First Hawaiian, Inc. · NASDAQ:FHB
First Hawaiian — Investor Presentation (May 2021)
31 slides from First Hawaiian's investor presentation, May 2021
Slide 1: Investor Presentation May 2021
Investor Presentation May 2021 0
Slide 2: Disclaimer
DISCLAIMER Forward-Looking Statements This presentation contains, and from time-to-time in connection with this presentation our management may make, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements reflect our vi
Slide 3: State of Hawaii Update
STATE OF HAWAII UPDATE STATE OF HAWAII COVID 19 TRENDS DAILY AVERAGE VISITOR ARRIVALS1 (thousands) 21.2 19.1 16.7 9.3 10.2 AVERAGE DAILY TEST POSITIVITY 7.4 6.9 NEW CASES RATE 3.2 (Last 7 days) (Last 7 days) 1.0 67 1.4% Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 MTD May Source: https://
Slide 4: Q1 2021 Highlights
Q1 2021 HIGHLIGHTS1 Q1 2021 Q4 2020 • Net income $57.7 mm Net Income ($mm) $57.7 $61.7 • Originated over 3,600 PPP loans for $459 mm Diluted EPS $0.44 $0.47 Net Interest Margin 2.55% 2.71% • Grew deposits $906 mm, 3 bp decrease in cost of deposits Efficiency Ratio 55.5% 46.6% ROA / ROATA2 1.02%/1.07
Slide 5: Digital Transformation: Relationship Banking Reimagined
DIGITAL TRANSFORMATION RELATIONSHIP BANKING REIMAGINED Sound advice and guidance powered by scalable, digital service with a focus on Customer Experience: Trust and Relationship: • Trust is our competitive New and Enhanced advantage in an • FHB.com environment where bank • Personal Financial Managem
Slide 6: Best in Class FHB Mobile App
BEST IN CLASS FHB MOBILE APP USING TECHNOLOGY TO PROVIDE A COMPLETE FINANCIAL OVERVIEW, ADVICE, AND GUIDANCE TO ALL CUSTOMERS Key Features • Aggregate and View Non-FHB Accounts (i.e. Checking and Savings, Brokerage, Credit Card) • Budget and Track Spending by Category, Across All Accounts • Receive
Slide 7: Investment Highlights
INVESTMENT HIGHLIGHTS 1 Strong, Consistent Financial Performance 2 Leading Position In Attractive Market 3 Experienced Leadership Team 4 High Quality Balance Sheet 5 Proven Through The Cycle Performance 6 Well-Capitalized With Attractive Dividend 6
Slide 8: Strong Performer in Attractive Market
STRONG PERFORMER IN ATTRACTIVE MARKET Branch Presence Financial Overview – 1Q 2021 YTD ($ billions) 54 branches Market Cap $3.7 Loans $ 13.3 Kauai Assets $ 23.5 Deposits $ 20.1 Efficiency Oahu ROATCE(2), (4) ROATA(2), (4) Ratio(2), (3) Niihau Molokai Honolulu Maui 16.9% 55.5% 56.5% 13.5% 1.5% Lanai
Slide 9: Fundamental Strengths of Hawaii's Economy
DESPITE NEAR-TERM CHALLENGES, THE FUNDAMENTAL STRENGTHS OF HAWAII’S ECONOMY REMAIN INTACT Hawaii GDP by Industry (2019)(1) Fundamental Strengths • Attractive destination for domestic and Visitor spending is ~19% of Hawaii GDP(2) international travelers • Attractive alternative for travelers concerne
Slide 10: Strong Performance Through the Cycle
STRONG PERFORMANCE THROUGH THE CYCLE Consistent Deposit Growth ($bn) Steady, Balanced Loan Growth ($bn) 1Q21 Cost of Deposits: 0.08% $20.1 $13.3 $9.1 $6.5 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 1Q21 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 1Q21 Through the Cycle Credi
Slide 11: Consistent Track Record of Strong Profitability
CONSISTENT TRACK RECORD OF STRONG PROFITABILITY Core Pre-Tax, Pre-Provision Earnings ($mm)(1) Stable Earnings Drivers $ 450 $ 385 $ 411 $ 406 ▪ Leading loan and deposit position in attractive $ 400 $ 356 $ 342 $ 341 $ 359 $ 370 $ 332 $ 325 market $ 350 $ 300 $ 250 ▪ Consistent underwriting standards
Slide 12: Proven, Consistent, and Conservative Credit Risk Management
PROVEN, CONSISTENT, AND CONSERVATIVE CREDIT RISK MANAGEMENT Strong through the cycle credit performance driven by conservative approach to credit risk management NCOs / Average Loans NPAs + 90s / Loans + OREO 1.50% 3.50% 2.94% 1.10% 3.00% 1.00% 2.50% 0.73% 2.00% 1.50% 0.50% 0.21% 0.14% 0.10% 1.00% 0
Slide 13: Well Capitalized with Attractive Dividend, $75MM Repurchase Program
WELL CAPITALIZED WITH AN ATTRACTIVE DIVIDEND, ANNOUNCED $75MM STOCK REPURCHASE PROGRAM Robust Capital Position Attractive Dividend Yield(1)(2) Tier 2 3.6% 15.2% NCT1 14.1% CET 1 2.3% 1.3 % 2.3 % First Hawaiian, Inc. Public U.S. Banks with $10-$50bn of Assets 12.8 % 12.4 % Capital Management Approach
Slide 14: Appendix
Appendix Pi es (A First Hawaiian, Inc.
Slide 15: Full Suite of Products and Services
FULL SUITE OF PRODUCTS AND SERVICES First Hawaiian is a full service community bank focused on building relationships with our customers Commercial Lending Consumer Lending • Largest commercial lender in Hawaii • Services provided to individuals and small • 56 commercial bankers(2) to mid-sized busi
Slide 16: The Leader in Hawaii
THE LEADER IN HAWAII The banking market in Hawaii is dominated by local banks, with the top 4 banks accounting for ~93% of deposits Branches 54 63 42 31 FTEs 2,090 2,058 1,071 816 Assets ($bn) 23.5 21.9 8.7 7.0 Loans ($bn) 13.3 12.1 5.3 5.1 Deposits ($bn) 20.1 19.6 7.8 6.2 YTD 1Q 2021 ROATCE 13.5%(1
Slide 17: Managing NIM Through a Challenging Interest Rate Environment
MANAGING NIM THROUGH A CHALLENGING INTEREST RATE ENVIRONMENT NIM Negatively Impacted by Excess Liquidity Actively Managing Funding Costs 3.85 %3.88 % 3.77 % 3.79 % ▪ Active repricing of high-cost commercial and 3.61 % 3.66 % 3.57 % consumer deposit accounts has helped to partially offset the impact
Slide 18: Solid, Low-Cost Core Deposit Base
SOLID, LOW-COST CORE DEPOSIT BASE Strong brand, deep ties to the community and a leading market share position have driven an attractive, low-cost deposit base Growing Consumer and Commercial Deposits, Deposit Portfolio Composition Reducing Public Time Deposits Public Time ~6% of Total ▪ In 2018 and
Slide 19: Steady Organic Growth and Balanced Loan Portfolio
STEADY ORGANIC GROWTH AND BALANCED LOAN PORTFOLIO Steady through the cycle organic loan growth and balanced loan portfolio Balanced Loan Portfolio (as of 3/31/21) Loan Portfolio Highlights (as of 3/31/21) Other Consumer Loans: $13.3bn Credit Card $133 mm 1Q21 Loan Yield: 3.39% ▪ Largest Hawaii-based
Slide 20: Demonstrated History of Disciplined Expense Management
DEMONSTRATED HISTORY OF DISCIPLINED EXPENSE MANAGEMENT Well Managed Core Noninterest Expense ($mm)(1),(2) Noninterest Expense / Average Assets(1) 3.50% CAGR: 1.9% $ 368 $ 368 $ 331 $ 342 $ 359 3.00% $ 312 $ 301 $ 296 $ 304 $ 327 3.00% 2.90% 2.87% 2.72% 2.65% 2.54% 2.49% 2.43% 2.38% 55.5% 2.50% 50.2%
Slide 21: Asset Quality
ASSET QUALITY CONTINUED IMPROVEMENT IN AQ SINCE Q2 2020 • 90 past due comprised of accruing loans Note: TLL - Total Loans and Leases • 30-89 past due comprised of accruing and non-accruing loans 20
Slide 22: Allowance for Credit Loss
ALLOWANCE FOR CREDIT LOSS NO PROVISION IN Q1 2021 No provision recorded in Q1 as the economic outlook remained stable and the composition of the portfolio risk was relatively unchanged. Q1 ACL decreased by $8.1 million to $200.4 million. The reserve for unfunded commitments increased by $3.5 million
Slide 23: Commercial Risk Rating
COMMERCIAL RISK RATING COMPOSITION BY LOAN TYPE As of 3/31/2021 ($ mm) Risk Rating C&I CRE Const. Lease Total Pass 2,828,177 91% 3,169,677 93% 674,491 91% 227,988 95% 6,900,333 92% Special Mention 123,093 4% 173,144 5% 14,814 2% 3,851 2% 314,902 4% Substandard 85,179 3% 52,923 2% 2,014 0% 6,309 3% 1
Slide 24: Deferrals and Modifications
DEFERRALS AND MODIFICATIONS REPERFORMANCE RATES REMAIN STRONG Subsequent COVID Returned Original Deferrals & Deferrals & to Pay Deferrals Delinquent As of 3/31/21 ($ mm) Mods Mods1 ($ mm) ($ mm) ($ mm) ($ mm) Commercial and Industrial 654 651 - - 3 Commercial Real Estate 1,137 1,124 - 11 2 Construct
Slide 25: Hawaii Banks Have a Significant Deposit Advantage
HAWAII BANKS HAVE A SIGNIFICANT DEPOSIT ADVANTAGE Hawaii banks experience more favorable deposit behavior across all rate cycles; Hawaii banks experienced a deposit beta(¹) of ~34% vs. ~47% for broader U.S. banks during the last rising rate cycle 6.00 % 5.50 % 5.25 % 5.00 % 4.50 % 4.00 % 3.50 % 3.32
Slide 26: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS We present net interest income, noninterest income, noninterest expense, efficiency ratio, net income, pre-tax, pre-provision earnings, basic and diluted earnings per share and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP fi
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION For the Three Months Ended March 31, December 31, March 31, (dollars in thousands, except per share amounts) 2021 2020 2020 Income Statement Data: Net income $ 57,693 $ 61,739 $ 38,865 Core net income $ 57,693 $ 65,288 $ 38,803 Average total stockholders' equity $ 2,7
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION For the Three Months Ended March 31, December 31, March 31, (dollars in thousands, except per share amounts) 2021 2020 2020 Net interest income $ 129,158 $ 135,227 $ 138,683 Core net interest income (non-GAAP) $ 129,158 $ 135,227 $ 138,683 Noninterest income $ 43,868
Slide 29: GAAP to Non-GAAP Reconciliation - Annual
GAAP TO NON-GAAP RECONCILIATION - ANNUAL As of and for the Twelve Months Ended December 31, (Dollars in millions, except per share data) 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net Income $185.8 $ 284.4 $ 264.4 $ 183.7 $230.2 $213.8 $216.7 $214.5 $211.1 $199.7 Basic EPS $1.43 $2.14 $1.93 $
Slide 30: GAAP to Non-GAAP Reconciliation - Annual
GAAP TO NON-GAAP RECONCILIATION - ANNUAL For the Fiscal Year Ended December 31, (Dollars in millions) 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net Interest Income $ 535.7 $ 573.4 $ 566.3 $ 528.8 $ 491.7 $ 461.3 $ 443.8 $ 439.0 $ 447.5 $4 70.0 Accounting Change (ASC 310 Adjustment) – – – – –
Slide 31: GAAP to Non-GAAP Reconciliation - Annual
GAAP TO NON-GAAP RECONCILIATION - ANNUAL For the Fiscal Year Ended December 31, (Dollars in millions, except per share data) 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net Income $ 185.8 $ 284.4 $ 264.4 $ 183.7 $ 230.2 $ 213.8 $ 216.7 $ 214.5 $ 211.1 $ 199.7 Accounting Change (ASC 310 Adjustm