First Hawaiian
Annual Report 2019

Plain-text annual report

2 0 1 9 A N N U A L R E P O R T TA BLE O F CONT ENT S 1 CEO’s Message 5 Financial Highlights 6 Talent Development 8 Business Banking 10 Corporate Banking 12 Small Business Banking 14 Personal Banking 16 Wealth Management & Private Banking 18 Philanthropy 20 Employee Volunteerism 22 Consolidated Statements of Income 23 Consolidated Balance Sheets 24 GAAP/Non-GAAP Reconciliation 25 Environmental, Social & Governance Statistics 26 Senior Management Committee 28 Senior Officers Boards of Directors (Inside Back Cover) Shareholder Information (Back Cover) First Hawaiian, Inc. (NASDAQ: FHB) is a bank holding company headquartered in Honolulu, Hawai‘i. Its principal subsidiary, First Hawaiian Bank, was founded in 1858 as Bishop & Co., and today is Hawai‘i’s oldest and largest financial institution with assets of $20.2 billion at December 31, 2019. The bank has 53 branches throughout Hawai‘i, three on Guam and two on Saipan. The bank offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online, and mobile banking channels. For more information about First Hawaiian, Inc., visit www.fhb.com. ON THE COVER: Big wave surfer, world champion stand-up paddleboarder and FHB customer, Kai Lenny, surfing his favorite Maui waves at Pe‘ahi (a.k.a Jaws) on November 27, 2018 a few hours after the World Surf League’s Jaws Challenge was canceled due to waves being too big and unruly. Photographer Mike Coots captured this shot from a helicopter overhead. We remain the leader among Hawai‘i banks in profitability, total assets, total loans and leases, deposits, credit quality and efficiency ratio. C E O ' S M E S S A G E Charting Our Independent Future Dear Fellow Shareholders, Following BNP Paribas’ sale of its remaining shares in our company in February 2019, we began a new round of strategic planning to chart the future of First Hawaiian, Inc. as a fully independent, publicly traded company. This year was marked by two key strategic steps: our successful transition to independence and our investment in the customer experience through technology projects. We completed our separation from BNP Paribas, absorbed transition costs while maintaining our best- in-the-State efficiency ratio, improved the quality of the balance sheet and continued to deliver outstanding financial performance. On the technology front, we continue to invest in digitization projects, including the replacement of our core banking platform, to enhance customer experience while building a digital architecture that makes us more agile in adopting new products and services. The architecture unlocks the innovation. Combining our 161 years of relationship banking experience with digital enablement, our bank continues to grow and thrive by earning the trust of our shareholders, customers, employees and communities. Shareholders We deliver long-term value and honor their trust by returning capital to them. During 2019, we repurchased 5.1 million shares, returning $136 million in capital to shareholders. The company’s dividend payout ratio during 2019 was 48.8% of diluted earnings per share, virtually identical to our target of paying out 50 cents per dollar earned. Customers We anticipate their needs and improve their financial lives. The improved digital experience we are building for customers uses new technology to supplement our proven, person-to-person relationship banking strategy. This new application will bring our “trusted advisor” service to a broader range of clients online and on mobile devices, offering them greater insight into their financial performance, more opportunities for growth and more sophisticated tools to control their finances. Employees We care for our employees like family. We have created award-winning programs for workforce training and talent development, strengthening our pipeline of leaders capable of transforming First Hawaiian, while reducing employee turnover. Our Communities First Hawaiian has a long history of earning the trust of the communities in which we live and work. Since our founding by Charles Reed Bishop in 1858 as Bishop & Co., our bank has contributed to charities that support local health, education, cultural advancement and social well-being. We encourage and enable our employees’ generosity as well, supporting in-house volunteer projects and employee giving programs, raising hundreds of thousands of dollars for charity. 50 Years . . . and Counting Our bank’s success is built on long-running relationships with customers, with corporate partners and with our own employees. 1 First Hawaiian has a long history of earning the trust of the communities in which we live and work. We are celebrating the 50th anniversary of the 1970 opening of our first branch on Guam, a U.S. territory in the Western Pacific. We have three branches on Guam and another two on nearby Saipan in the Northern Mariana Islands. We are Guam’s largest bank based on both total loans and deposits. We have also hit the 50-year mark in our relationship with Mastercard®. It was still called “Master Charge” when we became the first Hawai‘i bank to issue its card a half-century ago. Today, we are the only local bank in Hawai‘i that issues our own credit cards. To mark these long-standing ties, we introduced a new United® Credit Card in 2019, giving our Guam and Saipan customers enhanced mileage rewards. Robert S. Harrison 20 19 NUMBERS 2 NET INCOME $284.4 million up 7.6% from 2018. LOANS AND LEASES $13.2 billion up 1.0%, even after our strategic decision to sell more than $400 million of shared national credits to reposition our balance sheet. Areas of significant growth were commercial real estate loans and residential loans. EFFICIENCY RATIO 48.4% is an improvement over 2018 and better than all other Hawai‘i banks. Developing a Talented Workforce Fifty is the magic number for three employees who have now worked for our bank for more than a half century. They are emblematic of our stable workforce—99 employees and 164 bank retirees are members of the FHB 40-Year Club. Employees stay with our company because they see opportunities for training, development and advancement. In 2019, our bank won its second consecutive ATD BEST award from the worldwide Association for Talent Development. We are the only Hawai‘i company ever to win the prestigious prize. We did it by demonstrating how innovative talent development and employee learning are woven into our strategy and corporate culture. Thanks to our talented business bankers, First Hawaiian Bank won the SBA Lender of the Year—Category 1 award from the U.S. Small Business Administration Hawai‘i District for the third year in a row. Our commitment to continuous learning is part of the reason First Hawaiian Bank has been named one of the “Best Places to Work in Hawai‘i” for eight straight years by Hawaii Business magazine. Valued, well-trained, long-serving employees help us build stronger relationships with our customers over time. That’s good for our clients, our workforce, our recruitment and retention efforts as well as for our shareholders. Giving Back: A Tradition For the eighth consecutive year, First Hawaiian Bank ranked first among for-profit companies in Hawaii Business magazine’s annual list of “Hawai‘i’s Most Charitable Companies.” The bank, our FHB Foundation and our employee giving program, Kōkua Mai, contributed $4.25 million to charities during 2019. Employees and retirees donated over $815,000 to our in- house Kōkua Mai campaign, which supports 32 nonprofit agencies in Hawai‘i, Guam and Saipan. Over its 13-year life, Kōkua Mai has raised $8.6 million for charities that are personally meaningful to employees. Again this year, 99% of our employees donated to Kōkua Mai, a reflection of our bank’s “Yes” spirit toward meeting the needs of our neighbors and our neighborhoods. Our employees do more than reach for their wallets when help is needed; they also contribute thousands of hours of their time each year as volunteers. The bank’s own Community Care program, organized and run by employee teams, showed that our colleagues are willing to get their hands dirty to make a difference. More than 1,100 employees spent nearly 8,300 hours in 2019 volunteering on 29 help projects such as housing the homeless, preserving Native Hawaiian forests, repairing an ancient fishpond, preparing school supplies and assembling care packages for seniors. Growth Rates Moderating Although economic growth rates in Hawai‘i are moderating, 2019 was the state’s 10th consecutive year of real Gross Domestic Product expansion following the 2007–09 Great Recession. Government and academic economists forecast stable expansion at least through 2022, although at a modest pace. Hawai‘i’s GDP is expected to top $100 billion for the first time in 2020 and many other key economic measures continue to be positive. Seasonally adjusted unemployment ended 2019 at 2.6%, same as a year earlier. Only five states had a lower rate at year-end. Hawai‘i’s unemployment rate has remained below 3% since 2016. State tax revenues rose more than 5% in fiscal year 2019 and are forecast to increase 3% to 4% annually through 2026. DILUTED EARNINGS Up 10.4% to $2.13 per share. TOTAL ASSETS $20.2 billion down 2.6% EXCELLENT CREDIT QUALITY 0.04% at year end Ratio of non-accrual loans and leases to total loans and leases. DEPOSITS No. 1 in Hawai‘i deposits since 2004 $16.4 billion, down 4.1%, primarily due to a deliberate reduction in higher-cost government agency time deposits. NET INTEREST MARGIN 3.20% up 4 basis points in a challenging interest rate environment. 3 Top 20 Bank We are the highest ranked Hawai‘i bank First Hawaiian Bank ranked #18 in Forbes’ 2020 list of Best Banks in America. The magazine annually ranks the 100 largest publicly traded U.S. banks and thrifts based on growth, credit quality and profitability. They were giants in such fields as contracting, medicine, education and retail. Combined, these pillars of the community served as First Hawaiian directors for nearly 130 years. Bob Wo alone was a director for more than a half century (1963–2014), a period that saw huge changes in banking and in Hawai‘i business. We miss these four friends and colleagues. I was honored to work with and learn from each of them. “The First Hawaiian Way” Now, as a fully independent company, we continue our commitment to increasing long-term value for our shareholders, delivering exceptional customer experiences, providing our employees opportunities for growth and advancement and supporting the needs of the communities where we do business. Aloha, ROBERT S. HARRISON Chairman, President & Chief Executive Officer Foreclosure cases fell for the sixth consecutive year in 2019. On the other hand, Hawai‘i bankruptcy filings reached a five-year high. The picture is mixed for Hawai‘i tourism. Visitor arrivals grew a robust 5.4% over 2018, the ninth straight annual increase, and exceeded 10 million for the first time. Hawai‘i hotels’ occupancy and room revenues grew in 2019. Hawai‘i hotels ranked highest among major markets nationwide in revenue per available room and average daily rate. However, overall visitor spending was up just 1.4% for the year, below the rate of inflation. The State of Hawai‘i and University of Hawai‘i Economic Research Organization both predict that arrivals will continue to rise around 1% to 2% annually through at least 2022, with real visitor spending running slightly negative during the same period. Responding to Slower Growth First Hawaiian has demonstrated solid financial performance through all phases of the business cycle. During the decade following the start of the Great Recession, we posted steady growth in loans, deposits and profitability and continued to support the borrowing needs of our customers. We strengthened customer relationships while keeping credit quality high, thanks to consistent underwriting standards throughout the cycle. And we did so while maintaining a strong expense management culture that exists to this day. Aloha and Mahalo This was a sad year for the First Hawaiian ‘ohana (family) as four long-time members of our Boards of Directors passed away: David C. Hulihee, Dr. Richard T. Mamiya, Wesley T. Park, and Robert C. Wo. 4 FINANCIAL HIGHLIGHTS F I R S T H A W A I I A N , I N C . (dollars in thousands, except per share amounts) N E T I N C O M E (IN MILLION S) 2019 Net Income: $284.4 million 5-Year Compound Annual Growth Rate: 5.6% $300 $250 $200 $150 $100 $50 . 4 4 8 2 $ . 4 4 6 2 $ . 2 0 3 2 $ . 7 6 1 2 $ . 8 3 1 2 $ . 7 3 8 1 $ 4 1 0 2 5 1 0 2 6 1 0 2 7 1 0 2 8 1 0 2 9 1 0 2 A S S E T S (IN BILLIONS) Total Assets (12/31/19): $20.2 billion 5-Year Compound Annual Growth Rate: 2.1% $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 . 5 0 2 $ . 7 0 2 $ . 2 0 2 $ . 4 9 1 $ . 7 9 1 $ . 1 8 1 $ 4 1 0 2 5 1 0 2 6 1 0 2 7 1 0 2 8 1 0 2 9 1 0 2 D E P O S I T S (IN BILLIONS) Total Deposits (12/31/19): $16.4 billion 5-Year Compound Annual Growth Rate: 2.2% $18 $16 $14 $12 $10 $8 $6 $4 $2 . 8 6 1 $ . 6 7 1 $ . 2 7 1 $ . 4 6 1 $ . 1 6 1 $ . 7 4 1 $ 4 1 0 2 5 1 0 2 6 1 0 2 7 1 0 2 8 1 0 2 9 1 0 2 (1) These amounts are Non-GAAP financial measures. See GAAP/Non-GAAP Reconciliation on page 24 of this Annual Report for reconciliations of core net income, core basic earnings per share and core diluted earnings per share to comparable GAAP measures. (2) These ratios are Non-GAAP financial measures. For an explanation of how these ratios are computed, as well as a reconciliation of the components of such ratios to comparable GAAP measures, see GAAP/Non-GAAP Reconciliation on page 24 of this Annual Report, including Notes (1) through (6) in that section. 5 Year Ended December 31,20192018INCOME STATEMENT DATAInterest income$  678,692$  646,051Interest expense105,29079,733Net interest income573,402566,318Provision for loan and lease losses13,80022,180Net interest income after provision for loan and lease losses559,602544,138Noninterest income192,533178,993Noninterest expense370,437364,953Income before provision for income taxes381,698358,178Provision for income taxes97,30693,784Net income$  284,392$   264,394Core adjustments (Non-GAAP)(1)7,39322,317Core net income (Non-GAAP)(1)$  291,785$  286,711Core basic earnings per share (Non-GAAP)(1)$ 2.19$ 2.09Core diluted earnings per share (Non-GAAP)(1)$ 2.19$ 2.09Basic weighted-average outstanding shares133,076,489136,945,134Diluted weighted-average outstanding shares133,387,157137,111,420OTHER FINANCIAL INFO / PERFORMANCE RATIOSNet interest margin3.20%3.16%Core net interest margin (Non-GAAP)(2)3.20%3.16%Efficiency ratio48.36%48.96%Core efficiency ratio (Non-GAAP)(2)47.55%46.59%Return on average total assets1.40%1.31%Core return on average total assets (Non-GAAP)(2)1.44%1.42%Return on average total stockholders’ equity10.90%10.76%Core return on average total stockholders’ equity (Non-GAAP)(2)11.18%11.67%BALANCE SHEET DATALoans and leases$ 13,212,554$  13,076,623Allowance for loan and lease losses130,530141,718lnterest-bearing deposits in other banks333,642606,801Investment securities4,075,6444,498,342Goodwill995,492995,492Total assets20,166,73420,695,678Total deposits16,444,99417,150,068Total liabilities17,526,47618,170,839Total stockholders’ equity2,640,2582,524,839Book value per share20.3218.72ASSET QUALITY RATIOSNon-performing loans and leases / total loans and leases0.04%0.05%Allowance for loan and lease losses / total loans and leases0.99%1.08%Net charge-offs / average total loans and leases0.19%0.14%CAPITAL RATIOSCommon Equity Tier 1 capital ratio11.88%11.97%Tier 1 capital ratio11.88%11.97%Total capital ratio12.81%12.99%Tier 1 leverage ratio8.79%8.72%Total stockholders’ equity to total assets13.09%12.20%Tangible stockholders’ equity to tangible assets (Non-GAAP)(2) 8.58%7.76%6 A wide range of learning opportunities are offered from formal classroom programs to online courses to bite-sized videos, articles, infographics, book clubs, circles of growth, communities of practice, Toastmasters and on-the-job development activities. FHB employees can choose what, where and how they build their professional skills. FHB has been at the forefront of community learning initiatives as the presenting title sponsor for the Hawaii Business Leadership Conference, the State’s largest professional development event. Collectively, these tangible investments in our workforce, and our belief in the power of reinvention, are reasons why thousands of employees continue to vote for FHB as a “Best Place to Work” in Hawai‘i over the past eight consecutive years. The Association for Talent Development (ATD) recognized FHB with the ATD BEST Award, the talent development industry’s most rigorous and coveted accolade. FHB is honored to be the only company in Hawai‘i to receive this international recognition in 2018, and again in 2019, for demonstrating enterprise-wide success through talent development. T A L E N T D E V E L O P M E N T Investing in our people is essential to FHBʼs long-term sustainability. We know that promising career potential is a key reason why employees join FHB. Attracting and retaining top talent ensures that we are providing the best experiences to our customers. Our bank's commitment to learning is steadfast, both within and outside of our organization. Learning and development are foundational to our purpose as an institution. Providing an inclusive workplace where everyone is supported to perform at their best includes having an encouraging environment with easy access to learning. Our innovative strategy to build future-focused skills is equipping our workforce to be successful in the face of increasing complexity within the financial industry. In 2015, FHB refocused our future of corporate education with the launch of our Strive initiative to “build tomorrow’s leaders today.” Our talent development programs address the diverse needs at multiple levels to include emerging leaders, advanced leaders, executive leaders and transformational change leaders. Senior leaders at FHB serve as faculty to facilitate internal sessions aimed at equipping our next generation to lead in a new context. FHB offers a mobile, 24/7 online learning platform, which empowers employees to learn for their jobs, careers, personal interests and for the future of work. 2018 2019 Left: Growing our leaders through FHB’s award-winning talent development programs. Right: Executive Vice President Iris Matsumoto and Senior Vice President of Human Resources Sherri Okinaga with the 2019 ATD BEST Award. 7 Diamond Bakery Carl Murai, Chairman Gary Yoshioka, President KALIHI, O‘AHU “With a loan from Bishop & Co., the predecessor to First Hawaiian Bank, our founders Natsu Muramoto, Kikutaro Hiruya and Hidegoro Murai opened Diamond Bakery’s 17,000-square-foot factory in 1921 on King Street in Honolulu. “Our company started out with Saloon Pilot, Soda, Graham and Royal Creem Crackers and diversified by going into confectionaries, which created a need to double our factory space. We again turned to First Hawaiian, which expedited the construction and equipment loan, enabling us to open a new Kalihi factory in 1974. “Modernization allowed us to bake much faster and be innovative. Diamond Bakery was one of the first Hawai‘i companies to introduce the portion pack that preserved the shelf life of our crackers. Today, we’ve added an expanding variety of cookie and cracker flavors. As new products are developed, we’ve financed technology and automation projects to keep our factory running efficiently. Also, through eCommerce, our customer base has been significantly expanded to sustain brand awareness and growth initiatives. “Business partnerships are founded on trust, respect, and shared success— this is our vision statement. First Hawaiian has been a great partner for us. They take the time to really understand what we're trying to do—strategically, tactically and culturally as a company. “From CEO Bob Harrison to Vernon Nakamura, our local Kalihi branch manager, and Steve Lim, our loan officer, we know their commitment includes the bank’s broad band of resources to help us achieve our vision. Steve is an incredible sounding board for us. Best of all, he’s become a good friend. In a partnership, you have to have honesty and trust. We’ve found all that and more in First Hawaiian Bank.” 8 B U S I N E S S B A N K I N G 9 C O R P O R A T E B U S I N E S S B A N K I N G 10 Servco Pacific Inc. Mark Fukunaga, Chairman & CEO Rick Ching, President & COO Mike Regan, EVP & CFO MĀPUNAPUNA, O‘A HU “Providing products and services that customers want was our core business long before we began our relationship with First Hawaiian in 1975. But that relationship grew into a strong partnership in the early 1990s after financing for our inventory was pulled on relatively short notice. We were scrambling to get tens of millions of dollars in place and First Hawaiian was there for us, and they were there again at another critical point in our business when they helped us purchase over 14 acres at Honolulu Harbor for our port facilities. “For 100 years, Servco has focused on serving our customers and following them wherever they wanted to go. And like every business today, we’re facing a lot of disruption. We anticipate our traditional auto business will turn into a mobility business involving autonomous vehicles, car sharing, smart shuttles and smart carpooling. First Hawaiian gives us confidence to travel that road. “Our Hui Car Share joint venture with Toyota continues to grow. We’re now looking at approaching downtown Honolulu companies to pool cars in their garages so employees can car share. We envision people ultimately using multi-mobile options such as rail, bus, smart vehicles and Biki Bikeshare. “In 2018, we opened our hydrogen fueling station in Māpunapuna to assist the State in meeting its energy self-sufficiency initiatives. Our inventory includes the Mirai, an electric vehicle powered by a hydrogen fuel cell —it’s only emission is water. Essentially, fuel cell vehicles offer zero carbon emissions and zero compromise on fast refueling and driving range. “When we look at Servco’s diversity, its global growth expansion into Australia and the complexity of our financing needs, First Hawaiian has been indispensable to what we do. It’s been a great business partnership and one that has developed into many friendships through the years as well. We are looking forward to working more with First Hawaiian in the future.” 11 Uncle’s Hawaiian Ice Cream Sandwiches Paul and Barbara Logan, Owners WAIALUA, O‘AHU After satisfying careers and operating a successful restaurant, retired mechanical engineer/chef Paul and his wife Barbara, who worked in finance, returned home to retire in Waialua. Fate had something different in mind. Instead, Paul became a farmer. While selling produce at the Waimea Valley Farmers Market, they decided to experiment, offering ultra-premium ice cream sandwiched between homemade cookies. The treats caught on. “When you’re running a business, it’s important to have a banker you can go to for financial help and advice. So, when our previous bank responded to our financial requests with one ‘No’ after another, we asked First Hawaiian Bank— the bank that says ‘Yes.’ “Our banker, Kurt Murata, has been stellar. He understood our desire to use local ingredients whenever possible, including Waialua coffee and Big Island mac nuts. He learned how we grew our menu to 20 flavors and carefully cultivated our business of wholesaling to local restaurants, retailers large and small and military commissaries. “Kurt anticipated our future operational, equipment and expansion needs, and offered us the credit vehicles we needed. Having that financial lifeline became especially meaningful after we moved into our own new facility and saw the community kitchen we had previously rented abruptly close. “First Hawaiian really looks out for us, which is why we now do all our banking there. Through the bank’s support we’ve been able to expand our list of retailers and purchase new equipment that has enabled us to debut Uncle’s mini ice cream sandwiches at Whole Foods Market. “We are so grateful that ‘Yes’ is not just a slogan at First Hawaiian Bank. Thanks to their faith in us, we are spreading happiness one ice cream sandwich at a time and making our biggest dreams for Uncle’s come true!” 12 S M A L L B U S I N E S S B A N K I N G 13 Nalani Jenkins and Tracy Lawson Nalani Jenkins of award-winning musical group Nā Leo Pilimehana, Co-Founder 721, LLC Tracy Lawson, President & Founder, Lawson & Associates, Inc., Co-Founder 721, LLC HONOLUL U, O‘AHU “First Hawaiian is the embodiment of aloha—kind, concerned and genuine. We believe good things come from that, such as the bank’s nomination of Tracy for the U.S. Small Business Administration’s 2019 Small Business Person of the Year Award for the City and County of Honolulu. Our banking relationship has provided a turning point with our personal goals as well. “It’s all about dreaming big and fulfilling those dreams. Up to this point in life, it’s been head down, grinding away, working and raising our kids. Now we can think in a visionary way—having dreams that scare you so much you almost don’t want to articulate them—like our Alaska and Moloka‘i real estate purchases. “In 2018, family ties to Alaska led us serendipitously to a lakefront property on Mirror Lake. It was the last one of its kind for sale and we were fortunate to get it. We dream of someday building family memories there. “Our other purchase in 2019 was 44 acres in Kaluako‘i on Moloka‘i, near Pāpōhaku Beach where Tracy spent time in her youth. We are drawn to this land and feel obligated to revive it. Kā‘ana in Kaluako‘i is the piko of hula. It’s where legends say hula originated. We haven’t settled on what we’ll do just yet on Moloka‘i, but we have big ideas! We want to plant trees and hope to build something appropriate and helpful to the community. “There’s a reason for us to have these properties and First Hawaiian made our dreams possible. Relationship, caring and authenticity have always been our experience at First Hawaiian, which is very meaningful to us. It’s a good place to be when your head and heart are aligned.” 14 P E R S O N A L B A N K I N G 15 W E A L T H M A N A G E M E N T A N D P R I V A T E B A N K I N G 16 Merton and Claire Lau HONOLUL U, O‘ AHU “Relationships are very important to us and referrals based on trusted relationships are ones that you know are worth considering. So when our acquaintances kept mentioning how pleased they were with First Hawaiian Bank, we had to find out for ourselves. We opened our savings and checking accounts with the bank in 1966. “We established such a good relationship with our banker that we eventually opened business and personal lines of credit. Having ready access to cash whenever we needed it for our growing family gave us great peace of mind. In our real estate development and management businesses, the credit line provided a competitive advantage to act quickly whenever opportunities arose. “When our own children were ready to purchase homes, First Hawaiian was right there to help them with mortgage loans. Eric Yee, in private banking, assembled an entire team of wealth management and banking professionals, including Vernon Wong, David Tanaka and Wesley Wakamura, who have assisted us with everything from financial planning, college funding and trusts to investments, insurance and business loans. Everyone makes us feel like family. They even prepare our favorite entrées when we dine at the Bankers Club. “The bank and its employees have never disappointed, which is why we have no reservations about recommending First Hawaiian to other family members and acquaintances just as our friends did with us. It was a special moment when our children were able to meet the people who have become our trusted advisors, and we’re pleased to know that the relationship we began with First Hawaiian more than 50 years ago will continue many more years with our children and grandchildren.” 17 P H I L A N T H R O P Y 18 Lawakua Kajukenbo Charitable Fund Matt Levi, Grandmaster and Founder KALIHI, O‘AHU For 30 years the Lawakua Kajukenbo Club has taught the unique experience of self-mastery to young people living in and around public housing in the Kalihi, Pālama and Hālawa areas. It’s a place where kids ages 7 to 18 are recognized for their effort, attitude and attendance—a place that presents them with opportunities they otherwise would not have. Grandmaster Matt Levi founded Lawakua in 1977, using martial arts to instill students with character, self-discipline, leadership and academic drive. Since partnering with O‘ahu’s Juvenile Drug Court in 2005, Lawakua’s training has been lauded for a reduction in repeat youth offenders. It remains the only martial arts program in the nation, which is part of a state's juvenile justice system. Through generous grants from the FHB Foundation as well as donations from the community, the Lawakua Charitable Fund is able to provide free Kajukenbo classes, martial arts uniforms (gi) and academic tutoring to over 100 students annually. Education is a key component of the program with about a third of the students receiving partial to full scholarships from O‘ahu private schools. Of the 31 current scholarship recipients, 20 are on their school’s honor roll and four are members of the National Honor Society. Kajukenbo was developed by five martial arts masters at Pālama Settlement in the 1940s and became Hawai‘i’s first mixed martial art. Its name is an acronym: “Ka” for Karate, “Ju” for Jiujitsu and Judo, “Ken” for Kenpo Karate and “Bo” for Western and Chinese boxing. Lawakua added essential life lessons to its program based on the traits of the tiger, snake, crane, leopard and dragon. As students train, they develop the animals’ virtues of independence, restraint, benevolence, stamina and strength. The program’s value is recognized in the communities it serves. Lawakua’s waiting list of applicants is positive proof. “Our students have demonstrated that, given the opportunity, they have the ability and skills to succeed,” said Matt Levi. “We deeply appreciate First Hawaiian’s generous donations and personal involvement by its management, which enable our program to reach more and more young people every year.” 19 C A R I N G f o r C O M M U N I T Y Over half of our employees provided thousands of hours of community service to improve the lives of others and strengthen our collective future. 20 Turning a school workshop into a robotics learning center, packing food boxes for seniors, assisting with forest preservation and helping to build transitional housing units for homeless families are just a few of the 29 Community Care projects undertaken by First Hawaiian in 2019. The bank’s “Yes” Teams, originating from our 58 retail branches and numerous work groups, also demonstrated support for their communities by volunteering to staff charity fundraising events, auctions and activities. We are equally proud of our employees who consistently volunteer their time and expertise in the community by coaching youth athletics, assisting with Aloha Week festivities, serving on non-profit boards and more. Our employees’ caring spirit also helped First Hawaiian retain its position at the top of Hawaii Business magazine’s list of corporate contributors to charities in 2019. At the heart of our annual charitable contributions is Kōkua Mai, our employee-driven giving program, which once again exceeded its annual goal with contributions from our generous employees and retirees totaling over $815,000. Our community giving efforts are complemented by grants from the First Hawaiian Bank Foundation, which creates educational opportunities for youth, builds healthier communities and supports the rich cultural heritage we share across Hawai‘i, Guam and Saipan. In 2019, the Foundation’s grants provided $4.25 million to more than 400 community non-profit organizations. Since our bank’s founding more than 161 years ago, First Hawaiian has consistently demonstrated that supporting communities that we serve is truly a part of who we are as a company. 21 CONSOLIDATED STATEMENTS OF INCOME F I R S T H A W A I I A N , I N C . (dollars in thousands except per share amounts) I N T E R E S T I N C O M E Loans and lease financing Available-for-sale securities Other Total interest income I N T E R E S T E X P E N S E Deposits Short-term and long-term borrowings Total interest expense Net interest income Provision for loan and lease losses Net interest income after provision for loan and lease losses N O N I N T E R E S T I N C O M E Service charges on deposit accounts Credit and debit card fees Other service charges and fees Trust and investment services income Bank-owned life insurance Investment securities losses, net Other-than-temporary impairment (OTTI) losses on available-for-sale debt securities Other Total noninterest income N O N I N T E R E S T E X P E N S E Salaries and employee benefits Contracted services and professional fees Occupancy Equipment Regulatory assessment and fees Advertising and marketing Card rewards program Other Total noninterest expense Income before provision for income taxes Provision for income taxes Net income Core adjustments (Non-GAAP)(1) Core net income (Non-GAAP)(1) Core basic earnings per share (Non-GAAP)(1) Year Ended December 31, 2019 2018 $ 574,013 $  529,877 92,505 12,174 678,692 87,865 17,425 105,290 573,402 13,800 559,602 33,778 66,749 36,253 35,102 15,479 (2,715 ) — 7,887 192,533 107,123 9,051 646,051 72,976 6,757 79,733 566,318 22,180 544,138 32,036 65,716 38,316 31,324 9,217 — ) (24,085 26,469 178,993 173,098 167,162 56,321 28,753 17,343 7,390 6,910 29,961 50,661 370,437 381,698 97,306 49,775 27,330 17,714 14,217 4,813 24,860 59,082 364,953 358,178 93,784 $ 284,392 $  264,394 7,393 22,317 $  291,785 $  286,711 $  2.19 $  2.09 Core diluted earnings per share (Non-GAAP)(1) $  2.19 $  2.09 Basic weighted-average outstanding shares Diluted weighted-average outstanding shares 133,076,489 137,387,157 136,945,134 137,111,420 Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for the Consolidated Financial Statements, including Report of Independent Registered Public Accounting Firm, thereon. (1) Core net income excludes certain gains, expenses and one-time items. See GAAP/Non-GAAP Reconciliation on page 24 of this Annual Report for reconciliations of core net income, core basic earnings per share and core diluted earnings per share to comparable GAAP measures. 22 CONSOLIDATED BALANCE SHEETS F I R S T H A W A I I A N , I N C . (dollars in thousands) A S S E T S Year Ended December 31, 2019 2018 L O A N S A N D L E A S E S (I N BI LLI ON S) Total Loans & Leases (12/31/19): $13.2 billion 5-Year Compound Annual Growth Rate: 5.7% Cash and due from banks $ 360,375 $ 396,836 Interest-bearing deposits in other banks Investment securities Loans and leases Less: allowance for loan and lease losses Net loans and leases Premises and equipment, net Other real estate owned and repossessed personal property Accrued interest receivable Bank-owned life insurance Goodwill Mortgage servicing rights Other assets Total assets 333,642 4,075,644 13,212,554 130,530 13,082,024 316,885 319 45,239 453,873 995,492 12,668 490,573 606,801 4,498,342 13,076,623 141,718 12,934,905 304,996 751 48,920 446,076 995,492 16,155 446,404 $ 20,166,734 $  20,695,678 $14 $13 $12 $11 $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 L I A B I L I T I E S A N D S T O C K H O L D E R S ’ E Q U I T Y . 1 3 1 $ . 2 3 1 $ . 3 2 1 $ . 5 1 1 $ . 7 0 1 $ . 0 0 1 $ 4 1 0 2 5 1 0 2 6 1 0 2 7 1 0 2 8 1 0 2 9 1 0 2 $ 10,564,922 $  11,142,127 5,880,072 16,444,994 400,000 200,019 138,222 343,241 6,007,941 17,150,068 D I V E R S I F I E D L O A N & L E A S E P O R T F O L I O — As of 12/31/19 600,026 127,909 292,836 12% Consumer Deposits: Interest-bearing Noninterest-bearing Total deposits Short-term borrowings Long-term borrowings Retirement benefits payable Other liabilities Total liabilities Stockholders’ equity Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss, net Treasury stock Total stockholders’ equity 17,526,476 18,170,839 1,399 2,503,677 437,072 (31,749 ) (270,141 ) 2,640,258 1,397 2,495,853 291,919 ) (132,195 ) (132,135 2,524,839 Total liabilities and stockholders’ equity $ 20,166,734 $  20,695,678 Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for the Consolidated Financial Statements, including Report of Independent Registered Public Accounting Firm, thereon. 35% Residential Real Estate 21% Commercial 30% Commercial Real Estate 2% Other 23 GAAP/NON-GAAP RECONCILIATION We present net interest income, noninterest income, noninterest expense, net income, earnings per share, and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a Non-GAAP financial measure. These core measures exclude from the corresponding GAAP measure the impact of certain items that we do not believe are representative of our financial results. We believe that the presentation of these Non-GAAP financial measures helps identify underlying trends in our business from period to period that could otherwise be distorted by the effect of certain expenses, gains and other items included in our operating results. We believe that these core measures provide useful information about our operating results and enhance the overall understanding of our past performance and future performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. Non-GAAP measures have limitations as analytical tools and investors should not consider them in isolation or as a substitute for analysis of our financial results or financial condition as reported under GAAP. The following table provides a reconciliation of net interest income, noninterest income, noninterest expense, and net income to their “core” Non-GAAP financial measures: (dollars in thousands except per share data) Net interest income Core net interest income (Non-GAAP) Noninterest income Loss on sale of securities Costs associated with the sale of stock OTTI losses on available-for-sale debt securities Core noninterest income (Non-GAAP) Noninterest expense Loss on litigation settlement(a) One-time items(b), (c) Core noninterest expense (Non-GAAP) Net income Loss on sale of securities Costs associated with the sale of stock OTTI losses on available-for-sale debt securities Loss on litigation settlement(a) One-time items(c) Tax adjustments(d) Total core adjustments Core net income (Non-GAAP) Basic earnings per share Diluted earnings per share Year Ended December 31, 2019 2018 $ 573,402 $ 566,318 $ 573,402 $ 566,318 $ 192,533 $ 178,993 2,715 4,500 — — — 24,085 $ 199,748 $ 203,078 $ 370,437 $ 364,953 — (2,814 ) (4,125 ) (2,267 ) $ 367,623 $ 358,561 $ 284,392 $ 264,394 2,715 4,500 — — 2,814 (2,636 ) 7,393 — — 24,085 4,125 2,267 (8,160 ) 22,317 $ 291,785 $ 286,711 $  2.14 $  1.93 $  2.13 $  1.93 Core basic earnings per share (Non-GAAP) $  2.19 $  2.09 Core diluted earnings per share (Non-GAAP) $  2.19 $  2.09 Basic weighted-average outstanding shares   133,076,489 136,945,134 Diluted weighted-average outstanding shares   133,387,157 137,111,420 (a) The Bank reached an agreement in principle to resolve a putative class action lawsuit alleging that the Bank improperly charged certain overdraft fees. In connection with the anticipated settlement agreement, the Company recorded an expense of approximately $4.1 million during the year ended December 31, 2018. (b) Adjustments that are not material to our financial results have not been presented for certain periods. (c) One-time items for the year ended December 31, 2019 included costs related to a nonrecurring payment to a former executive of the Company pursuant to the Bank’s Executive Change-in-Control Retention Plan, nonrecurring offering costs and the loss on our funding swap as a result of a 2019 decrease in the conversion rate of our Visa Class B restricted shares sold in 2016. One-time items for the year ended December 31, 2018 included public company transition related costs, the loss on our funding swap as a result of a 2018 decrease in the conversion rate of our Visa Class B restricted shares sold in 2016 and nonrecurring offering costs. (d) Represents the adjustments to net income, tax effected at the Company's effective tax rate for the respective period. Note (1): Core net interest margin is a Non-GAAP financial measure. We compute our core net interest margin as the ratio of core net interest income to average earning assets. For a reconciliation to the most directly comparable GAAP financial measure for core net interest income, see GAAP/Non-GAAP Reconciliation above. Note (2): Core efficiency ratio is a Non-GAAP financial measure. We compute our core efficiency ratio as the ratio of core noninterest expense to the sum of core net interest income and core noninterest income. For a reconciliation to the most directly comparable GAAP financial measure for core noninterest expense, core net interest income and core noninterest income, see GAAP/Non-GAAP Reconciliation above. Note (3): Core return on average total assets is a Non-GAAP financial measure. We compute our core return on average total assets as the ratio of core net income to average total assets. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see GAAP/Non-GAAP Reconciliation above. Note (4): Core return on average total stockholders’ equity is a Non-GAAP financial measure. We compute our core return on average total stockholders’ equity as the ratio of core net income to average total stockholders’ equity. For a reconciliation to the most directly comparable GAAP financial measure for core net income, see GAAP/Non-GAAP Reconciliation above. Note (5): Core basic earnings per share and core diluted earnings per share are computed by dividing core net income by the weighted average number of common shares outstanding for the period and, in the case of core diluted earnings per share, assuming conversion of potentially dilutive common stock equivalents. Note (6): Tangible stockholders’ equity to tangible assets is a Non-GAAP financial measure. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets. We compute our tangible stockholders’ equity by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our tangible assets by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. 24      ENV IR ONMENTAL Eliminating single-use plastic from 995,440 units to zero in the bank’s cafeterias   FHB provides a 50% bus pass subsidy for all employees  Electrical vehicle charging stations E N V I R O N M E N T A L , S O C I A L a n d G O V E R N A N C E S T A T I S T I C S Paper recycling in all facilities Installation of 4,500 Energy Star monitors as part of our PC Refresh initiative SO CIAL 661 29 53% blood donations by 249 donors through annual sponsored blood drives Community Care volunteer service activities (or 1,121 employees) participate in Community Care 99% participation rate in Kōkua Mai, the bank’s employee giving campaign  Employees and retirees raised $815,000 for 32 charities in Hawai‘i, Guam and Saipan through Kōkua Mai  $8.6 million donated to charities since Kōkua Mai’s 2007 inception  8,291 Community Care volunteer hours PHI LA NT HROPY $4.25 million in donations to over 400 charities in the areas of: Education & Financial Literacy Health & Human Services Arts & Culture  $100,000 in scholarships to 53 children of FHB employees 25 GOV ERNANCE Values-Based Governance Core Values of Caring, Character and Collaboration 2,119 employees 714 Men (34%) | 1,405 Women (66%) 34% are management positions 54% women officers | 46% men officers Of the 2,119 employees, 18% of women and 16% of men are in management roles. TALE NT DE VEL OPM ENT Award-winning talent development program open to all employees Over 100 professional development courses for employees through Online Learning Center 10 Leadership Development programs offered to employees S E N I O R M A N A G E M E N T 26 Photographed at Highway Inn restaurant, an FHB business banking client, located in Honolulu. 26 27 LEFT TO RIGHT: Robert S. Harrison Chairman, President & Chief Executive Officer Mitchell E. Nishimoto Vice Chairman, Retail Banking Group Ralph M. Mesick Vice Chairman & Chief Risk Officer Iris Y. Matsumoto Executive Vice President, Human Resources Group Gina O.W. Anonuevo Executive Vice President & Chief Compliance Officer Alan H. Arizumi Vice Chairman, Wealth Management Group Lance A. Mizumoto Vice Chairman & Chief Lending Officer Ravi Mallela Executive Vice President & Chief Financial Officer Joel E. Rappoport Executive Vice President, General Counsel Christopher L. Dods Executive Vice President, Digital Banking & Corporate Secretary & Marketing Group SENIOR OFFICERS Lea M. Nakamura Treasury & Investment Division Edward G. Untalan Guam & CNMI Region Office First Hawaiian Bank EXECUTIVE VICE PRESID ENTS Tony K.F. Au Residential Real Estate Division Derek A. Baughman Enterprise Technology Management Neill A. Char Private Banking Division and Wealth Advisory Division Darrick J.M. Ching Consumer Branch Banking Division Michael A. Coates Enterprise Operations Services Division Conrado Figueroa Western Region Dealer Center Daniel A. Nishikawa Commercial Real Estate Division Kevin T. Sakamoto Consumer Banking Division Brian Uemori Chief Credit Officer SEN IOR VIC E P R ES IDEN TS Joanne H. Arizumi Retail Banking Group Darlene N. Blakeney Corporate Banking Division James K. Bourgeois Data Management Department Martha L. Camacho Leeward O‘ahu Region Derek A. Chang Corporate Banking Division Paula C.H. Chang Dealer Division Dean C. Duque Maui Region Office Shirley M. Durham Enterprise Operations Services Division Jodie M. Duvall Wealth Advisory Division Paulette L. Franklin Credit Administration Division John S. Fujimoto Controller’s Division Jerome K. Fukuhara Financial Planning & Analysis Division Glenn T. Goya Makiki Banking Center 28 Raymond W. Phillips Investment Services Department Eliza E. Young Credit Department Calvin K. Hangai Controller Bradford L. Harrison Wealth Advisory Division Jason H. Haruki Institutional Advisory Services Vernon Y. Nakamura Kalihi Banking Center Cameron W. Nekota Bank Properties Division and Community Relations Division Michael T. Nishida Enterprise Information Security Department Kevin S. Haseyama Finance Group Todd T. Nitta Dealer Division Jeffrey N.M. Higashi Pearlridge Banking Center Todd D. Noia Commercial Real Estate Division Gregg M. Hirano Card Services Division Theresa A. Hirata Wealth Management Service Center Shigeo Hone Japan Business Development David A. Honma Hawai‘i Region Office Alyssa S.N. Hostelley Business Services Division Laurae U. Imamura EOS – Commercial Loan Center Stephen E.K. Kaaa Waikīkī Banking Center Leland K. Kahawai Kaua‘i Region Office Courtney S. Kajikawa Personal Trust Division James S. Kaneshiro Enterprise Operations Services Division Mark D. Kobayashi Core Platform Conversion Glen R. Okazaki Service Delivery Division Sherri-Ann Y. Okinaga Human Resources Group Anna Ono Audit Division Carol M. Ono Human Resources Group Mark F. Oyadomori Wealth Advisory Division David K. Rair Legal & Corporate Services Division Group Joyce Y. Sakai Commercial Real Estate Division Alethea A. Seto Sales, Service & Retail Training Division Gregory J. Sitar Kāhala Banking Center Susan A. Strong Omni Channel Center Carole Lau Commercial Real Estate Division Wayne K. Suehiro University Banking Center Kent R. Lau Main Banking Region Lynn M. Takahashi Private Banking Division Malcolm Lau Retail Planning Department Mark S. Taylor Core Platform Conversion Tricia K.F. Lee Corporate Compliance Division Michael G. Taylor Wealth Advisory Division George C.K. Leong, Jr. Commercial Real Estate Division Robert N. Taylor Enterprise Risk Kenneth L. Miller Institutional Advisory Services Elizabeth L. Tom Private Banking Division Marcia H. Morita Commercial Deposit Department Joe Morrison Credit Administration Division Jody J. Mukaigawa Kapi‘olani Banking Region Candice Y. Naito Metro O‘ahu Region Lisa A. Tomihama Main Banking Region Michael A. Tottori Wealth Advisory Division Jaylene S.L. Tsukayama Call Center Ryan S. Ushijima Trust Compliance Department Dean Uyeda Credit Administration Division Jeffrey S. Ventura East O‘ahu/Windward Region Wesley M. Wakamura Kapi‘olani Banking Region William L. Weeshoff Marketing Communications Division Derek M.S. Wong Credit Originations Department Vernon Y.C. Wong Wealth Advisory Division Eric B. Yee Private Banking Division Terence C.Y. Yeh Credit Administration Division Sherri Y. Yim Financial Planning & Analysis Division First Hawaiian Leasing, Inc. Robert S. Harrison Chairman Lance A. Mizumoto Chief Executive Officer Darlene N. Blakeney President Bishop Street Capital Management Corporation Kenneth L. Miller Chairman, Chief Executive Officer, Chief Investment Officer and Director of Equity Jennifer C.M. Carias President Ryan S. Ushijima Senior Vice President and Chief Compliance Officer First Hawaiian Bank Foundation Robert S. Harrison Chairman Walter A. Dods, Jr. Chairman Emeritus Cameron W. Nekota President K A U A ‘ I ( 6 ) Lihu‘e O ‘ A H U ( 3 2 ) Kailua Honolulu W N S E M A U I ( 7 ) Lāna‘i City Wailuku L Ā N A ‘ I ( 1 ) G U A M ( 3 ) Hagatna T H E 6 2 B R A N C H E S o f T H E 5 8 B R A N C H E S o f F I R S T H A W A I I A N B A N K F I R S T H A W A I I A N B A N K Kailua-Kona H A W A I ‘ I ( 7 ) S A I P A N ( 2 ) Hilo BOARDS O F DIRECTORS First Hawaiian, Inc. Board of Directors First Hawaiian Bank Board of Directors Robin K. Campaniano President and Chief Executive Officer (Retired), AIG Hawaii Insurance Company Matthew J. Cox   Chairman and Chief Executive Officer, Matson, Inc. Bert T. Kobayashi, Jr. Senior Partner, Kobayashi, Sugita & Goda Faye W. Kurren   President and Chief Executive Officer (Retired), Hawaii Dental Service W. Allen Doane   Chairman and Chief Executive Officer (Retired), Alexander & Baldwin, Inc. Leighton S.L. Mau President and Chief Operating Officer, Waikiki Business Plaza, Inc. Walter A. Dods, Jr. Chairman and Chief Executive Officer (Retired), First Hawaiian Bank Mark K. Teruya President FreshPoint Hawaii, LLC Allen B. Uyeda   Chief Executive Officer (Retired), First Insurance Company of Hawaii, Ltd. Jenai S. Wall   Chairman and Chief Executive Officer, Foodland Super Market, Ltd. C. Scott Wo   Owner/Executive Team, C. S. Wo & Sons, Ltd. Albert M. Yamada Vice Chairman, Chief Financial Officer, Chief Administrative Officer and Secretary (Retired), First Hawaiian Bank Michael K. Fujimoto Executive Chairman, HPM Building Supply Robert S. Harrison   Chairman, President, and Chief Executive Officer, First Hawaiian Bank Robert P. Hiam President and Chief Executive Officer (Retired), Hawaii Medical Service Association Donald G. Horner Partner, Malu Investments MEMBER FDIC First Hawaiian’s Vision Empowering our employees, customers and communities to help them prosper. Our Mission Bringing together our people, culture and technology to deliver personalized financial solutions to meet our customers’ needs. Our Core Values We live by our values of Caring, Character and Collaboration with a growth mindset to perform well and improve every day. CARING We value relationships over transactions. We treat people with dignity and respect. We serve each other, our customers and our community. CHARACTER We act with integrity. We take responsibility for our actions. We are not afraid to take risks and learn from our mistakes. COLLABORATION We achieve our best results when we work together. We value others’ viewpoints and draw strength from diversity. We share credit when things go well and accept responsibility when things don’t go well. S H A R E H O L D E R I N F O R M A T I O N CORPORATE HEADQUARTERS First Hawaiian, Inc. 999 Bishop Street, Honolulu, Hawai‘i 96813 TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Company LLC, 6201 15th Avenue, Brooklyn, NY 11219 help@astfinancial.com COMMON STOCK LISTING: FHB The common stock of First Hawaiian, Inc. is traded on the Nasdaq Global Select Market under the ticker symbol FHB. INQUIRIES Shareholders with questions about stock transfer services or share holdings may contact American Stock Transfer & Trust Company LLC, by calling (800) 937-5449, visiting www.astfinancial.com or via email at help@astfinancial.com. Beneficial stockholders with shares held by a broker in the name of a brokerage house should contact their broker. Investor Relations Contact: Kevin Haseyama (808) 525-6268 | ir@fhb.com Media Contact: Susan Kam (808) 525-6254 | skam@fhb.com CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward- looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward- looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our Annual Report on Form 10-K for the Year Ended December 31, 2019 filed with the Securities and Exchange Commission. 

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