First Hawaiian, Inc.

Good day, and thank you for standing by. Welcome to the First Hawaiian, Inc. Second Quarter 2023 Earnings Conference Call. At this time, all participants are on the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kevin Haseyama, Investor Relations Manager. Please go ahead.

Thank you, Shannon. And thank you, everyone, for joining us as we review our financial results for the second quarter of 2023. With me today are Bob Harrison, Chairman, President, and CEO, Jamie Moses, Chief Financial Officer, and Lee Nakamura, Chief Risk Officer. We have 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 will be making forward-looking statements, so please refer to slide one for our safe harbor statement. We may also discuss certain non-GAAP financial measures. The appendix to this presentation contains reconciliations of these non-GAAP financial measurements to the most directly comparable gap measurements. And now I'll turn the call over to Bob.

Good morning, everyone. I'm pleased to welcome Lee Nakamura. Lee was recently promoted to Chief Risk Officer after holding a variety of positions in the bank, including Deputy Chief Risk Officer and Treasurer. Lee has over 30 years of banking experience, and I'm confident she'll do great in her new role. I'll start with an overview of the local economy The Hawaii economy continues to do well. The statewide seasonally adjusted unemployment rate in June was 3%, which is lower than the national rate of 3.6%. Total visitor arrivals were 802,000 in May, which is 5.4% of the May 2019 arrival number. Japanese visitor arrivals at 34,000 was 70% below the May 19 levels. Visitor spend in March was $1.7 billion, 19% higher than May 2019. The housing market has remained stable. In June, the median sales price for a single family home on Oahu was $1.1 million, or 4.5% June of last year. The median sales price for condos on Oahu was $510,000, 4.5% below 2022. Turning to slide two, I'll give an overview of our second quarter results. Net income was $62.4 million, or 49 cents per share. As loans grew, we continued to grow capital, and credit quality remained excellent. Our return on average tangible assets was 1.05%, and our return on average tangible common equity was 18.57%. We continue to maintain strong capital levels with the CET one ratio of 12.05 and total capital of 13.17%. The board maintained the quarterly dividend at 26 cents. Turning to slide three, our balance sheet remains solid. In the second quarter, we brought down our excess liquidity by a little over $300 million as the recent disruption in the banking industry calmed down. This enabled us to reduce some higher cost short-term borrowings. We continue to have a strong liquidity position. As of June 30th, our total available liquidity was $8.6 billion, which was over 100% of uninsured non-public deposits. The duration of our VETMA portfolio remains stable at 5.5 years, and cash flows from the portfolio were about $60 million per month, as we had expected. Turning to slide four, period end loans and leases were $14.4 billion, an increase of $142 million, or 1% from the end of Q1. In the second quarter, about $130 million of completed construction loans were converted to CRE, and during the quarter, We also exited approximately $55 million of non-relationship shared national credits. We continue to believe that full-year loan growth will be in the low to mid single-digit range. Now I'll turn it over to Jamie.