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Section 1: 8-K (8-K)

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false0000354707 0000354707 2019-10-30 2019-10-30





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: October 30, 2019

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))

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

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.




Item 7.01 Regulation FD Disclosure.
On October 30, 2019, HEI issued a news release, “American Savings Bank Reports Third Quarter 2019 Earnings.” This news release is furnished as Exhibit 99.


Item 9.01 Financial Statements and Exhibits.
    
(d) Exhibits
 
Exhibit 99
News release, dated October 30, 2019, “American Savings Bank Reports Third Quarter 2019 Earnings”

The information furnished in connection with this current report on Form 8-K 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.













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/ Gregory C. Hazelton
 
 
Gregory C. Hazelton
 
 
Executive Vice President,
 
 
   Chief Financial Officer and Treasurer
 
 
(Principal Financial Officer)
 
 
 
 
 
Date: October 30, 2019
 
 
 
 
 


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EXHIBIT INDEX

Exhibit No.
Description
News release, dated October 30, 2019, “American Savings Bank Reports Third Quarter 2019 Earnings”


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Section 2: EX-99 (EXHIBIT 99)

Exhibit


Exhibit 99
400741214_heicatalyst2a29.jpg NEWS RELEASE
October 30, 2019
Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Director, Investor Relations & Strategic Planning

AMERICAN SAVINGS BANK REPORTS THIRD QUARTER 2019 EARNINGS

3Q 2019 Net Income of $22.9 Million
Solid Loan Growth and Strong Capital Position

HONOLULU - American Savings Bank, F.S.B. (American), a wholly owned subsidiary of Hawaiian Electric Industries, Inc. (NYSE: HE) today reported net income for the third quarter of 2019 of $22.9 million compared to $17.0 million in the second, or linked, quarter of 2019 and $21.2 million in the third quarter of 2018. Key measures of profitability remained healthy, with return on average equity of 13.7% and return on assets of 1.29%.
“Our results and earnings growth reflect good performance in a volatile market environment.  We continued to deliver strong loan growth with steady net interest margins despite the continued challenges of the lower interest rate environment,” said Richard Wacker, president and chief executive officer. “In October, we completed the sale of our former headquarters, achieving another important milestone from the transition to our new campus,” said Wacker.
Financial Highlights
Net interest income was $62.1 million in the third quarter of 2019 compared to $61.5 million in the linked quarter and $61.1 million in the third quarter of 2018. The increase in net interest income compared to the linked quarter was primarily due to lower amortization of premiums in the investment securities portfolio as well as higher loan volume. The increase in net interest income compared to the prior year quarter was primarily due to higher loan volumes and yields. Net interest margin for the third quarter of 2019 was 3.82%, equivalent to net interest margin in the linked quarter and slightly above the prior year quarter’s 3.81%. Year to date, net interest margin was 3.87%.
The provision for loan losses was $3.3 million in the third quarter of 2019 compared to $7.7 million in the linked quarter and $6.0 million in the third quarter of 2018. The lower provision versus the




linked quarter was due to the release of reserves from the payoff of a nonperforming commercial credit and the partial charge-off of a commercial credit that had contributed to elevated provision in the linked quarter. The decrease in provision versus the prior year quarter was primarily due to higher provision in the third quarter of 2018 resulting from increased reserves for the consumer and credit scored loan portfolios.
The net charge-off ratio was 0.69% in the third quarter of 2019 compared to 0.29% in the linked quarter and 0.40% in the prior year quarter. The higher net charge-off ratio in the third quarter of 2019 reflects a partial charge-off of the above mentioned commercial credit that impacted provision in the first half of 2019. Nonaccrual loans as a percent of total loans receivable held for investment was 0.63% compared to 0.79% in the linked quarter and 0.59% in the prior year quarter.
Noninterest income was $16.3 million in the third quarter of 2019 compared to $15.5 million in the linked quarter and $15.3 million in the third quarter of 2018. The increase in noninterest income compared to the linked and prior year quarters was primarily due to increases in mortgage banking income, as stronger residential loan production bolstered by the declining interest rate environment resulted in an increase in loan sales. American also recognized a gain on sale of securities during the quarter.
Noninterest expense was $45.9 million in the third quarter of 2019 compared to $48.0 million in the linked quarter and $43.6 million in the third quarter of 2018. The improvement in noninterest expense over the linked quarter was partially driven by an assessment credit received for the insurance premium charged by the Federal Deposit Insurance Corporation. As was the case in the first and second quarters of 2019, noninterest expense for the quarter also included depreciation and occupancy costs related to the new campus building while still including the costs of properties being vacated. In October 2019, American sold one of the properties it vacated with the move to the new campus building. The gain on sale will be recognized in the fourth quarter.
Total loans were $5.1 billion as of September 30, 2019, up $240.0 million or 6.6% annualized from December 31, 2018, driven mainly by increases in the home equity lines of credit, commercial, and commercial real estate portfolios.
Total deposits were $6.2 billion at September 30, 2019, an increase of $37.4 million or 0.8% annualized from December 31, 2018. Low-cost core deposits were $5.4 billion as of September 30, 2019.
Overall, American’s return on average equity was 13.7% in the third quarter of 2019 compared to 10.5% in the second quarter of 2019 and 13.8% in the prior year quarter. Return on average assets was 1.29% in the third quarter of 2019 compared to 0.96% in the linked quarter and 1.22% in the third quarter of last year. American paid dividends of $14.0 million to HEI during the quarter while maintaining healthy capital levels—leverage ratio of 8.8% and total capital ratio of 14.0% at September 30, 2019.

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HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2019 EPS GUIDANCE
Concurrent with American’s regulatory filing 30 days after the end of the quarter, American announced its third quarter 2019 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 third quarter of 2019.
HEI plans to announce its third quarter 2019 consolidated financial results on Friday, November 1, 2019 and will also conduct a webcast and conference call at 10:15 a.m. Hawaii time (4:15 p.m. Eastern time) that same day to discuss its consolidated earnings, including American’s earnings, and 2019 EPS guidance.
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 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 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 on-line replay of the November 1, 2019 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 November 15, 2019 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10134898.
HEI supplies power to approximately 95% of Hawaii’s population through its electric utilities, Hawaiian Electric, Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited; provides a

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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 “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, 2018 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, 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.
###

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

 
 

 
 

 
 
 
 
Interest and fees on loans
 
$
59,260

 
$
58,620

 
$
55,885

 
$
175,740

 
$
163,318

Interest and dividends on investment securities
 
7,599

 
7,535

 
9,300

 
25,762

 
27,130

Total interest and dividend income
 
66,859

 
66,155

 
65,185

 
201,502

 
190,448

Interest expense
 
 

 
 
 
 
 
 
 
 
Interest on deposit liabilities
 
4,384

 
4,287

 
3,635

 
12,923

 
9,876

Interest on other borrowings
 
422

 
411

 
404

 
1,361

 
1,293

Total interest expense
 
4,806

 
4,698

 
4,039

 
14,284

 
11,169

Net interest income
 
62,053

 
61,457

 
61,146

 
187,218

 
179,279

Provision for loan losses
 
3,315

 
7,688

 
6,033

 
17,873

 
12,337

Net interest income after provision for loan losses
 
58,738

 
53,769

 
55,113

 
169,345

 
166,942

Noninterest income
 
 

 
 
 
 
 
 
 
 
Fees from other financial services
 
5,085

 
4,798

 
4,543

 
14,445

 
13,941

Fee income on deposit liabilities
 
5,320

 
5,004

 
5,454

 
15,402

 
15,781

Fee income on other financial products
 
1,706

 
1,830

 
1,746

 
5,129

 
5,075

Bank-owned life insurance
 
1,660

 
2,390

 
2,663

 
6,309

 
4,667

Mortgage banking income
 
1,490

 
976

 
169

 
3,080

 
1,399

Gains on sale of investment securities, net
 
653

 

 

 
653

 

Other income, net
 
428

 
534

 
736

 
1,420

 
1,708

Total noninterest income
 
16,342

 
15,532

 
15,311

 
46,438

 
42,571

Noninterest expense
 
 

 
 
 
 
 
 
 
 
Compensation and employee benefits
 
25,364

 
25,750

 
23,952

 
76,626

 
72,047

Occupancy
 
5,694

 
5,479

 
4,363

 
15,843

 
12,837

Data processing
 
3,763

 
3,852

 
3,583

 
11,353

 
10,587

Services
 
2,829

 
2,606

 
2,485

 
7,861

 
8,560

Equipment
 
2,163

 
2,189

 
1,783

 
6,416

 
5,385

Office supplies, printing and postage
 
1,297

 
1,663

 
1,556

 
4,320

 
4,554

Marketing
 
1,142

 
1,323

 
993

 
3,455

 
2,723

FDIC insurance
 
(5
)
 
628

 
638

 
1,249

 
2,078

Other expense
 
3,676

 
4,519

 
4,240

 
12,049

 
12,897

Total noninterest expense
 
45,923

 
48,009

 
43,593

 
139,172

 
131,668

Income before income taxes
 
29,157

 
21,292

 
26,831

 
76,611

 
77,845

Income taxes
 
6,269

 
4,276

 
5,610

 
15,868

 
17,103

Net income
 
$
22,888

 
$
17,016

 
$
21,221

 
$
60,743

 
$
60,742

Comprehensive income
 
$
26,697

 
$
31,291

 
$
16,480

 
$
85,079

 
$
39,944

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
 
 
 
 
Return on average assets
 
1.29

 
0.96

 
1.22

 
1.14

 
1.18

Return on average equity
 
13.75

 
10.46

 
13.80

 
12.44

 
13.32

Return on average tangible common equity
 
15.68

 
11.97

 
15.93

 
14.23

 
15.40

Net interest margin
 
3.82

 
3.82

 
3.81

 
3.87

 
3.78

Efficiency ratio
 
58.58

 
62.36

 
57.02

 
59.56

 
59.35

Net charge-offs to average loans outstanding
 
0.69

 
0.29

 
0.40

 
0.46

 
0.33

As of period end
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.63

 
0.79

 
0.59

 
 
 
 
Allowance for loan losses to loans outstanding
 
1.04

 
1.17

 
1.14

 
 
 
 
Tangible common equity to tangible assets
 
8.4

 
8.2

 
7.7

 
 
 
 
Tier-1 leverage ratio
 
8.8

 
8.7

 
8.6

 
 
 
 
Total capital ratio
 
14.0

 
14.0

 
13.8

 
 
 
 
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
14.0

 
$
15.0

 
$
14.0

 
$
47.0

 
$
36.0


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.

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American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands)
September 30, 2019
 
December 31, 2018
 
Assets
 
 

 
 
Cash and due from banks
 
$
135,813

 
$
122,059

Interest-bearing deposits
 
1,315

 
4,225

Investment securities
 
 
 
 
Available-for-sale, at fair value
 
1,210,748

 
1,388,533

Held-to-maturity, at amortized cost
 
132,704

 
141,875

Stock in Federal Home Loan Bank, at cost
 
9,953

 
9,958

Loans held for investment
 
5,084,336

 
4,843,021

Allowance for loan losses
 
(53,040
)
 
(52,119
)
Net loans
 
5,031,296

 
4,790,902

Loans held for sale, at lower of cost or fair value
 
17,115

 
1,805

Other
 
514,116

 
486,347

Goodwill
 
82,190

 
82,190

Total assets
 
$
7,135,250

 
$
7,027,894

Liabilities and shareholder’s equity
 
 
 
 
Deposit liabilities–noninterest-bearing
 
$
1,885,028

 
$
1,800,727

Deposit liabilities–interest-bearing
 
4,311,195

 
4,358,125

Other borrowings
 
129,190

 
110,040

Other
 
135,606

 
124,613

Total liabilities
 
6,461,019

 
6,393,505

Common stock
 
1

 
1

Additional paid-in capital
 
348,933

 
347,170

Retained earnings
 
339,029

 
325,286

Accumulated other comprehensive loss, net of tax benefits
 
 
 
 
     Net unrealized gains (losses) on securities
$
2,945

 

$
(24,423
)
 

     Retirement benefit plans
(16,677
)
(13,732
)
(13,645
)
(38,068
)
Total shareholder’s equity
 
674,231

 
634,389

Total liabilities and shareholder’s equity
 
$
7,135,250

 
$
7,027,894


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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