Exhibit 99
NEWS RELEASEOctober 30, 2017
Contact: | Clifford H. Chen | Telephone: (808) 543-7300 |
Treasurer & Manager, Investor Relations & Strategic Planning | E-mail: ir@hei.com | |
AMERICAN SAVINGS BANK REPORTS THIRD QUARTER 2017 EARNINGS
Net Income of $17.6 Million - Return on Assets of 1.07%
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 $17.6 million for the third quarter of 2017 compared to $16.7 million in the second, or linked, quarter of 2017 and $15.1 million in the third quarter of 2016.
“Our results for the third quarter show that we continue to deliver well for our customers, the bank, and for shareholders," said Richard Wacker, president and chief executive officer of American. "Solid deposit growth and improved asset quality continue to fuel the bank’s broad profitability improvement compared to last year. Overall loan growth lagged as we continued to reduce our commercial lending exposure to national syndicated credits and resolve specific problem loans that paid in full, offsetting the continued good growth in other segments of the loan portfolio.”
Third quarter of 2017 net income of $17.6 million was $2.5 million higher than the third quarter of 2016 and $0.9 million higher than the second (linked) quarter of 2017.
Compared to the third quarter of 2016, the $2.5 million increase was primarily driven by the following on an after-tax basis:
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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.
October 30, 2017
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• | $3 million higher net interest income driven mainly by growth in interest-earning assets funded by strong deposit growth and overall improvement in asset yields; and |
• | $3 million lower provision for loan losses resulting from our work to improve commercial loan asset quality. |
These items were offset by the following on an after-tax basis:
• | $2 million lower noninterest income primarily due to lower mortgage banking income and no gain on sale of real estate; and |
• | $1 million higher noninterest expense primarily due to higher performance based incentive cost. |
Compared to the linked second quarter of 2017, the $0.9 million increase was primarily driven by lower provision for loan losses.
Net interest income (pretax) was $56.1 million in the third quarter of 2017, compared to $55.9 million in the linked quarter and $51.9 million in the prior year quarter. Net interest margin was 3.69% in the third quarter of 2017, compared to 3.68% in the linked quarter and 3.57% in the third quarter of 2016.
The provision for loan losses (pretax) was $0.5 million in the third quarter of 2017 compared to $2.8 million in the linked quarter and $5.7 million in the third quarter of 2016. The decrease from the linked quarter reflected the release of reserves attributed to the strategic reduction in our commercial loan portfolio, including a $53 million decrease in our exposure to national syndicated credits. The higher provision in the prior year quarter was largely due to reserves for specific commercial credits. The third quarter of 2017 net charge-off ratio was 0.32%, compared to 0.21% in the linked quarter and 0.20% in the prior year quarter. Nonaccrual loans as a percent of total loans receivable held for investment was 0.50% compared to 0.44% in the linked quarter and 1.11% in the prior year quarter.
Noninterest income (pretax) was $15.2 million in the third quarter of 2017 compared to $16.2 million in the linked quarter and $18.5 million in the prior year quarter. The higher noninterest income in the prior year quarter was largely due to $1.8 million higher mortgage banking income and the $1.0 million gain on sale of real estate.
Noninterest expense (pretax) was $44.1 million compared to $44.6 million in the linked quarter and $41.9 million in the third quarter of 2016.
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
October 30, 2017
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Total loans were $4.7 billion at September 30, 2017, a decrease of $65 million or 1.8% annualized from December 31, 2016. This decrease reflects our work to improve overall commercial loan quality through the strategic decrease in our exposure to national syndicated credits, as well as the reduction in the commercial real estate loan portfolio. The decrease in our commercial portfolio was partially offset by growth in the home equity lines of credit, consumer and residential loan portfolios.
Total deposits were $5.8 billion at September 30, 2017, an increase of $203 million or 4.9% annualized from December 31, 2016. Low-cost core deposits increased $153 million or 4.2% annualized from December 31, 2016. The average cost of funds was 0.20% for the third quarter of 2017 compared to 0.21% for the second quarter of 2017 and 0.24% for the third quarter of 2016.
American’s return on average equity was 11.6% for the third quarter of 2017 compared to 11.3% in the linked quarter and 10.4% in the third quarter of 2016. Return on average assets was 1.07% for the third quarter of 2017, compared to 1.02% in the linked quarter and 0.97% 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, including a leverage ratio of 8.7% and a total capital ratio of 13.9% at September 30, 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 third 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 third quarter of 2017.
HEI plans to announce its third quarter 2017 consolidated financial results on Thursday, November 2, 2017 and will conduct a webcast and conference call to discuss its consolidated earnings, including American’s earnings, and 2017 EPS guidance on Thursday, November 2, 2017, at 9:00 a.m. Hawaii time (3:00 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
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
October 30, 2017
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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’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 November 2, 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 November 16, 2017 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10112461.
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.
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American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended | Nine months ended September 30 | |||||||||||||||||||
(in thousands) | September 30, 2017 | June 30, 2017 | September 30, 2016 | 2017 | 2016 | |||||||||||||||
Interest and dividend income | ||||||||||||||||||||
Interest and fees on loans | $ | 52,210 | $ | 52,317 | $ | 50,444 | $ | 155,269 | $ | 148,571 | ||||||||||
Interest and dividends on investment securities | 6,850 | 6,763 | 4,759 | 20,593 | 14,219 | |||||||||||||||
Total interest and dividend income | 59,060 | 59,080 | 55,203 | 175,862 | 162,790 | |||||||||||||||
Interest expense | ||||||||||||||||||||
Interest on deposit liabilities | 2,444 | 2,311 | 1,871 | 6,858 | 5,154 | |||||||||||||||
Interest on other borrowings | 470 | 824 | 1,464 | 2,110 | 4,416 | |||||||||||||||
Total interest expense | 2,914 | 3,135 | 3,335 | 8,968 | 9,570 | |||||||||||||||
Net interest income | 56,146 | 55,945 | 51,868 | 166,894 | 153,220 | |||||||||||||||
Provision for loan losses | 490 | 2,834 | 5,747 | 7,231 | 15,266 | |||||||||||||||
Net interest income after provision for loan losses | 55,656 | 53,111 | 46,121 | 159,663 | 137,954 | |||||||||||||||
Noninterest income | ||||||||||||||||||||
Fees from other financial services | 5,635 | 5,810 | 5,599 | 17,055 | 16,799 | |||||||||||||||
Fee income on deposit liabilities | 5,533 | 5,565 | 5,627 | 16,526 | 16,045 | |||||||||||||||
Fee income on other financial products | 1,904 | 1,971 | 2,151 | 5,741 | 6,563 | |||||||||||||||
Bank-owned life insurance | 1,257 | 1,925 | 1,616 | 4,165 | 3,620 | |||||||||||||||
Mortgage banking income | 520 | 587 | 2,347 | 1,896 | 5,096 | |||||||||||||||
Gains on sale of investment securities, net | — | — | — | — | 598 | |||||||||||||||
Other income, net | 380 | 391 | 1,165 | 1,229 | 1,786 | |||||||||||||||
Total noninterest income | 15,229 | 16,249 | 18,505 | 46,612 | 50,507 | |||||||||||||||
Noninterest expense | ||||||||||||||||||||
Compensation and employee benefits | 23,724 | 24,742 | 22,844 | 71,703 | 67,197 | |||||||||||||||
Occupancy | 4,284 | 4,185 | 3,991 | 12,623 | 12,244 | |||||||||||||||
Data processing | 3,262 | 3,207 | 3,150 | 9,749 | 9,599 | |||||||||||||||
Services | 2,863 | 2,766 | 2,427 | 7,989 | 8,093 | |||||||||||||||
Equipment | 1,814 | 1,771 | 1,759 | 5,333 | 5,193 | |||||||||||||||
Office supplies, printing and postage | 1,444 | 1,527 | 1,483 | 4,506 | 4,431 | |||||||||||||||
Marketing | 934 | 839 | 747 | 2,290 | 2,507 | |||||||||||||||
FDIC insurance | 746 | 822 | 907 | 2,296 | 2,704 | |||||||||||||||
Other expense | 5,050 | 4,705 | 4,591 | 14,066 | 13,948 | |||||||||||||||
Total noninterest expense | 44,121 | 44,564 | 41,899 | 130,555 | 125,916 | |||||||||||||||
Income before income taxes | 26,764 | 24,796 | 22,727 | 75,720 | 62,545 | |||||||||||||||
Income taxes | 9,172 | 8,063 | 7,623 | 25,582 | 21,483 | |||||||||||||||
Net income | $ | 17,592 | $ | 16,733 | $ | 15,104 | $ | 50,138 | $ | 41,062 | ||||||||||
Comprehensive income | $ | 18,009 | $ | 18,956 | $ | 13,176 | $ | 53,613 | $ | 49,537 | ||||||||||
OTHER BANK INFORMATION (annualized %, except as of period end) | ||||||||||||||||||||
Return on average assets | 1.07 | 1.02 | 0.97 | 1.02 | 0.89 | |||||||||||||||
Return on average equity | 11.64 | 11.25 | 10.36 | 11.24 | 9.50 | |||||||||||||||
Return on average tangible common equity | 13.47 | 13.06 | 12.06 | 13.04 | 11.07 | |||||||||||||||
Net interest margin | 3.69 | 3.68 | 3.57 | 3.68 | 3.59 | |||||||||||||||
Efficiency ratio | 61.82 | 61.73 | 59.54 | 61.15 | 61.81 | |||||||||||||||
Net charge-offs to average loans outstanding | 0.32 | 0.21 | 0.20 | 0.27 | 0.19 | |||||||||||||||
As of period end | ||||||||||||||||||||
Nonaccrual loans to loans receivable held for investment | 0.50 | 0.44 | 1.11 | |||||||||||||||||
Allowance for loan losses to loans outstanding | 1.13 | 1.19 | 1.24 | |||||||||||||||||
Tangible common equity to tangible assets | 8.01 | 7.88 | 8.03 | |||||||||||||||||
Tier-1 leverage ratio | 8.7 | 8.5 | 8.6 | |||||||||||||||||
Total capital ratio | 13.9 | 13.7 | 13.3 | |||||||||||||||||
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) | $ | 9.4 | $ | 9.4 | $ | 9.0 | $ | 28.1 | $ | 27.0 | ||||||||||
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.
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American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands) | September 30, 2017 | December 31, 2016 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 120,492 | $ | 137,083 | ||||||||
Interest-bearing deposits | 69,223 | 52,128 | ||||||||||
Restricted cash | — | 1,764 | ||||||||||
Available-for-sale investment securities, at fair value | 1,320,110 | 1,105,182 | ||||||||||
Stock in Federal Home Loan Bank, at cost | 9,706 | 11,218 | ||||||||||
Loans receivable held for investment | 4,676,281 | 4,738,693 | ||||||||||
Allowance for loan losses | (53,047 | ) | (55,533 | ) | ||||||||
Net loans | 4,623,234 | 4,683,160 | ||||||||||
Loans held for sale, at lower of cost or fair value | 15,728 | 18,817 | ||||||||||
Other | 378,224 | 329,815 | ||||||||||
Goodwill | 82,190 | 82,190 | ||||||||||
Total assets | $ | 6,618,907 | $ | 6,421,357 | ||||||||
Liabilities and shareholder’s equity | ||||||||||||
Deposit liabilities–noninterest-bearing | $ | 1,710,698 | $ | 1,639,051 | ||||||||
Deposit liabilities–interest-bearing | 4,041,628 | 3,909,878 | ||||||||||
Other borrowings | 153,552 | 192,618 | ||||||||||
Other | 107,558 | 101,635 | ||||||||||
Total liabilities | 6,013,436 | 5,843,182 | ||||||||||
Common stock | 1 | 1 | ||||||||||
Additional paid in capital | 344,512 | 342,704 | ||||||||||
Retained earnings | 279,956 | 257,943 | ||||||||||
Accumulated other comprehensive loss, net of tax benefits | ||||||||||||
Net unrealized losses on securities | $ | (5,479 | ) | $ | (7,931 | ) | ||||||
Retirement benefit plans | (13,519 | ) | (18,998 | ) | (14,542 | ) | (22,473 | ) | ||||
Total shareholder’s equity | 605,471 | 578,175 | ||||||||||
Total liabilities and shareholder’s equity | $ | 6,618,907 | $ | 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.
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