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First Hawaiian, Inc. Reports Second Quarter 2023 Financial Results and Declares Dividend

HONOLULU, July 28, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended June 30, 2023.

“I’m pleased to report that we had a solid second quarter in spite of a challenging interest rate environment,” said Bob Harrison, Chairman, President and CEO. “We grew loans and capital, credit quality remains excellent, and our profitability measures continue to be strong.”

On July 19, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 1, 2023, to stockholders of record at the close of business on August 21, 2023.  

Second Quarter 2023 Highlights:

  • Net income of $62.4 million, or $0.49 per diluted share
  • Total loans and leases increased $141.6 million versus prior quarter
  • Total deposits decreased $203.3 million versus prior quarter
  • Net interest margin decreased 20 basis points to 2.91%
  • Recorded a $5.0 million provision for credit losses
  • Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet 
Total assets were $24.5 billion as of June 30, 2023, compared to $24.9 billion as of March 31, 2023.

Gross loans and leases were $14.4 billion as of June 30, 2023, an increase of $141.6 million, or 1.0%, from $14.2 billion as of March 31, 2023.

Total deposits were $21.1 billion as of June 30, 2023, a decrease of $203.3 million, or 1.0%, from $21.3 billion as of March 31, 2023.  

Net Interest Income 
Net interest income for the second quarter of 2023 was $159.9 million, a decrease of $7.3 million, or 4.4%, compared to $167.2 million for the prior quarter.  

The net interest margin was 2.91% in the second quarter of 2023, a decrease of 20 basis points compared to 3.11% in the prior quarter.

Provision Expense 
During the quarter ended June 30, 2023, we recorded a $5.0 million provision for credit losses. In the quarter ended March 31, 2023, we recorded a $8.8 million provision for credit losses.

Noninterest Income 
Noninterest income was $47.3 million in the second quarter of 2023, a decrease of $1.7 million compared to noninterest income of $49.0 million in the prior quarter.     

Noninterest Expense 
Noninterest expense was $120.9 million in the second quarter of 2023, an increase of $2.3 million compared to noninterest expense of $118.6 million in the prior quarter.  

The efficiency ratio was 58.0% and 54.5% for the quarters ended June 30, 2023 and March 31, 2023, respectively.

Taxes 
The effective tax rate was 23.3% and 24.8% for the quarters ended June 30, 2023 and March 31, 2023, respectively.

Asset Quality 
The allowance for credit losses was $148.6 million, or 1.03% of total loans and leases, as of June 30, 2023, compared to $147.1 million, or 1.03% of total loans and leases, as of March 31, 2023. The reserve for unfunded commitments was $36.2 million as of both June 30, 2023 and March 31, 2023.   Net charge-offs were $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended June 30, 2023, compared to net charge-offs of $3.2 million, or 0.09% of average loans and leases on an annualized basis, for the quarter ended March 31, 2023. Total non-performing assets were $13.2 million, or 0.09% of total loans and leases and other real estate owned, on June 30, 2023, compared to total non-performing assets of $13.8 million, or 0.10% of total loans and leases and other real estate owned, on March 31, 2023.

Capital 
Total stockholders' equity was $2.4 billion and $2.3 billion on June 30, 2023 and March 31, 2023, respectively.    

The tier 1 leverage, common equity tier 1 and total capital ratios were 8.30%, 12.05% and 13.17%, respectively, on June 30, 2023, compared with 8.26%, 11.97%, and 13.09%, respectively, on March 31, 2023.

The Company did not repurchase any shares in the second quarter.

First Hawaiian, Inc. 
First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii.  Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii’s oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit the Company’s website, www.fhb.com.

Conference Call Information 
First Hawaiian will host a conference call to discuss the Company’s results today at 1:00 p.m. Eastern Time, 7:00 a.m. Hawaii Time.

To access the call by phone, please register via the following link: https://register.vevent.com/register/BI348950fc095448439d48b25a0e9c5697, 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 quarter ended March 31, 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.com
Media Contact:
Lindsay Chambers
(808) 525-6254
lchambers@fhb.com


                 
Financial Highlights Table 1
  For the Three Months Ended For the Six Months Ended 
  June 30, March 31, June 30, June 30, 
(dollars in thousands, except per share data) 2023 2023 2022 2023 2022  
Operating Results:                
Net interest income $159,939 $167,247 $145,147 $327,186 $279,019  
Provision for credit losses  5,000  8,800  1,000  13,800  (4,747) 
Noninterest income  47,348  49,023  44,137  96,371  85,517  
Noninterest expense  120,881  118,567  109,175  239,448  213,217  
Net income  62,442  66,818  59,360  129,260  117,079  
Basic earnings per share  0.49  0.52  0.46  1.01  0.92  
Diluted earnings per share  0.49  0.52  0.46  1.01  0.91  
Dividends declared per share  0.26  0.26  0.26  0.52  0.52  
Dividend payout ratio  53.06% 50.00% 56.52% 51.49% 57.14 %
Performance Ratios(1):                
Net interest margin  2.91% 3.11% 2.60% 3.01% 2.51 %
Efficiency ratio  57.96% 54.46% 57.33% 56.17% 58.15 %
Return on average total assets  1.01% 1.10% 0.94% 1.06% 0.94 %
Return on average tangible assets (non-GAAP)(2)  1.05% 1.15% 0.98% 1.10% 0.98 %
Return on average total stockholders' equity  10.68% 11.78% 10.52% 11.23% 9.82 %
Return on average tangible stockholders' equity (non-GAAP)(2)  18.57% 20.78% 18.79% 19.65% 16.76 %
Average Balances:                
Average loans and leases $14,283,222 $14,079,337 $13,058,558 $14,181,842 $12,939,745  
Average earning assets  22,186,316  21,873,259  22,520,605  22,030,652  22,492,066  
Average assets  24,821,486  24,548,124  25,250,176  24,685,560  25,165,783  
Average deposits  21,057,259  21,468,624  22,401,558  21,261,805  22,182,406  
Average stockholders' equity  2,344,285  2,299,422  2,262,654  2,321,977  2,404,471  
Market Value Per Share:                
Closing  18.01  20.63  22.80  18.01  22.80  
High  21.00  28.28  28.44  28.28  31.16  
Low  15.08  19.68  21.49  15.08  21.49  


  As of As of As of As of 
  June 30, March 31, December 31, June 30, 
(dollars in thousands, except per share data) 2023 2023 2022 2022 
Balance Sheet Data:             
Loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781 
Total assets  24,511,566  24,884,207  24,577,223  25,377,533 
Total deposits  21,078,166  21,281,500  21,689,029  22,601,454 
Short-term borrowings    250,000  75,000   
Long-term borrowings  500,000  500,000     
Total stockholders' equity  2,359,738  2,329,012  2,269,005  2,252,611 
              
Per Share of Common Stock:             
Book value $18.49 $18.26 $17.82 $17.67 
Tangible book value (non-GAAP)(2)  10.69  10.45  10.00  9.86 
              
Asset Quality Ratios:             
Non-accrual loans and leases / total loans and leases  0.09% 0.10% 0.08% 0.06%
Allowance for credit losses for loans and leases / total loans and leases  1.03% 1.03% 1.02% 1.12%
              
Capital Ratios:             
Common Equity Tier 1 Capital Ratio  12.05% 11.97% 11.82% 11.98%
Tier 1 Capital Ratio  12.05% 11.97% 11.82% 11.98%
Total Capital Ratio  13.17% 13.09% 12.92% 13.14%
Tier 1 Leverage Ratio  8.30% 8.26% 8.11% 7.54%
Total stockholders' equity to total assets  9.63% 9.36% 9.23% 8.88%
Tangible stockholders' equity to tangible assets (non-GAAP)(2)  5.80% 5.58% 5.40% 5.16%
              
Non-Financial Data:             
Number of branches  51  51  51  51 
Number of ATMs  296  296  294  297 
Number of Full-Time Equivalent Employees  2,126  2,100  2,063  2,021 

_____________________

 (1)   Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023.

 (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 Six Months Ended
  June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts) 2023 2023 2022  2023 2022 
Interest income               
Loans and lease financing $185,340 $172,339 $111,916  $357,679 $215,648 
Available-for-sale investment securities  18,094  18,688  16,643   36,782  48,750 
Held-to-maturity investment securities  18,282  18,957  18,289   37,239  18,289 
Other  7,489  3,561  2,896   11,050  3,678 
Total interest income  229,205  213,545  149,744   442,750  286,365 
Interest expense               
Deposits  58,071  43,284  4,597   101,355  7,346 
Short-term and long-term borrowings  10,656  2,563     13,219   
Other  539  451     990   
Total interest expense  69,266  46,298  4,597   115,564  7,346 
Net interest income  159,939  167,247  145,147   327,186  279,019 
Provision for credit losses  5,000  8,800  1,000   13,800  (4,747)
Net interest income after provision for credit losses  154,939  158,447  144,147   313,386  283,766 
Noninterest income               
Service charges on deposit accounts  7,246  7,231  6,843   14,477  14,344 
Credit and debit card fees  15,461  16,298  17,056   31,759  31,906 
Other service charges and fees  9,056  9,162  9,018   18,218  18,672 
Trust and investment services income  9,448  9,614  8,759   19,062  17,642 
Bank-owned life insurance  3,271  5,120  (859)  8,391  (1,276)
Other  2,866  1,598  3,320   4,464  4,229 
Total noninterest income  47,348  49,023  44,137   96,371  85,517 
Noninterest expense               
Salaries and employee benefits  57,904  56,032  49,902   113,936  98,128 
Contracted services and professional fees  17,498  16,313  18,617   33,811  35,764 
Occupancy  7,554  7,782  7,334   15,336  14,744 
Equipment  11,000  9,736  7,754   20,736  13,731 
Regulatory assessment and fees  3,676  3,836  2,301   7,512  4,525 
Advertising and marketing  1,891  1,994  1,994   3,885  4,022 
Card rewards program  7,681  8,085  7,285   15,766  14,168 
Other  13,677  14,789  13,988   28,466  28,135 
Total noninterest expense  120,881  118,567  109,175   239,448  213,217 
Income before provision for income taxes  81,406  88,903  79,109   170,309  156,066 
Provision for income taxes  18,964  22,085  19,749   41,049  38,987 
Net income $62,442 $66,818 $59,360  $129,260 $117,079 
Basic earnings per share $0.49 $0.52 $0.46  $1.01 $0.92 
Diluted earnings per share $0.49 $0.52 $0.46  $1.01 $0.91 
Basic weighted-average outstanding shares  127,591,371  127,453,820  127,672,244   127,522,975  127,614,564 
Diluted weighted-average outstanding shares  127,832,351  128,033,812  128,014,777   127,901,225  128,108,630 


             
Consolidated Balance Sheets Table 3
  June 30, March 31, December 31, June 30,
(dollars in thousands, except share amount) 2023
 2023
 2022
 2022
Assets            
Cash and due from banks $318,333  $253,705  $297,502  $279,629 
Interest-bearing deposits in other banks  239,798   611,887   229,122   1,254,047 
Investment securities:            
Available-for-sale, at fair value (amortized cost: $3,296,825 as of June 30, 2023, $3,427,708 as of March 31, 2023, $3,549,599 as of December 31, 2022 and $4,267,809 as of June 30, 2022)  2,909,372   3,054,280   3,151,133   3,967,746 
Held-to-maturity, at amortized cost (fair value: $3,697,261 as of June 30, 2023, $3,824,478 as of March 31, 2023, $3,814,822 as of December 31, 2022 and $3,910,780 as of June 30, 2022)  4,180,408   4,261,361   4,320,639   4,093,215 
Loans held for sale           180 
Loans and leases  14,362,832   14,221,272   14,092,012   13,262,781 
Less: allowance for credit losses  148,581   147,122   143,900   148,942 
Net loans and leases  14,214,251   14,074,150   13,948,112   13,113,839 
             
Premises and equipment, net  277,817   278,121   280,355   310,047 
Other real estate owned and repossessed personal property     91   91    
Accrued interest receivable  80,710   79,200   78,194   63,240 
Bank-owned life insurance  476,177   473,255   473,067   470,542 
Goodwill  995,492   995,492   995,492   995,492 
Mortgage servicing rights  6,072   6,299   6,562   7,152 
Other assets  813,136   796,366   796,954   822,404 
Total assets $24,511,566  $24,884,207  $24,577,223  $25,377,533 
Liabilities and Stockholders' Equity            
Deposits:            
Interest-bearing $12,911,539  $12,579,155  $12,824,383  $12,990,571 
Noninterest-bearing  8,166,627   8,702,345   8,864,646   9,610,883 
Total deposits  21,078,166   21,281,500   21,689,029   22,601,454 
Short-term borrowings     250,000   75,000    
Long-term borrowings  500,000   500,000       
Retirement benefits payable  100,671   101,622   102,577   134,151 
Other liabilities  472,991   422,073   441,612   389,317 
Total liabilities  22,151,828   22,555,195   22,308,218   23,124,922 
             
Stockholders' equity            
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,327,860 / 127,608,037 shares as of June 30, 2023, issued/outstanding: 141,291,086 / 127,573,680 shares as of March 31, 2023, issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022 and issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022)  1,413   1,413   1,410   1,409 
Additional paid-in capital  2,543,226   2,540,653   2,538,336   2,533,407 
Retained earnings  799,045   769,791   736,544   654,777 
Accumulated other comprehensive loss, net  (612,736)  (611,679)  (639,254)  (571,457)
Treasury stock (13,719,823 shares as of June 30, 2023, 13,717,406 shares as of March 31, 2023, 13,600,591 shares as of December 31, 2022 and 13,492,821 shares as of June 30, 2022)  (371,210)  (371,166)  (368,031)  (365,525)
Total stockholders' equity  2,359,738   2,329,012   2,269,005   2,252,611 
Total liabilities and stockholders' equity $24,511,566  $24,884,207  $24,577,223  $25,377,533 


                          
Average Balances and Interest Rates                       Table 4
  Three Months Ended Three Months Ended Three Months Ended 
  June 30, 2023 March 31, 2023 June 30, 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 $569.3 $7.2 5.07%$299.6 $3.4 4.60%$1,297.3 $2.8 0.85%
Available-for-Sale Investment Securities                         
Taxable  2,978.6  18.0 2.42  3,081.4  18.4 2.39  3,946.4  16.6 1.68 
Non-Taxable  5.8  0.1 5.74  31.1  0.4 5.55  8.4  0.1 5.26 
Held-to-Maturity Investment Securities                         
Taxable  3,618.7  15.3 1.69  3,683.8  15.7 1.70  3,533.6  15.0 1.70 
Non-Taxable  610.4  3.7 2.46  612.2  4.1 2.74  607.0  4.1 2.71 
Total Investment Securities  7,213.5  37.1 2.06  7,408.5  38.6 2.09  8,095.4  35.8 1.77 
Loans Held for Sale  0.5   5.87  0.1   5.53  0.3   5.06 
Loans and Leases(1)                         
Commercial and industrial  2,265.7  36.2 6.41  2,192.9  32.4 5.98  1,951.3  15.0 3.09 
Commercial real estate  4,183.6  64.9 6.22  4,105.7  58.3 5.76  3,808.9  30.7 3.23 
Construction  874.3  15.2 6.96  873.9  14.7 6.83  711.3  6.3 3.57 
Residential:                         
Residential mortgage  4,314.0  39.1 3.62  4,307.0  38.4 3.57  4,183.0  36.7 3.51 
Home equity line  1,119.3  9.2 3.31  1,074.9  8.7 3.27  945.7  5.9 2.49 
Consumer  1,196.6  17.7 5.92  1,213.5  17.2 5.75  1,218.0  15.5 5.09 
Lease financing  329.7  3.6 4.43  311.4  3.1 4.10  240.4  2.1 3.53 
Total Loans and Leases  14,283.2  185.9 5.22  14,079.3  172.8 4.96  13,058.6  112.2 3.44 
Other Earning Assets  119.8  0.3 0.99  85.8  0.2 0.76  69.0  0.1 0.79 
Total Earning Assets(2)  22,186.3  230.5 4.16  21,873.3  215.0 3.97  22,520.6  150.9 2.68 
Cash and Due from Banks  257.9       286.1       300.8      
Other Assets  2,377.3       2,388.7       2,428.8      
Total Assets $24,821.5      $24,548.1      $25,250.2      
                          
Interest-Bearing Liabilities                         
Interest-Bearing Deposits                         
Savings $6,099.4 $16.1 1.05%$6,354.3 $13.9 0.89% 6,971.3 $1.7 0.10%
Money Market  3,809.8  19.6 2.07  3,853.5  14.3 1.50  4,127.4  1.4 0.14 
Time  2,877.8  22.4 3.12  2,515.6  15.1 2.44  1,671.4  1.5 0.36 
Total Interest-Bearing Deposits  12,787.0  58.1 1.82  12,723.4  43.3 1.38  12,770.1  4.6 0.14 
Federal Funds Purchased  2.9   5.00  67.1  0.7 4.43      
Other Short-Term Borrowings  362.9  4.7 5.16  52.8  0.7 5.02      
Long-Term Borrowings  500.0  6.0 4.78  105.5  1.2 4.52      
Other Interest-Bearing Liabilities  54.0  0.5 4.00  42.8  0.4 4.27      
Total Interest-Bearing Liabilities  13,706.8  69.3 2.03  12,991.6  46.3 1.45  12,770.1  4.6 0.14 
Net Interest Income    $161.2      $168.7      $146.3   
Interest Rate Spread       2.13%      2.52%      2.54%
Net Interest Margin       2.91%      3.11%      2.60%
Noninterest-Bearing Demand Deposits  8,270.3       8,745.2       9,631.4      
Other Liabilities  500.1       511.9       586.0      
Stockholders' Equity  2,344.3       2,299.4       2,262.7      
Total Liabilities and Stockholders' Equity $24,821.5      $24,548.1      $25,250.2      

______________________________

(1)   Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2)   Interest income includes taxable-equivalent basis adjustments of $1.3 million, $1.4 million and $1.2 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

                  
Average Balances and Interest Rates               Table 5
  Six Months Ended Six Months Ended 
  June 30, 2023 June 30, 2022 
  Average Income/ Yield/ Average Income/ Yield/ 
(dollars in millions) Balance Expense Rate Balance Expense Rate 
Earning Assets                 
Interest-Bearing Deposits in Other Banks $435.2 $10.6 4.91%$1,218.3 $3.3 0.55%
Available-for-Sale Investment Securities                 
Taxable  3,029.7  36.4 2.41  5,862.7  45.7 1.56 
Non-Taxable  18.4  0.5 5.58  320.8  3.9 2.41 
Held-to-Maturity Investment Securities                 
Taxable  3,651.1  30.9 1.70  1,776.6  15.0 1.69 
Non-Taxable  611.3  7.9 2.60  305.2  4.1 2.71 
Total Investment Securities  7,310.5  75.7 2.08  8,265.3  68.7 1.66 
Loans Held for Sale  0.3   5.79  0.8   2.60 
Loans and Leases(1)                 
Commercial and industrial  2,229.5  68.6 6.20  1,962.1  29.7 3.05 
Commercial real estate  4,144.9  123.2 5.99  3,721.0  56.4 3.06 
Construction  874.1  29.9 6.89  738.9  12.1 3.30 
Residential:                 
Residential mortgage  4,310.5  77.5 3.59  4,147.2  71.5 3.45 
Home equity line  1,097.2  17.9 3.29  918.8  11.3 2.48 
Consumer  1,205.0  34.8 5.84  1,218.3  31.1 5.14 
Lease financing  320.6  6.8 4.27  233.4  4.0 3.48 
Total Loans and Leases  14,181.8  358.7 5.09  12,939.7  216.1 3.36 
Other Earning Assets  102.9  0.5 0.90  68.0  0.4 1.05 
Total Earning Assets(2)  22,030.7  445.5 4.07  22,492.1  288.5 2.58 
Cash and Due from Banks  271.9       296.5      
Other Assets  2,383.0       2,377.2      
Total Assets $24,685.6      $25,165.8      
                  
Interest-Bearing Liabilities                 
Interest-Bearing Deposits                 
Savings $6,226.2 $30.0 0.97%$6,820.7 $2.2 0.07%
Money Market  3,831.5  33.9 1.78  4,088.3  2.0 0.09 
Time  2,697.7  37.5 2.80  1,709.8  3.2 0.38 
Total Interest-Bearing Deposits  12,755.4  101.4 1.60  12,618.8  7.4 0.12 
Federal Funds Purchased  34.8  0.8 4.45      
Other Short-Term Borrowings  208.7  5.3 5.14      
Long-Term Borrowings  303.8  7.1 4.73      
Other Interest-Bearing Liabilities  48.5  1.0 4.12      
Total Interest-Bearing Liabilities  13,351.2  115.6 1.75  12,618.8  7.4 0.12 
Net Interest Income    $329.9      $281.1   
Interest Rate Spread       2.32%      2.46%
Net Interest Margin       3.01%      2.51%
Noninterest-Bearing Demand Deposits  8,506.4       9,563.6      
Other Liabilities  506.0       578.9      
Stockholders' Equity  2,322.0       2,404.5      
Total Liabilities and Stockholders' Equity $24,685.6      $25,165.8      

______________________________

(1)   Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2)   Interest income includes taxable-equivalent basis adjustments of $2.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively.

          
Analysis of Change in Net Interest Income        Table 6
  Three Months Ended June 30, 2023
  Compared to March 31, 2023
(dollars in millions) Volume Rate Total
Change in Interest Income:         
Interest-Bearing Deposits in Other Banks $3.4  $0.4  $3.8 
Available-for-Sale Investment Securities         
Taxable  (0.6)  0.2   (0.4)
Non-Taxable  (0.3)     (0.3)
Held-to-Maturity Investment Securities         
Taxable  (0.3)  (0.1)  (0.4)
Non-Taxable     (0.4)  (0.4)
Total Investment Securities  (1.2)  (0.3)  (1.5)
Loans and Leases         
Commercial and industrial  1.2   2.6   3.8 
Commercial real estate  1.3   5.3   6.6 
Construction     0.5   0.5 
Residential:         
Residential mortgage  0.1   0.6   0.7 
Home equity line  0.4   0.1   0.5 
Consumer  (0.2)  0.7   0.5 
Lease financing  0.2   0.3   0.5 
Total Loans and Leases  3.0   10.1   13.1 
Other Earning Assets  0.1      0.1 
Total Change in Interest Income  5.3   10.2   15.5 
          
Change in Interest Expense:         
Interest-Bearing Deposits         
Savings  (0.5)  2.7   2.2 
Money Market  (0.2)  5.5   5.3 
Time  2.5   4.8   7.3 
Total Interest-Bearing Deposits  1.8   13.0   14.8 
Federal Funds Purchased  (0.8)  0.1   (0.7)
Other Short-Term Borrowings  4.0      4.0 
Long-Term Borrowings  4.7   0.1   4.8 
Other Interest-Bearing Liabilities  0.1      0.1 
Total Change in Interest Expense  9.8   13.2   23.0 
Change in Net Interest Income $(4.5) $(3.0) $(7.5)


          
Analysis of Change in Net Interest Income        Table 7
  Three Months Ended June 30, 2023
  Compared to June 30, 2022
(dollars in millions) Volume Rate Total
Change in Interest Income:         
Interest-Bearing Deposits in Other Banks $(2.3) $6.7  $4.4 
Available-for-Sale Investment Securities         
Taxable  (4.7)  6.1   1.4 
Held-to-Maturity Investment Securities         
Taxable  0.3      0.3 
Non-Taxable     (0.4)  (0.4)
Total Investment Securities  (4.4)  5.7   1.3 
Loans and Leases         
Commercial and industrial  2.8   18.4   21.2 
Commercial real estate  3.3   30.9   34.2 
Construction  1.7   7.2   8.9 
Residential:         
Residential mortgage  1.2   1.2   2.4 
Home equity line  1.2   2.1   3.3 
Consumer  (0.3)  2.5   2.2 
Lease financing  0.9   0.6   1.5 
Total Loans and Leases  10.8   62.9   73.7 
Other Earning Assets  0.1   0.1   0.2 
Total Change in Interest Income  4.2   75.4   79.6 
          
Change in Interest Expense:         
Interest-Bearing Deposits         
Savings  (0.2)  14.6   14.4 
Money Market  (0.1)  18.3   18.2 
Time  1.8   19.1   20.9 
Total Interest-Bearing Deposits  1.5   52.0   53.5 
Other Short-Term Borrowings  4.7      4.7 
Long-Term Borrowings  6.0      6.0 
Other Interest-Bearing Liabilities  0.5      0.5 
Total Change in Interest Expense  12.7   52.0   64.7 
Change in Net Interest Income $(8.5) $23.4  $14.9 


          
Analysis of Change in Net Interest Income        Table 8
  Six Months Ended June 30, 2023
  Compared to June 30, 2022
(dollars in millions) Volume Rate Total
Change in Interest Income:         
Interest-Bearing Deposits in Other Banks $(3.4) $10.7  $7.3 
Available-for-Sale Investment Securities         
Taxable  (27.6)  18.3   (9.3)
Non-Taxable  (5.6)  2.2   (3.4)
Held-to-Maturity Investment Securities         
Taxable  15.8   0.1   15.9 
Non-Taxable  4.0   (0.2)  3.8 
Total Investment Securities  (13.4)  20.4   7.0 
Loans and Leases         
Commercial and industrial  4.5   34.4   38.9 
Commercial real estate  7.1   59.7   66.8 
Construction  2.5   15.3   17.8 
Residential:         
Residential mortgage  3.0   3.0   6.0 
Home equity line  2.5   4.1   6.6 
Consumer  (0.4)  4.1   3.7 
Lease financing  1.7   1.1   2.8 
Total Loans and Leases  20.9   121.7   142.6 
Other Earning Assets  0.2   (0.1)  0.1 
Total Change in Interest Income  4.3   152.7   157.0 
          
Change in Interest Expense:         
Interest-Bearing Deposits         
Savings  (0.2)  28.0   27.8 
Money Market  (0.1)  32.0   31.9 
Time  2.8   31.5   34.3 
Total Interest-Bearing Deposits  2.5   91.5   94.0 
Federal Funds Purchased  0.8      0.8 
Other Short-Term Borrowings  5.3      5.3 
Long-Term Borrowings  7.1      7.1 
Other Interest-Bearing Liabilities  1.0      1.0 
Total Change in Interest Expense  16.7   91.5   108.2 
Change in Net Interest Income $(12.4) $61.2  $48.8 


             
Loans and Leases           Table 9
  June 30, March 31, December 31, June 30,
(dollars in thousands) 2023 2023 2022 2022
Commercial and industrial:            
Commercial and industrial excluding Paycheck Protection Program loans $2,175,841 $2,254,506 $2,217,604 $1,898,899
Paycheck Protection Program loans  11,990  13,826  18,293  43,233
Total commercial and industrial  2,187,831  2,268,332  2,235,897  1,942,132
Commercial real estate  4,290,948  4,106,200  4,132,309  3,956,828
Construction  913,837  913,959  844,643  727,771
Residential:            
Residential mortgage  4,317,537  4,318,742  4,302,788  4,212,768
Home equity line  1,138,163  1,095,365  1,055,351  971,569
Total residential  5,455,700  5,414,107  5,358,139  5,184,337
Consumer  1,182,116  1,191,552  1,222,934  1,207,051
Lease financing  332,400  327,122  298,090  244,662
Total loans and leases $14,362,832 $14,221,272 $14,092,012 $13,262,781


             
Deposits           Table 10
  June 30, March 31, December 31, June 30,
(dollars in thousands) 2023 2023 2022 2022
Demand $8,166,627 $8,702,345 $8,864,646 $9,610,883
Savings  5,835,975  6,173,398  6,382,910  7,243,185
Money Market  3,767,792  3,818,355  3,965,423  4,079,706
Time  3,307,772  2,587,402  2,476,050  1,667,680
Total Deposits $21,078,166 $21,281,500 $21,689,029 $22,601,454


             
Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More           Table 11
  June 30,  March 31,  December 31,  June 30, 
(dollars in thousands)    2023    2023    2022    2022
Non-Performing Assets            
Non-Accrual Loans and Leases            
Commercial Loans:            
Commercial and industrial $ 1,024 $1,158 $1,215 $682
Commercial real estate    727  727  727
Total Commercial Loans   1,024  1,885  1,942  1,409
Residential Loans:            
Residential mortgage   6,097  6,896  6,166  6,450
Home equity line   6,107  4,903  3,797  
Total Residential Loans   12,204  11,799  9,963  6,450
Total Non-Accrual Loans and Leases   13,228  13,684  11,905  7,859
Other Real Estate Owned    91  91  
Total Non-Performing Assets $ 13,228 $13,775 $11,996 $7,859
             
Accruing Loans and Leases Past Due 90 Days or More            
Commercial Loans:            
Commercial and industrial $ 599 $461 $291 $2,230
Commercial real estate   619  1,346    176
Construction    102    352
Total Commercial Loans   1,218  1,909  291  2,758
Residential Loans:            
Residential mortgage   58  58  58  750
Home equity line        1,039
Total Residential Loans   58  58  58  1,789
Consumer   1,975  2,502  2,885  1,218
Total Accruing Loans and Leases Past Due 90 Days or More $ 3,251 $4,469 $3,234 $5,765
             
Total Loans and Leases $ 14,362,832 $14,221,272 $14,092,012 $13,262,781


                 
Allowance for Credit Losses and Reserve for Unfunded Commitments Table 12
  For the Three Months Ended For the Six Months Ended 
  June 30, March 31, June 30, June 30, June 30, 
(dollars in thousands) 2023
 2023
 2022
 2023
 2022
 
Balance at Beginning of Period $183,321  $177,735  $179,238   177,735   187,584  
Loans and Leases Charged-Off                
Commercial and industrial  (997)  (791)  (243)  (1,788)  (949) 
Residential Loans:                
Residential mortgage     (122)     (122)    
Home equity line  (137)  (135)  (1,120)  (272)  (1,163) 
Total Residential Loans  (137)  (257)  (1,120)  (394)  (1,163) 
Consumer  (4,516)  (4,782)  (3,659)  (9,298)  (7,768) 
Total Loans and Leases Charged-Off  (5,650)  (5,830)  (5,022)  (11,480)  (9,880) 
Recoveries on Loans and Leases Previously Charged-Off                
Commercial Loans:                
Commercial and industrial  292   246   301   538   354  
Commercial real estate              14  
Lease financing        60      60  
Total Commercial Loans  292   246   361   538   428  
Residential Loans:                
Residential mortgage  30   27   192   57   208  
Home equity line  59   177   191   236   219  
Total Residential Loans  89   204   383   293   427  
Consumer  1,728   2,166   1,940   3,894   4,088  
Total Recoveries on Loans and Leases Previously Charged-Off  2,109   2,616   2,684   4,725   4,943  
Net Loans and Leases Charged-Off  (3,541)  (3,214)  (2,338)  (6,755)  (4,937) 
Provision for Credit Losses  5,000   8,800   1,000   13,800   (4,747) 
Balance at End of Period $184,780  $183,321  $177,900  $184,780  $177,900  
Components:                
Allowance for Credit Losses $148,581  $147,122  $148,942  $148,581  $148,942  
Reserve for Unfunded Commitments  36,199   36,199   28,958   36,199   28,958  
Total Allowance for Credit Losses and Reserve for Unfunded Commitments $184,780  $183,321  $177,900  $184,780  $177,900  
Average Loans and Leases Outstanding $14,283,222  $14,079,337  $13,058,558  $14,181,842  $12,939,745  
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1)  0.10 % 0.09 % 0.07 % 0.10 % 0.08 %
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding  1.03 % 1.03 % 1.12 % 1.03 % 1.12 %
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases  11.23x  10.75x  18.95x  11.23x  18.95x 

_____________________________

(1)   Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023.

                            
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 $33,877 $299,913 $385,159 $38,769 $157,794 $165,747 $952,182 $15,003 $2,048,444
Special Mention  103  31,193  154  849  2,397  1,481  2,967  186  39,330
Substandard  352  563  260  936  819  1,100  12,539  17  16,586
Other(1)  11,743  13,284  6,301  3,275  2,644  1,668  44,556    83,471
Total Commercial and Industrial  46,075  344,953  391,874  43,829  163,654  169,996  1,012,244  15,206  2,187,831
Current period gross charge-offs  72  60  9  28  92  1,527      1,788
                            
Commercial Real Estate                           
Risk rating:                           
Pass  212,159  876,558  655,847  333,142  564,881  1,499,805  72,447    4,214,839
Special Mention  1,737  156    547  6,983  12,389  12,952    34,764
Substandard    5,141    171    35,883  2    41,197
Other(1)            148      148
Total Commercial Real Estate  213,896  881,855  655,847  333,860  571,864  1,548,225  85,401    4,290,948
Current period gross charge-offs                  
                            
Construction                           
Risk rating:                           
Pass  77,826  182,679  365,959  76,728  61,906  82,554  6,562    854,214
Special Mention          205        205
Other(1)  6,601  26,882  15,766  3,261  2,136  4,067  705    59,418
Total Construction  84,427  209,561  381,725  79,989  64,247  86,621  7,267    913,837
Current period gross charge-offs                  
                            
Lease Financing                           
Risk rating:                           
Pass  69,487  94,276  21,167  39,215  35,964  70,312      330,421
Special Mention      365  60          425
Substandard        171  7  1,376      1,554
Total Lease Financing  69,487  94,276  21,532  39,446  35,971  71,688      332,400
Current period gross charge-offs                  
                            
Total Commercial Lending $413,885 $1,530,645 $1,450,978 $497,124 $835,736 $1,876,530 $1,104,912 $15,206 $7,725,016
Current period gross charge-offs $72 $60 $9 $28 $92 $1,527 $ $ $1,788


                            
                       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 $138,593 $530,776 $1,030,287 $544,330 $236,821 $1,036,361 $ $ $3,517,168
680 - 739  25,500  81,562  117,701  74,446  34,186  135,766      469,161
620 - 679  2,468  11,212  16,463  10,747  5,743  38,132      84,765
550 - 619    3,383  4,058  2,471  254  12,362      22,528
Less than 550    197  2,372  1,581  51  5,403      9,604
No Score(3)  6,075  19,497  12,552  6,378  9,837  56,201      110,540
Other(2)  9,916  18,075  17,857  12,952  8,915  28,438  7,618    103,771
Total Residential Mortgage  182,552  664,702  1,201,290  652,905  295,807  1,312,663  7,618    4,317,537
Current period gross charge-offs            122      122
                            
Home Equity Line                           
FICO:                           
740 and greater              930,741  1,668  932,409
680 - 739              151,418  2,449  153,867
620 - 679              32,897  1,376  34,273
550 - 619              9,428  1,448  10,876
Less than 550              5,127  312  5,439
No Score(3)              1,299    1,299
Total Home Equity Line              1,130,910  7,253  1,138,163
Current period gross charge-offs              254  18  272
                            
Total Residential Lending $182,552 $664,702 $1,201,290 $652,905 $295,807 $1,312,663 $1,138,528 $7,253 $5,455,700
Current period gross charge-offs $ $ $ $ $ $122 $254 $18 $394
                            
Consumer Lending                           
FICO:                           
740 and greater  70,561  153,960  93,788  45,022  34,093  19,410  117,437  140  534,411
680 - 739  44,064  84,900  49,136  23,895  19,424  11,352  72,327  431  305,529
620 - 679  14,643  37,576  19,488  9,771  11,007  8,482  33,692  941  135,600
550 - 619  2,255  10,974  8,135  5,608  6,314  5,207  11,730  748  50,971
Less than 550  418  4,358  4,478  2,695  2,975  2,765  4,247  560  22,496
No Score(3)  1,425  586  2    6  17  39,035  167  41,238
Other(2)  36  1,208  3,536  343  1,113  1  85,634    91,871
Total Consumer Lending $133,402 $293,562 $178,563 $87,334 $74,932 $47,234 $364,102 $2,987 $1,182,116
Current period gross charge-offs $58 $1,244 $1,260 $630 $1,239 $1,388 $3,131 $348 $9,298
                            
Total Loans and Leases $729,839 $2,488,909 $2,830,831 $1,237,363 $1,206,475 $3,236,427 $2,607,542 $25,446 $14,362,832
Current period gross charge-offs $130 $1,304 $1,269 $658 $1,331 $3,037 $3,385 $366 $11,480

_______________________________

(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 Six Months Ended 
  June 30, March 31, June 30, June 30, 
(dollars in thousands) 2023 2023 2022 2023 2022 
Income Statement Data:                
Net income $62,442 $66,818 $59,360 $129,260 $117,079 
                 
Average total stockholders' equity $2,344,285 $2,299,422 $2,262,654 $2,321,977 $2,404,471 
Less: average goodwill  995,492  995,492  995,492  995,492  995,492 
Average tangible stockholders' equity $1,348,793 $1,303,930 $1,267,162 $1,326,485 $1,408,979 
                 
Average total assets $24,821,486 $24,548,124 $25,250,176 $24,685,560 $25,165,783 
Less: average goodwill  995,492  995,492  995,492  995,492  995,492 
Average tangible assets $23,825,994 $23,552,632 $24,254,684 $23,690,068 $24,170,291 
                 
Return on average total stockholders' equity(1)  10.68% 11.78% 10.52% 11.23% 9.82%
Return on average tangible stockholders' equity (non-GAAP)(1)  18.57% 20.78% 18.79% 19.65% 16.76%
                 
Return on average total assets(1)  1.01% 1.10% 0.94% 1.06% 0.94%
Return on average tangible assets (non-GAAP)(1)  1.05% 1.15% 0.98% 1.10% 0.98%


  As of As of As of As of 
  June 30, March 31, December 31, June 30, 
(dollars in thousands, except shares outstanding and per share amounts) 2023 2023 2022 2022 
Balance Sheet Data:             
Total stockholders' equity $2,359,738 $2,329,012 $2,269,005 $2,252,611 
Less: goodwill  995,492  995,492  995,492  995,492 
Tangible stockholders' equity $1,364,246 $1,333,520 $1,273,513 $1,257,119 
              
Total assets $24,511,566 $24,884,207 $24,577,223 $25,377,533 
Less: goodwill  995,492  995,492  995,492  995,492 
Tangible assets $23,516,074 $23,888,715 $23,581,731 $24,382,041 
              
Shares outstanding  127,608,037  127,573,680  127,363,327  127,451,087 
              
Total stockholders' equity to total assets  9.63% 9.36% 9.23% 8.88%
Tangible stockholders' equity to tangible assets (non-GAAP)  5.80% 5.58% 5.40% 5.16%
              
Book value per share $18.49 $18.26 $17.82 $17.67 
Tangible book value per share (non-GAAP) $10.69 $10.45 $10.00 $9.86 

_____________________________

(1)   Annualized for the three and six months ended June 30, 2023 and 2022 and three months ended March 31, 2023. 


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