3Q 2022 Net Income of $20.8 million
Continued Net Interest Margin Expansion,
Strong Loan Growth and
Favorable Credit Trends
HONOLULU, Oct. 28,
2022 /PRNewswire/ -- American Savings Bank, F.S.B.
(ASB), a wholly owned subsidiary of Hawaiian Electric Industries,
Inc. (NYSE: HE), today reported third quarter 2022 net income of
$20.8 million, compared to
$17.5 million in the second, or
linked quarter of 2022 and $19.3
million in the third quarter of 2021.
"We are pleased with the bank's solid results for the third
quarter and year to date," said Ann
Teranishi, president and chief executive officer of ASB. "We
again saw broad-based loan growth during the quarter, reflecting
great work by our team along with the Hawaii economy's ongoing recovery from the
pandemic. We continued to see positive credit trends despite the
inflationary environment, and the rising interest rate environment
continued to benefit our net interest margin and overall
profitability," said Teranishi.
Financial Highlights
Third quarter 2022 net interest income of $65.7 million was up from $61.8 million in the linked quarter, and
$60.3 million in the third quarter of
2021. The increase versus the linked quarter reflected higher
yields and balances across nearly the entire loan portfolio and
higher yields in the investment securities portfolio, partially
offset by higher funding costs and lower fee income associated with
the Paycheck Protection Program (PPP) portfolio as PPP loans
continued to pay down. The increase versus the prior year quarter
reflected higher average earning assets balances and higher yields,
partially offset by lower PPP fee income. Net interest margin was
2.96% compared to 2.85% in the linked quarter, and 2.90% in the
third quarter last year.
In the third quarter ASB recorded a negative provision for
credit losses of $0.2 million
compared to a provision for credit losses of $2.8 million in the linked quarter and a negative
provision for credit losses of $1.7
million in the third quarter of 2021. The quarter's negative
provision reflected continued favorable credit trends that led to
the release of reserves, more than offsetting additional
provisioning for loan growth. As of September 30, 2022, ASB's
allowance for credit losses to outstanding loans was 1.24% compared
to 1.28% as of June 30, 2022 and
1.48% as of September 30, 2021.
The net charge-off ratio for the third quarter of 2022 was
0.03%, compared to nil in the linked quarter and 0.03% in the third
quarter of 2021. Nonaccrual loans as a percent of total loans
receivable held for investment were 0.35% in the third quarter of
2022, compared to 0.40% in the linked quarter and 0.97% in the
prior year quarter.
Noninterest income was $13.0
million in the third quarter of 2022 compared to
$12.5 million in the linked quarter
and $14.8 million in the third
quarter of 2021. The increase compared to the linked quarter was
primarily due to an increase in fee income on deposit liabilities
and higher bank-owned life insurance income. The decrease compared
to the prior year quarter was primarily due to lower bank-owned
life insurance income and lower mortgage banking
income.
Noninterest expense was $51.6
million compared to $49.4
million in the linked quarter and $51.5 million in the third quarter of 2021. The
increase in noninterest expense versus the linked quarter was
primarily due to increased compensation and benefits expenses and
higher services and occupancy costs. The increase in noninterest
expense versus the same quarter last year was primarily due to
higher services expenses and occupancy costs, with offsets from
lower compensation and benefits expenses due to higher incentive
compensation in 2021.
Total earning assets as of September 30,
2022 were $8.9 billion, up
4.7% from December 31, 2021.
Total loans were $5.7 billion as
of September 30, 2022, up 9.3% from December 31, 2021,
reflecting growth across nearly the entire portfolio
year-to-date.
Total deposits were $8.3 billion
as of September 30, 2022, an increase of 1.1% from
December 31, 2021. For the third quarter of 2022, the average
cost of funds was 0.13%, up 0.08% versus the linked quarter and up
0.07% versus the same quarter last year.
For the third quarter of 2022 return on average equity was 15.1%
compared to 12.2% in the linked quarter and 10.3% in the third
quarter of 2021. Return on average assets was 0.89% for the third
quarter of 2022, compared to 0.76% in the linked quarter and 0.86%
in the same quarter last year.
In the third quarter of 2022, ASB paid dividends of $5.0 million to HEI. ASB had a Tier 1 leverage
ratio of 7.75% as of September 30, 2022.
HEI EARNINGS RELEASE, HEI WEBCAST
AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2022 GUIDANCE
Concurrent with ASB's regulatory filing 30 days after the end of
the quarter, ASB announced its third quarter 2022 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 third quarter of 2022.
HEI plans to announce its third quarter 2022 consolidated
financial results on Monday, November 7,
2022 and will also conduct a webcast and conference call at
11:15 a.m. Hawaii time (4:15 p.m. Eastern time) that
same day to discuss its consolidated earnings, including ASB's
earnings, and 2022 guidance.
To listen to the conference call, dial 1-844-200-6205 (U.S.) or
+1-929-526-1599 (international) and enter passcode 162868. 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 November 21,
2022. To access the audio replay, dial 1-866-813-9403 (U.S.)
or +44-204-525-0658 (international) and enter passcode 881525.
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, 2021
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
|
|
Nine months ended
September 30
|
(in thousands)
|
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
|
2022
|
|
2021
|
Interest and
dividend income
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
53,365
|
|
$
48,129
|
|
$
49,445
|
|
$
147,499
|
|
$
150,418
|
Interest and dividends
on investment securities
|
|
15,052
|
|
14,693
|
|
11,996
|
|
43,729
|
|
31,709
|
Total interest and
dividend income
|
|
68,417
|
|
62,822
|
|
61,441
|
|
191,228
|
|
182,127
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
1,704
|
|
921
|
|
1,176
|
|
3,572
|
|
3,919
|
Interest on other
borrowings
|
|
1,055
|
|
139
|
|
5
|
|
1,199
|
|
55
|
Total interest
expense
|
|
2,759
|
|
1,060
|
|
1,181
|
|
4,771
|
|
3,974
|
Net interest
income
|
|
65,658
|
|
61,762
|
|
60,260
|
|
186,457
|
|
178,153
|
Provision for credit
losses
|
|
(186)
|
|
2,757
|
|
(1,725)
|
|
(692)
|
|
(22,367)
|
Net interest income
after provision for credit losses
|
|
65,844
|
|
59,005
|
|
61,985
|
|
187,149
|
|
200,520
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
Fees from other
financial services
|
|
4,763
|
|
4,716
|
|
4,800
|
|
15,066
|
|
15,337
|
Fee income on deposit
liabilities
|
|
4,879
|
|
4,552
|
|
4,262
|
|
14,122
|
|
12,029
|
Fee income on other
financial products
|
|
2,416
|
|
2,529
|
|
2,124
|
|
7,663
|
|
6,767
|
Bank-owned life
insurance
|
|
122
|
|
(142)
|
|
2,026
|
|
661
|
|
6,211
|
Mortgage banking
income
|
|
181
|
|
372
|
|
1,272
|
|
1,630
|
|
7,497
|
Gain on sale of real
estate
|
|
—
|
|
—
|
|
—
|
|
1,002
|
|
—
|
Gain on sale of
investment securities, net
|
|
—
|
|
—
|
|
—
|
|
—
|
|
528
|
Other income,
net
|
|
633
|
|
475
|
|
283
|
|
1,480
|
|
631
|
Total noninterest
income
|
|
12,994
|
|
12,502
|
|
14,767
|
|
41,624
|
|
49,000
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
28,597
|
|
27,666
|
|
30,888
|
|
83,478
|
|
86,595
|
Occupancy
|
|
5,577
|
|
5,467
|
|
5,157
|
|
16,996
|
|
15,226
|
Data
processing
|
|
4,509
|
|
4,484
|
|
4,278
|
|
13,144
|
|
13,162
|
Services
|
|
2,751
|
|
2,522
|
|
2,272
|
|
7,712
|
|
7,609
|
Equipment
|
|
2,432
|
|
2,402
|
|
2,373
|
|
7,163
|
|
6,989
|
Office supplies,
printing and postage
|
|
1,123
|
|
1,073
|
|
1,072
|
|
3,256
|
|
3,094
|
Marketing
|
|
925
|
|
934
|
|
995
|
|
2,877
|
|
2,308
|
FDIC
insurance
|
|
914
|
|
891
|
|
808
|
|
2,613
|
|
2,412
|
Other
expense
|
|
4,729
|
|
3,959
|
|
3,668
|
|
11,929
|
|
9,790
|
Total noninterest
expense
|
|
51,557
|
|
49,398
|
|
51,511
|
|
149,168
|
|
147,185
|
Income before income
taxes
|
|
27,281
|
|
22,109
|
|
25,241
|
|
79,605
|
|
102,335
|
Income taxes
|
|
6,525
|
|
4,643
|
|
5,976
|
|
17,513
|
|
23,230
|
Net
income
|
|
$
20,756
|
|
$
17,466
|
|
$
19,265
|
|
$
62,092
|
|
$
79,105
|
Comprehensive income
(loss)
|
|
$
(78,186)
|
|
$
(71,369)
|
|
$
7,581
|
|
$
(248,126)
|
|
$
38,666
|
OTHER BANK INFORMATION
(annualized %, except as of period end)
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
0.89
|
|
0.76
|
|
0.86
|
|
0.90
|
|
1.21
|
Return on average
equity
|
|
15.11
|
|
12.17
|
|
10.26
|
|
13.65
|
|
14.31
|
Return on average
tangible common equity
|
|
17.77
|
|
14.20
|
|
11.52
|
|
15.79
|
|
16.11
|
Net interest
margin
|
|
2.96
|
|
2.85
|
|
2.90
|
|
2.87
|
|
2.94
|
Efficiency
ratio
|
|
65.55
|
|
66.52
|
|
68.66
|
|
65.40
|
|
64.80
|
Net charge-offs to
average loans outstanding
|
|
0.03
|
|
0.00
|
|
0.03
|
|
0.01
|
|
0.08
|
As of period
end
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans to
loans receivable held for investment
|
|
0.35
|
|
0.40
|
|
0.97
|
|
|
|
|
Allowance for credit
losses to loans outstanding
|
|
1.24
|
|
1.28
|
|
1.48
|
|
|
|
|
Tangible common equity
to tangible assets
|
|
4.0
|
|
4.9
|
|
7.3
|
|
|
|
|
Tier-1 leverage
ratio
|
|
7.7
|
|
7.7
|
|
8.0
|
|
|
|
|
Dividend paid to HEI
(via ASB Hawaii, Inc.) ($ in millions)
|
|
$
5.0
|
|
$
12.0
|
|
$
12.0
|
|
$
32.0
|
|
$
40.0
|
|
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)
|
September 30,
2022
|
December 31,
2021
|
Assets
|
|
|
|
|
Cash and due from
banks
|
|
$
143,618
|
|
$
100,051
|
Interest-bearing
deposits
|
|
6,179
|
|
151,189
|
Cash and cash
equivalents
|
|
149,797
|
|
251,240
|
Investment
securities
|
|
|
|
|
Available-for-sale, at
fair value
|
|
2,232,336
|
|
2,574,618
|
Held-to-maturity, at
amortized cost
|
|
510,879
|
|
522,270
|
Stock in Federal Home
Loan Bank, at cost
|
|
15,000
|
|
10,000
|
Loans held for
investment
|
|
5,687,390
|
|
5,211,114
|
Allowance for credit
losses
|
|
(70,406)
|
|
(71,130)
|
Net loans
|
|
5,616,984
|
|
5,139,984
|
Loans held for sale, at
lower of cost or fair value
|
|
3,101
|
|
10,404
|
Other
|
|
705,324
|
|
590,897
|
Goodwill
|
|
82,190
|
|
82,190
|
Total
assets
|
|
$
9,315,611
|
|
$
9,181,603
|
Liabilities and
shareholder's equity
|
|
|
|
|
Deposit
liabilities–noninterest-bearing
|
|
$
2,921,857
|
|
$
2,976,632
|
Deposit
liabilities–interest-bearing
|
|
5,337,028
|
|
5,195,580
|
Other
borrowings
|
|
409,040
|
|
88,305
|
Other
|
|
198,596
|
|
193,268
|
Total
liabilities
|
|
8,866,521
|
|
8,453,785
|
Common stock
|
|
1
|
|
1
|
Additional paid-in
capital
|
|
355,293
|
|
353,895
|
Retained
earnings
|
|
441,796
|
|
411,704
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
Net unrealized losses on
securities
|
$ (340,266)
|
|
$
(32,037)
|
|
Retirement benefit
plans
|
(7,734)
|
(348,000)
|
(5,745)
|
(37,782)
|
Total shareholder's
equity
|
|
449,090
|
|
727,818
|
Total liabilities
and shareholder's equity
|
|
$
9,315,611
|
|
$
9,181,603
|
|
This information should
be read in conjunction with the consolidated financial statements
and the notes thereto in HEI filings with the SEC.
|
Contact:
|
Julie R.
Smolinski
|
Telephone: (808)
543-7300
|
|
Vice President,
Investor Relations & Corporate Sustainability
|
E-mail:
ir@hei.com
|
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SOURCE Hawaiian Electric Industries, Inc.