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First Hawaiian, Inc. Reports Fourth Quarter 2022 Financial Results and Declares Dividend
Source: Nasdaq GlobeNewswire / 27 Jan 2023 07:00:01 America/Chicago
HONOLULU, Jan. 27, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended December 31, 2022.
“We are pleased to report that we closed 2022 with a solid fourth quarter,” said Bob Harrison, Chairman, President and CEO. “We saw continued earnings growth, driven by strong loan growth and excellent credit quality.”
On January 25, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on March 3, 2023, to stockholders of record at the close of business on February 17, 2023.
Additionally, the Company’s Board of Directors adopted a stock repurchase program for up to $40 million of its outstanding common stock during 2023.
Fourth Quarter 2022 Highlights:
- Net income of $79.6 million, or $0.62 per diluted share
- Total loans and leases increased $391.6 million versus prior quarter
- Total deposits decreased $402.7 million versus prior quarter
- Net interest margin increased 22 basis points to 3.15%
- Recorded a $3.0 million provision for credit losses
- Board of Directors declared a quarterly dividend of $0.26 per share
Balance Sheet
Total assets were $24.6 billion as of December 31, 2022, compared to $24.9 billion as of September 30, 2022.
Gross loans and leases were $14.1 billion as of December 31, 2022, an increase of $391.6 million, or 2.9%, from $13.7 billion as of September 30, 2022.
Total deposits were $21.7 billion as of December 31, 2022, a decrease of $402.7 million, or 1.8%, from $22.1 billion as of September 30, 2022.
Net Interest Income
Net interest income for the fourth quarter of 2022 was $171.8 million, an increase of $9.1 million, or 5.6%, compared to $162.7 million for the prior quarter.
The net interest margin was 3.15% in the fourth quarter of 2022, an increase of 22 basis points compared to 2.93% in the prior quarter.
Provision Expense
During the quarter ended December 31, 2022, we recorded a $3.0 million provision for credit losses. In the quarter ended September 30, 2022, we recorded a $3.2 million provision for credit losses.
Noninterest Income
Noninterest income was $48.2 million in the fourth quarter of 2022, an increase of $2.3 million compared to noninterest income of $45.9 million in the prior quarter.
Noninterest Expense
Noninterest expense was $113.9 million in the fourth quarter of 2022, an increase of $0.6 million compared to noninterest expense of $113.3 million in the prior quarter.
The efficiency ratio was 51.5% and 54.0% for the quarters ended December 31, 2022 and September 30, 2022, respectively.
Taxes
The effective tax rate was 22.8% and 25.0% for the quarters ended December 31, 2022 and September 30, 2022, respectively.
Asset Quality
The allowance for credit losses was $143.9 million, or 1.02% of total loans and leases, as of December 31, 2022, compared to $148.2 million, or 1.08% of total loans and leases, as of September 30, 2022. The reserve for unfunded commitments was $33.8 million as of December 31, 2022, compared to $30.1 million as of September 30, 2022. Net charge-offs were $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended December 31, 2022, compared to net charge-offs of $2.8 million, or 0.08% of average loans and leases on an annualized basis, for the quarter ended September 30, 2022. Total non-performing assets were $12.0 million, or 0.09% of total loans and leases and other real estate owned, on December 31, 2022, compared to total non-performing assets of $8.4 million, or 0.06% of total loans and leases and other real estate owned, on September 30, 2022.
Capital
Total stockholders' equity was $2.3 billion on December 31, 2022 compared to $2.2 billion on September 30, 2022.
The tier 1 leverage, common equity tier 1 and total capital ratios were 8.11%, 11.82%, and 12.92%, respectively, on December 31, 2022, compared with 7.78%, 11.79%, and 12.92%, respectively, on September 30, 2022.
The Company did not repurchase any shares in the fourth quarter.
As to the stock repurchase program approved for 2023, repurchases of shares of the Company’s common stock may be conducted through open-market purchases, which may include purchases under a trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1, or through privately negotiated transactions. The timing and exact amount of share repurchases, if any, will be subject to management’s discretion and various factors, including the Company’s capital position and financial performance, as well as market conditions. The repurchase program may be suspended, terminated or modified at any time for any reason.
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, 8:00 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/BI73d7abf351534972a54610116ab71617, 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, June 30, 2022, and September 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 Year Ended December 31, September 30, December 31, December 31, (dollars in thousands, except per share data) 2022 2022 2021 2022 2021 Operating Results: Net interest income $ 171,794 $ 162,736 $ 137,327 $ 613,549 $ 530,559 Provision for credit losses 2,956 3,183 — 1,392 (39,000 ) Noninterest income 48,151 45,857 41,573 179,525 184,916 Noninterest expense 113,922 113,332 108,749 440,471 405,479 Net income 79,588 69,018 57,022 265,685 265,735 Basic earnings per share 0.62 0.54 0.45 2.08 2.06 Diluted earnings per share 0.62 0.54 0.44 2.08 2.05 Dividends declared per share 0.26 0.26 0.26 1.04 1.04 Dividend payout ratio 41.94 % 48.15 % 59.09 % 50.00 % 50.73 % Performance Ratios(1): Net interest margin 3.15 % 2.93 % 2.38 % 2.78 % 2.43 % Efficiency ratio 51.47 % 53.98 % 60.50 % 55.20 % 56.45 % Return on average total assets 1.28 % 1.10 % 0.88 % 1.06 % 1.09 % Return on average tangible assets (non-GAAP)(2) 1.34 % 1.14 % 0.92 % 1.11 % 1.13 % Return on average total stockholders' equity 14.27 % 12.08 % 8.46 % 11.44 % 9.81 % Return on average tangible stockholders' equity (non-GAAP)(2) 25.93 % 21.53 % 13.47 % 20.03 % 15.51 % Average Balances: Average loans and leases $ 13,876,136 $ 13,491,428 $ 12,814,316 $ 13,314,821 $ 13,034,295 Average earning assets 21,856,135 22,258,066 23,100,445 22,272,795 21,921,149 Average assets 24,575,648 24,957,042 25,650,505 24,964,422 24,426,258 Average deposits 21,725,177 22,148,039 22,246,577 22,058,497 21,011,587 Average stockholders' equity 2,213,030 2,267,152 2,675,513 2,321,606 2,708,370 Market Value Per Share: Closing 26.04 24.63 27.33 26.04 27.33 High 27.16 28.14 30.14 31.16 30.80 Low 24.06 21.21 25.17 21.21 23.14 As of As of As of December 31, September 30, December 31, (dollars in thousands, except per share data) 2022 2022 2021 Balance Sheet Data: Loans and leases $ 14,092,012 $ 13,700,374 $ 12,961,999 Total assets 24,577,223 24,870,272 24,992,410 Total deposits 21,689,029 22,091,738 21,816,146 Short-term borrowings 75,000 — — Total stockholders' equity 2,269,005 2,200,651 2,656,912 Per Share of Common Stock: Book value $ 17.82 $ 17.28 $ 20.84 Tangible book value (non-GAAP)(2) 10.00 9.46 13.03 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.08 % 0.06 % 0.05 % Allowance for credit losses for loans and leases / total loans and leases 1.02 % 1.08 % 1.21 % Capital Ratios: Common Equity Tier 1 Capital Ratio 11.82 % 11.79 % 12.24 % Tier 1 Capital Ratio 11.82 % 11.79 % 12.24 % Total Capital Ratio 12.92 % 12.92 % 13.49 % Tier 1 Leverage Ratio 8.11 % 7.78 % 7.24 % Total stockholders' equity to total assets 9.23 % 8.85 % 10.63 % Tangible stockholders' equity to tangible assets (non-GAAP)(2) 5.40 % 5.05 % 6.92 % Non-Financial Data: Number of branches 51 51 54 Number of ATMs 294 303 299 Number of Full-Time Equivalent Employees 2,063 2,042 2,036 (1) Except for the efficiency ratio, amounts are annualized for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021.
(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 Year Ended December 31, September 30, December 31, December 31, (dollars in thousands, except per share amounts) 2022 2022 2021 2022 2021 Interest income Loans and lease financing $ 159,526 $ 134,646 $ 111,865 $ 509,820 $ 444,488 Available-for-sale investment securities 18,714 19,644 28,393 87,108 101,410 Held-to-maturity investment securities 19,137 17,950 — 55,376 — Other 3,088 4,150 1,051 10,916 3,413 Total interest income 200,465 176,390 141,309 663,220 549,311 Interest expense Deposits 28,202 13,653 3,216 49,201 13,853 Short-term and long-term borrowings 469 1 766 470 4,899 Total interest expense 28,671 13,654 3,982 49,671 18,752 Net interest income 171,794 162,736 137,327 613,549 530,559 Provision for credit losses 2,956 3,183 — 1,392 (39,000 ) Net interest income after provision for credit losses 168,838 159,553 137,327 612,157 569,559 Noninterest income Service charges on deposit accounts 7,376 7,089 7,171 28,809 27,510 Credit and debit card fees 16,376 17,746 16,266 66,028 63,580 Other service charges and fees 9,185 9,179 9,196 37,036 38,578 Trust and investment services income 9,023 9,800 8,895 36,465 34,719 Bank-owned life insurance 2,865 (341 ) 2,851 1,248 13,185 Investment securities gains, net — — — — 102 Other 3,326 2,384 (2,806 ) 9,939 7,242 Total noninterest income 48,151 45,857 41,573 179,525 184,916 Noninterest expense Salaries and employee benefits 49,629 51,372 45,982 199,129 182,384 Contracted services and professional fees 17,638 16,625 14,603 70,027 63,349 Occupancy 8,175 8,115 8,074 31,034 29,348 Equipment 9,984 10,791 6,317 34,506 24,719 Regulatory assessment and fees 2,591 2,487 2,557 9,603 8,245 Advertising and marketing 2,072 1,902 1,579 7,996 6,108 Card rewards program 8,681 8,141 7,471 30,990 25,244 Other 15,152 13,899 22,166 57,186 66,082 Total noninterest expense 113,922 113,332 108,749 440,471 405,479 Income before provision for income taxes 103,067 92,078 70,151 351,211 348,996 Provision for income taxes 23,479 23,060 13,129 85,526 83,261 Net income $ 79,588 $ 69,018 $ 57,022 $ 265,685 $ 265,735 Basic earnings per share $ 0.62 $ 0.54 $ 0.45 $ 2.08 $ 2.06 Diluted earnings per share $ 0.62 $ 0.54 $ 0.44 $ 2.08 $ 2.05 Basic weighted-average outstanding shares 127,356,795 127,377,713 127,893,011 127,489,889 128,963,131 Diluted weighted-average outstanding shares 127,894,773 127,796,617 128,512,257 127,981,699 129,537,922 Consolidated Balance Sheets Table 3 December 31, September 30, December 31, (dollars in thousands) 2022 2022 2021 Assets Cash and due from banks $ 297,502 $ 291,360 $ 246,716 Interest-bearing deposits in other banks 229,122 657,574 1,011,753 Investment securities: Available-for-sale, at fair value (amortized cost: $3,549,599 as of December 31, 2022, $3,673,396 as of September 30, 2022 and $8,560,733 as of December 31, 2021) 3,151,133 3,289,160 8,428,032 Held-to-maturity, at amortized cost (fair value: $3,814,822 as of December 31, 2022, $3,960,713 as of September 30, 2022 and nil as of December 31, 2021) 4,320,639 4,406,143 — Loans held for sale — 361 538 Loans and leases 14,092,012 13,700,374 12,961,999 Less: allowance for credit losses 143,900 148,163 157,262 Net loans and leases 13,948,112 13,552,211 12,804,737 Premises and equipment, net 280,355 299,179 318,448 Other real estate owned and repossessed personal property 91 139 175 Accrued interest receivable 78,194 68,545 63,158 Bank-owned life insurance 473,067 470,202 471,819 Goodwill 995,492 995,492 995,492 Mortgage servicing rights 6,562 6,866 8,302 Other assets 796,954 833,040 643,240 Total assets $ 24,577,223 $ 24,870,272 $ 24,992,410 Liabilities and Stockholders' Equity Deposits: Interest-bearing $ 12,824,383 $ 12,774,645 $ 12,422,283 Noninterest-bearing 8,864,646 9,317,093 9,393,863 Total deposits 21,689,029 22,091,738 21,816,146 Short-term borrowings 75,000 — — Retirement benefits payable 102,577 133,981 134,491 Other liabilities 441,612 443,902 384,861 Total liabilities 22,308,218 22,669,621 22,335,498 Stockholders' equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022, issued/outstanding: 140,958,520 / 127,357,680 shares as of September 30, 2022 and issued/outstanding: 140,581,715 / 127,502,472 shares as of December 31, 2021) 1,410 1,410 1,406 Additional paid-in capital 2,538,336 2,535,601 2,527,663 Retained earnings 736,544 690,433 604,534 Accumulated other comprehensive loss, net (639,254 ) (658,756 ) (121,693 ) Treasury stock (13,600,591 shares as of December 31, 2022, 13,600,840 shares as of September 30, 2022 and 13,079,243 shares as of December 31, 2021) (368,031 ) (368,037 ) (354,998 ) Total stockholders' equity 2,269,005 2,200,651 2,656,912 Total liabilities and stockholders' equity $ 24,577,223 $ 24,870,272 $ 24,992,410 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended December 31, 2022 September 30, 2022 December 31, 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 $ 321.3 $ 2.9 3.64 % $ 724.0 $ 4.0 2.20 % $ 2,074.5 $ 0.8 0.15 % Available-for-Sale Investment Securities Taxable 3,180.8 18.3 2.30 3,733.8 19.2 2.05 7,515.2 25.8 1.37 Non-Taxable 37.9 0.5 5.42 45.1 0.6 5.16 615.3 3.3 2.14 Held-to-Maturity Investment Securities Taxable 3,754.9 15.8 1.69 3,573.6 14.6 1.64 — — — Non-Taxable 613.4 4.2 2.69 613.6 4.2 2.72 — — — Total Investment Securities 7,587.0 38.8 2.04 7,966.1 38.6 1.93 8,130.5 29.1 1.43 Loans Held for Sale 0.1 — 6.50 0.7 — 3.62 1.0 — 1.35 Loans and Leases(1) Commercial and industrial 2,126.3 28.1 5.24 2,025.5 20.7 4.05 2,084.0 21.1 4.01 Commercial real estate 4,116.8 53.9 5.19 4,016.7 42.3 4.18 3,572.9 26.0 2.89 Construction 804.4 11.8 5.83 737.4 8.6 4.63 806.6 6.3 3.09 Residential: Residential mortgage 4,280.6 38.1 3.56 4,224.0 36.4 3.45 4,014.9 34.9 3.48 Home equity line 1,029.7 8.1 3.10 991.1 7.2 2.87 864.4 5.5 2.52 Consumer 1,220.9 17.1 5.55 1,218.0 17.1 5.57 1,241.3 16.3 5.22 Lease financing 297.4 2.9 3.92 278.7 2.7 3.81 230.2 1.9 3.27 Total Loans and Leases 13,876.1 160.0 4.58 13,491.4 135.0 3.98 12,814.3 112.0 3.48 Other Earning Assets 71.6 0.2 0.80 75.9 0.1 0.69 80.1 0.3 1.27 Total Earning Assets(2) 21,856.1 201.9 3.67 22,258.1 177.7 3.18 23,100.4 142.2 2.45 Cash and Due from Banks 286.4 277.0 282.2 Other Assets 2,433.1 2,421.9 2,267.9 Total Assets $ 24,575.6 $ 24,957.0 $ 25,650.5 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,455.5 $ 10.3 0.63 % $ 6,871.5 $ 6.7 0.39 % 7,086.0 $ 0.8 0.04 % Money Market 4,012.9 9.8 0.97 4,086.1 4.8 0.47 4,048.3 0.5 0.05 Time 2,163.2 8.1 1.48 1,720.5 2.1 0.48 1,819.0 1.9 0.42 Total Interest-Bearing Deposits 12,631.6 28.2 0.89 12,678.1 13.6 0.43 12,953.3 3.2 0.10 Federal Funds Purchased 45.5 0.5 4.09 0.2 — 1.67 — — — Long-Term Borrowings — — — — — — 110.9 0.8 2.74 Total Interest-Bearing Liabilities 12,677.1 28.7 0.90 12,678.3 13.6 0.43 13,064.2 4.0 0.12 Net Interest Income $ 173.2 $ 164.1 $ 138.2 Interest Rate Spread 2.77 % 2.75 % 2.33 % Net Interest Margin 3.15 % 2.93 % 2.38 % Noninterest-Bearing Demand Deposits 9,093.6 9,469.9 9,293.3 Other Liabilities 591.9 541.6 617.5 Stockholders' Equity 2,213.0 2,267.2 2,675.5 Total Liabilities and Stockholders' Equity $ 24,575.6 $ 24,957.0 $ 25,650.5 (1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2) Interest income includes taxable-equivalent basis adjustments of $1.4 million, $1.3 million and $0.9 million for the three months ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively.
Average Balances and Interest Rates Table 5 Year Ended Year Ended December 31, 2022 December 31, 2021 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $ 867.6 $ 10.3 1.19 % $ 1,723.0 $ 2.3 0.14 % Available-for-Sale Investment Securities Taxable 4,650.1 83.2 1.79 6,608.9 93.3 1.41 Non-Taxable 180.0 4.9 2.74 481.9 10.2 2.12 Held-to-Maturity Investment Securities Taxable 2,728.2 45.5 1.67 — — — Non-Taxable 460.6 12.5 2.71 — — — Total Investment Securities 8,018.9 146.1 1.82 7,090.8 103.5 1.46 Loans Held for Sale 0.6 — 3.14 3.6 0.1 2.24 Loans and Leases(1) Commercial and industrial 2,019.5 78.4 3.88 2,586.8 82.2 3.18 Commercial real estate 3,895.3 153.2 3.93 3,456.7 101.6 2.94 Construction 755.0 32.5 4.30 804.5 25.4 3.16 Residential: Residential mortgage 4,200.2 145.5 3.46 3,836.6 138.3 3.60 Home equity line 965.0 26.5 2.75 834.3 22.2 2.66 Consumer 1,218.9 65.3 5.35 1,275.5 67.8 5.31 Lease financing 260.9 9.7 3.69 239.9 7.6 3.14 Total Loans and Leases 13,314.8 511.1 3.84 13,034.3 445.1 3.42 Other Earning Assets 70.9 0.6 0.89 69.4 1.1 1.54 Total Earning Assets(2) 22,272.8 668.1 3.00 21,921.1 552.1 2.52 Cash and Due from Banks 289.0 289.3 Other Assets 2,402.6 2,215.9 Total Assets $ 24,964.4 $ 24,426.3 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,741.5 $ 19.2 0.29 % $ 6,581.1 $ 2.5 0.04 % Money Market 4,068.8 16.6 0.41 3,831.4 2.1 0.05 Time 1,826.7 13.4 0.73 2,005.0 9.3 0.47 Total Interest-Bearing Deposits 12,637.0 49.2 0.39 12,417.5 13.9 0.11 Federal Funds Purchased 11.5 0.5 4.08 — — — Long-Term Borrowings — — — 177.5 4.9 2.76 Total Interest-Bearing Liabilities 12,648.5 49.7 0.39 12,595.0 18.8 0.15 Net Interest Income $ 618.4 $ 533.3 Interest Rate Spread 2.61 % 2.37 % Net Interest Margin 2.78 % 2.43 % Noninterest-Bearing Demand Deposits 9,421.5 8,594.1 Other Liabilities 572.8 528.8 Stockholders' Equity 2,321.6 2,708.4 Total Liabilities and Stockholders' Equity $ 24,964.4 $ 24,426.3 (1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2) Interest income includes taxable-equivalent basis adjustments of $4.9 million and $2.8 million for the year ended December 31, 2022 and 2021, respectively.
Analysis of Change in Net Interest Income Table 6 Three Months Ended December 31, 2022 Compared to September 30, 2022 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (2.9 ) $ 1.8 $ (1.1 ) Available-for-Sale Investment Securities Taxable (3.0 ) 2.1 (0.9 ) Non-Taxable (0.1 ) — (0.1 ) Held-to-Maturity Investment Securities Taxable 0.8 0.4 1.2 Total Investment Securities (2.3 ) 2.5 0.2 Loans and Leases Commercial and industrial 1.1 6.3 7.4 Commercial real estate 1.1 10.5 11.6 Construction 0.8 2.4 3.2 Residential: Residential mortgage 0.5 1.2 1.7 Home equity line 0.3 0.6 0.9 Lease financing 0.2 — 0.2 Total Loans and Leases 4.0 21.0 25.0 Other Earning Assets — 0.1 0.1 Total Change in Interest Income (1.2 ) 25.4 24.2 Change in Interest Expense: Interest-Bearing Deposits Savings (0.4 ) 4.0 3.6 Money Market (0.1 ) 5.1 5.0 Time 0.7 5.3 6.0 Total Interest-Bearing Deposits 0.2 14.4 14.6 Federal Funds Purchased 0.5 — 0.5 Total Change in Interest Expense 0.7 14.4 15.1 Change in Net Interest Income $ (1.9 ) $ 11.0 $ 9.1 Analysis of Change in Net Interest Income Table 7 Three Months Ended December 31, 2022 Compared to December 31, 2021 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (1.2 ) $ 3.3 $ 2.1 Available-for-Sale Investment Securities Taxable (19.5 ) 12.0 (7.5 ) Non-Taxable (4.9 ) 2.1 (2.8 ) Held-to-Maturity Investment Securities Taxable 15.8 — 15.8 Non-Taxable 4.2 — 4.2 Total Investment Securities (4.4 ) 14.1 9.7 Loans and Leases Commercial and industrial 0.4 6.6 7.0 Commercial real estate 4.5 23.4 27.9 Construction — 5.5 5.5 Residential: Residential mortgage 2.3 0.9 3.2 Home equity line 1.2 1.4 2.6 Consumer (0.2 ) 1.0 0.8 Lease financing 0.6 0.4 1.0 Total Loans and Leases 8.8 39.2 48.0 Other Earning Assets — (0.1 ) (0.1 ) Total Change in Interest Income 3.2 56.5 59.7 Change in Interest Expense: Interest-Bearing Deposits Savings (0.1 ) 9.6 9.5 Money Market — 9.3 9.3 Time 0.5 5.7 6.2 Total Interest-Bearing Deposits 0.4 24.6 25.0 Federal Funds Purchased 0.5 — 0.5 Long-Term Borrowings (0.4 ) (0.4 ) (0.8 ) Total Change in Interest Expense 0.5 24.2 24.7 Change in Net Interest Income $ 2.7 $ 32.3 $ 35.0 Analysis of Change in Net Interest Income Table 8 Year Ended December 31, 2022 Compared to December 31, 2021 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (1.7 ) $ 9.7 $ 8.0 Available-for-Sale Investment Securities Taxable (31.6 ) 21.5 (10.1 ) Non-Taxable (7.7 ) 2.4 (5.3 ) Held-to-Maturity Investment Securities Taxable 45.5 — 45.5 Non-Taxable 12.5 — 12.5 Total Investment Securities 18.7 23.9 42.6 Loans Held for Sale (0.1 ) — (0.1 ) Loans and Leases Commercial and industrial (20.0 ) 16.2 (3.8 ) Commercial real estate 14.1 37.5 51.6 Construction (1.6 ) 8.7 7.1 Residential: Residential mortgage 12.7 (5.5 ) 7.2 Home equity line 3.5 0.8 4.3 Consumer (3.0 ) 0.5 (2.5 ) Lease financing 0.7 1.4 2.1 Total Loans and Leases 6.4 59.6 66.0 Other Earning Assets — (0.5 ) (0.5 ) Total Change in Interest Income 23.3 92.7 116.0 Change in Interest Expense: Interest-Bearing Deposits Savings — 16.7 16.7 Money Market 0.1 14.4 14.5 Time (0.8 ) 4.9 4.1 Total Interest-Bearing Deposits (0.7 ) 36.0 35.3 Federal Funds Purchased 0.5 — 0.5 Long-Term Borrowings (2.5 ) (2.4 ) (4.9 ) Total Change in Interest Expense (2.7 ) 33.6 30.9 Change in Net Interest Income $ 26.0 $ 59.1 $ 85.1 Loans and Leases Table 9 December 31, September 30, December 31, (dollars in thousands) 2022 2022 2021 Commercial and industrial: Commercial and industrial excluding Paycheck Protection Program loans $ 2,217,604 $ 2,017,095 $ 1,870,657 Paycheck Protection Program loans 18,293 26,712 216,442 Total commercial and industrial 2,235,897 2,043,807 2,087,099 Commercial real estate 4,132,309 4,103,310 3,639,623 Construction 844,643 765,862 813,969 Residential: Residential mortgage 4,302,788 4,252,041 4,083,367 Home equity line 1,055,351 1,010,631 876,608 Total residential 5,358,139 5,262,672 4,959,975 Consumer 1,222,934 1,218,885 1,229,939 Lease financing 298,090 305,838 231,394 Total loans and leases $ 14,092,012 $ 13,700,374 $ 12,961,999 Deposits Table 10 December 31, September 30, December 31, (dollars in thousands) 2022 2022 2021 Demand $ 8,864,646 $ 9,317,093 $ 9,393,863 Savings 6,382,910 6,724,783 6,612,775 Money Market 3,965,423 4,150,940 4,033,070 Time 2,476,050 1,898,922 1,776,438 Total Deposits $ 21,689,029 $ 22,091,738 $ 21,816,146 Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11 December 31, September 30, December 31, (dollars in thousands) 2022 2022 2021 Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 1,215 $ 1,528 $ 718 Commercial real estate 727 727 727 Total Commercial Loans 1,942 2,255 1,445 Residential Loans: Residential mortgage 6,166 6,028 5,637 Home equity line 3,797 — — Total Residential Loans 9,963 6,028 5,637 Total Non-Accrual Loans and Leases 11,905 8,283 7,082 Other Real Estate Owned 91 139 175 Total Non-Performing Assets $ 11,996 $ 8,422 $ 7,257 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 291 $ 1,445 $ 740 Construction — 390 — Total Commercial Loans 291 1,835 740 Residential Loans: Residential mortgage 58 — 987 Home equity line — 1,832 3,681 Total Residential Loans 58 1,832 4,668 Consumer 2,885 1,976 1,800 Total Accruing Loans and Leases Past Due 90 Days or More $ 3,234 $ 5,643 $ 7,208 Restructured Loans on Accrual Status and Not Past Due 90 Days or More $ 25,399 $ 27,342 $ 34,893 Total Loans and Leases $ 14,092,012 $ 13,700,374 $ 12,961,999 Allowance for Credit Losses and Reserve for Unfunded Commitments Table 12 For the Three Months Ended For the Year Ended December 31, September 30, December 31, December 31, December 31, (dollars in thousands) 2022 2022 2021 2022 2021 Balance at Beginning of Period $ 178,304 $ 177,900 $ 193,768 187,584 239,057 Loans and Leases Charged-Off Commercial Loans: Commercial and industrial (735 ) (328 ) (4,432 ) (2,012 ) (5,949 ) Commercial real estate — (750 ) — (750 ) (66 ) Total Commercial Loans (735 ) (1,078 ) (4,432 ) (2,762 ) (6,015 ) Residential Loans: Residential mortgage (102 ) (1 ) (534 ) (103 ) (632 ) Home equity line (12 ) — (107 ) (1,175 ) (342 ) Total Residential Loans (114 ) (1 ) (641 ) (1,278 ) (974 ) Consumer (5,094 ) (3,986 ) (3,250 ) (16,848 ) (16,634 ) Total Loans and Leases Charged-Off (5,943 ) (5,065 ) (8,323 ) (20,888 ) (23,623 ) Recoveries on Loans and Leases Previously Charged-Off Commercial Loans: Commercial and industrial 303 240 244 897 867 Commercial real estate — — 9 14 39 Construction — — 100 — 266 Lease financing — — — 60 — Total Commercial Loans 303 240 353 971 1,172 Residential Loans: Residential mortgage 173 37 15 418 261 Home equity line 138 356 28 713 117 Total Residential Loans 311 393 43 1,131 378 Consumer 1,804 1,653 1,743 7,545 9,600 Total Recoveries on Loans and Leases Previously Charged-Off 2,418 2,286 2,139 9,647 11,150 Net Loans and Leases Charged-Off (3,525 ) (2,779 ) (6,184 ) (11,241 ) (12,473 ) Provision for Credit Losses 2,956 3,183 — 1,392 (39,000 ) Balance at End of Period $ 177,735 $ 178,304 $ 187,584 $ 177,735 $ 187,584 Components: Allowance for Credit Losses $ 143,900 $ 148,163 $ 157,262 $ 143,900 $ 157,262 Reserve for Unfunded Commitments 33,835 30,141 30,322 33,835 30,322 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $ 177,735 $ 178,304 $ 187,584 $ 177,735 $ 187,584 Average Loans and Leases Outstanding $ 13,876,136 $ 13,491,428 $ 12,814,316 $ 13,314,821 $ 13,034,295 Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) 0.10 % 0.08 % 0.19 % 0.08 % 0.10 % Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.02 % 1.08 % 1.21 % 1.02 % 1.21 % Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 12.09x 17.89x 22.21x 12.09x 22.21x (1) Annualized for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021.
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 $ 359,881 $ 422,567 $ 54,656 $ 170,222 $ 51,476 $ 137,257 $ 894,384 $ 15,715 $ 2,106,158 Special Mention 2,059 240 1,371 2,643 184 1,431 22,897 378 31,203 Substandard 625 289 1,117 1,092 668 885 14,733 65 19,474 Other (1) 17,679 7,721 4,329 3,965 1,881 1,167 42,320 — 79,062 Total Commercial and Industrial 380,244 430,817 61,473 177,922 54,209 140,740 974,334 16,158 2,235,897 Commercial Real Estate Risk rating: Pass 889,583 695,882 319,838 565,587 395,474 1,173,163 48,081 — 4,087,608 Special Mention 170 — 555 14,878 512 11,398 675 — 28,188 Substandard — — 173 — 1,704 14,485 — — 16,362 Other (1) — — — — — 151 — — 151 Total Commercial Real Estate 889,753 695,882 320,566 580,465 397,690 1,199,197 48,756 — 4,132,309 Construction Risk rating: Pass 124,464 261,536 96,423 97,000 88,973 84,704 25,957 — 779,057 Special Mention — — — 221 — — — — 221 Substandard — — — — 21 490 — — 511 Other (1) 29,694 21,339 4,686 2,201 3,784 2,196 954 — 64,854 Total Construction 154,158 282,875 101,109 99,422 92,778 87,390 26,911 — 844,643 Lease Financing Risk rating: Pass 113,563 24,052 43,497 37,502 6,004 67,687 — — 292,305 Special Mention — 411 2,498 1,299 — — — — 4,208 Substandard — — 197 12 11 1,357 — — 1,577 Total Lease Financing 113,563 24,463 46,192 38,813 6,015 69,044 — — 298,090 Total Commercial Lending $ 1,537,718 $ 1,434,037 $ 529,340 $ 896,622 $ 550,692 $ 1,496,371 $ 1,050,001 $ 16,158 $ 7,510,939 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 Basis Cost Basis Total Residential Lending Residential Mortgage FICO: 740 and greater $ 557,636 $ 1,064,444 $ 560,463 $ 245,241 $ 165,258 $ 920,100 $ — $ — $ 3,513,142 680 - 739 73,929 112,672 82,416 40,355 22,126 130,508 — — 462,006 620 - 679 12,320 13,804 9,881 3,649 3,054 35,441 — — 78,149 550 - 619 2,455 2,246 1,791 263 601 6,955 — — 14,311 Less than 550 — 1,321 367 — 966 5,304 — — 7,958 No Score (3) 22,289 14,671 6,820 10,599 15,921 47,245 — — 117,545 Other (2) 18,970 18,211 15,287 9,201 9,124 29,128 9,202 554 109,677 Total Residential Mortgage 687,599 1,227,369 677,025 309,308 217,050 1,174,681 9,202 554 4,302,788 Home Equity Line FICO: 740 and greater — — — — — — 817,123 2,059 819,182 680 - 739 — — — — — — 171,117 2,714 173,831 620 - 679 — — — — — — 45,368 2,100 47,468 550 - 619 — — — — — — 7,485 1,029 8,514 Less than 550 — — — — — — 1,151 481 1,632 No Score (3) — — — — — — 4,724 — 4,724 Total Home Equity Line — — — — — — 1,046,968 8,383 1,055,351 Total Residential Lending 687,599 1,227,369 677,025 309,308 217,050 1,174,681 1,056,170 8,937 5,358,139 Consumer Lending FICO: 740 and greater 200,887 111,047 53,534 43,912 24,951 8,432 125,126 185 568,074 680 - 739 99,787 67,140 37,260 31,751 15,874 7,665 72,101 514 332,092 620 - 679 25,949 29,587 14,226 16,872 9,672 6,488 31,854 937 135,585 550 - 619 3,017 5,475 5,226 8,056 5,396 3,924 11,269 854 43,217 Less than 550 656 1,351 2,286 3,779 1,869 1,593 3,541 443 15,518 No Score (3) 3,205 258 — 51 24 29 38,805 227 42,599 Other (2) 1,615 4,082 353 1,368 — — 78,430 1 85,849 Total Consumer Lending 335,116 218,940 112,885 105,789 57,786 28,131 361,126 3,161 1,222,934 Total Loans and Leases $ 2,560,433 $ 2,880,346 $ 1,319,250 $ 1,311,719 $ 825,528 $ 2,699,183 $ 2,467,297 $ 28,256 $ 14,092,012 (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 Year Ended December 31, September 30, December 31, December 31, (dollars in thousands, except per share amounts) 2022 2022 2021 2022 2021 Income Statement Data: Net income $ 79,588 $ 69,018 $ 57,022 $ 265,685 $ 265,735 Average total stockholders' equity $ 2,213,030 $ 2,267,152 $ 2,675,513 $ 2,321,606 $ 2,708,370 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders' equity $ 1,217,538 $ 1,271,660 $ 1,680,021 $ 1,326,114 $ 1,712,878 Average total assets $ 24,575,648 $ 24,957,042 $ 25,650,505 $ 24,964,422 $ 24,426,258 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $ 23,580,156 $ 23,961,550 $ 24,655,013 $ 23,968,930 $ 23,430,766 Return on average total stockholders' equity(1) 14.27 % 12.08 % 8.46 % 11.44 % 9.81 % Return on average tangible stockholders' equity (non-GAAP)(1) 25.93 % 21.53 % 13.47 % 20.03 % 15.51 % Return on average total assets(1) 1.28 % 1.10 % 0.88 % 1.06 % 1.09 % Return on average tangible assets (non-GAAP)(1) 1.34 % 1.14 % 0.92 % 1.11 % 1.13 % As of As of As of December 31, September 30, December 31, (dollars in thousands, except per share amounts) 2022 2022 2021 Balance Sheet Data: Total stockholders' equity $ 2,269,005 $ 2,200,651 $ 2,656,912 Less: goodwill 995,492 995,492 995,492 Tangible stockholders' equity $ 1,273,513 $ 1,205,159 $ 1,661,420 Total assets $ 24,577,223 $ 24,870,272 $ 24,992,410 Less: goodwill 995,492 995,492 995,492 Tangible assets $ 23,581,731 $ 23,874,780 $ 23,996,918 Shares outstanding 127,363,327 127,357,680 127,502,472 Total stockholders' equity to total assets 9.23 % 8.85 % 10.63 % Tangible stockholders' equity to tangible assets (non-GAAP) 5.40 % 5.05 % 6.92 % Book value per share $ 17.82 $ 17.28 $ 20.84 Tangible book value per share (non-GAAP) $ 10.00 $ 9.46 $ 13.03 (1) Annualized for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021.
