American Savings Bank Reports Second Quarter 2017 Earnings
HONOLULU, July 28, 2017 /PRNewswire/ -- American Savings Bank, F.S.B. (American), a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. (HEI) (NYSE - HE) today reported net income of $16.7 million for the second quarter of 2017 compared to $15.8 million in the first, or linked, quarter of 2017 and $13.3 million in the second quarter of 2016.
"We continued our strong performance into the second quarter, delivering well for our customers, the bank, and for shareholders. Our results through the second quarter demonstrate broad improvement in our profitability with better yields, efficiency, asset quality, and bottom line return on equity compared to last year," said Richard Wacker, president and chief executive officer of American. "Our balance sheet continued to grow nicely as customers entrusted us with more of their deposits. Total lending was flat as our work to improve commercial loan asset quality offset growth we saw in consumer, home equity, residential, and commercial real estate lending."
Second quarter of 2017 net income of $16.7 million was $3.4 million higher than the second quarter of 2016 and $0.9 million higher than the first (linked) quarter of 2017.
Compared to the second quarter of 2016, the $3.4 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 deposit growth into our investment portfolio. The $1 million (after-tax) lower provision for loan losses was offset by $1 million (after-tax) higher non-interest expense.
Compared to the linked first quarter of 2017, the $0.9 million increase was primarily driven by the following on an after-tax basis:
-- $1 million higher net interest income driven mainly by higher loan
portfolio yields and growth in our consumer loan and investment
portfolios;
-- $1 million lower provision for loan losses; and
-- $1 million higher noninterest income mainly due to improved performance
from bank-owned life insurance investments.
These increases were offset by $2 million (after-tax) higher noninterest expense primarily due to higher compensation and benefits.
Net interest income (pretax) was $55.9 million in the second quarter of 2017, compared to $54.8 million in the linked quarter and $51.0 million in the prior year quarter. Net interest margin was 3.68% in the second quarter of 2017, unchanged from the linked quarter and 3.58% in the second quarter of 2016. The higher net interest margin compared to the prior year quarter was primarily attributable to higher investment portfolio yields and growth of our higher yielding consumer and commercial real estate portfolios.
The provision for loan losses (pretax) was $2.8 million in the second quarter of 2017 compared to $3.9 million in the linked quarter and $4.8 million in the second quarter of 2016. The decrease from the linked quarter reflected improved credit quality. The second quarter of 2017 net charge-off ratio was 0.21%, compared to 0.29% in the linked quarter and 0.15% in the prior year quarter. Nonaccrual loans as a percent of total loans receivable held for investment was 0.44% compared to 0.41% in the linked quarter and 1.02% in the prior year quarter.
Noninterest income (pretax) was $16.2 million in the second quarter of 2017 compared to $15.1 million in the linked quarter and $16.6 million in the prior year quarter. Noninterest expense (pretax) was $44.6 million compared to $41.9 million in the linked quarter and $42.6 million in the second quarter of 2016.
Total loans were $4.7 billion at June 30, 2017 and included growth in the consumer, home equity line of credit, and residential loan portfolios during the second quarter of 2017.
________________________
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.
Total deposits were $5.7 billion at June 30, 2017, an increase of $175 million or 6.3% annualized from December 31, 2016. Low-cost core deposits increased $143 million or 5.8% annualized from December 31, 2016. The average cost of funds was 0.21% for the second quarter of 2017 compared to 0.20% for the first quarter of 2017 and 0.23% for the second quarter of 2016.
American's return on average equity was 11.3% for the second quarter of 2017 compared to 10.8% in the linked quarter and 9.2% in the second quarter of 2016. Return on average assets was 1.02% for the second quarter of 2017, compared to 0.98% in the linked quarter and 0.86% 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 8.5% and a total capital ratio of 13.7% at June 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 second 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 second quarter of 2017.
HEI plans to announce its second quarter 2017 consolidated financial results on Thursday, August 3, 2017 and will conduct a webcast and conference call to discuss its consolidated earnings, including American's earnings, and 2017 EPS guidance on Thursday, August 3, 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 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 August 3, 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 August 17, 2017 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10108918.
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 Six months ended June 30
(in thousands) June 30, 2017 March 31, 2017 June 30, 2016 2017 2016
------------- ------------- -------------- ------------- ---- ----
Interest and dividend income
Interest and fees on loans $52,317 $50,742 $49,690 $103,059 $98,127
Interest and dividends on investment
securities 6,763 6,980 4,443 13,743 9,460
Total interest and dividend income 59,080 57,722 54,133 116,802 107,587
---------------------------------- ------ ------ ------ ------- -------
Interest expense
Interest on deposit liabilities 2,311 2,103 1,691 4,414 3,283
Interest on other borrowings 824 816 1,467 1,640 2,952
Total interest expense 3,135 2,919 3,158 6,054 6,235
---------------------- ----- ----- ----- ----- -----
Net interest income 55,945 54,803 50,975 110,748 101,352
Provision for loan losses 2,834 3,907 4,753 6,741 9,519
-----
Net interest income after provision
for loan losses 53,111 50,896 46,222 104,007 91,833
----------------------------------- ------ ------ ------ ------- ------
Noninterest income
Fees from other financial services 5,810 5,610 5,701 11,420 11,200
Fee income on deposit liabilities 5,565 5,428 5,262 10,993 10,418
Fee income on other financial
products 1,971 1,866 2,207 3,837 4,412
Bank-owned life insurance 1,925 983 1,006 2,908 2,004
Mortgage banking income 587 789 1,554 1,376 2,749
Gains on sale of investment
securities, net - - 598 - 598
Other income, net 391 458 288 849 621
Total noninterest income 16,249 15,134 16,616 31,383 32,002
------------------------ ------ ------ ------ ------ ------
Noninterest expense
Compensation and employee benefits 24,742 23,237 21,919 47,979 44,353
Occupancy 4,185 4,154 4,115 8,339 8,253
Data processing 3,207 3,280 3,277 6,487 6,449
Services 2,766 2,360 2,755 5,126 5,666
Equipment 1,771 1,748 1,771 3,519 3,434
Office supplies, printing and
postage 1,527 1,535 1,583 3,062 2,948
Marketing 839 517 899 1,356 1,760
FDIC insurance 822 728 913 1,550 1,797
Other expense 4,705 4,311 5,382 9,016 9,357
Total noninterest expense 44,564 41,870 42,614 86,434 84,017
------------------------- ------ ------ ------ ------ ------
Income before income taxes 24,796 24,160 20,224 48,956 39,818
Income taxes 8,063 8,347 6,939 16,410 13,860
Net income $16,733 $15,813 $13,285 $32,546 $25,958
========== ======= ======= ======= ======= =======
Comprehensive income $18,956 $16,648 $16,051 $35,604 $36,361
==================== ======= ======= ======= ======= =======
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets 1.02 0.98 0.86 1.00 0.85
Return on average equity 11.25 10.82 9.22 11.04 9.06
Return on average tangible common
equity 13.06 12.58 10.75 12.82 10.57
Net interest margin 3.68 3.68 3.58 3.68 3.60
Efficiency ratio 61.73 59.87 63.05 60.81 63.00
Net charge-offs to average loans
outstanding 0.21 0.29 0.15 0.25 0.18
As of period end
Nonaccrual loans to loans receivable
held for investment 0.44 0.41 1.02
Allowance for loan losses to loans
outstanding 1.19 1.19 1.16
Tangible common equity to tangible
assets 7.88 7.78 8.15
Tier-1 leverage ratio 8.5 8.5 8.7
Total capital ratio 13.7 13.6 13.2
Dividend paid to HEI (via ASB
Hawaii, Inc.) ($ in millions) $9.4 $9.4 $9.0 $18.8 $18.0
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.
American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands) June 30, 2017 December 31, 2016
------------- -------------
Assets
Cash and due from banks $128,609 $137,083
Interest-bearing deposits 37,049 52,128
Restricted cash - 1,764
Available-for-sale investment securities,
at fair value 1,302,886 1,105,182
Stock in Federal Home Loan Bank, at cost 11,706 11,218
Loans receivable held for investment 4,744,634 4,738,693
Allowance for loan losses (56,356) (55,533)
------------------------- ------- -------
Net loans 4,688,278 4,683,160
--------- --------- ---------
Loans held for sale, at lower of cost or fair
value 5,261 18,817
Other 354,898 329,815
Goodwill 82,190 82,190
Total assets $6,610,877 $6,421,357
============ ========== ==========
Liabilities and shareholder's equity
Deposit liabilities-noninterest-bearing $1,694,150 $1,639,051
Deposit liabilities-interest-bearing 4,030,236 3,909,878
Other borrowings 188,130 192,618
Other 101,974 101,635
Total liabilities 6,014,490 5,843,182
----------------- --------- ---------
Common stock 1 1
Additional paid in capital 344,062 342,704
Retained earnings 271,739 257,943
Accumulated other comprehensive loss, net of
tax benefits
Net unrealized losses on
securities $(5,687) $(7,931)
Retirement benefit plans (13,728) (19,415) (14,542) (22,473)
-------
Total shareholder's equity 596,387 578,175
Total liabilities and shareholder's equity $6,610,877 $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.
Contact: Clifford H. Chen Telephone: (808) 543-7300
Treasurer, Manager Investor
Relations & Strategic
Planning E-mail: ir@hei.com
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SOURCE Hawaiian Electric Industries, Inc.
