deposit balances was due to growth in consumer and commercial deposits, which included a portion of PPP loan proceeds, and an increase in public deposits.

Net Interest Income
Net interest income for the second quarter of 2020 was $127.8 million, a decrease of $10.9 million, or 7.8%, compared to $138.7 million for the prior quarter. 

The NIM was 2.58% in the second quarter of 2020, a decrease of 54 basis points compared to 3.12% in the first quarter of 2020.  The decline in NIM was due to lower interest rates and excess liquidity.

Provision Expense
During the quarter ended June 30, 2020, the Bank recorded a total provision for credit losses of $55.4 million.  In the quarter ended March 31, 2020, the total provision for credit losses was $41.2 million.  The provision expense recorded in the first and second quarters was due to expectations for increased credit losses as a result of COVID-19 and its impact on Hawaiis economy.

Noninterest Income
Noninterest income was $45.7 million in the second quarter of 2020, a decrease of $3.6 million compared to noninterest income of $49.2 million in the first quarter of 2020.

Noninterest Expense
Noninterest expense was $91.5 million in the second quarter of 2020, a decrease of $5.0 million from $96.5 million in the first quarter of 2020.

The efficiency ratio was 52.7% and 51.3% for the quarters ended June 30, 2020 and March 31, 2020, respectively.

Taxes
The effective tax rate was 24.6% for the quarter ended June 30, 2020 and 22.6% for the quarter ended March 31, 2020.

Asset Quality
The allowance for credit losses was $192.1 million, or 1.40% of total loans and leases, as of June 30, 2020, compared to $166.0 million, or 1.24% of total loans and leases, as of March 31, 2020.  The reserve for unfunded commitments was $23.2 million as of June 30, 2020 compared to $17.3 million as of March 31, 2020.  Net charge-offs were $23.4 million, or 0.67% of average loans and leases on an annualized basis for the quarter ended June 30, 2020, compared to $6.1 million, or 0.19% of average loans and leases on an annualized basis for the quarter ended March 31, 2020.  Total non-performing assets were $33.3 million, or 0.24% of total loans and leases and other real estate owned, at June 30, 2020, compared to non-performing assets of $7.2 million, or 0.05% of total loans and leases and other real estate owned, at March 31, 2020. 

Capital
Total stockholders equity was $2.7 billion at both June 30 and March 31, 2020.   

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.75%, 11.86% and 13.11%, respectively, at June 30, 2020, compared with 8.63%, 11.65% and 12.90%, respectively, at March 31, 2020.

The Company suspended its stock repurchase program during the first quarter and did not repurchase any shares of common stock 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 Hawaiis 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 Companys website, www.fhb.com.

Conference Call Information
First Hawaiian will host a conference call to discuss the Companys 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:  4496063  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 July 31, 2020.  Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID:  4496063

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.  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, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

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 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.

Investor Relations Contact:
Kevin Haseyama, CFA
(808) 525-6268
khaseyama@fhb.com

Media Contact:
Susan Kam
(808) 525-6254
skam@fhb.com


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 

 

March 31, 

 

June 30, 

 

June 30, 

 

(dollars in thousands, except per share data)

 

2020

 

2020

 

2019

 

2020

 

2019

 

Operating Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

 127,822

 

$

138,683

 

$

145,613

 

$

 266,505

 

$

290,702

 

Provision for credit losses

 

 

 55,446

 

 

41,200

 

 

3,870

 

 

 96,646

 

 

9,550

 

Noninterest income

 

 

 45,656

 

 

49,228

 

 

48,773

 

 

 94,884

 

 

95,845

 

Noninterest expense

 

 

 91,450

 

 

96,466

 

 

93,290

 

 

 187,916

 

 

185,913

 

Net income

 

 

 20,049

 

 

38,865

 

 

72,433

 

 

 58,914

 

 

142,357

 

Basic earnings per share

 

 

 0.15

 

 

0.30

 

 

0.54

 

 

 0.45

 

 

1.06

 

Diluted earnings per share

 

 

 0.15

 

 

0.30

 

 

0.54

 

 

 0.45

 

 

1.06

 

Dividends declared per share

 

 

 0.26

 

 

0.26

 

 

0.26

 

 

 0.52

 

 

0.52

 

Dividend payout ratio

 

 

 173.33

%

 

86.67

%

 

48.15

%

 

 115.56

%

 

49.06

%

Supplemental Income Statement Data (non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core net interest income

 

$

 127,822

 

$

138,683

 

$

145,613

 

$

 266,505

 

$

290,702

 

Core noninterest income

 

 

 45,867

 

 

49,143

 

 

48,752

 

 

 95,010

 

 

98,437

 

Core noninterest expense

 

 

 91,450

 

 

96,466

 

 

93,029

 

 

 187,916

 

 

185,391

 

Core net income

 

 

 20,204

 

 

38,803

 

 

72,612

 

 

 59,007

 

 

144,664

 

Core basic earnings per share

 

 

 0.16

 

 

0.30

 

 

0.54

 

 

 0.45

 

 

1.07

 

Core diluted earnings per share

 

 

 0.16

 

 

0.30

 

 

0.54

 

 

 0.45

 

 

1.07

 

Performance Ratio (1) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

 2.58

 

3.12

%

 

3.25

%

 

 2.84

 

3.24

%

Core net interest margin (non-GAAP)

 

 

 2.58

 

3.12

%

 

3.25

%

 

 2.84

%

 

3.24

%

Efficiency ratio

 

 

 52.70

 

51.33

%

 

47.99

%

 

 51.99

%

 

48.09

%

Core efficiency ratio (non-GAAP)

 

 

 52.64

 

51.35

%

 

47.86

%

 

 51.97

%

 

47.64

%

Return on average total assets

 

 

 0.36

 

0.77

%

 

1.42

%

 

 0.56

%

 

1.40

%

Core return on average total assets (non-GAAP)

 

 

 0.36

 

0.77

%

 

1.43

%

 

 0.56

%

 

1.43

%

Return on average tangible assets (non-GAAP)

 

 

 0.38

 

0.81

%

 

1.50

%

 

 0.58

%

 

1.48

%

Core return on average tangible assets (non-GAAP) (2)

 

 

 0.38

 

0.81

%

 

1.50

%

 

 0.58

%

 

1.50

%

Return on average total stockholders' equity

 

 

 2.99

 

5.87

%

 

11.13

%

 

 4.42

%

 

11.15

%

Core return on average total stockholders' equity (non-GAAP)

 

 

 3.01

 

5.87

%

 

11.16

%

 

 4.43

%

 

11.33

%

Return on average tangible stockholders' equity (non-GAAP)

 

 

 4.74

 

9.39

%

 

17.99

%

 

 7.04

%

 

18.17

%

Core return on average tangible stockholders equity (non-GAAP) (3)

 

 

 4.77

 

9.37

%

 

18.03

%

 

 7.05

%

 

18.46

%

Average Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average loans and leases

 

$

 13,956,669

 

$

13,191,426

 

$

13,209,655

 

$

 13,574,048

 

$

13,142,057

 

Average earning assets

 

 

 19,854,795

 

 

17,814,189

 

 

17,971,615

 

 

 18,834,492

 

 

18,031,189

 

Average assets

 

 

 22,341,654

 

 

20,313,304

 

 

20,390,273

 

 

 21,327,479

 

 

20,442,266

 

Average deposits

 

 

 18,540,394

 

 

16,543,305

 

 

16,664,837

 

 

 17,541,849

 

 

16,764,700

 

Average stockholders' equity

 

 

 2,697,775

 

 

2,660,811

 

 

2,610,565

 

 

 2,679,293

 

 

2,575,775

 

Market Value Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closing

 

 

 17.24

 

 

16.53

 

 

25.87

 

 

 17.24

 

 

25.87

 

High

 

 

 21.50

 

 

31.25

 

 

28.20

 

 

 31.25

 

 

28.20

 

Low

 

 

 13.56

 

 

15.42

 

 

24.83

 

 

 13.56

 

 

22.13

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

As of

 

As of

 

 

 

June 30, 

 

March 31, 

 

December 31, 

 

June 30, 

 

 

 

2020

 

2020

 

2019

 

2019

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

 13,764,030

 

$

13,380,270

 

$

13,211,650

 

$

13,264,609

 

Total assets

 

 

 22,993,715

 

 

20,755,891

 

 

20,166,734

 

 

20,526,367

 

Total deposits

 

 

 19,361,634

 

 

17,020,002

 

 

16,444,994

 

 

16,792,078

 

Short-term borrowings

 

 

 200,000

 

 

400,000

 

 

400,000

 

 

200,000

 

Long-term borrowings

 

 

 200,019

 

 

200,019

 

 

200,019

 

 

400,028

 

Total stockholders' equity

 

 

 2,701,897

 

 

2,664,685

 

 

2,640,258

 

 

2,659,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share of Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value

 

$

 20.81

 

$

20.52

 

$

20.32

 

$

19.92

 

Tangible book value (non-GAAP) (4)

 

 

 13.14

 

 

12.86

 

 

12.66

 

 

12.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans and leases / total loans and leases

 

 

 0.24

 

0.05

%

 

0.04

%

 

0.03

%

Allowance for credit losses for loans and leases / total loans and leases

 

 

 1.40

 

1.24

%

 

0.99

%

 

1.04

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital Ratio

 

 

 11.86

 

11.65

%

 

11.88

%

 

11.84

%

Tier 1 Capital Ratio

 

 

 11.86

 

11.65

%

 

11.88

%

 

11.84

%

Total Capital Ratio

 

 

 13.11

 

12.90

%

 

12.81

%

 

12.81

%

Tier 1 Leverage Ratio

 

 

 7.75

 

8.63

%

 

8.79

%

 

8.75

%

Total stockholders' equity to total assets

 

 

 11.75

 

12.84

%

 

13.09

%

 

12.96

%

Tangible stockholders' equity to tangible assets (non-GAAP)

 

 

 7.76

 

8.45

%

 

8.58

%

 

8.52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of branches

 

 

 58

 

 

58

 

 

58

 

 

59

 

Number of ATMs

 

 

 295

 

 

304

 

 

301

 

 

292

 

Number of Full-Time Equivalent Employees

 

 

 2,100

 

 

2,103

 

 

2,092

 

 

2,123

 

(1)  Except for the efficiency ratio and the core efficiency ratio, amounts are annualized for the three and six months ended June 30, 2020 and 2019 and the three months ended March 31, 2020.

(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 14, 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 14, 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 14, GAAP to Non-GAAP Reconciliation.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income

 

Table 2

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

June 30, 

 

March 31, 

 

June 30, 

 

June 30, 

(dollars in thousands, except per share amounts)

 

2020

 

2020

 

2019

 

2020

 

2019

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and lease financing

 

$

 122,298

 

 

$

134,971

 

$

146,883

 

$

 257,269

 

 

$

291,289

 

Available-for-sale securities

 

 

 17,529

 

 

 

21,210

 

 

24,784

 

 

 38,739

 

 

 

49,270

 

Other

 

 

 792

 

 

 

2,351

 

 

2,151

 

 

 3,143

 

 

 

5,820

 

Total interest income

 

 

 140,619

 

 

 

158,532

 

 

173,818

 

 

 299,151

 

 

 

346,379

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 8,583

 

 

 

15,600

 

 

23,693

 

 

 24,183

 

 

 

46,890

 

Short-term and long-term borrowings

 

 

 4,214

 

 

 

4,249

 

 

4,512

 

 

 8,463

 

 

 

8,787

 

Total interest expense

 

 

 12,797

 

 

 

19,849

 

 

28,205

 

 

 32,646

 

 

 

55,677

 

Net interest income

 

 

 127,822

 

 

 

138,683

 

 

145,613

 

 

 266,505

 

 

 

290,702

 

Provision for credit losses

 

 

 55,446

 

 

 

41,200

 

 

3,870

 

 

 96,646

 

 

 

9,550

 

Net interest income after provision for credit losses

 

 

 72,376

 

 

 

97,483

 

 

141,743

 

 

 169,859

 

 

 

281,152

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

 5,927

 

 

 

8,950

 

 

8,123

 

 

 14,877

 

 

 

16,183

 

Credit and debit card fees

 

 

 10,870

 

 

 

14,949

 

 

16,629

 

 

 25,819

 

 

 

33,284

 

Other service charges and fees

 

 

 7,912

 

 

 

8,539

 

 

9,403

 

 

 16,451

 

 

 

18,532

 

Trust and investment services income

 

 

 8,664

 

 

 

9,591

 

 

8,931

 

 

 18,255

 

 

 

17,549

 

Bank-owned life insurance

 

 

 4,432

 

 

 

2,260

 

 

3,390

 

 

 6,692

 

 

 

7,203

 

Investment securities (losses) gains, net

 

 

 (211

)

 

 

85

 

 

21

 

 

 (126

)

 

 

(2,592

)

Other

 

 

 8,062

 

 

 

4,854

 

 

2,276

 

 

 12,916

 

 

 

5,686

 

Total noninterest income

 

 

 45,656

 

 

 

49,228

 

 

48,773

 

 

 94,884

 

 

 

95,845

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

 42,414

 

 

 

44,829

 

 

42,185

 

 

 87,243

 

 

 

87,045

 

Contracted services and professional fees

 

 

 15,478

 

 

 

16,055

 

 

14,303

 

 

 31,533

 

 

 

27,948

 

Occupancy

 

 

 7,302

 

 

 

7,243

 

 

7,286

 

 

 14,545

 

 

 

14,272

 

Equipment

 

 

 5,207

 

 

 

4,708

 

 

4,544

 

 

 9,915

 

 

 

8,828

 

Regulatory assessment and fees

 

 

 2,100

 

 

 

1,946

 

 

2,149

 

 

 4,046

 

 

 

3,596

 

Advertising and marketing

 

 

 1,402

 

 

 

1,823

 

 

1,980

 

 

 3,225

 

 

 

3,946

 

Card rewards program

 

 

 5,163

 

 

 

7,015

 

 

7,664

 

 

 12,178

 

 

 

14,396

 

Other

 

 

 12,384

 

 

 

12,847

 

 

13,179

 

 

 25,231

 

 

 

25,882

 

Total noninterest expense

 

 

 91,450

 

 

 

96,466

 

 

93,290

 

 

 187,916

 

 

 

185,913

 

Income before provision for income taxes

 

 

 26,582

 

 

 

50,245

 

 

97,226

 

 

 76,827

 

 

 

191,084

 

Provision for income taxes

 

 

 6,533

 

 

 

11,380

 

 

24,793

 

 

 17,913

 

 

 

48,727

 

Net income

 

$

 20,049

 

 

$

38,865

 

$

72,433

 

$

 58,914

 

 

$

142,357

 

Basic earnings per share

 

$

 0.15

 

 

$

0.30

 

$

0.54

 

$

 0.45

 

 

$

1.06

 

Diluted earnings per share

 

$

 0.15

 

 

$

0.30

 

$

0.54

 

$

 0.45

 

 

$

1.06

 

Basic weighted-average outstanding shares

 

 

 129,856,730

 

 

 

129,895,706

 

 

134,420,380

 

 

 129,876,218

 

 

 

134,655,217

 

Diluted weighted-average outstanding shares

 

 

 130,005,195

 

 

 

130,351,585

 

 

134,652,008

 

 

 130,163,722

 

 

 

134,924,331

 


 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

Table 3

 

 

June 30, 

 

March 31, 

 

December 31, 

 

June 30, 

(dollars in thousands)

 

2020

 

2020

 

2019

 

2019

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

 347,592

 

 

$

353,908

 

 

$

360,375

 

 

$

423,802

 

Interest-bearing deposits in other banks

 

 

 1,507,630

 

 

 

698,924

 

 

 

333,642

 

 

 

259,713

 

Investment securities, at fair value (amortized cost: $5,025,433 as of June 30, 2020, $4,014,397 as of March 31, 2020, $4,080,663 as of December 31, 2019 and $4,399,597 as of June 30, 2019)

 

 

 5,135,775

 

 

 

4,058,457

 

 

 

4,075,644

 

 

 

4,395,476

 

Loans held for sale

 

 

 6,698

 

 

 

8,180

 

 

 

904

 

 

 

215

 

Loans and leases

 

 

 13,764,030

 

 

 

13,380,270

 

 

 

13,211,650

 

 

 

13,264,609

 

Less: allowance for credit losses

 

 

 192,120

 

 

 

166,013

 

 

 

130,530

 

 

 

138,535

 

Net loans and leases

 

 

 13,571,910

 

 

 

13,214,257

 

 

 

13,081,120

 

 

 

13,126,074

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment, net

 

 

 322,919

 

 

 

321,254

 

 

 

316,885

 

 

 

313,200

 

Other real estate owned and repossessed personal property

 

 

 446

 

 

 

238

 

 

 

319

 

 

 

 

Accrued interest receivable

 

 

 58,420

 

 

 

43,552

 

 

 

45,239

 

 

 

49,205

 

Bank-owned life insurance

 

 

 458,720

 

 

 

455,226

 

 

 

453,873

 

 

 

450,722

 

Goodwill

 

 

 995,492

 

 

 

995,492

 

 

 

995,492

 

 

 

995,492

 

Mortgage servicing rights

 

 

 11,595

 

 

 

11,979

 

 

 

12,668

 

 

 

14,573

 

Other assets

 

 

 576,518

 

 

 

594,424

 

 

 

490,573

 

 

 

497,895

 

Total assets

 

$

 22,993,715

 

 

$

20,755,891

 

 

$

20,166,734

 

 

$

20,526,367

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing

 

$

 12,481,543

 

 

$

11,274,463

 

 

$

10,564,922

 

 

$

11,028,921

 

Noninterest-bearing

 

 

 6,880,091

 

 

 

5,745,539

 

 

 

5,880,072

 

 

 

5,763,157

 

Total deposits

 

 

 19,361,634

 

 

 

17,020,002

 

 

 

16,444,994

 

 

 

16,792,078

 

Short-term borrowings

 

 

 200,000

 

 

 

400,000

 

 

 

400,000

 

 

 

200,000

 

Long-term borrowings

 

 

 200,019

 

 

 

200,019

 

 

 

200,019

 

 

 

400,028

 

Retirement benefits payable

 

 

 138,624

 

 

 

138,396

 

 

 

138,222

 

 

 

128,610

 

Other liabilities

 

 

 391,541

 

 

 

332,789

 

 

 

343,241

 

 

 

346,210

 

Total liabilities

 

 

 20,291,818

 

 

 

18,091,206

 

 

 

17,526,476

 

 

 

17,866,926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,140,542 / 129,866,898 shares as of June 30, 2020, issued/outstanding: 140,092,172 / 129,827,968 shares as of March 31, 2020, issued/outstanding: 139,917,150 / 129,928,479 shares as of December 31, 2019 and issued/outstanding: 139,857,673 / 133,508,212 shares as of June 30, 2019)

 

 

 1,401

 

 

 

1,401

 

 

 

1,399

 

 

 

1,399

 

Additional paid-in capital

 

 

 2,509,271

 

 

 

2,506,477

 

 

 

2,503,677

 

 

 

2,499,946

 

Retained earnings

 

 

 415,296

 

 

 

429,323

 

 

 

437,072

 

 

 

363,748

 

Accumulated other comprehensive income (loss), net

 

 

 52,731

 

 

 

4,129

 

 

 

(31,749

)

 

 

(31,984

)

Treasury stock (10,273,644 shares as of June 30, 2020, 10,264,204 shares as of March 31, 2020, 9,988,671 shares as of December 31, 2019 and 6,349,461 shares as of June 30, 2019)

 

 

 (276,802

)

 

 

(276,645

)

 

 

(270,141

)

 

 

(173,668

)

Total stockholders' equity

 

 

 2,701,897

 

 

 

2,664,685

 

 

 

2,640,258

 

 

 

2,659,441

 

Total liabilities and stockholders' equity

 

$

 22,993,715

 

 

$

20,755,891

 

 

$

20,166,734

 

 

$

20,526,367

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balances and Interest Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

 

 

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 $ 1,436.2 $ 0.4 0.10% $516.8 $1.6 1.25%$247.2 $1.4 2.35%Available-for-Sale Investment Securities 4,390.4 17.5 1.60 4,033.2 21.2 2.10 4,438.1 24.8 2.23 Loans Held for Sale 9.8 0.1 2.93 15.8 0.1 1.70 0.7 — 2.76 Loans and Leases(1) Commercial and industrial 3,601.0 24.3 2.71 2,776.2 24.6 3.56 3,235.0 34.3 4.26 Commercial real estate 3,438.8 28.3 3.31 3,433.2 34.6 4.05 3,094.4 36.0 4.67 Construction 584.1 4.9 3.35 538.5 5.7 4.27 583.6 6.9 4.73 Residential: Residential mortgage 3,682.7 35.7 3.88 3,721.2 37.7 4.05 3,581.2 37.2 4.16 Home equity line 885.2 6.8 3.07 887.4 7.7 3.50 908.5 8.6 3.79 Consumer 1,526.5 20.6 5.42 1,611.7 23.0 5.75 1,657.7 22.7 5.48 Lease financing 238.4 1.7 2.88 223.2 1.6 2.85 149.3 1.2 3.31 Total Loans and Leases 13,956.7 122.3 3.52 13,191.4 134.9 4.11 13,209.7 146.9 4.46 Other Earning Assets 61.7 0.4 2.79 57.0 0.7 5.30 76.0 0.7 3.71 Total Earning Assets(2) 19,854.8 140.7 2.84 17,814.2 158.5 3.57 17,971.7 173.8 3.88 Cash and Due from Banks 295.1 327.4 342.6 Other Assets 2,191.8 2,171.7 2,076.0 Total Assets $ 22,341.7 $20,313.3 $20,390.3 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 5,501.9 $ 0.9 0.07% $5,090.4 $3.3 0.26% 4,712.2 $4.0 0.34%Money Market 3,270.3 1.1 0.13 3,064.8 4.6 0.61 3,126.7 7.4 0.95 Time 3,335.6 6.6 0.79 2,534.7 7.7 1.23 3,084.6 12.3 1.60 Total Interest-Bearing Deposits 12,107.8 8.6 0.29 10,689.9 15.6 0.59 10,923.5 23.7 0.87 Short-Term Borrowings 395.6 2.8 2.88 401.7 2.8 2.88 50.4 0.3 2.25 Long-Term Borrowings 200.0 1.4 2.77 200.0 1.4 2.77 593.5 4.2 2.86 Total Interest-Bearing Liabilities 12,703.4 12.8 0.41 11,291.6 19.8 0.71 11,567.4 28.2 0.98 Net Interest Income $ 127.9 $138.7 $145.6 Interest Rate Spread 2.43% 2.86% 2.90%Net Interest Margin 2.58% 3.12% 3.25%Noninterest-Bearing Demand Deposits 6,432.6 5,853.4 5,741.3 Other Liabilities 507.9 507.5 471.0 Stockholders' Equity 2,697.8 2,660.8 2,610.6 Total Liabilities and Stockholders' Equity $ 22,341.7 $20,313.3 $20,390.3

(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 $0.1 million, nil and nil for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.


Average Balances and Interest Rates

Table 5

Six Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

Average

Income/

Yield/

Average

Income/

Yield/

(dollars in millions)

Balance

Expense

Rate

Balance

Expense

Rate

Earning Assets

Interest-Bearing Deposits in Other Banks

$

976.5

$

2.0

0.40

%

$

376.5

$

4.6

2.49

%

Available-for-Sale Investment Securities

4,211.8

38.7

1.84

4,428.0

49.3

2.23

Loans Held for Sale

12.8

0.1

2.17

0.5

2.76

Loans and Leases(1)

Commercial and industrial

3,188.4

48.9

3.08

3,200.9

67.5

4.25

Commercial real estate

3,426.3

62.9

3.69

3,044.9

70.7

4.68

Construction

561.5

10.6

3.79

610.2

14.4

4.75

Residential:

Residential mortgage

3,711.5

73.4

3.95

3,563.2

73.9

4.14

Home equity line

886.3

14.5

3.28

912.1

17.3

3.82

Consumer

1,569.2

43.6

5.59

1,662.5

45.2

5.48

Lease financing

230.8

3.3

2.90

148.3

2.3

3.15

Total Loans and Leases

13,574.0

257.2

3.80

13,142.1

291.3

4.46

Other Earning Assets

59.4

1.2

3.99

84.1

1.2

2.81

Total Earning Assets(2)

18,834.5

299.2

3.19

18,031.2

346.4

3.86

Cash and Due from Banks

311.2

351.4

Other Assets

2,181.8

2,059.7

Total Assets

$

21,327.5

$

20,442.3

Interest-Bearing Liabilities

Interest-Bearing Deposits

Savings

$

5,296.1

$

4.2

0.16

%

$

4,762.6

$

8.2

0.35

%

Money Market

3,167.6

5.7

0.36

3,155.0

15.0

0.96

Time

2,935.1

14.3

0.98

3,063.3

23.7

1.56

Total Interest-Bearing Deposits

11,398.8

24.2

0.43

10,980.9

46.9

0.86

Short-Term Borrowings

398.6

5.7

2.88

31.7

0.4

2.29

Long-Term Borrowings

200.0

2.7

2.77

596.7

8.4

2.85

Total Interest-Bearing Liabilities

11,997.4

32.6

0.55

11,609.3

55.7

0.97

Net Interest Income

$

266.6

$

290.7

Interest Rate Spread

2.64

%

2.89

%

Net Interest Margin

2.84

%

3.24

%

Noninterest-Bearing Demand Deposits

6,143.0

5,783.8

Other Liabilities

507.8

473.4

Stockholders' Equity

2,679.3

2,575.8

Total Liabilities and Stockholders' Equity

$

21,327.5

$

20,442.3

(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 $0.1 million and nil for the six months ended June 30, 2020 and 2019, respectively.


Analysis of Change in Net Interest Income

Table 6

Three Months Ended June 30, 2020

Compared to March 31, 2020

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

1.1

$

(2.3

)

$

(1.2

)

Available-for-Sale Investment Securities

1.7

(5.4

)

(3.7

)

Loans and Leases

Commercial and industrial

6.4

(6.7

)

(0.3

)

Commercial real estate

(6.3

)

(6.3

)

Construction

0.5

(1.3

)

(0.8

)

Residential:

Residential mortgage

(0.4

)

(1.6

)

(2.0

)

Home equity line

(0.9

)

(0.9

)

Consumer

(1.2

)

(1.2

)

(2.4

)

Lease financing

0.1

0.1

Total Loans and Leases

5.4

(18.0

)

(12.6

)

Other Earning Assets

0.1

(0.4

)

(0.3

)

Total Change in Interest Income

8.3

(26.1

)

(17.8

)

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.2

(2.6

)

(2.4

)

Money Market

0.3

(3.8

)

(3.5

)

Time

2.1

(3.2

)

(1.1

)

Total Interest-Bearing Deposits

2.6

(9.6

)

(7.0

)

Total Change in Interest Expense

2.6

(9.6

)

(7.0

)

Change in Net Interest Income

$

5.7

$

(16.5

)

$

(10.8

)


Analysis of Change in Net Interest Income

Table 7

Three Months Ended June 30, 2020

Compared to June 30, 2019

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

1.4

$

(2.4

)

$

(1.0

)

Available-for-Sale Investment Securities

(0.3

)

(7.0

)

(7.3

)

Loans Held for Sale

0.1

0.1

Loans and Leases

Commercial and industrial

3.6

(13.6

)

(10.0

)

Commercial real estate

3.7

(11.4

)

(7.7

)

Construction

(2.0

)

(2.0

)

Residential:

Residential mortgage

1.0

(2.5

)

(1.5

)

Home equity line

(0.2

)

(1.6

)

(1.8

)

Consumer

(1.8

)

(0.3

)

(2.1

)

Lease financing

0.7

(0.2

)

0.5

Total Loans and Leases

7.0

(31.6

)

(24.6

)

Other Earning Assets

(0.1

)

(0.2

)

(0.3

)

Total Change in Interest Income

8.1

(41.2

)

(33.1

)

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.6

(3.7

)

(3.1

)

Money Market

0.3

(6.6

)

(6.3

)

Time

1.0

(6.7

)

(5.7

)

Total Interest-Bearing Deposits

1.9

(17.0

)

(15.1

)

Short-Term Borrowings

2.4

0.1

2.5

Long-Term Borrowings

(2.7

)

(0.1

)

(2.8

)

Total Change in Interest Expense

1.6

(17.0

)

(15.4

)

Change in Net Interest Income

$

6.5

$

(24.2

)

$

(17.7

)


Analysis of Change in Net Interest Income

Table 8

Six Months Ended June 30, 2020

Compared to June 30, 2019

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

3.4

$

(6.0

)

$

(2.6

)

Available-for-Sale Investment Securities

(2.3

)

(8.3

)

(10.6

)

Loans Held for Sale

0.1

0.1

Loans and Leases

Commercial and industrial

(0.2

)

(18.4

)

(18.6

)

Commercial real estate

8.3

(16.1

)

(7.8

)

Construction

(1.1

)

(2.7

)

(3.8

)

Residential:

Residential mortgage

2.9

(3.4

)

(0.5

)

Home equity line

(0.5

)

(2.3

)

(2.8

)

Consumer

(2.5

)

0.9

(1.6

)

Lease financing

1.2

(0.2

)

1.0

Total Loans and Leases

8.1

(42.2

)

(34.1

)

Other Earning Assets

(0.4

)

0.4

Total Change in Interest Income

8.9

(56.1

)

(47.2

)

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.9

(4.9

)

(4.0

)

Money Market

0.1

(9.4

)

(9.3

)

Time

(1.0

)

(8.4

)

(9.4

)

Total Interest-Bearing Deposits

(22.7

)

(22.7

)

Short-Term Borrowings

5.2

0.1

5.3

Long-Term Borrowings

(5.5

)

(0.2

)

(5.7

)

Total Change in Interest Expense

(0.3

)

(22.8

)

(23.1

)

Change in Net Interest Income

$

9.2

$

(33.3

)

$

(24.1

)


Loans and Leases

Table 9

June 30,

March 31,

December 31,

June 30,

(dollars in thousands)

2020

2020

2019

2019

Commercial and industrial

$

3,423,708

$

3,025,345

$

2,743,242

$

3,177,844

Commercial real estate

3,423,499

3,413,014

3,463,953

3,194,219

Construction

617,935

572,062

519,241

549,578

Residential:

Residential mortgage

3,691,950

3,673,455

3,768,936

3,618,433

Home equity line

876,491

891,698

893,239

908,452

Total residential

4,568,441

4,565,153

4,662,175

4,526,885

Consumer

1,492,160

1,568,073

1,620,556

1,650,713

Lease financing

238,287

236,623

202,483

165,370

Total loans and leases

$

13,764,030

$

13,380,270

$

13,211,650

$

13,264,609


Deposits

Table 10

June 30,

March 31,

December 31,

June 30,

(dollars in thousands)

2020

2020

2019

2019

Demand

$

6,880,091

$

5,745,539

$

5,880,072

$

5,763,157

Savings

5,727,367

5,213,471

4,998,933

4,908,000

Money Market

3,247,511

3,148,694

3,055,832

3,050,843

Time

3,506,665

2,912,298

2,510,157

3,070,078

Total Deposits

$

19,361,634

$

17,020,002

$

16,444,994

$

16,792,078


Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More

Table 11

June 30,

March 31,

December 31,

June 30,

(dollars in thousands)

2020

2020

2019

2019

Non-Performing Assets

Non-Accrual Loans and Leases

Commercial Loans:

Commercial and industrial

$

11,559

$

32

$

32

$

119

Commercial real estate

13,168