HONOLULU, Oct. 30, 2013 /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 third
quarter of 2013 of $15.3 million,
compared to $15.9 million in the
second (or linked) quarter of 2013 and $14.2
million in the third quarter of 2012.
"American continued to deliver stable results from its high
quality balance sheet in a challenging regulatory and interest rate
environment. We continued to prudently grow loans, increasing our
loan portfolio at a rate of 9.3% since the end of last year.
At the same time, improved credit quality has lowered our provision
expense for loan losses, as nonperforming assets declined 24% since
the end of last year and net loan charge-offs declined 75%
year-to-date compared to the same period last year. In the
short term, the lower credit costs are offsetting the impact of
regulatory caps on interchange fees that became effective for us
this quarter," said Richard Wacker,
president and chief executive officer of American.
Third quarter 2013 net income was $0.6
million lower than the linked quarter primarily driven by
$1 million (after-tax) lower fees
from other financial services as expected under the Durbin
Amendment which placed a limit on interchange fees and became
effective on July 1, 2013 for American.
In the quarter, American completed the strategic sale of its
credit card portfolio and successfully launched a new, more
competitive offering for its customers, including a full range of
consumer and business credit card products and services.
Compared to the linked quarter (on an after-tax basis), the
aggregate impact of the transaction was nominal as the net gain on
sale of less than $1 million recorded
in the third quarter of 2013 was roughly equivalent to the lower
provision expense in the second quarter of 2013 related to the
release of credit card reserves. For the full year, the net gain is
expected to be largely offset by lower credit card-related income
for the remainder of the year.
Compared to the same quarter of 2012, net income increased by
$1.1 million primarily driven by
(after-tax and rounded to the nearest million):
- $2 million lower provision for
loan losses;
- $1 million net gain on the sale
of the credit card portfolio (mentioned above); and
- $1 million higher fee income on
other financial products.
These were largely offset by (after-tax):
- $2 million lower mortgage banking
income; and
- $1 million lower fees from other
financial services due to lower interchange fees mentioned
above.
Net interest margin was 3.73% in the third quarter of 2013
compared to 3.79% in the linked quarter and 3.92% in the third
quarter of 2012. The decline in net interest margin compared
to the linked quarter was largely attributable to lower yields on
loans and a lower level of commercial loan prepayments and
associated fees. The effect of these on net interest income
was offset by loan growth, particularly in the commercial markets,
home equity lines of credit and residential portfolios during the
quarter. Compared to the third quarter of 2012, the net
interest margin decline was primarily due to lower yields on
interest-earning assets as loan portfolios continued to re-price
down in the low interest rate environment.
Provision for loan losses (pretax) was $0.1 million in the third quarter compared to a
net credit of $1.0 million in the
linked quarter of 2013 and provision of $3.6
million in the third quarter of 2012. As discussed
earlier, in the second quarter of 2013, American released
$1 million (pretax) of reserves in connection with the
decision to sell its credit card portfolio. In the third
quarter of 2013, provision for loan losses for loan growth and
current quarter charge-offs were offset by the release of reserves
related to the payoff of a specific commercial loan and recoveries
of previously charged-off loans reflecting the ongoing improvement
in the quality of the bank's loan portfolio. The third
quarter 2013 net charge-off ratio was nil from 0.08% in the linked
quarter and 0.35% in the prior year quarter.
Non-interest expense (pretax) was $39.7
million in the third quarter of 2013 consistent with
$39.8 million in the linked
quarter and $38.6 million in the
third quarter of 2012. The increase from the prior year
quarter is primarily driven by higher compensation expense related
to increased production as well as the costs associated with sale
of the credit card portfolio.
Loans grew by $92 million and
$265 million in the third quarter and
year-to-date 2013, respectively. Third quarter loan growth
was primarily driven by increases in the commercial markets and
commercial real estate portfolios and increases in home equity
lines of credit and residential mortgages. Year-to-date
annualized loan growth was 9.3%.
Total deposits were $4.3 billion
at September 30, 2013, up
$35 million from
June 30, 2013, primarily due to the increases in
commercial deposits. Other borrowings increased by
$52 million to $240 million in the third quarter as we executed
a 5-year Federal Home Loan Bank borrowing agreement to support our
loan growth. The average cost of funds remained low at 0.22%
for the third quarter 2013, unchanged from the linked quarter and
down 3 basis points from the same period last year.
Overall, return on average equity and return on average assets
were strong at 12.1% and 1.20%, respectively, in the quarter.
American's solid results enabled it to pay dividends of
$10 million to HEI in the quarter while maintaining healthy
capital levels -- leverage ratio of 9.3% and total risk-based
capital ratio of 12.5% at September 30,
2013.
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 TELECONFERENCE TO
DISCUSS EARNINGS AND EPS GUIDANCE
Concurrent with American's
regulatory filing 30 days after the end of the quarter, American
announced its third quarter 2013 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 third quarter of 2013.
HEI plans to announce its third quarter 2013 consolidated
financial results on Thursday, November 7,
2013 and will conduct a webcast and teleconference call to
discuss third quarter 2013 consolidated earnings and 2013 EPS
guidance, including American's earnings, on Thursday, November
7, 2013, at 12:00 p.m.
Hawaii time (5:00 p.m. Eastern time). The event can be
accessed through HEI's website at www.hei.com or by dialing
(877) 280-4960, passcode: 82443306 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. (Hawaiian Electric) intend to
continue to use HEI's website, www.hei.com, as a means of
disclosing material information, as well as other important
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. Also, at the Investor Relations section of
HEI's website, investors may sign up to receive e-mail alerts
(based on each investor's selected preferences). The
information on HEI's website is not incorporated by reference into
this document or into 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 into
this document or into 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. Replays of
the teleconference call will also be available approximately two
hours after the event through November 21,
2013, by dialing (888) 286-8010, passcode:
68694218.
HEI supplies power to approximately 450,000 customers or 95% of
Hawaii's population through its
electric utilities, Hawaiian Electric, 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 Quarterly Report on Form 10-Q for the quarters
ended June 30, 2013 and March 31,
2013, respectively, and HEI's subsequent 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
|
|
Nine months
ended
September
30
|
(in thousands)
|
|
September 30,
2013
|
|
June 30,
2013
|
|
September 30,
2012
|
|
2013
|
|
2012
|
Interest and
dividend income
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
43,337
|
|
|
$
|
43,624
|
|
|
$
|
43,880
|
|
|
$
|
129,564
|
|
|
$
|
133,241
|
|
Interest and dividend
on investment and mortgage-related securities
|
|
3,025
|
|
|
3,234
|
|
|
3,432
|
|
|
9,723
|
|
|
10,534
|
|
Total interest and
dividend income
|
|
46,362
|
|
|
46,858
|
|
|
47,312
|
|
|
139,287
|
|
|
143,775
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
1,262
|
|
|
1,296
|
|
|
1,540
|
|
|
3,870
|
|
|
5,015
|
|
Interest on other
borrowings
|
|
1,206
|
|
|
1,178
|
|
|
1,201
|
|
|
3,548
|
|
|
3,676
|
|
Total interest
expense
|
|
2,468
|
|
|
2,474
|
|
|
2,741
|
|
|
7,418
|
|
|
8,691
|
|
Net interest
income
|
|
43,894
|
|
|
44,384
|
|
|
44,571
|
|
|
131,869
|
|
|
135,084
|
|
Provision for loan
losses
|
|
54
|
|
|
(959)
|
|
|
3,580
|
|
|
953
|
|
|
9,504
|
|
Net interest
income after provision for loan losses
|
|
43,840
|
|
|
45,343
|
|
|
40,991
|
|
|
130,916
|
|
|
125,580
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,728
|
|
|
7,996
|
|
|
7,674
|
|
|
21,367
|
|
|
22,474
|
|
Fee income on deposit
liabilities
|
|
4,819
|
|
|
4,433
|
|
|
4,527
|
|
|
13,566
|
|
|
13,127
|
|
Fee income on other
financial products
|
|
2,714
|
|
|
1,780
|
|
|
1,660
|
|
|
6,288
|
|
|
4,741
|
|
Mortgage banking
income
|
|
1,547
|
|
|
2,003
|
|
|
4,077
|
|
|
6,896
|
|
|
8,297
|
|
Gain on sale of
securities
|
|
—
|
|
|
1,226
|
|
|
—
|
|
|
1,226
|
|
|
134
|
|
Other
income
|
|
3,888
|
|
|
1,731
|
|
|
1,346
|
|
|
7,211
|
|
|
4,021
|
|
Total noninterest
income
|
|
18,696
|
|
|
19,169
|
|
|
19,284
|
|
|
56,554
|
|
|
52,794
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
20,564
|
|
|
20,063
|
|
|
18,684
|
|
|
60,715
|
|
|
56,026
|
|
Occupancy
|
|
4,208
|
|
|
4,219
|
|
|
4,400
|
|
|
12,550
|
|
|
12,866
|
|
Data
processing
|
|
2,168
|
|
|
2,827
|
|
|
2,644
|
|
|
7,982
|
|
|
7,244
|
|
Services
|
|
2,424
|
|
|
2,328
|
|
|
3,062
|
|
|
6,855
|
|
|
7,066
|
|
Equipment
|
|
1,825
|
|
|
1,870
|
|
|
1,762
|
|
|
5,469
|
|
|
5,299
|
|
Other
expense
|
|
8,539
|
|
|
8,500
|
|
|
8,096
|
|
|
24,634
|
|
|
22,909
|
|
Total noninterest
expense
|
|
39,728
|
|
|
39,807
|
|
|
38,648
|
|
|
118,205
|
|
|
111,410
|
|
Income before
income taxes
|
|
22,808
|
|
|
24,705
|
|
|
21,627
|
|
|
69,265
|
|
|
66,964
|
|
Income
taxes
|
|
7,532
|
|
|
8,786
|
|
|
7,419
|
|
|
23,915
|
|
|
22,690
|
|
Net
income
|
|
$
|
15,276
|
|
|
$
|
15,919
|
|
|
$
|
14,208
|
|
|
$
|
45,350
|
|
|
$
|
44,274
|
|
Comprehensive
income
|
|
$
|
14,107
|
|
|
$
|
7,340
|
|
|
$
|
15,517
|
|
|
$
|
36,931
|
|
|
$
|
46,872
|
|
OTHER BANK
INFORMATION (annualized %, except as of period end)
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
1.20
|
|
|
1.25
|
|
|
1.15
|
|
|
1.19
|
|
|
1.19
|
|
Return on average
equity
|
|
12.13
|
|
|
12.56
|
|
|
11.24
|
|
|
11.99
|
|
|
11.81
|
|
Return on average
tangible common equity
|
|
14.50
|
|
|
15.00
|
|
|
13.41
|
|
|
14.33
|
|
|
14.14
|
|
Net interest
margin
|
|
3.73
|
|
|
3.79
|
|
|
3.92
|
|
|
3.77
|
|
|
3.98
|
|
Net charge-offs to
average loans outstanding
|
|
—
|
|
|
0.08
|
|
|
0.35
|
|
|
0.06
|
|
|
0.27
|
|
Efficiency
ratio
|
|
63
|
|
|
62
|
|
|
60
|
|
|
62
|
|
|
59
|
|
As of period
end
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets
to loans outstanding and real estate owned *
|
|
1.33
|
|
|
1.56
|
|
|
1.73
|
|
|
|
|
|
Allowance for loan
losses to loans outstanding
|
|
1.01
|
|
|
1.04
|
|
|
1.06
|
|
|
|
|
|
Tier-1 leverage ratio
*
|
|
9.3
|
|
|
9.3
|
|
|
9.3
|
|
|
|
|
|
Total risk-based
capital ratio *
|
|
12.5
|
|
|
12.5
|
|
|
12.9
|
|
|
|
|
|
Tangible common
equity to total assets
|
|
8.36
|
|
|
8.42
|
|
|
8.72
|
|
|
|
|
|
Dividend paid to HEI
(via ASHI) ($ in millions)
|
|
10
|
|
|
10
|
|
|
10
|
|
|
|
|
|
|
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, 2012 and HEI's Quarterly
Reports on SEC Form 10-Q for the quarters ended March 31, 2013,
June 30, 2013 and September 30, 2013 (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)
|
|
September 30,
2013
|
|
December 31,
2012
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
189,524
|
|
|
$
|
184,430
|
|
Available-for-sale
investment and mortgage-related securities
|
|
535,264
|
|
|
671,358
|
|
Investment in stock
of Federal Home Loan Bank of Seattle
|
|
93,413
|
|
|
96,022
|
|
Loans receivable held
for investment
|
|
4,046,184
|
|
|
3,779,218
|
|
Allowance for loan
losses
|
|
(41,052)
|
|
|
(41,985)
|
|
Loans receivable held
for investment, net
|
|
4,005,132
|
|
|
3,737,233
|
|
Loans held for sale,
at lower of cost or fair value
|
|
5,829
|
|
|
26,005
|
|
Other
|
|
248,020
|
|
|
244,435
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
Total
assets
|
|
$
|
5,159,372
|
|
|
$
|
5,041,673
|
|
|
|
|
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
Deposit
liabilities—noninterest-bearing
|
|
$
|
1,205,526
|
|
|
$
|
1,164,308
|
|
Deposit
liabilities—interest-bearing
|
|
3,105,316
|
|
|
3,065,608
|
|
Other
borrowings
|
|
239,612
|
|
|
195,926
|
|
Other
|
|
102,172
|
|
|
117,752
|
|
Total
liabilities
|
|
4,652,626
|
|
|
4,543,594
|
|
|
|
|
|
|
Common
stock
|
|
335,448
|
|
|
333,712
|
|
Retained
earnings
|
|
195,113
|
|
|
179,763
|
|
Accumulated other
comprehensive income (loss), net of taxes
|
|
(23,815)
|
|
|
(15,396)
|
|
Total
shareholder's equity
|
|
506,746
|
|
|
498,079
|
|
Total liabilities
and shareholder's equity
|
|
$
|
5,159,372
|
|
|
$
|
5,041,673
|
|
|
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, 2012 and HEI's Quarterly
Reports on SEC Form 10-Q for the quarters ended March 31, 2013,
June 30, 2013 and September 30, 2013 (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.
|
|
Contact:
|
Shelee M.T.
Kimura
|
|
|
Manager, Investor
Relations &
|
Telephone: (808)
543-7384
|
|
Strategic
Planning
|
E-mail:
skimura@hei.com
|
(Logo:
http://photos.prnewswire.com/prnh/20110411/LA80136LOGO)
SOURCE Hawaiian Electric Industries, Inc.