Finance
American Savings Bank Reports Second Quarter 2024 Financial Results
-
2Q 2024 net loss of $45.8 million reflects after-tax goodwill impairment of $66.1 million in connection with HEI’s ongoing review of strategic options for ASB
-
Excluding the non-cash goodwill impairment, and excluding after-tax Maui wildfire-related expenses of $0.3 million, ASB’s core net income1 for the second quarter was $20.7 million, compared to $20.9 million in the first quarter of 2024 and $20.2 million in the second quarter of 2023
-
Non-cash goodwill impairment has no impact on ASB’s liquidity or ability to serve customers’ financial needs
-
Net interest margin expanded to 2.79%, up 4 basis points from the prior quarter
-
Strong credit quality and another release of reserves reflect healthy Hawaii economy
HONOLULU, July 31, 2024–(BUSINESS WIRE)–American Savings Bank, F.S.B. (ASB), a wholly owned subsidiary of Hawaiian Electric Industries, Inc. (NYSE – HE), today reported a second quarter 2024 net loss of $45.8 million. The second quarter 2024 results reflect the impact of an after-tax goodwill impairment of $66.1 million in connection with HEI’s ongoing review of strategic options for ASB. The goodwill impairment is related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB’s liquidity.
“The bank’s core operations and earnings remain strong, and in the second quarter ASB improved profitability and grew core net income2 compared to the same quarter last year,” said Ann Teranishi, president and chief executive officer of ASB. “We saw net interest margin expand in the quarter, and management’s prudent expense control resulted in a decrease in core noninterest expense. ASB is in a strong financial position with high liquidity, deep borrowing capacity and a loyal, long-tenured base of deposits.”
“Over the last year, HEI has been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii,” said Scott Seu, HEI president and CEO. “Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB. We will continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term.”
Teranishi continued, “In connection with HEI’s ongoing evaluation, the bank recorded a non-cash goodwill impairment charge that reflects management’s analysis of our bank’s market valuation. This non-cash charge has no impact on ASB’s liquidity or ASB’s ability to serve our customers’ financial needs. We remain focused on taking care of Hawaii’s residents, businesses and communities as we have for nearly 100 years.”
There is no set timetable for HEI’s comprehensive review of strategic options for ASB, and there can be no assurances that any actions regarding ASB will result from this evaluation. Neither HEI nor ASB expect to disclose or provide an update concerning developments related to this process unless or until HEI’s Board of Directors has approved a definitive course of action or otherwise determined that further disclosure is appropriate or necessary.
___________
|
1 |
|
See the “Explanation of ASB’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliation at the end of this release. For the first quarter of 2024 and the second quarter 2023, core net income was approximately equivalent to GAAP net income. |
|
2 |
|
Refer to footnote 1. |
Financial Highlights
Second quarter 2024 net interest income was $61.7 million compared to $62.3 million in the linked quarter and $63.2 million in the second quarter of 2023. The lower net interest income compared to the linked quarter was primarily due to lower yields on the investment portfolio and lower earning asset balances. The lower net interest income compared to the prior year quarter was primarily due to higher interest expense on deposit liabilities, partially offset by higher interest and dividend income due to higher earning asset yields. Net interest margin for the second quarter of 2024 was 2.79% compared to 2.75% in both the linked and prior year quarters. The yield on earning assets improved 1 basis point during the quarter, and cost of funding improved 2 basis points.
In the second quarter of 2024 ASB recorded a negative provision for credit losses of $1.9 million compared to a negative provision for credit losses of $2.2 million in the linked quarter and a provision for credit losses of $0.04 million in the second quarter of 2023. The quarter’s negative provision reflects a $0.8 million release of reserves due to an improved economic outlook for Maui following the August 2023 wildfires, as well as lower loss rates and lower loan balances. As of June 30, 2024, ASB’s allowance for credit losses to outstanding loans was 1.11% compared to 1.16% as of March 31, 2024 and 1.13% as of June 30, 2023.
The net charge-off ratio for the second quarter of 2024 was 0.15%, compared to 0.14% in both the linked and prior year quarters. Nonaccrual loans as a percentage of total loans receivable held for investment were 0.53%, compared to 0.53% in the linked quarter and 0.22% in the prior year quarter.
Noninterest income was $15.8 million in the second quarter of 2024 compared to $17.2 million in the linked quarter and $15.6 million in the second quarter of 2023. The decrease compared to the linked quarter was primarily due to lower bank-owned life insurance (BOLI) income related to changes in the fair market value of the underlying assets. The increase compared to the prior year quarter was primarily due to higher BOLI income and higher fee income, partially offset by the gain on sale of real estate recorded last year.
Noninterest expense was $136.5 million compared to $55.9 million in the linked quarter and $53.8 million in the second quarter of 2023. The increase compared to the linked and prior year quarters primarily reflects the goodwill impairment charge of $82.2 million pre-tax ($66.1 million after tax) taken in connection with HEI’s ongoing review of strategic options for ASB. Noninterest expense for the quarter also included pre-tax wildfire-related services expenses of $1.2 million.
Total loans were $6.1 billion as of June 30, 2024, down 2.5% from December 31, 2023.
Total deposits were $8.0 billion as of June 30, 2024, down 1.3% from December 31, 2023. Core deposits declined 1.3% from December 31, 2023, while certificates of deposit decreased 1.4% primarily due to the paydown of $166 million in public time deposits. As of June 30, 2024, 83% of deposits were F.D.I.C. insured or fully collateralized, with approximately 79% of deposits F.D.I.C. insured. For the second quarter of 2024, the average cost of funds was 115 basis points, down slightly from 117 basis points in the linked quarter and up 32 basis points from the prior year quarter.
Wholesale funding totaled $520 million as of June 30, 2024, down $73 million from March 31, 2024.
In the second quarter of 2024, ASB did not pay a dividend to HEI, supporting ASB’s healthy capital levels. ASB had a Tier 1 leverage ratio of 8.4% as of June 30, 2024.
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS
Concurrent with ASB’s regulatory filing 30 days after the end of the quarter, ASB announced its second quarter 2024 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 2024.
HEI plans to announce its second quarter 2024 consolidated financial results on Friday, August 9, 2024 and will also conduct a webcast and conference call at 10:30 a.m. Hawaii time (4:30 p.m. Eastern time) that same day to discuss its consolidated earnings, including ASB’s earnings.
To listen to the conference call, dial 1-888-660-6377 (U.S.) or 1-929-203-0797 (international) and enter passcode 2393042. Parties may also access presentation materials (which include reconciliation of non-GAAP measures) 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 23, 2024. To access the audio replay, dial 1-800-770-2030 (U.S.) or 1-647-362-9199 (international) and enter passcode 2393042.
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 https://hpuc.my.site.com/cdms/s/ 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.
NON-GAAP MEASURES
Measures described as “core” (e.g., core net income and core noninterest expense) are non-GAAP measures which exclude after-tax Maui wildfire-related costs and the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB. See “Explanation of ASB’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliations at the end of this release.
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, 2023 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. |
||||||||||||||||||
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|
||||||||||||||||||
|
|
Three months ended |
|
Six months ended June 30 |
|||||||||||||||
|
(in thousands) |
|
June 30, |
|
March 31, |
|
June 30, |
|
2024 |
|
2023 |
||||||||
|
Interest and dividend income |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest and fees on loans |
|
$ |
72,960 |
|
|
$ |
72,971 |
|
|
$ |
67,966 |
|
$ |
145,931 |
|
|
$ |
132,808 |
|
Interest and dividends on investment securities |
|
|
13,218 |
|
|
|
14,964 |
|
|
|
13,775 |
|
|
28,182 |
|
|
|
28,412 |
|
Total interest and dividend income |
|
|
86,178 |
|
|
|
87,935 |
|
|
|
81,741 |
|
|
174,113 |
|
|
|
161,220 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest on deposit liabilities |
|
|
18,015 |
|
|
|
17,432 |
|
|
|
9,661 |
|
|
35,447 |
|
|
|
16,498 |
|
Interest on other borrowings |
|
|
6,479 |
|
|
|
8,154 |
|
|
|
8,852 |
|
|
14,633 |
|
|
|
16,573 |
|
Total interest expense |
|
|
24,494 |
|
|
|
25,586 |
|
|
|
18,513 |
|
|
50,080 |
|
|
|
33,071 |
|
Net interest income |
|
|
61,684 |
|
|
|
62,349 |
|
|
|
63,228 |
|
|
124,033 |
|
|
|
128,149 |
|
Provision for credit losses |
|
|
(1,910 |
) |
|
|
(2,159 |
) |
|
|
43 |
|
|
(4,069 |
) |
|
|
1,218 |
|
Net interest income after provision for credit losses |
|
|
63,594 |
|
|
|
64,508 |
|
|
|
63,185 |
|
|
128,102 |
|
|
|
126,931 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Fees from other financial services |
|
|
5,133 |
|
|
|
4,874 |
|
|
|
5,009 |
|
|
10,007 |
|
|
|
9,688 |
|
Fee income on deposit liabilities |
|
|
4,630 |
|
|
|
4,898 |
|
|
|
4,504 |
|
|
9,528 |
|
|
|
9,103 |
|
Fee income on other financial products |
|
|
2,960 |
|
|
|
2,743 |
|
|
|
2,768 |
|
|
5,703 |
|
|
|
5,512 |
|
Bank-owned life insurance |
|
|
2,255 |
|
|
|
3,584 |
|
|
|
1,955 |
|
|
5,839 |
|
|
|
3,380 |
|
Mortgage banking income |
|
|
364 |
|
|
|
424 |
|
|
|
230 |
|
|
788 |
|
|
|
360 |
|
Gain on sale of real estate |
|
|
— |
|
|
|
— |
|
|
|
495 |
|
|
— |
|
|
|
495 |
|
Other income, net |
|
|
423 |
|
|
|
686 |
|
|
|
678 |
|
|
1,109 |
|
|
|
1,479 |
|
Total noninterest income |
|
|
15,765 |
|
|
|
17,209 |
|
|
|
15,639 |
|
|
32,974 |
|
|
|
30,017 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Compensation and employee benefits |
|
|
29,802 |
|
|
|
32,459 |
|
|
|
29,394 |
|
|
62,261 |
|
|
|
59,598 |
|
Occupancy |
|
|
5,220 |
|
|
|
5,063 |
|
|
|
5,539 |
|
|
10,283 |
|
|
|
11,127 |
|
Data processing |
|
|
4,960 |
|
|
|
4,846 |
|
|
|
5,095 |
|
|
9,806 |
|
|
|
10,107 |
|
Services |
|
|
4,250 |
|
|
|
4,151 |
|
|
|
2,689 |
|
|
8,401 |
|
|
|
5,284 |
|
Equipment |
|
|
2,477 |
|
|
|
2,649 |
|
|
|
2,957 |
|
|
5,126 |
|
|
|
5,603 |
|
Office supplies, printing and postage |
|
|
1,006 |
|
|
|
1,018 |
|
|
|
1,109 |
|
|
2,024 |
|
|
|
2,274 |
|
Marketing |
|
|
747 |
|
|
|
776 |
|
|
|
834 |
|
|
1,523 |
|
|
|
1,850 |
|
Goodwill impairment |
|
|
82,190 |
|
|
|
— |
|
|
|
— |
|
|
82,190 |
|
|
|
— |
|
Other expense |
|
|
5,813 |
|
|
|
4,942 |
|
|
|
6,152 |
|
|
10,755 |
|
|
|
12,343 |
|
Total noninterest expense |
|
|
136,465 |
|
|
|
55,904 |
|
|
|
53,769 |
|
|
192,369 |
|
|
|
108,186 |
|
Income (loss) before income taxes |
|
|
(57,106 |
) |
|
|
25,813 |
|
|
|
25,055 |
|
|
(31,293 |
) |
|
|
48,762 |
|
Income tax (benefit) |
|
|
(11,319 |
) |
|
|
4,879 |
|
|
|
4,851 |
|
|
(6,440 |
) |
|
|
9,996 |
|
Net income (loss) |
|
$ |
(45,787 |
) |
|
$ |
20,934 |
|
|
$ |
20,204 |
|
$ |
(24,853 |
) |
|
$ |
38,766 |
|
Comprehensive income (loss) |
|
$ |
(44,154 |
) |
|
$ |
11,166 |
|
|
$ |
12,994 |
|
$ |
(32,988 |
) |
|
$ |
49,986 |
|
OTHER BANK INFORMATION (annualized %, except as of period end) |
|
|
|
|
|
|
|
|
||||||||||
|
Return on average assets |
|
|
(1.97 |
) |
|
|
0.88 |
|
|
|
0.84 |
|
|
(0.53 |
) |
|
|
0.81 |
|
Return on average equity |
|
|
(33.97 |
) |
|
|
15.64 |
|
|
|
16.20 |
|
|
(9.25 |
) |
|
|
15.87 |
|
Return on average tangible common equity |
|
|
(39.84 |
) |
|
|
18.48 |
|
|
|
19.40 |
|
|
(10.89 |
) |
|
|
19.07 |
|
Net interest margin |
|
|
2.79 |
|
|
|
2.75 |
|
|
|
2.75 |
|
|
2.77 |
|
|
|
2.80 |
|
Efficiency ratio |
|
|
176.20 |
|
|
|
70.27 |
|
|
|
68.18 |
|
|
122.52 |
|
|
|
68.40 |
|
Net charge-offs to average loans outstanding |
|
|
0.15 |
|
|
|
0.14 |
|
|
|
0.14 |
|
|
0.14 |
|
|
|
0.14 |
|
As of period end |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Nonaccrual loans to loans receivable held for investment |
|
|
0.53 |
|
|
|
0.53 |
|
|
|
0.22 |
|
|
|
|
|||
|
Allowance for credit losses to loans outstanding |
|
|
1.11 |
|
|
|
1.16 |
|
|
|
1.13 |
|
|
|
|
|||
|
Tangible common equity to tangible assets |
|
|
5.4 |
|
|
|
5.0 |
|
|
|
4.3 |
|
|
|
|
|||
|
Tier-1 leverage ratio |
|
|
8.4 |
|
|
|
8.0 |
|
|
|
7.8 |
|
|
|
|
|||
|
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11.0 |
|
$ |
— |
|
|
$ |
25.0 |
|
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. |
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|
|
||||||||||||
|
(in thousands) |
June 30, 2024 |
December 31, 2023 |
||||||||||
|
Assets |
|
|
|
|
||||||||
|
Cash and due from banks |
|
$ |
139,114 |
|
|
$ |
184,383 |
|
||||
|
Interest-bearing deposits |
|
|
195,721 |
|
|
|
251,072 |
|
||||
|
Cash and cash equivalents |
|
|
334,835 |
|
|
|
435,455 |
|
||||
|
Investment securities |
|
|
|
|
||||||||
|
Available-for-sale, at fair value |
|
|
1,061,687 |
|
|
|
1,136,439 |
|
||||
|
Held-to-maturity, at amortized cost |
|
|
1,179,182 |
|
|
|
1,201,314 |
|
||||
|
Stock in Federal Home Loan Bank, at cost |
|
|
29,204 |
|
|
|
14,728 |
|
||||
|
Loans held for investment |
|
|
6,030,158 |
|
|
|
6,180,810 |
|
||||
|
Allowance for credit losses |
|
|
(66,813 |
) |
|
|
(74,372 |
) |
||||
|
Net loans |
|
|
5,963,345 |
|
|
|
6,106,438 |
|
||||
|
Loans held for sale, at lower of cost or fair value |
|
|
13,904 |
|
|
|
15,168 |
|
||||
|
Other |
|
|
698,648 |
|
|
|
681,460 |
|
||||
|
Goodwill |
|
|
— |
|
|
|
82,190 |
|
||||
|
Total assets |
|
$ |
9,280,805 |
|
|
$ |
9,673,192 |
|
||||
|
Liabilities and shareholder’s equity |
|
|
|
|
||||||||
|
Deposit liabilities–noninterest-bearing |
|
$ |
2,515,062 |
|
|
$ |
2,599,762 |
|
||||
|
Deposit liabilities–interest-bearing |
|
|
5,521,411 |
|
|
|
5,546,016 |
|
||||
|
Other borrowings |
|
|
520,000 |
|
|
|
750,000 |
|
||||
|
Other |
|
|
226,488 |
|
|
|
247,563 |
|
||||
|
Total liabilities |
|
|
8,782,961 |
|
|
|
9,143,341 |
|
||||
|
Common stock |
|
|
1 |
|
|
|
1 |
|
||||
|
Additional paid-in capital |
|
|
359,048 |
|
|
|
358,067 |
|
||||
|
Retained earnings |
|
|
439,202 |
|
|
|
464,055 |
|
||||
|
Accumulated other comprehensive loss, net of tax benefits |
|
|
|
|
||||||||
|
Net unrealized losses on securities |
$ |
(291,864 |
) |
|
$ |
(282,963 |
) |
|
||||
|
Retirement benefit plans |
|
(8,543 |
) |
|
(300,407 |
) |
|
(9,309 |
) |
|
(292,272 |
) |
|
Total shareholder’s equity |
|
|
497,844 |
|
|
|
529,851 |
|
||||
|
Total liabilities and shareholder’s equity |
|
$ |
9,280,805 |
|
|
$ |
9,673,192 |
|
||||
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. |
Explanation of ASB’s Use of Certain Unaudited Non-GAAP Measures
HEI and ASB management use certain non-GAAP measures to evaluate the performance of HEI and the bank.
Management believes these non-GAAP measures provide useful information and are a better indicator of the companies’ core operating activities. Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings and returns on average equity and average assets for the bank.
The reconciling adjustments from GAAP earnings to core earnings are limited to the costs related to the Maui wildfires and the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB. Management does not consider these items to be representative of the company’s fundamental core earnings.
|
Reconciliation of GAAP to non-GAAP Measures |
||||||||
|
|
||||||||
|
(in thousands) |
|
Three months ended |
|
Six months ended |
||||
|
Maui wildfire related costs and goodwill impairment |
|
|
|
|
||||
|
Pretax expenses: |
|
|
|
|
||||
|
Provision for credit losses |
|
$ |
(800 |
) |
|
$ |
(2,300 |
) |
|
Professional services expense |
|
|
1,201 |
|
|
|
2,909 |
|
|
Other expenses, net |
|
|
51 |
|
|
|
(266 |
) |
|
Pretax Maui wildfire related costs, net |
|
|
452 |
|
|
|
343 |
|
|
Pretax goodwill impairment |
|
|
82,190 |
|
|
|
82,190 |
|
|
Income tax benefit |
|
|
(16,181 |
) |
|
|
(16,152 |
) |
|
After-tax expenses |
|
$ |
66,461 |
|
|
$ |
66,381 |
|
|
|
|
|
|
|
||||
|
ASB net income (loss) |
|
|
|
|
||||
|
GAAP (as reported) |
|
$ |
(45,787 |
) |
|
$ |
(24,853 |
) |
|
Excluding expense relating to Maui wildfire costs and goodwill impairment (after tax): |
|
|
|
|
||||
|
Provision for credit losses |
|
|
(586 |
) |
|
|
(1,684 |
) |
|
Professional services expense |
|
|
880 |
|
|
|
2,130 |
|
|
Other expenses, net |
|
|
37 |
|
|
|
(195 |
) |
|
Goodwill impairment |
|
|
66,130 |
|
|
|
66,130 |
|
|
Maui wildfire related cost, net and goodwill impairment (after tax) |
|
|
66,461 |
|
|
|
66,381 |
|
|
Non-GAAP (core) net income |
|
$ |
20,674 |
|
|
$ |
41,528 |
|
|
|
|
Three months ended |
|
Six months ended |
||
|
Ratios (annualized %) |
|
|
|
|
||
|
Based on GAAP |
|
|
|
|
||
|
Return on average assets |
|
(1.97 |
) |
|
(0.53 |
) |
|
Return on average equity |
|
(33.97 |
) |
|
(9.25 |
) |
|
Return on average tangible common equity |
|
(39.84 |
) |
|
(10.89 |
) |
|
Efficiency ratio |
|
176.20 |
|
|
122.52 |
|
|
Based on Non-GAAP (core) |
|
|
|
|
||
|
Return on average assets |
|
0.89 |
|
|
0.88 |
|
|
Return on average equity |
|
15.34 |
|
|
15.46 |
|
|
Return on average tangible common equity |
|
17.99 |
|
|
18.20 |
|
|
Efficiency ratio |
|
68.46 |
|
|
68.49 |
|
|
1 |
|
Accounting principles generally accepted in the United States of America |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240730272283/en/
Contacts
Mateo Garcia
Director, Investor Relations
Telephone: (808) 543-7300
E-mail: ir@hei.com
Finance
Homegrown Music Festival looks to right finances, hire new leadership
DULUTH — The Duluth Homegrown Music Festival is seeking both new operational leadership and a solution to financial filing issues that caused the organization to lose its federal tax-exempt status, which it has not held since 2022.
The organization is currently operating as a taxable nonprofit, confirmed Don Ness, the former Duluth mayor who serves as president of Homegrown’s
board of directors.
Ness and the board are working to discern whether there might be any outstanding tax liabilities in the wake of an apparent filing lapse.
“It’s a serious matter that requires diligence to do things right, and to correct past oversight, and to make sure that we are in full compliance with all tax and regulatory requirements,” Ness said. “The board is 100% committed to that course of action.”
As the Duluth Monitor first reported, Homegrown had its federal tax-exempt status revoked in 2022 after failing to make required financial reports for three years. The Monitor also reported that Minnesota Attorney General Keith Ellison’s office has notified the organization it may be in violation of state law requiring the proper registration of soliciting charities.
Clint Austin / Duluth Media Group file photo
“All but one of us have been on for less than a year,” Ness said of the current board members. “We’ve been committed to saying, ‘hey, we need to improve the points of accountability.’”
The organization will also require new operational leadership. Co-directors Cory Jezierski and Dereck Murphy-Williams resigned earlier this month, after leading Homegrown through four successful festivals.
“My contract ended at the end of May, and I knew a few days later that I did not want to continue in that position,” Jezierski said. “Simply put, it was the best thing for my mental health. It’s a job that requires many, many hours and a lot of work, and it can be very stressful as well.”
Amy Arntson / Duluth Media Group file photo
Murphy-Williams did not respond to an interview request for this article, nor did preceding Homegrown director Melissa LaTour. According to LaTour’s
LinkedIn profile,
she was Homegrown director from 2016 to 2022.
Jason Beckman, a recent president who is no longer serving on the board, responded to a News Tribune email but did not provide an interview availability before this article went to press.
Ness does not believe the reporting lapses were due to any ill intent. He praised Jezierski and Murphy-Williams for their success managing festival operations. “They cared deeply about the festival,” he said. “It’s amazing to see that our community continues to support this really unique and special festival.”
“Those guys run a hell of a festival,” said Scott Lunt, festival founder and a current board member. “I think they needed help with bookkeeping.”
Clint Austin / Duluth Media Group file photo
By Jezierski’s account, issues with the festival’s tax status became apparent shortly after he became co-director. “We went to file taxes, they were rejected,” Jezierski said. “At that time we, of course, didn’t know why right away, but once we started pulling on that thread, we unraveled a whole lot of the problems that were going on.”
Jezierski said “it took a long time to try to get any sort of help” from the board, but said that by the time he and Murphy-Williams left the organization, “everything had been turned over to be reconciled” with a financial professional.
Ness, like Lunt, was deeply involved with Homegrown in its first decade but had not had an official role with the festival since then. After launching the festival in 1999 and running it on his own for several years, Lunt was “burnt out,” Ness remembered.
Derek Montgomery / Duluth Media Group file photo
After a transition period during which the festival was run in partnership with the Ripsaw newspaper, Homegrown established a nonprofit organization in 2006 with Ness as festival director. Ness subsequently stepped down when he was elected mayor in 2007.
By 2025, Ness was in his current position as executive director of the Ordean Foundation.
“I was approached by a couple of longtime music scenesters,” Ness recalled. “They said, ‘There are questions about (Homegrown’s) nonprofit status. There are questions about some governance issues. We’re concerned.’”
Ness agreed to join the board, and became president. The 2026 festival ran smoothly from an operational standpoint, but Ness found the financial reporting to be lacking.
Clint Austin / Duluth Media Group file photo
“The last board meeting that we had prior to the (co-directors’) resignations was intended to be an overview of the festival that was a month before,” Ness said. “I certainly felt very uncomfortable with how little financial information we were receiving.”
Lunt also joined the board in 2025, marking his first time serving in that capacity. He said the new board has been spending significant time addressing the accounting and reporting issues.
“Every year at Homegrown time I’m like, ‘I should get more involved,’ and then I don’t,” Lunt said. “Then this board thing came up, and it was kind of sold to me as, like, four meetings a year. I was like, ‘Oh, that’s perfect.’ And now we’re meeting weekly.”
Clint Austin / Duluth Media Group file photo
Although it’s unclear how the organization’s finances will look when the accounting and reporting issues have been fully addressed, along with any outstanding tax liabilities, both Ness and Lunt said they are confident the annual festival will continue without interruption.
“The organization will continue,” Ness said. “The festival will continue. Homegrown is in no danger in terms of its viability.” The financial documentation Ness initially received indicated budgeted revenues of about $140,000, against about $130,000 in expenses.
“Financially, I think we’re in a great spot. We have the money to hire the (financial) professionals, and we have (done so),” Lunt said. “We were hoping that we could get all this sorted out before it had to become more public.”
“We poured countless hours into this festival, and this is how it ends, with everyone talking about this,” Jezierski said. “It’s rough.”
“There’s a DIY ethos that is really at the core of Homegrown,” reflected Ness. “We’re throwing a music festival that isn’t waiting for some famous band from the East Coast to bless us with their presence. We are doing this on our own.”
Clint Austin / Duluth Media Group file photo
That DIY spirit also means “you’re kind of passing wisdom down from person to person, and sometimes that’s imperfect.” Ness continued. “The ways that we do things evolve over time, because it’s not a buttoned-down corporate sort of thing. That can create its own set of challenges.”
“It’s self-supporting,” said Lunt about the festival. “It’s widely volunteer-run. You do need to pay a couple people, obviously, to keep track of some things, but it’s going to be strong into the future. It’s gone through its bumps before.”
Finance
LUMIQ Raises Strategic Funding to Become the AI Decision Layer for Financial Services
While most AI in financial services remains advisory, LUMIQ has built the layer that owns the decision — autonomous, auditable AI agents making regulated calls in production at leading banks, insurers, and capital markets firms. Today, LUMIQ serves clients across India, the United States, and Southeast Asia — leading institutions across insurance, banking, and capital markets.
NEW YORK and SINGAPORE, June 19, 2026 /PRNewswire/ — LUMIQ, an AI-native financial services company, today announced a strategic funding round to scale auto-decisioning for financial institutions across the United States and Southeast Asia. The round was led by Bajaj Finserv, one of India’s largest and most diversified financial services groups, with participation from existing investor Info Edge Ventures.
Right now, thousands of customers are waiting for a policy to be issued, a loan to be disbursed, a claim to be adjudicated, because somewhere an FSI employee is drowning in decisions, held back by the risk of getting it wrong. Today, when e-commerce delivers the same day, banks and insurers still decide in weeks. We built LiteCone to take that burden: AI decides the routine cases, completely and accountably, so humans spend their judgment on the one case that actually needs it. This round lets us bring that to every financial institution in the markets that matter most.
Shoaib Mohammad, Co-founder and CEO, LUMIQ
From AI that assists to AI that decides
For decades, financial institutions have bought technology that made their people faster — faster data, faster scoring, faster copilots. The decision still landed on a human. LUMIQ is changing that. Through its LiteCone platform, the company deploys AI agents that read the file, apply the institution’s own guidelines, and reach the decision end to end — escalating only the cases that genuinely require human judgment. The output is not a recommendation. It is a decision, with full reasoning attached, cross-referenced to policy, and defensible under audit.
The results in production speak clearly. At a leading life insurer, LUMIQ’s LEO agent decides 75–80% of underwriting cases with zero human touch, reduced policy issuance cost by roughly 25%, and compressed turnaround from days to under eight minutes — running 24×7 with complete auditability. Across its client base spanning insurance, banking, and capital markets in India, the US, and Southeast Asia, LUMIQ now processes millions of decisions annually.
LiteCone turns a real financial-services role into a working AI agent in weeks. Every agent we deploy is consistent, explainable, compliant, and auditable by design — not as an afterthought. This capital lets us go deeper on the platform and broader across roles. And through our cloud and AI lab partnerships, institutions will increasingly find LiteCone already embedded in the platforms they run today.
Vaibhav Dobriyal, Co-founder and Chief Product Officer, LUMIQ
Finance
Consumer confidence plunges among younger adults
Consumer confidence has plunged among traditionally optimistic younger adults amid fears for their personal finances and the wider economy, figures show.
GfK’s long-running Consumer Confidence Index remained unchanged at an overall score of minus 23 in June.
However, the analyst said this was was “misleading as, beneath the surface, there are new signs that confidence is weakening”.
Neil Bellamy, consumer insights director at GfK, said: “The biggest fall this month is among those aged 16 to 29, traditionally one of the most optimistic groups.
“Here confidence has dropped 11 points over the past month to minus two, the lowest level seen for two years, driven by large falls in views on both their own personal finances and the wider economy.
“More broadly, there are now no demographic groups with a positive confidence score, including higher-income households earning £50,000 or more, who have slipped back into negative territory as of June.
“Confidence remains subdued and vulnerable to further economic or political uncertainty.”
Overall, confidence in personal finances over the coming year remained flat at minus two, four points lower than this time last year.
The measures of both personal finances and the economy over the previous 12 months were both slightly down, by two points and three points respectively, “reflecting the sense that things have been extremely tough over the last year for so many”, GfK said.
The only measure to increase was expectations for the wider economy over the next 12 months, up two points to minus 36 but still eight points below this time last year.
The major purchase index, an indicator of confidence in buying big ticket items, remained at minus 20, four points lower than June last year.
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