First Hawaiian's earnings jump, but deposits decline
Apr. 29—First Hawaiian Bank boosted earnings 15.8 % from a year ago but saw its deposits decline for the third straight quarter and shrink by $407.5 million from the previous three months.
First Hawaiian Bank boosted earnings 15.8 % from a year ago but saw its deposits decline for the third straight quarter and shrink by $407.5 million from the previous three months.
Chairman, President and CEO Bob Harrison said Friday that the bank was largely unaffected by the failures in March by mainland institutions Silicon Valley Bank and Signature Bank.
"We had a couple accounts that drew down balances, but ... what happened during the quarter was very, very little, " he said on a conference call with analysts. "This crisis is different than all the ones before it, based on the speed of deposit flight, but we really didn't see much from the date of the crisis to the end of the quarter. ... The large depositors just didn't seem as worried about it when we talked them through it."
Harrison said the bank was proactive in reaching out to customers when the Silicon Valley Bank and Signature Bank shutdowns occurred.
"We really kind of mobilized all the troops, " he said. "The vast majority of our deposits are within the footprint of Hawaii, Guam and Saipan. So, in those markets we have really deep relationships with the customers. They trust us. The first thing we did was contact our bankers, walk them through the events of what happened, ask them to reach out to their customers, which they did. They had a lot of good conversations about that."
Harrison said that in response to the recent volatility in the banking industry, First Hawaiian decided to increase its liquidity position using long-term Federal Home Loan Bank borrowings and ended the quarter with about $866 million of cash and cash equivalents.
"Our balance sheet remains solid, " he said. "The FHLB borrowing was for a term of 18 months and gives us flexibility in managing the liability side of the balance sheet. We continue to have a strong liquidity position with a loan-to-deposit ratio of 67 %, a stable core deposit base, steady cash flows from the investment portfolio, and ample access to additional funding from the FHLB and the various Fed lending programs."
The bank's retail deposit portfolio has an average balance of about $22, 000, and commercial deposits have an average balance of just under $148, 000, Chief Financial Officer James Moses said.
First Hawaiian Inc., the holding company for the bank, reported first-quarter earnings of $66.8 million, or 52 cents a share, that missed analysts' consensus estimate of 54 cents a share. In the year-earlier quarter, First Hawaiian had earnings of $57.7 million, or 45 cents a share.
The bank set aside $8.8 million for potential loan losses in the quarter primarily due to loan growth after releasing $5.7 million from its reserve in the year-earlier quarter.
First Hawaiian's loans increased 0.9 %, or $129.3 million, to $14.22 billion from the fourth quarter and increased 10.3 % from the year-earlier quarter.
"Loan growth was modest in the first quarter, and we plan to focus our resources on supporting our relationship customers, " Harrison said. "We expect loan growth to slow over the rest of the year and be in the low-to mid-single-digit range. Drawdowns on existing lines such as construction, dealer flooring and home equity will contribute to our growth."
The bank's net interest income, which is the difference between what the bank generates in loans and pays out in deposits, soared 24.9 % to $167.2 million from the year-earlier quarter. First Hawaiian's net interest margin improved by 69 basis points to 3.11 % in the fourth quarter from 2.42 % in the year-earlier period.
First Hawaiian's noninterest income, which includes service charges and fees, increased 18.5 % to $49 million from the year-earlier quarter.
The bank kept its dividend at 26 cents a share for the 18th straight quarter and said it will be payable June 2 to stockholders of rec ord at the close of business May 22. First Hawaiian hasn't raised its dividend since the first quarter of 2019.
Shares of the company slipped 27 cents to $19.11 after the earnings were announced.
