American Savings Bank Reports Third Quarter 2020 Financial Results
10/30/2020 - 05:00 PM
HONOLULU , Oct. 30, 2020 /PRNewswire/ -- 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 2020 of $12.2 million $14.0 million $22.9 million
"I continue to be impressed by the resilience of our customers as they adapt to the ongoing challenges of Hawaii's still-suppressed economy. Even so, because the timing of a sustained reopening of our tourism sector remains uncertain, our results again reflect elevated provision for potential credit losses," said Rich Wacker , president and chief executive officer of American. "While low interest rates continue to compress lending margins, in the third quarter we were able to reduce expenses and improve noninterest income from core activities, including strong mortgage banking income from our residential lending activity, replacing most of the prior quarter's gains on sales of securities."
Financial Highlights
Net interest income was $57.3 million $56.7 million $62.1 million 3.12% , compared to 3.21% in the linked quarter and 3.82% in the third quarter of 2019. Year to date net interest margin was 3.34% .
The provision for credit losses was $14.0 million $15.1 million $3.3 million $12.3 million $23.4 million
The net charge-off ratio for the third quarter of 2020 was 0.32% , compared to 0.49% in the linked quarter and 0.69% in the third quarter of 2019. The lower net charge-off ratio in the third quarter of 2020 reflected improvement in credit quality of the personal unsecured loan portfolio. Nonaccrual loans as a percent of total loans receivable held for investment was 0.77% in the third quarter of 2020, compared to 0.86% in the linked quarter and 0.63% in the prior year quarter.
Noninterest income was $19.0 million $24.2 million $16.3 million $9.3 million
Noninterest expense was $47.3 million $48.4 million $45.9 million $1.4 million $3.1 million
Total loans were $5.5 billion 7.3% 1 from December 31, 2019, driven mainly by the addition of $370 million
Total deposits were $7.0 billion 12.2% 2 from December 31, 2019. The average cost of funds was 0.13% for the quarter, down five basis points versus the linked quarter and down seventeen basis points versus the prior year quarter.
Overall, American's return on average equity for the third quarter of 2020 was 6.75% , compared to 8.00% in the linked quarter and 13.75% in the third quarter of 2019. Return on average assets was 0.61% for the third quarter of 2020, compared to 0.72% in the linked quarter and 1.29% in the same quarter last year.
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1 Annualized from December 31, 2019, total loans as of September 30, 2020 increased 9.7% .
2 Annualized from December 31, 2019, total deposits as of September 30, 2020 increased 16.3% .
In the third quarter of 2020, American retained capital and did not pay a dividend to HEI. American had a leverage ratio of 8.3% at September 30, 2020.
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2020 GUIDANCE
Concurrent with American's regulatory filing 30 days after the end of the quarter, American announced its third quarter 2020 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 third quarter 2020.
HEI plans to announce its third quarter 2020 consolidated financial results on Friday, November 6, 2020 and will also conduct a webcast and conference call at 11:15 a.m. Hawaii time (4:15 p.m. Eastern time) that same day to discuss its consolidated earnings, including American's earnings, and 2020 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
HEI and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to continue to use HEI's website, www.hei.com www.hei.com 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 November 6, 2020 webcast will be available on HEI's website beginning about two hours after the event. Audio replays of the conference call will also be available approximately two hours after the event through November 20, 2020 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 10148946.
HEI supplies power to approximately 95% of Hawaii's population through its electric utility, Hawaiian Electric; 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, 2019 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
Nine months ended September 30,
(in thousands)
September 30, 2020
June 30,
September 30, 2019
2020
2019
Interest and dividend income
Interest and fees on loans
$
52,419
$
53,541
$
59,260
$
161,505
$
175,740
Interest and dividends on investment securities
7,221
6,288
7,599
22,939
25,762
Total interest and dividend income
59,640
59,829
66,859
184,444
201,502
Interest expense
Interest on deposit liabilities
2,287
3,071
4,384
8,945
12,923
Interest on other borrowings
61
75
422
449
1,361
Total interest expense
2,348
3,146
4,806
9,394
14,284
Net interest income
57,292
56,683
62,053
175,050
187,218
Provision for credit losses
13,970
15,133
3,315
39,504
17,873
Net interest income after provision for credit losses
43,322
41,550
58,738
135,546
169,345
Noninterest income
Fees from other financial services
4,233
3,102
5,085
11,906
14,445
Fee income on deposit liabilities
3,832
2,897
5,320
11,842
15,402
Fee income on other financial products
1,524
1,212
1,706
4,608
5,129
Bank-owned life insurance
1,965
1,673
1,660
4,432
6,309
Mortgage banking income
7,681
6,252
1,490
15,933
3,080
Gain on sale of securities, net
—
9,275
653
9,275
653
Other income, net
(231)
(251)
428
(69)
1,420
Total noninterest income
19,004
24,160
16,342
57,927
46,438
Noninterest expense
Compensation and employee benefits
26,431
25,079
25,364
77,287
76,626
Occupancy
5,693
5,442
5,694
16,402
15,843
Data processing
3,366
3,849
3,763
11,052
11,353
Services
2,624
2,474
2,829
7,907
7,861
Equipment
2,001
2,290
2,163
6,630
6,416
Office supplies, printing and postage
1,187
1,049
1,297
3,577
4,320
Marketing
727
379
1,142
1,908
3,455
FDIC insurance
714
751
(5)
1,567
1,249
Other expense1
4,556
7,063
3,676
15,813
12,049
Total noninterest expense
47,299
48,376
45,923
142,143
139,172
Income before income taxes
15,027
17,334
29,157
51,330
76,611
Income taxes
2,877
3,320
6,269
9,405
15,868
Net income
$
12,150
$
14,014
$
22,888
$
41,925
$
60,743
Comprehensive income
$
13,543
$
13,734
$
26,697
$
62,885
$
85,079
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets
0.61
0.72
1.29
0.73
1.14
Return on average equity
6.75
8.00
13.75
7.95
12.44
Return on average tangible common equity
7.62
9.07
15.68
9.00
14.23
Net interest margin
3.12
3.21
3.82
3.34
3.87
Efficiency ratio
61.99
59.84
58.58
61.01
59.56
Net charge-offs to average loans outstanding
0.32
0.49
0.69
0.41
0.46
As of period end
Nonaccrual loans to loans receivable held for investment
0.77
0.86
0.63
Allowance for credit losses to loans outstanding
1.67
1.50
1.04
Tangible common equity to tangible assets
8.0
7.9
8.4
Tier-1 leverage ratio
8.3
8.4
8.8
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
$
—
$
—
$
14.0
$
28.0
$
47.0
1
The three and nine-month periods ended September 30, 2020 include approximately $0.7 million and $4.5 million , respectively, of certain direct and incremental COVID-19 related costs. For the nine months ended September 30, 2020, these costs, which have been recorded in Other expense , include $2.4 million of compensation expense and $1.7 million of enhanced cleaning and sanitation costs.
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)
September 30, 2020
December 31, 2019
Assets
Cash and due from banks
$
150,087
$
129,770
Interest-bearing deposits
10,918
48,628
Investment securities
Available-for-sale, at fair value
1,747,658
1,232,826
Held-to-maturity, at amortized cost
133,858
139,451
Stock in Federal Home Loan Bank, at cost
10,920
8,434
Loans held for investment
5,480,902
5,121,176
Allowance for credit losses
(91,459)
(53,355)
Net loans
5,389,443
5,067,821
Loans held for sale, at lower of cost or fair value
16,806
12,286
Other
533,865
511,611
Goodwill
82,190
82,190
Total assets
$
8,075,745
$
7,233,017
Liabilities and shareholder's equity
Deposit liabilities–noninterest-bearing
$
2,424,539
$
1,909,682
Deposit liabilities–interest-bearing
4,613,598
4,362,220
Other borrowings
151,875
115,110
Other
165,300
146,954
Total liabilities
7,355,312
6,533,966
Common stock
1
1
Additional paid-in capital
351,322
349,453
Retained earnings
356,812
358,259
Accumulated other comprehensive income (loss), net of taxes
Net unrealized gains on securities
$
22,248
$
2,481
Retirement benefit plans
(9,950)
12,298
(11,143)
(8,662)
Total shareholder's equity
720,433
699,051
Total liabilities and shareholder's equity
$
8,075,745
$
7,233,017
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.
Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
Director, Investor Relations
E-mail: ir@hei.com
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SOURCE Hawaiian Electric Industries, Inc.
