HONOLULU, April 30, 2015 /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 2015 of $13.5
million, compared to $12.1
million in the fourth (or linked) quarter of 2014 and
$14.4 million in the first
quarter of 2014.
"We made good progress on our key priorities during the quarter,
with strong core deposit growth, excellent asset quality, and broad
improvement in non-interest income. Mortgage production was
strong following the dip in interest rates, but our decision to
sell most of the low-rate loans contributed to lower loan growth
than in prior quarters," said Rich
Wacker, president and chief executive officer of
American. "We also accomplished an important step toward the
planned spin-off of ASB Hawaii by filing our Form 10 with the
Securities and Exchange Commission."
First quarter 2015 net income was $1.4
million higher than the linked quarter primarily driven by
(on an after-tax basis):
- $1 million lower provision for loan losses, with no repeat
of the lava flow-related provision in the linked quarter; and
- $1 million higher noninterest
income in the first quarter of 2015 across many areas, especially
mortgage banking income from gains on sale of newly originated
mortgages.
These were partially offset by $1
million lower net interest income primarily due to interest
and fees related to commercial loan payoffs in the fourth quarter
of 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 American.
Compared to the same quarter of 2014, net income was lower by
$0.9 million primarily driven by (on
an after-tax basis):
- $2 million gain in the first
quarter of 2014 on the sale of the municipal bond securities
portfolio; and
- $2 million higher noninterest
expense in the first quarter of 2015 due primarily to higher
pension expense from the effect of a lower discount rate and
changes in the national mortality tables.
These were largely offset by (on an after-tax basis):
- $1 million higher non-interest
income, excluding the gain on sale of the municipal bond securities
portfolio discussed above, particularly from mortgage banking and
fees on deposit products in the first quarter of 2015; and
- $1 million higher net interest
income in the first quarter of 2015 driven by the growth in our
lending portfolio.
Net interest income (pretax) was $45.5
million in the first quarter of 2015 compared to
$46.7 million in the linked quarter
of 2014 and $44.1 million in the
prior year quarter. Net interest margin was 3.52% compared to
3.65% in the linked quarter and 3.64% in the first quarter of
2014. Compared to the linked quarter, the declines were due
to the previously mentioned fourth quarter 2014 interest and fees
realized in connection with certain commercial loan payoffs
combined with lower yields related to the accounting effect of
slower recognition of loan fees and faster premium amortization on
mortgage-related securities in the first quarter of 2015.
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.
Provision for loan losses (pretax) was $0.6 million in the first quarter of 2015, lower
than the $2.6 million in the linked
quarter of 2014 and lower than the provision of $1.0 million in the first quarter of
2014. The higher provision in the linked quarter was largely
due to reserves for a commercial loan impacted by the lava flows on
Hawaii Island. The first quarter 2015 net charge-off ratio
was 0.04%, consistent with the linked quarter and 0.02% in the
prior year quarter. Credit quality and trends continue to be
stable and good, reflecting prudent credit risk management and a
strong Hawaii economy.
Noninterest income (pretax) was $16.1
million in the first quarter of 2015, compared to
$15.3 million in the linked
quarter and $16.9 million in the
first quarter of 2014, which included the $2.8 million gain on the sale of the municipal
bond portfolio.
Noninterest expense (pretax) was $40.4
million in the first quarter of 2015, compared to
$41.1 million in the linked
quarter and $37.5 million in the
first quarter of 2014. Noninterest expense was $0.7 million lower compared to the linked
quarter, which included a settlement of a purported class action
lawsuit related to overdraft fees on debit card transactions and
other one-time costs.
Loan growth was 1% annualized in the first quarter of 2015
driven largely by increases in commercial real estate and
commercial markets loans. Residential loans were down
slightly as more newly originated mortgages were sold in the
secondary markets. American continues to expect to meet its
target of mid-single digit loan growth for the full year.
Total deposits were $4.8 billion
at March 31, 2015, up $128 million from December 31, 2014,
primarily driven by the 12% annualized increase in low-cost core
deposits. Average cost of funds remained low at 0.22% for the
first quarter of 2015, consistent with the linked quarter and 1
basis point lower than the 0.23% for the prior year quarter.
American's return on average equity was 10.0%, up from 8.9% in
the linked quarter, but lower than the 10.9% in the first quarter
of last year. Return on average assets was 0.96% for the
first quarter of 2015, compared to 0.88% from the linked quarter
and 1.09% in the same quarter last year. American's solid
results enabled it to pay dividends of $7.5
million to HEI in the quarter while maintaining healthy
capital levels – leverage ratio of 8.9% and total capital ratio of
13.2% at March 31, 2015.
HEI EARNINGS RELEASE
Concurrent with American's regulatory filing 30 days after the
end of the quarter, American announced its first quarter 2015
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
2015.
HEI plans to announce its first quarter 2015 consolidated
financial results via press release on Wednesday,
May 6, 2015. However, in light of the upcoming
special meeting of shareholders to be held on May 12, 2015, there will not be a webcast and
conference call for the first quarter.
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, 2014 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 Company, Inc, 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,
2015
|
|
December 31,
2014
|
|
March 31,
2014
|
|
Interest and
dividend income
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
45,198
|
|
|
$
|
46,276
|
|
|
$
|
43,682
|
|
|
Interest and
dividends on investment securities
|
|
3,051
|
|
|
3,187
|
|
|
3,035
|
|
|
Total interest and
dividend income
|
|
48,249
|
|
|
49,463
|
|
|
46,717
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
1,260
|
|
|
1,303
|
|
|
1,225
|
|
|
Interest on other
borrowings
|
|
1,466
|
|
|
1,468
|
|
|
1,405
|
|
|
Total interest
expense
|
|
2,726
|
|
|
2,771
|
|
|
2,630
|
|
|
Net interest
income
|
|
45,523
|
|
|
46,692
|
|
|
44,087
|
|
|
Provision for loan
losses
|
|
614
|
|
|
2,560
|
|
|
995
|
|
|
Net interest
income after provision for loan losses
|
|
44,909
|
|
|
44,132
|
|
|
43,092
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,355
|
|
|
5,760
|
|
|
5,128
|
|
|
Fee income on deposit
liabilities
|
|
5,315
|
|
|
5,074
|
|
|
4,421
|
|
|
Fee income on other
financial products
|
|
1,889
|
|
|
1,806
|
|
|
2,290
|
|
|
Bank-owned life
insurance
|
|
983
|
|
|
1,004
|
|
|
963
|
|
|
Mortgage banking
income
|
|
1,822
|
|
|
1,164
|
|
|
628
|
|
|
Gains on sale of
investment securities
|
|
—
|
|
|
—
|
|
|
2,847
|
|
|
Other income,
net
|
|
735
|
|
|
455
|
|
|
625
|
|
|
Total noninterest
income
|
|
16,099
|
|
|
15,263
|
|
|
16,902
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
21,766
|
|
|
19,835
|
|
|
20,286
|
|
|
Occupancy
|
|
4,113
|
|
|
4,238
|
|
|
3,953
|
|
|
Data
processing
|
|
3,116
|
|
|
2,975
|
|
|
3,060
|
|
|
Services
|
|
2,341
|
|
|
2,561
|
|
|
2,273
|
|
|
Equipment
|
|
1,701
|
|
|
1,638
|
|
|
1,645
|
|
|
Office supplies,
printing and postage
|
|
1,483
|
|
|
1,602
|
|
|
1,616
|
|
|
Marketing
|
|
841
|
|
|
1,309
|
|
|
711
|
|
|
FDIC
insurance
|
|
811
|
|
|
820
|
|
|
796
|
|
|
Other
expense
|
|
4,205
|
|
|
6,116
|
|
|
3,122
|
|
|
Total noninterest
expense
|
|
40,377
|
|
|
41,094
|
|
|
37,462
|
|
|
Income before
income taxes
|
|
20,631
|
|
|
18,301
|
|
|
|
22,532
|
|
|
Income
taxes
|
|
7,156
|
|
|
6,188
|
|
|
8,133
|
|
|
Net
income
|
|
$
|
13,475
|
|
|
$
|
12,113
|
|
|
$
|
14,399
|
|
|
Comprehensive
income
|
|
$
|
17,318
|
|
|
$
|
5,419
|
|
|
$
|
15,423
|
|
|
OTHER BANK
INFORMATION (annualized %, except as of period end)
|
|
|
|
|
|
Return on average
assets
|
|
0.96
|
|
|
0.88
|
|
|
1.09
|
|
|
Return on average
equity
|
|
9.96
|
|
|
8.93
|
|
|
10.94
|
|
|
Return on average
tangible common equity
|
|
11.74
|
|
|
10.52
|
|
|
12.96
|
|
|
Net interest
margin
|
|
3.52
|
|
|
3.65
|
|
|
3.64
|
|
|
Net charge-offs to
average loans outstanding
|
|
0.04
|
|
|
0.04
|
|
|
0.02
|
|
|
As of period
end
|
|
|
|
|
|
|
|
Nonperforming assets
to loans outstanding and real estate owned *
|
|
0.80
|
|
|
0.85
|
|
|
1.12
|
|
|
Allowance for loan
losses to loans outstanding
|
|
1.03
|
|
|
1.03
|
|
|
0.98
|
|
|
Tier-1 leverage ratio
*
|
|
8.9
|
|
|
8.9
|
|
|
9.0
|
|
|
Total capital ratio
*
|
|
13.2
|
|
|
12.3
|
|
|
12.7
|
|
|
Tangible common
equity to total assets
|
|
8.18
|
|
|
8.23
|
|
|
8.42
|
|
|
Dividend paid to HEI
(via ASB Hawaii, Inc.) ($ in millions)
|
|
8
|
|
|
9
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
* Regulatory
basis. Capital ratios as of March 31, 2015 calculated under Basel
III rules, which became effective January 1, 2015.
|
|
|
Prior period
financial statements reflect the retrospective application of
Accounting Standards Update (ASU) No. 2014-01, "Investments-Equity
Method and Joint Ventures (Topic 323): Accounting for Investments
in Qualified Affordable Housing Projects," which was adopted as of
January 1, 2015 and did not have a material impact on ASB's
financial condition or results of operations.
|
|
|
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, 2014, ASB Hawaii,
Inc.'s Form 10 filed with the SEC on March 30, 2015 and HEI's
Quarterly Report on SEC Form 10-Q for the quarter ended March 31,
2015 (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)
|
|
|
March 31,
2015
|
December 31,
2014
|
|
(in
thousands)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Cash and due from
banks
|
|
$
|
98,484
|
|
|
$
|
107,233
|
|
|
Interest-bearing
deposits
|
|
172,517
|
|
|
54,230
|
|
|
Available-for-sale
investment securities, at fair value
|
|
590,648
|
|
|
550,394
|
|
|
Stock in Federal Home
Loan Bank of Seattle, at cost
|
|
63,711
|
|
|
69,302
|
|
|
Loans receivable held
for investment
|
|
4,447,299
|
|
|
4,434,651
|
|
|
Allowance for loan
losses
|
|
(45,795)
|
|
|
(45,618)
|
|
|
Net loans
|
|
4,401,504
|
|
|
4,389,033
|
|
|
Loans held for sale,
at lower of cost or fair value
|
|
9,906
|
|
|
8,424
|
|
|
Other
|
|
305,917
|
|
|
305,416
|
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
|
Total
assets
|
|
$
|
5,724,877
|
|
|
$
|
5,566,222
|
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
|
Deposit
liabilities–noninterest-bearing
|
|
$
|
1,420,085
|
|
|
$
|
1,342,794
|
|
|
Deposit
liabilities–interest-bearing
|
|
3,331,243
|
|
|
3,280,621
|
|
|
Other
borrowings
|
|
312,094
|
|
|
290,656
|
|
|
Other
|
|
117,849
|
|
|
118,363
|
|
|
Total
liabilities
|
|
5,181,271
|
|
|
5,032,434
|
|
|
Common
stock
|
|
1
|
|
|
1
|
|
|
Additional paid in
capital
|
|
338,411
|
|
|
338,411
|
|
|
Retained
earnings
|
|
217,909
|
|
|
211,934
|
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
|
Net unrealized gains on securities
|
$
|
3,913
|
|
|
$
|
462
|
|
|
|
Retirement benefit
plans
|
(16,628)
|
|
(12,715)
|
|
(17,020)
|
|
(16,558)
|
|
|
Total
shareholder's equity
|
|
543,606
|
|
|
533,788
|
|
|
Total
liabilities and shareholder's equity
|
|
$
|
5,724,877
|
|
|
$
|
5,566,222
|
|
|
|
Prior period
financial statements reflect the retrospective application of
Accounting Standards Update (ASU) No. 2014-01, "Investments-Equity
Method and Joint Ventures (Topic 323): Accounting for Investments
in Qualified Affordable Housing Projects," which was adopted as of
January 1, 2015 and did not have a material impact on ASB's
financial condition or results of operations.
|
|
|
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, 2014, ASB Hawaii, Inc.'s Form
10 filed with the SEC on March 30, 2015 and HEI's Quarterly Report
on SEC Form 10-Q for the quarter ended March 31, 2015 (when filed),
as updated by SEC Forms 8-K.
|
|
Contact:
|
Clifford H.
Chen
|
|
|
Manager, Investor
Relations &
|
Telephone: (808)
543-7300
|
|
Strategic
Planning
|
E-mail:
ir@hei.com
|
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SOURCE Hawaiian Electric Industries, Inc.