First Hawaiian(FHB) - 2024 Q1 - Quarterly Results

First Quarter 2024 Overview This section provides an executive summary of the company's first quarter 2024 financial results and key announcements Financial Highlights First Hawaiian reported a solid first quarter for 2024, characterized by strong earnings, excellent credit quality, and growing capital levels, with net income increasing to $54.2 million and net interest margin expanding to 2.91% - Chairman, President, and CEO Bob Harrison highlighted strong earnings, excellent credit quality, and growing capital levels for the first quarter of 2024[2] Q1 2024 Key Financial Metrics | Metric | Q1 2024 | Q4 2023 | Change (QoQ) | | :--- | :--- | :--- | :--- | | Net Income | $54.2 million | $47.5 million | +$6.7 million | | Diluted EPS | $0.42 | $0.37 | +$0.05 | | Net Interest Margin | 2.91% | 2.81% | +10 bps | | Total Assets | $24.3 billion | $24.9 billion | -$0.6 billion | | Gross Loans and Leases | $14.3 billion | $14.4 billion | -$33.3 million | | Total Deposits | $20.7 billion | $21.3 billion | -$663.2 million | | Provision for Credit Losses | $6.3 million | $5.3 million | +$1.0 million | - Noninterest expense decreased by $13.5 million quarter-over-quarter to $128.8 million, leading to an improved efficiency ratio of 62.2% from 67.3% in the prior quarter[8] Dividend Declaration The Board of Directors approved a quarterly cash dividend of $0.26 per share, consistent with the previous quarter, payable on May 31, 2024 - A quarterly cash dividend of $0.26 per share was declared on April 24, 2024[2] - The dividend is payable on May 31, 2024, to stockholders of record at the close of business on May 20, 2024[2] Detailed Financial Analysis This section provides an in-depth analysis of the company's consolidated financial statements, net interest income, loan and deposit portfolios, asset quality, and capital adequacy Consolidated Financial Statements The company's income statement shows a quarter-over-quarter increase in net income to $54.2 million, while the balance sheet reflects a sequential decrease in total assets and deposits Consolidated Statements of Income Consolidated Income Statement Highlights (in thousands) | Line Item | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $154,427 | $151,793 | $167,247 | | Provision for Credit Losses | $6,300 | $5,330 | $8,800 | | Noninterest Income | $51,371 | $58,347 | $49,023 | | Noninterest Expense | $128,813 | $142,307 | $118,567 | | Net Income | $54,220 | $47,502 | $66,818 | | Diluted EPS | $0.42 | $0.37 | $0.52 | Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Line Item | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $24,279,186 | $24,926,474 | $24,884,207 | | Net Loans and Leases | $14,160,372 | $14,196,964 | $14,074,150 | | Total Deposits | $20,669,481 | $21,332,657 | $21,281,500 | | Total Stockholders' Equity | $2,513,761 | $2,486,066 | $2,329,012 | Net Interest Income Analysis Net interest income (NII) rose by $2.6 million quarter-over-quarter to $154.4 million, with the net interest margin (NIM) expanding 10 basis points to 2.91%, driven by higher yields on earning assets Average Balances and Interest Rates Key Interest Rate Metrics | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Margin | 2.91% | 2.81% | 3.11% | | Interest Rate Spread | 1.98% | 1.90% | 2.52% | | Yield on Earning Assets | 4.61% | 4.44% | 3.97% | | Rate on Interest-Bearing Liabilities | 2.63% | 2.54% | 1.45% | Analysis of Change in Net Interest Income - Compared to Q4 2023, the $2.7 million increase in net interest income was driven by a $4.0 million rise in interest income, partially offset by a $1.3 million increase in interest expense[26] - Compared to Q1 2023, the $12.8 million decrease in net interest income was due to a significant $44.2 million increase in interest expense, which was not fully offset by the $31.4 million increase in interest income[27] Loan and Deposit Portfolio The total loan and lease portfolio decreased slightly by 0.2% quarter-over-quarter to $14.3 billion, while total deposits decreased by 3.1% to $20.7 billion Loans and Leases Composition Loan Portfolio Breakdown (in thousands) | Loan Type | Mar 31, 2024 | Dec 31, 2023 | Change (QoQ) | | :--- | :--- | :--- | :--- | | Commercial and industrial | $2,189,875 | $2,165,349 | +$24,526 | | Commercial real estate | $4,301,300 | $4,340,243 | -$38,943 | | Construction | $972,517 | $900,292 | +$72,225 | | Total residential | $5,408,280 | $5,457,903 | -$49,623 | | Consumer | $1,054,227 | $1,109,901 | -$55,674 | | Total Loans and Leases | $14,320,208 | $14,353,497 | -$33,289 | Deposits Composition Deposit Portfolio Breakdown (in thousands) | Deposit Type | Mar 31, 2024 | Dec 31, 2023 | Change (QoQ) | | :--- | :--- | :--- | :--- | | Demand (Noninterest-bearing) | $7,048,553 | $7,583,562 | -$535,009 | | Savings | $6,277,679 | $6,445,084 | -$167,405 | | Money Market | $4,059,204 | $3,847,853 | +$211,351 | | Time | $3,284,045 | $3,456,158 | -$172,113 | | Total Deposits | $20,669,481 | $21,332,657 | -$663,176 | Asset Quality and Credit Risk Asset quality remained excellent and stable in the first quarter, with total non-performing assets at $18.0 million and the allowance for credit losses increasing to $159.8 million Non-Performing Assets Non-Performing Assets (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Non-Accrual Loans and Leases | $18,017 | $18,595 | | Total Non-Performing Assets | $18,017 | $18,595 | | Accruing Loans Past Due 90+ Days | $3,620 | $3,496 | - Total non-performing assets as a percentage of total loans and other real estate owned remained stable at 0.13% at both March 31, 2024, and December 31, 2023[10] Allowance for Credit Losses Allowance for Credit Losses Activity (in thousands) | Metric | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | | Beginning Balance (ACL + Reserve) | $192,138 | $192,570 | | Net Loans and Leases Charged-Off | ($3,789) | ($5,762) | | Provision for Credit Losses | $6,300 | $5,330 | | Ending Balance (ACL + Reserve) | $194,649 | $192,138 | - The ratio of Allowance for Credit Losses to total loans outstanding increased to 1.12% from 1.09% in the prior quarter[31] Loan Portfolio Credit Quality Details - The vast majority of the commercial lending portfolio, totaling $7.9 billion, is categorized with a 'Pass' risk rating[32] - For residential and consumer lending, credit quality is strong, with the largest segments of the portfolio belonging to borrowers with FICO scores of 740 and greater[33] Capital Adequacy The company strengthened its capital position during the quarter, with all regulatory capital ratios showing improvement, including the Common Equity Tier 1 ratio increasing to 12.55% Regulatory Capital Ratios | Ratio | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Common Equity Tier 1 Capital Ratio | 12.55% | 12.39% | | Tier 1 Capital Ratio | 12.55% | 12.39% | | Total Capital Ratio | 13.75% | 13.57% | | Tier 1 Leverage Ratio | 8.80% | 8.64% | - Total stockholders' equity increased by $27.7 million during the first quarter[11] - No shares were repurchased in the first quarter[11] Non-GAAP Financial Measures Reconciliation The company provides reconciliations for non-GAAP measures to their closest GAAP equivalents, with key non-GAAP metrics showing quarter-over-quarter improvement Key Non-GAAP Metrics | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Return on Average Tangible Stockholders' Equity | 14.53% | 13.66% | 20.78% | | Tangible Book Value per Share | $11.88 | $11.68 | $10.45 | | Tangible Stockholders' Equity to Tangible Assets | 6.52% | 6.23% | 5.58% | Other Information This section includes the company profile, conference call details, and important disclosures regarding forward-looking statements and non-GAAP financial measures Company Profile First Hawaiian, Inc. (NASDAQ: FHB) is the holding company for First Hawaiian Bank, Hawaii's oldest and largest financial institution, providing a wide range of banking services - First Hawaiian Bank is Hawaii's oldest and largest financial institution, with branches throughout Hawaii, Guam, and Saipan[12] Conference Call Information The company will host a conference call and live webcast, including a slide presentation, to discuss its first-quarter 2024 financial results - A conference call to discuss results was scheduled for April 26, 2024, at 1:00 p.m. Eastern Time[13] - A live webcast and slide presentation are available at **www.fhb.com/earnings**[14](index=14&type=chunk) Forward-Looking Statements and Non-GAAP Measures Disclosure The report includes a standard safe harbor statement regarding forward-looking statements and explains the use of non-GAAP financial measures for evaluating performance - The press release contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[15] - The company uses non-GAAP financial measures such as return on average tangible assets and tangible book value per share, which are reconciled to GAAP measures in Table 12[16][17]