HONOLULU, April 30, 2014 /PRNewswire/ -- 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
first quarter of 2014 of $14.5
million, compared to $12.2
million in the fourth (or linked) quarter of 2013 and
$14.2 million in the first
quarter of 2013.
"American delivered another quarter of solid results, meeting
the credit needs of an expanding customer base while maintaining
strong asset quality and financial returns. Low interest
rates and the effects of the more intense regulatory environment
continued to curb opportunities to improve profitability, but the
healthy Hawaiian economy helped us grow. The sale of our
municipal bond holdings accelerated some income into the first
quarter as we repositioned our investment portfolio due to recent
interagency guidance on liquidity standards and the likelihood of
higher interest rates over time," said Rich
Wacker, president and chief executive officer of
American.
First quarter 2014 net income was $2.4
million higher than the linked quarter primarily driven by
(on an after-tax basis):
- $2 million gain on the sale of the municipal bond
securities portfolio due to the strategic shift towards higher
quality liquid assets; and
- $2 million lower noninterest
expense ($1 million of which is due
to lower compensation and benefits expense).
These were partially offset by $1
million (after-tax) decrease in fee income, including lower
mortgage banking income associated with lower refinancing
volumes.
Compared to the same quarter of 2013, net income increased by
$0.4 million primarily driven by (on
an after-tax basis):
- $2 million gain on the sale of
the municipal bond securities portfolio; and
- $1 million lower provision for
loan losses.
These were largely offset by (on an after-tax basis):
- $2 million lower mortgage banking
income from significantly lower refinancing activity as a result of
higher interest rates; and
- $1 million lower interchange fees
under regulatory caps (Durbin Amendment) that became effective for
American on July 1, 2013.
Net interest margin was 3.64% compared to 3.67% in the linked
quarter and 3.78% in the first quarter of 2013. Compared to
the prior year quarter, the decline in net interest margin was
largely attributable to lower yields on interest earning assets as
loans continued to re-price down in this low interest rate
environment, although at a slower pace.
Provision for loan losses (pretax) was $1.0 million in the first quarter of 2014,
slightly higher than the $0.6 million
in the linked quarter of 2013, but lower than the provision of
$1.9 million in the first
quarter of 2013. The $0.9
million decline in the provision from the prior year quarter
was largely due to lower net charge-offs and improving credit
trends in the first quarter of 2014 compared to the prior
year. The first quarter 2014 net charge-off ratio improved to
0.02% from 0.15% in the linked quarter and 0.12% in the prior year
quarter due to improved credit quality of the loan portfolio.
Noninterest income (pretax) was $16.9
million in the first quarter of 2014, compared to
$15.5 million in the linked
quarter and $18.7 million in the
first quarter of 2013. Excluding the $2.8 million gain on the sale of the municipal
bond portfolio, non-interest income was $14.1 million and in line with management
expectations for lower mortgage banking income due to moderating
refinancing volumes, and lower year-over-year fee income due to the
regulatory limits on interchange fees (Durbin Amendment).
Noninterest expense (pretax) was $38.4
million in the first quarter of 2014, lower than the
$41.3 million in the linked
quarter and the $38.7 million in the
first quarter of 2013. Noninterest expense in the linked
quarter was elevated largely due to the timing of
performance-related compensation costs and higher marketing
expenses.
Loan growth was 3.6% annualized in the first quarter of 2014
primarily driven by increases in home equity lending and commercial
real estate, and is in line with the bank's target of mid-single
digit loan growth for the year.
Total deposits were $4.5 billion
at March 31, 2014, up $106 million from December 31, 2013,
primarily due to the increase in low-cost core deposits.
Average cost of funds remained low at 0.23% for the first quarter
of 2014, consistent with the linked and prior year quarter.
American's return on average equity was 11.0% up from 9.6% in
the linked quarter and slightly lower than 11.3% in the first
quarter of last year. Return on average assets was 1.10%
for the first quarter of 2014, compared to 0.94% from the linked
quarter and 1.12% in the same quarter last year. American's
solid results enabled it to pay dividends of $8.75 million to HEI in the quarter while
maintaining healthy capital levels – leverage ratio of 9.0% and
total risk-based capital ratio of 12.7% at March 31, 2014.
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.
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 first quarter 2014
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 first quarter of
2014.
HEI plans to announce its first quarter 2014 consolidated
financial results on Wednesday, May 7, 2014 and will
conduct a webcast and conference call to discuss its consolidated
earnings, including American's earnings, and 2014 EPS guidance on
Wednesday, May 7, 2014, at
7:00 am Hawaii time (1:00 p.m. Eastern
time). Interested parties may listen to the conference by
calling (866) 270-6057 and entering passcode: 47349847, 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. Audio
replays of the conference call will also be available approximately
two hours after the event through May 21,
2014, by dialing (888) 286-8010, passcode:
24249299.
HEI supplies power to approximately 450,000 customers or 95% of
Hawaii's population through its
electric utilities, Hawaiian Electric Company, Inc., 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 Annual Report on Form 10-K for the year ended
December 31, 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
|
(in thousands)
|
|
March 31,
2014
|
|
December
31, 2013
|
|
March 31,
2013
|
Interest and
dividend income
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
43,682
|
|
|
$
|
43,405
|
|
|
$
|
42,603
|
|
Interest and
dividends on investment and mortgage-related securities
|
|
3,035
|
|
|
3,372
|
|
|
3,464
|
|
Total interest and
dividend income
|
|
46,717
|
|
|
46,777
|
|
|
46,067
|
|
Interest
expense
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
1,225
|
|
|
1,222
|
|
|
1,312
|
|
Interest on other
borrowings
|
|
1,405
|
|
|
1,437
|
|
|
1,164
|
|
Total interest
expense
|
|
2,630
|
|
|
2,659
|
|
|
2,476
|
|
Net interest
income
|
|
44,087
|
|
|
44,118
|
|
|
43,591
|
|
Provision for loan
losses
|
|
995
|
|
|
554
|
|
|
1,858
|
|
Net interest
income after provision for loan losses
|
|
43,092
|
|
|
43,564
|
|
|
41,733
|
|
Noninterest
income
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,128
|
|
|
5,732
|
|
|
7,643
|
|
Fee income on deposit
liabilities
|
|
4,421
|
|
|
4,797
|
|
|
4,314
|
|
Fee income on other
financial products
|
|
2,290
|
|
|
2,117
|
|
|
1,794
|
|
Mortgage banking
income
|
|
628
|
|
|
1,413
|
|
|
3,346
|
|
Gains on sale of
securities
|
|
2,847
|
|
|
—
|
|
|
—
|
|
Other income,
net
|
|
1,588
|
|
|
1,470
|
|
|
1,592
|
|
Total noninterest
income
|
|
16,902
|
|
|
15,529
|
|
|
18,689
|
|
Noninterest
expense
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
20,286
|
|
|
22,195
|
|
|
20,088
|
|
Occupancy
|
|
3,953
|
|
|
4,197
|
|
|
4,123
|
|
Data
processing
|
|
3,060
|
|
|
2,970
|
|
|
2,987
|
|
Services
|
|
2,273
|
|
|
2,160
|
|
|
2,103
|
|
Equipment
|
|
1,645
|
|
|
1,826
|
|
|
1,774
|
|
Other
expense
|
|
7,153
|
|
|
7,951
|
|
|
7,595
|
|
Total noninterest
expense
|
|
38,370
|
|
|
41,299
|
|
|
38,670
|
|
Income before
income taxes
|
|
21,624
|
|
|
17,794
|
|
|
21,752
|
|
Income
taxes
|
|
7,085
|
|
|
5,610
|
|
|
7,597
|
|
Net
income
|
|
$
|
14,539
|
|
|
$
|
12,184
|
|
|
$
|
14,155
|
|
Comprehensive
income
|
|
$
|
15,563
|
|
|
$
|
23,802
|
|
|
$
|
15,484
|
|
OTHER BANK
INFORMATION (annualized %, except as of period end)
|
|
|
|
|
Return on average
assets
|
|
1.10
|
|
|
0.94
|
|
|
1.12
|
|
Return on average
equity
|
|
11.03
|
|
|
9.56
|
|
|
11.28
|
|
Return on average
tangible common equity
|
|
13.06
|
|
|
11.39
|
|
|
13.49
|
|
Net interest
margin
|
|
3.64
|
|
|
3.67
|
|
|
3.78
|
|
Net charge-offs to
average loans outstanding
|
|
0.02
|
|
|
0.15
|
|
|
0.12
|
|
As of period
end
|
|
|
|
|
|
|
Nonperforming assets
to loans outstanding and real estate owned *
|
|
1.12
|
|
|
1.20
|
|
|
1.89
|
|
Allowance for loan
losses to loans outstanding
|
|
0.98
|
|
|
0.97
|
|
|
1.11
|
|
Tier-1 leverage ratio
*
|
|
9.0
|
|
|
9.1
|
|
|
9.1
|
|
Total risk-based
capital ratio *
|
|
12.7
|
|
|
12.1
|
|
|
12.8
|
|
Tangible common
equity to total assets
|
|
8.44
|
|
|
8.50
|
|
|
8.38
|
|
Dividend paid to HEI
(through ASHI) (for the periods presented, in millions)
|
|
$
|
9
|
|
|
$
|
10
|
|
|
$
|
10
|
|
* 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 and HEI's Quarterly
Report on SEC Form 10-Q for the quarter ended March 31, 2014 (when
filed), as updated by SEC Forms 8-K. Results of operations for
interim periods are not necessarily indicative of results to be
expected for future interim periods or the full year.
|
American Savings
Bank, F.S.B.
BALANCE SHEETS
DATA
(Unaudited)
|
|
|
|
|
|
(in thousands)
|
|
March 31,
2014
|
|
December 31,
2013
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
$
|
211,083
|
|
|
|
|
$
|
156,603
|
|
Securities purchased
under resale agreements
|
|
|
|
40,000
|
|
|
|
|
—
|
|
Available-for-sale
investment and mortgage-related securities
|
|
|
|
517,534
|
|
|
|
|
529,007
|
|
Investment in stock
of Federal Home Loan Bank of Seattle
|
|
|
|
86,697
|
|
|
|
|
92,546
|
|
Loans receivable held
for investment
|
|
|
|
4,188,460
|
|
|
|
|
4,150,229
|
|
Allowance for loan
losses
|
|
|
|
(40,923)
|
|
|
|
|
(40,116)
|
|
Loans receivable held
for investment, net
|
|
|
|
4,147,537
|
|
|
|
|
4,110,113
|
|
Loans held for sale,
at lower of cost or fair value
|
|
|
|
4,363
|
|
|
|
|
5,302
|
|
Other
|
|
|
|
282,079
|
|
|
|
|
268,063
|
|
Goodwill
|
|
|
|
82,190
|
|
|
|
|
82,190
|
|
Total
assets
|
|
|
|
$
|
5,371,483
|
|
|
|
|
$
|
5,243,824
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
|
|
|
|
Deposit
liabilities—noninterest-bearing
|
|
|
|
$
|
1,284,957
|
|
|
|
|
$
|
1,214,418
|
|
Deposit
liabilities—interest-bearing
|
|
|
|
3,193,030
|
|
|
|
|
3,158,059
|
|
Other
borrowings
|
|
|
|
244,642
|
|
|
|
|
244,514
|
|
Other
|
|
|
|
120,324
|
|
|
|
|
105,679
|
|
Total
liabilities
|
|
|
|
4,842,953
|
|
|
|
|
4,722,670
|
|
Common
stock
|
|
|
|
336,617
|
|
|
|
|
336,054
|
|
Retained
earnings
|
|
|
|
203,086
|
|
|
|
|
197,297
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
|
|
|
|
Net unrealized losses
on securities
|
|
$
|
(2,858)
|
|
|
|
|
$
|
(3,663)
|
|
|
|
Retirement benefit
plans
|
|
(8,315)
|
|
|
(11,173)
|
|
|
(8,534)
|
|
|
(12,197)
|
|
Total
shareholder's equity
|
|
|
|
528,530
|
|
|
|
|
521,154
|
|
Total liabilities
and shareholder's equity
|
|
|
|
$
|
5,371,483
|
|
|
|
|
$
|
5,243,824
|
|
|
|
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 and HEI's Quarterly
Report on SEC Form 10-Q for the quarter ended March 31, 2014 (when
filed), 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
|
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SOURCE Hawaiian Electric Industries, Inc.