UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 30, 2015
|
| | |
Exact Name of Registrant | Commission | I.R.S. Employer |
as Specified in Its Charter | File Number | Identification No. |
Hawaiian Electric Industries, Inc. | 1-8503 | 99-0208097 |
State of Hawaii
(State or other jurisdiction of incorporation)
1001 Bishop Street, Suite 2900, Honolulu, Hawaii 96813
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code:
(808) 543-5662
None
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
On July 30, 2015, HEI issued a news release, “American Savings Bank Reports Second Quarter 2015 Earnings.” This news release is furnished as HEI Exhibit 99.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| |
HEI Exhibit 99 | News release, dated July 30, 2015, “American Savings Bank Reports Second Quarter 2015 Earnings” |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| | |
HAWAIIAN ELECTRIC INDUSTRIES, INC. | | |
(Registrant) | | |
/s/ James A. Ajello | | |
James A. Ajello | | |
Executive Vice President and | | |
Chief Financial Officer | | |
(Principal Financial and Accounting Officer) | | |
| | |
Date: July 30, 2015 | | |
| | |
EXHIBIT INDEX
Exhibit No. Description
| |
HEI Exhibit 99 | News release, dated July 30, 2015, “American Savings Bank Reports Second |
Quarter 2015 Earnings”
HEI Exhibit 99
July 30, 2015
|
| | |
Contact: | Clifford H. Chen | |
| Manager, Investor Relations & | Telephone: (808) 543-7300 |
| Strategic Planning | E-mail: ir@hei.com |
AMERICAN SAVINGS BANK REPORTS SECOND QUARTER 2015 EARNINGS
Net Income of $12.9 Million
American Continues to Deliver Solid Results as It Prepares for Spin-off
HONOLULU - 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 2015 of $12.9 million, compared to $13.5 million in the first (or linked) quarter of 2015 and $11.5 million in the second quarter of 2014.
“We delivered solid results with good core deposit growth, sound credit quality and a continuing strong mortgage banking environment this quarter,” said Rich Wacker, president and chief executive officer of American. “With the HEI shareholders approving the merger with NextEra Energy on June 10th, we are a step closer to the spin-off of ASB Hawaii at the time of that merger.”
Second quarter 2015 net income was $0.6 million lower than the linked quarter primarily driven by (on an after-tax basis):
| |
• | $1 million higher net interest income primarily driven by higher interest-earning assets and fees related to the early payoff of commercial loans, offset by |
| |
• | $1 million higher provision for loan losses; and |
| |
• | $1 million higher noninterest expense. |
Compared to the second quarter of 2014, net income was higher by $1.3 million primarily driven by (on an after-tax basis):
| |
• | $1 million higher net interest income in the second quarter of 2015 primarily due to higher average loan balances; and |
| |
• | $2 million higher noninterest income primarily from mortgage banking and fees on deposit products in the second quarter of 2015, partially offset by |
_______________________
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.
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
July 30, 2015
Page 2
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• | $1 million higher noninterest expense in the second quarter of 2015 due primarily to higher pension and benefits expense. |
Net interest income (pretax) was $46.6 million in the second quarter of 2015 compared to $45.5 million in the linked quarter of 2015 and $44.1 million in the prior year quarter. Net interest margin was 3.52% in both the second and linked quarter of 2015 and 3.55% in the second quarter of 2014. 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 $1.8 million in the second quarter of 2015, higher than both the $0.6 million in the linked quarter of 2015 and the $1.0 million in the second quarter of 2014. The higher provision in the second quarter of 2015 was mainly due to the downgrade of one large commercial lending relationship and higher charge-offs. The second quarter 2015 net charge-off ratio was 0.11%, compared to 0.04% in the linked quarter and a net recovery of 0.04% in the prior year quarter. Credit quality continues to be strong, reflecting prudent credit risk management and a strong Hawaii economy. In the second quarter of 2015, credit trends remained favorable, with decreases in overall delinquency and non-performing assets, both on a linked quarter and year over year basis. Related to lending growth, provision for an increase in unfunded commercial real-estate commitments was recorded as noninterest expense.
Noninterest income (pretax) was $16.4 million in the second quarter of 2015, compared to $16.1 million in the linked quarter and $13.8 million in the second quarter of 2014 due to higher mortgage banking income and deposit related fee initiatives.
Noninterest expense (pretax) was $41.5 million in the second quarter of 2015, compared to $40.4 million in the linked quarter and $39.0 million in the second quarter of 2014. Noninterest expense was $1.1 million higher compared to the linked quarter primarily due to higher medical benefits expense, the timing of certain professional services and the provision for higher unfunded commercial real-estate commitments mentioned above.
Total loans were $4.5 billion at June 30, 2015, an increase of $10 million and $22 million in the second quarter and year-to-date 2015, respectively. Although year-to-date annualized loan growth was 1.01%, American expects to meet its target of mid-single digit loan growth for the full year.
Total deposits were $4.8 billion at June 30, 2015, an increase of $52 million and $180 million in the second quarter and year-to-date 2015, respectively, primarily driven by the 8.2% year-to-date annualized increase in low-cost core deposits. Average cost of funds remained low at 0.22% for the second quarter of 2015, consistent with both the linked quarter and the prior year quarter.
American’s return on average equity was 9.4% for the second quarter of 2015, compared to 10.0% in the linked quarter and 8.7% in the second quarter of last year. Return on average assets was 0.89% for
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
July 30, 2015
Page 3
the second quarter of 2015, compared to 0.96% for the linked quarter and 0.86% 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 8.8% and total capital ratio of 13.5% at June 30, 2015.
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2015 EPS GUIDANCE
Concurrent with American’s regulatory filing 30 days after the end of the quarter, American announced its second 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 second quarter of 2015.
HEI plans to announce its second quarter 2015 consolidated financial results on Monday, August 10, 2015 and will conduct a webcast and conference call to discuss its consolidated earnings, including American’s earnings, and 2015 EPS guidance on Monday, August 10, 2015, at 7:00 a.m. Hawaii time (1:00 p.m. Eastern time). Interested parties may listen to the conference call by dialing (888) 311-8190 and entering passcode: 74311446. International parties may listen to the conference call by calling the following toll free number, (330) 863-3378 and entering passcode: 74311446. The event can also be accessed through 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 which will be included 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 on-line replay of the webcast will be available at the same website beginning about two hours after the event. Audio replays of the teleconference will also be available approximately two hours after the event through August 24, 2015, by dialing (855) 859-2056 or (404) 537-3406 and entering passcode: 74311446.
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
July 30, 2015
Page 4
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, HEI’s Quarterly Report on Form 10-Q for the quarter ended March 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, 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, 2015 | | March 31, 2015 | | June 30, 2014 | | 2015 | | 2014 |
Interest and dividend income | | |
| | |
| | |
| | | | |
Interest and fees on loans | | $ | 46,035 |
| | $ | 45,198 |
| | $ | 43,851 |
| | $ | 91,233 |
| | $ | 87,533 |
|
Interest and dividends on investment securities | | 3,306 |
| | 3,051 |
| | 2,950 |
| | 6,357 |
| | 5,985 |
|
Total interest and dividend income | | 49,341 |
| | 48,249 |
| | 46,801 |
| | 97,590 |
| | 93,518 |
|
Interest expense | | |
| | |
| | | | | | |
Interest on deposit liabilities | | 1,266 |
| | 1,260 |
| | 1,237 |
| | 2,526 |
| | 2,462 |
|
Interest on other borrowings | | 1,487 |
| | 1,466 |
| | 1,420 |
| | 2,953 |
| | 2,825 |
|
Total interest expense | | 2,753 |
| | 2,726 |
| | 2,657 |
| | 5,479 |
| | 5,287 |
|
Net interest income | | 46,588 |
| | 45,523 |
| | 44,144 |
| | 92,111 |
| | 88,231 |
|
Provision for loan losses | | 1,825 |
| | 614 |
| | 1,021 |
| | 2,439 |
| | 2,016 |
|
Net interest income after provision for loan losses | | 44,763 |
| | 44,909 |
| | 43,123 |
| | 89,672 |
| | 86,215 |
|
Noninterest income | | |
| | |
| | | | | | |
Fees from other financial services | | 5,550 |
| | 5,355 |
| | 5,217 |
| | 10,905 |
| | 10,345 |
|
Fee income on deposit liabilities | | 5,424 |
| | 5,315 |
| | 4,645 |
| | 10,739 |
| | 9,066 |
|
Fee income on other financial products | | 2,103 |
| | 1,889 |
| | 2,064 |
| | 3,992 |
| | 4,354 |
|
Bank-owned life insurance | | 1,058 |
| | 983 |
| | 982 |
| | 2,041 |
| | 1,945 |
|
Mortgage banking income | | 2,068 |
| | 1,822 |
| | 246 |
| | 3,890 |
| | 874 |
|
Gains on sale of investment securities | | — |
| | — |
| | — |
| | — |
| | 2,847 |
|
Other income, net | | 239 |
| | 735 |
| | 661 |
| | 974 |
| | 1,286 |
|
Total noninterest income | | 16,442 |
| | 16,099 |
| | 13,815 |
| | 32,541 |
| | 30,717 |
|
Noninterest expense | | |
| | |
| | | | | | |
Compensation and employee benefits | | 22,319 |
| | 21,766 |
| | 19,872 |
| | 44,085 |
| | 40,158 |
|
Occupancy | | 4,009 |
| | 4,113 |
| | 4,489 |
| | 8,122 |
| | 8,442 |
|
Data processing | | 2,953 |
| | 3,116 |
| | 2,971 |
| | 6,069 |
| | 6,031 |
|
Services | | 2,833 |
| | 2,341 |
| | 2,855 |
| | 5,174 |
| | 5,128 |
|
Equipment | | 1,690 |
| | 1,701 |
| | 1,609 |
| | 3,391 |
| | 3,254 |
|
Office supplies, printing and postage | | 1,303 |
| | 1,483 |
| | 1,456 |
| | 2,786 |
| | 3,072 |
|
Marketing | | 844 |
| | 841 |
| | 1,031 |
| | 1,685 |
| | 1,742 |
|
FDIC insurance | | 773 |
| | 811 |
| | 805 |
| | 1,584 |
| | 1,601 |
|
Other expense | | 4,755 |
| | 4,205 |
| | 3,894 |
| | 8,960 |
| | 7,016 |
|
Total noninterest expense | | 41,479 |
| | 40,377 |
| | 38,982 |
| | 81,856 |
| | 76,444 |
|
Income before income taxes | | 19,726 |
| | 20,631 |
| | 17,956 |
| | 40,357 |
| | 40,488 |
|
Income taxes | | 6,875 |
| | 7,156 |
| | 6,420 |
| | 14,031 |
| | 14,553 |
|
Net income | | $ | 12,851 |
| | $ | 13,475 |
| | $ | 11,536 |
| | $ | 26,326 |
| | $ | 25,935 |
|
Comprehensive income | | $ | 9,544 |
| | $ | 17,318 |
| | $ | 14,294 |
| | $ | 26,862 |
| | $ | 29,717 |
|
OTHER BANK INFORMATION (annualized %, except as of period end) | | | | | | | | |
Return on average assets | | 0.89 |
| | 0.96 |
| | 0.86 |
| | 0.93 |
| | 0.97 |
|
Return on average equity | | 9.38 |
| | 9.96 |
| | 8.69 |
| | 9.67 |
| | 9.81 |
|
Return on average tangible common equity | | 11.04 |
| | 11.74 |
| | 10.28 |
| | 11.39 |
| | 11.61 |
|
Net interest margin | | 3.52 |
| | 3.52 |
| | 3.55 |
| | 3.52 |
| | 3.59 |
|
Net charge-offs to average loans outstanding | | 0.11 |
| | 0.04 |
| | (0.04 | ) | | 0.08 |
| | (0.01 | ) |
As of period end | | | | | | | | | | |
Nonperforming assets to loans outstanding and real estate owned * | | 0.70 |
| | 0.80 |
| | 1.05 |
| | | | |
Allowance for loan losses to loans outstanding | | 1.04 |
| | 1.03 |
| | 0.99 |
| | | | |
Tangible common equity to tangible assets | | 8.16 |
| | 8.18 |
| | 8.45 |
| | | | |
Tier-1 leverage ratio * | | 8.8 |
| | 8.9 |
| | 9.0 |
| | | | |
Total capital ratio * | | 13.5 |
| | 13.2 |
| | 12.6 |
| | | | |
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) | | $ | 7.5 |
| | $ | 7.5 |
| | $ | 9.8 |
| | | | |
* Regulatory basis. Capital ratios as of June 30, 2015 and 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 Reports on SEC Form 10-Q for the quarters ended March 31, 2015 and June 30, 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)
|
| | | | | | | | | | | | |
| June 30, 2015 | | December 31, 2014 | |
(in thousands) | | |
| | |
|
Assets | | |
| | |
|
Cash and due from banks | | $ | 106,914 |
| | $ | 107,233 |
|
Interest-bearing deposits | | 162,088 |
| | 54,230 |
|
Available-for-sale investment securities, at fair value | | 693,520 |
| | 550,394 |
|
Stock in Federal Home Loan Bank, at cost | | 10,678 |
| | 69,302 |
|
Loans receivable held for investment | | 4,457,182 |
| | 4,434,651 |
|
Allowance for loan losses | | (46,365 | ) | | (45,618 | ) |
Net loans | | 4,410,817 |
| | 4,389,033 |
|
Loans held for sale, at lower of cost or fair value | | 5,581 |
| | 8,424 |
|
Other | | 305,310 |
| | 305,416 |
|
Goodwill | | 82,190 |
| | 82,190 |
|
Total assets | | $ | 5,777,098 |
| | $ | 5,566,222 |
|
Liabilities and shareholder’s equity | | | | |
Deposit liabilities–noninterest-bearing | | $ | 1,455,721 |
| | $ | 1,342,794 |
|
Deposit liabilities–interest-bearing | | 3,347,550 |
| | 3,280,621 |
|
Other borrowings | | 314,157 |
| | 290,656 |
|
Other | | 113,015 |
| | 118,363 |
|
Total liabilities | | 5,230,443 |
| | 5,032,434 |
|
Common stock | | 1 |
| | 1 |
|
Additional paid in capital | | 339,416 |
| | 338,411 |
|
Retained earnings | | 223,260 |
| | 211,934 |
|
Accumulated other comprehensive loss, net of tax benefits | | | | |
Net unrealized gains on securities | $ | 219 |
| |
| $ | 462 |
| |
Retirement benefit plans | (16,241 | ) | (16,022 | ) | (17,020 | ) | (16,558 | ) |
Total shareholder’s equity | | 546,655 |
| | 533,788 |
|
Total liabilities and shareholder’s equity | | $ | 5,777,098 |
| | $ | 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 Reports on SEC Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015 (when filed), as updated by SEC Forms 8-K.
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