First Hawaiian(US:FHB)2023-07-28 23:00Financial Data and Key Metrics Changes - Net income for Q2 2023 was $62.4 million, or $0.49 per share, with a return on average tangible assets of 1.05% and return on average tangible common equity of 18.57% [5][6] - Total capital ratio was 13.17% and CET1 ratio was 12.05%, maintaining strong capital levels [5] - Noninterest income decreased by $1.7 million to $47.3 million, primarily due to lower BOLI income and credit/debit card fee income [8] Business Line Data and Key Metrics Changes - Period-end loans and leases increased by $142 million, or 1%, to $14.4 billion [6] - Retail and commercial deposits decreased by $964 million, or 4.9%, year-to-date, with public deposit balances increasing by $461 million [7][24] - Non-performing assets and loans 90 days or more past due were 11 basis points at the end of Q2, down 2 basis points from the prior quarter [26] Market Data and Key Metrics Changes - The statewide unemployment rate in Hawaii was 3% in June, lower than the national rate of 3.6% [4] - Total visitor arrivals in Hawaii were 802,000 in May, a 5.4% increase compared to May 2019 [4] - The median sales price for a single-family home on Oahu was $1.1 million, a 4.5% increase from June of the previous year [22] Company Strategy and Development Direction - The company aims to focus on relationship-based lending rather than credit-only deals, emphasizing the importance of liquidity and capital [48] - There is a strategic shift towards better pricing and structure in commercial real estate lending, both in Hawaii and on the Mainland [44] - The company is investing in technology and operational efficiencies to enhance digital offerings and customer service [65][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong credit quality despite economic uncertainties, with a focus on monitoring the commercial real estate segment [11][26] - The outlook for loan growth is projected to be in the low to mid-single-digit range for the full year [6][54] - Management noted that deposit outflows have shown signs of abating, with a trend towards stabilization [51] Other Important Information - The company exited approximately $55 million of non-relationship shared national credits during the quarter [6] - The allowance for credit loss increased by $1.5 million to $148.6 million, equating to 1.03% of total loans and leases [27] - The company maintained its quarterly dividend at $0.26 [5] Q&A Session Summary Question: What is the outlook for deposit outflows? - Management indicated that deposit outflows have been less severe in the current quarter compared to Q2, suggesting a potential stabilization trend [51] Question: Can you provide details on upcoming loan maturities? - Management discussed the NIM guidance and noted that new loan yields are currently higher than previous periods, indicating a more sustainable lending environment [36][58] Question: How is the company managing expenses amid margin pressures? - Management confirmed that they are focused on managing non-strategic expenses while continuing to invest in technology and personnel [66][82] Question: What is the company's strategy for new account growth? - The company is actively pursuing new deposit accounts through enhanced customer value propositions and improved digital offerings [38] Question: Can you clarify the company's exposure to criticized loans? - Management provided updates on specific criticized loans, indicating that they are comfortable with the overall credit quality of the portfolio [11][74]