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MarketScreener Homepage  >  Equities  >  Nasdaq  >  First Hawaiian, Inc.    FHB

FIRST HAWAIIAN, INC.

(FHB)
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First Hawaiian : Reports Third Quarter 2020 Financial Results and Declares Dividend

10/23/2020 | 08:01am EST

HONOLULU, Oct. 23, 2020 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended September 30, 2020.

“In spite of the current economic environment, we reported solid financial results for the third quarter,” said Bob Harrison, Chairman, President and CEO. “These are still challenging times, but the re-opening of the local economy, and more recently, the pre-testing program for trans-Pacific travel, are important steps toward the state’s economic recovery.”

On October 21, 2020 the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on December 4, 2020 to stockholders of record at the close of business on November 23, 2020.

Third Quarter 2020 Highlights:

  • Net income of $65.1 million, or $0.50 per diluted share
  • Net interest income increased $6.2 million, or 4.8% versus prior quarter
  • Noninterest income increased $3.2 million, or 7.1% versus prior quarter
  • Consumer and commercial deposits increased $166.0 million and public deposits decreased $629.9 million versus the prior quarter
  • Net interest margin (“NIM”) was 2.70%, a 12 basis point increase versus the prior quarter
  • Recorded a $5.1 million provision for credit losses
  • Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet

Total assets were $22.3 billion as of September 30, 2020, compared to $23.0 billion as of June 30, 2020.

Gross loans and leases were $13.5 billion as of September 30, 2020, a decrease of $264.1 million, or 1.9%, from $13.8 billion as of June 30, 2020.

Total deposits were $18.9 billion as of September 30, 2020, a decrease of $463.9 million, or 2.4%, from $19.4 billion as of June 30, 2020.

Net Interest Income

Net interest income for the third quarter of 2020 was $134.0 million, an increase of $6.2 million, or 4.8%, compared to $127.8 million for the prior quarter.

The NIM was 2.70% in the third quarter of 2020, an increase of 12 basis points compared to 2.58% in the second quarter of 2020.

Provision Expense

During the quarter ended September 30, 2020, the Bank recorded a total provision for credit losses of $5.1 million. In the quarter ended June 30, 2020, the total provision for credit losses was $55.4 million.

Noninterest Income

Noninterest income was $48.9 million in the third quarter of 2020, an increase of $3.2 million compared to noninterest income of $45.7 million in the second quarter of 2020.

Noninterest Expense

Noninterest expense was $91.6 million in the third quarter of 2020, essentially unchanged from $91.5 million in the second quarter of 2020.

The efficiency ratio was 50.0% and 52.7% for the quarters ended September 30, 2020 and June 30, 2020, respectively.

Taxes

The effective tax rate was 24.5% for the quarter ended September 30, 2020 and 24.6% for the quarter ended June 30, 2020.

Asset Quality

The allowance for credit losses was $195.9 million, or 1.45% of total loans and leases, as of September 30, 2020, compared to $192.1 million, or 1.40% of total loans and leases, as of June 30, 2020. The reserve for unfunded commitments was $24.6 million as of September 30, 2020 compared to $23.2 million as of June 30, 2020. Net recoveries were $0.1 million, or 0.0% of average loans and leases on an annualized basis for the quarter ended September 30, 2020, compared to $23.4 million, or 0.67% of average loans and leases on an annualized basis for the quarter ended June 30, 2020. Total non-performing assets were $17.6 million, or 0.13% of total loans and leases and other real estate owned, at September 30, 2020, compared to non-performing assets of $33.3 million, or 0.24% of total loans and leases and other real estate owned, at June 30, 2020.

Capital

Total stockholders' equity was $2.7 billion at both September 30 and June 30, 2020.

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.91%, 12.22% and 13.47%, respectively, at September 30, 2020, compared with 7.75%, 11.86% and 13.11%, respectively, at June 30, 2020.

The Company suspended its stock repurchase program during the first quarter and did not repurchase any shares of common stock in the third quarter.

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, 7:00 a.m. Hawaii Time. To access the call, participants should dial (844) 452-2942 (US/Canada), or (574) 990-9846 (International) ten minutes prior to the start of the call and enter the conference ID: 5358159. 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. A telephonic replay of the conference call will be available two hours after the conclusion of the call until 4:30 p.m. (Eastern Time) on October 30, 2020. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 5358159.

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, 2019 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

Use of Non-GAAP Financial Measures

We present net interest income, noninterest income, noninterest expense, net income, earnings per share (basic and diluted) and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measures exclude from the corresponding GAAP measure the impact of certain items that we do not believe are representative of our financial results. We believe that the presentation of these non-GAAP financial measures helps identify underlying trends in our business from period to period that could otherwise be distorted by the effect of certain expenses, gains and other items included in our operating results. We believe that these core measures provide useful information about our operating results and enhance the overall understanding of our past performance and future performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition.

Core net interest margin, core efficiency ratio, core return on average total assets and core return on average total stockholders’ equity are non-GAAP financial measures. We compute our core net interest margin as the ratio of core net interest income to average earning assets. We compute our core efficiency ratio as the ratio of core noninterest expense to the sum of core net interest income and core noninterest income. We compute our core return on average total assets as the ratio of core net income to average total assets. We compute our core return on average total stockholders’ equity as the ratio of core net income to average total stockholders’ equity.

Return on average tangible stockholders’ equity, core return on average tangible stockholders’ equity, return on average tangible assets, core return on average tangible assets and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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 core return on average tangible stockholders’ equity as the ratio of core 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 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 core return on average tangible assets as the ratio of core net income to average tangible assets. 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. 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.

Tables 14 and 15 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

 Investor Relations Contact:
Kevin Haseyama, CFA
(808) 525-6268
khaseyama@fhb.com
Media Contact:
Susan Kam
(808) 525-6254
skam@fhb.com



Financial Highlights              Table 1
  For the Three Months Ended For the Nine Months Ended 
  September 30, June 30, September 30, September 30, 
(dollars in thousands, except per share data) 2020 2020 2019 2020 2019 
Operating Results:                
Net interest income $ 134,002 $127,822 $143,081 $ 400,507 $433,783 
Provision for credit losses   5,072  55,446     101,718  9,550 
Noninterest income   48,898  45,656  49,980   143,782  145,825 
Noninterest expense   91,629  91,450  93,466   279,545  279,379 
Net income   65,101  20,049  74,199   124,015  216,556 
Basic earnings per share   0.50  0.15  0.56   0.95  1.62 
Diluted earnings per share   0.50  0.15  0.56   0.95  1.61 
Dividends declared per share   0.26  0.26  0.26   0.78  0.78 
Dividend payout ratio   52.00% 173.33% 46.43%  82.11% 48.45%
Supplemental Income Statement Data (non-GAAP):                
Core net interest income $ 134,002 $127,822 $143,081 $ 400,507 $433,783 
Core noninterest income   48,874  45,867  49,980   143,884  148,417 
Core noninterest expense   91,629  91,450  91,222   279,545  276,613 
Core net income   65,083  20,204  75,871   124,090  220,535 
Core basic earnings per share   0.50  0.16  0.57   0.96  1.65 
Core diluted earnings per share   0.50  0.16  0.57   0.95  1.64 
Performance Ratio(1):                
Net interest margin   2.70% 2.58% 3.19%  2.79% 3.22%
Core net interest margin (non-GAAP)   2.70% 2.58% 3.19%  2.79% 3.22%
Efficiency ratio   50.01% 52.70% 48.41%  51.32% 48.20%
Core efficiency ratio (non-GAAP)   50.02% 52.64% 47.25%  51.31% 47.51%
Return on average total assets   1.16% 0.36% 1.45%  0.76% 1.42%
Core return on average total assets (non-GAAP)   1.16% 0.36% 1.48%  0.76% 1.44%
Return on average tangible assets (non-GAAP)   1.21% 0.38% 1.52%  0.80% 1.49%
Core return on average tangible assets (non-GAAP)(2)   1.21% 0.38% 1.56%  0.80% 1.52%
Return on average total stockholders' equity   9.58% 2.99% 11.12%  6.16% 11.13%
Core return on average total stockholders' equity (non-GAAP)   9.57% 3.01% 11.37%  6.17% 11.34%
Return on average tangible stockholders' equity (non-GAAP)   15.16% 4.74% 17.81%  9.79% 18.04%
Core return on average tangible stockholders’ equity (non-GAAP)(3)   15.15% 4.77% 18.21%  9.80% 18.37%
Average Balances:                
Average loans and leases $ 13,559,367 $13,956,669 $13,032,349 $ 13,569,119 $13,105,086 
Average earning assets   19,846,674  19,854,795  17,862,564   19,174,349  17,974,363 
Average assets   22,341,485  22,341,654  20,332,457   21,667,948  20,405,261 
Average deposits   18,892,033  18,540,394  16,573,796   17,995,196  16,700,366 
Average stockholders' equity   2,704,129  2,697,775  2,648,428   2,687,632  2,600,259 
Market Value Per Share:                
Closing   14.47  17.24  26.70   14.47  26.70 
High   18.96  21.50  27.84   31.25  28.20 
Low   14.32  13.56  24.25   13.56  22.13 



  As of As of As of As of 
  September 30, June 30, December 31, September 30, 
  2020 2020 2019 2019 
Balance Sheet Data:             
Loans and leases $ 13,499,969 $13,764,030 $13,211,650 $12,843,396 
Total assets   22,310,701  22,993,715  20,166,734  20,598,220 
Total deposits   18,897,762  19,361,634  16,444,994  16,857,246 
Short-term borrowings    200,000  400,000  400,000 
Long-term borrowings   200,010  200,019  200,019  200,018 
Total stockholders' equity   2,733,934  2,701,897  2,640,258  2,654,558 
              
Per Share of Common Stock:             
Book value $ 21.04 $20.81 $20.32 $20.22 
Tangible book value (non-GAAP)(4)   13.38  13.14  12.66  12.64 
              
Asset Quality Ratios:             
Non-accrual loans and leases / total loans and leases   0.13% 0.24% 0.04% 0.03%
Allowance for credit losses for loans and leases / total loans and leases   1.45% 1.40% 0.99% 1.04%
              
Capital Ratios:             
Common Equity Tier 1 Capital Ratio    12.22% 11.86% 11.88% 12.15%
Tier 1 Capital Ratio   12.22% 11.86% 11.88% 12.15%
Total Capital Ratio   13.47% 13.11% 12.81% 13.11%
Tier 1 Leverage Ratio   7.91% 7.75% 8.79% 8.68%
Total stockholders' equity to total assets   12.25% 11.75% 13.09% 12.89%
Tangible stockholders' equity to tangible assets (non-GAAP)   8.16% 7.76% 8.58% 8.46%
              
Non-Financial Data:             
Number of branches   58  58  58  58 
Number of ATMs   302  295  301  293 
Number of Full-Time Equivalent Employees   2,099  2,100  2,092  2,099 
(1)Except for the efficiency ratio and the core efficiency ratio, amounts are annualized for the three and nine months ended September 30, 2020 and 2019 and the three months ended June 30, 2020.

(2)Core return on average tangible assets is a non-GAAP financial measure. We compute our core return on average tangible assets as the ratio of core 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. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 14, GAAP to Non-GAAP Reconciliation.

(3)Core return on average tangible stockholders’ equity is a non-GAAP financial measure. We compute our core return on average tangible stockholders’ equity as the ratio of core 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. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 14, GAAP to Non-GAAP Reconciliation.

(4)Tangible book value is a non-GAAP financial measure. We compute our tangible book value as the ratio of tangible stockholders’ equity to shares outstanding. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see Table 14, GAAP to Non-GAAP Reconciliation.



Consolidated Statements of Income Table 2
  For the Three Months Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30,
(dollars in thousands, except per share amounts) 2020 2020  2019 2020  2019 
Interest income               
Loans and lease financing $ 120,940 $122,298  $144,691 $ 378,209  $435,980 
Available-for-sale securities   20,317  17,529   22,256   59,056   71,526 
Other   670  792   3,234   3,813   9,054 
Total interest income   141,927  140,619   170,181   441,078   516,560 
Interest expense               
Deposits   6,227  8,583   22,753   30,410   69,643 
Short-term and long-term borrowings   1,698  4,214   4,347   10,161   13,134 
Total interest expense   7,925  12,797   27,100   40,571   82,777 
Net interest income   134,002  127,822   143,081   400,507   433,783 
Provision for credit losses   5,072  55,446      101,718   9,550 
Net interest income after provision for credit losses   128,930  72,376   143,081   298,789   424,233 
Noninterest income               
Service charges on deposit accounts   6,523  5,927   8,554   21,400   24,737 
Credit and debit card fees   14,049  10,870   16,839   39,868   50,123 
Other service charges and fees   9,021  7,912   8,903   25,472   27,435 
Trust and investment services income   8,664  8,664   8,698   26,919   26,247 
Bank-owned life insurance   4,903  4,432   5,743   11,595   12,946 
Investment securities gains (losses), net   24  (211)     (102)  (2,592)
Other   5,714  8,062   1,243   18,630   6,929 
Total noninterest income   48,898  45,656   49,980   143,782   145,825 
Noninterest expense               
Salaries and employee benefits   44,291  42,414   44,955   131,534   132,000 
Contracted services and professional fees   15,073  15,478   14,649   46,606   42,597 
Occupancy   6,921  7,302   7,250   21,466   21,522 
Equipment   5,137  5,207   4,024   15,052   12,852 
Regulatory assessment and fees   2,445  2,100   1,992   6,491   5,588 
Advertising and marketing   1,374  1,402   1,647   4,599   5,593 
Card rewards program   5,046  5,163   6,930   17,224   21,326 
Other   11,342  12,384   12,019   36,573   37,901 
Total noninterest expense   91,629  91,450   93,466   279,545   279,379 
Income before provision for income taxes   86,199  26,582   99,595   163,026   290,679 
Provision for income taxes   21,098  6,533   25,396   39,011   74,123 
Net income $ 65,101 $20,049  $74,199 $ 124,015  $216,556 
Basic earnings per share $ 0.50 $0.15  $0.56 $ 0.95  $1.62 
Diluted earnings per share $ 0.50 $0.15  $0.56 $ 0.95  $1.61 
Basic weighted-average outstanding shares   129,896,054  129,856,730   132,583,902   129,882,878   133,957,192 
Diluted weighted-average outstanding shares   130,085,534  130,005,195   132,877,769   130,129,690   134,231,762 



Consolidated Balance Sheets Table 3
  September 30, June 30, December 31, September 30,
(dollars in thousands) 2020  2020  2019  2019 
Assets            
Cash and due from banks $ 333,744  $347,592  $360,375  $358,863 
Interest-bearing deposits in other banks   482,585   1,507,630   333,642   985,154 
Investment securities, at fair value (amortized cost: $5,584,556 as of September 30, 2020, $5,025,433 as of June 30, 2020, $4,080,663 as of December 31, 2019 and $4,143,124 as of September 30, 2019)   5,692,883   5,135,775   4,075,644   4,157,082 
Loans held for sale   34,669   6,698   904   1,594 
Loans and leases   13,499,969   13,764,030   13,211,650   12,843,396 
Less: allowance for credit losses   195,876   192,120   130,530   132,964 
Net loans and leases   13,304,093   13,571,910   13,081,120   12,710,432 
             
Premises and equipment, net   321,229   322,919   316,885   315,309 
Other real estate owned and repossessed personal property     446   319   82 
Accrued interest receivable   66,005   58,420   45,239   44,671 
Bank-owned life insurance   462,422   458,720   453,873   453,410 
Goodwill   995,492   995,492   995,492   995,492 
Mortgage servicing rights   10,922   11,595   12,668   13,630 
Other assets   606,657   576,518   490,573   562,501 
Total assets $ 22,310,701  $22,993,715  $20,166,734  $20,598,220 
Liabilities and Stockholders' Equity            
Deposits:            
Interest-bearing $ 11,989,492  $12,481,543  $10,564,922  $11,136,424 
Noninterest-bearing   6,908,270   6,880,091   5,880,072   5,720,822 
Total deposits   18,897,762   19,361,634   16,444,994   16,857,246 
Short-term borrowings     200,000   400,000   400,000 
Long-term borrowings   200,010   200,019   200,019   200,018 
Retirement benefits payable   138,806   138,624   138,222   128,442 
Other liabilities   340,189   391,541   343,241   357,956 
Total liabilities   19,576,767   20,291,818   17,526,476   17,943,662 
             
Stockholders' equity            
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,190,428 / 129,911,789 shares as of September 30, 2020, issued/outstanding: 140,140,542 / 129,866,898 shares as of June 30, 2020, issued/outstanding: 139,917,150 / 129,928,479 shares as of December 31, 2019 and issued/outstanding: 139,908,699 / 131,260,900 shares as of September 30, 2019)   1,402   1,401   1,399   1,399 
Additional paid-in capital   2,511,849   2,509,271   2,503,677   2,501,324 
Retained earnings   446,315   415,296   437,072   403,317 
Accumulated other comprehensive income (loss), net   51,254   52,731   (31,749)  (18,774)
Treasury stock (10,278,639 shares as of September 30, 2020, 10,273,644 shares as of June 30, 2020, 9,988,671 shares as of December 31, 2019 and 8,647,799 shares as of September 30, 2019)   (276,886)  (276,802)  (270,141)  (232,708)
Total stockholders' equity   2,733,934   2,701,897   2,640,258   2,654,558 
Total liabilities and stockholders' equity $ 22,310,701  $22,993,715  $20,166,734  $20,598,220 



Average Balances and Interest Rates                      Table 4 
  Three Months Ended Three Months Ended Three Months Ended 
  September 30, 2020 June 30, 2020 September 30, 2019 
  Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ 
(dollars in millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate 
Earning Assets                         
Interest-Bearing Deposits in Other Banks $ 889.6 $ 0.2  0.10%$1,436.2 $0.4 0.10%$447.8 $2.3 2.02%
Available-for-Sale Investment Securities   5,334.2   20.3  1.53  4,390.4  17.5 1.60  4,296.3  22.3 2.07 
Loans Held for Sale   10.2   0.1  2.67  9.8  0.1 2.93  1.4   2.36 
Loans and Leases(1)                         
Commercial and industrial   3,230.4   21.6  2.67  3,601.0  24.3 2.71  2,885.9  30.0 4.12 
Commercial real estate   3,418.0   27.8  3.23  3,438.8  28.3 3.31  3,294.7  37.3 4.49 
Construction   637.6   5.2  3.22  584.1  4.9 3.35  477.2  5.6 4.67 
Residential:                         
Residential mortgage   3,680.5   37.9  4.12  3,682.7  35.7 3.88  3,644.9  38.6 4.23 
Home equity line   871.1   6.6  3.02  885.2  6.8 3.07  912.8  8.6 3.74 
Consumer   1,474.4   20.2  5.46  1,526.5  20.6 5.42  1,651.4  23.3 5.61 
Lease financing   247.4   1.8  2.90  238.4  1.7 2.88  165.4  1.3 3.14 
Total Loans and Leases   13,559.4   121.1  3.56  13,956.7  122.3 3.52  13,032.3  144.7 4.41 
Other Earning Assets   53.3   0.5  3.32  61.7  0.4 2.79  84.8  0.9 4.47 
Total Earning Assets(2)   19,846.7   142.2  2.86  19,854.8  140.7 2.84  17,862.6  170.2 3.79 
Cash and Due from Banks   307.9       295.1       341.7      
Other Assets   2,186.9       2,191.8       2,128.2      
Total Assets $ 22,341.5      $22,341.7      $20,332.5      
                          
Interest-Bearing Liabilities                         
Interest-Bearing Deposits                         
Savings $ 5,768.3 $ 0.6  0.04%$5,501.9 $0.9 0.07% 4,891.5 $4.6 0.37%
Money Market   3,288.2   0.4  0.05  3,270.3  1.1 0.13  3,067.4  7.1 0.92 
Time   3,029.8   5.2  0.69  3,335.6  6.6 0.79  2,872.6  11.1 1.54 
Total Interest-Bearing Deposits   12,086.3   6.2  0.20  12,107.8  8.6 0.29  10,831.5  22.8 0.83 
Short-Term Borrowings   45.1   0.3  2.69  395.6  2.8 2.88  370.0  2.6 2.84 
Long-Term Borrowings   200.0   1.4  2.77  200.0  1.4 2.77  239.1  1.7 2.82 
Total Interest-Bearing Liabilities   12,331.4   7.9  0.26  12,703.4  12.8 0.41  11,440.6  27.1 0.94 
Net Interest Income    $ 134.3      $127.9      $143.1   
Interest Rate Spread        2.60%      2.43%      2.85%
Net Interest Margin        2.70%      2.58%      3.19%
Noninterest-Bearing Demand Deposits   6,805.7       6,432.6       5,742.3      
Other Liabilities   500.3       507.9       501.2      
Stockholders' Equity   2,704.1       2,697.8       2,648.4      
Total Liabilities and Stockholders' Equity $ 22,341.5      $22,341.7      $20,332.5      

 


(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 $0.3 million, $0.1 million and nil for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.



Average Balances and Interest Rates               Table 5 
  Nine Months Ended Nine Months Ended 
  September 30, 2020 September 30, 2019 
  Average Income/ Yield/ Average Income/ Yield/ 
(dollars in millions) Balance Expense Rate Balance Expense Rate 
Earning Assets                 
Interest-Bearing Deposits in Other Banks $ 947.3 $ 2.2  0.31%$400.6 $6.9 2.31%
Available-for-Sale Investment Securities   4,588.7   59.1  1.72  4,383.6  71.5 2.18 
Loans Held for Sale   11.9   0.2  2.31  0.8   2.52 
Loans and Leases(1)                 
Commercial and industrial   3,202.4   70.5  2.94  3,094.8  97.5 4.21 
Commercial real estate   3,423.9   90.7  3.54  3,129.8  108.1 4.62 
Construction   586.9   15.8  3.59  565.2  20.0 4.73 
Residential:                 
Residential mortgage   3,700.8   111.3  4.01  3,590.2  112.4 4.17 
Home equity line   881.2   21.1  3.20  912.4  25.9 3.79 
Consumer   1,537.5   63.9  5.55  1,658.7  68.5 5.52 
Lease financing   236.4   5.1  2.90  154.0  3.6 3.15 
Total Loans and Leases   13,569.1   378.4  3.72  13,105.1  436.0 4.44 
Other Earning Assets   57.3   1.6  3.78  84.3  2.2 3.37 
Total Earning Assets(2)   19,174.3   441.5  3.07  17,974.4  516.6 3.84 
Cash and Due from Banks   310.1       348.1      
Other Assets   2,183.5       2,082.8      
Total Assets $ 21,667.9      $20,405.3      
                  
Interest-Bearing Liabilities                 
Interest-Bearing Deposits                 
Savings $ 5,454.7 $ 4.7  0.12%$4,806.0 $12.8 0.35%
Money Market   3,208.1   6.1  0.25  3,125.5  22.1 0.95 
Time   2,966.9   19.6  0.88  2,999.0  34.8 1.55 
Total Interest-Bearing Deposits   11,629.7   30.4  0.35  10,930.5  69.7 0.85 
Short-Term Borrowings   279.9   6.0  2.87  145.7  3.0 2.76 
Long-Term Borrowings   200.0   4.2  2.77  476.2  10.1 2.84 
Total Interest-Bearing Liabilities   12,109.6   40.6  0.45  11,552.4  82.8 0.96 
Net Interest Income    $ 400.9      $433.8   
Interest Rate Spread        2.62%      2.88%
Net Interest Margin        2.79%      3.22%
Noninterest-Bearing Demand Deposits   6,365.5       5,769.9      
Other Liabilities   505.2       482.7      
Stockholders' Equity   2,687.6       2,600.3      
Total Liabilities and Stockholders' Equity $ 21,667.9      $20,405.3      


(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 $0.4 million and nil for the nine months ended September 30, 2020 and 2019, respectively.



Analysis of Change in Net Interest Income        Table 6
  Three Months Ended September 30, 2020
  Compared to June 30, 2020
(dollars in millions) Volume Rate Total
Change in Interest Income:         
Interest-Bearing Deposits in Other Banks $ (0.2) $  $ (0.2)
Available-for-Sale Investment Securities   3.6    (0.8)   2.8 
Loans and Leases         
Commercial and industrial   (2.3)   (0.4)   (2.7)
Commercial real estate   (0.1)   (0.4)   (0.5)
Construction   0.5    (0.2)   0.3 
Residential:         
Residential mortgage      2.2    2.2 
Home equity line   (0.1)   (0.1)   (0.2)
Consumer   (0.6)   0.2    (0.4)
Lease financing   0.1       0.1 
Total Loans and Leases   (2.5)   1.3    (1.2)
Other Earning Assets      0.1    0.1 
Total Change in Interest Income   0.9    0.6    1.5 
          
Change in Interest Expense:         
Interest-Bearing Deposits         
Savings   0.1    (0.4)   (0.3)
Money Market      (0.7)   (0.7)
Time   (0.6)   (0.8)   (1.4)
Total Interest-Bearing Deposits   (0.5)   (1.9)   (2.4)
Short-Term Borrowings   (2.3)   (0.2)   (2.5)
Total Change in Interest Expense   (2.8)   (2.1)   (4.9)
Change in Net Interest Income $ 3.7  $ 2.7  $ 6.4 



Analysis of Change in Net Interest Income        Table 7
  Three Months Ended September 30, 2020
  Compared to September 30, 2019
(dollars in millions) Volume Rate Total
Change in Interest Income:         
Interest-Bearing Deposits in Other Banks $ 1.1  $ (3.2) $ (2.1)
Available-for-Sale Investment Securities   4.6    (6.6)   (2.0)
Loans Held for Sale   0.1       0.1 
Loans and Leases         
Commercial and industrial   3.2    (11.6)   (8.4)
Commercial real estate   1.3    (10.8)   (9.5)
Construction   1.6    (2.0)   (0.4)
Residential:         
Residential mortgage   0.4    (1.1)   (0.7)
Home equity line   (0.4)   (1.6)   (2.0)
Consumer   (2.5)   (0.6)   (3.1)
Lease financing   0.6    (0.1)   0.5 
Total Loans and Leases   4.2    (27.8)   (23.6)
Other Earning Assets   (0.3)   (0.1)   (0.4)
Total Change in Interest Income   9.7    (37.7)   (28.0)
          
Change in Interest Expense:         
Interest-Bearing Deposits         
Savings   0.7    (4.7)   (4.0)
Money Market   0.4    (7.1)   (6.7)
Time   0.6    (6.5)   (5.9)
Total Interest-Bearing Deposits   1.7    (18.3)   (16.6)
Short-Term Borrowings   (2.2)   (0.1)   (2.3)
Long-Term Borrowings   (0.3)      (0.3)
Total Change in Interest Expense   (0.8)   (18.4)   (19.2)
Change in Net Interest Income $ 10.5  $ (19.3) $ (8.8)



Analysis of Change in Net Interest Income        Table 8
  Nine Months Ended September 30, 2020
  Compared to September 30, 2019
(dollars in millions) Volume Rate Total
Change in Interest Income:         
Interest-Bearing Deposits in Other Banks $ 4.5  $ (9.2) $ (4.7)
Available-for-Sale Investment Securities   3.2    (15.6)   (12.4)
Loans Held for Sale   0.2       0.2 
Loans and Leases         
Commercial and industrial   3.3    (30.3)   (27.0)
Commercial real estate   9.5    (26.9)   (17.4)
Construction   0.8    (5.0)   (4.2)
Residential:         
Residential mortgage   3.3    (4.4)   (1.1)
Home equity line   (0.9)   (3.9)   (4.8)
Consumer   (5.0)   0.4    (4.6)
Lease financing   1.8    (0.3)   1.5 
Total Loans and Leases   12.8    (70.4)   (57.6)
Other Earning Assets   (0.8)   0.2    (0.6)
Total Change in Interest Income   19.9    (95.0)   (75.1)
          
Change in Interest Expense:         
Interest-Bearing Deposits         
Savings   1.4    (9.5)   (8.1)
Money Market   0.6    (16.6)   (16.0)
Time   (0.4)   (14.8)   (15.2)
Total Interest-Bearing Deposits   1.6    (40.9)   (39.3)
Short-Term Borrowings   2.9    0.1    3.0 
Long-Term Borrowings   (5.7)   (0.2)   (5.9)
Total Change in Interest Expense   (1.2)   (41.0)   (42.2)
Change in Net Interest Income $ 21.1  $ (54.0) $ (32.9)



Loans and Leases           Table 9
  September 30, June 30, December 31, September 30,
(dollars in thousands) 2020 2020 2019 2019
Commercial and industrial $ 3,170,262 $3,423,708 $2,743,242 $2,654,077
Commercial real estate   3,461,085  3,423,499  3,463,953  3,309,389
Construction   662,871  617,935  519,241  486,977
Residential:            
Residential mortgage   3,669,051  3,691,950  3,768,936  3,671,424
Home equity line   864,789  876,491  893,239  916,106
Total residential   4,533,840  4,568,441  4,662,175  4,587,530
Consumer   1,425,934  1,492,160  1,620,556  1,637,549
Lease financing   245,977  238,287  202,483  167,874
Total loans and leases $ 13,499,969 $13,764,030 $13,211,650 $12,843,396



Deposits           Table 10
  September 30, June 30, December 31, September 30,
(dollars in thousands) 2020 2020 2019 2019
Demand $ 6,908,270 $6,880,091 $5,880,072 $5,720,822
Savings   5,994,687  5,727,367  4,998,933  4,899,468
Money Market   3,379,985  3,247,511  3,055,832  3,529,363
Time   2,614,820  3,506,665  2,510,157  2,707,593
Total Deposits $ 18,897,762 $19,361,634 $16,444,994 $16,857,246



Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More           Table 11
  September 30, June 30, December 31, September 30,
(dollars in thousands) 2020 2020 2019 2019
Non-Performing Assets            
Non-Accrual Loans and Leases            
Commercial Loans:            
Commercial and industrial $ 725 $11,559 $32 $12
Commercial real estate   7,067  13,168  30  33
Construction   2,043  2,043    
Total Commercial Loans   9,835  26,770  62  45
Residential Loans:            
Residential mortgage   7,798  6,059  5,406  3,959
Total Residential Loans   7,798  6,059  5,406  3,959
Consumer        200
Total Non-Accrual Loans and Leases   17,633  32,829  5,468  4,204
Other Real Estate Owned    446  319  82
Total Non-Performing Assets $ 17,633 $33,275 $5,787 $4,286
             
Accruing Loans and Leases Past Due 90 Days or More            
Commercial Loans:            
Commercial and industrial $ 1,938 $2,309 $1,429 $750
Commercial real estate   1,307  900  1,013  
Construction   100  248  2,367  
Total Commercial Loans   3,345  3,457  4,809  750
Residential Loans:            
Residential mortgage      74  139
Home equity line   4,503  4,496  2,995  3,192
Total Residential Loans   4,503  4,496  3,069  3,331
Consumer   2,897  2,167  4,272  3,076
Total Accruing Loans and Leases Past Due 90 Days or More $ 10,745 $10,120 $12,150 $7,157
             
Restructured Loans on Accrual Status and Not Past Due 90 Days or More $ 9,726 $11,182 $14,493 $22,350
Total Loans and Leases $ 13,499,969 $13,764,030 $13,211,650 $12,843,396



Allowance for Credit Losses              Table 12 
  For the Three Months Ended For the Nine Months Ended 
  September 30, June 30, September 30, September 30, September 30, 
(dollars in thousands) 2020  2020  2019  2020  2019  
Balance at Beginning of Period $ 192,120  $166,013  $138,535  $ 130,530  $141,718  
Adjustment to Adopt ASC Topic 326            770     
After Adoption of ASC Topic 326   192,120   166,013   138,535    131,300   141,718  
Loans and Leases Charged-Off                
Commercial Loans:                
Commercial and industrial   (598)  (13,974)  (514)   (14,773)  (2,514) 
Commercial real estate     (2,723)      (2,723)    
Construction     (379)      (379)    
Lease financing              (24) 
Total Commercial Loans   (598)  (17,076)  (514)   (17,875)  (2,538) 
Residential Loans:                
Residential mortgage     (14)  (7)   (14)  (7) 
Home equity line            (8)    
Total Residential Loans     (14)  (7)   (22)  (7) 
Consumer   (4,238)  (8,907)  (8,015)   (21,742)  (24,118) 
Total Loans and Leases Charged-Off   (4,836)  (25,997)  (8,536)   (39,639)  (26,663) 
Recoveries on Loans and Leases Previously Charged-Off                
Commercial Loans:                
Commercial and industrial   1,699   100   241    2,019   303  
Commercial real estate        30      93  
Construction   30   30       170     
Total Commercial Loans   1,729   130   271    2,189   396  
Residential Loans:                
Residential mortgage   27   17   368    179   704  
Home equity line   16   8   57    146   156  
Total Residential Loans   43   25   425    325   860  
Consumer   3,148   2,456   2,269    7,687   7,103  
Total Recoveries on Loans and Leases Previously Charged-Off   4,920   2,611   2,965    10,201   8,359  
Net Loans and Leases Recovered (Charged-Off)   84   (23,386)  (5,571)   (29,438)  (18,304) 
Provision for Credit Losses - Loans and Leases   3,672   49,493       94,014   9,550  
Balance at End of Period $ 195,876  $192,120  $132,964  $ 195,876  $132,964  
Average Loans and Leases Outstanding $ 13,559,367  $13,956,669  $13,032,349  $ 13,569,119  $13,105,086  
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1)   - % 0.67 % 0.17 %  0.29 % 0.19 %
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding   1.45 % 1.40 % 1.04 %  1.45 % 1.04 %

 


(1)Annualized for the three and nine months ended September 30, 2020 and 2019 and three months ended June 30, 2020.



Loans and Leases by Year of Origination and Credit Quality Indicator  Table 13
                       Revolving   
                       Loans   
                       Converted   
  Term Loans Revolving to Term   
  Amortized Cost Basis by Origination Year Loans Loans   
                    Amortized Amortized   
(dollars in thousands) 2020 2019 2018 2017 2016 Prior Cost Basis Cost Basis Total
Commercial Lending                           
Commercial and Industrial                           
Risk rating:                           
Pass $ 999,763 $ 330,209 $ 202,595 $ 76,154 $ 52,391 $ 92,446 $ 1,033,278 $ 26,148 $ 2,812,984
Special Mention   25,677   7,786   33,794   2,354   306   791   105,339   452   176,499
Substandard   23,836   2,172   2,611   1,395   4,265   9,375   37,883   283   81,820
Doubtful             195       195
Other (1)   12,084   15,053   10,998   6,439   2,454   492   51,244     98,764
Total Commercial and Industrial   1,061,360   355,220   249,998   86,342   59,416   103,299   1,227,744   26,883   3,170,262
                            
Commercial Real Estate                           
Risk rating:                           
Pass   289,941   625,894   544,367   447,473   305,557   880,689   36,258   2   3,130,181
Special Mention   1,487   94,217   30,760   39,438   31,211   58,911   2,999     259,023
Substandard     10,882   14,594   6,972   10,685   19,240   9,006     71,379
Other (1)             502       502
Total Commercial Real Estate   291,428   730,993   589,721   493,883   347,453   959,342   48,263   2   3,461,085
                            
Construction                           
Risk rating:                           
Pass   32,810   182,503   187,257   91,415   24,053   42,269   26,133     586,440
Special Mention     515   1,647   4,749     9,172       16,083
Substandard       538   1,840   525   1,043       3,946
Other (1)   13,349   23,382   8,804   4,264   1,796   4,222   585     56,402
Total Construction   46,159   206,400   198,246   102,268   26,374   56,706   26,718     662,871
                            
Lease Financing                           
Risk rating:                           
Pass   68,770   66,472   15,044   18,063   4,110   63,537       235,996
Special Mention     940   158   1,376   424   643       3,541
Substandard   2,703   1,680   359   1,174     524       6,440
Total Lease Financing   71,473   69,092   15,561   20,613   4,534   64,704       245,977
                            
Total Commercial Lending $ 1,470,420 $ 1,361,705 $ 1,053,526 $ 703,106 $ 437,777 $ 1,184,051 $ 1,302,725 $ 26,885 $ 7,540,195



                       Revolving   
                       Loans   
                       Converted   
  Term Loans Revolving to Term   
  Amortized Cost Basis by Origination Year Loans Loans   
(continued)                   Amortized Amortized   
(dollars in thousands) 2020 2019 2018 2017 2016 Prior Cost Basis Cost Basis Total
Residential Lending                           
Residential Mortgage                           
FICO:                           
740 and greater $ 457,209 $ 410,369 $ 319,988 $ 390,552 $ 341,709 $ 919,509 $ $ $ 2,839,336
680 - 739   71,240   54,497   55,179   59,237   44,911   162,726       447,790
620 - 679   12,653   11,595   9,753   8,559   8,942   48,554       100,056
550 - 619   1,946   2,316   3,923   5,423   4,506   13,256       31,370
Less than 550       534   2,153   953   3,480       7,120
No Score (3)   14,827   19,364   22,222   22,616   14,954   49,251       143,234
Other (2)   16,598   17,402   17,874   22,807   11,060   13,653   579   172   100,145
Total Residential Mortgage   574,473   515,543   429,473   511,347   427,035   1,210,429   579   172   3,669,051
                            
Home Equity Line                           
FICO:                           
740 and greater               617,973   5,600   623,573
680 - 739               163,305   3,799   167,104
620 - 679               47,448   1,295   48,743
550 - 619               13,210   1,464   14,674
Less than 550               4,750   613   5,363
No Score (3)               5,332     5,332
Total Home Equity Line               852,018   12,771   864,789
Total Residential Lending   574,473   515,543   429,473   511,347   427,035   1,210,429   852,597   12,943   4,533,840
                            
Consumer Lending                           
FICO:                           
740 and greater   102,091   127,590   106,359   61,204   28,613   8,443   105,905     540,205
680 - 739   67,228   100,723   77,874   42,470   20,280   7,302   77,445     393,322
620 - 679   29,733   60,484   39,213   27,825   13,701   5,148   39,748     215,852
550 - 619   5,927   24,376   21,050   18,784   9,388   4,134   16,484     100,143
Less than 550   1,558   11,200   11,967   9,579   4,671   1,969   6,590     47,534
No Score (3)   3,998   120   105   115   23     33,654     38,015
Other (2)   886   9,144   89   2,219   47   6,787   71,691     90,863
Total Consumer Lending   211,421   333,637   256,657   162,196   76,723   33,783   351,517     1,425,934
                            
Total Loans and Leases $ 2,256,314 $ 2,210,885 $ 1,739,656 $ 1,376,649 $ 941,535 $ 2,428,263 $ 2,506,839 $ 39,828 $ 13,499,969

 


(1)Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score.

(2)Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating.

(3)No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.



GAAP to Non-GAAP Reconciliation              Table 14 
  For the Three Months Ended For the Nine Months Ended 
  September 30, June 30, September 30, September 30, 
(dollars in thousands, except per share amounts) 2020 2020 2019 2020 2019 
Income Statement Data:                
Net income $ 65,101 $20,049 $74,199 $ 124,015 $216,556 
Core net income $ 65,083 $20,204 $75,871 $ 124,090 $220,535 
                 
Average total stockholders' equity $ 2,704,129 $2,697,775 $2,648,428 $ 2,687,632 $2,600,259 
Less: average goodwill   995,492  995,492  995,492   995,492  995,492 
Average tangible stockholders' equity $ 1,708,637 $1,702,283 $1,652,936 $ 1,692,140 $1,604,767 
                 
Average total assets $ 22,341,485 $22,341,654 $20,332,457 $ 21,667,948 $20,405,261 
Less: average goodwill   995,492  995,492  995,492   995,492  995,492 
Average tangible assets $ 21,345,993 $21,346,162 $19,336,965 $ 20,672,456 $19,409,769 
                 
Return on average total stockholders' equity(1)   9.58% 2.99% 11.12%  6.16% 11.13%
Core return on average total stockholders' equity (non-GAAP)(1)   9.57% 3.01% 11.37%  6.17% 11.34%
Return on average tangible stockholders' equity (non-GAAP)(1)   15.16% 4.74% 17.81%  9.79% 18.04%
Core return on average tangible stockholders' equity (non-GAAP)(1)   15.15% 4.77%