First Hawaiian, Inc. · NASDAQ:FHB
First Hawaiian — Q2 2020 Earnings Presentation
21 slides from First Hawaiian's earnings presentation, Jul 24, 2020
Slide 1: 2nd Quarter 2020 Earnings Call
2nd QUARTER 2020 EARNINGS CALL July 24, 2020 0
Slide 2: Forward-Looking Statements
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 performance. Th
Slide 3: Updates
UPDATES ➢ Increase in daily new cases following re-opening of the economy, but well within capacity of the healthcare system ➢ Retail, restaurants, bars, gyms re-opened under new guidelines Hawaii ➢ Quarantine lifted for inter-island travel ➢ Quarantine requirement for trans-Pacific travelers extend
Slide 4: Loan Deferrals
LOAN DEFERRALS MAJORITY OF LOANS ARE RETURNING TO PAYMENT Balance ➢ Worked with all commercial customers who went on Total Deferred Loans1 Count ($ mm) deferral Commercial and Industrial 931 1,433 ➢ Over 95% of borrowers have returned to payment Commercial Real Estate 1,179 434 or indicated they int
Slide 5: Total Exposure to Select Industries and Leveraged Lending
TOTAL EXPOSURE TO SELECT INDUSTRIES AND LEVERAGED LENDING % of CRE/ Total Total C&I As of 6/30/20 Const Loans Comments (mm) (mm) (mm) and Leases Hospitality and $537 $162 $375 3.9% • 21% Rcvd Pay Deferral, Includes $57 mm PPP loans Hotels Retail $701 $227 $474 5.1% • 33% Rcvd Pay Deferral, Includes
Slide 6: Asset Quality Trends
ASSET QUALITY TRENDS HIGHER DOWNGRADES AND CHARGE OFFS BASED ON PORTFOLIO REVIEW ($ millions) Provision and NCO ($ millions) NPA and 90 Past Due 100 100 80 80 60 60 40 40 20 0 20 Jun-20 Mar-20 Dec-19 0 Provision Net Charge Off Jun-20 Mar-20 Dec-19 ($ millions) Commercial Criticized Assets ($ million
Slide 7: Commercial Risk Rating Evolution Since Pandemic
COMMERCIAL RISK RATING EVOLUTION SINCE PANDEMIC C&I CRE Const. Lease Total Risk Rating % % % % % ($ 000’s) ($ 000’s) ($ 000’s) ($ 000’s) ($ 000’s) Pass 3,039,942 89% 3,011,228 88% 535,591 87% 207,303 87% 6,794,064 88% Special Mention 188,332 6% 345,639 10% 17,980 3% 24,538 10% 576,489 8% Substandard
Slide 8: Allowance for Credit Loss
ALLOWANCE FOR CREDIT LOSS PROVISION INCORPORATES COVID-19 IMPACT Q2 provisions reflect weaker economic outlook and downgrades in commercial portfolio We continue to hold a qualitative overlay for consumer loans based on default expectation not imbedded in the model Cumulative increase in allowance a
Slide 9: Q2 2020 Highlights
Q2 2020 HIGHLIGHTS ➢ Strong capital and liquidity ➢ 21 bp increase in CET1 ratio positions ➢ 50% reduction in cost of deposits Q2 2020 Net Income ($mm) $20.0 Diluted Earnings Per Share $0.15 • Well-capitalized with 11.86% CET1 ratio • CET1 ratio increased 21 bp from Q1 Net Interest Margin 2.58% • St
Slide 10: 21 bp Increase in CET1 Ratio
21 BP INCREASE IN CET1 RATIO • Well-capitalized with 11.86% CET1 ratio as of 6/30 • 21 bp increase in CET1 ratio primarily due to decrease in balance of loans with 100% risk-weighting • As of June 30, FHI had $365 million of capital over and above the amount required to remain “well capitalized,” in
Slide 11: 2.9% Growth in Loans and Leases
2.9% GROWTH IN LOANS AND LEASES Total Loans and Leases Q2 ‘20 vs Q1 ‘20 Net Change ($ billions) ($ millions) C&I 398 (+13.2%) 13.4 13.8 13.3 0.2 46 (+8.0%) Leasing Construction 0.2 0.2 0.9 0.9 Home Equity 0.9 Residential 18 (+0.5%) 1.5 Consumer 1.7 1.6 CRE 10 (+0.3%) 3.4 Leasing 2 (+0.7%) 3.0 C&I 3.
Slide 12: 13.8% Deposit Growth
13.8% DEPOSIT GROWTH 50% DECREASE IN COST OF DEPOSITS Total Deposits Public Deposits ($ billions) ($ billions) 19.4 2.39 17.0 1.72 1.63 0.86 16.8 3.5 Time 1.56 1.48 1.57 0.54 1.28 0.56 0.64 1.01 0.64 2.9 0.65 3.1 0.62 Money 0.51 1.53 3.2 1.18 Market 1.00 0.83 0.99 0.92 0.66 0.50 3.1 3.1 Sep-18 Dec-1
Slide 13: NIM Decrease Driven by Rate Cuts and Excess Cash
NIM DECREASE DRIVEN BY RATE CUTS AND EXCESS CASH 200.0 5.00% 195.0 4.90% 190.0 4.80% 185.0 4.70% 180.0 Net Interest Income and Net Interest Margin 4.60% Q2 2020 Q1 2020 175.0 4.50% 170.0 ($ millions) 4.40% 165.0 4.30% Reported NIM 2.58% 3.12% 160.0 4.20% 155.0 145.6 4.10% 150.0 4.00% Excess cash 0.2
Slide 14: Reduced Activity Levels Drove Changes in Noninterest Income/Expense
REDUCED ACTIVITY LEVELS DROVE CHANGES IN NONINTEREST INCOME/EXPENSE Noninterest Income Noninterest Expense 100.0 125.0% ($ millions) 96.5 49.2 93.3 100.0% 48.8 91.5 45.7 75.0% 51.3% 52.7% 48.0% 50.0% 25.0% 75.0 0.0% Q2 19 Q1 20 Q2 20 Q2 19 Q1 20 Q2 20 Nonint Expense Efficiency Ratio Key Drivers of Q
Slide 15: Questions
QUESTIONS 14
Slide 16: Appendix
> AP Pp EN D IX fA First Hawaiian, Inc. 15
Slide 17: Summary Income Statement
SUMMARY INCOME STATEMENT Quarter ended ($ in millions except per share data) 6/30/20 3/31/20 6/30/19 Net interest income $ 127.8 $ 138.7 $ 145.6 Provision for loan and lease losses 55.4 41.2 3.9 Noninterest income 45.7 49.2 48.8 Noninterest expense 91.5 96.5 93.3 Pre-tax income 26.6 50.2 97.2 Tax ex
Slide 18: Selected Balance Sheet Items
SELECTED BALANCE SHEET ITEMS As of ($ in millions except per share data) 6/30/20 3/31/20 6/30/19 Selected Assets Investment securities $ 5,135.8 $ 4,058.5 $ 4,395.5 Loans and leases 13,764.0 13,380.3 13,264.6 Total assets 22,993.7 20,755.9 20,526.4 Selected Liabilities and Stockholders’ Equity Total
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS We present net interest income, noninterest income, noninterest expense, efficiency ratio, net income, basic and diluted earnings per share and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measu
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION 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) 2020 2020 2019 2020 2019 Income Statement Data: Net income $ 20,049 $ 38,865 $ 72,433 $ 58,914 $ 142,357 Core net income $ 20,204
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION 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) 2020 2020 2019 2020 2019 Net interest income $ 127,822 $ 138,683 $ 145,613 $ 266,505 $ 290,702 Core net interest income (non-GAAP)