HONOLULU, July 23, 2021 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), ("First Hawaiian" or the "Company") today reported financial results for its quarter ended June 30, 2021.

"We are pleased with our financial performance during the second quarter, which was driven by the strong return of tourism and pickup in the local economy," said Bob Harrison, Chairman, President and CEO. "We had good activity in the loan portfolio, solid growth in fee income and credit quality remained excellent. In addition, we benefitted from the improved outlook for the local economy with the release of $35 million from our reserves for credit losses."

On July 21, 2021 the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 3, 2021 to stockholders of record at the close of business on August 23, 2021.

Second Quarter 2021 Highlights:

Net income of $86.7 million, or $0.67 per diluted share
Total loans and leases decreased $196.5 million, or 1.5%, versus prior quarter
Total deposits increased $701.4 million, or 3.5%, versus prior quarter
Recorded a $35.0 million negative provision for credit losses
Board of Directors declared a quarterly dividend of $0.26 per share
Repurchased $22.4 million of stock under share repurchase program

Balance Sheet

Total assets were $24.2 billion as of June 30, 2021, compared to $23.5 billion as of March 31, 2021.

Gross loans and leases were $13.1 billion as of June 30, 2021, a decrease of $196.5 million, or 1.5%, from $13.3 billion as of March 31, 2021.

Total deposits were $20.8 billion as of June 30, 2021, an increase of $701.4 million, or 3.5%, from $20.1 billion as of March 31, 2021.

Net Interest Income

Net interest income for the second quarter of 2021 was $131.5 million, an increase of $2.3 million, or 1.8%, compared to $129.2 million for the prior quarter.

The net interest margin (NIM) was 2.46% in the second quarter of 2021, a decrease of 9 basis points compared to 2.55% in the first quarter of 2021.

Provision Expense

During the quarter ended June 30, 2021, we recorded a $35.0 million negative provision for credit losses. We did not record a provision for credit losses in the quarter ended March 31, 2021.

Noninterest Income

Noninterest income was $49.4 million in the second quarter of 2021, an increase of $5.5 million compared to noninterest income of $43.9 million in the first quarter of 2021.

Noninterest Expense

Noninterest expense was $99.4 million in the second quarter of 2021, an increase of $3.1 million compared to noninterest expense of $96.3 million in the first quarter of 2021.

The efficiency ratio was 54.7% and 55.5% for the quarters ended June 30, 2021 and March 31, 2021, respectively.

Taxes

The effective tax rate was 25.5% for the quarter ended June 30, 2021 and 24.8% for the quarter ended March 31, 2021.

Asset Quality

The allowance for credit losses was $169.1 million, or 1.29% of total loans and leases, as of June 30, 2021, compared to $200.4 million, or 1.51% of total loans and leases, as of March 31, 2021. The reserve for unfunded commitments was $29.2 million as of June 30, 2021 compared to $34.1 million as of March 31, 2021. Net charge-offs were $1.1 million, or 0.03% of average loans and leases on an annualized basis, for the quarter ended June 30, 2021, compared to net charge-offs of $4.6 million, or 0.14% of average loans and leases on an annualized basis, for the quarter ended March 31, 2021. Total non-performing assets were $8.9 million, or 0.07% of total loans and leases and other real estate owned, at June 30, 2021, compared to total non-performing assets of $9.1 million, or 0.07% of total loans and leases and other real estate owned at March 31, 2021.

Capital

Total stockholders' equity was $2.7 billion at both June 30, 2021 and March 31, 2021.

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.68%, 12.76% and 14.01%, respectively, at June 30, 2021, compared with 7.90%, 12.82% and 14.07%, respectively, at March 31, 2021.

The Company repurchased 0.8 million shares of common stock at a total cost of $22.4 million under the stock repurchase program in the second quarter. The average cost was $27.99 per share repurchased. Remaining buyback authority under the stock repurchase program was $43.1 million at June 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 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, 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: 3681457. 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 30, 2021. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 3681457.

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

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)	2021				2021			2020			2021				2020
Operating Results:
Net interest income	$	131,481			$	129,158		$	127,822		$	260,639			$	266,505
Provision for credit losses		(35,000	)			—			55,446			(35,000	)			96,646
Noninterest income		49,371				43,868			45,656			93,239				94,884
Noninterest expense		99,388				96,306			91,450			195,694				187,916
Net income		86,741				57,693			20,049			144,434				58,914
Basic earnings per share		0.67				0.44			0.15			1.11				0.45
Diluted earnings per share		0.67				0.44			0.15			1.11				0.45
Dividends declared per share		0.26				0.26			0.26			0.52				0.52
Dividend payout ratio		38.81		%		59.09	%		173.33	%		46.85		%		115.56	%
Supplemental Income Statement Data (non-GAAP):
Core net interest income	$	131,481			$	129,158		$	127,822		$	260,639			$	266,505
Core noninterest income		49,269				43,868			45,867			93,137				95,010
Core noninterest expense		98,228				96,306			91,450			194,534				187,916
Core net income		87,704				57,693			20,204			145,397				59,007
Core basic earnings per share		0.68				0.44			0.16			1.12				0.45
Core diluted earnings per share		0.68				0.44			0.16			1.12				0.45
Performance Ratios⁽¹⁾:
Net interest margin		2.46		%		2.55	%		2.58	%		2.50		%		2.84	%
Core net interest margin (non-GAAP)		2.46		%		2.55	%		2.58	%		2.50		%		2.84	%
Efficiency ratio		54.74		%		55.53	%		52.70	%		55.12		%		51.99	%
Core efficiency ratio (non-GAAP)		54.13		%		55.53	%		52.64	%		54.81		%		51.97	%
Return on average total assets		1.45		%		1.02	%		0.36	%		1.24		%		0.56	%
Core return on average total assets (non-GAAP)		1.46		%		1.02	%		0.36	%		1.25		%		0.56	%
Return on average tangible assets (non-GAAP)		1.51		%		1.07	%		0.38	%		1.30		%		0.58	%
Core return on average tangible assets (non-GAAP)⁽²⁾		1.53		%		1.07	%		0.38	%		1.30		%		0.58	%
Return on average total stockholders' equity		12.92		%		8.58	%		2.99	%		10.75		%		4.42	%
Core return on average total stockholders' equity (non-GAAP)		13.07		%		8.58	%		3.01	%		10.82		%		4.43	%
Return on average tangible stockholders' equity (non-GAAP)		20.51		%		13.51	%		4.74	%		16.99		%		7.04	%
Core return on average tangible stockholders' equity (non-GAAP)⁽³⁾		20.74		%		13.51	%		4.77	%		17.10		%		7.05	%
Average Balances:
Average loans and leases	$	13,205,086			$	13,242,270		$	13,956,669		$	13,223,575			$	13,574,048
Average earning assets		21,539,264				20,476,149			19,854,795			21,010,643				18,834,492
Average assets		24,015,065				22,944,699			22,341,654			23,482,839				21,327,479
Average deposits		20,638,015				19,503,067			18,540,394			20,073,676				17,541,849
Average stockholders' equity		2,691,966				2,727,701			2,697,775			2,709,735				2,679,293
Market Value Per Share:
Closing		28.34				27.37			17.24			28.34				17.24
High		29.85				30.80			21.50			30.80				31.25
Low		24.75				23.14			13.56			23.14				13.56


	As of			As of			As of			As of
	June 30,			March 31,			December 31,			June 30,
(dollars in thousands, except per share data)	2021			2021			2020			2020
Balance Sheet Data:
Loans and leases	$	13,103,785		$	13,300,289		$	13,279,097		$	13,764,030
Total assets		24,246,328			23,497,596			22,662,831			22,993,715
Total deposits		20,835,115			20,133,681			19,227,723			19,361,634
Short-term borrowings		—			—			—			200,000
Long-term borrowings		200,000			200,010			200,010			200,019
Total stockholders' equity		2,731,341			2,683,630			2,744,104			2,701,897

Per Share of Common Stock:
Book value	$	21.17		$	20.68		$	21.12		$	20.81
Tangible book value (non-GAAP)⁽⁴⁾		13.45			13.01			13.46			13.14

Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases		0.07	%		0.07	%		0.07	%		0.24	%
Allowance for credit losses for loans and leases / total loans and leases		1.29	%		1.51	%		1.57	%		1.40	%

Capital Ratios:
Common Equity Tier 1 Capital Ratio		12.76	%		12.82	%		12.47	%		11.86	%
Tier 1 Capital Ratio		12.76	%		12.82	%		12.47	%		11.86	%
Total Capital Ratio		14.01	%		14.07	%		13.73	%		13.11	%
Tier 1 Leverage Ratio		7.68	%		7.90	%		8.00	%		7.75	%
Total stockholders' equity to total assets		11.26	%		11.42	%		12.11	%		11.75	%
Tangible stockholders' equity to tangible assets (non-GAAP)		7.47	%		7.50	%		8.07	%		7.76	%

Non-Financial Data:
Number of branches		54			54			54			58
Number of ATMs		294			297			297			295
Number of Full-Time Equivalent Employees		2,087			2,090			2,103			2,100

________________________

⁽¹⁾Except for the efficiency ratio and the core efficiency ratio, amounts are annualized for the three and six months ended June 30, 2021 and 2020 and the three months ended March 31, 2021.

⁽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)	2021			2021		2020			2021			2020
Interest income
Loans and lease financing	$	110,919		$	110,939	$	122,298		$	221,858		$	257,269
Available-for-sale securities		24,637			23,146		17,529			47,783			38,739
Other		666			491		792			1,157			3,143
Total interest income		136,222			134,576		140,619			270,798			299,151
Interest expense
Deposits		3,363			4,056		8,583			7,419			24,183
Short-term and long-term borrowings		1,378			1,362		4,214			2,740			8,463
Total interest expense		4,741			5,418		12,797			10,159			32,646
Net interest income		131,481			129,158		127,822			260,639			266,505
Provision for credit losses		(35,000	)		—		55,446			(35,000	)		96,646
Net interest income after provision for credit losses		166,481			129,158		72,376			295,639			169,859
Noninterest income
Service charges on deposit accounts		6,632			6,718		5,927			13,350			14,877
Credit and debit card fees		16,746			14,551		10,870			31,297			25,819
Other service charges and fees		10,303			8,846		7,912			19,149			16,451
Trust and investment services income		8,707			8,492		8,664			17,199			18,255
Bank-owned life insurance		3,104			2,389		4,432			5,493			6,692
Investment securities gains (losses), net		102			—		(211	)		102			(126	)
Other		3,777			2,872		8,062			6,649			12,916
Total noninterest income		49,371			43,868		45,656			93,239			94,884
Noninterest expense
Salaries and employee benefits		45,982			43,936		42,414			89,918			87,243
Contracted services and professional fees		16,516			17,188		15,478			33,704			31,533
Occupancy		7,314			7,170		7,302			14,484			14,545
Equipment		6,362			5,491		5,207			11,853			9,915
Regulatory assessment and fees		1,826			2,034		2,100			3,860			4,046
Advertising and marketing		1,469			1,591		1,402			3,060			3,225
Card rewards program		6,262			4,835		5,163			11,097			12,178
Other		13,657			14,061		12,384			27,718			25,231
Total noninterest expense		99,388			96,306		91,450			195,694			187,916
Income before provision for income taxes		116,464			76,720		26,582			193,184			76,827
Provision for income taxes		29,723			19,027		6,533			48,750			17,913
Net income	$	86,741		$	57,693	$	20,049		$	144,434		$	58,914
Basic earnings per share	$	0.67		$	0.44	$	0.15		$	1.11		$	0.45
Diluted earnings per share	$	0.67		$	0.44	$	0.15		$	1.11		$	0.45
Basic weighted-average outstanding shares		129,392,339			129,933,104		129,856,730			129,661,228			129,876,218
Diluted weighted-average outstanding shares		129,828,847			130,589,878		130,005,195			130,164,762			130,163,722


Consolidated Balance Sheets	Table 3
	June 30,			March 31,			December 31,			June 30,
(dollars in thousands)	2021			2021			2020			2020
Assets
Cash and due from banks	$	347,861		$	278,994		$	303,373		$	347,592
Interest-bearing deposits in other banks		1,558,437			983,816			737,571			1,507,630
Investment securities, at fair value (amortized cost: $6,951,153 as of June 30, 2021, $6,708,431 as of March 31, 2021, $5,985,031 as of December 31, 2020 and $5,025,433 as of June 30, 2020)		6,953,930			6,692,479			6,071,415			5,135,775
Loans held for sale		1,241			9,390			11,579			6,698
Loans and leases		13,103,785			13,300,289			13,279,097			13,764,030
Less: allowance for credit losses		169,148			200,366			208,454			192,120
Net loans and leases		12,934,637			13,099,923			13,070,643			13,571,910

Premises and equipment, net		319,452			319,949			322,401			322,919
Other real estate owned and repossessed personal property		—			—			—			446
Accrued interest receivable		66,734			69,879			69,626			58,420
Bank-owned life insurance		466,402			468,927			466,537			458,720
Goodwill		995,492			995,492			995,492			995,492
Mortgage servicing rights		10,007			10,869			10,731			11,595
Other assets		592,135			567,878			603,463			576,518
Total assets	$	24,246,328		$	23,497,596		$	22,662,831		$	22,993,715
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing	$	12,245,193		$	11,958,606		$	11,705,609		$	12,481,543
Noninterest-bearing		8,589,922			8,175,075			7,522,114			6,880,091
Total deposits		20,835,115			20,133,681			19,227,723			19,361,634
Short-term borrowings		—			—			—			200,000
Long-term borrowings		200,000			200,010			200,010			200,019
Retirement benefits payable		144,101			143,736			143,373			138,624
Other liabilities		335,771			336,539			347,621			391,541
Total liabilities		21,514,987			20,813,966			19,918,727			20,291,818

Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,542,398 / 129,019,871 shares as of June 30, 2021, issued/outstanding: 140,455,180 / 129,749,890 shares as of March 31, 2021, issued/outstanding: 140,191,133 / 129,912,272 shares as of December 31, 2020 and issued/outstanding: 140,140,542 / 129,866,898 shares as of June 30, 2020)		1,405			1,405			1,402			1,401
Additional paid-in capital		2,520,790			2,517,048			2,514,014			2,509,271
Retained earnings		550,511			497,418			473,974			415,296
Accumulated other comprehensive (loss) income, net		(29,702	)		(43,435	)		31,604			52,731
Treasury stock (11,522,527 shares as of June 30, 2021, 10,705,290 shares as of March 31, 2021, 10,278,861 shares as of December 31, 2020 and 10,273,644 shares as of June 30, 2020)		(311,663	)		(288,806	)		(276,890	)		(276,802	)
Total stockholders' equity		2,731,341			2,683,630			2,744,104			2,701,897
Total liabilities and stockholders' equity	$	24,246,328		$	23,497,596		$	22,662,831		$	22,993,715


Average Balances and Interest Rates																	Table 4
	Three Months Ended						Three Months Ended						Three Months Ended
	June 30, 2021						March 31, 2021						June 30, 2020
	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	$	1,503.0	$	0.4	0.10	%	$	938.7	$	0.2	0.10	%	$	1,436.2	$	0.4	0.10	%
Available-for-Sale Investment Securities
Taxable		6,298.3		22.5	1.43			5,949.9		22.1	1.49			4,389.7		17.5	1.60
Non-Taxable		468.4		2.7	2.30			278.0		1.3	1.80			0.7		—	2.58
Total Available-for-Sale Investment Securities		6,766.7		25.2	1.49			6,227.9		23.4	1.50			4,390.4		17.5	1.60
Loans Held for Sale		2.0		—	1.44			9.2		0.1	2.46			9.8		0.1	2.93
Loans and Leases⁽¹⁾
Commercial and industrial		2,882.1		21.1	2.94			3,026.7		20.4	2.74			3,601.0		24.3	2.71
Commercial real estate		3,419.7		25.3	2.97			3,385.2		24.9	2.98			3,438.8		28.3	3.31
Construction		800.9		6.3	3.15			746.8		5.8	3.16			584.1		4.9	3.35
Residential:
Residential mortgage		3,765.4		34.0	3.62			3,696.1		34.7	3.76			3,682.7		35.7	3.88
Home equity line		812.6		5.5	2.72			822.0		5.7	2.80			885.2		6.8	3.07
Consumer		1,277.9		16.9	5.32

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