Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries First Hawaiian, Inc. Reports Second Quarter 2023 Financial Results and Declares Dividend By: First Hawaiian, Inc. via GlobeNewswire July 28, 2023 at 08:00 AM EDT HONOLULU, July 28, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended June 30, 2023. “I’m pleased to report that we had a solid second quarter in spite of a challenging interest rate environment,” said Bob Harrison, Chairman, President and CEO. “We grew loans and capital, credit quality remains excellent, and our profitability measures continue to be strong.” On July 19, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 1, 2023, to stockholders of record at the close of business on August 21, 2023. Second Quarter 2023 Highlights: Net income of $62.4 million, or $0.49 per diluted shareTotal loans and leases increased $141.6 million versus prior quarterTotal deposits decreased $203.3 million versus prior quarterNet interest margin decreased 20 basis points to 2.91%Recorded a $5.0 million provision for credit lossesBoard of Directors declared a quarterly dividend of $0.26 per share Balance Sheet Total assets were $24.5 billion as of June 30, 2023, compared to $24.9 billion as of March 31, 2023. Gross loans and leases were $14.4 billion as of June 30, 2023, an increase of $141.6 million, or 1.0%, from $14.2 billion as of March 31, 2023. Total deposits were $21.1 billion as of June 30, 2023, a decrease of $203.3 million, or 1.0%, from $21.3 billion as of March 31, 2023. Net Interest Income Net interest income for the second quarter of 2023 was $159.9 million, a decrease of $7.3 million, or 4.4%, compared to $167.2 million for the prior quarter. The net interest margin was 2.91% in the second quarter of 2023, a decrease of 20 basis points compared to 3.11% in the prior quarter. Provision Expense During the quarter ended June 30, 2023, we recorded a $5.0 million provision for credit losses. In the quarter ended March 31, 2023, we recorded a $8.8 million provision for credit losses. Noninterest Income Noninterest income was $47.3 million in the second quarter of 2023, a decrease of $1.7 million compared to noninterest income of $49.0 million in the prior quarter. Noninterest Expense Noninterest expense was $120.9 million in the second quarter of 2023, an increase of $2.3 million compared to noninterest expense of $118.6 million in the prior quarter. The efficiency ratio was 58.0% and 54.5% for the quarters ended June 30, 2023 and March 31, 2023, respectively. Taxes The effective tax rate was 23.3% and 24.8% for the quarters ended June 30, 2023 and March 31, 2023, respectively. Asset Quality The allowance for credit losses was $148.6 million, or 1.03% of total loans and leases, as of June 30, 2023, compared to $147.1 million, or 1.03% of total loans and leases, as of March 31, 2023. The reserve for unfunded commitments was $36.2 million as of both June 30, 2023 and March 31, 2023. Net charge-offs were $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended June 30, 2023, compared to net charge-offs of $3.2 million, or 0.09% of average loans and leases on an annualized basis, for the quarter ended March 31, 2023. Total non-performing assets were $13.2 million, or 0.09% of total loans and leases and other real estate owned, on June 30, 2023, compared to total non-performing assets of $13.8 million, or 0.10% of total loans and leases and other real estate owned, on March 31, 2023. Capital Total stockholders' equity was $2.4 billion and $2.3 billion on June 30, 2023 and March 31, 2023, respectively. The tier 1 leverage, common equity tier 1 and total capital ratios were 8.30%, 12.05% and 13.17%, respectively, on June 30, 2023, compared with 8.26%, 11.97%, and 13.09%, respectively, on March 31, 2023. The Company did not repurchase any shares in the second 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 by phone, please register via the following link: https://register.vevent.com/register/BI348950fc095448439d48b25a0e9c5697, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. 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. Forward-Looking StatementsThis 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. 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 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, 2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. Use of Non-GAAP Financial MeasuresReturn on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy. Table 14 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures. Investor Relations Contact: Kevin Haseyama, CFA(808) 525-6268khaseyama@fhb.comMedia Contact:Lindsay Chambers(808) 525-6254lchambers@fhb.com Financial Highlights Table 1 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2023 2022 Operating Results: Net interest income $159,939 $167,247 $145,147 $327,186 $279,019 Provision for credit losses 5,000 8,800 1,000 13,800 (4,747) Noninterest income 47,348 49,023 44,137 96,371 85,517 Noninterest expense 120,881 118,567 109,175 239,448 213,217 Net income 62,442 66,818 59,360 129,260 117,079 Basic earnings per share 0.49 0.52 0.46 1.01 0.92 Diluted earnings per share 0.49 0.52 0.46 1.01 0.91 Dividends declared per share 0.26 0.26 0.26 0.52 0.52 Dividend payout ratio 53.06% 50.00% 56.52% 51.49% 57.14 %Performance Ratios(1): Net interest margin 2.91% 3.11% 2.60% 3.01% 2.51 %Efficiency ratio 57.96% 54.46% 57.33% 56.17% 58.15 %Return on average total assets 1.01% 1.10% 0.94% 1.06% 0.94 %Return on average tangible assets (non-GAAP)(2) 1.05% 1.15% 0.98% 1.10% 0.98 %Return on average total stockholders' equity 10.68% 11.78% 10.52% 11.23% 9.82 %Return on average tangible stockholders' equity (non-GAAP)(2) 18.57% 20.78% 18.79% 19.65% 16.76 %Average Balances: Average loans and leases $14,283,222 $14,079,337 $13,058,558 $14,181,842 $12,939,745 Average earning assets 22,186,316 21,873,259 22,520,605 22,030,652 22,492,066 Average assets 24,821,486 24,548,124 25,250,176 24,685,560 25,165,783 Average deposits 21,057,259 21,468,624 22,401,558 21,261,805 22,182,406 Average stockholders' equity 2,344,285 2,299,422 2,262,654 2,321,977 2,404,471 Market Value Per Share: Closing 18.01 20.63 22.80 18.01 22.80 High 21.00 28.28 28.44 28.28 31.16 Low 15.08 19.68 21.49 15.08 21.49 As of As of As of As of June 30, March 31, December 31, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2022 Balance Sheet Data: Loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781 Total assets 24,511,566 24,884,207 24,577,223 25,377,533 Total deposits 21,078,166 21,281,500 21,689,029 22,601,454 Short-term borrowings — 250,000 75,000 — Long-term borrowings 500,000 500,000 — — Total stockholders' equity 2,359,738 2,329,012 2,269,005 2,252,611 Per Share of Common Stock: Book value $18.49 $18.26 $17.82 $17.67 Tangible book value (non-GAAP)(2) 10.69 10.45 10.00 9.86 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.09% 0.10% 0.08% 0.06%Allowance for credit losses for loans and leases / total loans and leases 1.03% 1.03% 1.02% 1.12% Capital Ratios: Common Equity Tier 1 Capital Ratio 12.05% 11.97% 11.82% 11.98%Tier 1 Capital Ratio 12.05% 11.97% 11.82% 11.98%Total Capital Ratio 13.17% 13.09% 12.92% 13.14%Tier 1 Leverage Ratio 8.30% 8.26% 8.11% 7.54%Total stockholders' equity to total assets 9.63% 9.36% 9.23% 8.88%Tangible stockholders' equity to tangible assets (non-GAAP)(2) 5.80% 5.58% 5.40% 5.16% Non-Financial Data: Number of branches 51 51 51 51 Number of ATMs 296 296 294 297 Number of Full-Time Equivalent Employees 2,126 2,100 2,063 2,021 _____________________ (1) Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. (2) Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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 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 tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. 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. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation. Consolidated Statements of Income Table 2 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30,(dollars in thousands, except per share amounts) 2023 2023 2022 2023 2022 Interest income Loans and lease financing $185,340 $172,339 $111,916 $357,679 $215,648 Available-for-sale investment securities 18,094 18,688 16,643 36,782 48,750 Held-to-maturity investment securities 18,282 18,957 18,289 37,239 18,289 Other 7,489 3,561 2,896 11,050 3,678 Total interest income 229,205 213,545 149,744 442,750 286,365 Interest expense Deposits 58,071 43,284 4,597 101,355 7,346 Short-term and long-term borrowings 10,656 2,563 — 13,219 — Other 539 451 — 990 — Total interest expense 69,266 46,298 4,597 115,564 7,346 Net interest income 159,939 167,247 145,147 327,186 279,019 Provision for credit losses 5,000 8,800 1,000 13,800 (4,747)Net interest income after provision for credit losses 154,939 158,447 144,147 313,386 283,766 Noninterest income Service charges on deposit accounts 7,246 7,231 6,843 14,477 14,344 Credit and debit card fees 15,461 16,298 17,056 31,759 31,906 Other service charges and fees 9,056 9,162 9,018 18,218 18,672 Trust and investment services income 9,448 9,614 8,759 19,062 17,642 Bank-owned life insurance 3,271 5,120 (859) 8,391 (1,276)Other 2,866 1,598 3,320 4,464 4,229 Total noninterest income 47,348 49,023 44,137 96,371 85,517 Noninterest expense Salaries and employee benefits 57,904 56,032 49,902 113,936 98,128 Contracted services and professional fees 17,498 16,313 18,617 33,811 35,764 Occupancy 7,554 7,782 7,334 15,336 14,744 Equipment 11,000 9,736 7,754 20,736 13,731 Regulatory assessment and fees 3,676 3,836 2,301 7,512 4,525 Advertising and marketing 1,891 1,994 1,994 3,885 4,022 Card rewards program 7,681 8,085 7,285 15,766 14,168 Other 13,677 14,789 13,988 28,466 28,135 Total noninterest expense 120,881 118,567 109,175 239,448 213,217 Income before provision for income taxes 81,406 88,903 79,109 170,309 156,066 Provision for income taxes 18,964 22,085 19,749 41,049 38,987 Net income $62,442 $66,818 $59,360 $129,260 $117,079 Basic earnings per share $0.49 $0.52 $0.46 $1.01 $0.92 Diluted earnings per share $0.49 $0.52 $0.46 $1.01 $0.91 Basic weighted-average outstanding shares 127,591,371 127,453,820 127,672,244 127,522,975 127,614,564 Diluted weighted-average outstanding shares 127,832,351 128,033,812 128,014,777 127,901,225 128,108,630 Consolidated Balance Sheets Table 3 June 30, March 31, December 31, June 30,(dollars in thousands, except share amount) 2023 2023 2022 2022Assets Cash and due from banks $318,333 $253,705 $297,502 $279,629 Interest-bearing deposits in other banks 239,798 611,887 229,122 1,254,047 Investment securities: Available-for-sale, at fair value (amortized cost: $3,296,825 as of June 30, 2023, $3,427,708 as of March 31, 2023, $3,549,599 as of December 31, 2022 and $4,267,809 as of June 30, 2022) 2,909,372 3,054,280 3,151,133 3,967,746 Held-to-maturity, at amortized cost (fair value: $3,697,261 as of June 30, 2023, $3,824,478 as of March 31, 2023, $3,814,822 as of December 31, 2022 and $3,910,780 as of June 30, 2022) 4,180,408 4,261,361 4,320,639 4,093,215 Loans held for sale — — — 180 Loans and leases 14,362,832 14,221,272 14,092,012 13,262,781 Less: allowance for credit losses 148,581 147,122 143,900 148,942 Net loans and leases 14,214,251 14,074,150 13,948,112 13,113,839 Premises and equipment, net 277,817 278,121 280,355 310,047 Other real estate owned and repossessed personal property — 91 91 — Accrued interest receivable 80,710 79,200 78,194 63,240 Bank-owned life insurance 476,177 473,255 473,067 470,542 Goodwill 995,492 995,492 995,492 995,492 Mortgage servicing rights 6,072 6,299 6,562 7,152 Other assets 813,136 796,366 796,954 822,404 Total assets $24,511,566 $24,884,207 $24,577,223 $25,377,533 Liabilities and Stockholders' Equity Deposits: Interest-bearing $12,911,539 $12,579,155 $12,824,383 $12,990,571 Noninterest-bearing 8,166,627 8,702,345 8,864,646 9,610,883 Total deposits 21,078,166 21,281,500 21,689,029 22,601,454 Short-term borrowings — 250,000 75,000 — Long-term borrowings 500,000 500,000 — — Retirement benefits payable 100,671 101,622 102,577 134,151 Other liabilities 472,991 422,073 441,612 389,317 Total liabilities 22,151,828 22,555,195 22,308,218 23,124,922 Stockholders' equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,327,860 / 127,608,037 shares as of June 30, 2023, issued/outstanding: 141,291,086 / 127,573,680 shares as of March 31, 2023, issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022 and issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022) 1,413 1,413 1,410 1,409 Additional paid-in capital 2,543,226 2,540,653 2,538,336 2,533,407 Retained earnings 799,045 769,791 736,544 654,777 Accumulated other comprehensive loss, net (612,736) (611,679) (639,254) (571,457)Treasury stock (13,719,823 shares as of June 30, 2023, 13,717,406 shares as of March 31, 2023, 13,600,591 shares as of December 31, 2022 and 13,492,821 shares as of June 30, 2022) (371,210) (371,166) (368,031) (365,525)Total stockholders' equity 2,359,738 2,329,012 2,269,005 2,252,611 Total liabilities and stockholders' equity $24,511,566 $24,884,207 $24,577,223 $25,377,533 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended June 30, 2023 March 31, 2023 June 30, 2022 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 $569.3 $7.2 5.07%$299.6 $3.4 4.60%$1,297.3 $2.8 0.85%Available-for-Sale Investment Securities Taxable 2,978.6 18.0 2.42 3,081.4 18.4 2.39 3,946.4 16.6 1.68 Non-Taxable 5.8 0.1 5.74 31.1 0.4 5.55 8.4 0.1 5.26 Held-to-Maturity Investment Securities Taxable 3,618.7 15.3 1.69 3,683.8 15.7 1.70 3,533.6 15.0 1.70 Non-Taxable 610.4 3.7 2.46 612.2 4.1 2.74 607.0 4.1 2.71 Total Investment Securities 7,213.5 37.1 2.06 7,408.5 38.6 2.09 8,095.4 35.8 1.77 Loans Held for Sale 0.5 — 5.87 0.1 — 5.53 0.3 — 5.06 Loans and Leases(1) Commercial and industrial 2,265.7 36.2 6.41 2,192.9 32.4 5.98 1,951.3 15.0 3.09 Commercial real estate 4,183.6 64.9 6.22 4,105.7 58.3 5.76 3,808.9 30.7 3.23 Construction 874.3 15.2 6.96 873.9 14.7 6.83 711.3 6.3 3.57 Residential: Residential mortgage 4,314.0 39.1 3.62 4,307.0 38.4 3.57 4,183.0 36.7 3.51 Home equity line 1,119.3 9.2 3.31 1,074.9 8.7 3.27 945.7 5.9 2.49 Consumer 1,196.6 17.7 5.92 1,213.5 17.2 5.75 1,218.0 15.5 5.09 Lease financing 329.7 3.6 4.43 311.4 3.1 4.10 240.4 2.1 3.53 Total Loans and Leases 14,283.2 185.9 5.22 14,079.3 172.8 4.96 13,058.6 112.2 3.44 Other Earning Assets 119.8 0.3 0.99 85.8 0.2 0.76 69.0 0.1 0.79 Total Earning Assets(2) 22,186.3 230.5 4.16 21,873.3 215.0 3.97 22,520.6 150.9 2.68 Cash and Due from Banks 257.9 286.1 300.8 Other Assets 2,377.3 2,388.7 2,428.8 Total Assets $24,821.5 $24,548.1 $25,250.2 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $6,099.4 $16.1 1.05%$6,354.3 $13.9 0.89% 6,971.3 $1.7 0.10%Money Market 3,809.8 19.6 2.07 3,853.5 14.3 1.50 4,127.4 1.4 0.14 Time 2,877.8 22.4 3.12 2,515.6 15.1 2.44 1,671.4 1.5 0.36 Total Interest-Bearing Deposits 12,787.0 58.1 1.82 12,723.4 43.3 1.38 12,770.1 4.6 0.14 Federal Funds Purchased 2.9 — 5.00 67.1 0.7 4.43 — — — Other Short-Term Borrowings 362.9 4.7 5.16 52.8 0.7 5.02 — — — Long-Term Borrowings 500.0 6.0 4.78 105.5 1.2 4.52 — — — Other Interest-Bearing Liabilities 54.0 0.5 4.00 42.8 0.4 4.27 — — — Total Interest-Bearing Liabilities 13,706.8 69.3 2.03 12,991.6 46.3 1.45 12,770.1 4.6 0.14 Net Interest Income $161.2 $168.7 $146.3 Interest Rate Spread 2.13% 2.52% 2.54%Net Interest Margin 2.91% 3.11% 2.60%Noninterest-Bearing Demand Deposits 8,270.3 8,745.2 9,631.4 Other Liabilities 500.1 511.9 586.0 Stockholders' Equity 2,344.3 2,299.4 2,262.7 Total Liabilities and Stockholders' Equity $24,821.5 $24,548.1 $25,250.2 ______________________________ (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 $1.3 million, $1.4 million and $1.2 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively. Average Balances and Interest Rates Table 5 Six Months Ended Six Months Ended June 30, 2023 June 30, 2022 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $435.2 $10.6 4.91%$1,218.3 $3.3 0.55%Available-for-Sale Investment Securities Taxable 3,029.7 36.4 2.41 5,862.7 45.7 1.56 Non-Taxable 18.4 0.5 5.58 320.8 3.9 2.41 Held-to-Maturity Investment Securities Taxable 3,651.1 30.9 1.70 1,776.6 15.0 1.69 Non-Taxable 611.3 7.9 2.60 305.2 4.1 2.71 Total Investment Securities 7,310.5 75.7 2.08 8,265.3 68.7 1.66 Loans Held for Sale 0.3 — 5.79 0.8 — 2.60 Loans and Leases(1) Commercial and industrial 2,229.5 68.6 6.20 1,962.1 29.7 3.05 Commercial real estate 4,144.9 123.2 5.99 3,721.0 56.4 3.06 Construction 874.1 29.9 6.89 738.9 12.1 3.30 Residential: Residential mortgage 4,310.5 77.5 3.59 4,147.2 71.5 3.45 Home equity line 1,097.2 17.9 3.29 918.8 11.3 2.48 Consumer 1,205.0 34.8 5.84 1,218.3 31.1 5.14 Lease financing 320.6 6.8 4.27 233.4 4.0 3.48 Total Loans and Leases 14,181.8 358.7 5.09 12,939.7 216.1 3.36 Other Earning Assets 102.9 0.5 0.90 68.0 0.4 1.05 Total Earning Assets(2) 22,030.7 445.5 4.07 22,492.1 288.5 2.58 Cash and Due from Banks 271.9 296.5 Other Assets 2,383.0 2,377.2 Total Assets $24,685.6 $25,165.8 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $6,226.2 $30.0 0.97%$6,820.7 $2.2 0.07%Money Market 3,831.5 33.9 1.78 4,088.3 2.0 0.09 Time 2,697.7 37.5 2.80 1,709.8 3.2 0.38 Total Interest-Bearing Deposits 12,755.4 101.4 1.60 12,618.8 7.4 0.12 Federal Funds Purchased 34.8 0.8 4.45 — — — Other Short-Term Borrowings 208.7 5.3 5.14 — — — Long-Term Borrowings 303.8 7.1 4.73 — — — Other Interest-Bearing Liabilities 48.5 1.0 4.12 — — — Total Interest-Bearing Liabilities 13,351.2 115.6 1.75 12,618.8 7.4 0.12 Net Interest Income $329.9 $281.1 Interest Rate Spread 2.32% 2.46%Net Interest Margin 3.01% 2.51%Noninterest-Bearing Demand Deposits 8,506.4 9,563.6 Other Liabilities 506.0 578.9 Stockholders' Equity 2,322.0 2,404.5 Total Liabilities and Stockholders' Equity $24,685.6 $25,165.8 ______________________________ (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 $2.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively. Analysis of Change in Net Interest Income Table 6 Three Months Ended June 30, 2023 Compared to March 31, 2023(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $3.4 $0.4 $3.8 Available-for-Sale Investment Securities Taxable (0.6) 0.2 (0.4)Non-Taxable (0.3) — (0.3)Held-to-Maturity Investment Securities Taxable (0.3) (0.1) (0.4)Non-Taxable — (0.4) (0.4)Total Investment Securities (1.2) (0.3) (1.5)Loans and Leases Commercial and industrial 1.2 2.6 3.8 Commercial real estate 1.3 5.3 6.6 Construction — 0.5 0.5 Residential: Residential mortgage 0.1 0.6 0.7 Home equity line 0.4 0.1 0.5 Consumer (0.2) 0.7 0.5 Lease financing 0.2 0.3 0.5 Total Loans and Leases 3.0 10.1 13.1 Other Earning Assets 0.1 — 0.1 Total Change in Interest Income 5.3 10.2 15.5 Change in Interest Expense: Interest-Bearing Deposits Savings (0.5) 2.7 2.2 Money Market (0.2) 5.5 5.3 Time 2.5 4.8 7.3 Total Interest-Bearing Deposits 1.8 13.0 14.8 Federal Funds Purchased (0.8) 0.1 (0.7)Other Short-Term Borrowings 4.0 — 4.0 Long-Term Borrowings 4.7 0.1 4.8 Other Interest-Bearing Liabilities 0.1 — 0.1 Total Change in Interest Expense 9.8 13.2 23.0 Change in Net Interest Income $(4.5) $(3.0) $(7.5) Analysis of Change in Net Interest Income Table 7 Three Months Ended June 30, 2023 Compared to June 30, 2022(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $(2.3) $6.7 $4.4 Available-for-Sale Investment Securities Taxable (4.7) 6.1 1.4 Held-to-Maturity Investment Securities Taxable 0.3 — 0.3 Non-Taxable — (0.4) (0.4)Total Investment Securities (4.4) 5.7 1.3 Loans and Leases Commercial and industrial 2.8 18.4 21.2 Commercial real estate 3.3 30.9 34.2 Construction 1.7 7.2 8.9 Residential: Residential mortgage 1.2 1.2 2.4 Home equity line 1.2 2.1 3.3 Consumer (0.3) 2.5 2.2 Lease financing 0.9 0.6 1.5 Total Loans and Leases 10.8 62.9 73.7 Other Earning Assets 0.1 0.1 0.2 Total Change in Interest Income 4.2 75.4 79.6 Change in Interest Expense: Interest-Bearing Deposits Savings (0.2) 14.6 14.4 Money Market (0.1) 18.3 18.2 Time 1.8 19.1 20.9 Total Interest-Bearing Deposits 1.5 52.0 53.5 Other Short-Term Borrowings 4.7 — 4.7 Long-Term Borrowings 6.0 — 6.0 Other Interest-Bearing Liabilities 0.5 — 0.5 Total Change in Interest Expense 12.7 52.0 64.7 Change in Net Interest Income $(8.5) $23.4 $14.9 Analysis of Change in Net Interest Income Table 8 Six Months Ended June 30, 2023 Compared to June 30, 2022(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $(3.4) $10.7 $7.3 Available-for-Sale Investment Securities Taxable (27.6) 18.3 (9.3)Non-Taxable (5.6) 2.2 (3.4)Held-to-Maturity Investment Securities Taxable 15.8 0.1 15.9 Non-Taxable 4.0 (0.2) 3.8 Total Investment Securities (13.4) 20.4 7.0 Loans and Leases Commercial and industrial 4.5 34.4 38.9 Commercial real estate 7.1 59.7 66.8 Construction 2.5 15.3 17.8 Residential: Residential mortgage 3.0 3.0 6.0 Home equity line 2.5 4.1 6.6 Consumer (0.4) 4.1 3.7 Lease financing 1.7 1.1 2.8 Total Loans and Leases 20.9 121.7 142.6 Other Earning Assets 0.2 (0.1) 0.1 Total Change in Interest Income 4.3 152.7 157.0 Change in Interest Expense: Interest-Bearing Deposits Savings (0.2) 28.0 27.8 Money Market (0.1) 32.0 31.9 Time 2.8 31.5 34.3 Total Interest-Bearing Deposits 2.5 91.5 94.0 Federal Funds Purchased 0.8 — 0.8 Other Short-Term Borrowings 5.3 — 5.3 Long-Term Borrowings 7.1 — 7.1 Other Interest-Bearing Liabilities 1.0 — 1.0 Total Change in Interest Expense 16.7 91.5 108.2 Change in Net Interest Income $(12.4) $61.2 $48.8 Loans and Leases Table 9 June 30, March 31, December 31, June 30,(dollars in thousands) 2023 2023 2022 2022Commercial and industrial: Commercial and industrial excluding Paycheck Protection Program loans $2,175,841 $2,254,506 $2,217,604 $1,898,899Paycheck Protection Program loans 11,990 13,826 18,293 43,233Total commercial and industrial 2,187,831 2,268,332 2,235,897 1,942,132Commercial real estate 4,290,948 4,106,200 4,132,309 3,956,828Construction 913,837 913,959 844,643 727,771Residential: Residential mortgage 4,317,537 4,318,742 4,302,788 4,212,768Home equity line 1,138,163 1,095,365 1,055,351 971,569Total residential 5,455,700 5,414,107 5,358,139 5,184,337Consumer 1,182,116 1,191,552 1,222,934 1,207,051Lease financing 332,400 327,122 298,090 244,662Total loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781 Deposits Table 10 June 30, March 31, December 31, June 30,(dollars in thousands) 2023 2023 2022 2022Demand $8,166,627 $8,702,345 $8,864,646 $9,610,883Savings 5,835,975 6,173,398 6,382,910 7,243,185Money Market 3,767,792 3,818,355 3,965,423 4,079,706Time 3,307,772 2,587,402 2,476,050 1,667,680Total Deposits $21,078,166 $21,281,500 $21,689,029 $22,601,454 Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11 June 30, March 31, December 31, June 30, (dollars in thousands) 2023 2023 2022 2022Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 1,024 $1,158 $1,215 $682Commercial real estate — 727 727 727Total Commercial Loans 1,024 1,885 1,942 1,409Residential Loans: Residential mortgage 6,097 6,896 6,166 6,450Home equity line 6,107 4,903 3,797 —Total Residential Loans 12,204 11,799 9,963 6,450Total Non-Accrual Loans and Leases 13,228 13,684 11,905 7,859Other Real Estate Owned — 91 91 —Total Non-Performing Assets $ 13,228 $13,775 $11,996 $7,859 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 599 $461 $291 $2,230Commercial real estate 619 1,346 — 176Construction — 102 — 352Total Commercial Loans 1,218 1,909 291 2,758Residential Loans: Residential mortgage 58 58 58 750Home equity line — — — 1,039Total Residential Loans 58 58 58 1,789Consumer 1,975 2,502 2,885 1,218Total Accruing Loans and Leases Past Due 90 Days or More $ 3,251 $4,469 $3,234 $5,765 Total Loans and Leases $ 14,362,832 $14,221,272 $14,092,012 $13,262,781 Allowance for Credit Losses and Reserve for Unfunded Commitments Table 12 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Balance at Beginning of Period $183,321 $177,735 $179,238 177,735 187,584 Loans and Leases Charged-Off Commercial and industrial (997) (791) (243) (1,788) (949) Residential Loans: Residential mortgage — (122) — (122) — Home equity line (137) (135) (1,120) (272) (1,163) Total Residential Loans (137) (257) (1,120) (394) (1,163) Consumer (4,516) (4,782) (3,659) (9,298) (7,768) Total Loans and Leases Charged-Off (5,650) (5,830) (5,022) (11,480) (9,880) Recoveries on Loans and Leases Previously Charged-Off Commercial Loans: Commercial and industrial 292 246 301 538 354 Commercial real estate — — — — 14 Lease financing — — 60 — 60 Total Commercial Loans 292 246 361 538 428 Residential Loans: Residential mortgage 30 27 192 57 208 Home equity line 59 177 191 236 219 Total Residential Loans 89 204 383 293 427 Consumer 1,728 2,166 1,940 3,894 4,088 Total Recoveries on Loans and Leases Previously Charged-Off 2,109 2,616 2,684 4,725 4,943 Net Loans and Leases Charged-Off (3,541) (3,214) (2,338) (6,755) (4,937) Provision for Credit Losses 5,000 8,800 1,000 13,800 (4,747) Balance at End of Period $184,780 $183,321 $177,900 $184,780 $177,900 Components: Allowance for Credit Losses $148,581 $147,122 $148,942 $148,581 $148,942 Reserve for Unfunded Commitments 36,199 36,199 28,958 36,199 28,958 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $184,780 $183,321 $177,900 $184,780 $177,900 Average Loans and Leases Outstanding $14,283,222 $14,079,337 $13,058,558 $14,181,842 $12,939,745 Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) 0.10 % 0.09 % 0.07 % 0.10 % 0.08 %Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.03 % 1.03 % 1.12 % 1.03 % 1.12 %Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 11.23x 10.75x 18.95x 11.23x 18.95x _____________________________ (1) Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. 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) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis TotalCommercial Lending Commercial and Industrial Risk rating: Pass $33,877 $299,913 $385,159 $38,769 $157,794 $165,747 $952,182 $15,003 $2,048,444Special Mention 103 31,193 154 849 2,397 1,481 2,967 186 39,330Substandard 352 563 260 936 819 1,100 12,539 17 16,586Other(1) 11,743 13,284 6,301 3,275 2,644 1,668 44,556 — 83,471Total Commercial and Industrial 46,075 344,953 391,874 43,829 163,654 169,996 1,012,244 15,206 2,187,831Current period gross charge-offs 72 60 9 28 92 1,527 — — 1,788 Commercial Real Estate Risk rating: Pass 212,159 876,558 655,847 333,142 564,881 1,499,805 72,447 — 4,214,839Special Mention 1,737 156 — 547 6,983 12,389 12,952 — 34,764Substandard — 5,141 — 171 — 35,883 2 — 41,197Other(1) — — — — — 148 — — 148Total Commercial Real Estate 213,896 881,855 655,847 333,860 571,864 1,548,225 85,401 — 4,290,948Current period gross charge-offs — — — — — — — — — Construction Risk rating: Pass 77,826 182,679 365,959 76,728 61,906 82,554 6,562 — 854,214Special Mention — — — — 205 — — — 205Other(1) 6,601 26,882 15,766 3,261 2,136 4,067 705 — 59,418Total Construction 84,427 209,561 381,725 79,989 64,247 86,621 7,267 — 913,837Current period gross charge-offs — — — — — — — — — Lease Financing Risk rating: Pass 69,487 94,276 21,167 39,215 35,964 70,312 — — 330,421Special Mention — — 365 60 — — — — 425Substandard — — — 171 7 1,376 — — 1,554Total Lease Financing 69,487 94,276 21,532 39,446 35,971 71,688 — — 332,400Current period gross charge-offs — — — — — — — — — Total Commercial Lending $413,885 $1,530,645 $1,450,978 $497,124 $835,736 $1,876,530 $1,104,912 $15,206 $7,725,016Current period gross charge-offs $72 $60 $9 $28 $92 $1,527 $— $— $1,788 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans (continued) Amortized Amortized (dollars in thousands) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis TotalResidential Lending Residential Mortgage FICO: 740 and greater $138,593 $530,776 $1,030,287 $544,330 $236,821 $1,036,361 $— $— $3,517,168680 - 739 25,500 81,562 117,701 74,446 34,186 135,766 — — 469,161620 - 679 2,468 11,212 16,463 10,747 5,743 38,132 — — 84,765550 - 619 — 3,383 4,058 2,471 254 12,362 — — 22,528Less than 550 — 197 2,372 1,581 51 5,403 — — 9,604No Score(3) 6,075 19,497 12,552 6,378 9,837 56,201 — — 110,540Other(2) 9,916 18,075 17,857 12,952 8,915 28,438 7,618 — 103,771Total Residential Mortgage 182,552 664,702 1,201,290 652,905 295,807 1,312,663 7,618 — 4,317,537Current period gross charge-offs — — — — — 122 — — 122 Home Equity Line FICO: 740 and greater — — — — — — 930,741 1,668 932,409680 - 739 — — — — — — 151,418 2,449 153,867620 - 679 — — — — — — 32,897 1,376 34,273550 - 619 — — — — — — 9,428 1,448 10,876Less than 550 — — — — — — 5,127 312 5,439No Score(3) — — — — — — 1,299 — 1,299Total Home Equity Line — — — — — — 1,130,910 7,253 1,138,163Current period gross charge-offs — — — — — — 254 18 272 Total Residential Lending $182,552 $664,702 $1,201,290 $652,905 $295,807 $1,312,663 $1,138,528 $7,253 $5,455,700Current period gross charge-offs $— $— $— $— $— $122 $254 $18 $394 Consumer Lending FICO: 740 and greater 70,561 153,960 93,788 45,022 34,093 19,410 117,437 140 534,411680 - 739 44,064 84,900 49,136 23,895 19,424 11,352 72,327 431 305,529620 - 679 14,643 37,576 19,488 9,771 11,007 8,482 33,692 941 135,600550 - 619 2,255 10,974 8,135 5,608 6,314 5,207 11,730 748 50,971Less than 550 418 4,358 4,478 2,695 2,975 2,765 4,247 560 22,496No Score(3) 1,425 586 2 — 6 17 39,035 167 41,238Other(2) 36 1,208 3,536 343 1,113 1 85,634 — 91,871Total Consumer Lending $133,402 $293,562 $178,563 $87,334 $74,932 $47,234 $364,102 $2,987 $1,182,116Current period gross charge-offs $58 $1,244 $1,260 $630 $1,239 $1,388 $3,131 $348 $9,298 Total Loans and Leases $729,839 $2,488,909 $2,830,831 $1,237,363 $1,206,475 $3,236,427 $2,607,542 $25,446 $14,362,832Current period gross charge-offs $130 $1,304 $1,269 $658 $1,331 $3,037 $3,385 $366 $11,480 _______________________________ (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 Six Months Ended June 30, March 31, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Income Statement Data: Net income $62,442 $66,818 $59,360 $129,260 $117,079 Average total stockholders' equity $2,344,285 $2,299,422 $2,262,654 $2,321,977 $2,404,471 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders' equity $1,348,793 $1,303,930 $1,267,162 $1,326,485 $1,408,979 Average total assets $24,821,486 $24,548,124 $25,250,176 $24,685,560 $25,165,783 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $23,825,994 $23,552,632 $24,254,684 $23,690,068 $24,170,291 Return on average total stockholders' equity(1) 10.68% 11.78% 10.52% 11.23% 9.82%Return on average tangible stockholders' equity (non-GAAP)(1) 18.57% 20.78% 18.79% 19.65% 16.76% Return on average total assets(1) 1.01% 1.10% 0.94% 1.06% 0.94%Return on average tangible assets (non-GAAP)(1) 1.05% 1.15% 0.98% 1.10% 0.98% As of As of As of As of June 30, March 31, December 31, June 30, (dollars in thousands, except shares outstanding and per share amounts) 2023 2023 2022 2022 Balance Sheet Data: Total stockholders' equity $2,359,738 $2,329,012 $2,269,005 $2,252,611 Less: goodwill 995,492 995,492 995,492 995,492 Tangible stockholders' equity $1,364,246 $1,333,520 $1,273,513 $1,257,119 Total assets $24,511,566 $24,884,207 $24,577,223 $25,377,533 Less: goodwill 995,492 995,492 995,492 995,492 Tangible assets $23,516,074 $23,888,715 $23,581,731 $24,382,041 Shares outstanding 127,608,037 127,573,680 127,363,327 127,451,087 Total stockholders' equity to total assets 9.63% 9.36% 9.23% 8.88%Tangible stockholders' equity to tangible assets (non-GAAP) 5.80% 5.58% 5.40% 5.16% Book value per share $18.49 $18.26 $17.82 $17.67 Tangible book value per share (non-GAAP) $10.69 $10.45 $10.00 $9.86 _____________________________ (1) Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. 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First Hawaiian, Inc. Reports Second Quarter 2023 Financial Results and Declares Dividend By: First Hawaiian, Inc. via GlobeNewswire July 28, 2023 at 08:00 AM EDT HONOLULU, July 28, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended June 30, 2023. “I’m pleased to report that we had a solid second quarter in spite of a challenging interest rate environment,” said Bob Harrison, Chairman, President and CEO. “We grew loans and capital, credit quality remains excellent, and our profitability measures continue to be strong.” On July 19, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 1, 2023, to stockholders of record at the close of business on August 21, 2023. Second Quarter 2023 Highlights: Net income of $62.4 million, or $0.49 per diluted shareTotal loans and leases increased $141.6 million versus prior quarterTotal deposits decreased $203.3 million versus prior quarterNet interest margin decreased 20 basis points to 2.91%Recorded a $5.0 million provision for credit lossesBoard of Directors declared a quarterly dividend of $0.26 per share Balance Sheet Total assets were $24.5 billion as of June 30, 2023, compared to $24.9 billion as of March 31, 2023. Gross loans and leases were $14.4 billion as of June 30, 2023, an increase of $141.6 million, or 1.0%, from $14.2 billion as of March 31, 2023. Total deposits were $21.1 billion as of June 30, 2023, a decrease of $203.3 million, or 1.0%, from $21.3 billion as of March 31, 2023. Net Interest Income Net interest income for the second quarter of 2023 was $159.9 million, a decrease of $7.3 million, or 4.4%, compared to $167.2 million for the prior quarter. The net interest margin was 2.91% in the second quarter of 2023, a decrease of 20 basis points compared to 3.11% in the prior quarter. Provision Expense During the quarter ended June 30, 2023, we recorded a $5.0 million provision for credit losses. In the quarter ended March 31, 2023, we recorded a $8.8 million provision for credit losses. Noninterest Income Noninterest income was $47.3 million in the second quarter of 2023, a decrease of $1.7 million compared to noninterest income of $49.0 million in the prior quarter. Noninterest Expense Noninterest expense was $120.9 million in the second quarter of 2023, an increase of $2.3 million compared to noninterest expense of $118.6 million in the prior quarter. The efficiency ratio was 58.0% and 54.5% for the quarters ended June 30, 2023 and March 31, 2023, respectively. Taxes The effective tax rate was 23.3% and 24.8% for the quarters ended June 30, 2023 and March 31, 2023, respectively. Asset Quality The allowance for credit losses was $148.6 million, or 1.03% of total loans and leases, as of June 30, 2023, compared to $147.1 million, or 1.03% of total loans and leases, as of March 31, 2023. The reserve for unfunded commitments was $36.2 million as of both June 30, 2023 and March 31, 2023. Net charge-offs were $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended June 30, 2023, compared to net charge-offs of $3.2 million, or 0.09% of average loans and leases on an annualized basis, for the quarter ended March 31, 2023. Total non-performing assets were $13.2 million, or 0.09% of total loans and leases and other real estate owned, on June 30, 2023, compared to total non-performing assets of $13.8 million, or 0.10% of total loans and leases and other real estate owned, on March 31, 2023. Capital Total stockholders' equity was $2.4 billion and $2.3 billion on June 30, 2023 and March 31, 2023, respectively. The tier 1 leverage, common equity tier 1 and total capital ratios were 8.30%, 12.05% and 13.17%, respectively, on June 30, 2023, compared with 8.26%, 11.97%, and 13.09%, respectively, on March 31, 2023. The Company did not repurchase any shares in the second 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 by phone, please register via the following link: https://register.vevent.com/register/BI348950fc095448439d48b25a0e9c5697, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. 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. Forward-Looking StatementsThis 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. 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 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, 2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. Use of Non-GAAP Financial MeasuresReturn on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy. Table 14 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures. Investor Relations Contact: Kevin Haseyama, CFA(808) 525-6268khaseyama@fhb.comMedia Contact:Lindsay Chambers(808) 525-6254lchambers@fhb.com Financial Highlights Table 1 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2023 2022 Operating Results: Net interest income $159,939 $167,247 $145,147 $327,186 $279,019 Provision for credit losses 5,000 8,800 1,000 13,800 (4,747) Noninterest income 47,348 49,023 44,137 96,371 85,517 Noninterest expense 120,881 118,567 109,175 239,448 213,217 Net income 62,442 66,818 59,360 129,260 117,079 Basic earnings per share 0.49 0.52 0.46 1.01 0.92 Diluted earnings per share 0.49 0.52 0.46 1.01 0.91 Dividends declared per share 0.26 0.26 0.26 0.52 0.52 Dividend payout ratio 53.06% 50.00% 56.52% 51.49% 57.14 %Performance Ratios(1): Net interest margin 2.91% 3.11% 2.60% 3.01% 2.51 %Efficiency ratio 57.96% 54.46% 57.33% 56.17% 58.15 %Return on average total assets 1.01% 1.10% 0.94% 1.06% 0.94 %Return on average tangible assets (non-GAAP)(2) 1.05% 1.15% 0.98% 1.10% 0.98 %Return on average total stockholders' equity 10.68% 11.78% 10.52% 11.23% 9.82 %Return on average tangible stockholders' equity (non-GAAP)(2) 18.57% 20.78% 18.79% 19.65% 16.76 %Average Balances: Average loans and leases $14,283,222 $14,079,337 $13,058,558 $14,181,842 $12,939,745 Average earning assets 22,186,316 21,873,259 22,520,605 22,030,652 22,492,066 Average assets 24,821,486 24,548,124 25,250,176 24,685,560 25,165,783 Average deposits 21,057,259 21,468,624 22,401,558 21,261,805 22,182,406 Average stockholders' equity 2,344,285 2,299,422 2,262,654 2,321,977 2,404,471 Market Value Per Share: Closing 18.01 20.63 22.80 18.01 22.80 High 21.00 28.28 28.44 28.28 31.16 Low 15.08 19.68 21.49 15.08 21.49 As of As of As of As of June 30, March 31, December 31, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2022 Balance Sheet Data: Loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781 Total assets 24,511,566 24,884,207 24,577,223 25,377,533 Total deposits 21,078,166 21,281,500 21,689,029 22,601,454 Short-term borrowings — 250,000 75,000 — Long-term borrowings 500,000 500,000 — — Total stockholders' equity 2,359,738 2,329,012 2,269,005 2,252,611 Per Share of Common Stock: Book value $18.49 $18.26 $17.82 $17.67 Tangible book value (non-GAAP)(2) 10.69 10.45 10.00 9.86 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.09% 0.10% 0.08% 0.06%Allowance for credit losses for loans and leases / total loans and leases 1.03% 1.03% 1.02% 1.12% Capital Ratios: Common Equity Tier 1 Capital Ratio 12.05% 11.97% 11.82% 11.98%Tier 1 Capital Ratio 12.05% 11.97% 11.82% 11.98%Total Capital Ratio 13.17% 13.09% 12.92% 13.14%Tier 1 Leverage Ratio 8.30% 8.26% 8.11% 7.54%Total stockholders' equity to total assets 9.63% 9.36% 9.23% 8.88%Tangible stockholders' equity to tangible assets (non-GAAP)(2) 5.80% 5.58% 5.40% 5.16% Non-Financial Data: Number of branches 51 51 51 51 Number of ATMs 296 296 294 297 Number of Full-Time Equivalent Employees 2,126 2,100 2,063 2,021 _____________________ (1) Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. (2) Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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 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 tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. 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. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation. Consolidated Statements of Income Table 2 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30,(dollars in thousands, except per share amounts) 2023 2023 2022 2023 2022 Interest income Loans and lease financing $185,340 $172,339 $111,916 $357,679 $215,648 Available-for-sale investment securities 18,094 18,688 16,643 36,782 48,750 Held-to-maturity investment securities 18,282 18,957 18,289 37,239 18,289 Other 7,489 3,561 2,896 11,050 3,678 Total interest income 229,205 213,545 149,744 442,750 286,365 Interest expense Deposits 58,071 43,284 4,597 101,355 7,346 Short-term and long-term borrowings 10,656 2,563 — 13,219 — Other 539 451 — 990 — Total interest expense 69,266 46,298 4,597 115,564 7,346 Net interest income 159,939 167,247 145,147 327,186 279,019 Provision for credit losses 5,000 8,800 1,000 13,800 (4,747)Net interest income after provision for credit losses 154,939 158,447 144,147 313,386 283,766 Noninterest income Service charges on deposit accounts 7,246 7,231 6,843 14,477 14,344 Credit and debit card fees 15,461 16,298 17,056 31,759 31,906 Other service charges and fees 9,056 9,162 9,018 18,218 18,672 Trust and investment services income 9,448 9,614 8,759 19,062 17,642 Bank-owned life insurance 3,271 5,120 (859) 8,391 (1,276)Other 2,866 1,598 3,320 4,464 4,229 Total noninterest income 47,348 49,023 44,137 96,371 85,517 Noninterest expense Salaries and employee benefits 57,904 56,032 49,902 113,936 98,128 Contracted services and professional fees 17,498 16,313 18,617 33,811 35,764 Occupancy 7,554 7,782 7,334 15,336 14,744 Equipment 11,000 9,736 7,754 20,736 13,731 Regulatory assessment and fees 3,676 3,836 2,301 7,512 4,525 Advertising and marketing 1,891 1,994 1,994 3,885 4,022 Card rewards program 7,681 8,085 7,285 15,766 14,168 Other 13,677 14,789 13,988 28,466 28,135 Total noninterest expense 120,881 118,567 109,175 239,448 213,217 Income before provision for income taxes 81,406 88,903 79,109 170,309 156,066 Provision for income taxes 18,964 22,085 19,749 41,049 38,987 Net income $62,442 $66,818 $59,360 $129,260 $117,079 Basic earnings per share $0.49 $0.52 $0.46 $1.01 $0.92 Diluted earnings per share $0.49 $0.52 $0.46 $1.01 $0.91 Basic weighted-average outstanding shares 127,591,371 127,453,820 127,672,244 127,522,975 127,614,564 Diluted weighted-average outstanding shares 127,832,351 128,033,812 128,014,777 127,901,225 128,108,630 Consolidated Balance Sheets Table 3 June 30, March 31, December 31, June 30,(dollars in thousands, except share amount) 2023 2023 2022 2022Assets Cash and due from banks $318,333 $253,705 $297,502 $279,629 Interest-bearing deposits in other banks 239,798 611,887 229,122 1,254,047 Investment securities: Available-for-sale, at fair value (amortized cost: $3,296,825 as of June 30, 2023, $3,427,708 as of March 31, 2023, $3,549,599 as of December 31, 2022 and $4,267,809 as of June 30, 2022) 2,909,372 3,054,280 3,151,133 3,967,746 Held-to-maturity, at amortized cost (fair value: $3,697,261 as of June 30, 2023, $3,824,478 as of March 31, 2023, $3,814,822 as of December 31, 2022 and $3,910,780 as of June 30, 2022) 4,180,408 4,261,361 4,320,639 4,093,215 Loans held for sale — — — 180 Loans and leases 14,362,832 14,221,272 14,092,012 13,262,781 Less: allowance for credit losses 148,581 147,122 143,900 148,942 Net loans and leases 14,214,251 14,074,150 13,948,112 13,113,839 Premises and equipment, net 277,817 278,121 280,355 310,047 Other real estate owned and repossessed personal property — 91 91 — Accrued interest receivable 80,710 79,200 78,194 63,240 Bank-owned life insurance 476,177 473,255 473,067 470,542 Goodwill 995,492 995,492 995,492 995,492 Mortgage servicing rights 6,072 6,299 6,562 7,152 Other assets 813,136 796,366 796,954 822,404 Total assets $24,511,566 $24,884,207 $24,577,223 $25,377,533 Liabilities and Stockholders' Equity Deposits: Interest-bearing $12,911,539 $12,579,155 $12,824,383 $12,990,571 Noninterest-bearing 8,166,627 8,702,345 8,864,646 9,610,883 Total deposits 21,078,166 21,281,500 21,689,029 22,601,454 Short-term borrowings — 250,000 75,000 — Long-term borrowings 500,000 500,000 — — Retirement benefits payable 100,671 101,622 102,577 134,151 Other liabilities 472,991 422,073 441,612 389,317 Total liabilities 22,151,828 22,555,195 22,308,218 23,124,922 Stockholders' equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,327,860 / 127,608,037 shares as of June 30, 2023, issued/outstanding: 141,291,086 / 127,573,680 shares as of March 31, 2023, issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022 and issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022) 1,413 1,413 1,410 1,409 Additional paid-in capital 2,543,226 2,540,653 2,538,336 2,533,407 Retained earnings 799,045 769,791 736,544 654,777 Accumulated other comprehensive loss, net (612,736) (611,679) (639,254) (571,457)Treasury stock (13,719,823 shares as of June 30, 2023, 13,717,406 shares as of March 31, 2023, 13,600,591 shares as of December 31, 2022 and 13,492,821 shares as of June 30, 2022) (371,210) (371,166) (368,031) (365,525)Total stockholders' equity 2,359,738 2,329,012 2,269,005 2,252,611 Total liabilities and stockholders' equity $24,511,566 $24,884,207 $24,577,223 $25,377,533 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended June 30, 2023 March 31, 2023 June 30, 2022 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 $569.3 $7.2 5.07%$299.6 $3.4 4.60%$1,297.3 $2.8 0.85%Available-for-Sale Investment Securities Taxable 2,978.6 18.0 2.42 3,081.4 18.4 2.39 3,946.4 16.6 1.68 Non-Taxable 5.8 0.1 5.74 31.1 0.4 5.55 8.4 0.1 5.26 Held-to-Maturity Investment Securities Taxable 3,618.7 15.3 1.69 3,683.8 15.7 1.70 3,533.6 15.0 1.70 Non-Taxable 610.4 3.7 2.46 612.2 4.1 2.74 607.0 4.1 2.71 Total Investment Securities 7,213.5 37.1 2.06 7,408.5 38.6 2.09 8,095.4 35.8 1.77 Loans Held for Sale 0.5 — 5.87 0.1 — 5.53 0.3 — 5.06 Loans and Leases(1) Commercial and industrial 2,265.7 36.2 6.41 2,192.9 32.4 5.98 1,951.3 15.0 3.09 Commercial real estate 4,183.6 64.9 6.22 4,105.7 58.3 5.76 3,808.9 30.7 3.23 Construction 874.3 15.2 6.96 873.9 14.7 6.83 711.3 6.3 3.57 Residential: Residential mortgage 4,314.0 39.1 3.62 4,307.0 38.4 3.57 4,183.0 36.7 3.51 Home equity line 1,119.3 9.2 3.31 1,074.9 8.7 3.27 945.7 5.9 2.49 Consumer 1,196.6 17.7 5.92 1,213.5 17.2 5.75 1,218.0 15.5 5.09 Lease financing 329.7 3.6 4.43 311.4 3.1 4.10 240.4 2.1 3.53 Total Loans and Leases 14,283.2 185.9 5.22 14,079.3 172.8 4.96 13,058.6 112.2 3.44 Other Earning Assets 119.8 0.3 0.99 85.8 0.2 0.76 69.0 0.1 0.79 Total Earning Assets(2) 22,186.3 230.5 4.16 21,873.3 215.0 3.97 22,520.6 150.9 2.68 Cash and Due from Banks 257.9 286.1 300.8 Other Assets 2,377.3 2,388.7 2,428.8 Total Assets $24,821.5 $24,548.1 $25,250.2 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $6,099.4 $16.1 1.05%$6,354.3 $13.9 0.89% 6,971.3 $1.7 0.10%Money Market 3,809.8 19.6 2.07 3,853.5 14.3 1.50 4,127.4 1.4 0.14 Time 2,877.8 22.4 3.12 2,515.6 15.1 2.44 1,671.4 1.5 0.36 Total Interest-Bearing Deposits 12,787.0 58.1 1.82 12,723.4 43.3 1.38 12,770.1 4.6 0.14 Federal Funds Purchased 2.9 — 5.00 67.1 0.7 4.43 — — — Other Short-Term Borrowings 362.9 4.7 5.16 52.8 0.7 5.02 — — — Long-Term Borrowings 500.0 6.0 4.78 105.5 1.2 4.52 — — — Other Interest-Bearing Liabilities 54.0 0.5 4.00 42.8 0.4 4.27 — — — Total Interest-Bearing Liabilities 13,706.8 69.3 2.03 12,991.6 46.3 1.45 12,770.1 4.6 0.14 Net Interest Income $161.2 $168.7 $146.3 Interest Rate Spread 2.13% 2.52% 2.54%Net Interest Margin 2.91% 3.11% 2.60%Noninterest-Bearing Demand Deposits 8,270.3 8,745.2 9,631.4 Other Liabilities 500.1 511.9 586.0 Stockholders' Equity 2,344.3 2,299.4 2,262.7 Total Liabilities and Stockholders' Equity $24,821.5 $24,548.1 $25,250.2 ______________________________ (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 $1.3 million, $1.4 million and $1.2 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively. Average Balances and Interest Rates Table 5 Six Months Ended Six Months Ended June 30, 2023 June 30, 2022 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $435.2 $10.6 4.91%$1,218.3 $3.3 0.55%Available-for-Sale Investment Securities Taxable 3,029.7 36.4 2.41 5,862.7 45.7 1.56 Non-Taxable 18.4 0.5 5.58 320.8 3.9 2.41 Held-to-Maturity Investment Securities Taxable 3,651.1 30.9 1.70 1,776.6 15.0 1.69 Non-Taxable 611.3 7.9 2.60 305.2 4.1 2.71 Total Investment Securities 7,310.5 75.7 2.08 8,265.3 68.7 1.66 Loans Held for Sale 0.3 — 5.79 0.8 — 2.60 Loans and Leases(1) Commercial and industrial 2,229.5 68.6 6.20 1,962.1 29.7 3.05 Commercial real estate 4,144.9 123.2 5.99 3,721.0 56.4 3.06 Construction 874.1 29.9 6.89 738.9 12.1 3.30 Residential: Residential mortgage 4,310.5 77.5 3.59 4,147.2 71.5 3.45 Home equity line 1,097.2 17.9 3.29 918.8 11.3 2.48 Consumer 1,205.0 34.8 5.84 1,218.3 31.1 5.14 Lease financing 320.6 6.8 4.27 233.4 4.0 3.48 Total Loans and Leases 14,181.8 358.7 5.09 12,939.7 216.1 3.36 Other Earning Assets 102.9 0.5 0.90 68.0 0.4 1.05 Total Earning Assets(2) 22,030.7 445.5 4.07 22,492.1 288.5 2.58 Cash and Due from Banks 271.9 296.5 Other Assets 2,383.0 2,377.2 Total Assets $24,685.6 $25,165.8 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $6,226.2 $30.0 0.97%$6,820.7 $2.2 0.07%Money Market 3,831.5 33.9 1.78 4,088.3 2.0 0.09 Time 2,697.7 37.5 2.80 1,709.8 3.2 0.38 Total Interest-Bearing Deposits 12,755.4 101.4 1.60 12,618.8 7.4 0.12 Federal Funds Purchased 34.8 0.8 4.45 — — — Other Short-Term Borrowings 208.7 5.3 5.14 — — — Long-Term Borrowings 303.8 7.1 4.73 — — — Other Interest-Bearing Liabilities 48.5 1.0 4.12 — — — Total Interest-Bearing Liabilities 13,351.2 115.6 1.75 12,618.8 7.4 0.12 Net Interest Income $329.9 $281.1 Interest Rate Spread 2.32% 2.46%Net Interest Margin 3.01% 2.51%Noninterest-Bearing Demand Deposits 8,506.4 9,563.6 Other Liabilities 506.0 578.9 Stockholders' Equity 2,322.0 2,404.5 Total Liabilities and Stockholders' Equity $24,685.6 $25,165.8 ______________________________ (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 $2.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively. Analysis of Change in Net Interest Income Table 6 Three Months Ended June 30, 2023 Compared to March 31, 2023(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $3.4 $0.4 $3.8 Available-for-Sale Investment Securities Taxable (0.6) 0.2 (0.4)Non-Taxable (0.3) — (0.3)Held-to-Maturity Investment Securities Taxable (0.3) (0.1) (0.4)Non-Taxable — (0.4) (0.4)Total Investment Securities (1.2) (0.3) (1.5)Loans and Leases Commercial and industrial 1.2 2.6 3.8 Commercial real estate 1.3 5.3 6.6 Construction — 0.5 0.5 Residential: Residential mortgage 0.1 0.6 0.7 Home equity line 0.4 0.1 0.5 Consumer (0.2) 0.7 0.5 Lease financing 0.2 0.3 0.5 Total Loans and Leases 3.0 10.1 13.1 Other Earning Assets 0.1 — 0.1 Total Change in Interest Income 5.3 10.2 15.5 Change in Interest Expense: Interest-Bearing Deposits Savings (0.5) 2.7 2.2 Money Market (0.2) 5.5 5.3 Time 2.5 4.8 7.3 Total Interest-Bearing Deposits 1.8 13.0 14.8 Federal Funds Purchased (0.8) 0.1 (0.7)Other Short-Term Borrowings 4.0 — 4.0 Long-Term Borrowings 4.7 0.1 4.8 Other Interest-Bearing Liabilities 0.1 — 0.1 Total Change in Interest Expense 9.8 13.2 23.0 Change in Net Interest Income $(4.5) $(3.0) $(7.5) Analysis of Change in Net Interest Income Table 7 Three Months Ended June 30, 2023 Compared to June 30, 2022(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $(2.3) $6.7 $4.4 Available-for-Sale Investment Securities Taxable (4.7) 6.1 1.4 Held-to-Maturity Investment Securities Taxable 0.3 — 0.3 Non-Taxable — (0.4) (0.4)Total Investment Securities (4.4) 5.7 1.3 Loans and Leases Commercial and industrial 2.8 18.4 21.2 Commercial real estate 3.3 30.9 34.2 Construction 1.7 7.2 8.9 Residential: Residential mortgage 1.2 1.2 2.4 Home equity line 1.2 2.1 3.3 Consumer (0.3) 2.5 2.2 Lease financing 0.9 0.6 1.5 Total Loans and Leases 10.8 62.9 73.7 Other Earning Assets 0.1 0.1 0.2 Total Change in Interest Income 4.2 75.4 79.6 Change in Interest Expense: Interest-Bearing Deposits Savings (0.2) 14.6 14.4 Money Market (0.1) 18.3 18.2 Time 1.8 19.1 20.9 Total Interest-Bearing Deposits 1.5 52.0 53.5 Other Short-Term Borrowings 4.7 — 4.7 Long-Term Borrowings 6.0 — 6.0 Other Interest-Bearing Liabilities 0.5 — 0.5 Total Change in Interest Expense 12.7 52.0 64.7 Change in Net Interest Income $(8.5) $23.4 $14.9 Analysis of Change in Net Interest Income Table 8 Six Months Ended June 30, 2023 Compared to June 30, 2022(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $(3.4) $10.7 $7.3 Available-for-Sale Investment Securities Taxable (27.6) 18.3 (9.3)Non-Taxable (5.6) 2.2 (3.4)Held-to-Maturity Investment Securities Taxable 15.8 0.1 15.9 Non-Taxable 4.0 (0.2) 3.8 Total Investment Securities (13.4) 20.4 7.0 Loans and Leases Commercial and industrial 4.5 34.4 38.9 Commercial real estate 7.1 59.7 66.8 Construction 2.5 15.3 17.8 Residential: Residential mortgage 3.0 3.0 6.0 Home equity line 2.5 4.1 6.6 Consumer (0.4) 4.1 3.7 Lease financing 1.7 1.1 2.8 Total Loans and Leases 20.9 121.7 142.6 Other Earning Assets 0.2 (0.1) 0.1 Total Change in Interest Income 4.3 152.7 157.0 Change in Interest Expense: Interest-Bearing Deposits Savings (0.2) 28.0 27.8 Money Market (0.1) 32.0 31.9 Time 2.8 31.5 34.3 Total Interest-Bearing Deposits 2.5 91.5 94.0 Federal Funds Purchased 0.8 — 0.8 Other Short-Term Borrowings 5.3 — 5.3 Long-Term Borrowings 7.1 — 7.1 Other Interest-Bearing Liabilities 1.0 — 1.0 Total Change in Interest Expense 16.7 91.5 108.2 Change in Net Interest Income $(12.4) $61.2 $48.8 Loans and Leases Table 9 June 30, March 31, December 31, June 30,(dollars in thousands) 2023 2023 2022 2022Commercial and industrial: Commercial and industrial excluding Paycheck Protection Program loans $2,175,841 $2,254,506 $2,217,604 $1,898,899Paycheck Protection Program loans 11,990 13,826 18,293 43,233Total commercial and industrial 2,187,831 2,268,332 2,235,897 1,942,132Commercial real estate 4,290,948 4,106,200 4,132,309 3,956,828Construction 913,837 913,959 844,643 727,771Residential: Residential mortgage 4,317,537 4,318,742 4,302,788 4,212,768Home equity line 1,138,163 1,095,365 1,055,351 971,569Total residential 5,455,700 5,414,107 5,358,139 5,184,337Consumer 1,182,116 1,191,552 1,222,934 1,207,051Lease financing 332,400 327,122 298,090 244,662Total loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781 Deposits Table 10 June 30, March 31, December 31, June 30,(dollars in thousands) 2023 2023 2022 2022Demand $8,166,627 $8,702,345 $8,864,646 $9,610,883Savings 5,835,975 6,173,398 6,382,910 7,243,185Money Market 3,767,792 3,818,355 3,965,423 4,079,706Time 3,307,772 2,587,402 2,476,050 1,667,680Total Deposits $21,078,166 $21,281,500 $21,689,029 $22,601,454 Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11 June 30, March 31, December 31, June 30, (dollars in thousands) 2023 2023 2022 2022Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 1,024 $1,158 $1,215 $682Commercial real estate — 727 727 727Total Commercial Loans 1,024 1,885 1,942 1,409Residential Loans: Residential mortgage 6,097 6,896 6,166 6,450Home equity line 6,107 4,903 3,797 —Total Residential Loans 12,204 11,799 9,963 6,450Total Non-Accrual Loans and Leases 13,228 13,684 11,905 7,859Other Real Estate Owned — 91 91 —Total Non-Performing Assets $ 13,228 $13,775 $11,996 $7,859 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 599 $461 $291 $2,230Commercial real estate 619 1,346 — 176Construction — 102 — 352Total Commercial Loans 1,218 1,909 291 2,758Residential Loans: Residential mortgage 58 58 58 750Home equity line — — — 1,039Total Residential Loans 58 58 58 1,789Consumer 1,975 2,502 2,885 1,218Total Accruing Loans and Leases Past Due 90 Days or More $ 3,251 $4,469 $3,234 $5,765 Total Loans and Leases $ 14,362,832 $14,221,272 $14,092,012 $13,262,781 Allowance for Credit Losses and Reserve for Unfunded Commitments Table 12 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Balance at Beginning of Period $183,321 $177,735 $179,238 177,735 187,584 Loans and Leases Charged-Off Commercial and industrial (997) (791) (243) (1,788) (949) Residential Loans: Residential mortgage — (122) — (122) — Home equity line (137) (135) (1,120) (272) (1,163) Total Residential Loans (137) (257) (1,120) (394) (1,163) Consumer (4,516) (4,782) (3,659) (9,298) (7,768) Total Loans and Leases Charged-Off (5,650) (5,830) (5,022) (11,480) (9,880) Recoveries on Loans and Leases Previously Charged-Off Commercial Loans: Commercial and industrial 292 246 301 538 354 Commercial real estate — — — — 14 Lease financing — — 60 — 60 Total Commercial Loans 292 246 361 538 428 Residential Loans: Residential mortgage 30 27 192 57 208 Home equity line 59 177 191 236 219 Total Residential Loans 89 204 383 293 427 Consumer 1,728 2,166 1,940 3,894 4,088 Total Recoveries on Loans and Leases Previously Charged-Off 2,109 2,616 2,684 4,725 4,943 Net Loans and Leases Charged-Off (3,541) (3,214) (2,338) (6,755) (4,937) Provision for Credit Losses 5,000 8,800 1,000 13,800 (4,747) Balance at End of Period $184,780 $183,321 $177,900 $184,780 $177,900 Components: Allowance for Credit Losses $148,581 $147,122 $148,942 $148,581 $148,942 Reserve for Unfunded Commitments 36,199 36,199 28,958 36,199 28,958 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $184,780 $183,321 $177,900 $184,780 $177,900 Average Loans and Leases Outstanding $14,283,222 $14,079,337 $13,058,558 $14,181,842 $12,939,745 Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) 0.10 % 0.09 % 0.07 % 0.10 % 0.08 %Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.03 % 1.03 % 1.12 % 1.03 % 1.12 %Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 11.23x 10.75x 18.95x 11.23x 18.95x _____________________________ (1) Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. 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) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis TotalCommercial Lending Commercial and Industrial Risk rating: Pass $33,877 $299,913 $385,159 $38,769 $157,794 $165,747 $952,182 $15,003 $2,048,444Special Mention 103 31,193 154 849 2,397 1,481 2,967 186 39,330Substandard 352 563 260 936 819 1,100 12,539 17 16,586Other(1) 11,743 13,284 6,301 3,275 2,644 1,668 44,556 — 83,471Total Commercial and Industrial 46,075 344,953 391,874 43,829 163,654 169,996 1,012,244 15,206 2,187,831Current period gross charge-offs 72 60 9 28 92 1,527 — — 1,788 Commercial Real Estate Risk rating: Pass 212,159 876,558 655,847 333,142 564,881 1,499,805 72,447 — 4,214,839Special Mention 1,737 156 — 547 6,983 12,389 12,952 — 34,764Substandard — 5,141 — 171 — 35,883 2 — 41,197Other(1) — — — — — 148 — — 148Total Commercial Real Estate 213,896 881,855 655,847 333,860 571,864 1,548,225 85,401 — 4,290,948Current period gross charge-offs — — — — — — — — — Construction Risk rating: Pass 77,826 182,679 365,959 76,728 61,906 82,554 6,562 — 854,214Special Mention — — — — 205 — — — 205Other(1) 6,601 26,882 15,766 3,261 2,136 4,067 705 — 59,418Total Construction 84,427 209,561 381,725 79,989 64,247 86,621 7,267 — 913,837Current period gross charge-offs — — — — — — — — — Lease Financing Risk rating: Pass 69,487 94,276 21,167 39,215 35,964 70,312 — — 330,421Special Mention — — 365 60 — — — — 425Substandard — — — 171 7 1,376 — — 1,554Total Lease Financing 69,487 94,276 21,532 39,446 35,971 71,688 — — 332,400Current period gross charge-offs — — — — — — — — — Total Commercial Lending $413,885 $1,530,645 $1,450,978 $497,124 $835,736 $1,876,530 $1,104,912 $15,206 $7,725,016Current period gross charge-offs $72 $60 $9 $28 $92 $1,527 $— $— $1,788 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans (continued) Amortized Amortized (dollars in thousands) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis TotalResidential Lending Residential Mortgage FICO: 740 and greater $138,593 $530,776 $1,030,287 $544,330 $236,821 $1,036,361 $— $— $3,517,168680 - 739 25,500 81,562 117,701 74,446 34,186 135,766 — — 469,161620 - 679 2,468 11,212 16,463 10,747 5,743 38,132 — — 84,765550 - 619 — 3,383 4,058 2,471 254 12,362 — — 22,528Less than 550 — 197 2,372 1,581 51 5,403 — — 9,604No Score(3) 6,075 19,497 12,552 6,378 9,837 56,201 — — 110,540Other(2) 9,916 18,075 17,857 12,952 8,915 28,438 7,618 — 103,771Total Residential Mortgage 182,552 664,702 1,201,290 652,905 295,807 1,312,663 7,618 — 4,317,537Current period gross charge-offs — — — — — 122 — — 122 Home Equity Line FICO: 740 and greater — — — — — — 930,741 1,668 932,409680 - 739 — — — — — — 151,418 2,449 153,867620 - 679 — — — — — — 32,897 1,376 34,273550 - 619 — — — — — — 9,428 1,448 10,876Less than 550 — — — — — — 5,127 312 5,439No Score(3) — — — — — — 1,299 — 1,299Total Home Equity Line — — — — — — 1,130,910 7,253 1,138,163Current period gross charge-offs — — — — — — 254 18 272 Total Residential Lending $182,552 $664,702 $1,201,290 $652,905 $295,807 $1,312,663 $1,138,528 $7,253 $5,455,700Current period gross charge-offs $— $— $— $— $— $122 $254 $18 $394 Consumer Lending FICO: 740 and greater 70,561 153,960 93,788 45,022 34,093 19,410 117,437 140 534,411680 - 739 44,064 84,900 49,136 23,895 19,424 11,352 72,327 431 305,529620 - 679 14,643 37,576 19,488 9,771 11,007 8,482 33,692 941 135,600550 - 619 2,255 10,974 8,135 5,608 6,314 5,207 11,730 748 50,971Less than 550 418 4,358 4,478 2,695 2,975 2,765 4,247 560 22,496No Score(3) 1,425 586 2 — 6 17 39,035 167 41,238Other(2) 36 1,208 3,536 343 1,113 1 85,634 — 91,871Total Consumer Lending $133,402 $293,562 $178,563 $87,334 $74,932 $47,234 $364,102 $2,987 $1,182,116Current period gross charge-offs $58 $1,244 $1,260 $630 $1,239 $1,388 $3,131 $348 $9,298 Total Loans and Leases $729,839 $2,488,909 $2,830,831 $1,237,363 $1,206,475 $3,236,427 $2,607,542 $25,446 $14,362,832Current period gross charge-offs $130 $1,304 $1,269 $658 $1,331 $3,037 $3,385 $366 $11,480 _______________________________ (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 Six Months Ended June 30, March 31, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Income Statement Data: Net income $62,442 $66,818 $59,360 $129,260 $117,079 Average total stockholders' equity $2,344,285 $2,299,422 $2,262,654 $2,321,977 $2,404,471 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders' equity $1,348,793 $1,303,930 $1,267,162 $1,326,485 $1,408,979 Average total assets $24,821,486 $24,548,124 $25,250,176 $24,685,560 $25,165,783 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $23,825,994 $23,552,632 $24,254,684 $23,690,068 $24,170,291 Return on average total stockholders' equity(1) 10.68% 11.78% 10.52% 11.23% 9.82%Return on average tangible stockholders' equity (non-GAAP)(1) 18.57% 20.78% 18.79% 19.65% 16.76% Return on average total assets(1) 1.01% 1.10% 0.94% 1.06% 0.94%Return on average tangible assets (non-GAAP)(1) 1.05% 1.15% 0.98% 1.10% 0.98% As of As of As of As of June 30, March 31, December 31, June 30, (dollars in thousands, except shares outstanding and per share amounts) 2023 2023 2022 2022 Balance Sheet Data: Total stockholders' equity $2,359,738 $2,329,012 $2,269,005 $2,252,611 Less: goodwill 995,492 995,492 995,492 995,492 Tangible stockholders' equity $1,364,246 $1,333,520 $1,273,513 $1,257,119 Total assets $24,511,566 $24,884,207 $24,577,223 $25,377,533 Less: goodwill 995,492 995,492 995,492 995,492 Tangible assets $23,516,074 $23,888,715 $23,581,731 $24,382,041 Shares outstanding 127,608,037 127,573,680 127,363,327 127,451,087 Total stockholders' equity to total assets 9.63% 9.36% 9.23% 8.88%Tangible stockholders' equity to tangible assets (non-GAAP) 5.80% 5.58% 5.40% 5.16% Book value per share $18.49 $18.26 $17.82 $17.67 Tangible book value per share (non-GAAP) $10.69 $10.45 $10.00 $9.86 _____________________________ (1) Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023.
HONOLULU, July 28, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended June 30, 2023. “I’m pleased to report that we had a solid second quarter in spite of a challenging interest rate environment,” said Bob Harrison, Chairman, President and CEO. “We grew loans and capital, credit quality remains excellent, and our profitability measures continue to be strong.” On July 19, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 1, 2023, to stockholders of record at the close of business on August 21, 2023. Second Quarter 2023 Highlights: Net income of $62.4 million, or $0.49 per diluted shareTotal loans and leases increased $141.6 million versus prior quarterTotal deposits decreased $203.3 million versus prior quarterNet interest margin decreased 20 basis points to 2.91%Recorded a $5.0 million provision for credit lossesBoard of Directors declared a quarterly dividend of $0.26 per share Balance Sheet Total assets were $24.5 billion as of June 30, 2023, compared to $24.9 billion as of March 31, 2023. Gross loans and leases were $14.4 billion as of June 30, 2023, an increase of $141.6 million, or 1.0%, from $14.2 billion as of March 31, 2023. Total deposits were $21.1 billion as of June 30, 2023, a decrease of $203.3 million, or 1.0%, from $21.3 billion as of March 31, 2023. Net Interest Income Net interest income for the second quarter of 2023 was $159.9 million, a decrease of $7.3 million, or 4.4%, compared to $167.2 million for the prior quarter. The net interest margin was 2.91% in the second quarter of 2023, a decrease of 20 basis points compared to 3.11% in the prior quarter. Provision Expense During the quarter ended June 30, 2023, we recorded a $5.0 million provision for credit losses. In the quarter ended March 31, 2023, we recorded a $8.8 million provision for credit losses. Noninterest Income Noninterest income was $47.3 million in the second quarter of 2023, a decrease of $1.7 million compared to noninterest income of $49.0 million in the prior quarter. Noninterest Expense Noninterest expense was $120.9 million in the second quarter of 2023, an increase of $2.3 million compared to noninterest expense of $118.6 million in the prior quarter. The efficiency ratio was 58.0% and 54.5% for the quarters ended June 30, 2023 and March 31, 2023, respectively. Taxes The effective tax rate was 23.3% and 24.8% for the quarters ended June 30, 2023 and March 31, 2023, respectively. Asset Quality The allowance for credit losses was $148.6 million, or 1.03% of total loans and leases, as of June 30, 2023, compared to $147.1 million, or 1.03% of total loans and leases, as of March 31, 2023. The reserve for unfunded commitments was $36.2 million as of both June 30, 2023 and March 31, 2023. Net charge-offs were $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended June 30, 2023, compared to net charge-offs of $3.2 million, or 0.09% of average loans and leases on an annualized basis, for the quarter ended March 31, 2023. Total non-performing assets were $13.2 million, or 0.09% of total loans and leases and other real estate owned, on June 30, 2023, compared to total non-performing assets of $13.8 million, or 0.10% of total loans and leases and other real estate owned, on March 31, 2023. Capital Total stockholders' equity was $2.4 billion and $2.3 billion on June 30, 2023 and March 31, 2023, respectively. The tier 1 leverage, common equity tier 1 and total capital ratios were 8.30%, 12.05% and 13.17%, respectively, on June 30, 2023, compared with 8.26%, 11.97%, and 13.09%, respectively, on March 31, 2023. The Company did not repurchase any shares in the second 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 by phone, please register via the following link: https://register.vevent.com/register/BI348950fc095448439d48b25a0e9c5697, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. 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. Forward-Looking StatementsThis 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. 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 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, 2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. Use of Non-GAAP Financial MeasuresReturn on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy. Table 14 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures. Investor Relations Contact: Kevin Haseyama, CFA(808) 525-6268khaseyama@fhb.comMedia Contact:Lindsay Chambers(808) 525-6254lchambers@fhb.com Financial Highlights Table 1 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2023 2022 Operating Results: Net interest income $159,939 $167,247 $145,147 $327,186 $279,019 Provision for credit losses 5,000 8,800 1,000 13,800 (4,747) Noninterest income 47,348 49,023 44,137 96,371 85,517 Noninterest expense 120,881 118,567 109,175 239,448 213,217 Net income 62,442 66,818 59,360 129,260 117,079 Basic earnings per share 0.49 0.52 0.46 1.01 0.92 Diluted earnings per share 0.49 0.52 0.46 1.01 0.91 Dividends declared per share 0.26 0.26 0.26 0.52 0.52 Dividend payout ratio 53.06% 50.00% 56.52% 51.49% 57.14 %Performance Ratios(1): Net interest margin 2.91% 3.11% 2.60% 3.01% 2.51 %Efficiency ratio 57.96% 54.46% 57.33% 56.17% 58.15 %Return on average total assets 1.01% 1.10% 0.94% 1.06% 0.94 %Return on average tangible assets (non-GAAP)(2) 1.05% 1.15% 0.98% 1.10% 0.98 %Return on average total stockholders' equity 10.68% 11.78% 10.52% 11.23% 9.82 %Return on average tangible stockholders' equity (non-GAAP)(2) 18.57% 20.78% 18.79% 19.65% 16.76 %Average Balances: Average loans and leases $14,283,222 $14,079,337 $13,058,558 $14,181,842 $12,939,745 Average earning assets 22,186,316 21,873,259 22,520,605 22,030,652 22,492,066 Average assets 24,821,486 24,548,124 25,250,176 24,685,560 25,165,783 Average deposits 21,057,259 21,468,624 22,401,558 21,261,805 22,182,406 Average stockholders' equity 2,344,285 2,299,422 2,262,654 2,321,977 2,404,471 Market Value Per Share: Closing 18.01 20.63 22.80 18.01 22.80 High 21.00 28.28 28.44 28.28 31.16 Low 15.08 19.68 21.49 15.08 21.49 As of As of As of As of June 30, March 31, December 31, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2022 Balance Sheet Data: Loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781 Total assets 24,511,566 24,884,207 24,577,223 25,377,533 Total deposits 21,078,166 21,281,500 21,689,029 22,601,454 Short-term borrowings — 250,000 75,000 — Long-term borrowings 500,000 500,000 — — Total stockholders' equity 2,359,738 2,329,012 2,269,005 2,252,611 Per Share of Common Stock: Book value $18.49 $18.26 $17.82 $17.67 Tangible book value (non-GAAP)(2) 10.69 10.45 10.00 9.86 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.09% 0.10% 0.08% 0.06%Allowance for credit losses for loans and leases / total loans and leases 1.03% 1.03% 1.02% 1.12% Capital Ratios: Common Equity Tier 1 Capital Ratio 12.05% 11.97% 11.82% 11.98%Tier 1 Capital Ratio 12.05% 11.97% 11.82% 11.98%Total Capital Ratio 13.17% 13.09% 12.92% 13.14%Tier 1 Leverage Ratio 8.30% 8.26% 8.11% 7.54%Total stockholders' equity to total assets 9.63% 9.36% 9.23% 8.88%Tangible stockholders' equity to tangible assets (non-GAAP)(2) 5.80% 5.58% 5.40% 5.16% Non-Financial Data: Number of branches 51 51 51 51 Number of ATMs 296 296 294 297 Number of Full-Time Equivalent Employees 2,126 2,100 2,063 2,021 _____________________ (1) Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. (2) Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. 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 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 tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. 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. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation. Consolidated Statements of Income Table 2 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30,(dollars in thousands, except per share amounts) 2023 2023 2022 2023 2022 Interest income Loans and lease financing $185,340 $172,339 $111,916 $357,679 $215,648 Available-for-sale investment securities 18,094 18,688 16,643 36,782 48,750 Held-to-maturity investment securities 18,282 18,957 18,289 37,239 18,289 Other 7,489 3,561 2,896 11,050 3,678 Total interest income 229,205 213,545 149,744 442,750 286,365 Interest expense Deposits 58,071 43,284 4,597 101,355 7,346 Short-term and long-term borrowings 10,656 2,563 — 13,219 — Other 539 451 — 990 — Total interest expense 69,266 46,298 4,597 115,564 7,346 Net interest income 159,939 167,247 145,147 327,186 279,019 Provision for credit losses 5,000 8,800 1,000 13,800 (4,747)Net interest income after provision for credit losses 154,939 158,447 144,147 313,386 283,766 Noninterest income Service charges on deposit accounts 7,246 7,231 6,843 14,477 14,344 Credit and debit card fees 15,461 16,298 17,056 31,759 31,906 Other service charges and fees 9,056 9,162 9,018 18,218 18,672 Trust and investment services income 9,448 9,614 8,759 19,062 17,642 Bank-owned life insurance 3,271 5,120 (859) 8,391 (1,276)Other 2,866 1,598 3,320 4,464 4,229 Total noninterest income 47,348 49,023 44,137 96,371 85,517 Noninterest expense Salaries and employee benefits 57,904 56,032 49,902 113,936 98,128 Contracted services and professional fees 17,498 16,313 18,617 33,811 35,764 Occupancy 7,554 7,782 7,334 15,336 14,744 Equipment 11,000 9,736 7,754 20,736 13,731 Regulatory assessment and fees 3,676 3,836 2,301 7,512 4,525 Advertising and marketing 1,891 1,994 1,994 3,885 4,022 Card rewards program 7,681 8,085 7,285 15,766 14,168 Other 13,677 14,789 13,988 28,466 28,135 Total noninterest expense 120,881 118,567 109,175 239,448 213,217 Income before provision for income taxes 81,406 88,903 79,109 170,309 156,066 Provision for income taxes 18,964 22,085 19,749 41,049 38,987 Net income $62,442 $66,818 $59,360 $129,260 $117,079 Basic earnings per share $0.49 $0.52 $0.46 $1.01 $0.92 Diluted earnings per share $0.49 $0.52 $0.46 $1.01 $0.91 Basic weighted-average outstanding shares 127,591,371 127,453,820 127,672,244 127,522,975 127,614,564 Diluted weighted-average outstanding shares 127,832,351 128,033,812 128,014,777 127,901,225 128,108,630 Consolidated Balance Sheets Table 3 June 30, March 31, December 31, June 30,(dollars in thousands, except share amount) 2023 2023 2022 2022Assets Cash and due from banks $318,333 $253,705 $297,502 $279,629 Interest-bearing deposits in other banks 239,798 611,887 229,122 1,254,047 Investment securities: Available-for-sale, at fair value (amortized cost: $3,296,825 as of June 30, 2023, $3,427,708 as of March 31, 2023, $3,549,599 as of December 31, 2022 and $4,267,809 as of June 30, 2022) 2,909,372 3,054,280 3,151,133 3,967,746 Held-to-maturity, at amortized cost (fair value: $3,697,261 as of June 30, 2023, $3,824,478 as of March 31, 2023, $3,814,822 as of December 31, 2022 and $3,910,780 as of June 30, 2022) 4,180,408 4,261,361 4,320,639 4,093,215 Loans held for sale — — — 180 Loans and leases 14,362,832 14,221,272 14,092,012 13,262,781 Less: allowance for credit losses 148,581 147,122 143,900 148,942 Net loans and leases 14,214,251 14,074,150 13,948,112 13,113,839 Premises and equipment, net 277,817 278,121 280,355 310,047 Other real estate owned and repossessed personal property — 91 91 — Accrued interest receivable 80,710 79,200 78,194 63,240 Bank-owned life insurance 476,177 473,255 473,067 470,542 Goodwill 995,492 995,492 995,492 995,492 Mortgage servicing rights 6,072 6,299 6,562 7,152 Other assets 813,136 796,366 796,954 822,404 Total assets $24,511,566 $24,884,207 $24,577,223 $25,377,533 Liabilities and Stockholders' Equity Deposits: Interest-bearing $12,911,539 $12,579,155 $12,824,383 $12,990,571 Noninterest-bearing 8,166,627 8,702,345 8,864,646 9,610,883 Total deposits 21,078,166 21,281,500 21,689,029 22,601,454 Short-term borrowings — 250,000 75,000 — Long-term borrowings 500,000 500,000 — — Retirement benefits payable 100,671 101,622 102,577 134,151 Other liabilities 472,991 422,073 441,612 389,317 Total liabilities 22,151,828 22,555,195 22,308,218 23,124,922 Stockholders' equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,327,860 / 127,608,037 shares as of June 30, 2023, issued/outstanding: 141,291,086 / 127,573,680 shares as of March 31, 2023, issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022 and issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022) 1,413 1,413 1,410 1,409 Additional paid-in capital 2,543,226 2,540,653 2,538,336 2,533,407 Retained earnings 799,045 769,791 736,544 654,777 Accumulated other comprehensive loss, net (612,736) (611,679) (639,254) (571,457)Treasury stock (13,719,823 shares as of June 30, 2023, 13,717,406 shares as of March 31, 2023, 13,600,591 shares as of December 31, 2022 and 13,492,821 shares as of June 30, 2022) (371,210) (371,166) (368,031) (365,525)Total stockholders' equity 2,359,738 2,329,012 2,269,005 2,252,611 Total liabilities and stockholders' equity $24,511,566 $24,884,207 $24,577,223 $25,377,533 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended June 30, 2023 March 31, 2023 June 30, 2022 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 $569.3 $7.2 5.07%$299.6 $3.4 4.60%$1,297.3 $2.8 0.85%Available-for-Sale Investment Securities Taxable 2,978.6 18.0 2.42 3,081.4 18.4 2.39 3,946.4 16.6 1.68 Non-Taxable 5.8 0.1 5.74 31.1 0.4 5.55 8.4 0.1 5.26 Held-to-Maturity Investment Securities Taxable 3,618.7 15.3 1.69 3,683.8 15.7 1.70 3,533.6 15.0 1.70 Non-Taxable 610.4 3.7 2.46 612.2 4.1 2.74 607.0 4.1 2.71 Total Investment Securities 7,213.5 37.1 2.06 7,408.5 38.6 2.09 8,095.4 35.8 1.77 Loans Held for Sale 0.5 — 5.87 0.1 — 5.53 0.3 — 5.06 Loans and Leases(1) Commercial and industrial 2,265.7 36.2 6.41 2,192.9 32.4 5.98 1,951.3 15.0 3.09 Commercial real estate 4,183.6 64.9 6.22 4,105.7 58.3 5.76 3,808.9 30.7 3.23 Construction 874.3 15.2 6.96 873.9 14.7 6.83 711.3 6.3 3.57 Residential: Residential mortgage 4,314.0 39.1 3.62 4,307.0 38.4 3.57 4,183.0 36.7 3.51 Home equity line 1,119.3 9.2 3.31 1,074.9 8.7 3.27 945.7 5.9 2.49 Consumer 1,196.6 17.7 5.92 1,213.5 17.2 5.75 1,218.0 15.5 5.09 Lease financing 329.7 3.6 4.43 311.4 3.1 4.10 240.4 2.1 3.53 Total Loans and Leases 14,283.2 185.9 5.22 14,079.3 172.8 4.96 13,058.6 112.2 3.44 Other Earning Assets 119.8 0.3 0.99 85.8 0.2 0.76 69.0 0.1 0.79 Total Earning Assets(2) 22,186.3 230.5 4.16 21,873.3 215.0 3.97 22,520.6 150.9 2.68 Cash and Due from Banks 257.9 286.1 300.8 Other Assets 2,377.3 2,388.7 2,428.8 Total Assets $24,821.5 $24,548.1 $25,250.2 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $6,099.4 $16.1 1.05%$6,354.3 $13.9 0.89% 6,971.3 $1.7 0.10%Money Market 3,809.8 19.6 2.07 3,853.5 14.3 1.50 4,127.4 1.4 0.14 Time 2,877.8 22.4 3.12 2,515.6 15.1 2.44 1,671.4 1.5 0.36 Total Interest-Bearing Deposits 12,787.0 58.1 1.82 12,723.4 43.3 1.38 12,770.1 4.6 0.14 Federal Funds Purchased 2.9 — 5.00 67.1 0.7 4.43 — — — Other Short-Term Borrowings 362.9 4.7 5.16 52.8 0.7 5.02 — — — Long-Term Borrowings 500.0 6.0 4.78 105.5 1.2 4.52 — — — Other Interest-Bearing Liabilities 54.0 0.5 4.00 42.8 0.4 4.27 — — — Total Interest-Bearing Liabilities 13,706.8 69.3 2.03 12,991.6 46.3 1.45 12,770.1 4.6 0.14 Net Interest Income $161.2 $168.7 $146.3 Interest Rate Spread 2.13% 2.52% 2.54%Net Interest Margin 2.91% 3.11% 2.60%Noninterest-Bearing Demand Deposits 8,270.3 8,745.2 9,631.4 Other Liabilities 500.1 511.9 586.0 Stockholders' Equity 2,344.3 2,299.4 2,262.7 Total Liabilities and Stockholders' Equity $24,821.5 $24,548.1 $25,250.2 ______________________________ (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 $1.3 million, $1.4 million and $1.2 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively. Average Balances and Interest Rates Table 5 Six Months Ended Six Months Ended June 30, 2023 June 30, 2022 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $435.2 $10.6 4.91%$1,218.3 $3.3 0.55%Available-for-Sale Investment Securities Taxable 3,029.7 36.4 2.41 5,862.7 45.7 1.56 Non-Taxable 18.4 0.5 5.58 320.8 3.9 2.41 Held-to-Maturity Investment Securities Taxable 3,651.1 30.9 1.70 1,776.6 15.0 1.69 Non-Taxable 611.3 7.9 2.60 305.2 4.1 2.71 Total Investment Securities 7,310.5 75.7 2.08 8,265.3 68.7 1.66 Loans Held for Sale 0.3 — 5.79 0.8 — 2.60 Loans and Leases(1) Commercial and industrial 2,229.5 68.6 6.20 1,962.1 29.7 3.05 Commercial real estate 4,144.9 123.2 5.99 3,721.0 56.4 3.06 Construction 874.1 29.9 6.89 738.9 12.1 3.30 Residential: Residential mortgage 4,310.5 77.5 3.59 4,147.2 71.5 3.45 Home equity line 1,097.2 17.9 3.29 918.8 11.3 2.48 Consumer 1,205.0 34.8 5.84 1,218.3 31.1 5.14 Lease financing 320.6 6.8 4.27 233.4 4.0 3.48 Total Loans and Leases 14,181.8 358.7 5.09 12,939.7 216.1 3.36 Other Earning Assets 102.9 0.5 0.90 68.0 0.4 1.05 Total Earning Assets(2) 22,030.7 445.5 4.07 22,492.1 288.5 2.58 Cash and Due from Banks 271.9 296.5 Other Assets 2,383.0 2,377.2 Total Assets $24,685.6 $25,165.8 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $6,226.2 $30.0 0.97%$6,820.7 $2.2 0.07%Money Market 3,831.5 33.9 1.78 4,088.3 2.0 0.09 Time 2,697.7 37.5 2.80 1,709.8 3.2 0.38 Total Interest-Bearing Deposits 12,755.4 101.4 1.60 12,618.8 7.4 0.12 Federal Funds Purchased 34.8 0.8 4.45 — — — Other Short-Term Borrowings 208.7 5.3 5.14 — — — Long-Term Borrowings 303.8 7.1 4.73 — — — Other Interest-Bearing Liabilities 48.5 1.0 4.12 — — — Total Interest-Bearing Liabilities 13,351.2 115.6 1.75 12,618.8 7.4 0.12 Net Interest Income $329.9 $281.1 Interest Rate Spread 2.32% 2.46%Net Interest Margin 3.01% 2.51%Noninterest-Bearing Demand Deposits 8,506.4 9,563.6 Other Liabilities 506.0 578.9 Stockholders' Equity 2,322.0 2,404.5 Total Liabilities and Stockholders' Equity $24,685.6 $25,165.8 ______________________________ (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 $2.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively. Analysis of Change in Net Interest Income Table 6 Three Months Ended June 30, 2023 Compared to March 31, 2023(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $3.4 $0.4 $3.8 Available-for-Sale Investment Securities Taxable (0.6) 0.2 (0.4)Non-Taxable (0.3) — (0.3)Held-to-Maturity Investment Securities Taxable (0.3) (0.1) (0.4)Non-Taxable — (0.4) (0.4)Total Investment Securities (1.2) (0.3) (1.5)Loans and Leases Commercial and industrial 1.2 2.6 3.8 Commercial real estate 1.3 5.3 6.6 Construction — 0.5 0.5 Residential: Residential mortgage 0.1 0.6 0.7 Home equity line 0.4 0.1 0.5 Consumer (0.2) 0.7 0.5 Lease financing 0.2 0.3 0.5 Total Loans and Leases 3.0 10.1 13.1 Other Earning Assets 0.1 — 0.1 Total Change in Interest Income 5.3 10.2 15.5 Change in Interest Expense: Interest-Bearing Deposits Savings (0.5) 2.7 2.2 Money Market (0.2) 5.5 5.3 Time 2.5 4.8 7.3 Total Interest-Bearing Deposits 1.8 13.0 14.8 Federal Funds Purchased (0.8) 0.1 (0.7)Other Short-Term Borrowings 4.0 — 4.0 Long-Term Borrowings 4.7 0.1 4.8 Other Interest-Bearing Liabilities 0.1 — 0.1 Total Change in Interest Expense 9.8 13.2 23.0 Change in Net Interest Income $(4.5) $(3.0) $(7.5) Analysis of Change in Net Interest Income Table 7 Three Months Ended June 30, 2023 Compared to June 30, 2022(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $(2.3) $6.7 $4.4 Available-for-Sale Investment Securities Taxable (4.7) 6.1 1.4 Held-to-Maturity Investment Securities Taxable 0.3 — 0.3 Non-Taxable — (0.4) (0.4)Total Investment Securities (4.4) 5.7 1.3 Loans and Leases Commercial and industrial 2.8 18.4 21.2 Commercial real estate 3.3 30.9 34.2 Construction 1.7 7.2 8.9 Residential: Residential mortgage 1.2 1.2 2.4 Home equity line 1.2 2.1 3.3 Consumer (0.3) 2.5 2.2 Lease financing 0.9 0.6 1.5 Total Loans and Leases 10.8 62.9 73.7 Other Earning Assets 0.1 0.1 0.2 Total Change in Interest Income 4.2 75.4 79.6 Change in Interest Expense: Interest-Bearing Deposits Savings (0.2) 14.6 14.4 Money Market (0.1) 18.3 18.2 Time 1.8 19.1 20.9 Total Interest-Bearing Deposits 1.5 52.0 53.5 Other Short-Term Borrowings 4.7 — 4.7 Long-Term Borrowings 6.0 — 6.0 Other Interest-Bearing Liabilities 0.5 — 0.5 Total Change in Interest Expense 12.7 52.0 64.7 Change in Net Interest Income $(8.5) $23.4 $14.9 Analysis of Change in Net Interest Income Table 8 Six Months Ended June 30, 2023 Compared to June 30, 2022(dollars in millions) Volume Rate TotalChange in Interest Income: Interest-Bearing Deposits in Other Banks $(3.4) $10.7 $7.3 Available-for-Sale Investment Securities Taxable (27.6) 18.3 (9.3)Non-Taxable (5.6) 2.2 (3.4)Held-to-Maturity Investment Securities Taxable 15.8 0.1 15.9 Non-Taxable 4.0 (0.2) 3.8 Total Investment Securities (13.4) 20.4 7.0 Loans and Leases Commercial and industrial 4.5 34.4 38.9 Commercial real estate 7.1 59.7 66.8 Construction 2.5 15.3 17.8 Residential: Residential mortgage 3.0 3.0 6.0 Home equity line 2.5 4.1 6.6 Consumer (0.4) 4.1 3.7 Lease financing 1.7 1.1 2.8 Total Loans and Leases 20.9 121.7 142.6 Other Earning Assets 0.2 (0.1) 0.1 Total Change in Interest Income 4.3 152.7 157.0 Change in Interest Expense: Interest-Bearing Deposits Savings (0.2) 28.0 27.8 Money Market (0.1) 32.0 31.9 Time 2.8 31.5 34.3 Total Interest-Bearing Deposits 2.5 91.5 94.0 Federal Funds Purchased 0.8 — 0.8 Other Short-Term Borrowings 5.3 — 5.3 Long-Term Borrowings 7.1 — 7.1 Other Interest-Bearing Liabilities 1.0 — 1.0 Total Change in Interest Expense 16.7 91.5 108.2 Change in Net Interest Income $(12.4) $61.2 $48.8 Loans and Leases Table 9 June 30, March 31, December 31, June 30,(dollars in thousands) 2023 2023 2022 2022Commercial and industrial: Commercial and industrial excluding Paycheck Protection Program loans $2,175,841 $2,254,506 $2,217,604 $1,898,899Paycheck Protection Program loans 11,990 13,826 18,293 43,233Total commercial and industrial 2,187,831 2,268,332 2,235,897 1,942,132Commercial real estate 4,290,948 4,106,200 4,132,309 3,956,828Construction 913,837 913,959 844,643 727,771Residential: Residential mortgage 4,317,537 4,318,742 4,302,788 4,212,768Home equity line 1,138,163 1,095,365 1,055,351 971,569Total residential 5,455,700 5,414,107 5,358,139 5,184,337Consumer 1,182,116 1,191,552 1,222,934 1,207,051Lease financing 332,400 327,122 298,090 244,662Total loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781 Deposits Table 10 June 30, March 31, December 31, June 30,(dollars in thousands) 2023 2023 2022 2022Demand $8,166,627 $8,702,345 $8,864,646 $9,610,883Savings 5,835,975 6,173,398 6,382,910 7,243,185Money Market 3,767,792 3,818,355 3,965,423 4,079,706Time 3,307,772 2,587,402 2,476,050 1,667,680Total Deposits $21,078,166 $21,281,500 $21,689,029 $22,601,454 Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11 June 30, March 31, December 31, June 30, (dollars in thousands) 2023 2023 2022 2022Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 1,024 $1,158 $1,215 $682Commercial real estate — 727 727 727Total Commercial Loans 1,024 1,885 1,942 1,409Residential Loans: Residential mortgage 6,097 6,896 6,166 6,450Home equity line 6,107 4,903 3,797 —Total Residential Loans 12,204 11,799 9,963 6,450Total Non-Accrual Loans and Leases 13,228 13,684 11,905 7,859Other Real Estate Owned — 91 91 —Total Non-Performing Assets $ 13,228 $13,775 $11,996 $7,859 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 599 $461 $291 $2,230Commercial real estate 619 1,346 — 176Construction — 102 — 352Total Commercial Loans 1,218 1,909 291 2,758Residential Loans: Residential mortgage 58 58 58 750Home equity line — — — 1,039Total Residential Loans 58 58 58 1,789Consumer 1,975 2,502 2,885 1,218Total Accruing Loans and Leases Past Due 90 Days or More $ 3,251 $4,469 $3,234 $5,765 Total Loans and Leases $ 14,362,832 $14,221,272 $14,092,012 $13,262,781 Allowance for Credit Losses and Reserve for Unfunded Commitments Table 12 For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Balance at Beginning of Period $183,321 $177,735 $179,238 177,735 187,584 Loans and Leases Charged-Off Commercial and industrial (997) (791) (243) (1,788) (949) Residential Loans: Residential mortgage — (122) — (122) — Home equity line (137) (135) (1,120) (272) (1,163) Total Residential Loans (137) (257) (1,120) (394) (1,163) Consumer (4,516) (4,782) (3,659) (9,298) (7,768) Total Loans and Leases Charged-Off (5,650) (5,830) (5,022) (11,480) (9,880) Recoveries on Loans and Leases Previously Charged-Off Commercial Loans: Commercial and industrial 292 246 301 538 354 Commercial real estate — — — — 14 Lease financing — — 60 — 60 Total Commercial Loans 292 246 361 538 428 Residential Loans: Residential mortgage 30 27 192 57 208 Home equity line 59 177 191 236 219 Total Residential Loans 89 204 383 293 427 Consumer 1,728 2,166 1,940 3,894 4,088 Total Recoveries on Loans and Leases Previously Charged-Off 2,109 2,616 2,684 4,725 4,943 Net Loans and Leases Charged-Off (3,541) (3,214) (2,338) (6,755) (4,937) Provision for Credit Losses 5,000 8,800 1,000 13,800 (4,747) Balance at End of Period $184,780 $183,321 $177,900 $184,780 $177,900 Components: Allowance for Credit Losses $148,581 $147,122 $148,942 $148,581 $148,942 Reserve for Unfunded Commitments 36,199 36,199 28,958 36,199 28,958 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $184,780 $183,321 $177,900 $184,780 $177,900 Average Loans and Leases Outstanding $14,283,222 $14,079,337 $13,058,558 $14,181,842 $12,939,745 Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) 0.10 % 0.09 % 0.07 % 0.10 % 0.08 %Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.03 % 1.03 % 1.12 % 1.03 % 1.12 %Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 11.23x 10.75x 18.95x 11.23x 18.95x _____________________________ (1) Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. 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) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis TotalCommercial Lending Commercial and Industrial Risk rating: Pass $33,877 $299,913 $385,159 $38,769 $157,794 $165,747 $952,182 $15,003 $2,048,444Special Mention 103 31,193 154 849 2,397 1,481 2,967 186 39,330Substandard 352 563 260 936 819 1,100 12,539 17 16,586Other(1) 11,743 13,284 6,301 3,275 2,644 1,668 44,556 — 83,471Total Commercial and Industrial 46,075 344,953 391,874 43,829 163,654 169,996 1,012,244 15,206 2,187,831Current period gross charge-offs 72 60 9 28 92 1,527 — — 1,788 Commercial Real Estate Risk rating: Pass 212,159 876,558 655,847 333,142 564,881 1,499,805 72,447 — 4,214,839Special Mention 1,737 156 — 547 6,983 12,389 12,952 — 34,764Substandard — 5,141 — 171 — 35,883 2 — 41,197Other(1) — — — — — 148 — — 148Total Commercial Real Estate 213,896 881,855 655,847 333,860 571,864 1,548,225 85,401 — 4,290,948Current period gross charge-offs — — — — — — — — — Construction Risk rating: Pass 77,826 182,679 365,959 76,728 61,906 82,554 6,562 — 854,214Special Mention — — — — 205 — — — 205Other(1) 6,601 26,882 15,766 3,261 2,136 4,067 705 — 59,418Total Construction 84,427 209,561 381,725 79,989 64,247 86,621 7,267 — 913,837Current period gross charge-offs — — — — — — — — — Lease Financing Risk rating: Pass 69,487 94,276 21,167 39,215 35,964 70,312 — — 330,421Special Mention — — 365 60 — — — — 425Substandard — — — 171 7 1,376 — — 1,554Total Lease Financing 69,487 94,276 21,532 39,446 35,971 71,688 — — 332,400Current period gross charge-offs — — — — — — — — — Total Commercial Lending $413,885 $1,530,645 $1,450,978 $497,124 $835,736 $1,876,530 $1,104,912 $15,206 $7,725,016Current period gross charge-offs $72 $60 $9 $28 $92 $1,527 $— $— $1,788 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans (continued) Amortized Amortized (dollars in thousands) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis TotalResidential Lending Residential Mortgage FICO: 740 and greater $138,593 $530,776 $1,030,287 $544,330 $236,821 $1,036,361 $— $— $3,517,168680 - 739 25,500 81,562 117,701 74,446 34,186 135,766 — — 469,161620 - 679 2,468 11,212 16,463 10,747 5,743 38,132 — — 84,765550 - 619 — 3,383 4,058 2,471 254 12,362 — — 22,528Less than 550 — 197 2,372 1,581 51 5,403 — — 9,604No Score(3) 6,075 19,497 12,552 6,378 9,837 56,201 — — 110,540Other(2) 9,916 18,075 17,857 12,952 8,915 28,438 7,618 — 103,771Total Residential Mortgage 182,552 664,702 1,201,290 652,905 295,807 1,312,663 7,618 — 4,317,537Current period gross charge-offs — — — — — 122 — — 122 Home Equity Line FICO: 740 and greater — — — — — — 930,741 1,668 932,409680 - 739 — — — — — — 151,418 2,449 153,867620 - 679 — — — — — — 32,897 1,376 34,273550 - 619 — — — — — — 9,428 1,448 10,876Less than 550 — — — — — — 5,127 312 5,439No Score(3) — — — — — — 1,299 — 1,299Total Home Equity Line — — — — — — 1,130,910 7,253 1,138,163Current period gross charge-offs — — — — — — 254 18 272 Total Residential Lending $182,552 $664,702 $1,201,290 $652,905 $295,807 $1,312,663 $1,138,528 $7,253 $5,455,700Current period gross charge-offs $— $— $— $— $— $122 $254 $18 $394 Consumer Lending FICO: 740 and greater 70,561 153,960 93,788 45,022 34,093 19,410 117,437 140 534,411680 - 739 44,064 84,900 49,136 23,895 19,424 11,352 72,327 431 305,529620 - 679 14,643 37,576 19,488 9,771 11,007 8,482 33,692 941 135,600550 - 619 2,255 10,974 8,135 5,608 6,314 5,207 11,730 748 50,971Less than 550 418 4,358 4,478 2,695 2,975 2,765 4,247 560 22,496No Score(3) 1,425 586 2 — 6 17 39,035 167 41,238Other(2) 36 1,208 3,536 343 1,113 1 85,634 — 91,871Total Consumer Lending $133,402 $293,562 $178,563 $87,334 $74,932 $47,234 $364,102 $2,987 $1,182,116Current period gross charge-offs $58 $1,244 $1,260 $630 $1,239 $1,388 $3,131 $348 $9,298 Total Loans and Leases $729,839 $2,488,909 $2,830,831 $1,237,363 $1,206,475 $3,236,427 $2,607,542 $25,446 $14,362,832Current period gross charge-offs $130 $1,304 $1,269 $658 $1,331 $3,037 $3,385 $366 $11,480 _______________________________ (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 Six Months Ended June 30, March 31, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Income Statement Data: Net income $62,442 $66,818 $59,360 $129,260 $117,079 Average total stockholders' equity $2,344,285 $2,299,422 $2,262,654 $2,321,977 $2,404,471 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders' equity $1,348,793 $1,303,930 $1,267,162 $1,326,485 $1,408,979 Average total assets $24,821,486 $24,548,124 $25,250,176 $24,685,560 $25,165,783 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $23,825,994 $23,552,632 $24,254,684 $23,690,068 $24,170,291 Return on average total stockholders' equity(1) 10.68% 11.78% 10.52% 11.23% 9.82%Return on average tangible stockholders' equity (non-GAAP)(1) 18.57% 20.78% 18.79% 19.65% 16.76% Return on average total assets(1) 1.01% 1.10% 0.94% 1.06% 0.94%Return on average tangible assets (non-GAAP)(1) 1.05% 1.15% 0.98% 1.10% 0.98% As of As of As of As of June 30, March 31, December 31, June 30, (dollars in thousands, except shares outstanding and per share amounts) 2023 2023 2022 2022 Balance Sheet Data: Total stockholders' equity $2,359,738 $2,329,012 $2,269,005 $2,252,611 Less: goodwill 995,492 995,492 995,492 995,492 Tangible stockholders' equity $1,364,246 $1,333,520 $1,273,513 $1,257,119 Total assets $24,511,566 $24,884,207 $24,577,223 $25,377,533 Less: goodwill 995,492 995,492 995,492 995,492 Tangible assets $23,516,074 $23,888,715 $23,581,731 $24,382,041 Shares outstanding 127,608,037 127,573,680 127,363,327 127,451,087 Total stockholders' equity to total assets 9.63% 9.36% 9.23% 8.88%Tangible stockholders' equity to tangible assets (non-GAAP) 5.80% 5.58% 5.40% 5.16% Book value per share $18.49 $18.26 $17.82 $17.67 Tangible book value per share (non-GAAP) $10.69 $10.45 $10.00 $9.86 _____________________________ (1) Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023.
