1Q 2023 Net Income of $18.6 million
Solid Credit Quality, Strong Capital Base and
Ample Liquidity
American Savings Bank, F.S.B. (ASB), a wholly owned subsidiary
of Hawaiian Electric Industries, Inc. (NYSE - HE), today
reported first quarter 2023 net income of $18.6 million, compared
to $17.9 million in the fourth quarter of 2022 and $23.9 million in
the first quarter of 2022.
“The bank delivered solid results for the quarter, growing net
income over the previous quarter to $18.6 million,” said Ann
Teranishi, president and chief executive officer of ASB. “Although
we’ve seen a few mainland banks experience challenges in recent
months, our capital levels remain strong, well above regulatory
required levels, and we continue to maintain ample access to
liquidity totaling more than $3 billion, or nearly three times the
amount of uninsured deposits. We have a strong and resilient
deposit franchise, with 86% of deposits from our retail customers,
and with 85% of our total deposits F.D.I.C. insured or fully
collateralized,” said Teranishi.
Financial Highlights
First quarter 2023 net interest income was $64.9 million
compared to $66.1 million in the linked quarter and $59.0 million
in the first quarter of 2022. The lower net interest income
compared to the linked quarter was primarily due to higher interest
expense due to higher funding costs, partially offset by higher
interest and dividend income. The higher net interest income
compared to the prior year quarter was primarily due to higher
interest and dividend income, partially offset by higher interest
expense. Net interest margin for the first quarter of 2023 was
2.85% compared to 2.91% in the linked quarter and 2.79% in the
first quarter of 2022.
The first quarter 2023 provision for credit losses was $1.2
million compared to $2.7 million in the linked quarter and a
negative provision for credit losses of $3.3 million in the first
quarter of 2022. As of March 31, 2023, ASB’s allowance for credit
losses to outstanding loans was 1.18% compared to 1.21% as of
December 31, 2022 and 1.30% as of March 31, 2022.
The net charge-off ratio for the first quarter of 2023 was
0.14%, compared to 0.06% in the linked quarter and 0.01% in the
first quarter of 2022. Nonaccrual loans as a percentage of total
loans receivable held for investment were 0.24%, compared to 0.28%
in the linked quarter and 0.72% in the prior year quarter.
Noninterest income was $14.4 million in the first quarter of
2023 compared to $15.3 million in the linked quarter and $16.1
million in the first quarter of 2022. The decrease compared to the
linked quarter was primarily due to a gain on sale of real estate
recognized in the linked quarter, and lower bank-owned life
insurance (BOLI) income. The decrease compared to the prior year
quarter was primarily due to a gain on sale of real estate
recognized in the prior year quarter, lower mortgage banking income
and lower fees from other financial services, partially offset by
higher BOLI income.
Noninterest expense was $54.4 million compared to $56.1 million
in the linked quarter and $48.2 million in the first quarter of
2022. The decrease compared to the linked quarter was primarily due
to lower occupancy costs due to branch termination costs in the
linked quarter, partially offset by higher data processing costs.
The increase compared to the prior year quarter was primarily due
to higher compensation and benefits expenses.
Total loans were $6.1 billion as of March 31, 2023, up 1% from
December 31, 2022, reflecting growth across most of the
portfolio.
Total deposits were $8.2 billion as of March 31, 2023, an
increase of 0.75% from December 31, 2022. Core deposits declined
2.26% from December 31, 2022 while certificates of deposits
increased 37.9%. For the first quarter of 2023, the average cost of
funds was 0.66%, up 28 basis points versus the linked quarter and
up 61 basis points versus the prior year quarter.
Wholesale funding totaled $680.7 million in the first quarter,
down $14.4 million from $695.1 million in the fourth quarter of
2022.
For the first quarter of 2023, return on average equity was
15.5%, compared to 15.7% in the linked quarter and 13.7% in the
first quarter of 2022. Return on average assets was 0.78% for the
first quarter of 2023, compared to 0.76% in the linked quarter and
1.04% in the prior year quarter.
In the first quarter of 2023, ASB paid dividends of $14.0
million to HEI. ASB had a Tier 1 leverage ratio of 7.7% as of March
31, 2023.
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO
DISCUSS EARNINGS AND 2023 GUIDANCE
Concurrent with ASB’s regulatory filing 30 days after the end of
the quarter, ASB announced its first quarter 2023 financial results
today. Please note that these reported results relate only to ASB
and are not necessarily indicative of HEI’s consolidated financial
results for the first quarter 2023.
HEI plans to announce its first quarter 2023 consolidated
financial results on Tuesday, May 9, 2023 and will also conduct a
webcast and conference call at 10:15 a.m. Hawaii time (4:15 p.m.
Eastern time) that same day to discuss its consolidated earnings,
including ASB’s earnings, and 2023 guidance.
To listen to the conference call, dial 1-833-470-1428 (U.S.) or
+1-929-526-1599 (international) and enter passcode 795993. Parties
may also access presentation materials and/or listen to the
conference call by visiting the conference call link on HEI’s
website at www.hei.com under “Investor
Relations,” sub-heading “News and Events — Events and
Presentations.”
A replay will be available online and via phone. The online
replay will be available on HEI’s website about two hours after the
event. An audio replay will also be available about two hours after
the event through May 23, 2023. To access the audio replay, dial
1-929-458-6194 (U.S.) or +(44)-204-525-0658 (international) and
enter passcode 328950.
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 in the Investor Relations section of the website.
Accordingly, investors should routinely monitor the Investor
Relations section of HEI’s website, in addition to following HEI’s,
Hawaiian Electric’s and ASB’s press releases, HEI’s and Hawaiian
Electric’s Securities and Exchange Commission (SEC) filings and
HEI’s public conference calls and webcasts. Investors may sign up
to receive e-mail alerts via the “Investor Relations” section of
the website. 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
dms.puc.hawaii.gov/dms 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.
The HEI family of companies provides the energy and financial
services that empower much of the economic and community activity
of Hawaii. HEI’s electric utility, Hawaiian Electric, supplies
power to approximately 95% of Hawaii’s population and is
undertaking an ambitious effort to decarbonize its operations and
the broader state economy. Its banking subsidiary, ASB, is one of
Hawaii’s largest financial institutions, providing a wide array of
banking and other financial services and working to advance
economic growth, affordability and financial fitness. HEI also
helps advance Hawaii’s sustainability goals through investments by
its non-regulated subsidiary, Pacific Current. For more
information, visit www.hei.com.
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, political
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 Annual Report on Form 10-K
for the year ended December 31, 2022 and HEI’s other 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, ASB 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
(in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Interest and dividend income
Interest and fees on loans
$
64,842
$
60,331
$
46,005
Interest and dividends on investment
securities
14,637
14,315
13,984
Total interest and dividend income
79,479
74,646
59,989
Interest expense
Interest on deposit liabilities
6,837
3,755
947
Interest on other borrowings
7,721
4,775
5
Total interest expense
14,558
8,530
952
Net interest income
64,921
66,116
59,037
Provision for credit losses
1,175
2,729
(3,263
)
Net interest income after provision for
credit losses
63,746
63,387
62,300
Noninterest income
Fees from other financial services
4,679
4,764
5,587
Fee income on deposit liabilities
4,599
4,640
4,691
Fee income on other financial products
2,744
2,628
2,718
Bank-owned life insurance
1,425
1,872
681
Mortgage banking income
130
62
1,077
Gain on sale of real estate
—
776
1,002
Other income, net
801
606
372
Total noninterest income
14,378
15,348
16,128
Noninterest expense
Compensation and employee benefits
30,204
30,361
27,215
Occupancy
5,588
7,030
5,952
Data processing
5,012
4,537
4,151
Services
2,595
2,967
2,439
Equipment
2,646
2,937
2,329
Office supplies, printing and postage
1,165
1,142
1,060
Marketing
1,016
1,091
1,018
FDIC insurance
1,077
978
808
Other expense
5,114
5,056
3,241
Total noninterest expense
54,417
56,099
48,213
Income before income taxes
23,707
22,636
30,215
Income taxes
5,145
4,739
6,345
Net income
$
18,562
$
17,897
$
23,870
Comprehensive income (loss)
$
36,992
$
29,282
$
(98,571
)
OTHER BANK INFORMATION (annualized %,
except as of period end)
Return on average assets
0.78
0.76
1.04
Return on average equity
15.51
15.73
13.70
Return on average tangible common
equity
18.73
19.20
15.53
Net interest margin
2.85
2.91
2.79
Efficiency ratio
68.62
68.86
64.14
Net charge-offs to average loans
outstanding
0.14
0.06
0.01
As of period end
Nonaccrual loans to loans receivable held
for investment
0.24
0.28
0.72
Allowance for credit losses to loans
outstanding
1.18
1.21
1.30
Tangible common equity to tangible
assets
4.3
4.1
5.8
Tier-1 leverage ratio
7.7
7.8
7.8
Dividend paid to HEI (via ASB Hawaii,
Inc.) ($ in millions)
$
14.0
$
10.0
$
15.0
This information should be read in conjunction with the
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)
March 31, 2023
December 31, 2022
Assets
Cash and due from banks
$
138,742
$
153,042
Interest-bearing deposits
44,315
3,107
Cash and cash equivalents
183,057
156,149
Investment securities
Available-for-sale, at fair value
1,419,755
1,429,667
Held-to-maturity, at amortized cost
1,238,185
1,251,747
Stock in Federal Home Loan Bank, at
cost
10,000
26,560
Loans held for investment
6,059,354
5,978,906
Allowance for credit losses
(71,296
)
(72,216
)
Net loans
5,988,058
5,906,690
Loans held for sale, at lower of cost or
fair value
660
824
Other
688,165
692,143
Goodwill
82,190
82,190
Total assets
$
9,610,070
$
9,545,970
Liabilities and shareholder’s
equity
Deposit
liabilities–noninterest-bearing
$
2,769,789
$
2,811,077
Deposit liabilities–interest-bearing
5,460,812
5,358,619
Other borrowings
680,690
695,120
Other
206,317
212,269
Total liabilities
9,117,608
9,077,085
Common stock
1
1
Additional paid-in capital
356,391
355,806
Retained earnings
454,255
449,693
Accumulated other comprehensive loss, net
of tax benefits
Net unrealized losses on securities
$
(308,622
)
$
(328,904
)
Retirement benefit plans
(9,563
)
(318,185
)
(7,711
)
(336,615
)
Total shareholder’s equity
492,462
468,885
Total liabilities and shareholder’s
equity
$
9,610,070
$
9,545,970
This information should be read in conjunction with the
consolidated financial statements and the notes thereto in HEI
filings with the SEC.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230428005086/en/
Mateo Garcia Director, Investor Relations 808-543-7300
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