HONOLULU--(BUSINESS WIRE)--
American Savings Bank, F.S.B., a wholly-owned subsidiary of
Hawaiian Electric Industries, Inc. (NYSE:HE), today announced a
performance improvement initiative that aims to improve both operating
and capital efficiency.
"Over the years, American has made significant investments to
transform itself from a traditional thrift to a full-service community
bank," said Timothy K. Schools, president of American Savings Bank.
"More recently, we have been evaluating ways to build upon the
tremendous job our team has done in executing the transformation.
Today, I am pleased to announce a bank-wide performance improvement
initiative focused on the delivery of enhanced products and services,
certain productivity improvements and the repositioning of the bank's
balance sheet. In particular, I am pleased to announce that we have
substantially completed the balance sheet repositioning which puts us
well on our way to improving the bank's performance and capital
efficiency," added Schools.
BALANCE SHEET REPOSITIONING
In June, the bank repositioned a portion of its balance sheet to
reduce the size of its wholesale (noncustomer) assets to levels that
are more consistent with industry averages. In total, the bank sold
approximately $1.3 billion of high-quality, investment securities with
a weighted-average yield of 4.33% and retired approximately $1.2
billion of wholesale borrowings with a weighted-average cost of 4.70%.
The bank subsequently purchased approximately $0.3 billion of
short-term agency notes and entered into approximately $0.2 billion of
FHLB advances to facilitate the timing of the release of certain
collateral. The bank anticipates that the notes and advances will
mature over the remainder of 2008.
An after-tax charge of approximately $36 million related to the
balance sheet repositioning will be recognized in the second quarter.
Two-thirds of the charge relates to fees associated with the early
retirement of borrowings and the remainder from realized losses on the
sale of certain securities.
The repositioning will allow the bank, subject to regulatory
approval, to reduce the capital necessary to run the bank by nearly
20% and improve the bank's key profitability ratios of net interest
margin and return on assets. Subject to regulatory approval, the bank
is expected to return approximately $75 million to its parent, HEI,
who intends to use the proceeds to pay down debt and for other
corporate purposes. On a go-forward basis these transactions are not
expected to have a significant impact on the bank's earnings or
interest rate risk. In addition, following the charge and any return
of capital to HEI, the bank is expected to remain well-capitalized.
"Importantly, these transactions position the bank for improved
performance while maintaining our safety and soundness, and the
quality of our customer service," noted Schools.
PRODUCTIVITY IMPROVEMENTS AND ENHANCED PRODUCTS AND SERVICES
Productivity improvements are another key part of the performance
improvement initiative. One example is the recent change in American's
organizational structure to realign executive responsibilities to
better support external and internal customers. The reorganization
enables quicker delivery of new and/or enhanced products and services
in response to changing marketplace demands. The successful
introduction of ASB Free Checking this spring underscores the bank's
enhanced ability to identify opportunities and to respond with a
market-leading product.
To further enhance productivity, plans are being developed to
optimize American's corporate real estate, supplier management and
purchasing, application of technology and equipment, and processes and
procedures. New products and services are also being developed to
better serve customers and continue to enhance their banking
experience with American.
WEBCAST AND TELECONFERENCE
American Savings Bank, F.S.B. and its parent, HEI, will conduct a
webcast and teleconference call to review the contents of this release
on Friday, June 27, 2008 at 2:00 a.m. Hawaii Time (8:00 a.m. EST). The
event can be accessed through HEI's website at http://www.hei.com or
by dialing (800) 901-5231, passcode: 53348129 for the teleconference
call.
An online replay of the webcast will be available at the same
website beginning about two hours after the event. Replays of the
teleconference call will also be available approximately two hours
after the event through July 11, 2008, by dialing (888) 286-8010,
passcode: 27365200.
HEI supplies power to over 400,000 customers or 95% of Hawaii's
population through its electric utilities, Hawaiian Electric Company,
Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company,
Limited, and provides a wide array of banking and other financial
services to consumers and businesses through American Savings Bank,
F.S.B., the state's third largest financial institution based on 2007
year-end asset size.
FORWARD-LOOKING STATEMENTS
Certain statements herein constitute "forward-looking statements,"
within the meaning of the Private Securities Litigation Reform Act of
1995, that involve a number of risks and uncertainties that could
cause actual results to differ materially from those indicated,
including the changing of regional and national economic conditions,
changes in the real estate market, changes in levels of market
interest rates, credit risks on lending activities, and competitive
and regulatory factors. All forward-looking statements are necessarily
speculative and undue reliance should not be placed on any such
statements, which are accurate only as of the date made. HEI and ASB
disclaim any duty to update such forward-looking statements.
Forward-looking statements in this release should be read in
conjunction with the "Forward-Looking Statements" discussion (which is
incorporated by reference herein) set forth on page iv of HEI's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008,
and in HEI's future periodic reports that discuss important factors
that could cause HEI's results to differ materially from those
anticipated in such statements.
Source: Hawaiian Electric Industries, Inc.
Contact: Hawaiian Electric Industries, Inc.
Suzy P. Hollinger, 808-543-7385 Telephone
Manager, Treasury and Investor Relations
Fax: 808-203-1155
shollinger@hei.com