Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

American Savings Bank Reports Third Quarter 2013 Earnings

          American Savings Bank Reports Third Quarter 2013 Earnings

Net Income of $15.3 Million

Bank Continues to Deliver Solid Results

PR Newswire

HONOLULU, Oct. 30, 2013

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):

  o $2 million lower provision for loan losses;
  o $1 million net gain on the sale of the credit card portfolio (mentioned
    above); and
  o $1 million higher fee income on other financial products.

These were largely offset by (after-tax):

  o $2 million lower mortgage banking income; and  
  o $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.

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 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,, 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 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.

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.


                                                           Nine months ended
                  Three months ended
                                                            September 30
(in thousands)    September 30,  June 30,   September 30,  2013        2012
                  2013           2013       2012
Interest and
dividend income
Interest and      $   43,337     $ 43,624   $   43,880     $ 129,564   $ 133,241
fees on loans
Interest and
dividend on
investment and    3,025          3,234      3,432          9,723       10,534
Total interest
and dividend      46,362         46,858     47,312         139,287     143,775
Interest expense
Interest on
deposit           1,262          1,296      1,540          3,870       5,015
Interest on       1,206          1,178      1,201          3,548       3,676
other borrowings
Total interest    2,468          2,474      2,741          7,418       8,691
Net interest      43,894         44,384     44,571         131,869     135,084
Provision for     54             (959)      3,580          953         9,504
loan losses
Net interest
income after      43,840         45,343     40,991         130,916     125,580
provision for
loan losses
Fees from other
financial         5,728          7,996      7,674          21,367      22,474
Fee income on
deposit           4,819          4,433      4,527          13,566      13,127
Fee income on
other financial   2,714          1,780      1,660          6,288       4,741
Mortgage banking  1,547          2,003      4,077          6,896       8,297
Gain on sale of   —              1,226      —              1,226       134
Other income      3,888          1,731      1,346          7,211       4,021
noninterest       18,696         19,169     19,284         56,554      52,794
Compensation and
employee          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
noninterest       39,728         39,807     38,648         118,205     111,410
Income before     22,808         24,705     21,627         69,265      66,964
income taxes
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     $   14,107     $ 7,340    $   15,517     $ 36,931    $ 46,872
(annualized %, except as of
period end)
Return on         1.20           1.25       1.15           1.19        1.19
average assets
Return on         12.13          12.56      11.24          11.99       11.81
average equity
Return on
average tangible  14.50          15.00      13.41          14.33       14.14
common equity
Net interest      3.73           3.79       3.92           3.77        3.98
Net charge-offs
to average loans  —              0.08       0.35           0.06        0.27
Efficiency ratio  63             62         60             62          59
As of period end
assets to loans
outstanding and   1.33           1.56       1.73
real estate
owned *
Allowance for
loan losses to    1.01           1.04       1.06
Tier-1 leverage   9.3            9.3        9.3
ratio *
Total risk-based  12.5           12.5       12.9
capital ratio *
Tangible common
equity to total   8.36           8.42       8.72
Dividend paid to
HEI (via ASHI)    10             10         10
($ in millions)

*  Regulatory basis

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.


(in thousands)                           September 30, 2013  December 31, 2012
Cash and cash equivalents                $   189,524         $   184,430
Available-for-sale investment and        535,264             671,358
mortgage-related securities
Investment in stock of Federal Home      93,413              96,022
Loan Bank of Seattle
Loans receivable held for investment     4,046,184           3,779,218
Allowance for loan losses                (41,052)            (41,985)
Loans receivable held for investment,    4,005,132           3,737,233
Loans held for sale, at lower of cost    5,829               26,005
or fair value
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   (23,815)            (15,396)
(loss), net of taxes
Total shareholder's equity               506,746             498,079
Total liabilities and shareholder's      $   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:


SOURCE Hawaiian Electric Industries, Inc.

Sponsored Links
Sponsored Links