HONOLULU, Jan. 30, 2017 /PRNewswire/ --
Selected 2016 Highlights
- Achieved 2016 earnings and profitability targets consistent
with guidance ranges
- Return on assets of 0.92% vs. target of ~0.90%
- Net interest margin of 3.59% vs. target of ~3.5% to 3.6%
- Loan growth of 2.6% led by commercial real estate and consumer
lending
- Strong deposit growth of 10.4% including low-cost core deposit
growth of 7.5%
- Strong capital levels: 8.6% leverage ratio; 13.4% total capital
ratio
- Named one of Hawaii Business "Best Places to Work" for
the 7th consecutive year; American
Banker "Best Banks to Work For" list for the 4th
consecutive year and only Hawaii
bank to make the national list
- Contributed ~7,000 volunteer hours and nearly $1 million of charitable contributions to
community organizations
American Savings Bank, F.S.B.
(American), a wholly-owned subsidiary of Hawaiian Electric
Industries, Inc. (NYSE - HE) today reported net income for the full
year of 2016 of $57.3 million
compared to $54.7 million in
2015. Net income for the fourth quarter of 2016 was
$16.2 million, compared to
$15.1 million in the third, or
linked, quarter of 2016 and $15.0
million in the fourth quarter of 2015.
"We closed 2016 with a strong 4th quarter and
positioned the bank to deliver for our customers and shareholders
in 2017," said Richard Wacker,
president and chief executive officer of American. "We are
building on important strategic achievements like the successful
implementation of our new e-banking platform to improve efficiency
and deepen customer relationships."
Full Year Net Income:
Net income for 2016 of $57.3
million was $2.5 million
higher than 2015, reflecting solid revenue and asset growth.
The most significant drivers impacting the net income increase for
2016 were as follows on an after-tax basis:
- $11 million higher net interest
income driven mainly by commercial real estate and consumer loan
and investment portfolio growth; partially offset by
- $6 million higher provision for
loan losses largely related to commercial real estate and consumer
lending activities; and
- $2 million higher noninterest
expense primarily due to costs related to the conversion and
upgrade of our e-banking platform.
Fourth Quarter Net Income:
Fourth quarter of 2016 net income of $16.2 million was $1.1
million higher than the third, or linked quarter and
$1.3 million higher than the
fourth quarter of 2015.
Compared to the linked quarter of 2016, the $1.1 million increase in the fourth quarter of
2016 was primarily driven by the following on an after-tax
basis:
- $3 million lower provision for
loan losses primarily due to reserves for specific commercial
credits in the third quarter of 2016; and
- $1 million higher net interest
income driven mainly by higher yields in the commercial real estate
and commercial markets loan portfolios and investment portfolio
growth.
These increases were partially offset by the following on an
after-tax basis:
- $1 million lower noninterest
income primarily due to the gain on sale of real estate and higher
mortgage banking income in the third quarter of 2016; and
- $1 million higher noninterest
expense.
Compared to the fourth quarter of 2015, the $1.3 million higher net income in the fourth
quarter of 2016 was primarily driven by the following on an
after-tax basis:
- $3 million higher net interest
income mainly due to higher yields and growth in the commercial
real estate and consumer loan portfolios; partially offset by
- $1 million higher noninterest
expense.
___________________
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.
Financial Highlights:
Net interest income (pretax) was $206.2
million in 2016, higher than the $188.6 million in 2015 primarily due to
commercial real estate and consumer loan and investment portfolio
growth in 2016. Net interest margin was 3.59% in 2016
compared to 3.53% in 2015, in line with the bank's net interest
margin target of 3.5% to 3.6% for 2016. The improvement in
net interest margin was primarily attributable to higher yields on
interest-earning assets and loan growth in higher yielding
commercial real estate and consumer loan portfolios. The
fourth quarter of 2016 net interest income (pretax) was
$53.0 million, compared to
$51.9 million in the linked quarter
and $48.7 million in the prior year
quarter. Net interest margin was 3.59% in the fourth quarter
of 2016 compared to 3.57% in the linked quarter and 3.55% in the
fourth quarter of 2015.
The provision for loan losses (pretax) was $16.8 million in 2016 compared to $6.3 million in 2015. The higher
provision for loan losses was driven by growth in the commercial
real estate and consumer portfolios as well as reserves for
specific commercial credits. The fourth quarter of 2016
provision for loan losses was $1.5 million compared to $5.7 million in the linked quarter and
$0.8 million in the fourth quarter of
2015. The lower fourth quarter of 2016 provision compared to
the linked quarter was primarily attributable to reserves for
specific commercial and commercial real estate credits in the third
quarter of 2016. The 2016 net charge-off ratio was 0.24%
compared to 0.04% in 2015. The fourth quarter of 2016 net
charge-off ratio was 0.40%, compared to 0.20% in the linked quarter
and net recovery of 0.08% in the prior year quarter. The
fourth quarter of 2016 net charge-off rate increased primarily due
to charge-offs of specific commercial credits that had been
previously individually reserved. Nonaccrual loans as a
percent of total loans receivable held for investment decreased to
0.49% from 1.11% in the linked quarter. The decrease was
driven by the return to accrual status of certain commercial and
commercial real estate loans, the full payoff of a troubled
commercial loan and the transfer of a segment of residential
mortgage loans to the held-for-sale portfolio.
Noninterest income (pretax) for 2016 was $67.0 million, compared to $67.8 million in 2015. In the fourth
quarter of 2016, noninterest income (pretax) was $16.5 million, compared to $18.5 million in the linked quarter and
$16.8 million in the prior year
quarter. The linked quarter was positively impacted by the
$1.0 million gain on sale of
real estate.
Noninterest expense (pretax) for 2016 was $169.1 million, compared to $166.3 million in 2015. The increase
was primarily due to expenses related to the conversion and upgrade
of the e-banking platform. In the fourth quarter of 2016,
noninterest expense (pretax) was $43.1
million compared to $41.9 million in the linked quarter and
$42.0 million in the fourth
quarter of 2015.
American achieved loan growth of 2.6% in 2016 driven mainly by
commercial real estate and consumer loans that also helped to
improve net interest margin. At the same time, the bank
strategically reduced exposure to shared national credits by
$93 million or 2.0% of total
loans.
Total deposits were $5.5 billion
at December 31, 2016, an increase of
$168 million or 12.5% annualized from
September 30, 2016, and $524
million or 10.4% from December
31, 2015. Low-cost core deposits increased
$152 million or 12.8% annualized from September 30, 2016, and $342 million or 7.5% from December 31, 2015. The average cost of
funds was 0.23% for the full year 2016, up 1 basis point from
the prior year. For the fourth quarter of 2016, the average
cost of funds was 0.22% and unchanged from the prior year
quarter.
Overall, American's return on average equity for the full year
was solid at 9.90% in 2016 compared to 9.93% in 2015 and the return
on average assets for the full year was 0.92% in 2016 compared to
0.95% in 2015. For the fourth quarter of 2016, the return on
average equity was 11.1%, up from 10.4% in the linked quarter and
10.7% in the fourth quarter of 2015. Return on average assets
was 1.02% for the fourth quarter of 2016, compared to 0.97% from
the linked quarter and 1.01% in the same quarter last year.
In 2016, American paid dividends of $36
million to HEI while maintaining healthy capital levels --
leverage ratio of 8.6% and total capital ratio of 13.4% at
December 31, 2016.
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 fourth quarter 2016
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 2016.
HEI plans to announce its fourth quarter and 2016 consolidated
financial results on Tuesday, February 14, 2017 and will
conduct a webcast and conference call to discuss its consolidated
earnings, including American's earnings, and 2017 EPS guidance on
Tuesday, February 14, 2017, at 10:00 a.m. Hawaii time (3:00 p.m. Eastern
time).
Interested parties within the United
States may listen to the conference by calling (888)
317-6016 and international parties may listen to the conference by
calling (412) 317-6016 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 on-line replay of the February 14,
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 February 28, 2017 by dialing
(877) 344-7529 or (412) 317-0088 and entering passcode:
10097589.
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.
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 "will," "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 "Cautionary Note Regarding 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 September 30, 2016 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,
|
(in thousands)
|
|
December 31,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
|
2016
|
|
2015
|
Interest and
dividend income
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
51,203
|
|
|
$
|
50,444
|
|
|
$
|
47,136
|
|
|
$
|
199,774
|
|
|
$
|
184,782
|
|
Interest and
dividends on investment securities
|
|
4,965
|
|
|
4,759
|
|
|
4,550
|
|
|
19,184
|
|
|
15,120
|
|
Total interest and
dividend income
|
|
56,168
|
|
|
55,203
|
|
|
51,686
|
|
|
218,958
|
|
|
199,902
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
2,013
|
|
|
1,871
|
|
|
1,467
|
|
|
7,167
|
|
|
5,348
|
|
Interest on other
borrowings
|
|
1,172
|
|
|
1,464
|
|
|
1,510
|
|
|
5,588
|
|
|
5,978
|
|
Total interest
expense
|
|
3,185
|
|
|
3,335
|
|
|
2,977
|
|
|
12,755
|
|
|
11,326
|
|
Net interest
income
|
|
52,983
|
|
|
51,868
|
|
|
48,709
|
|
|
206,203
|
|
|
188,576
|
|
Provision for loan
losses
|
|
1,497
|
|
|
5,747
|
|
|
839
|
|
|
16,763
|
|
|
6,275
|
|
Net interest
income after provision for loan losses
|
|
51,486
|
|
|
46,121
|
|
|
47,870
|
|
|
189,440
|
|
|
182,301
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,585
|
|
|
5,599
|
|
|
5,667
|
|
|
22,384
|
|
|
22,211
|
|
Fee income on deposit
liabilities
|
|
5,714
|
|
|
5,627
|
|
|
5,746
|
|
|
21,759
|
|
|
22,368
|
|
Fee income on other
financial products
|
|
2,144
|
|
|
2,151
|
|
|
2,006
|
|
|
8,707
|
|
|
8,094
|
|
Bank-owned life
insurance
|
|
1,017
|
|
|
1,616
|
|
|
1,016
|
|
|
4,637
|
|
|
4,078
|
|
Mortgage banking
income
|
|
1,529
|
|
|
2,347
|
|
|
1,003
|
|
|
6,625
|
|
|
6,330
|
|
Gains on sale of
investment securities, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
598
|
|
|
—
|
|
Other income,
net
|
|
470
|
|
|
1,165
|
|
|
1,387
|
|
|
2,256
|
|
|
4,750
|
|
Total noninterest
income
|
|
16,459
|
|
|
18,505
|
|
|
16,825
|
|
|
66,966
|
|
|
67,831
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
22,920
|
|
|
22,844
|
|
|
23,705
|
|
|
90,117
|
|
|
90,518
|
|
Occupancy
|
|
4,077
|
|
|
3,991
|
|
|
4,115
|
|
|
16,321
|
|
|
16,365
|
|
Data
processing
|
|
3,431
|
|
|
3,150
|
|
|
3,002
|
|
|
13,030
|
|
|
12,103
|
|
Services
|
|
2,961
|
|
|
2,427
|
|
|
2,474
|
|
|
11,054
|
|
|
10,204
|
|
Equipment
|
|
1,745
|
|
|
1,759
|
|
|
1,578
|
|
|
6,938
|
|
|
6,577
|
|
Office supplies,
printing and postage
|
|
1,644
|
|
|
1,483
|
|
|
1,452
|
|
|
6,075
|
|
|
5,749
|
|
Marketing
|
|
982
|
|
|
747
|
|
|
844
|
|
|
3,489
|
|
|
3,463
|
|
FDIC
insurance
|
|
839
|
|
|
907
|
|
|
881
|
|
|
3,543
|
|
|
3,274
|
|
Other
expense
|
|
4,539
|
|
|
4,591
|
|
|
3,991
|
|
|
18,487
|
|
|
18,067
|
|
Total noninterest
expense
|
|
43,138
|
|
|
41,899
|
|
|
42,042
|
|
|
169,054
|
|
|
166,320
|
|
Income before
income taxes
|
|
24,807
|
|
|
22,727
|
|
|
22,653
|
|
|
87,352
|
|
|
83,812
|
|
Income
taxes
|
|
8,590
|
|
|
7,623
|
|
|
7,700
|
|
|
30,073
|
|
|
29,082
|
|
Net
income
|
|
$
|
16,217
|
|
|
$
|
15,104
|
|
|
$
|
14,953
|
|
|
$
|
57,279
|
|
|
$
|
54,730
|
|
Comprehensive
income
|
|
$
|
2,540
|
|
|
$
|
13,176
|
|
|
$
|
9,477
|
|
|
$
|
52,077
|
|
|
$
|
54,017
|
|
OTHER BANK
INFORMATION (annualized %, except as of period end)
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
1.02
|
|
|
0.97
|
|
|
1.01
|
|
|
0.92
|
|
|
0.95
|
|
Return on average
equity
|
|
11.09
|
|
|
10.36
|
|
|
10.66
|
|
|
9.90
|
|
|
9.93
|
|
Return on average
tangible common equity
|
|
12.90
|
|
|
12.06
|
|
|
12.48
|
|
|
11.53
|
|
|
11.68
|
|
Net interest
margin
|
|
3.59
|
|
|
3.57
|
|
|
3.55
|
|
|
3.59
|
|
|
3.53
|
|
Efficiency
ratio
|
|
62.12
|
|
|
59.54
|
|
|
64.15
|
|
|
61.89
|
|
|
64.87
|
|
Net charge-offs
(recoveries) to average loans outstanding
|
|
0.40
|
|
|
0.20
|
|
|
(0.08)
|
|
|
0.24
|
|
|
0.04
|
|
As of period
end
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans to
loans receivable held for investment
|
|
0.49
|
|
|
1.11
|
|
|
1.00
|
|
|
|
|
|
Allowance for loan
losses to loans outstanding
|
|
1.17
|
|
|
1.24
|
|
|
1.08
|
|
|
|
|
|
Tangible common
equity to tangible assets
|
|
7.82
|
|
|
8.03
|
|
|
8.05
|
|
|
|
|
|
Tier-1 leverage
ratio
|
|
8.6
|
|
|
8.6
|
|
|
8.8
|
|
|
|
|
|
Total capital
ratio
|
|
13.4
|
|
|
13.3
|
|
|
13.3
|
|
|
|
|
|
Dividend paid to HEI
(via ASB Hawaii, Inc.) ($ in millions)
|
|
$
|
9.0
|
|
|
$
|
9.0
|
|
|
$
|
7.5
|
|
|
$
|
36.0
|
|
|
$
|
30.0
|
|
|
This information
should be read in conjunction with the consolidated financial
statements and the notes thereto in HEI filings with the
SEC.
|
American Savings
Bank, F.S.B.
|
BALANCE SHEETS
DATA
|
(Unaudited)
|
|
December 31
|
2016
|
|
2015
|
|
(in
thousands)
|
|
|
|
|
Assets
|
|
|
|
|
Cash and due from
banks
|
|
$
|
137,083
|
|
|
$
|
127,201
|
|
Interest-bearing
deposits
|
|
52,128
|
|
|
93,680
|
|
Restricted
cash
|
|
1,764
|
|
|
—
|
|
Available-for-sale
investment securities, at fair value
|
|
1,105,182
|
|
|
820,648
|
|
Stock in Federal Home
Loan Bank, at cost
|
|
11,218
|
|
|
10,678
|
|
Loans receivable held
for investment
|
|
4,738,693
|
|
|
4,615,819
|
|
Allowance for loan
losses
|
|
(55,533)
|
|
|
(50,038)
|
|
Net loans
|
|
4,683,160
|
|
|
4,565,781
|
|
Loans held for sale,
at lower of cost or fair value
|
|
18,817
|
|
|
4,631
|
|
Other
|
|
329,815
|
|
|
309,946
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
Total
assets
|
|
$
|
6,421,357
|
|
|
$
|
6,014,755
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
Deposit
liabilities–noninterest-bearing
|
|
$
|
1,639,051
|
|
|
$
|
1,520,374
|
|
Deposit
liabilities–interest-bearing
|
|
3,909,878
|
|
|
3,504,880
|
|
Other
borrowings
|
|
192,618
|
|
|
328,582
|
|
Other
|
|
101,635
|
|
|
101,029
|
|
Total
liabilities
|
|
5,843,182
|
|
|
5,454,865
|
|
Common
stock
|
|
1
|
|
|
1
|
|
Additional paid in
capital
|
|
342,704
|
|
|
340,496
|
|
Retained
earnings
|
|
257,943
|
|
|
236,664
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
Net unrealized losses on
securities
|
$
|
(7,931)
|
|
|
$
|
(1,872)
|
|
|
Retirement benefit
plans
|
(14,542)
|
|
(22,473)
|
|
(15,399)
|
|
(17,271)
|
|
Total
shareholder's equity
|
|
578,175
|
|
|
559,890
|
|
Total
liabilities and shareholder's equity
|
|
$
|
6,421,357
|
|
|
$
|
6,014,755
|
|
|
This information
should be read in conjunction with the consolidated financial
statements and the notes thereto in HEI filings with the
SEC.
|
Contact:
|
Clifford H.
Chen
|
|
|
Manager, Investor
Relations &
|
Telephone: (808)
543-7300
|
|
Strategic
Planning
|
E-mail:
ir@hei.com
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/american-savings-bank-reports-2016-and-fourth-quarter-earnings-300399100.html
SOURCE Hawaiian Electric Industries, Inc.