First Hawaiian, Inc. · NASDAQ:FHB
First Hawaiian — Investor Presentation (May 2020)
34 slides from First Hawaiian's investor presentation, May 20, 2020
Slide 1: Investor Presentation May / June 2020
0 Investor Presentation May / June 2020
Slide 2: Disclaimer: Forward-Looking Statements
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 refl e
Slide 3: FHB's COVID-19 Response
FHB’S COVID - 19 RESPONSE Caring For Our Employees » Over 50% of employees able to work from home » Social distancing practices for essential job functions unable to work from home » Temporarily closed 26, or 45%, of our branches and redeployed affected employees to augment areas experiencing higher
Slide 4: Experienced and Well Prepared
EXPERIENCED AND WELL PREPARED 3 » Crisis - tested senior management team with an average of 28 years in banking industry » Strong capital and liquidity positions » Consistent risk management and underwriting philosophy » 4 members of senior management team have experience as Chief Risk Officer » Ver
Slide 5: Q1 2020 Highlights
Q1 2020 HIGHLIGHTS (1) ROATA and ROATCE are non - GAAP financial measures. A reconciliation of average tangible assets and average tangible stockholders ’ equity to the comparable GAAP measurements is provided in the appendix of this slide presentation. (2) Declared on April 22, 2020. Payable June 5
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS 5 Best - in - class Financial Performance Leading Position In Attractive Market Experienced Leadership Team High Quality Balance Sheet Proven Through The Cycle Performance Well - Capitalized With Attractive Dividend 1 2 3 4 5 6
Slide 7: Best-in-Class Franchise
NALs / Loans 51.4% 54.0% FHB Top Quartile 9.4% 10.0% FHB Top Quartile BEST - IN - CLASS FRANCHISE 6 Branch Presence Financial Overview – 1Q 2020 YTD ($ billions) Source: Public filings and S&P Global Market Intelligence as of 15 - May - 2020 Note: Financial data as of 31 - Mar - 2020. Market data as
Slide 8: Fundamental Strengths of Hawaii's Economy Remain Intact
DESPITE NEAR - TERM CHALLENGES, THE FUNDAMENTAL STRENGTHS OF HAWAII’S ECONOMY REMAIN INTACT 7 • Attractive destination for domestic and international travelers • COVID - 19 has been well controlled within the state • Attractive alternative for travelers concerned about international travel • Well -
Slide 9: Experienced Leadership Team
EXPERIENCED LEADERSHIP TEAM LEADERSHIP TEAM ROBERT HARRISON Chairman, President & Chief Executive Officer ▪ Joined First Hawaiian Bank in 1996. Named Chief Executive Officer in January 2012 and Chairman of First Hawaiian Bank in May 2014. Served as Chief Operating Officer of First Hawaiian Bank from
Slide 10: High Quality Balance Sheet, Strong Liquidity
HIGH QUALITY BALANCE SHEET, STRONG LIQUIDITY 9 Actions Taken Prior to the Crisis Helped to De - Risk and Strengthen the Balance Sheet ▪ Opportunistically executed investment portfolio transactions to improve the bank’s asset / liability profile and improve the earnings potential of the investment po
Slide 11: Strong Performance Throughout the Cycle
Source: Public filings and S&P Global Market Intelligence as of 15 - May - 2020 Note: Financial data as of 31 - Mar - 2020. $10 – $50bn banks constituted as of 31 - Dec - 2019; excludes merger targets. (1) FHB ratios shown as core. Core excludes certain gains, expenses and one - time items. See annu
Slide 12: Proven, Consistent, and Conservative Credit Risk Management
0.21% 0.73% 0.19% 0.11% 1.18% 0.13% 0.00% 0.50% 1.00% 1.50% '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 1Q20 PROVEN, CONSISTENT, AND CONSERVATIVE CREDIT RISK MANAGEMENT Strong through the cycle credit performance driven by conservative approach to credit risk management 11 Year Ended Dec
Slide 13: Consistent Track Record of Strong Profitability
1.39% 1.30% 1.31% 1.22% 1.10% 1.18% 1.22% 1.49% 1.51% 0.81% 0.87% 1.03% 1.05% 1.09% 1.05% 1.10% 1.07% 1.40% 1.37% 0.60% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 CONSISTENT TRACK RECORD OF STRONG PROFITABILITY 12 Source: Public filings and S&P Global
Slide 14: Well Capitalized with an Attractive Dividend
7.4% 4.7% First Hawaiian, Inc. Public U.S. Banks with $10-$50bn of Assets WELL CAPITALIZED WITH AN ATTRACTIVE DIVIDEND 13 Source: Public filings and S&P Global Market Intelligence as of 15 - May - 2020 Note: Financial data as of 31 - Mar - 2020. $10 – $50bn banks constituted as of 31 - Dec - 2019, e
Slide 15: Appendix
OA First Hawaiian, Inc. Appendix
Slide 16: Full Suite of Products and Services
FULL SUITE OF PRODUCTS AND SERVICES 15 • Largest commercial lender in Hawaii • 57 commercial bankers (2) • Relationship - based lending • Primary focus on Hawaii, additional focus on California • C&I, leases, auto dealer flooring, CRE, and C&D • Strong relationships with proven local real estate dev
Slide 17: Managing NIM Through a Challenging Interest Rate Environment
$ 133 $ 135 $ 140 $ 141 $ 141 $ 144 $ 145 $ 146 $ 143 $ 140 $ 139 3.23 % 3.29 % 3.47 % 3.58 % 3.61 % 3.77 % 3.85 % 3.88 % 3.79 % 3.66 % 3.57 % 0.28 % 0.31 % 0.35 % 0.40 % 0.47 % 0.48 % 0.56 % 0.57 % 0.54 % 0.44 % 0.38 % 2.96 % 2.99 % 3.13 % 3.18 % 3.11 % 3.23 % 3.23 % 3.25 % 3.19 % 3.15 % 3.12 % – %
Slide 18: Solid, Low-Cost Core Deposit Base
$8.9 $9.1 $9.4 $10.2 $10.5 $12.2 $12.9 $13.6 $14.7 $16.1 $16.8 $17.6 $17.2 $16.4 $17.0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 1Q20 Demand 34% Money Market 18% Savings 27% Time 12% SOLID, LOW - COST CORE DEPOSIT BASE Strong brand, deep ties to the community and a leading market share
Slide 19: Steady Organic Growth and Balanced Loan Portfolio
$6.4 $6.5 $7.9 $8.0 $8.3 $8.3 $9.0 $9.5 $10.0 $10.7 $11.5 $12.3 $13.1 $13.2 $13.4 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 1Q20 STEADY ORGANIC GROWTH AND BALANCED LOAN PORTFOLIO Steady through the cycle organic loan growth and balanced loan portfolio 18 Well positioned to serve client
Slide 20: Commercial and Industrial Lending Overview
• Largest commercial lender in Hawaii with long tenured staff – over 20 years on average with long - time niche focus on corporate lending and auto finance but also active small business lender in Hawaii and Guam. • Corporate lending to SNC C&I lending is $693 million -- most companies have operatio
Slide 21: CRE
CRE 20 As of 3/31/20 Total Balance (mm) % of Total Loans and Leases Non - owner Occupied Balance (mm) (LTV) Owner Occupied Balance (mm) (LTV) Retail (ex Auto Dealer) $563 4.2% $451 (61.1%) $112 (62.9%) Industrial $551 4.1% $327 (62.5%) $223 (64.7%) Commercial and Office >= 5mm $521 3.9% $521 (64.0%)
Slide 22: Construction
CONSTRUCTION 21 • Largest construction lender in Hawaii but smaller book: 4.3% of loans with 48% in Hawaii with balance on U.S. mainland • Housing - based focus – mix of for - sale (other) and multi - family rentals • Through - the - Cycle (“TTC”) loss rate: 0.18%, Peak losses: 1.46% • Classified ex
Slide 23: Total Exposure to Select Industries and Leveraged Lending
TOTAL EXPOSURE TO SELECT INDUSTRIES AND LEVERAGED LENDING 22 As of 3/31/20 Total (mm) C&I (mm) CRE/ Con (mm) % of Total Loans and Leases Comments Hospitality and Hotels $546 $168 $378 4.1% • C&I: five investment grade global names • CRE: ~20 loans with WALTV of 53% Retail (ex auto ) $737 $158 $579 5
Slide 24: Residential, HELOC and Consumer Loans
RESIDENTIAL, HELOC AND CONSUMER LOANS 23 As of 3/31/20 Balance (mm) % of Total Loans and Leases Comments Residential $3,673 27.5% • 99.9% of Residential and Home Equity loans in Hawaii/Guam/Saipan • Weighted Average LTV: 64.4% • Weighted Average FICO: 764 (Super Prime: 73%, Prime: 16%) • Peak annual
Slide 25: Deferrals
DEFERRALS T emporary relief to bridge the disruption 24 • Proactive outreach started at the outset of the mandatory “stay at home” • Combination of on - line, call center and business banker outbound calling to offer payment relief to customers impacted by the shutdown • Primary objective: Carry a g
Slide 26: Credit: CECL Impact on ACL and Reserve for Unfunded Commitments
CREDIT CECL Impact on ACL and Reserve for Unfunded Commitments 25 C & I 14% CRE 24% Construction 7% Residential 16% Home Equity 7% Consumer 31% Combined Allocation • Cumulative increase of $52.1 million, or 40%, over year end 2019 • “Day One” adoption reflected in a one - time adjustment to capital
Slide 27: Demonstrated History of Disciplined Expense Management
46.7% 46.8% 46.4% 47.9% 50.2% 47.9% 47.0% 46.6% 47.6% 51.4% 61.7% 63.0% 63.9% 62.8% 61.4% 60.0% 58.3% 56.4% 56.2% 58.2% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 First Hawaiian, Inc. Public U.S. Banks with $10-$50bn of Assets 2.04% 1.87% 1.78% 1.74% 1.74%
Slide 28: The Leader in Hawaii
THE LEADER IN HAWAII 27 The banking market in Hawaii is dominated by local banks, with the top 4 banks accounting for ~92% of deposits Sources: S&P Global Market Intelligence, FDIC, SEC and company filings. Company filings used for peers where available, othe rwi se regulatory data used. Note: Finan
Slide 29: Hawaii Banks Have a Significant Deposit Advantage
HAWAII BANKS HAVE A SIGNIFICANT DEPOSIT ADVANTAGE 28 Source: S&P Global Market Intelligence and the Federal Reserve website (1) Deposit beta is defined as the change in deposit costs as a percentage of the change in Fed Funds over a particular period. D ep osit cost uses starting point (2Q04) to pea
Slide 30: 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 earn ing s per share and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non - GAAP financial measure. These core
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP TO NON - GAAP RECONCILIATION 30 ( 1) Annualized for the three months ended March 31, 2020, December 31, 2019 and March 31, 2019. (dollars in thousands, except per share amounts) Income Statement Data: Net income $ 38,865 $ 67,836 $ 69,924 Core net income $ 38,803 $ 71,250 $ 72,052 Average total
Slide 32: GAAP to Non-GAAP Reconciliation
GAAP TO NON - GAAP RECONCILIATION 31 1) One - time items for all periods shown included nonrecurring offering costs 2) Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period. (dollars in thousands, except per share amounts) Net interest i
Slide 33: GAAP to Non-GAAP Reconciliation - Annual
GAAP TO NON - GAAP RECONCILIATION - ANNUAL 32 Note: Totals may not sum due to rounding. As of and for the Twelve Months Ended December 31, (Dollars in millions, except per share data) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net Income $ 284.4 $ 264.4 $ 183.7 $230.2 $213.8 $216.7 $214.5 $211.1 $
Slide 34: GAAP to Non-GAAP Reconciliation - Annual
GAAP TO NON - GAAP RECONCILIATION - ANNUAL 33 Note: Totals may not sum due to rounding. (1) Noninterest income and expenses prior to 2017 have been revised from the amounts previously reported to reflect the reclassif ica tions described in the footnote to Table 1 of the fourth quarter 2017 earnings