HONOLULU, July 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
second quarter of 2014 of $11.7
million, compared to $14.5
million in the first (or linked) quarter of 2014 and
$15.9 million in the second
quarter of 2013.
"American continued to deliver solid results in line with
expectations, with good growth across our target market segments in
both loans and core deposits. Asset quality continued to
improve, reflecting the healthy local market environment, and our
rate of asset growth has helped offset the effects of the
persistently low rate environment," said Rich Wacker, president and chief executive
officer of American.
Second quarter 2014 net income was $2.9
million lower than the linked quarter primarily driven by
(on an after-tax basis):
- $2 million gain on the sale of municipal bond
securities in the first (or linked) quarter of 2014 in response to
recent regulatory guidance on liquidity standards and the
anticipation of higher interest rates over time; and
- $1 million higher noninterest
expense due to higher branch security expense, product development
costs, and timing of debit card-related expenses.
Compared to the same quarter of 2013, net income decreased by
$4.2 million primarily driven by (on
an after-tax basis):
- $1 million lower interchange fees
under regulatory caps (Durbin Amendment) that became effective for
American on July 1, 2013;
- $1 million gain on the sale of
securities in the second quarter of 2013;
- $1 million lower mortgage banking
income from significantly lower refinancing activity; and
- $1 million change in the
provision for loan losses, which was a credit in the second quarter
of 2013 due to the sale of American's credit card portfolio.
Net interest income (pretax) was $44.1
million in both the second quarter of 2014 and in the linked
quarter and $44.4 million in the
second quarter of 2013. Net interest margin was 3.55%
compared to 3.64% in the linked quarter and 3.79% in the second
quarter of 2013. The 0.09% point decline in net interest
margin compared to the linked quarter was attributable to multiple
factors, including the effect of the sale of higher yielding
municipal bond securities in the first quarter and slower
recognition of mortgage-related fees as prepayment rates decline,
and the ongoing effect of low rates on interest-earning assets.
Compared to the second quarter of 2013, the net
interest margin decline was primarily attributable to lower yields
on interest earning assets as the loan portfolio continued to
re-price down in the low interest rate environment. In both
periods, a portion of the net interest margin decline was offset by
loan growth.
Provision for loan losses (pretax) was $1.0 million in the second quarter of 2014, flat
compared to the linked quarter, but higher than the net credit of
$1.0 million in the second
quarter of 2013. In the second quarter of 2013, American
released $1 million (pretax) of
allowance for loan losses in connection with the agreement to sell
its credit card portfolio in the third quarter of 2013 and released
allowance associated with specific commercial loan paydowns.
The second quarter 2014 net charge-off ratio improved to a recovery
of 0.04% from a charge-off of 0.02% in the linked quarter and a
charge-off of 0.08% in the prior year quarter primarily due to the
improved credit quality of the loan portfolio and the strengthening
Hawaii economy.
Noninterest income (pretax) was $13.8
million in the second quarter of 2014, compared to
$16.9 million in the linked
quarter and $19.2 million in the
second quarter of 2013. Second quarter noninterest income was
relatively in line with the first quarter, excluding the
$2.8 million gain on the sale of the
municipal bond portfolio in the linked quarter. Compared to
the second quarter of 2013, noninterest income declined by
$5.4 million primarily due to lower
year-over-year fee income due to the regulatory limits on
interchange fees (Durbin Amendment) of $2.3
million, lower mortgage banking income of $1.8 million due to lower refinancing
volumes and no gain on sales of securities, which were $1.2 million in the prior year quarter.
Noninterest expense (pretax) was $39.9
million in the second quarter of 2014, higher than
$38.4 million in the linked
quarter and in line with $39.8
million in the second quarter of 2013. Noninterest
expense was higher compared to the linked quarter primarily due to
higher branch security expense, product development costs and
timing of debit card-related expenses.
Total loans grew by $99 million
and $136 million in the second
quarter and year-to-date 2014, respectively. Second quarter
loan growth was primarily driven by increases in residential, home
equity lending and commercial real estate. Annualized loan
growth was 9.4% and 6.5% in the second quarter and year-to-date
2014, respectively.
Total deposits were $4.5 billion
at June 30, 2014, an increase of
$47 million and $152 million in the second quarter and
year-to-date 2014, respectively. Second quarter deposit
growth was primarily due to the increase in low-cost core
deposits. Annualized deposit growth was 4.2% and 7.0% in the
second quarter and year-to-date 2014, respectively. Average
cost of funds remained low at 0.22% for the second quarter of 2014,
1 basis point lower than the linked quarter and consistent with the
prior year quarter.
As a result of the net income impacts detailed above, American's
second quarter 2014 return on average equity was 8.8%, compared to
11.0% in the linked quarter and 12.6% in the second quarter of last
year. Return on average assets was 0.87% for the second
quarter of 2014, compared to 1.10% in the linked quarter and 1.25%
in the same quarter last year.
American's year-to-date return on average equity was 9.9%,
compared to 11.9% for the same period in the prior year.
Year-to-date return on average assets was 0.98% compared to 1.19%
for the same period in the prior year.
American's continued solid results enabled it to pay dividends
of $9.75 million to HEI in the
quarter while maintaining healthy capital levels – leverage ratio
of 9.0% and total risk-based capital ratio of 12.6% at June 30, 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 second 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 second quarter of 2014.
HEI plans to announce its second quarter 2014 consolidated
financial results on Monday, August 11, 2014 and will
conduct a webcast and conference call to discuss its consolidated
earnings, including American's earnings, and 2014 EPS guidance on
Monday, August 11, 2014, at
7:00 a.m. Hawaii time (1:00 p.m. Eastern
time). Interested parties may listen to the conference by
calling (877) 474-9504 and entering passcode: 92297255,
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 August 25,
2014, by dialing (888) 286-8010, passcode:
58411343.
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, HEI's Quarterly
Report on Form 10-Q for the quarter ended March 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, 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
|
|
Six months ended
June 30
|
(in thousands)
|
|
June 30,
2014
|
|
March 31,
2014
|
|
June 30,
2013
|
|
2014
|
|
2013
|
Interest and
dividend income
|
Interest and fees on
loans
|
|
$
|
43,851
|
|
|
$
|
43,682
|
|
|
$
|
43,624
|
|
|
$
|
87,533
|
|
|
$
|
86,227
|
|
Interest and
dividends on investment and mortgage-related securities
|
|
2,950
|
|
|
3,035
|
|
|
3,234
|
|
|
5,985
|
|
|
6,698
|
|
Total interest and
dividend income
|
|
46,801
|
|
|
46,717
|
|
|
46,858
|
|
|
93,518
|
|
|
92,925
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
1,237
|
|
|
1,225
|
|
|
1,296
|
|
|
2,462
|
|
|
2,608
|
|
Interest on other
borrowings
|
|
1,420
|
|
|
1,405
|
|
|
1,178
|
|
|
2,825
|
|
|
2,342
|
|
Total interest
expense
|
|
2,657
|
|
|
2,630
|
|
|
2,474
|
|
|
5,287
|
|
|
4,950
|
|
Net interest
income
|
|
44,144
|
|
|
44,087
|
|
|
44,384
|
|
|
88,231
|
|
|
87,975
|
|
Provision (credit)
for loan losses
|
|
1,021
|
|
|
995
|
|
|
(959)
|
|
|
2,016
|
|
|
899
|
|
Net interest
income after provision (credit) for loan losses
|
|
43,123
|
|
|
43,092
|
|
|
45,343
|
|
|
86,215
|
|
|
87,076
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,217
|
|
|
5,128
|
|
|
7,996
|
|
|
10,345
|
|
|
15,639
|
|
Fee income on deposit
liabilities
|
|
4,645
|
|
|
4,421
|
|
|
4,433
|
|
|
9,066
|
|
|
8,747
|
|
Fee income on other
financial products
|
|
2,064
|
|
|
2,290
|
|
|
1,780
|
|
|
4,354
|
|
|
3,574
|
|
Mortgage banking
income
|
|
246
|
|
|
628
|
|
|
2,003
|
|
|
874
|
|
|
5,349
|
|
Gain on sale of
securities
|
|
—
|
|
|
2,847
|
|
|
1,226
|
|
|
2,847
|
|
|
1,226
|
|
Other income,
net
|
|
1,643
|
|
|
1,588
|
|
|
1,731
|
|
|
3,231
|
|
|
3,323
|
|
Total noninterest
income
|
|
13,815
|
|
|
16,902
|
|
|
19,169
|
|
|
30,717
|
|
|
37,858
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
19,872
|
|
|
20,286
|
|
|
20,063
|
|
|
40,158
|
|
|
40,151
|
|
Occupancy
|
|
4,489
|
|
|
3,953
|
|
|
4,219
|
|
|
8,442
|
|
|
8,342
|
|
Data
processing
|
|
2,971
|
|
|
3,060
|
|
|
2,827
|
|
|
6,031
|
|
|
5,814
|
|
Services
|
|
2,855
|
|
|
2,273
|
|
|
2,328
|
|
|
5,128
|
|
|
4,431
|
|
Equipment
|
|
1,609
|
|
|
1,645
|
|
|
1,870
|
|
|
3,254
|
|
|
3,644
|
|
Other
expense
|
|
8,094
|
|
|
7,153
|
|
|
8,500
|
|
|
15,247
|
|
|
16,095
|
|
Total noninterest
expense
|
|
39,890
|
|
|
38,370
|
|
|
39,807
|
|
|
78,260
|
|
|
78,477
|
|
Income before
income taxes
|
|
17,048
|
|
|
21,624
|
|
|
24,705
|
|
|
38,672
|
|
|
46,457
|
|
Income
taxes
|
|
5,372
|
|
|
7,085
|
|
|
8,786
|
|
|
12,457
|
|
|
16,383
|
|
Net
income
|
|
$
|
11,676
|
|
|
$
|
14,539
|
|
|
$
|
15,919
|
|
|
$
|
26,215
|
|
|
$
|
30,074
|
|
Comprehensive
income
|
|
$
|
14,434
|
|
|
$
|
15,563
|
|
|
$
|
7,340
|
|
|
$
|
29,997
|
|
|
$
|
22,824
|
|
OTHER BANK
INFORMATION (annualized %, except as of period end)
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
0.87
|
|
|
1.10
|
|
|
1.25
|
|
|
0.98
|
|
|
1.19
|
|
Return on average
equity
|
|
8.78
|
|
|
11.03
|
|
|
12.56
|
|
|
9.90
|
|
|
11.93
|
|
Return on average
tangible common equity
|
|
10.39
|
|
|
13.06
|
|
|
15.00
|
|
|
11.72
|
|
|
14.25
|
|
Net interest
margin
|
|
3.55
|
|
|
3.64
|
|
|
3.79
|
|
|
3.59
|
|
|
3.79
|
|
Net charge-offs
(recoveries) to average loans outstanding
|
|
(0.04)
|
|
|
0.02
|
|
|
0.08
|
|
|
(0.01)
|
|
|
0.10
|
|
As of period
end
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets
to loans outstanding and real estate owned *
|
|
1.05
|
|
|
1.12
|
|
|
1.56
|
|
|
|
|
|
Allowance for loan
losses to loans outstanding
|
|
0.99
|
|
|
0.98
|
|
|
1.04
|
|
|
|
|
|
Tier-1 leverage ratio
*
|
|
9.0
|
|
|
9.0
|
|
|
9.3
|
|
|
|
|
|
Total risk-based
capital ratio *
|
|
12.6
|
|
|
12.7
|
|
|
12.5
|
|
|
|
|
|
Tangible common
equity to total assets
|
|
8.46
|
|
|
8.44
|
|
|
8.42
|
|
|
|
|
|
Dividend paid to HEI
(via ASHI) ($ in millions)
|
|
10
|
|
|
9
|
|
|
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
Reports on SEC Form 10-Q for the quarters ended March 31, 2014 and
June 30, 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)
|
|
June 30,
2014
|
|
December 31,
2013
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
$
|
174,950
|
|
|
|
|
$
|
156,603
|
|
Available-for-sale
investment and mortgage-related securities
|
|
|
|
549,321
|
|
|
|
|
529,007
|
|
Investment in stock
of Federal Home Loan Bank of Seattle
|
|
|
|
80,863
|
|
|
|
|
92,546
|
|
Loans receivable held
for investment
|
|
|
|
4,287,612
|
|
|
|
|
4,150,229
|
|
Allowance for loan
losses
|
|
|
|
(42,372)
|
|
|
|
|
(40,116)
|
|
Loans receivable held
for investment, net
|
|
|
|
4,245,240
|
|
|
|
|
4,110,113
|
|
Loans held for sale,
at lower of cost or fair value
|
|
|
|
956
|
|
|
|
|
5,302
|
|
Other
|
|
|
|
284,607
|
|
|
|
|
268,063
|
|
Goodwill
|
|
|
|
82,190
|
|
|
|
|
82,190
|
|
Total
assets
|
|
|
|
$
|
5,418,127
|
|
|
|
|
$
|
5,243,824
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
|
|
|
|
Deposit
liabilities—noninterest-bearing
|
|
|
|
$
|
1,301,758
|
|
|
|
|
$
|
1,214,418
|
|
Deposit
liabilities—interest-bearing
|
|
|
|
3,223,102
|
|
|
|
|
3,158,059
|
|
Other
borrowings
|
|
|
|
242,455
|
|
|
|
|
244,514
|
|
Other
|
|
|
|
116,953
|
|
|
|
|
105,679
|
|
Total
liabilities
|
|
|
|
4,884,268
|
|
|
|
|
4,722,670
|
|
Common
stock
|
|
|
|
337,262
|
|
|
|
|
336,054
|
|
Retained
earnings
|
|
|
|
205,012
|
|
|
|
|
197,297
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
|
|
|
|
Net unrealized losses
on securities
|
|
$
|
(315)
|
|
|
|
|
$
|
(3,663)
|
|
|
|
Retirement benefit
plans
|
|
(8,100)
|
|
|
(8,415)
|
|
|
(8,534)
|
|
|
(12,197)
|
|
Total shareholder's
equity
|
|
|
|
533,859
|
|
|
|
|
521,154
|
|
Total liabilities
and shareholder's equity
|
|
|
|
$
|
5,418,127
|
|
|
|
|
$
|
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
Reports on SEC Form 10-Q for the quarters ended March 31, 2014 and
June 30, 2014 (when filed), as updated by SEC Forms
8-K.
|
Contact:
|
Clifford H.
Chen
|
|
|
Manager, Investor
Relations &
|
Telephone: (808)
543-7384
|
|
Strategic
Planning
|
E-mail:
cchen@hei.com
|
Logo -
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SOURCE American Savings Bank, F.S.B.