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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: April 30, 2018

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))

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 7.01 Regulation FD Disclosure.
On April 30, 2018, HEI issued a news release, “American Savings Bank Reports First Quarter 2018 Earnings.” This news release is furnished as Exhibit 99.


Item 9.01 Financial Statements and Exhibits.
    
(d) Exhibits
 
Exhibit 99
News release, dated January 30, 2018, “American Savings Bank Reports First Quarter 2018 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 and
 
 
   Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)
 
 
 
 
 
Date: April 30, 2018
 
 
 
 
 


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EXHIBIT INDEX

Exhibit No.
Description
News release, dated April 30, 2018, “American Savings Bank Reports First Quarter 2018 Earnings”


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Section 2: EX-99 (EXHIBIT 99)

Exhibit


Exhibit 99

393272491_heicatalyst2a12.jpg NEWS RELEASE
April 30, 2018
Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Manager, Investor Relations
E-mail: ir@hei.com

AMERICAN SAVINGS BANK REPORTS FIRST QUARTER 2018 EARNINGS

1Q2018 Net Income of $19.0 Million - Record Quarterly Earnings
Return on Assets of 1.12% and Return on Equity of 12.6%
Good Loan and Deposit Growth; Strong Capital
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 first quarter of 2018 of $19.0 million compared to $16.9 million in the fourth, or linked, quarter of 2017 and $15.8 million in the first quarter of 2017. Key measures of profitability improved, with return on average equity rising to 12.6%, up 1.49% and 1.76% compared to the linked and prior year quarters, respectively.
“Our first quarter results reflect the benefits of our efforts to manage the effects of rising interest rates while we continue to deliver good earning asset growth from our focus on deepening our customer relationships. The bank delivered higher net interest margin, good deposit and loan growth, and - with the bottom line benefits from tax reform - we reported the highest quarterly net income in American’s history," said Richard Wacker, president and chief executive officer. “We continued to deliver well for our customers, the bank, and for shareholders, and our team is committed to continuous improvement.”
The lower federal corporate tax rate from the Tax Cuts and Jobs Act of 2017 reduced tax expense by approximately $3 million in the first quarter of 2018, compared to the linked and first quarter of 2017. During the fourth quarter of 2017, the bank recognized a one-time tax benefit of $1.7 million, which was partially offset by the discretionary award of approximately $1 million in special $1,000 cash bonuses paid to employees in December 2017. Beginning in 2018, American also meaningfully increased wage rates for entry level and lower wage positions, increasing compensation costs in the quarter and for the year.





Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 30, 2018
Page 2    
Financial Highlights
    Net interest income was $58.5 million in the first quarter of 2018 compared to $57.0 million in the linked quarter and $54.8 million in the first quarter of 2017. The increase in net interest income was primarily due to higher yields on earning assets and strong deposit growth that funded earning asset growth in the investment portfolio and retail loan portfolios, which include consumer loans, residential loans and home equity lines of credit. Net interest margin was 3.76% in the first quarter of 2018 compared to 3.68% in both the linked and prior year quarter of 2017.
The provision for loan losses was $3.5 million in the first quarter of 2018 compared to $3.7 million in the linked quarter and $3.9 million in the first quarter of 2017. The net charge-off ratio was 0.28% in the first quarter of 2018 compared to 0.26% in the linked quarter and 0.29% in the prior year quarter. Nonaccrual loans as a percent of total loans receivable held for investment was 0.53% compared to 0.51% in the linked quarter and 0.41% in the prior year quarter.  
Noninterest income was $13.4 million in the first quarter of 2018 compared to $15.0 million in the linked quarter and $15.1 million in the first quarter of 2017. The decrease in noninterest income in the first quarter of 2018 compared to the linked quarter and first quarter of 2017 was primarily due to lower net debit card interchange fees of $1.2 million and $0.9 million, respectively, resulting primarily from a reclassification of $1.0 million in expenses relating to a new accounting standard.
Noninterest expense was $43.9 million in the first quarter of 2018 compared to $45.3 million in the linked quarter and $41.9 million in the first quarter of 2017. Noninterest expense in the first quarter of 2018 compared to the linked and prior year quarter includes higher compensation and benefit expense of $0.6 million and $1.4 million, respectively, reflecting a higher minimum wage for employees, along with higher performance-based incentives and annual merit increases, partially offset by the reclassification noted above. As previously mentioned, noninterest expense in the fourth quarter of 2017 was impacted by approximately $1 million in increased compensation for employees through a $1,000 bonus in connection with the enactment of the Tax Cuts and Jobs Act of 2017.
Total loans were $4.7 billion at March 31, 2018, up $71 million or 6.1% annualized, driven mainly by increases in commercial and commercial real estate loans of $63 million compared to December 31, 2017.




Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 30, 2018
Page 3
Total deposits were $6.1 billion at March 31, 2018, an increase of $188 million or 12.8% annualized from December 31, 2017. Low-cost core deposits increased $178 million or 13.9% annualized from December 31, 2017. The average cost of funds was 0.23% for the first quarter of 2018, up 2 basis points from the linked quarter and up 3 basis points from the prior year quarter.
     Overall, American’s return on average equity was 12.58% in the first quarter of 2018 compared to 11.09% in the fourth quarter of 2017 and 10.82% in the prior year quarter. Return on average assets was 1.12% in the first quarter of 2018 compared to 1.01% in the fourth quarter of 2017 and 0.98% in the same quarter last year. American’s solid results enabled it to pay dividends of $10.9 million to HEI while maintaining healthy capital levels -- leverage ratio of 8.6% and total capital ratio of 14.0% at March 31, 2018.
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2018 EPS GUIDANCE
Concurrent with American’s regulatory filing 30 days after the end of the quarter, American announced its first quarter 2018 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 2018.
HEI plans to announce its first quarter 2018 consolidated financial results on Thursday, May 10, 2018 and will conduct a webcast and conference call to discuss its consolidated earnings, including American’s earnings, and 2018 EPS guidance on Thursday, May 10, 2018, at 7:30 a.m. Hawaii time (1:30 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 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 such portions 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





Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 30, 2018
Page 4

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 May 10, 2018 webcast will be available on HEI’s 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 24, 2018 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10119007.
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 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, 2017 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 Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 30, 2018
Page 5

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.


###






American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended 
(in thousands)
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
Interest and dividend income
 
 

 
 

 
 

Interest and fees on loans
 
$
52,800

 
$
51,986

 
$
50,742

Interest and dividends on investment securities
 
9,202

 
8,230

 
6,980

Total interest and dividend income
 
62,002

 
60,216

 
57,722

Interest expense
 
 

 
 
 
 
Interest on deposit liabilities
 
2,957

 
2,802

 
2,103

Interest on other borrowings
 
496

 
386

 
816

Total interest expense
 
3,453

 
3,188

 
2,919

Net interest income
 
58,549

 
57,028

 
54,803

Provision for loan losses
 
3,541

 
3,670

 
3,907

Net interest income after provision for loan losses
 
55,008

 
53,358

 
50,896

Noninterest income
 
 
 
 
 
 
Fees from other financial services
 
4,654

 
5,741

 
5,610

Fee income on deposit liabilities
 
5,189

 
5,678

 
5,428

Fee income on other financial products
 
1,654

 
1,464

 
1,866

Bank-owned life insurance
 
871

 
1,374

 
983

Mortgage banking income
 
613

 
305

 
789

Other income, net
 
436

 
388

 
458

Total noninterest income
 
13,417

 
14,950

 
15,134

Noninterest expense
 
 
 
 
 
 
Compensation and employee benefits
 
24,440

 
23,836

 
23,042

Occupancy
 
4,280

 
4,076

 
4,154

Data processing
 
3,464

 
3,531

 
3,280

Services
 
3,047

 
3,005

 
2,360

Equipment
 
1,728

 
1,899

 
1,748

Office supplies, printing and postage
 
1,507

 
1,676

 
1,535

Marketing
 
645

 
1,211

 
517

FDIC insurance
 
713

 
608

 
728

Other expense
 
4,101

 
5,470

 
4,506

Total noninterest expense
 
43,925

 
45,312

 
41,870

Income before income taxes
 
24,500

 
22,996

 
24,160

Income taxes
 
5,540

 
6,137

 
8,347

Net income
 
$
18,960

 
$
16,859

 
$
15,813

Comprehensive income
 
$
6,885

 
$
10,245

 
$
16,648

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
Return on average assets
 
1.12

 
1.01

 
0.98

Return on average equity
 
12.58

 
11.09

 
10.82

Return on average tangible common equity
 
14.57

 
12.82

 
12.58

Net interest margin
 
3.76

 
3.68

 
3.68

Efficiency ratio
 
61.04

 
62.95

 
59.87

Net charge-offs to average loans outstanding
 
0.28

 
0.26

 
0.29

As of period end
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.53

 
0.51

 
0.41

Allowance for loan losses to loans outstanding
 
1.14

 
1.15

 
1.19

Tangible common equity to tangible assets
 
7.66

 
7.81

 
7.78

Tier-1 leverage ratio
 
8.6

 
8.6

 
8.5

Total capital ratio
 
14.0

 
14.2

 
13.6

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
10.9

 
$
9.4

 
$
9.4

The Statements of Income Data reflects the retrospective application of ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which was adopted in first quarter 2018. Nonservice cost was reclassified from “Compensation and employee benefits” to “Other expense.”
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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American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
 
March 31, 2018
 
December 31, 2017
 
Assets
 
 

 
 
Cash and due from banks
 
$
123,580

 
$
140,934

Interest-bearing deposits
 
90,643

 
93,165

Investment securities
 
 
 
 
Available-for-sale, at fair value
 
1,418,490

 
1,401,198

Held-to-maturity, at amortized cost
 
43,450

 
44,515

Stock in Federal Home Loan Bank, at cost
 
10,158

 
9,706

Loans held for investment
 
4,742,024

 
4,670,768

Allowance for loan losses
 
(53,895
)
 
(53,637
)
Net loans
 
4,688,129

 
4,617,131

Loans held for sale, at lower of cost or fair value
 
7,379

 
11,250

Other
 
425,426

 
398,570

Goodwill
 
82,190

 
82,190

Total assets
 
$
6,889,445

 
$
6,798,659

Liabilities and shareholder’s equity
 
 
 
 
Deposit liabilities–noninterest-bearing
 
$
1,795,114

 
$
1,760,233

Deposit liabilities–interest-bearing
 
4,283,953

 
4,130,364

Other borrowings
 
100,430

 
190,859

Other
 
106,482

 
110,356

Total liabilities
 
6,285,979

 
6,191,812

Common stock
 
1

 
1

Additional paid in capital
 
345,652

 
345,018

Retained earnings
 
300,837

 
292,957

Accumulated other comprehensive loss, net of tax benefits
 
 
 
 
     Net unrealized losses on securities
$
(28,248
)
 

$
(14,951
)
 

     Retirement benefit plans
(14,776
)
(43,024
)
(16,178
)
(31,129
)
Total shareholder’s equity
 
603,466

 
606,847

Total liabilities and shareholder’s equity
 
$
6,889,445

 
$
6,798,659


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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