American Savings Bank Reports Second Quarter 2014 Earnings

          American Savings Bank Reports Second Quarter 2014 Earnings

Net Income of $11.7 Million

Bank Delivers Solid Results In Line with Expectations

PR Newswire

HONOLULU, July 30, 2014

HONOLULU, July 30, 2014 /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 second
quarter of 2014 of $11.7 million, compared to $14.5 million in the first (or
linked) quarter of 2014 and $15.9million in the second quarter of 2013. 

"American continued to deliver solid results in line with expectations, with
good growth across our target market segments in both loans and core
deposits. Asset quality continued to improve, reflecting the healthy local
market environment, and our rate of asset growth has helped offset the effects
of the persistently low rate environment," said Rich Wacker, president and
chief executive officer of American.

Second quarter 2014 net income was $2.9 million lower than the linked quarter
primarily driven by (on an after-tax basis):

  o$2million gain on the sale of municipal bond securities in the first (or
    linked) quarter of 2014 in response to recent regulatory guidance on
    liquidity standards and the anticipation of higher interest rates over
    time; and
  o$1 million higher noninterest expense due to higher branch security
    expense, product development costs, and timing of debit card-related
    expenses.

Compared to the same quarter of 2013, net income decreased by $4.2 million
primarily driven by (on an after-tax basis):

  o$1 million lower interchange fees under regulatory caps (Durbin Amendment)
    that became effective for American on July1,2013;
  o$1 million gain on the sale of securities in the second quarter of 2013;
  o$1 million lower mortgage banking income from significantly lower
    refinancing activity; and
  o$1 million change in the provision for loan losses, which was a credit in
    the second quarter of 2013 due to the sale of American's credit card
    portfolio.

Net interest income (pretax) was $44.1 million in both the second quarter of
2014 and in the linked quarter and $44.4 million in the second quarter of
2013. Net interest margin was 3.55% compared to 3.64% in the linked quarter
and 3.79% in the second quarter of 2013. The 0.09% point decline in net
interest margin compared to the linked quarter was attributable to multiple
factors, including the effect of the sale of higher yielding municipal bond
securities in the first quarter and slower recognition of mortgage-related
fees as prepayment rates decline, and the ongoing effect of low rates on
interest-earning assets. Compared to the second quarter of 2013, the net
interest margin decline was primarily attributable to lower yields on interest
earning assets as the loan portfolio continued to re-price down in the low
interest rate environment. In both periods, a portion of the net interest
margin decline was offset by loan growth.

Provision for loan losses (pretax) was $1.0 million in the second quarter of
2014, flat compared to the linked quarter, but higher than the net credit of
$1.0million in the second quarter of 2013. In the second quarter of 2013,
American released $1 million (pretax) of allowance for loan losses in
connection with the agreement to sell its credit card portfolio in the third
quarter of 2013 and released allowance associated with specific commercial
loan paydowns. The second quarter 2014 net charge-off ratio improved to a
recovery of 0.04% from a charge-off of 0.02% in the linked quarter and a
charge-off of 0.08% in the prior year quarter primarily due to the improved
credit quality of the loan portfolio and the strengthening Hawaii economy.

Noninterest income (pretax) was $13.8 million in the second quarter of 2014,
compared to $16.9million in the linked quarter and $19.2 million in the
second quarter of 2013. Second quarter noninterest income was relatively in
line with the first quarter, excluding the $2.8 million gain on the sale of
the municipal bond portfolio in the linked quarter. Compared to the second
quarter of 2013, noninterest income declined by $5.4 million primarily due to
lower year-over-year fee income due to the regulatory limits on interchange
fees (Durbin Amendment) of $2.3 million, lower mortgage banking income of
$1.8million due to lower refinancing volumes and no gain on sales of
securities, which were $1.2million in the prior year quarter.

Noninterest expense (pretax) was $39.9 million in the second quarter of 2014,
higher than $38.4million in the linked quarter and in line with $39.8 million
in the second quarter of 2013. Noninterest expense was higher compared to the
linked quarter primarily due to higher branch security expense, product
development costs and timing of debit card-related expenses.

Total loans grew by $99 million and $136 million in the second quarter and
year-to-date 2014, respectively. Second quarter loan growth was primarily
driven by increases in residential, home equity lending and commercial real
estate. Annualized loan growth was 9.4% and 6.5% in the second quarter and
year-to-date 2014, respectively.

Total deposits were $4.5 billion at June 30, 2014, an increase of $47 million
and $152 million in the second quarter and year-to-date 2014, respectively.
Second quarter deposit growth was primarily due to the increase in low-cost
core deposits. Annualized deposit growth was 4.2% and 7.0% in the second
quarter and year-to-date 2014, respectively. Average cost of funds remained
low at 0.22% for the second quarter of 2014, 1 basis point lower than the
linked quarter and consistent with the prior year quarter.

As a result of the net income impacts detailed above, American's second
quarter 2014 return on average equity was 8.8%, compared to 11.0% in the
linked quarter and 12.6% in the second quarter of last year. Return on
average assets was 0.87% for the second quarter of 2014, compared to 1.10% in
the linked quarter and 1.25% in the same quarter last year.

American's year-to-date return on average equity was 9.9%, compared to 11.9%
for the same period in the prior year. Year-to-date return on average assets
was 0.98% compared to 1.19% for the same period in the prior year.

American's continued solid results enabled it to pay dividends of $9.75
million to HEI in the quarter while maintaining healthy capital levels –
leverage ratio of 9.0% and total risk-based capital ratio of 12.6% at June 30,
2014.

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.

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 second quarter 2014 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 2014.

HEI plans to announce its second quarter 2014 consolidated financial results
on Monday, August11,2014 and will conduct a webcast and conference call to
discuss its consolidated earnings, including American's earnings, and 2014 EPS
guidance on Monday, August 11, 2014, at 7:00 a.m. Hawaii time (1:00p.m.
Eastern time). Interested parties may listen to the conference by calling
(877)474-9504 and entering passcode: 92297255, 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/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 online replay of the webcast will be available at the same website
beginning about two hours after the event. Audio replays of the conference
call will also be available approximately two hours after the event through
August 25, 2014, by dialing (888)286-8010, passcode: 58411343.

HEI supplies power to approximately 450,000 customers or 95% of Hawaii's
population through its electric utilities, Hawaiian Electric Company, Inc.,
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 Annual Report on Form
10-K for the year ended December 31, 2013, HEI's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2014 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              Six months ended
                                                          June 30
(inthousands)           June 30,   March 31,  June 30,   2014       2013
                         2014       2014       2013
Interest and dividend income
Interest and fees on     $ 43,851   $ 43,682   $ 43,624   $ 87,533   $ 86,227
loans
Interest and dividends
on investment and        2,950      3,035      3,234      5,985      6,698
mortgage-related
securities
Total interest and       46,801     46,717     46,858     93,518     92,925
dividend income
Interest expense
Interest on deposit      1,237      1,225      1,296      2,462      2,608
liabilities
Interest on other        1,420      1,405      1,178      2,825      2,342
borrowings
Total interest expense   2,657      2,630      2,474      5,287      4,950
Net interest income      44,144     44,087     44,384     88,231     87,975
Provision (credit) for   1,021      995        (959)      2,016      899
loan losses
Net interest income
after provision          43,123     43,092     45,343     86,215     87,076
(credit) for loan
losses
Noninterest income
Fees from other          5,217      5,128      7,996      10,345     15,639
financial services
Fee income on deposit    4,645      4,421      4,433      9,066      8,747
liabilities
Fee income on other      2,064      2,290      1,780      4,354      3,574
financial products
Mortgage banking income  246        628        2,003      874        5,349
Gain on sale of          —          2,847      1,226      2,847      1,226
securities
Other income, net        1,643      1,588      1,731      3,231      3,323
Total noninterest        13,815     16,902     19,169     30,717     37,858
income
Noninterest expense
Compensation and         19,872     20,286     20,063     40,158     40,151
employee benefits
Occupancy                4,489      3,953      4,219      8,442      8,342
Data processing          2,971      3,060      2,827      6,031      5,814
Services                 2,855      2,273      2,328      5,128      4,431
Equipment                1,609      1,645      1,870      3,254      3,644
Other expense            8,094      7,153      8,500      15,247     16,095
Total noninterest        39,890     38,370     39,807     78,260     78,477
expense
Income before income     17,048     21,624     24,705     38,672     46,457
taxes
Income taxes             5,372      7,085      8,786      12,457     16,383
Net income               $ 11,676   $ 14,539   $ 15,919   $ 26,215   $ 30,074
Comprehensive income     $ 14,434   $ 15,563   $ 7,340    $ 29,997   $ 22,824
OTHER BANK INFORMATION (annualized
%, except as of period end)
Return on average        0.87       1.10       1.25       0.98       1.19
assets
Return on average        8.78       11.03      12.56      9.90       11.93
equity
Return on average        10.39      13.06      15.00      11.72      14.25
tangible common equity
Net interest margin      3.55       3.64       3.79       3.59       3.79
Net charge-offs
(recoveries) to average  (0.04)     0.02       0.08       (0.01)     0.10
loans outstanding
As of period end
Nonperforming assets to
loans outstanding and    1.05       1.12       1.56
real estate owned *
Allowance for loan
losses to loans          0.99       0.98       1.04
outstanding
Tier-1 leverage ratio *  9.0        9.0        9.3
Total risk-based         12.6       12.7       12.5
capital ratio *
Tangible common equity   8.46       8.44       8.42
to total assets
Dividend paid to HEI
(via ASHI) ($ in         10         9          10
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, 2013 and HEI's Quarterly Reports
 on SEC Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014
 (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.
BALANCE SHEETS DATA
(Unaudited)
(inthousands)                   June 30, 2014           December 31, 2013
Assets
Cash and cash equivalents                  $ 174,950                 $ 156,603
Available-for-sale investment              549,321                   529,007
and mortgage-related securities
Investment in stock of Federal             80,863                    92,546
Home Loan Bank of Seattle
Loans receivable held for                  4,287,612                 4,150,229
investment
Allowance for loan losses                  (42,372)                  (40,116)
Loans receivable held for                  4,245,240                 4,110,113
investment, net
Loans held for sale, at lower              956                       5,302
of cost or fair value
Other                                      284,607                   268,063
Goodwill                                   82,190                    82,190
Total assets                               $ 5,418,127               $ 5,243,824
Liabilities and shareholder's
equity
Deposit                                    $ 1,301,758               $ 1,214,418
liabilities—noninterest-bearing
Deposit                                    3,223,102                 3,158,059
liabilities—interest-bearing
Other borrowings                           242,455                   244,514
Other                                      116,953                   105,679
Total liabilities                          4,884,268                 4,722,670
Common stock                               337,262                   336,054
Retained earnings                          205,012                   197,297
Accumulated other comprehensive
loss, net of tax benefits
Net unrealized losses on         $ (315)                 $ (3,663)
securities
Retirement benefit plans         (8,100)   (8,415)       (8,534)     (12,197)
Total shareholder's equity                 533,859                   521,154
Total liabilities and                      $ 5,418,127               $ 5,243,824
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 and HEI's Quarterly Reports on SEC Form 10-Q
for the quarters ended March 31, 2014 and June 30, 2014 (when filed), as
updated by SEC Forms 8-K.



Contact: Clifford H. Chen
         Manager, Investor Relations & Telephone: (808) 543-7384
         Strategic Planning            E-mail: cchen@hei.com



Logo - http://photos.prnewswire.com/prnh/20110411/LA80136LOGO

SOURCE American Savings Bank, F.S.B.

Website: http://www.hei.com
 
Press spacebar to pause and continue. Press esc to stop.