First Hawaiian, Inc. · NASDAQ:FHB
First Hawaiian — Investor Presentation (February 2018)
27 slides from First Hawaiian's investor presentation, Feb 6, 2018
Slide 1: Investor Presentation February 2018
INVESTOR PRESENTATION FEBRUARY 2018
Slide 2: Disclaimer
DISCLAIMER Forward-Looking Statements This presentation 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 perf
Slide 3: 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 Consistently Increasing Capital Return Proven Through the Cycle Performance 5 6 Significant Catalysts for Enhanced Perform
Slide 4: Strong Performance in 4Q 2017, 9.1% Dividend Increase
STRONG PERFORMANCE IN 4Q 2017, 9.1% DIVIDEND INCREASE Quarterly Results 4Q 2017 3Q 2017 4Q 2016 ($ in millions) Loans and Leases $ 12,277 $ 12,150 $ 11,520 Deposits 17,612 17,595 16,795 Net Interest Margin 2.99 % 2.96 % 2.99 % Noninterest Income / Total Revenue 27.1 26.1 27.4 Efficiency Ratio(3),(4)
Slide 5: Best-in-Class Franchise
BEST-IN-CLASS FRANCHISE Branch Presence Financial Overview – 4Q 2017 YTD ($ billions) Market Cap $ 4.0 Loans $ 12.3 62 branches Kauai Assets $ 20.5 Deposits $ 17.6 NIM Since 4Q 2015 Efficiency Ratio(2), (3) Oahu ROATCE(2), (4),(5) Niihau Molokai 28 bps Maui Honolulu 48.7 % 14.9 % Lanai Kahoolawe Haw
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 (2016) Population (000s) ’18-’23 Projected HHI Change: 11.9% Tourism accounts for ~21% of Hawaii GDP(1) G
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 19% 39% 24% 77% 82% 63% 63% Sources: SNL Financial, FDIC
Slide 8: Steady Realized & Forecasted Balance Sheet Growth
STEADY REALIZED & FORECASTED BALANCE SHEET GROWTH High Quality Composition (4Q17) Recent Growth Profile ($bn) 2018 Outlook • High single digit growth in residential, CRE and Construction Mid-single digit growth in consumer Low single digit growth in C&I 13% $ 12.3 $ 11.5 $ 10.7 • • • Maintain credit
Slide 9: Strong Performance Through the Cycle
STRONG PERFORMANCE THROUGH THE CYCLE Consistent Deposit Growth ($bn) Steady, Balanced Loan Growth ($bn) 4Q17 YTD Cost of Deposits: 0.25% $17.6 $12.3 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Through the Cycle Credit Performer Strong Expense Mgmt. Culture
Slide 10: Sustained, Consistent Track Record of Strong Profitability
SUSTAINED, CONSISTENT TRACK RECORD OF STRONG PROFITABILITY Focused on maintaining peer leading profitability through stable, consistent growth Consistent Core Earnings ($mm)(1) Low Earnings Volatility(1),(2) 19.0 % $ 230 $ 217 $ 205 $ 202 $ 198 $ 197 $ 196 First Hawaiian, Inc. Public U.S. Banks with
Slide 11: Ongoing Capital Distribution with Future Opportunities
ONGOING CAPITAL DISTRIBUTION WITH FUTURE OPPORTUNITIES Robust capital levels and strong capital generation support an attractive return opportunity for shareholders through organic growth, dividends and / or share repurchases(1) Attractive Dividend Yield(3) Robust Capital Position Tier 2 NCT1 3.3% 1
Slide 12: Well Positioned in Current Environment
WELL POSITIONED IN CURRENT ENVIRONMENT 1• Rising Interest Rates • Balance sheet positioned for NIM improvement from additional rate increases and higher long-term rates 2• Reduced Tax Rate • Estimate effective tax rate in 2018 of ~26% • Additional tax optimization strategies available 3• Capital Dis
Slide 13: 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 3.50 % • ~ 30% of loan portfolio indexed to 1 or 3 month Libor 3.15 % 3.18 % 3.22 % 3.23 % • 98% of balance sheet funded with deposits 3.00 % • Hawaii has experienced lower deposit costs
Slide 14: Tax Return Impact and Opportunities
TAX RETURN IMPACT AND OPPORTUNITIES Invest in Business Accrues directly to shareholders • Our people; increased minimum wage Accelerate strategic initiatives — Digital platform — Branch network • • • Increased return profile Generates incremental retained earnings Provides opportunity to consider fu
Slide 15: 2018 Outlook
2018 OUTLOOK Growth Digit Growth Digit Growth Digit Growth Digit Growth Dividend (1) Primarily adjusted for the $47.6 million charge to provision for income taxes in 4Q 2017 due to revaluation of certain tax-related assets due to the passage of the Tax Cuts and Jobs Act 14 2018 OUTLOOK Continued Hig
Slide 16: Appendix
APPENDIX
Slide 17: Full Suite of Products and Services
FULL SUITE OF PRODUCTS AND SERVICES First Hawaiian is a full service community bank focused on building relationships with our customers Commercial Lending Consumer Lending • • • • Largest commercial lender in Hawaii 52 commercial bankers(2) Relationship-based lending Primary focus on Hawaii, additi
Slide 18: Growing, Low-Cost Core Deposit Base
GROWING, LOW-COST CORE DEPOSIT BASE Strong brand, deep ties to the community and a leading market share position have driven an attractive, low-cost deposit base Consistent Deposit Growth ($bn) Deposit Portfolio Composition (4Q17) $17.6 ~13% of Total Deposits are Public Deposits Public Time 11% Ti e
Slide 19: Steady Organic Growth and Balanced Loan Portfolio
STEADY ORGANIC GROWTH AND BALANCED LOAN PORTFOLIO Steady through the cycle organic loan growth and balanced loan portfolio with attractive forward growth opportunities Steady Loan Growth ($bn) Balanced Loan Portfolio (4Q17) $12.3 Consum r & Other 13% Commercial 27% RE 33% mercial RE 27% Loans: $12.3
Slide 20: Proven, Consistent, and Conservative Credit Risk Management
PROVEN, CONSISTENT, AND CONSERVATIVE CREDIT RISK MANAGEMENT Strong through the cycle credit performance driven by conservative approach to credit risk management NCOs / Average Loans NPAs + 90s / Loans + OREO 1.50% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 1.00% 0.50% % % % % 0.00% '06 '07 '08
Slide 21: Operating Leverage Through Prudent Expense Management
OPERATING LEVERAGE THROUGH PRUDENT EXPENSE MANAGEMENT Well Managed Core Noninterest Expense ($mm)(1),(3) Non-Interest Expense / Average Assets(1),(3) CAGR: 1.5% 3.50% $ 342 $ 331 $ 327 $ 312 $ 301 $ 304 $ 296 3.00% 2.50% 2.00% 1.71% 1.71% 1.50% '11 '12 '13 '14 '15 '16 '17 2011 2012 2013 2014 2015 20
Slide 22: 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 23: 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 24: GAAP to Non-GAAP Reconciliation - Quarterly
GAAP TO NON-GAAP RECONCILIATION - QUARTERLY For the Three Months Ended For the Dece 2017 528,804 528,804 December 31, 2017 September 30, 2017 December 31, 2016 (dollars in thous ands , except per s hare amounts ) Net interes t income Core net interes t income (non-GAAP) $ 134,886 $ 133,319 $ 131,250
Slide 25: GAAP to Non-GAAP Reconciliation - Quarterly
GAAP TO NON-GAAP RECONCILIATION - QUARTERLY For th e Th re e Mon th s En de d For th De 2017 De ce m be r 31, 2017 S e pte m be r 30, 2017 De ce m be r 31, 2016 (dollars in t housands, except per share amount s) In com e S tate m e n t Data: Net income $ 11,684 $ 58,363 $ 56,552 $ 183,682 Average t
Slide 26: 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 $ 183.7 $230.2 $213.8 $216.7 $214.5 $211.1 $199.7 Average Total Stockholders’ Equity $ 2,538.3 $2,568.2 $2,735.8 $2,6
Slide 27: 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
First Hawaiian — Investor Presentation (February 2018) on 6ix