Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 18, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | FIRST HAWAIIAN, INC. | |
Entity Central Index Key | 0000036377 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 135,012,015 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest income | ||
Loans and lease financing | $ 144,406 | $ 123,551 |
Available-for-sale securities | 24,486 | 28,993 |
Other | 3,669 | 2,392 |
Total interest income | 172,561 | 154,936 |
Interest expense | ||
Deposits | 23,197 | 15,264 |
Short-term and long-term borrowings | 4,275 | |
Total interest expense | 27,472 | 15,264 |
Net interest income | 145,089 | 139,672 |
Provision for loan and lease losses | 5,680 | 5,950 |
Net interest income after provision for loan and lease losses | 139,409 | 133,722 |
Noninterest income | ||
Service charges on deposit accounts | 8,060 | 7,955 |
Credit and debit card fees | 16,655 | 15,497 |
Other service charges and fees | 9,129 | 9,342 |
Trust and investment services income | 8,618 | 8,231 |
Bank-owned life insurance | 3,813 | 2,044 |
Investment securities losses, net | (2,613) | |
Other | 3,410 | 5,631 |
Total noninterest income | 47,072 | 48,700 |
Noninterest expense | ||
Salaries and employee benefits | 44,860 | 42,160 |
Contracted services and professional fees | 13,645 | 12,287 |
Occupancy | 6,986 | 6,484 |
Equipment | 4,284 | 4,588 |
Regulatory assessment and fees | 1,447 | 3,973 |
Advertising and marketing | 1,966 | 951 |
Card rewards program | 6,732 | 5,718 |
Other | 12,703 | 14,426 |
Total noninterest expense | 92,623 | 90,587 |
Income before provision for income taxes | 93,858 | 91,835 |
Provision for income taxes | 23,934 | 23,877 |
Net income (loss) | $ 69,924 | $ 67,958 |
Basic earnings per share (in dollars per share) | $ 0.52 | $ 0.49 |
Diluted earnings per share (in dollars per share) | $ 0.52 | $ 0.49 |
Basic weighted-average outstanding shares (in shares) | 134,879,336 | 139,600,712 |
Diluted weighted-average outstanding shares (in shares) | 135,198,345 | 139,732,100 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 69,924 | $ 67,958 |
Other comprehensive income (loss), net of tax: | ||
Net change in investment securities | 53,441 | (48,777) |
Net change in cash flow derivative hedges | 544 | |
Other comprehensive income (loss) | 53,441 | (48,233) |
Total comprehensive income | $ 123,365 | $ 19,725 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and due from banks | $ 336,555 | $ 396,836 |
Interest-bearing deposits in other banks | 281,312 | 606,801 |
Investment securities | 4,485,660 | 4,498,342 |
Loans held for sale | 432 | |
Loans and leases | 13,197,454 | 13,076,191 |
Less: allowance for loan and lease losses | 141,546 | 141,718 |
Net loans and leases | 13,055,908 | 12,934,473 |
Premises and equipment, net | 310,902 | 304,996 |
Other real estate owned and repossessed personal property | 124 | 751 |
Accrued interest receivable | 49,489 | 48,920 |
Bank-owned life insurance | 447,936 | 446,076 |
Goodwill | 995,492 | 995,492 |
Mortgage servicing rights | 15,399 | 16,155 |
Other assets | 462,359 | 446,404 |
Total assets | 20,441,136 | 20,695,678 |
Deposits: | ||
Interest-bearing | 10,951,764 | 11,142,127 |
Noninterest-bearing | 5,843,480 | 6,007,941 |
Total deposits | 16,795,244 | 17,150,068 |
Long-term borrowings | 600,028 | 600,026 |
Retirement benefits payable | 127,845 | 127,909 |
Other liabilities | 304,817 | 292,836 |
Total liabilities | 17,827,934 | 18,170,839 |
Commitments and contingent liabilities (Note 12) | ||
Stockholders' equity | ||
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,851,508 / 135,012,015 as of March 31, 2019; issued/outstanding: 139,656,674 / 134,874,302 as of December 31, 2018) | 1,399 | 1,397 |
Additional paid-in capital | 2,497,770 | 2,495,853 |
Retained earnings | 326,451 | 291,919 |
Accumulated other comprehensive loss, net | (78,754) | (132,195) |
Treasury stock (4,839,493 shares as of March 31, 2019 and 4,782,372 shares as of December 31, 2018) | (133,664) | (132,135) |
Total stockholders' equity | 2,613,202 | 2,524,839 |
Total liabilities and stockholders' equity | $ 20,441,136 | $ 20,695,678 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
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) | 139,851,508 | 139,656,674 |
Common stock outstanding (in shares) | 135,012,015 | 134,874,302 |
Treasury stock (in shares) | 4,839,493 | 4,782,372 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated other comprehensive Income (loss) | Treasury Stock | Total |
Balance, beginning 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 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 67,958 | 67,958 | ||||
Cash dividends declared ($0.26 and $0.24 per share for the three months ended March 31, 2019 and 2018, 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, net of tax | (48,233) | (48,233) | ||||
Balance, ending 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 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Adoption of Accounting Standards Update No. 2018-02 | 20,068 | (20,068) | ||||
Balance, beginning at Dec. 31, 2018 | $ 1,397 | 2,495,853 | 291,919 | (132,195) | (132,135) | $ 2,524,839 |
Balance (in shares) at Dec. 31, 2018 | 134,874,302 | 134,874,302 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 69,924 | $ 69,924 | ||||
Cash dividends declared ($0.26 and $0.24 per share for the three months ended March 31, 2019 and 2018, respectively) | (35,067) | (35,067) | ||||
Equity-based awards | $ 2 | 1,917 | (325) | (1,529) | 65 | |
Equity-based awards (in shares) | 137,713 | |||||
Other comprehensive loss, net of tax | 53,441 | 53,441 | ||||
Balance, ending at Mar. 31, 2019 | $ 1,399 | $ 2,497,770 | $ 326,451 | $ (78,754) | $ (133,664) | $ 2,613,202 |
Balance (in shares) at Mar. 31, 2019 | 135,012,015 | 135,012,015 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Stockholders' Equity | ||
Cash dividends declared (in dollars per share) | $ 0.26 | $ 0.24 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 69,924 | $ 67,958 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan and lease losses | 5,680 | 5,950 |
Depreciation, amortization and accretion, net | 14,588 | 13,220 |
Deferred income taxes | 16,461 | 7,511 |
Stock-based compensation | 1,594 | 1,748 |
Other gains | (26) | (13) |
Originations of loans held for sale | (745) | (862) |
Proceeds from sales of loans held for sale | 1,199 | 465 |
Net gains on sales of loans held for sale | (22) | |
Net losses on investment securities | 2,613 | |
Change in assets and liabilities: | ||
Net increase in other assets | (1,293) | (4,869) |
Net decrease in other liabilities | (46,569) | (37,891) |
Net cash provided by operating activities | 63,404 | 53,217 |
Available-for-sale securities: | ||
Proceeds from maturities and principal repayments | 142,954 | 218,941 |
Proceeds from sales | 863,053 | |
Purchases | (927,606) | (130,252) |
Other investments: | ||
Proceeds from sales | 2,063 | 2,285 |
Purchases | (2,211) | (4,403) |
Loans: | ||
Net increase in loans and leases resulting from originations and principal repayments | (51,823) | (189,496) |
Proceeds from sales of loans originated for investment | 570 | |
Purchases of loans | (76,451) | |
Proceeds from bank-owned life insurance | 1,953 | |
Purchases of premises, equipment and software | (9,571) | (3,446) |
Purchases of mortgage servicing rights | (6,444) | |
Proceeds from sales of other real estate owned | 653 | 332 |
Other | (768) | (594) |
Net cash used in investing activities | (57,754) | (112,507) |
Cash flows from financing activities | ||
Net decrease in deposits | (354,824) | (249,700) |
Dividends paid | (35,067) | (33,504) |
Stock tendered for payment of withholding taxes | (1,529) | |
Proceeds from employee stock purchase plan | 342 | |
Net cash used in financing activities | (391,420) | (282,862) |
Net decrease in cash and cash equivalents | (385,770) | (342,152) |
Cash and cash equivalents at beginning of period | 1,003,637 | 1,034,644 |
Cash and cash equivalents at end of period | 617,867 | 692,492 |
Supplemental disclosures | ||
Interest paid | 27,398 | 15,100 |
Income taxes paid, net of income tax refunds | $ 4,883 | 189 |
Noncash investing and financing activities: | ||
Transfers from loans and leases to loans held for sale | $ 4 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
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. FHB offers a comprehensive suite of banking services to consumer and commercial customers including loans, deposit products, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. The accompanying unaudited interim consolidated financial statements of First Hawaiian, Inc. and Subsidiary (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, 2018. 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. Transition to an Independent Public Company On July 1, 2016, FHI became a direct wholly owned subsidiary of BancWest Corporation (“BWC”), a Delaware corporation and an indirect wholly owned subsidiary of BNP Paribas (“BNPP”). In connection with FHI’s initial public offering (“IPO”) in August 2016, BNPP announced its intent to sell its interest in FHI, including FHI’s wholly owned subsidiary, FHB, over time, subject to market conditions and other considerations. BNPP, through FHI’s IPO completed on August 9, 2016 and secondary offerings completed on February 17, 2017, May 10, 2018, August 1, 2018 and September 10, 2018, sold, in the aggregate (inclusive of sales pursuant to the underwriters’ exercise of overallotment options in connection with such secondary sales), 109,830,000 shares of FHI common stock to the public. Concurrently with two of the secondary offerings in 2018, FHI entered into share repurchase agreements with BWC, to repurchase, in the aggregate, 4,769,870 shares of FHI common stock. On February 1, 2019, BWC completed the sale of its remaining 24,859,750 shares of FHI common stock in a public offering. FHI did not receive any of the proceeds from the sales of shares of FHI common stock in that offering, in any of the secondary offerings described above or the IPO. As a result of the completion of the February 1, 2019 public offering, BNPP (through BWC, the selling stockholder) fully exited its ownership interest in FHI common stock. 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. Accounting Standards Adopted in 2019 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) . This guidance provides that lessees will be required to recognize the following for all operating 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. The Company adopted the provisions of ASU No. 2016-02 on January 1, 2019 and elected several practical expedients made available by the FASB. Specifically, the Company elected the transition practical expedient to not recast comparative periods upon the adoption of the new guidance. In addition, the Company elected the package of practical expedients which among other things, requires no reassessment of whether existing contracts are or contain leases as well as no reassessment of lease classification for existing leases and the practical expedient which permits the Company to not separate nonlease components from lease components in determining the consideration in the lease agreement when the Company is a lessee and a lessor. The Company identified the primary lease agreements in scope of this new guidance as those relating to branch premises. As a result, the Company recognized a lease liability of $50.3 million and a related right-of-use asset of $50.6 million on its consolidated balance sheet on January 1, 2019. See “Note 15. Leases” for required disclosures related to this new guidance. 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 . Prior to the adoption of ASU No. 2017-08, entities typically amortized 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. The Company adopted the provisions of ASU No. 2017-08 on January 1, 2019, and it did not have a material impact on the Company’s consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, 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. Historically, the Company has participated in limited activities in fair value and cash flow hedging relationships. As a result, the adoption of ASU No. 2017-12 on January 1, 2019, did not have a material impact on the Company’s consolidated financial statements. See “Note 11. Derivative Financial Instruments” for required disclosures related to this new guidance. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . This guidance aligns the accounting for implementation costs related to a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Common examples of hosting arrangements include software as a service, platform or infrastructure as a service and other similar types of hosting arrangements. While capitalized costs related to internal-use software is generally considered an intangible asset, costs incurred to implement a cloud computing arrangement that is a service contract would typically be characterized in the company’s financial statements in the same manner as other service costs (e.g., prepaid expense). The new guidance provides that an entity would be required to amortize capitalized implementation costs over the term of the hosting arrangement on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which the entity expects to benefit from access to the hosted software. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with earlier adoption permitted in any annual or interim period for which financial statements have not yet been issued or made available for issuance. The Company early adopted the provisions of ASU No. 2018-15 on January 1, 2019 due to the Company’s shift towards utilizing more hosting arrangements that are service contracts. The adoption of ASU No. 2018-15 did not have a material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815), Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes . This update expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on the SOFR. Due to concerns about the sustainability of the London Interbank Offered Rate (“LIBOR”), a committee convened by the Federal Reserve Board and the Federal Reserve Bank of New York initiated an effort to introduce an alternative reference rate in the U.S. The committee identified SOFR as the preferred alternative reference rate to LIBOR. The OIS rate based on SOFR was added as a U.S. benchmark interest rate to facilitate broader use in the marketplace and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies. The Company adopted the provisions of ASU No. 2018-16 on January 1, 2019 and it 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 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. This guidance requires entities to record a cumulative effect adjustment to the consolidated 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, finance and information technology, to evaluate the requirements of the new standard and the impact it will have on the Company’s current processes. Management has evaluated the Company’s existing credit loss forecasting models to determine their appropriateness for CECL, has performed a data gap analysis, and is developing analytical approaches to determine CECL model inputs. The Company has also engaged a software vendor and is in the final stages of implementing a CECL production platform. However, as the impact of adopting the new guidance is expected to be heavily influenced by an assessment of the composition, characteristics, and credit quality of the Company’s loan and investment securities portfolio as well as the economic conditions in effect at the adoption date, management is currently unable to reasonably estimate the impact of adopting the new standard. 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 August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement . This guidance is a part of the FASB’s disclosure framework project to improve disclosure effectiveness. This guidance eliminates certain disclosure requirements for fair value measurements: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, an entity’s policy for the timing of transfers between levels of the fair value hierarchy and an entity’s valuation processes for Level 3 fair value measurements. This guidance also adds new disclosure requirements for public entities: changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements of instruments held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements, including how the weighted average is calculated. Furthermore, this guidance modifies certain requirements which will involve disclosing: transfers into and out of Level 3 of the fair value hierarchy, purchases and issuances of Level 3 assets and liabilities, and information about the measurement uncertainty of Level 3 fair value measurements as of the reporting date. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company’s consolidated financial statements. |
Investment Securities
Investment Securities | 3 Months Ended |
Mar. 31, 2019 | |
Investment Securities | |
Investment Securities | 2. Investment Securities As of March 31, 2019 and December 31, 2018, 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 agencies and 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, 2019 and December 31, 2018, 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, 2019 and December 31, 2018 were as follows: March 31, 2019 December 31, 2018 Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Cost Gains Losses Value U.S. Treasury securities $ — $ — $ — $ — $ 389,470 $ — $ — $ 389,470 Government agency debt securities 24,778 — (13) 24,765 — — — — Government-sponsored enterprises debt securities 164,718 — (3,123) 161,595 248,372 — (6,778) 241,594 Government agency mortgage-backed securities 377,960 — (6,925) 371,035 426,710 — (15,174) 411,536 Government-sponsored enterprises mortgage-backed securities 131,884 71 (4,059) 127,896 156,056 85 (5,294) 150,847 Collateralized mortgage obligations: Government agency 2,778,862 1,404 (50,100) 2,730,166 2,779,620 — (97,171) 2,682,449 Government-sponsored enterprises 1,076,399 4,607 (10,803) 1,070,203 620,337 — (17,745) 602,592 Debt securities issued by states and political subdivisions — — — — 19,854 — — 19,854 Total available-for-sale securities $ 4,554,601 $ 6,082 $ (75,023) $ 4,485,660 $ 4,640,419 $ 85 $ (142,162) $ 4,498,342 Proceeds from calls and sales of investment securities were nil and $863.1 million, respectively, for the three months ended March 31, 2019. Proceeds from both calls and sales of investment securities were nil for the three months ended March 31, 2018. The Company recorded gross realized gains of nil and gross realized losses of $2.6 million for the three months ended March 31, 2019. The Company recorded no gross realized gains and no gross realized losses for the three months ended March 31, 2018. The income tax benefit related to the Company’s net realized loss on the sale of investment securities was $0.7 million and nil for the three months ended March 31, 2019 and 2018, respectively. Gains and losses realized on sales of securities are determined using the specific identification method. Interest income from taxable investment securities was $24.5 million and $28.9 million for the three months ended March 31, 2019 and 2018, respectively. Interest income from non-taxable investment securities was nil and $0.1 million during the three months ended March 31, 2019 and 2018, respectively. The amortized cost and fair value of debt securities issued by government-sponsored enterprises as of March 31, 2019, by contractual maturity, are shown below. Debt securities issued by government agencies, 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, 2019 Amortized Fair (dollars in thousands) Cost Value Due in one year or less $ — $ — Due after one year through five years 99,992 98,193 Due after five years through ten years 64,726 63,402 Due after ten years — — 164,718 161,595 Government agency debt securities 24,778 24,765 Government agency mortgage-backed securities 377,960 371,035 Government-sponsored enterprises mortgage-backed securities 131,884 127,896 Collateralized mortgage obligations: Government agency 2,778,862 2,730,166 Government-sponsored enterprises 1,076,399 1,070,203 Total mortgage-backed securities and collateralized mortgage obligations 4,389,883 4,324,065 Total available-for-sale securities $ 4,554,601 $ 4,485,660 At March 31, 2019, pledged securities totaled $2.0 billion, of which $1.8 billion was pledged to secure public deposits and $209.5 million was pledged to secure other financial transactions. At December 31, 2018, pledged securities totaled $2.0 billion, of which $1.7 billion was pledged to secure public deposits and $232.7 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 agencies and government-sponsored enterprises, taken in the aggregate, which were in excess of 10% of stockholders’ equity as of March 31, 2019 and December 31, 2018. 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 160 and 154 individual securities in each category have been in a continuous loss position as of March 31, 2019 and December 31, 2018, 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, 2019 Less Than 12 Months 12 Months or More Total Unrealized Unrealized Unrealized (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value Government agency debt securities $ (13) $ 24,765 $ — $ — $ (13) $ 24,765 Government-sponsored enterprises debt securities — — (3,123) 161,595 (3,123) 161,595 Government agency mortgage-backed securities — — (6,925) 371,035 (6,925) 371,035 Government-sponsored enterprises mortgage-backed securities — — (4,059) 123,430 (4,059) 123,430 Collateralized mortgage obligations: Government agency (327) 99,455 (49,773) 2,417,727 (50,100) 2,517,182 Government-sponsored enterprises (450) 138,465 (10,353) 449,284 (10,803) 587,749 Total available-for-sale securities with unrealized losses $ (790) $ 262,685 $ (74,233) $ 3,523,071 $ (75,023) $ 3,785,756 Time in Continuous Loss as of December 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 Government-sponsored enterprises debt securities $ — $ — $ (6,778) $ 157,939 $ (6,778) $ 157,939 Government agency mortgage-backed securities — — (15,174) 373,891 (15,174) 373,891 Government-sponsored enterprises mortgage-backed securities (1) 172 (5,293) 125,869 (5,294) 126,041 Collateralized mortgage obligations: Government agency — — (97,171) 2,475,532 (97,171) 2,475,532 Government-sponsored enterprises — — (17,745) 486,175 (17,745) 486,175 Total available-for-sale securities with unrealized losses $ (1) $ 172 $ (142,161) $ 3,619,406 $ (142,162) $ 3,619,578 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, 2019, 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 December 31, 2018, the Company had the intent to sell 48 securities with an aggregated amortized cost basis of $898.2 million. As a result, the Company recorded an OTTI write-down of $24.1 million in December 2018. The OTTI write-down represented the difference between the amortized cost basis and the fair value of the securities as of December 31, 2018. In January 2019, the Company completed its sale of the 48 securities and recorded an additional loss of $2.6 million. 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 rate to unrestricted Class A common shares. On June 28, 2018, Visa additionally funded its litigation escrow account, thereby reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on July 5, 2018, Visa announced a decrease in conversion rate from 1.6483 to 1.6298 effective June 28, 2018. In July 2018, the Company made a payment of approximately $0.7 million to the buyer as a result of the reduction in the Visa Class B conversion rate. See “Note 11. Derivative Financial Instruments” for more information. The Company held approximately 120,000 Visa Class B restricted shares as of both March 31, 2019 and December 31, 2018. 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, 2019 | |
Loans and Leases. | |
Loans and Leases | 3. Loans and Leases As of March 31, 2019 and December 31, 2018, loans and leases were comprised of the following: March 31, December 31, (dollars in thousands) 2019 2018 Commercial and industrial $ 3,203,770 $ 3,208,760 Commercial real estate 3,147,304 2,990,783 Construction 595,491 626,757 Residential: Residential mortgage 3,543,964 3,527,101 Home equity line 907,829 912,517 Total residential 4,451,793 4,439,618 Consumer 1,653,109 1,662,504 Lease financing 145,987 147,769 Total loans and leases $ 13,197,454 $ 13,076,191 Outstanding loan balances are reported net of net deferred loan costs of $37.3 million and $36.3 million at March 31, 2019 and December 31, 2018, respectively. As of March 31, 2019, residential real estate loans totaling $2.6 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 $937.4 million were pledged to collateralize the Company’s borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2018, residential real estate loans totaling $2.5 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer and commercial and industrial loans totaling $957.0 million were pledged to collateralize the Company’s borrowing capacity at the FRB. Residential real estate loans collateralized by properties that were in the process of foreclosure totaled $4.9 million and $4.6 million at March 31, 2019 and December 31, 2018, 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 Company’s 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, 2019 and December 31, 2018, remaining loan and lease commitments were comprised of the following: March 31, December 31, (dollars in thousands) 2019 2018 Commercial and industrial $ 2,384,738 $ 2,484,857 Commercial real estate 132,701 114,186 Construction 529,679 526,938 Residential: Residential mortgage 479 121 Home equity line 894,162 913,636 Total residential 894,641 913,757 Consumer 1,527,217 1,509,853 Total loan and lease commitments $ 5,468,976 $ 5,549,591 |
Allowance for Loan and Lease Lo
Allowance for Loan and Lease Losses | 3 Months Ended |
Mar. 31, 2019 | |
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 residential mortgages including 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, 2019 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 $ 34,501 $ 19,725 $ 5,813 $ 432 $ 44,906 $ 35,813 $ 528 $ 141,718 Charge-offs — — — (24) — (8,598) — (8,622) Recoveries 37 31 — — 250 2,452 — 2,770 Increase (decrease) in Provision (2,745) 1,441 (432) 3 (245) 5,432 2,226 5,680 Balance at end of period $ 31,793 $ 21,197 $ 5,381 $ 411 $ 44,911 $ 35,099 $ 2,754 $ 141,546 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 The disaggregation of the Allowance and recorded investment in loans by impairment methodology as of March 31, 2019 and December 31, 2018 were as follows: March 31, 2019 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 $ 429 $ 26 $ — $ — $ 430 $ — $ — $ 885 Collectively evaluated for impairment 31,364 21,171 5,381 411 44,481 35,099 2,754 140,661 Balance at end of period $ 31,793 $ 21,197 $ 5,381 $ 411 $ 44,911 $ 35,099 $ 2,754 $ 141,546 Loans and leases: Individually evaluated for impairment $ 10,073 $ 3,907 $ — $ — $ 15,529 $ — $ — $ 29,509 Collectively evaluated for impairment 3,193,697 3,143,397 595,491 145,987 4,436,264 1,653,109 — 13,167,945 Balance at end of period $ 3,203,770 $ 3,147,304 $ 595,491 $ 145,987 $ 4,451,793 $ 1,653,109 $ — $ 13,197,454 December 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 $ 108 $ 32 $ — $ — $ 396 $ — $ — $ 536 Collectively evaluated for impairment 34,393 19,693 5,813 432 44,510 35,813 528 141,182 Balance at end of period $ 34,501 $ 19,725 $ 5,813 $ 432 $ 44,906 $ 35,813 $ 528 $ 141,718 Loans and leases: Individually evaluated for impairment $ 8,719 $ 5,743 $ — $ — $ 16,114 $ — $ — $ 30,576 Collectively evaluated for impairment 3,200,041 2,985,040 626,757 147,769 4,423,504 1,662,504 — 13,045,615 Balance at end of period $ 3,208,760 $ 2,990,783 $ 626,757 $ 147,769 $ 4,439,618 $ 1,662,504 $ — $ 13,076,191 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, credit cards, home equity lines of credit and residential mortgage 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, 2019 and December 31, 2018 were as follows: March 31, 2019 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,102,106 $ 3,000,806 $ 594,368 $ 144,874 $ 6,842,154 Special mention 60,275 101,393 185 947 162,800 Substandard 41,389 45,105 938 166 87,598 Total $ 3,203,770 $ 3,147,304 $ 595,491 $ 145,987 $ 7,092,552 December 31, 2018 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,069,546 $ 2,876,907 $ 625,607 $ 146,356 $ 6,718,416 Special mention 57,012 91,298 200 1,223 149,733 Substandard 82,010 22,578 950 190 105,728 Doubtful 192 — — — 192 Total $ 3,208,760 $ 2,990,783 $ 626,757 $ 147,769 $ 6,974,069 There were no loans and leases graded as Loss as of March 31, 2019 and December 31, 2018. The credit risk profiles based on payment activity for loans and leases that were not subject to loan grading as of March 31, 2019 and December 31, 2018 were as follows: March 31, 2019 (dollars in thousands) Residential Mortgage Home Equity Line Consumer Consumer - Auto Credit Cards Total Performing $ 3,538,122 $ 901,821 $ 234,539 $ 1,056,907 $ 325,656 $ 6,057,045 Non-performing and delinquent 5,842 6,008 5,121 26,036 4,850 47,857 Total $ 3,543,964 $ 907,829 $ 239,660 $ 1,082,943 $ 330,506 $ 6,104,902 December 31, 2018 (dollars in thousands) Residential Mortgage Home Equity Line Consumer Consumer - Auto Credit Cards Total Performing $ 3,519,172 $ 903,284 $ 234,458 $ 1,044,393 $ 339,162 $ 6,040,469 Non-performing and delinquent 7,929 9,233 5,448 33,739 5,304 61,653 Total $ 3,527,101 $ 912,517 $ 239,906 $ 1,078,132 $ 344,466 $ 6,102,122 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, 2019 and December 31, 2018 were as follows: March 31, 2019 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 $ 1,415 $ 307 $ 350 $ 2,072 $ 3,201,508 $ 3,203,580 $ 190 $ 3,203,770 Commercial real estate 225 129 — 354 3,146,950 3,147,304 — 3,147,304 Construction — — 89 89 595,402 595,491 — 595,491 Lease financing — — — — 145,987 145,987 — 145,987 Residential mortgage 1,353 399 — 1,752 3,538,122 3,539,874 4,090 3,543,964 Home equity line 3,083 477 2,448 6,008 901,821 907,829 — 907,829 Consumer 25,640 6,829 3,538 36,007 1,617,102 1,653,109 — 1,653,109 Total $ 31,716 $ 8,141 $ 6,425 $ 46,282 $ 13,146,892 $ 13,193,174 $ 4,280 $ 13,197,454 December 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 $ 1,293 $ — $ 141 $ 1,434 $ 3,207,052 $ 3,208,486 $ 274 $ 3,208,760 Commercial real estate — — — — 2,989,125 2,989,125 1,658 2,990,783 Construction 91 — — 91 626,666 626,757 — 626,757 Lease financing 47 — — 47 147,722 147,769 — 147,769 Residential mortgage 2,274 1,012 32 3,318 3,519,172 3,522,490 4,611 3,527,101 Home equity line 5,616 775 2,842 9,233 903,284 912,517 — 912,517 Consumer 32,406 8,712 3,373 44,491 1,618,013 1,662,504 — 1,662,504 Total $ 41,727 $ 10,499 $ 6,388 $ 58,614 $ 13,011,034 $ 13,069,648 $ 6,543 $ 13,076,191 The total carrying amounts and the total unpaid principal balances of impaired loans and leases as of March 31, 2019 and December 31, 2018 were as follows: March 31, 2019 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 2,387 $ 2,421 $ — Commercial real estate 3,188 3,188 — Residential mortgage 8,220 8,534 — Total $ 13,795 $ 14,143 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 7,686 $ 7,686 $ 429 Commercial real estate 719 719 26 Residential mortgage 7,309 7,695 430 Total $ 15,714 $ 16,100 $ 885 Total impaired loans: Commercial and industrial $ 10,073 $ 10,107 $ 429 Commercial real estate 3,907 3,907 26 Residential mortgage 15,529 16,229 430 Total $ 29,509 $ 30,243 $ 885 December 31, 2018 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 4,449 $ 4,498 $ — Commercial real estate 5,016 5,016 — Residential mortgage 9,112 9,426 — Total $ 18,577 $ 18,940 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 4,270 $ 4,270 $ 108 Commercial real estate 727 727 32 Residential mortgage 7,002 7,387 396 Total $ 11,999 $ 12,384 $ 536 Total impaired loans: Commercial and industrial $ 8,719 $ 8,768 $ 108 Commercial real estate 5,743 5,743 32 Residential mortgage 16,114 16,813 396 Total $ 30,576 $ 31,324 $ 536 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, 2019 and 2018: Three Months Ended March 31, 2019 Average Interest Recorded Income (dollars in thousands) Investment Recognized Impaired loans with no related allowance recorded: Commercial and industrial $ 3,418 $ 29 Commercial real estate 4,102 171 Residential mortgage 8,666 100 Total $ 16,186 $ 300 Impaired loans with a related allowance recorded: Commercial and industrial $ 5,978 $ 108 Commercial real estate 723 10 Residential mortgage 7,156 96 Total $ 13,857 $ 214 Total impaired loans: Commercial and industrial $ 9,396 $ 137 Commercial real estate 4,825 181 Residential mortgage 15,822 196 Total $ 30,043 $ 514 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 mortgage 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 mortgage 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 mortgage 16,448 214 Total $ 45,452 $ 462 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. 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 loan 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. The following presents, by class, information related to loans modified in a TDR during the three months ended March 31, 2019 and 2018: Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Number of Recorded Related Number of Recorded Related (dollars in thousands) Contracts Investment (1) Allowance Contracts Investment (1) Allowance Commercial and industrial 4 $ 916 $ 24 — $ — $ — Residential mortgage 1 352 14 — — — Total 5 $ 1,268 $ 38 — $ — $ — (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 an extension of maturity dates, temporary interest-only payments, reduced payments, or below-market interest rates. The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $5.7 billion and $5.8 billion as of March 31, 2019 and December 31, 2018, respectively. Of the $5.7 billion at March 31, 2019, there were commitments of $1.1 million related to borrowers who had loan terms modified in a TDR. Of the $5.8 billion at December 31, 2018, there were commitments of $1.8 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, 2019 2018 Number of Recorded Number of Recorded (dollars in thousands) Contracts Investment (1) Contracts Investment (1) Commercial and industrial (2) — $ — 2 $ 564 Total — $ — 2 $ 564 (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. Foreclosure Proceedings 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 as of March 31, 2019. As of December 31, 2018, 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 Residential real estate property held from one foreclosed residential mortgage loan included in other real estate owned and repossessed personal property shown in the unaudited interim consolidated balance sheets was $0.1 million as of March 31, 2019. Residential real estate properties held from one foreclosed residential mortgage loan and one foreclosed home equity line included in other real estate owned and repossessed personal property shown in the unaudited interim consolidated balance sheets was $0.8 million as of December 31, 2018. |
Mortgage Servicing Rights
Mortgage Servicing Rights | 3 Months Ended |
Mar. 31, 2019 | |
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 residential real estate loans serviced for others was $2.6 billion and $2.7 billion as of March 31, 2019 and December 31, 2018, respectively. Servicing fees include contractually specified fees, late charges, and ancillary fees, and were $1.6 million and $1.7 million for the three months ended March 31, 2019 and 2018, respectively. Amortization of mortgage servicing rights (“MSRs”) was $0.8 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively. The estimated future amortization expenses for MSRs over the next five years are as follows: Estimated (dollars in thousands) Amortization Under one year $ 2,236 One to two years 1,968 Two to three years 1,733 Three to four years 1,523 Four to five years 1,339 The details of the Company’s MSRs are presented below: March 31, December 31, (dollars in thousands) 2019 2018 Gross carrying amount $ 63,350 $ 63,342 Less: accumulated amortization 47,951 47,187 Net carrying value $ 15,399 $ 16,155 The following table presents changes in amortized MSRs for the three months ended March 31, 2019 and 2018: Three Months Ended March 31, (dollars in thousands) 2019 2018 Balance at beginning of period $ 16,155 $ 13,196 Originations 8 7 Purchases — 6,444 Amortization (764) (988) Balance at end of period $ 15,399 $ 18,659 Fair value of amortized MSRs at beginning of period $ 27,662 $ 21,697 Fair value of amortized MSRs at end of period $ 26,383 $ 29,048 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, 2019 and 2018. The quantitative assumptions used in determining the lower of cost or fair value of the Company’s MSRs as of March 31, 2019 and December 31, 2018 were as follows: March 31, 2019 December 31, 2018 Weighted Weighted Range Average Range Average Conditional prepayment rate 8.00 % - 20.28 % 8.47 % 7.86 % - 19.26 % 8.31 % Life in years (of the MSR) 3.18 - 7.56 7.08 3.43 - 7.68 7.19 Weighted-average coupon rate 3.97 % - 6.67 % 4.02 % 3.97 % - 6.70 % 4.02 % Discount rate 10.00 % - 10.01 % 10.00 % 10.00 % - 10.02 % 10.00 % 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, 2019 | |
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 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, 2019 and December 31, 2018 were as follows: (dollars in thousands) March 31, 2019 December 31, 2018 Public deposits $ 1,759,692 $ 1,749,726 Federal Home Loan Bank 2,589,411 2,497,030 Federal Reserve Bank 937,390 957,017 ACH transactions 152,579 150,903 Interest rate swaps 30,665 28,843 Total $ 5,469,737 $ 5,383,519 As the Company did not enter into reverse repurchase agreements, no collateral was accepted as of March 31, 2019 and December 31, 2018. In addition, no debt was extinguished by in-substance defeasance. The Company did not have any repurchase agreements as of March 31, 2019 and December 31, 2018. |
Deposits
Deposits | 3 Months Ended |
Mar. 31, 2019 | |
Deposits | |
Deposits | 7. Deposits As of March 31, 2019 and December 31, 2018, deposits were categorized as interest-bearing or noninterest-bearing as follows: (dollars in thousands) March 31, 2019 December 31, 2018 U.S.: Interest-bearing $ 10,158,299 $ 10,393,449 Noninterest-bearing 5,184,816 5,368,729 Foreign: Interest-bearing 793,465 748,678 Noninterest-bearing 658,664 639,212 Total deposits $ 16,795,244 $ 17,150,068 The following table presents the maturity distribution of time certificates of deposit as of March 31, 2019: Under $250,000 (dollars in thousands) $250,000 or More Total Three months or less $ 306,984 $ 658,915 $ 965,899 Over three through six months 149,913 486,994 636,907 Over six through twelve months 383,212 401,934 785,146 One to two years 118,264 86,489 204,753 Two to three years 112,532 48,892 161,424 Three to four years 54,408 21,947 76,355 Four to five years 67,061 13,691 80,752 Thereafter 54 — 54 Total $ 1,192,428 $ 1,718,862 $ 2,911,290 Time certificates of deposit in denominations of $250,000 or more, in the aggregate, were $1.7 billion and $1.9 billion as of March 31, 2019 and December 31, 2018, respectively. Overdrawn deposit accounts are classified as loans and totaled $2.7 million and $2.4 million as of March 31, 2019 and December 31, 2018, respectively. |
Long-Term Borrowings
Long-Term Borrowings | 3 Months Ended |
Mar. 31, 2019 | |
Long-Term Borrowings | |
Long-Term Borrowings | 8. Long-Term Borrowings Long-term borrowings consisted of the following as of March 31, 2019 and December 31, 2018: (dollars in thousands) March 31, 2019 December 31, 2018 Finance lease (1) $ 28 $ 26 FHLB fixed-rate advances (1) 600,000 600,000 Total long-term borrowings $ 600,028 $ 600,026 (1) Interest is payable monthly. As of March 31, 2019 and December 31, 2018, the Company’s long-term borrowings included $600.0 million in FHLB fixed-rate advances with a weighted average interest rate of 2.80% and maturity dates ranging from 2020 to 2024. The FHLB fixed-rate advances require monthly interest-only payments with the principal amount due on the maturity date. As of March 31, 2019 and December 31, 2018, the available remaining borrowing capacity with the FHLB was $1.4 billion and $1.3 billion, respectively. The FHLB fixed-rate advances and remaining borrowing capacity were secured by residential real estate loan collateral as of March 31, 2019 and December 31, 2018. See “Note 6. Transfers of Financial Assets” for more information. As of March 31, 2019 and December 31, 2018, the Company’s long-term borrowings included a finance lease obligation with a 6.78% annual interest rate that matures in 2022. As of March 31, 2019, future contractual principal payments and maturities on long-term borrowings were as follows: Principal (dollars in thousands) Payments 2019 $ 9 2020 400,009 2021 10 2022 — 2023 100,000 Thereafter 100,000 Total $ 600,028 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | 9. 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, 2019 and 2018 are presented below: Income Tax Pre-tax Benefit Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2018 $ (180,915) $ 48,720 $ (132,195) Three months ended March 31, 2019 Investment securities: Unrealized net gains arising during the period 70,523 (18,991) 51,532 Reclassification of net losses to net income: Investment securities losses, net 2,613 (704) 1,909 Net change in investment securities 73,136 (19,695) 53,441 Other comprehensive income 73,136 (19,695) 53,441 Accumulated other comprehensive loss at March 31, 2019 $ (107,779) $ 29,025 $ (78,754) 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 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 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) The following table summarizes changes in accumulated other comprehensive loss, net of tax, for the periods indicated: Total Pensions Accumulated and Other Other Investment Cash Flow Comprehensive (dollars in thousands) Benefits Securities Derivative Hedges Loss Three Months Ended March 31, 2019 Balance at beginning of period $ (28,379) $ (103,816) $ — $ (132,195) Other comprehensive income — 53,441 — 53,441 Balance at end of period $ (28,379) $ (50,375) $ — $ (78,754) 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) |
Regulatory Capital Requirements
Regulatory Capital Requirements | 3 Months Ended |
Mar. 31, 2019 | |
Regulatory Capital Requirements | |
Regulatory Capital Requirements | 10. 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, 2019 and December 31, 2018: First Hawaiian Minimum Well- First Hawaiian, Inc. Bank Capital Capitalized (dollars in thousands) Amount Ratio Amount Ratio Ratio (1) Ratio (1) March 31, 2019: Common equity tier 1 capital to risk-weighted assets $ 1,696,464 12.05 % $ 1,695,844 12.05 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,696,464 12.05 % 1,695,844 12.05 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,838,610 13.06 % 1,837,990 13.06 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,696,464 8.71 % 1,695,844 8.70 % 4.00 % 5.00 % December 31, 2018: Common equity tier 1 capital to risk-weighted assets $ 1,661,542 11.97 % $ 1,658,172 11.94 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,661,542 11.97 % 1,658,172 11.94 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,803,860 12.99 % 1,800,490 12.97 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,661,542 8.72 % 1,658,172 8.70 % 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 increased each subsequent year by an additional 0.625% until reaching 2.5% on January 1, 2019. As of March 31, 2019, 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, 2019, to change the capital adequacy category of the Company or the Bank. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
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, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 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 $ 23,892 $ — $ (352) $ 41,317 $ 31 $ (44) Derivatives not designated as hedging instruments: Interest rate swaps 2,334,559 29,034 (1,897) 2,269,247 12,305 (12,007) Funding swap 64,395 — (1,839) 62,039 — (2,607) Foreign exchange contracts 2,473 3 (2) 1,191 — (34) (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 $29.2 million and $2.1 million as of March 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, the CME variation margin was $0.8 million and $0.5 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 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. As of March 31, 2019 and December 31, 2018, the LCH variation margin was $26.3 million and $0.6 million, respectively. As of March 31, 2019, the Company pledged nil in financial instruments and $30.7 million in cash as collateral for interest rate swaps. As of December 31, 2018, the Company pledged $26.2 million in financial instruments and $2.6 million in cash as collateral for interest rate swaps. As of March 31, 2019 and December 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. 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, 2019, the Company carried one interest rate swap with a notional amount of $23.9 million with a negative fair value of $0.4 million that was categorized as a fair value hedge for a commercial and industrial loan. The Company received a USD Prime floating rate and paid a fixed rate of 2.90%. The swap matures in 2023. At December 31, 2018, the Company carried interest rate swaps with notional amounts totaling $41.3 million with a positive fair value of nil and a negative fair value of nil that were categorized as fair value hedges for commercial and industrial loans and commercial real estate loans. The following table shows the gains and losses recognized in income related to derivatives in fair value hedging relationships for the three months ended March 31, 2019 and 2018: Gains (losses) recognized in the consolidated statements of March 31, (dollars in thousands) income line item 2019 2018 Gains (losses) on fair value hedging relationships recognized in Interest Income (1) : Recognized on interest rate swap Loans and lease financing $ (342) $ — Recognized on hedged item Loans and lease financing 262 — Gains (losses) on fair value hedging relationships recognized in Noninterest Income (2) : Recognized on interest rate swap Other $ — $ 550 Recognized on hedged item Other — (763) (1) In connection with the adoption of ASU 2017-12, beginning January 1, 2019, gain (loss) amounts for the interest rate swap qualifying as fair value hedging and the hedged item are included in Loans and Lease Financing Interest Income. (2) Prior to January 1, 2019, gain (loss) amounts for the interest rate swaps qualifying as fair value hedging and the hedged items were included in Other Noninterest Income. As of March 31, 2019 and December 31, 2018, the following amounts were recorded in the unaudited interim consolidated balance sheets related to the cumulative basis adjustments for fair value hedges: Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset Carrying Amount of the Hedged Asset (dollars in thousands) March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018 Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included Loans and leases $ 24,448 $ 42,496 $ 544 $ 293 Cash Flow Hedges During 2018, the Company carried two interest rate swaps with notional amounts totaling $150.0 million, in order to reduce exposure to interest rate increases associated with short-term fixed-rate liabilities. The Company received 6-month LIBOR and paid fixed rates ranging from 2.98% to 3.03%. The swaps matured in December 2018. As of March 31, 2019 and December 31, 2018, the Company no longer held any cash flow hedges. The interest rate swaps designated as cash flow hedges resulted in net interest expense of $0.5 million during the three months ended March 31, 2018. The Company utilized interest rate swaps to reduce exposure to interest rates associated with short-term fixed-rate liabilities. The Company entered into interest rate swaps paying fixed rates and receiving LIBOR. The LIBOR index corresponded to the short-term fixed-rate nature of the liabilities being hedged. If interest rates rose, the increase in interest received on the swaps offset increases in interest costs associated with these liabilities. By hedging with interest rate swaps, the Company minimized the adverse impact on interest expense associated with increasing rates on short-term liabilities. The interest rate swaps were designated and qualified as cash flow hedges. The effective portion of the gain or loss on the interest rate swaps was 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 during the three months ended March 31, 2018. The following table summarizes the effect of cash flow hedging relationships for the three months ended March 31, 2018: March 31, (dollars in thousands) 2018 Pretax gains recognized in other comprehensive income on derivatives (effective portion) $ 738 There were no gains or losses reclassified from accumulated other comprehensive loss to earnings during the three months ended March 31, 2018. 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, 2019 and 2018. Net gains (losses) recognized in the consolidated statements March 31, (dollars in thousands) of income line item 2019 2018 Derivatives Not Designated As Hedging Instruments: Interest rate swaps Other noninterest income $ 16 $ 404 Funding swap Other noninterest income 5 (84) Foreign exchange contracts Other noninterest income — (63) As of March 31, 2019, the Company carried multiple interest rate swaps with notional amounts totaling $2.3 billion, all of which were related to the Company’s customer swap program, with a positive fair value of $29.0 million and a negative fair value of $1.9 million. The Company received 1-month and 3-month LIBOR and paid fixed rates ranging from 2.02% to 5.78%. The swaps mature between November 2019 and January 2039. As of December 31, 2018, the Company carried multiple interest rate swaps with notional amounts totaling $2.3 billion, including $2.2 billion related to the Company’s customer swap program, with a positive fair value of $12.3 million and a negative fair value of $12.0 million. The Company received 1-month and 3-month LIBOR and paid fixed rates ranging from 2.02% to 5.78%. These swaps resulted in net interest expense of nil and $0.2 million for the three months ended March 31, 2019 and 2018, 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 $0.8 million and $3.2 million for the three months ended March 31, 2019 and 2018, respectively. Interest rate swaps related to the program had asset fair values of $29.0 million and $12.3 million as of March 31, 2019 and December 31, 2018, respectively, and liability fair values of $1.9 million and $11.2 million as of March 31, 2019 and December 31, 2018, 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 rate to unrestricted Class A common shares. On June 28, 2018, Visa additionally funded its litigation escrow account, thereby reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on July 5, 2018, Visa announced a decrease in conversion rate from 1.6483 to 1.6298 effective June 28, 2018. In July 2018, the Company made a payment of approximately $0.7 million to the buyer as a result of the reduction in the Visa Class B conversion rate. 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. A derivative liability (“Visa derivative”) of $1.8 million and $2.6 million was included in the unaudited interim consolidated balance sheets at March 31, 2019 and December 31, 2018, respectively, to provide for the fair value of this liability. There were no sales of these shares prior to 2016. See “Note 17. 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 were recognized during both the three months ended March 31, 2019 and 2018 . 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 $1.6 million and $0.8 million at March 31, 2019 and December 31, 2018, respectively, for which we posted $1.5 million and $0.5 million, respectively, in collateral in the normal course of business. If the Company’s credit rating had been downgraded as of March 31, 2019 and December 31, 2018, we may have been required to settle the contracts in an amount equal to their fair value. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | 12. Commitments and Contingent Liabilities Contingencies On January 27, 2017, a putative class action lawsuit was filed by a Bank customer alleging that FHB improperly charged an overdraft fee in circumstances where an account had sufficient funds to cover the transaction at the time the transaction was authorized but not at the time the transaction was presented for payment, and that this practice constituted an unjust and deceptive trade practice and a breach of contract. The lawsuit further alleged 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 constituted a usurious interest charge and an unfair and deceptive trade practice. On October 2, 2018, the parties reached an agreement in principle to resolve this class action lawsuit. In connection with the anticipated settlement agreement, the Company recorded an expense of approximately $4.1 million during the three months ended September 30, 2018. During the three months ended March 31, 2019, the Court entered an order preliminarily approving the settlement agreement, pursuant to which the Company funded a $4.1 million settlement account. The final approval hearing has been set for August 6, 2019. 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 unaudited interim 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 $85.6 million and $92.3 million at March 31, 2019 and December 31, 2018, 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 $17.3 million as of both March 31, 2019 and December 31, 2018. 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, 2019 have maturities ranging from April 2019 to July 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, 2019 and December 31, 2018 were as follows: March 31, December 31, (dollars in thousands) 2019 2018 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 5,468,976 $ 5,549,591 Standby letters of credit 186,321 204,324 Commercial letters of credit 9,602 7,535 Guarantees The Company sells residential mortgage loans in the secondary market primarily to The Federal National Mortgage Association (“Fannie Mae”) and The Federal Home Loan Mortgage Corporation (“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 On April 1, 2016, a series of reorganization transactions (the “Reorganization Transactions”) were undertaken to facilitate FHI’s IPO. In connection with the Reorganization Transactions, FHI distributed its interest in BWHI, including Bank of the West (“BOW”) to BNPP so that BWHI was held directly by BNPP. 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 BWC, 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, 2019 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | 13. Revenue from Contracts with Customers 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 periods indicated: Three Months Ended March 31, 2019 Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Net interest income (1) $ 113,903 $ 27,980 $ 3,206 $ 145,089 Service charges on deposit accounts 7,541 3 516 8,060 Credit and debit card fees — 19,707 1,727 21,434 Other service charges and fees 5,333 369 542 6,244 Trust and investment services income 8,618 — — 8,618 Other 215 1,509 208 1,932 Not in scope of Topic 606 (1) 2,469 (3,507) 1,822 784 Total noninterest income 24,176 18,081 4,815 47,072 Total revenue $ 138,079 $ 46,061 $ 8,021 $ 192,161 (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. 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, 2019 and 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, 2019 and December 31, 2018, the Company had contract liabilities of $2.4 million and $2.6 million, respectively, which will be recognized over the remaining term of the respective contracts with the vendors. For the three months ended March 31, 2019, 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, 2019 and December 31, 2018, 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, 2019 and December 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, 2019 | |
Earnings per Share | |
Earnings per Share | 14. Earnings per Share For the three months ended March 31, 2019 and 2018, 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, 2019 and 2018, 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) 2019 2018 Numerator: Net income $ 69,924 $ 67,958 Denominator: Basic: weighted-average shares outstanding 134,879,336 139,600,712 Add: weighted-average equity-based awards 319,009 131,388 Diluted: weighted-average shares outstanding 135,198,345 139,732,100 Basic earnings per share $ 0.52 $ 0.49 Diluted earnings per share $ 0.52 $ 0.49 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Leases | 15. Leases The Company, as lessee, is obligated under a number of noncancelable operating leases primarily for branch premises and related real estate. Terms of such leases extend for periods up to 45 years, many of which provide for periodic adjustment of rent payments based on changes in various economic indicators. Renewal options are included in the Company’s lease liabilities and related right-of-use assets to the extent that the Company is reasonably certain to exercise such options. For all of the Company’s short-term leases (i.e., leases with an initial term of 12 months or less), the Company recognizes lease expense on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. The Company’s branch premises leases typically require that the Company is responsible to pay for non-lease variable components, primarily maintenance expense, as well as costs that are not a component of a lease agreement such as real property taxes, property insurance and sales taxes. Maintenance expense is paid to maintain common areas and covers costs including landscaping, cleaning and general maintenance. Such variable costs are typically re-evaluated by the landlord on an annual basis and are charged to the Company based on the portion of the total building premises that is occupied by the Company. The Company subleases certain premises and real estate to third parties. The sublease portfolio consists of operating leases for space connected with two of the Company’s branch properties. The components of the Company’s net lease expense for the three months ended March 31, 2019 were as follows: March 31, (dollars in thousands) 2019 Operating lease expense $ 2,316 Short-term lease expense 185 Variable lease expense 223 Finance lease expense: Amortization of right-of-use assets 1 Interest on lease liabilities — Total finance lease expense 1 Less: Sublease income (225) Net lease expense $ 2,500 Other information related to the Company’s lease liabilities as of and for the three months ended March 31, 2019 was as follows: March 31, (dollars in thousands) 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 1,757 Operating cash flows paid for finance leases 28 Financing cash flows paid for finance leases — Weighted Average Remaining Lease Term Operating leases 15.2 years Finance leases 3.2 years Weighted Average Discount Rate Operating leases 3.43 % Finance leases 6.78 % Operating lease right-of-use assets were $48.7 million and finance lease right-of-use assets were not material as of March 31, 2019. Operating lease right-of-use assets and finance lease right-of use assets were recorded as a component of other assets and premises and equipment, respectively, as of March 31, 2019. Operating lease liabilities were $48.9 million and finance lease liabilities were not material as of March 31, 2019. Operating lease liabilities and finance lease liabilities were recorded as a component of other liabilities and long-term borrowings, respectively, as of March 31, 2019. There were no right-of-use assets obtained in exchange for new lease obligations for the three months ended March 31, 2019. The most significant assumption related to the Company’s application of ASC Topic 842 was the discount rate assumption. As most of the Company’s lease agreements do not provide for an implicit interest rate, the Company used the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liability as of January 1, 2019. The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of March 31, 2019: Net Operating Lease (dollars in thousands) Payments Year ending December 31: 2019 (excluding the three months ended March 31, 2019) $ 7,040 2020 8,691 2021 7,984 2022 5,125 2023 2,632 Thereafter 34,638 Total future minimum lease payments $ 66,110 Less: Imputed interest (17,172) Total $ 48,938 The following table presents future minimum rental payments under leases with terms in excess of one year as of December 31, 2018 presented in accordance with ASC Topic 840, “Leases” : Operating Less Net Operating Lease Sublease Lease (dollars in thousands) Payments Income Payments Year ending December 31: 2019 $ 8,780 $ 903 $ 7,877 2020 8,668 903 7,765 2021 7,961 892 7,069 2022 5,101 — 5,101 2023 2,632 — 2,632 Thereafter 34,638 — 34,638 Total future minimum lease payments $ 67,780 $ 2,698 $ 65,082 The Company has several operating leases with related parties associated with its branch premises. The lease payments to related parties were $0.2 million for the three months ended March 31, 2019. The future minimum rental payments due to related parties are $0.2 million (remainder of 2019), $0.3 million (2020), $0.3 million (2021), $0.2 million (2022), $0.2 million (2023), and $7.5 million thereafter. The Company, as lessor, rents office space in its headquarters office building as well as office space located primarily in Hawaii to third party lessees. The cost and accumulated depreciation related to leased properties were $288.7 million and $135.4 million, respectively, as of March 31, 2019, and $289.2 million and $133.7 million, respectively, as of December 31, 2018. Terms of such leases, including renewal options, may be extended for up to ten years, many of which provide for periodic adjustment of rent payments based on changes in consumer or other price indices. The Company recognizes lease income on a straight-line basis over the lease term. Non-lease components, primarily consisting of costs incurred by the Company for maintenance and utilities, are recognized as income in the period in which the payments are due. The Company recognized operating lease income related to lease payments of $1.5 million for the three months ended March 31, 2019. In addition, the Company recognized $1.1 million of lease income related to variable lease payments for the three months ended March 31, 2019. Certain of the Company’s leases are with related parties for the use of space at the Company’s headquarters office building. The rental income paid by the related parties for the three months ended March 31, 2019 and the future minimum rental income from related parties as of March 31, 2019 was not material. The following table sets forth future minimum rental income under noncancelable operating leases with terms in excess of one year as of March 31, 2019: Minimum Rental (dollars in thousands) Income Year ending December 31: 2019 (excluding the three months ended March 31, 2019) $ 4,492 2020 5,747 2021 5,439 2022 3,719 2023 2,795 Thereafter 5,837 Total $ 28,029 |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2019 | |
Benefit Plans | |
Benefit Plans | 16. Benefit Plans The Company sponsors an unfunded supplemental executive retirement plan (“SERP”) for certain key executives. On March 11, 2019, the Company’s board of directors approved an amendment to the SERP to freeze the SERP. As a result of such amendment, effective July 1, 2019, there will be no new accruals of benefits, including service accruals. Existing benefits under the SERP, as of the effective date of the amendment described above, will otherwise continue in accordance with the terms of the SERP. The following table sets forth the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans for the three months ended March 31, 2019 and 2018: Income line item where recognized in Pension Benefits Other Benefits (dollars in thousands) the consolidated statements of income 2019 2018 2019 2018 Three Months Ended March 31, Service cost Salaries and employee benefits $ 17 $ 174 $ 159 $ 212 Interest cost Other noninterest expense 2,044 1,794 206 185 Expected return on plan assets Other noninterest expense (1,195) (1,240) — — Prior service credit Other noninterest expense — — (107) (107) Recognized net actuarial loss Other noninterest expense 1,564 1,611 (76) — Total net periodic benefit cost $ 2,430 $ 2,339 $ 182 $ 290 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value | |
Fair Value | 17. 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 unobservable inputs to 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, 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, deposit liabilities with no defined or contractual maturity, 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, 2019 and December 31, 2018, 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. 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. 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 rate to unrestricted Class A common shares. On July 5, 2018, Visa announced a decrease in conversion rate from 1.6483 to 1.6298 effective June 28, 2018. The Visa derivative of $1.8 million and $2.6 million was included in the unaudited interim consolidated balance sheets at March 31, 2019 and December 31, 2018, 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 rate, 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, 2019 and December 31, 2018 are summarized below: Fair Value Measurements as of March 31, 2019 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 Government agency debt securities $ — $ 24,765 $ — $ 24,765 Government-sponsored enterprises debt securities — 161,595 — 161,595 Government agency mortgage-backed securities (1) — 371,035 — 371,035 Government-sponsored enterprises mortgage-backed securities (1) — 127,896 — 127,896 Collateralized mortgage obligations: Government agency — 2,730,166 — 2,730,166 Government-sponsored enterprises — 1,070,203 — 1,070,203 Total available-for-sale securities — 4,485,660 — 4,485,660 Other assets (2) — 29,037 — 29,037 Liabilities Other liabilities (3) — (2,251) (1,839) (4,090) Total $ — $ 4,512,446 $ (1,839) $ 4,510,607 (1) Backed by residential real estate. (2) Other assets include derivative assets. (3) Other liabilities include derivative liabilities. Fair Value Measurements as of December 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 $ — $ 389,470 $ — $ 389,470 Government-sponsored enterprises debt securities — 241,594 — 241,594 Government agency mortgage-backed securities (1) — 411,536 — 411,536 Government-sponsored enterprises mortgage-backed securities (1) — 150,847 — 150,847 Collateralized mortgage obligations: Government agency — 2,682,449 — 2,682,449 Government-sponsored enterprises — 602,592 — 602,592 Debt securities issued by states and political subdivisions — 19,854 — 19,854 Total available-for-sale securities — 4,498,342 — 4,498,342 Other assets (2) — 12,336 — 12,336 Liabilities Other liabilities (3) — (12,085) (2,607) (14,692) Total $ — $ 4,498,593 $ (2,607) $ 4,495,986 (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, 2019, 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, 2019 and 2018 are summarized below. Visa Derivative (dollars in thousands) 2019 2018 Three Months Ended March 31, Balance as of January 1, $ (2,607) $ (5,439) Total net gains (losses) included in other noninterest income 5 (84) Settlements 763 678 Balance as of March 31, $ (1,839) $ (4,845) Total net gains (losses) included in net income attributable to the change in unrealized gains or losses related to liabilities still held as of March 31, $ 5 $ (84) 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 and deposit liabilities with no defined or contractual maturity. March 31, 2019 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 $ 617,867 $ 336,555 $ 281,312 $ — $ 617,867 Loans (1) 13,051,467 — — 13,031,566 13,031,566 Financial liabilities: Time deposits (2) $ 2,911,290 $ — $ 2,883,440 $ — $ 2,883,440 Long-term borrowings (3) 600,000 — 603,665 — 603,665 December 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 $ 1,003,637 $ 396,836 $ 606,801 $ — $ 1,003,637 Loans held for sale 432 — 432 — 432 Loans (1) 12,928,422 — — 12,664,170 12,664,170 Financial liabilities: Time deposits (2) $ 3,092,164 $ — $ 3,058,792 $ — $ 3,058,792 Long-term borrowings (3) 600,000 — 602,088 — 602,088 (1) Excludes financing leases of $146.0 million at March 31, 2019 and $147.8 million at December 31, 2018. (2) Excludes deposit liabilities with no defined or contractual maturity of $13.9 billion and $14.1 billion as of March 31, 2019 and December 31, 2018, respectively. (3) Excludes capital lease obligations of $28 thousand and $26 thousand at March 31, 2019 and December 31, 2018, respectively. Unfunded loan and lease commitments and letters of credit are not included in the tables above. As of March 31, 2019 and December 31, 2018, the Company had $5.7 billion and $5.8 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 $13.8 million and $14.2 million at March 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018: (dollars in thousands) Level 1 Level 2 Level 3 March 31, 2019 Impaired loans $ — $ — $ 357 December 31, 2018 Impaired loans $ — $ — $ 402 Total losses on impaired loans were $0.5 million for the three months ended March 31, 2018. No losses were recognized on impaired loans for the three months ended March 31, 2019. For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of March 31, 2019 and December 31, 2018, the significant unobservable inputs used in the fair value measurements were as follows: Quantitative Information about Level 3 Fair Value Measurements at March 31, 2019 Significant Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Impaired loans $ 357 Appraisal Value Appraisal Value n/m (1) Visa derivative $ (1,839) Discounted Cash Flow Expected Conversion Rate 1.6298 Expected Term 4 years Growth Rate 15% Quantitative Information about Level 3 Fair Value Measurements at December 31, 2018 Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Impaired loans $ 402 Appraisal Value Appraisal Value n/m (1) Visa derivative $ (2,607) Discounted Cash Flow Expected Conversion Rate 1.6298 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, 2019 | |
Reportable Operating Segments | |
Reportable Operating Segments | 18. 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 60 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, automobile loans and auto dealer financing, business 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, 2019 Net interest income $ 113,903 $ 27,980 $ 3,206 $ 145,089 Provision for loan and lease losses (2,572) (3,108) — (5,680) Net interest income after provision for loan and lease losses 111,331 24,872 3,206 139,409 Noninterest income 24,176 18,081 4,815 47,072 Noninterest expense (57,166) (19,485) (15,972) (92,623) Income (loss) before (provision) benefit for income taxes 78,341 23,468 (7,951) 93,858 (Provision) benefit for income taxes (19,927) (6,041) 2,034 (23,934) Net income (loss) $ 58,414 $ 17,427 $ (5,917) $ 69,924 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 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
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. FHB offers a comprehensive suite of banking services to consumer and commercial customers including loans, deposit products, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. The accompanying unaudited interim consolidated financial statements of First Hawaiian, Inc. and Subsidiary (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, 2018. 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. |
Transition to an Independent Public Company | Transition to an Independent Public Company On July 1, 2016, FHI became a direct wholly owned subsidiary of BancWest Corporation (“BWC”), a Delaware corporation and an indirect wholly owned subsidiary of BNP Paribas (“BNPP”). In connection with FHI’s initial public offering (“IPO”) in August 2016, BNPP announced its intent to sell its interest in FHI, including FHI’s wholly owned subsidiary, FHB, over time, subject to market conditions and other considerations. BNPP, through FHI’s IPO completed on August 9, 2016 and secondary offerings completed on February 17, 2017, May 10, 2018, August 1, 2018 and September 10, 2018, sold, in the aggregate (inclusive of sales pursuant to the underwriters’ exercise of overallotment options in connection with such secondary sales), 109,830,000 shares of FHI common stock to the public. Concurrently with two of the secondary offerings in 2018, FHI entered into share repurchase agreements with BWC, to repurchase, in the aggregate, 4,769,870 shares of FHI common stock. On February 1, 2019, BWC completed the sale of its remaining 24,859,750 shares of FHI common stock in a public offering. FHI did not receive any of the proceeds from the sales of shares of FHI common stock in that offering, in any of the secondary offerings described above or the IPO. As a result of the completion of the February 1, 2019 public offering, BNPP (through BWC, the selling stockholder) fully exited its ownership interest in FHI common stock. |
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. |
Accounting Standard Adopted in 2019 and Recent Accounting Pronouncements | Accounting Standards Adopted in 2019 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) . This guidance provides that lessees will be required to recognize the following for all operating 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. The Company adopted the provisions of ASU No. 2016-02 on January 1, 2019 and elected several practical expedients made available by the FASB. Specifically, the Company elected the transition practical expedient to not recast comparative periods upon the adoption of the new guidance. In addition, the Company elected the package of practical expedients which among other things, requires no reassessment of whether existing contracts are or contain leases as well as no reassessment of lease classification for existing leases and the practical expedient which permits the Company to not separate nonlease components from lease components in determining the consideration in the lease agreement when the Company is a lessee and a lessor. The Company identified the primary lease agreements in scope of this new guidance as those relating to branch premises. As a result, the Company recognized a lease liability of $50.3 million and a related right-of-use asset of $50.6 million on its consolidated balance sheet on January 1, 2019. See “Note 15. Leases” for required disclosures related to this new guidance. 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 . Prior to the adoption of ASU No. 2017-08, entities typically amortized 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. The Company adopted the provisions of ASU No. 2017-08 on January 1, 2019, and it did not have a material impact on the Company’s consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, 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. Historically, the Company has participated in limited activities in fair value and cash flow hedging relationships. As a result, the adoption of ASU No. 2017-12 on January 1, 2019, did not have a material impact on the Company’s consolidated financial statements. See “Note 11. Derivative Financial Instruments” for required disclosures related to this new guidance. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . This guidance aligns the accounting for implementation costs related to a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Common examples of hosting arrangements include software as a service, platform or infrastructure as a service and other similar types of hosting arrangements. While capitalized costs related to internal-use software is generally considered an intangible asset, costs incurred to implement a cloud computing arrangement that is a service contract would typically be characterized in the company’s financial statements in the same manner as other service costs (e.g., prepaid expense). The new guidance provides that an entity would be required to amortize capitalized implementation costs over the term of the hosting arrangement on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which the entity expects to benefit from access to the hosted software. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with earlier adoption permitted in any annual or interim period for which financial statements have not yet been issued or made available for issuance. The Company early adopted the provisions of ASU No. 2018-15 on January 1, 2019 due to the Company’s shift towards utilizing more hosting arrangements that are service contracts. The adoption of ASU No. 2018-15 did not have a material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815), Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes . This update expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on the SOFR. Due to concerns about the sustainability of the London Interbank Offered Rate (“LIBOR”), a committee convened by the Federal Reserve Board and the Federal Reserve Bank of New York initiated an effort to introduce an alternative reference rate in the U.S. The committee identified SOFR as the preferred alternative reference rate to LIBOR. The OIS rate based on SOFR was added as a U.S. benchmark interest rate to facilitate broader use in the marketplace and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies. The Company adopted the provisions of ASU No. 2018-16 on January 1, 2019 and it 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 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. This guidance requires entities to record a cumulative effect adjustment to the consolidated 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, finance and information technology, to evaluate the requirements of the new standard and the impact it will have on the Company’s current processes. Management has evaluated the Company’s existing credit loss forecasting models to determine their appropriateness for CECL, has performed a data gap analysis, and is developing analytical approaches to determine CECL model inputs. The Company has also engaged a software vendor and is in the final stages of implementing a CECL production platform. However, as the impact of adopting the new guidance is expected to be heavily influenced by an assessment of the composition, characteristics, and credit quality of the Company’s loan and investment securities portfolio as well as the economic conditions in effect at the adoption date, management is currently unable to reasonably estimate the impact of adopting the new standard. 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 August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement . This guidance is a part of the FASB’s disclosure framework project to improve disclosure effectiveness. This guidance eliminates certain disclosure requirements for fair value measurements: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, an entity’s policy for the timing of transfers between levels of the fair value hierarchy and an entity’s valuation processes for Level 3 fair value measurements. This guidance also adds new disclosure requirements for public entities: changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements of instruments held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements, including how the weighted average is calculated. Furthermore, this guidance modifies certain requirements which will involve disclosing: transfers into and out of Level 3 of the fair value hierarchy, purchases and issuances of Level 3 assets and liabilities, and information about the measurement uncertainty of Level 3 fair value measurements as of the reporting date. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company’s consolidated financial statements. |
Investment Securities (Tables)
Investment Securities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investment Securities | |
Schedule of amortized cost and fair value of securities | March 31, 2019 December 31, 2018 Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Cost Gains Losses Value U.S. Treasury securities $ — $ — $ — $ — $ 389,470 $ — $ — $ 389,470 Government agency debt securities 24,778 — (13) 24,765 — — — — Government-sponsored enterprises debt securities 164,718 — (3,123) 161,595 248,372 — (6,778) 241,594 Government agency mortgage-backed securities 377,960 — (6,925) 371,035 426,710 — (15,174) 411,536 Government-sponsored enterprises mortgage-backed securities 131,884 71 (4,059) 127,896 156,056 85 (5,294) 150,847 Collateralized mortgage obligations: Government agency 2,778,862 1,404 (50,100) 2,730,166 2,779,620 — (97,171) 2,682,449 Government-sponsored enterprises 1,076,399 4,607 (10,803) 1,070,203 620,337 — (17,745) 602,592 Debt securities issued by states and political subdivisions — — — — 19,854 — — 19,854 Total available-for-sale securities $ 4,554,601 $ 6,082 $ (75,023) $ 4,485,660 $ 4,640,419 $ 85 $ (142,162) $ 4,498,342 |
Schedule of amortized cost and fair value of debt securities by contractual maturity | March 31, 2019 Amortized Fair (dollars in thousands) Cost Value Due in one year or less $ — $ — Due after one year through five years 99,992 98,193 Due after five years through ten years 64,726 63,402 Due after ten years — — 164,718 161,595 Government agency debt securities 24,778 24,765 Government agency mortgage-backed securities 377,960 371,035 Government-sponsored enterprises mortgage-backed securities 131,884 127,896 Collateralized mortgage obligations: Government agency 2,778,862 2,730,166 Government-sponsored enterprises 1,076,399 1,070,203 Total mortgage-backed securities and collateralized mortgage obligations 4,389,883 4,324,065 Total available-for-sale securities $ 4,554,601 $ 4,485,660 |
Schedule of gross unrealized losses and fair values of securities in a continuous loss position | Time in Continuous Loss as of March 31, 2019 Less Than 12 Months 12 Months or More Total Unrealized Unrealized Unrealized (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value Government agency debt securities $ (13) $ 24,765 $ — $ — $ (13) $ 24,765 Government-sponsored enterprises debt securities — — (3,123) 161,595 (3,123) 161,595 Government agency mortgage-backed securities — — (6,925) 371,035 (6,925) 371,035 Government-sponsored enterprises mortgage-backed securities — — (4,059) 123,430 (4,059) 123,430 Collateralized mortgage obligations: Government agency (327) 99,455 (49,773) 2,417,727 (50,100) 2,517,182 Government-sponsored enterprises (450) 138,465 (10,353) 449,284 (10,803) 587,749 Total available-for-sale securities with unrealized losses $ (790) $ 262,685 $ (74,233) $ 3,523,071 $ (75,023) $ 3,785,756 Time in Continuous Loss as of December 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 Government-sponsored enterprises debt securities $ — $ — $ (6,778) $ 157,939 $ (6,778) $ 157,939 Government agency mortgage-backed securities — — (15,174) 373,891 (15,174) 373,891 Government-sponsored enterprises mortgage-backed securities (1) 172 (5,293) 125,869 (5,294) 126,041 Collateralized mortgage obligations: Government agency — — (97,171) 2,475,532 (97,171) 2,475,532 Government-sponsored enterprises — — (17,745) 486,175 (17,745) 486,175 Total available-for-sale securities with unrealized losses $ (1) $ 172 $ (142,161) $ 3,619,406 $ (142,162) $ 3,619,578 |
Loans and Leases (Tables)
Loans and Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Loans and Leases. | |
Schedule of components of loans and leases | March 31, December 31, (dollars in thousands) 2019 2018 Commercial and industrial $ 3,203,770 $ 3,208,760 Commercial real estate 3,147,304 2,990,783 Construction 595,491 626,757 Residential: Residential mortgage 3,543,964 3,527,101 Home equity line 907,829 912,517 Total residential 4,451,793 4,439,618 Consumer 1,653,109 1,662,504 Lease financing 145,987 147,769 Total loans and leases $ 13,197,454 $ 13,076,191 |
Schedule of components of remaining loan and lease commitments | March 31, December 31, (dollars in thousands) 2019 2018 Commercial and industrial $ 2,384,738 $ 2,484,857 Commercial real estate 132,701 114,186 Construction 529,679 526,938 Residential: Residential mortgage 479 121 Home equity line 894,162 913,636 Total residential 894,641 913,757 Consumer 1,527,217 1,509,853 Total loan and lease commitments $ 5,468,976 $ 5,549,591 |
Allowance for Loan and Lease _2
Allowance for Loan and Lease Losses (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Allowance for Loan and Lease Losses | |
Schedule of components of allowance for loan and lease losses | Three Months Ended March 31, 2019 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 $ 34,501 $ 19,725 $ 5,813 $ 432 $ 44,906 $ 35,813 $ 528 $ 141,718 Charge-offs — — — (24) — (8,598) — (8,622) Recoveries 37 31 — — 250 2,452 — 2,770 Increase (decrease) in Provision (2,745) 1,441 (432) 3 (245) 5,432 2,226 5,680 Balance at end of period $ 31,793 $ 21,197 $ 5,381 $ 411 $ 44,911 $ 35,099 $ 2,754 $ 141,546 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 |
Schedule of disaggregation of Allowance and recorded investment in loans by impairment methodology | March 31, 2019 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 $ 429 $ 26 $ — $ — $ 430 $ — $ — $ 885 Collectively evaluated for impairment 31,364 21,171 5,381 411 44,481 35,099 2,754 140,661 Balance at end of period $ 31,793 $ 21,197 $ 5,381 $ 411 $ 44,911 $ 35,099 $ 2,754 $ 141,546 Loans and leases: Individually evaluated for impairment $ 10,073 $ 3,907 $ — $ — $ 15,529 $ — $ — $ 29,509 Collectively evaluated for impairment 3,193,697 3,143,397 595,491 145,987 4,436,264 1,653,109 — 13,167,945 Balance at end of period $ 3,203,770 $ 3,147,304 $ 595,491 $ 145,987 $ 4,451,793 $ 1,653,109 $ — $ 13,197,454 December 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 $ 108 $ 32 $ — $ — $ 396 $ — $ — $ 536 Collectively evaluated for impairment 34,393 19,693 5,813 432 44,510 35,813 528 141,182 Balance at end of period $ 34,501 $ 19,725 $ 5,813 $ 432 $ 44,906 $ 35,813 $ 528 $ 141,718 Loans and leases: Individually evaluated for impairment $ 8,719 $ 5,743 $ — $ — $ 16,114 $ — $ — $ 30,576 Collectively evaluated for impairment 3,200,041 2,985,040 626,757 147,769 4,423,504 1,662,504 — 13,045,615 Balance at end of period $ 3,208,760 $ 2,990,783 $ 626,757 $ 147,769 $ 4,439,618 $ 1,662,504 $ — $ 13,076,191 |
Schedule of credit risk profiles by internally assigned grade for loans and leases | March 31, 2019 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,102,106 $ 3,000,806 $ 594,368 $ 144,874 $ 6,842,154 Special mention 60,275 101,393 185 947 162,800 Substandard 41,389 45,105 938 166 87,598 Total $ 3,203,770 $ 3,147,304 $ 595,491 $ 145,987 $ 7,092,552 December 31, 2018 Commercial Commercial and Real Lease (dollars in thousands) Industrial Estate Construction Financing Total Grade: Pass $ 3,069,546 $ 2,876,907 $ 625,607 $ 146,356 $ 6,718,416 Special mention 57,012 91,298 200 1,223 149,733 Substandard 82,010 22,578 950 190 105,728 Doubtful 192 — — — 192 Total $ 3,208,760 $ 2,990,783 $ 626,757 $ 147,769 $ 6,974,069 |
Schedule of credit risk profiles based on payment activity for loans and leases | March 31, 2019 (dollars in thousands) Residential Mortgage Home Equity Line Consumer Consumer - Auto Credit Cards Total Performing $ 3,538,122 $ 901,821 $ 234,539 $ 1,056,907 $ 325,656 $ 6,057,045 Non-performing and delinquent 5,842 6,008 5,121 26,036 4,850 47,857 Total $ 3,543,964 $ 907,829 $ 239,660 $ 1,082,943 $ 330,506 $ 6,104,902 December 31, 2018 (dollars in thousands) Residential Mortgage Home Equity Line Consumer Consumer - Auto Credit Cards Total Performing $ 3,519,172 $ 903,284 $ 234,458 $ 1,044,393 $ 339,162 $ 6,040,469 Non-performing and delinquent 7,929 9,233 5,448 33,739 5,304 61,653 Total $ 3,527,101 $ 912,517 $ 239,906 $ 1,078,132 $ 344,466 $ 6,102,122 |
Schedule of aging analyses of past due loans and leases | March 31, 2019 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 $ 1,415 $ 307 $ 350 $ 2,072 $ 3,201,508 $ 3,203,580 $ 190 $ 3,203,770 Commercial real estate 225 129 — 354 3,146,950 3,147,304 — 3,147,304 Construction — — 89 89 595,402 595,491 — 595,491 Lease financing — — — — 145,987 145,987 — 145,987 Residential mortgage 1,353 399 — 1,752 3,538,122 3,539,874 4,090 3,543,964 Home equity line 3,083 477 2,448 6,008 901,821 907,829 — 907,829 Consumer 25,640 6,829 3,538 36,007 1,617,102 1,653,109 — 1,653,109 Total $ 31,716 $ 8,141 $ 6,425 $ 46,282 $ 13,146,892 $ 13,193,174 $ 4,280 $ 13,197,454 December 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 $ 1,293 $ — $ 141 $ 1,434 $ 3,207,052 $ 3,208,486 $ 274 $ 3,208,760 Commercial real estate — — — — 2,989,125 2,989,125 1,658 2,990,783 Construction 91 — — 91 626,666 626,757 — 626,757 Lease financing 47 — — 47 147,722 147,769 — 147,769 Residential mortgage 2,274 1,012 32 3,318 3,519,172 3,522,490 4,611 3,527,101 Home equity line 5,616 775 2,842 9,233 903,284 912,517 — 912,517 Consumer 32,406 8,712 3,373 44,491 1,618,013 1,662,504 — 1,662,504 Total $ 41,727 $ 10,499 $ 6,388 $ 58,614 $ 13,011,034 $ 13,069,648 $ 6,543 $ 13,076,191 |
Schedule of total carrying amounts and total unpaid principal balances of impaired loans and leases | March 31, 2019 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 2,387 $ 2,421 $ — Commercial real estate 3,188 3,188 — Residential mortgage 8,220 8,534 — Total $ 13,795 $ 14,143 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 7,686 $ 7,686 $ 429 Commercial real estate 719 719 26 Residential mortgage 7,309 7,695 430 Total $ 15,714 $ 16,100 $ 885 Total impaired loans: Commercial and industrial $ 10,073 $ 10,107 $ 429 Commercial real estate 3,907 3,907 26 Residential mortgage 15,529 16,229 430 Total $ 29,509 $ 30,243 $ 885 December 31, 2018 Unpaid Recorded Principal Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: Commercial and industrial $ 4,449 $ 4,498 $ — Commercial real estate 5,016 5,016 — Residential mortgage 9,112 9,426 — Total $ 18,577 $ 18,940 $ — Impaired loans with a related allowance recorded: Commercial and industrial $ 4,270 $ 4,270 $ 108 Commercial real estate 727 727 32 Residential mortgage 7,002 7,387 396 Total $ 11,999 $ 12,384 $ 536 Total impaired loans: Commercial and industrial $ 8,719 $ 8,768 $ 108 Commercial real estate 5,743 5,743 32 Residential mortgage 16,114 16,813 396 Total $ 30,576 $ 31,324 $ 536 |
Schedule of average balances, and of interest income recognized from, impaired loans | Three Months Ended March 31, 2019 Average Interest Recorded Income (dollars in thousands) Investment Recognized Impaired loans with no related allowance recorded: Commercial and industrial $ 3,418 $ 29 Commercial real estate 4,102 171 Residential mortgage 8,666 100 Total $ 16,186 $ 300 Impaired loans with a related allowance recorded: Commercial and industrial $ 5,978 $ 108 Commercial real estate 723 10 Residential mortgage 7,156 96 Total $ 13,857 $ 214 Total impaired loans: Commercial and industrial $ 9,396 $ 137 Commercial real estate 4,825 181 Residential mortgage 15,822 196 Total $ 30,043 $ 514 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 mortgage 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 mortgage 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 mortgage 16,448 214 Total $ 45,452 $ 462 |
Schedule of information related to loans modified in a TDR | Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Number of Recorded Related Number of Recorded Related (dollars in thousands) Contracts Investment (1) Allowance Contracts Investment (1) Allowance Commercial and industrial 4 $ 916 $ 24 — $ — $ — Residential mortgage 1 352 14 — — — Total 5 $ 1,268 $ 38 — $ — $ — (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, 2019 2018 Number of Recorded Number of Recorded (dollars in thousands) Contracts Investment (1) Contracts Investment (1) Commercial and industrial (2) — $ — 2 $ 564 Total — $ — 2 $ 564 (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. |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Mortgage Servicing Rights | |
Schedule of estimated future amortization expense for mortgage servicing assets | Estimated (dollars in thousands) Amortization Under one year $ 2,236 One to two years 1,968 Two to three years 1,733 Three to four years 1,523 Four to five years 1,339 |
Schedule of gross carrying values, accumulated amortization, and net carrying values of mortgage servicing assets | March 31, December 31, (dollars in thousands) 2019 2018 Gross carrying amount $ 63,350 $ 63,342 Less: accumulated amortization 47,951 47,187 Net carrying value $ 15,399 $ 16,155 |
Schedule of changes in amortized mortgage servicing assets | Three Months Ended March 31, (dollars in thousands) 2019 2018 Balance at beginning of period $ 16,155 $ 13,196 Originations 8 7 Purchases — 6,444 Amortization (764) (988) Balance at end of period $ 15,399 $ 18,659 Fair value of amortized MSRs at beginning of period $ 27,662 $ 21,697 Fair value of amortized MSRs at end of period $ 26,383 $ 29,048 |
Schedule of quantitative assumptions used in determining lower of cost or fair value of MSRs | March 31, 2019 December 31, 2018 Weighted Weighted Range Average Range Average Conditional prepayment rate 8.00 % - 20.28 % 8.47 % 7.86 % - 19.26 % 8.31 % Life in years (of the MSR) 3.18 - 7.56 7.08 3.43 - 7.68 7.19 Weighted-average coupon rate 3.97 % - 6.67 % 4.02 % 3.97 % - 6.70 % 4.02 % Discount rate 10.00 % - 10.01 % 10.00 % 10.00 % - 10.02 % 10.00 % |
Transfers of Financial Assets (
Transfers of Financial Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Transfers of Financial Assets | |
Schedule of carrying amounts of assets pledged as collateral | (dollars in thousands) March 31, 2019 December 31, 2018 Public deposits $ 1,759,692 $ 1,749,726 Federal Home Loan Bank 2,589,411 2,497,030 Federal Reserve Bank 937,390 957,017 ACH transactions 152,579 150,903 Interest rate swaps 30,665 28,843 Total $ 5,469,737 $ 5,383,519 |
Deposits (Tables)
Deposits (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Deposits | |
Schedule of deposits by category | (dollars in thousands) March 31, 2019 December 31, 2018 U.S.: Interest-bearing $ 10,158,299 $ 10,393,449 Noninterest-bearing 5,184,816 5,368,729 Foreign: Interest-bearing 793,465 748,678 Noninterest-bearing 658,664 639,212 Total deposits $ 16,795,244 $ 17,150,068 |
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, 2019: Under $250,000 (dollars in thousands) $250,000 or More Total Three months or less $ 306,984 $ 658,915 $ 965,899 Over three through six months 149,913 486,994 636,907 Over six through twelve months 383,212 401,934 785,146 One to two years 118,264 86,489 204,753 Two to three years 112,532 48,892 161,424 Three to four years 54,408 21,947 76,355 Four to five years 67,061 13,691 80,752 Thereafter 54 — 54 Total $ 1,192,428 $ 1,718,862 $ 2,911,290 |
Long-Term Borrowings (Tables)
Long-Term Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Long-Term Borrowings | |
Schedule of long-term borrowings | (dollars in thousands) March 31, 2019 December 31, 2018 Finance lease (1) $ 28 $ 26 FHLB fixed-rate advances (1) 600,000 600,000 Total long-term borrowings $ 600,028 $ 600,026 |
Schedule of future contractual principal payments on long-term borrowings | As of March 31, 2019, future contractual principal payments and maturities on long-term borrowings were as follows: Principal (dollars in thousands) Payments 2019 $ 9 2020 400,009 2021 10 2022 — 2023 100,000 Thereafter 100,000 Total $ 600,028 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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, 2018 $ (180,915) $ 48,720 $ (132,195) Three months ended March 31, 2019 Investment securities: Unrealized net gains arising during the period 70,523 (18,991) 51,532 Reclassification of net losses to net income: Investment securities losses, net 2,613 (704) 1,909 Net change in investment securities 73,136 (19,695) 53,441 Other comprehensive income 73,136 (19,695) 53,441 Accumulated other comprehensive loss at March 31, 2019 $ (107,779) $ 29,025 $ (78,754) 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 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 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) |
Summary of changes in accumulated other comprehensive loss, net of tax | Total Pensions Accumulated and Other Other Investment Cash Flow Comprehensive (dollars in thousands) Benefits Securities Derivative Hedges Loss Three Months Ended March 31, 2019 Balance at beginning of period $ (28,379) $ (103,816) $ — $ (132,195) Other comprehensive income — 53,441 — 53,441 Balance at end of period $ (28,379) $ (50,375) $ — $ (78,754) 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) |
Regulatory Capital Requiremen_2
Regulatory Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Regulatory Capital Requirements | |
Schedule of regulatory capital ratios | First Hawaiian Minimum Well- First Hawaiian, Inc. Bank Capital Capitalized (dollars in thousands) Amount Ratio Amount Ratio Ratio (1) Ratio (1) March 31, 2019: Common equity tier 1 capital to risk-weighted assets $ 1,696,464 12.05 % $ 1,695,844 12.05 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,696,464 12.05 % 1,695,844 12.05 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,838,610 13.06 % 1,837,990 13.06 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,696,464 8.71 % 1,695,844 8.70 % 4.00 % 5.00 % December 31, 2018: Common equity tier 1 capital to risk-weighted assets $ 1,661,542 11.97 % $ 1,658,172 11.94 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets 1,661,542 11.97 % 1,658,172 11.94 % 6.00 % 8.00 % Total capital to risk-weighted assets 1,803,860 12.99 % 1,800,490 12.97 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) 1,661,542 8.72 % 1,658,172 8.70 % 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”). |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Financial Instruments | |
Summary of notional amounts and fair values of derivatives held | March 31, 2019 December 31, 2018 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 $ 23,892 $ — $ (352) $ 41,317 $ 31 $ (44) Derivatives not designated as hedging instruments: Interest rate swaps 2,334,559 29,034 (1,897) 2,269,247 12,305 (12,007) Funding swap 64,395 — (1,839) 62,039 — (2,607) Foreign exchange contracts 2,473 3 (2) 1,191 — (34) (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. |
Schedule of net gains and losses recognized in income related to derivatives in fair value hedging relationships | Gains (losses) recognized in the consolidated statements of March 31, (dollars in thousands) income line item 2019 2018 Gains (losses) on fair value hedging relationships recognized in Interest Income (1) : Recognized on interest rate swap Loans and lease financing $ (342) $ — Recognized on hedged item Loans and lease financing 262 — Gains (losses) on fair value hedging relationships recognized in Noninterest Income (2) : Recognized on interest rate swap Other $ — $ 550 Recognized on hedged item Other — (763) (1) In connection with the adoption of ASU 2017-12, beginning January 1, 2019, gain (loss) amounts for the interest rate swap qualifying as fair value hedging and the hedged item are included in Loans and Lease Financing Interest Income. (2) Prior to January 1, 2019, gain (loss) amounts for the interest rate swaps qualifying as fair value hedging and the hedged items were included in Other Noninterest Income. |
Schedule of amounts related to cumulative basis adjustments for fair value hedges | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset Carrying Amount of the Hedged Asset (dollars in thousands) March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018 Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included Loans and leases $ 24,448 $ 42,496 $ 544 $ 293 |
Summary of effect of cash flow hedging relationships | March 31, (dollars in thousands) 2018 Pretax gains recognized in other comprehensive income on derivatives (effective portion) $ 738 |
Summary of impact on pretax earnings of derivatives not designated as hedges | Net gains (losses) recognized in the consolidated statements March 31, (dollars in thousands) of income line item 2019 2018 Derivatives Not Designated As Hedging Instruments: Interest rate swaps Other noninterest income $ 16 $ 404 Funding swap Other noninterest income 5 (84) Foreign exchange contracts Other noninterest income — (63) |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingent Liabilities | |
Schedule of financial instruments with off-balance sheet risk | March 31, December 31, (dollars in thousands) 2019 2018 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 5,468,976 $ 5,549,591 Standby letters of credit 186,321 204,324 Commercial letters of credit 9,602 7,535 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contracts with Customers | |
Summary of revenues disaggregated by type of service and business segments | Three Months Ended March 31, 2019 Treasury Retail Commercial and (dollars in thousands) Banking Banking Other Total Net interest income (1) $ 113,903 $ 27,980 $ 3,206 $ 145,089 Service charges on deposit accounts 7,541 3 516 8,060 Credit and debit card fees — 19,707 1,727 21,434 Other service charges and fees 5,333 369 542 6,244 Trust and investment services income 8,618 — — 8,618 Other 215 1,509 208 1,932 Not in scope of Topic 606 (1) 2,469 (3,507) 1,822 784 Total noninterest income 24,176 18,081 4,815 47,072 Total revenue $ 138,079 $ 46,061 $ 8,021 $ 192,161 (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. 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. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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) 2019 2018 Numerator: Net income $ 69,924 $ 67,958 Denominator: Basic: weighted-average shares outstanding 134,879,336 139,600,712 Add: weighted-average equity-based awards 319,009 131,388 Diluted: weighted-average shares outstanding 135,198,345 139,732,100 Basic earnings per share $ 0.52 $ 0.49 Diluted earnings per share $ 0.52 $ 0.49 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Summary of net lease expense | The components of the Company’s net lease expense for the three months ended March 31, 2019 were as follows: March 31, (dollars in thousands) 2019 Operating lease expense $ 2,316 Short-term lease expense 185 Variable lease expense 223 Finance lease expense: Amortization of right-of-use assets 1 Interest on lease liabilities — Total finance lease expense 1 Less: Sublease income (225) Net lease expense $ 2,500 |
Summary of other information related to the Company’s lease liabilities | March 31, (dollars in thousands) 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 1,757 Operating cash flows paid for finance leases 28 Financing cash flows paid for finance leases — Weighted Average Remaining Lease Term Operating leases 15.2 years Finance leases 3.2 years Weighted Average Discount Rate Operating leases 3.43 % Finance leases 6.78 % |
Summary of future minimum rental payments under noncancellable leases | The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of March 31, 2019: Net Operating Lease (dollars in thousands) Payments Year ending December 31: 2019 (excluding the three months ended March 31, 2019) $ 7,040 2020 8,691 2021 7,984 2022 5,125 2023 2,632 Thereafter 34,638 Total future minimum lease payments $ 66,110 Less: Imputed interest (17,172) Total $ 48,938 The following table presents future minimum rental payments under leases with terms in excess of one year as of December 31, 2018 presented in accordance with ASC Topic 840, “Leases” : Operating Less Net Operating Lease Sublease Lease (dollars in thousands) Payments Income Payments Year ending December 31: 2019 $ 8,780 $ 903 $ 7,877 2020 8,668 903 7,765 2021 7,961 892 7,069 2022 5,101 — 5,101 2023 2,632 — 2,632 Thereafter 34,638 — 34,638 Total future minimum lease payments $ 67,780 $ 2,698 $ 65,082 |
Summary of future minimum rental income under noncancellable operating leases | Minimum Rental (dollars in thousands) Income Year ending December 31: 2019 (excluding the three months ended March 31, 2019) $ 4,492 2020 5,747 2021 5,439 2022 3,719 2023 2,795 Thereafter 5,837 Total $ 28,029 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Benefit Plans | |
Schedule of components of net periodic benefit cost | Income line item where recognized in Pension Benefits Other Benefits (dollars in thousands) the consolidated statements of income 2019 2018 2019 2018 Three Months Ended March 31, Service cost Salaries and employee benefits $ 17 $ 174 $ 159 $ 212 Interest cost Other noninterest expense 2,044 1,794 206 185 Expected return on plan assets Other noninterest expense (1,195) (1,240) — — Prior service credit Other noninterest expense — — (107) (107) Recognized net actuarial loss Other noninterest expense 1,564 1,611 (76) — Total net periodic benefit cost $ 2,430 $ 2,339 $ 182 $ 290 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Fair Value Measurements as of March 31, 2019 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 Government agency debt securities $ — $ 24,765 $ — $ 24,765 Government-sponsored enterprises debt securities — 161,595 — 161,595 Government agency mortgage-backed securities (1) — 371,035 — 371,035 Government-sponsored enterprises mortgage-backed securities (1) — 127,896 — 127,896 Collateralized mortgage obligations: Government agency — 2,730,166 — 2,730,166 Government-sponsored enterprises — 1,070,203 — 1,070,203 Total available-for-sale securities — 4,485,660 — 4,485,660 Other assets (2) — 29,037 — 29,037 Liabilities Other liabilities (3) — (2,251) (1,839) (4,090) Total $ — $ 4,512,446 $ (1,839) $ 4,510,607 (1) Backed by residential real estate. (2) Other assets include derivative assets. (3) Other liabilities include derivative liabilities. Fair Value Measurements as of December 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 $ — $ 389,470 $ — $ 389,470 Government-sponsored enterprises debt securities — 241,594 — 241,594 Government agency mortgage-backed securities (1) — 411,536 — 411,536 Government-sponsored enterprises mortgage-backed securities (1) — 150,847 — 150,847 Collateralized mortgage obligations: Government agency — 2,682,449 — 2,682,449 Government-sponsored enterprises — 602,592 — 602,592 Debt securities issued by states and political subdivisions — 19,854 — 19,854 Total available-for-sale securities — 4,498,342 — 4,498,342 Other assets (2) — 12,336 — 12,336 Liabilities Other liabilities (3) — (12,085) (2,607) (14,692) Total $ — $ 4,498,593 $ (2,607) $ 4,495,986 (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) 2019 2018 Three Months Ended March 31, Balance as of January 1, $ (2,607) $ (5,439) Total net gains (losses) included in other noninterest income 5 (84) Settlements 763 678 Balance as of March 31, $ (1,839) $ (4,845) Total net gains (losses) included in net income attributable to the change in unrealized gains or losses related to liabilities still held as of March 31, $ 5 $ (84) |
Summary of estimated fair value of financial instruments not required to be carried at fair value on a recurring basis | March 31, 2019 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 $ 617,867 $ 336,555 $ 281,312 $ — $ 617,867 Loans (1) 13,051,467 — — 13,031,566 13,031,566 Financial liabilities: Time deposits (2) $ 2,911,290 $ — $ 2,883,440 $ — $ 2,883,440 Long-term borrowings (3) 600,000 — 603,665 — 603,665 December 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 $ 1,003,637 $ 396,836 $ 606,801 $ — $ 1,003,637 Loans held for sale 432 — 432 — 432 Loans (1) 12,928,422 — — 12,664,170 12,664,170 Financial liabilities: Time deposits (2) $ 3,092,164 $ — $ 3,058,792 $ — $ 3,058,792 Long-term borrowings (3) 600,000 — 602,088 — 602,088 (1) Excludes financing leases of $146.0 million at March 31, 2019 and $147.8 million at December 31, 2018. (2) Excludes deposit liabilities with no defined or contractual maturity of $13.9 billion and $14.1 billion as of March 31, 2019 and December 31, 2018, respectively. (3) Excludes capital lease obligations of $28 thousand and $26 thousand at March 31, 2019 and December 31, 2018, respectively. |
Schedule of assets with fair value adjustments on a nonrecurring basis | (dollars in thousands) Level 1 Level 2 Level 3 March 31, 2019 Impaired loans $ — $ — $ 357 December 31, 2018 Impaired loans $ — $ — $ 402 |
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, 2019 Significant Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Impaired loans $ 357 Appraisal Value Appraisal Value n/m (1) Visa derivative $ (1,839) Discounted Cash Flow Expected Conversion Rate 1.6298 Expected Term 4 years Growth Rate 15% Quantitative Information about Level 3 Fair Value Measurements at December 31, 2018 Range (dollars in thousands) Fair value Valuation Technique Unobservable Input (Weighted Average) Impaired loans $ 402 Appraisal Value Appraisal Value n/m (1) Visa derivative $ (2,607) Discounted Cash Flow Expected Conversion Rate 1.6298 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, 2019 | |
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, 2019 Net interest income $ 113,903 $ 27,980 $ 3,206 $ 145,089 Provision for loan and lease losses (2,572) (3,108) — (5,680) Net interest income after provision for loan and lease losses 111,331 24,872 3,206 139,409 Noninterest income 24,176 18,081 4,815 47,072 Noninterest expense (57,166) (19,485) (15,972) (92,623) Income (loss) before (provision) benefit for income taxes 78,341 23,468 (7,951) 93,858 (Provision) benefit for income taxes (19,927) (6,041) 2,034 (23,934) Net income (loss) $ 58,414 $ 17,427 $ (5,917) $ 69,924 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 |
Organization and Basis of Pre_3
Organization and Basis of Presentation - Subsidiary Ownership (Details) | Mar. 31, 2019 |
First Hawaiian Bank (FHB) | |
Capitalization | |
Outstanding common stock owned (as a percent) | 100.00% |
Organization and Basis of Pre_4
Organization and Basis of Presentation - Transition to an Independent Public Company (Details) - shares | Feb. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2018 |
BNP Paribas (BNPP) | |||
Reorganization Transactions | |||
Number of shares sold | 109,830,000 | ||
BNP Paribas (BNPP) | First Hawaiian, Inc. (FHI) | |||
Reorganization Transactions | |||
Number of shares sold | 24,859,750 | ||
Outstanding common stock owned (as a percent) | 0.00% | ||
BancWest Corporation (BWC) | |||
Reorganization Transactions | |||
Number of shares repurchased | 4,769,870 |
Organization and Basis of Pre_5
Organization and Basis of Presentation - Accounting Standards Adopted (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Jan. 01, 2019 | |
Accounting Standards Adopted in 2019 | ||
Recognized lease liability on consolidated balance sheet | $ 48.9 | |
Right-of-use asset on consolidated balance sheet | $ 48.7 | |
Practical expedient, ASU No. 2016-02 | true | |
ASU 2016-02 | ||
Accounting Standards Adopted in 2019 | ||
Recognized lease liability on consolidated balance sheet | $ 50.3 | |
Right-of-use asset on consolidated balance sheet | $ 50.6 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value of Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Available for sale debt securities | ||
Amortized Cost | $ 4,554,601 | $ 4,640,419 |
Unrealized Gains | 6,082 | 85 |
Unrealized Losses | (75,023) | (142,162) |
Fair value | 4,485,660 | 4,498,342 |
U.S. Treasury securities | ||
Available for sale debt securities | ||
Amortized Cost | 389,470 | |
Fair value | 389,470 | |
Government agency debt securities | ||
Available for sale debt securities | ||
Amortized Cost | 24,778 | |
Unrealized Losses | (13) | |
Fair value | 24,765 | |
Government-sponsored enterprises debt securities | ||
Available for sale debt securities | ||
Amortized Cost | 164,718 | 248,372 |
Unrealized Losses | (3,123) | (6,778) |
Fair value | 161,595 | 241,594 |
Government agency mortgage-backed securities | ||
Available for sale debt securities | ||
Amortized Cost | 377,960 | 426,710 |
Unrealized Losses | (6,925) | (15,174) |
Fair value | 371,035 | 411,536 |
Government-sponsored enterprises mortgage-backed securities | ||
Available for sale debt securities | ||
Amortized Cost | 131,884 | 156,056 |
Unrealized Gains | 71 | 85 |
Unrealized Losses | (4,059) | (5,294) |
Fair value | 127,896 | 150,847 |
Collateralized mortgage obligations: Government agency | ||
Available for sale debt securities | ||
Amortized Cost | 2,778,862 | 2,779,620 |
Unrealized Gains | 1,404 | |
Unrealized Losses | (50,100) | (97,171) |
Fair value | 2,730,166 | 2,682,449 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Available for sale debt securities | ||
Amortized Cost | 1,076,399 | 620,337 |
Unrealized Gains | 4,607 | |
Unrealized Losses | (10,803) | (17,745) |
Fair value | $ 1,070,203 | 602,592 |
States and political subdivisions | ||
Available for sale debt securities | ||
Amortized Cost | 19,854 | |
Fair value | $ 19,854 |
Investment Securities - Proceed
Investment Securities - Proceeds from Calls and Sales, Realized Gains and Losses and Interest Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
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 | 863,100 | 0 |
Debt Securities, Available-for-sale, Realized Gain (Loss) [Abstract] | ||
Gross realized gains on sales of investment securities | 0 | 0 |
Gross realized losses on sales of investment securities | 2,600 | 0 |
Income tax benefit related to net realized loss on sale of investment securities | 700 | 0 |
Interest income from taxable and nontaxable investment securities | ||
Taxable interest income | 24,500 | 28,900 |
Non-taxable interest income | $ 0 | $ 100 |
Investment Securities - Contrac
Investment Securities - Contractual Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due after one year through five years | $ 99,992 | |
Due after five years through ten years | 64,726 | |
Total contractual maturities | 164,718 | |
Mortgage- and asset-backed securities | 4,389,883 | |
Amortized Cost | 4,554,601 | $ 4,640,419 |
Fair Value | ||
Due after one year through five years | 98,193 | |
Due after five years through ten years | 63,402 | |
Total contractual maturities | 161,595 | |
Mortgage- and asset-backed securities | 4,324,065 | |
Fair value | 4,485,660 | 4,498,342 |
Government agency debt securities | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 24,778 | |
Amortized Cost | 24,778 | |
Fair Value | ||
Mortgage- and asset-backed securities | 24,765 | |
Fair value | 24,765 | |
Government agency mortgage-backed securities | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 377,960 | |
Amortized Cost | 377,960 | 426,710 |
Fair Value | ||
Mortgage- and asset-backed securities | 371,035 | |
Fair value | 371,035 | 411,536 |
Government-sponsored enterprises mortgage-backed securities | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 131,884 | |
Amortized Cost | 131,884 | 156,056 |
Fair Value | ||
Mortgage- and asset-backed securities | 127,896 | |
Fair value | 127,896 | 150,847 |
Collateralized mortgage obligations: Government agency | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 2,778,862 | |
Amortized Cost | 2,778,862 | 2,779,620 |
Fair Value | ||
Mortgage- and asset-backed securities | 2,730,166 | |
Fair value | 2,730,166 | 2,682,449 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Amortized Cost | ||
Mortgage- and asset-backed securities | 1,076,399 | |
Amortized Cost | 1,076,399 | 620,337 |
Fair Value | ||
Mortgage- and asset-backed securities | 1,070,203 | |
Fair value | $ 1,070,203 | $ 602,592 |
Investment Securities - Pledged
Investment Securities - Pledged Securities and Concentration (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Pledged securities | ||
Total pledged securities | $ 2,000,000 | $ 2,000,000 |
Securities pledged to secure public deposits | 1,759,692 | 1,749,726 |
Securities pledged to secure other financial transactions | 209,500 | 232,700 |
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 | Mar. 31, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Securities in the available-for-sale portfolio in a continuous loss position | ||
Number of individual securities in a continuous loss position | security | 160 | 154 |
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | $ (790) | $ (1) |
12 Months or More Unrealized Losses | (74,233) | (142,161) |
Total Unrealized Losses | (75,023) | (142,162) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 262,685 | 172 |
12 Months or More Fair Value | 3,523,071 | 3,619,406 |
Total Fair Value | 3,785,756 | 3,619,578 |
Government agency debt securities | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (13) | |
Total Unrealized Losses | (13) | |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 24,765 | |
Total Fair Value | 24,765 | |
Government-sponsored enterprises debt securities | ||
Time in Continuous Loss, Unrealized Losses | ||
12 Months or More Unrealized Losses | (3,123) | (6,778) |
Total Unrealized Losses | (3,123) | (6,778) |
Time in Continuous Loss, Fair Value | ||
12 Months or More Fair Value | 161,595 | 157,939 |
Total Fair Value | 161,595 | 157,939 |
Government agency mortgage-backed securities | ||
Time in Continuous Loss, Unrealized Losses | ||
12 Months or More Unrealized Losses | (6,925) | (15,174) |
Total Unrealized Losses | (6,925) | (15,174) |
Time in Continuous Loss, Fair Value | ||
12 Months or More Fair Value | 371,035 | 373,891 |
Total Fair Value | 371,035 | 373,891 |
Government-sponsored enterprises mortgage-backed securities | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (1) | |
12 Months or More Unrealized Losses | (4,059) | (5,293) |
Total Unrealized Losses | (4,059) | (5,294) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 172 | |
12 Months or More Fair Value | 123,430 | 125,869 |
Total Fair Value | 123,430 | 126,041 |
Collateralized mortgage obligations: Government agency | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (327) | |
12 Months or More Unrealized Losses | (49,773) | (97,171) |
Total Unrealized Losses | (50,100) | (97,171) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 99,455 | |
12 Months or More Fair Value | 2,417,727 | 2,475,532 |
Total Fair Value | 2,517,182 | 2,475,532 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Time in Continuous Loss, Unrealized Losses | ||
Less Than 12 Months Unrealized Losses | (450) | |
12 Months or More Unrealized Losses | (10,353) | (17,745) |
Total Unrealized Losses | (10,803) | (17,745) |
Time in Continuous Loss, Fair Value | ||
Less Than 12 Months Fair Value | 138,465 | |
12 Months or More Fair Value | 449,284 | 486,175 |
Total Fair Value | $ 587,749 | $ 486,175 |
Investment Securities - Other-T
Investment Securities - Other-Than-Temporary Impairment (Details) $ in Millions | 1 Months Ended | 12 Months Ended |
Jan. 31, 2019USD ($)security | Dec. 31, 2018USD ($)security | |
Investment Securities | ||
Total OTTI write-downs included in earnings | $ 24.1 | |
Number of securities intended to sell or sold | security | 48 | 48 |
Amortized cost of securities intended to sell | $ 898.2 | |
Additional loss from sale of securities | $ 2.6 |
Investment Securities - Visa Cl
Investment Securities - Visa Class B Restricted Shares (Details) $ in Thousands | 12 Months Ended | 96 Months Ended | ||||||
Dec. 31, 2016USD ($)shares | Dec. 31, 2008USD ($)shares | Dec. 31, 2015shares | Mar. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Jul. 31, 2018USD ($) | Jun. 28, 2018 | Dec. 31, 2017 | |
Visa | Class B restricted shares | ||||||||
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 | shares | 274,000 | 0 | ||||||
Shares held | shares | 120,000 | 120,000 | ||||||
Cost basis | $ 0 | $ 0 | ||||||
Visa | Class B restricted shares | ||||||||
Visa Class B Restricted Shares | ||||||||
Stock received in initial public offering (in shares) | shares | 394,000 | |||||||
Funding Swap (Visa Derivative) | Class B restricted shares | ||||||||
Visa Class B Restricted Shares | ||||||||
Conversion rate | 1.6298 | 1.6483 | ||||||
Funding Swap (Visa Derivative) | Visa | ||||||||
Visa Class B Restricted Shares | ||||||||
Estimated liability that was subsequently paid to the buyer | $ 700 |
Loans and Leases - Components (
Loans and Leases - Components (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Loans and leases | ||
Loans and leases | $ 13,197,454 | $ 13,076,191 |
Outstanding loan balances, net deferred loan costs | 37,300 | 36,300 |
Residential real estate loans pledged to collateralize the borrowing capacity at the FHLB | 2,600,000 | 2,500,000 |
Consumer and commercial and industrial loans pledged to collateralize the borrowing capacity at the FRB | 937,400 | 957,000 |
Real estate | ||
Loans and leases | ||
Loans and leases | 4,451,793 | 4,439,618 |
Commercial and Industrial | ||
Loans and leases | ||
Loans and leases | 3,203,770 | 3,208,760 |
Commercial Real Estate | ||
Loans and leases | ||
Loans and leases | 3,147,304 | 2,990,783 |
Commercial Real Estate | Real estate | ||
Loans and leases | ||
Loans and leases | 3,147,304 | 2,990,783 |
Construction | ||
Loans and leases | ||
Loans and leases | 595,491 | 626,757 |
Construction | Real estate | ||
Loans and leases | ||
Loans and leases | 595,491 | 626,757 |
Residential | ||
Loans and leases | ||
Loans and leases | 4,451,793 | 4,439,618 |
Real estate loans in the process of foreclosure | 4,900 | 4,600 |
Residential | Real estate | ||
Loans and leases | ||
Loans and leases | 3,543,964 | 3,527,101 |
Home Equity Line | ||
Loans and leases | ||
Loans and leases | 907,829 | 912,517 |
Home Equity Line | Real estate | ||
Loans and leases | ||
Loans and leases | 907,829 | 912,517 |
Consumer | ||
Loans and leases | ||
Loans and leases | 1,653,109 | 1,662,504 |
Lease Financing | ||
Loans and leases | ||
Loans and leases | $ 145,987 | $ 147,769 |
Loans and Leases - Commitments
Loans and Leases - Commitments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Loans and leases | ||
Loan and lease commitments | $ 5,468,976 | $ 5,549,591 |
Real estate | ||
Loans and leases | ||
Loan and lease commitments | 894,641 | 913,757 |
Commercial and Industrial | ||
Loans and leases | ||
Loan and lease commitments | 2,384,738 | 2,484,857 |
Commercial Real Estate | Real estate | ||
Loans and leases | ||
Loan and lease commitments | 132,701 | 114,186 |
Construction | Real estate | ||
Loans and leases | ||
Loan and lease commitments | 529,679 | 526,938 |
Residential | Real estate | ||
Loans and leases | ||
Loan and lease commitments | 479 | 121 |
Home Equity Line | Real estate | ||
Loans and leases | ||
Loan and lease commitments | 894,162 | 913,636 |
Consumer | ||
Loans and leases | ||
Loan and lease commitments | $ 1,527,217 | $ 1,509,853 |
Allowance for Loan and Lease _3
Allowance for Loan and Lease Losses - Activity (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)segmentclass | Mar. 31, 2018USD ($) | |
Allowance for loan and lease losses | ||
Number of primary portfolio segments | segment | 3 | |
Allowance for loan and lease losses: | ||
Balance at beginning of period | $ 141,718 | $ 137,253 |
Charge-offs | (8,622) | (7,100) |
Recoveries | 2,770 | 2,471 |
Increase (decrease) in Provision | 5,680 | 5,950 |
Balance at end of period | $ 141,546 | 138,574 |
Commercial Lending | ||
Allowance for loan and lease losses | ||
Number of distinct portfolios | class | 4 | |
Commercial and Industrial | ||
Allowance for loan and lease losses: | ||
Balance at beginning of period | $ 34,501 | 34,006 |
Charge-offs | (475) | |
Recoveries | 37 | 64 |
Increase (decrease) in Provision | (2,745) | 770 |
Balance at end of period | 31,793 | 34,365 |
Commercial Real Estate | ||
Allowance for loan and lease losses: | ||
Balance at beginning of period | 19,725 | 18,044 |
Recoveries | 31 | 122 |
Increase (decrease) in Provision | 1,441 | 1,088 |
Balance at end of period | 21,197 | 19,254 |
Construction | ||
Allowance for loan and lease losses: | ||
Balance at beginning of period | 5,813 | 6,817 |
Increase (decrease) in Provision | (432) | (841) |
Balance at end of period | 5,381 | 5,976 |
Lease Financing | ||
Allowance for loan and lease losses: | ||
Balance at beginning of period | 432 | 611 |
Charge-offs | (24) | |
Increase (decrease) in Provision | 3 | (26) |
Balance at end of period | 411 | 585 |
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 | |
Allowance for loan and lease losses: | ||
Balance at beginning of period | 44,906 | 42,852 |
Recoveries | 250 | 182 |
Increase (decrease) in Provision | (245) | 186 |
Balance at end of period | 44,911 | 43,220 |
Consumer | ||
Allowance for loan and lease losses: | ||
Balance at beginning of period | 35,813 | 31,249 |
Charge-offs | (8,598) | (6,625) |
Recoveries | 2,452 | 2,103 |
Increase (decrease) in Provision | 5,432 | 4,271 |
Balance at end of period | 35,099 | 30,998 |
Unallocated | ||
Allowance for loan and lease losses: | ||
Balance at beginning of period | 528 | 3,674 |
Increase (decrease) in Provision | 2,226 | 502 |
Balance at end of period | $ 2,754 | $ 4,176 |
Allowance for Loan and Lease _4
Allowance for Loan and Lease Losses - Disaggregation by Impairment Methodology (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | $ 885 | $ 536 | ||
Collectively evaluated for impairment | 140,661 | 141,182 | ||
Total allowance for loan and lease losses | 141,546 | 141,718 | $ 138,574 | $ 137,253 |
Loans and leases: | ||||
Individually evaluated for impairment | 29,509 | 30,576 | ||
Collectively evaluated for impairment | 13,167,945 | 13,045,615 | ||
Total loans and leases | 13,197,454 | 13,076,191 | ||
Commercial Lending | ||||
Loans and leases: | ||||
Total loans and leases | 7,092,552 | 6,974,069 | ||
Commercial and Industrial | ||||
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | 429 | 108 | ||
Collectively evaluated for impairment | 31,364 | 34,393 | ||
Total allowance for loan and lease losses | 31,793 | 34,501 | 34,365 | 34,006 |
Loans and leases: | ||||
Individually evaluated for impairment | 10,073 | 8,719 | ||
Collectively evaluated for impairment | 3,193,697 | 3,200,041 | ||
Total loans and leases | 3,203,770 | 3,208,760 | ||
Commercial Real Estate | ||||
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | 26 | 32 | ||
Collectively evaluated for impairment | 21,171 | 19,693 | ||
Total allowance for loan and lease losses | 21,197 | 19,725 | 19,254 | 18,044 |
Loans and leases: | ||||
Individually evaluated for impairment | 3,907 | 5,743 | ||
Collectively evaluated for impairment | 3,143,397 | 2,985,040 | ||
Total loans and leases | 3,147,304 | 2,990,783 | ||
Construction | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 5,381 | 5,813 | ||
Total allowance for loan and lease losses | 5,381 | 5,813 | 5,976 | 6,817 |
Loans and leases: | ||||
Collectively evaluated for impairment | 595,491 | 626,757 | ||
Total loans and leases | 595,491 | 626,757 | ||
Lease Financing | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 411 | 432 | ||
Total allowance for loan and lease losses | 411 | 432 | 585 | 611 |
Loans and leases: | ||||
Collectively evaluated for impairment | 145,987 | 147,769 | ||
Total loans and leases | 145,987 | 147,769 | ||
Residential | ||||
Allowance for loan and lease losses: | ||||
Individually evaluated for impairment | 430 | 396 | ||
Collectively evaluated for impairment | 44,481 | 44,510 | ||
Total allowance for loan and lease losses | 44,911 | 44,906 | 43,220 | 42,852 |
Loans and leases: | ||||
Individually evaluated for impairment | 15,529 | 16,114 | ||
Collectively evaluated for impairment | 4,436,264 | 4,423,504 | ||
Total loans and leases | 4,451,793 | 4,439,618 | ||
Consumer | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 35,099 | 35,813 | ||
Total allowance for loan and lease losses | 35,099 | 35,813 | 30,998 | 31,249 |
Loans and leases: | ||||
Collectively evaluated for impairment | 1,653,109 | 1,662,504 | ||
Total loans and leases | 1,653,109 | 1,662,504 | ||
Unallocated | ||||
Allowance for loan and lease losses: | ||||
Collectively evaluated for impairment | 2,754 | 528 | ||
Total allowance for loan and lease losses | $ 2,754 | $ 528 | $ 4,176 | $ 3,674 |
Allowance for Loan and Lease _5
Allowance for Loan and Lease Losses - Credit Risk Profiles (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)factor | Dec. 31, 2018USD ($) | |
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 | $ 13,197,454 | $ 13,076,191 |
Loss | ||
Credit quality | ||
Loans and leases | 0 | 0 |
Commercial Lending | ||
Credit quality | ||
Loans and leases | 7,092,552 | 6,974,069 |
Commercial Lending | Pass | ||
Credit quality | ||
Loans and leases | 6,842,154 | 6,718,416 |
Commercial Lending | Special mention | ||
Credit quality | ||
Loans and leases | 162,800 | 149,733 |
Commercial Lending | Substandard | ||
Credit quality | ||
Loans and leases | 87,598 | 105,728 |
Commercial Lending | Doubtful | ||
Credit quality | ||
Loans and leases | 192 | |
Commercial and Industrial | ||
Credit quality | ||
Loans and leases | 3,203,770 | 3,208,760 |
Commercial and Industrial | Pass | ||
Credit quality | ||
Loans and leases | 3,102,106 | 3,069,546 |
Commercial and Industrial | Special mention | ||
Credit quality | ||
Loans and leases | 60,275 | 57,012 |
Commercial and Industrial | Substandard | ||
Credit quality | ||
Loans and leases | 41,389 | 82,010 |
Commercial and Industrial | Doubtful | ||
Credit quality | ||
Loans and leases | 192 | |
Commercial Real Estate | ||
Credit quality | ||
Loans and leases | 3,147,304 | 2,990,783 |
Commercial Real Estate | Pass | ||
Credit quality | ||
Loans and leases | 3,000,806 | 2,876,907 |
Commercial Real Estate | Special mention | ||
Credit quality | ||
Loans and leases | 101,393 | 91,298 |
Commercial Real Estate | Substandard | ||
Credit quality | ||
Loans and leases | 45,105 | 22,578 |
Construction | ||
Credit quality | ||
Loans and leases | 595,491 | 626,757 |
Construction | Pass | ||
Credit quality | ||
Loans and leases | 594,368 | 625,607 |
Construction | Special mention | ||
Credit quality | ||
Loans and leases | 185 | 200 |
Construction | Substandard | ||
Credit quality | ||
Loans and leases | 938 | 950 |
Lease Financing | ||
Credit quality | ||
Loans and leases | 145,987 | 147,769 |
Lease Financing | Pass | ||
Credit quality | ||
Loans and leases | 144,874 | 146,356 |
Lease Financing | Special mention | ||
Credit quality | ||
Loans and leases | 947 | 1,223 |
Lease Financing | Substandard | ||
Credit quality | ||
Loans and leases | 166 | 190 |
Residential and consumer | ||
Credit quality | ||
Loans and leases | 6,104,902 | 6,102,122 |
Residential and consumer | Performing | ||
Credit quality | ||
Loans and leases | 6,057,045 | 6,040,469 |
Residential and consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 47,857 | 61,653 |
Residential Mortgage | ||
Credit quality | ||
Loans and leases | 3,543,964 | 3,527,101 |
Residential Mortgage | Performing | ||
Credit quality | ||
Loans and leases | 3,538,122 | 3,519,172 |
Residential Mortgage | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 5,842 | 7,929 |
Home Equity Line | ||
Credit quality | ||
Loans and leases | 907,829 | 912,517 |
Home Equity Line | Performing | ||
Credit quality | ||
Loans and leases | 901,821 | 903,284 |
Home Equity Line | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 6,008 | 9,233 |
Consumer | ||
Credit quality | ||
Loans and leases | 1,653,109 | 1,662,504 |
Consumer loans | Consumer | ||
Credit quality | ||
Loans and leases | 239,660 | 239,906 |
Consumer loans | Consumer | Performing | ||
Credit quality | ||
Loans and leases | 234,539 | 234,458 |
Consumer loans | Consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 5,121 | 5,448 |
Consumer - Auto | Consumer | ||
Credit quality | ||
Loans and leases | 1,082,943 | 1,078,132 |
Consumer - Auto | Consumer | Performing | ||
Credit quality | ||
Loans and leases | 1,056,907 | 1,044,393 |
Consumer - Auto | Consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | 26,036 | 33,739 |
Credit Cards | Consumer | ||
Credit quality | ||
Loans and leases | 330,506 | 344,466 |
Credit Cards | Consumer | Performing | ||
Credit quality | ||
Loans and leases | 325,656 | 339,162 |
Credit Cards | Consumer | Non-performing and delinquent | ||
Credit quality | ||
Loans and leases | $ 4,850 | $ 5,304 |
Allowance for Loan and Lease _6
Allowance for Loan and Lease Losses - Aging of Analysis of Past Due Loans and Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | $ 46,282 | $ 58,614 |
Current | 13,146,892 | 13,011,034 |
Total Accruing Loans and Leases | 13,193,174 | 13,069,648 |
Total Non Accruing Loans and Leases | 4,280 | 6,543 |
Total loans and leases | 13,197,454 | 13,076,191 |
30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 31,716 | 41,727 |
60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 8,141 | 10,499 |
Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 6,425 | 6,388 |
Commercial and Industrial | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 2,072 | 1,434 |
Current | 3,201,508 | 3,207,052 |
Total Accruing Loans and Leases | 3,203,580 | 3,208,486 |
Total Non Accruing Loans and Leases | 190 | 274 |
Total loans and leases | 3,203,770 | 3,208,760 |
Commercial and Industrial | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 1,415 | 1,293 |
Commercial and Industrial | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 307 | |
Commercial and Industrial | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 350 | 141 |
Commercial Real Estate | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 354 | |
Current | 3,146,950 | 2,989,125 |
Total Accruing Loans and Leases | 3,147,304 | 2,989,125 |
Total Non Accruing Loans and Leases | 1,658 | |
Total loans and leases | 3,147,304 | 2,990,783 |
Commercial Real Estate | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 225 | |
Commercial Real Estate | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 129 | |
Construction | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 89 | 91 |
Current | 595,402 | 626,666 |
Total Accruing Loans and Leases | 595,491 | 626,757 |
Total loans and leases | 595,491 | 626,757 |
Construction | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 91 | |
Construction | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 89 | |
Lease Financing | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 47 | |
Current | 145,987 | 147,722 |
Total Accruing Loans and Leases | 145,987 | 147,769 |
Total loans and leases | 145,987 | 147,769 |
Lease Financing | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 47 | |
Residential Mortgage | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 1,752 | 3,318 |
Current | 3,538,122 | 3,519,172 |
Total Accruing Loans and Leases | 3,539,874 | 3,522,490 |
Total Non Accruing Loans and Leases | 4,090 | 4,611 |
Total loans and leases | 3,543,964 | 3,527,101 |
Residential Mortgage | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 1,353 | 2,274 |
Residential Mortgage | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 399 | 1,012 |
Residential Mortgage | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 32 | |
Home Equity Line | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 6,008 | 9,233 |
Current | 901,821 | 903,284 |
Total Accruing Loans and Leases | 907,829 | 912,517 |
Total loans and leases | 907,829 | 912,517 |
Home Equity Line | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 3,083 | 5,616 |
Home Equity Line | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 477 | 775 |
Home Equity Line | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 2,448 | 2,842 |
Consumer | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 36,007 | 44,491 |
Current | 1,617,102 | 1,618,013 |
Total Accruing Loans and Leases | 1,653,109 | 1,662,504 |
Total loans and leases | 1,653,109 | 1,662,504 |
Consumer | 30 - 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 25,640 | 32,406 |
Consumer | 60 - 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | 6,829 | 8,712 |
Consumer | Greater Than or Equal to 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due | ||
Total Past Due | $ 3,538 | $ 3,373 |
Allowance for Loan and Lease _7
Allowance for Loan and Lease Losses - Impaired Loans and Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Recorded Investment | |||
Impaired loans with no related allowance recorded | $ 13,795 | $ 18,577 | |
Impaired loans with a related allowance recorded | 15,714 | 11,999 | |
Total impaired loans | 29,509 | 30,576 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 14,143 | 18,940 | |
Impaired loans with a related allowance recorded | 16,100 | 12,384 | |
Total impaired loans | 30,243 | 31,324 | |
Related Allowance, Impaired loans | 885 | 536 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 16,186 | $ 36,735 | |
Impaired loans with a related allowance recorded | 13,857 | 8,717 | |
Total impaired loans | 30,043 | 45,452 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 300 | 366 | |
Impaired loans with a related allowance recorded | 214 | 96 | |
Total impaired loans | 514 | 462 | |
Commercial and Industrial | |||
Recorded Investment | |||
Impaired loans with no related allowance recorded | 2,387 | 4,449 | |
Impaired loans with a related allowance recorded | 7,686 | 4,270 | |
Total impaired loans | 10,073 | 8,719 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 2,421 | 4,498 | |
Impaired loans with a related allowance recorded | 7,686 | 4,270 | |
Total impaired loans | 10,107 | 8,768 | |
Related Allowance, Impaired loans | 429 | 108 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 3,418 | 17,469 | |
Impaired loans with a related allowance recorded | 5,978 | 145 | |
Total impaired loans | 9,396 | 17,614 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 29 | 181 | |
Impaired loans with a related allowance recorded | 108 | 2 | |
Total impaired loans | 137 | 183 | |
Commercial Real Estate | |||
Recorded Investment | |||
Impaired loans with no related allowance recorded | 3,188 | 5,016 | |
Impaired loans with a related allowance recorded | 719 | 727 | |
Total impaired loans | 3,907 | 5,743 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 3,188 | 5,016 | |
Impaired loans with a related allowance recorded | 719 | 727 | |
Total impaired loans | 3,907 | 5,743 | |
Related Allowance, Impaired loans | 26 | 32 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 4,102 | 9,502 | |
Impaired loans with a related allowance recorded | 723 | 887 | |
Total impaired loans | 4,825 | 10,389 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 171 | 55 | |
Impaired loans with a related allowance recorded | 10 | 10 | |
Total impaired loans | 181 | 65 | |
Construction | |||
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 1,001 | ||
Interest Income Recognized | |||
Total impaired loans | 1,001 | ||
Residential | |||
Recorded Investment | |||
Impaired loans with no related allowance recorded | 8,220 | 9,112 | |
Impaired loans with a related allowance recorded | 7,309 | 7,002 | |
Total impaired loans | 15,529 | 16,114 | |
Unpaid Principal Balance | |||
Impaired loans with no related allowance recorded | 8,534 | 9,426 | |
Impaired loans with a related allowance recorded | 7,695 | 7,387 | |
Total impaired loans | 16,229 | 16,813 | |
Related Allowance, Impaired loans | 430 | $ 396 | |
Average Recorded Investment | |||
Impaired loans with no related allowance recorded | 8,666 | 8,763 | |
Impaired loans with a related allowance recorded | 7,156 | 7,685 | |
Total impaired loans | 15,822 | 16,448 | |
Interest Income Recognized | |||
Impaired loans with no related allowance recorded | 100 | 130 | |
Impaired loans with a related allowance recorded | 96 | 84 | |
Total impaired loans | $ 196 | $ 214 |
Allowance for Loan and Lease _8
Allowance for Loan and Lease Losses - Troubled Debt Restructuring Modifications (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019USD ($)propertycontract | Mar. 31, 2018USD ($)contract | Dec. 31, 2018USD ($)propertycontract | |
Troubled debt restructuring modifications | |||
Number of Contracts | contract | 5 | ||
Recorded Investment | $ 1,268 | ||
Related Allowance | 38 | ||
Aggregate commitments to extend credit, standby letters of credit and commercial letters of credit | 5,700,000 | $ 5,800,000 | |
Commitments related to borrowers who had loan terms modified in a TDR | $ 1,100 | $ 1,800 | |
Loans modified in TDRs that experienced a payment default | |||
Period past due for payment default | 30 days | ||
Number of contracts | contract | 2 | ||
Recorded Investment | $ 564 | ||
Commercial and Industrial | |||
Troubled debt restructuring modifications | |||
Number of Contracts | contract | 4 | ||
Recorded Investment | $ 916 | ||
Related Allowance | $ 24 | ||
Loans modified in TDRs that experienced a payment default | |||
Number of contracts | contract | 2 | ||
Recorded Investment | $ 564 | ||
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 | $ 352 | ||
Related Allowance | $ 14 | ||
Loans modified in TDRs that experienced a payment default | |||
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 | 1 | |
Real estate property held from a foreclosed TDR | $ 100 | $ 800 | |
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 | ||
Home Equity Line | Real estate property held from foreclosed TDR | |||
Loans modified in TDRs that experienced a payment default | |||
Number of real estate properties | property | 1 | ||
Commitments to extend credit | |||
Troubled debt restructuring modifications | |||
Aggregate commitments to extend credit, standby letters of credit and commercial letters of credit | $ 5,468,976 | $ 5,549,591 | |
Standby letters of credit | |||
Troubled debt restructuring modifications | |||
Aggregate commitments to extend credit, standby letters of credit and commercial letters of credit | 186,321 | 204,324 | |
Commercial Letters of credit | |||
Troubled debt restructuring modifications | |||
Aggregate commitments to extend credit, standby letters of credit and commercial letters of credit | $ 9,602 | $ 7,535 |
Mortgage Servicing Rights - Loa
Mortgage Servicing Rights - Loans, Fees, Amortization and Carrying Value (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Other Intangible Assets | |||
Unpaid principal amount of consumer loans serviced for others | $ 2,600,000 | $ 2,700,000 | |
Contractually specified fees, late charges, and ancillary fees | 1,600 | $ 1,700 | |
Amortization of mortgage servicing rights | 764 | 988 | |
MSRs | |||
Other Intangible Assets | |||
Amortization of mortgage servicing rights | 800 | $ 1,000 | |
Estimated future amortization expenses | |||
Under one year | 2,236 | ||
One to two years | 1,968 | ||
Two to three years | 1,733 | ||
Three to four years | 1,523 | ||
Four to five years | 1,339 | ||
Details of mortgage servicing rights | |||
Gross carrying amount | 63,350 | 63,342 | |
Less: accumulated amortization | 47,951 | 47,187 | |
Net carrying value | $ 15,399 | $ 16,155 |
Mortgage Servicing Rights - Cha
Mortgage Servicing Rights - Changes in Amortized MSRs (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in amortized mortgage servicing rights | ||||
Balance at beginning of period | $ 16,155 | $ 13,196 | ||
Originations | 8 | 7 | ||
Purchases | 6,444 | |||
Amortization | (764) | (988) | ||
Balance at end of period | 15,399 | 18,659 | ||
Fair value of amortized MSRs at end of period | 26,383 | 29,048 | $ 27,662 | $ 21,697 |
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, 2019 | Dec. 31, 2018 | |
Minimum | ||
Quantitative assumptions used in determining lower of cost or fair value of MSRs | ||
Conditional prepayment rate (as a percent) | 8.00% | 7.86% |
Life (of the MSR) | 3 years 2 months 5 days | 3 years 5 months 5 days |
Weighted-average coupon rate (as a percent) | 3.97% | 3.97% |
Discount rate (as a percent) | 10.00% | 10.00% |
Maximum | ||
Quantitative assumptions used in determining lower of cost or fair value of MSRs | ||
Conditional prepayment rate (as a percent) | 20.28% | 19.26% |
Life (of the MSR) | 7 years 6 months 22 days | 7 years 8 months 5 days |
Weighted-average coupon rate (as a percent) | 6.67% | 6.70% |
Discount rate (as a percent) | 10.01% | 10.02% |
Weighted Average | ||
Quantitative assumptions used in determining lower of cost or fair value of MSRs | ||
Conditional prepayment rate (as a percent) | 8.47% | 8.31% |
Life (of the MSR) | 7 years 29 days | 7 years 2 months 9 days |
Weighted-average coupon rate (as a percent) | 4.02% | 4.02% |
Discount rate (as a percent) | 10.00% | 10.00% |
Transfers of Financial Assets -
Transfers of Financial Assets - Carrying Amounts of Assets Pledged as Collateral, Borrowings and Other Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Carrying amounts of the assets pledged as collateral | ||
Public deposits | $ 1,759,692 | $ 1,749,726 |
Federal Home Loan Bank | 2,589,411 | 2,497,030 |
Federal Reserve Bank | 937,390 | 957,017 |
ACH transactions | 152,579 | 150,903 |
Interest rate swaps | 30,665 | 28,843 |
Total | 5,469,737 | 5,383,519 |
Securities for reverse repurchase agreements | 0 | 0 |
Extinguishment of debt | ||
In-substance debt defeasance | $ 0 | $ 0 |
Transfers of Financial Assets_2
Transfers of Financial Assets - Repurchase Agreements (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Transfers of Financial Assets | ||
Repurchase agreements | $ 0 | $ 0 |
Deposits - Interest-bearing or
Deposits - Interest-bearing or Noninterest-bearing (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
U.S.: | ||
Interest-bearing | $ 10,158,299 | $ 10,393,449 |
Noninterest-bearing | 5,184,816 | 5,368,729 |
Foreign: | ||
Interest-bearing | 793,465 | 748,678 |
Noninterest-bearing | 658,664 | 639,212 |
Total deposits | $ 16,795,244 | $ 17,150,068 |
Deposits - Maturity Distributio
Deposits - Maturity Distribution of Time Certificates of Deposits (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Maturity distribution of time certificates of deposit | |
Three months or less | $ 965,899 |
Over three through six months | 636,907 |
Over six through twelve months | 785,146 |
One to two years | 204,753 |
Two to three years | 161,424 |
Three to four years | 76,355 |
Four to five years | 80,752 |
Thereafter | 54 |
Total | 2,911,290 |
Under $250,000 | |
Maturity distribution of time certificates of deposit | |
Three months or less | 306,984 |
Over three through six months | 149,913 |
Over six through twelve months | 383,212 |
One to two years | 118,264 |
Two to three years | 112,532 |
Three to four years | 54,408 |
Four to five years | 67,061 |
Thereafter | 54 |
Total | 1,192,428 |
$250,000 or More | |
Maturity distribution of time certificates of deposit | |
Three months or less | 658,915 |
Over three through six months | 486,994 |
Over six through twelve months | 401,934 |
One to two years | 86,489 |
Two to three years | 48,892 |
Three to four years | 21,947 |
Four to five years | 13,691 |
Total | $ 1,718,862 |
Deposits - Time Certificate Den
Deposits - Time Certificate Denominations and Overdrawn Accounts (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Deposits | ||
Time certificates of deposit in denominations of $250,000 or more, in the aggregate | $ 1,700 | $ 1,900 |
Overdrawn deposit accounts classified as loans | $ 2.7 | $ 2.4 |
Long-Term Borrowings - Componen
Long-Term Borrowings - Components (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Long-term borrowings | ||
Long-term borrowings | $ 600,028 | $ 600,026 |
Finance lease | ||
Long-term borrowings | ||
Long-term borrowings | $ 28 | $ 26 |
Interest rate (as a percent) | 6.78% | 6.78% |
FHLB short-term advance | ||
Long-term borrowings | ||
Long-term borrowings | $ 600,000 | $ 600,000 |
Remaining borrowing capacity | $ 1,400,000 | $ 1,300,000 |
Interest rate (as a percent) | 2.80% | 2.80% |
Long-Term Borrowings - Future C
Long-Term Borrowings - Future Contractual Principal Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Future contractual principal payments on long term borrowings | ||
2019 | $ 9 | |
2020 | 400,009 | |
2021 | 10 | |
2023 | 100,000 | |
Thereafter | 100,000 | |
Total | $ 600,028 | $ 600,026 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Changes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Pre-tax Amount | ||
Balance | $ (180,915) | $ (159,423) |
Other comprehensive income (loss) | 73,136 | (65,962) |
Balance | (107,779) | (225,385) |
Income Tax Benefit (Expense) | ||
Balance | 48,720 | 63,040 |
Other comprehensive income (loss) | (19,695) | 17,729 |
Balance | 29,025 | 60,701 |
Net of tax | ||
Balance, beginning | 2,524,839 | 2,532,551 |
Net of Tax | 69,924 | 67,958 |
Other comprehensive income (loss) | 53,441 | (48,233) |
Balance, ending | 2,613,202 | 2,520,862 |
Early Adoption | ASU 2018-02 | ||
Income Tax Benefit (Expense) | ||
Early adoption of ASU No. 2018-02 | (20,068) | |
Net of tax | ||
Other comprehensive income (loss) | (20,068) | |
Accumulated other comprehensive Income (loss) | ||
Net of tax | ||
Balance, beginning | (132,195) | (96,383) |
Other comprehensive income (loss) | 53,441 | (48,233) |
Balance, ending | (78,754) | (164,684) |
Accumulated other comprehensive Income (loss) | Early Adoption | ASU 2018-02 | ||
Net of tax | ||
Other comprehensive income (loss) | (20,068) | |
Pension and other benefits: | ||
Net of tax | ||
Balance, beginning | (28,379) | (25,946) |
Balance, ending | (28,379) | (31,339) |
Pension and other benefits: | Early Adoption | ASU 2018-02 | ||
Net of tax | ||
Other comprehensive income (loss) | (5,393) | |
Investment securities: | ||
Pre-tax Amount | ||
Unrealized net (losses) gains arising during the period | 70,523 | (66,700) |
Reclassification of net losses (gains) to net income | 2,613 | |
Other comprehensive income (loss) | 73,136 | (66,700) |
Income Tax Benefit (Expense) | ||
Unrealized net gains (losses) arising during the period | (18,991) | 17,923 |
Reclassification of net losses (gains) to net income | (704) | |
Other comprehensive income (loss) | (19,695) | 17,923 |
Net of tax | ||
Balance, beginning | (103,816) | (74,117) |
Unrealized net gains (losses) arising during the period | 51,532 | (48,777) |
Reclassification of net losses (gains) to net income | 1,909 | |
Other comprehensive income (loss) | 53,441 | (48,777) |
Balance, ending | $ (50,375) | (138,334) |
Investment securities: | Early Adoption | ASU 2018-02 | ||
Net of tax | ||
Other comprehensive income (loss) | (15,440) | |
Cash flow derivative hedges: | ||
Pre-tax Amount | ||
Unrealized net (losses) gains arising during the period | 738 | |
Other comprehensive income (loss) | 738 | |
Income Tax Benefit (Expense) | ||
Unrealized net gains (losses) arising during the period | (194) | |
Other comprehensive income (loss) | (194) | |
Net of tax | ||
Balance, beginning | 3,680 | |
Unrealized net gains (losses) arising during the period | 544 | |
Other comprehensive income (loss) | 544 | |
Balance, ending | 4,989 | |
Cash flow derivative hedges: | Early Adoption | ASU 2018-02 | ||
Net of tax | ||
Other comprehensive income (loss) | $ 765 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Changes, Net of Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net of tax | ||
Balance, beginning | $ 2,524,839 | $ 2,532,551 |
Net income | 69,924 | 67,958 |
Other comprehensive income (loss) | 53,441 | (48,233) |
Balance, ending | 2,613,202 | 2,520,862 |
ASU 2018-02 | Early Adoption | ||
Net of tax | ||
Other comprehensive income (loss) | (20,068) | |
Accumulated other comprehensive Income (loss) | ||
Net of tax | ||
Balance, beginning | (132,195) | (96,383) |
Other comprehensive income (loss) | 53,441 | (48,233) |
Balance, ending | (78,754) | (164,684) |
Accumulated other comprehensive Income (loss) | ASU 2018-02 | Early Adoption | ||
Net of tax | ||
Other comprehensive income (loss) | (20,068) | |
Pension and other benefits: | ||
Net of tax | ||
Balance, beginning | (28,379) | (25,946) |
Balance, ending | (28,379) | (31,339) |
Pension and other benefits: | ASU 2018-02 | Early Adoption | ||
Net of tax | ||
Other comprehensive income (loss) | (5,393) | |
Investment securities: | ||
Net of tax | ||
Balance, beginning | (103,816) | (74,117) |
Other comprehensive income (loss) | 53,441 | (48,777) |
Balance, ending | $ (50,375) | (138,334) |
Investment securities: | ASU 2018-02 | Early Adoption | ||
Net of tax | ||
Other comprehensive income (loss) | (15,440) | |
Cash flow derivative hedges: | ||
Net of tax | ||
Balance, beginning | 3,680 | |
Other comprehensive income (loss) | 544 | |
Balance, ending | 4,989 | |
Cash flow derivative hedges: | ASU 2018-02 | Early Adoption | ||
Net of tax | ||
Other comprehensive income (loss) | $ 765 |
Regulatory Capital Requiremen_3
Regulatory Capital Requirements (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Common equity tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 1,696,464 | $ 1,661,542 |
Actual Ratio (as a percent) | 12.05% | 11.97% |
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 | $ 1,696,464 | $ 1,661,542 |
Actual Ratio (as a percent) | 12.05% | 11.97% |
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 | $ 1,838,610 | $ 1,803,860 |
Actual Ratio (as a percent) | 13.06% | 12.99% |
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 | $ 1,696,464 | $ 1,661,542 |
Actual Ratio | 8.71% | 8.72% |
Minimum Capital Ratio (as a percent) | 4.00% | 4.00% |
Well-Capitalized Ratio (percent) | 5.00% | 5.00% |
First Hawaiian Bank (FHB) | ||
Common equity tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 1,695,844 | $ 1,658,172 |
Actual Ratio (as a percent) | 12.05% | 11.94% |
Tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 1,695,844 | $ 1,658,172 |
Actual Ratio (as a percent) | 12.05% | 11.94% |
Total capital to risk-weighted assets | ||
Actual Amount | $ 1,837,990 | $ 1,800,490 |
Actual Ratio (as a percent) | 13.06% | 12.97% |
Tier 1 capital to average assets (leverage ratio) | ||
Actual Amount | $ 1,695,844 | $ 1,658,172 |
Actual Ratio | 8.70% | 8.70% |
Regulatory Capital Requiremen_4
Regulatory Capital Requirements - Capital Conservation Buffer (Details) | Mar. 31, 2019 | 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% |
Derivative Financial Instrume_3
Derivative Financial Instruments - Notional Amounts and Fair Values (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Derivatives designated as hedging instruments | Interest rate swaps | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | $ 23,892 | $ 41,317 |
Derivatives designated as hedging instruments | Interest rate swaps | Included in other assets | ||
Notional amounts and fair values of derivatives | ||
Asset Derivatives | 31 | |
Derivatives designated as hedging instruments | Interest rate swaps | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | (352) | (44) |
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | 2,334,559 | 2,269,247 |
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other assets | ||
Notional amounts and fair values of derivatives | ||
Asset Derivatives | 29,034 | 12,305 |
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | (1,897) | (12,007) |
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | 64,395 | 62,039 |
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | (1,839) | (2,607) |
Derivatives Not Designated as Hedging Instruments | Foreign exchange contracts | ||
Notional amounts and fair values of derivatives | ||
Notional Amount | 2,473 | 1,191 |
Derivatives Not Designated as Hedging Instruments | Foreign exchange contracts | Included in other assets | ||
Notional amounts and fair values of derivatives | ||
Asset Derivatives | 3 | |
Derivatives Not Designated as Hedging Instruments | Foreign exchange contracts | Included in other liabilities | ||
Notional amounts and fair values of derivatives | ||
Liability Derivatives | $ (2) | $ (34) |
Derivative Financial Instrume_4
Derivative Financial Instruments - Clearinghouse Margin and Collateral (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Derivative contracts | ||
Initial margin collateral posted | $ 29.2 | $ 2.1 |
Interest rate swaps | ||
Derivative contracts | ||
Financial instruments pledged as collateral | 0 | 26.2 |
Cash pledged as collateral | 30.7 | 2.6 |
Chicago Mercantile Exchange (CME) | ||
Derivative contracts | ||
Variation margin | 0.8 | 0.5 |
London Clearing House (LCH) | ||
Derivative contracts | ||
Variation margin | $ 26.3 | $ 0.6 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Fair Value Hedges (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019USD ($)derivative | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
Loans and leases | |||
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Carrying Amount of the Hedged Asset | $ 24,448 | $ 42,496 | |
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset | $ 544 | 293 | |
Fair value hedges | |||
Fair hedges carried | |||
Fixed interest rate (as a percent) | 2.90% | ||
Loans and lease financing | |||
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Recognized on hedged item | $ 262 | ||
Loans and lease financing | Interest rate swaps | |||
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Recognized on interest rate swap | (342) | ||
Other | |||
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Recognized on hedged item | $ (763) | ||
Other | Interest rate swaps | |||
Net gains and losses recognized in income related to derivatives in fair value hedging relationships | |||
Recognized on interest rate swap | $ 550 | ||
Derivatives designated as hedging instruments | Interest rate swaps | |||
Fair hedges carried | |||
Notional amounts | $ 23,892 | 41,317 | |
Derivatives designated as hedging instruments | Interest rate swaps | Fair value hedges | |||
Fair hedges carried | |||
Number of derivatives carried | derivative | 1 | ||
Notional amounts | $ 23,900 | 41,300 | |
Positive fair value | 0 | ||
Fair value losses | $ 400 | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Cash Flow Hedges (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($)derivative | |
Cash Flow Hedges | |||
Effect of cash flow hedging relationships | |||
Pretax gains recognized in other comprehensive income on derivatives (effective portion) | $ 738 | ||
Pretax gain reclassified from accumulated other comprehensive income | 0 | ||
Interest rate swaps | |||
Cash flow hedges | |||
Recognized expenses related to the ineffective portion | 0 | ||
Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Net interest expense on derivative | $ 500 | ||
Minimum | Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Fixed interest rate (as a percent) | 2.98% | ||
Maximum | Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Fixed interest rate (as a percent) | 3.03% | ||
Derivatives designated as hedging instruments | Interest rate swaps | |||
Cash flow hedges | |||
Notional amounts | $ 23,892 | $ 41,317 | |
Derivatives designated as hedging instruments | Interest rate swaps | Cash Flow Hedges | |||
Cash flow hedges | |||
Number of derivatives carried | derivative | 2 | ||
Notional amounts | $ 150,000 |
Derivative Financial Instrume_7
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, 2019 | Mar. 31, 2018 | |
Interest rate swaps | ||
Impact on pretax earnings of derivatives not designated as hedges | ||
Net Gains (Losses) on Derivatives | $ 16 | $ 404 |
Funding Swap (Visa Derivative) | ||
Impact on pretax earnings of derivatives not designated as hedges | ||
Net Gains (Losses) on Derivatives | $ 5 | (84) |
Foreign exchange contracts | ||
Impact on pretax earnings of derivatives not designated as hedges | ||
Net Gains (Losses) on Derivatives | $ (63) |
Derivative Financial Instrume_8
Derivative Financial Instruments - Free-Standing (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | 96 Months Ended | |||||
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2016shares | Dec. 31, 2015shares | Dec. 31, 2018USD ($) | Jul. 31, 2018USD ($) | Jun. 28, 2018 | Dec. 31, 2017 | |
Visa | Class B restricted shares | ||||||||
Derivative financial instruments | ||||||||
Number of shares sold | shares | 274,000 | 0 | ||||||
Funding Swap (Visa Derivative) | Class B restricted shares | ||||||||
Derivative financial instruments | ||||||||
Conversion rate | 1.6298 | 1.6483 | ||||||
Funding Swap (Visa Derivative) | Visa | ||||||||
Derivative financial instruments | ||||||||
Estimated liability that was subsequently paid to the buyer | $ 700 | |||||||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | ||||||||
Derivative financial instruments | ||||||||
Notional Amount | $ 2,334,559 | $ 2,269,247 | ||||||
Net interest expense on derivative | $ 0 | $ 200 | ||||||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Minimum | ||||||||
Derivative financial instruments | ||||||||
Fixed interest rate (as a percent) | 2.02% | 2.02% | ||||||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Maximum | ||||||||
Derivative financial instruments | ||||||||
Fixed interest rate (as a percent) | 5.78% | 5.78% | ||||||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Customer swap program | ||||||||
Derivative financial instruments | ||||||||
Notional Amount | $ 2,200,000 | |||||||
Upfront fees on the dealer swap | $ 800 | $ 3,200 | ||||||
Derivative asset value | 29,000 | 12,300 | ||||||
Derivative liability value | 1,900 | 11,200 | ||||||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other assets | ||||||||
Derivative financial instruments | ||||||||
Positive fair value, derivative asset | 29,034 | 12,305 | ||||||
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Included in other liabilities | ||||||||
Derivative financial instruments | ||||||||
Negative fair value, derivative liability | 1,897 | 12,007 | ||||||
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | ||||||||
Derivative financial instruments | ||||||||
Notional Amount | 64,395 | 62,039 | ||||||
Derivatives Not Designated as Hedging Instruments | Funding Swap (Visa Derivative) | Included in other liabilities | ||||||||
Derivative financial instruments | ||||||||
Negative fair value, derivative liability | $ 1,839 | $ 2,607 |
Derivative Financial Instrume_9
Derivative Financial Instruments - Counterparty Credit Risk and Credit-Risk Related Contingent Features (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Derivative contracts | |||
Counterparty credit risk adjustments | $ 0.1 | $ 0.1 | |
Credit-risk-related contingent features | |||
Aggregate fair value of derivative instruments in a net liability position | 1.6 | $ 0.8 | |
Collateral posted for derivatives in a net liability position | 1.5 | $ 0.5 | |
Interest rate swaps | |||
Derivative contracts | |||
Collateral thresholds for derivative agreements with credit risk related contingent features | $ 0.5 |
Commitments and Contingent Li_3
Commitments and Contingent Liabilities - Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Sep. 30, 2018 | |
Contingencies | ||
Settlement agreement | $ 4.1 | |
Overdraft fee litigation | ||
Contingencies | ||
Settlement agreement | $ 4.1 | |
First Hawaiian Bank (FHB) | ||
Contingencies | ||
Period for one-time continuous negative balance overdraft fee | 7 days |
Commitments and Contingent Li_4
Commitments and Contingent Liabilities - Commitments to Extend Credit, Participations Sold (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Commitments to extend credit | ||
Commitments | ||
Participations sold to other institutions | $ 85.6 | $ 92.3 |
Standby letters of credit | ||
Commitments | ||
Participations sold to other institutions | $ 17.3 | $ 17.3 |
Commitments and Contingent Li_5
Commitments and Contingent Liabilities - Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financial instruments with off-balance sheet risk | ||
Contract amount | $ 5,700,000 | $ 5,800,000 |
Commitments to extend credit | ||
Financial instruments with off-balance sheet risk | ||
Contract amount | 5,468,976 | 5,549,591 |
Standby letters of credit | ||
Financial instruments with off-balance sheet risk | ||
Contract amount | 186,321 | 204,324 |
Commercial Letters of credit | ||
Financial instruments with off-balance sheet risk | ||
Contract amount | $ 9,602 | $ 7,535 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue | ||
Net interest income | $ 145,089 | $ 139,672 |
Service charges on deposit accounts | 8,060 | 7,955 |
Credit and debit card fees | 16,655 | 15,497 |
Other service charges and fees | 9,129 | 9,342 |
Not in scope of Topic 606 | 784 | 3,424 |
Total noninterest income | 47,072 | 48,700 |
Total revenue | 192,161 | 188,372 |
Retail Banking | ||
Disaggregation of Revenue | ||
Net interest income | 113,903 | 109,654 |
Service charges on deposit accounts | 7,541 | 7,448 |
Not in scope of Topic 606 | 2,469 | 2,160 |
Total noninterest income | 24,176 | 22,732 |
Total revenue | 138,079 | 132,386 |
Commercial Banking | ||
Disaggregation of Revenue | ||
Net interest income | 27,980 | 27,879 |
Service charges on deposit accounts | 3 | 4 |
Not in scope of Topic 606 | (3,507) | (1,330) |
Total noninterest income | 18,081 | 20,000 |
Total revenue | 46,061 | 47,879 |
Treasury and Other | ||
Disaggregation of Revenue | ||
Net interest income | 3,206 | 2,139 |
Service charges on deposit accounts | 516 | 503 |
Not in scope of Topic 606 | 1,822 | 2,594 |
Total noninterest income | 4,815 | 5,968 |
Total revenue | 8,021 | 8,107 |
Credit and debit card fees. | ||
Disaggregation of Revenue | ||
Revenue by type of service | 21,434 | 20,408 |
Credit and debit card fees. | Commercial Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 19,707 | 18,621 |
Credit and debit card fees. | Treasury and Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | 1,727 | 1,787 |
Other service charges and fees. | ||
Disaggregation of Revenue | ||
Revenue by type of service | 6,244 | 6,276 |
Other service charges and fees. | Retail Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 5,333 | 4,745 |
Other service charges and fees. | Commercial Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 369 | 898 |
Other service charges and fees. | Treasury and Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | 542 | 633 |
Trust and investment services income. | ||
Disaggregation of Revenue | ||
Revenue by type of service | 8,618 | 8,231 |
Trust and investment services income. | Retail Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 8,618 | 8,231 |
Other. | ||
Disaggregation of Revenue | ||
Revenue by type of service | 1,932 | 2,406 |
Other. | Retail Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 215 | 148 |
Other. | Commercial Banking | ||
Disaggregation of Revenue | ||
Revenue by type of service | 1,509 | 1,807 |
Other. | Treasury and Other | ||
Disaggregation of Revenue | ||
Revenue by type of service | $ 208 | $ 451 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Contract Balances (Details) | 3 Months Ended | |
Mar. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Revenue from Contracts with Customers | ||
Signing bonuses received from vendors | item | 2 | |
Contract liabilities | $ 2,400,000 | $ 2,600,000 |
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 C_5
Revenue from Contracts with Customers - Other (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Revenue from Contracts with Customers | ||
Significant performance obligations | $ 0 | |
Material contract acquisition costs | $ 0 | $ 0 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings per Share | ||
Adjustments to net income (in dollars) | $ 0 | $ 0 |
Antidilutive securities (in shares) | 0 | 0 |
Numerator: | ||
Net income | $ 69,924 | $ 67,958 |
Denominator: | ||
Basic: weighted-average shares outstanding (in shares) | 134,879,336 | 139,600,712 |
Add: weighted-average equity-based awards (in shares) | 319,009 | 131,388 |
Diluted: weighted-average shares outstanding (in shares) | 135,198,345 | 139,732,100 |
Basic earnings per share (in dollars per share) | $ 0.52 | $ 0.49 |
Diluted earnings per share (in dollars per share) | $ 0.52 | $ 0.49 |
Leases - Terms of Leases (Detai
Leases - Terms of Leases (Details) | 3 Months Ended |
Mar. 31, 2019item | |
Lessee, Lease, Description [Line Items] | |
Number of branch properties where operating leases for space are connected | 2 |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of lease | 45 years |
Leases - Net Lease Expense (Det
Leases - Net Lease Expense (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Net lease expense | |
Operating lease expense | $ 2,316 |
Short-term lease expense | 185 |
Variable lease expense | 223 |
Finance lease expense: | |
Amortization of right-of-use assets | 1 |
Total finance lease expense | 1 |
Less: Sublease income | (225) |
Net lease expense | $ 2,500 |
Leases - Lease Liabilities (Det
Leases - Lease Liabilities (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Supplemental Cash Flows Information | |
Operating cash flows from operating leases, cash paid for amounts included in the measurement of lease liabilities | $ 1,757,000 |
Operating cash flows from finance leases, cash paid for amounts included in the measurement of lease liabilities | $ 28,000 |
Weighted Average Remaining Lease Term, Operating leases | 15 years 2 months 12 days |
Weighted Average Remaining Lease Term, Finance leases | 3 years 2 months 12 days |
Weighted Average Discount Rate, Operating leases | 3.43% |
Weighted Average Discount Rate, Finance leases | 6.78% |
Operating lease right-of-use assets | $ 48,700,000 |
Other assets | us-gaap:OtherAssetsMember |
Finance lease right-of use assets | $ 0 |
Premises and equipment | fhb:PremisesAndEquipmentMember |
Operating lease liabilities | $ 48,900,000 |
Other liabilities | us-gaap:OtherLiabilitiesMember |
Finance lease liabilities | $ 0 |
Long-term borrowings | us-gaap:LongTermDebtMember |
Right-of-use assets obtained in exchange for new operating lease obligations | $ 0 |
Right-of-use assets obtained in exchange for new finance lease obligations | $ 0 |
Leases - Future Minimum Rental
Leases - Future Minimum Rental Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Future minimum rental payments under noncancelable leases | ||
2019 (excluding the three months ended March 31, 2019) | $ 7,040 | |
2020 | 8,691 | |
2021 | 7,984 | |
2022 | 5,125 | |
2023 | 2,632 | |
Thereafter | 34,638 | |
Total future minimum lease payments | 66,110 | |
Less: Imputed interest | (17,172) | |
Total | $ 48,938 | |
Future minimum rental payments in accordance with ASC Topic 840, Leases | ||
2019 | $ 8,780 | |
2020 | 8,668 | |
2021 | 7,961 | |
2022 | 5,101 | |
2023 | 2,632 | |
Thereafter | 34,638 | |
Total future minimum lease payments | 67,780 | |
Less Sublease Income | ||
2019 | 903 | |
2020 | 903 | |
2021 | 892 | |
Total future minimum lease payments | 2,698 | |
Net Operating Lease Payments | ||
2019 | 7,877 | |
2020 | 7,765 | |
2021 | 7,069 | |
2022 | 5,101 | |
2023 | 2,632 | |
Thereafter | 34,638 | |
Total future minimum lease payments | $ 65,082 |
Leases - Cost and Accumulated D
Leases - Cost and Accumulated Depreciation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Future minimum rental payments under noncancelable leases | ||
Remainder of 2019 | $ 7,040 | |
2020 | 8,691 | |
2021 | 7,984 | |
2022 | 5,125 | |
2023 | 2,632 | |
Thereafter | 34,638 | |
Office space leased in headquarters office and to third party lessees | ||
Cost | 288,700 | $ 289,200 |
Accumulated depreciation | $ 135,400 | $ 133,700 |
Future minimum rental income from related parties | not material | |
Related parties associated with its branch premises | ||
Lease payments to related parties | $ 200 | |
Future minimum rental payments under noncancelable leases | ||
Remainder of 2019 | 200 | |
2020 | 300 | |
2021 | 300 | |
2022 | 200 | |
2023 | 200 | |
Thereafter | $ 7,500 |
Leases - Future Minimum Renta_2
Leases - Future Minimum Rental Income (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Lessor, Lease, Description [Line Items] | |
Operating lease income related to lease payments | $ 1,500 |
Lease income related to variable lease payments | 1,100 |
Future minimum rental income under noncancellable operating leases | |
2019 (excluding the three months ended March 31, 2019) | 4,492 |
2020 | 5,747 |
2021 | 5,439 |
2022 | 3,719 |
2023 | 2,795 |
Thereafter | 5,837 |
Total | $ 28,029 |
Maximum | |
Lessor, Lease, Description [Line Items] | |
Terms of leases, including renewal options | 10 years |
Benefit Plans - Components of N
Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Pension Benefits | ||
Components of net periodic benefit cost | ||
Total net periodic benefit cost | $ 2,430 | $ 2,339 |
Pension Benefits | Salaries and employee benefits | ||
Components of net periodic benefit cost | ||
Service cost | 17 | 174 |
Pension Benefits | Other noninterest expense | ||
Components of net periodic benefit cost | ||
Interest cost | 2,044 | 1,794 |
Expected return on plan assets | (1,195) | (1,240) |
Recognized net actuarial loss | 1,564 | 1,611 |
Other Benefits | ||
Components of net periodic benefit cost | ||
Total net periodic benefit cost | 182 | 290 |
Other Benefits | Salaries and employee benefits | ||
Components of net periodic benefit cost | ||
Service cost | 159 | 212 |
Other Benefits | Other noninterest expense | ||
Components of net periodic benefit cost | ||
Interest cost | 206 | 185 |
Prior service credit | (107) | $ (107) |
Recognized net actuarial loss | $ (76) |
Fair Value - Visa Derivative (D
Fair Value - Visa Derivative (Details) - Funding Swap (Visa Derivative) $ in Thousands | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jun. 28, 2018 | Dec. 31, 2017 |
Class B restricted shares | ||||
Fair value | ||||
Conversion rate | 1.6298 | 1.6483 | ||
Fair Value Measurements, Recurring | Level 3 | ||||
Fair value | ||||
Derivative Liability | $ 1,800 | $ 2,600 | ||
Included in other liabilities | Derivatives Not Designated as Hedging Instruments | ||||
Fair value | ||||
Derivative Liability | $ 1,839 | $ 2,607 |
Fair Value - Assets and Liabili
Fair Value - Assets and Liabilities Recorded at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Investment securities | $ 4,485,660 | $ 4,498,342 |
Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 4,485,660 | 4,498,342 |
Other assets | 29,037 | 12,336 |
Liabilities | ||
Other liabilities | (4,090) | (14,692) |
Total | ||
Net Assets (Liabilities) | 4,510,607 | 4,495,986 |
Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 4,485,660 | 4,498,342 |
Other assets | 29,037 | 12,336 |
Liabilities | ||
Other liabilities | (2,251) | (12,085) |
Total | ||
Net Assets (Liabilities) | 4,512,446 | 4,498,593 |
Fair Value Measurements, Recurring | Level 3 | ||
Liabilities | ||
Other liabilities | (1,839) | (2,607) |
Total | ||
Net Assets (Liabilities) | (1,839) | (2,607) |
Government agency debt securities | ||
Assets | ||
Investment securities | 24,765 | |
Government agency debt securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 24,765 | |
Government agency debt securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 24,765 | |
U.S. Treasury securities | ||
Assets | ||
Investment securities | 389,470 | |
U.S. Treasury securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 389,470 | |
U.S. Treasury securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 389,470 | |
Government-sponsored enterprises debt securities | ||
Assets | ||
Investment securities | 161,595 | 241,594 |
Government-sponsored enterprises debt securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 161,595 | 241,594 |
Government-sponsored enterprises debt securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 161,595 | 241,594 |
Government agency mortgage-backed securities | ||
Assets | ||
Investment securities | 371,035 | 411,536 |
Government agency mortgage-backed securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 371,035 | 411,536 |
Government agency mortgage-backed securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 371,035 | 411,536 |
Government-sponsored enterprises mortgage-backed securities | ||
Assets | ||
Investment securities | 127,896 | 150,847 |
Government-sponsored enterprises mortgage-backed securities | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 127,896 | 150,847 |
Government-sponsored enterprises mortgage-backed securities | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 127,896 | 150,847 |
Collateralized mortgage obligations: Government agency | ||
Assets | ||
Investment securities | 2,730,166 | 2,682,449 |
Collateralized mortgage obligations: Government agency | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 2,730,166 | 2,682,449 |
Collateralized mortgage obligations: Government agency | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | 2,730,166 | 2,682,449 |
Collateralized mortgage obligations: Government-sponsored enterprises | ||
Assets | ||
Investment securities | 1,070,203 | 602,592 |
Collateralized mortgage obligations: Government-sponsored enterprises | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 1,070,203 | 602,592 |
Collateralized mortgage obligations: Government-sponsored enterprises | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | $ 1,070,203 | 602,592 |
States and political subdivisions | ||
Assets | ||
Investment securities | 19,854 | |
States and political subdivisions | Fair Value Measurements, Recurring | ||
Assets | ||
Investment securities | 19,854 | |
States and political subdivisions | Fair Value Measurements, Recurring | Level 2 | ||
Assets | ||
Investment securities | $ 19,854 |
Fair Value - Changes in Fair Va
Fair Value - Changes in Fair Value Levels and in Level 3 Liabilities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Fair value | ||
Amount of transfers between hierarchy levels | $ 0 | |
Visa derivative | Funding Swap (Visa Derivative) | ||
Changes in Level 3 liabilities measured at fair value on a recurring basis | ||
Balance | (2,607,000) | $ (5,439,000) |
Total net gains (losses) included in other noninterest income | 5,000 | (84,000) |
Settlements | 763,000 | 678,000 |
Balance | (1,839,000) | (4,845,000) |
Total net gains (losses) included in net income attributable to the change in unrealized gains or losses related to liabilities still held | $ 5,000 | $ (84,000) |
Fair Value - Financial Instrume
Fair Value - Financial Instruments not Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Lease and lease commitments excluded | ||
Financing leases | $ 146,000 | $ 147,800 |
Deposit liabilities with no defined or contractual maturity | 13,900,000 | 14,100,000 |
Capital lease obligations | 28 | 26 |
Book Value | ||
Financial assets: | ||
Cash and cash equivalents | 617,867 | 1,003,637 |
Loans held for sale | 432 | |
Loans | 13,051,467 | 12,928,422 |
Financial liabilities: | ||
Time Deposits | 2,911,290 | 3,092,164 |
Long-term borrowings | 600,000 | 600,000 |
Estimated Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 617,867 | 1,003,637 |
Loans held for sale | 432 | |
Loans | 13,031,566 | 12,664,170 |
Financial liabilities: | ||
Time Deposits | 2,883,440 | 3,058,792 |
Long-term borrowings | 603,665 | 602,088 |
Estimated Fair Value | Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 336,555 | 396,836 |
Estimated Fair Value | Level 2 | ||
Financial assets: | ||
Cash and cash equivalents | 281,312 | 606,801 |
Loans held for sale | 432 | |
Financial liabilities: | ||
Time Deposits | 2,883,440 | 3,058,792 |
Long-term borrowings | 603,665 | 602,088 |
Estimated Fair Value | Level 3 | ||
Financial assets: | ||
Loans | $ 13,031,566 | $ 12,664,170 |
Fair Value - Unfunded Loan and
Fair Value - Unfunded Loan and Lease Commitments and Letters of Credit (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Unfunded loan and lease commitments and letters of credit | ||
Aggregate commitments to extend credit, standby letters of credit and commercial letters of credit | $ 5,700 | $ 5,800 |
Level 3 | ||
Unfunded loan and lease commitments and letters of credit | ||
Aggregate commitments to extend credit, standby letters of credit and commercial letters of credit | 5,700 | 5,800 |
Estimated fair value of unfunded loan and lease commitments and letters of credit | $ 13.8 | $ 14.2 |
Fair Value - Assets and Liabi_2
Fair Value - Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis (Details) - Impaired loans - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Assets with fair value adjustments on a nonrecurring basis | |||
Total impairment losses | $ 0 | $ 500 | |
Fair Value Measurements, Nonrecurring | Level 3 | |||
Assets with fair value adjustments on a nonrecurring basis | |||
Fair value | $ 357 | $ 402 |
Fair Value - Significant Unobse
Fair Value - Significant Unobservable Inputs Used in Fair Value Measurements (Details) - Fair Value Measurements, Nonrecurring - Level 3 $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Weighted Average | ||
Fair value | ||
Expected Term | 4 years | 4 years |
Growth Rate (as a percent) | 15.00% | 15.00% |
Impaired loans | ||
Fair value | ||
Assets | $ 357 | $ 402 |
Impaired loans | Appraisal Value | ||
Fair value | ||
Assets | 357 | 402 |
Visa derivative | Discounted cash flow | ||
Fair value | ||
Liabilities | $ (1,839) | $ (2,607) |
Visa derivative | Discounted cash flow | Weighted Average | ||
Fair value | ||
Expected Conversion Rate | 1.6298 | 1.6298 |
Reportable Operating Segments -
Reportable Operating Segments - Business Segments (Details) | 3 Months Ended |
Mar. 31, 2019locationsegment | |
Reportable operating segments | |
Number of business segments | segment | 3 |
Retail Banking | |
Reportable operating segments | |
Number of Branches | location | 60 |
Reportable Operating Segments_2
Reportable Operating Segments - Selected Business Segment Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Selected business segment financial information | ||
Net interest income | $ 145,089 | $ 139,672 |
Provision for loan and lease losses | (5,680) | (5,950) |
Net interest income after provision for loan and lease losses | 139,409 | 133,722 |
Noninterest income | 47,072 | 48,700 |
Noninterest expense | (92,623) | (90,587) |
Income before provision for income taxes | 93,858 | 91,835 |
(Provision) benefit for income taxes | (23,934) | (23,877) |
Net income (loss) | 69,924 | 67,958 |
Retail Banking | ||
Selected business segment financial information | ||
Net interest income | 113,903 | 109,654 |
Provision for loan and lease losses | (2,572) | (2,348) |
Net interest income after provision for loan and lease losses | 111,331 | 107,306 |
Noninterest income | 24,176 | 22,732 |
Noninterest expense | (57,166) | (56,461) |
Income before provision for income taxes | 78,341 | 73,577 |
(Provision) benefit for income taxes | (19,927) | (19,207) |
Net income (loss) | 58,414 | 54,370 |
Commercial Banking | ||
Selected business segment financial information | ||
Net interest income | 27,980 | 27,879 |
Provision for loan and lease losses | (3,108) | (3,602) |
Net interest income after provision for loan and lease losses | 24,872 | 24,277 |
Noninterest income | 18,081 | 20,000 |
Noninterest expense | (19,485) | (19,648) |
Income before provision for income taxes | 23,468 | 24,629 |
(Provision) benefit for income taxes | (6,041) | (6,328) |
Net income (loss) | 17,427 | 18,301 |
Treasury and Other | ||
Selected business segment financial information | ||
Net interest income | 3,206 | 2,139 |
Net interest income after provision for loan and lease losses | 3,206 | 2,139 |
Noninterest income | 4,815 | 5,968 |
Noninterest expense | (15,972) | (14,478) |
Income before provision for income taxes | (7,951) | (6,371) |
(Provision) benefit for income taxes | 2,034 | 1,658 |
Net income (loss) | $ (5,917) | $ (4,713) |