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First Hawaiian, Inc. Reports Fourth Quarter 2023 Financial Results and Declares Dividend
ソース: Nasdaq GlobeNewswire / 26 1 2024 08:00:01 America/New_York
HONOLULU, Hawaii, Jan. 26, 2024 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended December 31, 2023.
“I’m happy to report that we finished 2023 with a strong fourth quarter. Our loan balances were stable, we grew consumer and commercial deposits, and credit quality remained excellent,” said Bob Harrison, Chairman, President, and CEO. “During the fourth quarter we also took action to strengthen our balance sheet and increase our future earnings power by selling low-yielding securities. We intend to use the proceeds to reduce high-cost deposits which will increase our net interest margin and net interest income in 2024.”
On January 24, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on March 1, 2024, to stockholders of record at the close of business on February 16, 2024.
Additionally, the Company’s Board of Directors adopted a stock repurchase program for up to $40 million of its outstanding common stock during 2024.
Fourth Quarter 2023 Highlights:
- Net income of $47.5 million, or $0.37 per diluted share
- Total loans and leases increased $21.2 million versus prior quarter
- Total deposits decreased $178.8 million versus prior quarter
- Net interest margin decreased 5 basis points to 2.81%
- Recorded a $5.3 million provision for credit losses
- Sold $525.6 million of low-yielding investment securities and recognized a $40.0 million loss
- Sold 120,104 shares of Visa Class B stock for a gain of $40.8 million
- $16.3 million FDIC special assessment included in expenses
- Board of Directors declared a quarterly dividend of $0.26 per share
Balance Sheet
Total assets were $24.9 billion at December 31, 2023 and September 30, 2023.
Gross loans and leases were $14.4 billion as of December 31, 2023, an increase of $21.2 million, or 0.1%, from $14.3 billion as of September 30, 2023.
Total deposits were $21.3 billion as of December 31, 2023, a decrease of $178.8 million, or 0.8%, from $21.5 billion as of September 30, 2023.
Net Interest Income
Net interest income for the fourth quarter of 2023 was $151.8 million, a decrease of $5.4 million, or 3.4%, compared to $157.1 million for the prior quarter.
The net interest margin was 2.81% in the fourth quarter of 2023, a decrease of 5 basis points compared to 2.86% in the prior quarter.
Provision Expense
During the quarter ended December 31, 2023, we recorded a $5.3 million provision for credit losses. In the quarter ended September 30, 2023, we recorded a $7.5 million provision for credit losses.
Noninterest Income
Noninterest income was $58.3 million in the fourth quarter of 2023, an increase of $12.3 million compared to noninterest income of $46.1 million in the prior quarter.
Noninterest Expense
Noninterest expense was $142.3 million in the fourth quarter of 2023, an increase of $22.9 million compared to noninterest expense of $119.4 million in the prior quarter.
The efficiency ratio was 67.3% and 58.3% for the quarters ended December 31, 2023 and September 30, 2023, respectively.
Taxes
The effective tax rate was 24.0% and 23.8% for the quarters ended December 31, 2023 and September 30, 2023, respectively.
Asset Quality
The allowance for credit losses was $156.5 million, or 1.09% of total loans and leases, as of December 31, 2023, compared to $154.8 million, or 1.08% of total loans and leases, as of September 30, 2023. The reserve for unfunded commitments was $35.6 million as of December 31, 2023 compared to $37.8 million as of September 30, 2023. Net charge-offs were $5.8 million, or 0.16% of average loans and leases on an annualized basis, for the quarter ended December 31, 2023, compared to net recoveries of $0.3 million, or 0.01% of average loans and leases on an annualized basis, for the quarter ended September 30, 2023. Total non-performing assets were $18.6 million, or 0.13% of total loans and leases and other real estate owned, on December 31, 2023, compared to total non-performing assets of $14.6 million, or 0.10% of total loans and leases and other real estate owned, on September 30, 2023.
Capital
Total stockholders' equity was $2.5 billion on December 31, 2023 an increase of $135.1 million from $2.4 billion as of September 30, 2023.
The tier 1 leverage, common equity tier 1 and total capital ratios were 8.64%, 12.39% and 13.57%, respectively, on December 31, 2023, compared with 8.45%, 12.21% and 13.38%, respectively, on September 30, 2023.
The Company did not repurchase any shares in the fourth quarter.
As to the stock repurchase program approved for 2024, 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.
To access the call by phone, please register via the following link: https://register.vevent.com/register/BIb0fdeb3d43a84da4acc2b0efeb9ba356, 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. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there can be no assurance that actual results will not prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements, including (without limitation) the risks and uncertainties associated with the domestic and global economic environment and capital market conditions and other risk factors. For a discussion of some of these risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023.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) 2023 2023 2022 2023 2022 Operating Results: Net interest income $ 151,793 $ 157,148 $ 171,794 $ 636,127 $ 613,549 Provision for credit losses 5,330 7,500 2,956 26,630 1,392 Noninterest income 58,347 46,097 48,151 200,815 179,525 Noninterest expense 142,307 119,383 113,922 501,138 440,471 Net income 47,502 58,221 79,588 234,983 265,685 Basic earnings per share 0.37 0.46 0.62 1.84 2.08 Diluted earnings per share 0.37 0.46 0.62 1.84 2.08 Dividends declared per share 0.26 0.26 0.26 1.04 1.04 Dividend payout ratio 70.27 % 56.52 % 41.94 % 56.52 % 50.00 % Performance Ratios(1): Net interest margin 2.81 % 2.86 % 3.15 % 2.92 % 2.78 % Efficiency ratio 67.28 % 58.31 % 51.47 % 59.48 % 55.20 % Return on average total assets 0.77 % 0.93 % 1.28 % 0.95 % 1.06 % Return on average tangible assets (non-GAAP)(2) 0.81 % 0.97 % 1.34 % 0.99 % 1.11 % Return on average total stockholders' equity 7.94 % 9.76 % 14.27 % 10.01 % 11.44 % Return on average tangible stockholders' equity (non-GAAP)(2) 13.66 % 16.84 % 25.93 % 17.39 % 20.03 % Average Balances: Average loans and leases $ 14,349,322 $ 14,349,402 $ 13,876,136 $ 14,266,291 $ 13,314,821 Average earning assets 21,688,816 22,060,480 21,856,135 21,952,009 22,272,795 Average assets 24,404,727 24,727,893 24,575,648 24,625,445 24,964,422 Average deposits 20,908,221 21,212,102 21,725,177 21,160,155 22,058,497 Average stockholders' equity 2,374,669 2,367,422 2,213,030 2,346,713 2,321,606 Market Value Per Share: Closing 22.86 18.05 26.04 22.86 26.04 High 23.22 22.59 27.16 28.28 31.16 Low 17.18 17.41 24.06 15.08 21.21 As of As of As of December 31, September 30, December 31, (dollars in thousands, except per share data) 2023 2023 2022 Balance Sheet Data: Loans and leases $ 14,353,497 $ 14,332,335 $ 14,092,012 Total assets 24,926,474 24,912,524 24,577,223 Total deposits 21,332,657 21,511,489 21,689,029 Short-term borrowings 500,000 500,000 75,000 Total stockholders' equity 2,486,066 2,351,009 2,269,005 Per Share of Common Stock: Book value $ 19.48 $ 18.42 $ 17.82 Tangible book value (non-GAAP)(2) 11.68 10.62 10.00 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.13 % 0.10 % 0.08 % Allowance for credit losses for loans and leases / total loans and leases 1.09 % 1.08 % 1.02 % Capital Ratios: Common Equity Tier 1 Capital Ratio 12.39 % 12.21 % 11.82 % Tier 1 Capital Ratio 12.39 % 12.21 % 11.82 % Total Capital Ratio 13.57 % 13.38 % 12.92 % Tier 1 Leverage Ratio 8.64 % 8.45 % 8.11 % Total stockholders' equity to total assets 9.97 % 9.44 % 9.23 % Tangible stockholders' equity to tangible assets (non-GAAP)(2) 6.23 % 5.67 % 5.40 % Non-Financial Data: Number of branches 50 50 51 Number of ATMs 275 294 294 Number of Full-Time Equivalent Employees 2,089 2,087 2,063 (1) Except for the efficiency ratio, amounts are annualized for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022.
(2) Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. Tangible stockholders’ equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders’ equity. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation.
Consolidated Statements of Income Table 2 For the Three Months Ended For the Year Ended December 31, September 30, December 31, December 31, (dollars in thousands, except per share amounts) 2023 2023 2022 2023 2022 Interest income Loans and lease financing $ 196,276 $ 194,098 $ 159,526 $ 748,053 $ 509,820 Available-for-sale investment securities 19,033 18,426 18,714 74,241 87,108 Held-to-maturity investment securities 17,987 18,271 19,137 73,497 55,376 Other 7,734 9,004 3,088 27,788 10,916 Total interest income 241,030 239,799 200,465 923,579 663,220 Interest expense Deposits 82,215 74,651 28,202 258,221 49,201 Short-term and long-term borrowings 6,232 6,838 469 26,289 470 Other 790 1,162 — 2,942 — Total interest expense 89,237 82,651 28,671 287,452 49,671 Net interest income 151,793 157,148 171,794 636,127 613,549 Provision for credit losses 5,330 7,500 2,956 26,630 1,392 Net interest income after provision for credit losses 146,463 149,648 168,838 609,497 612,157 Noninterest income Service charges on deposit accounts 7,646 7,524 7,376 29,647 28,809 Credit and debit card fees 16,381 15,748 16,376 63,888 66,028 Other service charges and fees 9,535 9,546 9,185 37,299 37,036 Trust and investment services income 9,645 9,742 9,023 38,449 36,465 Bank-owned life insurance 5,063 1,872 2,865 15,326 1,248 Investment securities gains, net 792 — — 792 — Other 9,285 1,665 3,326 15,414 9,939 Total noninterest income 58,347 46,097 48,151 200,815 179,525 Noninterest expense Salaries and employee benefits 55,882 55,937 49,629 225,755 199,129 Contracted services and professional fees 16,219 16,393 17,638 66,423 70,027 Occupancy 7,561 6,711 8,175 29,608 31,034 Equipment 12,547 11,826 9,984 45,109 34,506 Regulatory assessment and fees 20,412 4,149 2,591 32,073 9,603 Advertising and marketing 1,441 2,289 2,072 7,615 7,996 Card rewards program 7,503 8,358 8,681 31,627 30,990 Other 20,742 13,720 15,152 62,928 57,186 Total noninterest expense 142,307 119,383 113,922 501,138 440,471 Income before provision for income taxes 62,503 76,362 103,067 309,174 351,211 Provision for income taxes 15,001 18,141 23,479 74,191 85,526 Net income $ 47,502 $ 58,221 $ 79,588 $ 234,983 $ 265,685 Basic earnings per share $ 0.37 $ 0.46 $ 0.62 $ 1.84 $ 2.08 Diluted earnings per share $ 0.37 $ 0.46 $ 0.62 $ 1.84 $ 2.08 Basic weighted-average outstanding shares 127,612,734 127,609,860 127,356,795 127,567,547 127,489,889 Diluted weighted-average outstanding shares 128,028,964 127,936,440 127,894,773 127,915,873 127,981,699 Consolidated Balance Sheets Table 3 December 31, September 30, December 31, (dollars in thousands, except share amount) 2023 2023 2022 Assets Cash and due from banks $ 185,015 $ 246,028 $ 297,502 Interest-bearing deposits in other banks 1,554,882 967,400 229,122 Investment securities: Available-for-sale, at fair value (amortized cost: $2,558,675 as of December 31, 2023, $3,172,031 as of September 30, 2023 and $3,549,599 as of December 31, 2022) 2,255,336 2,722,704 3,151,133 Held-to-maturity, at amortized cost (fair value: $3,574,856 as of December 31, 2023, $3,433,029 as of September 30, 2023 and $3,814,822 as of December 31, 2022) 4,041,449 4,104,114 4,320,639 Loans held for sale 190 — — Loans and leases 14,353,497 14,332,335 14,092,012 Less: allowance for credit losses 156,533 154,795 143,900 Net loans and leases 14,196,964 14,177,540 13,948,112 Premises and equipment, net 281,461 277,805 280,355 Other real estate owned and repossessed personal property — — 91 Accrued interest receivable 84,417 84,327 78,194 Bank-owned life insurance 479,907 477,698 473,067 Goodwill 995,492 995,492 995,492 Mortgage servicing rights 5,699 5,855 6,562 Other assets 845,662 853,561 796,954 Total assets $ 24,926,474 $ 24,912,524 $ 24,577,223 Liabilities and Stockholders' Equity Deposits: Interest-bearing $ 13,749,095 $ 13,612,493 $ 12,824,383 Noninterest-bearing 7,583,562 7,898,996 8,864,646 Total deposits 21,332,657 21,511,489 21,689,029 Short-term borrowings 500,000 500,000 75,000 Retirement benefits payable 103,285 99,685 102,577 Other liabilities 504,466 450,341 441,612 Total liabilities 22,440,408 22,561,515 22,308,218 Stockholders' equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,340,539 / 127,618,761 shares as of December 31, 2023, issued/outstanding: 141,330,663 / 127,609,934 shares as of September 30, 2023 and issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022) 1,413 1,413 1,410 Additional paid-in capital 2,548,250 2,545,659 2,538,336 Retained earnings 837,859 823,895 736,544 Accumulated other comprehensive loss, net (530,210 ) (648,731 ) (639,254 ) Treasury stock (13,721,778 shares as of December 31, 2023, 13,720,729 shares as of September 30, 2023 and 13,600,591 shares as of December 31, 2022) (371,246 ) (371,227 ) (368,031 ) Total stockholders' equity 2,486,066 2,351,009 2,269,005 Total liabilities and stockholders' equity $ 24,926,474 $ 24,912,524 $ 24,577,223 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended December 31, 2023 September 30, 2023 December 31, 2022 Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $ 568.0 $ 7.8 5.39 % $ 608.6 $ 8.2 5.36 % $ 321.3 $ 2.9 3.64 % Available-for-Sale Investment Securities Taxable 2,598.4 19.0 2.92 2,834.6 18.4 2.59 3,180.8 18.3 2.30 Non-Taxable 1.9 — 5.12 2.3 — 5.48 37.9 0.5 5.42 Held-to-Maturity Investment Securities Taxable 3,472.1 14.8 1.70 3,544.1 15.0 1.70 3,754.9 15.8 1.69 Non-Taxable 603.9 3.9 2.58 604.3 4.1 2.66 613.4 4.2 2.69 Total Investment Securities 6,676.3 37.7 2.25 6,985.3 37.5 2.14 7,587.0 38.8 2.04 Loans Held for Sale 0.7 — 7.41 0.4 — 6.63 0.1 — 6.50 Loans and Leases(1) Commercial and industrial 2,148.1 36.7 6.78 2,123.5 35.7 6.66 2,126.3 28.1 5.24 Commercial real estate 4,356.3 71.4 6.51 4,381.8 71.4 6.47 4,116.8 53.9 5.19 Construction 888.7 16.7 7.45 873.7 15.5 7.05 804.4 11.8 5.83 Residential: Residential mortgage 4,294.8 38.8 3.61 4,316.3 40.1 3.72 4,280.6 38.1 3.56 Home equity line 1,174.8 11.3 3.83 1,154.0 10.1 3.45 1,029.7 8.1 3.10 Consumer 1,132.4 18.4 6.43 1,172.8 18.3 6.19 1,220.9 17.1 5.55 Lease financing 354.2 3.6 4.03 327.3 3.7 4.48 297.4 2.9 3.92 Total Loans and Leases 14,349.3 196.9 5.45 14,349.4 194.8 5.39 13,876.1 160.0 4.58 Other Earning Assets 94.5 — 0.06 116.8 0.8 2.64 71.6 0.2 0.80 Total Earning Assets(2) 21,688.8 242.4 4.44 22,060.5 241.3 4.35 21,856.1 201.9 3.67 Cash and Due from Banks 240.8 276.0 286.4 Other Assets 2,475.1 2,391.4 2,433.1 Total Assets $ 24,404.7 $ 24,727.9 $ 24,575.6 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,067.2 $ 22.4 1.46 % $ 5,982.5 $ 19.2 1.27 % 6,455.5 $ 10.3 0.63 % Money Market 3,905.0 27.5 2.79 3,907.2 24.7 2.51 4,012.9 9.8 0.97 Time 3,390.7 32.3 3.78 3,362.7 30.8 3.63 2,163.2 8.1 1.48 Total Interest-Bearing Deposits 13,362.9 82.2 2.44 13,252.4 74.7 2.23 12,631.6 28.2 0.89 Federal Funds Purchased — — — — — — 45.5 0.5 4.09 Other Short-Term Borrowings 515.2 6.2 4.80 113.1 1.5 5.17 — — — Long-Term Borrowings — — — 440.2 5.3 4.83 — — — Other Interest-Bearing Liabilities 42.1 0.8 7.44 89.1 1.2 5.17 — — — Total Interest-Bearing Liabilities 13,920.2 89.2 2.54 13,894.8 82.7 2.36 12,677.1 28.7 0.90 Net Interest Income $ 153.2 $ 158.6 $ 173.2 Interest Rate Spread 1.90 % 1.99 % 2.77 % Net Interest Margin 2.81 % 2.86 % 3.15 % Noninterest-Bearing Demand Deposits 7,545.3 7,959.7 9,093.6 Other Liabilities 564.5 506.0 591.9 Stockholders' Equity 2,374.7 2,367.4 2,213.0 Total Liabilities and Stockholders' Equity $ 24,404.7 $ 24,727.9 $ 24,575.6 (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, $1.5 million and $1.4 million for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.
Average Balances and Interest Rates Table 5 Year Ended Year Ended December 31, 2023 December 31, 2022 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $ 512.3 $ 26.5 5.18 % $ 867.6 $ 10.3 1.19 % Available-for-Sale Investment Securities Taxable 2,871.8 73.8 2.57 4,650.1 83.2 1.79 Non-Taxable 10.2 0.6 5.55 180.0 4.9 2.74 Held-to-Maturity Investment Securities Taxable 3,579.0 60.7 1.70 2,728.2 45.5 1.67 Non-Taxable 607.7 15.9 2.61 460.6 12.5 2.71 Total Investment Securities 7,068.7 151.0 2.14 8,018.9 146.1 1.82 Loans Held for Sale 0.4 — 6.63 0.6 — 3.14 Loans and Leases(1) Commercial and industrial 2,182.3 141.0 6.46 2,019.5 78.4 3.88 Commercial real estate 4,257.9 266.0 6.25 3,895.3 153.2 3.93 Construction 877.7 62.1 7.08 755.0 32.5 4.30 Residential: Residential mortgage 4,308.0 156.4 3.63 4,200.2 145.5 3.46 Home equity line 1,131.1 39.3 3.47 965.0 26.5 2.75 Consumer 1,178.6 71.5 6.07 1,218.9 65.3 5.35 Lease financing 330.7 14.1 4.26 260.9 9.7 3.69 Total Loans and Leases 14,266.3 750.4 5.26 13,314.8 511.1 3.84 Other Earning Assets 104.3 1.3 1.20 70.9 0.6 0.89 Total Earning Assets(2) 21,952.0 929.2 4.23 22,272.8 668.1 3.00 Cash and Due from Banks 265.1 289.0 Other Assets 2,408.3 2,402.6 Total Assets $ 24,625.4 $ 24,964.4 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,124.7 $ 71.5 1.17 % $ 6,741.5 $ 19.2 0.29 % Money Market 3,869.1 86.1 2.22 4,068.8 16.6 0.41 Time 3,040.0 100.6 3.31 1,826.7 13.4 0.73 Total Interest-Bearing Deposits 13,033.8 258.2 1.98 12,637.0 49.2 0.39 Federal Funds Purchased 17.2 0.8 4.45 11.5 0.5 4.08 Other Short-Term Borrowings 261.9 13.0 4.98 — — — Long-Term Borrowings 261.6 12.5 4.78 — — — Other Interest-Bearing Liabilities 57.1 3.0 5.15 — — — Total Interest-Bearing Liabilities 13,631.6 287.5 2.11 12,648.5 49.7 0.39 Net Interest Income $ 641.7 $ 618.4 Interest Rate Spread 2.12 % 2.61 % Net Interest Margin 2.92 % 2.78 % Noninterest-Bearing Demand Deposits 8,126.4 9,421.5 Other Liabilities 520.7 572.8 Stockholders' Equity 2,346.7 2,321.6 Total Liabilities and Stockholders' Equity $ 24,625.4 $ 24,964.4 (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 $5.6 million and $4.9 million for the years ended December 31, 2023 and 2022, respectively.
Analysis of Change in Net Interest Income Table 6 Three Months Ended December 31, 2023 Compared to September 30, 2023 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (0.5 ) $ 0.1 $ (0.4 ) Available-for-Sale Investment Securities Taxable (1.6 ) 2.2 0.6 Held-to-Maturity Investment Securities Taxable (0.2 ) — (0.2 ) Non-Taxable — (0.2 ) (0.2 ) Total Investment Securities (1.8 ) 2.0 0.2 Loans and Leases Commercial and industrial 0.4 0.6 1.0 Commercial real estate (0.4 ) 0.4 — Construction 0.3 0.9 1.2 Residential: Residential mortgage (0.2 ) (1.1 ) (1.3 ) Home equity line 0.1 1.1 1.2 Consumer (0.6 ) 0.7 0.1 Lease financing 0.3 (0.4 ) (0.1 ) Total Loans and Leases (0.1 ) 2.2 2.1 Other Earning Assets (0.2 ) (0.6 ) (0.8 ) Total Change in Interest Income (2.6 ) 3.7 1.1 Change in Interest Expense: Interest-Bearing Deposits Savings 0.3 2.9 3.2 Money Market — 2.8 2.8 Time 0.2 1.3 1.5 Total Interest-Bearing Deposits 0.5 7.0 7.5 Other Short-Term Borrowings 4.9 (0.2 ) 4.7 Long-Term Borrowings (2.6 ) (2.7 ) (5.3 ) Other Interest-Bearing Liabilities (0.8 ) 0.4 (0.4 ) Total Change in Interest Expense 2.0 4.5 6.5 Change in Net Interest Income $ (4.6 ) $ (0.8 ) $ (5.4 ) Analysis of Change in Net Interest Income Table 7 Three Months Ended December 31, 2023 Compared to December 31, 2022 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ 3.0 $ 1.9 $ 4.9 Available-for-Sale Investment Securities Taxable (3.7 ) 4.4 0.7 Non-Taxable (0.5 ) — (0.5 ) Held-to-Maturity Investment Securities Taxable (1.1 ) 0.1 (1.0 ) Non-Taxable (0.1 ) (0.2 ) (0.3 ) Total Investment Securities (5.4 ) 4.3 (1.1 ) Loans and Leases Commercial and industrial 0.3 8.3 8.6 Commercial real estate 3.3 14.2 17.5 Construction 1.3 3.6 4.9 Residential: Residential mortgage 0.1 0.6 0.7 Home equity line 1.2 2.0 3.2 Consumer (1.3 ) 2.6 1.3 Lease financing 0.6 0.1 0.7 Total Loans and Leases 5.5 31.4 36.9 Other Earning Assets — (0.2 ) (0.2 ) Total Change in Interest Income 3.1 37.4 40.5 Change in Interest Expense: Interest-Bearing Deposits Savings (0.6 ) 12.7 12.1 Money Market (0.2 ) 17.9 17.7 Time 6.4 17.8 24.2 Total Interest-Bearing Deposits 5.6 48.4 54.0 Federal Funds Purchased (0.3 ) (0.2 ) (0.5 ) Other Short-Term Borrowings 6.2 — 6.2 Other Interest-Bearing Liabilities 0.8 — 0.8 Total Change in Interest Expense 12.3 48.2 60.5 Change in Net Interest Income $ (9.2 ) $ (10.8 ) $ (20.0 ) Analysis of Change in Net Interest Income Table 8 Year Ended December 31, 2023 Compared to December 31, 2022 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (5.8 ) $ 22.0 $ 16.2 Available-for-Sale Investment Securities Taxable (38.3 ) 28.9 (9.4 ) Non-Taxable (6.9 ) 2.6 (4.3 ) Held-to-Maturity Investment Securities Taxable 14.4 0.8 15.2 Non-Taxable 3.9 (0.5 ) 3.4 Total Investment Securities (26.9 ) 31.8 4.9 Loans and Leases Commercial and industrial 6.8 55.8 62.6 Commercial real estate 15.4 97.4 112.8 Construction 5.9 23.7 29.6 Residential: Residential mortgage 3.7 7.2 10.9 Home equity line 5.1 7.7 12.8 Consumer (2.3 ) 8.5 6.2 Lease financing 2.8 1.6 4.4 Total Loans and Leases 37.4 201.9 239.3 Other Earning Assets 0.4 0.3 0.7 Total Change in Interest Income 5.1 256.0 261.1 Change in Interest Expense: Interest-Bearing Deposits Savings (1.9 ) 54.2 52.3 Money Market (0.9 ) 70.4 69.5 Time 13.8 73.4 87.2 Total Interest-Bearing Deposits 11.0 198.0 209.0 Federal Funds Purchased 0.2 0.1 0.3 Other Short-Term Borrowings 13.0 — 13.0 Long-Term Borrowings 12.5 — 12.5 Other Interest-Bearing Liabilities 3.0 — 3.0 Total Change in Interest Expense 39.7 198.1 237.8 Change in Net Interest Income $ (34.6 ) $ 57.9 $ 23.3 Loans and Leases Table 9 December 31, September 30, December 31, (dollars in thousands) 2023 2023 2022 Commercial and industrial: Commercial and industrial excluding Paycheck Protection Program loans $ 2,156,872 $ 2,091,379 $ 2,217,604 Paycheck Protection Program loans 8,477 10,063 18,293 Total commercial and industrial 2,165,349 2,101,442 2,235,897 Commercial real estate 4,340,243 4,387,751 4,132,309 Construction 900,292 885,112 844,643 Residential: Residential mortgage 4,283,315 4,303,924 4,302,788 Home equity line 1,174,588 1,167,388 1,055,351 Total residential 5,457,903 5,471,312 5,358,139 Consumer 1,109,901 1,154,203 1,222,934 Lease financing 379,809 332,515 298,090 Total loans and leases $ 14,353,497 $ 14,332,335 $ 14,092,012 Deposits Table 10 December 31, September 30, December 31, (dollars in thousands) 2023 2023 2022 Demand $ 7,583,562 $ 7,898,996 $ 8,864,646 Savings 6,445,084 6,028,308 6,382,910 Money Market 3,847,853 3,923,054 3,965,423 Time 3,456,158 3,661,131 2,476,050 Total Deposits $ 21,332,657 $ 21,511,489 $ 21,689,029 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) 2023 2023 2022 Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 970 $ 988 $ 1,215 Commercial real estate 2,953 — 727 Total Commercial Loans 3,923 988 1,942 Residential Loans: Residential mortgage 7,620 7,435 6,166 Home equity line 7,052 6,200 3,797 Total Residential Loans 14,672 13,635 9,963 Total Non-Accrual Loans and Leases 18,595 14,623 11,905 Other Real Estate Owned — — 91 Total Non-Performing Assets $ 18,595 $ 14,623 $ 11,996 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 494 $ 289 $ 291 Commercial real estate 300 170 — Total Commercial Loans 794 459 291 Residential mortgage — 1,430 58 Consumer 2,702 1,681 2,885 Total Accruing Loans and Leases Past Due 90 Days or More $ 3,496 $ 3,570 $ 3,234 Total Loans and Leases $ 14,353,497 $ 14,332,335 $ 14,092,012 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) 2023 2023 2022 2023 2022 Balance at Beginning of Period $ 192,570 $ 184,780 $ 178,304 177,735 187,584 Loans and Leases Charged-Off Commercial Loans: Commercial and industrial (910 ) (784 ) (735 ) (3,482 ) (2,012 ) Commercial real estate (2,500 ) — — (2,500 ) (750 ) Total Commercial Loans (3,410 ) (784 ) (735 ) (5,982 ) (2,762 ) Residential Loans: Residential mortgage — — (102 ) (122 ) (103 ) Home equity line (20 ) — (12 ) (292 ) (1,175 ) Total Residential Loans (20 ) — (114 ) (414 ) (1,278 ) Consumer (4,147 ) (3,665 ) (5,094 ) (17,110 ) (16,848 ) Total Loans and Leases Charged-Off (7,577 ) (4,449 ) (5,943 ) (23,506 ) (20,888 ) Recoveries on Loans and Leases Previously Charged-Off Commercial Loans: Commercial and industrial 171 2,637 303 3,346 897 Commercial real estate — — — — 14 Lease financing — — — — 60 Total Commercial Loans 171 2,637 303 3,346 971 Residential Loans: Residential mortgage 31 53 173 141 418 Home equity line 163 303 138 702 713 Total Residential Loans 194 356 311 843 1,131 Consumer 1,450 1,746 1,804 7,090 7,545 Total Recoveries on Loans and Leases Previously Charged-Off 1,815 4,739 2,418 11,279 9,647 Net Loans and Leases (Charged-Off) Recovered (5,762 ) 290 (3,525 ) (12,227 ) (11,241 ) Provision for Credit Losses 5,330 7,500 2,956 26,630 1,392 Balance at End of Period $ 192,138 $ 192,570 $ 177,735 $ 192,138 $ 177,735 Components: Allowance for Credit Losses $ 156,533 $ 154,795 $ 143,900 $ 156,533 $ 143,900 Reserve for Unfunded Commitments 35,605 37,775 33,835 35,605 33,835 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $ 192,138 $ 192,570 $ 177,735 $ 192,138 $ 177,735 Average Loans and Leases Outstanding $ 14,349,322 $ 14,349,402 $ 13,876,136 $ 14,266,291 $ 13,314,821 Ratio of Net Loans and Leases Charged-Off (Recovered) to Average Loans and Leases Outstanding(1) 0.16 % (0.01 ) % 0.10 % 0.09 % 0.08 % Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.09 % 1.08 % 1.02 % 1.09 % 1.02 % Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 8.42x 10.59x 12.09x 8.42x 12.09x (1) Annualized for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022.
Loans and Leases by Year of Origination and Credit Quality Indicator Table 13 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans Amortized Amortized (dollars in thousands) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis Total Commercial Lending Commercial and Industrial Risk rating: Pass $ 85,839 $ 273,663 $ 346,024 $ 32,753 $ 146,893 $ 141,681 $ 971,065 $ 1,823 $ 1,999,741 Special Mention 1 44,069 80 653 1,032 1,290 22,807 14 69,946 Substandard — 342 230 677 1,686 829 8,330 — 12,094 Other (1) 15,978 11,598 4,814 2,370 1,702 1,125 45,981 — 83,568 Total Commercial and Industrial 101,818 329,672 351,148 36,453 151,313 144,925 1,048,183 1,837 2,165,349 Current period gross charge-offs 130 70 75 87 168 2,952 — — 3,482 Commercial Real Estate Risk rating: Pass 346,369 872,783 676,362 337,529 523,446 1,414,613 74,238 1,350 4,246,690 Special Mention 2,307 7,618 41,320 1,359 13,550 11,998 819 — 78,971 Substandard 205 5,079 2,003 — 2,953 2,545 1,655 — 14,440 Other (1) — — — — — 142 — — 142 Total Commercial Real Estate 348,881 885,480 719,685 338,888 539,949 1,429,298 76,712 1,350 4,340,243 Current period gross charge-offs — — — — 2,500 — — — 2,500 Construction Risk rating: Pass 156,432 269,623 265,674 60,057 63,018 27,847 6,070 — 848,721 Special Mention — — — — 189 665 — — 854 Other (1) 12,728 21,036 8,250 2,143 2,031 3,820 709 — 50,717 Total Construction 169,160 290,659 273,924 62,200 65,238 32,332 6,779 — 900,292 Current period gross charge-offs — — — — — — — — — Lease Financing Risk rating: Pass 145,914 82,833 18,680 31,791 30,299 68,520 — — 378,037 Special Mention 56 137 414 35 — — — — 642 Substandard 712 416 — — 2 — — — 1,130 Total Lease Financing 146,682 83,386 19,094 31,826 30,301 68,520 — — 379,809 Current period gross charge-offs — — — — — — — — — Total Commercial Lending $ 766,541 $ 1,589,197 $ 1,363,851 $ 469,367 $ 786,801 $ 1,675,075 $ 1,131,674 $ 3,187 $ 7,785,693 Current period gross charge-offs $ 130 $ 70 $ 75 $ 87 $ 2,668 $ 2,952 $ — $ — $ 5,982 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans (continued) Amortized Amortized (dollars in thousands) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis Total Residential Lending Residential Mortgage FICO: 740 and greater $ 211,598 $ 529,296 $ 999,522 $ 529,881 $ 227,058 $ 987,251 $ — $ — $ 3,484,606 680 - 739 36,975 67,205 117,337 68,122 33,148 130,387 — — 453,174 620 - 679 3,544 16,395 19,184 12,811 4,096 38,987 — — 95,017 550 - 619 1,305 6,521 1,917 2,492 398 11,679 — — 24,312 Less than 550 — — 2,909 2,017 582 6,439 — — 11,947 No Score (3) 9,137 19,311 11,492 6,043 9,679 51,109 — — 106,771 Other (2) 15,802 17,528 17,432 12,534 8,599 25,513 10,080 — 107,488 Total Residential Mortgage 278,361 656,256 1,169,793 633,900 283,560 1,251,365 10,080 — 4,283,315 Current period gross charge-offs — — — — — 122 — — 122 Home Equity Line FICO: 740 and greater — — — — — — 964,932 1,511 966,443 680 - 739 — — — — — — 151,716 1,920 153,636 620 - 679 — — — — — — 36,541 1,189 37,730 550 - 619 — — — — — — 9,896 1,012 10,908 Less than 550 — — — — — — 4,488 100 4,588 No Score (3) — — — — — — 1,283 — 1,283 Total Home Equity Line — — — — — — 1,168,856 5,732 1,174,588 Current period gross charge-offs — — — — — — 273 19 292 Total Residential Lending $ 278,361 $ 656,256 $ 1,169,793 $ 633,900 $ 283,560 $ 1,251,365 $ 1,178,936 $ 5,732 $ 5,457,903 Current period gross charge-offs $ — $ — $ — $ — $ — $ 122 $ 273 $ 19 $ 414 Consumer Lending FICO: 740 and greater 92,117 128,358 76,148 33,507 21,819 8,970 123,592 155 484,666 680 - 739 68,865 71,031 37,925 17,116 13,270 5,690 76,645 401 290,943 620 - 679 28,533 29,229 16,919 7,843 7,972 4,624 35,210 781 131,111 550 - 619 4,996 10,859 7,760 4,917 4,651 2,986 13,223 925 50,317 Less than 550 1,790 6,370 4,842 2,796 2,905 2,040 5,222 455 26,420 No Score (3) 1,545 229 — — 1 10 42,933 136 44,854 Other (2) 361 368 982 335 1,059 1 78,484 — 81,590 Total Consumer Lending $ 198,207 $ 246,444 $ 144,576 $ 66,514 $ 51,677 $ 24,321 $ 375,309 $ 2,853 $ 1,109,901 Current period gross charge-offs $ 639 $ 2,400 $ 2,135 $ 1,142 $ 1,816 $ 2,622 $ 5,790 $ 566 $ 17,110 Total Loans and Leases $ 1,243,109 $ 2,491,897 $ 2,678,220 $ 1,169,781 $ 1,122,038 $ 2,950,761 $ 2,685,919 $ 11,772 $ 14,353,497 Current period gross charge-offs $ 769 $ 2,470 $ 2,210 $ 1,229 $ 4,484 $ 5,696 $ 6,063 $ 585 $ 23,506 (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) 2023 2023 2022 2023 2022 Income Statement Data: Net income $ 47,502 $ 58,221 $ 79,588 $ 234,983 $ 265,685 Average total stockholders' equity $ 2,374,669 $ 2,367,422 $ 2,213,030 $ 2,346,713 $ 2,321,606 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders' equity $ 1,379,177 $ 1,371,930 $ 1,217,538 $ 1,351,221 $ 1,326,114 Average total assets $ 24,404,727 $ 24,727,893 $ 24,575,648 $ 24,625,445 $ 24,964,422 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $ 23,409,235 $ 23,732,401 $ 23,580,156 $ 23,629,953 $ 23,968,930 Return on average total stockholders' equity(1) 7.94 % 9.76 % 14.27 % 10.01 % 11.44 % Return on average tangible stockholders' equity (non-GAAP)(1) 13.66 % 16.84 % 25.93 % 17.39 % 20.03 % Return on average total assets(1) 0.77 % 0.93 % 1.28 % 0.95 % 1.06 % Return on average tangible assets (non-GAAP)(1) 0.81 % 0.97 % 1.34 % 0.99 % 1.11 % As of As of As of December 31, September 30, December 31, (dollars in thousands, except per share amounts) 2023 2023 2022 Balance Sheet Data: Total stockholders' equity $ 2,486,066 $ 2,351,009 $ 2,269,005 Less: goodwill 995,492 995,492 995,492 Tangible stockholders' equity $ 1,490,574 $ 1,355,517 $ 1,273,513 Total assets $ 24,926,474 $ 24,912,524 $ 24,577,223 Less: goodwill 995,492 995,492 995,492 Tangible assets $ 23,930,982 $ 23,917,032 $ 23,581,731 Shares outstanding 127,618,761 127,609,934 127,363,327 Total stockholders' equity to total assets 9.97 % 9.44 % 9.23 % Tangible stockholders' equity to tangible assets (non-GAAP) 6.23 % 5.67 % 5.40 % Book value per share $ 19.48 $ 18.42 $ 17.82 Tangible book value per share (non-GAAP) $ 11.68 $ 10.62 $ 10.00 (1) Annualized for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022.
