HONOLULU, April 29, 2016 /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 of $12.7 million for the first quarter of 2016
compared to $15.0 million in the
fourth (or linked) quarter of 2015 and $13.5 million in the first quarter of
2015.
"American delivered solid results this quarter with strong
deposit growth, higher net interest income and margins, and a
better efficiency ratio. Our bottom line reflected the effect
of higher loss provisioning due to loan growth as well as higher
provisioning during the construction phase of several commercial
real estate projects, and we remain encouraged about the outlook
for Hawaii's economy this year,"
said Rich Wacker, president and
chief executive officer of American. "We have advanced our
preparations for the planned spin-off of ASB Hawaii and recently
filed our updated Form 10 registration statement with the
Securities and Exchange Commission."
First quarter 2016 net income was $2.3
million lower than the linked quarter primarily driven by
the following on an after-tax basis:
- $2 million higher provision for
loan losses mainly due to growth in lending in commercial real
estate and a commercial credit charge-off in the first quarter of
2016 compared to lower provisioning during the fourth quarter of
2015 attributable to net recoveries on previously charged-off
loans; and
- $1 million lower noninterest
income compared to the fourth quarter of 2015, which included gains
from the sale of mortgage serving rights.
These were partially offset by $1
million (after-tax) higher net interest income primarily
attributable to loan and investment portfolio growth and higher
yields on interest-earning assets in the first quarter of 2016.
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|
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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.
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Compared to the first quarter of 2015, net income declined by
$0.8 million primarily driven by the
following on an after-tax basis:
- $2 million higher provision for
loan losses mainly driven by commercial real estate loan growth and
a commercial credit charge-off in the first quarter of 2016;
and
- $1 million higher noninterest
expense primarily due to investment in our electronic banking
platform and higher compensation expense.
These were offset by $3 million
(after-tax) higher net interest income in the first quarter of 2016
due to loan and investment portfolio growth and higher yields on
interest-earning assets.
Net interest income (pretax) was $50.4
million in the first quarter of 2016 compared to
$48.7 million in the linked quarter
of 2015 and $45.5 million in the
prior year quarter. The increase was primarily attributable
to growth in the commercial real estate loans and the investment
portfolios along with higher yields on interest-earning
assets. Net interest margin was 3.62% compared to 3.55% in
the linked quarter and 3.52% in the first quarter of 2015.
Provision for loan losses (pretax) was $4.8 million in the first quarter of 2016
compared to $0.8 million in the
linked quarter of 2015 and $0.6 million in the first quarter of
2015. The increase in provision as discussed above was mainly
due to commercial real estate loan growth and a commercial credit
charge-off in the first quarter of 2016. During the
construction phase of commercial real estate projects, the bank
provides at a higher coverage rate compared to the period after
construction completion, and lending to construction projects
increased $30 million and
$53 million compared to the linked
and prior year quarters, respectively. The net charge-off
ratio was 0.21%, primarily attributable to the aforementioned
charge-off related to one commercial borrower, compared to the net
recovery in the linked quarter of 0.08% and 0.04% net charge-off
ratio in the prior year quarter. Credit quality and trends
continue to be stable, reflecting prudent credit risk management
and a strong Hawaii economy.
Noninterest income (pretax) was $15.4
million in the first quarter of 2016, compared to
$16.8 million in the linked
quarter and $16.1 million in the
first quarter of 2015. The $1.4
million lower noninterest income compared to the linked
quarter was primarily due to the gain on the sale of mortgage
servicing rights in the fourth quarter of 2015. The
$0.7 million decline compared to the
first quarter of 2015 was primarily driven by lower mortgage
banking income due to a decline in mortgage loan sales driven by
lower origination volume.
Noninterest expense (pretax) was $41.4
million in the first quarter of 2016, compared to
$42.0 million in the linked
quarter and $40.4 million in the
first quarter of 2015. Noninterest expense was $0.6 million lower compared to the linked quarter
primarily due to higher performance-based incentive compensation
expense in the fourth quarter of 2015. Noninterest expense
was $1.0 million greater compared to
the prior year quarter primarily due to higher compensation and
electronic banking platform expenses.
Loan growth was 2.2% annualized in the first quarter of 2016
driven largely by increases in commercial real estate and consumer
loans. American continues to expect to meet its target of
mid-single digit loan growth for the full year.
Total deposits were $5.1 billion
at March 31, 2016, up $115 million or 9.1% annualized from
December 31, 2015, primarily driven by the 6.5%
annualized increase in low-cost core deposits. Average cost
of funds remained low at 0.23% for the first quarter of 2016, 1
basis point higher than the linked quarter and the prior year
quarter.
American's return on average equity was 8.9%, compared to 10.7%
in the linked quarter and 10.0% in the first quarter of last
year. Return on average assets was 0.84% for the first
quarter of 2016, compared to 1.01% in the linked quarter and 0.96%
in the same quarter last year. American's solid results
enabled it to pay dividends of $9.0
million to HEI in the quarter while maintaining healthy
capital levels – leverage ratio of 8.7% and total capital ratio of
13.2% at March 31, 2016.
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO
DISCUSS EARNINGS AND 2016 EPS GUIDANCE
Concurrent with American's regulatory filing 30 days after the
end of the quarter, American announced its first quarter 2016
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
2016.
HEI plans to announce its first quarter and 2016 consolidated
financial results on Wednesday, May 4,
2016 and will conduct a webcast and conference call to
discuss its consolidated earnings, including American's earnings,
and 2016 EPS guidance on Wednesday, May 4, 2016, at
8:00 a.m. Hawaii time (2:00 p.m. Eastern
time).
Interested parties within the United
States may listen to the conference by calling (888)
311-8190 and entering passcode: 70436517. International
parties may listen to the conference by calling (330) 863-3378 and
entering passcode: 70436517 or by accessing the webcast on HEI's
website at www.hei.com under the heading "Investor
Relations." HEI and Hawaiian Electric Company 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
Company's and American's press releases, HEI's and Hawaiian
Electric Company'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 Company'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 Company's SEC
filings.
An online replay of the webcast will be available at the same
website beginning about two hours after the event. Replays of
the conference call will also be available approximately two hours
after the event through May 18, 2016,
by dialing (855) 859-2056 or (404) 537-3406 and entering
passcode: 70436517.
HEI supplies power to approximately 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, 2015 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, 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.
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STATEMENTS OF INCOME
DATA
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(Unaudited)
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Three months
ended
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(in thousands)
|
|
March 31,
2016
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|
December 31,
2015
|
|
March 31,
2015
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Interest and
dividend income
|
|
|
|
|
|
|
Interest and fees on
loans
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|
$
|
48,437
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|
|
$
|
47,136
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|
|
$
|
45,198
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Interest and
dividends on investment securities
|
|
5,017
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|
|
4,550
|
|
|
3,051
|
|
Total interest and
dividend income
|
|
53,454
|
|
|
51,686
|
|
|
48,249
|
|
Interest
expense
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
1,592
|
|
|
1,467
|
|
|
1,260
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|
Interest on other
borrowings
|
|
1,485
|
|
|
1,510
|
|
|
1,466
|
|
Total interest
expense
|
|
3,077
|
|
|
2,977
|
|
|
2,726
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|
Net interest
income
|
|
50,377
|
|
|
48,709
|
|
|
45,523
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|
Provision for loan
losses
|
|
4,766
|
|
|
839
|
|
|
614
|
|
Net interest
income after provision for loan losses
|
|
45,611
|
|
|
47,870
|
|
|
44,909
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|
Noninterest
income
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,499
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|
|
5,667
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|
|
5,355
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|
Fee income on deposit
liabilities
|
|
5,156
|
|
|
5,746
|
|
|
5,315
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|
Fee income on other
financial products
|
|
2,205
|
|
|
2,006
|
|
|
1,889
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|
Bank-owned life
insurance
|
|
998
|
|
|
1,016
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|
|
983
|
|
Mortgage banking
income
|
|
1,195
|
|
|
1,003
|
|
|
1,822
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Other income,
net
|
|
333
|
|
|
1,387
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|
|
735
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Total noninterest
income
|
|
15,386
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|
|
16,825
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|
|
16,099
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Noninterest
expense
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
22,434
|
|
|
23,705
|
|
|
21,766
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|
Occupancy
|
|
4,138
|
|
|
4,115
|
|
|
4,113
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|
Data
processing
|
|
3,172
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|
|
3,002
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|
|
3,116
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Services
|
|
2,911
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|
|
2,474
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|
|
2,341
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|
Equipment
|
|
1,663
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|
|
1,578
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|
|
1,701
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Office supplies,
printing and postage
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|
1,365
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|
|
1,452
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|
|
1,483
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|
Marketing
|
|
861
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|
|
844
|
|
|
841
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|
FDIC
insurance
|
|
884
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|
|
881
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|
|
811
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|
Other
expense
|
|
3,975
|
|
|
3,991
|
|
|
4,205
|
|
Total noninterest
expense
|
|
41,403
|
|
|
42,042
|
|
|
40,377
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|
Income before
income taxes
|
|
19,594
|
|
|
22,653
|
|
|
20,631
|
|
Income
taxes
|
|
6,921
|
|
|
7,700
|
|
|
7,156
|
|
Net
income
|
|
$
|
12,673
|
|
|
$
|
14,953
|
|
|
$
|
13,475
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Comprehensive
income
|
|
$
|
20,310
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|
|
$
|
9,477
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|
|
$
|
17,318
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OTHER BANK
INFORMATION (annualized %, except as of period end)
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|
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Return on average
assets
|
|
0.84
|
|
|
1.01
|
|
|
0.96
|
|
Return on average
equity
|
|
8.89
|
|
|
10.66
|
|
|
9.96
|
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Return on average
tangible common equity
|
|
10.39
|
|
|
12.48
|
|
|
11.74
|
|
Net interest
margin
|
|
3.62
|
|
|
3.55
|
|
|
3.52
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Net charge-offs to
average loans outstanding
|
|
0.21
|
|
|
(0.08)
|
|
|
0.04
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|
As of period
end
|
|
|
|
|
|
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Nonperforming assets
to loans outstanding and real estate owned
|
|
1.03
|
|
|
1.02
|
|
|
0.80
|
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Allowance for loan
losses to loans outstanding
|
|
1.13
|
|
|
1.08
|
|
|
1.03
|
|
Tangible common
equity to tangible assets
|
|
8.08
|
|
|
8.05
|
|
|
8.18
|
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Tier-1 leverage
ratio
|
|
8.7
|
|
|
8.8
|
|
|
8.9
|
|
Total capital
ratio
|
|
13.2
|
|
|
13.3
|
|
|
13.2
|
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Dividend paid to HEI
(via ASB Hawaii, Inc.) ($ in millions)
|
|
$
|
9.0
|
|
|
$
|
7.5
|
|
|
$
|
7.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This information
should be read in conjunction with the consolidated financial
statements and the notes thereto in HEI and ASB Hawaii, Inc.
filings with the SEC. 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,
2016
|
December 31,
2015
|
|
|
|
|
|
Assets
|
|
|
|
|
Cash and due from
banks
|
|
$
|
110,200
|
|
|
$
|
127,201
|
|
Interest-bearing
deposits
|
|
120,428
|
|
|
93,680
|
|
Available-for-sale
investment securities, at fair value
|
|
906,295
|
|
|
820,648
|
|
Stock in Federal Home
Loan Bank, at cost
|
|
11,218
|
|
|
10,678
|
|
Loans receivable held
for investment
|
|
4,642,276
|
|
|
4,615,819
|
|
Allowance for loan
losses
|
|
(52,326)
|
|
|
(50,038)
|
|
Net loans
|
|
4,589,950
|
|
|
4,565,781
|
|
Loans held for sale,
at lower of cost or fair value
|
|
7,900
|
|
|
4,631
|
|
Other
|
|
312,333
|
|
|
309,946
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
Total
assets
|
|
$
|
6,140,514
|
|
|
$
|
6,014,755
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
Deposit
liabilities–noninterest-bearing
|
|
$
|
1,541,402
|
|
|
$
|
1,520,374
|
|
Deposit
liabilities–interest-bearing
|
|
3,598,530
|
|
|
3,504,880
|
|
Other
borrowings
|
|
329,081
|
|
|
328,582
|
|
Other
|
|
99,605
|
|
|
101,029
|
|
Total
liabilities
|
|
5,568,618
|
|
|
5,454,865
|
|
Common
stock
|
|
1
|
|
|
1
|
|
Additional paid in
capital
|
|
341,192
|
|
|
340,496
|
|
Retained
earnings
|
|
240,337
|
|
|
236,664
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
Net unrealized gains
(losses) on securities
|
$
|
5,556
|
|
|
$
|
(1,872)
|
|
|
Retirement benefit
plans
|
(15,190)
|
|
(9,634)
|
|
(15,399)
|
|
(17,271)
|
|
Total shareholder's equity
|
|
571,896
|
|
|
559,890
|
|
Total liabilities
and shareholder's equity
|
|
$
|
6,140,514
|
|
|
$
|
6,014,755
|
|
|
|
|
|
|
|
|
|
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This information
should be read in conjunction with the consolidated financial
statements and the notes thereto in HEI and ASB Hawaii, Inc.
filings with the SEC.
|
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.