8-K: First Hawaiian Inc. Announces Solid Third Quarter Results, Declares Dividend

First Hawaiian, Inc. reported a strong third quarter for 2024, with increased net interest and noninterest income, well-controlled expenses, and excellent credit quality.

Summary

• First Hawaiian, Inc. announced its financial results for the third quarter of 2024, ending September 30, 2024.
• The company reported a net income of $61.5 million, or $0.48 per diluted share.
• Total loans and leases decreased by $118.5 million compared to the previous quarter.
• Total deposits also saw a decrease of $91.1 million from the prior quarter.
• Net interest margin increased by 3 basis points to 2.95%.
• A provision for credit losses of $7.4 million was recorded.
• Total assets stood at $23.8 billion, a decrease of $211.5 million from the previous quarter.
• Net interest income for the quarter was $156.7 million, a $3.9 million increase from the prior quarter.
• Noninterest income was $53.3 million, up $1.5 million from the previous quarter.
• Noninterest expense increased to $126.1 million, a $4.1 million increase from the prior quarter.
• The company's board declared a quarterly cash dividend of $0.26 per share, payable on November 29, 2024.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the increase in net interest and noninterest income, reaffirmation of credit ratings, and declaration of a dividend. However, there are some concerns about the decrease in loans and deposits and the increase in noninterest expenses.

Positives

• Net interest income increased by 2.5% compared to the previous quarter.
• Noninterest income saw a rise of $1.5 million compared to the prior quarter.
• The net interest margin improved by 3 basis points to 2.95%.
• Credit quality remained excellent, according to management.
• Moodys reaffirmed all of First Hawaiian Bank's long-term credit and deposit ratings.
• The company declared a consistent quarterly dividend of $0.26 per share.

Negatives

• Total loans and leases decreased by $118.5 million compared to the previous quarter.
• Total deposits decreased by $91.1 million compared to the prior quarter.
• Noninterest expense increased by $4.1 million compared to the previous quarter.
• The company recorded a $7.4 million provision for credit losses, up from $1.8 million in the previous quarter.
• Total assets decreased by $211.5 million compared to the previous quarter.

Risks

• The company faces risks and uncertainties associated with the domestic and global economic environment and capital market conditions.
• There is a risk that actual results could differ materially from forward-looking statements due to various factors.
• Decreases in loans and deposits could impact future revenue and profitability.
• Increased noninterest expenses could affect the company's efficiency and profitability.
• The increase in provision for credit losses could indicate potential future credit issues.

Future Outlook

The press release contains forward-looking statements regarding future events and financial performance, but cautions that actual results may differ materially due to various risks and uncertainties.

Management Comments

• Bob Harrison, Chairman, President, and CEO, stated that they had a very good third quarter.
• He noted that net interest income and noninterest income increased over the prior quarter, expenses were well controlled, and credit quality remained excellent.
• He also expressed pleasure that Moodys reaffirmed all of First Hawaiian Bank's long-term credit and deposit ratings.

Industry Context

The results reflect the performance of a regional bank in a changing economic environment, with a focus on maintaining credit quality and managing expenses. The reaffirmation of credit ratings by Moodys is a positive signal for the bank's stability.

Comparison to Industry Standards

• First Hawaiian's net interest margin of 2.95% is within the range of regional banks, but specific comparisons would require data from peer institutions such as Bank of Hawaii (BOH) or other similar sized regional banks.
• The efficiency ratio of 59.8% is a key metric for banks, and while it increased slightly from the previous quarter, it is important to compare this to the industry average and competitors to assess its relative performance.
• The decrease in loans and deposits is a trend that is being seen across the industry, and it is important to compare the magnitude of the decrease to other banks to assess the relative impact.
• The capital ratios of 9.14%, 13.03%, and 14.25% for tier 1 leverage, common equity tier 1, and total capital, respectively, are generally considered healthy and are in line with regulatory requirements for banks of this size.
• The provision for credit losses of $7.4 million is an important metric to watch, and it is important to compare this to the industry average and competitors to assess the relative risk.

Stakeholder Impact

• Shareholders will receive a quarterly dividend of $0.26 per share.
• Employees may be impacted by changes in expenses and operational efficiency.
• Customers may be affected by changes in loan and deposit products.
• Creditors will be interested in the company's credit quality and capital ratios.
• Suppliers may be impacted by changes in the company's expenses.

Next Steps

• The company will host a conference call to discuss the results.
• The declared dividend will be paid on November 29, 2024.

Key Dates

Keywords

financial results, net income, net interest income, noninterest income, dividends, loans, deposits, credit quality, net interest margin, banking