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News

American Savings Bank Reports Third Quarter 2021 Financial Results

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HONOLULU, Oct. 29, 2021 /PRNewswire/ — American Savings Bank, F.S.B. (American), a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. (NYSE – HE), today reported net income of $19.3 million for the third quarter of 2021, compared to $30.3 million in the second quarter of 2021 and $12.2 million in the third quarter of 2020.

“We're pleased with our financial results for the third quarter, which reflect continued solid performance and good credit quality, the latter of which drove an additional release of reserves. The governor's recent announcement encouraging visitors to return is a positive sign for our local economy and community,” said Ann Teranishi, president and chief executive officer of American. “We continue to build our capabilities to provide even more value to our customers through digital banking services and customized financial solutions, while delivering the superior customer experience we're known for,” said Teranishi.

Financial Highlights

Third quarter 2021 net interest income was $60.3 million compared to $60.8 million in the linked quarter and $57.3 million in the third quarter of 2020. The relatively flat net interest income versus the linked quarter reflected the impact of lower yields and lower recognition of fees associated with the Paycheck Protection Program (PPP) loan portfolio, partially offset by higher earning assets driven by increased liquidity from continued deposit growth. The increase in net interest income versus the third quarter of 2020 was primarily due to growth in earning assets, lower cost of funds and higher fee income associated with the PPP loan portfolio. Net interest margin for the third quarter of 2021 was 2.90% compared to 2.98% in the linked quarter and 3.12% in the third quarter of 2020. Net interest margin for the first nine months of 2021 was 2.94% compared to 3.34% for the same period in 2020.

The results for the third quarter of 2021 included a negative provision for credit losses of $1.7 million, reflecting credit upgrades in the commercial and commercial real estate loan portfolios and consumer loan paydowns. This compares to a negative provision for credit losses of $12.2 million in the linked quarter and a provision for credit losses of $14.0 million in the third quarter of 2020. As of September 30, 2021, American's allowance for credit losses to outstanding loans was 1.48% compared to 1.51% as of June 30, 2021 and 1.67% as of September 30, 2020.

The net charge-off ratio for the third quarter of 2021 was 0.03%, compared to 0.04% in the linked quarter and 0.32% in the third quarter of 2020. Nonaccrual loans as a percent of total loans receivable held for investment were 0.97% in the third quarter of 2021, compared to 1.03% in the linked quarter and 0.77% in the prior year quarter.

Noninterest income was $14.8 million in the third quarter of 2021, compared to $15.2 million in the linked quarter and $19.0 million in the third quarter of 2020. The decrease in noninterest income from the linked quarter was primarily due to lower fee income from financial services and lower mortgage banking income, partially offset by higher bank-owned life insurance income and fee income on deposit liabilities. The decrease in noninterest income from the prior year quarter was primarily due to lower mortgage banking income.

Third quarter of 2021 noninterest expense was $51.5 million, compared to $48.2 million in the linked quarter and $47.3 million in the third quarter of 2020. The increase in noninterest expense compared to the linked and prior year quarters was primarily due to higher incentive compensation costs reflecting the bank's strong performance for the first nine months of the year. The third quarter of 2021 also included higher data processing expense as the bank upgrades its technology and data analytic capabilities, partially offset by lower occupancy costs as the bank continues to optimize its branch footprint in connection with its digital transformation.

Total earning assets as of September 30, 2021 were $8.4 billion, up 9.3% from December 31, 2020.

Total loans were $5.1 billion as of September 30, 2021, down 1.3% compared to June 30, 2021 and down 4.0% from December 31, 2020. The reduction in the loan portfolio during the quarter included approximately $111 million in forgiven PPP loans, as well as declines in the home equity line of credit and consumer portfolios. The decrease in these portfolios was partially offset by growth in the residential, commercial and commercial real estate loan portfolios. Excluding PPP loan forgiveness, the loan portfolio grew by $46 million or 0.9% compared to June 30, 2021.    

The investment securities portfolio was $3.1 billion as of September 30, 2021, up 39.8% from December 31, 2020 as growth in deposits continued to outpace loan growth. The portfolio is primarily comprised of securities issued or guaranteed by U.S. government agencies or U.S. government sponsored agencies.

Total deposits were $8.0 billion as of September 30, 2021, an increase of 1.3% compared to June 30, 2021 and an increase of 8.0% from December 31, 2020. For the third quarter of 2021, the average cost of funds was 0.06%, down one basis point versus the linked quarter and down seven basis points versus the prior year quarter.

For the third quarter of 2021 return on average equity was 10.3%, compared to 16.8% in the linked quarter and 6.8% in the third quarter of 2020. Return on average assets was 0.86% for the third quarter of 2021, compared to 1.38% in the linked quarter and 0.61% in the same quarter last year.

In the third quarter of 2021, American paid dividends of $12.0 million to HEI. American had a Tier 1 leverage ratio of 8.0% as of September 30, 2021.

HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2021 GUIDANCE

Concurrent with American's regulatory filing 30 days after the end of the quarter, American announced its third quarter 2021 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 2021.

HEI plans to announce its third quarter 2021 consolidated financial results on Friday, November 5, 2021 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 2021 guidance. 

To listen to the conference call, dial 1-844-200-6205 (U.S.) or 1-929-526-1599 (international) and enter passcode 181692. 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 the “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 November 19, 2021. To access the audio replay, dial 1-866-813-9403 (U.S.) or 44-204-525-0658 (international) and enter passcode 965360.

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 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 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, American Savings Bank, 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, 2020 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,
2021

June 30,

2021

September 30,
2020

2021

2020

Interest and dividend income

Interest and fees on loans

$

49,445

$

51,026

$

52,419

$

150,418

$

161,505

Interest and dividends on investment securities

11,996

11,040

7,221

31,709

22,939

Total interest and dividend income

61,441

62,066

59,640

182,127

184,444

Interest expense

Interest on deposit liabilities

1,176

1,281

2,287

3,919

8,945

Interest on other borrowings

5

23

61

55

449

Total interest expense

1,181

1,304

2,348

3,974

9,394

Net interest income

60,260

60,762

57,292

178,153

175,050

Provision for credit losses

(1,725)

(12,207)

13,970

(22,367)

39,504

Net interest income after provision for credit losses

61,985

72,969

43,322

200,520

135,546

Noninterest income

Fees from other financial services

4,800

5,464

4,233

15,337

11,906

Fee income on deposit liabilities

4,262

3,904

3,832

12,029

11,842

Fee income on other financial products

2,124

2,201

1,524

6,767

4,608

Bank-owned life insurance

2,026

1,624

1,965

6,211

4,432

Mortgage banking income

1,272

1,925

7,681

7,497

15,933

Gain on sale of investment securities, net

528

9,275

Other income, net

283

76

(231)

631

(69)

Total noninterest income

14,767

15,194

19,004

49,000

57,927

Noninterest expense

Compensation and employee benefits

30,888

27,670

26,431

86,595

77,287

Occupancy

5,157

5,100

5,693

15,226

16,402

Data processing

4,278

4,533

3,366

13,162

11,052

Services

2,272

2,475

2,624

7,609

7,907

Equipment

2,373

2,394

2,001

6,989

6,630

Office supplies, printing and postage

1,072

978

1,187

3,094

3,577

Marketing

995

665

727

2,308

1,908

FDIC insurance

808

788

714

2,412

1,567

Other expense1

3,668

3,568

4,556

9,790

15,813

Total noninterest expense

51,511

48,171

47,299

147,185

142,143

Income before income taxes

25,241

39,992

15,027

102,335

51,330

Income taxes

5,976

9,708

2,877

23,230

9,405

Net income

$

19,265

$

30,284

$

12,150

$

79,105

$

41,925

Comprehensive income (loss)

$

7,581

$

47,283

$

13,543

$

38,666

$

62,885

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

Return on average assets

0.86

1.38

0.61

1.21

0.73

Return on average equity

10.26

16.76

6.75

14.31

7.95

Return on average tangible common equity

11.52

18.92

7.62

16.11

9.00

Net interest margin

2.90

2.98

3.12

2.94

3.34

Efficiency ratio

68.66

63.42

61.99

64.80

61.01

Net charge-offs to average loans outstanding

0.03

0.04

0.32

0.08

0.41

As of period end

Nonaccrual loans to loans receivable held for investment

0.97

1.03

0.77

Allowance for credit losses to loans outstanding

1.48

1.51

1.67

Tangible common equity to tangible assets

7.3

7.5

8.0

Tier-1 leverage ratio

8.0

8.0

8.3

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

$

12.0

$

23.0

$

$

40.0

$

28.0

The three- and nine-month periods ended September 30, 2021 include approximately $0.1 million and $0.5 million, respectively, of certain direct and incremental COVID-19 related costs. The three- and nine-month periods ended September 30, 2020 include approximately $0.7 million and $4.5 million, respectively, of certain significant direct and incremental COVID-19 related costs. These costs for the first nine months of 2020, 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, 2021

December 31, 2020

Assets

Cash and due from banks

$

109,942

$

178,422

Interest-bearing deposits

80,007

114,304

Cash and cash equivalents

189,949

292,726

Investment securities

Available-for-sale, at fair value

2,580,830

1,970,417

Held-to-maturity, at amortized cost

491,871

226,947

Stock in Federal Home Loan Bank, at cost

10,000

8,680

Loans held for investment

5,122,124

5,333,843

Allowance for credit losses

(75,944)

(101,201)

Net loans

5,046,180

5,232,642

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

53,998

28,275

Other

555,401

554,656

Goodwill

82,190

82,190

Total assets

$

9,010,419

$

8,396,533

Liabilities and shareholder's equity

Deposit liabilities–noninterest-bearing

$

2,931,394

$

2,598,500

Deposit liabilities–interest-bearing

5,045,144

4,788,457

Other borrowings

129,305

89,670

Other

168,064

183,731

Total liabilities

8,273,907

7,660,358

Common stock

1

1

Additional paid-in capital

353,429

351,758

Retained earnings

408,575

369,470

Accumulated other comprehensive income (loss), net of taxes

     Net unrealized gains (losses) on securities

$

(20,322)

$

19,986

     Retirement benefit plans

(5,171)

(25,493)

(5,040)

14,946

Total shareholder's equity

736,512

736,175

Total liabilities and shareholder's equity

$

9,010,419

$

8,396,533

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

Vice President, Investor Relations & Corporate Sustainability

E-mail:  ir@hei.com

 

American Savings Bank Logo (PRNewsfoto/American Savings Bank)

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/american-savings-bank-reports-third-quarter-2021-financial-results-301412243.html

SOURCE Hawaiian Electric Industries, Inc.

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