First Hawaiian, Inc. Reports Fourth Quarter 2022 Financial Results and Declares Dividend

HONOLULU, Jan. 27, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended December 31, 2022.

“We are pleased to report that we closed 2022 with a solid fourth quarter,” said Bob Harrison, Chairman, President and CEO. “We saw continued earnings growth, driven by strong loan growth and excellent credit quality.”

On January 25, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on March 3, 2023, to stockholders of record at the close of business on February 17, 2023.

Additionally, the Company’s Board of Directors adopted a stock repurchase program for up to $40 million of its outstanding common stock during 2023.

Fourth Quarter 2022 Highlights:

• Net income of $79.6 million, or $0.62 per diluted share
• Total loans and leases increased $391.6 million versus prior quarter
• Total deposits decreased $402.7 million versus prior quarter
• Net interest margin increased 22 basis points to 3.15%
• Recorded a $3.0 million provision for credit losses
• Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet

Total assets were $24.6 billion as of December 31, 2022, compared to $24.9 billion as of September 30, 2022.

Gross loans and leases were $14.1 billion as of December 31, 2022, an increase of $391.6 million, or 2.9%, from $13.7 billion as of September 30, 2022.

Total deposits were $21.7 billion as of December 31, 2022, a decrease of $402.7 million, or 1.8%, from $22.1 billion as of September 30, 2022.

Net Interest Income

Net interest income for the fourth quarter of 2022 was $171.8 million, an increase of $9.1 million, or 5.6%, compared to $162.7 million for the prior quarter.

The net interest margin was 3.15% in the fourth quarter of 2022, an increase of 22 basis points compared to 2.93% in the prior quarter.

Provision Expense

During the quarter ended December 31, 2022, we recorded a $3.0 million provision for credit losses. In the quarter ended September 30, 2022, we recorded a $3.2 million provision for credit losses.

Noninterest Income

Noninterest income was $48.2 million in the fourth quarter of 2022, an increase of $2.3 million compared to noninterest income of $45.9 million in the prior quarter.

Noninterest Expense

Noninterest expense was $113.9 million in the fourth quarter of 2022, an increase of $0.6 million compared to noninterest expense of $113.3 million in the prior quarter.

The efficiency ratio was 51.5% and 54.0% for the quarters ended December 31, 2022 and September 30, 2022, respectively.

Taxes

The effective tax rate was 22.8% and 25.0% for the quarters ended December 31, 2022 and September 30, 2022, respectively.

Asset Quality

The allowance for credit losses was $143.9 million, or 1.02% of total loans and leases, as of December 31, 2022, compared to $148.2 million, or 1.08% of total loans and leases, as of September 30, 2022. The reserve for unfunded commitments was $33.8 million as of December 31, 2022, compared to $30.1 million as of September 30, 2022. Net charge-offs were $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended December 31, 2022, compared to net charge-offs of $2.8 million, or 0.08% of average loans and leases on an annualized basis, for the quarter ended September 30, 2022. Total non-performing assets were $12.0 million, or 0.09% of total loans and leases and other real estate owned, on December 31, 2022, compared to total non-performing assets of $8.4 million, or 0.06% of total loans and leases and other real estate owned, on September 30, 2022.

Capital

Total stockholders' equity was $2.3 billion on December 31, 2022 compared to $2.2 billion on September 30, 2022.

The tier 1 leverage, common equity tier 1 and total capital ratios were 8.11%, 11.82%, and 12.92%, respectively, on December 31, 2022, compared with 7.78%, 11.79%, and 12.92%, respectively, on September 30, 2022.

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

As to the stock repurchase program approved for 2023, repurchases of shares of the Company’s common stock may be conducted through open-market purchases, which may include purchases under a trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1, or through privately negotiated transactions. The timing and exact amount of share repurchases, if any, will be subject to management’s discretion and various factors, including the Company’s capital position and financial performance, as well as market conditions. The repurchase program may be suspended, terminated or modified at any time for any reason.

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, 8:00 a.m. Hawaii Time.

Please note that the process for accessing the conference call has changed. Participants will need to click on the registration link provided below, register for the conference call, and then you will receive the dial-in number and a personalized PIN code.

To access the call by phone, please register via the following link: https://register.vevent.com/register/BI73d7abf351534972a54610116ab71617, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time.

A live webcast of the conference call, including a slide presentation, will be available at the following link: www.fhb.com/earnings. The archive of the webcast will be available at the same location.

Forward-Looking 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, 2021 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022.

Use of Non-GAAP Financial Measures
Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We believe that these measurements are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy.

Table 14 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

(1) Except for the efficiency ratio, amounts are annualized for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021.

(2) Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation.

(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2) Interest income includes taxable-equivalent basis adjustments of $1.4 million, $1.3 million and $0.9 million for the three months ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively.

(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2) Interest income includes taxable-equivalent basis adjustments of $4.9 million and $2.8 million for the year ended December 31, 2022 and 2021, respectively.