HONOLULU, Jan. 30, 2014 /PRNewswire/ --
Selected 2013 Highlights
- Achieved or exceeded 2013 profitability targets
- Net income down $1.1 million vs.
2012, consistent with upper end of guidance range
- ROA of 1.13% vs. target of 1.10%
- NIM of 3.74% vs. target of 3.6% to 3.7%
- Strong, broad-based loan growth of 9.7%
- Contributed $9 million (pretax)
to interest income to largely mitigate the negative impact of low
interest rates
- Growth in targeted residential mortgages, home equity lending,
commercial real estate, and commercial & industrial
lending
- #1 provider of new home equity lending in Hawaii
- Significant continued improvement in asset quality from 2012
- Net charge-off ratio improved to 0.09% from 0.24%
- Nonperforming loans down to 1.20% from 1.87% of total loans and
real estate owned
- Solid, high quality capital: 9.1% leverage ratio; 12.1% total
risk-based capital ratio
- Strategic Progress
- Strategic sale of credit card portfolio and launch of improved
credit card offering
- Leading mobile banking offering with 60% penetration of online
banking customers and mobile deposit volumes surpassing that of the
ATM network
- Partnership with Xerox, taking over selected non-core business
activities
- Named as American Banker "Best Banks to Work For" and
Hawaii Business "Best Places to Work"
- Delivered 3,300 volunteer hours to and over $1 million of charitable contributions to
community organizations
American Savings Bank, F.S.B.
(American), a wholly-owned indirect subsidiary of Hawaiian Electric
Industries, Inc. (HEI) (NYSE - HE) today reported net income for
the full year of 2013 of $57.5
million compared to $58.6
million in 2012. Net income for the fourth quarter of 2013
was $12.2 million, compared to
$15.3 million in the third, or
linked, quarter of 2013 and $14.4
million in the fourth quarter of 2012.
"We are pleased that we were able to continue to deliver solid
financial results in a challenging regulatory and interest rate
environment. Our ongoing focus on enhancing our products, sales and
risk management capabilities, combined with the improving economy,
produced stronger loan growth and better credit quality than we
targeted at the start of the year. That helped us mitigate the
challenges of continued low interest rates, as well as the impact
of new regulations on fee income and operating costs," said
Richard Wacker, president and chief
executive officer of American. "We head into 2014 with a solid
balance sheet, improved asset quality, and more competitive
offerings for our customers."
Full Year Net Income:
2013 net income of $57.5 million
was $1.1 million lower than 2012 net
income, reflecting the challenging regulatory and interest rate
environment. The most significant drivers impacting net income for
the year were (on an after-tax basis):
- $2 million lower net interest
income as lower yields on loans continued to more than offset the
favorable contributions of loan growth; net interest margins
declined 19 basis points for the full-year (discussed below),
representing a $7 million decrease in
net interest income, $2 million more
than the increase from loan growth;
- $2 million lower noninterest
income primarily due to lower mortgage banking income ($4 million) and lower interchange fees as a
result of rate caps mandated by the Durbin Amendment ($3 million) which became effective for American
in July 2013, offsetting more than
all of the increases in other fee income and the premium on the
sale of the credit card portfolio;
- $4 million higher noninterest
expense primarily driven by higher loan and investment product
production volumes to customers, sales and performance-related
incentives, and benefit cost inflation; and
- $7 million lower provision for
loan losses resulting from continued improvement in credit quality,
coupled with higher recoveries from previously charged-off loans,
and release of reserves related to the sale of the credit card
portfolio.
Note: Amounts indicated as "after-tax" in this earnings release
are based upon adjusting items for the composite statutory tax rate
of 40% for the bank.
Fourth Quarter Net Income:
Fourth quarter 2013 net income of $12.2
million was $3.1 million lower
than the linked quarter and $2.2
million lower than the same quarter of 2012.
Compared to the linked quarter of 2013, the $3.1 million net income decline was primarily
driven by (on an after-tax basis):
- $2 million lower noninterest
income mainly due to the gain on the strategic sale of the credit
card portfolio recorded in the third quarter of 2013 (discussed
above); and
- $1 million higher noninterest
expense, largely attributable to the timing of certain
performance-related compensation costs.
Compared to the same quarter of 2012, the most significant
variances were (on an after-tax basis):
- $4 million lower noninterest
income primarily due to lower gains on sales of residential
mortgages as the refinancing market contracted dramatically since
mid-2013, and lower interchange fees (as discussed above); and
- $2 million (after-tax) lower
provision for loan losses (as discussed above).
Financial Highlights:
Net interest margin was 3.74% in 2013 compared to 3.93% in 2012,
exceeding the bank's net interest margin target of 3.6% to 3.7% for
the year. Net interest margin was 3.67% in the fourth quarter of
2013 compared to 3.73% in the linked quarter and 3.81% in the
fourth quarter of 2012. The decline in net interest margin was
primarily attributable to lower yields on interest-earning assets
as loan portfolios continued to re-price down in this low interest
rate environment, albeit at a slower pace as the year progressed.
The impact of lower net interest margin on net interest income was
largely offset by strong, broad-based loan growth.
The provision for loan losses (pretax) was $1.5 million in 2013 compared to $12.9 million in 2012. Continued improvement
in credit quality, coupled with the recoveries of previously
charged-off loans and the release of reserves related to the sale
of the credit card portfolio, resulted in an unusually low
provision for 2013 despite robust loan growth. A significant
portion of recoveries over the last two years related to the
shrinking land and mainland residential loan portfolios; thus,
management expects recoveries to moderate in 2014 as these
portfolios run off. The fourth quarter of 2013 provision for loan
losses was $0.6 million compared
to $0.1 million in the linked quarter
and $3.4 million in the fourth
quarter of 2012.
The 2013 net charge-off ratio improved to 0.09% from 0.24% in
2012. The fourth quarter 2013 net charge-off ratio was 0.15%
compared to nil in the linked quarter and 0.13% in the prior year
quarter.
Noninterest income (pretax) for 2013 was $72.1 million, down from $75.7 million in 2012. The decrease from the
prior year is primarily driven by $6.3
million lower mortgage banking income and $4.3 million lower interchange fees that was
attributable to the Durbin amendment's rate caps, partially offset
by the 2013 gain on the strategic sale of the credit card portfolio
and higher fee income on other financial products. In the fourth
quarter of 2013, noninterest income (pretax) was $15.5 million, down from $18.7 million in the linked quarter largely
due to the third quarter gain on sale of the credit card portfolio,
and $22.9 million in the fourth
quarter of 2012 due to lower mortgage banking income and
interchange fees.
Noninterest expense (pretax) for 2013 was $159.5 million, up from $152.3 million in 2012. The increase from
the prior year is largely driven by higher compensation expense
related to increased business volumes, sales and performance
incentives, and higher inflation related employee benefits costs.
In the fourth quarter of 2013, noninterest expense (pretax) was
$41.3 million, up from $39.7 million in the linked quarter and
$40.9 million in the fourth
quarter of 2012. Fourth quarter 2013 noninterest expense was
elevated due to the timing of performance incentives and marketing
expenses.
Despite the competitive market environment, American achieved
strong loan growth of 9.7% in 2013, exceeding the bank's target of
mid-single digit loan growth while maintaining strong credit
discipline. Loan growth was primarily driven by residential, home
equity, commercial real estate and commercial market loans. Strong
loan growth helped to offset the impact of the decline in net
interest margin.
Total deposits were $4.4 billion
at December 31, 2013, an increase of
$62 million from
September 30, 2013 and $143
million from December 31,
2012. Low-cost core deposits increased $79 million from
September 30, 2013 and $189 million from December
31, 2012. The average cost of funds was 0.22% for the full
year 2013, down 4 basis points from the prior year. For the
fourth quarter of 2013, average cost of funds was 0.23%, up
1 basis point from the linked quarter and flat compared to the
prior year quarter.
Overall, American's return on average equity for the full year
remained solid at 11.4% in 2013 compared to 11.7% in 2012 and the
return on average assets for the full year was 1.13% in 2013
compared to 1.18% in 2012. For the fourth quarter of 2013, the
return on average equity was 9.6%, down from 12.1% in the linked
quarter and 11.3% in the same quarter last year. Return on average
assets was 0.94% for the fourth quarter of 2013, compared to 1.20%
from the linked quarter and 1.15% in the same quarter last
year.
In 2013, American paid dividends of $40
million to HEI while maintaining healthy capital levels --
leverage ratio of 9.1% and total risk-based capital ratio of 12.1%
at December 31, 2013.
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO
DISCUSS EARNINGS AND 2014 EPS GUIDANCE
Concurrent with American's regulatory filing 30 days after the
end of the quarter, American announced its fourth quarter 2013
financial results today. Please note that these reported results
relate only to American and are not necessarily indicative of HEI's
consolidated financial results for the fourth quarter and full year
2013.
HEI plans to announce its fourth quarter and 2013 consolidated
financial results on Tuesday, February 18,
2014 and will conduct a webcast and conference call to
discuss its consolidated earnings, including American's earnings,
and 2014 EPS guidance on Tuesday, February 18, 2014, at
12:00 noon Hawaii time
(5:00 p.m. Eastern time). Interested
parties may listen to the conference by calling (877) 415-3182 and
entering passcode: 61297681, or by accessing the webcast on HEI's
website at www.hei.com under the heading "Investor Relations." HEI
and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to
continue to use HEI's website, www.hei.com, as a means of
disclosing additional information. Such disclosures will be
included on HEI's website in the Investor Relations section.
Accordingly, investors should routinely monitor such portions of
HEI's website, in addition to following HEI's, Hawaiian Electric's
and American's press releases, HEI's and Hawaiian Electric's
Securities and Exchange Commission (SEC) filings and HEI's public
conference calls and webcasts. The information on HEI's website is
not incorporated by reference in this document or in HEI's and
Hawaiian Electric's SEC filings unless, and except to the extent,
specifically incorporated by reference. Investors may also wish to
refer to the Public Utilities Commission of the State of Hawaii (PUC) website at
dms.puc.hawaii.gov/dms in order to review documents filed with
and issued by the PUC. No information on the PUC website is
incorporated by reference in this document or in HEI's and Hawaiian
Electric's SEC filings.
An online replay of the webcast will be available at the same
website beginning about two hours after the event and will remain
on HEI's website for 12 months. Replays of the conference call will
also be available approximately two hours after the event through
March 4, 2014, by dialing
(888) 286-8010, passcode: 22850388.
HEI supplies power to approximately 450,000 customers or 95% of
Hawaii's population through its
electric utilities, Hawaiian Electric, Hawaii Electric Light
Company, Inc. and Maui Electric Company, Limited and provides a
wide array of banking and other financial services to consumers and
businesses through American, one of Hawaii's largest financial institutions.
FORWARD-LOOKING STATEMENTS
This release may contain "forward-looking statements," which
include statements that are predictive in nature, depend upon or
refer to future events or conditions, and usually include words
such as "expects," "anticipates," "intends," "plans," "believes,"
"predicts," "estimates" or similar expressions. In addition, any
statements concerning future financial performance, ongoing
business strategies or prospects or possible future actions are
also forward-looking statements. Forward-looking statements are
based on current expectations and projections about future events
and are subject to risks, uncertainties and the accuracy of
assumptions concerning HEI and its subsidiaries, the performance of
the industries in which they do business and economic and market
factors, among other things. These forward-looking statements are
not guarantees of future performance.
Forward-looking statements in this release should be read in
conjunction with the "Forward-Looking Statements" and "Risk
Factors" discussions (which are incorporated by reference herein)
set forth in HEI's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2013 and HEI's future periodic reports
that discuss important factors that could cause HEI's results to
differ materially from those anticipated in such statements. These
forward-looking statements speak only as of the date of the report,
presentation or filing in which they are made. Except to the extent
required by the federal securities laws, HEI, Hawaiian Electric,
American and their subsidiaries undertake no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
American Savings
Bank, F.S.B.
|
STATEMENTS OF INCOME
DATA
|
(Unaudited)
|
|
|
Three months
ended
|
|
Years ended
December 31,
|
(in thousands)
|
|
December 31,
2013
|
|
September 30,
2013
|
|
December 31,
2012
|
|
2013
|
|
2012
|
Interest and
dividend income
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
43,405
|
|
|
$
|
43,337
|
|
|
$
|
42,816
|
|
|
$
|
172,969
|
|
|
$
|
176,057
|
|
Interest and
dividends on investment and mortgage-related securities
|
|
3,372
|
|
|
3,025
|
|
|
3,288
|
|
|
13,095
|
|
|
13,822
|
|
Total interest and dividend income
|
|
46,777
|
|
|
46,362
|
|
|
46,104
|
|
|
186,064
|
|
|
189,879
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
1,222
|
|
|
1,262
|
|
|
1,408
|
|
|
5,092
|
|
|
6,423
|
|
Interest on other
borrowings
|
|
1,437
|
|
|
1,206
|
|
|
1,193
|
|
|
4,985
|
|
|
4,869
|
|
Total interest expense
|
|
2,659
|
|
|
2,468
|
|
|
2,601
|
|
|
10,077
|
|
|
11,292
|
|
Net interest
income
|
|
44,118
|
|
|
43,894
|
|
|
43,503
|
|
|
175,987
|
|
|
178,587
|
|
Provision for loan
losses
|
|
554
|
|
|
54
|
|
|
3,379
|
|
|
1,507
|
|
|
12,883
|
|
Net interest
income after provision for loan losses
|
|
43,564
|
|
|
43,840
|
|
|
40,124
|
|
|
174,480
|
|
|
165,704
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,732
|
|
|
5,728
|
|
|
8,887
|
|
|
27,099
|
|
|
31,361
|
|
Fee income on deposit
liabilities
|
|
4,797
|
|
|
4,819
|
|
|
4,648
|
|
|
18,363
|
|
|
17,775
|
|
Fee income on other
financial products
|
|
2,117
|
|
|
2,714
|
|
|
1,836
|
|
|
8,405
|
|
|
6,577
|
|
Mortgage banking
income
|
|
1,413
|
|
|
1,547
|
|
|
6,331
|
|
|
8,309
|
|
|
14,628
|
|
Gains on sale of
securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,226
|
|
|
134
|
|
Other income,
net
|
|
1,470
|
|
|
3,888
|
|
|
1,164
|
|
|
8,681
|
|
|
5,185
|
|
Total noninterest income
|
|
15,529
|
|
|
18,696
|
|
|
22,866
|
|
|
72,083
|
|
|
75,660
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
22,195
|
|
|
20,564
|
|
|
19,953
|
|
|
82,910
|
|
|
75,979
|
|
Occupancy
|
|
4,197
|
|
|
4,208
|
|
|
4,313
|
|
|
16,747
|
|
|
17,179
|
|
Data
processing
|
|
2,970
|
|
|
2,168
|
|
|
2,854
|
|
|
10,952
|
|
|
10,098
|
|
Services
|
|
2,160
|
|
|
2,424
|
|
|
2,800
|
|
|
9,015
|
|
|
9,866
|
|
Equipment
|
|
1,826
|
|
|
1,825
|
|
|
1,806
|
|
|
7,295
|
|
|
7,105
|
|
Other
expense
|
|
7,951
|
|
|
8,539
|
|
|
9,207
|
|
|
32,585
|
|
|
32,116
|
|
Total noninterest expense
|
|
41,299
|
|
|
39,728
|
|
|
40,933
|
|
|
159,504
|
|
|
152,343
|
|
Income before
income taxes
|
|
17,794
|
|
|
22,808
|
|
|
$
|
22,057
|
|
|
87,059
|
|
|
89,021
|
|
Income
taxes
|
|
5,610
|
|
|
7,532
|
|
|
7,694
|
|
|
29,525
|
|
|
30,384
|
|
Net
income
|
|
$
|
12,184
|
|
|
$
|
15,276
|
|
|
$
|
14,363
|
|
|
$
|
57,534
|
|
|
$
|
58,637
|
|
Comprehensive
income
|
|
$
|
23,802
|
|
|
$
|
14,107
|
|
|
$
|
5,740
|
|
|
$
|
60,733
|
|
|
$
|
52,612
|
|
OTHER BANK
INFORMATION (annualized %, except as of period end)
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
0.94
|
|
|
1.20
|
|
|
1.15
|
|
|
1.13
|
|
|
1.18
|
|
Return on average
equity
|
|
9.56
|
|
|
12.13
|
|
|
11.29
|
|
|
11.38
|
|
|
11.68
|
|
Return on average
tangible common equity
|
|
11.39
|
|
|
14.50
|
|
|
13.47
|
|
|
13.59
|
|
|
13.97
|
|
Net interest
margin
|
|
3.67
|
|
|
3.73
|
|
|
3.81
|
|
|
3.74
|
|
|
3.93
|
|
Net charge-offs to
average loans outstanding
|
|
0.15
|
|
|
—
|
|
|
0.13
|
|
|
0.09
|
|
|
0.24
|
|
As of period
end
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets
to loans outstanding and real estate owned *
|
|
1.20
|
|
|
1.33
|
|
|
1.87
|
|
|
|
|
|
Allowance for loan
losses to loans outstanding
|
|
0.97
|
|
|
1.01
|
|
|
1.11
|
|
|
|
|
|
Tier-1 leverage ratio
*
|
|
9.1
|
|
|
9.3
|
|
|
9.1
|
|
|
|
|
|
Total risk-based
capital ratio *
|
|
12.1
|
|
|
12.5
|
|
|
12.8
|
|
|
|
|
|
Tangible common
equity to total assets
|
|
8.5
|
|
|
8.36
|
|
|
8.39
|
|
|
|
|
|
Dividend paid to HEI
(via ASHI)
($ in millions)
|
|
10
|
|
|
10
|
|
|
15
|
|
|
40
|
|
|
45
|
|
* Regulatory
basis
|
This information
should be read in conjunction with the consolidated financial
statements and the notes thereto in HEI's Annual Report on SEC Form
10-K for the year ended December 31, 2013 (when filed) and HEI's
Quarterly Reports on SEC Form 10-Q for the quarters ended March 31,
2013, June 30, 2013 and September 30, 2013, as updated by SEC Forms
8-K.
|
American Savings
Bank, F.S.B.
|
BALANCE SHEETS
DATA
|
(Unaudited)
|
|
December 31
|
|
2013
|
|
2012
|
(in
thousands)
|
|
|
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
156,603
|
|
|
$
|
184,430
|
|
Available-for-sale
investment and mortgage-related securities
|
|
529,007
|
|
|
671,358
|
|
Investment in stock
of Federal Home Loan Bank of Seattle
|
|
92,546
|
|
|
96,022
|
|
Loans receivable held
for investment
|
|
4,150,229
|
|
|
3,779,218
|
|
Allowance for loan
losses
|
|
(40,116)
|
|
|
(41,985)
|
|
Loans receivable held
for investment, net
|
|
4,110,113
|
|
|
3,737,233
|
|
Loans held for sale,
at lower of cost or fair value
|
|
5,302
|
|
|
26,005
|
|
Other
|
|
268,063
|
|
|
244,435
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
Total
assets
|
|
$
|
5,243,824
|
|
|
$
|
5,041,673
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
Deposit
liabilities–noninterest-bearing
|
|
$
|
1,214,418
|
|
|
$
|
1,164,308
|
|
Deposit
liabilities–interest-bearing
|
|
3,158,059
|
|
|
3,065,608
|
|
Other
borrowings
|
|
244,514
|
|
|
195,926
|
|
Other
|
|
105,679
|
|
|
117,752
|
|
Total
liabilities
|
|
4,722,670
|
|
|
4,543,594
|
|
Common
stock
|
|
336,054
|
|
|
333,712
|
|
Retained
earnings
|
|
197,297
|
|
|
179,763
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
Net unrealized gains
(losses) on securities
|
$
|
(3,663)
|
|
|
$
|
10,761
|
|
|
Retirement benefit
plans
|
(8,534)
|
|
(12,197)
|
|
(26,157)
|
|
(15,396)
|
|
Total
shareholder's equity
|
|
521,154
|
|
|
498,079
|
|
Total liabilities
and shareholder's equity
|
|
$
|
5,243,824
|
|
|
$
|
5,041,673
|
|
|
|
|
|
|
This information
should be read in conjunction with the consolidated financial
statements and the notes thereto in HEI's Annual Report on SEC Form
10-K for the year ended December 31, 2013 (when filed) and HEI's
Quarterly Reports on SEC Form 10-Q for the quarters ended March 31,
2013, June 30, 2013 and September 30, 2013, as updated by SEC Forms
8-K.
|
Contact:
|
Shelee M.T.
Kimura
|
|
|
Manager, Investor
Relations &
|
Telephone: (808)
543-7384
|
|
Strategic
Planning
|
E-mail:
skimura@hei.com
|
(Logo:
http://photos.prnewswire.com/prnh/20110411/LA80136LOGO)
SOURCE Hawaiian Electric Industries, Inc.