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Section 1: 8-K (8-K)

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UNITED 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: February 13, 2020
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
Hawaiian Electric Company, Inc.
1-4955
99-0040500
State of Hawaii
(State or other jurisdiction of incorporation)
 1001 Bishop Street, Suite 2900, Honolulu, Hawaii  96813 - Hawaiian Electric Industries, Inc. (HEI)
1001 Bishop Street, Suite 2500, Honolulu, Hawaii  96813 - Hawaiian Electric Company, Inc. (Hawaiian Electric)
(Address of principal executive offices and zip code)
 Registrant’s telephone number, including area code:
 (808) 543-5662 - HEI
(808) 543-7771 - Hawaiian Electric
  Not applicable
(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))

Securities registered pursuant to 12(b) of the Act:
Registrant
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Hawaiian Electric Industries, Inc.
Common Stock, Without Par Value
HE
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule12b-2 of the Securities Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
Hawaiian Electric Industries, Inc.
Hawaiian Electric Company, Inc.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Hawaiian Electric Industries, Inc.
Hawaiian Electric Company, Inc.




Item 2.02 Results of Operations and Financial Condition.
On February 13, 2020, HEI issued a news release, “HEI Reports 2019 Results.” This news release is furnished as HEI Exhibit 99.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 10, 2019, Hawaiian Electric, a wholly-owned subsidiary of HEI, announced that during the first quarter of 2020, Alan Oshima would transition from his role as President and Chief Executive Officer of Hawaiian Electric to that of Senior Executive Advisor. Effective February 15, 2020, Mr. Oshima will complete this transition to Senior Executive Advisor and Scott Seu will assume the role of President and Chief Executive Officer of Hawaiian Electric.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits    
 
News release, dated February 13, 2020, “HEI Reports 2019 Results”
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)

The information furnished in connection with Item 2.02 of this current report on Form 8-K including HEI Exhibit 99 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.





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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. The signature of the undersigned companies shall be deemed to relate only to matters having reference to such companies and any subsidiaries thereof.

HAWAIIAN ELECTRIC INDUSTRIES, INC.
HAWAIIAN ELECTRIC COMPANY, INC.
(Registrant)
(Registrant)
/s/ Gregory C. Hazelton
/s/ Tayne S. Y. Sekimura
Gregory C. Hazelton
Tayne S. Y. Sekimura
Executive Vice President and
Senior Vice President and
Chief Financial Officer
Chief Financial Officer
 
 
 
 
Date: February 13, 2020
Date: February 13, 2020
 
 

2
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Section 2: EX-99 (EXHIBIT 99)

Exhibit


HEI Exhibit 99
402780041_heicatalyst2a39.jpg NEWS RELEASE
February 13, 2020

Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Director, Investor Relations & Strategic Planning
           E-mail: [email protected]
 
 
 
 
 
 
HEI REPORTS 2019 RESULTS

Full Year Net Income and Diluted Earnings Per Share (EPS)1 Grew 8%
Quarterly Dividend Increase to $0.33 Per Share

2019 Highlights:

Solid consolidated earnings with net income growth from both the utility and bank
Hawaiian Electric2 delivered on strategic priorities:
Achieved 28% of electricity sales from renewable sources; on track to meet or exceed goal of 30% in 2020
Integrated nation’s highest level of rooftop solar penetration, at 19% of residential customers
Completed 20 megawatt West Loch Solar project, contributing to 21% increase in solar capacity in 2019
Secured lowest cost renewables to date for Hawaii customers
Launched one of the largest U.S. utility renewables procurement efforts, seeking 900 megawatts of new renewables, over 500 gigawatt-hours of storage, and over 200 megawatts of grid services
Completed “One Company” initiative, restructuring functions across all three utilities to improve operational efficiency
Named 2019 “Utility of the Year” by Utility Dive
American Savings Bank achieved solid results despite lower interest rate environment
Maintained net interest margin above peers, driven by low cost of funds
Completed move to new campus and sales of former properties, realized expected one-time net gain of $5.5 million3 
Efficiency ratio improved to 57.8% from 59.4%
Grew total loans by $277 million, or 5.7% to $5.1 billion

_____________
1
Unless otherwise indicated, throughout this release earnings per share (EPS) refers to diluted earnings per share.
2
Hawaiian Electric, unless otherwise defined, refers to the three utilities, Hawaiian Electric Company, Inc. on Oahu, Hawaii
Electric Light Company, Inc. on Hawaii Island, and Maui Electric Company, Limited, serving Maui County. Over the past few years, the three utilities have been restructuring functions across the islands to improve efficiency. As of January 1, 2020 the three utilities now operate under one brand, “Hawaiian Electric.”
3
The after-tax gain on sale of properties and the after-tax campus transition costs for 2019 were $7.9 million and $2.4 million, respectively, and $7.9 million and $0.2 million for the fourth quarter of 2019, respectively.

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HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported 2019 year-end consolidated net income for common stock of $217.9 million and EPS of $1.99 compared to $201.8 million and EPS of $1.85 for 2018, representing net income and EPS growth of 8%.
For the fourth quarter of 2019, consolidated net income for common stock was $66.3 million and EPS was $0.61 compared to $49.6 million and EPS of $0.45 for the fourth quarter of 2018.
“HEI’s fourth quarter and 2019 earnings reflect continued solid performance across our companies,” said Constance H. Lau, president and CEO of HEI. “With another year of strong consolidated performance in 2019, and continued confidence in our future prospects, we announced a 3% increase in our dividend yesterday.”
“In addition to strong financial performance, in 2019 we made significant strides on key initiatives. Our utility launched one of the nation’s largest-ever renewable procurement efforts, which will add significantly to our renewable energy mix once completed. And we’re proud that Hawaiian Electric was named “Utility of the Year” by Utility Dive, a prominent industry publication, for advancing many initiatives that are transforming the power sector today, including renewable energy, electric vehicles, and performance-based regulation,” said Lau.
“American Savings Bank completed the sale of two former properties and moved into its state-of-the-art campus, and achieved strong loan growth and an above-peer net interest margin despite the challenging interest rate environment for banks,” said Lau.

HAWAIIAN ELECTRIC EARNINGS

Full Year Results:
Hawaiian Electric’s full-year 2019 net income was $156.8 million, compared to $143.7 million in 2018. The increase over the prior year was primarily driven by the following after-tax items:
$24 million revenue increase from recovery under the rate adjustment mechanism (RAM) and from rate increases to support investments to integrate more renewable energy, improve customer reliability and increase system efficiency;
$11 million revenue increase from recovery of the Schofield generation project under the major project interim recovery (MPIR) mechanism;
$2 million additional revenue earned under performance incentives for procuring low-cost renewable energy and for better reliability and call center performance; and
$2 million lower interest expense due to debt refinancing.

_________________
Note:  Amounts indicated as after-tax in this earnings release are based upon adjusting items using the current year composite statutory tax rates of 25.75% for the utilities and 26.79% for the bank.

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These items were partially offset by the following after-tax items:
$15 million higher operations and maintenance (O&M) expenses compared to 2018, primarily due to higher outside services for system support (asset management, energy management, enterprise resource and grid modernization systems); higher overhaul and maintenance expenses for generating facilities; and the reset of employee pension costs included in rates on Oahu and in Maui county as part of rate case decisions;
$9 million higher depreciation expense due to increasing investments to integrate more renewable energy, improve customer reliability and increase system efficiency; and
$5 million lower net income versus 2018 due to favorable tax adjustments in 2018.

Fourth Quarter Results:
Fourth quarter 2019 net income of $45.4 million was $10 million higher than in the fourth quarter of 2018, primarily driven by the following after-tax items:
$6 million lower O&M expenses in the fourth quarter of 2019 versus the fourth quarter of 2018, due to one-time write-offs in 2018, higher enterprise resource system project costs in 2018, and lower generation station maintenance expense in 2019;
$3 million revenue increase resulting from rate increases and recovery under the RAM;
$2 million revenue increase from recovery of the Schofield generation project under the MPIR mechanism; and
$2 million additional revenue earned under performance incentives due to better reliability and call center performance.
These items were partially offset by the following after-tax items:
$2 million from lower pole attachment fee revenues; and
$2 million from higher depreciation expense due to increasing investments to integrate more renewable energy, improve customer reliability and increase system efficiency.

AMERICAN SAVINGS BANK EARNINGS

Full Year Results:
American’s full-year 2019 net income was $89.0 million compared to $82.5 million in 2018. Net interest income was $248.1 million compared to $242.7 million in 2018, primarily due to loan growth and stable net interest margin from the previous year. Noninterest income was $16.7 million higher than 2018, primarily due to the $10.8 million pre-tax gain from sales of former properties and mortgage banking income. This was partially offset by $8.7 million higher provision for loan losses due in part to additional

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loan loss reserves for the consumer loan portfolio and borrower-specific circumstances requiring additional reserves on loans within the commercial and commercial real estate portfolios. Noninterest expense for the year was $8.0 million higher than 2018 primarily due to higher compensation and benefit expense, as well as higher occupancy costs related to American’s move to its new campus.
Loans were $5.1 billion at December 31, 2019, an increase of $277 million or 5.7% from December 31, 2018. Total deposits were $6.3 billion at December 31, 2019, an increase of $113 million or 1.8% from December 31, 2018. The average cost of funds was 0.29%, up from 0.25% the prior year.
American’s return on average equity4 of 13.5%, was consistent with full year 2018. The bank’s return on average assets was 1.25% compared to 1.20% in 2018.

Fourth Quarter Results:
American’s fourth quarter 2019 net income was $28.2 million compared to $22.9 million in the third, or linked quarter and $21.8 million in the prior year quarter. The increase in net income compared to the linked and prior year quarters was driven by higher noninterest income, largely related to the sales of former properties, offset by higher provision expense, lower net interest income, and higher noninterest expense.
American’s fourth quarter of 2019 return on average equity4 was 16.5%, compared to 13.8% in the linked quarter and 14.1% in the fourth quarter of 2018. Return on average assets was 1.58% compared to 1.29% in the linked quarter and 1.25% in the same quarter last year.
Please refer to American’s news release issued on January 30, 2020 for additional information on American.

HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was $27.9 million in 2019 compared to $24.4 million in 2018. The higher net loss for 2019 was primarily driven by higher interest expense associated with long-term debt issued in the fourth quarter of 2018. The fourth quarter net loss of $7.3 million was comparable to the prior year quarter.

BOARD INCREASES QUARTERLY DIVIDEND
On February 12, 2020, HEI announced that the Board of Directors increased HEI’s quarterly cash dividend from $0.32 per share to $0.33 per share, payable on March 10, 2020, to shareholders of record at the close of business on February 26, 2020 (ex-dividend date is February 25, 2020). The revised quarterly dividend amount is equivalent to an annual rate of $1.32 per share. Dividends have been paid
_________________
4
Bank return on average equity calculated using weighted average daily common equity.

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uninterrupted since 1901. At the indicated annual dividend rate and based on the closing price per share on February 11, 2020 of $48.14, HEI’s dividend yield is 2.7%.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
HEI will conduct a webcast and conference call to review its fourth quarter 2019 earnings and 2020 EPS guidance on Thursday, February 13, 2020, at 11:15 a.m. Hawaii time (4:15 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (844) 834-0652 and international parties may listen to the conference by calling (412) 317-5198 or by accessing the webcast on HEI’s website at www.hei.com under the “Investor Relations” section, sub-heading “News and Events.” HEI and 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 on HEI’s website in the Investor Relations section.
Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website at www.hei.com in addition to following HEI’s, Hawaiian Electric’s and American’s press releases, HEI’s and Hawaiian Electric’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’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’s SEC filings.
An online replay of the February 13, 2020 webcast will be available on HEI’s website beginning about two hours after the event. Audio replays of the conference call will also be available approximately two hours after the event through February 27, 2020, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10136945.
HEI supplies power to approximately 95% of Hawaii’s population through its electric utility, Hawaiian Electric; provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii’s largest financial institutions; and helps advance Hawaii’s clean energy and sustainability goals through investments by its non-regulated subsidiary, Pacific Current, LLC.

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

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“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 international, national and local economic, environmental, 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 and Hawaiian Electric’s Annual Report on Form 10-K for the year ended December 31, 2018 and HEI’s and Hawaiian Electric’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 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 release, report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, 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.

###

6



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended December 31
 
Years ended December 31
(in thousands, except per share amounts)
 
2019
 
2018
 
2019
 
2018
Revenues
 
 
 
 
 
 
 
 
Electric utility
 
$
645,333

 
$
680,563

 
$
2,545,942

 
$
2,546,525

Bank
 
80,630

 
81,256

 
328,570

 
314,275

Other
 
3

 
(169
)
 
89

 
49

Total revenues
 
725,966

 
761,650

 
2,874,601

 
2,860,849

Expenses
 
 
 
 
 
 
 
 
Electric utility
 
575,002

 
619,451

 
2,291,564

 
2,304,864

Bank (includes $10.8 million gain on sales of properties in 2019)
 
45,403

 
52,089

 
217,008

 
206,040

Other
 
4,766

 
5,506

 
17,355

 
16,589

Total expenses
 
625,171

 
677,046

 
2,525,927

 
2,527,493

Operating income (loss)
 
 
 
 
 
 
 
 
Electric utility
 
70,331

 
61,112

 
254,378

 
241,661

Bank
 
35,227

 
29,167

 
111,562

 
108,235

Other
 
(4,763
)
 
(5,675
)
 
(17,266
)
 
(16,540
)
Total operating income
 
100,795

 
84,604

 
348,674

 
333,356

Retirement defined benefits expense—other than service costs
 
(634
)
 
(1,289
)
 
(2,806
)
 
(5,962
)
Interest expense, net—other than on deposit liabilities and other bank borrowings
 
(21,818
)
 
(22,635
)
 
(90,899
)
 
(88,677
)
Allowance for borrowed funds used during construction
 
988

 
1,052

 
4,453

 
4,867

Allowance for equity funds used during construction
 
2,652

 
2,638

 
11,987

 
10,877

Income before income taxes
 
81,983

 
64,370

 
271,409

 
254,461

Income taxes
 
15,247

 
14,324

 
51,637

 
50,797

Net income
 
66,736

 
50,046

 
219,772

 
203,664

Preferred stock dividends of subsidiaries
 
473

 
473

 
1,890

 
1,890

Net income for common stock
 
$
66,263

 
$
49,573

 
$
217,882

 
$
201,774

Basic earnings per common share
 
$
0.61

 
$
0.46

 
$
2.00

 
$
1.85

Diluted earnings per common share
 
$
0.61

 
$
0.45

 
$
1.99

 
$
1.85

Dividends declared per common share
 
$
0.32

 
$
0.31

 
$
1.28

 
$
1.24

Weighted-average number of common shares outstanding
 
108,973

 
108,879

 
108,949

 
108,855

Weighted-average shares assuming dilution
 
109,405

 
109,132

 
109,407

 
109,146

Net income (loss) for common stock by segment
 
 
 
 
 
 
 
 
Electric utility
 
$
45,361

 
$
35,297

 
$
156,840

 
$
143,653

Bank
 
28,230

 
21,767

 
88,973

 
82,509

Other
 
(7,328
)
 
(7,491
)
 
(27,931
)
 
(24,388
)
Net income for common stock
 
$
66,263

 
$
49,573

 
$
217,882

 
$
201,774

Comprehensive income attributable to Hawaiian Electric Industries, Inc.
 
$
70,597

 
$
62,091

 
$
248,453

 
$
193,105

Return on average common equity (twelve months ended)
 
 
 
 
 
9.8
%
 
9.5
%

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.


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Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended December 31
 
Years ended December 31
($ in thousands, except per barrel amounts)
 
2019
 
2018
 
2019
 
2018
Revenues
 
$
645,333

 
$
680,563

 
$
2,545,942

 
$
2,546,525

Expenses
 
 

 
 

 
 
 
 
Fuel oil
 
179,387

 
215,292

 
720,709

 
760,528

Purchased power
 
160,920

 
161,069

 
633,256

 
639,307

Other operation and maintenance
 
119,932

 
127,686

 
481,737

 
461,491

Depreciation
 
53,936

 
51,816

 
215,731

 
203,626

Taxes, other than income taxes
 
60,827

 
63,588

 
240,131

 
239,912

Total expenses
 
575,002

 
619,451

 
2,291,564

 
2,304,864

Operating income
 
70,331

 
61,112

 
254,378

 
241,661

Allowance for equity funds used during construction
 
2,652

 
2,638

 
11,987

 
10,877

Retirement defined benefits expense—other than service costs
 
(709
)
 
(697
)
 
(2,836
)
 
(3,631
)
Interest expense and other charges, net
 
(16,897
)
 
(18,526
)
 
(70,842
)
 
(73,348
)
Allowance for borrowed funds used during construction
 
988

 
1,052

 
4,453

 
4,867

Income before income taxes
 
56,365

 
45,579

 
197,140

 
180,426

Income taxes
 
10,505

 
9,783

 
38,305

 
34,778

Net income
 
45,860

 
35,796

 
158,835

 
145,648

Preferred stock dividends of subsidiaries
 
229

 
229

 
915

 
915

Net income attributable to Hawaiian Electric
 
45,631

 
35,567

 
157,920

 
144,733

Preferred stock dividends of Hawaiian Electric
 
270

 
270

 
1,080

 
1,080

Net income for common stock
 
$
45,361

 
$
35,297

 
$
156,840

 
$
143,653

Comprehensive income attributable to Hawaiian Electric
 
$
43,910

 
$
36,530

 
$
155,462

 
$
144,971

OTHER ELECTRIC UTILITY INFORMATION
 
 
 
 
 
 
 
 
Kilowatthour sales (millions)
 
 
 
 
 
 
 
 
   Hawaiian Electric
 
1,723

 
1,671

 
6,563

 
6,526

   Hawaii Electric Light
 
272

 
268

 
1,050

 
1,064

   Maui Electric
 
296

 
281

 
1,127

 
1,099

 
 
2,291

 
2,220

 
8,740

 
8,689

Average fuel oil cost per barrel
 
$
78.04

 
$
97.27

 
$
82.17

 
$
87.90

Return on average common equity (twelve months ended)1
 
 
 
 
 
7.8
%
 
7.6
%

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings
with the SEC.
1 Simple average.




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American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended 
 
Years ended December 31
($ in thousands)
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
2019
 
2018
Interest and dividend income
 
 

 
 

 
 

 
 
 
 
Interest and fees on loans
 
$
57,892

 
$
59,260

 
$
57,145

 
$
233,632

 
$
220,463

Interest and dividends on investment securities
 
7,160

 
7,599

 
10,632

 
32,922

 
37,762

Total interest and dividend income
 
65,052

 
66,859

 
67,777

 
266,554

 
258,225

Interest expense
 
 
 
 
 
 
 
 
 
 
Interest on deposit liabilities
 
3,907

 
4,384

 
4,115

 
16,830

 
13,991

Interest on other borrowings
 
249

 
422

 
255

 
1,610

 
1,548

Total interest expense
 
4,156

 
4,806

 
4,370

 
18,440

 
15,539

Net interest income
 
60,896

 
62,053

 
63,407

 
248,114

 
242,686

Provision for loan losses
 
5,607

 
3,315

 
2,408

 
23,480

 
14,745

Net interest income after provision for loan losses
 
55,289

 
58,738

 
60,999

 
224,634

 
227,941

Noninterest income
 
 
 
 
 
 
 
 
 
 
Fees from other financial services
 
4,830

 
5,085

 
4,996

 
19,275

 
18,937

Fee income on deposit liabilities
 
5,475

 
5,320

 
5,530

 
20,877

 
21,311

Fee income on other financial products
 
1,378

 
1,706

 
1,977

 
6,507

 
7,052

Bank-owned life insurance
 
1,378

 
1,660

 
390

 
7,687

 
5,057

Mortgage banking income
 
1,863

 
1,490

 
94

 
4,943

 
1,493

Gain on sale of real estate
 
10,762

 

 

 
10,762

 

Gains on sale of investment securities, net
 

 
653

 

 
653

 

Other income, net
 
654

 
428

 
492

 
2,074

 
2,200

Total noninterest income
 
26,340

 
16,342

 
13,479

 
72,778

 
56,050

Noninterest expense
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
26,383

 
25,364

 
26,340

 
103,009

 
98,387

Occupancy
 
5,429

 
5,694

 
4,236

 
21,272

 
17,073

Data processing
 
3,953

 
3,763

 
3,681

 
15,306

 
14,268

Services
 
2,378

 
2,829

 
2,287

 
10,239

 
10,847

Equipment
 
2,344

 
2,163

 
1,801

 
8,760

 
7,186

Office supplies, printing and postage
 
1,192

 
1,297

 
1,580

 
5,512

 
6,134

Marketing
 
1,035

 
1,142

 
844

 
4,490

 
3,567

FDIC insurance
 
(45
)
 
(5
)
 
635

 
1,204

 
2,713

Other expense
 
3,537

 
3,676

 
4,341

 
15,586

 
17,238

Total noninterest expense
 
46,206

 
45,923

 
45,745

 
185,378

 
177,413

Income before income taxes
 
35,423

 
29,157

 
28,733

 
112,034

 
106,578

Income taxes
 
7,193

 
6,269

 
6,966

 
23,061

 
24,069

Net income
 
$
28,230

 
$
22,888

 
$
21,767

 
$
88,973

 
$
82,509

Comprehensive income
 
$
33,300

 
$
26,697

 
$
35,446

 
$
118,379

 
$
75,390

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
 
 
 
 
Return on average assets
 
1.58

 
1.29

 
1.25

 
1.25

 
1.20

Return on average equity
 
16.45

 
13.75

 
14.08

 
13.48

 
13.51

Return on average tangible common equity
 
18.69

 
15.68

 
16.23

 
15.39

 
15.61

Net interest margin
 
3.74

 
3.82

 
3.95

 
3.85

 
3.83

Efficiency ratio
 
52.97

 
58.58

 
59.50

 
57.77

 
59.39

Net charge-offs to average loans outstanding
 
0.41

 
0.69

 
0.37

 
0.45

 
0.34

As of period end
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.58

 
0.63

 
0.56

 
 
 
 
Allowance for loan losses to loans outstanding
 
1.04

 
1.04

 
1.08

 
 
 
 
Tangible common equity to tangible assets
 
8.6

 
8.4

 
8.0

 
 
 
 
Tier-1 leverage ratio
 
9.1

 
8.8

 
8.7

 
 
 
 
Total capital ratio
 
14.3

 
14.0

 
13.9

 
 
 
 
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
9.0

 
$
14.0

 
$
14.0

 
$
56.0

 
$
50.0


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.

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