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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: July 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 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 July 30, 2019, HEI issued a news release, “American Savings Bank Reports Second 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 July 30, 2019, “American Savings Bank Reports Second 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: July 30, 2019
 
 
 
 
 


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EXHIBIT INDEX

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


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Section 2: EX-99 (EXHIBIT 99)

Exhibit


Exhibit 99
398978662_heicatalyst2a29.jpg NEWS RELEASE
July 30, 2019
Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Director, Investor Relations & Strategic Planning
E-mail: ir@hei.com

AMERICAN SAVINGS BANK REPORTS SECOND QUARTER 2019 EARNINGS

2Q 2019 Net Income of $17.0 Million
Good Loan and Deposit Growth
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 second quarter of 2019 of $17.0 million compared to $20.8 million in the first, or linked, quarter of 2019 and $20.6 million in the second quarter of 2018. Key measures of profitability remained healthy, with return on average equity of 10.5% and return on assets of 0.96%.
“Our second quarter results were below our recent quarters’ performance due to volatility in our investment portfolio yield driven by the lower than expected interest rate environment as well as higher credit costs, including for one commercial exposure,” said Richard Wacker, president and chief executive officer. “We continued to deliver strong net interest margin, good loan and deposit growth, and improving year-over-year efficiency.  We are already seeing many of the benefits we anticipated from the consolidation of our non-branch teammates into our new ASB Campus and we are confident in the future improvements we will deliver for our customers, the bank, our team, and the community,” said Wacker.

Financial Highlights
Net interest income was $61.5 million in the second quarter of 2019 compared to $63.7 million in the linked quarter and $59.6 million in the second quarter of 2018. Net interest margin for the second quarter of 2019 was 3.82% compared to 3.99% in the linked quarter and 3.76% in the second quarter of 2018. Year-to-date, net interest margin was 3.90%. The decrease in net interest income and net interest margin compared to the linked quarter was primarily due to an increase in amortization of premiums in the investment securities portfolio.
The provision for loan losses was $7.7 million in the second quarter of 2019 compared to $6.9 million in the linked quarter and $2.8 million in the second quarter of 2018. The increase in provision over the linked quarter was primarily due to increased loss reserves for one commercial credit, increased reserves for loan portfolio growth, and additional loss reserves for the personal unsecured loan portfolio. The increase in provision over the prior year




quarter was due to an increase in loan loss reserves for the personal unsecured loan portfolio, and a lower provision in the prior year due to a release of reserves for improved credit quality in the commercial, commercial real estate and home equity line of credit loan portfolios.
The net charge-off ratio was 0.29% in the second quarter of 2019 compared to 0.39% in the linked quarter and 0.32% in the prior year quarter. Nonaccrual loans as a percent of total loans receivable held for investment was 0.79% compared to 0.83% in the linked quarter and 0.57% in the prior year quarter.
Noninterest income was $15.5 million in the second quarter of 2019 compared to $14.6 million in the linked quarter and $13.8 million in the second quarter of 2018. The increase in noninterest income compared to the linked quarter was primarily due to increases in mortgage banking, debit card interchange and fee income. The increase in noninterest income compared to the prior year quarter was primarily due to bank-owned life insurance proceeds received during the quarter.
Noninterest expense was $48.0 million in the second quarter of 2019 compared to $45.2 million in the linked quarter and $44.2 million in the second quarter of 2018. As was the case in the first quarter of 2019, noninterest expense included depreciation and occupancy costs related to the new campus building while still including the costs of properties being vacated.
Total loans were $5.0 billion as of June 30, 2019, up $164.5 million or 6.8% annualized from December 31, 2018, driven mainly by increases in commercial loans, home equity lines of credit, and residential loans.
Total deposits were $6.3 billion at June 30, 2019, an increase of $98.5 million or 3.2% annualized from December 31, 2018. Low-cost core deposits were $5.4 billion as of June 30, 2019.
Overall, American’s return on average equity was 10.5% in the second quarter of 2019 compared to 13.1% in the first quarter of 2019 and 13.6% in the prior year quarter. Return on average assets was 0.96% in the second quarter of 2019 compared to 1.18% in the first quarter of 2019 and 1.20% in the second quarter of last year. The decreases from the linked and prior year quarters were primarily due to lower earnings in the second quarter of 2019. American paid dividends of $15.0 million to HEI during the quarter while maintaining healthy capital levels—leverage ratio of 8.7% and total capital ratio of 14.0% at June 30, 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 second 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 second quarter of 2019.
HEI plans to announce its second quarter 2019 consolidated financial results on Friday, August 2, 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.

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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 August 2, 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 August 16, 2019 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10131926.
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

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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 
 
Six months ended June 30
(in thousands)
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
2019
 
2018
Interest and dividend income
 
 

 
 

 
 

 
 
 
 
Interest and fees on loans
 
$
58,620

 
$
57,860

 
$
54,633

 
$
116,480

 
$
107,433

Interest and dividends on investment securities
 
7,535

 
10,628

 
8,628

 
18,163

 
17,830

Total interest and dividend income
 
66,155

 
68,488

 
63,261

 
134,643

 
125,263

Interest expense
 
 

 
 

 
 
 
 
 
 
Interest on deposit liabilities
 
4,287

 
4,252

 
3,284

 
8,539

 
6,241

Interest on other borrowings
 
411

 
528

 
393

 
939

 
889

Total interest expense
 
4,698

 
4,780

 
3,677

 
9,478

 
7,130

Net interest income
 
61,457

 
63,708

 
59,584

 
125,165

 
118,133

Provision for loan losses
 
7,688

 
6,870

 
2,763

 
14,558

 
6,304

Net interest income after provision for loan losses
 
53,769

 
56,838

 
56,821

 
110,607

 
111,829

Noninterest income
 
 

 
 

 
 
 
 
 
 
Fees from other financial services
 
4,798

 
4,562

 
4,744

 
9,360

 
9,398

Fee income on deposit liabilities
 
5,004

 
5,078

 
5,138

 
10,082

 
10,327

Fee income on other financial products
 
1,830

 
1,593

 
1,675

 
3,423

 
3,329

Bank-owned life insurance
 
2,390

 
2,259

 
1,133

 
4,649

 
2,004

Mortgage banking income
 
976

 
614

 
617

 
1,590

 
1,230

Other income, net
 
534

 
458

 
536

 
992

 
972

Total noninterest income
 
15,532

 
14,564

 
13,843

 
30,096

 
27,260

Noninterest expense
 
 

 
 

 
 
 
 
 
 
Compensation and employee benefits
 
25,750

 
25,512

 
23,655

 
51,262

 
48,095

Occupancy
 
5,479

 
4,670

 
4,194

 
10,149

 
8,474

Data processing
 
3,852

 
3,738

 
3,540

 
7,590

 
7,004

Services
 
2,606

 
2,426

 
3,028

 
5,032

 
6,075

Equipment
 
2,189

 
2,064

 
1,874

 
4,253

 
3,602

Office supplies, printing and postage
 
1,663

 
1,360

 
1,491

 
3,023

 
2,998

Marketing
 
1,323

 
990

 
1,085

 
2,313

 
1,730

FDIC insurance
 
628

 
626

 
727

 
1,254

 
1,440

Other expense
 
4,519

 
3,854

 
4,556

 
8,373

 
8,657

Total noninterest expense
 
48,009

 
45,240

 
44,150

 
93,249

 
88,075

Income before income taxes
 
21,292

 
26,162

 
26,514

 
47,454

 
51,014

Income taxes
 
4,276

 
5,323

 
5,953

 
9,599

 
11,493

Net income
 
$
17,016

 
$
20,839

 
$
20,561

 
$
37,855

 
$
39,521

Comprehensive income
 
$
31,291

 
$
27,091

 
$
16,579

 
$
58,382

 
$
23,464

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
 
 
 
 
Return on average assets
 
0.96

 
1.18

 
1.20

 
1.07

 
1.16

Return on average equity
 
10.46

 
13.09

 
13.56

 
11.76

 
13.07

Return on average tangible common equity
 
11.97

 
15.03

 
15.68

 
13.48

 
15.13

Net interest margin
 
3.82

 
3.99

 
3.76

 
3.90

 
3.76

Efficiency ratio
 
62.36

 
57.80

 
60.13

 
60.06

 
60.58

Net charge-offs to average loans outstanding
 
0.29

 
0.39

 
0.32

 
0.34

 
0.30

As of period end
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.79

 
0.83

 
0.57

 
 
 
 
Allowance for loan losses to loans outstanding
 
1.17

 
1.12

 
1.11

 
 
 
 
Tangible common equity to tangible assets
 
8.2

 
8.1

 
7.6

 
 
 
 
Tier-1 leverage ratio
 
8.7

 
8.7

 
8.6

 
 
 
 
Total capital ratio
 
14.0

 
13.9

 
13.9

 
 
 
 
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
15.0

 
$
18.0

 
$
11.1

 
$
33.0

 
$
22.0


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)
June 30, 2019
 
December 31, 2018
 
Assets
 
 

 
 
Cash and due from banks
 
$
115,214

 
$
122,059

Interest-bearing deposits
 
52,415

 
4,225

Investment securities
 
 
 
 
Available-for-sale, at fair value
 
1,298,010

 
1,388,533

Held-to-maturity, at amortized cost
 
137,029

 
141,875

Stock in Federal Home Loan Bank, at cost
 
8,434

 
9,958

Loans held for investment
 
5,008,489

 
4,843,021

Allowance for loan losses
 
(58,425
)
 
(52,119
)
Net loans
 
4,950,064

 
4,790,902

Loans held for sale, at lower of cost or fair value
 
9,196

 
1,805

Other
 
511,502

 
486,347

Goodwill
 
82,190

 
82,190

Total assets
 
$
7,164,054

 
$
7,027,894

Liabilities and shareholder’s equity
 
 
 
 
Deposit liabilities–noninterest-bearing
 
$
1,883,044

 
$
1,800,727

Deposit liabilities–interest-bearing
 
4,374,339

 
4,358,125

Other borrowings
 
111,485

 
110,040

Other
 
134,162

 
124,613

Total liabilities
 
6,503,030

 
6,393,505

Common stock
 
1

 
1

Additional paid in capital
 
348,423

 
347,170

Retained earnings
 
330,141

 
325,286

Accumulated other comprehensive loss, net of tax benefits
 
 
 
 
     Net unrealized losses on securities
$
(830
)
 

$
(24,423
)
 

     Retirement benefit plans
(16,711
)
(17,541
)
(13,645
)
(38,068
)
Total shareholder’s equity
 
661,024

 
634,389

Total liabilities and shareholder’s equity
 
$
7,164,054

 
$
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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