Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 19, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | FIRST HAWAIIAN, INC. | |
Entity Central Index Key | 36,377 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 139,601,123 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Interest income | ||
Loans and lease financing | $ 123,551 | $ 109,266 |
Available-for-sale securities | 28,993 | 26,429 |
Other | 2,392 | 1,226 |
Total interest income | 154,936 | 136,921 |
Interest expense | ||
Deposits | 15,264 | 7,570 |
Short-term borrowings and long-term debt | 6 | |
Total interest expense | 15,264 | 7,576 |
Net interest income | 139,672 | 129,345 |
Provision for loan and lease losses | 5,950 | 4,500 |
Net interest income after provision for loan and lease losses | 133,722 | 124,845 |
Noninterest income: | ||
Service charges on deposit accounts | 7,955 | 9,381 |
Credit and debit card fees | 15,497 | 16,305 |
Other service charges and fees | 9,342 | 9,097 |
Trust and investment services income | 8,231 | 7,338 |
Bank-owned life insurance | 2,044 | 4,578 |
Other | 5,631 | 4,360 |
Total noninterest income | 48,700 | 51,059 |
Noninterest expense | ||
Salaries and employee benefits | 42,160 | 40,408 |
Contracted services and professional fees | 12,287 | 10,308 |
Occupancy | 6,484 | 5,709 |
Equipment | 4,588 | 4,197 |
Regulatory assessment and fees | 3,973 | 3,774 |
Advertising and marketing | 951 | 2,028 |
Card rewards program | 5,718 | 5,775 |
Other | 14,426 | 13,792 |
Total noninterest expense | 90,587 | 85,991 |
Income before provision for income taxes | 91,835 | 89,913 |
Provision for income taxes | 23,877 | 33,173 |
Net income | $ 67,958 | $ 56,740 |
Basic earnings per share (in dollars per share) | $ 0.49 | $ 0.41 |
Diluted earnings per share (in dollars per share) | 0.49 | 0.41 |
Dividends declared per share (in dollars per share) | $ 0.24 | $ 0.22 |
Basic weighted-average outstanding shares (in shares) | 139,600,712 | 139,545,728 |
Diluted weighted-average outstanding shares (in shares) | 139,732,100 | 139,637,410 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 67,958 | $ 56,740 |
Other comprehensive (loss) income, net of tax: | ||
Net unrealized (losses) gains on investment securities | (48,777) | 957 |
Net unrealized gains on cash flow derivative hedges | 544 | 362 |
Other comprehensive (loss) income | (48,233) | 1,319 |
Total comprehensive income | $ 19,725 | $ 58,059 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and due from banks | $ 283,135 | $ 367,084 |
Interest-bearing deposits in other banks | 409,357 | 667,560 |
Investment securities | 5,076,766 | 5,234,658 |
Loans held for sale | 397 | 556 |
Loans and leases | 12,464,165 | 12,277,369 |
Less: allowance for loan and lease losses | 138,574 | 137,253 |
Net loans and leases | 12,325,591 | 12,140,116 |
Premises and equipment, net | 288,565 | 289,215 |
Other real estate owned and repossessed personal property | 329 | |
Accrued interest receivable | 47,499 | 47,987 |
Bank-owned life insurance | 440,054 | 438,010 |
Goodwill | 995,492 | 995,492 |
Mortgage servicing rights | 18,659 | 13,196 |
Other assets | 357,427 | 355,258 |
Total assets | 20,242,942 | 20,549,461 |
Deposits: | ||
Interest-bearing | 11,312,288 | 11,485,269 |
Noninterest-bearing | 6,050,134 | 6,126,853 |
Total deposits | 17,362,422 | 17,612,122 |
Long-term debt | 34 | 34 |
Retirement benefits payable | 134,684 | 134,218 |
Other liabilities | 224,940 | 270,536 |
Total liabilities | 17,722,080 | 18,016,910 |
Commitments and contingent liabilities (Note 12) | ||
Stockholders' equity | ||
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,611,795 / 139,601,123 as of March 31, 2018; issued/outstanding: 139,599,454 / 139,588,782 as of December 31, 2017) | 1,396 | 1,396 |
Additional paid-in capital | 2,490,910 | 2,488,643 |
Retained earnings | 193,522 | 139,177 |
Accumulated other comprehensive loss, net | (164,684) | (96,383) |
Treasury stock (10,672 shares as of both March 31, 2018 and December 31, 2017) | (282) | (282) |
Total stockholders' equity | 2,520,862 | 2,532,551 |
Total liabilities and stockholders' equity | $ 20,242,942 | $ 20,549,461 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, issued (in shares) | 139,611,795 | 139,599,454 |
Common stock outstanding (in shares) | 139,601,123 | 139,588,782 |
Treasury stock (in shares) | 10,672 | 10,672 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated other comprehensive loss | Treasury Stock | Total |
Balance at Dec. 31, 2016 | $ 1,395 | $ 2,484,251 | $ 78,850 | $ (88,011) | $ 2,476,485 | |
Balance (in shares) at Dec. 31, 2016 | 139,530,654 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 56,740 | 56,740 | ||||
Cash dividends declared ($0.24 and $0.22 per share for three months ended March 31, 2018 and 2017, respectively) | (30,700) | (30,700) | ||||
Common stock issued under Employee Stock Purchase Plan | 528 | 528 | ||||
Common stock issued under Employee Stock Purchase Plan (in shares) | 15,961 | |||||
Equity-based awards | 1,817 | (195) | 1,622 | |||
Other comprehensive (loss) income, net of tax | 1,319 | 1,319 | ||||
Balance at Mar. 31, 2017 | $ 1,395 | 2,486,596 | 104,695 | (86,692) | 2,505,994 | |
Balance (in shares) at Mar. 31, 2017 | 139,546,615 | |||||
Balance at Dec. 31, 2017 | $ 1,396 | 2,488,643 | 139,177 | (96,383) | $ (282) | $ 2,532,551 |
Balance (in shares) at Dec. 31, 2017 | 139,588,782 | 139,588,782 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 67,958 | $ 67,958 | ||||
Cash dividends declared ($0.24 and $0.22 per share for three months ended March 31, 2018 and 2017, respectively) | (33,504) | (33,504) | ||||
Common stock issued under Employee Stock Purchase Plan | 342 | 342 | ||||
Common stock issued under Employee Stock Purchase Plan (in shares) | 12,341 | |||||
Equity-based awards | 1,925 | (177) | 1,748 | |||
Other comprehensive (loss) income, net of tax | (48,233) | (48,233) | ||||
Balance at Mar. 31, 2018 | $ 1,396 | $ 2,490,910 | 193,522 | (164,684) | $ (282) | $ 2,520,862 |
Balance (in shares) at Mar. 31, 2018 | 139,601,123 | 139,601,123 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Adoption of ASU | ASU 2018-02 | $ 20,068 | $ (20,068) |
Consolidated Statements of Sto7
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Stockholders' Equity | ||
Cash dividends declared (in dollars per share) | $ 0.24 | $ 0.22 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flow - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 67,958 | $ 56,740 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan and lease losses | 5,950 | 4,500 |
Depreciation, amortization and accretion, net | 13,220 | 14,363 |
Deferred income taxes | 7,511 | 6,816 |
Stock-based compensation | 1,748 | 1,622 |
Net gains on sale of real estate | (142) | |
Other gains | (13) | (12) |
Originations of loans held for sale | (862) | |
Proceeds from sales of loans held for sale | 465 | |
Change in assets and liabilities: | ||
Net (increase) decrease in other assets | (4,869) | 14,761 |
Net decrease in other liabilities | (37,891) | (33,625) |
Net cash provided by operating activities | 53,217 | 65,023 |
Available-for-sale securities: | ||
Proceeds from maturities and principal repayments | 218,941 | 205,927 |
Purchases | (130,252) | (390,968) |
Other investments: | ||
Proceeds from sales | 2,285 | 8,452 |
Purchases | (4,403) | (5,858) |
Loans: | ||
Net increase in loans and leases resulting from originations and principal repayments | (189,496) | (265,066) |
Proceeds from sales of loans originated for investment | 570 | 671 |
Proceeds from bank-owned life insurance | 3,987 | |
Purchases of premises, equipment and software | (3,446) | (1,032) |
Proceeds from sales of premises and equipment | 10 | |
Purchases of mortgage servicing rights | (6,444) | |
Proceeds from sales of other real estate owned | 332 | 635 |
Other | (594) | (550) |
Net cash used in investing activities | (112,507) | (443,792) |
Cash flows from financing activities | ||
Net (decrease) increase in deposits | (249,700) | 143,646 |
Net decrease in short-term borrowings | (9,151) | |
Dividends paid | (33,504) | (30,700) |
Proceeds from employee stock purchase plan | 342 | 528 |
Net cash (used in) provided by financing activities | (282,862) | 104,323 |
Net decrease in cash and cash equivalents | (342,152) | (274,446) |
Cash and cash equivalents at beginning of period | 1,034,644 | 1,052,058 |
Cash and cash equivalents at end of period | 692,492 | 777,612 |
Supplemental disclosures | ||
Interest paid | 15,100 | 7,457 |
Income taxes paid, net of income tax refunds | 189 | 180 |
Noncash investing and financing activities: | ||
Transfers from loans and leases to other real estate owned | 524 | |
Transfers from loans and leases to loans held for sale | $ 4 | $ 659 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation First Hawaiian, Inc. (“FHI” or the “Parent”), a bank holding company, owns 100% of the outstanding common stock of First Hawaiian Bank (“FHB” or the “Bank”), its only direct, wholly-owned subsidiary. FHI is a majority-owned, indirect subsidiary of BNP Paribas (“BNPP”), a financial institution based in France. The accompanying unaudited interim consolidated financial statements of First Hawaiian, Inc. and the Bank (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited interim consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair presentation of the interim period consolidated financial information, have been made. Results of operations for interim periods are not necessarily indicative of results to be expected for the entire year. Intercompany account balances and transactions have been eliminated in consolidation. Reorganization Transactions In connection with FHI’s initial public offering (“IPO”) in August 2016, in which BNPP sold approximately 17% of its interest in FHI, BNPP announced its intent to sell a controlling interest in FHI, including its wholly-owned subsidiary FHB, over time, subject to market conditions and other considerations. On April 1, 2016, a series of reorganization transactions (the “Reorganization Transactions”) were undertaken to facilitate the IPO. As part of the Reorganization Transactions, FHI, which was then known as BancWest Corporation (“BancWest”), formed a new bank holding company, BancWest Holding Inc. (“BWHI”), a Delaware corporation and a direct wholly‑owned subsidiary of BancWest, and contributed 100% of its interest in Bank of the West (“BOW”), as well as other assets and liabilities not related to FHB, to BWHI. Following the contribution of BOW to BWHI, BancWest distributed its interest in BWHI to BNPP. As part of these transactions, BancWest amended its certificate of incorporation to change its name to “First Hawaiian, Inc.”, with First Hawaiian Bank remaining as the only direct wholly-owned subsidiary of FHI. On July 1, 2016, in order to comply with the Board of Governors of the Federal Reserve System’s requirement (under Regulation YY) applicable to BNPP that a foreign banking organization with $50 billion or more in U.S. non-branch assets as of June 30, 2015 establish a U.S. intermediate holding company and hold its interest in the substantial majority of its U.S. subsidiaries through the intermediate holding company by July 1, 2016, FHI became an indirect subsidiary of BNP Paribas USA, Inc. (“BNP Paribas USA”), BNPP’s U.S. intermediate holding company. As part of that reorganization, FHI became a direct wholly-owned subsidiary of BancWest Corporation (“BWC”), a direct wholly-owned subsidiary of BNP Paribas USA. On August 4, 2016, FHI’s common stock began trading on the NASDAQ Global Select Market (“NASDAQ”) under the ticker symbol “FHB”. On August 9, 2016, the IPO of 24,250,000 shares of FHI common stock, which included the full exercise of the underwriters’ option to purchase an additional 3,163,043 shares, at $23.00 per share were completed. On February 17, 2017, a second offering of 28,750,000 shares of FHI common stock, which included the full exercise of the underwriters’ option to purchase an additional 3,750,000 shares, at $32.00 per share was completed. FHI did not receive any of the proceeds from the sales of shares by BNPP. Following the secondary offering and exercise of the underwriters’ option to purchase additional shares in February 2017, BNPP beneficially owned approximately 62% of FHI’s outstanding common stock. BNPP continued to beneficially own approximately 62% of FHI’s outstanding common stock as of March 31, 2018. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events, actual results may differ from these estimates. Correction of an Immaterial Error to the Financial Statements Subsequent to the issuance of the Company’s unaudited interim September 30, 2017 consolidated financial statements, the Company’s management determined that certain expenses related to card rewards program were incorrectly offset against credit and debit card fee income and credit card interchange assessment fees were incorrectly classified in card rewards program expense versus credit and debit card fee income in the consolidated statements of income for the three months ended March 31, 2017. For the three months ended March 31, 2017, income from service charges on deposit accounts was overstated by $0.1 million, credit and debit card fee income was understated by $1.8 million, occupancy expense was understated by $0.4 million and card rewards program expense was understated by $1.3 million. As a result, certain noninterest income and noninterest expense amounts have been restated from the amounts previously reported to correct the classification errors. There was no change to net income or earnings per share as previously reported as a result of these errors. Management has evaluated the materiality of these errors on its prior period financial statements from a quantitative and qualitative perspective, and has concluded that these errors were not material to the prior period. Accounting Standards Adopted in 2018 In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . This guidance requires entities to recognize revenues when they transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the provisions of ASU No. 2014-09 on January 1, 2018. The Company adopted the new guidance using the modified retrospective transition approach, in which the guidance would only be applied to existing contracts in effect at January 1, 2018 and new contracts entered into after this date. Most of the Company’s revenue is comprised of net interest income on loans, leases, investment securities and deposits, and is explicitly out of scope of the new revenue recognition guidance. Management conducted an assessment of the revenue streams that were potentially affected by the new guidance and reviewed contracts in scope to ensure compliance with the new guidance. These contracts included those related to credit and debit card fees, service charges and fees on deposit accounts and trust and investment services fees. The adoption of ASU No. 2014-09 did not have a material impact on the Company’s consolidated financial statements. However, additional disclosures required by the standard have been included in “Note 13. Revenue from Contracts with Customers” to the Company’s consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This guidance requires entities to report the service cost component of net periodic benefit cost in the same line item as other compensation costs arising from services rendered by pertinent employees during the reporting period. The other components of net periodic benefit costs are to be presented in the income statement separately from the service cost component. The Company adopted the provisions of ASU No. 2017-07 on January 1, 2018 and applied the guidance retrospectively to all periods for which a statement of income is presented. The Company continues to record the service cost component of net periodic benefit cost in salaries and employee benefits; however, all other components of net periodic benefit cost is now recorded in other noninterest expense. The Company elected to use the practical expedient which permits entities to estimate amounts for comparative periods using the information previously disclosed in the Company’s pension and other postretirement benefit plan disclosure as such amounts are not material. The adoption of ASU No. 2017-07 did not have a material impact on the Company’s consolidated financial statements. See “Note 15. Benefit Plans” for required disclosures. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting. This guidance applies to entities that change the terms or conditions of a share-based payment award. This guidance clarifies when an entity should account for a change as a modification. Modification accounting will be required only if the fair value, the vesting conditions or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The Company adopted the provisions of ASU No. 2017-09 on January 1, 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This guidance provided entities with an option to reclassify tax effects that were stranded in accumulated other comprehensive income, pursuant to the recently enacted Tax Cuts and Jobs Act of 2017 (the “Tax Act”), to retained earnings. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. This guidance may be early adopted in any interim or annual period for which financial statements have not yet been issued and applied either in the period of adoption or retrospectively to each period in which the effect of the change in the corporate tax rate in the Tax Act is recognized. The Company elected to early adopt the provisions of ASU No. 2018-02 on January 1, 2018 and reflected the reclassification related to the Tax Act in the period of adoption. The amount of the reclassification reflected the impact of the Tax Act that was signed into law on December 22, 2017 which reduced the corporate tax rate from 35% to 21%. The result of the early adoption of ASU No. 2018-02 was to reclassify a credit balance of $20.1 million from accumulated other comprehensive loss to retained earnings as of January 1, 2018. The Company utilizes a security-by-security approach to releasing income tax effects from accumulated other comprehensive loss. The adoption of ASU No. 2018-02 did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements The following ASUs have been issued by the FASB and are applicable to the Company in future reporting periods. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance provides that lessees will be required to recognize the following for all leases (with the exception of short-term leases): 1) a lease liability, which is the present value of a lessee's obligation to make lease payments, and 2) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period presented in the financial statements. As lessees, the Company has lease agreements for branch locations that are currently considered operating leases, and therefore, are not recognized on the Company’s consolidated balance sheets. The Company expects that the new guidance will require these leases to be recognized on the consolidated balance sheets as a right-of-use asset with a corresponding lease liability. The Company has formed a working group comprised of teams from different disciplines, including finance and bank properties. The Company continues to evaluate the impact this guidance will have on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments . This guidance eliminates the probable recognition threshold for credit losses on financial assets measured at amortized cost. For loans and held-to-maturity debt securities, this update requires a current expected credit loss (“CECL”) approach to determine the allowance for credit losses. CECL requires loss estimates for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts. In addition, this guidance modifies the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for a reversal of credit losses in future periods. The guidance requires entities to record a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with earlier adoption permitted. The new guidance will require significant operational changes, particularly in data collection and analysis. The Company has formed a working group comprised of teams from different disciplines, including credit and finance, to evaluate the requirements of the new standard and the impact it will have on the Company’s current processes. Management’s evaluation includes a review of existing credit models to identify areas where existing credit models used to comply with other regulatory requirements may be leveraged and areas where new impairment models may be required. The Company continues to evaluate the impact this guidance, including the method of implementation, will have on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment . This guidance simplifies the subsequent measurement of goodwill by eliminating Step 2 from the current two-step goodwill impairment test. This guidance provides that a goodwill impairment test be conducted by comparing the fair value of a reporting unit with its carrying amount. Entities are to recognize an impairment charge for goodwill by the amount by which the carrying amount exceeds the reporting unit’s fair value. Entities will continue to have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. Under current GAAP, entities normally amortize the premium as an adjustment of yield over the contractual life of the instrument. This guidance shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company’s consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-02, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities . The objectives of the new guidance are to: (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities, and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. Currently, the Company participates in limited activities in fair value and cash flow hedging relationships. However, hedging improvements in the new guidance will be considered in the development of future risk management strategies. |
Investment Securities
Investment Securities | 3 Months Ended |
Mar. 31, 2018 | |
Investment Securities | |
Investment Securities | 2. Investment Securities As of March 31, 2018 and December 31, 2017, investment securities consisted predominantly of the following investment categories: U.S. Treasury and debt securities – includes U.S. Treasury notes and debt securities issued by government- sponsored enterprises. Mortgage-backed securities – includes securities backed by notes or receivables secured by mortgage assets with cash flows based on actual or scheduled payments. Collateralized mortgage obligations – includes securities backed by a pool of mortgages with cash flows distributed based on certain rules rather than pass through payments. Debt securities issued by states and political subdivisions – includes general obligation bonds issued by state and local governments. As of March 31, 2018 and December 31, 2017, all of the Company’s investment securities were classified as debt securities and available-for-sale. Amortized cost and fair value of securities as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Cost Gains Losses Value U.S. Treasury securities $ 404,062 $ — $ (16,415) $ 387,647 $ 404,376 $ — $ (12,121) $ 392,255 Government-sponsored enterprises debt securities 249,714 — (10,059) 239,655 249,712 — (7,111) 242,601 Government agency mortgage-backed securities 470,478 64 (14,234) 456,308 356,858 — (5,468) 351,390 Government-sponsored enterprises mortgage-backed securities 174,378 134 (6,463) 168,049 178,702 169 (4,130) 174,741 Collateralized mortgage obligations: Government agency 3,204,890 — (117,182) 3,087,708 3,367,173 47 (76,746) 3,290,474 Government-sponsored enterprises 742,084 — (24,601) 717,483 779,911 25 (17,218) 762,718 Debt securities issued by states and political subdivisions 20,477 — (561) 19,916 20,543 — (64) 20,479 Total available-for-sale securities $ 5,266,083 $ 198 $ (189,515) $ 5,076,766 $ 5,357,275 $ 241 $ (122,858) $ 5,234,658 Proceeds from both calls and sales of investment securities were nil for the three months ended March 31, 2018 and 2017. The Company recorded no gross realized gains and no gross realized losses for the three months ended March 31, 2018 and 2017. Accordingly, no provision for income taxes related to net realized gains on the sale of investment securities was recorded for the three months ended March 31, 2018 and 2017. Gains and losses realized on sales of securities are determined using the specific identification method. Interest income from taxable investment securities was $28.9 million and $26.4 million for the three months ended March 31, 2018 and 2017, respectively. Interest income from non-taxable investment securities was $0.1 million during the three months ended March 31, 2018. The Company did not own any non-taxable investment securities during the three months ended March 31, 2017. The amortized cost and fair value of debt securities issued by the U.S. Treasury, government-sponsored enterprises and states and political subdivisions as of March 31, 2018, by contractual maturity, are shown below. Mortgage-backed securities and collateralized mortgage obligations are disclosed separately in the table below as remaining expected maturities will differ from contractual maturities as borrowers have the right to prepay obligations. March 31, 2018 Amortized Fair (dollars in thousands) Cost Value Due after one year through five years $ 430,259 $ 413,492 Due after five years through ten years 223,517 213,810 Due after ten years 20,477 19,916 674,253 647,218 Government agency mortgage-backed securities 470,478 456,308 Government-sponsored enterprises mortgage-backed securities 174,378 168,049 Collateralized mortgage obligations: Government agency 3,204,890 3,087,708 Government-sponsored enterprises 742,084 717,483 Total mortgage-backed securities and collateralized mortgage obligations 4,591,830 4,429,548 Total available-for-sale securities $ 5,266,083 $ 5,076,766 At March 31, 2018, pledged securities totaled $2.7 billion, of which $2.5 billion was pledged to secure public deposits and $229.7 million was pledged to secure other financial transactions. At December 31, 2017, pledged securities totaled $3.0 billion, of which $2.8 billion was pledged to secure public deposits and $229.2 million was pledged to secure other financial transactions. The Company held no securities of any single issuer, other than debt securities issued by the U.S. government, government agency and government-sponsored enterprises, which were in excess of 10% of stockholders’ equity as of March 31, 2018 and December 31, 2017. The following table presents the unrealized gross losses and fair values of securities in the available-for-sale portfolio by length of time that the 202 and 196 individual securities in each category have been in a continuous loss position as of March 31, 2018 and December 31, 2017, respectively. The unrealized losses on investment securities were attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. Time in Continuous Loss as of March 31, 2018 Less Than 12 Months 12 Months or More Total Unrealized Unrealized Unrealized (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value U.S. Treasury securities $ (1,713) $ 47,500 $ (14,702) $ 340,147 $ (16,415) $ 387,647 Government-sponsored enterprises debt securities (1,299) 58,701 (8,760) 180,954 (10,059) 239,655 Government agency mortgage-backed securities (6,345) 272,336 (7,889) 140,778 (14,234) 413,114 Government-sponsored enterprises mortgage-backed securities — 199 (6,463) 162,089 (6,463) 162,288 Collateralized mortgage obligations: Government agency (41,628) 1,377,239 (75,554) 1,710,469 (117,182) 3,087,708 Government-sponsored enterprises (7,092) 338,739 (17,509) 378,744 (24,601) 717,483 Debt securities issued by states and political subdivisions (561) 19,916 — — (561) 19,916 Total available-for-sale securities with unrealized losses $ (58,638) $ 2,114,630 $ (130,877) $ 2,913,181 $ (189,515) $ 5,027,811 Time in Continuous Loss as of December 31, 2017 Less Than 12 Months 12 Months or More Total Unrealized Unrealized Unrealized (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value U.S. Treasury securities $ (994) $ 48,182 $ (11,127) $ 344,073 $ (12,121) $ 392,255 Government-sponsored enterprises debt securities (642) 59,358 (6,469) 183,243 (7,111) 242,601 Government agency mortgage-backed securities (976) 200,963 (4,492) 150,427 (5,468) 351,390 Government-sponsored enterprises mortgage-backed securities (1) 63 (4,129) 168,342 (4,130) 168,405 Collateralized mortgage obligations: Government agency (23,236) 1,473,170 (53,510) 1,803,338 (76,746) 3,276,508 Government-sponsored enterprises (3,203) 327,435 (14,015) 403,321 (17,218) 730,756 Debt securities issued by states and political subdivisions (64) 10,641 — — (64) 10,641 Total available-for-sale securities with unrealized losses $ (29,116) $ 2,119,812 $ (93,742) $ 3,052,744 $ (122,858) $ 5,172,556 Other-Than-Temporary Impairment (“OTTI”) Unrealized losses for all investment securities are reviewed to determine whether the losses are other than temporary. Investment securities are evaluated for OTTI on at least a quarterly basis, and more frequently when economic and market conditions warrant such an evaluation, to determine whether the decline in fair value below amortized cost is other than temporary. The term other-than-temporary is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value are not necessarily favorable, or that there is a general lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. The decline in value is not related to any issuer- or industry-specific credit event. At March 31, 2018 and December 31, 2017, the Company did not have the intent to sell and determined it was more likely than not that the Company would not be required to sell the securities prior to recovery of the amortized cost basis. As the Company has the intent and ability to hold securities in an unrealized loss position, each security with an unrealized loss position in the above tables has been further assessed to determine if a credit loss exists. If it is probable that the Company will not collect all amounts due according to the contractual terms of an investment security, an OTTI is considered to have occurred. In determining whether a credit loss exists, the Company estimates the present value of future cash flows expected to be collected from the investment security. If the present value of future cash flows is less than the amortized cost basis of the security, an OTTI exists. As of March 31, 2018 and December 31, 2017, the Company did not expect any credit losses in its debt securities and no OTTI was recognized on securities during the three months ended March 31, 2018 and for the year ended December 31, 2017. Visa Class B Restricted Shares In 2008, the Company received 394,000 Visa Class B restricted shares as part of Visa’s initial public offering. Visa Class B restricted shares are not currently convertible to publicly traded Visa Class A common shares, and only transferable in limited circumstances, until the settlement of certain litigation which are indemnified by Visa members, including the Company. As there are existing transfer restrictions and the outcome of the aforementioned litigation is uncertain, these shares were included in the consolidated balance sheets at their historical cost of $0. In 2016, the Company recorded a $22.7 million net realized gain related to the sale of 274,000 Visa Class B restricted shares. Concurrent with the sale of the Visa Class B restricted shares, the Company entered into an agreement with the buyer that requires payment to the buyer in the event Visa reduces each member bank’s Class B conversion ratio to unrestricted Class A common shares. See “Note 11. Derivative Financial Instruments” for more information. There were no such sales during the three months ended March 31, 2018 or during the three months ended March 31, 2017. The Company held approximately 120,000 Visa Class B restricted shares as of both March 31, 2018 and December 31, 2017. These shares continued to be carried at $0 cost basis during each of the respective periods. |
Loans and Leases
Loans and Leases | 3 Months Ended |
Mar. 31, 2018 | |
Loans and Leases | |
Loans and Leases | 3. Loans and Leases As of March 31, 2018 and December 31, 2017, loans and leases were comprised of the following: March 31, December 31, (dollars in thousands) 2018 2017 Commercial and industrial $ 3,219,210 $ 3,135,266 Real estate: Commercial 2,738,557 2,667,597 Construction 594,266 632,911 Residential 4,156,003 4,090,053 Total real estate 7,488,826 7,390,561 Consumer 1,595,989 1,586,476 Lease financing 160,140 165,066 Total loans and leases $ 12,464,165 $ 12,277,369 Outstanding loan balances are reported net of unearned income, including net deferred loan costs of $33.1 million and $31.2 million at March 31, 2018 and December 31, 2017, respectively. As of March 31, 2018, residential real estate loans totaling $2.5 billion were pledged to collateralize the Company’s borrowing capacity at the Federal Home Loan Bank of Des Moines (“FHLB”), and consumer and commercial and industrial loans totaling $914.2 million were pledged to collateralize the borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2017, residential real estate loans totaling $2.4 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer and commercial and industrial loans totaling $914.5 million were pledged to collateralize the borrowing capacity at the FRB. Residential real estate loans collateralized by properties that were in the process of foreclosure totaled $4.3 million and $3.3 million at March 31, 2018 and December 31, 2017, respectively. In the course of evaluating the credit risk presented by a customer and the pricing that will adequately compensate the Company for assuming that risk, management may require a certain amount of collateral support. The type of collateral held varies, but may include accounts receivable, inventory, land, buildings, equipment, income-producing commercial properties and residential real estate. The Company applies the same collateral policy for loans whether they are funded immediately or on a delayed basis. The loan and lease portfolio is principally located in Hawaii and, to a lesser extent, on the U.S. Mainland, Guam and Saipan. The risk inherent in the portfolio depends upon both the economic stability of the state or territories, which affects property values, and the financial strength and creditworthiness of the borrowers. At March 31, 2018 and December 31, 2017, remaining loan and lease commitments were comprised of the following: March 31, December 31, (dollars in thousands) 2018 2017 Commercial and industrial $ 2,365,231 $ 2,406,261 Real estate: Commercial 78,275 78,266 Construction 481,366 450,856 Residential 993,524 980,792 Total real estate 1,553,165 1,509,914 Consumer 1,501,511 1,485,588 Total loan and lease commitments $ 5,419,907 $ 5,401,763 |
Allowance for Loan and Lease Lo
Allowance for Loan and Lease Losses | 3 Months Ended |
Mar. 31, 2018 | |
Allowance for Loan and Lease Losses | |
Allowance for Loan and Lease Losses | 4. Allowance for Loan and Lease Losses The Company must maintain an allowance for loan and lease losses (the “Allowance”) that is adequate to absorb estimated probable credit losses associated with its loan and lease portfolio. The Allowance consists of an allocated portion, which covers estimated credit losses for specifically identified loans and pools of loans and leases, and an unallocated portion. Segmentation Management has identified three primary portfolio segments in estimating the Allowance: commercial lending, residential real estate lending and consumer lending. Commercial lending is further segmented into four distinct classes based on characteristics relating to the borrower, transaction, and collateral. These portfolio segments are: commercial and industrial, commercial real estate, construction, and lease financing. Residential real estate is not further segmented, but consists of single-family residential mortgages, real estate secured installment loans and home equity lines of credit. Consumer lending is not further segmented, but consists primarily of automobile loans, credit cards, and other installment loans. Management has developed a methodology for each segment and class taking into consideration portfolio segment-specific and class-specific factors such as product type, loan portfolio characteristics, management information systems, and other risk factors. Specific Allocation Commercial A specific allocation is determined for individually impaired commercial loans. A loan is considered impaired when it is probable that the Company will be unable to collect the full amount of principal and interest according to the contractual terms of the loan agreement. Management identifies material impaired loans based on their size in relation to the Company’s total loan and lease portfolio. Each impaired loan equal to or exceeding a specified threshold requires an analysis to determine the appropriate level of reserve for that specific loan. Impaired loans below the specified threshold are treated as a pool, with specific allocations established based on qualitative factors such as asset quality trends, risk identification, lending policies, portfolio growth, and portfolio concentrations. Residential A specific allocation is determined for residential real estate loans based on delinquency status. In addition, each impaired loan equal to or exceeding a specified threshold requires analysis to determine the appropriate level of reserve for that specific loan, generally based on the value of the underlying collateral less estimated costs to sell. The specific allocation will be zero for impaired loans in which the value of the underlying collateral, less estimated costs to sell, exceeds the unpaid principal balance of the loan. Consumer A specific allocation is determined for the consumer loan portfolio using delinquency-based formula allocations. The Company uses a formula approach in determining the consumer loan specific allocation and recognizes the statistical validity of measuring losses predicated on past due status. Pooled Allocation Commercial Pooled allocation for pass, special mention, substandard, and doubtful grade commercial loans and leases that share common risk characteristics and properties is determined using a historical loss rate analysis and qualitative factor considerations. Loan grade categories are discussed under “Credit Quality”. Residential and Consumer Pooled allocation for non-delinquent consumer and residential real estate loans is determined using a historical loss rate analysis and qualitative factor considerations. Qualitative Adjustments Qualitative adjustments to historical loss rates or other static sources may be necessary since these rates may not be an accurate indicator of losses inherent in the current portfolio. To estimate the level of adjustments, management considers factors including global, national and local economic conditions; levels and trends in problem loans; the effect of credit concentrations; collateral value trends; changes in risk due to changes in lending policies and practices; management expertise; industry and regulatory trends; and volume of loans. Unallocated Allowance The Company’s Allowance incorporates an unallocated portion to cover risk factors and events that may have occurred as of the evaluation date that have not been reflected in the risk measures utilized due to inherent limitations in the precision of the estimation process. These risk factors, in addition to past and current events based on facts at the unaudited interim consolidated balance sheet date and realistic courses of action that management expects to take, are assessed in determining the level of unallocated allowance. The Allowance was comprised of the following for the periods indicated: Three Months Ended March 31, 2018 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Balance at beginning of period $ 34,006 $ 18,044 $ 6,817 $ 611 $ 42,852 $ 31,249 $ 3,674 $ 137,253 Charge-offs (475) — — — — (6,625) — (7,100) Recoveries 64 122 — — 182 2,103 — 2,471 Increase (decrease) in Provision 770 1,088 (841) (26) 186 4,271 502 5,950 Balance at end of period $ 34,365 $ 19,254 $ 5,976 $ 585 $ 43,220 $ 30,998 $ 4,176 $ 138,574 Three Months Ended March 31, 2017 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Balance at beginning of period $ 33,129 $ 18,448 $ 4,513 $ 847 $ 43,436 $ 28,388 $ 6,733 $ 135,494 Charge-offs (855) — — — (22) (5,572) — (6,449) Recoveries 114 77 — — 321 1,790 — 2,302 Increase (decrease) in Provision (831) 1,407 19 (34) (194) 2,850 1,283 4,500 Balance at end of period $ 31,557 $ 19,932 $ 4,532 $ 813 $ 43,541 $ 27,456 $ 8,016 $ 135,847 The disaggregation of the Allowance and recorded investment in loans by impairment methodology as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Individually evaluated for impairment $ 4 $ 6 $ — $ — $ 437 $ — $ — $ 447 Collectively evaluated for impairment 34,361 19,248 5,976 585 42,783 30,998 4,176 138,127 Balance at end of period $ 34,365 $ 19,254 $ 5,976 $ 585 $ 43,220 $ 30,998 $ 4,176 $ 138,574 Loans and leases: Individually evaluated for impairment $ 17,044 $ 10,141 $ 2,001 $ — $ 16,366 $ — $ — $ 45,552 Collectively evaluated for impairment 3,202,166 2,728,416 592,265 160,140 4,139,637 1,595,989 — 12,418,613 Balance at end of period $ 3,219,210 $ 2,738,557 $ 594,266 $ 160,140 $ 4,156,003 $ 1,595,989 $ — $ 12,464,165 December 31, 2017 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Individually evaluated for impairment $ 4 $ 6 $ — $ — $ 484 $ — $ — $ 494 Collectively evaluated for impairment 34,002 18,038 6,817 611 42,368 31,249 3,674 136,759 Balance at end of period $ 34,006 $ 18,044 $ 6,817 $ 611 $ 42,852 $ 31,249 $ 3,674 $ 137,253 Loans and leases: Individually evaluated for impairment $ 18,183 $ 10,636 $ — $ — $ 16,530 $ — $ — $ 45,349 Collectively evaluated for impairment 3,117,083 2,656,961 632,911 165,066 4,073,523 1,586,476 — 12,232,020 Balance at end of period $ 3,135,266 $ 2,667,597 $ 632,911 $ 165,066 $ 4,090,053 $ 1,586,476 $ — $ 12,277,369 Credit Quality The Company performs an internal loan review and grading on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of the Company’s lending policies and procedures. The objective of the loan review and grading procedures is to identify, in a timely manner, existing or emerging credit quality problems so that appropriate steps can be initiated to avoid or minimize future losses. Loans subject to grading include: commercial and industrial loans, commercial and standby letters of credit, installment loans to businesses or individuals for business and commercial purposes, commercial real estate loans, overdraft lines of credit, commercial credit cards, and other credits as may be determined. Loans which are not subject to grading include loans that are 100% sold with no recourse to the Company, consumer installment loans, indirect automobile loans, consumer credit cards, business credit cards, home equity lines of credit and residential real estate loans. Residential real estate and consumer loans are underwritten primarily on the basis of credit bureau scores, debt-service-to-income ratios, and collateral quality and loan to value ratios. A credit risk rating system is used to determine loan grade and is based on borrower credit risk and transactional risk. The loan grading process is a mechanism used to determine the risk of a particular borrower and is based on the following eight factors of a borrower: character, earnings and operating cash flow, asset and liability structure, debt capacity, financial reporting, management and controls, borrowing entity, and industry and operating environment. Pass – “Pass” (uncriticized) loans and leases, are not considered to carry greater than normal risk. The borrower has the apparent ability to satisfy obligations to the Company, and therefore no loss in ultimate collection is anticipated. Special Mention – Loans and leases that have potential weaknesses deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for assets or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Substandard – Loans and leases that are inadequately protected by the current financial condition and paying capacity of the obligor or by any collateral pledged. Loans and leases so classified must have a well-defined weakness or weaknesses that jeopardize the collection of the debt. They are characterized by the distinct possibility that the bank may sustain some loss if the deficiencies are not corrected. Doubtful – Loans and leases that have weaknesses found in substandard borrowers with the added provision that the weaknesses make collection of debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss – Loans and leases classified as loss are considered uncollectible and of such little value that their continuance as an asset is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future. The credit risk profiles by internally assigned grade for loans and leases as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,065,462 $ 2,640,740 $ 589,090 $ 158,105 $ 6,453,397 Special mention 100,677 75,962 2,417 1,684 180,740 Substandard 51,510 21,855 2,759 351 76,475 Doubtful 1,561 — — — 1,561 Total $ 3,219,210 $ 2,738,557 $ 594,266 $ 160,140 $ 6,712,173 December 31, 2017 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,035,121 $ 2,619,494 $ 628,112 $ 162,849 $ 6,445,576 Special mention 43,435 26,248 2,377 1,816 73,876 Substandard 54,996 21,855 2,422 401 79,674 Doubtful 1,714 — — — 1,714 Total $ 3,135,266 $ 2,667,597 $ 632,911 $ 165,066 $ 6,600,840 There were no loans and leases graded as Loss as of March 31, 2018 and December 31, 2017. The credit risk profiles based on payment activity for loans and leases that were not subject to loan grading as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 (dollars in thousands) Residential Consumer Consumer - Auto Credit Cards Total Performing $ 4,142,201 $ 222,434 $ 1,033,161 $ 315,545 $ 5,713,341 Non-performing and delinquent 13,802 2,899 18,617 3,333 38,651 Total $ 4,156,003 $ 225,333 $ 1,051,778 $ 318,878 $ 5,751,992 December 31, 2017 (dollars in thousands) Residential Consumer Consumer - Auto Credit Cards Total Performing $ 4,073,834 $ 231,023 $ 1,001,085 $ 324,781 $ 5,630,723 Non-performing and delinquent 16,219 3,335 22,612 3,640 45,806 Total $ 4,090,053 $ 234,358 $ 1,023,697 $ 328,421 $ 5,676,529 Impaired and Nonaccrual Loans and Leases The Company evaluates certain loans and leases individually for impairment. A loan or lease is considered to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan or lease. An allowance for impaired commercial loans, including commercial real estate and construction loans, is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. An allowance for impaired residential loans is measured based on the estimated fair value of the collateral, less any selling costs. Management exercises significant judgment in developing these estimates. The Company generally places a loan on nonaccrual status when management believes that collection of principal or interest has become doubtful or when a loan or lease becomes 90 days past due as to principal or interest, unless it is well secured and in the process of collection. It is the Company’s policy to charge off a loan when the facts indicate that the loan is considered uncollectible. The aging analyses of past due loans and leases as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 Accruing Loans and Leases Greater Total Non Than or Total Accruing 30-59 60-89 Equal to Total Accruing Loans Days Days 90 Days Past Loans and and Total (dollars in thousands) Past Due Past Due Past Due Due Current Leases Leases Outstanding Commercial and industrial $ 253 $ 30 $ 83 $ 366 $ 3,216,956 $ 3,217,322 $ 1,888 $ 3,219,210 Commercial real estate 712 — — 712 2,734,960 2,735,672 2,885 2,738,557 Construction — — 343 343 591,922 592,265 2,001 594,266 Lease financing — — — — 160,140 160,140 — 160,140 Residential 4,673 2,311 1,469 8,453 4,142,201 4,150,654 5,349 4,156,003 Consumer 19,612 3,493 1,744 24,849 1,571,140 1,595,989 — 1,595,989 Total $ 25,250 $ 5,834 $ 3,639 $ 34,723 $ 12,417,319 $ 12,452,042 $ 12,123 $ 12,464,165 December 31, 2017 Accruing Loans and Leases Greater Total Non Than or Total Accruing 30-59 60-89 Equal to Total Accruing Loans Days Days 90 Days Past Loans and and Total (dollars in thousands) Past Due Past Due Past Due Due Current Leases Leases Outstanding Commercial and industrial $ 156 $ — $ 220 $ 376 $ 3,131,958 $ 3,132,334 $ 2,932 $ 3,135,266 Commercial real estate — 1,099 1,400 2,499 2,663,312 2,665,811 1,786 2,667,597 Construction — 2,001 — 2,001 630,910 632,911 — 632,911 Lease financing — — — — 165,066 165,066 — 165,066 Residential 8,463 1,289 1,360 11,112 4,073,834 4,084,946 5,107 4,090,053 Consumer 24,379 3,814 1,394 29,587 1,556,889 1,586,476 — 1,586,476 Total $ 32,998 $ 8,203 $ 4,374 $ 45,575 $ 12,221,969 $ 12,267,544 $ 9,825 $ 12,277,369 The total carrying amounts and the total unpaid principal balances of impaired loans and leases as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 16,901 $ 17,424 $ — Commercial real estate 9,259 9,259 — Construction 2,001 2,001 — Residential 8,879 9,237 — Total $ 37,040 $ 37,921 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 143 $ 143 $ 4 Commercial real estate 882 882 6 Residential 7,487 7,768 437 Total $ 8,512 $ 8,793 $ 447 Total impaired loans: Commercial and industrial $ 17,044 $ 17,567 $ 4 Commercial real estate 10,141 10,141 6 Construction 2,001 2,001 — Residential 16,366 17,005 437 Total $ 45,552 $ 46,714 $ 447 December 31, 2017 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 18,036 $ 18,909 $ — Commercial real estate 9,745 9,745 — Residential 8,648 9,006 — Total $ 36,429 $ 37,660 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 147 $ 147 $ 4 Commercial real estate 891 891 6 Residential 7,882 8,162 484 Total $ 8,920 $ 9,200 $ 494 Total impaired loans: Commercial and industrial $ 18,183 $ 19,056 $ 4 Commercial real estate 10,636 10,636 6 Residential 16,530 17,168 484 Total $ 45,349 $ 46,860 $ 494 The following tables provide information with respect to the Company’s average balances, and of interest income recognized from, impaired loans for the three months ended March 31, 2018 and 2017: Three Months Ended March 31, 2018 Average Interest Recorded Income (dollars in thousands) Investment Recognized Impaired loans with no related allowance recorded: Commercial and industrial $ 17,469 $ 181 Commercial real estate 9,502 55 Construction 1,001 — Residential 8,763 130 Total $ 36,735 $ 366 Impaired loans with a related allowance recorded: Commercial and industrial $ 145 $ 2 Commercial real estate 887 10 Residential 7,685 84 Total $ 8,717 $ 96 Total impaired loans: Commercial and industrial $ 17,614 $ 183 Commercial real estate 10,389 65 Construction 1,001 — Residential 16,448 214 Total $ 45,452 $ 462 Three Months Ended March 31, 2017 Average Interest Recorded Income (dollars in thousands) Investment Recognized Impaired loans with no related allowance recorded: Commercial and industrial $ 21,705 $ 229 Commercial real estate 11,491 129 Lease financing 153 — Residential 8,841 136 Total $ 42,190 $ 494 Impaired loans with a related allowance recorded: Commercial and industrial $ 6,203 $ 47 Commercial real estate 940 11 Residential 9,426 94 Total $ 16,569 $ 152 Total impaired loans: Commercial and industrial $ 27,908 $ 276 Commercial real estate 12,431 140 Lease financing 153 — Residential 18,267 230 Total $ 58,759 $ 646 Modifications Commercial and industrial loans modified in a troubled debt restructuring (“TDR”) may involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor may be requested. Modifications of commercial real estate and construction loans in a TDR may involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Modifications of construction loans in a TDR may also involve extending the interest-only payment period. Interest continues to accrue on the missed payments and as a result, the effective yield on the lease remains unchanged. As the forbearance period usually involves an insignificant payment delay, lease financing modifications typically do not meet the reporting criteria for a TDR. Residential real estate loans modified in a TDR may be comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, normally two years. Generally, consumer loans are not classified as a TDR as they are normally charged off upon reaching a predetermined delinquency status that ranges from 120 to 180 days and varies by product type. Loans modified in a TDR may already be on nonaccrual status and in some cases partial charge-offs may have already been taken against the outstanding loan balance. Loans modified in a TDR are evaluated for impairment. As a result, this may have a financial effect of increasing the specific Allowance associated with the loan. An Allowance for impaired commercial loans, including commercial real estate and construction loans, that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. An Allowance for impaired residential loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs. Management exercises significant judgment in developing these estimates. There were no loans modified in a TDR during the three months ended March 31, 2018. The following presents, by class, information related to loans modified in a TDR during the three months ended March 31, 2017: Three Months Ended March 31, 2017 Number of Recorded Related (dollars in thousands) Contracts Investment (1) Allowance Commercial and industrial 1 $ 1,210 $ — Residential 1 353 11 Total 2 $ 1,563 $ 11 (1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. The above loans were modified in a TDR through temporary interest-only payments, reduced payments, or below-market interest rates. The Company had total remaining loan and lease commitments including standby letters of credit of $5.4 billion as of both March 31, 2018 and December 31, 2017. Of the $5.4 billion at March 31, 2018, there were commitments of $1.6 million related to borrowers who had loan terms modified in a TDR. Of the $5.4 billion at December 31, 2017, there were commitments of $1.9 million related to borrowers who had loan terms modified in a TDR. The following table presents, by class, loans modified in TDRs that have defaulted in the current period within 12 months of their permanent modification date for the periods indicated. The Company is reporting these defaulted TDRs based on a payment default definition of 30 days past due: Three Months Ended March 31, 2018 2017 Number of Recorded Number of Recorded (dollars in thousands) Contracts Investment (1) Contracts Investment (1) Commercial and industrial (2) 2 $ 564 — $ — Commercial real estate (3) — — 1 1,395 Residential (4) — — 1 510 Total 2 $ 564 2 $ 1,905 (1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. (2) For the three months ended March 31, 2018, the maturity dates for the commercial and industrial loans that subsequently defaulted were extended. (3) For the three months ended March 31, 2017, the commercial real estate loan that subsequently defaulted was refinanced. (4) For the three months ended March 31, 2017 , the residential real estate loan that subsequently defaulted was modified for interest-only payments. Foreclosure Proceedings As of both March 31, 2018 and December 31, 2017, there was one residential mortgage loan collateralized by real estate property of $0.3 million that was modified in a TDR that was in process of foreclosure. Foreclosed Property There were no holdings of foreclosed TDR properties at March 31, 2018. Residential real estate property held from one foreclosed TDR of a residential mortgage loan included in other real estate owned and repossessed personal property shown in the unaudited interim consolidated balance sheets was $0.3 million at December 31, 2017. |
Mortgage Servicing Rights
Mortgage Servicing Rights | 3 Months Ended |
Mar. 31, 2018 | |
Mortgage Servicing Rights | |
Mortgage Servicing Rights | 5. Mortgage Servicing Rights Mortgage servicing activities include collecting principal, interest, tax, and insurance payments from borrowers while accounting for and remitting payments to investors, taxing authorities, and insurance companies. The Company also monitors delinquencies and administers foreclosure proceedings. Mortgage loan servicing income is recorded in noninterest income as a part of other service charges and fees and amortization of the servicing assets is recorded in noninterest income as part of other income. The unpaid principal amount of consumer loans serviced for others was $2.9 billion and $2.3 billion as of March 31, 2018 and December 31, 2017, respectively. Servicing fees include contractually specified fees, late charges, and ancillary fees, and were $1.7 million for both the three months ended March 31, 2018 and 2017. Amortization of mortgage servicing rights (“MSRs”) was $1.0 million for both the three months ended March 31, 2018 and 2017. The estimated future amortization expense for MSRs over the next five years is as follows: Estimated (dollars in thousands) Amortization Under one year $ 2,593 One to two years 2,296 Two to three years 2,034 Three to four years 1,799 Four to five years 1,591 The details of the Company’s MSRs are presented below: March 31, December 31, (dollars in thousands) 2018 2017 Gross carrying amount $ 63,022 $ 56,571 Less: accumulated amortization 44,363 43,375 Net carrying value $ 18,659 $ 13,196 The following table presents changes in amortized MSRs for the three months ended March 31, 2018 and 2017: Three Months Ended March 31, (dollars in thousands) 2018 2017 Balance at beginning of period $ 13,196 $ 16,809 Originations 7 3 Purchases 6,444 — Amortization (988) (1,012) Balance at end of period $ 18,659 $ 15,800 Fair value of amortized MSRs at beginning of period $ 21,697 $ 25,160 Fair value of amortized MSRs at end of period $ 29,048 $ 24,495 MSRs are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment of MSRs was recorded for the three months ended March 31, 2018 and 2017. The quantitative assumptions used in determining the lower of cost or fair value of the Company’s MSRs as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 Weighted Weighted Range Average Range Average Conditional prepayment rate 7.76 % - 18.94 % 8.12 % 8.53 % - 19.63 % 9.04 % Life in years (of the MSR) 3.40 - 8.01 7.35 3.29 - 7.15 6.76 Weighted-average coupon rate 3.96 % - 6.77 % 4.02 % 3.97 % - 6.79 % 4.04 % Discount rate 10.50 % - 10.50 % 10.50 % 10.50 % - 10.52 % 10.50 % The sensitivities surrounding MSRs are expected to have an immaterial impact on fair value. |
Transfers of Financial Assets
Transfers of Financial Assets | 3 Months Ended |
Mar. 31, 2018 | |
Transfers of Financial Assets | |
Transfers of Financial Assets | 6. Transfers of Financial Assets The Company’s transfers of financial assets with continuing interest may include pledges of collateral to secure public deposits and repurchase agreements, FHLB and FRB borrowing capacity, automated clearing house (“ACH”) transactions and interest rate swaps. For public deposits and repurchase agreements, the Company enters into bilateral agreements with the entity to pledge investment securities as collateral in the event of default. The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default. The counterparty has the right to sell or repledge the investment securities. The Company is required by the counterparty to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional investment securities. For transfers of assets with the FHLB and the FRB, the Company enters into bilateral agreements to pledge loans and investment securities as collateral to secure borrowing capacity. For ACH transactions, the Company enters into bilateral agreements to collateralize possible daylight overdrafts. For interest rate swaps, the Company enters into bilateral agreements to pledge collateral when either party is in a negative fair value position to mitigate counterparty credit risk. Counterparties to ACH transactions, certain interest rate swaps, the FHLB and the FRB do not have the right to sell or repledge the collateral. The carrying amounts of the assets pledged as collateral to secure public deposits, borrowing arrangements and other transactions as of March 31, 2018 and December 31, 2017 were as follows: (dollars in thousands) March 31, 2018 December 31, 2017 Public deposits $ 2,486,067 $ 2,800,690 Federal Home Loan Bank 2,475,887 2,388,702 Federal Reserve Bank 914,177 914,454 ACH transactions 151,462 151,526 Interest rate swaps 30,657 27,502 Total $ 6,058,250 $ 6,282,874 As the Company did not enter into reverse repurchase agreements, no collateral was accepted as of March 31, 2018 and December 31, 2017. In addition, no debt was extinguished by in-substance defeasance. At March 31, 2018, the Company had $1.5 billion and $676.8 million of lines of credit available from the FHLB and the FRB, respectively. None of the lines available were drawn upon as of March 31, 2018. The Company did not have any repurchase agreements as of March 31, 2018 and December 31, 2017. |
Deposits
Deposits | 3 Months Ended |
Mar. 31, 2018 | |
Deposits | |
Deposits | 7. Deposits As of March 31, 2018 and December 31, 2017, deposits were categorized as interest-bearing or noninterest-bearing as follows: (dollars in thousands) March 31, 2018 December 31, 2017 U.S.: Interest-bearing $ 10,576,408 $ 10,800,140 Noninterest-bearing 5,419,275 5,494,803 Foreign: Interest-bearing 735,880 685,129 Noninterest-bearing 630,859 632,050 Total deposits $ 17,362,422 $ 17,612,122 The following table presents the maturity distribution of time certificates of deposit as of March 31, 2018: Under $250,000 (dollars in thousands) $250,000 or More Total Three months or less $ 278,084 $ 1,798,955 $ 2,077,039 Over three through six months 172,688 340,585 513,273 Over six through twelve months 397,408 472,221 869,629 One to two years 130,272 102,805 233,077 Two to three years 98,989 53,185 152,174 Three to four years 93,983 36,957 130,940 Four to five years 57,346 32,121 89,467 Thereafter 127 — 127 Total $ 1,228,897 $ 2,836,829 $ 4,065,726 Time certificates of deposit in denominations of $250,000 or more, in the aggregate, were $2.8 billion and $3.0 billion as of March 31, 2018 and December 31, 2017, respectively. Overdrawn deposit accounts are classified as loans and totaled $3.9 million and $2.7 million as of March 31, 2018 and December 31, 2017, respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2018 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | 8. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss is defined as the revenues, expenses, gains and losses that are included in comprehensive income but excluded from net income. The Company’s significant items of accumulated other comprehensive loss are pension and other benefits, net unrealized gains or losses on investment securities and net unrealized gains or losses on cash flow derivative hedges. Changes in accumulated other comprehensive loss for the three months ended March 31, 2018 and 2017 are presented below: Income Tax Pre-tax Benefit Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2017 $ (159,423) $ 63,040 $ (96,383) Three months ended March 31, 2018 Early adoption of ASU No. 2018-02 — (20,068) (20,068) Investment securities: Unrealized net losses arising during the period (66,700) 17,923 (48,777) Net change in unrealized losses on investment securities (66,700) 17,923 (48,777) Cash flow derivative hedges: Unrealized net gains on cash flow derivative hedges arising during the period 738 (194) 544 Net change in unrealized gains on cash flow derivative hedges 738 (194) 544 Other comprehensive loss (65,962) 17,729 (48,233) Accumulated other comprehensive loss at March 31, 2018 $ (225,385) $ 60,701 $ (164,684) Income Tax Pre-tax Benefit Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2016 $ (145,472) $ 57,461 $ (88,011) Three months ended March 31, 2017 Investment securities: Unrealized net gains arising during the period 1,578 (621) 957 Net change in unrealized gains on investment securities 1,578 (621) 957 Cash flow derivative hedges: Unrealized net gains on cash flow derivative hedges arising during the period 598 (236) 362 Net change in unrealized gains on cash flow derivative hedges 598 (236) 362 Other comprehensive income 2,176 (857) 1,319 Accumulated other comprehensive loss at March 31, 2017 $ (143,296) $ 56,604 $ (86,692) The following table summarizes changes in accumulated other comprehensive loss, net of tax, for the periods indicated: Total Pensions Unrealized Unrealized Accumulated and (Losses) Gains Gains on Other Other on Investment Cash Flow Comprehensive (dollars in thousands) Benefits Securities Derivative Hedges Loss Three Months Ended March 31, 2018 Balance at beginning of period $ (25,946) $ (74,117) $ 3,680 $ (96,383) Early adoption of ASU No. 2018-02 (5,393) (15,440) 765 (20,068) Other comprehensive (loss) income — (48,777) 544 (48,233) Balance at end of period $ (31,339) $ (138,334) $ 4,989 $ (164,684) Three Months Ended March 31, 2017 Balance at beginning of period $ (30,237) $ (59,958) $ 2,184 $ (88,011) Other comprehensive income — 957 362 1,319 Balance at end of period $ (30,237) $ (59,001) $ 2,546 $ (86,692) |
Regulatory Capital Requirements
Regulatory Capital Requirements | 3 Months Ended |
Mar. 31, 2018 | |
Regulatory Capital Requirements | |
Regulatory Capital Requirements | 9. Regulatory Capital Requirements Federal and state laws and regulations limit the amount of dividends the Company may declare or pay. The Company depends primarily on dividends from FHB as the source of funds for the Company’s payment of dividends. The Company and the Bank are subject to various regulatory capital requirements imposed by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s operating activities and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of its assets and certain off-balance-sheet items. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios of Common Equity Tier 1 (“CET1”) capital, Tier 1 capital and total capital to risk-weighted assets, as well as a minimum leverage ratio. The table below sets forth those ratios at March 31, 2018 and December 31, 2017: First Hawaiian, Inc. First Hawaiian Minimum Well- and the Bank Bank Capital Capitalized (dollars in thousands) Amount Ratio Amount Ratio Ratio (1) Ratio (1) March 31, 2018: Common equity tier 1 capital to risk-weighted assets $ 1,690,054 12.73 % $ 1,688,288 12.71 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,690,054 12.73 % 1,688,288 12.71 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,829,228 13.77 % 1,827,462 13.76 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,690,054 8.71 % 1,688,288 8.70 % 4.00 % 5.00 % December 31, 2017: Common equity tier 1 capital to risk-weighted assets $ 1,633,442 12.45 % $ 1,623,455 12.37 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,633,442 12.45 % 1,623,455 12.37 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,771,295 13.50 % 1,761,308 13.42 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,633,442 8.52 % 1,623,455 8.47 % 4.00 % 5.00 % (1) As defined by the regulations issued by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation (“FDIC”). A new capital conservation buffer, comprised of CET1 capital, was established above the regulatory minimum capital requirements. This capital conservation buffer was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. As of March 31, 2018, under the bank regulatory capital guidelines, the Company and Bank were both classified as well-capitalized. Management is not aware of any conditions or events that have occurred since March 31, 2018, to change the capital adequacy category of the Company or the Bank. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | 10. Income Taxes On December 22, 2017, President Trump signed into law the Tax Act. The Tax Act makes many significant amendments to the Internal Revenue Code of 1986, as amended (the “Code”), including reducing the corporate tax rate from 35% to 21%, effective January 1, 2018. GAAP requires that companies record and reflect the impact of the Tax Act in their financial statements for the quarter during which the Tax Act becomes law, even if provisions of the Tax Act become effective at a future date. Accordingly, the Company reported the impact of the Tax Act on its results of operations in its consolidated financial statements for the fourth quarter and year ended December 31, 2017. The reduction in the corporate tax rate under the Tax Act required a one-time revaluation of certain tax-related assets, which resulted in the Company recording $47.6 million in additional income tax expense in our consolidated statements of income in the fourth quarter of 2017. The Company’s effective tax rate was 26.00% and 36.89% for the three months ended March 31, 2018 and 2017, respectively. The Company is subject to examination by the Internal Revenue Service (“IRS”) and tax authorities in states in which the Company has significant business operations. The tax years under examination and open for examination vary by jurisdiction. There are currently no federal examinations under way; however, refund claims and tax returns for certain years are being reviewed by state jurisdictions. No material unanticipated adjustments were made by the IRS in the years most recently examined. The Company’s income tax returns for 2014 and subsequent tax years generally remain subject to examination by U.S. federal and foreign jurisdictions, and 2013 and subsequent years are subject to examination by state taxing authorities. A reconciliation of the amount of unrecognized tax benefits is as follows for the three months ended March 31, 2018 and 2017: Three Months Ended March 31, 2018 2017 Interest Interest and and (dollars in thousands) Tax Penalties Total Tax Penalties Total Balance at January 1, $ 130,619 $ 10,660 $ 141,279 $ 127,085 $ 9,965 $ 137,050 Additions for current year tax positions 354 — 354 199 — 199 Additions for prior years' tax positions: Accrual of interest and penalties — 242 242 — 71 71 Reductions for prior years' tax positions: Expiration of statute of limitations (70) (32) (102) (127) (51) (178) Other (257) — (257) — — — Balance at March 31, $ 130,646 $ 10,870 $ 141,516 $ 127,157 $ 9,985 $ 137,142 Included in the balance of unrecognized tax benefits was $15.0 million and $10.7 million of unrecognized tax benefits as of March 31, 2018 and 2017, respectively that, if recognized, would impact the effective tax rate. In connection with the Reorganization Transactions discussed below, the Company recorded unrecognized tax benefits and interest and penalties of $121.4 million and $7.0 million, respectively. Included in the balance of the unrecognized tax benefits as of March 31, 2018 was $93.9 million attributable to tax refund claims with respect to tax years 2005 through 2012 in the State of California. Such refund claims were filed by the Company in 2015, on behalf of the Company and its affiliates, including BOW, concerning the determination of taxes for which no benefit is currently recognized. It is reasonably possible that the amount of unrecognized tax benefits could decrease within the next 12 months by as much as $107.6 million of taxes and $5.6 million of accrued interest and penalties as a result of settlements and the expiration of the statute of limitations in various states. The Company recognizes interest and penalties attributable to both unrecognized tax benefits and undisputed tax adjustments in the provision for income taxes. Net expense attributable to interest and penalties were nil for both the three months ended March 31, 2018 and 2017. As of both March 31, 2018 and December 31, 2017, the Company had a liability of $12.8 million for accrued interest and penalties, of which $10.9 million and $10.7 million as of March 31, 2018 and December 31, 2017, respectively, were attributable to unrecognized tax benefits and the remainder was attributable to tax adjustments which are not expected to be in dispute. Prior to the Reorganization Transactions, the Company filed consolidated U.S. Federal and combined state tax returns that incorporated the tax receivables and unrecognized tax benefits of FHB and BOW. The consummation of the Reorganization Transactions did not relieve the Company of the pre-Reorganization Transactions tax receivables and unrecognized tax benefits recognized by BOW that were included in the Company's consolidated and combined tax returns. As of March 31, 2018, the Company maintained balances of $93.9 million related to current tax receivables, $116.5 million related to unrecognized tax benefits, and an indemnification receivable of $22.6 million. Additionally, in connection with the Reorganization Transactions, the Company incurred certain tax-related liabilities related to the distribution of its interest in BWHI amounting to $95.4 million. The amount necessary to pay the distribution taxes (net of the expected federal tax benefit of $33.4 million) was paid by BNPP to the Company on April 1, 2016. The Company reported total distribution taxes of $92.1 million in the 2016 tax returns of various state and local jurisdictions, and reimbursed BWHI approximately $2.1 million pursuant to a tax sharing agreement entered into on April 1, 2016 and pursuant to certain tax allocation agreements entered into among the parties. The Company expects that any future adjustment to such taxes will be similarly reimbursed to, or funded by, BWHI or its affiliates. Accordingly, the assumption of the pre-Reorganization Transactions tax receivables, unrecognized tax benefits and distribution tax liabilities and the offsetting indemnification receivables or payables were reflected as equity contributions and distributions on April 1, 2016. The reimbursement of distribution taxes to BWHI was also reflected as an adjustment to equity. If there are any future adjustments to the indemnified tax receivables or unrecognized tax benefits, an offsetting adjustment to the indemnification receivables or payables will be recorded to the provision for income taxes and other noninterest income or expense. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 11. Derivative Financial Instruments The Company enters into derivative contracts primarily to manage its interest rate risk, as well as for customer accommodation purposes. Derivatives used for risk management purposes consist of interest rate swaps that are designated as either a fair value hedge or a cash flow hedge. The derivatives are recognized on the unaudited interim consolidated balance sheets as either assets or liabilities at fair value. Derivatives entered into for customer accommodation purposes consist of various free-standing interest rate derivative products and foreign exchange contracts. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The following table summarizes notional amounts and fair values of derivatives held by the Company as of March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Fair Value Fair Value Notional Asset Liability Notional Asset Liability (dollars in thousands) Amount Derivatives (1) Derivatives (2) Amount Derivatives (1) Derivatives (2) Derivatives designated as hedging instruments: Interest rate swaps $ 194,548 $ 29 $ (873) $ 194,687 $ — $ (2,032) Derivatives not designated as hedging instruments: Interest rate swaps 1,988,253 3,936 (16,737) 1,820,442 14,658 (13,017) Funding swap 56,107 — (4,845) 43,113 — (5,439) Foreign exchange contracts 4,618 2 (40) 3,658 24 — (1) The positive fair values of derivative assets are included in other assets. (2) The negative fair values of derivative liabilities are included in other liabilities. Certain interest rate swaps noted above, are cleared through clearinghouses, rather than directly with counterparties. Those transactions cleared through a clearinghouse require initial margin collateral and variation margin payments depending on the contracts being in a net asset or liability position. The amount of initial margin cash collateral posted by the Company was $4.4 million and $2.9 million as of March 31, 2018 and December 31, 2017, respectively. Effective January 3, 2017, the Chicago Mercantile Exchange (“CME”) amended its rulebook to legally characterize variation margin payments, for derivative contracts that are referred to as settled-to-market (“STM”), as settlements of the derivative’s mark-to-market exposure and not collateral. Based on these changes, the Company has treated the CME variation margin as a settlement, which has resulted in a decrease in our cash collateral, and a corresponding decrease in our derivative asset and liability. The change was applied prospectively effective January 3, 2017. As of March 31, 2018 and December 31, 2017, the CME variation margin was $0.6 million and $3.1 million, respectively. Effective January 16, 2018, the London Clearing House (“LCH”) also amended its rulebook to legally characterize variation margin payments, for derivative contracts that are referred to as settled-to-market (“STM”), as settlements of the derivative’s mark-to-market exposure and not collateral. Consistent with the CME’s amended requirements discussed above, the Company has treated the LCH variation margin as a settlement, which has resulted in a decrease in our cash collateral, and a corresponding decrease in our derivative asset and liability. The change was applied prospectively effective January 16, 2018 and as a result prior period balances have not been adjusted. As of March 31, 2018, the LCH variation margin was $11.3 million. As of March 31, 2018, the Company pledged $23.7 million in financial instruments and $6.9 million in cash as collateral for interest rate swaps. As of March 31, 2018, the cash collateral includes the excess initial margin for interest rate swaps cleared through clearinghouses and cash collateral for interest rate swaps with financial institution counterparties. As of December 31, 2017, the Company pledged $22.6 million in financial instruments and $4.9 million in cash as collateral for interest rate swaps. As of December 31, 2017, the cash collateral includes the excess initial margin for interest rate swaps cleared through clearinghouses, the LCH variation margin which was not treated as settlements prior to January 16, 2018 and cash collateral for interest rate swaps with financial institution counterparties. Fair Value Hedges To manage the risk related to the Company’s net interest margin, interest rate swaps are utilized to hedge certain fixed-rate loans. These swaps have maturity, amortization and prepayment features that correspond to the loans hedged, and are designated and qualify as fair value hedges. Any gain or loss on the swaps, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, is recognized in current period earnings. At March 31, 2018, the Company carried interest rate swaps with notional amounts totaling $44.5 million with a positive fair value of nil and a negative fair value of $0.1 million that were categorized as fair value hedges for commercial and industrial loans and commercial real estate loans. The Company received 6-month London Interbank Offered Rate (“LIBOR”) and paid fixed rates ranging from 2.59% to 3.44%. The swaps mature between 2019 and 2023. At December 31, 2017, the Company carried interest rate swaps with notional amounts totaling $44.7 million with a positive fair value of nil and a negative fair value of $0.5 million that were categorized as fair value hedges for commercial and industrial loans and commercial real estate loans. The following table shows the net gains and losses recognized in income related to derivatives in fair value hedging relationships for the three months ended March 31, 2018 and 2017: March 31, (dollars in thousands) 2018 2017 Interest expense recorded in net interest income $ (108) $ (199) Gains (losses) recorded in noninterest income: Recognized on derivatives 550 219 Recognized on hedged item (763) (197) Net (losses) gains recognized on fair value hedges (ineffective portion) (213) 22 Net losses recognized on fair value hedges $ (321) $ (177) Cash Flow Hedges The Company utilizes interest rate swaps to reduce exposure to interest rates associated with short-term fixed-rate liabilities. The Company enters into interest rate swaps paying fixed rates and receiving LIBOR. The LIBOR index will correspond to the short-term fixed-rate nature of the liabilities being hedged. If interest rates rise, the increase in interest received on the swaps will offset increases in interest costs associated with these liabilities. By hedging with interest rate swaps, the Company minimizes the adverse impact on interest expense associated with increasing rates on short-term liabilities. The interest rate swaps are designated and qualify as cash flow hedges. The effective portion of the gain or loss on the interest rate swaps is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. There were no recognized expenses related to the ineffective portion of the change in fair value of derivatives designated as a cash flow hedge for the three months ended March 31, 2018 and 2017. As of March 31, 2018 and December 31, 2017, the Company carried two interest rate swaps with notional amounts totaling $150.0 million, with a negative fair value of $0.7 million as of March 31, 2018 and a negative fair value of $1.5 million as of December 31, 2017, in order to reduce exposure to interest rate increases associated with short-term fixed-rate liabilities. The swaps mature in 2018. The Company received 6-month LIBOR and paid fixed rates ranging from 2.98% to 3.03%. The interest rate swaps designated as cash flow hedges resulted in net interest expense of $0.5 million and $0.6 million during the three months ended March 31, 2018 and 2017, respectively. The following table summarizes the effect of cash flow hedging relationships for the three months ended March 31, 2018 and 2017: March 31, (dollars in thousands) 2018 2017 Pretax gains recognized in other comprehensive income on derivatives (effective portion) $ 738 $ 598 There were no gains or losses reclassified from accumulated other comprehensive loss to earnings during the three months ended March 31, 2018 and 2017. Free-Standing Derivative Instruments For the derivatives that are not designated as hedges, changes in fair value are reported in current period earnings. The following table summarizes the impact on pretax earnings of derivatives not designated as hedges, as reported on the unaudited interim consolidated statements of income for the three months ended March 31, 2018 and 2017: Net gains (losses) recognized in the consolidated statements Three Months Ended March 31, (dollars in thousands) of income line item 2018 2017 Derivatives Not Designated As Hedging Instruments: Interest rate swaps Other noninterest income $ 404 $ 253 Funding swap Other noninterest income (84) 3 Foreign exchange contracts Other noninterest income (63) 205 As of March 31, 2018, the Company carried multiple interest rate swaps with notional amounts totaling $2.0 billion, including $1.9 billion related to the Company’s customer swap program, with a positive fair value of $3.9 million and a negative fair value of $16.7 million. The Company received 1-month and 3-month LIBOR and paid fixed rates ranging from 1.89% to 5.47%. The swaps mature between 2018 and 2037. As of December 31, 2017, the Company carried multiple interest rate swaps with notional amounts totaling $1.8 billion, including $1.7 billion related to the Company’s customer swap program, with a positive fair value of $14.7 million and a negative fair value of $13.0 million. The Company received 1-month and 3-month LIBOR and paid fixed rates ranging from 1.36% to 5.33%. The swaps mature between 2018 and 2037. These swaps resulted in net interest expense of $0.2 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively. The Company’s customer swap program is designed by offering customers a variable-rate loan that is swapped to fixed-rate through an interest rate swap. The Company simultaneously executes an offsetting interest rate swap with a swap dealer. Upfront fees on the dealer swap are recorded in other noninterest income and totaled $3.2 million and $3.0 million for the three months ended March 31, 2018 and 2017, respectively. Interest rate swaps related to the program had asset fair values of $3.9 million and $14.7 million as of March 31, 2018 and December 31, 2017, respectively, and liability fair values of $15.8 million and $11.7 million as of March 31, 2018 and December 31, 2017, respectively. In conjunction with the 2016 sale of Class B restricted shares of common stock issued by Visa, the Company entered into a funding swap agreement with the buyer that requires payment to the buyer in the event Visa reduces each member bank’s Class B conversion ratio to unrestricted Class A common shares. A derivative liability (“Visa derivative”) of $4.8 million and $5.4 million was included in the unaudited interim consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively, to provide for the fair value of this liability. Under the terms of the funding swap agreement, the Company will make monthly payments to the buyer based on Visa’s Class A stock price and the number of Visa Class B restricted shares that were sold until the date on which the covered litigation is settled. There were no sales of these shares prior to 2016. See “Note 16. Fair Value” for more information. Counterparty Credit Risk By using derivatives, the Company is exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform , the Company’s counterparty credit risk is equal to the amount reported as a derivative asset, net of cash or other collateral received, and net of derivatives in a loss position with the same counterparty to the extent master netting arrangements exist. The Company minimizes counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate. Counterparty credit risk related to derivatives is considered in determining fair value. The Company’s interest rate swap agreements include bilateral collateral agreements with collateral requirements which begin with exposures in excess of $0.5 million. For each counterparty, the Company reviews the interest rate swap collateral daily. Collateral for customer interest rate swap agreements, calculated as the pledged asset less loan balance, requires valuation of the pledged asset. Counterparty credit risk adjustments of $0.1 million and nil were recognized for the three months ended March 31, 2018 and 2017 , respectively. Credit-Risk Related Contingent Features Certain of our derivative contracts contain provisions whereby if the Company’s credit rating were to be downgraded by certain major credit rating agencies as a result of a merger or material adverse change in the Company’s financial condition, the counterparty could require an early termination of derivative instruments in a net liability position. The aggregate fair value of all derivative instruments with such credit-risk related contingent features that are in a net liability position was $1.8 million and $4.5 million at March 31, 2018 and December 31, 2017, respectively, for which we posted $2.5 million and $4.8 million, respectively, in collateral in the normal course of business. If the Company’s credit rating had been downgraded as of March 31, 2018 or December 31, 2017, we would have been required to settle the contract in an amount equal to its fair value. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | 12. Commitments and Contingent Liabilities Contingencies On January 27, 2017, a purported class action lawsuit was filed by a Bank customer alleging that FHB improperly charges an overdraft fee in circumstances where an account had sufficient funds to cover the transaction at the time a transaction is authorized by the customer but not at the time the transaction is posted, and that this practice constitutes an unjust and deceptive trade practice and a breach of contract. The lawsuit further alleges that FHB’s practice of assessing a one-time continuous negative balance overdraft fee on accounts remaining in a negative balance for a seven-day period constitutes a usurious interest charge and an unfair and deceptive trade practice. This lawsuit is similar to lawsuits filed against other financial institutions pertaining to available balance overdraft fee disclosures and continuing negative balance overdraft fees. Because of the many questions of fact and law that may arise in the future, the outcome of this legal proceeding is uncertain at this point. Based on information available to the Company at present, the Company cannot reasonably estimate a range of potential loss, if any, for this action because, among other things, its potential liability depends on whether a class is certified and, if so, the composition and size of any such class, the applicable time period at issue, as well as an assessment of the appropriate measure of damages if the Company were to be found liable. Accordingly, the Company has not recognized any liability associated with this action. Management disputes any wrongdoing and the case is being vigorously defended. In addition to the litigation noted above, various other legal proceedings are pending or threatened against the Company. After consultation with legal counsel, management does not expect that the aggregate liability, if any, resulting from these proceedings would have a material effect on the Company’s consolidated financial position, results of operations or cash flows. Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and commercial letters of credit which are not reflected in the unaudited interim consolidated financial statements. Unfunded Commitments to Extend Credit A commitment to extend credit is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specified purpose. Commitments are reported net of participations sold to other institutions. Such commitments have fixed expiration dates and generally require a fee. The extension of a commitment gives rise to credit risk. The actual liquidity requirements or credit risk that the Company will experience is expected to be lower than the contractual amount of commitments to extend credit because a significant portion of those commitments are expected to expire without being drawn upon. Certain commitments are subject to loan agreements containing covenants regarding the financial performance of the customer that must be met before the Company is required to fund the commitment. The Company uses the same credit policies in making commitments to extend credit as it does in making loans. In addition, the Company manages the potential credit risk in commitments to extend credit by limiting the total amount of arrangements, both by individual customer and in the aggregate, by monitoring the size and expiration structure of these portfolios and by applying the same credit standards maintained for all of its related credit activities. Commitments to extend credit are reported net of participations sold to other institutions of $43.8 million and $49.1 million at March 31, 2018 and December 31, 2017, respectively. Standby and Commercial Letters of Credit Standby letters of credit are issued on behalf of customers in connection with contracts between the customers and third parties. Under standby letters of credit, the Company assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. The credit risk to the Company arises from its obligation to make payment in the event of a customer’s contractual default. Standby letters of credit are reported net of participations sold to other institutions of $17.8 million as of both March 31, 2018 and December 31, 2017. The Company also had commitments for commercial and similar letters of credit. Commercial letters of credit are issued specifically to facilitate commerce whereby the commitment is typically drawn upon when the underlying transaction between the customer and a third party is consummated. The maximum amount of potential future payments guaranteed by the Company is limited to the contractual amount of these letters. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral held supports those commitments for which collateral is deemed necessary. The commitments outstanding as of March 31, 2018 have maturities ranging from April 2018 to March 2021. Substantially all fees received from the issuance of such commitments are deferred and amortized on a straight-line basis over the term of the commitment. Financial instruments with off-balance sheet risk at March 31, 2018 and December 31, 2017 were as follows: March 31, December 31, (dollars in thousands) 2018 2017 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 5,419,907 $ 5,401,763 Standby letters of credit 162,663 161,798 Commercial letters of credit 6,076 5,540 Guarantees The Company sells residential mortgage loans in the secondary market primarily to The Federal National Mortgage Association (“FNMA” or “Fannie Mae”) and The Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”) that may potentially require repurchase under certain conditions. This risk is managed through the Company’s underwriting practices. The Company services loans sold to investors and loans originated by other originators under agreements that may include repurchase remedies if certain servicing requirements are not met. This risk is managed through the Company’s quality assurance and monitoring procedures. Management does not anticipate any material losses as a result of these transactions. Foreign Exchange Contracts The Company has forward foreign exchange contracts that represent commitments to purchase or sell foreign currencies at a future date at a specified price. The Company’s utilization of forward foreign exchange contracts is subject to the primary underlying risk of movements in foreign currency exchange rates and to additional counterparty risk should its counterparties fail to meet the terms of their contracts. Forward foreign exchange contracts are utilized to mitigate the Company’s risk to satisfy customer demand for foreign currencies and are not used for trading purposes. See “Note 11. Derivative Financial Instruments” for more information. Reorganization Transactions In connection with the Reorganization Transactions as discussed in Note 1, FHI (formerly BancWest) distributed its interest in BWHI (including BOW) to BNPP so that BWHI was held directly by BNPP. BWHI is now held indirectly by BNPP through its intermediate holding company. As a result of the Reorganization Transactions that occurred on April 1, 2016, various tax or other contingent liabilities could arise related to the business of BOW, or related to the Company’s operations prior to the restructuring when it was known as BancWest, including its then-wholly-owned subsidiary, BOW. The Company is not able to determine the ultimate outcome or estimate the amounts of these contingent liabilities, if any, at this time. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | 13. Revenue from Contracts with Customers As noted in Note 1, the Company adopted the provisions of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), on January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with Topic 605. Revenue Recognition In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services that are promised within each contract and identifies those that contain performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Disaggregation of Revenue The following table summarizes the Company’s revenues, which includes net interest income on financial instruments and noninterest income, disaggregated by type of service and business segments for the three months ended March 31, 2018: Three Months Ended March 31, 2018 Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Net interest income (1) $ 109,654 $ 27,879 $ 2,139 $ 139,672 Service charges on deposit accounts 7,448 4 503 7,955 Credit and debit card fees — 18,621 1,787 20,408 Other service charges and fees 4,745 898 633 6,276 Trust and investment services income 8,231 — — 8,231 Other 148 1,807 451 2,406 Not in scope of Topic 606 (1) 2,160 (1,330) 2,594 3,424 Total noninterest income 22,732 20,000 5,968 48,700 Total revenue $ 132,386 $ 47,879 $ 8,107 $ 188,372 (1) Most of the Company’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities as well as other noninterest income from loans, leases, investment securities and derivative financial instruments. For the three months ended March 31, 2018, substantially all of the Company’s revenues under the scope of Topic 606 were related to performance obligations satisfied at a point in time. The following is a discussion of revenues within the scope of Topic 606. Service Charges on Deposit Accounts Service charges on deposit accounts relate to fees generated from a variety of deposit products and services rendered to customers. Charges include, but are not limited to, overdraft fees, non-sufficient fund fees, dormant fees and monthly service charges. Such fees are recognized concurrent with the event on a daily basis or on a monthly basis depending upon the customer’s cycle date. Credit and Debit Card Fees Credit and debit card fees primarily represent revenues earned from interchange fees, ATM fees and merchant processing fees. Interchange and network revenues are earned on credit and debit card transactions conducted with payment networks. ATM fees are primarily earned as a result of surcharges assessed to non-FHB customers who use a FHB ATM. Merchant processing fees are primarily earned on transactions in which FHB is the acquiring bank. Such fees are generally recognized concurrently with the delivery of services on a daily basis. Trust and Investment Services Fees Trust and investment services fees represent revenue earned by directing, holding and managing customers’ assets. Fees are generally computed based on a percentage of the previous period’s value of assets under management. The transaction price (i.e., percentage of assets under management) is established at the inception of each contract. Trust and investment services fees also include broker dealer fees which represent revenue earned from buying and selling securities on behalf of customers. Such fees are recognized at the end of a valuation period or concurrently with the execution of a buy or sell transaction. Other Fees Other fees primarily include revenues generated from wire transfers, lockboxes, bank issuance of checks and insurance commissions. Such fees are recognized concurrent with the event or on a monthly basis. Contract Balances A contract liability is an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. In prior years, the Company received signing bonuses from two vendors which are being amortized over the term of the respective contracts. As of March 31, 2018 and December 31, 2017, the Company had contract liabilities of $3.2 million and $3.4 million, respectively, which will be recognized over the remaining term of the respective contracts with the vendors. For the three months ended March 31, 2018, the Company recognized revenues and contract liabilities decreased by approximately $0.2 million due to the passage of time. There were no changes in contract liabilities due to changes in transaction price estimates. A contract asset is the right to consideration for transferred goods or services when the amount is conditioned on something other than the passage of time. As of March 31, 2018 and December 31, 2017, there were no receivables from contracts with customers or contract assets recorded on the Company’s consolidated balance sheets. Other Except for the contract liabilities noted above, the Company did not have any significant performance obligations as of March 31, 2018. The Company also did not have any material contract acquisition costs or use any significant judgments or estimates in recognizing revenue for financial reporting purposes. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings per Share | |
Earnings per Share | 14. Earnings per Share For the three months ended March 31, 2018 and 2017, the Company made no adjustments to net income for the purpose of computing earnings per share and there were no antidilutive securities. For the three months ended March 31, 2018 and 2017, the computations of basic and diluted earnings per share were as follows: Three Months Ended March 31, (dollars in thousands, except shares and per share amounts) 2018 2017 Numerator: Net income $ 67,958 $ 56,740 Denominator: Basic: weighted-average shares outstanding 139,600,712 139,545,728 Add: weighted-average equity-based awards 131,388 91,682 Diluted: weighted-average shares outstanding 139,732,100 139,637,410 Basic earnings per share $ 0.49 $ 0.41 Diluted earnings per share $ 0.49 $ 0.41 |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2018 | |
Benefit Plans | |
Benefit Plans | 15. Benefit Plans The following table sets forth the components of net periodic benefit cost for the three months ended March 31, 2018 and 2017: Expense line item where recognized in Pension Benefits Other Benefits (dollars in thousands) the consolidated statements of income 2018 2017 2018 2017 Three Months Ended March 31, Service cost Salaries and employee benefits $ 174 $ 158 $ 212 $ 179 Interest cost Other noninterest expense 1,794 2,041 185 201 Expected return on plan assets Other noninterest expense (1,240) (1,242) — — Prior service credit Other noninterest expense — — (107) (107) Recognized net actuarial loss Other noninterest expense 1,611 1,999 — — Total net periodic benefit cost $ 2,339 $ 2,956 $ 290 $ 273 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value | |
Fair Value | 16. Fair Value The Company determines the fair values of its financial instruments based on the requirements established in Accounting Standards Codification (“ASC”) 820, Fair Value Measurements , which provides a framework for measuring fair value under GAAP and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 defines fair value as the exit price, the price that would be received for an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. Fair Value Hierarchy ASC 820 establishes three levels of fair values based on the markets in which the assets or liabilities are traded and the reliability of the assumptions used to determine fair value. The levels are: § Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. § Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. § Level 3: Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability (“Company-level data”). Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. ASC 820 requires that the Company disclose estimated fair values for certain financial instruments. Financial instruments include such items as investment securities, loans, deposits, interest rate and foreign exchange contracts, interest rate swaps and other instruments as defined by the standard. The Company has an organized and established process for determining and reviewing the fair value of financial instruments reported in the Company’s financial statements. The fair value measurements are reviewed to ensure they are reasonable and in line with market experience in similar asset and liability classes. Additionally, the Company may be required to record at fair value other assets on a nonrecurring basis, such as other real estate owned, other customer relationships, and other intangible assets. These nonrecurring fair value adjustments typically involve the application of lower-of-cost-or-fair-value accounting or write-downs of individual assets. Disclosure of fair values is not required for certain items such as lease financing, obligations for pension and other postretirement benefits, premises and equipment, prepaid expenses, and income tax assets and liabilities. Reasonable comparisons of fair value information with that of other financial institutions cannot necessarily be made because the standard permits many alternative calculation techniques, and numerous assumptions have been used to estimate the Company’s fair values. Valuation Techniques Used in the Fair Value Measurement of Assets and Liabilities Carried at Fair Value For the assets and liabilities measured at fair value on a recurring basis (categorized in the valuation hierarchy table below), the Company applies the following valuation techniques: Available-for-sale securities Available-for-sale debt securities are recorded at fair value on a recurring basis. Fair value measurement is based on quoted prices, including estimates by third-party pricing services, if available. If quoted prices are not available, fair values are measured using proprietary valuation models that utilize market observable parameters from active market makers and inter-dealer brokers whereby securities are valued based upon available market data for securities with similar characteristics. Management reviews the pricing information received from the Company’s third-party pricing service to evaluate the inputs and valuation methodologies used to place securities into the appropriate level of the fair value hierarchy and transfers of securities within the fair value hierarchy are made if necessary. On a monthly basis, management reviews the pricing information received from the third-party pricing service which includes a comparison to non-binding third-party broker quotes, as well as a review of market-related conditions impacting the information provided by the third-party pricing service. Management also identifies investment securities which may have traded in illiquid or inactive markets by identifying instances of a significant decrease in the volume or frequency of trades, relative to historical levels, as well as instances of a significant widening of the bid-ask spread in the brokered markets. As of March 31, 2018 and December 31, 2017, management did not make adjustments to prices provided by the third-party pricing services as a result of illiquid or inactive markets. The Company’s third-party pricing service has also established processes for the Company to submit inquiries regarding quoted prices. Periodically, the Company will challenge the quoted prices provided by the third-party pricing service. The Company’s third-party pricing service will review the inputs to the evaluation in light of the new market data presented by the Company. The Company’s third-party pricing service may then affirm the original quoted price or may update the evaluation on a going forward basis. The Company classifies all available-for-sale securities as Level 2 in the fair value hierarchy. Derivatives Most of the Company’s derivatives are traded in over-the-counter markets where quoted market prices are not readily available. For those derivatives, the Company measures fair value on a recurring basis using proprietary valuation models that primarily use market observable inputs, such as yield curves, and option volatilities. The fair value of derivatives includes values associated with counterparty credit risk and the Company’s own credit standing. The Company classifies these derivatives, included in other assets and other liabilities, as Level 2 in the fair value hierarchy. Concurrent with the sale of the Visa Class B restricted shares, the Company entered into an agreement with the buyer that requires payment to the buyer in the event Visa reduces each member bank’s Class B conversion ratio to unrestricted Class A common shares. The Visa derivative of $4.8 million and $5.4 million was included in the unaudited interim consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively, to provide for the fair value of this liability. The potential liability related to this funding swap agreement was determined based on management’s estimate of the timing and the amount of Visa’s litigation settlement and the resulting payments due to the counterparty under the terms of the contract. As such, the funding swap agreement is classified as Level 3 in the fair value hierarchy. The significant unobservable inputs used in the fair value measurement of the Company’s funding swap agreement are the potential future changes in the conversion factor, expected term and growth rate of the market price of Visa Class A common shares. Material increases or (decreases) in any of those inputs may result in a significantly higher or (lower) fair value measurement. Assets and Liabilities Recorded at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 are summarized below: Fair Value Measurements as of March 31, 2018 Quoted Prices in Significant Active Markets for Other Significant Identical Assets Observable Unobservable (dollars in thousands) (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets U.S. Treasury securities $ — $ 387,647 $ — $ 387,647 Government-sponsored enterprises debt securities — 239,655 — 239,655 Government agency mortgage-backed securities (1) — 456,308 — 456,308 Government-sponsored enterprises mortgage-backed securities (1) — 168,049 — 168,049 Collateralized mortgage obligations: Government agency — 3,087,708 — 3,087,708 Government-sponsored enterprises — 717,483 — 717,483 Debt securities issued by states and political subdivisions — 19,916 — 19,916 Total available-for-sale securities — 5,076,766 — 5,076,766 Other assets (2) — 3,967 — 3,967 Liabilities Other liabilities (3) — (17,650) (4,845) (22,495) Total $ — $ 5,063,083 $ (4,845) $ 5,058,238 Fair Value Measurements as of December 31, 2017 Quoted Prices in Significant Active Markets for Other Significant Identical Assets Observable Unobservable (dollars in thousands) (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets U.S. Treasury securities $ — $ 392,255 $ — $ 392,255 Government-sponsored enterprises debt securities — 242,601 — 242,601 Government agency mortgage-backed securities (1) — 351,390 — 351,390 Government-sponsored enterprises mortgage-backed securities (1) — 174,741 — 174,741 Collateralized mortgage obligations: Government agency — 3,290,474 — 3,290,474 Government-sponsored enterprises — 762,718 — 762,718 Debt securities issued by states and political subdivisions — 20,479 — 20,479 Total available-for-sale securities — 5,234,658 — 5,234,658 Other assets (2) — 14,682 — 14,682 Liabilities Other liabilities (3) — (15,049) (5,439) (20,488) Total $ — $ 5,234,291 $ (5,439) $ 5,228,852 (1) Backed by residential real estate. (2) Other assets include derivative assets. (3) Other liabilities include derivative liabilities. Changes in Fair Value Levels For the three months ended March 31, 2018, there were no transfers between fair value hierarchy levels. The changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2018 and 2017, are summarized in the table below. Visa Derivative (dollars in thousands) 2018 2017 Three Months Ended March 31, Balance as of January 1, $ (5,439) $ (7,460) Total net (losses) gains included in other noninterest income (84) 3 Settlements 678 470 Balance as of March 31, $ (4,845) $ (6,987) Total net (losses) gains included in net income attributable to the change in unrealized gains or losses related to liabilities still held as of March 31, $ (84) $ 3 Valuation Techniques Used in the Fair Value Measurement of Assets and Liabilities Carried at Other Than Fair Value For the financial instruments that are not required to be carried at fair value on a recurring basis (categorized in the valuation hierarchy table below), the Company uses the following methods and assumptions to estimate the fair value: Cash and cash equivalents Cash and cash equivalents include cash and due from banks and interest-bearing deposits in other banks. The carrying amount is considered a reasonable estimate of fair value because there is a relatively short duration of time between the origination of the instrument and its expected realization. As such, these short-term financial assets are classified as Level 1. Fair values of fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities. Accordingly, these assets are classified as Level 2. Loans held for sale Residential loans held for sale are carried at the lower of cost or fair value, and are therefore subject to fair value measurements on a nonrecurring basis. The fair value of loans held for sale is based on current quoted prices or rates in secondary markets for portfolios with similar characteristics. As such, the Company classifies these loans as Level 2. Loans Fair values are estimated for pools of loans with similar characteristics using discounted cash flow analyses. The Company utilizes interest rates currently being offered for groups of loans with similar terms to borrowers of similar credit quality to estimate the fair values of: (1) commercial and industrial loans; (2) certain mortgage loans, including 1-4 family residential, commercial real estate and rental property; and (3) consumer loans. As such, loans are classified as Level 3. Deposits The fair value of deposits with no maturity date, such as interest-bearing and noninterest-bearing checking, regular savings, and certain types of money market savings accounts, approximate their carrying amounts, the amounts payable on demand at the reporting date. Accordingly, these are classified as Level 1. Fair values of fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities. Accordingly, these are classified as Level 2. Assets and Liabilities Carried at Other Than Fair Value The following tables summarize for the periods indicated the estimated fair value of the Company’s financial instruments that are not required to be carried at fair value on a recurring basis, excluding leases. March 31, 2018 Fair Value Measurements Quoted Prices in Significant Significant Active Markets Other Unobservable for Identical Observable Inputs (dollars in thousands) Book Value Assets (Level 1) Inputs (Level 2) (Level 3) Total Financial assets: Cash and cash equivalents $ 692,492 $ 283,135 $ 409,354 $ — $ 692,489 Loans held for sale 397 — 397 — 397 Loans (1) 12,304,025 — — 12,505,553 12,505,553 Financial liabilities: Deposits $ 17,362,422 $ 13,296,696 $ 4,045,344 $ — $ 17,342,040 (1) Excludes financing leases of $160.1 million at March 31, 2018. December 31, 2017 Fair Value Measurements Quoted Prices in Significant Significant Active Markets Other Unobservable for Identical Observable Inputs (dollars in thousands) Book Value Assets (Level 1) Inputs (Level 2) (Level 3) Total Financial assets: Cash and cash equivalents $ 1,034,644 $ 367,084 $ 667,560 $ — $ 1,034,644 Loans held for sale 556 — 559 — 559 Loans (1) 12,112,303 — — 12,426,506 12,426,506 Financial liabilities: Deposits $ 17,612,122 $ 13,438,240 $ 4,160,393 $ — $ 17,598,633 (1) Excludes financing leases of $165.1 million at December 31, 2017. Unfunded loan and lease commitments and letters of credit are not included in the tables above. As of both March 31, 2018 and December 31, 2017, the Company had $5.6 billion of unfunded loan and lease commitments and letters of credit. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the related reserve for unfunded commitments, which totaled $11.6 million and $11.7 million at March 31, 2018 and December 31, 2017, respectively. No active trading market exists for these instruments, and the estimated fair value does not include value associated with the borrower relationship. The Company does not estimate the fair values of certain unfunded loan and lease commitments that can be canceled by providing notice to the borrower. As Company-level data is incorporated into the fair value measurement, unfunded loan and lease commitments and letters of credit are classified as Level 3. Valuation Techniques Used in the Fair Value Measurement of Assets and Liabilities Carried at the Lower of Cost or Fair Value The Company applies the following valuation techniques to assets measured at the lower of cost or fair value: Mortgage servicing rights MSRs are carried at the lower of cost or fair value and are therefore subject to fair value measurements on a nonrecurring basis. The fair value of MSRs is determined using models which use significant unobservable inputs, such as estimates of prepayment rates, the resultant weighted average lives of the MSRs and the option-adjusted spread levels. Accordingly, the Company classifies MSRs as Level 3. Impaired loans A large portion of the Company’s impaired loans are collateral dependent and are measured at fair value on a nonrecurring basis using collateral values as a practical expedient. The fair values of collateral for impaired loans are primarily based on real estate appraisal reports prepared by third party appraisers less disposition costs, present value of the expected future cash flows or the loan’s observable market price. Certain loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective rate, which is not a fair value measurement. The Company measures the impairment on certain loans and leases by performing a lower-of-cost-or-fair-value analysis. If impairment is determined by the value of the collateral or an observable market price, it is written down to fair value on a nonrecurring basis as Level 3. Other real estate owned The Company values these properties at fair value at the time the Company acquires them, which establishes their new cost basis. After acquisition, the Company carries such properties at the lower of cost or fair value less estimated selling costs on a nonrecurring basis. Fair value is measured on a nonrecurring basis using collateral values as a practical expedient. The fair values of collateral for other real estate owned are primarily based on real estate appraisal reports prepared by third party appraisers less disposition costs, and are classified as Level 3. Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis The Company may be required to record certain assets at fair value on a nonrecurring basis in accordance with GAAP. These assets are subject to fair value adjustments that result from the application of lower of cost or fair value accounting or write-downs of individual assets to fair value. The following table provides the level of valuation inputs used to determine each fair value adjustment and the fair value of the related individual assets or portfolio of assets with fair value adjustments on a nonrecurring basis as of March 31, 2018 and December 31, 2017: (dollars in thousands) Level 1 Level 2 Level 3 March 31, 2018 Impaired loans $ — $ — $ — December 31, 2017 Impaired loans $ — $ — $ 87 Total losses on impaired loans were $0.5 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively. For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of March 31, 2018 and December 31, 2017, the significant unobservable inputs used in the fair value measurements were as follows: Quantitative Information about Level 3 Fair Value Measurements at March 31, 2018 Significant Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Other liabilities $ (4,845) Discounted Cash Flow Expected Conversion Factor 1.6483 Expected Term 4 years Growth Rate 15% Quantitative Information about Level 3 Fair Value Measurements at December 31, 2017 Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Impaired loans $ 87 Appraisal Value Appraisal Value n/m (1) Other liabilities $ (5,439) Discounted Cash Flow Expected Conversion Factor 1.6483 Expected Term 4 years Growth Rate 15% (1) The fair value of these assets is determined based on appraised values of collateral or broker price opinions, the range of which is not meaningful to disclose. |
Reportable Operating Segments
Reportable Operating Segments | 3 Months Ended |
Mar. 31, 2018 | |
Reportable Operating Segments | |
Reportable Operating Segments | 17. Reportable Operating Segments The Company’s operations are organized into three business segments – Retail Banking, Commercial Banking, and Treasury and Other. These segments reflect how discrete financial information is currently evaluated by the chief operating decision maker and how performance is assessed and resources allocated. The Company’s internal management process measures the performance of these business segments. This process, which is not necessarily comparable with similar information for any other financial institution, uses various techniques to assign balance sheet and income statement amounts to the business segments, including allocations of income, expense, the provision for loan and lease losses, and capital. This process is dynamic and requires certain allocations based on judgment and other subjective factors. Unlike financial accounting, there is no comprehensive authoritative guidance for management accounting that is equivalent to GAAP. The net interest income of the business segments reflects the results of a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics and reflects the allocation of net interest income related to the Company’s overall asset and liability management activities on a proportionate basis. The basis for the allocation of net interest income is a function of the Company’s assumptions that are subject to change based on changes in current interest rates and market conditions. Funds transfer pricing also serves to transfer interest rate risk to Treasury. The Company allocates the provision for loan and lease losses to each segment based on management’s estimate of the inherent loss content in each of the specific loan and lease portfolios. Noninterest income and expense includes allocations from support units to the business segments. These allocations are based on actual usage where practicably calculated or by management’s estimate of such usage. Income tax expense is allocated to each business segment based on the consolidated effective income tax rate for the period shown. Business Segments Retail Banking Retail Banking offers a broad range of financial products and services to consumers and small businesses. Loan and lease products offered include residential and commercial mortgage loans, home equity lines of credit, automobile loans and leases, personal lines of credit, installment loans and small business loans and leases. Deposit products offered include checking, savings, and time deposit accounts. Retail Banking also offers wealth management services. Products and services from Retail Banking are delivered to customers through 61 banking locations throughout the State of Hawaii, Guam, and Saipan. Commercial Banking Commercial Banking offers products that include corporate banking, residential and commercial real estate loans, commercial lease financing, auto dealer financing, deposit products and credit cards. Commercial lending and deposit products are offered primarily to middle-market and large companies locally, nationally, and internationally. Treasury and Other Treasury consists of corporate asset and liability management activities including interest rate risk management. The segment’s assets and liabilities (and related interest income and expense) consist of interest-bearing deposits, investment securities, federal funds sold and purchased, government deposits, short and long-term borrowings and bank-owned properties. The primary sources of noninterest income are from bank-owned life insurance, net gains from the sale of investment securities, foreign exchange income related to customer-driven currency requests from merchants and island visitors and management of bank-owned properties. The net residual effect of the transfer pricing of assets and liabilities is included in Treasury, along with the elimination of intercompany transactions. Other organizational units (Technology, Operations, Credit and Risk Management, Human Resources, Finance, Administration, Marketing, and Corporate and Regulatory Administration) provide a wide-range of support to the Company’s other income earning segments. Expenses incurred by these support units are charged to the business segments through an internal cost allocation process. The following tables present selected business segment financial information for the periods indicated: Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Three Months Ended March 31, 2018 Net interest income $ 109,654 $ 27,879 $ 2,139 $ 139,672 Provision for loan and lease losses (2,348) (3,602) — (5,950) Net interest income after provision for loan and lease losses 107,306 24,277 2,139 133,722 Noninterest income 22,732 20,000 5,968 48,700 Noninterest expense (56,461) (19,648) (14,478) (90,587) Income (loss) before (provision) benefit for income taxes 73,577 24,629 (6,371) 91,835 (Provision) benefit for income taxes (19,207) (6,328) 1,658 (23,877) Net income (loss) $ 54,370 $ 18,301 $ (4,713) $ 67,958 Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Three Months Ended March 31, 2017 Net interest income (expense) $ 105,701 $ 27,533 $ (3,889) $ 129,345 Provision for loan and lease losses (1,663) (2,837) — (4,500) Net interest income (expense) after provision for loan and lease losses 104,038 24,696 (3,889) 124,845 Noninterest income (1) 23,619 18,834 8,606 51,059 Noninterest expense (1) (55,240) (16,313) (14,438) (85,991) Income (loss) before (provision) benefit for income taxes 72,417 27,217 (9,721) 89,913 (Provision) benefit for income taxes (26,733) (10,034) 3,594 (33,173) Net income (loss) $ 45,684 $ 17,183 $ (6,127) $ 56,740 (1) Certain prior period noninterest income and noninterest expense amounts have been revised from the amounts previously reported to conform to the current year’s presentations. For the quarter ended March 31, 2017, noninterest income and noninterest expense for Commercial banking were both understated by $1.3 million and both noninterest income and noninterest expense for Treasury and Other were understated by $0.4 million. See “Note 1. Organization and Basis of Presentation” for more information. |
Organization and Basis of Pre26
Organization and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | Organization and Basis of Presentation First Hawaiian, Inc. (“FHI” or the “Parent”), a bank holding company, owns 100% of the outstanding common stock of First Hawaiian Bank (“FHB” or the “Bank”), its only direct, wholly-owned subsidiary. FHI is a majority-owned, indirect subsidiary of BNP Paribas (“BNPP”), a financial institution based in France. The accompanying unaudited interim consolidated financial statements of First Hawaiian, Inc. and the Bank (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited interim consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair presentation of the interim period consolidated financial information, have been made. Results of operations for interim periods are not necessarily indicative of results to be expected for the entire year. Intercompany account balances and transactions have been eliminated in consolidation. |
Reorganization Transactions | Reorganization Transactions In connection with FHI’s initial public offering (“IPO”) in August 2016, in which BNPP sold approximately 17% of its interest in FHI, BNPP announced its intent to sell a controlling interest in FHI, including its wholly-owned subsidiary FHB, over time, subject to market conditions and other considerations. On April 1, 2016, a series of reorganization transactions (the “Reorganization Transactions”) were undertaken to facilitate the IPO. As part of the Reorganization Transactions, FHI, which was then known as BancWest Corporation (“BancWest”), formed a new bank holding company, BancWest Holding Inc. (“BWHI”), a Delaware corporation and a direct wholly‑owned subsidiary of BancWest, and contributed 100% of its interest in Bank of the West (“BOW”), as well as other assets and liabilities not related to FHB, to BWHI. Following the contribution of BOW to BWHI, BancWest distributed its interest in BWHI to BNPP. As part of these transactions, BancWest amended its certificate of incorporation to change its name to “First Hawaiian, Inc.”, with First Hawaiian Bank remaining as the only direct wholly-owned subsidiary of FHI. On July 1, 2016, in order to comply with the Board of Governors of the Federal Reserve System’s requirement (under Regulation YY) applicable to BNPP that a foreign banking organization with $50 billion or more in U.S. non-branch assets as of June 30, 2015 establish a U.S. intermediate holding company and hold its interest in the substantial majority of its U.S. subsidiaries through the intermediate holding company by July 1, 2016, FHI became an indirect subsidiary of BNP Paribas USA, Inc. (“BNP Paribas USA”), BNPP’s U.S. intermediate holding company. As part of that reorganization, FHI became a direct wholly-owned subsidiary of BancWest Corporation (“BWC”), a direct wholly-owned subsidiary of BNP Paribas USA. On August 4, 2016, FHI’s common stock began trading on the NASDAQ Global Select Market (“NASDAQ”) under the ticker symbol “FHB”. On August 9, 2016, the IPO of 24,250,000 shares of FHI common stock, which included the full exercise of the underwriters’ option to purchase an additional 3,163,043 shares, at $23.00 per share were completed. On February 17, 2017, a second offering of 28,750,000 shares of FHI common stock, which included the full exercise of the underwriters’ option to purchase an additional 3,750,000 shares, at $32.00 per share was completed. FHI did not receive any of the proceeds from the sales of shares by BNPP. Following the secondary offering and exercise of the underwriters’ option to purchase additional shares in February 2017, BNPP beneficially owned approximately 62% of FHI’s outstanding common stock. BNPP continued to beneficially own approximately 62% of FHI’s outstanding common stock as of March 31, 2018. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events, actual results may differ from these estimates. |
Correction of an Immaterial Error to the Financial Statements | Correction of an Immaterial Error to the Financial Statements Subsequent to the issuance of the Company’s unaudited interim September 30, 2017 consolidated financial statements, the Company’s management determined that certain expenses related to card rewards program were incorrectly offset against credit and debit card fee income and credit card interchange assessment fees were incorrectly classified in card rewards program expense versus credit and debit card fee income in the consolidated statements of income for the three months ended March 31, 2017. For the three months ended March 31, 2017, income from service charges on deposit accounts was overstated by $0.1 million, credit and debit card fee income was understated by $1.8 million, occupancy expense was understated by $0.4 million and card rewards program expense was understated by $1.3 million. As a result, certain noninterest income and noninterest expense amounts have been restated from the amounts previously reported to correct the classification errors. There was no change to net income or earnings per share as previously reported as a result of these errors. Management has evaluated the materiality of these errors on its prior period financial statements from a quantitative and qualitative perspective, and has concluded that these errors were not material to the prior period. |
Accounting Standard Adopted in 2018 and Recent Accounting Pronouncements | Accounting Standards Adopted in 2018 In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . This guidance requires entities to recognize revenues when they transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the provisions of ASU No. 2014-09 on January 1, 2018. The Company adopted the new guidance using the modified retrospective transition approach, in which the guidance would only be applied to existing contracts in effect at January 1, 2018 and new contracts entered into after this date. Most of the Company’s revenue is comprised of net interest income on loans, leases, investment securities and deposits, and is explicitly out of scope of the new revenue recognition guidance. Management conducted an assessment of the revenue streams that were potentially affected by the new guidance and reviewed contracts in scope to ensure compliance with the new guidance. These contracts included those related to credit and debit card fees, service charges and fees on deposit accounts and trust and investment services fees. The adoption of ASU No. 2014-09 did not have a material impact on the Company’s consolidated financial statements. However, additional disclosures required by the standard have been included in “Note 13. Revenue from Contracts with Customers” to the Company’s consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This guidance requires entities to report the service cost component of net periodic benefit cost in the same line item as other compensation costs arising from services rendered by pertinent employees during the reporting period. The other components of net periodic benefit costs are to be presented in the income statement separately from the service cost component. The Company adopted the provisions of ASU No. 2017-07 on January 1, 2018 and applied the guidance retrospectively to all periods for which a statement of income is presented. The Company continues to record the service cost component of net periodic benefit cost in salaries and employee benefits; however, all other components of net periodic benefit cost is now recorded in other noninterest expense. The Company elected to use the practical expedient which permits entities to estimate amounts for comparative periods using the information previously disclosed in the Company’s pension and other postretirement benefit plan disclosure as such amounts are not material. The adoption of ASU No. 2017-07 did not have a material impact on the Company’s consolidated financial statements. See “Note 15. Benefit Plans” for required disclosures. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting. This guidance applies to entities that change the terms or conditions of a share-based payment award. This guidance clarifies when an entity should account for a change as a modification. Modification accounting will be required only if the fair value, the vesting conditions or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The Company adopted the provisions of ASU No. 2017-09 on January 1, 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This guidance provided entities with an option to reclassify tax effects that were stranded in accumulated other comprehensive income, pursuant to the recently enacted Tax Cuts and Jobs Act of 2017 (the “Tax Act”), to retained earnings. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. This guidance may be early adopted in any interim or annual period for which financial statements have not yet been issued and applied either in the period of adoption or retrospectively to each period in which the effect of the change in the corporate tax rate in the Tax Act is recognized. The Company elected to early adopt the provisions of ASU No. 2018-02 on January 1, 2018 and reflected the reclassification related to the Tax Act in the period of adoption. The amount of the reclassification reflected the impact of the Tax Act that was signed into law on December 22, 2017 which reduced the corporate tax rate from 35% to 21%. The result of the early adoption of ASU No. 2018-02 was to reclassify a credit balance of $20.1 million from accumulated other comprehensive loss to retained earnings as of January 1, 2018. The Company utilizes a security-by-security approach to releasing income tax effects from accumulated other comprehensive loss. The adoption of ASU No. 2018-02 did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements The following ASUs have been issued by the FASB and are applicable to the Company in future reporting periods. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance provides that lessees will be required to recognize the following for all leases (with the exception of short-term leases): 1) a lease liability, which is the present value of a lessee's obligation to make lease payments, and 2) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period presented in the financial statements. As lessees, the Company has lease agreements for branch locations that are currently considered operating leases, and therefore, are not recognized on the Company’s consolidated balance sheets. The Company expects that the new guidance will require these leases to be recognized on the consolidated balance sheets as a right-of-use asset with a corresponding lease liability. The Company has formed a working group comprised of teams from different disciplines, including finance and bank properties. The Company continues to evaluate the impact this guidance will have on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments . This guidance eliminates the probable recognition threshold for credit losses on financial assets measured at amortized cost. For loans and held-to-maturity debt securities, this update requires a current expected credit loss (“CECL”) approach to determine the allowance for credit losses. CECL requires loss estimates for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts. In addition, this guidance modifies the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for a reversal of credit losses in future periods. The guidance requires entities to record a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with earlier adoption permitted. The new guidance will require significant operational changes, particularly in data collection and analysis. The Company has formed a working group comprised of teams from different disciplines, including credit and finance, to evaluate the requirements of the new standard and the impact it will have on the Company’s current processes. Management’s evaluation includes a review of existing credit models to identify areas where existing credit models used to comply with other regulatory requirements may be leveraged and areas where new impairment models may be required. The Company continues to evaluate the impact this guidance, including the method of implementation, will have on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment . This guidance simplifies the subsequent measurement of goodwill by eliminating Step 2 from the current two-step goodwill impairment test. This guidance provides that a goodwill impairment test be conducted by comparing the fair value of a reporting unit with its carrying amount. Entities are to recognize an impairment charge for goodwill by the amount by which the carrying amount exceeds the reporting unit’s fair value. Entities will continue to have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. Under current GAAP, entities normally amortize the premium as an adjustment of yield over the contractual life of the instrument. This guidance shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company’s consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-02, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities . The objectives of the new guidance are to: (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities, and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. Currently, the Company participates in limited activities in fair value and cash flow hedging relationships. However, hedging improvements in the new guidance will be considered in the development of future risk management strategies. |
Investment Securities (Tables)
Investment Securities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investment Securities | |
Schedule of amortized cost and fair value of securities | March 31, 2018 December 31, 2017 Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Cost Gains Losses Value U.S. Treasury securities $ 404,062 $ — $ (16,415) $ 387,647 $ 404,376 $ — $ (12,121) $ 392,255 Government-sponsored enterprises debt securities 249,714 — (10,059) 239,655 249,712 — (7,111) 242,601 Government agency mortgage-backed securities 470,478 64 (14,234) 456,308 356,858 — (5,468) 351,390 Government-sponsored enterprises mortgage-backed securities 174,378 134 (6,463) 168,049 178,702 169 (4,130) 174,741 Collateralized mortgage obligations: Government agency 3,204,890 — (117,182) 3,087,708 3,367,173 47 (76,746) 3,290,474 Government-sponsored enterprises 742,084 — (24,601) 717,483 779,911 25 (17,218) 762,718 Debt securities issued by states and political subdivisions 20,477 — (561) 19,916 20,543 — (64) 20,479 Total available-for-sale securities $ 5,266,083 $ 198 $ (189,515) $ 5,076,766 $ 5,357,275 $ 241 $ (122,858) $ 5,234,658 |
Schedule of amortized cost and fair value of debt securities by contractual maturity | March 31, 2018 Amortized Fair (dollars in thousands) Cost Value Due after one year through five years $ 430,259 $ 413,492 Due after five years through ten years 223,517 213,810 Due after ten years 20,477 19,916 674,253 647,218 Government agency mortgage-backed securities 470,478 456,308 Government-sponsored enterprises mortgage-backed securities 174,378 168,049 Collateralized mortgage obligations: Government agency 3,204,890 3,087,708 Government-sponsored enterprises 742,084 717,483 Total mortgage-backed securities and collateralized mortgage obligations 4,591,830 4,429,548 Total available-for-sale securities $ 5,266,083 $ 5,076,766 |
Schedule of gross unrealized losses and fair values of securities in a continuous loss position | Time in Continuous Loss as of March 31, 2018 Less Than 12 Months 12 Months or More Total Unrealized Unrealized Unrealized (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value U.S. Treasury securities $ (1,713) $ 47,500 $ (14,702) $ 340,147 $ (16,415) $ 387,647 Government-sponsored enterprises debt securities (1,299) 58,701 (8,760) 180,954 (10,059) 239,655 Government agency mortgage-backed securities (6,345) 272,336 (7,889) 140,778 (14,234) 413,114 Government-sponsored enterprises mortgage-backed securities — 199 (6,463) 162,089 (6,463) 162,288 Collateralized mortgage obligations: Government agency (41,628) 1,377,239 (75,554) 1,710,469 (117,182) 3,087,708 Government-sponsored enterprises (7,092) 338,739 (17,509) 378,744 (24,601) 717,483 Debt securities issued by states and political subdivisions (561) 19,916 — — (561) 19,916 Total available-for-sale securities with unrealized losses $ (58,638) $ 2,114,630 $ (130,877) $ 2,913,181 $ (189,515) $ 5,027,811 Time in Continuous Loss as of December 31, 2017 Less Than 12 Months 12 Months or More Total Unrealized Unrealized Unrealized (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value U.S. Treasury securities $ (994) $ 48,182 $ (11,127) $ 344,073 $ (12,121) $ 392,255 Government-sponsored enterprises debt securities (642) 59,358 (6,469) 183,243 (7,111) 242,601 Government agency mortgage-backed securities (976) 200,963 (4,492) 150,427 (5,468) 351,390 Government-sponsored enterprises mortgage-backed securities (1) 63 (4,129) 168,342 (4,130) 168,405 Collateralized mortgage obligations: Government agency (23,236) 1,473,170 (53,510) 1,803,338 (76,746) 3,276,508 Government-sponsored enterprises (3,203) 327,435 (14,015) 403,321 (17,218) 730,756 Debt securities issued by states and political subdivisions (64) 10,641 — — (64) 10,641 Total available-for-sale securities with unrealized losses $ (29,116) $ 2,119,812 $ (93,742) $ 3,052,744 $ (122,858) $ 5,172,556 |
Loans and Leases (Tables)
Loans and Leases (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Loans and Leases | |
Schedule of components of loans and leases | March 31, December 31, (dollars in thousands) 2018 2017 Commercial and industrial $ 3,219,210 $ 3,135,266 Real estate: Commercial 2,738,557 2,667,597 Construction 594,266 632,911 Residential 4,156,003 4,090,053 Total real estate 7,488,826 7,390,561 Consumer 1,595,989 1,586,476 Lease financing 160,140 165,066 Total loans and leases $ 12,464,165 $ 12,277,369 |
Schedule of components of remaining loan and lease commitments | March 31, December 31, (dollars in thousands) 2018 2017 Commercial and industrial $ 2,365,231 $ 2,406,261 Real estate: Commercial 78,275 78,266 Construction 481,366 450,856 Residential 993,524 980,792 Total real estate 1,553,165 1,509,914 Consumer 1,501,511 1,485,588 Total loan and lease commitments $ 5,419,907 $ 5,401,763 |
Allowance for Loan and Lease 29
Allowance for Loan and Lease Losses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Allowance for Loan and Lease Losses | |
Schedule of components of allowance for loan and lease losses | Three Months Ended March 31, 2018 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Balance at beginning of period $ 34,006 $ 18,044 $ 6,817 $ 611 $ 42,852 $ 31,249 $ 3,674 $ 137,253 Charge-offs (475) — — — — (6,625) — (7,100) Recoveries 64 122 — — 182 2,103 — 2,471 Increase (decrease) in Provision 770 1,088 (841) (26) 186 4,271 502 5,950 Balance at end of period $ 34,365 $ 19,254 $ 5,976 $ 585 $ 43,220 $ 30,998 $ 4,176 $ 138,574 Three Months Ended March 31, 2017 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Balance at beginning of period $ 33,129 $ 18,448 $ 4,513 $ 847 $ 43,436 $ 28,388 $ 6,733 $ 135,494 Charge-offs (855) — — — (22) (5,572) — (6,449) Recoveries 114 77 — — 321 1,790 — 2,302 Increase (decrease) in Provision (831) 1,407 19 (34) (194) 2,850 1,283 4,500 Balance at end of period $ 31,557 $ 19,932 $ 4,532 $ 813 $ 43,541 $ 27,456 $ 8,016 $ 135,847 |
Schedule of disaggregation of Allowance and recorded investment in loans by impairment methodology | March 31, 2018 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Individually evaluated for impairment $ 4 $ 6 $ — $ — $ 437 $ — $ — $ 447 Collectively evaluated for impairment 34,361 19,248 5,976 585 42,783 30,998 4,176 138,127 Balance at end of period $ 34,365 $ 19,254 $ 5,976 $ 585 $ 43,220 $ 30,998 $ 4,176 $ 138,574 Loans and leases: Individually evaluated for impairment $ 17,044 $ 10,141 $ 2,001 $ — $ 16,366 $ — $ — $ 45,552 Collectively evaluated for impairment 3,202,166 2,728,416 592,265 160,140 4,139,637 1,595,989 — 12,418,613 Balance at end of period $ 3,219,210 $ 2,738,557 $ 594,266 $ 160,140 $ 4,156,003 $ 1,595,989 $ — $ 12,464,165 December 31, 2017 Commercial Lending Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for loan and lease losses: Individually evaluated for impairment $ 4 $ 6 $ — $ — $ 484 $ — $ — $ 494 Collectively evaluated for impairment 34,002 18,038 6,817 611 42,368 31,249 3,674 136,759 Balance at end of period $ 34,006 $ 18,044 $ 6,817 $ 611 $ 42,852 $ 31,249 $ 3,674 $ 137,253 Loans and leases: Individually evaluated for impairment $ 18,183 $ 10,636 $ — $ — $ 16,530 $ — $ — $ 45,349 Collectively evaluated for impairment 3,117,083 2,656,961 632,911 165,066 4,073,523 1,586,476 — 12,232,020 Balance at end of period $ 3,135,266 $ 2,667,597 $ 632,911 $ 165,066 $ 4,090,053 $ 1,586,476 $ — $ 12,277,369 |
Schedule of credit risk profiles by internally assigned grade for loans and leases | March 31, 2018 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,065,462 $ 2,640,740 $ 589,090 $ 158,105 $ 6,453,397 Special mention 100,677 75,962 2,417 1,684 180,740 Substandard 51,510 21,855 2,759 351 76,475 Doubtful 1,561 — — — 1,561 Total $ 3,219,210 $ 2,738,557 $ 594,266 $ 160,140 $ 6,712,173 December 31, 2017 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,035,121 $ 2,619,494 $ 628,112 $ 162,849 $ 6,445,576 Special mention 43,435 26,248 2,377 1,816 73,876 Substandard 54,996 21,855 2,422 401 79,674 Doubtful 1,714 — — — 1,714 Total $ 3,135,266 $ 2,667,597 $ 632,911 $ 165,066 $ 6,600,840 |
Schedule of credit risk profiles based on payment activity for loans and leases | March 31, 2018 (dollars in thousands) Residential Consumer Consumer - Auto Credit Cards Total Performing $ 4,142,201 $ 222,434 $ 1,033,161 $ 315,545 $ 5,713,341 Non-performing and delinquent 13,802 2,899 18,617 3,333 38,651 Total $ 4,156,003 $ 225,333 $ 1,051,778 $ 318,878 $ 5,751,992 December 31, 2017 (dollars in thousands) Residential Consumer Consumer - Auto Credit Cards Total Performing $ 4,073,834 $ 231,023 $ 1,001,085 $ 324,781 $ 5,630,723 Non-performing and delinquent 16,219 3,335 22,612 3,640 45,806 Total $ 4,090,053 $ 234,358 $ 1,023,697 $ 328,421 $ 5,676,529 |
Schedule of aging analyses of past due loans and leases | March 31, 2018 Accruing Loans and Leases Greater Total Non Than or Total Accruing 30-59 60-89 Equal to Total Accruing Loans Days Days 90 Days Past Loans and and Total (dollars in thousands) Past Due Past Due Past Due Due Current Leases Leases Outstanding Commercial and industrial $ 253 $ 30 $ 83 $ 366 $ 3,216,956 $ 3,217,322 $ 1,888 $ 3,219,210 Commercial real estate 712 — — 712 2,734,960 2,735,672 2,885 2,738,557 Construction — — 343 343 591,922 592,265 2,001 594,266 Lease financing — — — — 160,140 160,140 — 160,140 Residential 4,673 2,311 1,469 8,453 4,142,201 4,150,654 5,349 4,156,003 Consumer 19,612 3,493 1,744 24,849 1,571,140 1,595,989 — 1,595,989 Total $ 25,250 $ 5,834 $ 3,639 $ 34,723 $ 12,417,319 $ 12,452,042 $ 12,123 $ 12,464,165 December 31, 2017 Accruing Loans and Leases Greater Total Non Than or Total Accruing 30-59 60-89 Equal to Total Accruing Loans Days Days 90 Days Past Loans and and Total (dollars in thousands) Past Due Past Due Past Due Due Current Leases Leases Outstanding Commercial and industrial $ 156 $ — $ 220 $ 376 $ 3,131,958 $ 3,132,334 $ 2,932 $ 3,135,266 Commercial real estate — 1,099 1,400 2,499 2,663,312 2,665,811 1,786 2,667,597 Construction — 2,001 — 2,001 630,910 632,911 — 632,911 Lease financing — — — — 165,066 165,066 — 165,066 Residential 8,463 1,289 1,360 11,112 4,073,834 4,084,946 5,107 4,090,053 Consumer 24,379 3,814 1,394 29,587 1,556,889 1,586,476 — 1,586,476 Total $ 32,998 $ 8,203 $ 4,374 $ 45,575 $ 12,221,969 $ 12,267,544 $ 9,825 $ 12,277,369 |
Schedule of total carrying amounts and total unpaid principal balances of impaired loans and leases | March 31, 2018 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 16,901 $ 17,424 $ — Commercial real estate 9,259 9,259 — Construction 2,001 2,001 — Residential 8,879 9,237 — Total $ 37,040 $ 37,921 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 143 $ 143 $ 4 Commercial real estate 882 882 6 Residential 7,487 7,768 437 Total $ 8,512 $ 8,793 $ 447 Total impaired loans: Commercial and industrial $ 17,044 $ 17,567 $ 4 Commercial real estate 10,141 10,141 6 Construction 2,001 2,001 — Residential 16,366 17,005 437 Total $ 45,552 $ 46,714 $ 447 December 31, 2017 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 18,036 $ 18,909 $ — Commercial real estate 9,745 9,745 — Residential 8,648 9,006 — Total $ 36,429 $ 37,660 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 147 $ 147 $ 4 Commercial real estate 891 891 6 Residential 7,882 8,162 484 Total $ 8,920 $ 9,200 $ 494 Total impaired loans: Commercial and industrial $ 18,183 $ 19,056 $ 4 Commercial real estate 10,636 10,636 6 Residential 16,530 17,168 484 Total $ 45,349 $ 46,860 $ 494 |
Schedule of average balances, and of interest income recognized from, impaired loans | Three Months Ended March 31, 2018 Average Interest Recorded Income (dollars in thousands) Investment Recognized Impaired loans with no related allowance recorded: Commercial and industrial $ 17,469 $ 181 Commercial real estate 9,502 55 Construction 1,001 — Residential 8,763 130 Total $ 36,735 $ 366 Impaired loans with a related allowance recorded: Commercial and industrial $ 145 $ 2 Commercial real estate 887 10 Residential 7,685 84 Total $ 8,717 $ 96 Total impaired loans: Commercial and industrial $ 17,614 $ 183 Commercial real estate 10,389 65 Construction 1,001 — Residential 16,448 214 Total $ 45,452 $ 462 Three Months Ended March 31, 2017 Average Interest Recorded Income (dollars in thousands) Investment Recognized Impaired loans with no related allowance recorded: Commercial and industrial $ 21,705 $ 229 Commercial real estate 11,491 129 Lease financing 153 — Residential 8,841 136 Total $ 42,190 $ 494 Impaired loans with a related allowance recorded: Commercial and industrial $ 6,203 $ 47 Commercial real estate 940 11 Residential 9,426 94 Total $ 16,569 $ 152 Total impaired loans: Commercial and industrial $ 27,908 $ 276 Commercial real estate 12,431 140 Lease financing 153 — Residential 18,267 230 Total $ 58,759 $ 646 |
Schedule of information related to loans modified in a TDR | Three Months Ended March 31, 2017 Number of Recorded Related (dollars in thousands) Contracts Investment (1) Allowance Commercial and industrial 1 $ 1,210 $ — Residential 1 353 11 Total 2 $ 1,563 $ 11 (1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. |
Schedule of TDRs that defaulted in period within 12 months of their permanent modification date | Three Months Ended March 31, 2018 2017 Number of Recorded Number of Recorded (dollars in thousands) Contracts Investment (1) Contracts Investment (1) Commercial and industrial (2) 2 $ 564 — $ — Commercial real estate (3) — — 1 1,395 Residential (4) — — 1 510 Total 2 $ 564 2 $ 1,905 (1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. (2) For the three months ended March 31, 2018, the maturity dates for the commercial and industrial loans that subsequently defaulted were extended. (3) For the three months ended March 31, 2017, the commercial real estate loan that subsequently defaulted was refinanced. For the three months ended March 31, 2017 , the residential real estate loan that subsequently defaulted was modified for interest-only payments |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Mortgage Servicing Rights | |
Schedule of estimated future amortization expense for mortgage servicing assets | Amortization of mortgage servicing rights (“MSRs”) was $1.0 million for both the three months ended March 31, 2018 and 2017. The estimated future amortization expense for MSRs over the next five years is as follows: Estimated (dollars in thousands) Amortization Under one year $ 2,593 One to two years 2,296 Two to three years 2,034 Three to four years 1,799 Four to five years 1,591 |
Schedule of gross carrying values, accumulated amortization, and net carrying values of mortgage servicing assets | March 31, December 31, (dollars in thousands) 2018 2017 Gross carrying amount $ 63,022 $ 56,571 Less: accumulated amortization 44,363 43,375 Net carrying value $ 18,659 $ 13,196 |
Schedule of changes in amortized mortgage servicing assets | Three Months Ended March 31, (dollars in thousands) 2018 2017 Balance at beginning of period $ 13,196 $ 16,809 Originations 7 3 Purchases 6,444 — Amortization (988) (1,012) Balance at end of period $ 18,659 $ 15,800 Fair value of amortized MSRs at beginning of period $ 21,697 $ 25,160 Fair value of amortized MSRs at end of period $ 29,048 $ 24,495 |
Schedule of quantitative assumptions used in determining lower of cost or fair value of MSRs | March 31, 2018 December 31, 2017 Weighted Weighted Range Average Range Average Conditional prepayment rate 7.76 % - 18.94 % 8.12 % 8.53 % - 19.63 % 9.04 % Life in years (of the MSR) 3.40 - 8.01 7.35 3.29 - 7.15 6.76 Weighted-average coupon rate 3.96 % - 6.77 % 4.02 % 3.97 % - 6.79 % 4.04 % Discount rate 10.50 % - 10.50 % 10.50 % 10.50 % - 10.52 % 10.50 % |
Transfers of Financial Assets (
Transfers of Financial Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Transfers of Financial Assets | |
Schedule of carrying amounts of assets pledged as collateral | (dollars in thousands) March 31, 2018 December 31, 2017 Public deposits $ 2,486,067 $ 2,800,690 Federal Home Loan Bank 2,475,887 2,388,702 Federal Reserve Bank 914,177 914,454 ACH transactions 151,462 151,526 Interest rate swaps 30,657 27,502 Total $ 6,058,250 $ 6,282,874 |
Deposits (Tables)
Deposits (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Deposits | |
Schedule of deposits by category | (dollars in thousands) March 31, 2018 December 31, 2017 U.S.: Interest-bearing $ 10,576,408 $ 10,800,140 Noninterest-bearing 5,419,275 5,494,803 Foreign: Interest-bearing 735,880 685,129 Noninterest-bearing 630,859 632,050 Total deposits $ 17,362,422 $ 17,612,122 |
Schedule of maturity distribution of time certificates of deposit | The following table presents the maturity distribution of time certificates of deposit as of March 31, 2018: Under $250,000 (dollars in thousands) $250,000 or More Total Three months or less $ 278,084 $ 1,798,955 $ 2,077,039 Over three through six months 172,688 340,585 513,273 Over six through twelve months 397,408 472,221 869,629 One to two years 130,272 102,805 233,077 Two to three years 98,989 53,185 152,174 Three to four years 93,983 36,957 130,940 Four to five years 57,346 32,121 89,467 Thereafter 127 — 127 Total $ 1,228,897 $ 2,836,829 $ 4,065,726 |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accumulated Other Comprehensive Loss. | |
Schedule of changes in accumulated other comprehensive loss | Income Tax Pre-tax Benefit Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2017 $ (159,423) $ 63,040 $ (96,383) Three months ended March 31, 2018 Early adoption of ASU No. 2018-02 — (20,068) (20,068) Investment securities: Unrealized net losses arising during the period (66,700) 17,923 (48,777) Net change in unrealized losses on investment securities (66,700) 17,923 (48,777) Cash flow derivative hedges: Unrealized net gains on cash flow derivative hedges arising during the period 738 (194) 544 Net change in unrealized gains on cash flow derivative hedges 738 (194) 544 Other comprehensive loss (65,962) 17,729 (48,233) Accumulated other comprehensive loss at March 31, 2018 $ (225,385) $ 60,701 $ (164,684) Income Tax Pre-tax Benefit Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2016 $ (145,472) $ 57,461 $ (88,011) Three months ended March 31, 2017 Investment securities: Unrealized net gains arising during the period 1,578 (621) 957 Net change in unrealized gains on investment securities 1,578 (621) 957 Cash flow derivative hedges: Unrealized net gains on cash flow derivative hedges arising during the period 598 (236) 362 Net change in unrealized gains on cash flow derivative hedges 598 (236) 362 Other comprehensive income 2,176 (857) 1,319 Accumulated other comprehensive loss at March 31, 2017 $ (143,296) $ 56,604 $ (86,692) |
Summary of changes in accumulated other comprehensive loss, net of tax | Total Pensions Unrealized Unrealized Accumulated and (Losses) Gains Gains on Other Other on Investment Cash Flow Comprehensive (dollars in thousands) Benefits Securities Derivative Hedges Loss Three Months Ended March 31, 2018 Balance at beginning of period $ (25,946) $ (74,117) $ 3,680 $ (96,383) Early adoption of ASU No. 2018-02 (5,393) (15,440) 765 (20,068) Other comprehensive (loss) income — (48,777) 544 (48,233) Balance at end of period $ (31,339) $ (138,334) $ 4,989 $ (164,684) Three Months Ended March 31, 2017 Balance at beginning of period $ (30,237) $ (59,958) $ 2,184 $ (88,011) Other comprehensive income — 957 362 1,319 Balance at end of period $ (30,237) $ (59,001) $ 2,546 $ (86,692) |
Regulatory Capital Requiremen34
Regulatory Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Regulatory Capital Requirements | |
Schedule of regulatory capital ratios | First Hawaiian, Inc. First Hawaiian Minimum Well- and the Bank Bank Capital Capitalized (dollars in thousands) Amount Ratio Amount Ratio Ratio (1) Ratio (1) March 31, 2018: Common equity tier 1 capital to risk-weighted assets $ 1,690,054 12.73 % $ 1,688,288 12.71 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,690,054 12.73 % 1,688,288 12.71 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,829,228 13.77 % 1,827,462 13.76 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,690,054 8.71 % 1,688,288 8.70 % 4.00 % 5.00 % December 31, 2017: Common equity tier 1 capital to risk-weighted assets $ 1,633,442 12.45 % $ 1,623,455 12.37 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,633,442 12.45 % 1,623,455 12.37 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,771,295 13.50 % 1,761,308 13.42 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,633,442 8.52 % 1,623,455 8.47 % 4.00 % 5.00 % (1) As defined by the regulations issued by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation (“FDIC”). |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Schedule of reconciliation of unrecognized tax benefits | Three Months Ended March 31, 2018 2017 Interest Interest and and (dollars in thousands) Tax Penalties Total Tax Penalties Total Balance at January 1, $ 130,619 $ 10,660 $ 141,279 $ 127,085 $ 9,965 $ 137,050 Additions for current year tax positions 354 — 354 199 — 199 Additions for prior years' tax positions: Accrual of interest and penalties — 242 242 — 71 71 Reductions for prior years' tax positions: Expiration of statute of limitations (70) (32) (102) (127) (51) (178) Other (257) — (257) — — — Balance at March 31, $ 130,646 $ 10,870 $ 141,516 $ 127,157 $ 9,985 $ 137,142 |
Derivative Financial Instrume36
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Financial Instruments | |
Summary of notional amounts and fair values of derivatives held | March 31, 2018 December 31, 2017 Fair Value Fair Value Notional Asset Liability Notional Asset Liability (dollars in thousands) Amount Derivatives (1) Derivatives (2) Amount Derivatives (1) Derivatives (2) Derivatives designated as hedging instruments: Interest rate swaps $ 194,548 $ 29 $ (873) $ 194,687 $ — $ (2,032) Derivatives not designated as hedging instruments: Interest rate swaps 1,988,253 3,936 (16,737) 1,820,442 14,658 (13,017) Funding swap 56,107 — (4,845) 43,113 — (5,439) Foreign exchange contracts 4,618 2 (40) 3,658 24 — (1) The positive fair values of derivative assets are included in other assets. The negative fair values of derivative liabilities are included in other liabilities. |
Schedule of net gains and losses recognized in income related to derivatives in fair value hedging relationships | March 31, (dollars in thousands) 2018 2017 Interest expense recorded in net interest income $ (108) $ (199) Gains (losses) recorded in noninterest income: Recognized on derivatives 550 219 Recognized on hedged item (763) (197) Net (losses) gains recognized on fair value hedges (ineffective portion) (213) 22 Net losses recognized on fair value hedges $ (321) $ (177) |
Summary of effect of cash flow hedging relationships | March 31, (dollars in thousands) 2018 2017 Pretax gains recognized in other comprehensive income on derivatives (effective portion) $ 738 $ 598 |
Summary of impact on pretax earnings of derivatives not designated as hedges | Net gains (losses) recognized in the consolidated statements Three Months Ended March 31, (dollars in thousands) of income line item 2018 2017 Derivatives Not Designated As Hedging Instruments: Interest rate swaps Other noninterest income $ 404 $ 253 Funding swap Other noninterest income (84) 3 Foreign exchange contracts Other noninterest income (63) 205 |
Commitments and Contingent Li37
Commitments and Contingent Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingent Liabilities | |
Schedule of financial instruments with off-balance sheet risk | March 31, December 31, (dollars in thousands) 2018 2017 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 5,419,907 $ 5,401,763 Standby letters of credit 162,663 161,798 Commercial letters of credit 6,076 5,540 |
Revenue from Contracts with C38
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contracts with Customers | |
Summary of revenues disaggregated by type of service and business segments | Three Months Ended March 31, 2018 Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Net interest income (1) $ 109,654 $ 27,879 $ 2,139 $ 139,672 Service charges on deposit accounts 7,448 4 503 7,955 Credit and debit card fees — 18,621 1,787 20,408 Other service charges and fees 4,745 898 633 6,276 Trust and investment services income 8,231 — — 8,231 Other 148 1,807 451 2,406 Not in scope of Topic 606 (1) 2,160 (1,330) 2,594 3,424 Total noninterest income 22,732 20,000 5,968 48,700 Total revenue $ 132,386 $ 47,879 $ 8,107 $ 188,372 Most of the Company’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities as well as other noninterest income from loans, leases, investment securities and derivative financial instruments. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings per Share | |
Schedule of computations of basic and diluted earnings per share | Three Months Ended March 31, (dollars in thousands, except shares and per share amounts) 2018 2017 Numerator: Net income $ 67,958 $ 56,740 Denominator: Basic: weighted-average shares outstanding 139,600,712 139,545,728 Add: weighted-average equity-based awards 131,388 91,682 Diluted: weighted-average shares outstanding 139,732,100 139,637,410 Basic earnings per share $ 0.49 $ 0.41 Diluted earnings per share $ 0.49 $ 0.41 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Benefit Plans | |
Schedule of components of net periodic benefit cost | Expense line item where recognized in Pension Benefits Other Benefits (dollars in thousands) the consolidated statements of income 2018 2017 2018 2017 Three Months Ended March 31, Service cost Salaries and employee benefits $ 174 $ 158 $ 212 $ 179 Interest cost Other noninterest expense 1,794 2,041 185 201 Expected return on plan assets Other noninterest expense (1,240) (1,242) — — Prior service credit Other noninterest expense — — (107) (107) Recognized net actuarial loss Other noninterest expense 1,611 1,999 — — Total net periodic benefit cost $ 2,339 $ 2,956 $ 290 $ 273 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Fair Value Measurements as of March 31, 2018 Quoted Prices in Significant Active Markets for Other Significant Identical Assets Observable Unobservable (dollars in thousands) (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets U.S. Treasury securities $ — $ 387,647 $ — $ 387,647 Government-sponsored enterprises debt securities — 239,655 — 239,655 Government agency mortgage-backed securities (1) — 456,308 — 456,308 Government-sponsored enterprises mortgage-backed securities (1) — 168,049 — 168,049 Collateralized mortgage obligations: Government agency — 3,087,708 — 3,087,708 Government-sponsored enterprises — 717,483 — 717,483 Debt securities issued by states and political subdivisions — 19,916 — 19,916 Total available-for-sale securities — 5,076,766 — 5,076,766 Other assets (2) — 3,967 — 3,967 Liabilities Other liabilities (3) — (17,650) (4,845) (22,495) Total $ — $ 5,063,083 $ (4,845) $ 5,058,238 Fair Value Measurements as of December 31, 2017 Quoted Prices in Significant Active Markets for Other Significant Identical Assets Observable Unobservable (dollars in thousands) (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets U.S. Treasury securities $ — $ 392,255 $ — $ 392,255 Government-sponsored enterprises debt securities — 242,601 — 242,601 Government agency mortgage-backed securities (1) — 351,390 — 351,390 Government-sponsored enterprises mortgage-backed securities (1) — 174,741 — 174,741 Collateralized mortgage obligations: Government agency — 3,290,474 — 3,290,474 Government-sponsored enterprises — 762,718 — 762,718 Debt securities issued by states and political subdivisions — 20,479 — 20,479 Total available-for-sale securities — 5,234,658 — 5,234,658 Other assets (2) — 14,682 — 14,682 Liabilities Other liabilities (3) — (15,049) (5,439) (20,488) Total $ — $ 5,234,291 $ (5,439) $ 5,228,852 (1) Backed by residential real estate. (2) Other assets include derivative assets. (3) Other liabilities include derivative liabilities. |
Summary of changes in Level 3 liabilities measured at fair value on a recurring basis | Visa Derivative (dollars in thousands) 2018 2017 Three Months Ended March 31, Balance as of January 1, $ (5,439) $ (7,460) Total net (losses) gains included in other noninterest income (84) 3 Settlements 678 470 Balance as of March 31, $ (4,845) $ (6,987) Total net (losses) gains included in net income attributable to the change in unrealized gains or losses related to liabilities still held as of March 31, $ (84) $ 3 |
Summary of estimated fair value of financial instruments not required to be carried at fair value on a recurring basis | March 31, 2018 Fair Value Measurements Quoted Prices in Significant Significant Active Markets Other Unobservable for Identical Observable Inputs (dollars in thousands) Book Value Assets (Level 1) Inputs (Level 2) (Level 3) Total Financial assets: Cash and cash equivalents $ 692,492 $ 283,135 $ 409,354 $ — $ 692,489 Loans held for sale 397 — 397 — 397 Loans (1) 12,304,025 — — 12,505,553 12,505,553 Financial liabilities: Deposits $ 17,362,422 $ 13,296,696 $ 4,045,344 $ — $ 17,342,040 (1) Excludes financing leases of $160.1 million at March 31, 2018. December 31, 2017 Fair Value Measurements Quoted Prices in Significant Significant Active Markets Other Unobservable for Identical Observable Inputs (dollars in thousands) Book Value Assets (Level 1) Inputs (Level 2) (Level 3) Total Financial assets: Cash and cash equivalents $ 1,034,644 $ 367,084 $ 667,560 $ — $ 1,034,644 Loans held for sale 556 — 559 — 559 Loans (1) 12,112,303 — — 12,426,506 12,426,506 Financial liabilities: Deposits $ 17,612,122 $ 13,438,240 $ 4,160,393 $ — $ 17,598,633 (1) Excludes financing leases of $165.1 million at December 31, 2017. |
Schedule of assets with fair value adjustments on a nonrecurring basis | (dollars in thousands) Level 1 Level 2 Level 3 March 31, 2018 Impaired loans $ — $ — $ — December 31, 2017 Impaired loans $ — $ — $ 87 |
Schedule of significant unobservable inputs used in fair value measurements for Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis | Quantitative Information about Level 3 Fair Value Measurements at March 31, 2018 Significant Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Other liabilities $ (4,845) Discounted Cash Flow Expected Conversion Factor 1.6483 Expected Term 4 years Growth Rate 15% Quantitative Information about Level 3 Fair Value Measurements at December 31, 2017 Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Impaired loans $ 87 Appraisal Value Appraisal Value n/m (1) Other liabilities $ (5,439) Discounted Cash Flow Expected Conversion Factor 1.6483 Expected Term 4 years Growth Rate 15% The fair value of these assets is determined based on appraised values of collateral or broker price opinions, the range of which is not meaningful to disclose. |
Reportable Operating Segments (
Reportable Operating Segments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Reportable Operating Segments | |
Schedule of selected business segment financial information | Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Three Months Ended March 31, 2018 Net interest income $ 109,654 $ 27,879 $ 2,139 $ 139,672 Provision for loan and lease losses (2,348) (3,602) — (5,950) Net interest income after provision for loan and lease losses 107,306 24,277 2,139 133,722 Noninterest income 22,732 20,000 5,968 48,700 Noninterest expense (56,461) (19,648) (14,478) (90,587) Income (loss) before (provision) benefit for income taxes 73,577 24,629 (6,371) 91,835 (Provision) benefit for income taxes (19,207) (6,328) 1,658 (23,877) Net income (loss) $ 54,370 $ 18,301 $ (4,713) $ 67,958 Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Three Months Ended March 31, 2017 Net interest income (expense) $ 105,701 $ 27,533 $ (3,889) $ 129,345 Provision for loan and lease losses (1,663) (2,837) — (4,500) Net interest income (expense) after provision for loan and lease losses 104,038 24,696 (3,889) 124,845 Noninterest income (1) 23,619 18,834 8,606 51,059 Noninterest expense (1) (55,240) (16,313) (14,438) (85,991) Income (loss) before (provision) benefit for income taxes 72,417 27,217 (9,721) 89,913 (Provision) benefit for income taxes (26,733) (10,034) 3,594 (33,173) Net income (loss) $ 45,684 $ 17,183 $ (6,127) $ 56,740 Certain prior period noninterest income and noninterest expense amounts have been revised from the amounts previously reported to conform to the current year’s presentations. For the quarter ended March 31, 2017, noninterest income and noninterest expense for Commercial banking were both understated by $1.3 million and both noninterest income and noninterest expense for Treasury and Other were understated by $0.4 million. See “Note 1. Organization and Basis of Presentation” for more information. |
Organization and Basis of Pre43
Organization and Basis of Presentation - Subsidiary Ownership (Details) | Mar. 31, 2018 |
First Hawaiian Bank | |
Capitalization | |
Outstanding common stock owned (as a percent) | 100.00% |
Organization and Basis of Pre44
Organization and Basis of Presentation - Reorganization and Stock Offerings (Details) - USD ($) $ / shares in Units, $ in Billions | Feb. 17, 2017 | Aug. 09, 2016 | Apr. 01, 2016 | Aug. 31, 2016 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2015 |
Reorganization Transactions | |||||||
Threshold of U.S. non-branch assets of foreign banking organization which will require a U.S. intermediate holding company | $ 50 | ||||||
BNP Paribas | First Hawaiian, Inc. | |||||||
Reorganization Transactions | |||||||
Outstanding common stock owned (as a percent) | 62.00% | ||||||
Outstanding common stock owned after sales of shares (as a percent) | 62.00% | ||||||
Initial public offering | BNP Paribas | First Hawaiian, Inc. | |||||||
Reorganization Transactions | |||||||
Number of shares sold | 24,250,000 | ||||||
Ownership interest sold (as a percent) | 17.00% | ||||||
Offering price (in dollars per share) | $ 23 | ||||||
Secondary offering | BNP Paribas | First Hawaiian, Inc. | |||||||
Reorganization Transactions | |||||||
Number of shares sold | 28,750,000 | ||||||
Offering price (in dollars per share) | $ 32 | ||||||
Underwriters’ option | BNP Paribas | First Hawaiian, Inc. | |||||||
Reorganization Transactions | |||||||
Number of shares sold | 3,750,000 | 3,163,043 | |||||
BancWest Corporation (BancWest) | Reorganization Transactions on April 1, 2016 | Bank of the West (BOW) | BancWest Holding Inc. (BWHI) | |||||||
Reorganization Transactions | |||||||
Ownership prior to transactions (as a percent) | 100.00% |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies - Correction of Immaterial Error (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Correction of an Immaterial Error to the Financial Statements | ||
Service charges on deposit accounts | $ (7,955) | $ (9,381) |
Credit and debit card fees | 15,497 | 16,305 |
Occupancy expense | 6,484 | 5,709 |
Card rewards program expense | 5,718 | 5,775 |
Net income | $ 67,958 | 56,740 |
Restatement adjustment | Misclassifications of noninterest income and noninterest expense | ||
Correction of an Immaterial Error to the Financial Statements | ||
Service charges on deposit accounts | 100 | |
Credit and debit card fees | 1,800 | |
Occupancy expense | 400 | |
Card rewards program expense | 1,300 | |
Net income | $ 0 |
Organization and Basis of Pre46
Organization and Basis of Presentation - ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Organization and Basis of Presentation | |||
Corporate tax rate (as a percent) | 21.00% | 35.00% | |
Reclassification of tax effects stranded in accumulated other comprehensive income | $ 20.1 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value of Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Available for sale debt securities | ||
Amortized Cost | $ 5,266,083 | $ 5,357,275 |
Unrealized Gains | 198 | 241 |
Unrealized Losses | (189,515) | (122,858) |
Fair value | 5,076,766 | 5,234,658 |
U.S. Treasury securities | ||
Available for sale debt securities | ||
Amortized Cost | 404,062 | 404,376 |
Unrealized Losses | (16,415) | (12,121) |
Fair value | 387,647 | 392,255 |
Government-sponsored enterprises debt securities | ||
Available for sale debt securities | ||
Amortized Cost | 249,714 | 249,712 |
Unrealized Losses | (10,059) | (7,111) |
Fair value | 239,655 | 242,601 |
Government agency mortgage-backed securities | ||
Available for sale debt securities | ||
Amortized Cost | 470,478 | 356,858 |
Unrealized Gains | 64 | |
Unrealized Losses | (14,234) | (5,468) |
Fair value | 456,308 | 351,390 |
Government-sponsored enterprises mortgage-backed securities | ||
Available for sale debt securities | ||
Amortized Cost | 174,378 | 178,702 |
Unrealized Gains | 134 | 169 |
Unrealized Losses | (6,463) | (4,130) |
Fair value | 168,049 | 174,741 |
Collateralized mortgage obligations: Government agency | ||
Available for sale debt securities | ||
Amortized Cost | 3,204,890 | 3,367,173 |
Unrealized Gains | 47 | |
Unrealized Losses | (117,182) | (76,746) |
Fair value | 3,087,708 | 3,290,474 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Available for sale debt securities | ||
Amortized Cost | 742,084 | 779,911 |
Unrealized Gains | 25 | |
Unrealized Losses | (24,601) | (17,218) |
Fair value | 717,483 | 762,718 |
States and political subdivisions | ||
Available for sale debt securities | ||
Amortized Cost | 20,477 | 20,543 |
Unrealized Losses | (561) | (64) |
Fair value | $ 19,916 | $ 20,479 |
Investment Securities - Proceed
Investment Securities - Proceeds from Calls and Sales, Realized Gains and Losses and Interest Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Proceeds from calls and sales of investment securities | ||
Proceeds from calls of available for sale securities | $ 0 | $ 0 |
Proceeds from sales of available for sale securities | 0 | 0 |
Available-for-sale Securities, Gross Realized Gain (Loss), Disclosures [Abstract] | ||
Gross realized gains on sales of investment securities | 0 | 0 |
Gross realized losses on sales of investment securities | 0 | 0 |
Provision for income taxes related to net realized gains on sale of investment securities | 0 | 0 |
Interest income from taxable and nontaxable investment securities | ||
Taxable interest income | 28.9 | 26.4 |
Non-taxable interest income | $ 0.1 | $ 0 |
Investment Securities - Contrac
Investment Securities - Contractual Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Amortized Cost | ||
Due after one year through five years | $ 430,259 | |
Due after five years through ten years | 223,517 | |
Due after ten years | 20,477 | |
Total contractual maturities | 674,253 | |
Mortgage- and asset-backed securities | 4,591,830 | |
Amortized Cost | 5,266,083 | $ 5,357,275 |
Fair Value | ||
Due after one year through five years | 413,492 | |
Due after five years through ten years | 213,810 | |
Due after ten years | 19,916 | |
Total contractual maturities | 647,218 | |
Mortgage- and asset-backed securities | 4,429,548 | |
Fair value | 5,076,766 | 5,234,658 |
Government agency mortgage-backed securities | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 470,478 | |
Amortized Cost | 470,478 | 356,858 |
Fair Value | ||
Mortgage- and asset-backed securities | 456,308 | |
Fair value | 456,308 | 351,390 |
Government-sponsored enterprises mortgage-backed securities | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 174,378 | |
Amortized Cost | 174,378 | 178,702 |
Fair Value | ||
Mortgage- and asset-backed securities | 168,049 | |
Fair value | 168,049 | 174,741 |
Collateralized mortgage obligations: Government agency | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 3,204,890 | |
Amortized Cost | 3,204,890 | 3,367,173 |
Fair Value | ||
Mortgage- and asset-backed securities | 3,087,708 | |
Fair value | 3,087,708 | 3,290,474 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 742,084 | |
Amortized Cost | 742,084 | 779,911 |
Fair Value | ||
Mortgage- and asset-backed securities | 717,483 | |
Fair value | $ 717,483 | $ 762,718 |
Investment Securities - Pledged
Investment Securities - Pledged Securities and Concentration (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Pledged securities | ||
Total pledged securities | $ 2,700,000 | $ 3,000,000 |
Securities pledged to secure public deposits | 2,486,067 | 2,800,690 |
Securities pledged to secure public deposits and repurchase transactions | 2,800,000 | |
Securities pledged to secure other financial transactions | 229,700 | 229,200 |
Non-government issuer | ||
Concentration of risk | ||
Securities of issuers in excess of 10% of stockholders' equity | $ 0 | $ 0 |
Investment Securities - Unreali
Investment Securities - Unrealized Gross Losses and Fair Values of Securities in a Continuous Loss Position (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018USD ($)security | Dec. 31, 2017USD ($)security | |
Securities in the available-for-sale portfolio in a continuous loss position | ||
Number of individual securities in a continuous loss position | security | 202 | 196 |
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | $ (58,638) | $ (29,116) |
12 Months or Longer Unrealized Losses | (130,877) | (93,742) |
Total Unrealized Losses | (189,515) | (122,858) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 2,114,630 | 2,119,812 |
12 Months or Longer Fair Value | 2,913,181 | 3,052,744 |
Total Fair Value | 5,027,811 | 5,172,556 |
U.S. Treasury securities | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (1,713) | (994) |
12 Months or Longer Unrealized Losses | (14,702) | (11,127) |
Total Unrealized Losses | (16,415) | (12,121) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 47,500 | 48,182 |
12 Months or Longer Fair Value | 340,147 | 344,073 |
Total Fair Value | 387,647 | 392,255 |
Government-sponsored enterprises debt securities | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (1,299) | (642) |
12 Months or Longer Unrealized Losses | (8,760) | (6,469) |
Total Unrealized Losses | (10,059) | (7,111) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 58,701 | 59,358 |
12 Months or Longer Fair Value | 180,954 | 183,243 |
Total Fair Value | 239,655 | 242,601 |
Government agency mortgage-backed securities | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (6,345) | (976) |
12 Months or Longer Unrealized Losses | (7,889) | (4,492) |
Total Unrealized Losses | (14,234) | (5,468) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 272,336 | 200,963 |
12 Months or Longer Fair Value | 140,778 | 150,427 |
Total Fair Value | 413,114 | 351,390 |
Government-sponsored enterprises mortgage-backed securities | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (1) | |
12 Months or Longer Unrealized Losses | (6,463) | (4,129) |
Total Unrealized Losses | (6,463) | (4,130) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 199 | 63 |
12 Months or Longer Fair Value | 162,089 | 168,342 |
Total Fair Value | 162,288 | 168,405 |
Collateralized mortgage obligations: Government agency | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (41,628) | (23,236) |
12 Months or Longer Unrealized Losses | (75,554) | (53,510) |
Total Unrealized Losses | (117,182) | (76,746) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 1,377,239 | 1,473,170 |
12 Months or Longer Fair Value | 1,710,469 | 1,803,338 |
Total Fair Value | 3,087,708 | 3,276,508 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (7,092) | (3,203) |
12 Months or Longer Unrealized Losses | (17,509) | (14,015) |
Total Unrealized Losses | (24,601) | (17,218) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 338,739 | 327,435 |
12 Months or Longer Fair Value | 378,744 | 403,321 |
Total Fair Value | 717,483 | 730,756 |
States and political subdivisions | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (561) | (64) |
Total Unrealized Losses | (561) | (64) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 19,916 | 10,641 |
Total Fair Value | $ 19,916 | $ 10,641 |
Investment Securities - Other-T
Investment Securities - Other-Than-Temporary Impairment (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Investment Securities | ||
Other than temporary impairment recognized | $ 0 | $ 0 |
Investment Securities - Visa Cl
Investment Securities - Visa Class B Restricted Shares (Details) - Class B shares - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | 96 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2008 | Dec. 31, 2015 | |
Visa | ||||||
Visa Class B Restricted Shares | ||||||
Historical cost included in the balance sheets | $ 0 | |||||
Net realized gain related to the sale of stock | $ 22,700 | |||||
Number of shares sold | 0 | 0 | 274,000 | 0 | ||
Shares held | 120,000 | 120,000 | ||||
Cost basis | $ 0 | $ 0 | ||||
Visa | ||||||
Visa Class B Restricted Shares | ||||||
Stock received in initial public offering (in shares) | 394,000 |
Loans and Leases - Components (
Loans and Leases - Components (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Loans and leases | ||
Loans and leases | $ 12,464,165 | $ 12,277,369 |
Unearned income, including net deferred loan costs | 33,100 | 31,200 |
Residential real estate loans pledged to collateralize the borrowing capacity at the FHLB | 2,500,000 | 2,400,000 |
Consumer and commercial and industrial loans pledged to collateralize the borrowing capacity at the FRB | 914,200 | 914,500 |
Real estate | ||
Loans and leases | ||
Loans and leases | 7,488,826 | 7,390,561 |
Commercial and Industrial | ||
Loans and leases | ||
Loans and leases | 3,219,210 | 3,135,266 |
Commercial Real Estate | ||
Loans and leases | ||
Loans and leases | 2,738,557 | 2,667,597 |
Commercial Real Estate | Real estate | ||
Loans and leases | ||
Loans and leases | 2,738,557 | 2,667,597 |
Construction | ||
Loans and leases | ||
Loans and leases | 594,266 | 632,911 |
Construction | Real estate | ||
Loans and leases | ||
Loans and leases | 594,266 | 632,911 |
Residential | ||
Loans and leases | ||
Loans and leases | 4,156,003 | 4,090,053 |
Real estate loans in the process of foreclosure | 4,300 | 3,300 |
Residential | Real estate | ||
Loans and leases | ||
Loans and leases | 4,156,003 | 4,090,053 |
Consumer | ||
Loans and leases | ||
Loans and leases | 1,595,989 | 1,586,476 |
Lease Financing | ||
Loans and leases | ||
Loans and leases | $ 160,140 | $ 165,066 |
Loans and Leases - Commitments
Loans and Leases - Commitments (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Loans and leases | ||
Loan and lease commitments | $ 5,419,907 | $ 5,401,763 |
Real estate | ||
Loans and leases | ||
Loan and lease commitments | 1,553,165 | 1,509,914 |
Commercial and Industrial | ||
Loans and leases | ||
Loan and lease commitments | 2,365,231 | 2,406,261 |
Commercial Real Estate | Real estate | ||
Loans and leases | ||
Loan and lease commitments | 78,275 | 78,266 |
Construction | Real estate | ||
Loans and leases | ||
Loan and lease commitments | 481,366 | 450,856 |
Residential | Real estate | ||
Loans and leases | ||
Loan and lease commitments | 993,524 | 980,792 |
Consumer | ||
Loans and leases | ||
Loan and lease commitments | $ 1,501,511 | $ 1,485,588 |
Allowance for Loan and Lease 56
Allowance for Loan and Lease Losses - Activity (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)segmentclass | Mar. 31, 2017USD ($) | |
Allowance for loan and lease losses | ||
Number of primary portfolio segments | segment | 3 | |
Activity in allowance for loan losses | ||
Balance at beginning of period | $ 137,253 | $ 135,494 |
Charge-offs | (7,100) | (6,449) |
Recoveries | 2,471 | 2,302 |
Increase (decrease) in Provision | 5,950 | 4,500 |
Balance at end of period | $ 138,574 | 135,847 |
Commercial Lending | ||
Allowance for loan and lease losses | ||
Number of distinct portfolios | class | 4 | |
Commercial and Industrial | ||
Activity in allowance for loan losses | ||
Balance at beginning of period | $ 34,006 | 33,129 |
Charge-offs | (475) | (855) |
Recoveries | 64 | 114 |
Increase (decrease) in Provision | 770 | (831) |
Balance at end of period | 34,365 | 31,557 |
Commercial Real Estate | ||
Activity in allowance for loan losses | ||
Balance at beginning of period | 18,044 | 18,448 |
Recoveries | 122 | 77 |
Increase (decrease) in Provision | 1,088 | 1,407 |
Balance at end of period | 19,254 | 19,932 |
Construction | ||
Activity in allowance for loan losses | ||
Balance at beginning of period | 6,817 | 4,513 |
Increase (decrease) in Provision | (841) | 19 |
Balance at end of period | 5,976 | 4,532 |
Lease Financing | ||
Activity in allowance for loan losses | ||
Balance at beginning of period | 611 | 847 |
Increase (decrease) in Provision | (26) | (34) |
Balance at end of period | 585 | 813 |
Residential | ||
Allowance for loan and lease losses | ||
Specific allocation for impaired loans in which the net collateral value exceeds the unpaid principal balance of the loan | 0 | |
Activity in allowance for loan losses | ||
Balance at beginning of period | 42,852 | 43,436 |
Charge-offs | (22) | |
Recoveries | 182 | 321 |
Increase (decrease) in Provision | 186 | (194) |
Balance at end of period | 43,220 | 43,541 |
Consumer | ||
Activity in allowance for loan losses | ||
Balance at beginning of period | 31,249 | 28,388 |
Charge-offs | (6,625) | (5,572) |
Recoveries | 2,103 | 1,790 |
Increase (decrease) in Provision | 4,271 | 2,850 |
Balance at end of period | 30,998 | 27,456 |
Unallocated | ||
Activity in allowance for loan losses | ||
Balance at beginning of period | 3,674 | 6,733 |
Increase (decrease) in Provision | 502 | 1,283 |
Balance at end of period | $ 4,176 | $ 8,016 |
Allowance for Loan and Lease 57
Allowance for Loan and Lease Losses - Disaggregation by Impairment Methodology (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | $ 447 | $ 494 | ||
Collectively evaluated for impairment | 138,127 | 136,759 | ||
Total allowance for loan and lease losses | 138,574 | 137,253 | $ 135,847 | $ 135,494 |
Loans and leases: | ||||
Individually evaluated for impairment | 45,552 | 45,349 | ||
Collectively evaluated for impairment | 12,418,613 | 12,232,020 | ||
Total loans and leases | 12,464,165 | 12,277,369 | ||
Commercial Lending | ||||
Loans and leases: | ||||
Total loans and leases | 6,712,173 | 6,600,840 | ||
Commercial and Industrial | ||||
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | 4 | 4 | ||
Collectively evaluated for impairment | 34,361 | 34,002 | ||
Total allowance for loan and lease losses | 34,365 | 34,006 | 31,557 | 33,129 |
Loans and leases: | ||||
Individually evaluated for impairment | 17,044 | 18,183 | ||
Collectively evaluated for impairment | 3,202,166 | 3,117,083 | ||
Total loans and leases | 3,219,210 | 3,135,266 | ||
Commercial Real Estate | ||||
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | 6 | 6 | ||
Collectively evaluated for impairment | 19,248 | 18,038 | ||
Total allowance for loan and lease losses | 19,254 | 18,044 | 19,932 | 18,448 |
Loans and leases: | ||||
Individually evaluated for impairment | 10,141 | 10,636 | ||
Collectively evaluated for impairment | 2,728,416 | 2,656,961 | ||
Total loans and leases | 2,738,557 | 2,667,597 | ||
Construction | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 5,976 | 6,817 | ||
Total allowance for loan and lease losses | 5,976 | 6,817 | 4,532 | 4,513 |
Loans and leases: | ||||
Individually evaluated for impairment | 2,001 | |||
Collectively evaluated for impairment | 592,265 | 632,911 | ||
Total loans and leases | 594,266 | 632,911 | ||
Lease Financing | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 585 | 611 | ||
Total allowance for loan and lease losses | 585 | 611 | 813 | 847 |
Loans and leases: | ||||
Collectively evaluated for impairment | 160,140 | 165,066 | ||
Total loans and leases | 160,140 | 165,066 | ||
Residential | ||||
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | 437 | 484 | ||
Collectively evaluated for impairment | 42,783 | 42,368 | ||
Total allowance for loan and lease losses | 43,220 | 42,852 | 43,541 | 43,436 |
Loans and leases: | ||||
Individually evaluated for impairment | 16,366 | 16,530 | ||
Collectively evaluated for impairment | 4,139,637 | 4,073,523 | ||
Total loans and leases | 4,156,003 | 4,090,053 | ||
Consumer | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 30,998 | 31,249 | ||
Total allowance for loan and lease losses | 30,998 | 31,249 | 27,456 | 28,388 |
Loans and leases: | ||||
Collectively evaluated for impairment | 1,595,989 | 1,586,476 | ||
Total loans and leases | 1,595,989 | 1,586,476 | ||
Unallocated | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 4,176 | 3,674 | ||
Total allowance for loan and lease losses | $ 4,176 | $ 3,674 | $ 8,016 | $ 6,733 |
Allowance for Loan and Lease 58
Allowance for Loan and Lease Losses - Credit Risk Profiles (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)factor | Dec. 31, 2017USD ($) | |
Credit quality | ||
Percentage of loans sold with no recourse not subject to grading | 100.00% | |
Number of risk factors in internal loan rating system | factor | 8 | |
Loans and leases | $ 12,464,165 | $ 12,277,369 |
Loss | ||
Credit quality | ||
Loans and leases | 0 | 0 |
Commercial Lending | ||
Credit quality | ||
Loans and leases | 6,712,173 | 6,600,840 |
Commercial Lending | Pass | ||
Credit quality | ||
Loans and leases | 6,453,397 | 6,445,576 |
Commercial Lending | Special mention | ||
Credit quality | ||
Loans and leases | 180,740 | 73,876 |
Commercial Lending | Substandard | ||
Credit quality | ||
Loans and leases | 76,475 | 79,674 |
Commercial Lending | Doubtful | ||
Credit quality | ||
Loans and leases | 1,561 | 1,714 |
Commercial and Industrial | ||
Credit quality | ||
Loans and leases | 3,219,210 | 3,135,266 |
Commercial and Industrial | Pass | ||
Credit quality | ||
Loans and leases | 3,065,462 | 3,035,121 |
Commercial and Industrial | Special mention | ||
Credit quality | ||
Loans and leases | 100,677 | 43,435 |
Commercial and Industrial | Substandard | ||
Credit quality | ||
Loans and leases | 51,510 | 54,996 |
Commercial and Industrial | Doubtful | ||
Credit quality | ||
Loans and leases | 1,561 | 1,714 |
Commercial Real Estate | ||
Credit quality | ||
Loans and leases | 2,738,557 | 2,667,597 |
Commercial Real Estate | Pass | ||
Credit quality | ||
Loans and leases | 2,640,740 | 2,619,494 |
Commercial Real Estate | Special mention | ||
Credit quality | ||
Loans and leases | 75,962 | 26,248 |
Commercial Real Estate | Substandard | ||
Credit quality | ||
Loans and leases | 21,855 | 21,855 |
Construction | ||
Credit quality | ||
Loans and leases | 594,266 | 632,911 |
Construction | Pass | ||
Credit quality | ||
Loans and leases | 589,090 | 628,112 |
Construction | Special mention | ||
Credit quality | ||
Loans and leases | 2,417 | 2,377 |
Construction | Substandard | ||
Credit quality | ||
Loans and leases | 2,759 | 2,422 |
Lease Financing | ||
Credit quality | ||
Loans and leases | 160,140 | 165,066 |
Lease Financing | Pass | ||
Credit quality | ||
Loans and leases | 158,105 | 162,849 |
Lease Financing | Special mention | ||
Credit quality | ||
Loans and leases | 1,684 | 1,816 |
Lease Financing | Substandard | ||
Credit quality | ||
Loans and leases | 351 | 401 |
Residential and consumer | ||
Credit quality | ||
Loans and leases | 5,751,992 | 5,676,529 |
Residential and consumer | Performing | ||
Credit quality | ||
Loans and leases | 5,713,341 | 5,630,723 |
Residential and consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 38,651 | 45,806 |
Residential | ||
Credit quality | ||
Loans and leases | 4,156,003 | 4,090,053 |
Residential | Performing | ||
Credit quality | ||
Loans and leases | 4,142,201 | 4,073,834 |
Residential | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 13,802 | 16,219 |
Consumer | ||
Credit quality | ||
Loans and leases | 1,595,989 | 1,586,476 |
Consumer loans | Consumer | ||
Credit quality | ||
Loans and leases | 225,333 | 234,358 |
Consumer loans | Consumer | Performing | ||
Credit quality | ||
Loans and leases | 222,434 | 231,023 |
Consumer loans | Consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 2,899 | 3,335 |
Consumer - Auto | Consumer | ||
Credit quality | ||
Loans and leases | 1,051,778 | 1,023,697 |
Consumer - Auto | Consumer | Performing | ||
Credit quality | ||
Loans and leases | 1,033,161 | 1,001,085 |
Consumer - Auto | Consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 18,617 | 22,612 |
Credit Cards | Consumer | ||
Credit quality | ||
Loans and leases | 318,878 | 328,421 |
Credit Cards | Consumer | Performing | ||
Credit quality | ||
Loans and leases | 315,545 | 324,781 |
Credit Cards | Consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | $ 3,333 | $ 3,640 |
Allowance for Loan and Lease 59
Allowance for Loan and Lease Losses - Aging of Analysis of Past Due Loans and Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | $ 34,723 | $ 45,575 |
Current | 12,417,319 | 12,221,969 |
Total Accruing Loans and Leases | 12,452,042 | 12,267,544 |
Total NonAccruing Loans and Leases | 12,123 | 9,825 |
Total loans and leases | 12,464,165 | 12,277,369 |
30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 25,250 | 32,998 |
60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 5,834 | 8,203 |
Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 3,639 | 4,374 |
Commercial and Industrial | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 366 | 376 |
Current | 3,216,956 | 3,131,958 |
Total Accruing Loans and Leases | 3,217,322 | 3,132,334 |
Total NonAccruing Loans and Leases | 1,888 | 2,932 |
Total loans and leases | 3,219,210 | 3,135,266 |
Commercial and Industrial | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 253 | 156 |
Commercial and Industrial | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 30 | |
Commercial and Industrial | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 83 | 220 |
Commercial Real Estate | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 712 | 2,499 |
Current | 2,734,960 | 2,663,312 |
Total Accruing Loans and Leases | 2,735,672 | 2,665,811 |
Total NonAccruing Loans and Leases | 2,885 | 1,786 |
Total loans and leases | 2,738,557 | 2,667,597 |
Commercial Real Estate | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 712 | |
Commercial Real Estate | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 1,099 | |
Commercial Real Estate | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 1,400 | |
Construction | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 343 | 2,001 |
Current | 591,922 | 630,910 |
Total Accruing Loans and Leases | 592,265 | 632,911 |
Total NonAccruing Loans and Leases | 2,001 | |
Total loans and leases | 594,266 | 632,911 |
Construction | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 2,001 | |
Construction | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 343 | |
Lease Financing | ||
Financing Receivable, Recorded Investment, Past Due | ||
Current | 160,140 | 165,066 |
Total Accruing Loans and Leases | 160,140 | 165,066 |
Total loans and leases | 160,140 | 165,066 |
Residential | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 8,453 | 11,112 |
Current | 4,142,201 | 4,073,834 |
Total Accruing Loans and Leases | 4,150,654 | 4,084,946 |
Total NonAccruing Loans and Leases | 5,349 | 5,107 |
Total loans and leases | 4,156,003 | 4,090,053 |
Residential | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 4,673 | 8,463 |
Residential | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 2,311 | 1,289 |
Residential | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 1,469 | 1,360 |
Consumer | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 24,849 | 29,587 |
Current | 1,571,140 | 1,556,889 |
Total Accruing Loans and Leases | 1,595,989 | 1,586,476 |
Total loans and leases | 1,595,989 | 1,586,476 |
Consumer | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 19,612 | 24,379 |
Consumer | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 3,493 | 3,814 |
Consumer | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | $ 1,744 | $ 1,394 |
Allowance for Loan and Lease 60
Allowance for Loan and Lease Losses - Impaired Loans and Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Recorded Investment | |||
Impaired loans with no related allowance recorded | $ 37,040 | $ 36,429 | |
Impaired loans with a related allowance recorded | 8,512 | 8,920 | |
Total impaired loans | 45,552 | 45,349 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 37,921 | 37,660 | |
Impaired loans with a related allowance recorded | 8,793 | 9,200 | |
Total impaired loans | 46,714 | 46,860 | |
Related Allowance, Impaired loans | 447 | 494 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 36,735 | $ 42,190 | |
Impaired loans with a related allowance recorded | 8,717 | 16,569 | |
Total impaired loans | 45,452 | 58,759 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 366 | 494 | |
Impaired loans with a related allowance recorded | 96 | 152 | |
Total impaired loans | 462 | 646 | |
Commercial and Industrial | |||
Recorded Investment | |||
Impaired loans with no related allowance recorded | 16,901 | 18,036 | |
Impaired loans with a related allowance recorded | 143 | 147 | |
Total impaired loans | 17,044 | 18,183 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 17,424 | 18,909 | |
Impaired loans with a related allowance recorded | 143 | 147 | |
Total impaired loans | 17,567 | 19,056 | |
Related Allowance, Impaired loans | 4 | 4 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 17,469 | 21,705 | |
Impaired loans with a related allowance recorded | 145 | 6,203 | |
Total impaired loans | 17,614 | 27,908 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 181 | 229 | |
Impaired loans with a related allowance recorded | 2 | 47 | |
Total impaired loans | 183 | 276 | |
Commercial Real Estate | |||
Recorded Investment | |||
Impaired loans with no related allowance recorded | 9,259 | 9,745 | |
Impaired loans with a related allowance recorded | 882 | 891 | |
Total impaired loans | 10,141 | 10,636 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 9,259 | 9,745 | |
Impaired loans with a related allowance recorded | 882 | 891 | |
Total impaired loans | 10,141 | 10,636 | |
Related Allowance, Impaired loans | 6 | 6 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 9,502 | 11,491 | |
Impaired loans with a related allowance recorded | 887 | 940 | |
Total impaired loans | 10,389 | 12,431 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 55 | 129 | |
Impaired loans with a related allowance recorded | 10 | 11 | |
Total impaired loans | 65 | 140 | |
Construction | |||
Recorded Investment | |||
Impaired loans with no related allowance recorded | 2,001 | ||
Total impaired loans | 2,001 | ||
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 2,001 | ||
Total impaired loans | 2,001 | ||
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 1,001 | ||
Total impaired loans | 1,001 | ||
Lease Financing | |||
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 153 | ||
Total impaired loans | 153 | ||
Residential | |||
Recorded Investment | |||
Impaired loans with no related allowance recorded | 8,879 | 8,648 | |
Impaired loans with a related allowance recorded | 7,487 | 7,882 | |
Total impaired loans | 16,366 | 16,530 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 9,237 | 9,006 | |
Impaired loans with a related allowance recorded | 7,768 | 8,162 | |
Total impaired loans | 17,005 | 17,168 | |
Related Allowance, Impaired loans | 437 | $ 484 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 8,763 | 8,841 | |
Impaired loans with a related allowance recorded | 7,685 | 9,426 | |
Total impaired loans | 16,448 | 18,267 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 130 | 136 | |
Impaired loans with a related allowance recorded | 84 | 94 | |
Total impaired loans | $ 214 | $ 230 |
Allowance for Loan and Lease 61
Allowance for Loan and Lease Losses - Troubled Debt Restructuring Modifications (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)contract | Mar. 31, 2017USD ($)contract | Dec. 31, 2017USD ($)propertycontract | |
Troubled debt restructuring modifications | |||
Number of Contracts | contract | 2 | ||
Recorded Investment | $ 0 | $ 1,563 | |
Related Allowance | $ 11 | ||
Total loan and lease commitments | 5,419,907 | $ 5,401,763 | |
Commitments related to borrowers who had loan terms modified in a TDR | $ 1,600 | 1,900 | |
Loans modified in TDRs that experienced a payment default | |||
Period past due for payment default | 30 days | ||
Number of contracts | contract | 2 | 2 | |
Recorded Investment | $ 564 | $ 1,905 | |
Commercial and Industrial | |||
Troubled debt restructuring modifications | |||
Number of Contracts | contract | 1 | ||
Recorded Investment | $ 1,210 | ||
Total loan and lease commitments | $ 2,365,231 | $ 2,406,261 | |
Loans modified in TDRs that experienced a payment default | |||
Number of contracts | contract | 2 | ||
Recorded Investment | $ 564 | ||
Commercial Real Estate | |||
Loans modified in TDRs that experienced a payment default | |||
Number of contracts | contract | 1 | ||
Recorded Investment | $ 1,395 | ||
Residential | |||
Troubled debt restructuring modifications | |||
Period of time monthly payments are lowered to accommodate borrowers' financial needs | 2 years | ||
Number of Contracts | contract | 1 | ||
Recorded Investment | $ 353 | ||
Related Allowance | $ 11 | ||
Loans modified in TDRs that experienced a payment default | |||
Number of contracts | contract | 1 | ||
Recorded Investment | $ 510 | ||
Number of residential mortgage loans collateralized by real estate property and modified in a TDR in the process of foreclosure | contract | 1 | 1 | |
Residential mortgage loans collateralized by real estate property and modified in a TDR in the process of foreclosure | $ 300 | $ 300 | |
Residential | Real estate property held from foreclosed TDR | |||
Loans modified in TDRs that experienced a payment default | |||
Number of real estate properties | property | 1 | ||
Real estate property held from a foreclosed TDR | 0 | $ 300 | |
Consumer | |||
Troubled debt restructuring modifications | |||
Total loan and lease commitments | $ 1,501,511 | $ 1,485,588 | |
Consumer | Minimum | |||
Troubled debt restructuring modifications | |||
Threshold period past due for charge-off | 120 days | ||
Consumer | Maximum | |||
Troubled debt restructuring modifications | |||
Threshold period past due for charge-off | 180 days |
Mortgage Servicing Rights - Loa
Mortgage Servicing Rights - Loans, Fees, Amortization and Carrying Value (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Other Intangible Assets | |||
Unpaid principal amount of consumer loans serviced for others | $ 2,900,000 | $ 2,300,000 | |
Contractually specified fees, late charges, and ancillary fees | 1,700 | $ 1,700 | |
Amortization of mortgage servicing rights | 988 | $ 1,012 | |
MSRs | |||
Estimated future amortization expense | |||
Under one year | 2,593 | ||
One to two years | 2,296 | ||
Two to three years | 2,034 | ||
Three to four years | 1,799 | ||
Four to five years | 1,591 | ||
Details of mortgage servicing rights | |||
Gross carrying amount | 63,022 | 56,571 | |
Less: accumulated amortization | 44,363 | 43,375 | |
Net carrying value | $ 18,659 | $ 13,196 |
Mortgage Servicing Rights - Cha
Mortgage Servicing Rights - Changes in Amortized MSRs (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in amortized mortgage servicing rights | ||||
Balance at beginning of period | $ 13,196,000 | $ 16,809,000 | $ 16,809,000 | |
Originations | 7,000 | 3,000 | ||
Purchases | 6,444,000 | |||
Amortization | (988,000) | (1,012,000) | ||
Balance at end of period | 18,659,000 | 15,800,000 | 13,196,000 | |
Fair value of amortized MSRs at end of period | 29,048,000 | $ 24,495,000 | 21,697,000 | $ 25,160,000 |
Impairment of MSRs recorded | $ 0 | $ 0 |
Mortgage Servicing Rights - Qua
Mortgage Servicing Rights - Quantitative Assumptions Used for MSRs (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Minimum | ||
Quantitative assumptions used in determining lower of cost or fair value of MSRs | ||
Conditional prepayment rate (as a percent) | 7.76% | 8.53% |
Life (of the MSR) | 3 years 4 months 24 days | 3 years 3 months 15 days |
Weighted-average coupon rate (as a percent) | 3.96% | 3.97% |
Discount rate (as a percent) | 10.50% | 10.50% |
Maximum | ||
Quantitative assumptions used in determining lower of cost or fair value of MSRs | ||
Conditional prepayment rate (as a percent) | 18.94% | 19.63% |
Life (of the MSR) | 8 years 4 days | 7 years 1 month 24 days |
Weighted-average coupon rate (as a percent) | 6.77% | 6.79% |
Discount rate (as a percent) | 10.50% | 10.52% |
Weighted Average | ||
Quantitative assumptions used in determining lower of cost or fair value of MSRs | ||
Conditional prepayment rate (as a percent) | 8.12% | 9.04% |
Life (of the MSR) | 7 years 4 months 6 days | 6 years 9 months 4 days |
Weighted-average coupon rate (as a percent) | 4.02% | 4.04% |
Discount rate (as a percent) | 10.50% | 10.50% |
Transfers of Financial Assets -
Transfers of Financial Assets - Carrying Amounts of Assets Pledged as Collateral (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Carrying amounts of the assets pledged as collateral | ||
Public deposits | $ 2,486,067 | $ 2,800,690 |
Federal Home Loan Bank | 2,475,887 | 2,388,702 |
Federal Reserve Bank | 914,177 | 914,454 |
ACH transactions | 151,462 | 151,526 |
Interest rate swaps | 30,657 | 27,502 |
Total | 6,058,250 | 6,282,874 |
Securities for reverse repurchase agreements | 0 | 0 |
Extinguishment of debt | ||
In-substance debt defeasance | $ 0 | $ 0 |
Transfers of Financial Assets66
Transfers of Financial Assets -Short-Term Borrowings - Lines of Credit (Details) $ in Millions | Mar. 31, 2018USD ($) |
U.S. financial institutions line of credit | |
Lines of credit | |
Amount drawn under lines of credit | $ 0 |
Federal Home Loan Bank line of credit | |
Lines of credit | |
Amount available | 1,500 |
Federal Reserve Bank line of credit | |
Lines of credit | |
Amount available | $ 676.8 |
Transfers of Financial Assets67
Transfers of Financial Assets - Repurchase Agreements (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Transfers of Financial Assets | ||
Repurchase agreements | $ 0 | $ 0 |
Deposits - Interest-bearing or
Deposits - Interest-bearing or Noninterest-bearing (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
U.S.: | ||
Interest-bearing | $ 10,576,408 | $ 10,800,140 |
Noninterest-bearing | 5,419,275 | 5,494,803 |
Foreign: | ||
Interest-bearing | 735,880 | 685,129 |
Noninterest-bearing | 630,859 | 632,050 |
Total deposits | $ 17,362,422 | $ 17,612,122 |
Deposits - Maturity Distributio
Deposits - Maturity Distribution of Time Certificates of Deposits (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Maturity distribution of time certificates of deposit | |
Three months or less | $ 2,077,039 |
Over three through six months | 513,273 |
Over six through twelve months | 869,629 |
One to two years | 233,077 |
Two to three years | 152,174 |
Three to four years | 130,940 |
Four to five years | 89,467 |
Thereafter | 127 |
Total | 4,065,726 |
$250000 | |
Maturity distribution of time certificates of deposit | |
Three months or less | 278,084 |
Over three through six months | 172,688 |
Over six through twelve months | 397,408 |
One to two years | 130,272 |
Two to three years | 98,989 |
Three to four years | 93,983 |
Four to five years | 57,346 |
Thereafter | 127 |
Total | 1,228,897 |
$250,000 or More | |
Maturity distribution of time certificates of deposit | |
Three months or less | 1,798,955 |
Over three through six months | 340,585 |
Over six through twelve months | 472,221 |
One to two years | 102,805 |
Two to three years | 53,185 |
Three to four years | 36,957 |
Four to five years | 32,121 |
Total | $ 2,836,829 |
Deposits - Time Certificate Den
Deposits - Time Certificate Denominations and Overdrawn Accounts (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Deposits | ||
Time certificates of deposit in denominations of $250,000 or more, in the aggregate | $ 2,800 | $ 3,000 |
Overdrawn deposit accounts classified as loans | $ 3.9 | $ 2.7 |
Accumulated Other Comprehensi71
Accumulated Other Comprehensive Loss - Changes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Pre-tax Amount | ||
Balance | $ (159,423) | $ (145,472) |
Other comprehensive income (loss) | (65,962) | 2,176 |
Balance | (225,385) | (143,296) |
Income Tax Benefit (Expense) | ||
Balance | 63,040 | 57,461 |
Other comprehensive income (loss) | 17,729 | (857) |
Balance | 60,701 | 56,604 |
Net of tax | ||
Balance | 2,532,551 | 2,476,485 |
Other comprehensive (loss) income | (48,233) | 1,319 |
Balance | 2,520,862 | 2,505,994 |
Accumulated other comprehensive loss | ||
Net of tax | ||
Balance | (96,383) | (88,011) |
Other comprehensive (loss) income | (48,233) | 1,319 |
Balance | (164,684) | (86,692) |
Accumulated other comprehensive loss | ASU 2018-02 | ||
Income Tax Benefit (Expense) | ||
Adoption of ASU | (20,068) | |
Accumulated other comprehensive loss | Adjustments for New Accounting Principle, Early Adoption | ASU 2018-02 | ||
Income Tax Benefit (Expense) | ||
Adoption of ASU | (20,068) | |
Investment securities: | ||
Pre-tax Amount | ||
Unrealized net (losses) gains arising during the period | (66,700) | 1,578 |
Other comprehensive income (loss) | (66,700) | 1,578 |
Income Tax Benefit (Expense) | ||
Unrealized net gains (losses) arising during the period | 17,923 | (621) |
Other comprehensive income (loss) | 17,923 | (621) |
Net of tax | ||
Balance | (74,117) | (59,958) |
Unrealized net gains (losses) arising during the period | (48,777) | 957 |
Other comprehensive (loss) income | (48,777) | 957 |
Balance | (138,334) | (59,001) |
Investment securities: | Adjustments for New Accounting Principle, Early Adoption | ASU 2018-02 | ||
Income Tax Benefit (Expense) | ||
Adoption of ASU | (15,440) | |
Cash flow derivative hedges: | ||
Pre-tax Amount | ||
Unrealized net (losses) gains arising during the period | 738 | 598 |
Other comprehensive income (loss) | 738 | 598 |
Income Tax Benefit (Expense) | ||
Unrealized net gains (losses) arising during the period | (194) | (236) |
Other comprehensive income (loss) | (194) | (236) |
Net of tax | ||
Balance | 3,680 | 2,184 |
Unrealized net gains (losses) arising during the period | 544 | 362 |
Other comprehensive (loss) income | 544 | 362 |
Balance | 4,989 | $ 2,546 |
Cash flow derivative hedges: | Adjustments for New Accounting Principle, Early Adoption | ASU 2018-02 | ||
Income Tax Benefit (Expense) | ||
Adoption of ASU | $ 765 |
Accumulated Other Comprehensi72
Accumulated Other Comprehensive Loss - Changes, Net of Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net of tax | ||
Balance | $ 2,532,551 | $ 2,476,485 |
Other comprehensive income (loss) | (48,233) | 1,319 |
Balance | 2,520,862 | 2,505,994 |
Accumulated other comprehensive loss | ||
Net of tax | ||
Balance | (96,383) | (88,011) |
Other comprehensive income (loss) | (48,233) | 1,319 |
Balance | (164,684) | (86,692) |
Accumulated other comprehensive loss | ASU 2018-02 | ||
Net of tax | ||
Adoption of ASU | (20,068) | |
Accumulated other comprehensive loss | ASU 2018-02 | Adjustments for New Accounting Principle, Early Adoption | ||
Net of tax | ||
Adoption of ASU | (20,068) | |
Pension and other benefits: | ||
Net of tax | ||
Balance | (25,946) | (30,237) |
Balance | (31,339) | (30,237) |
Pension and other benefits: | ASU 2018-02 | Adjustments for New Accounting Principle, Early Adoption | ||
Net of tax | ||
Adoption of ASU | (5,393) | |
Investment securities: | ||
Net of tax | ||
Balance | (74,117) | (59,958) |
Other comprehensive income (loss) | (48,777) | 957 |
Balance | (138,334) | (59,001) |
Investment securities: | ASU 2018-02 | Adjustments for New Accounting Principle, Early Adoption | ||
Net of tax | ||
Adoption of ASU | (15,440) | |
Cash flow derivative hedges: | ||
Net of tax | ||
Balance | 3,680 | 2,184 |
Other comprehensive income (loss) | 544 | 362 |
Balance | 4,989 | $ 2,546 |
Cash flow derivative hedges: | ASU 2018-02 | Adjustments for New Accounting Principle, Early Adoption | ||
Net of tax | ||
Adoption of ASU | $ 765 |
Regulatory Capital Requiremen73
Regulatory Capital Requirements (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Common equity tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 1,690,054 | $ 1,633,442 |
Actual Ratio (as a percent) | 12.73% | 12.45% |
Minimum Capital Ratio (as a percent) | 4.50% | 4.50% |
Well-Capitalized Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 1,690,054 | $ 1,633,442 |
Actual Ratio (as a percent) | 12.73% | 12.45% |
Minimum Capital Ratio (as a percent) | 6.00% | 6.00% |
Well-Capitalized Ratio (percent) | 8.00% | 8.00% |
Total capital to risk-weighted assets | ||
Actual Amount | $ 1,829,228 | $ 1,771,295 |
Actual Ratio (as a percent) | 13.77% | 13.50% |
Minimum Capital Ratio (as a percent) | 8.00% | 8.00% |
Well-Capitalized Ratio (as a percent) | 10.00% | 10.00% |
Tier 1 capital to average assets (leverage ratio) | ||
Actual Amount | $ 1,690,054 | $ 1,633,442 |
Actual Ratio | 8.71% | 8.52% |
Minimum Capital Ratio (as a percent) | 4.00% | 4.00% |
Well-Capitalized Ratio (percent) | 5.00% | 5.00% |
First Hawaiian Bank | ||
Common equity tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 1,688,288 | $ 1,623,455 |
Actual Ratio (as a percent) | 12.71% | 12.37% |
Tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 1,688,288 | $ 1,623,455 |
Actual Ratio (as a percent) | 12.71% | 12.37% |
Total capital to risk-weighted assets | ||
Actual Amount | $ 1,827,462 | $ 1,761,308 |
Actual Ratio (as a percent) | 13.76% | 13.42% |
Tier 1 capital to average assets (leverage ratio) | ||
Actual Amount | $ 1,688,288 | $ 1,623,455 |
Actual Ratio | 8.70% | 8.47% |
Regulatory Capital Requiremen74
Regulatory Capital Requirements - Capital Conservation Buffer (Details) | Mar. 31, 2018 | Jan. 01, 2016 |
Regulatory Capital Requirements | ||
Initial capital conservation buffer (as a percent) | 0.625% | |
Capital conservation buffer annual increase after initial year (as a percent) | 0.625% | |
Capital conservation buffer final level (as a percent) | 2.50% |
Income Taxes - Tax Act (Details
Income Taxes - Tax Act (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2017 | |
Tax Cuts and Jobs Act of 2017 | |||
Corporate tax rate (as a percent) | 21.00% | 35.00% | |
Additional income tax expense from on-time revaluation of certain tax-related assets | $ 47.6 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate 10-Q (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Taxes | ||
Effective tax rate (as a percent) | 26.00% | 36.89% |
Income Taxes - Examinations (De
Income Taxes - Examinations (Details) | 3 Months Ended |
Mar. 31, 2018item | |
Income Taxes | |
Number of examinations under way | 0 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Unrecognized Tax Benefits - (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Tax | |||
Balance | $ 130,619 | $ 127,085 | |
Additions for current year tax positions | 354 | 199 | |
Additions for Reorganization Transactions | 121,400 | ||
Reductions for prior years' tax positions: Expiration of statute of limitations | (70) | (127) | |
Reductions for prior years' tax positions: Other | (257) | ||
Balance | 130,646 | 127,157 | |
Interest and Penalties | |||
Balance | 10,660 | 9,965 | |
Additions for Reorganization Transactions | 7,000 | ||
Additions for prior years' tax positions: Accrual of interest and penalties | 242 | 71 | |
Reductions for prior years' tax positions: Expiration of statute of limitations | (32) | (51) | |
Balance | 10,870 | 9,985 | |
Total | |||
Balance | 141,279 | 137,050 | |
Additions for current year tax positions | 354 | 199 | |
Additions for prior years' tax positions: Accrual of interest and penalties | 242 | 71 | |
Reductions for prior years' tax positions: Expiration of statute of limitations | (102) | (178) | |
Reductions for prior years' tax positions: Other | (257) | ||
Balance | 141,516 | 137,142 | |
Unrecognized tax benefits | |||
Amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate | 15,000 | 10,700 | |
Unrecognized tax benefits attributable to tax refund claims in State of California | 93,900 | ||
Unrecognized tax benefits, reasonably possible to decrease within the next 12 months | 107,600 | ||
Unrecognized interest and penalties, reasonably possible to decrease within the next 12 months | 5,600 | ||
Net expense attributable to interest and penalties recorded | 0 | $ 0 | |
Accrued interest and penalties attributable to uncertain tax positions and undisputed tax adjustments | 12,800 | $ 12,800 | |
Accrued interest and penalties attributable to unrecognized tax benefits | $ 10,900 | $ 10,700 |
Income Taxes - Reorganization T
Income Taxes - Reorganization Transactions - (Details) - Reorganization Transactions on April 1, 2016 - USD ($) $ in Millions | Apr. 01, 2016 | Dec. 31, 2016 | Mar. 31, 2018 |
Income taxes | |||
Current tax receivables recorded | $ 93.9 | ||
Unrecognized tax positions | 116.5 | ||
Indemnification receivable | $ 22.6 | ||
Certain tax related liabilities incurred | $ 95.4 | ||
Expected federal tax benefit on distribution taxes | 33.4 | ||
Total state and local distribution taxes reported | $ 92.1 | ||
Net adjustments to pre-Reorganization indemnification receivables or payables and unrecognized tax benefits | $ 2.1 |
Derivative Financial Instrume80
Derivative Financial Instruments - Notional Amounts and Fair Values (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Derivatives designated as hedging instruments | Interest rate swaps | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | $ 194,548 | $ 194,687 |
Derivatives designated as hedging instruments | Interest rate swaps | Included in other assets | ||
Notional amounts and fair values of derivatives | ||
Asset Derivatives | 29 | |
Derivatives designated as hedging instruments | Interest rate swaps | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | (873) | (2,032) |
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | 1,988,253 | 1,820,442 |
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other assets | ||
Notional amounts and fair values of derivatives | ||
Asset Derivatives | 3,936 | 14,658 |
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | (16,737) | (13,017) |
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | 56,107 | 43,113 |
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | (4,845) | (5,439) |
Derivatives Not Designated as Hedging Instruments | Foreign exchange contracts | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | 4,618 | 3,658 |
Derivatives Not Designated as Hedging Instruments | Foreign exchange contracts | Included in other assets | ||
Notional amounts and fair values of derivatives | ||
Asset Derivatives | 2 | $ 24 |
Derivatives Not Designated as Hedging Instruments | Foreign exchange contracts | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | $ (40) |
Derivative Financial Instrume81
Derivative Financial Instruments - Clearinghouse Margin and Collateral (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Derivative contracts | ||
Initial margin collateral posted | $ 4.4 | $ 2.9 |
Interest rate swaps | ||
Derivative contracts | ||
Financial instruments pledged as collateral | 23.7 | 22.6 |
Cash pledged as collateral | 6.9 | 4.9 |
Chicago Mercantile Exchange (CME) | ||
Derivative contracts | ||
Variation margin | 0.6 | $ 3.1 |
London Clearing House (LCH) | ||
Derivative contracts | ||
Variation margin | $ 11.3 |
Derivative Financial Instrume82
Derivative Financial Instruments - Fair Value Hedges (Details) - Interest rate swaps - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Net losses recognized on fair value hedges | $ (321) | $ (177) | |
Minimum | Fair value hedges | |||
Fair hedges carried | |||
Fixed interest rate (as a percent) | 2.59% | ||
Maximum | Fair value hedges | |||
Fair hedges carried | |||
Fixed interest rate (as a percent) | 3.44% | ||
Net interest income | Fair value hedges | |||
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Expense recorded | $ (108) | (199) | |
Noninterest income | |||
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Gains (losses) recognized on derivatives | 550 | 219 | |
Gains (losses) recognized on hedged item | (763) | (197) | |
Net gains (losses) recognized on fair value hedges (ineffective portion) | (213) | $ 22 | |
Derivatives designated as hedging instruments | |||
Fair hedges carried | |||
Notional amounts | 194,548 | $ 194,687 | |
Derivatives designated as hedging instruments | Fair value hedges | |||
Fair hedges carried | |||
Notional amounts | 44,500 | 44,700 | |
Positive fair value | 0 | 0 | |
Fair value losses | $ 100 | $ 500 |
Derivative Financial Instrume83
Derivative Financial Instruments - Cash Flow Hedges (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)derivative | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($)derivative | |
Cash Flow Hedges | |||
Effect of cash flow hedging relationships | |||
Pretax gains recognized in other comprehensive income on derivatives (effective portion) | $ 738 | $ 598 | |
Pretax gain reclassified from accumulated other comprehensive income | 0 | 0 | |
Interest rate swaps | |||
Cash flow hedges | |||
Recognized expenses related to the ineffective portion | 0 | 0 | |
Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Net interest expense on derivative | $ 500 | $ 600 | |
Minimum | Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Fixed interest rate (as a percent) | 2.98% | 2.98% | |
Maximum | Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Fixed interest rate (as a percent) | 3.03% | 3.03% | |
Derivatives designated as hedging instruments | Interest rate swaps | |||
Cash flow hedges | |||
Notional amounts | $ 194,548 | $ 194,687 | |
Derivatives designated as hedging instruments | Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Number of derivatives carried | derivative | 2 | 2 | |
Notional amounts | $ 150,000 | $ 150,000 | |
Fair value losses | $ 700 | $ 1,500 |
Derivative Financial Instrume84
Derivative Financial Instruments - Derivatives Not Designated as Hedges (Details) - Derivatives Not Designated as Hedging Instruments - Other noninterest income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Interest rate swaps | ||
Impact on pretax earnings of derivatives not designated as hedges | ||
Net Gains (Losses) on Derivatives | $ 404 | $ 253 |
Funding Swap (Visa Derivative) | ||
Impact on pretax earnings of derivatives not designated as hedges | ||
Net Gains (Losses) on Derivatives | (84) | 3 |
Foreign exchange contracts | ||
Impact on pretax earnings of derivatives not designated as hedges | ||
Net Gains (Losses) on Derivatives | $ (63) | $ 205 |
Derivative Financial Instrume85
Derivative Financial Instruments - Free-Standing (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | 96 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Visa | Class B shares | |||||
Derivative financial instruments | |||||
Number of shares sold | 0 | 0 | 274,000 | 0 | |
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | |||||
Derivative financial instruments | |||||
Notional Amount | $ 1,988,253 | $ 1,820,442 | |||
Net interest expense on derivative | $ 200 | $ 300 | |||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Minimum | |||||
Derivative financial instruments | |||||
Fixed interest rate (as a percent) | 1.89% | 1.36% | |||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Maximum | |||||
Derivative financial instruments | |||||
Fixed interest rate (as a percent) | 5.47% | 5.33% | |||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Customer swap program | |||||
Derivative financial instruments | |||||
Notional Amount | $ 1,900,000 | $ 1,700,000 | |||
Upfront fees on the dealer swap | 3,200 | $ 3,000 | |||
Derivative asset value | 3,900 | 14,700 | |||
Derivative liability value | 15,800 | 11,700 | |||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other assets | |||||
Derivative financial instruments | |||||
Positive fair value, derivative asset | 3,936 | 14,658 | |||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other liabilities | |||||
Derivative financial instruments | |||||
Negative fair value, derivative liability | 16,737 | 13,017 | |||
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | |||||
Derivative financial instruments | |||||
Notional Amount | 56,107 | 43,113 | |||
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | Included in other liabilities | |||||
Derivative financial instruments | |||||
Negative fair value, derivative liability | $ 4,845 | $ 5,439 |
Derivative Financial Instrume86
Derivative Financial Instruments - Counterparty Credit Risk and Credit-Risk Related Contingent Features (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Derivative contracts | |||
Counterparty credit risk adjustments | $ 0.1 | $ 0 | |
Credit-risk-related contingent features | |||
Aggregate fair value of derivative instruments in a net liability position | 1.8 | $ 4.5 | |
Collateral posted for derivatives in a net liability position | 2.5 | $ 4.8 | |
Interest rate swaps | |||
Derivative contracts | |||
Collateral thresholds for derivative agreements with credit risk related contingent features | $ 0.5 |
Commitments and Contingent Li87
Commitments and Contingent Liabilities - Contingencies (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Overdraft fee litigation | |
Contingencies | |
Loss contingency liability | $ 0 |
First Hawaiian Bank | |
Contingencies | |
Period for one-time continuous negative balance overdraft fee | 7 days |
Commitments and Contingent Li88
Commitments and Contingent Liabilities - Commitments to Extend Credit, Participations Sold (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Commitments to extend credit | ||
Commitments | ||
Participations sold to other institutions | $ 43.8 | $ 49.1 |
Standby letters of credit | ||
Commitments | ||
Participations sold to other institutions | $ 17.8 | $ 17.8 |
Commitments and Contingent Li89
Commitments and Contingent Liabilities - Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Commitments to extend credit | ||
Financial instruments with off-balance sheet risk | ||
Contract amount | $ 5,419,907 | $ 5,401,763 |
Standby letters of credit | ||
Financial instruments with off-balance sheet risk | ||
Contract amount | 162,663 | 161,798 |
Commercial Letters of credit | ||
Financial instruments with off-balance sheet risk | ||
Contract amount | $ 6,076 | $ 5,540 |
Revenue from Contracts with C90
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue | ||
Net interest income (1) | $ 139,672 | $ 129,345 |
Not in scope of Topic 606 (1) | 3,424 | |
Noninterest Income | 48,700 | 51,059 |
Total revenue | 188,372 | |
Retail Banking | ||
Disaggregation of Revenue | ||
Net interest income (1) | 109,654 | 105,701 |
Not in scope of Topic 606 (1) | 2,160 | |
Noninterest Income | 22,732 | 23,619 |
Total revenue | 132,386 | |
Commercial Banking | ||
Disaggregation of Revenue | ||
Net interest income (1) | 27,879 | 27,533 |
Not in scope of Topic 606 (1) | (1,330) | |
Noninterest Income | 20,000 | 18,834 |
Total revenue | 47,879 | |
Treasury and Other | ||
Disaggregation of Revenue | ||
Net interest income (1) | 2,139 | (3,889) |
Not in scope of Topic 606 (1) | 2,594 | |
Noninterest Income | 5,968 | $ 8,606 |
Total revenue | 8,107 | |
Service charges on deposit accounts | ||
Disaggregation of Revenue | ||
Revenue by type of service | 7,955 | |
Service charges on deposit accounts | Retail Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 7,448 | |
Service charges on deposit accounts | Commercial Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 4 | |
Service charges on deposit accounts | Treasury and Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | 503 | |
Credit and debit card fees | ||
Disaggregation of Revenue | ||
Revenue by type of service | 20,408 | |
Credit and debit card fees | Commercial Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 18,621 | |
Credit and debit card fees | Treasury and Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | 1,787 | |
Other service charges and fees | ||
Disaggregation of Revenue | ||
Revenue by type of service | 6,276 | |
Other service charges and fees | Retail Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 4,745 | |
Other service charges and fees | Commercial Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 898 | |
Other service charges and fees | Treasury and Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | 633 | |
Trust and investment services income | ||
Disaggregation of Revenue | ||
Revenue by type of service | 8,231 | |
Trust and investment services income | Retail Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 8,231 | |
Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | 2,406 | |
Other | Retail Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 148 | |
Other | Commercial Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 1,807 | |
Other | Treasury and Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | $ 451 |
Revenue from Contracts with C91
Revenue from Contracts with Customers - Contract Balances (Details) | 3 Months Ended | |
Mar. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Revenue from Contracts with Customers | ||
Signing bonuses received from vendors | item | 2 | |
Contract liabilities | $ 3,200,000 | $ 3,400,000 |
Decrease in recognized revenues and contract liabilities | 200,000 | |
Change in contract liabilities due to changes in transaction price estimates | 0 | |
Receivables from contracts with customers or contract assets | $ 0 | $ 0 |
Revenue from Contracts with C92
Revenue from Contracts with Customers - Other (Details) | Mar. 31, 2018USD ($) |
Revenue from Contracts with Customers | |
Significant performance obligations | $ 0 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings per Share | ||
Adjustments to net income (in dollars) | $ 0 | $ 0 |
Antidilutive securities (in shares) | 0 | 0 |
Numerator: | ||
Net income | $ 67,958 | $ 56,740 |
Denominator: | ||
Basic: weighted-average shares outstanding (in shares) | 139,600,712 | 139,545,728 |
Add: weighted-average equity-based awards (in shares) | 131,388 | 91,682 |
Diluted: weighted-average shares outstanding (in shares) | 139,732,100 | 139,637,410 |
Basic earnings per share (in dollars per share) | $ 0.49 | $ 0.41 |
Diluted earnings per share (in dollars per share) | $ 0.49 | $ 0.41 |
Benefit Plans - Components of N
Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Pension Benefits | ||
Components of net periodic benefit cost | ||
Total net periodic benefit cost | $ 2,339 | $ 2,956 |
Pension Benefits | Salaries and employee benefits | ||
Components of net periodic benefit cost | ||
Service cost | 174 | 158 |
Pension Benefits | Other noninterest expense | ||
Components of net periodic benefit cost | ||
Interest cost | 1,794 | 2,041 |
Expected return on plan assets | (1,240) | (1,242) |
Recognized net actuarial loss | 1,611 | 1,999 |
Other Benefits | ||
Components of net periodic benefit cost | ||
Total net periodic benefit cost | 290 | 273 |
Other Benefits | Salaries and employee benefits | ||
Components of net periodic benefit cost | ||
Service cost | 212 | 179 |
Other Benefits | Other noninterest expense | ||
Components of net periodic benefit cost | ||
Interest cost | 185 | 201 |
Prior service credit | $ (107) | $ (107) |
Fair Value - Visa Derivative (D
Fair Value - Visa Derivative (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value Measurements, Recurring | Level 3 | Funding Swap (Visa Derivative) | ||
Fair value | ||
Derivative Liability | $ 4.8 | $ 5.4 |
Fair Value - Assets and Liabili
Fair Value - Assets and Liabilities Recorded at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Investment securities | $ 5,076,766 | $ 5,234,658 |
Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 5,076,766 | 5,234,658 |
Other assets | 3,967 | 14,682 |
Liabilities | ||
Other liabilities | (22,495) | (20,488) |
Total | ||
Net Assets (Liabilities) | 5,058,238 | 5,228,852 |
Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 5,076,766 | 5,234,658 |
Other assets | 3,967 | 14,682 |
Liabilities | ||
Other liabilities | (17,650) | (15,049) |
Total | ||
Net Assets (Liabilities) | 5,063,083 | 5,234,291 |
Fair Value Measurements, Recurring | Level 3 | ||
Liabilities | ||
Other liabilities | (4,845) | (5,439) |
Total | ||
Net Assets (Liabilities) | (4,845) | (5,439) |
U.S. Treasury securities | ||
Assets | ||
Investment securities | 387,647 | 392,255 |
U.S. Treasury securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 387,647 | 392,255 |
U.S. Treasury securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 387,647 | 392,255 |
Government-sponsored enterprises debt securities | ||
Assets | ||
Investment securities | 239,655 | 242,601 |
Government-sponsored enterprises debt securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 239,655 | 242,601 |
Government-sponsored enterprises debt securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 239,655 | 242,601 |
Government agency mortgage-backed securities | ||
Assets | ||
Investment securities | 456,308 | 351,390 |
Government agency mortgage-backed securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 456,308 | 351,390 |
Government agency mortgage-backed securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 456,308 | 351,390 |
Government-sponsored enterprises mortgage-backed securities | ||
Assets | ||
Investment securities | 168,049 | 174,741 |
Government-sponsored enterprises mortgage-backed securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 168,049 | 174,741 |
Government-sponsored enterprises mortgage-backed securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 168,049 | 174,741 |
Collateralized mortgage obligations: Government agency | ||
Assets | ||
Investment securities | 3,087,708 | 3,290,474 |
Collateralized mortgage obligations: Government agency | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 3,087,708 | 3,290,474 |
Collateralized mortgage obligations: Government agency | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 3,087,708 | 3,290,474 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Assets | ||
Investment securities | 717,483 | 762,718 |
Collateralized mortgage obligations: Government-sponsored enterprises | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 717,483 | 762,718 |
Collateralized mortgage obligations: Government-sponsored enterprises | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 717,483 | 762,718 |
States and political subdivisions | ||
Assets | ||
Investment securities | 19,916 | 20,479 |
States and political subdivisions | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 19,916 | 20,479 |
States and political subdivisions | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | $ 19,916 | $ 20,479 |
Fair Value - Changes in Fair Va
Fair Value - Changes in Fair Value Levels and in Level 3 Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Fair value | ||
Asset transfers out of Level 2 into Level 1 | $ 0 | |
Asset transfers into (out of) Level 3 | 0 | |
Liability transfers out of Level 1 into Level 2 | 0 | |
Liability transfers out of Level 2 into Level 1 | 0 | |
Liability transfers into (out of) Level 3 | 0 | |
Other liabilities - derivative | Funding Swap (Visa Derivative) | ||
Changes in Level 3 liabilities measured at fair value on a recurring basis | ||
Balance | (5,439) | $ (7,460) |
Total net (losses) gains included in other noninterest income | (84) | 3 |
Settlements | 678 | 470 |
Balance | (4,845) | (6,987) |
Total net (losses) gains included in net income attributable to the change in unrealized gains or losses related to liabilities still held | $ (84) | $ 3 |
Fair Value - Financial Instrume
Fair Value - Financial Instruments not Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Lease and lease commitments excluded | ||
Financing leases | $ 160,100 | $ 165,100 |
Book Value | ||
Financial assets: | ||
Cash and cash equivalents | 692,492 | 1,034,644 |
Loans held for sale | 397 | 556 |
Loans | 12,304,025 | 12,112,303 |
Financial liabilities: | ||
Deposits | 17,362,422 | 17,612,122 |
Estimated Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 692,489 | 1,034,644 |
Loans held for sale | 397 | 559 |
Loans | 12,505,553 | 12,426,506 |
Financial liabilities: | ||
Deposits | 17,342,040 | 17,598,633 |
Estimated Fair Value | Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 283,135 | 367,084 |
Financial liabilities: | ||
Deposits | 13,296,696 | 13,438,240 |
Estimated Fair Value | Level 2 | ||
Financial assets: | ||
Cash and cash equivalents | 409,354 | 667,560 |
Loans held for sale | 397 | 559 |
Financial liabilities: | ||
Deposits | 4,045,344 | 4,160,393 |
Estimated Fair Value | Level 3 | ||
Financial assets: | ||
Loans | $ 12,505,553 | $ 12,426,506 |
Fair Value - Unfunded Loan and
Fair Value - Unfunded Loan and Lease Commitments and Letters of Credit (Details) - Level 3 - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Unfunded loan and lease commitments and letters of credit | ||
Aggregate unfunded loan and lease commitments and letters of credit | $ 5,600 | $ 5,600 |
Estimated fair value of unfunded loan and lease commitments and letters of credit | $ 11.6 | $ 11.7 |
Fair Value - Assets and Liab100
Fair Value - Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis (Details) - Impaired loans - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Assets with fair value adjustments on a nonrecurring basis | |||
Total impairment losses | $ 500 | $ 300 | |
Fair Value Measurements, Nonrecurring | Level 3 | |||
Assets with fair value adjustments on a nonrecurring basis | |||
Fair value | $ 87 |
Fair Value - Significant Unobse
Fair Value - Significant Unobservable Inputs Used in Fair Value Measurements (Details) - Level 3 $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Fair Value Measurements, Nonrecurring | Impaired loans | ||
Significant unobservable inputs used in the fair value measurements | ||
Assets | $ 87 | |
Fair Value Measurements, Recurring | Other liabilities - derivative | ||
Significant unobservable inputs used in the fair value measurements | ||
Liabilities | $ (4,845) | $ (5,439) |
Fair Value Measurements, Recurring | Other liabilities - derivative | Discounted cash flow | Weighted Average | ||
Significant unobservable inputs used in the fair value measurements | ||
Expected Conversion Factor | 1.6483 | 1.6483 |
Expected Term | 4 years | 4 years |
Growth Rate (as a percent) | 15.00% | 15.00% |
Reportable Operating Segments -
Reportable Operating Segments - Business Segments (Details) | 3 Months Ended |
Mar. 31, 2018locationsegment | |
Reportable operating segments | |
Number of business segments | segment | 3 |
Retail Banking | |
Reportable operating segments | |
Number of banking locations | location | 61 |
Reportable Operating Segment103
Reportable Operating Segments - Selected Business Segment Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Selected business segment financial information | ||
Net interest income (expense) | $ 139,672 | $ 129,345 |
Provision for loan and lease losses | (5,950) | (4,500) |
Net interest income after provision for loan and lease losses | 133,722 | 124,845 |
Noninterest income | 48,700 | 51,059 |
Noninterest expense | (90,587) | (85,991) |
Income before provision for income taxes | 91,835 | 89,913 |
(Provision) benefit for income taxes | (23,877) | (33,173) |
Net income | 67,958 | 56,740 |
Retail Banking | ||
Selected business segment financial information | ||
Net interest income (expense) | 109,654 | 105,701 |
Provision for loan and lease losses | (2,348) | (1,663) |
Net interest income after provision for loan and lease losses | 107,306 | 104,038 |
Noninterest income | 22,732 | 23,619 |
Noninterest expense | (56,461) | (55,240) |
Income before provision for income taxes | 73,577 | 72,417 |
(Provision) benefit for income taxes | (19,207) | (26,733) |
Net income | 54,370 | 45,684 |
Commercial Banking | ||
Selected business segment financial information | ||
Net interest income (expense) | 27,879 | 27,533 |
Provision for loan and lease losses | (3,602) | (2,837) |
Net interest income after provision for loan and lease losses | 24,277 | 24,696 |
Noninterest income | 20,000 | 18,834 |
Noninterest expense | (19,648) | (16,313) |
Income before provision for income taxes | 24,629 | 27,217 |
(Provision) benefit for income taxes | (6,328) | (10,034) |
Net income | 18,301 | 17,183 |
Treasury and Other | ||
Selected business segment financial information | ||
Net interest income (expense) | 2,139 | (3,889) |
Net interest income after provision for loan and lease losses | 2,139 | (3,889) |
Noninterest income | 5,968 | 8,606 |
Noninterest expense | (14,478) | (14,438) |
Income before provision for income taxes | (6,371) | (9,721) |
(Provision) benefit for income taxes | 1,658 | 3,594 |
Net income | $ (4,713) | $ (6,127) |
Reportable Operating Segment104
Reportable Operating Segments - Revision of Prior Period Noninterest Income and Noninterest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Correction of an Immaterial Error to the Financial Statements | ||
Noninterest income | $ 48,700 | $ 51,059 |
Noninterest expense | 90,587 | 85,991 |
Commercial Banking | ||
Correction of an Immaterial Error to the Financial Statements | ||
Noninterest income | 20,000 | 18,834 |
Noninterest expense | 19,648 | 16,313 |
Treasury and Other | ||
Correction of an Immaterial Error to the Financial Statements | ||
Noninterest income | 5,968 | 8,606 |
Noninterest expense | $ 14,478 | 14,438 |
Restatement adjustment | Misclassifications of noninterest income and noninterest expense | Commercial Banking | ||
Correction of an Immaterial Error to the Financial Statements | ||
Noninterest income | 1,300 | |
Noninterest expense | 1,300 | |
Restatement adjustment | Misclassifications of noninterest income and noninterest expense | Treasury and Other | ||
Correction of an Immaterial Error to the Financial Statements | ||
Noninterest income | 400 | |
Noninterest expense | $ 400 |