Exhibit 99
October 28, 2016
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| | |
| Contact: | Clifford H. Chen | |
| | Manager, Investor Relations & | Telephone: (808) 543-7300 |
| | Strategic Planning | E-mail: ir@hei.com |
AMERICAN SAVINGS BANK REPORTS THIRD QUARTER 2016 EARNINGS
Net Income of $15.1 Million
American Continues to Deliver Solid Results
HONOLULU - American Savings Bank, F.S.B. (American), a wholly-owned indirect subsidiary of Hawaiian Electric Industries, Inc. (HEI) (NYSE - HE), today reported net income of $15.1 million for the third quarter of 2016 compared to $13.3 million in the second (or linked) quarter of 2016 and $13.5 million in the third quarter of 2015.
“American delivered strong deposit growth, good net interest margins and bottom line earnings improvement during the quarter,” said Rich Wacker, president and chief executive officer of American. “Average loans outstanding were flat to the prior quarter as we sold more of our new residential loan production and lowered our exposure to national credits as our Hawaii commercial real estate fundings grew. Our provision for loan loss reserves remained above our initial expectations, driven by faster growth in our commercial real estate and consumer portfolios as well as reserves for specific commercial credits.”
Third quarter 2016 net income was $1.8 million higher than the linked quarter primarily driven by $2 million (after-tax) higher revenues due to higher noninterest income and net interest income, partially offset by higher provision for loan losses.
Compared to the third quarter of 2015, net income improved by $1.7 million primarily driven by $2 million (after-tax) higher net interest income due to growth in the commercial real estate and consumer loan portfolios. Higher net interest income was partially offset by higher provision for loan losses.
Net interest income (pretax) was $51.9 million in the third quarter of 2016 compared to $51.0 million in the linked quarter of 2016 and $47.8 million in the prior year quarter. The increase compared to the linked and prior year quarter was primarily attributable to growth and higher yields in the commercial real estate and
_______________________
Note: Amounts indicated as “after-tax” in this earnings release are based upon adjusting items for the composite statutory tax rate of 40% for American.
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
October 28, 2016
Page 2
consumer loan portfolios. Net interest margin was 3.57% compared to 3.58% in the linked quarter and 3.53% in the third quarter of 2015.
Provision for loan losses (pretax) was $5.7 million in the third quarter of 2016 compared to $4.8 million in the linked quarter of 2016 and $3.0 million in the third quarter of 2015. The increase in provision compared to the linked and prior year quarter was largely due to reserves for specific commercial credits. The net charge-off ratio was 0.20% compared to 0.15% in the linked quarter and 0.10% in the prior year quarter.
Noninterest income (pretax) was $18.5 million in the third quarter of 2016, compared to $16.6 million in the linked quarter and $18.5 million in the third quarter of 2015. The $1.9 million higher noninterest income compared to the linked quarter was primarily due to a $1.0 million gain on sale of real estate and $0.8 million higher mortgage banking income in the third quarter of 2016.
Noninterest expense (pretax) was $41.9 million in the third quarter of 2016, compared to $42.6 million in the linked quarter and $42.4 million in the third quarter of 2015. The lower noninterest expense in the third quarter of 2016 compared to the linked quarter was mainly due to $1.2 million of nonrecurring cost related to the replacement and upgrade of the electronic banking platform that was launched last quarter.
Total loans were $4.7 billion at September 30, 2016, essentially flat to the linked quarter and increased $118 million year-to-date 2016. Year-to-date annualized loan growth was 3.4%, on track for American’s target of mid-single digit loan growth for the full year.
Total deposits were $5.4 billion at September 30, 2016, an increase of $149 million and $355 million in the third quarter and year-to-date 2016, respectively. Year-to-date annualized deposit growth of 9.4% was primarily driven by the $190 million (5.6% year-to-date annualized) increase in low-cost core deposits. Average cost of funds remained low at 0.24% for the third quarter of 2016, 1 basis point higher than the linked quarter and 2 basis points higher than the prior year quarter.
American’s return on average equity was 10.4% for the third quarter of 2016, compared to 9.2% in the linked quarter and 9.7% in the third quarter of 2015. Return on average assets was 0.97% for the third quarter of 2016, compared to 0.86% in the linked quarter and 0.92% in the same quarter last year. American’s solid results enabled it to pay dividends of $9.0 million to HEI in the quarter while maintaining healthy capital levels - leverage ratio of 8.6% and total capital ratio of 13.3% at September 30, 2016.
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
October 28, 2016
Page 3
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2016 EPS GUIDANCE
Concurrent with American’s regulatory filing 30 days after the end of the quarter, American announced its third 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 third quarter of 2016.
HEI plans to announce its third quarter and year-to-date 2016 consolidated financial results on Friday, November 4, 2016 and will conduct a webcast and conference call to discuss its consolidated earnings, including American’s earnings, and 2016 EPS guidance on Friday, November 4, 2016, at 11:00 a.m. Hawaii time (5:00 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (888) 317-6016. 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 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 Company’s and American’s press releases, HEI’s and Hawaiian Electric Company’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 Company’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 Company’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 conference call will also be available approximately two hours after the event through November 18, 2016, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10094997.
HEI supplies power to approximately 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 “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
October 28, 2016
Page 4
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, 2015, HEI’s Quarterly Report on Form 10-Q for the quarter ended June 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 Company, 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.
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American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
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| | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | Nine months ended September 30 |
| (in thousands) | | September 30, 2016 | | June 30, 2016 | | September 30, 2015 | | 2016 | | 2015 |
| Interest and dividend income | | |
| | |
| | |
| | | | |
| Interest and fees on loans | | $ | 50,444 |
| | $ | 49,690 |
| | $ | 46,413 |
| | $ | 148,571 |
| | $ | 137,646 |
|
| Interest and dividends on investment securities | | 4,759 |
| | 4,443 |
| | 4,213 |
| | 14,219 |
| | 10,570 |
|
| Total interest and dividend income | | 55,203 |
| | 54,133 |
| | 50,626 |
| | 162,790 |
| | 148,216 |
|
| Interest expense | | |
| �� | |
| | | | | | |
| Interest on deposit liabilities | | 1,871 |
| | 1,691 |
| | 1,355 |
| | 5,154 |
| | 3,881 |
|
| Interest on other borrowings | | 1,464 |
| | 1,467 |
| | 1,515 |
| | 4,416 |
| | 4,468 |
|
| Total interest expense | | 3,335 |
| | 3,158 |
| | 2,870 |
| | 9,570 |
| | 8,349 |
|
| Net interest income | | 51,868 |
| | 50,975 |
| | 47,756 |
| | 153,220 |
| | 139,867 |
|
| Provision for loan losses | | 5,747 |
| | 4,753 |
| | 2,997 |
| | 15,266 |
| | 5,436 |
|
| Net interest income after provision for loan losses | | 46,121 |
| | 46,222 |
| | 44,759 |
| | 137,954 |
| | 134,431 |
|
| Noninterest income | | |
| | |
| | | | | | |
| Fees from other financial services | | 5,599 |
| | 5,701 |
| | 5,639 |
| | 16,799 |
| | 16,544 |
|
| Fee income on deposit liabilities | | 5,627 |
| | 5,262 |
| | 5,883 |
| | 16,045 |
| | 16,622 |
|
| Fee income on other financial products | | 2,151 |
| | 2,207 |
| | 2,096 |
| | 6,563 |
| | 6,088 |
|
| Bank-owned life insurance | | 1,616 |
| | 1,006 |
| | 1,021 |
| | 3,620 |
| | 3,062 |
|
| Mortgage banking income | | 2,347 |
| | 1,554 |
| | 1,437 |
| | 5,096 |
| | 5,327 |
|
| Gains on sale of investment securities, net | | — |
| | 598 |
| | — |
| | 598 |
| | — |
|
| Other income, net | | 1,165 |
| | 288 |
| | 2,389 |
| | 1,786 |
| | 3,363 |
|
| Total noninterest income | | 18,505 |
| | 16,616 |
| | 18,465 |
| | 50,507 |
| | 51,006 |
|
| Noninterest expense | | |
| | |
| | | | | | |
| Compensation and employee benefits | | 22,844 |
| | 21,919 |
| | 22,728 |
| | 67,197 |
| | 66,813 |
|
| Occupancy | | 3,991 |
| | 4,115 |
| | 4,128 |
| | 12,244 |
| | 12,250 |
|
| Data processing | | 3,150 |
| | 3,277 |
| | 3,032 |
| | 9,599 |
| | 9,101 |
|
| Services | | 2,427 |
| | 2,755 |
| | 2,556 |
| | 8,093 |
| | 7,730 |
|
| Equipment | | 1,759 |
| | 1,771 |
| | 1,608 |
| | 5,193 |
| | 4,999 |
|
| Office supplies, printing and postage | | 1,483 |
| | 1,583 |
| | 1,511 |
| | 4,431 |
| | 4,297 |
|
| Marketing | | 747 |
| | 899 |
| | 934 |
| | 2,507 |
| | 2,619 |
|
| FDIC insurance | | 907 |
| | 913 |
| | 809 |
| | 2,704 |
| | 2,393 |
|
| Other expense | | 4,591 |
| | 5,382 |
| | 5,116 |
| | 13,948 |
| | 14,076 |
|
| Total noninterest expense | | 41,899 |
| | 42,614 |
| | 42,422 |
| | 125,916 |
| | 124,278 |
|
| Income before income taxes | | 22,727 |
| | 20,224 |
| | 20,802 |
| | 62,545 |
| | 61,159 |
|
| Income taxes | | 7,623 |
| | 6,939 |
| | 7,351 |
| | 21,483 |
| | 21,382 |
|
| Net income | | $ | 15,104 |
| | $ | 13,285 |
| | $ | 13,451 |
| | $ | 41,062 |
| | $ | 39,777 |
|
| Comprehensive income | | $ | 13,176 |
| | $ | 16,051 |
| | $ | 17,678 |
| | $ | 49,537 |
| | $ | 44,540 |
|
| OTHER BANK INFORMATION (annualized %, except as of period end) | | | | | | | | |
| Return on average assets | | 0.97 |
| | 0.86 |
| | 0.92 |
| | 0.89 |
| | 0.92 |
|
| Return on average equity | | 10.36 |
| | 9.22 |
| | 9.73 |
| | 9.50 |
| | 9.69 |
|
| Return on average tangible common equity | | 12.06 |
| | 10.75 |
| | 11.43 |
| | 11.07 |
| | 11.40 |
|
| Net interest margin | | 3.57 |
| | 3.58 |
| | 3.53 |
| | 3.59 |
| | 3.52 |
|
| Efficiency ratio | | 59.54 |
| | 63.05 |
| | 64.06 |
| | 61.81 |
| | 65.11 |
|
| Net charge-offs to average loans outstanding | | 0.20 |
| | 0.15 |
| | 0.10 |
| | 0.19 |
| | 0.08 |
|
| As of period end | | | | | | | | | | |
| Nonperforming assets to loans outstanding and real estate owned | | 1.12 |
| | 1.02 |
| | 1.00 |
| | | | |
| Allowance for loan losses to loans outstanding | | 1.24 |
| | 1.16 |
| | 1.06 |
| | | | |
| Tangible common equity to tangible assets | | 8.03 |
| | 8.15 |
| | 8.23 |
| | | | |
| Tier-1 leverage ratio | | 8.6 |
| | 8.7 |
| | 8.8 |
| | | | |
| Total capital ratio | | 13.3 |
| | 13.2 |
| | 13.4 |
| | | | |
| Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) | | $ | 9.0 |
| | $ | 9.0 |
| | $ | 7.5 |
| | | | |
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) | September 30, 2016 | | December 31, 2015 | |
| | | |
| | |
|
| Assets | | |
| | |
|
| Cash and due from banks | | $ | 109,591 |
| | $ | 127,201 |
|
| Interest-bearing deposits | | 103,989 |
| | 93,680 |
|
| Available-for-sale investment securities, at fair value | | 996,984 |
| | 820,648 |
|
| Stock in Federal Home Loan Bank, at cost | | 11,218 |
| | 10,678 |
|
| Loans receivable held for investment | | 4,734,638 |
| | 4,615,819 |
|
| Allowance for loan losses | | (58,737 | ) | | (50,038 | ) |
| Net loans | | 4,675,901 |
| | 4,565,781 |
|
| Loans held for sale, at lower of cost or fair value | | 26,743 |
| | 4,631 |
|
| Other | | 330,054 |
| | 309,946 |
|
| Goodwill | | 82,190 |
| | 82,190 |
|
| Total assets | | $ | 6,336,670 |
| | $ | 6,014,755 |
|
| Liabilities and shareholder’s equity | | | | |
| Deposit liabilities–noninterest-bearing | | $ | 1,570,613 |
| | $ | 1,520,374 |
|
| Deposit liabilities–interest-bearing | | 3,810,108 |
| | 3,504,880 |
|
| Other borrowings | | 265,388 |
| | 328,582 |
|
| Other | | 106,396 |
| | 101,029 |
|
| Total liabilities | | 5,752,505 |
| | 5,454,865 |
|
| Common stock | | 1 |
| | 1 |
|
| Additional paid in capital | | 342,234 |
| | 340,496 |
|
| Retained earnings | | 250,726 |
| | 236,664 |
|
| Accumulated other comprehensive loss, net of tax benefits | | | | |
| Net unrealized gains (losses) on securities | $ | 5,965 |
| |
| $ | (1,872 | ) | |
| Retirement benefit plans | (14,761 | ) | (8,796 | ) | (15,399 | ) | (17,271 | ) |
| Total shareholder’s equity | | 584,165 |
| | 559,890 |
|
| Total liabilities and shareholder’s equity | | $ | 6,336,670 |
| | $ | 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.
