First Hawaiian, Inc. (NASDAQ:FHB) Q3 2019 Earnings Conference Call Transcript

Oct 24, 2019 • 05:00 pm ET

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First Hawaiian, Inc. (NASDAQ:FHB) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Hawaiian Inc, Q3 2019 Earnings Conference Call.

[Operator Instructions]

I'd now like to hand the conference over to your speaker today, Mr. Kevin Haseyama. Investor Relations manager. Sir, you may begin.

Executive
Kevin Haseyama

Thank you Valerie. And thank you everyone for joining us, as we review our financial results for the third quarter of 2019. With me today are Bob Harrison, CEO; Ravi Mallela, CFO; and Ralph Mesic, Chief Risk Officer. We've prepared a slide presentation that we will refer to in our remarks today. The presentation is available for downloading and viewing on our website at fhb.com in the Investor Relations section.

During today's call, we'll be making forward-looking statements, so please refer to Slide one for our safe harbor statement. We'll also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP measurements.

And now I'll turn the call over to Bob, who will provide you with the third quarter highlights, starting on Slide two.

Executive
Robert Harrison

Thank you Kevin. Aloha everyone. And thanks for joining us today as we review our third quarter results. Pleased to report we had a solid quarter, driven by excellent credit quality, growth in non-interest income and continued prudent expense management.

Profitability measures remained strong, with a core return on average tangible assets of 1.56% and a core return on average tangible common equity of 18.21%. We continued to optimize our balance sheet with the sale of $409 million of Shared National Credits. And at the same time, $334 million reduction of public time deposits.

These actions enabled us to increase our 2019 stock repurchase program by $50 million to a total of $150 million. During the quarter, we executed an additional $59 million of share repurchases, bringing the year-to-date total repurchases to $99 million. Yesterday, our Board of Directors declared a $0.26 per share dividend, representing an attractive annualized dividend yield of 3.73% based on today's closing price.

Now I will turn it over to Ravi to go over the financials.

Executive
Ravi Mallela

Thanks, Bob. Turning to Slide three. Period end loans were down $421 million versus the prior quarter. This was primarily due to the $450 million reduction in SNC loans, which included the $409 million of loans sold, plus an additional $40 million of SNC loans that matured. CRE loans, grew by $115 million. Almost a $100 million of that growth was in Hawaii and Guam and included $50 million related to the conversion of construction loans to permanent financing. This conversion of construction loans to permanent financing, represented $50 million of the $63 million decline in construction loan balances that we saw in the quarter.

Residential mortgages grew by about $53 million, as production benefited from low mortgage rates. C&I loans declined by about $524 million, primarily due to the previously mentioned sale and run-off of about $450 million of SNC loans. Dealer flooring loans declined by about $37