-
First Hawaiian, Inc. Reports Third Quarter 2022 Financial Results and Declares Dividend
Source: Nasdaq GlobeNewswire / 28 Oct 2022 08:00:02 America/New_York
HONOLULU, Oct. 28, 2022 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended September 30, 2022.
“I’m pleased to report that we had a very strong third quarter, as net income increased by over 16% from the prior quarter,” said Bob Harrison, Chairman, President and CEO. “We had robust loan growth and credit quality remained excellent.”
On October 26, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on December 2, 2022, to stockholders of record at the close of business on November 21, 2022.
Third Quarter 2022 Highlights:
- Net income of $69.0 million, or $0.54 per diluted share
- Total loans and leases increased $437.6 million versus prior quarter
- Total deposits decreased $509.7 million versus prior quarter
- Net interest margin increased 33 basis points to 2.93%
- Recorded a $3.2 million provision for credit losses
- Board of Directors declared a quarterly dividend of $0.26 per share
Balance Sheet
Total assets were $24.9 billion as of September 30, 2022, compared to $25.4 billion as of June 30, 2022.Gross loans and leases were $13.7 billion as of September 30, 2022, an increase of $437.6 million, or 3.3%, from $13.3 billion as of June 30, 2022.
Total deposits were $22.1 billion as of September 30, 2022, a decrease of $509.7 million, or 2.3%, from $22.6 billion as of June 30, 2022.
Net Interest Income
Net interest income for the third quarter of 2022 was $162.7 million, an increase of $17.6 million, or 12.1%, compared to $145.1 million for the prior quarter.The net interest margin was 2.93% in the third quarter of 2022, an increase of 33 basis points compared to 2.60% in the prior quarter.
Provision Expense
During the quarter ended September 30, 2022, we recorded a $3.2 million provision for credit losses. In the quarter ended June 30, 2022, we recorded a $1.0 million provision for credit losses.Noninterest Income
Noninterest income was $45.9 million in the third quarter of 2022, an increase of $1.7 million compared to noninterest income of $44.1 million in the prior quarter.Noninterest Expense
Noninterest expense was $113.3 million in the third quarter of 2022, an increase of $4.2 million compared to noninterest expense of $109.2 million in the prior quarter.The efficiency ratio was 54.0% and 57.3% for the quarters ended September 30, 2022 and June 30, 2022, respectively.
Taxes
The effective tax rate was 25.0% for the quarters ended September 30, 2022 and June 30, 2022.Asset Quality
The allowance for credit losses was $148.2 million, or 1.08% of total loans and leases, as of September 30, 2022, compared to $148.9 million, or 1.12% of total loans and leases, as of June 30, 2022. The reserve for unfunded commitments was $30.1 million as of September 30, 2022, compared to $29.0 million as of June 30, 2022. Net charge-offs were $2.8 million, or 0.08% of average loans and leases on an annualized basis, for the quarter ended September 30, 2022, compared to net charge-offs of $2.3 million, or 0.07% of average loans and leases on an annualized basis, for the quarter ended June 30, 2022. Total non-performing assets were $8.4 million, or 0.06% of total loans and leases and other real estate owned, on September 30, 2022, compared to total non-performing assets of $7.9 million, or 0.06% of total loans and leases and other real estate owned, on June 30, 2022.Capital
Total stockholders’ equity was $2.2 billion on September 30, 2022 compared to $2.3 billion on June 30, 2022.The tier 1 leverage, common equity tier 1 and total capital ratios were 7.78%, 11.79%, and 12.92%, respectively, on September 30, 2022, compared with 7.54%, 11.98%, and 13.14%, respectively, on June 30, 2022.
The Company repurchased 0.1 million shares of common stock at a total cost of $2.5 million under the stock repurchase program in the third quarter. The average cost was $23.24 per share repurchased. Remaining buyback authority under the stock repurchase program was $65.5 million on September 30, 2022.
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.
Please note that the process for accessing the conference call has changed. Participants will need to click on the registration link provided below, register for the conference call, and then you will receive the dial-in number and a personalized PIN code.
To access the call by phone, please register via the following link: https://register.vevent.com/register/BIefa7fae07c09405291195a9acfdb68b6, 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 Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Further, statements about the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there can be no assurance that actual results will not prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements, including (without limitation) the risks and uncertainties associated with the ongoing impacts of COVID-19, the domestic and global economic environment and capital market conditions and other risk factors. For a discussion of some of these risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022.Use of Non-GAAP Financial Measures
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 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) 525-6268
khaseyama@fhb.comMedia Contact:
Lindsay Chambers
(808) 525-6254
lchambers@fhb.comFinancial Highlights Table 1 For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, (dollars in thousands, except per share data) 2022 2022 2021 2022 2021 Operating Results: Net interest income $ 162,736 $ 145,147 $ 132,593 $ 441,755 $ 393,232 Provision for credit losses 3,183 1,000 (4,000 ) (1,564 ) (39,000 ) Noninterest income 45,857 44,137 50,104 131,374 143,343 Noninterest expense 113,332 109,175 101,036 326,549 296,730 Net income 69,018 59,360 64,279 186,097 208,713 Basic earnings per share 0.54 0.46 0.50 1.46 1.61 Diluted earnings per share 0.54 0.46 0.50 1.45 1.61 Dividends declared per share 0.26 0.26 0.26 0.78 0.78 Dividend payout ratio 48.15 % 56.52 % 52.00 % 53.79 % 48.45 % Performance Ratios(1): Net interest margin 2.93 % 2.60 % 2.36 % 2.65 % 2.45 % Efficiency ratio 53.98 % 57.33 % 55.07 % 56.63 % 55.10 % Return on average total assets 1.10 % 0.94 % 1.02 % 0.99 % 1.16 % Return on average tangible assets (non-GAAP)(2) 1.14 % 0.98 % 1.06 % 1.03 % 1.21 % Return on average total stockholders’ equity 12.08 % 10.52 % 9.31 % 10.55 % 10.26 % Return on average tangible stockholders’ equity (non-GAAP)(2) 21.53 % 18.79 % 14.63 % 18.26 % 16.19 % Average Balances: Average loans and leases $ 13,491,428 $ 13,058,558 $ 12,881,885 $ 13,125,660 $ 13,108,427 Average earning assets 22,258,066 22,520,605 22,533,174 22,413,209 21,523,731 Average assets 24,957,042 25,250,176 25,058,085 25,095,438 24,013,691 Average deposits 22,148,039 22,401,558 21,621,836 22,170,824 20,595,400 Average stockholders’ equity 2,267,152 2,262,654 2,738,540 2,358,195 2,719,442 Market Value Per Share: Closing 24.63 22.71 29.35 24.63 29.35 High 28.14 28.44 30.06 31.16 30.80 Low 21.21 21.49 25.75 21.21 23.14 As of As of As of As of September 30, June 30, December 31, September 30, (dollars in thousands, except per share data) 2022 2022 2021 2021 Balance Sheet Data: Loans and leases $ 13,700,374 $ 13,262,781 $ 12,961,999 $ 12,834,339 Total assets 24,870,272 25,377,533 24,992,410 25,548,322 Total deposits 22,091,738 22,601,454 21,816,146 22,120,003 Long-term borrowings — — — 200,000 Total stockholders’ equity 2,200,651 2,252,611 2,656,912 2,711,734 Per Share of Common Stock: Book value $ 17.28 $ 17.67 $ 20.84 $ 21.14 Tangible book value (non-GAAP)(2) 9.46 9.86 13.03 13.38 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.06 % 0.06 % 0.05 % 0.07 % Allowance for credit losses for loans and leases / total loans and leases 1.08 % 1.12 % 1.21 % 1.26 % Capital Ratios: Common Equity Tier 1 Capital Ratio 11.79 % 11.98 % 12.24 % 12.63 % Tier 1 Capital Ratio 11.79 % 11.98 % 12.24 % 12.63 % Total Capital Ratio 12.92 % 13.14 % 13.49 % 13.88 % Tier 1 Leverage Ratio 7.78 % 7.54 % 7.24 % 7.39 % Total stockholders’ equity to total assets 8.85 % 8.88 % 10.63 % 10.61 % Tangible stockholders’ equity to tangible assets (non-GAAP)(2) 5.05 % 5.16 % 6.92 % 6.99 % Non-Financial Data: Number of branches 51 51 54 54 Number of ATMs 303 297 299 298 Number of Full-Time Equivalent Employees 2,042 2,021 2,036 2,025 (1) Except for the efficiency ratio, amounts are annualized for the three and nine months ended September 30, 2022 and 2021 and the three months ended June 30, 2022.
(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 Nine Months Ended September 30, June 30, September 30, September 30, (dollars in thousands, except per share amounts) 2022 2022 2021 2022 2021 Interest income Loans and lease financing $ 134,646 $ 111,916 $ 110,765 $ 350,294 $ 332,623 Available-for-sale investment securities 19,644 16,643 25,234 68,394 73,017 Held-to-maturity investment securities 17,950 18,289 — 36,239 — Other 4,150 2,896 1,205 7,828 2,362 Total interest income 176,390 149,744 137,204 462,755 408,002 Interest expense Deposits 13,653 4,597 3,218 20,999 10,637 Short-term and long-term borrowings 1 — 1,393 1 4,133 Total interest expense 13,654 4,597 4,611 21,000 14,770 Net interest income 162,736 145,147 132,593 441,755 393,232 Provision for credit losses 3,183 1,000 (4,000 ) (1,564 ) (39,000 ) Net interest income after provision for credit losses 159,553 144,147 136,593 443,319 432,232 Noninterest income Service charges on deposit accounts 7,089 6,843 6,989 21,433 20,339 Credit and debit card fees 17,746 17,056 16,017 49,652 47,314 Other service charges and fees 9,179 9,018 10,233 27,851 29,382 Trust and investment services income 9,800 8,759 8,625 27,442 25,824 Bank-owned life insurance (341 ) (859 ) 4,841 (1,617 ) 10,334 Investment securities gains, net — — — — 102 Other 2,384 3,320 3,399 6,613 10,048 Total noninterest income 45,857 44,137 50,104 131,374 143,343 Noninterest expense Salaries and employee benefits 51,372 49,902 46,484 149,500 136,402 Contracted services and professional fees 16,625 18,617 15,042 52,389 48,746 Occupancy 8,115 7,334 6,790 22,859 21,274 Equipment 10,791 7,754 6,549 24,522 18,402 Regulatory assessment and fees 2,487 2,301 1,828 7,012 5,688 Advertising and marketing 1,902 1,994 1,469 5,924 4,529 Card rewards program 8,141 7,285 6,676 22,309 17,773 Other 13,899 13,988 16,198 42,034 43,916 Total noninterest expense 113,332 109,175 101,036 326,549 296,730 Income before provision for income taxes 92,078 79,109 85,661 248,144 278,845 Provision for income taxes 23,060 19,749 21,382 62,047 70,132 Net income $ 69,018 $ 59,360 $ 64,279 $ 186,097 $ 208,713 Basic earnings per share $ 0.54 $ 0.46 $ 0.50 $ 1.46 $ 1.61 Diluted earnings per share $ 0.54 $ 0.46 $ 0.50 $ 1.45 $ 1.61 Basic weighted-average outstanding shares 127,377,713 127,672,244 128,660,038 127,534,746 129,323,973 Diluted weighted-average outstanding shares 127,796,617 128,014,777 129,210,448 127,996,672 129,895,311 Consolidated Balance Sheets Table 3 September 30, June 30, December 31, September 30, (dollars in thousands) 2022 2022 2021 2021 Assets Cash and due from banks $ 291,360 $ 279,629 $ 246,716 $ 268,467 Interest-bearing deposits in other banks 657,574 1,254,047 1,011,753 2,130,615 Investment securities: Available-for-sale, at fair value (amortized cost: $3,673,396 as of September 30, 2022, $4,267,809 as of June 30, 2022, $8,560,733 as of December 31, 2021 and $7,994,266 as of September 30, 2021) 3,289,160 3,967,746 8,428,032 7,953,727 Held-to-maturity, at amortized cost (fair value: $3,960,713 as of September 30, 2022, $3,910,780 as of June 30, 2022 and nil as of December 31, 2021 and September 30, 2021) 4,406,143 4,093,215 — — Loans held for sale 361 180 538 2,052 Loans and leases 13,700,374 13,262,781 12,961,999 12,834,339 Less: allowance for credit losses 148,163 148,942 157,262 161,246 Net loans and leases 13,552,211 13,113,839 12,804,737 12,673,093 Premises and equipment, net 299,179 310,047 318,448 317,272 Other real estate owned and repossessed personal property 139 — 175 — Accrued interest receivable 68,545 63,240 63,158 64,855 Bank-owned life insurance 470,202 470,542 471,819 468,968 Goodwill 995,492 995,492 995,492 995,492 Mortgage servicing rights 6,866 7,152 8,302 9,107 Other assets 833,040 822,404 643,240 664,674 Total assets $ 24,870,272 $ 25,377,533 $ 24,992,410 $ 25,548,322 Liabilities and Stockholders’ Equity Deposits: Interest-bearing $ 12,774,645 $ 12,990,571 $ 12,422,283 $ 13,246,579 Noninterest-bearing 9,317,093 9,610,883 9,393,863 8,873,424 Total deposits 22,091,738 22,601,454 21,816,146 22,120,003 Long-term borrowings — — — 200,000 Retirement benefits payable 133,981 134,151 134,491 144,400 Other liabilities 443,902 389,317 384,861 372,185 Total liabilities 22,669,621 23,124,922 22,335,498 22,836,588 Stockholders’ equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,958,520 / 127,357,680 shares as of September 30, 2022, issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022, issued/outstanding: 140,581,715 / 127,502,472 shares as of December 31, 2021 and issued/outstanding: 140,563,799 / 128,255,570 shares as of September 30, 2021) 1,410 1,409 1,406 1,406 Additional paid-in capital 2,535,601 2,533,407 2,527,663 2,524,168 Retained earnings 690,433 654,777 604,534 581,094 Accumulated other comprehensive loss, net (658,756 ) (571,457 ) (121,693 ) (61,463 ) Treasury stock (13,600,840 shares as of September 30, 2022, 13,492,821 shares as of June 30, 2022, 13,079,243 shares as of December 31, 2021 and 12,308,229 shares as of September 30, 2021) (368,037 ) (365,525 ) (354,998 ) (333,471 ) Total stockholders’ equity 2,200,651 2,252,611 2,656,912 2,711,734 Total liabilities and stockholders’ equity $ 24,870,272 $ 25,377,533 $ 24,992,410 $ 25,548,322 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended September 30, 2022 June 30, 2022 September 30, 2021 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 $ 724.0 $ 4.0 2.20 % $ 1,297.3 $ 2.8 0.85 % $ 2,356.4 $ 0.9 0.16 % Available-for-Sale Investment Securities Taxable 3,733.8 19.2 2.05 3,946.4 16.6 1.68 6,654.6 22.9 1.37 Non-Taxable 45.1 0.6 5.16 8.4 0.1 5.26 561.1 2.9 2.11 Held-to-Maturity Investment Securities Taxable 3,573.6 14.6 1.64 3,533.6 15.0 1.70 — — — Non-Taxable 613.6 4.2 2.72 607.0 4.1 2.71 — — — Total Investment Securities 7,966.1 38.6 1.93 8,095.4 35.8 1.77 7,215.7 25.8 1.43 Loans Held for Sale 0.7 — 3.62 0.3 — 5.06 2.2 — 2.39 Loans and Leases(1) Commercial and industrial 2,025.5 20.7 4.05 1,951.3 15.0 3.09 2,367.2 19.7 3.29 Commercial real estate 4,016.7 42.3 4.18 3,808.9 30.7 3.23 3,447.0 25.4 2.92 Construction 737.4 8.6 4.63 711.3 6.3 3.57 862.4 7.0 3.24 Residential: Residential mortgage 4,224.0 36.4 3.45 4,183.0 36.7 3.51 3,866.1 34.6 3.58 Home equity line 991.1 7.2 2.87 945.7 5.9 2.49 837.7 5.5 2.62 Consumer 1,218.0 17.1 5.57 1,218.0 15.5 5.09 1,260.2 16.8 5.28 Lease financing 278.7 2.7 3.81 240.4 2.1 3.53 241.3 2.0 3.23 Total Loans and Leases 13,491.4 135.0 3.98 13,058.6 112.2 3.44 12,881.9 111.0 3.43 Other Earning Assets 75.9 0.1 0.69 69.0 0.1 0.79 77.0 0.3 1.34 Total Earning Assets(2) 22,258.1 177.7 3.18 22,520.6 150.9 2.68 22,533.2 138.0 2.44 Cash and Due from Banks 277.0 300.8 290.5 Other Assets 2,421.9 2,428.8 2,234.4 Total Assets $ 24,957.0 $ 25,250.2 $ 25,058.1 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,871.5 $ 6.7 0.39 % $ 6,971.3 $ 1.7 0.10 % 6,886.0 $ 0.6 0.03 % Money Market 4,086.1 4.8 0.47 4,127.4 1.4 0.14 3,957.1 0.5 0.05 Time 1,720.5 2.1 0.48 1,671.4 1.5 0.36 1,884.4 2.1 0.45 Total Interest-Bearing Deposits 12,678.1 13.6 0.43 12,770.1 4.6 0.14 12,727.5 3.2 0.10 Federal Funds Purchased 0.2 — 1.67 — — — — — — Long-Term Borrowings — — — — — — 200.0 1.4 2.76 Total Interest-Bearing Liabilities 12,678.3 13.6 0.43 12,770.1 4.6 0.14 12,927.5 4.6 0.14 Net Interest Income $ 164.1 $ 146.3 $ 133.4 Interest Rate Spread 2.75 % 2.54 % 2.30 % Net Interest Margin 2.93 % 2.60 % 2.36 % Noninterest-Bearing Demand Deposits 9,469.9 9,631.4 8,894.3 Other Liabilities 541.6 586.0 497.7 Stockholders’ Equity 2,267.2 2,262.7 2,738.6 Total Liabilities and Stockholders’ Equity $ 24,957.0 $ 25,250.2 $ 25,058.1 (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, $1.2 million and $0.8 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively.
Average Balances and Interest Rates Table 5 Nine Months Ended Nine Months Ended September 30, 2022 September 30, 2021 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $ 1,051.7 $ 7.3 0.93 % $ 1,604.6 $ 1.5 0.13 % Available-for-Sale Investment Securities Taxable 5,145.3 64.9 1.68 6,303.5 67.5 1.43 Non-Taxable 227.9 4.4 2.59 436.9 6.9 2.11 Held-to-Maturity Investment Securities Taxable 2,382.2 29.7 1.66 — — — Non-Taxable 409.1 8.3 2.71 — — — Total Investment Securities 8,164.5 107.3 1.75 6,740.4 74.4 1.47 Loans Held for Sale 0.7 — 2.92 4.4 0.1 2.31 Loans and Leases(1) Commercial and industrial 1,983.5 50.3 3.39 2,756.2 61.2 2.97 Commercial real estate 3,820.6 98.8 3.46 3,417.5 75.6 2.96 Construction 738.4 20.7 3.74 803.8 19.2 3.19 Residential: Residential mortgage 4,173.1 108.0 3.45 3,776.5 103.3 3.65 Home equity line 943.2 18.5 2.62 824.1 16.7 2.71 Consumer 1,218.2 48.1 5.29 1,287.1 51.4 5.34 Lease financing 248.7 6.7 3.60 243.2 5.7 3.10 Total Loans and Leases 13,125.7 351.1 3.57 13,108.4 333.1 3.39 Other Earning Assets 70.6 0.5 0.92 65.9 0.8 1.65 Total Earning Assets(2) 22,413.2 466.2 2.78 21,523.7 409.9 2.54 Cash and Due from Banks 289.9 291.7 Other Assets 2,392.3 2,198.3 Total Assets $ 25,095.4 $ 24,013.7 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,837.8 $ 8.9 0.17 % $ 6,410.9 $ 1.7 0.04 % Money Market 4,087.6 6.8 0.22 3,758.3 1.5 0.05 Time 1,713.4 5.3 0.41 2,067.7 7.4 0.48 Total Interest-Bearing Deposits 12,638.8 21.0 0.22 12,236.9 10.6 0.12 Federal Funds Purchased 0.1 — 1.67 — — — Long-Term Borrowings — — — 200.0 4.2 2.76 Total Interest-Bearing Liabilities 12,638.9 21.0 0.22 12,436.9 14.8 0.16 Net Interest Income $ 445.2 $ 395.1 Interest Rate Spread 2.56 % 2.38 % Net Interest Margin 2.65 % 2.45 % Noninterest-Bearing Demand Deposits 9,532.0 8,358.5 Other Liabilities 566.3 498.9 Stockholders’ Equity 2,358.2 2,719.4 Total Liabilities and Stockholders’ Equity $ 25,095.4 $ 24,013.7 (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 $3.5 million and $1.9 million for the nine months ended September 30, 2022 and 2021, respectively.
Analysis of Change in Net Interest Income Table 6 Three Months Ended September 30, 2022 Compared to June 30, 2022 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (1.7 ) $ 2.9 $ 1.2 Available-for-Sale Investment Securities Taxable (0.9 ) 3.5 2.6 Non-Taxable 0.5 — 0.5 Held-to-Maturity Investment Securities Taxable 0.2 (0.6 ) (0.4 ) Non-Taxable 0.1 — 0.1 Total Investment Securities (0.1 ) 2.9 2.8 Loans and Leases Commercial and industrial 0.6 5.1 5.7 Commercial real estate 1.8 9.8 11.6 Construction 0.3 2.0 2.3 Residential: Residential mortgage 0.3 (0.6 ) (0.3 ) Home equity line 0.3 1.0 1.3 Consumer — 1.6 1.6 Lease financing 0.4 0.2 0.6 Total Loans and Leases 3.7 19.1 22.8 Total Change in Interest Income 1.9 24.9 26.8 Change in Interest Expense: Interest-Bearing Deposits Savings — 5.0 5.0 Money Market — 3.4 3.4 Time — 0.6 0.6 Total Interest-Bearing Deposits — 9.0 9.0 Total Change in Interest Expense — 9.0 9.0 Change in Net Interest Income $ 1.9 $ 15.9 $ 17.8 Analysis of Change in Net Interest Income Table 7 Three Months Ended September 30, 2022 Compared to September 30, 2021 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (1.1 ) $ 4.2 $ 3.1 Available-for-Sale Investment Securities Taxable (12.4 ) 8.7 (3.7 ) Non-Taxable (4.2 ) 1.9 (2.3 ) Held-to-Maturity Investment Securities Taxable 14.6 — 14.6 Non-Taxable 4.2 — 4.2 Total Investment Securities 2.2 10.6 12.8 Loans and Leases Commercial and industrial (3.0 ) 4.1 1.1 Commercial real estate 4.7 12.2 16.9 Construction (1.1 ) 2.6 1.5 Residential: Residential mortgage 3.1 (1.3 ) 1.8 Home equity line 1.1 0.6 1.7 Consumer (0.6 ) 0.9 0.3 Lease financing 0.3 0.4 0.7 Total Loans and Leases 4.5 19.5 24.0 Other Earning Assets — (0.2 ) (0.2 ) Total Change in Interest Income 5.6 34.1 39.7 Change in Interest Expense: Interest-Bearing Deposits Savings — 6.1 6.1 Money Market — 4.3 4.3 Time (0.2 ) 0.2 — Total Interest-Bearing Deposits (0.2 ) 10.6 10.4 Long-Term Borrowings (0.7 ) (0.7 ) (1.4 ) Total Change in Interest Expense (0.9 ) 9.9 9.0 Change in Net Interest Income $ 6.5 $ 24.2 $ 30.7 Analysis of Change in Net Interest Income Table 8 Nine Months Ended September 30, 2022 Compared to September 30, 2021 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (0.7 ) $ 6.5 $ 5.8 Available-for-Sale Investment Securities Taxable (13.4 ) 10.8 (2.6 ) Non-Taxable (3.8 ) 1.3 (2.5 ) Held-to-Maturity Investment Securities Taxable 29.7 — 29.7 Non-Taxable 8.3 — 8.3 Total Investment Securities 20.8 12.1 32.9 Loans Held for Sale (0.1 ) — (0.1 ) Loans and Leases Commercial and industrial (18.8 ) 7.9 (10.9 ) Commercial real estate 9.5 13.7 23.2 Construction (1.6 ) 3.1 1.5 Residential: Residential mortgage 10.5 (5.8 ) 4.7 Home equity line 2.3 (0.5 ) 1.8 Consumer (2.8 ) (0.5 ) (3.3 ) Lease financing 0.1 0.9 1.0 Total Loans and Leases (0.8 ) 18.8 18.0 Other Earning Assets 0.1 (0.4 ) (0.3 ) Total Change in Interest Income 19.3 37.0 56.3 Change in Interest Expense: Interest-Bearing Deposits Savings 0.1 7.1 7.2 Money Market 0.1 5.2 5.3 Time (1.1 ) (1.0 ) (2.1 ) Total Interest-Bearing Deposits (0.9 ) 11.3 10.4 Long-Term Borrowings (2.1 ) (2.1 ) (4.2 ) Total Change in Interest Expense (3.0 ) 9.2 6.2 Change in Net Interest Income $ 22.3 $ 27.8 $ 50.1 Loans and Leases Table 9 September 30, June 30, December 31, September 30, (dollars in thousands) 2022 2022 2021 2021 Commercial and industrial: Commercial and industrial excluding Paycheck Protection Program loans $ 2,017,095 $ 1,898,899 $ 1,870,657 $ 1,692,315 Paycheck Protection Program loans 26,712 43,233 216,442 503,069 Total commercial and industrial 2,043,807 1,942,132 2,087,099 2,195,384 Commercial real estate 4,103,310 3,956,828 3,639,623 3,569,768 Construction 765,862 727,771 813,969 826,078 Residential: Residential mortgage 4,252,041 4,212,768 4,083,367 3,914,632 Home equity line 1,010,631 971,569 876,608 852,074 Total residential 5,262,672 5,184,337 4,959,975 4,766,706 Consumer 1,218,885 1,207,051 1,229,939 1,238,714 Lease financing 305,838 244,662 231,394 237,689 Total loans and leases $ 13,700,374 $ 13,262,781 $ 12,961,999 $ 12,834,339 Deposits Table 10 September 30, June 30, December 31, September 30, (dollars in thousands) 2022 2022 2021 2021 Demand $ 9,317,093 $ 9,610,883 $ 9,393,863 $ 8,873,424 Savings 6,724,783 7,243,185 6,612,775 7,347,079 Money Market 4,150,940 4,079,706 4,033,070 4,019,250 Time 1,898,922 1,667,680 1,776,438 1,880,250 Total Deposits $ 22,091,738 $ 22,601,454 $ 21,816,146 $ 22,120,003 Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11 September 30, June 30, December 31, September 30, (dollars in thousands) 2022 2022 2021 2021 Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 1,528 $ 682 $ 718 $ 746 Commercial real estate 727 727 727 745 Total Commercial Loans 2,255 1,409 1,445 1,491 Residential Loans: Residential mortgage 6,028 6,450 5,637 7,137 Total Residential Loans 6,028 6,450 5,637 7,137 Total Non-Accrual Loans and Leases 8,283 7,859 7,082 8,628 Other Real Estate Owned 139 — 175 — Total Non-Performing Assets $ 8,422 $ 7,859 $ 7,257 $ 8,628 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 1,445 $ 2,230 $ 740 $ 439 Commercial real estate — 176 — — Construction 390 352 — — Total Commercial Loans 1,835 2,758 740 439 Residential Loans: Residential mortgage — 750 987 100 Home equity line 1,832 1,039 3,681 3,871 Total Residential Loans 1,832 1,789 4,668 3,971 Consumer 1,976 1,218 1,800 1,376 Total Accruing Loans and Leases Past Due 90 Days or More $ 5,643 $ 5,765 $ 7,208 $ 5,786 Restructured Loans on Accrual Status and Not Past Due 90 Days or More $ 27,342 $ 29,440 $ 34,893 $ 36,234 Total Loans and Leases $ 13,700,374 $ 13,262,781 $ 12,961,999 $ 12,834,339 Allowance for Credit Losses and Reserve for Unfunded Commitments Table 12 For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, (dollars in thousands) 2022 2022 2021 2022 2021 Balance at Beginning of Period $ 177,900 $ 179,238 $ 198,370 187,584 239,057 Loans and Leases Charged-Off Commercial Loans: Commercial and industrial (328 ) (243 ) (224 ) (1,277 ) (1,517 ) Commercial real estate (750 ) — — (750 ) (66 ) Total Commercial Loans (1,078 ) (243 ) (224 ) (2,027 ) (1,583 ) Residential Loans: Residential mortgage (1 ) — — (1 ) (98 ) Home equity line — (1,120 ) (235 ) (1,163 ) (235 ) Total Residential Loans (1 ) (1,120 ) (235 ) (1,164 ) (333 ) Consumer (3,986 ) (3,659 ) (2,926 ) (11,754 ) (13,384 ) Total Loans and Leases Charged-Off (5,065 ) (5,022 ) (3,385 ) (14,945 ) (15,300 ) Recoveries on Loans and Leases Previously Charged-Off Commercial Loans: Commercial and industrial 240 301 121 594 623 Commercial real estate — — 15 14 30 Construction — — — — 166 Lease financing — 60 — 60 — Total Commercial Loans 240 361 136 668 819 Residential Loans: Residential mortgage 37 192 215 245 246 Home equity line 356 191 27 575 89 Total Residential Loans 393 383 242 820 335 Consumer 1,653 1,940 2,405 5,741 7,857 Total Recoveries on Loans and Leases Previously Charged-Off 2,286 2,684 2,783 7,229 9,011 Net Loans and Leases Charged-Off (2,779 ) (2,338 ) (602 ) (7,716 ) (6,289 ) Provision for Credit Losses 3,183 1,000 (4,000 ) (1,564 ) (39,000 ) Balance at End of Period $ 178,304 $ 177,900 $ 193,768 $ 178,304 $ 193,768 Components: Allowance for Credit Losses $ 148,163 $ 148,942 $ 161,246 $ 148,163 $ 161,246 Reserve for Unfunded Commitments 30,141 28,958 32,522 30,141 32,522 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $ 178,304 $ 177,900 $ 193,768 $ 178,304 $ 193,768 Average Loans and Leases Outstanding $ 13,491,428 $ 13,058,558 $ 12,881,885 $ 13,125,660 $ 13,108,427 Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) 0.08 % 0.07 % 0.02 % 0.08 % 0.06 % Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.08 % 1.12 % 1.26 % 1.08 % 1.26 % Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 17.89 x 18.95 x 18.69 x 17.89 x 18.69 x (1) Annualized for the three and nine months ended September 30, 2022 and 2021, and three months ended June 30, 2022.
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) 2022 2021 2020 2019 2018 Prior Cost Basis Cost Basis Total Commercial Lending Commercial and Industrial Risk rating: Pass $ 310,400 $ 425,853 $ 55,272 $ 177,670 $ 55,923 $ 151,156 $ 709,823 $ 15,997 $ 1,902,094 Special Mention 2,179 274 1,492 2,562 209 1,776 31,747 467 40,706 Substandard 655 719 872 1,383 956 1,196 14,728 89 20,598 Other (1) 12,817 8,707 10,095 4,664 2,355 1,358 40,413 — 80,409 Total Commercial and Industrial 326,051 435,553 67,731 186,279 59,443 155,486 796,711 16,553 2,043,807 Commercial Real Estate Risk rating: Pass 700,785 696,763 355,992 548,364 449,754 1,242,315 66,075 — 4,060,048 Special Mention 183 — 559 14,965 515 9,549 687 — 26,458 Substandard — — 176 — 1,724 14,749 2 — 16,651 Other (1) — — — — — 153 — — 153 Total Commercial Real Estate 700,968 696,763 356,727 563,329 451,993 1,266,766 66,764 — 4,103,310 Construction Risk rating: Pass 83,233 225,116 84,312 92,856 116,344 86,722 13,443 — 702,026 Special Mention — — — 229 — — — — 229 Substandard — — — — 346 494 — — 840 Other (1) 22,424 25,610 4,258 2,247 3,908 3,367 953 — 62,767 Total Construction 105,657 250,726 88,570 95,332 120,598 90,583 14,396 — 765,862 Lease Financing Risk rating: Pass 110,563 25,450 46,635 42,307 6,904 68,028 — — 299,887 Special Mention — 434 2,591 1,342 9 — — — 4,376 Substandard — — 196 14 13 1,352 — — 1,575 Total Lease Financing 110,563 25,884 49,422 43,663 6,926 69,380 — — 305,838 Total Commercial Lending $ 1,243,239 $ 1,408,926 $ 562,450 $ 888,603 $ 638,960 $ 1,582,215 $ 877,871 $ 16,553 $ 7,218,817 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans (continued) Amortized Amortized (dollars in thousands) 2022 2021 2020 2019 2018 Prior Cost
BasisCost
BasisTotal Residential Lending Residential Mortgage FICO: 740 and greater $ 474,234 $ 1,056,814 $ 577,378 $ 244,169 $ 169,100 $ 941,705 $ — $ — $ 3,463,400 680 - 739 54,037 122,420 77,660 44,519 21,581 137,573 — — 457,790 620 - 679 7,749 19,021 13,776 4,801 3,868 35,926 — — 85,141 550 - 619 168 1,930 292 225 2,060 7,225 — — 11,900 Less than 550 2,053 1,236 59 — 339 4,621 — — 8,308 No Score (3) 16,029 14,771 6,874 13,004 16,023 50,871 — — 117,572 Other (2) 19,155 18,827 15,436 9,398 9,229 29,468 5,861 556 107,930 Total Residential Mortgage 573,425 1,235,019 691,475 316,116 222,200 1,207,389 5,861 556 4,252,041 Home Equity Line FICO: 740 and greater — — — — — — 781,307 1,961 783,268 680 - 739 — — — — — — 164,166 2,650 166,816 620 - 679 — — — — — — 42,043 2,124 44,167 550 - 619 — — — — — — 8,719 1,375 10,094 Less than 550 — — — — — — 1,157 487 1,644 No Score (3) — — — — — — 4,642 — 4,642 Total Home Equity Line — — — — — — 1,002,034 8,597 1,010,631 Total Residential Lending 573,425 1,235,019 691,475 316,116 222,200 1,207,389 1,007,895 9,153 5,262,672 Consumer Lending FICO: 740 and greater 167,566 120,725 59,620 50,907 30,750 12,114 116,628 195 558,505 680 - 739 80,920 72,861 41,177 36,236 19,242 10,311 68,968 569 330,284 620 - 679 19,673 32,216 15,779 19,379 11,622 8,584 30,441 1,033 138,727 550 - 619 2,159 5,975 5,859 9,266 6,476 5,188 9,803 983 45,709 Less than 550 520 1,557 2,631 4,311 2,106 1,991 2,923 379 16,418 No Score (3) 2,122 337 1 50 28 35 38,831 237 41,641 Other (2) 1,645 4,197 358 1,393 — 2,153 77,855 — 87,601 Total Consumer Lending 274,605 237,868 125,425 121,542 70,224 40,376 345,449 3,396 1,218,885 Total Loans and Leases $ 2,091,269 $ 2,881,813 $ 1,379,350 $ 1,326,261 $ 931,384 $ 2,829,980 $ 2,231,215 $ 29,102 $ 13,700,374 (1) Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score.
(2) Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating.
(3) No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.
GAAP to Non-GAAP Reconciliation Table 14 For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, (dollars in thousands, except per share amounts) 2022 2022 2021 2022 2021 Income Statement Data: Net income $ 69,018 $ 59,360 $ 64,279 $ 186,097 $ 208,713 Average total stockholders’ equity $ 2,267,152 $ 2,262,654 $ 2,738,540 $ 2,358,195 $ 2,719,442 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders’ equity $ 1,271,660 $ 1,267,162 $ 1,743,048 $ 1,362,703 $ 1,723,950 Average total assets $ 24,957,042 $ 25,250,176 $ 25,058,085 $ 25,095,438 $ 24,013,691 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $ 23,961,550 $ 24,254,684 $ 24,062,593 $ 24,099,946 $ 23,018,199 Return on average total stockholders’ equity(1) 12.08 % 10.52 % 9.31 % 10.55 % 10.26 % Return on average tangible stockholders’ equity (non-GAAP)(1) 21.53 % 18.79 % 14.63 % 18.26 % 16.19 % Return on average total assets(1) 1.10 % 0.94 % 1.02 % 0.99 % 1.16 % Return on average tangible assets (non-GAAP)(1) 1.14 % 0.98 % 1.06 % 1.03 % 1.21 % As of As of As of As of September 30, June 30, December 31, September 30, (dollars in thousands, except per share amounts) 2022 2022 2021 2021 Balance Sheet Data: Total stockholders’ equity $ 2,200,651 $ 2,252,611 $ 2,656,912 $ 2,711,734 Less: goodwill 995,492 995,492 995,492 995,492 Tangible stockholders’ equity $ 1,205,159 $ 1,257,119 $ 1,661,420 $ 1,716,242 Total assets $ 24,870,272 $ 25,377,533 $ 24,992,410 $ 25,548,322 Less: goodwill 995,492 995,492 995,492 995,492 Tangible assets $ 23,874,780 $ 24,382,041 $ 23,996,918 $ 24,552,830 Shares outstanding 127,357,680 127,451,087 127,502,472 128,255,570 Total stockholders’ equity to total assets 8.85 % 8.88 % 10.63 % 10.61 % Tangible stockholders’ equity to tangible assets (non-GAAP) 5.05 % 5.16 % 6.92 % 6.99 % Book value per share $ 17.28 $ 17.67 $ 20.84 $ 21.14 Tangible book value per share (non-GAAP) $ 9.46 $ 9.86 $ 13.03 $ 13.38 (1) Annualized for the three and nine months ended September 30, 2022 and 2021, and three months ended June 30, 2022.
