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First Hawaiian posts lower profit, but sees pickup in loans

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First Hawaiian Bank posted lower earnings in the fourth quarter that topped analysts’ expectations and projected accelerated loan growth for the new year amid improvement in the state’s economy.

The state’s largest bank reported today that net income in the final three months of the year fell 7.6% to $57 million, or 44 cents a share, from $61.7 million, or 47 cents a share, in the year-earlier period. The results beat analysts’ consensus estimate of 47 cents a share.

With an improved outlook, First Hawaiian also bought back $21.5 million worth of stock under its share repurchase program during the quarter and adopted a stock repurchase program for up to $75 million of stock for this year. Deposits rose 13.5% to $21.82 billion from the year-earlier period.

“We are pleased to report that we closed 2021 with a solid fourth quarter,” First Hawaiian Chairman, President and CEO Bob Harrison said in a statement. “We saw strong loan growth, continued to grow consumer and commercial deposits while reducing excess liquidity, and credit quality remained excellent.”

Loan growth slipped 2.4% to $12.96 billion in the fourth quarter from the year-ago period but rose 1% from the third quarter. The bank projected loan growth in 2022, excluding Paycheck Protection Program loan holdings, to be in the mid- to high single-digit range.

“The loan pipeline looks good as we start the year, and our balance sheet is well positioned to fund the loan growth and benefit from rising interest rates,” Harrison said on the bank’s conference call with analysts. “Capital levels remain high, and we have sufficient capital for our balance sheet growth while maintaining our key capital ratios at our desired targets.”

For the year, holding company First Hawaiian Inc. reported that net income rose 43.1% to $265.7 million, or $2.05 a share, from $185.8 million, or $1.43 a share, in 2020.

During the quarter, First Hawaiian opened a new Waikiki branch on Dec. 20 and donated the culturally historic Jean Charlot fresco mural that was commissioned for the previous Waikiki branch to the State Foundation on the Culture of the Arts, which plans to display it in a public space. Also during the quarter, First Hawaiian employees contributed $910,225 in donations to charities in Hawaii, Guam and Saipan.

First Hawaiian didn’t set aside any money for potential loan losses last quarter after taking a loan-loss provision of $20 million in the year-ago period.

Net interest income, which is the difference between what the bank generates in loans and pays out in deposits, inched up 1.6% to $137.3 million. Its net interest margin, however, worsened by 33 basis points to 2.38% from 2.71%.

Noninterest income, which includes charges and fees, declined 22.4% to $41.6 million.

First Hawaiian kept its quarterly stock dividend at 26 cents a share. It will be payable March 4 to stockholders of record at the close of business Feb. 18.

Shares of First Hawaiian fell 12 cents today to $28.88 after the earnings announcement on an overall down day for the stock market.

Separately, First Hawaiian announced a day earlier that Foodland Chairman and CEO Jenai Wall will not be standing for reelection as a director of the holding company or the bank at the annual shareholders’ meeting on April 20.

Wall currently serves on the board’s Compensation Committee and Risk Committee. Her 27 years of service began when she joined the First Hawaiian Bank board in 1995 and continued with her appointment to the First Hawaiian Inc. board in August 2018.

”With the many challenges presented by the pandemic over the past two years, I feel the need to devote my time to my work at Foodland and my community commitments, including to my role as chair of the board of The Queen’s Health Systems,” Wall said.

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