EXHIBIT 99.1

Picture 1

 

For Immediate Release

First Hawaiian, Inc. Reports Third Quarter 2018 Financial Results and Declares Dividend

·

Net income of $67.4 million, or $0.50 per diluted share,  and core net income1 of $70.8 million, or $0.52 per diluted share

·

1.31% return on average total assets and 1.45%  core return on average tangible assets1

·

11.01% return on average total stockholders’ equity and 19.61%  core return on average tangible stockholders’ equity1

·

BNP Paribas (“BNPP”) completed two offerings of our common stock, and First Hawaiian repurchased 1.8 million shares at a total cost of $50 million, reducing BNPP’s ownership from 48.8% to 18.4%

·

The number of BNPP-nominated directors decreased from five to two, resulting in a majority of independent directors on the Board

·

The Board of Directors declared a dividend of $0.24 per share

HONOLULU, Hawaii October 25, 2018 -- (Globe Newswire) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its third quarter ended September 30, 2018.

“I’m pleased with our strong financial performance in the third quarter,” said Bob Harrison, Chairman and Chief Executive Officer. “We had solid core earnings and good expense management, and asset quality remained excellent. Additionally, during the quarter, BNPP made significant progress in exiting its position in First Hawaiian by completing two secondary offerings, which, in conjunction with First Hawaiian’s repurchase of approximately 1.8 million shares, reduced BNPP’s ownership position from 48.8% to 18.4%. Also significant was the change in board composition, as the number of BNPP-nominated directors was decreased from five to two and three prominent members of the local business community, Faye Kurren,  Jenai Wall, and C. Scott Wo, joined the board, resulting in a majority of independent directors.”

On October 24, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share. The dividend will be payable on December 7, 2018 to stockholders of record at the close of business on November 26, 2018.

Earnings Highlights

Net income for the quarter ended September 30, 2018 was $67.4 million, or $0.50 per diluted share, compared to $69.1 million, or $0.50 per diluted share, for the quarter ended June 30, 2018, and $58.4 million, or $0.42 per diluted share, for the quarter ended September 30, 2017. Core net income1 for the quarter ended September 30, 2018 was $70.8 million, or $0.52 per diluted share, compared to $69.7 million, or $0.50 per diluted share, for the quarter ended June 20, 2018, and $57.0 million, or $0.41 per diluted share, for the quarter ended September 30, 2017.

Net interest income for the quarter ended September 30, 2018 was $141.3 million compared to $141.4 million for the quarter ended June 30, 2018, and an increase of $7.9 million compared to $133.3 million for the quarter ended September 30, 2017. Net interest income compared to the second quarter of 2018 was essentially flat, primarily due to higher interest expenses on deposits and borrowings and lower interest income on investments, mostly offset by higher interest income on loans and cash. The second quarter of 2018 included a $1.1 million positive premium amortization adjustment that did not recur in the third quarter. Excluding the premium amortization in the second quarter, third quarter net interest income would have been approximately $1 million higher than second quarter net interest income.  The increase in net interest income compared to the third quarter of 2017 was due to higher interest income on earnings assets from higher rates and balances, partially offset by higher interest expenses due to higher rates on deposits and higher balances of term borrowings.

Net interest margin (“NIM”) was 3.11%, 3.18% and 2.96%, for the quarters ended September 30, 2018, June 30, 2018, and September 30, 2017, respectively. The 7 basis point decrease in NIM versus the prior quarter was primarily due to higher funding costs, a lower premium amortization adjustment, higher cash balances and an additional day in the quarter.

Results for the quarter ended September 30, 2018 included a provision for loan and lease losses of $4.5 million compared to $6.0 million in the quarter ended June 30, 2018 and $4.5 million in the quarter ended September 30, 2017.


1A non-GAAP measure. For more information on this measure, including reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14  at the end of this document.


 

Noninterest income was $47.4 million in the quarter ended September 30, 2018, a decrease of $2.4 million compared to noninterest income of $49.8 million in the quarter ended June 30, 2018 and a decrease of $2.3 million compared to noninterest income of $49.7 million in the quarter ended September 30, 2017. The decrease in noninterest income compared to the second quarter of 2018 was primarily due to a  $3.2 million decrease in other income, $0.4 million lower credit and debit card fees and $0.2 million lower trust and investment services income, partially offset by $1.3 million higher income from bank-owned life insurance (“BOLI”). The $3.2 million decrease in other income was primarily due to  a $1.5 million decrease in swap fee income, and a  $1.0 million decrease in recoveries, as we recognized a gain on sale of leased equipment in the second quarter of 2018.

The decrease in noninterest income compared to the third quarter of 2017 was primarily due to $3.1 million lower other income and $1.0 million lower service charges on deposit accounts, partially offset by $1.1 million higher other service charges and fees, $0.6 million higher income from BOLI, and $0.4 million higher credit and debit card fees.  Other income in the third quarter of 2017 included a $2.7 million gain from the sale of a bank property.

Noninterest expense was $93.1 million for the quarter ended September 30, 2018, an increase of $1.3 million from $91.9 million in the quarter ended June 30, 2018, and an increase of $8.3 million from $84.8 million in the quarter ended September 30, 2017. The increase in noninterest expense compared to the second quarter of 2018 was primarily due to $3.7 million higher other expense, partially offset by $1.5 million lower contracted services and professional fees, and $0.6 million lower cards rewards program expenses. Other expense in the third quarter of 2018 included an expense of $4.1 million in connection with an agreement in principle to resolve a class action lawsuit regarding overdraft fees.

The increase in noninterest expense compared to the third quarter of 2017 was primarily due to $4.2 million higher other expense, $3.3 million higher salaries and employee benefits, $0.6 million higher contracted services and professional fees, and $0.5 million higher occupancy expenses, partially offset by $0.9 million lower advertising and marketing expenses. Other expense in the third quarter of 2018 included the aforementioned $4.1 million litigation-related expense.

The efficiency ratio was 49.4%, 48.0% and 46.3% for the quarters ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively. Core efficiency ratio1 was 46.9%, 47.6% and 46.7% for the quarters ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively.

The effective tax rate was 26.0% for the second and third quarters of 2018 and 37.7% in the third quarter of 2017.  The lower effective tax rate in the third quarter of 2018 compared to the same quarter last year was due to the lower corporate tax rate resulting from the Tax Cuts and Jobs Act.

Balance Sheet Highlights

Total assets were $20.0 billion at September 30, 2018, compared to $20.5 billion at June 30, 2018 and $20.6 billion at September 30, 2017.

The investment securities portfolio was $4.6 billion at September 30, 2018, compared to $4.8 billion at June 30, 2018 and $5.3 billion at September 30, 2017.

Total loans and leases were $12.6 billion at September 30, 2018, unchanged from $12.6 billion at June 30, 2018 and up $0.5 billion, or 3.7%, from $12.1 billion at September 30, 2017.  During the quarter ended September 30, 2018, increases in residential, commercial real estate (“CRE”) and consumer loan balances were offset by decreases in commercial and industrial (“C&I”) and construction loan balances.  The decreases in C&I and construction loan balances were due to large, unexpected prepayments.  The increase in loans and leases compared to the quarter ended September 30, 2017 was primarily due to increases in residential loans, CRE loans, consumer loans and construction loans, partially offset by a decline in C&I loans and lease financing.

Total deposits were $16.7 billion at September 30, 2018, a decrease of $0.7 billion from $17.4 billion at June 30, 2018, and a decrease of $0.9 billion, compared to $17.6 billion at September 30, 2017.  The decrease in deposit balances compared to the quarter ended June 30, 2018 was primarily due to a $0.6 billion reduction in public time deposits.  The decrease in deposit balances compared to the quarter ended September 30, 2017 was primarily due to a $1.3 billion reduction in public time deposits, partially offset by growth in consumer and commercial deposits.

Asset Quality

The Company’s asset quality remained excellent during the third quarter of 2018. Net charge offs for the quarter ended September 30, 2018 were $3.8 million, or 0.12% of average loans and leases on an annualized basis, compared to $4.0 million, or 0.13% of average loans and leases on an annualized basis, for the quarter ended June 30, 2018 and $4.1 million, or 0.13% of average loans and leases on an annualized basis for the quarter ended September 30, 2017.

Total non-performing assets were $11.3 million, or 0.09% of total loans and leases and other real estate owned, at September 30, 2018, compared to non-performing assets of $13.8 million, or 0.11% of total loans and leases and other real estate owned, at June 30, 2018 and non-performing assets of $8.4 million, or 0.07% of total loans and leases and other real estate owned, at September 30, 2017.

The ratio of the allowance for loan and lease losses to total loans and leases was 1.12% at September 30, 2018, 1.11% at June 30, 2018 and 1.13% at September 30, 2017.


 

Capital

During the third quarter of 2018, the Company repurchased approximately 1.8 million shares of FHI common stock from a wholly owned subsidiary of BNPP at a total cost of approximately $50 million.

Total stockholders' equity was $2.4 billion at September 30, 2018, compared to $2.5 billion at June 30, 2018 and $2.6 billion at September 30, 2017.

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.42%, 12.09% and 13.14%, respectively, at September 30, 2018, compared with 8.61%, 12.19% and 13.23% at June 30, 2018 and 8.66%, 12.71% and 13.77% at September 30, 2017.

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 5:00 p.m. Eastern Time, 11:00 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: 5377116. 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 7:30 p.m. (Eastern Time) on November 4, 2018.  Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 5377116.

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. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. For a discussion of some of the 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, 2017.

Use of Non-GAAP Financial Measures

We present net interest income, noninterest income, noninterest expense, net income, earnings per share 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 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 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 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 13 and 14 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most closely related GAAP measures.

 

 

Investor Relations Contact:

Media Contact:

Kevin Haseyama, CFA

Susan Kam

(808) 525‑6268

(808) 525‑6254

khaseyama@fhb.com

skam@fhb.com

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Highlights

 

 

 

 

 

 

 

 

 

 

 

 

Table 1

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

June 30, 

 

September 30, 

 

September 30, 

 

(dollars in thousands, except per share data)

    

2018

    

2018

    

2017

    

2018

    

2017

 

Operating Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

141,258

 

$

141,403

 

$

133,319

 

$

422,333

 

$

393,918

 

Provision for loan and lease losses

 

 

4,460

 

 

6,020

 

 

4,500

 

 

16,430

 

 

13,400

 

Noninterest income(1)

 

 

47,405

 

 

49,797

 

 

49,664

 

 

145,902

 

 

151,281

 

Noninterest expense(1)

 

 

93,147

 

 

91,865

 

 

84,784

 

 

275,599

 

 

257,704

 

Net income

 

 

67,388

 

 

69,053

 

 

58,363

 

 

204,399

 

 

171,998

 

Basic earnings per share

 

 

0.50

 

 

0.50

 

 

0.42

 

 

1.48

 

 

1.23

 

Diluted earnings per share

 

 

0.50

 

 

0.50

 

 

0.42

 

 

1.48

 

 

1.23

 

Dividends declared per share

 

 

0.24

 

 

0.24

 

 

0.22

 

 

0.72

 

 

0.66

 

Dividend payout ratio

 

 

48.00

%

 

48.00

%

 

52.38

%

 

48.65

%

 

53.66

%

Supplemental Income Statement Data (non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core net interest income

 

$

141,258

 

$

141,403

 

$

133,319

 

$

422,333

 

$

393,918

 

Core noninterest income(1)

 

 

47,405

 

 

49,797

 

 

46,997

 

 

145,902

 

 

148,614

 

Core noninterest expense(1)

 

 

88,511

 

 

90,951

 

 

84,241

 

 

269,642

 

 

256,320

 

Core net income

 

 

70,818

 

 

69,720

 

 

57,040

 

 

208,797

 

 

171,203

 

Core basic earnings per share

 

 

0.52

 

 

0.51

 

 

0.41

 

 

1.52

 

 

1.23

 

Core diluted earnings per share

 

 

0.52

 

 

0.50

 

 

0.41

 

 

1.52

 

 

1.23

 

Performance Ratio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.11

%  

 

3.18

%  

 

2.96

%  

 

3.14

%  

 

2.99

%

Core net interest margin (non-GAAP)

 

 

3.11

%  

 

3.18

%  

 

2.96

%  

 

3.14

%  

 

2.99

%

Efficiency ratio(1)

 

 

49.36

%  

 

48.04

%  

 

46.33

%  

 

48.49

%  

 

47.26

%

Core efficiency ratio (non-GAAP)(1)

 

 

46.90

%  

 

47.56

%  

 

46.72

%  

 

47.44

%  

 

47.24

%

Return on average total assets

 

 

1.31

%  

 

1.38

%  

 

1.15

%  

 

1.35

%  

 

1.16

%

Core return on average total assets (non-GAAP)

 

 

1.38

%  

 

1.39

%  

 

1.13

%  

 

1.37

%  

 

1.15

%

Return on average tangible assets

 

 

1.38

%  

 

1.45

%  

 

1.21

%  

 

1.42

%  

 

1.22

%

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

 

 

1.45

%  

 

1.46

%  

 

1.18

%  

 

1.45

%  

 

1.21

%

Return on average total stockholders' equity

 

 

11.01

%  

 

11.23

%  

 

9.03

%  

 

11.09

%  

 

9.10

%

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

 

 

11.57

%  

 

11.34

%  

 

8.82

%  

 

11.33

%  

 

9.06

%

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

 

 

18.66

%  

 

18.83

%  

 

14.76

%  

 

18.60

%  

 

15.01

%

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

 

 

19.61

%  

 

19.01

%  

 

14.42

%  

 

19.00

%  

 

14.94

%

Average Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average loans and leases

 

$

12,595,668

 

$

12,552,610

 

$

12,115,001

 

$

12,482,747

 

$

11,868,917

 

Average earning assets

 

 

18,041,483

 

 

17,817,943

 

 

17,867,021

 

 

17,982,396

 

 

17,605,376

 

Average assets

 

 

20,391,456

 

 

20,121,504

 

 

20,109,090

 

 

20,306,833

 

 

19,858,184

 

Average deposits

 

 

17,158,849

 

 

17,199,368

 

 

17,165,355

 

 

17,286,159

 

 

16,950,503

 

Average shareholders' equity

 

 

2,427,907

 

 

2,466,392

 

 

2,564,563

 

 

2,464,601

 

 

2,527,435

 

Market Value Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Closing

 

 

27.16

 

 

29.02

 

 

30.29

 

 

27.16

 

 

30.29

 

    High

 

 

30.02

 

 

31.28

 

 

31.48

 

 

32.36

 

 

35.32

 

    Low

 

 

27.02

 

 

27.09

 

 

26.30

 

 

26.92

 

 

26.30

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

As of

 

As of

 

 

 

September 30, 

 

June 30, 

 

December 31, 

 

September 30, 

 

 

    

2018

 

2018

 

2017

 

2017

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

12,600,464

 

$

12,637,686

 

$

12,277,369

 

$

12,149,711

 

Total assets

 

 

19,983,838

 

 

20,479,719

 

 

20,549,461

 

 

20,565,627

 

Total deposits

 

 

16,689,273

 

 

17,395,538

 

 

17,612,122

 

 

17,595,483

 

Short-term borrowings

 

 

30,000

 

 

 —

 

 

 —

 

 

 —

 

Long-term borrowings

 

 

400,026

 

 

200,034

 

 

34

 

 

34

 

Total stockholders' equity

 

 

2,423,462

 

 

2,459,175

 

 

2,532,551

 

 

2,581,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share of Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value

 

$

17.97

 

$

18.00

 

$

18.14

 

$

18.50

 

Tangible book value (non-GAAP)

 

 

10.59

 

 

10.71

 

 

11.01

 

 

11.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans and leases / total loans and leases

 

 

0.09

%  

 

0.11

%

 

0.08

%

 

0.06

%  

Allowance for loan and lease losses / total loans and leases

 

 

1.12

%  

 

1.11

%

 

1.12

%

 

1.13

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Capital Ratio

 

  

12.09

%  

  

12.19

%

  

12.45

%

  

12.71

%  

Tier 1 Capital Ratio

 

 

12.09

%  

 

12.19

%

 

12.45

%

 

12.71

%  

Total Capital Ratio

 

 

13.14

%  

 

13.23

%

 

13.50

%

 

13.77

%  

Tier 1 Leverage Ratio

 

 

8.42

%  

 

8.61

%

 

8.52

%

 

8.66

%  

Total stockholders' equity to total assets

 

 

12.13

%  

 

12.01

%

 

12.32

%

 

12.55

%  

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

 

 

7.52

%  

 

7.51

%

 

7.86

%

 

8.11

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of branches

 

 

60

 

 

61

 

 

62

 

 

62

 

Number of ATMs

 

 

296

 

 

303

 

 

310

 

 

312

 

Number of Full-Time Equivalent Employees

 

 

2,166

 

 

2,189

 

 

2,220

 

 

2,184

 


(1)

Subsequent to the issuance of the Company’s interim condensed consolidated financial statements as of September 30, 2017, the Company’s management determined that certain expenses related to the card rewards program were incorrectly offset against credit and debit card fee income and credit card interchange assessment fees were incorrectly classified in card rewards program expenses versus credit and debit card fee income in the interim condensed consolidated statements of income for the three and nine months ended September 30, 2017.  As a result, certain noninterest income and noninterest expense amounts have been revised from the amounts previously reported to correct the classification errors. There was no change to net income or earnings per share as previously reported as a result of these errors. Management has evaluated the materiality of these errors on its prior period financial statements from a quantitative and qualitative perspective, and has concluded that these errors were not material to any prior annual or interim period.

(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 13, 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 13, GAAP to Non-GAAP Reconciliation

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income

 

Table 2

 

 

Three Months Ended

 

For the Nine Months Ended

 

 

September 30, 

 

June 30, 

 

September 30, 

 

September 30, 

(dollars in thousands, except per share amounts)

    

2018

    

2018

    

2017

    

2018

    

2017

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and lease financing

 

$

135,394

 

$

130,283

 

$

118,986

 

$

389,228

 

$

342,431

Available-for-sale securities

 

 

25,196

 

 

27,397

 

 

24,195

 

 

81,586

 

 

75,683

Other

 

 

3,462

 

 

1,339

 

 

2,089

 

 

7,193

 

 

4,096

Total interest income

 

 

164,052

 

 

159,019

 

 

145,270

 

 

478,007

 

 

422,210

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

20,205

 

 

17,355

 

 

11,949

 

 

52,824

 

 

28,279

Short-term and long-term borrowings

 

 

2,589

 

 

261

 

 

 2

 

 

2,850

 

 

13

Total interest expense

 

 

22,794

 

 

17,616

 

 

11,951

 

 

55,674

 

 

28,292

Net interest income

 

 

141,258

 

 

141,403

 

 

133,319

 

 

422,333

 

 

393,918

Provision for loan and lease losses

 

 

4,460

 

 

6,020

 

 

4,500

 

 

16,430

 

 

13,400

Net interest income after provision for loan and lease losses

 

 

136,798

 

 

135,383

 

 

128,819

 

 

405,903

 

 

380,518

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

7,933

 

 

7,721

 

 

8,929

 

 

23,609

 

 

27,548

Credit and debit card fees

 

 

16,535

 

 

16,929

 

 

16,126

 

 

48,961

 

 

48,450

Other service charges and fees

 

 

9,578

 

 

9,633

 

 

8,510

 

 

28,553

 

 

25,717

Trust and investment services income

 

 

7,487

 

 

7,711

 

 

7,672

 

 

23,429

 

 

22,536

Bank-owned life insurance

 

 

3,692

 

 

2,395

 

 

3,119

 

 

8,131

 

 

10,624

Other

 

 

2,180

 

 

5,408

 

 

5,308

 

 

13,219

 

 

16,406

Total noninterest income

 

 

47,405

 

 

49,797

 

 

49,664

 

 

145,902

 

 

151,281

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

41,959

 

 

41,636

 

 

38,687

 

 

125,755

 

 

119,459

Contracted services and professional fees

 

 

11,478

 

 

13,005

 

 

10,834

 

 

36,770

 

 

33,530

Occupancy

 

 

6,757

 

 

6,908

 

 

6,238

 

 

20,149

 

 

17,382

Equipment

 

 

4,181

 

 

4,335

 

 

4,174

 

 

13,104

 

 

12,898

Regulatory assessment and fees

 

 

3,966

 

 

4,225

 

 

3,668

 

 

12,164

 

 

11,192

Advertising and marketing

 

 

1,060

 

 

1,115

 

 

2,005

 

 

3,126

 

 

5,255

Card rewards program

 

 

5,805

 

 

6,359

 

 

5,438

 

 

17,882

 

 

17,107

Other

 

 

17,941

 

 

14,282

 

 

13,740

 

 

46,649

 

 

40,881

Total noninterest expense

 

 

93,147

 

 

91,865

 

 

84,784

 

 

275,599

 

 

257,704

Income before provision for income taxes

 

 

91,056

 

 

93,315

 

 

93,699

 

 

276,206

 

 

274,095

Provision for income taxes

 

 

23,668

 

 

24,262

 

 

35,336

 

 

71,807

 

 

102,097

Net income

 

$

67,388

 

$

69,053

 

$

58,363

 

$

204,399

 

$

171,998

Basic earnings per share

 

$

0.50

 

$

0.50

 

$

0.42

 

$

1.48

 

$

1.23

Diluted earnings per share

 

$

0.50

 

$

0.50

 

$

0.42

 

$

1.48

 

$

1.23

Dividends declared per share

 

$

0.24

 

$

0.24

 

$

0.22

 

$

0.72

 

$

0.66

Basic weighted-average outstanding shares

 

 

135,466,669

 

 

137,907,063

 

 

139,556,532

 

 

137,643,005

 

 

139,549,665

Diluted weighted-average outstanding shares

 

 

135,675,498

 

 

138,065,879

 

 

139,696,330

 

 

137,809,573

 

 

139,670,487

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

Table 3

 

 

September 30, 

 

June 30, 

 

December 31, 

 

September 30, 

(dollars in thousands)

    

2018

    

2018

    

2017

    

2017

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

350,967

 

$

332,102

 

$

367,084

 

$

321,319

Interest-bearing deposits in other banks

 

 

348,526

 

 

611,698

 

 

667,560

 

 

793,046

Investment securities

 

 

4,595,301

 

 

4,842,551

 

 

5,234,658

 

 

5,314,973

Loans held for sale

 

 

 —

 

 

2,037

 

 

556

 

 

 —

Loans and leases

 

 

12,600,464

 

 

12,637,686

 

 

12,277,369

 

 

12,149,711

Less: allowance for loan and lease losses

 

 

141,250

 

 

140,601

 

 

137,253

 

 

137,327

Net loans and leases

 

 

12,459,214

 

 

12,497,085

 

 

12,140,116

 

 

12,012,384

 

 

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment, net

 

 

286,374

 

 

287,746

 

 

289,215

 

 

289,689

Other real estate owned and repossessed personal property

 

 

362

 

 

325

 

 

329

 

 

564

Accrued interest receivable

 

 

49,407

 

 

48,528

 

 

47,987

 

 

44,728

Bank-owned life insurance

 

 

444,987

 

 

442,449

 

 

438,010

 

 

435,607

Goodwill

 

 

995,492

 

 

995,492

 

 

995,492

 

 

995,492

Mortgage servicing rights

 

 

16,937

 

 

17,660

 

 

13,196

 

 

13,980

Other assets

 

 

436,271

 

 

402,046

 

 

355,258

 

 

343,845

Total assets

 

$

19,983,838

 

$

20,479,719

 

$

20,549,461

 

$

20,565,627

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing

 

$

10,881,918

 

$

11,430,455

 

$

11,485,269

 

$

11,687,849

Noninterest-bearing

 

 

5,807,355

 

 

5,965,083

 

 

6,126,853

 

 

5,907,634

Total deposits

 

 

16,689,273

 

 

17,395,538

 

 

17,612,122

 

 

17,595,483

Short-term borrowings

 

 

30,000

 

 

 —

 

 

 —

 

 

 —

Long-term borrowings

 

 

400,026

 

 

200,034

 

 

34

 

 

34

Retirement benefits payable

 

 

135,523

 

 

135,139

 

 

134,218

 

 

135,092

Other liabilities

 

 

305,554

 

 

289,833

 

 

270,536

 

 

253,160

Total liabilities

 

 

17,560,376

 

 

18,020,544

 

 

18,016,910

 

 

17,983,769

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,655,841 / 134,873,728 shares as of September 30, 2018, issued/outstanding: 139,620,801 / 136,642,060 shares as of June 30,  2018, issued/outstanding: 139,599,454 / 139,588,782 shares as of December 31, 2017 and issued and outstanding: 139,586,282 shares as of September 30, 2017)

 

 

1,397

 

 

1,396

 

 

1,396

 

 

1,396

Additional paid-in capital

 

 

2,494,436

 

 

2,492,656

 

 

2,488,643

 

 

2,489,273

Retained earnings

 

 

264,463

 

 

229,615

 

 

139,177

 

 

158,303

Accumulated other comprehensive loss, net

 

 

(204,699)

 

 

(182,410)

 

 

(96,383)

 

 

(67,114)

Treasury stock (4,782,113 shares as of September 30, 2018, 2,978,741 as of June 30, 2018, 10,672 as of December 31, 2017 and nil as of September 30, 2017)

 

 

(132,135)

 

 

(82,082)

 

 

(282)

 

 

 —

Total stockholders' equity

 

 

2,423,462

 

 

2,459,175

 

 

2,532,551

 

 

2,581,858

Total liabilities and stockholders' equity

 

$

19,983,838

 

$

20,479,719

 

$

20,549,461

 

$

20,565,627

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balances and Interest Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 4

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

 

September 30, 2018

 

June 30, 2018

 

September 30, 2017

 

 

 

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

 

$

656.7

 

$

3.3

 

1.99

%  

$

281.2

 

$

1.2

 

1.74

%  

$

597.5

 

$

2.0

 

1.30

%

Available-for-Sale Investment Securities

 

 

4,737.3

 

 

25.2

 

2.11

 

 

4,961.2