HONOLULU, April 30, 2012 /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 2012 of $15.9 million,
compared to $15.3 million in the
fourth, or linked, quarter of 2011 and $13.9
million in the first quarter of 2011.
"We are pleased that American Savings Bank continued its solid
performance. Our loan portfolio grew for the 6th
consecutive quarter, while we maintained our reduced cost
structure. Credit costs continued to decline and we are
cautiously optimistic about the continued improvement in
Hawaii's economy. While the
prolonged low interest rate environment continues to challenge
revenues in the near-term, we are remixing our loan portfolio to be
well-positioned when interest rates rise," said Richard Wacker, president and chief executive
officer of American Savings Bank.
Net income for the first quarter of 2012 improved from the
linked quarter due to lower non-interest expense, lower provision
for loan losses and the release of reserves related to a tax
position taken in a prior year ($1
million after-tax), partially offset by lower net interest
income ($1 million after-tax)
resulting from the continued low interest rate environment.
Compared to the same quarter of 2011, net income improved by
$2.0 million primarily due to (on an
after-tax basis):
- $1 million lower provision for
loan losses;
- $1 million higher noninterest
income due to higher gains on sales of loans; and
- $1 million for the release of
tax-related reserves which included taxes and expenses.
Net interest margin was 4.04% in the first quarter of 2012, down
from 4.16% in the linked and first quarter of 2011. Yields on
interest-earning assets declined consistent with the low interest
rate environment, as the bank continued to reduce its exposure to
30-year fixed-rate residential mortgages by $38 million in the quarter to control unfavorable
interest rate risk. While residential mortgage production was
very strong (up 73% over the same period of 2011) the bank
continues to sell the majority of its very low fixed-rate mortgage
production to the secondary market. In addition, existing
adjustable-rate commercial loans repriced down and new loans were
funded at lower than average portfolio rates.
Rates on interest-bearing deposits declined and low-cost core
deposits grew by $183 million over the last year to
$3.6 billion which offset some of the
decline in asset yields and produced a very low average cost of
funds of 0.28%.
Other dynamics can cause volatility in net interest margin
between quarters, such as the recognition of income on loan
prepayments which were elevated in the fourth quarter of
2011. Normalizing these variables, net interest margin
compression has been in line with management expectations,
including estimated full year 2012 net interest margin of about
4%.
Provision for loan losses (pretax) was $3.5 million in the first quarter of 2012
compared to $4.1 million in the
linked quarter and $4.6 million in
the first quarter of 2011. The decline in provision was due
to lower net charge-offs particularly in the residential portfolio
and improved consumer credit quality associated with the gradual
recovery in Hawaii's
economy.
Non-interest expense (pretax) was $35.2
million in the first quarter of 2012, down from $36.6 million in the linked quarter and
essentially flat with $35.1 million
in the first quarter of 2011. The bank expects 2012 annual
non-interest expense to be in line with its target of
$145 million.
First quarter of 2012 annualized loan growth of 3.2% is in line
with the bank's target of low to mid-single digit loan growth for
the year. Growth was driven primarily in commercial lending
and American's market leading home equity loan product. This
growth more than offset the deliberate decrease in the size of the
bank's residential loan portfolio, consistent with the bank's
long-term strategy to manage interest rate risk and to be
well-positioned when interest rates rise.
Total deposits were $4.1 billion
at the end of the first quarter of 2012, up $55 million compared to the linked quarter.
Overall, American achieved strong profitability metrics in the
quarter with a return on average equity of 12.9% and a return on
average assets of 1.29%. American also paid dividends of
$10 million to HEI in the quarter
while maintaining healthy capital levels -- Tier 1 leverage ratio
of 9.1% and total risk-based capital ratio of 12.9% at March 31, 2012.
HEI EARNINGS RELEASE, WEBCAST AND TELECONFERENCE
Consistent with the Office of the Comptroller of the
Currency (OCC) reporting requirements that banks file their
financial results with the OCC within 30 days after the end of the
quarter, we have concurrently announced American's first quarter
2012 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
2012.
HEI plans to announce its first quarter 2012 consolidated
financial results on Tuesday, May 8,
2012 and will conduct a webcast and teleconference call to
review first quarter 2012 consolidated earnings, including American
Savings Bank's earnings, on Wednesday, May 9, 2012, at
7:00 a.m. Hawaii time (1:00 p.m.
Eastern time). The event can be accessed through HEI's
website at www.hei.com or by dialing (866) 314-5050,
passcode: 22527679 for the teleconference call. The
presentation for the webcast will be on HEI's website under the
headings "Investor Relations," "News & Events" and
"Presentations & Webcasts." HEI and Hawaiian Electric
Company, Inc. (HECO) 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, HECO's and American's press releases, Securities and
Exchange Commission (SEC) filings and public conference calls and
webcasts. The information on HEI's website is not
incorporated by reference in this document or in the 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 the 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 teleconference call will also be available approximately two
hours after the event through May 23,
2012, by dialing (888) 286-8010, passcode:
92305336.
HEI supplies power to over 400,000 customers or 95% of
Hawaii's population through its
electric utilities, HECO, 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, 2011 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.
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, HECO, 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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March
31,
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December
31,
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March
31,
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(in
thousands)
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2012
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2011
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2011
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Interest income
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Interest
and fees on loans
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$
44,888
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$
46,500
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$
46,097
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Interest
on investment and mortgage-related securities
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3,805
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3,352
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3,769
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Total interest
income
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48,693
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49,852
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49,866
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Interest expense
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Interest
on deposit liabilities
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1,779
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1,837
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2,593
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Interest
on other borrowings
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1,261
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1,362
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1,367
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Total interest
expense
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3,040
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3,199
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3,960
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Net
interest income
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45,653
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46,653
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45,906
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Provision
for loan losses
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3,546
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4,082
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4,550
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Net
interest income after provision for loan losses
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42,107
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42,571
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41,356
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Noninterest income
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Fees from
other financial services
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7,337
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7,476
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6,946
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Fee income
on deposit liabilities
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4,278
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4,486
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4,449
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Fee income
on other financial products
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1,549
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1,364
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1,673
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Other
income
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3,395
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3,498
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2,379
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Total noninterest
income
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16,559
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16,824
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15,447
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Noninterest expense
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Compensation and employee benefits
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18,646
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17,820
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17,505
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Occupancy
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4,225
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4,313
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4,240
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Data
processing
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2,111
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1,676
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1,970
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Services
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1,783
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1,990
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1,771
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Equipment
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1,730
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1,762
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1,657
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Other
expense
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6,707
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8,997
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7,933
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Total noninterest
expense
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35,202
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36,558
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35,076
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Income
before income taxes
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23,464
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22,837
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21,727
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Income
taxes
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7,587
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7,497
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7,876
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Net
income
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$
15,877
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$
15,340
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$
13,851
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Comprehensive net income
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$
15,899
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$
7,400
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$
11,586
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OTHER
BANK INFORMATION (%)
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Return on
average assets
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1.29
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1.26
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1.15
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Return on
average equity
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12.87
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12.24
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11.20
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Return on
average tangible common equity
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15.44
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14.65
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13.44
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Net
interest margin
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4.04
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4.16
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4.16
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Net
charge-offs to average loans outstanding
(annualized)
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0.28
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0.48
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0.49
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Efficiency
ratio
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56
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57
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57
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As of
period end
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Nonperforming assets to loans outstanding and real
estate owned **
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2.02
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2.01
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1.82
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Allowance
for loan losses to loans outstanding
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1.05
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1.03
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1.14
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Tier-1
leverage ratio **
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9.1
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9.0
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9.1
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Total
risk-based capital ratio **
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12.9
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12.9
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13.5
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Tangible
common equity to total assets
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8.46
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8.42
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8.57
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**
Regulatory basis
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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, 2011 and HEI's Quarterly Report on
SEC Form 10-Q for the quarter ended March 31, 2012 (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.
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American
Savings Bank, F.S.B.
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BALANCE
SHEETS DATA
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(Unaudited)
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March
31,
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December
31,
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(in
thousands)
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2012
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2011
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Assets
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Cash and
cash equivalents
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$
229,635
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$
219,678
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Available-for-sale investment and mortgage-related
securities
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631,063
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624,331
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Investment
in stock of Federal Home Loan Bank of Seattle
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97,764
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97,764
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Loans
receivable held for investment, net
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3,672,401
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3,642,818
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Loans held
for sale, at lower of cost or fair value
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14,657
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9,601
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Other
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235,407
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233,592
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Goodwill
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82,190
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82,190
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Total
assets
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$4,963,117
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$
4,909,974
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Liabilities and shareholder's
equity
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Deposit
liabilities–noninterest-bearing
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$1,054,512
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$
993,828
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Deposit
liabilities–interest-bearing
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3,070,692
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3,076,204
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Other
borrowings
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232,843
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233,229
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Other
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110,117
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118,078
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Total
liabilities
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4,468,164
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4,421,339
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Common
stock
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332,299
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331,880
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Retained
earnings
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172,003
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166,126
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Accumulated other comprehensive loss, net of tax
benefits
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(9,349)
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(9,371)
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Total shareholder's
equity
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494,953
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488,635
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Total liabilities and
shareholder's equity
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$4,963,117
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$
4,909,974
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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, 2011 and
HEI's Quarterly Report on SEC Form 10-Q
for the
quarter ended March 31, 2012 (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.
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Contact:
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Shelee
M.T. Kimura
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Manager,
Investor Relations &
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Telephone:
(808) 543-7384
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Strategic
Planning
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E-mail:
skimura@hei.com
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(Logo:
http://photos.prnewswire.com/prnh/20110411/LA80136LOGO)
SOURCE Hawaiian Electric Industries, Inc.