American Savings Bank Reports 2013 And Fourth Quarter Earnings

        American Savings Bank Reports 2013 And Fourth Quarter Earnings

2013 Net Income of $57.5 Million - Return on Assets of 1.13%

Fourth Quarter 2013 Net Income of $12.2 Million

Solid Results in a Challenging Regulatory and Interest Rate Environment

PR Newswire

HONOLULU, Jan. 30, 2014

HONOLULU, Jan. 30, 2014 /PRNewswire/ --

Selected 2013 Highlights

  oAchieved or exceeded 2013 profitability targets

       oNet income down $1.1 million vs. 2012, consistent with upper end of
         guidance range
       oROA of 1.13% vs. target of 1.10%
       oNIM of 3.74% vs. target of 3.6% to 3.7%

  oStrong, broad-based loan growth of 9.7%

       oContributed $9 million (pretax) to interest income to largely
         mitigate the negative impact of low interest rates
       oGrowth in targeted residential mortgages, home equity lending,
         commercial real estate, and commercial & industrial lending
       o#1 provider of new home equity lending in Hawaii

  oSignificant continued improvement in asset quality from 2012

       oNet charge-off ratio improved to 0.09% from 0.24%
       oNonperforming loans down to 1.20% from 1.87% of total loans and real
         estate owned

  oSolid, high quality capital: 9.1% leverage ratio; 12.1% total risk-based
    capital ratio
  oStrategic Progress

       oStrategic sale of credit card portfolio and launch of improved credit
         card offering
       oLeading mobile banking offering with 60% penetration of online
         banking customers and mobile deposit volumes surpassing that of the
         ATM network
       oPartnership with Xerox, taking over selected non-core business
         activities

  oNamed as American Banker "Best Banks to Work For" and Hawaii Business
    "Best Places to Work"
  oDelivered 3,300 volunteer hours to and over $1 million of charitable
    contributions to community organizations

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 full year of 2013 of $57.5 million compared to $58.6 million in
2012. Net income for the fourth quarter of 2013 was $12.2million, compared to
$15.3 million in the third, or linked, quarter of 2013 and $14.4 million in
the fourth quarter of 2012. 

"We are pleased that we were able to continue to deliver solid financial
results in a challenging regulatory and interest rate environment. Our ongoing
focus on enhancing our products, sales and risk management capabilities,
combined with the improving economy, produced stronger loan growth and better
credit quality than we targeted at the start of the year. That helped us
mitigate the challenges of continued low interest rates, as well as the impact
of new regulations on fee income and operating costs," said Richard Wacker,
president and chief executive officer of American. "We head into 2014 with a
solid balance sheet, improved asset quality, and more competitive offerings
for our customers."

Full Year Net Income:

2013 net income of $57.5 million was $1.1 million lower than 2012 net income,
reflecting the challenging regulatory and interest rate environment. The most
significant drivers impacting net income for the year were (on an after-tax
basis):

  o$2 million lower net interest income as lower yields on loans continued to
    more than offset the favorable contributions of loan growth; net interest
    margins declined 19 basis points for the full-year (discussed below),
    representing a $7 million decrease in net interest income, $2 million more
    than the increase from loan growth;
  o$2 million lower noninterest income primarily due to lower mortgage
    banking income ($4 million) and lower interchange fees as a result of rate
    caps mandated by the Durbin Amendment ($3 million) which became effective
    for American in July 2013, offsetting more than all of the increases in
    other fee income and the premium on the sale of the credit card
    portfolio;
  o$4 million higher noninterest expense primarily driven by higher loan and
    investment product production volumes to customers, sales and
    performance-related incentives, and benefit cost inflation; and
  o$7 million lower provision for loan losses resulting from continued
    improvement in credit quality, coupled with higher recoveries from
    previously charged-off loans, and release of reserves related to the sale
    of the credit card portfolio.

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.

Fourth Quarter Net Income:

Fourth quarter 2013 net income of $12.2 million was $3.1 million lower than
the linked quarter and $2.2 million lower than the same quarter of 2012.

Compared to the linked quarter of 2013, the $3.1 million net income decline
was primarily driven by (on an after-tax basis):

  o$2 million lower noninterest income mainly due to the gain on the
    strategic sale of the credit card portfolio recorded in the third quarter
    of 2013 (discussed above); and
  o$1 million higher noninterest expense, largely attributable to the timing
    of certain performance-related compensation costs.

Compared to the same quarter of 2012, the most significant variances were (on
an after-tax basis):

  o$4 million lower noninterest income primarily due to lower gains on sales
    of residential mortgages as the refinancing market contracted dramatically
    since mid-2013, and lower interchange fees (as discussed above); and
  o$2 million (after-tax) lower provision for loan losses (as discussed
    above).

Financial Highlights:

Net interest margin was 3.74% in 2013 compared to 3.93% in 2012, exceeding the
bank's net interest margin target of 3.6% to 3.7% for the year. Net interest
margin was 3.67% in the fourth quarter of 2013 compared to 3.73% in the linked
quarter and 3.81% in the fourth quarter of 2012. The decline in net interest
margin was primarily attributable to lower yields on interest-earning assets
as loan portfolios continued to re-price down in this low interest rate
environment, albeit at a slower pace as the year progressed. The impact of
lower net interest margin on net interest income was largely offset by strong,
broad-based loan growth.

The provision for loan losses (pretax) was $1.5 million in 2013 compared to
$12.9million in 2012. Continued improvement in credit quality, coupled with
the recoveries of previously charged-off loans and the release of reserves
related to the sale of the credit card portfolio, resulted in an unusually low
provision for 2013 despite robust loan growth. A significant portion of
recoveries over the last two years related to the shrinking land and mainland
residential loan portfolios; thus, management expects recoveries to moderate
in 2014 as these portfolios run off. The fourth quarter of 2013 provision for
loan losses was $0.6million compared to $0.1 million in the linked quarter
and $3.4 million in the fourth quarter of 2012.

The 2013 net charge-off ratio improved to 0.09% from 0.24% in 2012. The fourth
quarter 2013 net charge-off ratio was 0.15% compared to nil in the linked
quarter and 0.13% in the prior year quarter.

Noninterest income (pretax) for 2013 was $72.1 million, down from
$75.7million in 2012. The decrease from the prior year is primarily driven by
$6.3 million lower mortgage banking income and $4.3million lower interchange
fees that was attributable to the Durbin amendment's rate caps, partially
offset by the 2013 gain on the strategic sale of the credit card portfolio and
higher fee income on other financial products. In the fourth quarter of 2013,
noninterest income (pretax) was $15.5 million, down from $18.7million in the
linked quarter largely due to the third quarter gain on sale of the credit
card portfolio, and $22.9million in the fourth quarter of 2012 due to lower
mortgage banking income and interchange fees.

Noninterest expense (pretax) for 2013 was $159.5 million, up from
$152.3million in 2012. The increase from the prior year is largely driven by
higher compensation expense related to increased business volumes, sales and
performance incentives, and higher inflation related employee benefits costs.
In the fourth quarter of 2013, noninterest expense (pretax) was $41.3 million,
up from $39.7million in the linked quarter and $40.9million in the fourth
quarter of 2012. Fourth quarter 2013 noninterest expense was elevated due to
the timing of performance incentives and marketing expenses.

Despite the competitive market environment, American achieved strong loan
growth of 9.7% in 2013, exceeding the bank's target of mid-single digit loan
growth while maintaining strong credit discipline. Loan growth was primarily
driven by residential, home equity, commercial real estate and commercial
market loans. Strong loan growth helped to offset the impact of the decline in
net interest margin.

Total deposits were $4.4 billion at December 31, 2013, an increase of $62
million from September30,2013 and $143 million from December 31, 2012.
Low-cost core deposits increased $79million from September 30, 2013 and $189
million from December 31, 2012. The average cost of funds was 0.22% for the
full year 2013, down 4basis points from the prior year. For the fourth
quarter of 2013, average cost of funds was 0.23%, up 1basis point from the
linked quarter and flat compared to the prior year quarter.

Overall, American's return on average equity for the full year remained solid
at 11.4% in 2013 compared to 11.7% in 2012 and the return on average assets
for the full year was 1.13% in 2013 compared to 1.18% in 2012. For the fourth
quarter of 2013, the return on average equity was 9.6%, down from 12.1% in the
linked quarter and 11.3% in the same quarter last year. Return on average
assets was 0.94% for the fourth quarter of 2013, compared to 1.20% from the
linked quarter and 1.15% in the same quarter last year.

In 2013, American paid dividends of $40 million to HEI while maintaining
healthy capital levels -- leverage ratio of 9.1% and total risk-based capital
ratio of 12.1% at December31,2013.

HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND
2014 EPS GUIDANCE

Concurrent with American's regulatory filing 30 days after the end of the
quarter, American announced its fourth 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 fourth
quarter and full year 2013.

HEI plans to announce its fourth quarter and 2013 consolidated financial
results on Tuesday, February 18, 2014 and will conduct a webcast and
conference call to discuss its consolidated earnings, including American's
earnings, and 2014 EPS guidance on Tuesday, February18,2014, at 12:00 noon
Hawaii time (5:00 p.m. Eastern time). Interested parties may listen to the
conference by calling (877) 415-3182 and entering passcode: 61297681, or 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, 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, 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/dmsin 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 online replay of the webcast will be available at the same website
beginning about two hours after the event and will remain on HEI's website for
12 months. Replays of the conference call will also be available approximately
two hours after the event through March 4, 2014, by dialing (888)286-8010,
passcode: 22850388.

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.

FORWARD-LOOKING STATEMENTS

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 quarter ended September30, 2013 and HEI's future 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.
STATEMENTS OF INCOME DATA
(Unaudited)
                  Three months ended                         Years ended
                                                             December 31,
(inthousands)    December31,  September30,  December31,  2013        2012
                  2013          2013           2012
Interest and
dividend income
Interest and      $  43,405     $   43,337     $  42,816     $ 172,969   $ 176,057
fees on loans
Interest and
dividends on
investment and    3,372         3,025          3,288         13,095      13,822
mortgage-related
securities
 Total
interest and      46,777        46,362         46,104        186,064     189,879
dividend income
Interest expense
Interest on
deposit           1,222         1,262          1,408         5,092       6,423
liabilities
Interest on       1,437         1,206          1,193         4,985       4,869
other borrowings
 Total         2,659         2,468          2,601         10,077      11,292
interest expense
Net interest      44,118        43,894         43,503        175,987     178,587
income
Provision for     554           54             3,379         1,507       12,883
loan losses
Net interest
income after      43,564        43,840         40,124        174,480     165,704
provision for
loan losses
Noninterest
income
Fees from other
financial         5,732         5,728          8,887         27,099      31,361
services
Fee income on
deposit           4,797         4,819          4,648         18,363      17,775
liabilities
Fee income on
other financial   2,117         2,714          1,836         8,405       6,577
products
Mortgage banking  1,413         1,547          6,331         8,309       14,628
income
Gains on sale of  —             —              —             1,226       134
securities
Other income,     1,470         3,888          1,164         8,681       5,185
net
 Total
noninterest       15,529        18,696         22,866        72,083      75,660
income
Noninterest
expense
Compensation and
employee          22,195        20,564         19,953        82,910      75,979
benefits
Occupancy         4,197         4,208          4,313         16,747      17,179
Data processing   2,970         2,168          2,854         10,952      10,098
Services          2,160         2,424          2,800         9,015       9,866
Equipment         1,826         1,825          1,806         7,295       7,105
Other expense     7,951         8,539          9,207         32,585      32,116
 Total
noninterest       41,299        39,728         40,933        159,504     152,343
expense
Income before     17,794        22,808         $  22,057     87,059      89,021
income taxes
Income taxes      5,610         7,532          7,694         29,525      30,384
Net income        $  12,184     $   15,276     $  14,363     $ 57,534    $ 58,637
Comprehensive     $  23,802     $   14,107     $  5,740      $ 60,733    $ 52,612
income
OTHER BANK INFORMATION
(annualized %, except as of
period end)
Return on         0.94          1.20           1.15          1.13        1.18
average assets
Return on         9.56          12.13          11.29         11.38       11.68
average equity
Return on
average tangible  11.39         14.50          13.47         13.59       13.97
common equity
Net interest      3.67          3.73           3.81          3.74        3.93
margin
Net charge-offs
to average loans  0.15          —              0.13          0.09        0.24
outstanding
As of period end
Nonperforming
assets to loans
outstanding and   1.20          1.33           1.87
real estate
owned*
Allowance for
loan losses to    0.97          1.01           1.11
loans
outstanding
Tier-1 leverage   9.1           9.3            9.1
ratio *
Total risk-based  12.1          12.5           12.8
capital ratio *
Tangible common
equity to total   8.5           8.36           8.39
assets
Dividend paid to
HEI (via ASHI)    10            10             15            40          45

($inmillions)
* 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, 2013 (when filed) and HEI's Quarterly Reports on SEC Form
10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013,
as updated by SEC Forms 8-K.



American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
December31                                2013                   2012
(in thousands)
Assets
Cash and cash equivalents                  $ 156,603              $ 184,430
Available-for-sale investment              529,007                671,358
and mortgage-related securities
Investment in stock of Federal             92,546                 96,022
Home Loan Bank of Seattle
Loans receivable held for                  4,150,229              3,779,218
investment
Allowance for loan losses                  (40,116)               (41,985)
Loans receivable held for                  4,110,113              3,737,233
investment, net
Loans held for sale, at lower              5,302                  26,005
of cost or fair value
Other                                      268,063                244,435
Goodwill                                   82,190                 82,190
Total assets                               $ 5,243,824            $ 5,041,673
Liabilities and shareholder's
equity
Deposit                                    $ 1,214,418            $ 1,164,308
liabilities–noninterest-bearing
Deposit                                    3,158,059              3,065,608
liabilities–interest-bearing
Other borrowings                           244,514                195,926
Other                                      105,679                117,752
Total liabilities                          4,722,670              4,543,594
Common stock                               336,054                333,712
Retained earnings                          197,297                179,763
Accumulated other comprehensive
loss, net of tax benefits
 Net unrealized gains       $ (3,663)               $ 10,761
(losses) on securities
 Retirement benefit plans   (8,534)    (12,197)     (26,157)  (15,396)
Total shareholder's equity                 521,154                498,079
Total liabilities and                      $ 5,243,824            $ 5,041,673
shareholder's equity



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, 2013 (when filed) and HEI's Quarterly Reports on
SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and
September 30, 2013, as updated by SEC Forms 8-K.



Contact: Shelee M.T. Kimura
         Manager, Investor Relations & Telephone: (808) 543-7384
         Strategic Planning            E-mail: skimura@hei.com



(Logo: http://photos.prnewswire.com/prnh/20110411/LA80136LOGO)

SOURCE Hawaiian Electric Industries, Inc.

Website: http://www.hei.com
 
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