What changed in this filing

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Item 1A. Risk Factors

2020-08-04 compared with 2020-05-08 · 27 added, 42 removed, 0 unchanged (100% of the section changed)

In light of recent developments relating to COVID-19, the Company is supplementing its risk factors contained in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 27, 2020.

The following risk factors should be read in conjunction with the risk factors in the Annual Report on Form 10-K.

Except as the below risk factor supplements those described in the Annual Report on Form 10-K and otherwise to the extent that additional factual information disclosed in this Quarterly Report on Form 10-Q relates to such risk factors, there are no material changes from the risk factors as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The Coronavirus Disease (COVID-19) pandemic and measures intended to prevent its spread are adversely affecting us and our customers, counterparties, employees, and third-party service providers, and the adverse impacts on our business, financial position, results of operations, and prospects could be significant and difficult to predict.

The spread of COVID-19 has created a global public health crisis that has resulted in widespread volatility, uncertainty and deteriorations in business, economic, and market conditions.

The extent of the impact of the COVID-19 pandemic on our capital, liquidity, and other financial positions and on our business, results of operations, and prospects will depend on a number of evolving factors, including:

The duration, extent, and severity of the pandemic.

COVID-19 does not yet appear to be contained and could affect significantly more households and businesses.

The duration and severity of the pandemic continue to be impossible to predict.

The response of governmental and nongovernmental authorities.

Both domestic and international governments have taken extraordinary measures in an effort to contain the spread of COVID-19.

These measures have primarily been directed toward curtailing household and business activity and include, among other things, travel bans and restrictions, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns.

These actions have a particularly meaningful impact on the travel and tourism industry, which is significant in a number of our key markets.

For example, in Hawaii, our primary market, the Governor of the State of Hawaii became the first in the nation to enact an emergency order requiring that all individuals, both residents and visitors, arriving or returning to the State of Hawaii to a mandatory 14-day self-quarantine, essentially bringing the Hawaii tourism industry to a halt.

Subsequently, this stay-at-home order has been extended to May 31, 2020, prolonging the slowdown in business and economic activity amid uncertainty regarding the containment or otherwise of COVID-19.

The effect on economies and markets.

Whether the actions of governmental and nongovernmental authorities will be successful in mitigating the adverse effects of COVID-19 is unclear.

To date, these measures have contributed to a significant increase in unemployment, a reduction in consumer confidence and spending, and significant volatility in equity markets, as well as a general downturn in business activity.

All of these impacts have had, and could continue to have, a significant impact on asset values in Hawaii or credit defaults among our borrowers.

While the United States government has taken steps to attempt to mitigate some of the more severe anticipated economic effects of the virus, including the passage of the CARES Act, there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion.

The decline in interest rates.

Governmental actions are meaningfully influencing the interest-rate environment, which could adversely affect our results of operations and financial condition.

For example, interest rates have also recently experienced a significant decline.

On March 3, 2020, the 10-year Treasury yield fell below 1.00% for the first time, and the Federal Reserve reduced the target federal funds rate by 50 basis points to a range of 1.00% to 1.25%.

On March 15, 2020, the Federal Reserve further reduced the target federal funds rate by 100 basis points to a range of 0.00% to 0.25% and announced a $700 billion quantitative easing program in response to the expected economic downturn caused by the COVID-19 pandemic.

Additionally, the Federal Reserve reduced the interest that it pays on excess reserves from 1.60% to 1.10% on March 3, 2020, and then further to 0.10% on March 15, 2020.

These reductions in interest rates, especially if prolonged, may adversely affect our net interest income, margins and profitability and therefore our financial prospects and results.

The disruption to our business.

As a result of the various restrictions being implemented by governments to contain the spread of COVID-19, we have experienced, and expect to continue to experience, significant disruption to our business and processes.

Such disruptions include a significant portion of our employees transitioning to working from home.

These changes to the delivery of our services increase the risk of operational failures and the risk of cyberfraud given the increase in online and remote activity.

Such risks, should they materialize, may impact our reputation, increase our costs and adversely impact our business, financial position, results of operations, and prospects.

We are unable to estimate the impact of COVID-19 on our business and operations at this time.

Should it continue for an extended period or increase in severity, the pandemic could cause us to experience higher credit losses in our lending portfolio, impairment of our goodwill and other financial assets, further reduced demand for our products and services, and other negative impacts on our financial position, results of operations, and prospects.

Sustained adverse effects may also prevent us from satisfying our minimum regulatory capital ratios and other supervisory requirements or result in downgrades in our credit ratings.

In April, 2020, we announced programs to support customers, employees, and communities during the COVID-19 pandemic.

These programs may negatively impact our revenue and other results of operations in the near term and, if not effective in mitigating the effect of COVID-19 on our customers, may adversely affect our business and results of operations more substantially over a longer period of time.

Furthermore, in an effort to support our communities during the pandemic, we are participating in the PPP under the CARES Act by making loans to small businesses that are subject to the terms and conditions of the PPP.

We face increased risks related to non-compliance by borrowers with the terms of

Additionally, we face risk on PPP loans if there is a deficiency in the manner in which the loan was originated, funded or serviced by us, such as an issue with the eligibility of a borrower to receive a PPP loan or the amount of such loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP.

If the SBA determines there is a deficiency, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from us.

If borrowers under PPP loans fail to qualify for loan forgiveness, we are at the heightened risk of holding such loans at unfavorable interest rates with no collateral and no guarantors.

Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 27, 2020, and Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 8, 2020, contain a discussion of our risk factors.

Except to the extent that additional factual information disclosed in this Quarterly Report on Form 10-Q relates to such risk factors, there are no material changes from the risk factors as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

A list of exhibits to this Form 10-Q is set forth on the Exhibit Index and is incorporated herein by reference.

Exhibit Index

Exhibit Number

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Amended, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Amended, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

August 3, 2020

First Hawaiian, Inc.

/s/ Robert S.

Chairman of the Board, President and Chief Executive Officer

(Principal Executive Officer)

/s/ Ravi Mallela

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors