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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: October 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 October 30, 2018, HEI issued a news release, “American Savings Bank Reports Third 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 October 30, 2018, “American Savings Bank Reports Third 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 Officer)
 
 
 
 
 
Date: October 30, 2018
 
 
 
 
 


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EXHIBIT INDEX

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


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Section 2: EX-99 (EXHIBIT 99)

Exhibit


Exhibit 99

395566903_heicatalyst2a16.jpg NEWS RELEASE
October 30, 2018
Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Director, Investor Relations

AMERICAN SAVINGS BANK REPORTS THIRD QUARTER 2018 EARNINGS

3Q2018 Net Income of $21.2 Million
Return on Assets of 1.22% and Return on Equity of 13.80%
Continued Strong Quarterly Earnings

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 2018 of $21.2 million compared to $20.6 million in the second, or linked, quarter of 2018 and $17.6 million in the third quarter of 2017. Key measures of profitability continued to strengthen, with return on average equity rising to 13.80%, up 0.24% and 2.16% compared to the linked and prior year quarters, respectively.
“We are pleased to report another quarter of strong earnings, driven by expanding net interest margin, improving operational efficiency and bottom line benefits of tax reform,” said Richard Wacker, president and chief executive officer.  “We expect to complete our new campus and consolidate our teammates into this new collaborative environment beginning around the end of this year. We are excited about the possibilities it represents to further improve the ways we make banking easy for our customers and deliver sustained high performance for them and our shareholders.”
FINANCIAL HIGHLIGHTS
    Net interest income was $61.1 million in the third quarter of 2018 compared to $59.6 million in the linked quarter and $56.1 million in the third quarter of 2017. Net interest margin for the third quarter of 2018 was 3.81%, compared to 3.76% in the linked quarter and 3.69% in the prior year quarter of 2017. Yield on earning assets increased 7 basis points compared to the linked quarter and 18 basis points compared to the prior year quarter. Cost of funds was 26 basis points for the third







Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
October 30, 2018
Page 2    

quarter of 2018, compared to 24 basis points in the linked quarter, and 20 basis points in the prior year quarter of 2017.
The provision for loan losses was $6.0 million in the third quarter of 2018 compared to $2.8 million in the linked quarter and $0.5 million in the third quarter of 2017. The higher third quarter of 2018 provision was primarily due to additional loan loss reserves for the consumer loan portfolio. In addition, the prior year quarter provision reflected the release of reserves attributed to the strategic reduction in the commercial loan portfolio, including the $53 million decrease in exposure to national syndicated credits. The net charge-off ratio was 0.40% in the third quarter of 2018 compared to 0.32% in both the linked and prior year quarters. Nonaccrual loans as a percent of total loans receivable held for investment was 0.59% compared to 0.57% in the linked quarter and 0.50% in the prior year quarter.  
Noninterest income was $15.3 million in the third quarter of 2018 compared to $13.8 million in the linked quarter and $15.2 million in the third quarter of 2017. The increase in noninterest income in the third quarter of 2018 compared to the linked quarter was due to an increase in bank-owned life insurance income of $1.5 million. The increase in noninterest income compared to the prior year quarter was due to a $1.4 million increase in bank-owned life insurance income substantially offset by lower debit card interchange fees relating to a new accounting standard that reclassified $1.1 million of debit card expenses in 2018 to noninterest income.
Noninterest expense was $43.6 million in the third quarter of 2018 compared to $44.2 million in the linked quarter and $44.1 million in the third quarter of 2017.
Tax expense was approximately $3.6 million lower in the third quarter of 2018 compared to the third quarter of 2017, primarily driven by the benefits of the lower federal corporate tax rate from the Tax Cuts and Jobs Act of 2017.
Total loans were $4.8 billion at September 30, 2018, up $83 million or 2.4% annualized from December 31, 2017, driven mainly by increases in home equity lines of credit, commercial and consumer loans of $90 million.
    Total deposits were $6.1 billion at September 30, 2018, an increase of $240 million or 5.4% annualized from December 31, 2017 including $100 million in repurchase agreements that were





Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
October 30, 2018
Page 3

transferred into deposit accounts. Excluding such transfer, total deposits increased by 3.1% annualized.
     Overall, American’s return on average equity was 13.80% in the third quarter of 2018 compared to 13.56% in the second quarter of 2018 and 11.64% in the prior year quarter. Return on average assets was 1.22% in the third quarter of 2018 compared to 1.20% in the second quarter of 2018 and 1.07% in the same quarter last year. American’s solid results enabled it to pay dividends of $14.0 million to HEI while maintaining healthy capital levels -- leverage ratio of 8.6% and total capital ratio of 13.8% at September 30, 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 third 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 third quarter of 2018.
HEI plans to announce its third quarter 2018 consolidated financial results on Wednesday, November 7, 2018 and will also conduct a webcast and conference call at 11:00 a.m. Hawaii time (4:00 p.m. Eastern time) that same day to discuss its consolidated earnings, including American’s earnings, and 2018 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 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 Electric’s SEC filings unless, and except to the extent, specifically incorporated by





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

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 November 7, 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 November 21, 2018 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10125059.
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.



###





American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended 
 
Nine months ended September 30
(in thousands)
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
2018
 
2017
Interest and dividend income
 
 

 
 

 
 

 
 
 
 
Interest and fees on loans
 
$
55,885

 
$
54,633

 
$
52,210

 
$
163,318

 
$
155,269

Interest and dividends on investment securities
 
9,300

 
8,628

 
6,850

 
27,130

 
20,593

Total interest and dividend income
 
65,185

 
63,261

 
59,060

 
190,448

 
175,862

Interest expense
 
 

 
 

 
 
 
 
 
 
Interest on deposit liabilities
 
3,635

 
3,284

 
2,444

 
9,876

 
6,858

Interest on other borrowings
 
404

 
393

 
470

 
1,293

 
2,110

Total interest expense
 
4,039

 
3,677

 
2,914

 
11,169

 
8,968

Net interest income
 
61,146

 
59,584

 
56,146

 
179,279

 
166,894

Provision for loan losses
 
6,033

 
2,763

 
490

 
12,337

 
7,231

Net interest income after provision for loan losses
 
55,113

 
56,821

 
55,656

 
166,942

 
159,663

Noninterest income
 
 

 
 

 
 
 
 
 
 
Fees from other financial services
 
4,543

 
4,744

 
5,635

 
13,941

 
17,055

Fee income on deposit liabilities
 
5,454

 
5,138

 
5,533

 
15,781

 
16,526

Fee income on other financial products
 
1,746

 
1,675

 
1,904

 
5,075

 
5,741

Bank-owned life insurance
 
2,663

 
1,133

 
1,257

 
4,667

 
4,165

Mortgage banking income
 
169

 
617

 
520

 
1,399

 
1,896

Other income, net
 
736

 
536

 
380

 
1,708

 
1,229

Total noninterest income
 
15,311

 
13,843

 
15,229

 
42,571

 
46,612

Noninterest expense
 
 

 
 

 
 
 
 
 
 
Compensation and employee benefits
 
23,952

 
23,655

 
23,512

 
72,047

 
71,095

Occupancy
 
4,363

 
4,194

 
4,284

 
12,837

 
12,623

Data processing
 
3,583

 
3,540

 
3,262

 
10,587

 
9,749

Services
 
2,485

 
3,028

 
2,863

 
8,560

 
7,989

Equipment
 
1,783

 
1,874

 
1,814

 
5,385

 
5,333

Office supplies, printing and postage
 
1,556

 
1,491

 
1,444

 
4,554

 
4,506

Marketing
 
993

 
1,085

 
934

 
2,723

 
2,290

FDIC insurance
 
638

 
727

 
746

 
2,078

 
2,296

Other expense
 
4,240

 
4,556

 
5,262

 
12,897

 
14,674

Total noninterest expense
 
43,593

 
44,150

 
44,121

 
131,668

 
130,555

Income before income taxes
 
26,831

 
26,514

 
26,764

 
77,845

 
75,720

Income taxes
 
5,610

 
5,953

 
9,172

 
17,103

 
25,582

Net income
 
$
21,221

 
$
20,561

 
$
17,592

 
$
60,742

 
$
50,138

Comprehensive income
 
$
16,480

 
$
16,579

 
$
18,009

 
$
39,944

 
$
53,613

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
 
 
 
 
Return on average assets
 
1.22

 
1.20

 
1.07

 
1.18

 
1.02

Return on average equity
 
13.80

 
13.56

 
11.64

 
13.32

 
11.24

Return on average tangible common equity
 
15.93

 
15.68

 
13.47

 
15.40

 
13.04

Net interest margin
 
3.81

 
3.76

 
3.69

 
3.78

 
3.68

Efficiency ratio
 
57.02

 
60.13

 
61.82

 
59.35

 
61.15

Net charge-offs to average loans outstanding
 
0.40

 
0.32

 
0.32

 
0.33

 
0.27

As of period end
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.59

 
0.57

 
0.50

 
 
 
 
Allowance for loan losses to loans outstanding
 
1.14

 
1.11

 
1.13

 
 
 
 
Tangible common equity to tangible assets
 
7.75

 
7.64

 
8.01

 
 
 
 
Tier-1 leverage ratio
 
8.6

 
8.6

 
8.7

 
 
 
 
Total capital ratio
 
13.8

 
13.9

 
13.9

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

 
$
11.1

 
$
9.4

 
$
36.0

 
$
28.1

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.

5



American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands)
September 30, 2018
 
December 31, 2017
 
Assets
 
 

 
 
Cash and due from banks
 
$
119,453

 
$
140,934

Interest-bearing deposits
 
39,575

 
93,165

Investment securities
 
 
 
 
Available-for-sale, at fair value
 
1,387,571

 
1,401,198

Held-to-maturity, at amortized cost
 
102,498

 
44,515

Stock in Federal Home Loan Bank, at cost
 
8,158

 
9,706

Loans held for investment
 
4,754,359

 
4,670,768

Allowance for loan losses
 
(54,127
)
 
(53,637
)
Net loans
 
4,700,232

 
4,617,131

Loans held for sale, at lower of cost or fair value
 
1,036

 
11,250

Other
 
488,743

 
398,570

Goodwill
 
82,190

 
82,190

Total assets
 
$
6,929,456

 
$
6,798,659

Liabilities and shareholder’s equity
 
 
 
 
Deposit liabilities–noninterest-bearing
 
$
1,789,351

 
$
1,760,233

Deposit liabilities–interest-bearing
 
4,341,064

 
4,130,364

Other borrowings
 
71,110

 
190,859

Other
 
115,401

 
110,356

Total liabilities
 
6,316,926

 
6,191,812

Common stock
 
1

 
1

Additional paid in capital
 
346,757

 
345,018

Retained earnings
 
317,519

 
292,957

Accumulated other comprehensive loss, net of tax benefits
 
 
 
 
     Net unrealized losses on securities
$
(37,719
)
 

$
(14,951
)
 

     Retirement benefit plans
(14,028
)
(51,747
)
(16,178
)
(31,129
)
Total shareholder’s equity
 
612,530

 
606,847

Total liabilities and shareholder’s equity
 
$
6,929,456

 
$
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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