First Hawaiian, Inc. · NASDAQ:FHB
First Hawaiian — Investor Presentation (November 2018)
26 slides from First Hawaiian's investor presentation, Nov 5, 2018
Slide 1: BNPP Reduced Stake to 18.4%, Majority Board Independent, FHB No Longer Subject to CCAR
BNPP REDUCED STAKE TO 18.4%, MAJORITY BOARD INDEPENDENT FHB NO LONGER SUBJECT TO CCAR(1) approximately 33.3% to 18.4% board meeting are independent directors, BNPP notified FHI that it would cease Source: Public filings (1) Capital distributions remain subject to the supervision of the Federal Reser
Slide 2: Strong Capital Distribution Record
STRONG CAPITAL DISTRIBUTION RECORD + Dividends • Since its IPO, First Hawaiian has returned $249mm to its stockholders in the form of dividends, or the equivalent of a ~7.8% cash-dividend return(1)(2) • Over that time, the quarterly dividend has increased twice (+20%) to $0.24 per quarter and we exp
Slide 3: Strong Performance in 3Q 2018
STRONG PERFORMANCE IN 3Q 2018 Quarterly Results 3Q 2018 2Q 2018 3Q 2017 ($ in millions) Loans and Leases $ 12,600 $ 12,638 $ 12,150 Deposits 16,689 17,396 17,595 Net Interest Margin 3.11 % 3.18 % 2.96 % Efficiency Ratio 46.9 47.6 46.7 ROATA(2) 1.45 1.46 1.18 ROATCE(2) 19.6 19.0 14.4 distribution thr
Slide 4: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 1 Best-in-class Financial Performance Leading Position in Attractive Market 2 3 High Quality Balance Sheet with Steady Growth Realized and Forecasted 4 Proven Through the Cycle Performance Consistently Increased Capital Return 5 6 Significant Catalysts for Enhanced Performa
Slide 5: Best-in-Class Franchise
BEST-IN-CLASS FRANCHISE Branch Presence Financial Overview – 2Q 2018 YTD ($ billions) Market Cap $ 3.9 Loans $ 12.6 60 branches Kauai Assets $ 20.5 Deposits $ 17.4 NIM Since 4Q 2015 Efficiency Ratio(2), (3) Oahu ROATCE(2), (4) Niihau Molokai 47 bps 51.2 % Maui Honolulu 18.7 % Lanai Kahoolawe Hawaii
Slide 6: Hawaii Is an Attractive Market with Strong Economic Backdrop
HAWAII IS AN ATTRACTIVE MARKET WITH STRONG ECONOMIC BACKDROP The Hawaii economy has remained steady through economic cycles and maintains a favorable outlook Real GDP ($ billion) GDP by Industry (2017) Population (000s) ’18-’23 Projected HHI Change: 11.7% $78.9 Tourism accounts for ~19% of Hawaii GD
Slide 7: The Clear Leader in Hawaii
THE CLEAR LEADER IN HAWAII The banking market in Hawaii is dominated by local banks with the top 6 banks accounting for ~97% of deposits; First Hawaiian is the clear leader among its Hawaii banking peers based on size and operating performance 32% 23% 39% 7% 23% 82% 81% 64% 60% Sources: SNL Financia
Slide 8: Strong Performance Through the Cycle
STRONG PERFORMANCE THROUGH THE CYCLE Consistent Deposit Growth ($bn) Steady, Balanced Loan Growth ($bn) 2Q18 Cost of Deposits: 0.38% $17.4 $12.6 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 2Q18 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 2Q18 Through the Cycle Credit Performer Strong Expense Mgmt. C
Slide 9: Consistent Track Record of Profitability
CONSISTENT TRACK RECORD OF PROFITABILITY STRONG Consistent Core Earnings ($mm)(1) Low Earnings Volatility(1),(2) 8.5 % $ 217 $ 205 $ 202 $ 198 $ 197 $ 196 $ 114 First Hawaiian, Inc. Public U.S. Banks with $10-$50bn of Assets Year Ended December 31 ROATA(1),(3) YTD ROATCE(1),(3) 1.44% 1.50% 20.0% 18.
Slide 10: Ongoing Capital Distribution Opportunities with Future Growth
ONGOING CAPITAL DISTRIBUTION OPPORTUNITIES(1) WITH FUTURE Attractive Dividend Yield(3) Robust Capital Position Tier 2 NCT1 3.3% 13.8% CET 1 First Hawaiian, Inc. Public U.S. Banks with $10-$50bn of Assets 48% 35% Payout Ratio (2) Dividend Per Share $0.24 $0.24 FHI Q2 Public U.S. Banks with $10-$50bn
Slide 11: Balance Sheet Positioned for NIM Improvement in Rising Rate Environment
BALANCE SHEET POSITIONED FOR NIM IMPROVEMENT IN RISING RATE ENVIRONMENT Improving NIM Positioned for Rising Rates • ~ 35% of loan portfolio indexed to 1 or 3 month Libor 3.50 % • Reduced high-beta public time deposits by $780mm, or 40%, on a YTD basis 3.00 % • Hawaii has experienced lower deposit co
Slide 12: Balance Sheet Positioned for NIM Improvement in Rising Rate Environment
BALANCE SHEET POSITIONED FOR NIM IMPROVEMENT IN RISING RATE ENVIRONMENT Improving NIM 347 % 329) 4.15 942.1849 22%929% | 204%3.02%, 3.00% 292% %13.% 9.18% Zo 9630049 02% 306 9,289% 449 $141 288%297% fe $135 bar%. $133 $191 g 499 $131 940% 0.50% 0.28 9.0.81 038 % bie 10.16 0.16 yore 90.18 0-24 Ye -%
Slide 13: Full Suite of Products and Services
FULL SUITE OF PRODUCTS AND SERVICES First Hawaiian is a full service community bank focused on building relationships with our customers Commercial Lending Consumer Lending • • • • Largest commercial lender in Hawaii 52 commercial bankers(2) Relationship-based lending Primary focus on Hawaii, additi
Slide 14: Growing, Low-Cost Core Deposit Base
GROWING, LOW-COST CORE DEPOSIT BASE Strong brand, deep ties to the community and a leading market share position have driven an attractive, low-cost deposit base Consistent Deposit Growth ($bn) Deposit Portfolio Composition (2Q18) ~14% of Total Deposits are Public Deposits Public $17.6 $17.4 Time 10
Slide 15: Steady Organic Growth and Balanced Loan Portfolio
STEADY ORGANIC GROWTH AND BALANCED LOAN PORTFOLIO Steady through the cycle organic loan growth and balanced loan portfolio with attractive forward growth opportunities Steady Loan Growth ($bn) Balanced Loan Portfolio (2Q18) $12.6 Consum r & Other 13% $12.3 Commercial 26% RE 34% mercial RE 27% Loans:
Slide 16: Proven, Consistent, and Conservative Credit Risk Management
PROVEN, CONSISTENT, AND CONSERVATIVE CREDIT RISK MANAGEMENT Strong through the cycle credit performance driven by conservative approach to credit risk management NCOs / Average Loans NPAs + 90s / Loans + OREO 1.50% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 1.00% 0.50% % % % % 0.00% '06'07'08'0
Slide 17: Operating Leverage Through Prudent Expense Management
OPERATING LEVERAGE THROUGH PRUDENT EXPENSE MANAGEMENT Well Managed Core Noninterest Expense ($mm)(1),(2) Noninterest Expense / Average Assets(1) 3.50% $ 312 $ 301 $ 304 $ 296 3.00% 2.50% 2.57% 2.51% 2.49% 2.43% 1.80% 2.00% 1.71% 1.71% 1.50% 2011 2012 2013 2014 2015 2016 2017 2Q18 YTD Year Ended Dece
Slide 18: 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 % 5.00 % 4.50 % 4.00 % 3.50 % 3.00 % 2.50
Slide 19: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION We present net interest income, noninterest income, noninterest expense, net income, earnings per share and the related ratio s described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measures exclude from the corresponding G
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION For th e Th re e Mon th s En de d For th e Ni n e Mon th s En de d S e pte m be r 30, 2018 Ju n e 30, 2018 S e pte m be r 30, 2017 S e pte m be r 30, (dollars in t housands, except per share amount s) 2018 2017 In com e S tate m e n t Data: Net income $ 67,388 $ 69,05
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION For th e Th re e Mon th s En de d For th e Ni n e Mon th s En de d S e pte m be r 30, 2018 Ju n e 30, 2018 S e pte m be r 30, 2017 S e pte m be r 30, (dollars in t housands, except per share amount s) 2018 2017 Net interest income Core net interest income (non-GAAP) $
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION For th e Th re e Mon th s En de d For th e S i x Mon th s En de d Ju n e 30, 2018 March 31, 2018 Ju n e 30, 2017 Ju n e 30, (dollars in t housands, except per share amount s) 2018 2017 In com e S tate m e n t Data: Net income $ 69,053 $ 67,958 $ 56,895 $ 137,011 $ 113
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION For th e Th re e Mon th s En de d For th e S i x Mon th s En de d Ju n e 30, 2018 March 31, 2018 Ju n e 30, 2017 Ju n e 30, (dollars in t housands, except per share amount s) 2018 2017 Net interes t income Core net interes t income (non-GAAP) $ 141,403 $ 139,672 $ 131
Slide 24: 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) 2017 2016 2015 2014 2013 2012 2011 Net Income Basic EPS Diluted EPS $ 183.7 $1.32 $1.32 $230.2 $1.65 $1.65 $213.8 $1.53 $1.53 $216.7 $1.55 $1.55 $214.5 $1.54 $1.54
Slide 25: 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) 2017 2016 2015 2014 2013 2012 2011 $ 528.8 Net Interest Income $491.7 $461.3 $443.8 $439.0 $447.5 $470.0 Accounting Change (ASC 310 Adjustment) – – – – (4.3) – – Early Buyout
Slide 26: GAAP to Non-GAAP Reconciliation - Annual
p GAAP TO NON-GAAP RECONCILIATION -ANNUAL i rirst Hawaiian, inc. For the Fiscal YearEnded December3t 20201 z0ts zoe a1 et eterestincome ‘ors eage 000 «aS _—saTO0 ‘Accounting Change(ASC310Asusment) = = Z er) - - any Buyout on Lease S 2 a) a = - any Loan Teminstion® = - «eo = : = = ‘GoreNetinterest in
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