[Executive Summary & Dividend Declaration](index=1&type=section&id=Executive%20Summary%20%26%20Dividend%20Declaration) [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) First Hawaiian, Inc. achieved strong financial performance in Q2 2025, with net income increasing by 23.6% quarter-over-quarter to $73.2 million, driven by revenue growth, expense control, and sustained excellent credit quality - Company's Q2 2025 net income was **$73.2 million**, up **23.6%** from Q1[2](index=2&type=chunk) - Performance driven by strong revenue, good expense control, and sustained excellent credit quality[2](index=2&type=chunk) [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) The company's Board of Directors declared a quarterly cash dividend of $0.26 per share - The Board of Directors declared a quarterly cash dividend of **$0.26 per share** on July 23, 2025[2](index=2&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) In Q2 2025, the company saw significant growth in net income and diluted EPS, improved net interest margin, reduced provision for credit losses, and a lower effective tax rate due to California tax law changes 2025 Second Quarter Key Financial Metrics | Metric | Q2 2025 | Q-o-Q Change | Q-o-Q Change Rate | Source | | :--- | :--- | :--- | :--- | :--- | | Net Income | $73.2 million | +$14.0 million | +23.6% | chunk_num:[2, 10, 20] | | Diluted EPS | $0.58 | +$0.11 | +23.4% | chunk_num:[10, 20, 23] | | Net Interest Margin (NIM) | 3.11% | +3 basis points | - | chunk_num:[6, 10, 20] | | Provision for Credit Losses | $4.5 million | -$6.0 million | -57.1% | chunk_num:[7, 10, 20] | | Effective Tax Rate | 16.9% | -6.1 percentage points | - | chunk_num:[11, 20] | - The decrease in effective tax rate was primarily due to a **$5.1 million net benefit** from the re-measurement of deferred tax assets resulting from recent California tax law changes[10](index=10&type=chunk)[11](index=11&type=chunk) [Balance Sheet Highlights](index=1&type=section&id=Balance%20Sheet%20Highlights) As of June 30, 2025, the company's total assets, loans and leases, and deposits all showed slight growth, indicating stable asset expansion 2025 Second Quarter Balance Sheet Highlights | Metric | June 30, 2025 | March 31, 2025 | Q-o-Q Change | Q-o-Q Change Rate | Source | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | $23.8 billion | $23.7 billion | +$0.1 billion | +0.4% | chunk_num:[4, 21, 24] | | Total Loans and Leases | $14.4 billion | $14.3 billion | +$58.8 million | +0.4% | chunk_num:[4, 10, 21, 24] | | Total Deposits | $20.2 billion | $20.2 billion | +$15.6 million | +0.1% | chunk_num:[5, 10, 21, 24] | [Income Statement Highlights](index=1&type=section&id=Income%20Statement%20Highlights) In Q2 2025, the company experienced growth in both net interest income and non-interest income, alongside an improved efficiency ratio, reflecting enhanced profitability and operational effectiveness 2025 Second Quarter Income Statement Highlights | Metric | Q2 2025 | Q1 2025 | Q-o-Q Change | Q-o-Q Change Rate | Source | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $163.6 million | $160.5 million | +$3.1 million | +1.9% | chunk_num:[6, 20, 23] | | Non-Interest Income | $54.0 million | $50.5 million | +$3.5 million | +6.9% | chunk_num:[8, 20, 23] | | Non-Interest Expense | $124.9 million | $123.6 million | +$1.3 million | +1.1% | chunk_num:[9, 20, 23] | | Efficiency Ratio | 57.2% | 58.2% | -1.0 percentage points | - | chunk_num:[9, 20] | [Asset Quality & Capital Highlights](index=2&type=section&id=Asset%20Quality%20%26%20Capital%20Highlights) The company maintained robust asset quality in Q2 2025 with ample allowance for credit losses, a lower net charge-off rate, and improved capital ratios, while returning capital to shareholders through share repurchases 2025 Second Quarter Asset Quality & Capital Highlights | Metric | June 30, 2025 | March 31, 2025 | Q-o-Q Change | Source | | :--- | :--- | :--- | :--- | :--- | | Allowance for Credit Losses (ACL) | $167.8 million | $166.6 million | +$1.2 million | chunk_num:[12, 21, 37] | | ACL as % of Total Loans and Leases | 1.17% | 1.17% | 0 basis points | chunk_num:[12, 21, 37] | | Net Charge-Offs | $3.3 million | $3.8 million | -$0.5 million | chunk_num:[12, 37] | | Net Charge-Off Rate (Annualized) | 0.09% | 0.11% | -0.02 percentage points | chunk_num:[12, 37] | | Total Non-Performing Assets | $28.6 million | $20.2 million | +$8.4 million | chunk_num:[12, 36] | | Non-Performing Assets as % of Total Loans and Leases | 0.20% | 0.14% | +0.06 percentage points | chunk_num:[12, 21] | | Total Shareholders' Equity | $2.7 billion | $2.6 billion | +$0.1 billion | chunk_num:[13, 21, 24] | | Tier 1 Leverage Ratio | 9.12% | 9.01% | +0.11 percentage points | chunk_num:[13, 21] | | Common Equity Tier 1 Ratio | 13.03% | 12.93% | +0.10 percentage points | chunk_num:[13, 21] | | Total Capital Ratio | 14.28% | 14.17% | +0.11 percentage points | chunk_num:[13, 21] | - The company repurchased **1.04 million shares** of common stock for a total cost of **$25 million** at an average price of **$23.99 per share** during the second quarter[13](index=13&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [About First Hawaiian, Inc.](index=2&type=section&id=About%20First%20Hawaiian%2C%20Inc.) First Hawaiian, Inc. is a bank holding company headquartered in Honolulu, Hawaii, with its primary subsidiary, First Hawaiian Bank, being the oldest and largest financial institution in Hawaii, offering comprehensive banking services - First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii[14](index=14&type=chunk) - Its primary subsidiary, First Hawaiian Bank, founded in 1858, is the oldest and largest financial institution in Hawaii, with branches in Hawaii, Guam, and Saipan[14](index=14&type=chunk) - The company provides comprehensive banking services to consumers and commercial clients, including deposit products, loans, wealth management, insurance, trust, retirement planning, credit cards, and merchant processing services[14](index=14&type=chunk) [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) The company will host a conference call on July 25, 2025, to discuss its second-quarter results, with dial-in and webcast links provided - First Hawaiian will host a conference call on **July 25, 2025, at 1:00 PM ET (7:00 AM HT)** to discuss the company's results[15](index=15&type=chunk) - A live webcast of the conference call, including a slide presentation, will be available on the company's website at www.fhb.com/earnings[16](index=16&type=chunk) [Disclosures](index=3&type=section&id=Disclosures) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, based on current expectations and estimates, but subject to various risks and uncertainties that could cause actual results to differ materially - This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, reflecting the company's current views on future events and financial performance[17](index=17&type=chunk) - These statements are not historical facts and are based on current expectations, estimates, and management beliefs, carrying inherent uncertainties where actual results may differ materially from forward-looking statements[17](index=17&type=chunk) - Important risk factors include domestic and global economic conditions and capital market conditions, with more information available in the company's filings with the U.S. Securities and Exchange Commission (SEC)[17](index=17&type=chunk) [Use of Non-GAAP Financial Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP financial measures (such as return on average tangible assets, return on average tangible common equity, tangible book value per share, and tangible common equity to tangible assets ratio) to assess financial performance and capital adequacy, providing reconciliations to the most directly comparable GAAP measures - The company uses non-GAAP financial measures such as return on average tangible assets, return on average tangible common equity, tangible book value per share, and tangible common equity to tangible assets ratio[18](index=18&type=chunk) - The company believes these metrics are useful for investors, regulators, and management in evaluating financial performance and capital adequacy[18](index=18&type=chunk) - These non-GAAP measures have limitations and should not be viewed in isolation or as a substitute for GAAP reported results; reconciliations to the most directly comparable GAAP measures can be found in Table 14 at the end of the document[18](index=18&type=chunk)[19](index=19&type=chunk) [Detailed Financial Tables](index=4&type=section&id=Detailed%20Financial%20Tables) [Financial Highlights (Table 1)](index=4&type=section&id=Financial%20Highlights%20%28Table%201%29) Table 1 provides comprehensive financial highlights for the company's Q2 2025 and prior periods, covering key data such as operating results, performance ratios, average balances, and market value per share, illustrating financial trends and performance across different timeframes Financial Highlights Overview (Q2 2025) | Metric | June 30, 2025 (Three Months) | March 31, 2025 (Three Months) | June 30, 2024 (Three Months) | June 30, 2025 (Six Months) | June 30, 2024 (Six Months) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Interest Income (USD thousands) | $163,583 | $160,526 | $152,851 | $324,109 | $307,278 | | Provision for Credit Losses (USD thousands) | $4,500 | $10,500 | $1,800 | $15,000 | $8,100 | | Non-Interest Income (USD thousands) | $53,958 | $50,477 | $51,768 | $104,435 | $103,139 | | Non-Interest Expense (USD thousands) | $124,939 | $123,560 | $122,086 | $248,499 | $250,899 | | Net Income (USD thousands) | $73,247 | $59,248 | $61,921 | $132,495 | $116,141 | | Diluted EPS | $0.58 | $0.47 | $0.48 | $1.05 | $0.91 | | Dividends Declared Per Share | $0.26 | $0.26 | $0.26 | $0.52 | $0.52 | | Net Interest Margin | 3.11% | 3.08% | 2.92% | 3.10% | 2.91% | | Efficiency Ratio | 57.23% | 58.22% | 59.22% | 57.71% | 60.69% | | Return on Average Total Assets | 1.23% | 1.01% | 1.04% | 1.12% | 0.97% | | Return on Average Tangible Assets (Non-GAAP) | 1.28% | 1.05% | 1.08% | 1.17% | 1.01% | | Return on Average Total Shareholders' Equity | 11.03% | 9.09% | 9.91% | 10.07% | 9.32% | | Return on Average Tangible Shareholders' Equity (Non-GAAP) | 17.61% | 14.59% | 16.42% | 16.12% | 15.48% | | Average Loans and Leases (USD thousands) | $14,288,918 | $14,309,998 | $14,358,049 | $14,299,400 | $14,335,306 | | Average Deposits (USD thousands) | $20,280,042 | $20,354,040 | $20,308,028 | $20,316,836 | $20,439,979 | | Stock Closing Price | $24.96 | $24.44 | $20.76 | $24.96 | $20.76 | Balance Sheet and Capital Ratios Highlights (Period End) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Loans and Leases (USD thousands) | $14,351,869 | $14,293,036 | $14,408,258 | $14,359,899 | | Total Assets (USD thousands) | $23,837,147 | $23,744,958 | $23,828,186 | $23,991,791 | | Total Deposits (USD thousands) | $20,231,419 | $20,215,816 | $20,322,216 | $20,318,832 | | Total Shareholders' Equity (USD thousands) | $2,694,545 | $2,648,852 | $2,617,486 | $2,550,312 | | Common Equity Tier 1 Ratio | 13.03% | 12.93% | 12.80% | 12.73% | | Tier 1 Capital Ratio | 13.03% | 12.93% | 12.80% | 12.73% | | Total Capital Ratio | 14.28% | 14.17% | 13.99% | 13.92% | | Tier 1 Leverage Ratio | 9.12% | 9.01% | 9.14% | 9.03% | | Shareholders' Equity to Total Assets Ratio | 11.30% | 11.16% | 10.98% | 10.63% | | Tangible Shareholders' Equity to Tangible Assets Ratio (Non-GAAP) | 7.44% | 7.27% | 7.10% | 6.76% | | Book Value Per Share | $21.61 | $21.07 | $20.70 | $19.94 | | Tangible Book Value Per Share (Non-GAAP) | $13.63 | $13.15 | $12.83 | $12.16 | [Consolidated Statements of Income (Table 2)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20%28Table%202%29) The consolidated statements of income detail the company's interest income, interest expense, non-interest income, non-interest expense, and ultimately net income and earnings per share for Q2 2025 and prior periods, reflecting the composition and changes in the company's profitability Consolidated Statements of Income (in thousands of USD) | Metric | June 30, 2025 (Three Months) | March 31, 2025 (Three Months) | June 30, 2024 (Three Months) | June 30, 2025 (Six Months) | June 30, 2024 (Six Months) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $236,739 | $235,150 | $244,934 | $471,889 | $489,886 | | Total Interest Expense | $73,156 | $74,624 | $92,083 | $147,780 | $182,608 | | Net Interest Income | $163,583 | $160,526 | $152,851 | $324,109 | $307,278 | | Provision for Credit Losses | $4,500 | $10,500 | $1,800 | $15,000 | $8,100 | | Net Interest Income Less Provision for Credit Losses | $159,083 | $150,026 | $151,051 | $309,109 | $299,178 | | Total Non-Interest Income | $53,958 | $50,477 | $51,768 | $104,435 | $103,139 | | Total Non-Interest Expense | $124,939 | $123,560 | $122,086 | $248,499 | $250,899 | | Income Before Income Taxes | $88,102 | $76,943 | $80,733 | $165,045 | $151,418 | | Income Tax Provision | $14,855 | $17,695 | $18,812 | $32,550 | $35,277 | | Net Income | $73,247 | $59,248 | $61,921 | $132,495 | $116,141 | | Diluted EPS | $0.58 | $0.47 | $0.48 | $1.05 | $0.91 | [Consolidated Balance Sheets (Table 3)](index=7&type=section&id=Consolidated%20Balance%20Sheets%20%28Table%203%29) The consolidated balance sheets provide a detailed breakdown of the company's assets, liabilities, and shareholders' equity as of June 30, 2025, and prior period ends, reflecting the company's financial position and capital structure Consolidated Balance Sheets (in thousands of USD) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Cash and Due from Banks | $304,624 | $240,738 | $258,057 | $290,501 | | Interest-Bearing Deposits in Banks | $1,094,411 | $1,073,841 | $912,133 | $824,258 | | Investment Securities Available for Sale | $1,891,654 | $1,858,428 | $1,926,516 | $2,067,956 | | Investment Securities Held to Maturity | $3,658,814 | $3,724,908 | $3,790,650 | $3,917,175 | | Loans and Leases | $14,351,869 | $14,293,036 | $14,408,258 | $14,359,899 | | Less: Allowance for Credit Losses | $167,825 | $166,612 | $160,393 | $160,517 | | Net Loans and Leases | $14,184,044 | $14,126,424 | $14,247,865 | $14,199,382 | | Total Assets | $23,837,147 | $23,744,958 | $23,828,186 | $23,991,791 | | Interest-Bearing Deposits | $13,386,987 | $13,330,265 | $13,347,068 | $13,461,365 | | Non-Interest-Bearing Deposits | $6,844,432 | $6,885,551 | $6,975,148 | $6,857,467 | | Total Deposits | $20,231,419 | $20,215,816 | $20,322,216 | $20,318,832 | | Short-Term Borrowings | $250,000 | $250,000 | $250,000 | $500,000 | | Total Liabilities | $21,142,602 | $21,096,106 | $21,210,700 | $21,441,479 | | Total Shareholders' Equity | $2,694,545 | $2,648,852 | $2,617,486 | $2,550,312 | | Total Liabilities and Shareholders' Equity | $23,837,147 | $23,744,958 | $23,828,186 | $23,991,791 | [Average Balances and Interest Rates (Tables 4 & 5)](index=8&type=section&id=Average%20Balances%20and%20Interest%20Rates%20%28Tables%204%20%26%205%29) Tables 4 and 5 detail the company's average balances, income/expense, and corresponding yields/rates for interest-earning assets and interest-bearing liabilities across different periods, revealing the composition and trends of net interest margin and interest rate spread Average Balances and Interest Rates (Q2 2025, in millions of USD) | Metric | Average Balance (USD millions) | Income/Expense (USD millions) | Yield/Rate | | :--- | :--- | :--- | :--- | | Interest-Bearing Deposits in Banks | $1,276.8 | $14.1 | 4.45% | | Total Investment Securities | $5,567.0 | $29.0 | 2.08% | | Total Loans and Leases | $14,288.9 | $194.0 | 5.44% | | Total Interest-Earning Assets | $21,167.6 | $237.5 | 4.50% | | Total Interest-Bearing Deposits | $13,459.0 | $70.3 | 2.09% | | Total Interest-Bearing Liabilities | $13,729.8 | $73.1 | 2.14% | | Net Interest Income | - | $164.4 | - | | Interest Rate Spread | - | - | 2.36% | | Net Interest Margin | - | - | 3.11% | Average Balances and Interest Rates (First Half 2025, in millions of USD) | Metric | Average Balance (USD millions) | Income/Expense (USD millions) | Yield/Rate | | :--- | :--- | :--- | :--- | | Interest-Bearing Deposits in Banks | $1,224.3 | $27.0 | 4.44% | | Total Investment Securities | $5,611.1 | $59.4 | 2.12% | | Total Loans and Leases | $14,299.4 | $386.7 | 5.44% | | Total Interest-Earning Assets | $21,168.4 | $473.9 | 4.50% | | Total Interest-Bearing Deposits | $13,465.4 | $142.0 | 2.13% | | Total Interest-Bearing Liabilities | $13,739.5 | $147.8 | 2.17% | | Net Interest Income | - | $326.1 | - | | Interest Rate Spread | - | - | 2.33% | | Net Interest Margin | - | - | 3.10% | [Analysis of Change in Net Interest Income (Tables 6, 7 & 8)](index=10&type=section&id=Analysis%20of%20Change%20in%20Net%20Interest%20Income%20%28Tables%206%2C%207%20%26%208%29) Tables 6, 7, and 8 analyze changes in net interest income, breaking down the impact of volume and rate changes for assets and liabilities, providing quarter-over-quarter and year-over-year comparisons to reveal specific drivers of net interest income growth or decline Analysis of Change in Net Interest Income (Q2 2025 vs. Q1 2025, in millions of USD) | Change Source | Volume Impact (USD millions) | Rate Impact (USD millions) | Total (USD millions) | | :--- | :--- | :--- | :--- | | Total Interest Income Change | $2.0 | -$0.9 | $1.1 | | Total Interest Expense Change | $0.3 | -$1.8 | -$1.5 | | Net Interest Income Change | $1.7 | $0.9 | $2.6 | Analysis of Change in Net Interest Income (Q2 2025 vs. Q2 2024, in millions of USD) | Change Source | Volume Impact (USD millions) | Rate Impact (USD millions) | Total (USD millions) | | :--- | :--- | :--- | :--- | | Total Interest Income Change | $2.6 | -$11.6 | -$9.0 | | Total Interest Expense Change | -$2.8 | -$16.2 | -$19.0 | | Net Interest Income Change | $5.4 | $4.6 | $10.0 | Analysis of Change in Net Interest Income (First Half 2025 vs. First Half 2024, in millions of USD) | Change Source | Volume Impact (USD millions) | Rate Impact (USD millions) | Total (USD millions) | | :--- | :--- | :--- | :--- | | Total Interest Income Change | $2.4 | -$21.4 | -$19.0 | | Total Interest Expense Change | -$5.2 | -$29.6 | -$34.8 | | Net Interest Income Change | $7.6 | $8.2 | $15.8 | [Loans and Leases (Table 9)](index=13&type=section&id=Loans%20and%20Leases%20%28Table%209%29) Table 9 provides a detailed breakdown of the company's loan and lease portfolio, including commercial and industrial, commercial real estate, construction, residential (mortgage and home equity), and consumer and lease financing, showing balances and changes across different reporting period ends Loans and Leases Portfolio (in thousands of USD) | Loan Category | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Commercial and Industrial | $2,370,210 | $2,261,394 | $2,247,428 | $2,208,690 | | Commercial Real Estate | $4,411,585 | $4,367,433 | $4,463,992 | $4,305,017 | | Construction | $884,306 | $954,072 | $918,326 | $1,017,649 | | Residential Mortgage | $4,085,827 | $4,129,518 | $4,168,154 | $4,216,416 | | Home Equity | $1,161,876 | $1,144,895 | $1,151,739 | $1,159,833 | | Consumer | $1,011,125 | $998,325 | $1,023,969 | $1,027,104 | | Lease Financing | $426,940 | $437,399 | $434,650 | $425,190 | | Total Loans and Leases | $14,351,869 | $14,293,036 | $14,408,258 | $14,359,899 | [Deposits (Table 10)](index=14&type=section&id=Deposits%20%28Table%2010%29) Table 10 presents a detailed classification of the company's deposits, including non-interest-bearing, savings, money market, and time deposits, reflecting the composition of the company's deposit base and changes at different reporting period ends Deposits Portfolio (in thousands of USD) | Deposit Category | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-Interest-Bearing Deposits | $6,844,432 | $6,885,551 | $6,975,148 | $6,857,467 | | Savings Deposits | $6,219,801 | $6,110,796 | $6,021,364 | $6,055,051 | | Money Market Deposits | $3,777,681 | $3,865,203 | $4,027,334 | $4,111,609 | | Time Deposits | $3,389,505 | $3,354,266 | $3,298,370 | $3,294,705 | | Total Deposits | $20,231,419 | $20,215,816 | $20,322,216 | $20,318,832 | [Non-Performing Assets and Accruing Loans and Leases Past Due (Table 11)](index=15&type=section&id=Non-Performing%20Assets%20and%20Accruing%20Loans%20and%20Leases%20Past%20Due%20%28Table%2011%29) Table 11 details the composition of the company's non-performing assets and accruing loans and leases past due 90 days or more, including breakdowns for commercial and residential loans, reflecting the status and changes in the company's asset quality Non-Performing Assets and Accruing Loans and Leases Past Due (in thousands of USD) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Non-Performing Loans and Leases | $28,591 | $20,188 | $20,679 | $18,013 | | Total Non-Performing Assets | $28,591 | $20,188 | $20,679 | $18,013 | | Total Accruing Loans and Leases Past Due 90 Days or More | $4,438 | $4,302 | $6,019 | $3,765 | | Total Loans and Leases | $14,351,869 | $14,293,036 | $14,408,258 | $14,359,899 | [Allowance for Credit Losses](index=16&type=section&id=Allowance%20for%20Credit%20Losses) This section provides an analysis of changes in the allowance for credit losses, including beginning balances, loan and lease charge-offs, recoveries of charged-off loans and leases, and the provision for credit losses, demonstrating the company's credit risk management and reserve coverage Allowance for Credit Losses Changes (in thousands of USD) | Metric | June 30, 2025 (Three Months) | March 31, 2025 (Three Months) | June 30, 2024 (Three Months) | June 30, 2025 (Six Months) | June 30, 2024 (Six Months) | | :--- | :--- | :--- | :--- | :--- | :--- | | Beginning Balance | $199,959 | $193,240 | $194,649 | $193,240 | $192,138 | | Total Loan and Lease Charge-Offs | -$5,329 | -$6,498 | -$4,859 | -$11,827 | -$10,622 | | Total Recoveries of Charged-Off Loans and Leases | $2,042 | $2,717 | $2,340 | $4,759 | $4,314 | | Net Charge-Offs on Loans and Leases | -$3,287 | -$3,781 | -$2,519 | -$7,068 | -$6,308 | | Provision for Credit Losses | $4,500 | $10,500 | $1,800 | $15,000 | $8,100 | | Ending Balance | $201,172 | $199,959 | $193,930 | $201,172 | $193,930 | | Allowance for Credit Losses | $167,825 | $166,612 | $160,517 | $167,825 | $160,517 | | Reserve for Unfunded Commitments | $33,347 | $33,347 | $33,413 | $33,347 | $33,413 | | Net Charge-Offs on Loans and Leases as % of Average Loans and Leases | 0.09% | 0.11% | 0.07% | 0.10% | 0.09% | | Allowance for Credit Losses as % of Loans and Leases | 1.17% | 1.17% | 1.12% | 1.17% | 1.12% | | Allowance for Credit Losses to Non-Performing Loans and Leases | 5.87x | 8.25x | 8.91x | 5.87x | 8.91x | [Loans and Leases by Year of Origination and Credit Quality Indicator (Table 13)](index=17&type=section&id=Loans%20and%20Leases%20by%20Year%20of%20Origination%20and%20Credit%20Quality%20Indicator%20%28Table%2013%29) Table 13 categorizes the company's loan and lease portfolio by year of origination and credit quality indicators (such as risk ratings and FICO scores), including commercial, residential, and consumer loans, offering in-depth insights into the risk characteristics of the loan portfolio Commercial Loan Portfolio by Risk Rating and Year of Origination (in thousands of USD) | Loan Category | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving | Converted to Term | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Commercial and Industrial | $87,223 | $155,681 | $73,653 | $175,502 | $196,945 | $263,817 | $1,396,245 | $21,144 | $2,370,210 | | Total Commercial Real Estate | $169,890 | $299,585 | $376,971 | $860,568 | $698,090 | $1,886,130 | $112,763 | $7,588 | $4,411,585 | | Total Construction | $13,028 | $156,164 | $214,176 | $290,283 | $135,955 | $52,842 | $21,858 | - | $884,306 | | Total Lease Financing | $75,371 | $92,505 | $97,059 | $52,552 | $12,574 | $96,879 | - | - | $426,940 | | Total Commercial Loans | $345,512 | $703,935 | $761,859 | $1,378,905 | $1,043,564 | $2,299,668 | $1,530,866 | $28,732 | $8,093,041 | Residential Loan Portfolio by FICO Score and Year of Origination (in thousands of USD) | Loan Category | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving | Converted to Term | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Residential Mortgage | $99,901 | $193,406 | $237,049 | $596,946 | $1,069,157 | $1,886,306 | $3,062 | - | $4,085,827 | | Total Home Equity Loans | - | - | - | - | - | - | $1,157,419 | $4,457 | $1,161,876 | | Total Residential Loans | $99,901 | $193,406 | $237,049 | $596,946 | $1,069,157 | $1,886,306 | $1,160,481 | $4,457 | $5,247,703 | Consumer Loan Portfolio by FICO Score and Year of Origination (in thousands of USD) | Loan Category | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving | Converted to Term | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Consumer Loans | $128,069 | $175,864 | $115,293 | $128,216 | $62,479 | $28,489 | $369,615 | $3,100 | $1,011,125 | [GAAP to Non-GAAP Reconciliation (Table 14)](index=19&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation%20%28Table%2014%29) Table 14 provides a reconciliation of GAAP to non-GAAP financial measures, detailing how goodwill is deducted from GAAP metrics (such as total shareholders' equity and total assets) to calculate corresponding tangible metrics, offering investors a clearer view of capital adequacy and profitability GAAP to Non-GAAP Reconciliation (Quarterly, in thousands of USD) | Metric | June 30, 2025 (Three Months) | March 31, 2025 (Three Months) | June 30, 2024 (Three Months) | June 30, 2025 (Six Months) | June 30, 2024 (Six Months) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income (USD thousands) | $73,247 | $59,248 | $61,921 | $132,495 | $116,141 | | Average Total Shareholders' Equity (USD thousands) | $2,663,850 | $2,641,978 | $2,512,471 | $2,652,975 | $2,504,656 | | Less: Average Goodwill (USD thousands) | $995,492 | $995,492 | $995,492 | $995,492 | $995,492 | | Average Tangible Shareholders' Equity (USD thousands) | $1,668,358 | $1,646,486 | $1,516,979 | $1,657,483 | $1,509,164 | | Average Total Assets (USD thousands) | $23,859,410 | $23,890,459 | $23,958,913 | $23,874,849 | $24,073,060 | | Less: Average Goodwill (USD thousands) | $995,492 | $995,492 | $995,492 | $995,492 | $995,492 | | Average Tangible Assets (USD thousands) | $22,863,918 | $22,894,967 | $22,963,421 | $22,879,357 | $23,077,568 | | Return on Average Total Shareholders' Equity | 11.03% | 9.09% | 9.91% | 10.07% | 9.32% | | Return on Average Tangible Shareholders' Equity (Non-GAAP) | 17.61% | 14.59% | 16.42% | 16.12% | 15.48% | | Return on Average Total Assets | 1.23% | 1.01% | 1.04% | 1.12% | 0.97% | | Return on Average Tangible Assets (Non-GAAP) | 1.28% | 1.05% | 1.08% | 1.17% | 1.01% | GAAP to Non-GAAP Reconciliation (Period End, in thousands of USD) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Shareholders' Equity (USD thousands) | $2,694,545 | $2,648,852 | $2,617,486 | $2,550,312 | | Less: Goodwill (USD thousands) | $995,492 | $995,492 | $995,492 | $995,492 | | Tangible Shareholders' Equity (USD thousands) | $1,699,053 | $1,653,360 | $1,621,994 | $1,554,820 | | Total Assets (USD thousands) | $23,837,147 | $23,744,958 | $23,828,186 | $23,991,791 | | Less: Goodwill (USD thousands) | $995,492 | $995,492 | $995,492 | $995,492 | | Tangible Assets (USD thousands) | $22,841,655 | $22,749,466 | $22,832,694 | $22,996,299 | | Shareholders' Equity to Total Assets Ratio | 11.30% | 11.16% | 10.98% | 10.63% | | Tangible Shareholders' Equity to Tangible Assets Ratio (Non-GAAP) | 7.44% | 7.27% | 7.10% | 6.76% | | Book Value Per Share | $21.61 | $21.07 | $20.70 | $19.94 | | Tangible Book Value Per Share (Non-GAAP) | $13.63 | $13.15 | $12.83 | $12.16 |

Core Viewpoint - First Hawaiian, Inc. plans to release its second quarter 2025 financial results on July 25, 2025, before market opens, followed by a conference call to discuss the results [1] Group 1: Financial Results Announcement - The financial results for the second quarter of 2025 will be released on July 25, 2025, before the market opens [1] - A conference call to discuss the results will take place on the same day at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) [1] Group 2: Conference Call Access - Participants can access the call by registering through a provided link, which will give them a dial-in number and a personalized PIN code [2] - It is recommended that participants dial in fifteen minutes prior to the scheduled start time to avoid delays [2] Group 3: Webcast Information - A live webcast of the conference call, including a slide presentation, will be available on the company's website [3] - An archive of the webcast will also be accessible at the same location [3] Group 4: Company Overview - First Hawaiian, Inc. is a bank holding company based in Honolulu, Hawaii, and its principal subsidiary is First Hawaiian Bank, the oldest and largest financial institution in Hawaii [4] - The company offers a wide range of banking services, including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card, and merchant processing services [4] - Customers can access their accounts through ATMs, online, and mobile banking channels [4]

Financial Performance - Interest income for Q1 2025 was $235,150,000, a decrease of 4.9% from $244,952,000 in Q1 2024[223] - Net interest income increased to $160,526,000, up 4.5% from $154,427,000 in the same period last year[223] - Net income for Q1 2025 was $59,248,000, representing a 9.4% increase compared to $54,220,000 in Q1 2024[223] - Basic earnings per share rose to $0.47, an increase of 11.9% from $0.42 in the prior year[223] - The dividend payout ratio improved to 55.32% from 61.90% in Q1 2024[223] - The efficiency ratio improved to 58.22%, compared to 62.15% in Q1 2024[223] - Return on average total assets increased to 1.01%, up from 0.90% in the previous year[223] Loan and Deposit Metrics - Total loans and leases were $14.3 billion as of March 31, 2025, a decrease of $115.2 million or 1% from December 31, 2024[229] - Total deposits were $20.2 billion as of March 31, 2025, a decrease of $106.4 million or 1% from December 31, 2024[232] - Core deposits totaled $18.8 billion as of March 31, 2025, representing 93% of total deposits, a slight decrease from $19.0 billion as of December 31, 2024[268] - The geographic distribution of total loans and leases shows 68% concentrated in Hawaii, 24% in the U.S. mainland, and 7% in Guam and Saipan as of March 31, 2025[302] Credit Quality and Allowance for Credit Losses - The allowance for credit losses (ACL) was $166.6 million as of March 31, 2025, an increase of $6.2 million or 4% from December 31, 2024[240] - The Allowance for Credit Losses (ACL) was $166.6 million or 1.17% of total loans and leases outstanding as of March 31, 2025, compared to $160.4 million or 1.11% as of December 31, 2024[319] - Net charge-offs of loans and leases were $3.8 million or 0.11% of total average loans and leases for the three months ended March 31, 2025[320] - Total Non-Performing Assets (NPAs) were $20.2 million as of March 31, 2025, a decrease of $0.5 million or 2% from December 31, 2024[310] Noninterest Income and Expense - Total noninterest income for the three months ended March 31, 2025, was $50.5 million, a decrease of $0.9 million or 2% compared to the same period in 2024[242] - Credit and debit card fees decreased by $1.7 million or 11% to $14.5 million, primarily due to a $1.4 million decrease in interchange settlement fees[243] - Other service charges and fees increased by $2.3 million or 23% to $12.2 million, mainly driven by a $2.1 million increase in fees from annuities and securities[244] - Total noninterest expense was $123.6 million for the three months ended March 31, 2025, a decrease of $5.3 million or 4% compared to the same period in 2024[247] Capital and Equity - Common Equity Tier 1 (CET1) capital ratio was 12.93% as of March 31, 2025, an increase of 13 basis points from December 31, 2024[228] - Total stockholders' equity was $2.6 billion, an increase of $31.4 million or 1% from December 31, 2024, primarily due to earnings of $59.2 million[342] Economic Indicators - The unemployment rate in Hawaii decreased to 2.9% as of March 31, 2025, down from 3.1% a year earlier[217] - The median price of a single-family home sold on Oahu increased by 7.5% to $1,150,000 in Q1 2025 compared to Q1 2024[219] Investment Securities - The carrying values of available-for-sale investment securities were $1.9 billion and held-to-maturity investment securities were $3.7 billion as of March 31, 2025[267] - The investment securities portfolio included $3.1 billion in collateralized mortgage obligations and $2.3 billion in mortgage-backed securities as of March 31, 2025[283] Risk Management - Interest rate risk is primarily derived from the bank's core business activities of extending loans and accepting deposits[355] - The bank's interest rate risk management process aims to maximize net interest income while maintaining adequate levels of funding and liquidity[368]

Core Viewpoint - First Hawaiian (NASDAQ: FHB) has shown a much-improved earnings outlook, leading to an upgrade to 'Buy' status following its first quarter results [1]. Group 1: Company Performance - The bank's earnings outlook has significantly improved, prompting a positive reassessment of its stock [1]. - The focus is on long-term, buy-and-hold investment strategies, particularly in stocks that can deliver sustainable high-quality earnings [1]. Group 2: Investment Strategy - The investment approach emphasizes dividend and income stocks, indicating a preference for companies that provide consistent returns [1].

Core Viewpoint - First Hawaiian, Inc. reported solid financial results for the first quarter of 2025, highlighting growth in retail deposits, an increase in net interest income, well-managed expenses, and strong credit quality despite economic uncertainties [2][11]. Financial Highlights - Net income for the first quarter of 2025 was $59.2 million, or $0.47 per diluted share, compared to $52.5 million, or $0.41 per diluted share in the previous quarter [11][24]. - Total assets were $23.7 billion as of March 31, 2025, slightly down from $23.8 billion at the end of 2024 [4]. - Gross loans and leases decreased by $115.2 million, or 0.8%, to $14.3 billion [4]. - Total deposits fell by $106.4 million, or 0.5%, to $20.2 billion [4]. Net Interest Income - Net interest income increased to $160.5 million, up $1.8 million, or 1.1%, from the prior quarter [5][20]. - The net interest margin improved to 3.08%, an increase of 5 basis points from 3.03% in the previous quarter [5][20]. Provision for Credit Losses - The company recorded a provision for credit losses of $10.5 million in the first quarter of 2025, compared to a negative provision of $0.8 million in the previous quarter [6][20]. Noninterest Income and Expense - Noninterest income rose significantly to $50.5 million, an increase of $21.1 million from $29.4 million in the prior quarter [7][20]. - Noninterest expense decreased slightly to $123.6 million, down $0.6 million from $124.1 million in the previous quarter [8][20]. Asset Quality - The allowance for credit losses was $166.6 million, or 1.17% of total loans and leases, up from $160.4 million, or 1.11%, at the end of 2024 [10][20]. - Net charge-offs were $3.8 million, or 0.11% of average loans and leases on an annualized basis, compared to $3.4 million, or 0.09%, in the previous quarter [10][20]. Capital Position - Total stockholders' equity remained stable at $2.6 billion as of March 31, 2025 [12]. - The tier 1 leverage ratio was 9.01%, while the common equity tier 1 and total capital ratios were 12.93% and 14.17%, respectively [12][20]. - The company repurchased 974 thousand shares of common stock at a total cost of $25.0 million during the first quarter [12][20]. Dividend Declaration - The Board of Directors declared a quarterly cash dividend of $0.26 per share, payable on May 30, 2025, to stockholders of record as of May 19, 2025 [2][11].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-14585 FIRST HAWAIIAN, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 99-0156159 (State or Other Juri ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-14585 FIRST HAWAIIAN, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 99-0156159 (State or Other Jur ...

1 st QUARTER 2021 EARNINGS CALL 0 APRIL 23, 2021 FORWARD-LOOKING STATEMENTS 1 This presentation 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", ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-14585 FIRST HAWAIIAN, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 99-0156159 (State or Other Jurisdiction of Incorporat ...

Part I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) First Hawaiian, Inc. operates Hawaii's largest full-service bank, First Hawaiian Bank, offering diverse services across 58 branches under strict regulation [General Overview](index=3&type=section&id=Item%201.%20Business%20-%20General) First Hawaiian Bank, Hawaii's largest full-service bank, reported **$20.2 billion** in assets and **$284.4 million** net income for 2019 Key Financial Metrics as of December 31, 2019 | Metric | Value (USD) | | :--- | :--- | | Total Assets | $20.2 billion | | Gross Loans and Leases | $13.2 billion | | Total Deposits | $16.4 billion | | Stockholders' Equity | $2.6 billion | | Net Income (FY 2019) | $284.4 million | | Diluted EPS (FY 2019) | $2.13 | - The company operates through a network of **58 branches**: **53 in Hawaii**, **3 in Guam**, and **2 in Saipan**[9](index=9&type=chunk) - The business is structured into three operating segments: Retail Banking, Commercial Banking, and Treasury and Other[11](index=11&type=chunk) [Products and Services](index=3&type=section&id=Item%201.%20Business%20-%20Our%20Products%20and%20Services) The Bank offers a full suite of retail, commercial, and wealth management services, holding the **largest deposit market share** in its operating regions - The Bank has maintained the **largest deposit market share** in Hawaii for over ten years and also leads in market share in Guam and Saipan[13](index=13&type=chunk) [Competition](index=5&type=section&id=Item%201.%20Business%20-%20Competition) The company faces intense competition from diverse financial institutions, including large mainland banks and technology-driven non-banks - Competition comes from a wide range of financial institutions, both within and outside its principal markets, including large mainland U.S. banks[16](index=16&type=chunk) - Technology has enabled non-banks to offer products and services traditionally provided by banks, increasing competitive pressure[16](index=16&type=chunk) [Organizational History and Structure](index=5&type=section&id=Item%201.%20Business%20-%20Organizational%20History%20and%20Structure) First Hawaiian, Inc. became an independent public company on **February 1, 2019**, following BNP Paribas' full divestiture of its ownership interest - BNPP, through its subsidiary BWC, completed the sale of its remaining shares of FHI common stock on **February 1, 2019**, fully exiting its ownership interest[21](index=21&type=chunk) [Supervision and Regulation](index=5&type=section&id=Item%201.%20Business%20-%20Supervision%20and%20Regulation) The company operates under a comprehensive federal and state regulatory framework, primarily overseen by the Federal Reserve, FDIC, and Hawaii DFI - FHI is a financial holding company regulated by the Federal Reserve, while its subsidiary bank, FHB, is primarily regulated by the FDIC and the Hawaii DFI[27](index=27&type=chunk)[29](index=29&type=chunk) - The Dodd-Frank Act, as amended by EGRRCPA, raised the asset threshold for applying certain enhanced prudential standards from **$50 billion** to **$250 billion**, which has resulted in the company no longer being subject to certain stress testing requirements[39](index=39&type=chunk)[42](index=42&type=chunk) - The company is subject to capital rules based on Basel III, requiring minimum ratios for CET1, Tier 1, and Total Capital, plus a capital conservation buffer[56](index=56&type=chunk)[59](index=59&type=chunk) - As of December 31, 2019, both the Company and the Bank were classified as "**well-capitalized**" under regulatory standards[66](index=66&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from geographic concentration, economic downturns, real estate volatility, interest rate fluctuations, and regulatory changes - A substantial majority of business is concentrated in Hawaii, Guam, and Saipan, making the company's results highly dependent on the local economies, which are influenced by tourism, military spending, and real estate[99](index=99&type=chunk)[102](index=102&type=chunk) - Real estate loans constituted **65%** of the total loan portfolio as of December 31, 2019, exposing the company to risks from declines in property values[107](index=107&type=chunk) - The company faces interest rate risk, as fluctuations can impact net interest income. The discontinuation of LIBOR after 2021 introduces uncertainty for floating-rate instruments[114](index=114&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk) - The adoption of the new CECL accounting standard, effective January 1, 2020, is expected to increase the Allowance for Credit Losses by **10-15%** compared to December 31, 2019 levels[143](index=143&type=chunk) - The recent outbreak of coronavirus (COVID-19) is identified as a risk, primarily through potential disruption to the global economy and the transportation and tourism industries vital to the company's markets[149](index=149&type=chunk) - The company is subject to extensive regulation, and changes in laws, such as the Tax Cuts and Jobs Act, or rules from bodies like the CFPB, can significantly impact operations and costs[209](index=209&type=chunk)[220](index=220&type=chunk)[227](index=227&type=chunk) [Item 1B. Unresolved Staff Comments](index=65&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - Not applicable[250](index=250&type=chunk) [Item 2. Properties](index=65&type=section&id=Item%202.%20Properties) The company owns its Honolulu headquarters and operates **58 branches** across Hawaii, Guam, and Saipan, with **34 leased** and **24 owned** - The company owns its corporate headquarters and main branch in Honolulu[251](index=251&type=chunk) - As of December 31, 2019, the company operated **58 branch offices**, with **34 leased** and **24 owned**[251](index=251&type=chunk) [Item 3. Legal Proceedings](index=67&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation but reports no legal proceedings expected to have a material adverse effect on its operations - The company is not presently party to any legal proceedings that it believes would have a material adverse effect on its business or financial condition[254](index=254&type=chunk) [Item 4. Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[255](index=255&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=68&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) FHI common stock trades on NASDAQ (FHB); the company repurchased **1.34 million shares** in 2019 and announced an **$80 million** program for 2020 - The company's common stock is listed on the NASDAQ under the ticker symbol "FHB"[258](index=258&type=chunk) Issuer Purchases of Equity Securities (Q4 2019) | Period | Total Shares Purchased | Average Price Paid ($) | Approx. Dollar Value Remaining ($) | | :--- | :--- | :--- | :--- | | Oct 2019 | 453,505 | 26.97 | 38,961,524 | | Nov 2019 | 717,000 | 28.39 | 18,607,194 | | Dec 2019 | 170,367 | 28.47 | 13,757,598 | | **Total Q4** | **1,340,872** | **27.92** | **-** | - The 2019 share repurchase program of up to **$150 million** expired on December 31, 2019, with **$13.8 million** remaining. A new **$80 million** share repurchase program was announced for 2020[260](index=260&type=chunk) [Item 6. Selected Financial Data](index=70&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data shows 2019 net income of **$284.4 million**, diluted EPS of **$2.13**, total assets of **$20.2 billion**, and a **3.20%** net interest margin Selected Financial Highlights (2018 vs. 2019) | Metric (in thousands, except per share data) | 2019 | 2018 | | :--- | :--- | :--- | | **Income Statement** | | | | Net Interest Income | $573,402 | $566,318 | | Provision for Loan and Lease Losses | $13,800 | $22,180 | | Net Income | $284,392 | $264,394 | | Diluted Earnings Per Share | $2.13 | $1.93 | | Dividends Declared Per Share | $1.04 | $0.96 | | **Balance Sheet (End of Period)** | | | | Total Assets | $20,166,734 | $20,695,678 | | Loans and Leases | $13,211,650 | $13,076,191 | | Total Deposits | $16,444,994 | $17,150,068 | | Total Stockholders' Equity | $2,640,258 | $2,524,839 | | **Performance Ratios** | | | | Net Interest Margin | 3.20% | 3.16% | | Return on Average Total Assets | 1.40% | 1.31% | | Return on Average Total Stockholders' Equity | 10.90% | 10.76% | | Efficiency Ratio | 48.36% | 48.96% | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=75&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) MD&A highlights 2019 net income growth to **$284.4 million**, driven by noninterest income and lower loan loss provisions, with strong capital levels maintained [Financial Highlights](index=79&type=section&id=Item%207.%20MD%26A%20-%20Financial%20Highlights) 2019 financial highlights include an **8%** net income increase to **$284.4 million** and **10%** diluted EPS growth to **$2.13**, driven by noninterest income and lower loan loss provisions Year-over-Year Performance (2019 vs 2018) | Metric | 2019 | 2018 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | $284.4M | $264.4M | +$20.0M | +8% | | Diluted EPS | $2.13 | $1.93 | +$0.20 | +10% | | Net Interest Income | $573.4M | $566.3M | +$7.1M | +1% | | Provision for Loan Losses | $13.8M | $22.2M | -$8.4M | -38% | | Noninterest Income | $192.5M | $179.0M | +$13.5M | +8% | | Noninterest Expense | $370.4M | $365.0M | +$5.5M | +2% | [Analysis of Results of Operations](index=84&type=section&id=Item%207.%20MD%26A%20-%20Analysis%20of%20Results%20of%20Operations) 2019 net interest income rose **1%** to **$573.4 million**, with margin at **3.20%**; loan loss provision decreased **38%**, and noninterest income grew **8%** - Net interest income increased to **$573.4 million** in 2019, a **1% rise** from 2018, with the net interest margin increasing by **4 basis points** to **3.20%**[318](index=318&type=chunk) - The provision for loan and lease losses decreased by **$8.4 million** (**38%**) to **$13.8 million** in 2019, partly due to the sale of **$408.9 million** in commercial and industrial loans[304](index=304&type=chunk)[321](index=321&type=chunk) - Noninterest income increased by **$13.5 million** (**8%**) in 2019, primarily because 2018 included a **$24.1 million** OTTI loss on securities, which did not recur in 2019[323](index=323&type=chunk)[331](index=331&type=chunk) - Noninterest expense increased by **$5.5 million** (**2%**) in 2019, mainly due to higher costs for contracted services, professional fees, salaries, and card rewards programs[336](index=336&type=chunk) [Analysis of Business Segments](index=96&type=section&id=Item%207.%20MD%26A%20-%20Analysis%20of%20Business%20Segments) In 2019, Retail Banking net income was stable, Commercial Banking decreased **2%**, and Treasury and Other significantly improved its net loss Net Income by Business Segment (in thousands) | Segment | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Retail Banking | $204,520 | $204,865 | $138,549 | | Commercial Banking | $92,632 | $94,344 | $69,571 | | Treasury and Other | $(12,760) | $(34,815) | $(24,438) | | **Total** | **$284,392** | **$264,394** | **$183,682** | [Analysis of Financial Condition](index=100&type=section&id=Item%207.%20MD%26A%20-%20Analysis%20of%20Financial%20Condition) As of December 31, 2019, total assets were **$20.2 billion**, loans grew **1%** to **$13.2 billion**, deposits decreased **4%** to **$16.4 billion**, and capital remained strong - Total loans and leases increased by **1%** to **$13.2 billion** at year-end 2019, driven by a **16% increase** in commercial real estate loans and a **5% increase** in residential real estate loans[388](index=388&type=chunk)[390](index=390&type=chunk)[392](index=392&type=chunk) - Total deposits decreased by **4%** to **$16.4 billion**, primarily due to a **$582.0 million** (**19%**) decrease in time deposits[444](index=444&type=chunk) - The Allowance for Loan and Lease Losses was **$130.5 million**, or **0.99%** of total loans, down from **1.08%** in 2018[434](index=434&type=chunk) - Non-performing assets (NPAs) decreased **21%** to **$5.8 million**, representing just **0.04%** of total loans and OREO[411](index=411&type=chunk) Regulatory Capital Ratios | Ratio | Dec 31, 2019 | Dec 31, 2018 | Well-Capitalized Minimum | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 11.88% | 11.97% | 6.50% | | Tier 1 Capital | 11.88% | 11.97% | 8.00% | | Total Capital | 12.81% | 12.99% | 10.00% | | Tier 1 Leverage | 8.79% | 8.72% | 5.00% | [Risk Governance and Quantitative and Qualitative Disclosures About Market Risk](index=133&type=section&id=Item%207.%20MD%26A%20-%20Risk%20Governance%20and%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages credit, market, liquidity, capital, and operational risks, with market risk primarily interest rate risk, showing asset sensitivity to rising rates - The company's most prominent risk exposures are identified as credit risk, market risk, liquidity risk, capital management, and operational risk[502](index=502&type=chunk) Net Interest Income Sensitivity Profile (Static Forecast) | Immediate Change in Interest Rates (bps) | Estimated % Change in NII (Dec 31, 2019) | Estimated % Change in NII (Dec 31, 2018) | | :--- | :--- | :--- | | +100 | 8.9% | 5.5% | | +50 | 4.4% | 2.7% | | -50 | (4.9)% | (2.8)% | | -100 | (9.6)% | (6.2)% | - The company's interest rate profile is asset-sensitive, projecting that net interest income will benefit from higher interest rates. The sensitivity to rate changes increased in 2019 compared to 2018[520](index=520&type=chunk)[521](index=521&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=141&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to market risk disclosures provided in Item 7. MD&A - Risk Governance and Quantitative and Qualitative Disclosures About Market Risk - Information required for this item is provided in the MD&A section under "Risk Governance and Quantitative and Qualitative Disclosures About Market Risk"[536](index=536&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=142&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2019, with Deloitte & Touche LLP providing an unqualified opinion [Report of Independent Registered Public Accounting Firm](index=142&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%20-%20Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on financial statements and internal controls, highlighting loan loss allowance and CECL adoption as critical audit matters - The auditor, Deloitte & Touche LLP, issued an unqualified opinion on both the financial statements and the company's internal control over financial reporting[537](index=537&type=chunk)[968](index=968&type=chunk) - Critical Audit Matter 1: The Allowance for Loan and Lease Losses was identified as a critical audit matter due to the significant judgment required by management in developing the qualitative component of the allowance[539](index=539&type=chunk)[541](index=541&type=chunk) - Critical Audit Matter 2: The upcoming adoption of the new credit loss standard (CECL) was identified as a critical audit matter due to the significant changes in estimation, new accounting policies, and subjective judgments involved[543](index=543&type=chunk)[544](index=544&type=chunk) [Notes to Consolidated Financial Statements](index=152&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%20-%20Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, BNPP divestiture, investment and loan portfolios, loan loss allowance, strong capital ratios, and segment reporting - BNPP completed the full divestiture of its ownership in FHI on **February 1, 2019**[575](index=575&type=chunk) - The company will adopt the new CECL credit loss standard on January 1, 2020, and expects it to increase the Allowance for Credit Losses by **10% to 15%**[642](index=642&type=chunk) Loan Portfolio Composition (in thousands) | Loan Category | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Commercial and industrial | $2,743,242 | $3,208,760 | | Commercial real estate | $3,463,953 | $2,990,783 | | Construction | $519,241 | $626,757 | | Residential | $4,662,175 | $4,439,618 | | Consumer | $1,620,556 | $1,662,504 | | Lease financing | $202,483 | $147,769 | | **Total** | **$13,211,650** | **$13,076,191** | - The company's pension plans had a net underfunded status of **$121.9 million** as of December 31, 2019[451](index=451&type=chunk)[796](index=796&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=154&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[960](index=960&type=chunk) [Item 9A. Controls and Procedures](index=154&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2019 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[961](index=961&type=chunk) - Management asserted that the company maintained effective internal control over financial reporting as of December 31, 2019, which was audited and attested to by Deloitte & Touche LLP[964](index=964&type=chunk)[965](index=965&type=chunk) [Item 9B. Other Information](index=157&type=section&id=Item%209B.%20Other%20Information) Disclosures include former affiliate BNPP's legacy Iranian activities and the Board's adoption of a majority voting standard for director elections - Due to its affiliation with BNP Paribas (BNPP) until **February 1, 2019**, the company disclosed that BNPP had legacy financing arrangements with Iranian entities, which generated approximately **EUR 1.0 million** in gross revenue for BNPP in the first three months of 2019[977](index=977&type=chunk)[979](index=979&type=chunk) - On **February 26, 2020**, the Board amended the company's bylaws to adopt a majority voting standard for the election of directors in uncontested elections[984](index=984&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=159&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2020 Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[988](index=988&type=chunk)[989](index=989&type=chunk)[990](index=990&type=chunk)[991](index=991&type=chunk) [Item 11. Executive Compensation](index=159&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive and director compensation is incorporated by reference from the 2020 Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[992](index=992&type=chunk)[993](index=993&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=159&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2020 Proxy Statement, detailing equity compensation plan securities - Information on security ownership is incorporated by reference from the 2020 Proxy Statement[993](index=993&type=chunk) Equity Compensation Plan Information as of December 31, 2019 | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | **879,817** | N/A | **4,911,647** | | Equity compensation plans not approved by security holders | 0 | N/A | 0 | | **Total** | **879,817** | N/A | **4,911,647** | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=160&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2020 Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[997](index=997&type=chunk)[998](index=998&type=chunk) [Item 14. Principal Accounting Fees and Services](index=160&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2020 Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[999](index=999&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=161&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements included in Item 8, notes the omission of schedules, and provides an index of filed exhibits - The consolidated financial statements are included in Item 8 of the report[1002](index=1002&type=chunk) - All financial statement schedules have been omitted because the required information is not applicable, not material, or is disclosed elsewhere in the report[1002](index=1002&type=chunk) [Item 16. Form 10-K Summary](index=161&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that no Form 10-K summary is provided - None[1004](index=1004&type=chunk)