Mahalo for supporting the Honolulu Star-Advertiser. Enjoy this free story!
First Hawaiian Inc., the state’s largest bank holding company, saw its shares up 5.2% on Friday after it reported improved interest rates and strength of loan growth.
The company increased its earnings by 39.6% to $79.6 million, or 62 cents per share, to exceed 58 cents per share. In the first quarter of the year, First Hawaiian earned $57 million, or 44 cents per share.
In the fourth quarter, the bank made a $3 million provision for possible loan losses that had not been made in the first quarter.
“We ended the year with a very good quarter,” former Hawaii Chairman, President and CEO Bob Harrison said on an earnings call with analysts. eh. “Income increased. … Loans increased. … Interest income continued to rise … while non-interest income has returned to normal levels and non-interest expenses have stabilized.”
Loans increased by 8.7% to $ 14.09 billion from last year and increased by 2.9% – driven by the financing of loans – from the third quarter for an annual rate of 11.6%. Excluding Payment Protection Program loans, total loans and leases increased $1.3 billion, or 10.4%, in 2022 from 2021.
“We expect loan growth to be in the mid-single digits for the full year 2023,” Harrison said.
The bank’s interest income, which is the difference between what the bank earns on loans and pays on deposits, rose 25.1% to $171.8 million from the first quarter. Hawaii’s prime rate rose 77 basis points to 3.15% in the fourth quarter from 2.38% a year earlier and rose 22 basis points from the third quarter.
First Hawaiian’s new Chief Financial Officer Jamie Moses said the increase in interest income from the third quarter “was due to higher yields and loan balances, partially offset by the higher deposits. Interest rates (increased) … were driven by higher rates on loans, cash and investment securities and were partly due to higher interest rates store.”
Moses said on the conference call that he expected the bank’s interest rate to increase to 45 basis points in the first quarter from the fourth quarter.
Hawaiian’s first-quarter non-interest income, which includes service fees and fees, rose 15.8% to $48.2 million.
Deposits fell 0.6% to $21.69 billion from the year-ago quarter and were down 1.8% from the third quarter.
For the year, First Hawaiian’s net income almost fell to $265.7 million from 2021, but included the $39 million the bank released from its loan-loss fund in 2021 and added to his income statement. In 2022 the bank set aside $1.4 million for bad debts.
The bank kept its quarterly dividend at 26 cents a share and said it would be paid on March 3 to investors of record at the close of business on February 17. At the close of trading on Friday , which is 3.9% of First Hawaiian’s annual dividend.
First Hawaiian also used a stock repurchase program to buy back $40 million of its stock in 2023.
The company’s shares ended the day up $1.31 at $26.75.