EX-99 2 heiexhibit997-30x18.htm EXHIBIT 99 Exhibit


Exhibit 99

heicatalyst2a14.jpg NEWS RELEASE
July 30, 2018
Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Manager, Investor Relations
E-mail: ir@hei.com

AMERICAN SAVINGS BANK REPORTS SECOND QUARTER 2018 EARNINGS

2Q2018 Net Income of $20.6 Million
Return on Assets of 1.20% and Return on Equity of 13.56%
Good Loan and Deposit Growth; Strong Capital

HONOLULU - American Savings Bank, F.S.B. (American), a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. (NYSE: HE) today reported net income for the second quarter of 2018 of $20.6 million compared to $19.0 million in the first, or linked, quarter of 2018 and $16.7 million in the second quarter of 2017. Key measures of profitability improved, with return on average equity rising to 13.56%, up 0.98% and 2.31% compared to the linked and prior year quarters, respectively.
“We are pleased to report another quarter of record earnings, reflecting a healthy Hawaii economic environment, good operating execution, and the bottom line benefits of tax reform,” said Richard Wacker, president and chief executive officer. “We are seeing the benefits of our efforts to make banking easy for customers and build deeper relationships with them.”
Tax expense was approximately $2 million lower in the second quarter of 2018 compared to the second quarter of 2017, primarily driven by the benefits of the lower federal corporate tax rate from the Tax Cuts and Jobs Act of 2017.
Financial Highlights
Net interest income was $59.6 million in the second quarter of 2018 compared to $58.5 million in the linked quarter and $55.9 million in the second quarter of 2017. The increase in net interest income compared to the linked quarter was primarily due to good deposit growth that funded commercial and home equity lines of credit loan portfolio growth. Net interest margin for the second quarter of 2018 was 3.76%, unchanged from the





Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
July 30, 2018
Page 2    
linked quarter, compared to 3.68% in the prior year quarter of 2017. Yield on earning assets remained relatively unchanged during the quarter, as yield on loans and leases increased 6 basis points from the previous quarter, offsetting an increase in amortization of premium within the investment portfolio. Cost of funds was 0.24% for the second quarter of 2018, relatively unchanged from the linked quarter, and compared to 0.21% in the prior year quarter of 2017.
The provision for loan losses was $2.8 million in the second quarter of 2018 compared to $3.5 million in the linked quarter and $2.8 million in the second quarter of 2017. The net charge-off ratio was 0.32% in the second quarter of 2018 compared to 0.28% in the linked quarter and 0.21% in the prior year quarter. Nonaccrual loans as a percent of total loans receivable held for investment was 0.57% compared to 0.53% in the linked quarter and 0.44% in the prior year quarter.  
Noninterest income was $13.8 million in the second quarter of 2018 compared to $13.4 million in the linked quarter and $16.2 million in the second quarter of 2017. The decrease in noninterest income in the second quarter of 2018 compared to the second quarter of 2017 was primarily due to lower net debit card interchange fees of $1.0 million, resulting primarily from a reclassification of $1.1 million in expenses relating to a new accounting standard discussed last quarter and lower income from bank-owned life insurance.
Noninterest expense was $44.2 million in the second quarter of 2018 compared to $43.9 million in the linked quarter and $44.6 million in the second quarter of 2017.
Total loans were $4.8 billion at June 30, 2018, up $104 million or 4.4% annualized from December 31, 2017, driven mainly by increases in commercial and commercial real estate loans of $91 million.
    Total deposits were $6.1 billion at June 30, 2018, an increase of $226 million or 7.7% annualized from December 31, 2017 including $100 million in repurchase agreements that were transferred into deposit accounts. Excluding such transfer, total deposits increased by 4.2% annualized.
Overall, American’s return on average equity was 13.56% in the second quarter of 2018 compared to 12.58% in the first quarter of 2018 and 11.25% in the prior year quarter. Return on average assets was 1.20% in the second quarter of 2018 compared to 1.12% in the first quarter of 2018 and 1.02% in the same quarter last year. American’s solid results enabled it to pay dividends of $11.1 million to HEI while maintaining healthy capital levels -- leverage ratio of 8.6% and total capital ratio of 13.9% at June 30, 2018.




Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
July 30, 2018
Page 3

HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2018 EPS GUIDANCE
Concurrent with American’s regulatory filing 30 days after the end of the quarter, American announced its second quarter 2018 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 2018.
HEI plans to announce its second quarter 2018 consolidated financial results on Friday, August 3, 2018 and will also conduct a webcast and conference call at 10:00 a.m. Hawaii time (4:00 p.m. Eastern time) that same day to discuss its consolidated earnings, including American’s earnings, and 2018 EPS guidance.
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 or by accessing the webcast on HEI’s website at www.hei.com under the “Investor Relations” section, sub-heading “News and Events.”  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. 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 at www.hei.com 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 August 3, 2018 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 August 17, 2018 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10121450.
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; provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii’s largest



Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
July 30, 2018
Page 4

financial institutions; and helps advance Hawaii’s clean energy and sustainability goals through investments by its non-regulated subsidiary, Pacific Current, LLC.


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American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended 
 
Six months ended June 30
(in thousands)
 
June 30, 2018
 
March 31, 2018
 
June 30, 2017
 
2018
 
2017
Interest and dividend income
 
 

 
 

 
 

 
 
 
 
Interest and fees on loans
 
$
54,633

 
$
52,800

 
$
52,317

 
$
107,433

 
$
103,059

Interest and dividends on investment securities
 
8,628

 
9,202

 
6,763

 
17,830

 
13,743

Total interest and dividend income
 
63,261

 
62,002

 
59,080

 
125,263

 
116,802

Interest expense
 
 

 
 

 
 
 
 
 
 
Interest on deposit liabilities
 
3,284

 
2,957

 
2,311

 
6,241

 
4,414

Interest on other borrowings
 
393

 
496

 
824

 
889

 
1,640

Total interest expense
 
3,677

 
3,453

 
3,135

 
7,130

 
6,054

Net interest income
 
59,584

 
58,549

 
55,945

 
118,133

 
110,748

Provision for loan losses
 
2,763

 
3,541

 
2,834

 
6,304

 
6,741

Net interest income after provision for loan losses
 
56,821

 
55,008

 
53,111

 
111,829

 
104,007

Noninterest income
 
 

 
 
 
 
 
 
 
 
Fees from other financial services
 
4,744

 
4,654

 
5,810

 
9,398

 
11,420

Fee income on deposit liabilities
 
5,138

 
5,189

 
5,565

 
10,327

 
10,993

Fee income on other financial products
 
1,675

 
1,654

 
1,971

 
3,329

 
3,837

Bank-owned life insurance
 
1,133

 
871

 
1,925

 
2,004

 
2,908

Mortgage banking income
 
617

 
613

 
587

 
1,230

 
1,376

Other income, net
 
536

 
436

 
391

 
972

 
849

Total noninterest income
 
13,843

 
13,417

 
16,249

 
27,260

 
31,383

Noninterest expense
 
 

 
 
 
 
 
 
 
 
Compensation and employee benefits
 
23,655

 
24,440

 
24,541

 
48,095

 
47,583

Occupancy
 
4,194

 
4,280

 
4,185

 
8,474

 
8,339

Data processing
 
3,540

 
3,464

 
3,207

 
7,004

 
6,487

Services
 
3,028

 
3,047

 
2,766

 
6,075

 
5,126

Equipment
 
1,874

 
1,728

 
1,771

 
3,602

 
3,519

Office supplies, printing and postage
 
1,491

 
1,507

 
1,527

 
2,998

 
3,062

Marketing
 
1,085

 
645

 
839

 
1,730

 
1,356

FDIC insurance
 
727

 
713

 
822

 
1,440

 
1,550

Other expense
 
4,556

 
4,101

 
4,906

 
8,657

 
9,412

Total noninterest expense
 
44,150

 
43,925

 
44,564

 
88,075

 
86,434

Income before income taxes
 
26,514

 
24,500

 
24,796

 
51,014

 
48,956

Income taxes
 
5,953

 
5,540

 
8,063

 
11,493

 
16,410

Net income
 
$
20,561

 
$
18,960

 
$
16,733

 
$
39,521

 
$
32,546

Comprehensive income
 
$
16,579

 
$
6,885

 
$
18,956

 
$
23,464

 
$
35,604

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
 
 
 
 
Return on average assets
 
1.20

 
1.12

 
1.02

 
1.16

 
1.00

Return on average equity
 
13.56

 
12.58

 
11.25

 
13.07

 
11.04

Return on average tangible common equity
 
15.68

 
14.57

 
13.06

 
15.13

 
12.82

Net interest margin
 
3.76

 
3.76

 
3.68

 
3.76

 
3.68

Efficiency ratio
 
60.13

 
61.04

 
61.73

 
60.58

 
60.81

Net charge-offs to average loans outstanding
 
0.32

 
0.28

 
0.21

 
0.30

 
0.25

As of period end
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.57

 
0.53

 
0.44

 
 
 
 
Allowance for loan losses to loans outstanding
 
1.11

 
1.14

 
1.19

 
 
 
 
Tangible common equity to tangible assets
 
7.64

 
7.66

 
7.88

 
 
 
 
Tier-1 leverage ratio
 
8.6

 
8.6

 
8.5

 
 
 
 
Total capital ratio
 
13.9

 
14.0

 
13.7

 
 
 
 
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
11.1

 
$
10.9

 
$
9.4

 
$
22.0

 
$
18.8

The Statements of Income Data reflects the retrospective application of ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which was adopted in first quarter 2018. Nonservice cost was reclassified from “Compensation and employee benefits” to “Other expense.”
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.

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American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands)
June 30, 2018
 
December 31, 2017
 
Assets
 
 

 
 
Cash and due from banks
 
$
120,189

 
$
140,934

Interest-bearing deposits
 
109,230

 
93,165

Investment securities
 
 
 
 
Available-for-sale, at fair value
 
1,409,528

 
1,401,198

Held-to-maturity, at amortized cost
 
62,630

 
44,515

Stock in Federal Home Loan Bank, at cost
 
10,158

 
9,706

Loans held for investment
 
4,774,744

 
4,670,768

Allowance for loan losses
 
(52,803
)
 
(53,637
)
Net loans
 
4,721,941

 
4,617,131

Loans held for sale, at lower of cost or fair value
 
5,248

 
11,250

Other
 
462,469

 
398,570

Goodwill
 
82,190

 
82,190

Total assets
 
$
6,983,583

 
$
6,798,659

Liabilities and shareholder’s equity
 
 
 
 
Deposit liabilities–noninterest-bearing
 
$
1,812,348

 
$
1,760,233

Deposit liabilities–interest-bearing
 
4,303,761

 
4,130,364

Other borrowings
 
126,930

 
190,859

Other
 
131,063

 
110,356

Total liabilities
 
6,374,102

 
6,191,812

Common stock
 
1

 
1

Additional paid in capital
 
346,188

 
345,018

Retained earnings
 
310,298

 
292,957

Accumulated other comprehensive loss, net of tax benefits
 
 
 
 
     Net unrealized losses on securities
$
(32,596
)
 

$
(14,951
)
 

     Retirement benefit plans
(14,410
)
(47,006
)
(16,178
)
(31,129
)
Total shareholder’s equity
 
609,481

 
606,847

Total liabilities and shareholder’s equity
 
$
6,983,583

 
$
6,798,659


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


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