Form 8-K HAWAIIAN ELECTRIC INDUST For: Apr 29
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 29, 2016
Exact Name of Registrant | Commission | I.R.S. Employer |
as Specified in Its Charter | File Number | Identification No. |
Hawaiian Electric Industries, Inc. | 1-8503 | 99-0208097 |
State of Hawaii
(State or other jurisdiction of incorporation)
1001 Bishop Street, Suite 2900, Honolulu, Hawaii 96813
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code:
(808) 543-5662
None
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
On April 29, 2016, HEI issued a news release, “American Savings Bank Reports First Quarter 2016 Earnings.” This news release is furnished as HEI Exhibit 99.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
HEI Exhibit 99 | News release, dated April 29, 2016, “American Savings Bank Reports First Quarter 2016 Earnings” |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HAWAIIAN ELECTRIC INDUSTRIES, INC. | ||
(Registrant) | ||
/s/ James A. Ajello | ||
James A. Ajello | ||
Executive Vice President and | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
Date: April 29, 2016 | ||
1
EXHIBIT INDEX
Exhibit No. Description
HEI Exhibit 99 | News release, dated April 29, 2016, “American Savings Bank Reports First Quarter |
2016 Earnings”
2
HEI Exhibit 99
April 29, 2016
Contact: | Clifford H. Chen | |
Manager, Investor Relations & | Telephone: (808) 543-7300 | |
Strategic Planning | E-mail: [email protected] | |
AMERICAN SAVINGS BANK REPORTS FIRST QUARTER 2016 EARNINGS
Net Income of $12.7 Million
American Delivers Solid Results as It Prepares for Spin-off
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 $12.7 million for the first quarter of 2016 compared to $15.0 million in the fourth (or linked) quarter of 2015 and $13.5 million in the first quarter of 2015.
“American delivered solid results this quarter with strong deposit growth, higher net interest income and margins, and a better efficiency ratio. Our bottom line reflected the effect of higher loss provisioning due to loan growth as well as higher provisioning during the construction phase of several commercial real estate projects, and we remain encouraged about the outlook for Hawaii’s economy this year,” said Rich Wacker, president and chief executive officer of American. “We have advanced our preparations for the planned spin-off of ASB Hawaii and recently filed our updated Form 10 registration statement with the Securities and Exchange Commission.”
First quarter 2016 net income was $2.3 million lower than the linked quarter primarily driven by the following on an after-tax basis:
• | $2 million higher provision for loan losses mainly due to growth in lending in commercial real estate and a commercial credit charge-off in the first quarter of 2016 compared to lower provisioning during the fourth quarter of 2015 attributable to net recoveries on previously charged-off loans; and |
• | $1 million lower noninterest income compared to the fourth quarter of 2015, which included gains from the sale of mortgage serving rights. |
These were partially offset by $1 million (after-tax) higher net interest income primarily attributable to loan and investment portfolio growth and higher yields on interest-earning assets in the first quarter of 2016.
_______________________
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.
April 29, 2016
Page 2
Compared to the first quarter of 2015, net income declined by $0.8 million primarily driven by the following on an after-tax basis:
• | $2 million higher provision for loan losses mainly driven by commercial real estate loan growth and a commercial credit charge-off in the first quarter of 2016; and |
• | $1 million higher noninterest expense primarily due to investment in our electronic banking platform and higher compensation expense. |
These were offset by $3 million (after-tax) higher net interest income in the first quarter of 2016 due to loan and investment portfolio growth and higher yields on interest-earning assets.
Net interest income (pretax) was $50.4 million in the first quarter of 2016 compared to $48.7 million in the linked quarter of 2015 and $45.5 million in the prior year quarter. The increase was primarily attributable to growth in the commercial real estate loans and the investment portfolios along with higher yields on interest-earning assets. Net interest margin was 3.62% compared to 3.55% in the linked quarter and 3.52% in the first quarter of 2015.
Provision for loan losses (pretax) was $4.8 million in the first quarter of 2016 compared to $0.8 million in the linked quarter of 2015 and $0.6 million in the first quarter of 2015. The increase in provision as discussed above was mainly due to commercial real estate loan growth and a commercial credit charge-off in the first quarter of 2016. During the construction phase of commercial real estate projects, the bank provides at a higher coverage rate compared to the period after construction completion, and lending to construction projects increased $30 million and $53 million compared to the linked and prior year quarters, respectively. The net charge-off ratio was 0.21%, primarily attributable to the aforementioned charge-off related to one commercial borrower, compared to the net recovery in the linked quarter of 0.08% and 0.04% net charge-off ratio in the prior year quarter. Credit quality and trends continue to be stable, reflecting prudent credit risk management and a strong Hawaii economy.
Noninterest income (pretax) was $15.4 million in the first quarter of 2016, compared to $16.8 million in the linked quarter and $16.1 million in the first quarter of 2015. The $1.4 million lower noninterest income compared to the linked quarter was primarily due to the gain on the sale of mortgage servicing rights in the fourth quarter of 2015. The $0.7 million decline compared to the first quarter of 2015 was primarily driven by lower mortgage banking income due to a decline in mortgage loan sales driven by lower origination volume.
Noninterest expense (pretax) was $41.4 million in the first quarter of 2016, compared to $42.0 million in the linked quarter and $40.4 million in the first quarter of 2015. Noninterest expense was $0.6 million lower compared to the linked quarter primarily due to higher performance-based incentive compensation expense in the fourth quarter of 2015. Noninterest expense was $1.0 million greater compared to the prior year quarter primarily due to higher compensation and electronic banking platform expenses.
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 29, 2016
Page 3
Loan growth was 2.2% annualized in the first quarter of 2016 driven largely by increases in commercial real estate and consumer loans. American continues to expect to meet its target of mid-single digit loan growth for the full year.
Total deposits were $5.1 billion at March 31, 2016, up $115 million or 9.1% annualized from December 31, 2015, primarily driven by the 6.5% annualized increase in low-cost core deposits. Average cost of funds remained low at 0.23% for the first quarter of 2016, 1 basis point higher than the linked quarter and the prior year quarter.
American’s return on average equity was 8.9%, compared to 10.7% in the linked quarter and 10.0% in the first quarter of last year. Return on average assets was 0.84% for the first quarter of 2016, compared to 1.01% in the linked quarter and 0.96% 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 8.7% and total capital ratio of 13.2% at March 31, 2016.
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 first 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 first quarter of 2016.
HEI plans to announce its first quarter and 2016 consolidated financial results on Wednesday, May 4, 2016 and will conduct a webcast and conference call to discuss its consolidated earnings, including American’s earnings, and 2016 EPS guidance on Wednesday, May 4, 2016, at 8:00 a.m. Hawaii time (2:00 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (888) 311-8190 and entering passcode: 70436517. International parties may listen to the conference by calling (330) 863-3378 and entering passcode: 70436517 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
Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 29, 2016
Page 4
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 May 18, 2016, by dialing (855) 859-2056 or (404) 537-3406 and entering passcode: 70436517.
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 “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 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 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.
###
American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended | ||||||||||||
(in thousands) | March 31, 2016 | December 31, 2015 | March 31, 2015 | |||||||||
Interest and dividend income | ||||||||||||
Interest and fees on loans | $ | 48,437 | $ | 47,136 | $ | 45,198 | ||||||
Interest and dividends on investment securities | 5,017 | 4,550 | 3,051 | |||||||||
Total interest and dividend income | 53,454 | 51,686 | 48,249 | |||||||||
Interest expense | ||||||||||||
Interest on deposit liabilities | 1,592 | 1,467 | 1,260 | |||||||||
Interest on other borrowings | 1,485 | 1,510 | 1,466 | |||||||||
Total interest expense | 3,077 | 2,977 | 2,726 | |||||||||
Net interest income | 50,377 | 48,709 | 45,523 | |||||||||
Provision for loan losses | 4,766 | 839 | 614 | |||||||||
Net interest income after provision for loan losses | 45,611 | 47,870 | 44,909 | |||||||||
Noninterest income | ||||||||||||
Fees from other financial services | 5,499 | 5,667 | 5,355 | |||||||||
Fee income on deposit liabilities | 5,156 | 5,746 | 5,315 | |||||||||
Fee income on other financial products | 2,205 | 2,006 | 1,889 | |||||||||
Bank-owned life insurance | 998 | 1,016 | 983 | |||||||||
Mortgage banking income | 1,195 | 1,003 | 1,822 | |||||||||
Other income, net | 333 | 1,387 | 735 | |||||||||
Total noninterest income | 15,386 | 16,825 | 16,099 | |||||||||
Noninterest expense | ||||||||||||
Compensation and employee benefits | 22,434 | 23,705 | 21,766 | |||||||||
Occupancy | 4,138 | 4,115 | 4,113 | |||||||||
Data processing | 3,172 | 3,002 | 3,116 | |||||||||
Services | 2,911 | 2,474 | 2,341 | |||||||||
Equipment | 1,663 | 1,578 | 1,701 | |||||||||
Office supplies, printing and postage | 1,365 | 1,452 | 1,483 | |||||||||
Marketing | 861 | 844 | 841 | |||||||||
FDIC insurance | 884 | 881 | 811 | |||||||||
Other expense | 3,975 | 3,991 | 4,205 | |||||||||
Total noninterest expense | 41,403 | 42,042 | 40,377 | |||||||||
Income before income taxes | 19,594 | 22,653 | 20,631 | |||||||||
Income taxes | 6,921 | 7,700 | 7,156 | |||||||||
Net income | $ | 12,673 | $ | 14,953 | $ | 13,475 | ||||||
Comprehensive income | $ | 20,310 | $ | 9,477 | $ | 17,318 | ||||||
OTHER BANK INFORMATION (annualized %, except as of period end) | ||||||||||||
Return on average assets | 0.84 | 1.01 | 0.96 | |||||||||
Return on average equity | 8.89 | 10.66 | 9.96 | |||||||||
Return on average tangible common equity | 10.39 | 12.48 | 11.74 | |||||||||
Net interest margin | 3.62 | 3.55 | 3.52 | |||||||||
Net charge-offs to average loans outstanding | 0.21 | (0.08 | ) | 0.04 | ||||||||
As of period end | ||||||||||||
Nonperforming assets to loans outstanding and real estate owned | 1.03 | 1.02 | 0.80 | |||||||||
Allowance for loan losses to loans outstanding | 1.13 | 1.08 | 1.03 | |||||||||
Tangible common equity to tangible assets | 8.08 | 8.05 | 8.18 | |||||||||
Tier-1 leverage ratio | 8.7 | 8.8 | 8.9 | |||||||||
Total capital ratio | 13.2 | 13.3 | 13.2 | |||||||||
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) | $ | 9.0 | $ | 7.5 | $ | 7.5 | ||||||
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI and ASB Hawaii, Inc. 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.
5
American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands) | March 31, 2016 | December 31, 2015 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 110,200 | $ | 127,201 | ||||||||
Interest-bearing deposits | 120,428 | 93,680 | ||||||||||
Available-for-sale investment securities, at fair value | 906,295 | 820,648 | ||||||||||
Stock in Federal Home Loan Bank, at cost | 11,218 | 10,678 | ||||||||||
Loans receivable held for investment | 4,642,276 | 4,615,819 | ||||||||||
Allowance for loan losses | (52,326 | ) | (50,038 | ) | ||||||||
Net loans | 4,589,950 | 4,565,781 | ||||||||||
Loans held for sale, at lower of cost or fair value | 7,900 | 4,631 | ||||||||||
Other | 312,333 | 309,946 | ||||||||||
Goodwill | 82,190 | 82,190 | ||||||||||
Total assets | $ | 6,140,514 | $ | 6,014,755 | ||||||||
Liabilities and shareholder’s equity | ||||||||||||
Deposit liabilities–noninterest-bearing | $ | 1,541,402 | $ | 1,520,374 | ||||||||
Deposit liabilities–interest-bearing | 3,598,530 | 3,504,880 | ||||||||||
Other borrowings | 329,081 | 328,582 | ||||||||||
Other | 99,605 | 101,029 | ||||||||||
Total liabilities | 5,568,618 | 5,454,865 | ||||||||||
Common stock | 1 | 1 | ||||||||||
Additional paid in capital | 341,192 | 340,496 | ||||||||||
Retained earnings | 240,337 | 236,664 | ||||||||||
Accumulated other comprehensive loss, net of tax benefits | ||||||||||||
Net unrealized gains (losses) on securities | $ | 5,556 | $ | (1,872 | ) | |||||||
Retirement benefit plans | (15,190 | ) | (9,634 | ) | (15,399 | ) | (17,271 | ) | ||||
Total shareholder’s equity | 571,896 | 559,890 | ||||||||||
Total liabilities and shareholder’s equity | $ | 6,140,514 | $ | 6,014,755 | ||||||||
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI and ASB Hawaii, Inc. filings with the SEC.
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