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First Hawaiian, Inc. Reports Third Quarter 2024 Financial Results and Declares Dividend
Source: Nasdaq GlobeNewswire / 25 Oct 2024 08:00:01 America/New_York
HONOLULU, Oct. 25, 2024 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended September 30, 2024.
“I’m happy to report that we had a very good third quarter,” said Bob Harrison, Chairman, President, and CEO. “Net interest income and noninterest income increased over the prior quarter, expenses were well controlled and credit quality remained excellent. I’m also pleased to report that during the third quarter, Moody’s reviewed and reaffirmed all of First Hawaiian Bank’s long-term credit and deposit ratings.”
On October 23, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on November 29, 2024, to stockholders of record at the close of business on November 18, 2024.
Third Quarter 2024 Highlights:
- Net income of $61.5 million, or $0.48 per diluted share
- Total loans and leases decreased $118.5 million versus the prior quarter
- Total deposits decreased $91.1 million versus the prior quarter
- Net interest margin increased 3 basis points to 2.95%
- Recorded a $7.4 million provision for credit losses
- Board of Directors declared a quarterly dividend of $0.26 per share
Balance Sheet
Total assets were $23.8 billion as of September 30, 2024, a decrease of $211.5 million, or 0.9%, from $24.0 billion as of June 30, 2024.
Gross loans and leases were $14.2 billion as of September 30, 2024, a decrease of $118.5 million, or 0.8%, from $14.4 billion as of June 30, 2024.
Total deposits were $20.2 billion as of September 30, 2024, a decrease of $91.1 million, or 0.4%, from $20.3 billion as of June 30, 2024.
Net Interest Income
Net interest income for the third quarter of 2024 was $156.7 million, an increase of $3.9 million, or 2.5%, compared to $152.9 million for the prior quarter.
The net interest margin was 2.95% in the third quarter of 2024, an increase of 3 basis points compared to 2.92% in the prior quarter.
Provision Expense
During the quarter ended September 30, 2024, we recorded a $7.4 million provision for credit losses. In the quarter ended June 30, 2024, we recorded a $1.8 million provision for credit losses.
Noninterest Income
Noninterest income was $53.3 million in the third quarter of 2024, an increase of $1.5 million compared to noninterest income of $51.8 million in the prior quarter.
Noninterest Expense
Noninterest expense was $126.1 million in the third quarter of 2024, an increase of $4.1 million compared to noninterest expense of $122.1 million in the prior quarter.
The efficiency ratio was 59.8% and 59.2% for the quarters ended September 30, 2024 and June 30, 2024, respectively.
Taxes
The effective tax rate was 19.6% and 23.3% for the quarters ended September 30, 2024 and June 30, 2024, respectively.
Asset Quality
The allowance for credit losses was $163.7 million, or 1.15% of total loans and leases, as of September 30, 2024, compared to $160.5 million, or 1.12% of total loans and leases, as of June 30, 2024. The reserve for unfunded commitments was $33.7 million as of September 30, 2024 compared to $33.4 million as of June 30, 2024. Net charge-offs were $3.9 million, or 0.11% of average loans and leases on an annualized basis, for the quarter ended September 30, 2024, compared to net charge-offs of $2.5 million, or 0.07% of average loans and leases on an annualized basis, for the quarter ended June 30, 2024. Total non-performing assets were $17.8 million, or 0.13% of total loans and leases and other real estate owned, as of September 30, 2024, compared to $18.0 million, or 0.13% of total loans and leases and other real estate owned, as of June 30, 2024.
Capital
Total stockholders' equity increased $97.7 million in the third quarter, and stood at $2.6 billion on September 30, 2024 and June 30, 2024.
The tier 1 leverage, common equity tier 1 and total capital ratios were 9.14%, 13.03% and 14.25%, respectively, on September 30, 2024, compared with 9.03%, 12.73% and 13.92%, respectively, on June 30, 2024.
The Company did not repurchase any shares in the third quarter.
First Hawaiian, Inc.
First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii. Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii’s oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit the Company’s website, www.fhb.com.
Conference Call Information
First Hawaiian will host a conference call to discuss the Company’s results today at 1:00 p.m. Eastern Time, 7:00 a.m. Hawaii Time.
To access the call by phone, participants will need to click on the following registration link: https://register.vevent.com/register/BIec8273f35cc340bcb13d27eae17d127b, register for the conference call, and then you will receive the dial-in number and a personalized PIN code. 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. 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, 2023 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024.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) 2024 2024 2023 2024 2023 Operating Results: Net interest income $ 156,707 $ 152,851 $ 157,148 $ 463,985 $ 484,334 Provision for credit losses 7,400 1,800 7,500 15,500 21,300 Noninterest income 53,288 51,768 46,097 156,427 142,468 Noninterest expense 126,147 122,086 119,383 377,046 358,831 Net income 61,492 61,921 58,221 177,633 187,481 Basic earnings per share 0.48 0.48 0.46 1.39 1.47 Diluted earnings per share 0.48 0.48 0.46 1.38 1.47 Dividends declared per share 0.26 0.26 0.26 0.78 0.78 Dividend payout ratio 54.17 % 54.17 % 56.52 % 56.52 % 53.06 % Performance Ratios(1): Net interest margin 2.95 % 2.92 % 2.86 % 2.93 % 2.96 % Efficiency ratio 59.77 % 59.22 % 58.31 % 60.38 % 56.86 % Return on average total assets 1.02 % 1.04 % 0.93 % 0.99 % 1.01 % Return on average tangible assets (non-GAAP)(2) 1.06 % 1.08 % 0.97 % 1.03 % 1.06 % Return on average total stockholders' equity 9.45 % 9.91 % 9.76 % 9.37 % 10.72 % Return on average tangible stockholders' equity (non-GAAP)(2) 15.35 % 16.42 % 16.84 % 15.43 % 18.68 % Average Balances: Average loans and leases $ 14,304,806 $ 14,358,049 $ 14,349,402 $ 14,325,065 $ 14,238,309 Average earning assets 21,328,882 21,247,707 22,060,480 21,352,739 22,040,704 Average assets 24,046,696 23,958,913 24,727,893 24,064,208 24,699,826 Average deposits 20,367,805 20,308,028 21,212,102 20,415,746 21,245,055 Average stockholders' equity 2,588,806 2,512,471 2,367,422 2,532,911 2,337,292 Market Value Per Share: Closing 23.15 20.76 18.05 23.15 18.05 High 26.18 22.68 22.59 26.18 28.28 Low 20.28 19.48 17.41 19.48 15.08 As of As of As of As of September 30, June 30, December 31, September 30, (dollars in thousands, except per share data) 2024 2024 2023 2023 Balance Sheet Data: Loans and leases $ 14,241,370 $ 14,359,899 $ 14,353,497 $ 14,332,335 Total assets 23,780,285 23,991,791 24,926,474 24,912,524 Total deposits 20,227,702 20,318,832 21,332,657 21,511,489 Short-term borrowings 250,000 500,000 500,000 500,000 Total stockholders' equity 2,648,034 2,550,312 2,486,066 2,351,009 Per Share of Common Stock: Book value $ 20.71 $ 19.94 $ 19.48 $ 18.42 Tangible book value (non-GAAP)(2) 12.92 12.16 11.68 10.62 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.13 % 0.13 % 0.13 % 0.10 % Allowance for credit losses for loans and leases / total loans and leases 1.15 % 1.12 % 1.09 % 1.08 % Capital Ratios: Common Equity Tier 1 Capital Ratio 13.03 % 12.73 % 12.39 % 12.21 % Tier 1 Capital Ratio 13.03 % 12.73 % 12.39 % 12.21 % Total Capital Ratio 14.25 % 13.92 % 13.57 % 13.38 % Tier 1 Leverage Ratio 9.14 % 9.03 % 8.64 % 8.45 % Total stockholders' equity to total assets 11.14 % 10.63 % 9.97 % 9.44 % Tangible stockholders' equity to tangible assets (non-GAAP)(2) 7.25 % 6.76 % 6.23 % 5.67 % Non-Financial Data: Number of branches 48 48 50 50 Number of ATMs 273 272 275 294 Number of Full-Time Equivalent Employees 2,022 2,032 2,089 2,087
(1) Except for the efficiency ratio, amounts are annualized for the three and nine months ended September 30, 2024 and 2023 and three months ended June 30, 2024.
(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) 2024 2024 2023 2024 2023 Interest income Loans and lease financing $ 205,682 $ 202,068 $ 194,098 $ 607,594 $ 551,777 Available-for-sale investment securities 12,850 14,143 18,426 41,539 55,208 Held-to-maturity investment securities 16,937 17,575 18,271 52,305 55,510 Other 14,527 11,148 9,004 38,444 20,054 Total interest income 249,996 244,934 239,799 739,882 682,549 Interest expense Deposits 87,500 85,609 74,651 257,252 176,006 Short-term and long-term borrowings 5,397 5,953 6,838 17,303 20,057 Other 392 521 1,162 1,342 2,152 Total interest expense 93,289 92,083 82,651 275,897 198,215 Net interest income 156,707 152,851 157,148 463,985 484,334 Provision for credit losses 7,400 1,800 7,500 15,500 21,300 Net interest income after provision for credit losses 149,307 151,051 149,648 448,485 463,034 Noninterest income Service charges on deposit accounts 7,783 7,793 7,524 23,122 22,001 Credit and debit card fees 17,533 15,861 15,748 49,567 47,507 Other service charges and fees 11,790 11,036 9,546 32,730 27,764 Trust and investment services income 9,077 9,426 9,742 28,857 28,804 Bank-owned life insurance 4,502 3,360 1,872 12,148 10,263 Other 2,603 4,292 1,665 10,003 6,129 Total noninterest income 53,288 51,768 46,097 156,427 142,468 Noninterest expense Salaries and employee benefits 59,563 57,737 55,937 176,562 169,873 Contracted services and professional fees 14,634 16,067 16,393 46,440 50,204 Occupancy 6,945 7,377 6,711 21,263 22,047 Equipment 13,078 13,196 11,826 39,687 32,562 Regulatory assessment and fees 3,412 3,814 4,149 15,346 11,661 Advertising and marketing 1,813 1,765 2,289 6,190 6,174 Card rewards program 8,678 8,719 8,358 25,905 24,124 Other 18,024 13,411 13,720 45,653 42,186 Total noninterest expense 126,147 122,086 119,383 377,046 358,831 Income before provision for income taxes 76,448 80,733 76,362 227,866 246,671 Provision for income taxes 14,956 18,812 18,141 50,233 59,190 Net income $ 61,492 $ 61,921 $ 58,221 $ 177,633 $ 187,481 Basic earnings per share $ 0.48 $ 0.48 $ 0.46 $ 1.39 $ 1.47 Diluted earnings per share $ 0.48 $ 0.48 $ 0.46 $ 1.38 $ 1.47 Basic weighted-average outstanding shares 127,886,167 127,867,853 127,609,860 127,820,737 127,552,255 Diluted weighted-average outstanding shares 128,504,035 128,262,594 127,936,440 128,362,433 127,897,829 Consolidated Balance Sheets Table 3 September 30, June 30, December 31, September 30, (dollars in thousands, except share amount) 2024 2024 2023 2023 Assets Cash and due from banks $ 252,209 $ 290,501 $ 185,015 $ 246,028 Interest-bearing deposits in other banks 820,603 824,258 1,554,882 967,400 Investment securities: Available-for-sale, at fair value (amortized cost: $2,290,781 as of September 30, 2024, $2,379,004 as of June 30, 2024, $2,558,675 as of December 31, 2023 and $3,172,031 as of September 30, 2023) 2,055,959 2,067,956 2,255,336 2,722,704 Held-to-maturity, at amortized cost (fair value: $3,475,143 as of September 30, 2024, $3,401,006 as of June 30, 2024, $3,574,856 as of December 31, 2023 and $3,433,029 as of September 30, 2023) 3,853,697 3,917,175 4,041,449 4,104,114 Loans held for sale — 2,820 190 — Loans and leases 14,241,370 14,359,899 14,353,497 14,332,335 Less: allowance for credit losses 163,700 160,517 156,533 154,795 Net loans and leases 14,077,670 14,199,382 14,196,964 14,177,540 Premises and equipment, net 287,036 283,762 281,461 277,805 Accrued interest receivable 81,875 82,512 84,417 84,327 Bank-owned life insurance 490,135 486,261 479,907 477,698 Goodwill 995,492 995,492 995,492 995,492 Mortgage servicing rights 5,236 5,395 5,699 5,855 Other assets 860,373 836,277 845,662 853,561 Total assets $ 23,780,285 $ 23,991,791 $ 24,926,474 $ 24,912,524 Liabilities and Stockholders' Equity Deposits: Interest-bearing $ 13,427,674 $ 13,461,365 $ 13,749,095 $ 13,612,493 Noninterest-bearing 6,800,028 6,857,467 7,583,562 7,898,996 Total deposits 20,227,702 20,318,832 21,332,657 21,511,489 Short-term borrowings 250,000 500,000 500,000 500,000 Retirement benefits payable 100,448 101,304 103,285 99,685 Other liabilities 554,101 521,343 504,466 450,341 Total liabilities 21,132,251 21,441,479 22,440,408 22,561,515 Stockholders' equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,735,601 / 127,886,167 shares as of September 30, 2024, issued/outstanding: 141,728,446 / 127,879,012 shares as of June 30, 2024, issued/outstanding: 141,340,539 / 127,618,761 shares as of December 31, 2023 and issued/outstanding: 141,330,663 / 127,609,934 shares as of September 30, 2023) 1,417 1,417 1,413 1,413 Additional paid-in capital 2,558,158 2,554,795 2,548,250 2,545,659 Retained earnings 915,062 887,176 837,859 823,895 Accumulated other comprehensive loss, net (452,658 ) (519,132 ) (530,210 ) (648,731 ) Treasury stock (13,849,434 shares as of September 30, 2024, 13,849,434 shares as of June 30, 2024, 13,721,778 shares as of December 31, 2023 and 13,720,729 shares as of September 30, 2023) (373,945 ) (373,944 ) (371,246 ) (371,227 ) Total stockholders' equity 2,648,034 2,550,312 2,486,066 2,351,009 Total liabilities and stockholders' equity $ 23,780,285 $ 23,991,791 $ 24,926,474 $ 24,912,524 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended September 30, 2024 June 30, 2024 September 30, 2023 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 $ 1,020.4 $ 13.9 5.40 % $ 773.4 $ 10.5 5.45 % $ 608.6 $ 8.2 5.36 % Available-for-Sale Investment Securities Taxable 2,062.6 12.8 2.48 2,100.7 14.1 2.69 2,834.6 18.4 2.59 Non-Taxable 1.5 — 5.06 1.5 — 5.76 2.3 — 5.48 Held-to-Maturity Investment Securities Taxable 3,288.2 13.8 1.67 3,358.2 14.4 1.71 3,544.1 15.0 1.70 Non-Taxable 602.3 3.7 2.46 602.9 4.0 2.64 604.3 4.1 2.66 Total Investment Securities 5,954.6 30.3 2.03 6,063.3 32.5 2.15 6,985.3 37.5 2.14 Loans Held for Sale 2.2 — 5.64 1.0 — 6.58 0.4 — 6.63 Loans and Leases(1) Commercial and industrial 2,165.3 38.0 6.98 2,201.6 38.1 6.96 2,123.5 35.7 6.66 Commercial real estate 4,278.3 71.6 6.67 4,305.6 71.5 6.68 4,381.8 71.4 6.47 Construction 1,040.7 20.3 7.74 984.8 18.5 7.57 873.7 15.5 7.05 Residential: Residential mortgage 4,204.5 40.4 3.84 4,229.4 40.1 3.80 4,316.3 40.1 3.72 Home equity line 1,158.5 13.2 4.52 1,164.2 12.6 4.35 1,154.0 10.1 3.45 Consumer 1,035.3 18.7 7.19 1,054.1 17.7 6.74 1,172.8 18.3 6.19 Lease financing 422.2 4.0 3.72 418.3 4.3 4.09 327.3 3.7 4.48 Total Loans and Leases 14,304.8 206.2 5.74 14,358.0 202.8 5.67 14,349.4 194.8 5.39 Other Earning Assets 46.9 0.7 5.83 52.0 0.7 5.25 116.8 0.8 2.64 Total Earning Assets(2) 21,328.9 251.1 4.69 21,247.7 246.5 4.66 22,060.5 241.3 4.35 Cash and Due from Banks 242.3 240.4 276.0 Other Assets 2,475.5 2,470.8 2,391.4 Total Assets $ 24,046.7 $ 23,958.9 $ 24,727.9 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 5,963.1 $ 23.6 1.57 % $ 6,000.4 $ 23.4 1.57 % $ 5,982.5 $ 19.2 1.27 % Money Market 4,179.5 31.9 3.04 4,076.7 30.6 3.02 3,907.2 24.7 2.51 Time 3,327.3 32.0 3.83 3,284.3 31.6 3.87 3,362.7 30.8 3.63 Total Interest-Bearing Deposits 13,469.9 87.5 2.58 13,361.4 85.6 2.58 13,252.4 74.7 2.23 Other Short-Term Borrowings 451.1 5.4 4.76 500.0 6.0 4.79 113.1 1.5 5.17 Long-Term Borrowings — — — — — — 440.2 5.3 4.83 Other Interest-Bearing Liabilities 22.4 0.4 6.97 38.2 0.5 5.48 89.1 1.2 5.17 Total Interest-Bearing Liabilities 13,943.4 93.3 2.66 13,899.6 92.1 2.66 13,894.8 82.7 2.36 Net Interest Income $ 157.8 $ 154.4 $ 158.6 Interest Rate Spread(3) 2.03 % 2.00 % 1.99 % Net Interest Margin(4) 2.95 % 2.92 % 2.86 % Noninterest-Bearing Demand Deposits 6,897.9 6,946.6 7,959.7 Other Liabilities 616.6 600.2 506.0 Stockholders' Equity 2,588.8 2,512.5 2,367.4 Total Liabilities and Stockholders' Equity $ 24,046.7 $ 23,958.9 $ 24,727.9
(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 $1.1 million, $1.5 million and $1.5 million for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
(3) Interest rate spread is the difference between the average yield on earning assets and the average rate paid on interest-bearing liabilities, on a fully taxable-equivalent basis.
(4) Net interest margin is net interest income annualized for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, on a fully taxable-equivalent basis, divided by average total earning assets.
Average Balances and Interest Rates Table 5 Nine Months Ended Nine Months Ended September 30, 2024 September 30, 2023 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $ 884.6 $ 35.9 5.43 % $ 493.6 $ 18.8 5.10 % Available-for-Sale Investment Securities Taxable 2,124.4 41.5 2.61 2,964.0 54.8 2.47 Non-Taxable 1.6 0.1 5.49 13.0 0.5 5.57 Held-to-Maturity Investment Securities Taxable 3,354.0 42.7 1.70 3,615.0 46.0 1.70 Non-Taxable 602.9 11.7 2.58 608.9 11.9 2.62 Total Investment Securities 6,082.9 96.0 2.10 7,200.9 113.2 2.10 Loans Held for Sale 1.3 0.1 6.11 0.3 — 6.11 Loans and Leases(1) Commercial and industrial 2,177.2 113.3 6.95 2,193.8 104.3 6.35 Commercial real estate 4,302.4 213.4 6.62 4,224.7 194.6 6.16 Construction 983.6 56.2 7.63 874.0 45.4 6.95 Residential: Residential mortgage 4,232.6 122.5 3.86 4,312.4 117.6 3.64 Home equity line 1,164.9 37.8 4.34 1,116.4 27.9 3.35 Consumer 1,057.6 54.4 6.87 1,194.1 53.2 5.95 Lease financing 406.8 11.9 3.90 322.9 10.5 4.34 Total Loans and Leases 14,325.1 609.5 5.68 14,238.3 553.5 5.19 Other Earning Assets 58.8 2.5 5.69 107.6 1.3 1.53 Total Earning Assets(2) 21,352.7 744.0 4.65 22,040.7 686.8 4.16 Cash and Due from Banks 242.4 273.3 Other Assets 2,469.1 2,385.8 Total Assets $ 24,064.2 $ 24,699.8 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,007.6 $ 70.5 1.57 % $ 6,144.1 $ 49.1 1.07 % Money Market 4,067.5 91.3 3.00 3,857.0 58.6 2.03 Time 3,312.3 95.5 3.85 2,921.8 68.3 3.12 Total Interest-Bearing Deposits 13,387.4 257.3 2.57 12,922.9 176.0 1.82 Federal Funds Purchased — — — 23.0 0.8 4.45 Other Short-Term Borrowings 483.6 17.3 4.78 176.5 6.8 5.15 Long-Term Borrowings — — — 349.8 12.5 4.78 Other Interest-Bearing Liabilities 31.1 1.3 5.75 62.1 2.1 4.63 Total Interest-Bearing Liabilities 13,902.1 275.9 2.65 13,534.3 198.2 1.96 Net Interest Income $ 468.1 $ 488.6 Interest Rate Spread(3) 2.00 % 2.20 % Net Interest Margin(4) 2.93 % 2.96 % Noninterest-Bearing Demand Deposits 7,028.4 8,322.2 Other Liabilities 600.8 506.0 Stockholders' Equity 2,532.9 2,337.3 Total Liabilities and Stockholders' Equity $ 24,064.2 $ 24,699.8
(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 $4.1 million and $4.2 million for the nine months ended September 30, 2024 and 2023, respectively.
(3) Interest rate spread is the difference between the average yield on earning assets and the average rate paid on interest-bearing liabilities, on a fully taxable-equivalent basis.
(4) Net interest margin is net interest income annualized for the nine months ended September 30, 2024 and 2023, on a fully taxable-equivalent basis, divided by average total earning assets.
Analysis of Change in Net Interest Income Table 6 Three Months Ended September 30, 2024 Compared to June 30, 2024 (dollars in millions) Volume Rate Total (1) Change in Interest Income: Interest-Bearing Deposits in Other Banks $ 3.5 $ (0.1 ) $ 3.4 Available-for-Sale Investment Securities Taxable (0.2 ) (1.1 ) (1.3 ) Held-to-Maturity Investment Securities Taxable (0.3 ) (0.3 ) (0.6 ) Non-Taxable — (0.3 ) (0.3 ) Total Investment Securities (0.5 ) (1.7 ) (2.2 ) Loans and Leases Commercial and industrial (0.3 ) 0.2 (0.1 ) Commercial real estate — 0.1 0.1 Construction 1.3 0.5 1.8 Residential: Residential mortgage (0.2 ) 0.5 0.3 Home equity line — 0.6 0.6 Consumer (0.3 ) 1.3 1.0 Lease financing — (0.3 ) (0.3 ) Total Loans and Leases 0.5 2.9 3.4 Other Earning Assets (0.1 ) 0.1 — Total Change in Interest Income 3.4 1.2 4.6 Change in Interest Expense: Interest-Bearing Deposits Savings — 0.2 0.2 Money Market 1.0 0.3 1.3 Time 0.6 (0.2 ) 0.4 Total Interest-Bearing Deposits 1.6 0.3 1.9 Other Short-Term Borrowings (0.5 ) (0.1 ) (0.6 ) Other Interest-Bearing Liabilities (0.2 ) 0.1 (0.1 ) Total Change in Interest Expense 0.9 0.3 1.2 Change in Net Interest Income $ 2.5 $ 0.9 $ 3.4
(1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
Analysis of Change in Net Interest Income Table 7 Three Months Ended September 30, 2024 Compared to September 30, 2023 (dollars in millions) Volume Rate Total (1) Change in Interest Income: Interest-Bearing Deposits in Other Banks $ 5.6 $ 0.1 $ 5.7 Available-for-Sale Investment Securities Taxable (4.8 ) (0.8 ) (5.6 ) Held-to-Maturity Investment Securities Taxable (1.0 ) (0.2 ) (1.2 ) Non-Taxable — (0.4 ) (0.4 ) Total Investment Securities (5.8 ) (1.4 ) (7.2 ) Loans and Leases Commercial and industrial 0.7 1.6 2.3 Commercial real estate (1.8 ) 2.0 0.2 Construction 3.2 1.6 4.8 Residential: Residential mortgage (1.0 ) 1.3 0.3 Home equity line — 3.1 3.1 Consumer (2.3 ) 2.7 0.4 Lease financing 0.9 (0.6 ) 0.3 Total Loans and Leases (0.3 ) 11.7 11.4 Other Earning Assets (0.7 ) 0.6 (0.1 ) Total Change in Interest Income (1.2 ) 11.0 9.8 Change in Interest Expense: Interest-Bearing Deposits Savings (0.1 ) 4.5 4.4 Money Market 1.8 5.4 7.2 Time (0.3 ) 1.5 1.2 Total Interest-Bearing Deposits 1.4 11.4 12.8 Other Short-Term Borrowings 4.0 (0.1 ) 3.9 Long-Term Borrowings (2.6 ) (2.7 ) (5.3 ) Other Interest-Bearing Liabilities (1.1 ) 0.3 (0.8 ) Total Change in Interest Expense 1.7 8.9 10.6 Change in Net Interest Income $ (2.9 ) $ 2.1 $ (0.8 )
(1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
Analysis of Change in Net Interest Income Table 8 Nine Months Ended September 30, 2024 Compared to September 30, 2023 (dollars in millions) Volume Rate Total (1) Change in Interest Income: Interest-Bearing Deposits in Other Banks $ 15.8 $ 1.3 $ 17.1 Available-for-Sale Investment Securities Taxable (16.3 ) 3.0 (13.3 ) Non-Taxable (0.4 ) — (0.4 ) Held-to-Maturity Investment Securities Taxable (3.3 ) — (3.3 ) Non-Taxable (0.1 ) (0.1 ) (0.2 ) Total Investment Securities (20.1 ) 2.9 (17.2 ) Loans Held for Sale 0.1 — 0.1 Loans and Leases Commercial and industrial (0.8 ) 9.8 9.0 Commercial real estate 3.7 15.1 18.8 Construction 6.1 4.7 10.8 Residential: Residential mortgage (2.2 ) 7.1 4.9 Home equity line 1.3 8.6 9.9 Consumer (6.5 ) 7.7 1.2 Lease financing 2.5 (1.1 ) 1.4 Total Loans and Leases 4.1 51.9 56.0 Other Earning Assets (0.8 ) 2.0 1.2 Total Change in Interest Income (0.9 ) 58.1 57.2 Change in Interest Expense: Interest-Bearing Deposits Savings (1.1 ) 22.5 21.4 Money Market 3.4 29.3 32.7 Time 9.9 17.3 27.2 Total Interest-Bearing Deposits 12.2 69.1 81.3 Federal Funds Purchased (0.4 ) (0.4 ) (0.8 ) Other Short-Term Borrowings 11.0 (0.5 ) 10.5 Long-Term Borrowings (6.3 ) (6.2 ) (12.5 ) Other Interest-Bearing Liabilities (1.2 ) 0.4 (0.8 ) Total Change in Interest Expense 15.3 62.4 77.7 Change in Net Interest Income $ (16.2 ) $ (4.3 ) $ (20.5 )
(1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.
Loans and Leases Table 9 September 30, June 30, December 31, September 30, (dollars in thousands) 2024 2024 2023 2023 Commercial and industrial $ 2,110,077 $ 2,208,690 $ 2,165,349 $ 2,101,442 Commercial real estate 4,265,289 4,305,017 4,340,243 4,387,751 Construction 1,056,249 1,017,649 900,292 885,112 Residential: Residential mortgage 4,187,060 4,216,416 4,283,315 4,303,924 Home equity line 1,159,823 1,159,833 1,174,588 1,167,388 Total residential 5,346,883 5,376,249 5,457,903 5,471,312 Consumer 1,030,044 1,027,104 1,109,901 1,154,203 Lease financing 432,828 425,190 379,809 332,515 Total loans and leases $ 14,241,370 $ 14,359,899 $ 14,353,497 $ 14,332,335 Deposits Table 10 September 30, June 30, December 31, September 30, (dollars in thousands) 2024 2024 2023 2023 Demand $ 6,800,028 $ 6,857,467 $ 7,583,562 $ 7,898,996 Savings 5,896,029 6,055,051 6,445,084 6,028,308 Money Market 4,129,381 4,111,609 3,847,853 3,923,054 Time 3,402,264 3,294,705 3,456,158 3,661,131 Total Deposits $ 20,227,702 $ 20,318,832 $ 21,332,657 $ 21,511,489 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) 2024 2024 2023 2023 Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 934 $ 1,084 $ 970 $ 988 Commercial real estate 152 3,085 2,953 — Construction — 447 — — Total Commercial Loans 1,086 4,616 3,923 988 Residential Loans: Residential mortgage 9,103 7,273 7,620 7,435 Home equity line 7,645 6,124 7,052 6,200 Total Residential Loans 16,748 13,397 14,672 13,635 Total Non-Accrual Loans and Leases 17,834 18,013 18,595 14,623 Total Non-Performing Assets $ 17,834 $ 18,013 $ 18,595 $ 14,623 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 529 $ 110 $ 494 $ 289 Commercial real estate 568 — 300 170 Total Commercial Loans 1,097 110 794 459 Residential mortgage 931 1,820 — 1,430 Consumer 2,515 1,835 2,702 1,681 Total Accruing Loans and Leases Past Due 90 Days or More $ 4,543 $ 3,765 $ 3,496 $ 3,570 Total Loans and Leases $ 14,241,370 $ 14,359,899 $ 14,353,497 $ 14,332,335 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) 2024 2024 2023 2024 2023 Balance at Beginning of Period $ 193,930 $ 194,649 $ 184,780 $ 192,138 $ 177,735 Loans and Leases Charged-Off Commercial Loans: Commercial and industrial (1,178 ) (677 ) (784 ) (2,764 ) (2,572 ) Commercial real estate (400 ) — — (400 ) — Total Commercial Loans (1,578 ) (677 ) (784 ) (3,164 ) (2,572 ) Residential Loans: Residential mortgage — — — — (122 ) Home equity line — — — — (272 ) Total Residential Loans — — — — (394 ) Consumer (4,192 ) (4,182 ) (3,665 ) (13,228 ) (12,963 ) Total Loans and Leases Charged-Off (5,770 ) (4,859 ) (4,449 ) (16,392 ) (15,929 ) Recoveries on Loans and Leases Previously Charged-Off Commercial and industrial 160 250 2,637 621 3,175 Residential Loans: Residential mortgage 31 28 53 89 110 Home equity line 86 112 303 242 539 Total Residential Loans 117 140 356 331 649 Consumer 1,560 1,950 1,746 5,199 5,640 Total Recoveries on Loans and Leases Previously Charged-Off 1,837 2,340 4,739 6,151 9,464 Net Loans and Leases (Charged-Off) Recovered (3,933 ) (2,519 ) 290 (10,241 ) (6,465 ) Provision for Credit Losses 7,400 1,800 7,500 15,500 21,300 Balance at End of Period $ 197,397 $ 193,930 $ 192,570 $ 197,397 $ 192,570 Components: Allowance for Credit Losses $ 163,700 $ 160,517 $ 154,795 $ 163,700 $ 154,795 Reserve for Unfunded Commitments 33,697 33,413 37,775 33,697 37,775 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $ 197,397 $ 193,930 $ 192,570 $ 197,397 $ 192,570 Average Loans and Leases Outstanding $ 14,304,806 $ 14,358,049 $ 14,349,402 $ 14,325,065 $ 14,238,309 Ratio of Net Loans and Leases Charged-Off (Recovered) to Average Loans and Leases Outstanding(1) 0.11 % 0.07 % (0.01 ) % 0.10 % 0.06 % Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.15 % 1.12 % 1.08 % 1.15 % 1.08 % Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 9.18x 8.91x 10.59x 9.18x 10.59x
(1) Annualized for the three and nine months ended September 30, 2024 and 2023 and three months ended June 30, 2024.
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) 2024 2023 2022 2021 2020 Prior Cost Basis Cost Basis Total Commercial Lending Commercial and Industrial Risk rating: Pass $ 100,174 $ 82,175 $ 191,861 $ 256,997 $ 20,866 $ 266,720 $ 1,026,457 $ 13,396 $ 1,958,646 Special Mention 303 1 7,327 48 398 1,371 18,239 — 27,687 Substandard — — 8,251 219 358 2,033 32,296 — 43,157 Other (1) 10,797 10,542 7,779 3,074 1,052 1,723 45,620 — 80,587 Total Commercial and Industrial 111,274 92,718 215,218 260,338 22,674 271,847 1,122,612 13,396 2,110,077 Current period gross charge-offs — 578 333 89 221 1,543 — — 2,764 Commercial Real Estate Risk rating: Pass 118,884 347,480 810,746 649,133 325,887 1,774,529 87,188 7,760 4,121,607 Special Mention 3,587 2,261 7,537 41,384 3,306 11,973 7,815 — 77,863 Substandard — — 54,984 1,003 — 9,548 149 — 65,684 Other (1) — — — — — 135 — — 135 Total Commercial Real Estate 122,471 349,741 873,267 691,520 329,193 1,796,185 95,152 7,760 4,265,289 Current period gross charge-offs — — — — — 400 — — 400 Construction Risk rating: Pass 61,677 246,176 361,974 241,212 58,820 46,344 4,484 — 1,020,687 Special Mention — — — — — 164 — — 164 Other (1) 4,970 9,468 12,022 3,575 1,199 3,463 701 — 35,398 Total Construction 66,647 255,644 373,996 244,787 60,019 49,971 5,185 — 1,056,249 Current period gross charge-offs — — — — — — — — — Lease Financing Risk rating: Pass 126,380 105,523 66,764 15,483 23,133 89,254 — — 426,537 Special Mention — 42 100 300 5 — — — 447 Substandard 4,899 602 343 — — — — — 5,844 Total Lease Financing 131,279 106,167 67,207 15,783 23,138 89,254 — — 432,828 Current period gross charge-offs — — — — — — — — — Total Commercial Lending $ 431,671 $ 804,270 $ 1,529,688 $ 1,212,428 $ 435,024 $ 2,207,257 $ 1,222,949 $ 21,156 $ 7,864,443 Current period gross charge-offs $ — $ 578 $ 333 $ 89 $ 221 $ 1,943 $ — $ — $ 3,164 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans (continued) Amortized Amortized (dollars in thousands) 2024 2023 2022 2021 2020 Prior Cost Basis Cost Basis Total Residential Lending Residential Mortgage FICO: 740 and greater $ 113,307 $ 206,224 $ 504,141 $ 956,983 $ 503,160 $ 1,129,857 $ — $ — $ 3,413,672 680 - 739 11,614 28,638 65,128 109,018 66,719 157,263 — — 438,380 620 - 679 1,519 1,792 22,921 19,854 11,651 37,979 — — 95,716 550 - 619 — 896 3,703 6,707 2,269 15,751 — — 29,326 Less than 550 — 286 2,380 3,818 2,959 5,569 — — 15,012 No Score (3) 543 7,117 16,923 10,512 5,553 52,526 — — 93,174 Other (2) 8,148 12,786 16,721 14,776 11,222 30,022 8,105 — 101,780 Total Residential Mortgage 135,131 257,739 631,917 1,121,668 603,533 1,428,967 8,105 — 4,187,060 Current period gross charge-offs — — — — — — — — — Home Equity Line FICO: 740 and greater — — — — — — 930,909 1,730 932,639 680 - 739 — — — — — — 167,097 1,137 168,234 620 - 679 — — — — — — 36,540 985 37,525 550 - 619 — — — — — — 14,514 581 15,095 Less than 550 — — — — — — 4,477 571 5,048 No Score (3) — — — — — — 1,282 — 1,282 Total Home Equity Line — — — — — — 1,154,819 5,004 1,159,823 Current period gross charge-offs — — — — — — — — — Total Residential Lending $ 135,131 $ 257,739 $ 631,917 $ 1,121,668 $ 603,533 $ 1,428,967 $ 1,162,924 $ 5,004 $ 5,346,883 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer Lending FICO: 740 and greater 71,777 71,423 94,710 51,952 18,512 10,435 121,278 128 440,215 680 - 739 51,651 51,667 49,864 23,959 9,995 7,497 77,278 525 272,436 620 - 679 21,223 20,604 21,700 12,515 5,155 5,577 35,665 851 123,290 550 - 619 4,116 7,348 9,802 5,983 2,862 3,862 12,674 825 47,472 Less than 550 1,071 3,266 6,247 3,999 1,783 2,492 4,836 525 24,219 No Score (3) 2,291 117 47 — 7 8 42,658 205 45,333 Other (2) — — 296 911 101 981 74,790 — 77,079 Total Consumer Lending $ 152,129 $ 154,425 $ 182,666 $ 99,319 $ 38,415 $ 30,852 $ 369,179 $ 3,059 $ 1,030,044 Current period gross charge-offs $ 385 $ 1,403 $ 2,107 $ 1,085 $ 518 $ 2,234 $ 4,952 $ 544 $ 13,228 Total Loans and Leases $ 718,931 $ 1,216,434 $ 2,344,271 $ 2,433,415 $ 1,076,972 $ 3,667,076 $ 2,755,052 $ 29,219 $ 14,241,370 Current period gross charge-offs $ 385 $ 1,981 $ 2,440 $ 1,174 $ 739 $ 4,177 $ 4,952 $ 544 $ 16,392
(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. As of September 30, 2024, the majority of the loans in this population were current.
(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. As of September 30, 2024, the majority of the loans in this population were current.
(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) 2024 2024 2023 2024 2023 Income Statement Data: Net income $ 61,492 $ 61,921 $ 58,221 $ 177,633 $ 187,481 Average total stockholders' equity $ 2,588,806 $ 2,512,471 $ 2,367,422 $ 2,532,911 $ 2,337,292 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders' equity $ 1,593,314 $ 1,516,979 $ 1,371,930 $ 1,537,419 $ 1,341,800 Average total assets $ 24,046,696 $ 23,958,913 $ 24,727,893 $ 24,064,208 $ 24,699,826 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $ 23,051,204 $ 22,963,421 $ 23,732,401 $ 23,068,716 $ 23,704,334 Return on average total stockholders' equity(1) 9.45 % 9.91 % 9.76 % 9.37 % 10.72 % Return on average tangible stockholders' equity (non-GAAP)(1) 15.35 % 16.42 % 16.84 % 15.43 % 18.68 % Return on average total assets(1) 1.02 % 1.04 % 0.93 % 0.99 % 1.01 % Return on average tangible assets (non-GAAP)(1) 1.06 % 1.08 % 0.97 % 1.03 % 1.06 % As of As of As of As of September 30, June 30, December 31, September 30, (dollars in thousands, except per share amounts) 2024 2024 2023 2023 Balance Sheet Data: Total stockholders' equity $ 2,648,034 $ 2,550,312 $ 2,486,066 $ 2,351,009 Less: goodwill 995,492 995,492 995,492 995,492 Tangible stockholders' equity $ 1,652,542 $ 1,554,820 $ 1,490,574 $ 1,355,517 Total assets $ 23,780,285 $ 23,991,791 $ 24,926,474 $ 24,912,524 Less: goodwill 995,492 995,492 995,492 995,492 Tangible assets $ 22,784,793 $ 22,996,299 $ 23,930,982 $ 23,917,032 Shares outstanding 127,886,167 127,879,012 127,618,761 127,609,934 Total stockholders' equity to total assets 11.14 % 10.63 % 9.97 % 9.44 % Tangible stockholders' equity to tangible assets (non-GAAP) 7.25 % 6.76 % 6.23 % 5.67 % Book value per share $ 20.71 $ 19.94 $ 19.48 $ 18.42 Tangible book value per share (non-GAAP) $ 12.92 $ 12.16 $ 11.68 $ 10.62
(1) Annualized for the three and nine months ended September 30, 2024 and 2023 and three months ended June 30, 2024.
