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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. 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))

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 o

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. o






Item 7.01 Regulation FD Disclosure.
On April 30, 2019, HEI issued a news release, “American Savings Bank Reports First 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 April 30, 2019, “American Savings Bank Reports First 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: April 30, 2019
 
 
 
 
 


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EXHIBIT INDEX

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


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Section 2: EX-99 (EXHIBIT 99)

Exhibit


Exhibit 99

397747400_heicatalyst2a25.jpg NEWS RELEASE
April 30, 2019
Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Director, Investor Relations & Strategic Planning

AMERICAN SAVINGS BANK REPORTS FIRST QUARTER 2019 EARNINGS

1Q2019 Net Income of $20.8 Million
Return on Assets of 1.18% and Return on Equity of 13.1%
Continued Strong Profitability and Capital Position at Bank

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 2019 of $20.8 million compared to $21.8 million in the fourth, or linked, quarter of 2018 and $19.0 million in the first quarter of 2018. Key measures of profitability remained strong, with return on average equity of 13.1%, versus 14.1% in the linked quarter and 12.6% in the prior year quarter.
“In addition to continued healthy financial performance in the first quarter, our most important accomplishment so far this year is the completion of and consolidation of our team into our new ASB Campus,” said Rich Wacker, president and chief executive officer. “We are excited about all the possibilities the new campus offers us to work better together for customers and to realize operational effectiveness and cost efficiencies.”
Financial Highlights
    Net interest income was $63.7 million in the first quarter of 2019 compared to $63.4 million in the linked quarter and $58.5 million in the first quarter of 2018. Net interest margin was 3.99% in the first quarter of 2019 compared to 3.95% in the linked quarter and 3.76% in the first quarter of 2018. Consistent improvement in net interest margin throughout 2018 and into 2019 was primarily driven by higher yields on earning assets as a result of the higher interest rate environment, combined with our continued low cost of core deposits.
The provision for loan losses was $6.9 million in the first quarter of 2019 compared to $2.4 million in the linked quarter and $3.5 million in the first quarter of 2018. The increase in the provision over the linked quarter was primarily due to favorable credit events that reduced the provision in the fourth quarter of 2018 and





Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 30, 2019
Page 2    

additional reserves required for two loans in the commercial and commercial real estate portfolios. The higher provision over the prior year quarter was primarily due to the additional reserves for the two aforementioned loans. Nonaccrual loans as a percent of total loans receivable held for investment was 0.83% in the first quarter of 2019 compared to 0.56% in the linked quarter and 0.53% in the prior year quarter, with the increase driven by the same commercial exposures impacting provision expense.  The annualized net charge-off rate was 0.39% in the first quarter of 2019 compared to 0.37% in the linked quarter and 0.28% in the prior year quarter.
Noninterest income was $14.6 million in the first quarter of 2019 compared to $13.5 million in the linked quarter and $13.4 million in the first quarter of 2018. The increase in noninterest income in the first quarter of 2019 compared to the linked quarter and first quarter of 2018 was primarily due to bank-owned life insurance proceeds received during the quarter.
Noninterest expense was $45.2 million in the first quarter of 2019 compared to $45.7 million in the linked quarter and $43.9 million in the first quarter of 2018. Noninterest expense in the first quarter of 2019 included new depreciation and occupancy costs of $1.3 million related to the new campus building while still including the costs of four properties being vacated. Of the four properties, two are owned by American and have been listed for sale and lease obligations for the remaining two properties end in the second quarter of 2019. The quarter also included higher compensation and employee benefits expense of $1.1 million compared to the first quarter of 2018 primarily due to annual merit increases and the 2018 increases to the entry-level employee wages.
Total loans were $4.9 billion at March 31, 2019, up $14.6 million or 1.2% annualized from December 31, 2018. The increase in total loans was driven mainly by increases in residential loans of $16.5 million, and increases in home equity loans of $17.4 million, partly offset by declines within the commercial and commercial real estate portfolios of $11.7 million and $4.4 million, respectively.
    Total deposits were $6.2 billion at March 31, 2019, an increase of $46.8 million or 3.04% annualized from December 31, 2018. Low-cost core deposits increased $94 million or 7.1% annualized from December 31, 2018. The average cost of funds was 0.31% for the first quarter of 2019, up 3 basis points from the linked quarter and up 8 basis points from the prior year quarter.
     Overall, American’s return on average equity was 13.1% in the first quarter of 2019 compared to 14.1% in the fourth quarter of 2018 and 12.6% in the prior year quarter. Return on average assets was 1.18% in the first quarter of 2019 compared to 1.25% in the fourth quarter of 2018 and 1.12% in the same quarter last year.






Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 30, 2019
Page 3

American’s solid results enabled it to pay dividends to HEI of $18 million in the first quarter of 2019 while maintaining healthy capital levels-leverage ratio of 8.7% and total capital ratio of 13.9% at March 31, 2019.
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 first 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 first quarter of 2019.
HEI plans to announce its first quarter 2019 consolidated financial results on Tuesday, May 7, 2019 and will conduct a webcast and conference call to discuss its consolidated earnings, including American’s earnings, and 2019 EPS guidance on Tuesday, May 7, 2019, 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 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 May 7, 2019 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 21, 2019 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10129956.




Hawaiian Electric Industries, Inc. Ÿ American Savings Bank, F.S.B.
April 30, 2019
Page 4
    
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, 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.


###





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

 
 

 
 

Interest and fees on loans
 
$
57,860

 
$
57,145

 
$
52,800

Interest and dividends on investment securities
 
10,628

 
10,632

 
9,202

Total interest and dividend income
 
68,488

 
67,777

 
62,002

Interest expense
 
 

 
 
 
 
Interest on deposit liabilities
 
4,252

 
4,115

 
2,957

Interest on other borrowings
 
528

 
255

 
496

Total interest expense
 
4,780

 
4,370

 
3,453

Net interest income
 
63,708

 
63,407

 
58,549

Provision for loan losses
 
6,870

 
2,408

 
3,541

Net interest income after provision for loan losses
 
56,838

 
60,999

 
55,008

Noninterest income
 
 

 
 
 
 
Fees from other financial services
 
4,562

 
4,996

 
4,654

Fee income on deposit liabilities
 
5,078

 
5,530

 
5,189

Fee income on other financial products
 
1,593

 
1,977

 
1,654

Bank-owned life insurance
 
2,259

 
390

 
871

Mortgage banking income
 
614

 
94

 
613

Other income, net
 
458

 
492

 
436

Total noninterest income
 
14,564

 
13,479

 
13,417

Noninterest expense
 
 

 
 
 
 
Compensation and employee benefits
 
25,512

 
26,340

 
24,440

Occupancy
 
4,670

 
4,236

 
4,280

Data processing
 
3,738

 
3,681

 
3,464

Services
 
2,426

 
2,287

 
3,047

Equipment
 
2,064

 
1,801

 
1,728

Office supplies, printing and postage
 
1,360

 
1,580

 
1,507

Marketing
 
990

 
844

 
645

FDIC insurance
 
626

 
635

 
713

Other expense
 
3,854

 
4,341

 
4,101

Total noninterest expense
 
45,240

 
45,745

 
43,925

Income before income taxes
 
26,162

 
28,733

 
24,500

Income taxes
 
5,323

 
6,966

 
5,540

Net income
 
$
20,839

 
$
21,767

 
$
18,960

Comprehensive income
 
$
27,091

 
$
35,446

 
$
6,885

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
Return on average assets
 
1.18

 
1.25

 
1.12

Return on average equity
 
13.09

 
14.08

 
12.58

Return on average tangible common equity
 
15.03

 
16.23

 
14.57

Net interest margin
 
3.99

 
3.95

 
3.76

Efficiency ratio
 
57.80

 
59.50

 
61.04

Net charge-offs to average loans outstanding
 
0.39

 
0.37

 
0.28

As of period end
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.83

 
0.56

 
0.53

Allowance for loan losses to loans outstanding
 
1.12

 
1.08

 
1.14

Tangible common equity to tangible assets
 
8.05

 
7.95

 
7.66

Tier-1 leverage ratio
 
8.7

 
8.7

 
8.6

Total capital ratio
 
13.9

 
13.9

 
14.0

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
18.0

 
$
14.0

 
$
10.9

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)
March 31, 2019
 
December 31, 2018
 
Assets
 
 

 
 
Cash and due from banks
 
$
136,585

 
$
122,059

Interest-bearing deposits
 
31,703

 
4,225

Investment securities
 
 
 
 
Available-for-sale, at fair value
 
1,348,263

 
1,388,533

Held-to-maturity, at amortized cost
 
140,203

 
141,875

Stock in Federal Home Loan Bank, at cost
 
9,434

 
9,958

Loans held for investment
 
4,858,180

 
4,843,021

Allowance for loan losses
 
(54,297
)
 
(52,119
)
Net loans
 
4,803,883

 
4,790,902

Loans held for sale, at lower of cost or fair value
 
8,136

 
1,805

Other
 
501,970

 
486,347

Goodwill
 
82,190

 
82,190

Total assets
 
$
7,062,367

 
$
7,027,894

Liabilities and shareholder’s equity
 
 
 
 
Deposit liabilities–noninterest-bearing
 
$
1,879,244

 
$
1,800,727

Deposit liabilities–interest-bearing
 
4,326,415

 
4,358,125

Other borrowings
 
89,870

 
110,040

Other
 
122,651

 
124,613

Total liabilities
 
6,418,180

 
6,393,505

Commitments and contingencies
 
 
 
 
Common stock
 
1

 
1

Additional paid in capital
 
347,877

 
347,170

Retained earnings
 
328,125

 
325,286

Accumulated other comprehensive loss, net of tax benefits
 
 
 
 
     Net unrealized losses on securities
$
(14,984
)
 

$
(24,423
)
 

     Retirement benefit plans
(16,832
)
(31,816
)
(13,645
)
(38,068
)
Total shareholder’s equity
 
644,187

 
634,389

Total liabilities and shareholder’s equity
 
$
7,062,367

 
$
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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