10:00:55 EDT Thu 28 Mar 2024
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First Hawaiian, Inc. Reports Second Quarter 2022 Financial Results and Declares Dividend

2022-07-29 08:00 ET - News Release

HONOLULU, July 29, 2022 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), ("First Hawaiian" or the "Company") today reported financial results for its quarter ended June 30, 2022.

"I'm pleased to report that we had a very strong second quarter as the bank continued to perform well," said Bob Harrison, Chairman, President and CEO. "We had good loan and deposit growth, credit quality remained excellent, and we successfully converted to our new core operating system."

On July 27, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on September 2, 2022, to stockholders of record at the close of business on August 22, 2022.

Second Quarter 2022 Highlights:

  • Net income of $59.4 million, or $0.46 per diluted share
  • Total loans and leases increased $371.0 million versus prior quarter.
  • Total deposits increased $331.0 million versus prior quarter
  • Net interest margin increased 18 basis points to 2.60%
  • Recorded a $1.0 million provision for credit losses
  • Board of Directors declared a quarterly dividend of $0.26 per share

Balance Sheet

Total assets were $25.4 billion as of June 30, 2022, compared to $25.0 billion as of March 31, 2022.

Gross loans and leases were $13.3 billion as of June 30, 2022, an increase of $371.0 million, or 2.9%, from $12.9 billion as of March 31, 2022.

Total deposits were $22.6 billion as of June 30, 2022, an increase of $331.0 million, or 1.5%, from $22.3 billion as of March 31, 2022.

Net Interest Income

Net interest income for the second quarter of 2022 was $145.1 million, an increase of $11.3 million, or 8.4%, compared to $133.9 million for the prior quarter.

The net interest margin was 2.60% in the second quarter of 2022, an increase of 18 basis points compared to 2.42% in the prior quarter.

Provision Expense

During the quarter ended June 30, 2022, we recorded a $1.0 million provision for credit losses. In the quarter ended March 31, 2022, we recorded a $5.7 million negative provision for credit losses.

Noninterest Income

Noninterest income was $44.1 million in the second quarter of 2022, an increase of $2.7 million compared to noninterest income of $41.4 million in the prior quarter.

Noninterest Expense

Noninterest expense was $109.2 million in the second quarter of 2022, an increase of $5.1 million compared to noninterest expense of $104.0 million in the prior quarter.

The efficiency ratio was 57.3% and 59.0% for the quarters ended June 30, 2022 and March 31, 2022, respectively.

Taxes

The effective tax rate was 25.0% for the quarters ended June 30, 2022 and March 31, 2022.

Asset Quality

The allowance for credit losses was $148.9 million, or 1.12% of total loans and leases, as of June 30, 2022, compared to $150.3 million, or 1.17% of total loans and leases, as of March 31, 2022. The reserve for unfunded commitments was $29.0 million as of June 30, 2022 and March 31, 2022. Net charge-offs were $2.3 million, or 0.07% of average loans and leases on an annualized basis, for the quarter ended June 30, 2022, compared to net charge-offs of $2.6 million, or 0.08% of average loans and leases on an annualized basis, for the quarter ended March 31, 2022. Total non-performing assets were $7.9 million, or 0.06% of total loans and leases and other real estate owned, on June 30, 2022, compared to total non-performing assets of $8.6 million, or 0.07% of total loans and leases and other real estate owned, on March 31, 2022.

Capital

Total stockholders' equity was $2.3 billion on June 30, 2022 and March 31, 2022.

The tier 1 leverage, common equity tier 1 and total capital ratios were 7.54%, 11.98%, and 13.14%, respectively, on June 30, 2022, compared with 7.50%, 12.27% and 13.48%, respectively, on March 31, 2022.

The Company repurchased 0.3 million shares of common stock at a total cost of $7.0 million under the stock repurchase program in the second quarter. The average cost was $24.09 per share repurchased. Remaining buyback authority under the stock repurchase program was $68.0 million on June 30, 2022.

First Hawaiian, Inc.

First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii. Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii's oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit the Company's website, www.fhb.com.

Conference Call Information

First Hawaiian will host a conference call to discuss the Company's results today at 1:00 p.m. Eastern Time, 7:00 a.m. Hawaii Time.

Please note that the process for accessing the conference call has changed. Participants will need to click on the registration link provided below, register for the conference call, and then you will receive the dial-in number and a personalized PIN code.

To access the call by phone, please register via the following link: https://register.vevent.com/register/BI2ebfe69a17064bc89a14e15354a8e329, and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time.

A live webcast of the conference call, including a slide presentation, will be available at the following link: www.fhb.com/earnings. The archive of the webcast will be available at the same location.

Forward-Looking Statements
This press release 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. These statements are often, but not always, made through the use of words or phrases such as "may", "might", "should", "could", "predict", "potential", "believe", "expect", "continue", "will", "anticipate", "seek", "estimate", "intend", "plan", "projection", "would", "annualized" and "outlook", or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Further, statements about the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there can be no assurance that actual results will not prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements, including (without limitation) the risks and uncertainties associated with the ongoing impacts of COVID-19, the domestic and global economic environment and capital market conditions and other risk factors. For a discussion of some of these risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission ("SEC") filings, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

Use of Non-GAAP Financial Measures
Return on average tangible assets, return on average tangible stockholders' equity, tangible book value per share and tangible stockholders' equity to tangible assets are non-GAAP financial measures. We believe that these measurements are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP. Investors should consider our performance and capital adequacy as reported under GAAP and all other relevant information when assessing our performance and capital adequacy.

Table 14 at the end of this document provides a reconciliation of these non-GAAP financial measures with their most directly comparable GAAP measures.

Investor Relations Contact:
Kevin Haseyama, CFA
(808) 525-6268
khaseyama@fhb.com

Media Contact:
Lindsay Chambers
(808) 525-6254
lchambers@fhb.com



Financial HighlightsTable 1
For the Three Months EndedFor the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share data)20222022
2021
2022
2021
Operating Results:
Net interest income$ 145,147$133,872$131,481$ 279,019$260,639
Provision for credit losses 1,000(5,747)(35,000) (4,747)(35,000)
Noninterest income 44,13741,38049,371 85,51793,239
Noninterest expense 109,175104,04299,388 213,217195,694
Net income 59,36057,71986,741 117,079144,434
Basic earnings per share 0.460.450.67 0.921.11
Diluted earnings per share 0.460.450.67 0.911.11
Dividends declared per share 0.260.260.26 0.520.52
Dividend payout ratio 56.52%57.78%38.81% 57.14%46.85%
Performance Ratios(1):
Net interest margin 2.60% 2.42%2.46% 2.51% 2.50%
Efficiency ratio 57.33% 59.04%54.74% 58.15% 55.12%
Return on average total assets 0.94% 0.93%1.45% 0.94% 1.24%
Return on average tangible assets (non-GAAP)(2) 0.98% 0.97%1.51% 0.98% 1.30%
Return on average total stockholders' equity 10.52% 9.19%12.92% 9.82% 10.75%
Return on average tangible stockholders' equity (non-GAAP)(2) 18.79% 15.08%20.51% 16.76% 16.99%
Average Balances:
Average loans and leases$ 13,058,558$12,819,612$13,205,086$ 12,939,745$13,223,575
Average earning assets 22,520,60522,463,20921,539,264 22,492,06621,010,643
Average assets 25,250,17625,080,45324,015,065 25,165,78323,482,839
Average deposits 22,401,55821,960,81920,638,015 22,182,40620,073,676
Average stockholders' equity 2,262,6542,547,8652,691,966 2,404,4712,709,735
Market Value Per Share:
Closing 22.8027.8928.34 22.8028.34
High 28.4431.1629.85 31.1630.80
Low 21.4926.9324.75 21.4923.14



As ofAs ofAs ofAs of
June 30, March 31, December 31, June 30,
(dollars in thousands, except per share data)2022202220212021
Balance Sheet Data:
Loans and leases$ 13,262,781$12,891,743$12,961,999$13,103,785
Total assets 25,377,53325,042,72024,992,41024,246,328
Total deposits 22,601,45422,270,43021,816,14620,835,115
Long-term borrowings ---200,000
Total stockholders' equity 2,252,6112,285,1492,656,9122,731,341
Per Share of Common Stock:
Book value$ 17.67$17.90$20.84$21.17
Tangible book value (non-GAAP)(2) 9.8610.1013.0313.45
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases 0.06% 0.07%0.05%0.07%
Allowance for credit losses for loans and leases / total loans and leases 1.12% 1.17%1.21%1.29%
Capital Ratios:
Common Equity Tier 1 Capital Ratio 11.98% 12.27%12.24%12.76%
Tier 1 Capital Ratio 11.98% 12.27%12.24%12.76%
Total Capital Ratio 13.14% 13.48%13.49%14.01%
Tier 1 Leverage Ratio 7.54% 7.50%7.24%7.68%
Total stockholders' equity to total assets 8.88% 9.13%10.63%11.26%
Tangible stockholders' equity to tangible assets (non-GAAP)(2) 5.16% 5.36%6.92%7.47%
Non-Financial Data:
Number of branches 51515454
Number of ATMs 297298299294
Number of Full-Time Equivalent Employees 2,0212,0222,0362,087


(1)Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022.
(2)Return on average tangible assets, return on average tangible stockholders' equity, tangible book value per share and tangible stockholders' equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. We compute our return on average tangible stockholders' equity as the ratio of net income to average tangible stockholders' equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders' equity. We compute our tangible book value per share as the ratio of tangible stockholders' equity to outstanding shares. Tangible stockholders' equity is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our total stockholders' equity. We compute our tangible stockholders' equity to tangible assets as the ratio of tangible stockholders' equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. For a reconciliation to the most directly comparable GAAP financial measure, see Table 14, GAAP to Non-GAAP Reconciliation.



Consolidated Statements of IncomeTable 2
For the Three Months EndedFor the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts)20222022202120222021
Interest income
Loans and lease financing$ 111,916$103,732$110,919$ 215,648$221,858
Available-for-sale investment securities 16,64332,10724,637 48,75047,783
Held-to-maturity investment securities 18,289-- 18,289-
Other 2,896782666 3,6781,157
Total interest income 149,744136,621136,222 286,365270,798
Interest expense
Deposits 4,5972,7493,363 7,3467,419
Short-term and long-term borrowings --1,378 -2,740
Total interest expense 4,5972,7494,741 7,34610,159
Net interest income 145,147133,872131,481 279,019260,639
Provision for credit losses 1,000(5,747)(35,000) (4,747)(35,000)
Net interest income after provision for credit losses 144,147139,619166,481 283,766295,639
Noninterest income
Service charges on deposit accounts 6,8437,5016,632 14,34413,350
Credit and debit card fees 17,05614,85016,746 31,90631,297
Other service charges and fees 9,0189,65410,303 18,67219,149
Trust and investment services income 8,7598,8838,707 17,64217,199
Bank-owned life insurance (859)(417)3,104 (1,276)5,493
Investment securities (losses) gains, net --102 -102
Other 3,3209093,777 4,2296,649
Total noninterest income 44,13741,38049,371 85,51793,239
Noninterest expense
Salaries and employee benefits 49,90248,22645,982 98,12889,918
Contracted services and professional fees 18,61717,14716,516 35,76433,704
Occupancy 7,3347,4107,314 14,74414,484
Equipment 7,7545,9776,362 13,73111,853
Regulatory assessment and fees 2,3012,2241,826 4,5253,860
Advertising and marketing 1,9942,0281,469 4,0223,060
Card rewards program 7,2856,8836,262 14,16811,097
Other 13,98814,14713,657 28,13527,718
Total noninterest expense 109,175104,04299,388 213,217195,694
Income before provision for income taxes 79,10976,957116,464 156,066193,184
Provision for income taxes 19,74919,23829,723 38,98748,750
Net income$ 59,360$57,719$86,741$ 117,079$144,434
Basic earnings per share$ 0.46$0.45$0.67$ 0.92$1.11
Diluted earnings per share$ 0.46$0.45$0.67$ 0.91$1.11
Basic weighted-average outstanding shares 127,672,244127,556,242129,392,339 127,614,564129,661,228
Diluted weighted-average outstanding shares 128,014,777128,121,126129,828,847 128,108,630130,164,762



Consolidated Balance SheetsTable 3
June 30, March 31, December 31, June 30,
(dollars in thousands)2022202220212021
Assets
Cash and due from banks$ 279,629$274,022$246,716$347,861
Interest-bearing deposits in other banks 1,254,0471,352,1381,011,7531,558,437
Investment securities:
Available-for-sale, at fair value (amortized cost: $4,267,809 as of June 30, 2022, $8,733,170 as of March 31, 2022, $8,560,733 as of December 31, 2021 and $6,951,153 as of June 30, 2021) 3,967,7468,062,3848,428,0326,953,930
Held-to-maturity, at amortized cost (fair value: $3,910,780 as of June 30, 2022 and nil as of March 31, 2022, December 31, 2021 and June 30, 2021) 4,093,215---
Loans held for sale 180-5381,241
Loans and leases 13,262,78112,891,74312,961,99913,103,785
Less: allowance for credit losses 148,942150,280157,262169,148
Net loans and leases 13,113,83912,741,46312,804,73712,934,637
Premises and equipment, net 310,047315,766318,448319,452
Other real estate owned and repossessed personal property --175-
Accrued interest receivable 63,24061,56163,15866,734
Bank-owned life insurance 470,542471,401471,819466,402
Goodwill 995,492995,492995,492995,492
Mortgage servicing rights 7,1527,6508,30210,007
Other assets 822,404760,843643,240592,135
Total assets$ 25,377,533$25,042,720$24,992,410$24,246,328
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing$ 12,990,571$12,504,821$12,422,283$12,245,193
Noninterest-bearing 9,610,8839,765,6099,393,8638,589,922
Total deposits 22,601,45422,270,43021,816,14620,835,115
Long-term borrowings ---200,000
Retirement benefits payable 134,151134,323134,491144,101
Other liabilities 389,317352,818384,861335,771
Total liabilities 23,124,92222,757,57122,335,49821,514,987
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,943,908 / 127,451,087 shares as of June 30, 2022, issued/outstanding: 140,875,595 / 127,686,307 shares as of March 31, 2022, issued/outstanding: 140,581,715 / 127,502,472 shares as of December 31, 2021 and issued/outstanding: 140,542,398 / 129,019,871 shares as of June 30, 2021) 1,4091,4091,4061,405
Additional paid-in capital 2,533,4072,530,7952,527,6632,520,790
Retained earnings 654,777628,642604,534550,511
Accumulated other comprehensive loss, net (571,457)(517,502)(121,693)(29,702)
Treasury stock (13,492,821 shares as of June 30, 2022, 13,189,288 shares as of March 31, 2022, 13,079,243 shares as of December 31, 2021 and 11,522,527 shares as of June 30, 2021) (365,525)(358,195)(354,998)(311,663)
Total stockholders' equity 2,252,6112,285,1492,656,9122,731,341
Total liabilities and stockholders' equity$ 25,377,533$25,042,720$24,992,410$24,246,328



Average Balances and Interest RatesTable 4
Three Months Ended Three Months Ended Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
AverageIncome/Yield/AverageIncome/Yield/AverageIncome/Yield/
(dollars in millions)BalanceExpenseRateBalanceExpenseRateBalanceExpenseRate
Earning Assets
Interest-Bearing Deposits in Other Banks$ 1,297.3$ 2.8 0.85% $1,138.3$0.60.20%$1,503.0$0.40.10%
Available-for-Sale Investment Securities
Taxable 3,946.4 16.6 1.687,800.329.21.506,298.322.51.43
Non-Taxable 8.4 0.1 5.26636.73.62.32468.42.72.30
Held-to-Maturity Investment Securities
Taxable 3,533.6 15.0 1.70------
Non-Taxable 607.0 4.1 2.71------
Total Investment Securities 8,095.4 35.8 1.778,437.032.81.566,766.725.21.49
Loans Held for Sale 0.3 - 5.061.2-2.022.0-1.44
Loans and Leases(1)
Commercial and industrial 1,951.3 15.0 3.091,973.114.63.012,882.121.12.94
Commercial real estate 3,808.9 30.7 3.233,632.225.82.883,419.725.32.97
Construction 711.3 6.3 3.57766.95.73.03800.96.33.15
Residential:
Residential mortgage 4,183.0 36.7 3.514,111.034.83.383,765.434.03.62
Home equity line 945.7 5.9 2.49891.65.52.48812.65.52.72
Consumer 1,218.0 15.5 5.091,218.615.65.191,277.916.95.32
Lease financing 240.4 2.1 3.53226.21.93.42246.51.93.06
Total Loans and Leases 13,058.6 112.2 3.4412,819.6103.93.2713,205.1111.03.37
Other Earning Assets 69.0 0.1 0.7967.10.21.3162.50.31.91
Total Earning Assets(2) 22,520.6 150.9 2.6822,463.2137.52.4721,539.3136.92.55
Cash and Due from Banks 300.8292.1290.7
Other Assets 2,428.82,325.22,185.1
Total Assets$ 25,250.2$25,080.5$24,015.1
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings$ 6,971.3$ 1.7 0.10% $6,668.4$0.50.03%6,361.8$0.50.03%
Money Market 4,127.4 1.4 0.144,048.90.50.053,783.10.50.06
Time 1,671.4 1.5 0.361,748.51.70.392,034.52.30.45
Total Interest-Bearing Deposits 12,770.1 4.6 0.1412,465.82.70.0912,179.43.30.11
Long-Term Borrowings - - ----200.01.42.76
Total Interest-Bearing Liabilities 12,770.1 4.6 0.1412,465.82.70.0912,379.44.70.15
Net Interest Income$ 146.3$134.8$132.2
Interest Rate Spread 2.54% 2.38%2.40%
Net Interest Margin 2.60% 2.42%2.46%
Noninterest-Bearing Demand Deposits 9,631.49,495.08,458.6
Other Liabilities 586.0571.8485.1
Stockholders' Equity 2,262.72,547.92,692.0
Total Liabilities and Stockholders' Equity$ 25,250.2$25,080.5$24,015.1


(1)Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2)Interest income includes taxable-equivalent basis adjustments of $1.2 million, $1.0 million and $0.7 million for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively.



Average Balances and Interest RatesTable 5
Six Months Ended Six Months Ended
June 30, 2022June 30, 2021
AverageIncome/Yield/AverageIncome/Yield/
(dollars in millions)BalanceExpenseRateBalanceExpenseRate
Earning Assets
Interest-Bearing Deposits in Other Banks$ 1,218.3$ 3.3 0.55% $1,222.4$0.60.10%
Available-for-Sale Investment Securities
Taxable 5,862.7 45.7 1.566,125.144.61.46
Non-Taxable 320.8 3.9 2.41373.74.02.11
Held-to-Maturity Investment Securities
Taxable 1,776.6 15.0 1.69---
Non-Taxable 305.2 4.1 2.71---
Total Investment Securities 8,265.3 68.7 1.666,498.848.61.49
Loans Held for Sale 0.8 - 2.605.60.12.28
Loans and Leases(1)
Commercial and industrial 1,962.1 29.7 3.052,954.041.52.84
Commercial real estate 3,721.0 56.4 3.063,402.650.22.98
Construction 738.9 12.1 3.30774.012.13.16
Residential:
Residential mortgage 4,147.2 71.5 3.453,730.968.73.68
Home equity line 918.8 11.3 2.48817.311.22.76
Consumer 1,218.3 31.1 5.141,300.734.75.37
Lease financing 233.4 4.0 3.48244.13.73.04
Total Loans and Leases 12,939.7 216.1 3.3613,223.6222.13.38
Other Earning Assets 68.0 0.4 1.0560.20.51.85
Total Earning Assets(2) 22,492.1 288.5 2.5821,010.6271.92.60
Cash and Due from Banks 296.5292.3
Other Assets 2,377.22,179.9
Total Assets$ 25,165.8$23,482.8
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings$ 6,820.7$ 2.2 0.07% $6,169.5$1.10.04%
Money Market 4,088.3 2.0 0.093,657.31.00.05
Time 1,709.8 3.2 0.382,160.85.30.49
Total Interest-Bearing Deposits 12,618.8 7.4 0.1211,987.67.40.12
Long-Term Borrowings - - -200.02.72.76
Total Interest-Bearing Liabilities 12,618.8 7.4 0.1212,187.610.10.17
Net Interest Income$ 281.1$261.8
Interest Rate Spread 2.46% 2.43%
Net Interest Margin 2.51% 2.50%
Noninterest-Bearing Demand Deposits 9,563.68,086.1
Other Liabilities 578.9499.4
Stockholders' Equity 2,404.52,709.7
Total Liabilities and Stockholders' Equity$ 25,165.8$23,482.8


(1)Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.
(2)Interest income includes taxable-equivalent basis adjustments of $2.1 million and $1.1 million for the six months ended June 30, 2022 and 2021, respectively.



Analysis of Change in Net Interest IncomeTable 6
Three Months Ended June 30, 2022
Compared to March 31, 2022
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$ 0.1$ 2.1$ 2.2
Available-for-Sale Investment Securities
Taxable (15.8) 3.2 (12.6)
Non-Taxable (5.6) 2.1 (3.5)
Held-to-Maturity Investment Securities
Taxable 15.0 - 15.0
Non-Taxable 4.1 - 4.1
Total Investment Securities (2.3) 5.3 3.0
Loans and Leases
Commercial and industrial (0.1) 0.5 0.4
Commercial real estate 1.4 3.5 4.9
Construction (0.4) 1.0 0.6
Residential:
Residential mortgage 0.6 1.3 1.9
Home equity line 0.4 - 0.4
Consumer - (0.1) (0.1)
Lease financing 0.1 0.1 0.2
Total Loans and Leases 2.0 6.3 8.3
Other Earning Assets - (0.1) (0.1)
Total Change in Interest Income (0.2) 13.6 13.4
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 1.1 1.2
Money Market - 0.9 0.9
Time (0.1) (0.1) (0.2)
Total Interest-Bearing Deposits - 1.9 1.9
Total Change in Interest Expense - 1.9 1.9
Change in Net Interest Income$ (0.2)$ 11.7$ 11.5



Analysis of Change in Net Interest IncomeTable 7
Three Months Ended June 30, 2022
Compared to June 30, 2021
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$ -$ 2.4$ 2.4
Available-for-Sale Investment Securities
Taxable (9.4) 3.5 (5.9)
Non-Taxable (4.1) 1.5 (2.6)
Held-to-Maturity Investment Securities
Taxable 15.0 - 15.0
Non-Taxable 4.1 - 4.1
Total Investment Securities 5.6 5.0 10.6
Loans and Leases
Commercial and industrial (7.1) 1.0 (6.1)
Commercial real estate 3.0 2.4 5.4
Construction (0.8) 0.8 -
Residential:
Residential mortgage 3.7 (1.0) 2.7
Home equity line 0.9 (0.5) 0.4
Consumer (0.7) (0.7) (1.4)
Lease financing (0.1) 0.3 0.2
Total Loans and Leases (1.1) 2.3 1.2
Other Earning Assets - (0.2) (0.2)
Total Change in Interest Income 4.5 9.5 14.0
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 1.1 1.2
Money Market 0.1 0.8 0.9
Time (0.4) (0.4) (0.8)
Total Interest-Bearing Deposits (0.2) 1.5 1.3
Long-Term Borrowings (0.7) (0.7) (1.4)
Total Change in Interest Expense (0.9) 0.8 (0.1)
Change in Net Interest Income$ 5.4$ 8.7$ 14.1



Analysis of Change in Net Interest IncomeTable 8
Six Months Ended June 30, 2022
Compared to June 30, 2021
(dollars in millions)VolumeRateTotal
Change in Interest Income:
Interest-Bearing Deposits in Other Banks$ -$ 2.7$ 2.7
Available-for-Sale Investment Securities
Taxable (1.9) 3.0 1.1
Non-Taxable (0.6) 0.5 (0.1)
Held-to-Maturity Investment Securities
Taxable 15.0 - 15.0
Non-Taxable 4.1 - 4.1
Total Investment Securities 16.6 3.5 20.1
Loans Held for Sale (0.1) - (0.1)
Loans and Leases
Commercial and industrial (14.7) 2.9 (11.8)
Commercial real estate 4.8 1.4 6.2
Construction (0.5) 0.5 -
Residential:
Residential mortgage 7.2 (4.4) 2.8
Home equity line 1.3 (1.2) 0.1
Consumer (2.1) (1.5) (3.6)
Lease financing (0.2) 0.5 0.3
Total Loans and Leases (4.2) (1.8) (6.0)
Other Earning Assets 0.1 (0.2) (0.1)
Total Change in Interest Income 12.4 4.2 16.6
Change in Interest Expense:
Interest-Bearing Deposits
Savings 0.1 1.0 1.1
Money Market 0.2 0.8 1.0
Time (1.0) (1.1) (2.1)
Total Interest-Bearing Deposits (0.7) 0.7 -
Long-Term Borrowings (1.4) (1.3) (2.7)
Total Change in Interest Expense (2.1) (0.6) (2.7)
Change in Net Interest Income$ 14.5$ 4.8$ 19.3



Loans and LeasesTable 9
June 30, March 31, December 31, June 30,
(dollars in thousands)2022202220212021
Commercial and industrial:
Commercial and industrial excluding Paycheck Protection Program loans$ 1,898,899$1,817,346$1,870,657$1,753,444
Paycheck Protection Program loans 43,233106,188216,442811,103
Total commercial and industrial 1,942,1321,923,5342,087,0992,564,547
Commercial real estate 3,956,8283,759,9803,639,6233,528,068
Construction 727,771708,300813,969853,865
Residential:
Residential mortgage 4,212,7684,153,8244,083,3673,821,407
Home equity line 971,569918,101876,608825,368
Total residential 5,184,3375,071,9254,959,9754,646,775
Consumer 1,207,0511,204,8341,229,9391,267,559
Lease financing 244,662223,170231,394242,971
Total loans and leases$ 13,262,781$12,891,743$12,961,999$13,103,785



DepositsTable 10
June 30, March 31, December 31, June 30,
(dollars in thousands)2022202220212021
Demand$ 9,610,883$9,765,609$9,393,863$8,589,922
Savings 7,243,1856,812,7586,612,7756,421,053
Money Market 4,079,7063,990,2254,033,0703,920,477
Time 1,667,6801,701,8381,776,4381,903,663
Total Deposits$ 22,601,454$22,270,430$21,816,146$20,835,115



Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or MoreTable 11
June 30, March 31, December 31, June 30,
(dollars in thousands)2022202220212021
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial$ 682$707$718$828
Commercial real estate 727727727937
Lease financing -75--
Total Commercial Loans 1,4091,5091,4451,765
Residential Loans:
Residential mortgage 6,4507,0925,6377,140
Total Residential Loans 6,4507,0925,6377,140
Total Non-Accrual Loans and Leases 7,8598,6017,0828,905
Other Real Estate Owned --175-
Total Non-Performing Assets$ 7,859$8,601$7,257$8,905
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial$ 2,230$591$740$494
Commercial real estate 176---
Construction 352--60
Total Commercial Loans 2,758591740554
Residential Loans:
Residential mortgage 75013987-
Home equity line 1,0392,2523,6814,680
Total Residential Loans 1,7892,2654,6684,680
Consumer 1,2181,5881,8001,134
Total Accruing Loans and Leases Past Due 90 Days or More$ 5,765$4,444$7,208$6,368
Restructured Loans on Accrual Status and Not Past Due 90 Days or More$ 29,440$32,590$34,893$36,668
Total Loans and Leases$ 13,262,781$12,891,743$12,961,999$13,103,785



Allowance for Credit Losses and Reserve for Unfunded Commitments
Table 12
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(dollars in thousands)2022
2022
2021
2022
2021
Balance at Beginning of Period$ 179,238$187,584$234,469 187,584239,057
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial (243)(706)(330) (949)(1,293)
Commercial real estate --- -(66)
Total Commercial Loans (243)(706)(330) (949)(1,359)
Residential Loans:
Residential mortgage --- -(98)
Home equity line (1,120)(43)- (1,163)-
Total Residential Loans (1,120)(43)- (1,163)(98)
Consumer (3,659)(4,109)(3,917) (7,768)(10,458)
Total Loans and Leases Charged-Off (5,022)(4,858)(4,247) (9,880)(11,915)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial 30153287 354502
Commercial real estate -1412 1415
Construction --- -166
Lease financing 60-- 60-
Total Commercial Loans 36167299 428683
Residential Loans:
Residential mortgage 1921614 20831
Home equity line 1912838 21962
Total Residential Loans 3834452 42793
Consumer 1,9402,1482,797 4,0885,452
Total Recoveries on Loans and Leases Previously Charged-Off 2,6842,2593,148 4,9436,228
Net Loans and Leases Charged-Off (2,338)(2,599)(1,099) (4,937)(5,687)
Provision for Credit Losses 1,000(5,747)(35,000) (4,747)(35,000)
Balance at End of Period$ 177,900$179,238$198,370$ 177,900$198,370
Components:
Allowance for Credit Losses$ 148,942$150,280$169,148$ 148,942$169,148
Reserve for Unfunded Commitments 28,95828,95829,222 28,95829,222
Total Allowance for Credit Losses and Reserve for Unfunded Commitments$ 177,900$179,238$198,370$ 177,900$198,370
Average Loans and Leases Outstanding$ 13,058,558$12,819,612$13,205,086$ 12,939,745$13,223,575
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) 0.07% 0.08%0.03% 0.08% 0.09%
Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.12% 1.17%1.29% 1.12% 1.29%
Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases18.95x17.47x18.99x18.95x18.99x


(1)Annualized for the three and six months ended June 30, 2022 and 2021, and three months ended March 31, 2022.



Loans and Leases by Year of Origination and Credit Quality IndicatorTable 13
Revolving
Loans
Converted
Term LoansRevolvingto Term
Amortized Cost Basis by Origination YearLoansLoans
AmortizedAmortized
(dollars in thousands)20222021202020192018PriorCost BasisCost BasisTotal
Commercial Lending
Commercial and Industrial
Risk rating:
Pass$ 216,303$ 421,981$ 66,601$ 182,175$ 60,586$ 156,647$ 697,256$ 19,128$ 1,820,677
Special Mention 2,816 316 1,628 2,822 748 5,295 1,073 841 15,539
Substandard - 320 1,103 1,605 1,019 879 16,214 114 21,254
Other (1) 12,807 9,613 11,531 5,366 3,075 1,576 40,694 - 84,662
Total Commercial and Industrial 231,926 432,230 80,863 191,968 65,428 164,397 755,237 20,083 1,942,132
Commercial Real Estate
Risk rating:
Pass 516,062 695,446 338,391 516,210 459,372 1,270,438 84,174 - 3,880,093
Special Mention - - 562 47,781 - 11,140 695 - 60,178
Substandard - - 180 - 1,742 14,476 3 - 16,401
Other (1) - - - - - 156 - - 156
Total Commercial Real Estate 516,062 695,446 339,133 563,991 461,114 1,296,210 84,872 - 3,956,828
Construction
Risk rating:
Pass 39,575 193,588 127,677 85,471 115,881 88,509 14,965 - 665,666
Special Mention - - - 236 - 350 - - 586
Substandard - - - - 351 498 - - 849
Other (1) 13,228 29,529 6,049 2,849 3,913 4,151 951 - 60,670
Total Construction 52,803 223,117 133,726 88,556 120,145 93,508 15,916 - 727,771
Lease Financing
Risk rating:
Pass 41,656 26,813 49,889 43,989 7,801 68,457 - - 238,605
Special Mention - 457 2,642 1,358 11 17 - - 4,485
Substandard - - 195 16 14 1,347 - - 1,572
Total Lease Financing 41,656 27,270 52,726 45,363 7,826 69,821 - - 244,662
Total Commercial Lending$ 842,447$ 1,378,063$ 606,448$ 889,878$ 654,513$ 1,623,936$ 856,025$ 20,083$ 6,871,393


Revolving
Loans
Converted
Term LoansRevolvingto Term
Amortized Cost Basis by Origination YearLoansLoans
(continued)AmortizedAmortized
(dollars in thousands)20222021202020192018PriorCost BasisCost BasisTotal
Residential Lending
Residential Mortgage
FICO:
740 and greater$ 352,342$ 1,069,214$ 587,478$ 252,428$ 178,752$ 974,057$ -$ -$ 3,414,271
680 - 739 46,224 124,306 79,422 45,117 21,882 144,226 - - 461,177
620 - 679 5,305 19,143 14,291 5,405 3,892 38,470 - - 86,506
550 - 619 169 1,943 294 226 2,073 8,017 - - 12,722
Less than 550 2,085 1,242 60 - 340 4,656 - - 8,383
No Score (3) 10,652 14,868 7,544 13,471 16,488 54,373 - - 117,396
Other (2) 20,365 19,445 15,580 9,552 9,757 31,304 4,999 1,311 112,313
Total Residential Mortgage 437,142 1,250,161 704,669 326,199 233,184 1,255,103 4,999 1,311 4,212,768
Home Equity Line
FICO:
740 and greater - - - - - - 748,148 2,227 750,375
680 - 739 - - - - - - 157,042 3,106 160,148
620 - 679 - - - - - - 40,070 2,454 42,524
550 - 619 - - - - - - 9,202 1,601 10,803
Less than 550 - - - - - - 1,159 491 1,650
No Score (3) - - - - - - 6,069 - 6,069
Total Home Equity Line - - - - - - 961,690 9,879 971,569
Total Residential Lending 437,142 1,250,161 704,669 326,199 233,184 1,255,103 966,689 11,190 5,184,337
Consumer Lending
FICO:
740 and greater 115,911 132,565 66,828 59,155 38,001 17,426 117,266 203 547,355
680 - 739 53,590 80,240 45,783 41,393 23,562 13,947 67,636 566 326,717
620 - 679 11,760 35,430 17,746 22,180 13,928 11,374 30,079 1,018 143,515
550 - 619 1,000 6,548 6,576 10,400 7,652 6,801 10,044 1,026 50,047
Less than 550 379 1,758 2,973 5,022 2,547 2,525 3,047 483 18,734
No Score (3) 1,087 402 9 52 31 45 37,536 303 39,465
Other (2) 1,675 4,218 358 1,674 - 2,152 71,141 - 81,218
Total Consumer Lending 185,402 261,161 140,273 139,876 85,721 54,270 336,749 3,599 1,207,051
Total Loans and Leases$ 1,464,991$ 2,889,385$ 1,451,390$ 1,355,953$ 973,418$ 2,933,309$ 2,159,463$ 34,872$ 13,262,781


(1) Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score.
(2)Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a "Pass" rating.
(3) No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.



GAAP to Non-GAAP ReconciliationTable 14
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)20222022202120222021
Income Statement Data:
Net income$ 59,360$57,719$86,741$ 117,079$144,434
Average total stockholders' equity$ 2,262,654$2,547,865$2,691,966$ 2,404,471$2,709,735
Less: average goodwill 995,492995,492995,492 995,492995,492
Average tangible stockholders' equity$ 1,267,162$1,552,373$1,696,474$ 1,408,979$1,714,243
Average total assets$ 25,250,176$25,080,453$24,015,065$ 25,165,783$23,482,839
Less: average goodwill 995,492995,492995,492 995,492995,492
Average tangible assets$ 24,254,684$24,084,961$23,019,573$ 24,170,291$22,487,347
Return on average total stockholders' equity(1) 10.52% 9.19%12.92% 9.82% 10.75%
Return on average tangible stockholders' equity (non-GAAP)(1) 18.79% 15.08%20.51% 16.76% 16.99%
Return on average total assets(1) 0.94% 0.93%1.45% 0.94% 1.24%
Return on average tangible assets (non-GAAP)(1) 0.98% 0.97%1.51% 0.98% 1.30%


As ofAs ofAs ofAs of
June 30, March 31, December 31, June 30,
(dollars in thousands, except per share amounts)2022202220212021
Balance Sheet Data:
Total stockholders' equity$ 2,252,611$2,285,149$2,656,912$2,731,341
Less: goodwill 995,492995,492995,492995,492
Tangible stockholders' equity$ 1,257,119$1,289,657$1,661,420$1,735,849
Total assets$ 25,377,533$25,042,720$24,992,410$24,246,328
Less: goodwill 995,492995,492995,492995,492
Tangible assets$ 24,382,041$24,047,228$23,996,918$23,250,836
Shares outstanding 127,451,087127,686,307127,502,472129,019,871
Total stockholders' equity to total assets 8.88% 9.13%10.63%11.26%
Tangible stockholders' equity to tangible assets (non-GAAP) 5.16% 5.36%6.92%7.47%
Book value per share$ 17.67$17.90$20.84$21.17
Tangible book value per share (non-GAAP)$ 9.86$10.10$13.03$13.45


(1) Annualized for the three and six months ended June 30, 2022 and 2021, and three months ended March 31, 2022.






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