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First Hawaiian, Inc. Reports Third Quarter 2023 Financial Results and Declares Dividend
Source: Nasdaq GlobeNewswire / 27 Oct 2023 08:00:01 America/New_York
HONOLULU, Oct. 27, 2023 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ:FHB), (“First Hawaiian” or the “Company”) today reported financial results for its quarter ended September 30, 2023.
“I’m pleased to report that we delivered strong results in the third quarter. Our loan balances were stable, we grew consumer and commercial deposits, and credit quality remained excellent,” said Bob Harrison, Chairman, President, and CEO. “It was during this time that the world saw the devastating impacts of the wildfires on Maui. Our priority during the quarter was to help our customers, colleagues and the community through this tragedy, and we are committed to helping Maui recover and rebuild stronger than ever.”
On October 18, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share. The dividend will be payable on December 1, 2023, to stockholders of record at the close of business on November 20, 2023.
Third Quarter 2023 Highlights:
- Net income of $58.2 million, or $0.46 per diluted share
- Total loans and leases decreased $30.5 million versus prior quarter
- Total deposits increased $433.3 million versus prior quarter
- Net interest margin decreased 5 basis points to 2.86%
- Recorded a $7.5 million provision for credit losses
- Board of Directors declared a quarterly dividend of $0.26 per share
Balance Sheet
Total assets were $24.9 billion as of September 30, 2023, compared to $24.5 billion as of June 30, 2023.
Gross loans and leases were $14.3 billion as of September 30, 2023, a slight decrease of $30.5 million, or 0.2%, from $14.4 billion as of June 30, 2023.
Total deposits were $21.5 billion as of September 30, 2023, an increase of $433.3 million, or 2.1%, from $21.1 billion as of June 30, 2023.
Net Interest Income
Net interest income for the third quarter of 2023 was $157.1 million, a decrease of $2.8 million, or 1.7%, compared to $159.9 million for the prior quarter.
The net interest margin was 2.86% in the third quarter of 2023, a decrease of 5 basis points compared to 2.91% in the prior quarter.
Provision Expense
During the quarter ended September 30, 2023, we recorded a $7.5 million provision for credit losses. In the quarter ended June 30, 2023, we recorded a $5.0 million provision for credit losses.
Noninterest Income
Noninterest income was $46.1 million in the third quarter of 2023, a decrease of $1.3 million compared to noninterest income of $47.3 million in the prior quarter.
Noninterest Expense
Noninterest expense was $119.4 million in the third quarter of 2023, a decrease of $1.5 million compared to noninterest expense of $120.9 million in the prior quarter.
The efficiency ratio was 58.3% and 58.0% for the quarters ended September 30, 2023 and June 30, 2023, respectively.
Taxes
The effective tax rate was 23.8% and 23.3% for the quarters ended September 30, 2023 and June 30, 2023, respectively.
Asset Quality
The allowance for credit losses was $154.8 million, or 1.08% of total loans and leases, as of September 30, 2023, compared to $148.6 million, or 1.03% of total loans and leases, as of June 30, 2023. The reserve for unfunded commitments was $37.8 million as of September 30, 2023 compared to $36.2 million as of June 30, 2023. Net recoveries were $0.3 million, or 0.01% of average loans and leases on an annualized basis, for the quarter ended September 30, 2023, compared to net charge-offs of $3.5 million, or 0.10% of average loans and leases on an annualized basis, for the quarter ended June 30, 2023. Total non-performing assets were $14.6 million, or 0.10% of total loans and leases and other real estate owned, on September 30, 2023, compared to total non-performing assets of $13.2 million, or 0.09% of total loans and leases and other real estate owned, on June 30, 2023.
Capital
Total stockholders' equity was $2.4 billion on September 30, 2023 and June 30, 2023.
The tier 1 leverage, common equity tier 1 and total capital ratios were 8.45%, 12.21% and 13.38%, respectively, on September 30, 2023, compared with 8.30%, 12.05% and 13.17%, respectively, on June 30, 2023.
The Company did not repurchase any shares in the third quarter.
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.
To access the call by phone, please register via the following link: https://register.vevent.com/register/BIb8dec5c067a34a9783388cdb9da26a39, 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. 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 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, 2022 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023.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.comMedia Contact:
Lindsay Chambers
(808) 525-6254
lchambers@fhb.comFinancial Highlights Table 1 For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, (dollars in thousands, except per share data) 2023 2023 2022 2023 2022 Operating Results: Net interest income $ 157,148 $ 159,939 $ 162,736 $ 484,334 $ 441,755 Provision for credit losses 7,500 5,000 3,183 21,300 (1,564 ) Noninterest income 46,097 47,348 45,857 142,468 131,374 Noninterest expense 119,383 120,881 113,332 358,831 326,549 Net income 58,221 62,442 69,018 187,481 186,097 Basic earnings per share 0.46 0.49 0.54 1.47 1.46 Diluted earnings per share 0.46 0.49 0.54 1.47 1.45 Dividends declared per share 0.26 0.26 0.26 0.78 0.78 Dividend payout ratio 56.52 % 53.06 % 48.15 % 53.06 % 53.79 % Performance Ratios(1): Net interest margin 2.86 % 2.91 % 2.93 % 2.96 % 2.65 % Efficiency ratio 58.31 % 57.96 % 53.98 % 56.86 % 56.63 % Return on average total assets 0.93 % 1.01 % 1.10 % 1.01 % 0.99 % Return on average tangible assets (non-GAAP)(2) 0.97 % 1.05 % 1.14 % 1.06 % 1.03 % Return on average total stockholders' equity 9.76 % 10.68 % 12.08 % 10.72 % 10.55 % Return on average tangible stockholders' equity (non-GAAP)(2) 16.84 % 18.57 % 21.53 % 18.68 % 18.26 % Average Balances: Average loans and leases $ 14,349,402 $ 14,283,222 $ 13,491,428 $ 14,238,309 $ 13,125,660 Average earning assets 22,060,480 22,186,316 22,258,066 22,040,704 22,413,209 Average assets 24,727,893 24,821,486 24,957,042 24,699,826 25,095,438 Average deposits 21,212,102 21,057,259 22,148,039 21,245,055 22,170,824 Average stockholders' equity 2,367,422 2,344,285 2,267,152 2,337,292 2,358,195 Market Value Per Share: Closing 18.05 18.01 24.63 18.05 24.63 High 22.59 21.00 28.14 28.28 31.16 Low 17.41 15.08 21.21 15.08 21.21 As of As of As of As of September 30, June 30, December 31, September 30, (dollars in thousands, except per share data) 2023 2023 2022 2022 Balance Sheet Data: Loans and leases $ 14,332,335 $ 14,362,832 $ 14,092,012 $ 13,700,374 Total assets 24,912,524 24,511,566 24,577,223 24,870,272 Total deposits 21,511,489 21,078,166 21,689,029 22,091,738 Short-term borrowings 500,000 — 75,000 — Long-term borrowings — 500,000 — — Total stockholders' equity 2,351,009 2,359,738 2,269,005 2,200,651 Per Share of Common Stock: Book value $ 18.42 $ 18.49 $ 17.82 $ 17.28 Tangible book value (non-GAAP)(2) 10.62 10.69 10.00 9.46 Asset Quality Ratios: Non-accrual loans and leases / total loans and leases 0.10 % 0.09 % 0.08 % 0.06 % Allowance for credit losses for loans and leases / total loans and leases 1.08 % 1.03 % 1.02 % 1.08 % Capital Ratios: Common Equity Tier 1 Capital Ratio 12.21 % 12.05 % 11.82 % 11.79 % Tier 1 Capital Ratio 12.21 % 12.05 % 11.82 % 11.79 % Total Capital Ratio 13.38 % 13.17 % 12.92 % 12.92 % Tier 1 Leverage Ratio 8.45 % 8.30 % 8.11 % 7.78 % Total stockholders' equity to total assets 9.44 % 9.63 % 9.23 % 8.85 % Tangible stockholders' equity to tangible assets (non-GAAP)(2) 5.67 % 5.80 % 5.40 % 5.05 % Non-Financial Data: Number of branches 50 51 51 51 Number of ATMs 294 296 294 303 Number of Full-Time Equivalent Employees 2,087 2,126 2,063 2,042
(1) Except for the efficiency ratio, amounts are annualized for the three and nine months ended September 30, 2023 and 2022 and three months ended June 30, 2023. (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 Income Table 2 For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, (dollars in thousands, except per share amounts) 2023 2023 2022 2023 2022 Interest income Loans and lease financing $ 194,098 $ 185,340 $ 134,646 $ 551,777 $ 350,294 Available-for-sale investment securities 18,426 18,094 19,644 55,208 68,394 Held-to-maturity investment securities 18,271 18,282 17,950 55,510 36,239 Other 9,004 7,489 4,150 20,054 7,828 Total interest income 239,799 229,205 176,390 682,549 462,755 Interest expense Deposits 74,651 58,071 13,653 176,006 20,999 Short-term and long-term borrowings 6,838 10,656 1 20,057 1 Other 1,162 539 — 2,152 — Total interest expense 82,651 69,266 13,654 198,215 21,000 Net interest income 157,148 159,939 162,736 484,334 441,755 Provision for credit losses 7,500 5,000 3,183 21,300 (1,564 ) Net interest income after provision for credit losses 149,648 154,939 159,553 463,034 443,319 Noninterest income Service charges on deposit accounts 7,524 7,246 7,089 22,001 21,433 Credit and debit card fees 15,748 15,461 17,746 47,507 49,652 Other service charges and fees 9,546 9,056 9,179 27,764 27,851 Trust and investment services income 9,742 9,448 9,800 28,804 27,442 Bank-owned life insurance 1,872 3,271 (341 ) 10,263 (1,617 ) Other 1,665 2,866 2,384 6,129 6,613 Total noninterest income 46,097 47,348 45,857 142,468 131,374 Noninterest expense Salaries and employee benefits 55,937 57,904 51,372 169,873 149,500 Contracted services and professional fees 16,393 17,498 16,625 50,204 52,389 Occupancy 6,711 7,554 8,115 22,047 22,859 Equipment 11,826 11,000 10,791 32,562 24,522 Regulatory assessment and fees 4,149 3,676 2,487 11,661 7,012 Advertising and marketing 2,289 1,891 1,902 6,174 5,924 Card rewards program 8,358 7,681 8,141 24,124 22,309 Other 13,720 13,677 13,899 42,186 42,034 Total noninterest expense 119,383 120,881 113,332 358,831 326,549 Income before provision for income taxes 76,362 81,406 92,078 246,671 248,144 Provision for income taxes 18,141 18,964 23,060 59,190 62,047 Net income $ 58,221 $ 62,442 $ 69,018 $ 187,481 $ 186,097 Basic earnings per share $ 0.46 $ 0.49 $ 0.54 $ 1.47 $ 1.46 Diluted earnings per share $ 0.46 $ 0.49 $ 0.54 $ 1.47 $ 1.45 Basic weighted-average outstanding shares 127,609,860 127,591,371 127,377,713 127,552,255 127,534,746 Diluted weighted-average outstanding shares 127,936,440 127,832,351 127,796,617 127,897,829 127,996,672 Consolidated Balance Sheets Table 3 September 30, June 30, December 31, September 30, (dollars in thousands, except share amount) 2023 2023 2022 2022 Assets Cash and due from banks $ 246,028 $ 318,333 $ 297,502 $ 291,360 Interest-bearing deposits in other banks 967,400 239,798 229,122 657,574 Investment securities: Available-for-sale, at fair value (amortized cost: $3,172,031 as of September 30, 2023, $3,296,825 as of June 30, 2023, $3,549,599 as of December 31, 2022 and $3,673,396 as of September 30, 2022) 2,722,704 2,909,372 3,151,133 3,289,160 Held-to-maturity, at amortized cost (fair value: $3,433,029 as of September 30, 2023, $3,697,261 as of June 30, 2023, $3,814,822 as of December 31, 2022 and $3,960,713 as of September 30, 2022) 4,104,114 4,180,408 4,320,639 4,406,143 Loans held for sale — — — 361 Loans and leases 14,332,335 14,362,832 14,092,012 13,700,374 Less: allowance for credit losses 154,795 148,581 143,900 148,163 Net loans and leases 14,177,540 14,214,251 13,948,112 13,552,211 Premises and equipment, net 277,805 277,817 280,355 299,179 Other real estate owned and repossessed personal property — — 91 139 Accrued interest receivable 84,327 80,710 78,194 68,545 Bank-owned life insurance 477,698 476,177 473,067 470,202 Goodwill 995,492 995,492 995,492 995,492 Mortgage servicing rights 5,855 6,072 6,562 6,866 Other assets 853,561 813,136 796,954 833,040 Total assets $ 24,912,524 $ 24,511,566 $ 24,577,223 $ 24,870,272 Liabilities and Stockholders' Equity Deposits: Interest-bearing $ 13,612,493 $ 12,911,539 $ 12,824,383 $ 12,774,645 Noninterest-bearing 7,898,996 8,166,627 8,864,646 9,317,093 Total deposits 21,511,489 21,078,166 21,689,029 22,091,738 Short-term borrowings 500,000 — 75,000 — Long-term borrowings — 500,000 — — Retirement benefits payable 99,685 100,671 102,577 133,981 Other liabilities 450,341 472,991 441,612 443,902 Total liabilities 22,561,515 22,151,828 22,308,218 22,669,621 Stockholders' equity Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,330,663 / 127,609,934 shares as of September 30, 2023, issued/outstanding: 141,327,860 / 127,608,037 shares as of June 30, 2023, issued/outstanding: 140,963,918 / 127,363,327 shares as of December 31, 2022 and issued/outstanding: 140,958,520 / 127,357,680 shares as of September 30, 2022) 1,413 1,413 1,410 1,410 Additional paid-in capital 2,545,659 2,543,226 2,538,336 2,535,601 Retained earnings 823,895 799,045 736,544 690,433 Accumulated other comprehensive loss, net (648,731 ) (612,736 ) (639,254 ) (658,756 ) Treasury stock (13,720,729 shares as of September 30, 2023, 13,719,823 shares as of June 30, 2023, 13,600,591 shares as of December 31, 2022 and 13,600,840 shares as of September 30, 2022) (371,227 ) (371,210 ) (368,031 ) (368,037 ) Total stockholders' equity 2,351,009 2,359,738 2,269,005 2,200,651 Total liabilities and stockholders' equity $ 24,912,524 $ 24,511,566 $ 24,577,223 $ 24,870,272 Average Balances and Interest Rates Table 4 Three Months Ended Three Months Ended Three Months Ended September 30, 2023 June 30, 2023 September 30, 2022 Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $ 608.6 $ 8.2 5.36 % $ 569.3 $ 7.2 5.07 % $ 724.0 $ 4.0 2.20 % Available-for-Sale Investment Securities Taxable 2,834.6 18.4 2.59 2,978.6 18.0 2.42 3,733.8 19.2 2.05 Non-Taxable 2.3 — 5.48 5.8 0.1 5.74 45.1 0.6 5.16 Held-to-Maturity Investment Securities Taxable 3,544.1 15.0 1.70 3,618.7 15.3 1.69 3,573.6 14.6 1.64 Non-Taxable 604.3 4.1 2.66 610.4 3.7 2.46 613.6 4.2 2.72 Total Investment Securities 6,985.3 37.5 2.14 7,213.5 37.1 2.06 7,966.1 38.6 1.93 Loans Held for Sale 0.4 — 6.63 0.5 — 5.87 0.7 — 3.62 Loans and Leases(1) Commercial and industrial 2,123.5 35.7 6.66 2,265.7 36.2 6.41 2,025.5 20.7 4.05 Commercial real estate 4,381.8 71.4 6.47 4,183.6 64.9 6.22 4,016.7 42.3 4.18 Construction 873.7 15.5 7.05 874.3 15.2 6.96 737.4 8.6 4.63 Residential: Residential mortgage 4,316.3 40.1 3.72 4,314.0 39.1 3.62 4,224.0 36.4 3.45 Home equity line 1,154.0 10.1 3.45 1,119.3 9.2 3.31 991.1 7.2 2.87 Consumer 1,172.8 18.3 6.19 1,196.6 17.7 5.92 1,218.0 17.1 5.57 Lease financing 327.3 3.7 4.48 329.7 3.6 4.43 278.7 2.7 3.81 Total Loans and Leases 14,349.4 194.8 5.39 14,283.2 185.9 5.22 13,491.4 135.0 3.98 Other Earning Assets 116.8 0.8 2.64 119.8 0.3 0.99 75.9 0.1 0.69 Total Earning Assets(2) 22,060.5 241.3 4.35 22,186.3 230.5 4.16 22,258.1 177.7 3.18 Cash and Due from Banks 276.0 257.9 277.0 Other Assets 2,391.4 2,377.3 2,421.9 Total Assets $ 24,727.9 $ 24,821.5 $ 24,957.0 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 5,982.5 $ 19.2 1.27 % $ 6,099.4 $ 16.1 1.05 % 6,871.5 $ 6.7 0.39 % Money Market 3,907.2 24.7 2.51 3,809.8 19.6 2.07 4,086.1 4.8 0.47 Time 3,362.7 30.8 3.63 2,877.8 22.4 3.12 1,720.5 2.1 0.48 Total Interest-Bearing Deposits 13,252.4 74.7 2.23 12,787.0 58.1 1.82 12,678.1 13.6 0.43 Federal Funds Purchased — — — 2.9 — 5.00 0.2 — 1.67 Other Short-Term Borrowings 113.1 1.5 5.17 362.9 4.7 5.16 — — — Long-Term Borrowings 440.2 5.3 4.83 500.0 6.0 4.78 — — — Other Interest-Bearing Liabilities 89.1 1.2 5.17 54.0 0.5 4.00 — — — Total Interest-Bearing Liabilities 13,894.8 82.7 2.36 13,706.8 69.3 2.03 12,678.3 13.6 0.43 Net Interest Income $ 158.6 $ 161.2 $ 164.1 Interest Rate Spread 1.99 % 2.13 % 2.75 % Net Interest Margin 2.86 % 2.91 % 2.93 % Noninterest-Bearing Demand Deposits 7,959.7 8,270.3 9,469.9 Other Liabilities 506.0 500.1 541.6 Stockholders' Equity 2,367.4 2,344.3 2,267.2 Total Liabilities and Stockholders' Equity $ 24,727.9 $ 24,821.5 $ 24,957.0
(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 $1.5 million, $1.3 million and $1.3 million for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022, respectively. Average Balances and Interest Rates Table 5 Nine Months Ended Nine Months Ended September 30, 2023 September 30, 2022 Average Income/ Yield/ Average Income/ Yield/ (dollars in millions) Balance Expense Rate Balance Expense Rate Earning Assets Interest-Bearing Deposits in Other Banks $ 493.6 $ 18.8 5.10 % $ 1,051.7 $ 7.3 0.93 % Available-for-Sale Investment Securities Taxable 2,964.0 54.8 2.47 5,145.3 64.9 1.68 Non-Taxable 13.0 0.5 5.57 227.9 4.4 2.59 Held-to-Maturity Investment Securities Taxable 3,615.0 46.0 1.70 2,382.2 29.7 1.66 Non-Taxable 608.9 11.9 2.62 409.1 8.3 2.71 Total Investment Securities 7,200.9 113.2 2.10 8,164.5 107.3 1.75 Loans Held for Sale 0.3 — 6.11 0.7 — 2.92 Loans and Leases(1) Commercial and industrial 2,193.8 104.3 6.35 1,983.5 50.3 3.39 Commercial real estate 4,224.7 194.6 6.16 3,820.6 98.8 3.46 Construction 874.0 45.4 6.95 738.4 20.7 3.74 Residential: Residential mortgage 4,312.4 117.6 3.64 4,173.1 108.0 3.45 Home equity line 1,116.4 27.9 3.35 943.2 18.5 2.62 Consumer 1,194.1 53.2 5.95 1,218.2 48.1 5.29 Lease financing 322.9 10.5 4.34 248.7 6.7 3.60 Total Loans and Leases 14,238.3 553.5 5.19 13,125.7 351.1 3.57 Other Earning Assets 107.6 1.3 1.53 70.6 0.5 0.92 Total Earning Assets(2) 22,040.7 686.8 4.16 22,413.2 466.2 2.78 Cash and Due from Banks 273.3 289.9 Other Assets 2,385.8 2,392.3 Total Assets $ 24,699.8 $ 25,095.4 Interest-Bearing Liabilities Interest-Bearing Deposits Savings $ 6,144.1 $ 49.1 1.07 % $ 6,837.8 $ 8.9 0.17 % Money Market 3,857.0 58.6 2.03 4,087.6 6.8 0.22 Time 2,921.8 68.3 3.12 1,713.4 5.3 0.41 Total Interest-Bearing Deposits 12,922.9 176.0 1.82 12,638.8 21.0 0.22 Federal Funds Purchased 23.0 0.8 4.45 0.1 — 1.67 Other Short-Term Borrowings 176.5 6.8 5.15 — — — Long-Term Borrowings 349.8 12.5 4.78 — — — Other Interest-Bearing Liabilities 62.1 2.1 4.63 — — — Total Interest-Bearing Liabilities 13,534.3 198.2 1.96 12,638.9 21.0 0.22 Net Interest Income $ 488.6 $ 445.2 Interest Rate Spread 2.20 % 2.56 % Net Interest Margin 2.96 % 2.65 % Noninterest-Bearing Demand Deposits 8,322.2 9,532.0 Other Liabilities 506.0 566.3 Stockholders' Equity 2,337.3 2,358.2 Total Liabilities and Stockholders' Equity $ 24,699.8 $ 25,095.4
(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 $4.2 million and $3.5 million for the nine months ended September 30, 2023 and 2022, respectively. Analysis of Change in Net Interest Income Table 6 Three Months Ended September 30, 2023 Compared to June 30, 2023 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ 0.6 $ 0.4 $ 1.0 Available-for-Sale Investment Securities Taxable (0.9 ) 1.3 0.4 Non-Taxable (0.1 ) — (0.1 ) Held-to-Maturity Investment Securities Taxable (0.3 ) — (0.3 ) Non-Taxable — 0.4 0.4 Total Investment Securities (1.3 ) 1.7 0.4 Loans and Leases Commercial and industrial (2.1 ) 1.6 (0.5 ) Commercial real estate 3.5 3.0 6.5 Construction — 0.3 0.3 Residential: Residential mortgage — 1.0 1.0 Home equity line 0.4 0.5 0.9 Consumer (0.3 ) 0.9 0.6 Lease financing — 0.1 0.1 Total Loans and Leases 1.5 7.4 8.9 Other Earning Assets — 0.5 0.5 Total Change in Interest Income 0.8 10.0 10.8 Change in Interest Expense: Interest-Bearing Deposits Savings (0.3 ) 3.4 3.1 Money Market 0.5 4.6 5.1 Time 4.3 4.1 8.4 Total Interest-Bearing Deposits 4.5 12.1 16.6 Other Short-Term Borrowings (3.2 ) — (3.2 ) Long-Term Borrowings (0.7 ) — (0.7 ) Other Interest-Bearing Liabilities 0.5 0.2 0.7 Total Change in Interest Expense 1.1 12.3 13.4 Change in Net Interest Income $ (0.3 ) $ (2.3 ) $ (2.6 ) Analysis of Change in Net Interest Income Table 7 Three Months Ended September 30, 2023 Compared to September 30, 2022 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (0.7 ) $ 4.9 $ 4.2 Available-for-Sale Investment Securities Taxable (5.2 ) 4.4 (0.8 ) Non-Taxable (0.6 ) — (0.6 ) Held-to-Maturity Investment Securities Taxable (0.1 ) 0.5 0.4 Non-Taxable — (0.1 ) (0.1 ) Total Investment Securities (5.9 ) 4.8 (1.1 ) Loans and Leases Commercial and industrial 1.0 14.0 15.0 Commercial real estate 4.1 25.0 29.1 Construction 1.8 5.1 6.9 Residential: Residential mortgage 0.8 2.9 3.7 Home equity line 1.3 1.6 2.9 Consumer (0.6 ) 1.8 1.2 Lease financing 0.5 0.5 1.0 Total Loans and Leases 8.9 50.9 59.8 Other Earning Assets 0.1 0.6 0.7 Total Change in Interest Income 2.4 61.2 63.6 Change in Interest Expense: Interest-Bearing Deposits Savings (1.0 ) 13.5 12.5 Money Market (0.2 ) 20.1 19.9 Time 3.7 25.0 28.7 Total Interest-Bearing Deposits 2.5 58.6 61.1 Other Short-Term Borrowings 1.5 — 1.5 Long-Term Borrowings 5.3 — 5.3 Other Interest-Bearing Liabilities 1.2 — 1.2 Total Change in Interest Expense 10.5 58.6 69.1 Change in Net Interest Income $ (8.1 ) $ 2.6 $ (5.5 ) Analysis of Change in Net Interest Income Table 8 Nine Months Ended September 30, 2023 Compared to September 30, 2022 (dollars in millions) Volume Rate Total Change in Interest Income: Interest-Bearing Deposits in Other Banks $ (5.7 ) $ 17.2 $ 11.5 Available-for-Sale Investment Securities Taxable (33.6 ) 23.5 (10.1 ) Non-Taxable (6.3 ) 2.4 (3.9 ) Held-to-Maturity Investment Securities Taxable 15.6 0.7 16.3 Non-Taxable 3.9 (0.3 ) 3.6 Total Investment Securities (20.4 ) 26.3 5.9 Loans and Leases Commercial and industrial 5.9 48.1 54.0 Commercial real estate 11.4 84.4 95.8 Construction 4.3 20.4 24.7 Residential: Residential mortgage 3.6 6.0 9.6 Home equity line 3.7 5.7 9.4 Consumer (0.9 ) 6.0 5.1 Lease financing 2.3 1.5 3.8 Total Loans and Leases 30.3 172.1 202.4 Other Earning Assets 0.3 0.5 0.8 Total Change in Interest Income 4.5 216.1 220.6 Change in Interest Expense: Interest-Bearing Deposits Savings (1.0 ) 41.2 40.2 Money Market (0.4 ) 52.2 51.8 Time 6.1 56.9 63.0 Total Interest-Bearing Deposits 4.7 150.3 155.0 Federal Funds Purchased 0.8 — 0.8 Other Short-Term Borrowings 6.8 — 6.8 Long-Term Borrowings 12.5 — 12.5 Other Interest-Bearing Liabilities 2.1 — 2.1 Total Change in Interest Expense 26.9 150.3 177.2 Change in Net Interest Income $ (22.4 ) $ 65.8 $ 43.4 Loans and Leases Table 9 September 30, June 30, December 31, September 30, (dollars in thousands) 2023 2023 2022 2022 Commercial and industrial: Commercial and industrial excluding Paycheck Protection Program loans $ 2,091,379 $ 2,175,841 $ 2,217,604 $ 2,017,095 Paycheck Protection Program loans 10,063 11,990 18,293 26,712 Total commercial and industrial 2,101,442 2,187,831 2,235,897 2,043,807 Commercial real estate 4,387,751 4,290,948 4,132,309 4,103,310 Construction 885,112 913,837 844,643 765,862 Residential: Residential mortgage 4,303,924 4,317,537 4,302,788 4,252,041 Home equity line 1,167,388 1,138,163 1,055,351 1,010,631 Total residential 5,471,312 5,455,700 5,358,139 5,262,672 Consumer 1,154,203 1,182,116 1,222,934 1,218,885 Lease financing 332,515 332,400 298,090 305,838 Total loans and leases $ 14,332,335 $ 14,362,832 $ 14,092,012 $ 13,700,374 Deposits Table 10 September 30, June 30, December 31, September 30, (dollars in thousands) 2023 2023 2022 2022 Demand $ 7,898,996 $ 8,166,627 $ 8,864,646 $ 9,317,093 Savings 6,028,308 5,835,975 6,382,910 6,724,783 Money Market 3,923,054 3,767,792 3,965,423 4,150,940 Time 3,661,131 3,307,772 2,476,050 1,898,922 Total Deposits $ 21,511,489 $ 21,078,166 $ 21,689,029 $ 22,091,738 Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11 September 30, June 30, December 31, September 30, (dollars in thousands) 2023 2023 2022 2022 Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: Commercial and industrial $ 988 $ 1,024 $ 1,215 $ 1,528 Commercial real estate — — 727 727 Total Commercial Loans 988 1,024 1,942 2,255 Residential Loans: Residential mortgage 7,435 6,097 6,166 6,028 Home equity line 6,200 6,107 3,797 — Total Residential Loans 13,635 12,204 9,963 6,028 Total Non-Accrual Loans and Leases 14,623 13,228 11,905 8,283 Other Real Estate Owned — — 91 139 Total Non-Performing Assets $ 14,623 $ 13,228 $ 11,996 $ 8,422 Accruing Loans and Leases Past Due 90 Days or More Commercial Loans: Commercial and industrial $ 289 $ 599 $ 291 $ 1,445 Commercial real estate 170 619 — — Construction — — — 390 Total Commercial Loans 459 1,218 291 1,835 Residential Loans: Residential mortgage 1,430 58 58 — Home equity line — — — 1,832 Total Residential Loans 1,430 58 58 1,832 Consumer 1,681 1,975 2,885 1,976 Total Accruing Loans and Leases Past Due 90 Days or More $ 3,570 $ 3,251 $ 3,234 $ 5,643 Total Loans and Leases $ 14,332,335 $ 14,362,832 $ 14,092,012 $ 13,700,374 Allowance for Credit Losses and Reserve for Unfunded Commitments Table 12 For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, (dollars in thousands) 2023 2023 2022 2023 2022 Balance at Beginning of Period $ 184,780 $ 183,321 $ 177,900 177,735 187,584 Loans and Leases Charged-Off Commercial Loans: Commercial and industrial (784 ) (997 ) (328 ) (2,572 ) (1,277 ) Commercial real estate — — (750 ) — (750 ) Total Commercial Loans (784 ) (997 ) (1,078 ) (2,572 ) (2,027 ) Residential Loans: Residential mortgage — — (1 ) (122 ) (1 ) Home equity line — (137 ) — (272 ) (1,163 ) Total Residential Loans — (137 ) (1 ) (394 ) (1,164 ) Consumer (3,665 ) (4,516 ) (3,986 ) (12,963 ) (11,754 ) Total Loans and Leases Charged-Off (4,449 ) (5,650 ) (5,065 ) (15,929 ) (14,945 ) Recoveries on Loans and Leases Previously Charged-Off Commercial Loans: Commercial and industrial 2,637 292 240 3,175 594 Commercial real estate — — — — 14 Lease financing — — — — 60 Total Commercial Loans 2,637 292 240 3,175 668 Residential Loans: Residential mortgage 53 30 37 110 245 Home equity line 303 59 356 539 575 Total Residential Loans 356 89 393 649 820 Consumer 1,746 1,728 1,653 5,640 5,741 Total Recoveries on Loans and Leases Previously Charged-Off 4,739 2,109 2,286 9,464 7,229 Net Loans and Leases Recovered (Charged-Off) 290 (3,541 ) (2,779 ) (6,465 ) (7,716 ) Provision for Credit Losses 7,500 5,000 3,183 21,300 (1,564 ) Balance at End of Period $ 192,570 $ 184,780 $ 178,304 $ 192,570 $ 178,304 Components: Allowance for Credit Losses $ 154,795 $ 148,581 $ 148,163 $ 154,795 $ 148,163 Reserve for Unfunded Commitments 37,775 36,199 30,141 37,775 30,141 Total Allowance for Credit Losses and Reserve for Unfunded Commitments $ 192,570 $ 184,780 $ 178,304 $ 192,570 $ 178,304 Average Loans and Leases Outstanding $ 14,349,402 $ 14,283,222 $ 13,491,428 $ 14,238,309 $ 13,125,660 Ratio of Net Loans and Leases (Recovered) Charged-Off to Average Loans and Leases Outstanding(1) (0.01 ) % 0.10 % 0.08 % 0.06 % 0.08 % Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding 1.08 % 1.03 % 1.08 % 1.08 % 1.08 % Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases 10.59x 11.23x 17.89x 10.59x 17.89x
(1) Annualized for the three and nine months ended September 30, 2023 and 2022 and three months ended June 30, 2023. Loans and Leases by Year of Origination and Credit Quality Indicator Table 13 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans Amortized Amortized (dollars in thousands) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis Total Commercial Lending Commercial and Industrial Risk rating: Pass $ 55,062 $ 294,558 $ 368,460 $ 35,603 $ 150,195 $ 147,197 $ 906,094 $ 3,427 $ 1,960,596 Special Mention 1 31,427 95 730 1,125 1,569 2,677 87 37,711 Substandard 217 532 245 847 1,839 1,034 13,947 — 18,661 Other (1) 13,438 12,424 5,575 2,856 2,226 1,513 46,442 — 84,474 Total Commercial and Industrial 68,718 338,941 374,375 40,036 155,385 151,313 969,160 3,514 2,101,442 Current period gross charge-offs 130 69 74 28 108 2,163 — — 2,572 Commercial Real Estate Risk rating: Pass 288,996 881,117 665,048 329,663 559,287 1,508,430 60,613 — 4,293,154 Special Mention 2,322 7,643 41,304 543 6,935 13,039 12,483 — 84,269 Substandard — 5,110 2,004 170 — 2,599 300 — 10,183 Other (1) — — — — — 145 — — 145 Total Commercial Real Estate 291,318 893,870 708,356 330,376 566,222 1,524,213 73,396 — 4,387,751 Current period gross charge-offs — — — — — — — — — Construction Risk rating: Pass 129,160 209,227 335,433 59,164 64,168 28,916 3,826 — 829,894 Special Mention — — — — 197 669 — — 866 Other (1) 10,194 24,825 10,313 2,260 2,115 3,932 713 — 54,352 Total Construction 139,354 234,052 345,746 61,424 66,480 33,517 4,539 — 885,112 Current period gross charge-offs — — — — — — — — — Lease Financing Risk rating: Pass 83,255 88,367 19,869 35,583 34,828 69,043 — — 330,945 Special Mention — — 341 38 — — — — 379 Substandard 747 440 — — 4 — — — 1,191 Total Lease Financing 84,002 88,807 20,210 35,621 34,832 69,043 — — 332,515 Current period gross charge-offs — — — — — — — — — Total Commercial Lending $ 583,392 $ 1,555,670 $ 1,448,687 $ 467,457 $ 822,919 $ 1,778,086 $ 1,047,095 $ 3,514 $ 7,706,820 Current period gross charge-offs $ 130 $ 69 $ 74 $ 28 $ 108 $ 2,163 $ — $ — $ 2,572 Revolving Loans Converted Term Loans Revolving to Term Amortized Cost Basis by Origination Year Loans Loans (continued) Amortized Amortized (dollars in thousands) 2023 2022 2021 2020 2019 Prior Cost Basis Cost Basis Total Residential Lending Residential Mortgage FICO: 740 and greater $ 195,053 $ 527,072 $ 1,018,441 $ 536,878 $ 231,038 $ 1,012,924 $ — $ — $ 3,521,406 680 - 739 29,006 78,642 116,247 73,209 32,906 131,547 — — 461,557 620 - 679 2,847 11,153 15,830 10,678 5,705 36,289 — — 82,502 550 - 619 269 3,343 4,037 2,458 249 11,724 — — 22,080 Less than 550 — 196 2,362 1,573 50 5,373 — — 9,554 No Score (3) 5,589 19,402 11,729 6,343 9,757 53,515 — — 106,335 Other (2) 10,518 17,079 17,682 12,840 8,733 26,171 7,467 — 100,490 Total Residential Mortgage 243,282 656,887 1,186,328 643,979 288,438 1,277,543 7,467 — 4,303,924 Current period gross charge-offs — — — — — 122 — — 122 Home Equity Line FICO: 740 and greater — — — — — — 961,974 1,503 963,477 680 - 739 — — — — — — 148,629 2,382 151,011 620 - 679 — — — — — — 34,333 1,326 35,659 550 - 619 — — — — — — 9,099 948 10,047 Less than 550 — — — — — — 5,257 264 5,521 No Score (3) — — — — — — 1,673 — 1,673 Total Home Equity Line — — — — — — 1,160,965 6,423 1,167,388 Current period gross charge-offs — — — — — — 254 18 272 Total Residential Lending $ 243,282 $ 656,887 $ 1,186,328 $ 643,979 $ 288,438 $ 1,277,543 $ 1,168,432 $ 6,423 $ 5,471,312 Current period gross charge-offs $ — $ — $ — $ — $ — $ 122 $ 254 $ 18 $ 394 Consumer Lending FICO: 740 and greater 85,839 139,753 84,741 39,390 27,790 13,589 116,342 153 507,597 680 - 739 60,184 79,628 43,948 20,531 16,192 8,577 74,428 416 303,904 620 - 679 21,797 32,632 18,094 8,650 9,214 6,191 33,543 892 131,013 550 - 619 3,745 10,422 7,898 4,953 5,597 4,069 12,456 684 49,824 Less than 550 774 5,629 4,519 3,175 3,048 2,459 4,567 560 24,731 No Score (3) 1,455 297 — — 5 13 41,852 150 43,772 Other (2) — 1,188 1,007 340 1,086 1 89,740 — 93,362 Total Consumer Lending $ 173,794 $ 269,549 $ 160,207 $ 77,039 $ 62,932 $ 34,899 $ 372,928 $ 2,855 $ 1,154,203 Current period gross charge-offs $ 152 $ 1,710 $ 1,723 $ 880 $ 1,500 $ 1,995 $ 4,541 $ 462 $ 12,963 Total Loans and Leases $ 1,000,468 $ 2,482,106 $ 2,795,222 $ 1,188,475 $ 1,174,289 $ 3,090,528 $ 2,588,455 $ 12,792 $ 14,332,335 Current period gross charge-offs $ 282 $ 1,779 $ 1,797 $ 908 $ 1,608 $ 4,280 $ 4,795 $ 480 $ 15,929
(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 Reconciliation Table 14 For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, (dollars in thousands) 2023 2023 2022 2023 2022 Income Statement Data: Net income $ 58,221 $ 62,442 $ 69,018 $ 187,481 $ 186,097 Average total stockholders' equity $ 2,367,422 $ 2,344,285 $ 2,267,152 $ 2,337,292 $ 2,358,195 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible stockholders' equity $ 1,371,930 $ 1,348,793 $ 1,271,660 $ 1,341,800 $ 1,362,703 Average total assets $ 24,727,893 $ 24,821,486 $ 24,957,042 $ 24,699,826 $ 25,095,438 Less: average goodwill 995,492 995,492 995,492 995,492 995,492 Average tangible assets $ 23,732,401 $ 23,825,994 $ 23,961,550 $ 23,704,334 $ 24,099,946 Return on average total stockholders' equity(1) 9.76 % 10.68 % 12.08 % 10.72 % 10.55 % Return on average tangible stockholders' equity (non-GAAP)(1) 16.84 % 18.57 % 21.53 % 18.68 % 18.26 % Return on average total assets(1) 0.93 % 1.01 % 1.10 % 1.01 % 0.99 % Return on average tangible assets (non-GAAP)(1) 0.97 % 1.05 % 1.14 % 1.06 % 1.03 % As of As of As of As of September 30, June 30, December 31, September 30, (dollars in thousands, except per share amounts) 2023 2023 2022 2022 Balance Sheet Data: Total stockholders' equity $ 2,351,009 $ 2,359,738 $ 2,269,005 $ 2,200,651 Less: goodwill 995,492 995,492 995,492 995,492 Tangible stockholders' equity $ 1,355,517 $ 1,364,246 $ 1,273,513 $ 1,205,159 Total assets $ 24,912,524 $ 24,511,566 $ 24,577,223 $ 24,870,272 Less: goodwill 995,492 995,492 995,492 995,492 Tangible assets $ 23,917,032 $ 23,516,074 $ 23,581,731 $ 23,874,780 Shares outstanding 127,609,934 127,608,037 127,363,327 127,357,680 Total stockholders' equity to total assets 9.44 % 9.63 % 9.23 % 8.85 % Tangible stockholders' equity to tangible assets (non-GAAP) 5.67 % 5.80 % 5.40 % 5.05 % Book value per share $ 18.42 $ 18.49 $ 17.82 $ 17.28 Tangible book value per share (non-GAAP) $ 10.62 $ 10.69 $ 10.00 $ 9.46
(1) Annualized for the three and nine months ended September 30, 2023 and 2022 and three months ended June 30, 2023. 
