Hawaiian Electric Industries Reports First Quarter 2012 Earnings & Declares Dividend EPS of $0.40 Reflects Improvement at Both Utility and Bank

Hawaiian Electric Company Invests Over $40 Million in Infrastructure

Loan Growth Continues at American Savings Bank

Board Declares Dividend of $0.31 Per Share

HONOLULU, May 8, 2012 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the first quarter of 2012 of $38.3 million, or $0.40 diluted earnings per share (EPS), compared to $28.5 million, or $0.30 diluted EPS for the first quarter of 2011. 

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"HEI delivered solid results in the first quarter of 2012 and continued to reinvest earnings into our Hawaii-based businesses.  Our three utilities, Hawaiian Electric, Maui Electric and Hawaii Electric Light Company, invested over $40 million -- one and a half times their earnings -- in infrastructure for a more modern and reliable electric grid that will be able to integrate significant amounts of renewable energy across our islands.  As we announced last week, American Savings Bank increased its loan portfolio for the sixth consecutive quarter, adding more than $100 million in loans to customers over the last year," said Constance H. Lau, HEI president and chief executive officer.

"Like many companies across Hawaii, our companies' futures are linked to an economically and environmentally vibrant Hawaii.  Reducing Hawaii's dependence on oil is of paramount importance to our state and our customers," said Lau.  Since the end of 2010, over 90% of the increase in the typical Oahu customer's bill was due to the increase in the cost of oil which went up over $40 per barrel.  "That's why we remain committed to encouraging the development of renewable energy in Hawaii and we are making progress with 12% of our customers' energy usage provided by renewable energy," said Lau.      

Hawaiian Electric Company Continues to Invest in Clean Energy and Reliability

Hawaiian Electric Company's[1] net income for the first quarter of 2012 was $27.3 million compared to $19.2 million in the first quarter of 2011.  The main driver of the improvement was the recovery of costs for reliability and clean energy investments on Oahu.  In 2011, the Oahu utility continued to ramp up its clean energy and reliability initiatives which resulted in spending in advance of revenues to recover the costs.  This put pressure on first half 2011 earnings until the Oahu utility was able to start the recovery of these costs in July 2011.

Operations and maintenance (O&M) expenses[2] (after-tax) were $1 million lower for the first quarter of 2012 compared to the first quarter of the prior year; however, management continues to estimate O&M expenses to be approximately 6% higher for the year compared to 2011 as work continues on strengthening the electric grid.

All three Hawaiian Electric utilities are now fully decoupled and no longer impacted by changes in sales volumes under Hawaii's new regulatory framework.  Hawaiian Electric on Oahu decoupled last year and Hawaii Electric Light Company on Hawaii Island and Maui Electric in Maui County just received Hawaii Public Utilities Commission approval to decouple in April and May 2012, respectively.  The new decoupled regulatory model helps the utilities fulfill their critical role in carrying out the state's energy policy to reduce Hawaii's dependence on oil and to provide clean, secure, reliable power at stable costs for our customers. 

[1] 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.

[2] Excludes demand side management (DSM) program costs. DSM program costs were $1 million in the first quarter of 2012 compared to $2 million in the first quarter of 2011. DSM program costs are recovered through a surcharge.

American Savings Bank Continues Solid Performance

American Savings Bank (American) net income for the first quarter of 2012 was $15.9 million compared to $13.9 million in the first quarter of 2011.  Net income improved by $2.0 million primarily due to lower provision for loan losses as consumer credit quality improved with Hawaii's gradual economic recovery and higher noninterest income from higher gains on sales of very low fixed rate residential mortgages.

Overall, American achieved strong profitability in the quarter with a return on average equity of 12.9% and a return on average assets of 1.29%. 

Also refer to the American news release on Form 8-K filed on April 30, 2012.

Holding and Other Companies

The holding and other companies' net losses were $4.9 million in the first quarter of 2012 compared to $4.6 million in the first quarter of 2011.

BOARD DECLARES QUARTERLY DIVIDEND

On May 8, 2012, the board of directors maintained HEI's quarterly cash dividend of 31 cents per share, payable on June 13, 2012, to shareholders of record at the close of business on May 21, 2012 (ex-dividend date is May 17, 2012).  The dividend is equivalent to an annual rate of $1.24 per share.

Dividends have been paid continuously since 1901.  At the indicated annual dividend rate and the closing share price on May 7, 2012 of $26.51, HEI's yield is 4.7%.

WEBCAST AND TELECONFERENCE

Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review its first quarter 2012 earnings on Wednesday, May 9, 2012, at 7:00 a.m. Hawaii time (1:00 p.m. Eastern time).  The event can be accessed through HEI's website at www.hei.com or by dialing (866) 314-5050, passcode:  22527679 for the teleconference call.  The presentation for the webcast will be on HEI's website under the headings "Investor Relations," "News & Events" and "Presentations & Webcasts."  HEI and Hawaiian Electric Company, Inc. (HECO) 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, HECO's and American's press releases, Securities and Exchange Commission (SEC) filings and public conference calls and webcasts.  The information on HEI's website is not incorporated by reference in this document or in the 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 the Company's SEC filings.

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 May 23, 2012, by dialing (888) 286-8010, passcode: 92305336.

HEI supplies power to over 400,000 customers or 95% of Hawaii's population through its electric utilities, HECO, 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, one of Hawaii's largest financial institutions.

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 Annual Report on Form 10-K for the year ended December 31, 2011 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.  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, HECO, 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



March 31,

(in thousands, except per share amounts) 


2012


2011

Revenues





Electric utility


$  749,610


$  645,335

Bank


65,252


65,313

Other


(2)


(15)

    Total revenues


814,860


710,633

Expenses





Electric utility


692,356


600,127

Bank


42,340


43,559

Other


4,348


3,572

    Total expenses


739,044


647,258

Operating income (loss)





Electric utility


57,254


45,208

Bank


22,912


21,754

Other


(4,350)


(3,587)

     Total operating income 


75,816


63,375

Interest expense–other than on deposit liabilities 





     and other bank borrowings


(18,539)


(20,140)

Allowance for borrowed funds used during construction


870


520

Allowance for equity funds used during construction


1,940


1,244

Income before income taxes


60,087


44,999

Income taxes


21,298


16,064

Net income 


38,789


28,935

Preferred stock dividends of subsidiaries


473


473

Net income for common stock


$   38,316


$   28,462

Basic earnings per common share


$       0.40


$       0.30

Diluted earnings per common share


$       0.40


$       0.30

Dividends per common share


$       0.31


$       0.31

Weighted-average number of common shares outstanding


96,167


94,817

Adjusted weighted-average shares


96,561


95,182






Net income (loss) for common stock  by segment





     Electric utility


$    27,300


$    19,189

     Bank


15,877


13,851

     Other


(4,861)


(4,578)

Net income for common stock


$    38,316


$    28,462

Comprehensive income attributable to common shareholders


$    38,627


$    26,624







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, 2011 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2012 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


March 31,

December 31,

(dollars in thousands)

2012

2011

Assets



Cash and cash equivalents

$    236,346

$      270,265

Accounts receivable and unbilled revenues, net

306,760

344,322

Available-for-sale investment and mortgage-related securities

631,063

624,331

Investment in stock of Federal Home Loan Bank of Seattle 

97,764

97,764

Loans receivable held for investment, net

3,672,401

3,642,818

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

14,657

9,601

Property, plant and equipment, net of accumulated depreciation of



    $2,061,649 in 2012 and $2,049,821 in 2011 

3,375,654

3,334,501

Regulatory assets

677,674

669,389

Other

538,443

517,550

Goodwill

82,190

82,190

     Total assets

$  9,632,952

$   9,592,731

Liabilities and shareholders' equity



Liabilities



Accounts payable

$    183,733

$      216,176

Interest and dividends payable

23,778

25,041

Deposit liabilities

4,125,204

4,070,032

Short-term borrowings—other than bank

156,288

68,821

Other bank borrowings

232,843

233,229

Long-term debt, net—other than bank

1,282,602

1,340,070

Deferred income taxes

375,510

354,051

Regulatory liabilities

316,560

315,466

Contributions in aid of construction

378,039

356,203

Retirement benefits liability

513,187

530,410

Other

456,817

516,990

     Total liabilities

8,044,561

8,026,489




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:  96,541,143 shares in 2012 and 96,038,328 shares in 2011 

1,362,880

1,349,446

Retained earnings

210,044

201,640

Accumulated other comprehensive loss, net of tax benefits

(18,826)

(19,137)

     Total shareholders' equity

1,554,098

1,531,949

     Total liabilities and shareholders' equity

$  9,632,952

$   9,592,731





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, 2011 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2012 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three months ended March 31

2012

2011

(in thousands)



Cash flows from operating activities



Net income 

$       38,789

$     28,935

Adjustments to reconcile net income to net cash used in operating activities



      Depreciation of property, plant and equipment

37,911

37,708

      Other amortization

1,419

2,354

      Provision for loan losses

3,546

4,550

      Loans receivable originated and purchased, held for sale

(89,087)

(35,015)

      Proceeds from sale of loans receivable, held for sale

85,252

43,048

      Change in deferred income taxes

21,260

16,687

      Change in excess tax benefits from share-based payment arrangements

(44)

(22)

      Allowance for equity funds used during construction

(1,940)

(1,244)

      Change in cash overdraft

-

(2,688)

      Changes in assets and liabilities



           Decrease (increase) in accounts receivable and unbilled revenues, net

37,562

(19,880)

           Increase in fuel oil stock

(14,458)

(3,513)

           Decrease in accounts, interest and dividends payable

(36,991)

(40,016)

           Change in prepaid and accrued income taxes and utility revenue taxes

(41,126)

(1,594)

           Contributions to defined benefit pension and other postretirement benefit plans

(26,815)

(31,200)

           Change in other assets and liabilities

(30,994)

(11,344)

Net cash used in operating activities

(15,716)

(13,234)

Cash flows from investing activities



Available-for-sale investment and mortgage-related securities purchased

(53,931)

(109,307)

Principal repayments on available-for-sale investment and mortgage-related securities

46,355

114,529

Net increase in loans held for investment

(34,212)

(70,269)

Proceeds from sale of real estate acquired in settlement of loans

3,371

1,253

Capital expenditures

(65,300)

(38,491)

Contributions in aid of construction

22,855

5,749

Other

-

145

Net cash used in investing activities

(80,862)

(96,391)

Cash flows from financing activities



Net increase in deposit liabilities

55,172

59,883

Net increase (decrease) in short-term borrowings with original maturities of three months or less

87,467

(24,923)

Net increase (decrease) in retail repurchase agreements

(379)

7,368

Proceeds from issuance of long-term debt

-

125,000

Repayment of long-term debt

(57,500)

(50,000)

Change in excess tax benefits from share-based payment arrangements

44

22

Net proceeds from issuance of common stock

5,940

5,674

Common stock dividends

(23,855)

(23,593)

Preferred stock dividends of subsidiaries

(473)

(473)

Other

(3,757)

(3,730)

Net cash provided by financing activities

62,659

95,228

Net decrease in cash and cash equivalents