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

First Hawaiian, Inc.

January 26, 2024 19 min read

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.com

Media Contact:
Lindsay Chambers
(808) 525-6254
lchambers@fhb.com


Financial 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

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

Amortized

(dollars in thousands)

2023

2022

2021

2020

2019

Prior

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

44,069

653

1,032

1,290

22,807

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

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

137

414

—

642

Substandard

712

416

—

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

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.

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