HE Hawaiian Electric Industries

2Q 2023 Net Income of $20.2 million

Credit Quality Remains Solid

Strong Capital Position with Ample Liquidity

American Savings Bank, F.S.B. (ASB), a wholly owned subsidiary of Hawaiian Electric Industries, Inc. (NYSE - HE), today reported second quarter 2023 net income of $20.2 million, compared to $18.6 million in the first quarter of 2023 and $17.5 million in the second quarter of 2022.

“Our team delivered solid results in the second quarter, growing net income to $20.2 million,” said Ann Teranishi, president and chief executive officer of ASB. “Credit quality remains strong, indicative of the continued strength and resilience of Hawaii’s economy, consumers, and businesses. ASB’s capital position remains healthy, with liquidity of approximately three times uninsured or uncollateralized deposits. Our loyal and long-tenured deposit base demonstrates the value of our customer relationships,” said Teranishi.

Financial Highlights

Second quarter 2023 net interest income was $63.2 million compared to $64.9 million in the first, or linked quarter of 2023 and $61.8 million in the second quarter of 2022. The lower net interest income compared to the linked quarter was primarily due to higher interest expense from increased wholesale borrowings and certificates of deposit, and lower interest and dividends on investment securities, partially offset by higher interest and fees on loans. The higher net interest income compared to the prior year quarter was primarily due to higher interest and fees on loans, partially offset by higher interest expense. Net interest margin for the second quarter of 2023 was 2.75%, compared to 2.85% in both the linked and prior year quarters.

The second quarter 2023 provision for credit losses was $0.04 million, compared to $1.2 million in the linked quarter and $2.8 million in the second quarter of 2022. As of June 30, 2023, ASB’s allowance for credit losses to outstanding loans was 1.13% compared to 1.18% as of March 31, 2023 and 1.28% as of June 30, 2022.

The net charge-off ratio for the second quarter of 2023 was 0.14%, unchanged from the linked quarter and up from nil in the second quarter of 2022. Nonaccrual loans as a percentage of total loans receivable held for investment were 0.22%, compared to 0.24% in the linked quarter and 0.40% in the prior year quarter.

Noninterest income was $15.6 million in the second quarter of 2023 compared to $14.4 million in the linked quarter and $12.5 million in the second quarter of 2022. The increase compared to the linked and prior year quarters was primarily due to higher bank-owned life insurance income, a gain on sale of real estate and higher fees from other financial services.

Noninterest expense was $53.8 million compared to $54.4 million in the linked quarter and $49.4 million in the second quarter of 2022. The decrease compared to the linked quarter was primarily due to lower deposit account expenses and lower compensation and benefits expenses. The increase compared to the prior year quarter was primarily due to higher compensation and benefits expenses and F.D.I.C. premiums.

Total loans were $6.1 billion as of June 30, 2023, up 2.7% from December 31, 2022, reflecting growth across most of the portfolio.

Total deposits were $8.2 billion as of June 30, 2023, a decrease of 0.08% from December 31, 2022. Core deposits declined 2.8%, while certificates of deposits increased 33.3%. As of June 30, 2023, 86% of deposits were F.D.I.C. insured or fully collateralized, up slightly from 85% as of March 31, 2023, with approximately 79% of deposits F.D.I.C. insured. For the second quarter of 2023, the average cost of funds was 0.83%, up 17 basis points versus the linked quarter and up 78 basis points versus the prior year quarter.

Wholesale funding totaled $750 million as of June 30, 2023, up from $681 million as of March 31, 2023.

For the second quarter of 2023, return on average equity was 16.2%, compared to 15.5% in the linked quarter and 12.2% in the second quarter of 2022. Return on average assets was 0.84% for the second quarter of 2023, compared to 0.78% in the linked quarter and 0.76% in the prior year quarter.

In the second quarter of 2023, ASB paid dividends of $11.0 million to HEI. ASB had a Tier 1 leverage ratio of 7.8% as of June 30, 2023.

HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2023 GUIDANCE

Concurrent with ASB’s regulatory filing 30 days after the end of the quarter, ASB announced its second quarter 2023 financial results today. Please note that these reported results relate only to ASB and are not necessarily indicative of HEI’s consolidated financial results for the second quarter 2023.

HEI plans to announce its second quarter 2023 consolidated financial results on Monday, August 7, 2023 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 ASB’s earnings, and 2023 guidance.

To listen to the conference call, dial 1-833-470-1428 (U.S.) or +1-929-526-1599 (international) and enter passcode 910697. Parties may also access presentation materials and/or listen to the conference call by visiting the conference call link on HEI’s website at www.hei.com under “Investor Relations,” sub-heading “News and Events — Events and Presentations.”

A replay will be available online and via phone. The online replay will be available on HEI’s website about two hours after the event. An audio replay will also be available about two hours after the event through August 21, 2023. To access the audio replay, dial 1-929-458-6194 (U.S.) or +(44)-204-525-0658 (international) and enter passcode 380478.

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 in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website, in addition to following HEI’s, Hawaiian Electric’s and ASB’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. Investors may sign up to receive e-mail alerts via the Investor Relations section of the website. The information on HEI’s website is not incorporated by reference into this document or into 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 to review documents filed with, and issued by, the PUC. No information on the PUC website is incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings.

The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of Hawaii. HEI’s electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii’s population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy. Its banking subsidiary, ASB, is one of Hawaii’s largest financial institutions, providing a wide array of banking and other financial services and working to advance economic growth, affordability and financial fitness. HEI also helps advance Hawaii’s sustainability goals through investments by its non-regulated subsidiary, Pacific Current. For more information, visit www.hei.com.

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, 2022 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, ASB 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

 

Six months ended June 30

(in thousands)

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

 

2023

 

 

2022

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

67,966

 

$

64,842

 

$

48,129

 

 

$

132,808

 

$

94,134

 

Interest and dividends on investment securities

 

 

13,775

 

 

14,637

 

 

14,693

 

 

 

28,412

 

 

28,677

 

Total interest and dividend income

 

 

81,741

 

 

79,479

 

 

62,822

 

 

 

161,220

 

 

122,811

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposit liabilities

 

 

9,661

 

 

6,837

 

 

921

 

 

 

16,498

 

 

1,868

 

Interest on other borrowings

 

 

8,852

 

 

7,721

 

 

139

 

 

 

16,573

 

 

144

 

Total interest expense

 

 

18,513

 

 

14,558

 

 

1,060

 

 

 

33,071

 

 

2,012

 

Net interest income

 

 

63,228

 

 

64,921

 

 

61,762

 

 

 

128,149

 

 

120,799

 

Provision for credit losses

 

 

43

 

 

1,175

 

 

2,757

 

 

 

1,218

 

 

(506

)

Net interest income after provision for credit losses

 

 

63,185

 

 

63,746

 

 

59,005

 

 

 

126,931

 

 

121,305

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Fees from other financial services

 

 

5,009

 

 

4,679

 

 

4,716

 

 

 

9,688

 

 

10,303

 

Fee income on deposit liabilities

 

 

4,504

 

 

4,599

 

 

4,552

 

 

 

9,103

 

 

9,243

 

Fee income on other financial products

 

 

2,768

 

 

2,744

 

 

2,529

 

 

 

5,512

 

 

5,247

 

Bank-owned life insurance

 

 

1,955

 

 

1,425

 

 

(142

)

 

 

3,380

 

 

539

 

Mortgage banking income

 

 

230

 

 

130

 

 

372

 

 

 

360

 

 

1,449

 

Gain on sale of real estate

 

 

495

 

 

—

 

 

—

 

 

 

495

 

 

1,002

 

Other income, net

 

 

678

 

 

801

 

 

475

 

 

 

1,479

 

 

847

 

Total noninterest income

 

 

15,639

 

 

14,378

 

 

12,502

 

 

 

30,017

 

 

28,630

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

29,394

 

 

30,204

 

 

27,666

 

 

 

59,598

 

 

54,881

 

Occupancy

 

 

5,539

 

 

5,588

 

 

5,467

 

 

 

11,127

 

 

11,419

 

Data processing

 

 

5,095

 

 

5,012

 

 

4,484

 

 

 

10,107

 

 

8,635

 

Services

 

 

2,689

 

 

2,595

 

 

2,522

 

 

 

5,284

 

 

4,961

 

Equipment

 

 

2,957

 

 

2,646

 

 

2,402

 

 

 

5,603

 

 

4,731

 

Office supplies, printing and postage

 

 

1,109

 

 

1,165

 

 

1,073

 

 

 

2,274

 

 

2,133

 

Marketing

 

 

834

 

 

1,016

 

 

934

 

 

 

1,850

 

 

1,952

 

Other expense

 

 

6,152

 

 

6,191

 

 

4,850

 

 

 

12,343

 

 

8,899

 

Total noninterest expense

 

 

53,769

 

 

54,417

 

 

49,398

 

 

 

108,186

 

 

97,611

 

Income before income taxes

 

 

25,055

 

 

23,707

 

 

22,109

 

 

 

48,762

 

 

52,324

 

Income taxes

 

 

4,851

 

 

5,145

 

 

4,643

 

 

 

9,996

 

 

10,988

 

Net income

 

$

20,204

 

$

18,562

 

$

17,466

 

 

$

38,766

 

$

41,336

 

Comprehensive income (loss)

 

$

12,994

 

$

36,992

 

$

(71,369

)

 

$

49,986

 

$

(169,940

)

OTHER BANK INFORMATION (annualized %, except as of period end)

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.84

 

 

0.78

 

 

0.76

 

 

 

0.81

 

 

0.90

 

Return on average equity

 

 

16.20

 

 

15.51

 

 

12.17

 

 

 

15.87

 

 

13.01

 

Return on average tangible common equity

 

 

19.40

 

 

18.73

 

 

14.20

 

 

 

19.07

 

 

14.95

 

Net interest margin

 

 

2.75

 

 

2.85

 

 

2.85

 

 

 

2.80

 

 

2.82

 

Efficiency ratio

 

 

68.18

 

 

68.62

 

 

66.52

 

 

 

68.40

 

 

65.32

 

Net charge-offs to average loans outstanding

 

 

0.14

 

 

0.14

 

 

0.00

 

 

 

0.14

 

 

0.01

 

As of period end

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans to loans receivable held for investment

 

 

0.22

 

 

0.24

 

 

0.40

 

 

 

 

 

Allowance for credit losses to loans outstanding

 

 

1.13

 

 

1.18

 

 

1.28

 

 

 

 

 

Tangible common equity to tangible assets

 

 

4.3

 

 

4.3

 

 

4.9

 

 

 

 

 

Tier-1 leverage ratio

 

 

7.8

 

 

7.7

 

 

7.7

 

 

 

 

 

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

 

$

11.0

 

$

14.0

 

$

12.0

 

 

$

25.0

 

$

27.0

 

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.

American Savings Bank, F.S.B.

BALANCE SHEETS DATA

(Unaudited)

 

(in thousands)

June 30, 2023

December 31, 2022

Assets

 

 

 

 

Cash and due from banks

 

$

158,170

 

 

$

153,042

 

Interest-bearing deposits

 

 

9,958

 

 

 

3,107

 

Cash and cash equivalents

 

 

168,128

 

 

 

156,149

 

Investment securities

 

 

 

 

Available-for-sale, at fair value

 

 

1,368,037

 

 

 

1,429,667

 

Held-to-maturity, at amortized cost

 

 

1,224,917

 

 

 

1,251,747

 

Stock in Federal Home Loan Bank, at cost

 

 

18,000

 

 

 

26,560

 

Loans held for investment

 

 

6,138,182

 

 

 

5,978,906

 

Allowance for credit losses

 

 

(69,068

)

 

 

(72,216

)

Net loans

 

 

6,069,114

 

 

 

5,906,690

 

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

 

 

6,910

 

 

 

824

 

Other

 

 

683,395

 

 

 

692,143

 

Goodwill

 

 

82,190

 

 

 

82,190

 

Total assets

 

$

9,620,691

 

 

$

9,545,970

 

Liabilities and shareholder’s equity

 

 

 

 

Deposit liabilities–noninterest-bearing

 

$

2,683,725

 

 

$

2,811,077

 

Deposit liabilities–interest-bearing

 

 

5,479,510

 

 

 

5,358,619

 

Other borrowings

 

 

750,000

 

 

 

695,120

 

Other

 

 

212,268

 

 

 

212,269

 

Total liabilities

 

 

9,125,503

 

 

 

9,077,085

 

Common stock

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

357,123

 

 

 

355,806

 

Retained earnings

 

 

463,459

 

 

 

449,693

 

Accumulated other comprehensive loss, net of tax benefits

 

 

 

 

Net unrealized losses on securities

$

(315,917

)

 

$

(328,904

)

 

Retirement benefit plans

 

(9,478

)

 

(325,395

)

 

(7,711

)

 

(336,615

)

Total shareholder’s equity

 

 

495,188

 

 

 

468,885

 

Total liabilities and shareholder’s equity

 

$

9,620,691

 

 

$

9,545,970

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230728096702/en/

Mateo Garcia Director, Investor Relations Telephone: (808) 543-7300 E-mail: ir@hei.com