Business Context and Reporting Period
Company: First Hawaiian, Inc.
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 1993
Business Overview: A Delaware corporation and registered bank holding company operating primarily in Hawaii. The Corporation's principal assets are its investments in First Hawaiian Bank (the "Bank"), First Hawaiian Creditcorp, Inc. ("Creditcorp"), First Hawaiian Leasing, Inc. ("FHL"), and Pioneer Federal Savings Bank ("Pioneer"). As of June 30, 1993, it was the 76th largest bank holding company in the U.S.
Key Financial Metrics
Consolidated Balance Sheet (as of Dec 31, 1993):
- Total Assets: $7.3 billion
- Total Deposits: $5.2 billion
- Total Stockholders' Equity: $608.4 million
Subsidiary Highlights:
- First Hawaiian Bank: $6.1 billion in assets; $4.5 billion in deposits; $4.0 billion in loans (66.2% of total assets). Loan portfolio composition: 53.0% real estate, 31.1% commercial, 12.2% consumer, 3.7% leases.
- Creditcorp: $433.0 million in assets; $350.0 million in deposits; $415.0 million in loans/leases.
- Pioneer Federal Savings Bank: $650.3 million in assets; $399.4 million in deposits; $544.0 million in loans.
- FHL: $51.5 million in assets; $49.3 million net investment in leases.
Investment Portfolio: Total book value of $1.23 billion, primarily U.S. Treasury and government agency securities ($918 million).
Market Data: 32,411,797 shares of Common Stock outstanding as of February 22, 1994. Aggregate market value of non-affiliate voting stock was $486,635,000.
Note: Specific revenue, net income, cash flow, and margin figures are incorporated by reference from the Annual Report and are not explicitly detailed in the provided text.
Material Changes
- Acquisition of Pioneer: On August 6, 1993, the Corporation acquired Pioneer Federal Savings Bank for $87 million. This acquisition increased the Corporation's deposit share in Hawaii to 23% (combined with the Bank) and added $650.3 million in assets.
- Foreign Operations: Average foreign assets to average total assets decreased to 6.19% in 1993 from 6.51% in 1992. Total foreign outstandings were $256 million.
- Legal Proceedings: A counterclaim involving the Bank and MasterCard International was settled and dismissed on January 21, 1994, with no payment or obligation assumed by the Corporation.
Outlook, Risks, and Contingencies
Hurricane Iniki Exposure: The Corporation held $141.9 million in loans collateralized by properties damaged by Hurricane Iniki (1992). All properties were insured, and the Corporation does not anticipate material losses. However, the hurricane caused a tightening in the homeowners' insurance market, increasing costs and creating potential risks if insurance becomes unavailable.
Regulatory Environment: The Corporation is subject to the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), which imposes strict capital requirements and "prompt corrective action" standards. Dividend payments are limited to 50% of consolidated net income per debt covenants and are restricted if subsidiaries become undercapitalized.
Competition and Legislation: Competition in Hawaii is intense. Proposed state and federal legislation could permit out-of-state bank holding companies to acquire Hawaii banks, potentially altering the competitive landscape.
Capital Requirements: Proposed federal rules regarding interest rate risk and credit concentration could impact capital ratios, though the specific impact is currently unassessable.
Investor Verification Checklist
- Verify the specific revenue, net income, and earnings per share figures in the "Summary of Selected Consolidated Financial Data" (Page 16 of the Annual Report) which is incorporated by reference.
- Confirm the status of the new headquarters construction in Honolulu (anticipated completion 1996) and associated capital expenditures.
- Review the "Management's Discussion and Analysis" (Pages 17-32 of the Annual Report) for detailed net interest margin analysis and non-interest income breakdown.
- Monitor the availability and cost of homeowners' casualty insurance in Hawaii following Hurricane Iniki.
- Track legislative developments regarding interstate banking and potential out-of-state acquisitions of Hawaii banks.