EX-99 2 heiexhibit9904-28x17.htm EXHIBIT 99 Exhibit


Exhibit 99

heicatalyst2a05.jpg NEWS RELEASE
April 28, 2017
Contact:
Clifford H. Chen
Telephone: (808) 543-7300
 
Treasurer, Manager, Investor Relations & Strategic Planning
E-mail: ir@hei.com

AMERICAN SAVINGS BANK REPORTS FIRST QUARTER 2017 EARNINGS

2017 Net Income of $15.8 Million - Return on Assets of 0.98%
Solid Profitability In Line with Expectations

HONOLULU - American Savings Bank, F.S.B. (American), a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. (HEI) (NYSE - HE) today reported net income of $15.8 million for the first quarter of 2017 compared to $16.2 million in the fourth, or linked, quarter of 2016 and $12.7 million in the first quarter of 2016.
“We are off to a strong start in 2017 as we continue to deliver for our customers and shareholders. Our first quarter results demonstrate strong core deposit growth, higher net interest income and margins, improved operating efficiency, and better asset quality metrics," said Richard Wacker, president and chief executive officer of American. "Total loans declined slightly, reflecting the completion and payoff of a large commercial real estate construction project and the resolution and payoff of a prior nonperforming commercial loan.”
    First quarter of 2017 net income of $15.8 million was $3.1 million higher than the first quarter of 2016 and $0.4 million lower than the fourth (linked) quarter of 2016.
Compared to the first quarter of 2016, the $3.1 million increase was primarily driven by $3 million (after-tax) higher net interest income mainly due to growth in the commercial real estate and consumer loan portfolios as well as the deployment of strong deposit growth into our investment portfolio.
Compared to the linked fourth quarter of 2016, the $0.4 million decrease was primarily driven by the following on an after-tax basis:






________________
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.




Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 28, 2017
Page 2    

•
$1 million higher net interest income driven mainly by higher yields in our investment portfolio and growth in our consumer portfolio; and
•
$1 million lower noninterest expense.
These increases were offset by the following on an after-tax basis:
•
$1 million higher provision for loan losses including additional reserves for a commercial real estate relationship in the first quarter of 2017; and
•
$1 million lower noninterest income primarily due to lower mortgage banking income as a result of a reduction in residential mortgage refinancing activity.
Net interest income (pretax) was $54.8 million in the first quarter of 2017, compared to $53.0 million in the linked quarter and $50.4 million in the prior year quarter. Net interest margin was 3.68% in the first quarter of 2017 compared to 3.59% in the linked quarter and 3.62% in the first quarter of 2016. The higher net interest margin was primarily attributable to higher yields on interest-earning assets.
The provision for loan losses (pretax) was $3.9 million in the first quarter of 2017 compared to $1.5 million in the linked quarter and $4.8 million in the first quarter of 2016. As previously mentioned, the increase from the linked quarter was primarily due to reserves for a commercial real estate relationship. The first quarter of 2017 net charge-off ratio was 0.29%, compared to 0.40% in the linked quarter and 0.21% in the prior year quarter. The fourth quarter of 2016 net charge-off ratio included charge-offs of specific commercial credits that had been previously individually reserved. Nonaccrual loans as a percent of total loans receivable held for investment dropped to 0.41% compared to 0.49% in the linked quarter and 1.01% in the prior year quarter.  
Noninterest income (pretax) was $15.1 million in the first quarter of 2017 compared to $16.5 million in the linked quarter and $15.4 million in the prior year quarter, primarily attributable to the decline in mortgage banking activity.
Noninterest expense (pretax) was $41.9 million compared to $43.1 million in the linked quarter and $41.4 million in the first quarter of 2016.
Total loans were $4.7 billion at March 31, 2017 and included growth in the residential and consumer loan portfolio during the first quarter of 2017. The reduction in our exposure to national credits, a loan payoff connected with a completed construction project, and the resolution and payoff of a prior nonperforming







Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 28, 2017
Page 3

commercial loan contributed to the 1.2% annualized decline in our loan portfolio in the first quarter of 2017.     
Total deposits were $5.7 billion at March 31, 2017, an increase of $126 million or 9.1% annualized increase from December 31, 2016. Low-cost core deposits increased $140 million or 11.4% annualized increase from December 31, 2016. The average cost of funds was 0.20% for the first quarter of 2017 compared to 0.22% for the fourth quarter of 2016 and 0.23% for the first quarter of 2016.
    American’s return on average equity was 10.8% for the first quarter of 2017 compared to 11.1% in the linked quarter and 8.9% in the first quarter of 2016. Return on average assets was 0.98% for the first quarter of 2017, compared to 1.02% in the linked quarter and 0.84% in the same quarter last year. American’s solid results enabled it to pay dividends of $9.4 million to HEI while maintaining healthy capital levels -- leverage ratio of 8.5% and total capital ratio of 13.6% at March 31, 2017.

HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2017 EPS GUIDANCE
Concurrent with American’s regulatory filing 30 days after the end of the quarter, American announced its first quarter 2017 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 2017.
HEI plans to announce its first quarter 2017 consolidated financial results on Friday, May 5, 2017 and will conduct a webcast and conference call to discuss its consolidated earnings, including American’s earnings, and 2017 EPS guidance on Friday, May 5, 2017, 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 (844) 834-0652 and international parties may listen to the conference by calling (412) 317-5198. Parties may also listen to the conference 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 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 Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 28, 2017
Page 4

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 May 5, 2017 webcast will be available on HEI’s 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 19, 2017 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10104146.
HEI supplies power to approximately 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.



###





American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended 
(in thousands)
 
March 31, 2017
 
December 31, 2016
 
March 31, 2016
Interest and dividend income
 
 

 
 

 
 

Interest and fees on loans
 
$
50,742

 
$
51,203

 
$
48,437

Interest and dividends on investment securities
 
6,980

 
4,965

 
5,017

Total interest and dividend income
 
57,722

 
56,168

 
53,454

Interest expense
 
 

 
 
 
 
Interest on deposit liabilities
 
2,103

 
2,013

 
1,592

Interest on other borrowings
 
816

 
1,172

 
1,485

Total interest expense
 
2,919

 
3,185

 
3,077

Net interest income
 
54,803

 
52,983

 
50,377

Provision for loan losses
 
3,907

 
1,497

 
4,766

Net interest income after provision for loan losses
 
50,896

 
51,486

 
45,611

Noninterest income
 
 
 
 
 
 
Fees from other financial services
 
5,610

 
5,585

 
5,499

Fee income on deposit liabilities
 
5,428

 
5,714

 
5,156

Fee income on other financial products
 
1,866

 
2,144

 
2,205

Bank-owned life insurance
 
983

 
1,017

 
998

Mortgage banking income
 
789

 
1,529

 
1,195

Other income, net
 
458

 
470

 
333

Total noninterest income
 
15,134

 
16,459

 
15,386

Noninterest expense
 
 
 
 
 
 
Compensation and employee benefits
 
23,237

 
22,920

 
22,434

Occupancy
 
4,154

 
4,077

 
4,138

Data processing
 
3,280

 
3,431

 
3,172

Services
 
2,360

 
2,961

 
2,911

Equipment
 
1,748

 
1,745

 
1,663

Office supplies, printing and postage
 
1,535

 
1,644

 
1,365

Marketing
 
517

 
982

 
861

FDIC insurance
 
728

 
839

 
884

Other expense
 
4,311

 
4,539

 
3,975

Total noninterest expense
 
41,870

 
43,138

 
41,403

Income before income taxes
 
24,160

 
24,807

 
19,594

Income taxes
 
8,347

 
8,590

 
6,921

Net income
 
$
15,813

 
$
16,217

 
$
12,673

Comprehensive income
 
$
16,648

 
$
2,540

 
$
20,310

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
Return on average assets
 
0.98

 
1.02

 
0.84

Return on average equity
 
10.82

 
11.09

 
8.89

Return on average tangible common equity
 
12.58

 
12.90

 
10.39

Net interest margin
 
3.68

 
3.59

 
3.62

Efficiency ratio
 
59.87

 
62.12

 
62.96

Net charge-offs to average loans outstanding
 
0.29

 
0.40

 
0.21

As of period end
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment

 
0.41

 
0.49

 
1.01

Allowance for loan losses to loans outstanding
 
1.19

 
1.17

 
1.13

Tangible common equity to tangible assets
 
7.78

 
7.82

 
8.08

Tier-1 leverage ratio
 
8.5

 
8.6

 
8.7

Total capital ratio
 
13.6

 
13.4

 
13.2

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
9.4

 
$
9.0

 
$
9.0

This information should be read in conjunction with the condensed consolidated financial statements and the notes thereto in HEI 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.

5


American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands)
March 31, 2017
 
December 31, 2016
 
 
 
 

 
 

Assets
 
 

 
 

Cash and due from banks
 
$
125,901

 
$
137,083

Interest-bearing deposits
 
94,573

 
52,128

Restricted cash
 
—

 
1,764

Available-for-sale investment securities, at fair value
 
1,228,922

 
1,105,182

Stock in Federal Home Loan Bank, at cost
 
11,706

 
11,218

Loans receivable held for investment
 
4,725,271

 
4,738,693

Allowance for loan losses
 
(55,997
)
 
(55,533
)
Net loans
 
4,669,274

 
4,683,160

Loans held for sale, at lower of cost or fair value
 
10,454

 
18,817

Other
 
336,626

 
329,815

Goodwill
 
82,190

 
82,190

Total assets
 
$
6,559,646

 
$
6,421,357

Liabilities and shareholder’s equity
 
 
 
 
Deposit liabilities–noninterest-bearing
 
$
1,696,390

 
$
1,639,051

Deposit liabilities–interest-bearing
 
3,978,700

 
3,909,878

Other borrowings
 
200,154

 
192,618

Other
 
98,223

 
101,635

Total liabilities
 
5,973,467

 
5,843,182

Common stock
 
1

 
1

Additional paid in capital
 
343,435

 
342,704

Retained earnings
 
264,381

 
257,943

Accumulated other comprehensive loss, net of tax benefits
 
 
 
 
     Net unrealized losses on securities
$
(7,708
)
 

$
(7,931
)
 

     Retirement benefit plans
(13,930
)
(21,638
)
(14,542
)
(22,473
)
Total shareholder’s equity
 
586,179

 
578,175

Total liabilities and shareholder’s equity
 
$
6,559,646

 
$
6,421,357


This information should be read in conjunction with the condensed consolidated financial statements and the notes thereto in HEI filings with the SEC.


6