Hawaiian Electric Industries Reports 2015 Year-End & Fourth Quarter Earnings

2015 Net Income of $159.9 Million;

2015 Diluted Earnings Per Share (EPS) of $1.50 and Core[1] EPS of $1.65;

Fourth Quarter Net Income of $42.3 Million; EPS of $0.39; Core[1] EPS of $0.41

Results In Line with EPS Guidance

11 Feb, 2016, 16:15 ET from Hawaiian Electric Industries, Inc.

HONOLULU, Feb. 11, 2016 /PRNewswire/ --

Selected 2015 Highlights:

  • Reported net income of $159.9 million in 2015 vs $168.1 million in 2014, down 5%;
    Core1 net income of $175.7 million in 2015 vs $173.0 million in 2014, up 2%
  • Reported EPS of $1.50 in 2015 vs $1.63 in 2014, down 8%;
    Core1 EPS of $1.65 in 2015 vs $1.68 in 2014, down 2%
  • Reported ROE of 8.6%; Core1 ROE of 9.4%
  • Continued legacy of delivering value for customers and Hawaii:
    • Record 22%2 of electricity used by Hawaiian Electric customers was from renewable sources
      • Surpassed Hawaii's 2015 renewable portfolio standard target of 15%
      • Avoided-oil equivalent of 1.9 million barrels which would have cost our state over $140 million3 in imported oil in 2015
      • 2015 residential bills lower by 18% due to lower fuel prices compared to 2014
      • Led the nation in the integration of customer-sited solar:  by the end of 2015, over 20% of single family homes on the islands we serve and approximately 13% of our customers have solar systems
    • Continuing cost management efforts limited utility other operations and maintenance (O&M) expense4 increases to 1% over the 2014 level, in line with the Honolulu inflation rate of 1%
    • Bank provided over $1.9 billion of credit to consumers and businesses and originated over 3,500 mortgages
    • Bank credit quality excellent with net charge-offs of 4 basis points on a loan book of $4.6 billion
    • Contributed nearly twenty thousand volunteer hours and over $2 million of charitable contributions to community organizations
  • History of continuous dividends since 1901
  • Progress on proposed merger with NextEra Energy and spin-off of American Savings Bank:
      • Received shareholder approval for the merger with NextEra Energy, Inc.
      • Filed Hawaii Public Utilities Commission (PUC) application for the proposed merger and PUC has initiated hearings
      • Filed SEC Form 10 for the bank spin-off

_________________

1 

Non-GAAP measure which excludes merger-related and spin-off costs after-tax.  See the "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.

2  

Based upon preliminary Renewable Portfolio Standard information as of 12/31/15.

3  

Estimate based on the 2015 average price per barrel of $74.71 and as compared to 2008 oil usage levels.

4  

Excludes net income neutral expenses covered by surcharges or by third parties and merger-related costs.  See "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.

 

Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported 2015 year-end consolidated net income for common stock of $159.9 million and diluted earnings per share (EPS) of $1.50 compared to $168.1 million and EPS of $1.63 for 2014.  For the fourth quarter of 2015, consolidated net income for common stock was $42.3 million and EPS of $0.39 compared to $33.3 million and EPS of $0.32 for the fourth quarter of 2014.  Excluding after-tax costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. of $15.8 million and $4.9 million in 2015 and 2014, respectively, and $2.2 million and $4.3 million in the fourth quarter of 2015 and 2014, respectively, core1 earnings in 2015 were $175.7 million and core1 EPS of $1.65, compared to $173.0 million and EPS of $1.68 in 2014.  For the fourth quarter of 2015, core1 earnings were $44.5 million and core1 EPS of $0.41 compared to $37.6 million and EPS of $0.36 for the fourth quarter of 2014.

"Our HEI companies delivered a competitive core1 return on equity of 9.4% for the year," said Constance Lau, HEI president and chief executive officer, "and our continuing efforts to push the boundaries of renewable energy integration helped us achieve an energy portfolio powered by 22%2 renewable sources in 2015, exceeding Hawaii's 2015 Renewable Portfolio Standard (RPS) target of 15%.  Thirteen percent of our customers now have customer-sited solar, a level of integration that leads the nation.  We continue to push for even higher levels of renewable integration to meet Hawaii's 100% RPS goal for 2045.  We remain focused on further reducing costs for our customers by vigilantly managing expenses; and increasing customer choice and engagement in Hawaii's move to 100% renewable energy by designing new time of use rates and demand response programs.  Fortunately, lower oil prices in 2015 reduced the average residential bill by 18%, but it's important that we continue to reduce our state's exposure to future oil price volatility and price increases."

"Our bank delivered solid financial results in 2015, producing healthy loan growth with good credit quality while maintaining its capital levels.  Our bank continues to make investments to continually improve the customer experience and is well positioned to continue to grow in 2016," said Lau.

"In December 2014, we announced our proposed merger with NextEra Energy, and pending approval by the Hawaii Public Utilities Commission, we are looking forward to working with NextEra Energy as a partner to help accelerate Hawaii's clean energy transformation.  We also announced the related spin-off of American Savings Bank, and we are confident that American, as a new, publicly-traded entity, will provide benefits for our Hawaii customers and communities," added Lau.

HAWAIIAN ELECTRIC COMPANY EARNINGS CONSISTENT WITH EXPECTATIONS

Full Year Results:

Hawaiian Electric Company's5 full-year 2015 net income was $135.7 million compared to $137.6 million in 2014.  The $1.9 million decrease from the prior year was primarily driven by the following after-tax items:

  • $7 million higher depreciation expense as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency; and
  • $3 million higher O&M expenses4 impacted by a regulatory decision denying recovery of enterprise resource planning software costs, additional reserves for environmental costs and higher employee benefit costs offset in part by higher 2014 costs for initial phase smart grid installations.

These items were partially offset by $7 million higher net revenues6 primarily due to $8 million in recovery of costs for clean energy and reliability investments partially offset by $1 million lower fuel efficiency performance.

_________________

Note: Amounts indicated as "after-tax" in this earnings release are based upon adjusting items for the composite statutory tax rates of 39% for the utilities and 40% for the bank.

5  

Hawaiian Electric Company, unless otherwise defined, refers to the three utilities, Hawaiian Electric Company, Inc. on Oahu, Maui Electric Company, Limited, and Hawaii Electric Light Company, Inc.

6  

Net revenues represent the after-tax impact of "Revenues" less the following expenses which are largely pass through items in revenues: "fuel oil," "purchased power" and "taxes, other than income taxes" as shown on the Hawaiian Electric Company, Inc. and Subsidiaries' Consolidated Statements of Income.

 

Fourth Quarter Results:

Fourth quarter 2015 net income of $33.0 million was $3.9 million higher than the fourth quarter of 2014 primarily driven by the following after-tax items:

  • $5 million lower O&M expenses4 in the fourth quarter of 2015 largely due to lower maintenance costs including vegetation management costs, the deferral of RFP costs and higher fourth quarter of 2014 costs for initial phase smart grid installations and the upgrade of the customer information system partially offset by the additional reserves for environmental costs in 2015; and
  • $2 million higher net revenues in 2015 attributable to the recovery of costs for clean energy and reliability investments.

These items were partially offset by the following after-tax items:

  • $2 million higher depreciation expense in the fourth quarter of 2015 as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency; and
  • $1 million higher interest expense and other charges.

AMERICAN SAVINGS BANK:   SOLID FINANCIAL PERFORMANCE

Full Year Results:

American Savings Bank's (American) full-year 2015 net income was $54.7 million compared to $51.3 million in 2014.  The $3.4 million increase from the prior year was primarily driven by the following after-tax items:

  • $5 million higher net interest income as contributions from loan and investment portfolio growth more than offset the lower yield on earning assets; and
  • $4 million higher noninterest income primarily due to higher mortgage banking income ($2 million) resulting from selling a larger portion of low rate mortgage loan originations and higher deposit-related fee initiatives ($2 million).

These increases were partially offset by $6 million after-tax higher noninterest expense primarily due to higher pension and benefits expense.

American achieved loan growth of 4.1% in 2015, consistent with the bank's target and growth strategies, operating in the competitive Hawaii market environment.  Loan growth was primarily driven by commercial real estate, residential and home equity loans and helped to offset the impact of the decline in net interest margin.

Total deposits were $5.0 billion at December 31, 2015, an increase of $402 million or 8.7% from December 31, 2014.  Low-cost core deposits increased $357 million or 8.5% from December 31, 2014.  The average cost of funds was 0.22% for the full year 2015, down 1 basis point from the prior year.

Overall, American's return on average equity for the full year remained solid at 9.9% in 2015 compared to 9.6% in 2014, and the return on average assets for the full year was 0.95% in 2015 consistent with 2014.

Fourth Quarter Results:

Fourth quarter 2015 net income of $15.0 million was $1.5 million higher than the third, or linked quarter and $2.8 million higher than the fourth quarter of 2014.

Compared to the linked quarter of 2015, the $1.5 million increase in the fourth quarter of 2015 was primarily driven by the following after-tax items:

  • $1 million lower provision for loan losses primarily related to the recovery during the fourth quarter of 2015 of previously charged-off loans; and
  • $1 million higher net interest income due to strong loan and investment portfolio growth.

These increases were partially offset by $1 million (after-tax) of lower noninterest income primarily due to the gain on sale of the American service center building vacated as part of the campus consolidation plan in the linked quarter.

Compared to the fourth quarter of 2014, the $2.8 million higher net income in the fourth quarter of 2015 was primarily driven by the following after-tax items:

  • $1 million higher net interest income due to strong loan and investment portfolio growth;
  • $1 million higher provision for loan losses in the fourth quarter of 2014 primarily due to the downgrade of one performing commercial real estate loan; and
  • $1 million higher noninterest income.

American's fourth quarter of 2015 return on average equity was 10.7%, up from 9.7% in the linked quarter and 8.9% in the fourth quarter last year.  Return on average assets was 1.01% for the fourth quarter of 2015, compared to 0.92% from the linked quarter and 0.88% in the same quarter last year.

Also refer to the American's news release issued on January 29, 2016.

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $30.6 million in 2015 compared to $20.8 million in 2014.  Excluding after-tax costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. of $15.2 million in 2015 and $4.9 million in 2014, holding and other companies' net losses in 2015 and 2014 were $15.4 million and $15.9 million, respectively.

Fourth quarter net losses were $5.6 million in 2015 compared to $8.0 million in the fourth quarter of 2014.  Excluding after-tax costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. of $1.8 million in the fourth quarter of 2015 and $4.3 million in the fourth quarter of 2014, holding and other companies' net losses in 2015 and 2014 were $3.8 million and $3.7 million, respectively.

WEBCAST AND CONFERENCE CALL

HEI TO ANNOUNCE 2016 EPS GUIDANCE IN EARNINGS CONFERENCE CALL

Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its 2015 earnings on Thursday, February 11, 2016, at 12:00 noon Hawaii time (5:00 p.m. Eastern time).  HEI will announce 2016 EPS guidance during the scheduled webcast and conference call.

Interested parties within the United States may listen to the conference by calling (888) 311-8190 and entering passcode: 15902422.  International parties may listen to the conference by calling (330) 863-3378 and entering passcode: 15902422 or by accessing the webcast on HEI's website under the heading "Investor Relations."  HEI and Hawaiian Electric Company intend to continue to use HEI's website, www.hei.com, as a means of disclosing additional information.  Such disclosures will be included on HEI's website in the Investor Relations section.  Accordingly, investors should routinely monitor such portions of HEI's website, in addition to following HEI's, Hawaiian Electric Company's and American's press releases, HEI's and Hawaiian Electric Company'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 in this document or in HEI's and Hawaiian Electric Company'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 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 Company's SEC filings.

An online replay of the webcast will be available at the same website beginning about two hours after the event and will remain on HEI's website for 12 months.  Replays of the conference call will also be available approximately two hours after the event through February 25, 2016, by dialing (855) 859-2056 or (404) 537-3406 and entering passcode: 15902422.

HEI supplies power to approximately 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, one of Hawaii's largest financial institutions.

NON-GAAP MEASURES

See "Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures" and related reconciliations on pages 15 to 16 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 "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 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 "Forward-Looking Statements" and "Risk Factors" discussions (which are incorporated by reference herein) set forth in HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and HEI's future 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 Company, 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.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three months ended December 31

Years ended December 31

(in thousands, except per share amounts)

2015

2014

2015

2014

Revenues

Electric utility

$

555,434

$

725,267

$

2,335,166

$

2,987,323

Bank

68,511

64,726

267,733

252,497

Other

87

47

83

(278)

Total revenues

624,032

790,040

2,602,982

3,239,542

Expenses

Electric utility

487,772

666,389

2,061,050

2,711,555

Bank

45,858

46,424

183,921

173,202

Other

7,180

9,060

35,458

22,185

Total expenses

540,810

721,873

2,280,429

2,906,942

Operating income (loss)

Electric utility

67,662

58,878

274,116

275,768

Bank

22,653

18,302

83,812

79,295

Other

(7,093)

(9,013)

(35,375)

(22,463)

Total operating income

83,222

68,167

322,553

332,600

Interest expense, net—other than on deposit liabilities and other bank borrowings

(19,915)

(17,704)

(77,150)

(76,352)

Allowance for borrowed funds used during construction

539

702

2,457

2,579

Allowance for equity funds used during construction

1,562

1,838

6,928

6,771

Income before income taxes

65,408

53,003

254,788

265,598

Income taxes

22,615

19,277

93,021

95,579

Net income

42,793

33,726

161,767

170,019

Preferred stock dividends of subsidiaries

473

473

1,890

1,890

Net income for common stock

$

42,320

$

33,253

$

159,877

$

168,129

Basic earnings per common share

$

0.39

$

0.32

$

1.50

$

1.65

Diluted earnings per common share

$

0.39

$

0.32

$

1.50

$

1.63

Dividends per common share

$

0.31

$

0.31

$

1.24

$

1.24

Weighted-average number of common shares outstanding

107,460

102,561

106,418

101,968

Adjusted weighted-average shares

107,797

103,991

106,721

102,937

Net income (loss) for common stock by segment

Electric utility

$

32,993

$

29,112

$

135,714

$

137,641

Bank

14,953

12,113

54,730

51,301

Other

(5,626)

(7,972)

(30,567)

(20,813)

Net income for common stock

$

42,320

$

33,253

$

159,877

$

168,129

Comprehensive income attributable to Hawaiian Electric Industries, Inc.

$

38,075

$

19,869

$

160,993

$

157,501

Return on average common equity

8.6

%

9.6

%

Prior period financial statements reflect the retrospective application of Accounting Standards Update (ASU) No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on the Company's financial condition or results of operations.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited)

December 31

2015

2014

(dollars in thousands)

Assets

Cash and cash equivalents

$

300,478

$

175,542

Accounts receivable and unbilled revenues, net

242,766

313,696

Available-for-sale investment securities, at fair value

820,648

550,394

Stock in Federal Home Loan Bank, at cost

10,678

69,302

Loans receivable held for investment, net

4,565,781

4,389,033

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

4,631

8,424

Property, plant and equipment, net of accumulated depreciation of $2,339,319 and $2,250,950 at the respective dates

4,377,658

4,148,774

Regulatory assets

896,731

905,264

Other

488,635

542,523

Goodwill

82,190

82,190

Total assets

$

11,790,196

$

11,185,142

Liabilities and shareholders' equity

Liabilities

Accounts payable

$

138,523

$

186,425

Interest and dividends payable

26,042

25,336

Deposit liabilities

5,025,254

4,623,415

Short-term borrowings—other than bank

103,063

118,972

Other bank borrowings

328,582

290,656

Long-term debt, net—other than bank

1,586,546

1,506,546

Deferred income taxes

680,877

633,570

Regulatory liabilities

371,543

344,849

Contributions in aid of construction

506,087

466,432

Defined benefit pension and other postretirement benefit plans liability

589,918

632,845

Other

471,828

531,230

Total liabilities

9,828,263

9,360,276

Preferred stock of subsidiaries - not subject to mandatory redemption

34,293

34,293

Shareholders' equity

Preferred stock, no par value, authorized 10,000,000 shares; issued: none

Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 107,460,406 shares and 102,565,266 shares at the respective dates

1,629,136

1,521,297

Retained earnings

324,766

296,654

Accumulated other comprehensive loss, net of tax benefits

(26,262)

(27,378)

Total shareholders' equity

1,927,640

1,790,573

Total liabilities and shareholders' equity

$

11,790,196

$

11,185,142

Prior period financial statements reflect the retrospective application of ASU No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on the Company's financial condition or results of operations.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three months ended December 31

Years ended December 31

(dollars in thousands, except per barrel amounts)

2015

2014

2015

2014

Revenues

$

555,434

$

725,267

$

2,335,166

$

2,987,323

Expenses

Fuel oil

135,930

265,696

654,600

1,131,685

Purchased power

148,287

175,887

594,096

722,008

Other operation and maintenance

106,570

115,129

413,089

410,612

Depreciation

44,540

41,597

177,380

166,387

Taxes, other than income taxes

52,445

68,080

221,885

280,863

Total expenses

487,772

666,389

2,061,050

2,711,555

Operating income

67,662

58,878

274,116

275,768

Allowance for equity funds used during construction

1,562

1,838

6,928

6,771

Interest expense and other charges, net

(17,200)

(15,768)

(66,370)

(64,757)

Allowance for borrowed funds used during construction

539

702

2,457

2,579

Income before income taxes

52,563

45,650

217,131

220,361

Income taxes

19,071

16,039

79,422

80,725

Net income

33,492

29,611

137,709

139,636

Preferred stock dividends of subsidiaries

229

229

915

915

Net income attributable to Hawaiian Electric

33,263

29,382

136,794

138,721

Preferred stock dividends of Hawaiian Electric

270

270

1,080

1,080

Net income for common stock

$

32,993

$

29,112

$

135,714

$

137,641

Comprehensive income attributable to Hawaiian Electric

$

33,862

$

28,517

$

136,594

$

137,078

OTHER ELECTRIC UTILITY INFORMATION

Kilowatthour sales (millions)

   Hawaiian Electric

1,738

1,720

6,754

6,782

   Hawaii Electric Light

273

269

1,065

1,062

   Maui Electric

290

288

1,138

1,132

2,301

2,277

8,957

8,976

Wet-bulb temperature (Oahu average; degrees Fahrenheit)

71.9

70.0

70.6

69.6

Cooling degree days (Oahu)

1,395

1,206

5,082

4,909

Average fuel oil cost per barrel

$

61.59

$

122.04

$

74.71

$

129.65

Twelve months ended December 31

2015

2014

Return on average common equity (%) (simple average)

8.02

8.74

   Hawaiian Electric

7.22

6.71

   Hawaii Electric Light

8.52

8.81

   Maui Electric

7.96

8.40

   Hawaiian Electric Consolidated

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q/A for the quarters ended March 31, 2015 and June 30, 2015 and Hawaiian Electric's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited)

December 31

2015

2014

(dollars in thousands, except par value)

Assets

Property, plant and equipment

Utility property, plant and equipment

   Land

$

52,792

$

52,299

   Plant and equipment

6,315,698

6,009,482

   Less accumulated depreciation

(2,266,004)

(2,175,510)

   Construction in progress

175,309

158,616

   Utility property, plant and equipment, net

4,277,795

4,044,887

Nonutility property, plant and equipment, less accumulated depreciation of $1,229 and $1,227 at respective dates

7,272

6,563

   Total property, plant and equipment, net

4,285,067

4,051,450

Current assets

Cash and cash equivalents

24,449

13,762

Customer accounts receivable, net

132,778

158,484

Accrued unbilled revenues, net

84,509

137,374

Other accounts receivable, net

10,408

4,283

Fuel oil stock, at average cost

71,216

106,046

Materials and supplies, at average cost

54,429

57,250

Prepayments and other

36,640

33,468

Regulatory assets

72,231

71,421

   Total current assets

486,660

582,088

Other long-term assets

Regulatory assets

824,500

833,843

Unamortized debt expense

8,341

8,323

Other

75,486

81,838

   Total other long-term assets

908,327

924,004

   Total assets

$

5,680,054

$

5,557,542

Capitalization and liabilities

Capitalization

Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,805,327 shares)

$

105,388

$

105,388

Premium on capital stock

578,930

578,938

Retained earnings

1,043,082

997,773

Accumulated other comprehensive income, net of taxes-retirement benefit plans

925

45

   Common stock equity

1,728,325

1,682,144

Cumulative preferred stock — not subject to mandatory redemption

34,293

34,293

Long-term debt, net

1,286,546

1,206,546

   Total capitalization

3,049,164

2,922,983

Current liabilities

Accounts payable

114,846

163,934

Interest and preferred dividends payable

23,111

22,316

Taxes accrued

191,084

250,402

Regulatory liabilities

2,204

632

Other

54,079

61,664

   Total current liabilities

385,324

498,948

Deferred credits and other liabilities

Deferred income taxes

654,806

573,439

Regulatory liabilities

369,339

344,217

Unamortized tax credits

84,214

79,492

Defined benefit pension and other postretirement benefit plans liability

552,974

595,395

Other

78,146

76,636

   Total deferred credits and other liabilities

1,739,479

1,669,179

Contributions in aid of construction

506,087

466,432

      Total capitalization and liabilities

$

5,680,054

$

5,557,542

The Consolidated Balance Sheet as of December 31, 2014 reflects the retrospective application of ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which was adopted as of December 31, 2015.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q/A for the quarters ended March 31, 2015 and June 30, 2015 and Hawaiian Electric's Quarterly Report on SEC Form 10-Q  for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

American Savings Bank, F.S.B. STATEMENTS OF INCOME DATA (Unaudited)

Three months ended

Years ended December 31,

(in thousands)

December 31, 2015

September 30, 2015

December 31, 2014

2015

2014

Interest and dividend income

Interest and fees on loans

$

47,136

$

46,413

$

46,276

$

184,782

$

179,341

Interest and dividends on investment securities

4,550

4,213

3,187

15,120

11,945

Total interest and dividend income

51,686

50,626

49,463

199,902

191,286

Interest expense

Interest on deposit liabilities

1,467

1,355

1,303

5,348

5,077

Interest on other borrowings

1,510

1,515

1,468

5,978

5,731

Total interest expense

2,977

2,870

2,771

11,326

10,808

Net interest income

48,709

47,756

46,692

188,576

180,478

Provision for loan losses

839

2,997

2,560

6,275

6,126

Net interest income after provision for loan losses

47,870

44,759

44,132

182,301

174,352

Noninterest income

Fees from other financial services

5,667

5,639

5,760

22,211

21,747

Fee income on deposit liabilities

5,746

5,883

5,074

22,368

19,249

Fee income on other financial products

2,006

2,096

1,806

8,094

8,131

Bank-owned life insurance

1,016

1,021

1,004

4,078

3,949

Mortgage banking income

1,003

1,437

1,164

6,330

2,913

Gains on sale of investment securities

2,847

Other income, net

1,387

2,389

455

4,750

2,375

Total noninterest income

16,825

18,465

15,263

67,831

61,211

Noninterest expense

Compensation and employee benefits

23,705

22,728

19,835

90,518

79,885

Occupancy

4,115

4,128

4,238

16,365

17,197

Data processing

3,002

3,032

2,975

12,103

11,690

Services

2,474

2,556

2,561

10,204

10,269

Equipment

1,578

1,608

1,638

6,577

6,564

Office supplies, printing and postage

1,452

1,511

1,602

5,749

6,089

Marketing

844

934

1,309

3,463

3,999

FDIC insurance

881

809

820

3,274

3,261

Other expense

3,991

5,116

6,116

18,067

17,314

Total noninterest expense

42,042

42,422

41,094

166,320

156,268

Income before income taxes

22,653

20,802

18,301

83,812

79,295

Income taxes

7,700

7,351

6,188

29,082

27,994

Net income

$

14,953

$

13,451

$

12,113

$

54,730

$

51,301

Comprehensive income

$

9,477

$

17,678

$

5,419

$

54,017

$

46,940

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

Return on average assets

1.01

0.92

0.88

0.95

0.95

Return on average equity

10.66

9.73

8.93

9.93

9.60

Return on average tangible common equity

12.48

11.43

10.52

11.68

11.35

Net interest margin

3.55

3.53

3.65

3.53

3.62

Net charge-offs to average loans outstanding

(0.08)

0.10

0.04

0.04

0.01

As of period end

Nonperforming assets to loans outstanding and real estate owned *

1.02

1.00

0.85

Allowance for loan losses to loans outstanding

1.08

1.06

1.03

Tangible common equity to tangible assets

8.05

8.23

8.23

Tier-1 leverage ratio *

8.8

8.8

8.9

Total capital ratio *

13.3

13.4

12.3

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

$

7.5

$

7.5

$

8.8

$

30.0

$

36.0

* Regulatory basis. Capital ratios as of December 31, 2015 and September 30, 2015 calculated under Basel III rules, which became effective January 1, 2015.

Prior period financial statements reflect the retrospective application of ASU No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on ASB's financial condition or results of operations.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

American Savings Bank, F.S.B. BALANCE SHEETS DATA (Unaudited)

December 31

2015

2014

(in thousands)

Assets

Cash and due from banks

$

127,201

$

107,233

Interest-bearing deposits

93,680

54,230

Available-for-sale investment securities, at fair value

820,648

550,394

Stock in Federal Home Loan Bank, at cost

10,678

69,302

Loans receivable held for investment

4,615,819

4,434,651

Allowance for loan losses

(50,038)

(45,618)

Net loans

4,565,781

4,389,033

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

4,631

8,424

Other

309,946

305,416

Goodwill

82,190

82,190

Total assets

$

6,014,755

$

5,566,222

Liabilities and shareholder's equity

Deposit liabilities–noninterest-bearing

$

1,520,374

$

1,342,794

Deposit liabilities–interest-bearing

3,504,880

3,280,621

Other borrowings

328,582

290,656

Other

101,029

118,363

Total liabilities

5,454,865

5,032,434

Common stock

1

1

Additional paid in capital

340,496

338,411

Retained earnings

236,664

211,934

Accumulated other comprehensive loss, net of tax benefits

     Net unrealized gains (losses) on securities

$

(1,872)

$

462

     Retirement benefit plans

(15,399)

(17,271)

(17,020)

(16,558)

  Total shareholder's equity

559,890

533,788

  Total liabilities and shareholder's equity

$

6,014,755

$

5,566,222

Prior period financial statements reflect the retrospective application of ASU No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on ASB's financial condition or results of operations.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

EXPLANATION OF HEI'S USE OF CERTAIN UNAUDITED NON-GAAP MEASURES

HEI and Hawaiian Electric Company management use certain non-GAAP measures to evaluate the performance of the utility and HEI.  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 the adjusted return on average common equity (ROACE) for the utility and HEI consolidated.

The reconciling adjustment from GAAP earnings to core earnings is limited to the costs related to the pending merger between HEI and NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc.  For more information on the pending merger, see HEI's definitive proxy statement on Form DEFM14A filed on March 26, 2015.  Management does not consider these items to be representative of the company's fundamental core earnings.

The accompanying table also provides the calculation of utility GAAP O&M adjusted for costs related to the pending merger discussed above. "O&M-related net income neutral items" which are O&M expenses covered by specific surcharges or by third parties have also been excluded.  These "O&M-related net income neutral items" are grossed-up in revenue and expense and do not impact net income.

RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES

Hawaiian Electric Industries, Inc. and Subsidiaries (HEI)

Unaudited

($ in millions, except per share amounts)

Three months ended December 31

Years ended December 31

2015

2014

2015

2014

HEI CONSOLIDATED NET INCOME

GAAP (as reported)

$

42.3

$

33.3

$

159.9

$

168.1

Excluding special items (after-tax):

Costs related to pending merger with NextEra Energy, Inc. and spin-off of ASB Hawaii, Inc.

2.2

4.3

15.8

4.9

Non-GAAP (core)

$

44.5

$

37.6

$

175.7

$

173.0

HEI CONSOLIDATED DILUTED EARNINGS PER SHARE

GAAP (as reported)

$

0.39

$

0.32

$

1.50

$

1.63

Excluding special items (after-tax):

Costs related to pending merger with NextEra Energy, Inc. and spin-off of ASB Hawaii, Inc.

0.02

0.04

0.15

0.05

Non-GAAP (core)

$

0.41

$

0.36

$

1.65

$

1.68

Years ended December 31

2015

2014

HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)

Based on GAAP

8.6

%

9.6

%

Based on non-GAAP (core)2

9.4

%

9.8

%

Note: Columns may not foot due to rounding

1 Accounting principles generally accepted in the United States of America

2 Calculated as core net income divided by average GAAP common equity

 

RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES

Hawaiian Electric Company, Inc. and Subsidiaries

Unaudited

($ in millions)

Three months ended December 31

Years ended December 31

2015

2014

2015

2014

HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME

GAAP (as reported)

$

33.0

$

29.1

$

135.7

$

137.6

Excluding special items (after-tax):

Costs related to pending merger with NextEra Energy, Inc.

0.2

0.5

Non-GAAP (core)

$

33.2

$

29.1

$

136.2

$

137.6

Years ended December 31

2015

2014

HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)

Based on GAAP

8.0

%

8.4

%

Based on non-GAAP (core)2

8.0

%

8.4

%

Three months ended December 31

Years ended December 31

2015

2014

2015

2014

HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE

GAAP (as reported)

$

106.6

$

115.1

$

413.1

$

410.6

Excluding O&M-related net income neutral items3

1.6

2.5

7.0

10.0

Excluding costs related to pending merger with  NextEra Energy, Inc.

0.4

0.8

Non-GAAP (Adjusted other O&M expense)

$

104.6

$

112.6

$

405.3

$

400.6

Note:  Columns may not foot due to rounding

1 Accounting principles generally accepted in the United States of America

2 Calculated as core net income divided by average GAAP common equity

3 Expenses covered by surcharges or by third parties recorded in revenues

 

Contact:

Clifford H. Chen

Telephone: (808) 543-7300

Manager, Investor Relations & Strategic Planning 

E-mail: ir@hei.com

Logo - http://photos.prnewswire.com/prnh/20110411/LA80136LOGO

 

SOURCE Hawaiian Electric Industries, Inc.



RELATED LINKS

http://www.hei.com