Q3 2024 First Hawaiian Inc Earnings Call

In This Article:

Participants

Kevin Haseyama; Strategic Planning and Investor Relations Manager; First Hawaiian Inc

Robert Harrison; Chairman of the Board, President, Chief Executive Officer; First Hawaiian Inc

James Moses; Vice Chairman, Chief Financial Officer, Finance Group; First Hawaiian Inc

Lea Nakamura; Executive Vice President, Chief Risk Officer; First Hawaiian Inc

David Feaster; Analyst; Raymond James

Andrew Liesch; Analyst; Piper Sandler Co.

Jared Shaw; Analyst; Barclays

Kelly Motta; Analyst; Keefe, Bruyette & Woods

Anthony Elian; Analyst; J.P. Morgan

Timur Braziler; Analyst; Wells Fargo Securities

Presentation

Operator

Thank you for standing by, and welcome to First Hawaiian Inc's third quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. (Operator Instructions)
I would now like to hand the call over to Investor Relations Manager, Kevin Haseyama. Please go ahead.

Kevin Haseyama

Thank you, Latief, and thank you for joining us as we review our financial results for the third quarter of 2024. With me today are Bob Harrison, Chairman, President and CEO; James Moses, our Chief Financial Officer; and Lea Nakamura, our Chief Risk Officer. We prepared a slide presentation that we'll 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 will be making forward-looking statements. So please refer to slide 1 for our Safe Harbor statement. We may also discuss certain non-GAAP financial measures to the appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable GAAP measurements.
And now I'll turn the call over to, Bob.

Robert Harrison

Thank you, Kevin. I'll start by giving a quick overview of local economy. The overall Hawaii economy continues to be resilient. Well, [Maui] continues its recovery for the wildfires the rest of the state has seen relatively stable tourism numbers and a low unemployment rate. The statewide seasonally adjusted unemployment rate for September was 2.9% compared to the national rate of 4.1%.
Through August, total visitor arrivals were down 2.2% and spending was down 2.3% compared to 2023 levels for the same period. Housing market remains stable. In September, the median sales price for a single-family home on Oahu was $1.1 million, 6% higher than last September. The median sales price for condos on Oahu was $518,000, 2.8% below the previous year.
Turning to slide 2, I'll give an overview of our third quarter results. We're really pleased that the momentum we saw building in the second quarter carried over the third quarter. Deposit balances left out and deposit costs were up 1 basis points from the second quarter. Unexpected loan payoffs were a headwind for loans in the third quarter for credit quality remained excellent and assets repriced up driving margin expansion.
Non-interest income continued to be solid, and we continue to exercise good discipline on expenses. During the quarter, we released $3.8 million of tax reserves we recorded in connection with our 2016 separation from BNPP increased expenses for the third quarter by $3.8 million of reduced income tax expense by the same amount, resulting in no impact to net income.
Turning to slide 3, I'll go over some balance sheet highlights. The investment portfolio runoff is still being used to fund loan growth and reduce high-cost deposits continue to have ample liquidity. We had a $500 million FHLB advances maturing the third quarter and took out a new $250 million, 12 months advance a lower rate.
The balance sheet remains well capitalized and our capital levels continue to grow due to strong earnings and a favorable AOCI change. Because of our stronger growing capital levels, we intend to resume share repurchases in the fourth quarter.
Turning to slide 4, total loans were down $119 million compared to the prior quarter. And while construction loans grew as expected, we had good activity in the C&I and CRE portfolios. Unexpected payoffs of those portfolios were a headwind in the third quarter. The pipeline in the fourth quarter remained strong due to those pay-offs in the third quarter, full year loan growth will be relatively flat.
Now I'll turn it over to Jamie.