1ST QUARTER 2017
EARNINGS CONFERENCE CALL
APRIL 27, 2017
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. 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, and any such
forward-looking statements are subject to risks, assumptions, estimates and uncertainties
that are difficult to predict. Actual results may prove to be materially different from the results
expressed or implied by the forward-looking statements. Factors that could cause our actual
results to differ materially from those described in the forward-looking statements can be
found in our SEC filings, including, but not limited to, our annual report on Form 10-K for the
year ended December 31, 2016, which is available on our website (www.fhb.com) and the
SEC’s website (www.sec.gov). Any forward-looking statement speaks only as of the date on
which it is made, and we do not undertake any obligation to update or review any forwardlooking statement, whether as a result of new information, future developments or otherwise,
except as required by applicable law.
2
Q1 2017 HIGHLIGHTS
Solid
Earnings
Disciplined
Growth,
Strong
Balance Sheet
Strong
Financial
Performance
Other
Highlights
(1) Non-GAAP
• Net income of $56.7 million, or $0.41 per diluted share
• Core net income(1) of $57.0 million, or $0.41 per diluted share
• Loan and lease growth of $261 million, or 2.3%
• Deposit growth of $144 million, or 0.9%
• Net charge-off ratio: 0.15% annualized
• Capital ratios in excess of well-capitalized ratios at 3/31/17
• Efficiency ratio of 47.2%
(1)
(1)
• ROATA of 1.16%, core ROATA of 1.17%
(1)
(1)
• ROATCE of 15.41%, core ROATCE of 15.48%
• Successful follow-on stock offering. 28.75 million shares sold,
reducing BNP Paribas’ ownership to 62%
financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation
3
SUMMARY INCOME STATEMENT
Quarter ended
3/31/17
($ in millions except per share data)
Net interest income
$
Provision for loan and lease losses
12/31/16
129.3
$
3/31/16
131.3
$
117.3
4.5
3.9
0.7
Noninterest income
49.4
49.0
73.5
Noninterest expense
84.3
82.5
85.1
89.9
93.9
105.0
33.2
37.3
39.5
Pre-tax income
Tax expense
Net Income
$
Core adjustments (1)
Tax adjustments
Core Net Income (1)
56.7
$
56.6
$
65.5
0.4
(0.9)
(23.1)
(0.1)
0.3
8.7
$
57.0
$
56.0
$
51.1
$
0.41
$
0.41
$
0.47
Earnings per diluted share:
Earnings available to common shareholders
Core EPS (1)
(1) Non-GAAP
0.41
0.40
0.37
financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation
4
NET INTEREST INCOME
Q4 2016 net interest income included $2.1 million of loan prepayment fees
150.0
145.0($ millions)
140.0
135.0
130.0
125.0
117.3
120.0
115.0
110.0
105.0
100.0
95.0
90.0
85.0
80.0
75.0
70.0
65.0
60.0
55.0
50.0
2.77%
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Q1 16
3.20%
131.3
120.4
129.3
3.10%
122.7
3.00%
2.99%
3.00%
2.90%
2.88%
2.87%
2.80%
2.70%
2.60%
2.50%
Q2 16
Q3 16
Net Interest Income
Q4 16
Net Interest Margin
Q1 17
5
NONINTEREST INCOME
Positive trend in noninterest income
$80.0
($ millions)
73.5
$70.0
Includes $25.7 million net
gain on the sale of Visa
shares and investment
securities
$60.0
$50.0
48.7
49.0
49.4
Q3 16
Q4 16
Q1 17
46.4
$40.0
$30.0
Q1 16
Q2 16
6
NONINTEREST EXPENSE
100.0
100.0%
($ millions)
85.1
82.8
82.5
84.3
75.0%
78.5
75.0
44.6%
47.0%
48.3%
45.8%
47.2%
50.0%
50.0
25.0%
25.0
0.0%
Q1 16
Q2 16
Q3 16
Nonint Expense
Q4 16
Q1 17
Efficiency Ratio
7
SELECTED BALANCE SHEET ITEMS
3/31/17
($ in millions except per share data)
12/31/16
3/31/16
Selected Assets
Interest bearing deposits in other banks
$
Investment securities
527.7
$
798.2
$
2,048.9
5,260.3
5,077.5
3,864.9
Loans and leases
11,781.5
11,520.4
10,962.6
Total assets
19,792.8
19,661.8
19,087.5
16,938.2
16,794.5
16,054.5
2,506.0
2,476.5
2,471.7
139,637,410
139,546,875
139,459,620
Selected Liabilities and Stockholders’ Equity
Total deposits
Total stockholders’ equity
Diluted weighted shares outstanding
Book value per share
$
17.96
17.75
17.72
Tangible book value per share (1)
$
10.82
10.61
10.59
(1) Non-GAAP
financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation
8
LOANS
Total loans and leases grew $261 million, or 2.3%, in the 1st quarter
($ billions)
($ billions)
Loans and Leases
CRE & Construction
11.78
11.40
3.00
11.52
11.19
2.57
2.61
Mar-16
Jun-16
2.79
2.79
Sep-16
Dec-16
10.96
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
C&I
($ billions)
3.29
3.20
3.27
($ billions)
3.24
Mar-16
Jun-16
Sep-16
Dec-16
Residential & HELOC
3.80
3.24
3.59
Mar-17
Mar-16
Mar-17
3.65
3.69
Jun-16
Sep-16
Dec-16
3.86
Mar-17
9
DEPOSITS
Total deposits increased $144 million, or 0.9%, in the 1st quarter of 2017
($ billions)
17.0
16.1
DEPOSIT COMPOSITION
TOTAL DEPOSITS
16.8
16.9
16.1
Time
23.1%
Demand
35.5%
Money
Market
14.8%
Savings
26.6%
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
3/31/17
10
ASSET QUALITY
NCOs / Ave Loans and Leases
0.15%
0.12%
0.12%
Q3 16
Q4 16
ALLL
($ millions)
137.2
136.4
135.0
0.10%
135.5
135.8
Dec-16
Mar-17
-0.04%
Q1 16
Q2 16
Q1 17
Mar-16
Non-Accrual Loans and Leases / Total
Loans and Leases
0.13%
Jun-16
Sep-16
Delinquency Rate
0.32%
0.12%
0.08%
0.22%
0.08%
0.25%
0.28%
0.27%
0.06%
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
11
HAWAII’S ECONOMY
Healthy Labor
Market
March statewide seasonally-adjusted state unemployment rate was
2.7%, compared to 4.5% nationally
Strong Visitor
Industry
YTD visitor arrivals: 1.5 million, up 3.3% vs prior year
(data through 2/28/17)
Oahu
Residential
Real Estate
(YTD through 3/31/17)
YTD visitor spending: $2.9 billion, up 9.0% vs prior year
Volume of single family home sales: +1.0% vs prior year
Volume of condominium sales: +7.1% vs prior year
Median single-family home sale price: $750k, +3.5% vs prior year
Median condominium sale price: $390k, +2.6% vs prior year
Sources: Hawaii Tourism Authority, State of Hawaii Department of Labor and Industrial Relations, Honolulu Board of
Realtors.
12
QUESTIONS
APPENDIX
Non-GAAP Reconciliations
14
GAAP TO NON-GAAP RECONCILIATIONS
We present net interest income, noninterest income, noninterest expense, net income, earnings per share and the related ratios described below, on
an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measures exclude from the corresponding GAAP measure the impact
of certain items that we do not believe are representative of our financial results. We believe that the presentation of these non-GAAP financial
measures helps identify underlying trends in our business from period to period that could otherwise be distorted by the effect of certain expenses,
gains and other items included in our operating results. We believe that these core measures provide useful information about our operating results
and enhance the overall understanding of our past performance and future performance. Investors should consider our performance and financial
condition as reported under GAAP and all other relevant information when assessing our performance or financial condition.
Core net interest margin, core return on average total assets and core return on average total stockholders’ equity are non-GAAP financial measures.
We compute our core net interest margin as the ratio of core net interest income to average earning assets. We compute our core return on average
total assets as the ratio of core net income to average total assets. We compute our core return on average total stockholders’ equity as the ratio of
core net income to average stockholders’ equity.
Return on average tangible stockholders’ equity, core return on average tangible stockholders’ equity, return on average tangible assets, core return
on average tangible assets and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average
tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby
effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our core return on average
tangible stockholders’ equity as the ratio of core net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby
effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our return on average tangible
assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to
the effect of goodwill from our average total assets. We compute our core return on average tangible assets as the ratio of core net income to average
tangible assets. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of
which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. We believe that these measurements are useful for
investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although
these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and
should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP.
The following tables provide a reconciliation of these non-GAAP financial measures with their most closely related GAAP measures.
15
GAAP TO NON-GAAP RECONCILIATION
(dollars in thousands, except per share amounts)
Net income
Average total stockholders' equity
Less: average goodwill
Average tangible stockholders' equity
As of and for the Three Months Ende d
March 31,
Dece mber 31,
March 31,
2017
2016
2016
$
56,552
$
65,531
$
56,740
$
$
$
2,505,994
995,492
1,510,502
$
19,769,508
Average tangible assets
$
T otal assets
Less: goodwill
T angible assets
$
T otal stockholders' equity
Less: goodwill
T angible stockholders' equity
Average total assets
$
2,488,519
995,492
1,493,027
$
$
$
$
Return on average total stockholders' equity (a)
Return on average tangible stockholders' equity (non-GAAP) (a)
$
$
2,769,476
995,492
1,773,984
$
$
2,471,734
995,492
1,476,242
$
19,778,918
$
19,290,342
18,774,016
$
18,783,426
$
18,294,850
19,792,785
995,492
18,797,293
$
19,661,829
995,492
18,666,337
$
19,087,504
995,492
18,092,012
995,492
$
139,546,615
Shares outstanding
$
2,476,485
995,492
1,480,993
995,492
Less: average goodwill
2,507,514
995,492
1,512,022
995,492
$
139,530,654
139,459,620
9.25 %
15.41 %
8.97 %
14.88 %
9.52 %
14.86 %
1.16 %
1.23 %
1.14 %
1.20 %
1.37 %
1.44 %
T otal stockholders' equity to total assets
T angible stockholders' equity to tangible assets (non-GAAP)
12.66 %
8.04 %
12.60 %
7.93 %
12.95 %
8.16 %
Average stockholders' equity to average assets
12.59 %
12.68 %
14.36 %
7.95 %
8.05 %
9.70 %
Return on average total assets(a)
Return on average tangible assets (non-GAAP) (a)
T angible average stockholders' equity to tangible average assets (non-GAAP)
Book value per share
T angible book value per share (non-GAAP)
(a) Annualized for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016.
$
$
17.96
10.82
$
$
17.75
10.61
$
$
17.72
10.59
16
GAAP TO NON-GAAP RECONCILIATION
For the Thre e Months Ended
March 31,
De cembe r 31,
March 31,
2017
2016
2016
(dollars in thousands, except per share amounts)
Net interest income
Core net interest income (non-GAAP)
$
$
129,345
129,345
$
$
131,250
131,250
$
$
117,312
117,312
Noninterest income
Loss (gain) on sale of securities
Gain on sale of stock (Visa/MasterCard)
Core noninterest income (non-GAAP)
$
$
$
49,021
(1,516)
—
47,505
$
$
49,407
—
—
49,407
$
73,519
(3,050)
(22,678)
47,791
Noninterest expense
$
84,339
$
82,503
$
85,064
$
(384)
83,955
$
(583)
81,920
$
(2,547)
82,517
(a)
One-time items
Core noninterest expense (non-GAAP)
Net income
Loss (gain) on sale of securities
Gain on sale of stock (Visa/MasterCard)
One-time items
$
(a)
(a)
(b)
$
384
(b)
Tax adjustments
Total core adjustments
Core net income (non-GAAP)
Core basic earnings per share (non-GAAP)
Core diluted earnings per share (non-GAAP)
56,740
—
—
$
$
$
(142)
242
56,982
0.41
0.41
$
$
$
56,552
(1,516)
—
$
65,531
(3,050)
(22,678)
583
2,547
382
(551)
56,001
0.40
0.40
8,723
(14,458)
51,073
0.37
0.37
$
$
$
One-time items include initial public offering related costs.
Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period.
17