First Hawaiian Bank has operated as a subsidiary of the French Banking Company, PNB Paribas S.A. since its acquisition by the bank in 2001. After the acquisition, First Hawaiian Bank continued to operate as a separate institution.
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First Hawaiian, Inc. (NASDAQ:FHB) hopes to raise $557,750,000 through its sale of 21,086,957 shares common stock and an additional 3,163,043 shares as an over-allotment option for purchase by its underwriters. The bank has set its price range at $21 to $23 per share.
The underwriters for the offering include: Goldman Sachs, BofA Merrill Lynch, BNP Paribas, Barclays, Credit Suisse, Deutsche Bank, J.P. Morgan, Citi, Morgan Stanley, UBS Investment Bank, BBVA, Commerzbank Capital, HSBC Corporation, ING, Keefe Bruyette Woods, Banco Santander, and Wells Fargo Securities.
Business Summary and Executive Management Team Overview
Based in Honolulu, Hawaii and founded in 1858, First Hawaiian Bank has 62 branches throughout Hawaii. The bank reported that it had $19.1 billion in assets as of March 31, 2016, and generated net income of $65.5 million for that quarter. For the year that ended on Dec. 31, 2016, the bank reported that its net income was $213.8 million.
Robert S. Harrison is the CEO and chairman of First Hawaiian Bank. He has served as the bank's CEO since 2012. Prior to that, Harrison served as the bank's COO from Dec. 1, 2009, to Jan. 1, 2012, and as its president from Dec. 1, 2009 to June 22, 2015. He holds an MBA from Cornell University and an undergraduate degree in applied mathematics from UCLA. Harrison has more than 23 years of experience in the financial sector, both in Hawaii and mainland U.S.
Eric K. Yeaman has served as the president and COO of First Hawaiian Bank since June 22, 2015. Before joining First Hawaiian, Yeaman was the CEO and president of Hawaiian Telecom Communications, Inc. from June 16, 2008, to June 22, 2015. Yeaman is a certified public accountant and holds a Bachelor of Business Administration in accounting from the University of Hawaii at Manoa.
Financial highlights and risks
First Hawaiian Bank has the largest market share of deposit accounts at 36.5 percent in the state of Hawaii. The bank's 2015 net income of $213.8 million was down from its 2014 income by 1 percent. For the second quarter that ended in June, the bank reported a net income of $54.9 million, which was slightly higher than the 2015 figure of $54.6 million.
The bank identifies its geographic concentration in Hawaii, Guam and Saipan as its primary risks. Similarly, the bank is dependent on the military base population, meaning that if the military cuts back its personnel that are stationed there, the bank could be adversely impacted. And, like any bank, FHB is subject to interest rate risk and fluctuations in interest rates, which could adversely affect earnings.
Conclusion: Consider buying
Despite an overall difficult year for the financial sector, the three banks, which have successfully gone public in 2016 have had an average total return of 10% from their IPO price.
Given First Hawaiian Bank's strong regional presence in Hawaii, good asset portfolio, and it is profitable, we believe it will follow in this positive trend for investors. The bank has strong leadership and a solid market share of deposit accounts.
We hear the deal is already very popular has been pushed up a day to price Wednesday night.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in FBH over the next 72 hours.
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