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FHB First Hawaiian

Filed: 2 Aug 21, 5:01pm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to               

Commission File Number  001-14585

FIRST HAWAIIAN, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

99-0156159

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

999 Bishop Street, 29th Floor

Honolulu, HI

96813

(Address of Principal Executive Offices)

(Zip Code)

(808) 525-7000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered:

Common Stock, par value $0.01 per share

FHB

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No .

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No .

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 129,585,404 shares of Common Stock, par value $0.01 per share, were outstanding as of July 26, 2021.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRST HAWAIIAN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

(dollars in thousands, except per share amounts)

  

2021

  

2020

  

2021

  

2020

Interest income

Loans and lease financing

$

110,919

$

122,298

$

221,858

$

257,269

Available-for-sale securities

24,637

17,529

47,783

38,739

Other

666

792

1,157

3,143

Total interest income

136,222

140,619

270,798

299,151

Interest expense

Deposits

3,363

8,583

7,419

24,183

Short-term and long-term borrowings

1,378

4,214

2,740

8,463

Total interest expense

4,741

12,797

10,159

32,646

Net interest income

131,481

127,822

260,639

266,505

Provision for credit losses

(35,000)

55,446

(35,000)

96,646

Net interest income after provision for credit losses

166,481

72,376

295,639

169,859

Noninterest income

Service charges on deposit accounts

6,632

5,927

13,350

14,877

Credit and debit card fees

16,746

10,870

31,297

25,819

Other service charges and fees

10,303

7,912

19,149

16,451

Trust and investment services income

8,707

8,664

17,199

18,255

Bank-owned life insurance

3,104

4,432

5,493

6,692

Investment securities gains (losses), net

102

(211)

102

(126)

Other

3,777

8,062

6,649

12,916

Total noninterest income

49,371

45,656

93,239

94,884

Noninterest expense

Salaries and employee benefits

45,982

42,414

89,918

87,243

Contracted services and professional fees

16,516

15,478

33,704

31,533

Occupancy

7,314

7,302

14,484

14,545

Equipment

6,362

5,207

11,853

9,915

Regulatory assessment and fees

1,826

2,100

3,860

4,046

Advertising and marketing

1,469

1,402

3,060

3,225

Card rewards program

6,262

5,163

11,097

12,178

Other

13,657

12,384

27,718

25,231

Total noninterest expense

99,388

91,450

195,694

187,916

Income before provision for income taxes

116,464

26,582

193,184

76,827

Provision for income taxes

29,723

6,533

48,750

17,913

Net income

$

86,741

$

20,049

$

144,434

$

58,914

Basic earnings per share

$

0.67

$

0.15

$

1.11

$

0.45

Diluted earnings per share

$

0.67

$

0.15

$

1.11

$

0.45

Basic weighted-average outstanding shares

129,392,339

129,856,730

129,661,228

129,876,218

Diluted weighted-average outstanding shares

129,828,847

130,005,195

130,164,762

130,163,722

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

2

FIRST HAWAIIAN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

(dollars in thousands)

  

2021

  

2020

  

2021

  

2020

Net income

$

86,741

    

$

20,049

$

144,434

  

$

58,914

Other comprehensive income (loss), net of tax:

Net change in pensions and other benefits

(96)

Net change in investment securities

13,733

48,602

(61,306)

84,576

Other comprehensive income (loss)

13,733

48,602

(61,306)

84,480

Total comprehensive income

$

100,474

$

68,651

$

83,128

$

143,394

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

3

FIRST HAWAIIAN, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30, 

December 31, 

(dollars in thousands, except share amount)

  

2021

  

2020

Assets

Cash and due from banks

$

347,861

$

303,373

Interest-bearing deposits in other banks

1,558,437

737,571

Investment securities, at fair value (amortized cost: $6,951,153 as of June 30, 2021 and $5,985,031 as of December 31, 2020)

6,953,930

6,071,415

Loans held for sale

1,241

11,579

Loans and leases

13,103,785

13,279,097

Less: allowance for credit losses

169,148

208,454

Net loans and leases

12,934,637

13,070,643

Premises and equipment, net

319,452

322,401

Accrued interest receivable

66,734

69,626

Bank-owned life insurance

466,402

466,537

Goodwill

995,492

995,492

Mortgage servicing rights

10,007

10,731

Other assets

592,135

603,463

Total assets

$

24,246,328

$

22,662,831

Liabilities and Stockholders' Equity

Deposits:

Interest-bearing

$

12,245,193

$

11,705,609

Noninterest-bearing

8,589,922

7,522,114

Total deposits

20,835,115

19,227,723

Long-term borrowings

200,000

200,010

Retirement benefits payable

144,101

143,373

Other liabilities

335,771

347,621

Total liabilities

21,514,987

19,918,727

Commitments and contingent liabilities (Note 12)

Stockholders' equity

Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,542,398 / 129,019,871 as of June 30, 2021; issued/outstanding: 140,191,133 / 129,912,272 as of December 31, 2020)

1,405

1,402

Additional paid-in capital

2,520,790

2,514,014

Retained earnings

550,511

473,974

Accumulated other comprehensive (loss) income, net

(29,702)

31,604

Treasury stock (11,522,527 shares as of June 30, 2021 and 10,278,861 shares as of December 31, 2020)

(311,663)

(276,890)

Total stockholders' equity

2,731,341

2,744,104

Total liabilities and stockholders' equity

$

24,246,328

$

22,662,831

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

4

FIRST HAWAIIAN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Three Months Ended June 30, 2021

Accumulated

Additional

Other

Common Stock

Paid-In

Retained

Comprehensive

Treasury

(dollars in thousands, except share amounts)

  

Shares

  

Amount

  

Capital

  

Earnings

  

Income (Loss)

  

Stock

  

Total

Balance as of March 31, 2021

129,749,890

$

1,405

$

2,517,048

$

497,418

$

(43,435)

$

(288,806)

$

2,683,630

Net income

86,741

86,741

Cash dividends declared ($0.26 per share)

(33,637)

(33,637)

Equity-based awards

69,828

3,742

(11)

(471)

3,260

Common stock repurchased

(799,847)

(22,386)

(22,386)

Other comprehensive income, net of tax

13,733

13,733

Balance as of June 30, 2021

129,019,871

$

1,405

$

2,520,790

$

550,511

$

(29,702)

$

(311,663)

$

2,731,341

Six Months Ended June 30, 2021

Accumulated

Additional

Other

Common Stock

Paid-In

Retained

Comprehensive

Treasury

(dollars in thousands, except share amounts)

  

Shares

  

Amount

  

Capital

  

Earnings

  

Income (Loss)

  

Stock

  

Total

Balance as of December 31, 2020

  

129,912,272

$

1,402

  

$

2,514,014

  

$

473,974

  

$

31,604

  

$

(276,890)

  

$

2,744,104

Net income

144,434

144,434

Cash dividends declared ($0.52 per share)

(67,448)

(67,448)

Equity-based awards

239,910

3

6,776

(449)

(2,845)

3,485

Common stock repurchased

(1,132,311)

(31,928)

(31,928)

Other comprehensive loss, net of tax

(61,306)

(61,306)

Balance as of June 30, 2021

129,019,871

$

1,405

$

2,520,790

$

550,511

$

(29,702)

$

(311,663)

$

2,731,341

5

FIRST HAWAIIAN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(Unaudited)

Three Months Ended June 30, 2020

Accumulated

Additional

Other

Common Stock

Paid-In

Retained

Comprehensive

Treasury

(dollars in thousands, except share amounts)

  

Shares

  

Amount

  

Capital

  

Earnings

  

Income (Loss)

  

Stock

  

Total

Balance as of March 31, 2020

129,827,968

$

1,401

$

2,506,477

$

429,323

$

4,129

$

(276,645)

$

2,664,685

Net income

20,049

20,049

Cash dividends declared ($0.26 per share)

(33,765)

(33,765)

Equity-based awards

38,930

2,794

(311)

(157)

2,326

Other comprehensive income, net of tax

48,602

48,602

Balance as of June 30, 2020

129,866,898

$

1,401

$

2,509,271

$

415,296

$

52,731

$

(276,802)

$

2,701,897

Six Months Ended June 30, 2020

Accumulated

Additional

Other

Common Stock

Paid-In

Retained

Comprehensive

Treasury

(dollars in thousands, except share amounts)

  

Shares

  

Amount

  

Capital

  

Earnings

  

Income (Loss)

  

Stock

  

Total

Balance as of December 31, 2019

129,928,479

$

1,399

$

2,503,677

$

437,072

$

(31,749)

$

(270,141)

$

2,640,258

Cumulative-effect adjustment of a change in accounting principle, net of tax: ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments

(12,517)

(12,517)

Net income

58,914

58,914

Cash dividends declared ($0.52 per share)

(67,547)

(67,547)

Equity-based awards

156,178

2

5,594

(626)

(1,661)

3,309

Common stock repurchased

(217,759)

(5,000)

(5,000)

Other comprehensive income, net of tax

84,480

84,480

Balance as of June 30, 2020

129,866,898

$

1,401

$

2,509,271

$

415,296

$

52,731

$

(276,802)

$

2,701,897

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

6

FIRST HAWAIIAN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended

June 30, 

(dollars in thousands)

  

2021

  

2020

Cash flows from operating activities

Net income

$

144,434

$

58,914

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

(35,000)

96,646

Depreciation, amortization and accretion, net

27,567

34,058

Deferred income tax provision (benefits)

7,168

(13,786)

Stock-based compensation

6,779

5,596

Other losses (gains)

76

(33)

Originations of loans held for sale

(73,368)

(123,331)

Proceeds from sales of loans held for sale

85,787

120,970

Net gains on sales of loans originated for investment and held for sale

(2,442)

(4,581)

Net (gains) losses on investment securities

(102)

126

Change in assets and liabilities:

Net decrease in other assets

19,740

18,272

Net increase (decrease) in other liabilities

67,557

(84,298)

Net cash provided by operating activities

248,196

108,553

Cash flows from investing activities

Available-for-sale securities:

Proceeds from maturities and principal repayments

920,073

597,670

Proceeds from calls and sales

2,820

644,703

Purchases

(1,900,080)

(2,195,832)

Other investments:

Proceeds from sales

7,956

18,346

Purchases

(60,155)

(27,562)

Loans:

Net decrease (increase) in loans and leases resulting from originations and principal repayments

183,820

(698,069)

Proceeds from sales of loans originated for investment

2,200

132,011

Purchases of loans

(39,558)

(40,611)

Proceeds from bank-owned life insurance

5,628

1,845

Purchases of premises, equipment and software

(9,689)

(20,646)

Proceeds from sales of premises and equipment

1,394

Proceeds from sales of other real estate owned

316

Other

(2,422)

(1,951)

Net cash used in investing activities

(888,013)

(1,589,780)

Cash flows from financing activities

Net increase in deposits

1,607,392

2,916,640

Repayment of short-term borrowings

(200,000)

Dividends paid

(67,448)

(67,547)

Stock tendered for payment of withholding taxes

(2,845)

(1,661)

Common stock repurchased

(31,928)

(5,000)

Net cash provided by financing activities

1,505,171

2,642,432

Net increase in cash and cash equivalents

865,354

1,161,205

Cash and cash equivalents at beginning of period

1,040,944

694,017

Cash and cash equivalents at end of period

$

1,906,298

$

1,855,222

Supplemental disclosures

Interest paid

$

14,464

$

37,370

Income taxes paid, net of income tax refunds

30,399

4,242

Noncash investing and financing activities:

Operating lease right-of-use assets obtained in exchange for new lease obligations

7,221

1,965

Transfers from loans and leases to loans held for sale

1,839

130,863

Obligation to fund low-income housing partnerships

15,314

11,369

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

7

FIRST HAWAIIAN, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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, including loans, deposit products, wealth management, insurance, trust, retirement planning, credit card and merchant processing services, to consumer and commercial customers.

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, 2020.

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.

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 2021

In October 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. Prior to the adoption of ASU No. 2020-08, previous guidance shortened the amortization period for certain purchased callable debt securities held at a premium by requiring that entities amortize the premium associated with those callable debt securities to the earliest call date. The guidance in ASU No. 2020-08 changes the amortization period so that an entity shall amortize the premium to the next call date. The Company adopted the provisions of ASU No. 2020-08 on January 1, 2021 and it did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

The following ASU has been issued by the FASB and is applicable to the Company in future reporting periods.

In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842), Lessors – Certain Leases with Variable Lease Payments. This guidance amends the Topic 842 lease classification requirements for lessors to align them with practice under Topic 840. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: 1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the Topic 842 lease classification criteria, and 2) the lessor would have otherwise recognized a day-one loss. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. As the Company adopted Topic 842 before the issuance date of this ASU, the Company has the option to apply these amendments either 1) retrospectively to leases that commenced or were modified on or after the adoption of Topic 842, or 2) prospectively to leases that commence or are modified on or after the date that

8

the Company adopts ASU No. 2021-05. Early adoption is permitted. The Company is in the process of evaluating the impact that this new guidance may have on the Company’s consolidated financial statements.

2. Investment Securities

As of June 30, 2021 and December 31, 2020, 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 government agencies.

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.

As of June 30, 2021 and December 31, 2020, all of the Company’s investment securities were classified as available-for-sale. Amortized cost and fair value of securities as of June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021

December 31, 2020

Amortized

Unrealized

Unrealized

Fair

Amortized

Unrealized

Unrealized

Fair

(dollars in thousands)

  

Cost

  

Gains

  

Losses

  

Value

  

Cost

  

Gains

  

Losses

  

Value

U.S. Treasury and government agency debt securities

$

182,354

$

545

$

(2,127)

$

180,772

$

170,123

$

1,359

$

(61)

$

171,421

Mortgage-backed securities:

Residential - Government agency

110,115

3,174

113,289

155,169

5,293

160,462

Residential - Government-sponsored enterprises

1,257,032

10,776

(4,360)

1,263,448

434,282

13,643

(725)

447,200

Commercial - Government agency

487,607

6,956

(3,116)

491,447

583,232

16,537

(119)

599,650

Commercial - Government-sponsored enterprises

1,244,031

7,116

(27,342)

1,223,805

931,095

9,045

(7,983)

932,157

Collateralized mortgage obligations:

Government agency

1,645,170

22,631

(5,667)

1,662,134

1,902,326

32,246

(1,019)

1,933,553

Government-sponsored enterprises

2,024,844

11,195

(17,004)

2,019,035

1,808,804

18,991

(823)

1,826,972

Total available-for-sale securities

$

6,951,153

$

62,393

$

(59,616)

$

6,953,930

$

5,985,031

$

97,114

$

(10,730)

$

6,071,415

Accrued interest receivable related to available-for-sale investment securities was $11.6 million and $10.6 million as of June 30, 2021 and December 31, 2020, respectively, and is recorded separately from the amortized cost basis of investment securities on the Company’s unaudited interim consolidated balance sheets.

Proceeds from calls and sales of investment securities were $0.2 million and $2.5 million, respectively, for the three months ended June 30, 2021, and $0.3 million and $2.5 million, respectively, for the six months ended June 30, 2021. Proceeds from calls and sales of investment securities were $26.7 million and $539.5 million, respectively, for the three months ended June 30, 2020, and $101.7 million and $543.0 million, respectively, for the six months ended June 30, 2020. The Company recorded gross realized gains of $0.1 million and gross realized losses of NaN during both the three and six months ended June 30, 2021. The Company recorded gross realized gains of $0.5 million and gross realized losses of $0.8 million for the three months ended June 30, 2020, and gross realized gains of $0.6 million and gross realized losses of $0.8 million for the six months ended June 30, 2020. The income tax expense related to the Company’s net realized gains on the sale of investment securities was NaN during both the three and six months ended June 30, 2021. The income tax benefit related to the net realized loss on the sale of investment securities was $0.1 million and NaN, respectively, for the three and six months ended June 30, 2020. Gains and losses realized on sales of securities are determined using the specific identification method.

Interest income from taxable investment securities was $22.4 million and $17.5 million, respectively, for the three months ended June 30, 2021 and 2020, and $44.6 million and $38.7 million, respectively, for the six months ended June 30, 2021 and 2020. Interest income from non-taxable investment securities was $2.2 million and NaN, respectively, during the three months ended June 30, 2021 and 2020, and $3.2 million and NaN, respectively, during the six months ended June 30, 2021 and 2020.

9

The amortized cost and fair value of debt securities issued by the U.S. Treasury and government agencies as of June 30, 2021, by contractual maturity, are shown below. 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.

June 30, 2021

Amortized

Fair

(dollars in thousands)

  

Cost

  

Value

Due in one year or less

$

$

Due after one year through five years

41,497

41,787

Due after five years through ten years

83,608

82,670

Due after ten years

57,249

56,315

182,354

180,772

Mortgage-backed securities:

Residential - Government agency

110,115

113,289

Residential - Government-sponsored enterprises

1,257,032

1,263,448

Commercial - Government agency

487,607

491,447

Commercial - Government-sponsored enterprises

1,244,031

1,223,805

Total mortgage-backed securities

3,098,785

3,091,989

Collateralized mortgage obligations:

Government agency

1,645,170

1,662,134

Government-sponsored enterprises

2,024,844

2,019,035

Total collateralized mortgage obligations

3,670,014

3,681,169

Total available-for-sale securities

$

6,951,153

$

6,953,930

At June 30, 2021, pledged securities totaled $2.0 billion, of which $1.8 billion was pledged to secure public deposits and $192.8 million was pledged to secure other financial transactions. At December 31, 2020, pledged securities totaled $2.4 billion, of which $2.3 billion was pledged to secure public deposits and $186.1 million was pledged to secure other financial transactions.

The Company held 0 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 June 30, 2021 or December 31, 2020.

The following tables present the unrealized gross losses and fair values of securities in the available-for-sale portfolio by length of time that the 162 and 50 individual securities in each category have been in a continuous loss position as of June 30, 2021 and December 31, 2020, 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 June 30, 2021

Less Than 12 Months

12 Months or More

Total

Unrealized

Unrealized

Unrealized

(dollars in thousands)

  

Losses

  

Fair Value

  

Losses

  

Fair Value

  

Losses

  

Fair Value

U.S. Treasury and government agency debt securities

$

(2,127)

$

120,987

$

$

$

(2,127)

$

120,987

Mortgage-backed securities:

Residential - Government-sponsored enterprises

(4,360)

618,414

(4,360)

618,414

Commercial - Government agency

(2,899)

193,041

(217)

7,064

(3,116)

200,105

Commercial - Government-sponsored enterprises

(27,342)

865,899

(27,342)

865,899

Collateralized mortgage obligations:

Government agency

(5,667)

463,392

(5,667)

463,392

Government-sponsored enterprises

(17,004)

1,237,282

(17,004)

1,237,282

Total available-for-sale securities with unrealized losses

$

(59,399)

$

3,499,015

$

(217)

$

7,064

$

(59,616)

$

3,506,079

10

Time in Continuous Loss as of December 31, 2020

Less Than 12 Months

12 Months or More

Total

Unrealized

Unrealized

Unrealized

(dollars in thousands)

  

Losses

  

Fair Value

  

Losses

  

Fair Value

  

Losses

  

Fair Value

U.S. Treasury and government agency debt securities

$

(61)

$

38,507

$

$

$

(61)

$

38,507

Mortgage-backed securities:

Residential - Government-sponsored enterprises

(725)

64,987

(725)

64,987

Commercial - Government agency

(119)

32,346

(119)

32,346

Commercial - Government-sponsored enterprises

(7,983)

427,759

(7,983)

427,759

Collateralized mortgage obligations:

Government agency

(994)

209,124

(25)

6,190

(1,019)

215,314

Government-sponsored enterprises

(823)

296,160

(823)

296,160

Total available-for-sale securities with unrealized losses

$

(10,705)

$

1,068,883

$

(25)

$

6,190

$

(10,730)

$

1,075,073

At June 30, 2021 and December 31, 2020, the Company did not have any securities with 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 had the intent and ability to hold the remaining securities in an unrealized loss position as of June 30, 2021 and December 31, 2020, each security with an unrealized loss position in the above tables has been further assessed to determine if a credit loss exists. As of June 30, 2021 and December 31, 2020, the Company did not expect any credit losses in its debt securities and 0 credit losses were recognized on securities during the three and six months ended June 30, 2021 and for the year ended December 31, 2020.

As of June 30, 2021 and December 31, 2020, the Company’s available-for-sale investment securities were comprised entirely of debt, mortgage-backed securities and collateralized mortgage obligations issued by the U.S. Government, its agencies and government-sponsored enterprises. Management has concluded that the long history with 0 credit losses from these issuers indicates an expectation that nonpayment of the amortized cost basis is 0. The Company’s available-for-sale investment securities are explicitly or implicitly fully guaranteed by the U.S. government. The U.S. government can print its own currency and its currency is routinely held by central banks and other major financial institutions. The dollar is used in international commerce, and commonly is viewed as a reserve currency, all of which qualitatively indicates that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. Thus, the Company has not recorded an allowance for credit losses for its available-for-sale debt securities as of June 30, 2021 and December 31, 2020.

Visa Class B Restricted Shares

In 2008, the Company received 394,000 Visa Class B restricted shares as part of Visa’s IPO. 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.  On September 27, 2019, Visa additionally funded its litigation escrow account, thereby further reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on September 30, 2019, Visa announced a decrease in conversion rate from 1.6298 to 1.6228, effective September 27, 2019. In October 2019, the Company made a payment of approximately $0.3 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 June 30, 2021 and December 31, 2020. These shares continued to be carried at $0 cost basis as of both June 30, 2021 and December 31, 2020.

11

3. Loans and Leases

As of June 30, 2021 and December 31, 2020, loans and leases were comprised of the following:

June 30, 

December 31, 

(dollars in thousands)

  

2021

  

2020

Commercial and industrial

$

2,564,547

$

3,019,507

Commercial real estate

3,528,068

3,392,676

Construction

853,865

735,819

Residential:

Residential mortgage

3,821,407

  

3,690,218

Home equity line

825,368

841,624

Total residential

  

4,646,775

4,531,842

Consumer

1,267,559

1,353,842

Lease financing

242,971

245,411

Total loans and leases

$

13,103,785

$

13,279,097

Outstanding loan balances are reported net of deferred loan costs and fees of $20.4 million and $26.1 million at June 30, 2021 and December 31, 2020, respectively.

Accrued interest receivable related to loans and leases was $55.1 million and $59.0 million as of June 30, 2021 and December 31, 2020, respectively, and is recorded separately from the amortized cost basis of loans and leases on the Company’s unaudited interim consolidated balance sheets.

As of June 30, 2021, 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, commercial and industrial, commercial real estate and residential real estate loans totaling $1.9 billion were pledged to collateralize the Company’s borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2020, residential real estate loans totaling $2.9 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer, commercial and industrial, commercial real estate and residential mortgage loans totaling $1.9 billion 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 $2.6 million and $2.3 million as of June 30, 2021 and December 31, 2020, 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 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 strength and stability of the state or territories, which affects property values, and the financial strength and creditworthiness of the borrowers.

4. Allowance for Credit Losses

The Company maintains the allowance for credit losses for loans and leases (the “ACL”) that is deducted from the amortized cost basis of loans and leases to present the net carrying value of loans and leases expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount of loans and leases.

The Company also maintains an estimated reserve for unfunded commitments on the unaudited interim consolidated balance sheets. The reserve for unfunded commitments is reduced in the period in which the off-balance sheet financial instruments expire, loan funding occurs, or is otherwise settled.

12

In response to the COVID-19 pandemic, on March 27, 2020, the CARES Act was signed into law. The CARES Act creates a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to troubled debt restructurings (“TDRs”) for a limited period of time to account for the effects of COVID-19. Financial institutions accounting for eligible loans under the CARES Act are not required to report such loans as TDRs in accordance with GAAP. In addition, Interagency Statements were issued on March 22, 2020 and April 7, 2020 to encourage financial institutions to work prudently with borrowers and to describe the agencies’ interpretation of how current accounting rules under GAAP apply to certain COVID-19 related modifications. The agencies confirmed with the FASB that short-term modifications (e.g., six months or less) for payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant and made on a good faith basis in response to borrowers impacted by COVID-19 who were current prior to any relief are not TDRs under GAAP. The agencies also confirmed that these short-term modifications should not be reported as being on nonaccrual status and should not be considered past due during the period of the deferral. The Company has adopted the provisions of both the CARES Act and Interagency Statements. The Company is first applying the CARES Act guidance in determining if certain loan modifications are not required to be reported as TDRs. If the loan modification does not qualify under the CARES Act, then the Interagency Statement guidance is applied. On December 27, 2020, the Consolidated Appropriations Act – 2021 (the “CAA”) was signed into law, which extends the temporary relief from TDR reporting through the earlier of (1) January 1, 2022, or (2) 60 days after the date on which the national emergency concerning COVID-19 terminates. The interim consolidated financial information below reflects the application of this guidance.

Rollforward of the Allowance for Credit Losses

The following presents the activity in the ACL by class of loans and leases for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 2021

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

    

Industrial

    

Estate

    

Construction

    

Financing

    

Mortgage

    

Line

    

Consumer

    

Total

 

Allowance for credit losses:

Balance at beginning of period

$

27,322

$

51,691

$

10,552

$

3,197

$

38,471

$

6,668

$

62,465

$

200,366

Charge-offs

(330)

(3,917)

(4,247)

Recoveries

287

12

14

38

2,797

3,148

Decrease in Provision

(4,216)

(4,670)

(400)

(130)

(4,277)

(456)

(15,970)

(30,119)

Balance at end of period

$

23,063

$

47,033

$

10,152

$

3,067

$

34,208

$

6,250

$

45,375

$

169,148

Six Months Ended June 30, 2021

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

  

Industrial

  

Estate

  

Construction

  

Financing

  

Mortgage

    

Line

  

Consumer

  

Total

Allowance for credit losses:

Balance at beginning of period

$

24,711

$

58,123

$

10,039

$

3,298

$

40,461

$

7,163

$

64,659

$

208,454

Charge-offs

(1,293)

(66)

(98)

(10,458)

(11,915)

Recoveries

502

15

166

31

62

5,452

6,228

Decrease in Provision

(857)

(11,039)

(53)

(231)

(6,186)

(975)

(14,278)

(33,619)

Balance at end of period

$

23,063

$

47,033

$

10,152

$

3,067

$

34,208

$

6,250

$

45,375

$

169,148

Three Months Ended June 30, 2020

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

    

Industrial

    

Estate

    

Construction

    

Financing

    

Mortgage

    

Line

    

Consumer

    

Total

Allowance for credit losses:

Balance at beginning of period

$

20,884

$

42,838

$

8,824

$

851

$

30,021

$

6,556

$

56,039

$

166,013

Charge-offs

(13,974)

(2,723)

(379)

(14)

(8,907)

(25,997)

Recoveries

100

30

17

8

2,456

2,611

Increase (decrease) in Provision

14,289

13,007

(3,199)

2,986

3,850

1,071

17,489

49,493

Balance at end of period

$

21,299

$

53,122

$

5,276

$

3,837

$

33,874

$

7,635

$

67,077

$

192,120

13

Six Months Ended June 30, 2020

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

  

Industrial

  

Estate

  

Construction

  

Financing

  

Mortgage

    

Line

  

Consumer

  

Unallocated

  

Total

Allowance for credit losses:

Balance at beginning of period

$

28,975

$

22,325

$

4,844

$

424

$

29,303

$

9,876

$

34,644

$

139

$

130,530

Adoption of ASU No. 2016-13

(16,105)

10,559

(1,803)

207

(2,793)

(4,731)

15,575

(139)

770

Charge-offs

(14,175)

(2,723)

(379)

(14)

(8)

(17,504)

(34,803)

Recoveries

320

140

152

130

4,539

5,281

Increase in Provision

22,284

22,961

2,474

3,206

7,226

2,368

29,823

90,342

Balance at end of period

$

21,299

$

53,122

$

5,276

$

3,837

$

33,874

$

7,635

$

67,077

$

$

192,120

Rollforward of the Reserve for Unfunded Commitments

The following presents the activity in the Reserve for Unfunded Commitments for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 2021

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

    

Industrial

    

Estate

    

Construction

    

Financing

    

Mortgage

    

Line

    

Consumer

    

Total

Reserve for unfunded commitments:

Balance at beginning of period

$

16,129

$

1,112

$

8,313

$

$

$

8,500

$

49

$

34,103

Decrease in Provision

(3,321)

(134)

(440)

(979)

(7)

(4,881)

Balance at end of period

$

12,808

$

978

$

7,873

$

$

$

7,521

$

42

$

29,222

Six Months Ended June 30, 2021

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

  

Industrial

  

Estate

  

Construction

  

Financing

  

Mortgage

  

Line

  

Consumer

  

Total

Reserve for unfunded commitments:

Balance at beginning of period

$

11,719

$

1,328

$

9,037

$

$

2

$

8,452

$

65

$

30,603

Increase (decrease) in Provision

1,089

(350)

(1,164)

(2)

(931)

(23)

(1,381)

Balance at end of period

$

12,808

$

978

$

7,873

$

$

$

7,521

$

42

$

29,222

Three Months Ended June 30, 2020

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

    

Industrial

    

Estate

    

Construction

    

Financing

    

Mortgage

    

Line

    

Consumer

    

Total

Reserve for unfunded commitments:

Balance at beginning of period

$

4,791

$

696

$

4,813

$

$

1

$

6,927

$

23

$

17,251

Increase in Provision

3,390

472

1,095

2

963

31

5,953

Balance at end of period

$

8,181

$

1,168

$

5,908

$

$

3

$

7,890

$

54

$

23,204

Six Months Ended June 30, 2020

Commercial Lending

Residential Lending

Commercial

Commercial

Home

and

Real

Lease

Residential

Equity

(dollars in thousands)

  

Industrial

  

Estate

  

Construction

  

Financing

  

Mortgage

  

Line

  

Consumer

  

Total

Reserve for unfunded commitments:

Balance at beginning of period

$

$

$

$

$

$

$

600

$

600

Adoption of ASU No. 2016-13

5,390

778

4,119

7

6,587

(581)

16,300

Increase (decrease) in Provision

2,791

390

1,789

(4)

1,303

35

6,304

Balance at end of period

$

8,181

$

1,168

$

5,908

$

$

3

$

7,890

$

54

$

23,204

Credit Quality Information

The Company performs an internal loan review and grading or scoring procedures 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 or scoring procedures is to identify, in a timely manner, existing or emerging credit quality issues so that appropriate steps can be initiated to avoid or minimize future losses.

14

Loans and leases subject to grading primarily include: commercial and industrial loans, commercial real estate loans, construction loans and lease financing. Other loans subject to grading include installment loans to businesses or individuals for business and commercial purposes, overdraft lines of credit, commercial credit cards, and other credits as may be determined. Credit quality indicators for internally graded loans and leases are generally updated on an annual basis or on a quarterly basis for those loans and leases deemed to be of potentially higher risk.

An internal 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 factors of a borrower: character, earnings and operating cash flow, asset and liability structure, debt capacity, 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.

Loans that are primarily monitored for credit quality using FICO scores include: residential mortgage loans, home equity lines and consumer loans. FICO scores are calculated primarily based on a consideration of payment history, the current amount of debt, the length of credit history available, a recent history of new sources of credit and the mix of credit type. FICO scores are updated on a monthly, quarterly or bi-annual basis, depending on the product type.

15

The amortized cost basis by year of origination and credit quality indicator of the Company’s loans and leases as of June 30, 2021 was as follows:

Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Loans

Amortized

Amortized

(dollars in thousands)

2021

2020

2019

2018

2017

Prior

Cost Basis

Cost Basis

Total

Commercial Lending

Commercial and Industrial

Risk rating:

Pass

$

606,765

$

422,457

$

242,554

$

136,069

$

48,828

$

207,502

$

674,340

$

23,935

$

2,362,450

Special Mention

122

8,994

33,617

12,735

1,425

4,647

14,338

376

76,254

Substandard

7,149

2,400

16,246

137

8,731

6,397

1,344

42,404

Other (1)

9,812

8,774

10,337

6,632

3,531

965

43,388

83,439

Total Commercial and Industrial

616,699

447,374

288,908

171,682

53,921

221,845

738,463

25,655

2,564,547

Commercial Real Estate

Risk rating:

Pass

288,366

342,013

571,608

557,533

449,551

1,055,803

63,775

2

3,328,651

Special Mention

1,482

52,852

16,081

33,022

55,933

7,604

166,974

Substandard

411

7,016

2,069

21,962

502

31,960

Other (1)

483

483

Total Commercial Real Estate

288,366

343,906

624,460

580,630

484,642

1,134,181

71,881

2

3,528,068

Construction

Risk rating:

Pass

49,592

97,149

296,405

173,352

62,983

70,998

55,892

806,371

Special Mention

494

705

361

1,560

Substandard

373

1,378

1,751

Other (1)

11,829

15,036

5,247

5,381

2,953

2,930

807

44,183

Total Construction

61,421

112,185

302,146

179,811

65,936

75,667

56,699

853,865

Lease Financing

Risk rating:

Pass

21,690

69,598

55,494

11,376

16,623

60,091

234,872

Special Mention

545

308

465

246

81

232

1,877

Substandard

2,720

1,668

260

1,072

502

6,222

Total Lease Financing

22,235

72,626

57,627

11,882

17,776

60,825

242,971

Total Commercial Lending

$

988,721

$

976,091

$

1,273,141

$

944,005

$

622,275

$

1,492,518

$

867,043

$

25,657

$

7,189,451

(continued)

16

Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Loans

(continued)

Amortized

Amortized

(dollars in thousands)

2021

2020

2019

2018

2017

Prior

Cost Basis

Cost Basis

Total

Residential Lending

Residential Mortgage

FICO:

740 and greater

$

570,542

$

675,163

$

329,047

$

224,827

$

293,853

$

958,515

$

$

$

3,051,947

680 - 739

68,225

86,857

50,699

43,075

42,753

144,223

435,832

620 - 679

11,867

12,564

9,988

6,352

9,310

41,478

91,559

550 - 619

1,018

171

1,322

1,752

11,788

16,051

Less than 550

1,274

346

2,545

2,807

6,972

No Score (3)

10,207

8,602

15,988

21,087

18,814

51,217

125,915

Other (2)

10,440

17,605

12,917

11,910

19,349

20,130

625

155

93,131

Total Residential Mortgage

671,281

803,083

418,810

308,919

388,376

1,230,158

625

155

3,821,407

Home Equity Line

FICO:

740 and greater

610,924

1,757

612,681

680 - 739

147,286

3,619

150,905

620 - 679

39,660

2,036

41,696

550 - 619

12,966

1,256

14,222

Less than 550

2,025

47

2,072

No Score (3)

3,792

3,792

Total Home Equity Line

816,653

8,715

825,368

Total Residential Lending

671,281

803,083

418,810

308,919

388,376

1,230,158

817,278

8,870

4,646,775

Consumer Lending

FICO:

740 and greater

82,086

97,867

100,874

77,671

38,340

16,537

112,925

284

526,584

680 - 739

50,771

70,303

73,024

48,071

26,097

12,183

70,627

747

351,823

620 - 679

21,372

31,170

37,145

25,852

17,799

9,120

31,515

1,258

175,231

550 - 619

2,887

9,729

17,206

14,016

11,217

6,263

10,652

1,234

73,204

Less than 550

322

3,826

6,934

5,439

3,757

2,295

3,184

748

26,505

No Score (3)

834

63

85

51

87

4

33,144

420

34,688

Other (2)

394

370

1,759

52

2,183

49

74,717

79,524

Total Consumer Lending

158,666

213,328

237,027

171,152

99,480

46,451

336,764

4,691

1,267,559

Total Loans and Leases

$

1,818,668

$

1,992,502

$

1,928,978

$

1,424,076

$

1,110,131

$

2,769,127

$

2,021,085

$

39,218

$

13,103,785

(1)Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score.
(2)Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating.
(3)No FICO scores are primarily related to loans and leases extended to non-residents.  Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance.

17

The amortized cost basis by year of origination and credit quality indicator of the Company’s loans and leases as of December 31, 2020 was as follows:

Revolving

Loans

Converted

Term Loans

Revolving

to Term

Amortized Cost Basis by Origination Year

Loans

Loans

Amortized

Amortized

(dollars in thousands)

2020

2019

2018

2017

2016

Prior

Cost Basis

Cost Basis

Total

Commercial Lending

Commercial and Industrial

Risk rating:

Pass

$

873,639

$

324,030

$

183,329

$

73,000

$

49,886

$

94,360

$

1,058,786

$

28,853

$

2,685,883

Special Mention

20,937

10,370

20,164

2,099

279

8,316

101,183

1,549

164,897

Substandard

23,804

2,023

2,568

677

4,063

8,113

33,775

250

75,273

Other (1)

13,142

13,426

9,246

5,337

1,867

280

50,156

93,454

Total Commercial and Industrial

931,522

349,849

215,307

81,113

56,095

111,069

1,243,900

30,652

3,019,507

Commercial Real Estate

Risk rating:

Pass

342,845

611,243

541,104

447,366

295,426

814,398

47,604

323

3,100,309

Special Mention

1,500

63,617

26,187

33,482

37,841

61,279

2,999

226,905

Substandard

29

3,964

18,983

3,779

10,615

18,083

9,511

64,964

Other (1)

498

498

Total Commercial Real Estate

344,374

678,824

586,274

484,627

343,882

894,258

60,114

323

3,392,676

Construction

Risk rating:

</