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.

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