HE Hawaiian Electric Industries

Full Year 2022 Performance Highlights

• Executed on market opportunities, growing loans by 15%, the strongest in over a decade
• Strong credit quality drove 0.03% net charge off ratio (lowest since 2014), and low provision for credit losses ($2 million)
• Net interest income up 6.5% versus 2021
• Net interest margin remained strong at 2.89%
• Continued strong capital and liquidity position

American Savings Bank, F.S.B. (ASB), a wholly owned subsidiary of Hawaiian Electric Industries, Inc. (NYSE - HE), today reported 2022 net income of $80.0 million, compared to $101.2 million in 2021. Net income for 2021 reflected a $25.8 million negative provision for credit losses following large provisioning in 2020 related to the COVID-19 pandemic, compared to a provision for credit losses totaling $2.0 million in 2022 (pre-tax). Net income for 2021 also included $14.3 million in Paycheck Protection Program (PPP) fee income, compared to $2.9 million in PPP fee income in 2022 (pre-tax).

“We are pleased with our 2022 results, which reflect strong execution by our team, solid credit quality and a healthy Hawaii economy,” said Ann Teranishi, president and chief executive officer of ASB. “Excluding unique pandemic recovery-related items that benefited our 2021 net income, we saw meaningful growth in earnings year over year. We also saw the strongest loan growth in recent memory, reflecting great work by our team and the resilience of Hawaii’s consumers and businesses. We continued to see positive credit trends despite the inflationary environment, and rising interest rates benefited our net interest margin and profitability,” said Teranishi.

Net income for the fourth quarter of 2022 was $17.9 million, compared to $20.8 million in the third quarter of 2022 and $22.1 million in the fourth quarter of 2021.

Financial Highlights

Net interest income was $252.6 million in 2022 compared to $237.2 million in 2021. The increase in net interest income for the year was primarily due to higher yields on loans and investment securities, strong loan growth across nearly the entire portfolio and higher balances of investment securities. Fourth quarter 2022 net interest income was $66.1 million compared to $65.7 million in the linked quarter and $59.1 million in the fourth quarter of 2021. Higher net interest income compared to the linked and prior year quarters was primarily due to higher yields and balances on loans, partially offset by higher funding costs. Net interest margin was 2.89% in 2022, compared to 2.91% in 2021. Net interest margin for the fourth quarter of 2022 was 2.91% compared to 2.96% in the linked quarter and 2.79% in the fourth quarter of 2021.

Strong loan growth during the year required additional credit loss reserves, but those additional reserves were partially offset by provision releases due to favorable credit trends. The provision for credit losses for 2022 was $2.0 million compared to a negative provision for credit losses of $25.8 million in 2021. The fourth quarter 2022 provision for credit losses was $2.7 million compared to a negative provision for credit losses of $0.2 million in the linked quarter and a negative provision for credit losses of $3.5 million in the fourth quarter of 2021. As of December 31, 2022, ASB’s allowance for credit losses to outstanding loans was 1.21% compared to 1.24% as of September 30, 2022 and 1.36% as of December 31, 2021.

The 2022 net charge-off ratio was 0.03% compared to 0.07% in 2021. The net charge-off ratio for the fourth quarter of 2022 was 0.06%, compared to 0.03% in both the linked quarter and the fourth quarter of 2021. Nonaccrual loans as a percent of total loans receivable held for investment were 0.28% as of December 31, 2022, compared to 0.35% as of September 30, 2022 and 0.86% as of December 31, 2021.

Noninterest income for 2022 was $57.0 million compared to $64.7 million in 2021. The decrease in noninterest income was primarily due to lower mortgage banking income, lower bank-owned life insurance (BOLI) income and lower fees from other financial services, partially offset by higher fee income on deposit liabilities, gains on sales of real estate and fee income on other financial products. Noninterest income was $15.3 million in the fourth quarter of 2022 compared to $13.0 million in the linked quarter and $15.7 million in the fourth quarter of 2021. The increase compared to the linked quarter was primarily due to higher BOLI income and a gain on sale of real estate. The decrease compared to the prior year quarter was primarily due to lower mortgage banking income and lower fees from other financial services, partially offset by higher BOLI income and a gain on sale of real estate.

Noninterest expense for 2022 was $205.3 million compared to $197.2 million in 2021. The increase in noninterest expense was driven by a pension accounting change that resulted in lower pension expense in 2021, and higher occupancy costs in 2022 primarily from the write-off of leases related to branch closures. Fourth quarter noninterest expense was $56.1 million compared to $51.6 million in the linked quarter and $50.0 million in the fourth quarter of 2022. The increase compared to the linked and prior year quarters was primarily due to higher compensation and benefits expenses and higher occupancy costs.

Total earning assets as of December 31, 2022 were $9.1 billion, up 7.2% from December 31, 2021.

Total loans were $6.0 billion as of December 31, 2022, up 15% from December 31, 2021, reflecting growth across the entire portfolio with the exception of PPP loans. Commercial real estate, residential and home equity line of credit were the strongest sources of loan growth for the year.

Total deposits were $8.2 billion as of December 31, 2022, a decrease of 0.03% from December 31, 2021. The average cost of funds was 0.16% for the full year 2022, 10 basis points higher than the prior year. For the fourth quarter of 2022, the average cost of funds was 0.38%, up 25 basis points versus the linked quarter and up 33 basis points versus the prior year quarter.

ASB’s return on average equity for the full year 2022 was 14.1% compared to 13.8% in 2021. Return on average assets for the full year was 0.86% in 2022 compared to 1.15% in 2021. For the fourth quarter of 2022, return on average equity was 15.7%, compared to 15.1% in the linked quarter and 12.1% in the fourth quarter of 2021. Return on average assets was 0.76% for the fourth quarter of 2022, compared to 0.89% in the linked quarter and 0.97% in the same quarter last year.

In the fourth quarter of 2022, ASB paid dividends of $10.0 million to HEI. ASB had a Tier 1 leverage ratio of 7.78% as of December 31, 2022.

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 fourth quarter and full year 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 fourth quarter and full year 2022.

HEI plans to announce its fourth quarter and full year 2022 consolidated financial results on Tuesday, February 14, 2023 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 2023 guidance.

To listen to the conference call, dial 1-844-200-6205 (U.S.) or +1-929-526-1599 (international) and enter passcode 864795. 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 February 28, 2023. To access the audio replay, dial 1-866-813-9403 (U.S.) or +44-204-525-0658 (international) and enter passcode 326110.

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

 

Years ended December 31

(in thousands)

 

December 31,

2022

 

September 30,

2022

 

December 31,

2021

 

2022

 

2021

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

60,331

 

$

53,365

 

$

48,384

 

$

207,830

 

$

198,802

Interest and dividends on investment securities

 

 

14,315

 

 

 

15,052

 

 

 

11,755

 

 

 

58,044

 

 

 

43,464

 

Total interest and dividend income

 

 

74,646

 

 

 

68,417

 

 

 

60,139

 

 

 

265,874

 

 

 

242,266

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposit liabilities

 

 

3,755

 

 

 

1,704

 

 

 

1,062

 

 

 

7,327

 

 

 

4,981

 

Interest on other borrowings

 

 

4,775

 

 

 

1,055

 

 

 

4

 

 

 

5,974

 

 

 

59

 

Total interest expense

 

 

8,530

 

 

 

2,759

 

 

 

1,066

 

 

 

13,301

 

 

 

5,040

 

Net interest income

 

 

66,116

 

 

 

65,658

 

 

 

59,073

 

 

 

252,573

 

 

 

237,226

 

Provision for credit losses

 

 

2,729

 

 

 

(186

)

 

 

(3,458

)

 

 

2,037

 

 

 

(25,825

)

Net interest income after provision for credit losses

 

 

63,387

 

 

 

65,844

 

 

 

62,531

 

 

 

250,536

 

 

 

263,051

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Fees from other financial services

 

 

4,764

 

 

 

4,763

 

 

 

5,888

 

 

 

19,830

 

 

 

21,225

 

Fee income on deposit liabilities

 

 

4,640

 

 

 

4,879

 

 

 

4,634

 

 

 

18,762

 

 

 

16,663

 

Fee income on other financial products

 

 

2,628

 

 

 

2,416

 

 

 

2,003

 

 

 

10,291

 

 

 

8,770

 

Bank-owned life insurance

 

 

1,872

 

 

 

122

 

 

 

1,107

 

 

 

2,533

 

 

 

7,318

 

Mortgage banking income

 

 

62

 

 

 

181

 

 

 

1,808

 

 

 

1,692

 

 

 

9,305

 

Gain on sale of real estate

 

 

776

 

 

 

—

 

 

 

—

 

 

 

1,778

 

 

 

—

 

Gain on sale of investment securities, net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

528

 

Other income, net

 

 

606

 

 

 

633

 

 

 

220

 

 

 

2,086

 

 

 

851

 

Total noninterest income

 

 

15,348

 

 

 

12,994

 

 

 

15,660

 

 

 

56,972

 

 

 

64,660

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

30,361

 

 

 

28,597

 

 

 

27,375

 

 

 

113,839

 

 

 

113,970

 

Occupancy

 

 

7,030

 

 

 

5,577

 

 

 

5,358

 

 

 

24,026

 

 

 

20,584

 

Data processing

 

 

4,537

 

 

 

4,509

 

 

 

4,472

 

 

 

17,681

 

 

 

17,634

 

Services

 

 

2,967

 

 

 

2,751

 

 

 

2,718

 

 

 

10,679

 

 

 

10,327

 

Equipment

 

 

2,937

 

 

 

2,432

 

 

 

2,521

 

 

 

10,100

 

 

 

9,510

 

Office supplies, printing and postage

 

 

1,142

 

 

 

1,123

 

 

 

1,145

 

 

 

4,398

 

 

 

4,239

 

Marketing

 

 

1,091

 

 

 

925

 

 

 

1,562

 

 

 

3,968

 

 

 

3,870

 

FDIC insurance

 

 

978

 

 

 

914

 

 

 

823

 

 

 

3,591

 

 

 

3,235

 

Other expense

 

 

5,056

 

 

 

4,729

 

 

 

3,993

 

 

 

16,985

 

 

 

13,783

 

Total noninterest expense

 

 

56,099

 

 

 

51,557

 

 

 

49,967

 

 

 

205,267

 

 

 

197,152

 

Income before income taxes

 

 

22,636

 

 

 

27,281

 

 

 

28,224

 

 

 

102,241

 

 

 

130,559

 

Income taxes

 

 

4,739

 

 

 

6,525

 

 

 

6,095

 

 

 

22,252

 

 

 

29,325

 

Net income

 

$

17,897

 

 

$

20,756

 

 

$

22,129

 

 

$

79,989

 

 

$

101,234

 

Comprehensive income (loss)

 

$

29,282

 

 

$

(78,186

)

 

$

9,840

 

 

$

(218,844

)

 

$

48,506

 

OTHER BANK INFORMATION (annualized %, except as of period end)

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.76

 

 

 

0.89

 

 

 

0.97

 

 

 

0.86

 

 

 

1.15

 

Return on average equity

 

 

15.73

 

 

 

15.11

 

 

 

12.10

 

 

 

14.08

 

 

 

13.76

 

Return on average tangible common equity

 

 

19.20

 

 

 

17.77

 

 

 

13.63

 

 

 

16.46

 

 

 

15.49

 

Net interest margin

 

 

2.91

 

 

 

2.96

 

 

 

2.79

 

 

 

2.89

 

 

 

2.91

 

Efficiency ratio

 

 

68.86

 

 

 

65.55

 

 

 

66.86

 

 

 

66.31

 

 

 

65.31

 

Net charge-offs to average loans outstanding

 

 

0.06

 

 

 

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

0.07

 

As of period end

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans to loans receivable held for investment

 

 

0.28

 

 

 

0.35

 

 

 

0.86

 

 

 

 

 

Allowance for credit losses to loans outstanding

 

 

1.21

 

 

 

1.24

 

 

 

1.36

 

 

 

 

 

Tangible common equity to tangible assets

 

 

4.1

 

 

 

4.0

 

 

 

7.1

 

 

 

 

 

Tier-1 leverage ratio

 

 

7.8

 

 

 

7.7

 

 

 

7.9

 

 

 

 

 

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)

 

$

10.0

 

 

$

5.0

 

 

$

19.0

 

 

$

42.0

 

 

$

59.0

 

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)

 

(in thousands)

December 31, 2022

December 31, 2021

Assets

 

 

 

 

Cash and due from banks

 

$

153,042

 

 

$

100,051

 

Interest-bearing deposits

 

 

3,107

 

 

 

151,189

 

Cash and cash equivalents

 

 

156,149

 

 

 

251,240

 

Investment securities

 

 

 

 

Available-for-sale, at fair value

 

 

1,429,667

 

 

 

2,574,618

 

Held-to-maturity, at amortized cost

 

 

1,251,747

 

 

 

522,270

 

Stock in Federal Home Loan Bank, at cost

 

 

26,560

 

 

 

10,000

 

Loans held for investment

 

 

5,978,906

 

 

 

5,211,114

 

Allowance for credit losses

 

 

(72,216

)

 

 

(71,130

)

Net loans

 

 

5,906,690

 

 

 

5,139,984

 

Loans held for sale, at lower of cost or fair value

 

 

824

 

 

 

10,404

 

Other

 

 

692,143

 

 

 

590,897

 

Goodwill

 

 

82,190

 

 

 

82,190

 

Total assets

 

$

9,545,970

 

 

$

9,181,603

 

Liabilities and shareholder’s equity

 

 

 

 

Deposit liabilities–noninterest-bearing

$

2,811,077

 

 

$

2,976,632

 

Deposit liabilities–interest-bearing

 

 

5,358,619

 

 

 

5,195,580

 

Other borrowings

 

 

695,120

 

 

 

88,305

 

Other

 

 

212,269

 

 

 

193,268

 

Total liabilities

 

 

9,077,085

 

 

 

8,453,785

 

Common stock

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

355,806

 

 

 

353,895

 

Retained earnings

 

 

449,693

 

 

 

411,704

 

Accumulated other comprehensive loss, net of tax benefits

 

 

 

 

Net unrealized losses on securities

$

(328,904

)

 

$

(32,037

)

 

Retirement benefit plans

 

(7,711

)

 

(336,615

)

 

(5,745

)

 

(37,782

)

Total shareholder’s equity

 

 

468,885

 

 

 

727,818

 

Total liabilities and shareholder’s equity

 

$

9,545,970

 

 

$

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230130005198/en/

Mateo Garcia Director, Investor Relations Telephone: (808) 543-7300 E-mail: ir@hei.com