First Hawaiian(US:FHB)2023-02-23 16:00Part I Business First Hawaiian, Inc. operates First Hawaiian Bank, Hawaii's largest full-service bank with $24.6 billion in assets and 51 branches, offering diverse services across three segments under extensive regulation Company Snapshot (as of December 31, 2022) | Metric | Value | | :--- | :--- | | Total Assets | $24.6 billion | | Gross Loans and Leases | $14.1 billion | | Total Deposits | $21.7 billion | | Stockholders' Equity | $2.3 billion | | Net Income (FY 2022) | $265.7 million | | Diluted EPS (FY 2022) | $2.08 per share | | Branches | 51 (46 in Hawaii, 3 in Guam, 2 in Saipan) | - The company operates through three primary segments: Retail Banking, Commercial Banking, and Treasury and Other16 - As of December 31, 2022, the company employed over 2,000 people with an average tenure of 11.8 years17 - The company is extensively regulated by federal and state authorities, including the Federal Reserve, FDIC, Hawaii DFI, and the CFPB313436 Risk Factors The company faces significant market, credit, operational, and regulatory risks, particularly from its concentrated geographic markets, large real estate loan portfolio, cybersecurity threats, and evolving banking regulations - The business is highly dependent on the economies of Hawaii, Guam, and Saipan, which are influenced by tourism, U.S. military spending, and real estate110 - As of December 31, 2022, real estate loans constituted approximately 73% ($10.3 billion) of the total loan and lease portfolio, creating significant exposure to real estate market fluctuations115 - The company faces operational risks from potential cybersecurity incidents, fraudulent activity, and reliance on third-party vendors for critical services like core banking and IT142151 - Extensive regulation by federal and state agencies presents significant compliance risk. Changes in laws, capital requirements (Basel III), and consumer protection rules (CFPB) could adversely affect operations and profitability168171176 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - Not applicable207 Properties The company's headquarters are in Honolulu, Hawaii, operating 51 branch offices across its markets, with 30 leased and the rest owned - The company operates 51 branch offices, with 30 leased and 21 owned, including the corporate headquarters in Honolulu208 Legal Proceedings The company is involved in various litigation matters but does not anticipate any material adverse effect on its financial condition or operations - The company is not currently party to any legal proceedings expected to have a material adverse effect on its business or financial condition209 Mine Safety Disclosures This section is not applicable to the company - Not applicable210 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities First Hawaiian, Inc. common stock trades on NASDAQ as FHB; the company authorized a new $40 million stock repurchase program for 2023, with no repurchases in Q4 2022 - The company's common stock is listed on the NASDAQ under the ticker symbol "FHB"213 - No shares of the company's common stock were repurchased during the three months ended December 31, 2022215 - On January 25, 2023, the Board of Directors authorized a new stock repurchase program for up to $40 million of common stock for 2023216 Cumulative Total Stockholder Return (2017-2022) | Index | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | First Hawaiian, Inc. | $100.00 | $79.07 | $107.37 | $88.91 | $106.40 | $103.13 | | S&P 500 Index | $100.00 | $93.76 | $120.84 | $140.49 | $178.27 | $143.61 | | KBW Regional Banking Index | $100.00 | $80.63 | $97.07 | $85.33 | $113.65 | $102.90 | Reserved This section is not applicable - Not applicable220 Management's Discussion and Analysis of Financial Condition and Results of Operations Net income remained stable at $265.7 million in 2022, driven by increased net interest income, while loans grew 9% to $14.1 billion and the company maintained a strong 11.82% CET1 ratio amid Hawaii's economic recovery Key Financial Performance (FY 2022 vs. FY 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | $265.7 million | $265.7 million | | Diluted EPS | $2.08 | $2.05 | | Net Interest Income | $613.5 million | $530.6 million | | Provision for Credit Losses | $1.4 million | ($39.0 million) | | Noninterest Income | $179.5 million | $184.9 million | | Noninterest Expense | $440.5 million | $405.5 million | Key Balance Sheet Items (as of Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Loans and Leases | $14.1 billion | $13.0 billion | | Total Deposits | $21.7 billion | $21.8 billion | | Total Assets | $24.6 billion | $25.0 billion | | Total Stockholders' Equity | $2.3 billion | $2.7 billion | - The Hawaii economy continued to recover in 2022, with the statewide unemployment rate falling to 3.2% from 5.7% in 2021. Domestic visitor arrivals have nearly returned to pre-pandemic levels, though international tourism from Japan remains significantly lower227228 - The company remains well-capitalized with a Common Equity Tier 1 (CET1) capital ratio of 11.82% as of December 31, 2022235388 Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures are integrated within Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Information regarding quantitative and qualitative disclosures about market risk is provided in Item 7 of the report452 Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for 2022, with Deloitte & Touche LLP issuing an unqualified opinion on both financial statements and internal controls - The independent registered public accounting firm, Deloitte & Touche LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of the company's internal control over financial reporting as of December 31, 2022453454 - The critical audit matter identified was the Allowance for Credit Losses (ACL), specifically highlighting the significant judgment required by management in determining the economic forecast and qualitative overlays used in the ACL calculation458460 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure This section is not applicable to the company - Not applicable814 Controls and Procedures Management and auditors concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes reported - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022815 - Management asserted that the company maintained effective internal control over financial reporting as of December 31, 2022, based on the COSO 2013 framework818 - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2022820 Other Information This section is not applicable to the company - Not applicable830 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section is not applicable to the company - Not applicable831 Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement833835837 Executive Compensation Executive and director compensation details are incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement838839 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information is incorporated by reference from the 2023 Proxy Statement, with 1,264,151 securities issuable under equity plans and 3,678,877 remaining available - Information regarding security ownership is incorporated by reference from the company's 2023 Proxy Statement840 Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining for Future Issuance | | :--- | :--- | :--- | | Approved by security holders | 1,264,151 | 3,678,877 | | Not approved by security holders | 0 | 0 | | Total | 1,264,151 | 3,678,877 | Certain Relationships and Related Transactions, and Director Independence Details on related party transactions and director independence are incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement843844 Principal Accounting Fees and Services Principal accounting fees and services information is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the company's 2023 Proxy Statement845 Part IV Exhibits, Financial Statement Schedules This section lists financial statements from Item 8, omits schedules, and provides an index of all exhibits filed with the Form 10-K - This section contains the list of consolidated financial statements included in Item 8 and the Exhibit Index for the report847850 - All financial statement schedules have been omitted because the required information is not applicable, not material, or is already disclosed elsewhere in the report847 Form 10-K Summary The company has not provided a summary for its Form 10-K - None848