Hawaiian Electric Industries Reports First Quarter 2014 Earnings Diluted Earnings Per Share of $0.45

Hawaiian Electric Company Continues to Integrate Clean Energy Resources

American Savings Bank Continues to Deliver Solid Results

Board Declares Dividend of $0.31 Per Share

HONOLULU, May 7, 2014 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the first quarter of 2014 of $45.9 million, or $0.45 diluted earnings per share (EPS), compared to $33.7 million, or $0.34 diluted EPS for the first quarter of 2013.  Yesterday, the HEI board of directors declared a dividend of $0.31 per share, continuing its 113-year history of paying continuous dividends.

"We are off to a solid start in 2014 with first quarter financial results aligned with our full year expectations.  We're proud of our leadership in the nation's clean energy transformation, including integrating higher percentages of renewable and distributed generation than states across the nation.  The policy guidance recently received from the Hawaii Public Utilities Commission will allow us to continue our work with more clarity as we invest in the modernization of our grid to integrate even more low-cost renewable generation in the future," said Constance H. Lau, HEI president and chief executive officer.

"American Savings Bank continued to deliver solid results despite the ongoing low interest rate and challenging regulatory environment.  The bank had annualized loan growth of 3.6% this quarter, while maintaining strong asset quality and financial returns.  American's solid results enabled it to pay dividends of $8.75 million to HEI in the quarter while maintaining healthy capital levels," added Lau.

HAWAIIAN ELECTRIC COMPANY CONTINUES INVESTMENTS FOR IMPROVED RELIABILITY TO BETTER SERVE OUR CUSTOMERS

Hawaiian Electric Company's1 net income for the first quarter of 2014 was $35.4 million compared to $24.4 million in the first quarter of 2013.  The $11.0 million increase from the prior year was driven by the following items (on an after-tax basis): 

  • $8 million lower operations and maintenance (O&M) expenses2 compared to the same quarter last year primarily due to the timing of overhauls, lower production expenses and lower customer service expenses which were elevated in the prior year quarter during the stabilization period for the new customer information system; and 
  • $6 million higher net revenues3 compared to the first quarter of 2013 primarily due to $8 million for the estimated recovery of costs for reliability and clean energy investments partially offset by $1 million due to reduced fuel efficiency performance of the generation units on Oahu which were run at lower levels compared to 2013 in part to integrate more renewable energy.

These were partially offset by (after-tax):

  • $2 million higher depreciation expense resulting from additional infrastructure investments for improved reliability; and
  • $1 million higher interest expense.

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 net income neutral expenses covered by surcharges or by third parties of $2 million in both the first quarter of 2014 and 2013. See "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.

3

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 Consolidated Statements of Income.


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.

AMERICAN SAVINGS BANK CONTINUES TO DELIVER SOLID PERFORMANCE

American Savings Bank's (American) net income for the first quarter of 2014 was $14.5 million compared to $12.2 million in the fourth (or linked) quarter of 2013 and $14.2 million in the first quarter of 2013.

First quarter 2014 net income was $2.4 million higher than the linked quarter primarily driven by a $2 million (after-tax) gain on the sale of the municipal bond securities portfolio due to the strategic shift towards higher quality liquid assets and $2 million (after-tax) lower noninterest expenses ($1 million of which is due to lower compensation and benefits expense), partially offset by $1 million (after-tax) decrease in fee income, including lower mortgage banking income associated with lower refinancing volumes.   

Compared to the first quarter of 2013, net income increased by $0.4 million.  The increase was primarily driven by the $2 million (after-tax) gain on the sale of the municipal bond securities portfolio and lower provision for loan losses.  These were largely offset by lower mortgage banking income from significantly lower refinancing activity and lower interchange fees due to the Durbin Amendment which placed a limit on interchange fees and became effective on July 1, 2013 for American.

Overall, American achieved solid profitability in the first quarter of 2014 with a return on average equity of 11.0% and a return on average assets of 1.10%. 

Also, refer to the American news release issued on April 30, 2014.

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $4.0 million in the first quarter of 2014, down from $4.9 million in the first quarter of 2013.  The lower net losses were due to lower interest expense and higher tax benefits.

BOARD DECLARES QUARTERLY DIVIDEND

On May 6, 2014, the board of directors maintained HEI's quarterly cash dividend of $0.31 cents per share, payable on June 10, 2014, to shareholders of record at the close of business on May 22, 2014 (ex-dividend date is May 20, 2014).  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 6, 2014 of $23.22, HEI's yield is 5.3%.

HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE

Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its first quarter 2014 earnings and 2014 earnings per share (EPS) guidance on Wednesday, May 7, 2014 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) 270-6057, passcode:  47349847 for the teleconference call.  The presentation for the webcast will be 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.  Also, at the Investor Relations section of HEI's website, investors may sign up to receive e-mail alerts (based on each investor's selected preferences).  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 on-line replay of the webcast will be available on HEI's website beginning about two hours after the event.  Audio replays of the teleconference will also be available approximately two hours after the event through May 21, 2014, by dialing (888) 286-8010, passcode:  24249299.

HEI supplies power to approximately 450,000 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, 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 14 to 15 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 Annual Report on Form 10-K for the year ended December 31, 2013 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 March 31


2014


2013

(in thousands, except per share amounts)





Revenues





Electric utility


$

720,062



$

717,441


Bank


63,619



64,756


Other


68



35


Total revenues


783,749



782,232


Expenses





Electric utility


649,396



666,320


Bank


41,996



43,005


Other


4,051



4,082


Total expenses


695,443



713,407


Operating income (loss)





Electric utility


70,666



51,121


Bank


21,623



21,751


Other


(3,983)



(4,047)


Total operating income


88,306



68,825


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


(19,456)



(18,731)


Allowance for borrowed funds used during construction


614



730


Allowance for equity funds used during construction


1,609



1,215


Income before income taxes


71,073



52,039


Income taxes


24,673



17,887


Net income


46,400



34,152


Preferred stock dividends of subsidiaries


473



473


Net income for common stock


$

45,927



$

33,679


Basic earnings per common share


$

0.45



$

0.34


Diluted earnings per common share


$

0.45



$

0.34


Dividends per common share


$

0.31



$

0.31


Weighted-average number of common shares outstanding


101,382



98,135


Adjusted weighted-average shares


102,165



98,540


Net income (loss) for common stock by segment





Electric utility


$

35,420



$

24,429


Bank


14,539



14,155


Other


(4,032)



(4,905)


Net income for common stock


$

45,927



$

33,679


Comprehensive income attributable to Hawaiian Electric Industries, Inc.


$

47,094



$

33,618


Return on average common equity (twelve months ended)1


10.4%



8.5%



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, 2013 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014 (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.

1

On a core basis, 2014 and 2013 return on average common equity (twelve months ended March 31) were 10.4% and 10.0%, respectively. See reconciliation of GAAP to non-GAAP measures.

 


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(dollars in thousands)


March 31, 2014

December 31, 2013

Assets

Cash and cash equivalents




$

269,120





$

220,036


Accounts receivable and unbilled revenues, net




324,433





346,785


Available-for-sale investment and mortgage-related securities




517,534





529,007


Investment in stock of Federal Home Loan Bank of Seattle




86,697





92,546


Loans receivable held for investment, net




4,147,537





4,110,113


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




4,363





5,302


Property, plant and equipment, net of accumulated depreciation of $2,206,650 and $2,192,422 at the respective dates




3,908,392





3,865,514


Regulatory assets




579,963





575,924


Other




537,841





512,627


Goodwill




82,190





82,190


Total assets




$

10,458,070





$

10,340,044


Liabilities and shareholders' equity









Liabilities









Accounts payable




$

210,511





$

212,331


Interest and dividends payable




28,520





26,716


Deposit liabilities




4,477,987





4,372,477


Short-term borrowings—other than bank




136,369





105,482


Other bank borrowings




244,642





244,514


Long-term debt, net—other than bank




1,492,945





1,492,945


Deferred income taxes




538,321





529,260


Regulatory liabilities




350,916





349,299


Contributions in aid of construction




438,020





432,894


Defined benefit pension and other postretirement benefit plans liability




284,043





288,539


Other




475,575





524,224


Total liabilities




8,677,849





8,578,681


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: 101,477,616 shares and 101,259,800 shares at the respective dates




1,491,338





1,488,126


Retained earnings




270,173





255,694


Accumulated other comprehensive loss, net of tax benefits









Net unrealized losses on securities


$

(2,858)





$

(3,663)




Unrealized losses on derivatives


(466)





(525)




Retirement benefit plans


(12,259)



(15,583)



(12,562)



(16,750)


Total shareholders' equity




1,745,928





1,727,070


Total liabilities and shareholders' equity




$

10,458,070





$

10,340,044



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, 2013 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014 (when filed), as updated by SEC Forms 8-K.

 


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three months ended March 31


2014


2013

(in thousands)





Cash flows from operating activities





Net income


$

46,400



$

34,152


Adjustments to reconcile net income to net cash provided by operating activities





Depreciation of property, plant and equipment


43,181



39,726


Other amortization


1,609



935


Provision for loan losses


995



1,858


Loans receivable originated and purchased, held for sale


(46,998)



(79,224)


Proceeds from sale of loans receivable, held for sale


48,720



102,254


Increase in deferred income taxes


6,298



19,967


Excess tax benefits from share-based payment arrangements


(164)



(414)


Allowance for equity funds used during construction


(1,609)



(1,215)


Change in cash overdraft


(1,038)




Changes in assets and liabilities





Decrease in accounts receivable and unbilled revenues, net


22,352



14,335


Increase in fuel oil stock


(34,260)



(29,272)


Increase in regulatory assets


(9,258)



(17,746)


Increase (decrease) in accounts, interest and dividends payable


(9,307)



38,148


Change in prepaid and accrued income taxes and utility revenue taxes


(19,474)



(50,933)


Decrease in defined benefit pension and other postretirement benefit plans liability


(818)



(702)


Change in other assets and liabilities


(27,208)



(23,550)


Net cash provided by operating activities


19,421



48,319


Cash flows from investing activities





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


(79,912)



(26,705)


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


15,597



36,504


Proceeds from sale of available-for-sale investment securities


79,564




Net increase in loans held for investment


(37,887)



(66,934)


Proceeds from sale of real estate acquired in settlement of loans


1,429



3,046


Capital expenditures


(65,829)



(71,041)


Contributions in aid of construction


6,958



11,710


Other


5,848



869


Net cash used in investing activities


(74,232)



(112,551)


Cash flows from financing activities





Net increase in deposit liabilities


105,510



82,704


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


30,887



50,244


Net increase (decrease) in retail repurchase agreements


141



(2,680)


Proceeds from issuance of long-term debt




50,000


Repayment of long-term debt




(50,000)


Excess tax benefits from share-based payment arrangements


164



414


Net proceeds from issuance of common stock


3,054



4,703


Common stock dividends


(31,435)



(24,394)


Preferred stock dividends of subsidiaries


(473)



(473)


Other


(3,953)



(3,240)


Net cash provided by financing activities


103,895



107,278


Net increase in cash and cash equivalents


49,084



43,046


Cash and cash equivalents, beginning of period


220,036



219,662


Cash and cash equivalents, end of period


$

269,120



$

262,708



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, 2013 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014, 2013 (when filed), as updated by SEC Forms 8-K. Cash flows for interim periods are not necessarily indicative of cash flows to be expected for future interim periods or the full year.

 


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


Three months ended March 31


2014


2013

(dollars in thousands, except per barrel amounts)





Revenues


$

720,062



$

717,441


Expenses





Fuel oil


286,300



305,100


Purchased power


164,916



153,364


Other operation and maintenance


88,606



101,813


Depreciation


41,603



38,280


Taxes, other than income taxes


67,971



67,763


Total expenses


649,396



666,320


Operating income


70,666



51,121


Allowance for equity funds used during construction


1,609



1,215


Interest expense and other charges, net


(15,723)



(14,519)


Allowance for borrowed funds used during construction


614



730


Income before income taxes


57,166



38,547


Income taxes


21,247



13,619


Net income


35,919



24,928


Preferred stock dividends of subsidiaries


229



229


Net income attributable to Hawaiian Electric


35,690



24,699


Preferred stock dividends of Hawaiian Electric


270



270


Net income for common stock


$

35,420



$

24,429


Comprehensive income attributable to Hawaiian Electric


$

35,429



$

24,447


OTHER ELECTRIC UTILITY INFORMATION





Kilowatthour sales (millions)





Hawaiian Electric


1,595



1,591


Hawaii Electric Light


260



263


Maui Electric


271



269




2,126



2,123


Wet-bulb temperature (Oahu average; degrees Fahrenheit)


67.1



66.0


Cooling degree days (Oahu)


828



789


Average fuel oil cost per barrel


$

131.15



$

130.83





Twelve months ended March 31


2014


2013

Return on average common equity (%) (simple average)1





Hawaiian Electric


9.21



6.97


Hawaii Electric Light


7.64



5.07


Maui Electric


7.68



7.41


Hawaiian Electric Consolidated


8.69



6.68



This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2013 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014 (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.

1

On a core basis, the 2014 and 2013 return on average common equity (twelve months ended March 31) were 9.2% and 8.9%, respectively for Hawaiian Electric; 7.6% and 6.3%, respectively for Hawaii Electric Light; 7.7% and 8.8%, respectively for Maui Electric and 8.7% and 8.4% respectively, for Hawaiian Electric Consolidated. See reconciliation of GAAP to non-GAAP measures.

 


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)




March 31,


December 31,

($ in thousands, except par value)


2014


2013

Assets





Property, plant and equipment





Utility property, plant and equipment





Land


$

51,845



$

51,883


Plant and equipment


5,762,899



5,701,875


Less accumulated depreciation


(2,134,460)



(2,111,229)


Construction in progress


148,602



143,233


Utility property, plant and equipment, net


3,828,886



3,785,762


Nonutility property, plant and equipment, less accumulated depreciation of $1,224 and $1,223 at respective dates


6,566



6,567


Total property, plant and equipment, net


3,835,452



3,792,329


Current assets





Cash and cash equivalents


17,359



62,825


Customer accounts receivable, net


164,016



175,448


Accrued unbilled revenues, net


131,864



144,124


Other accounts receivable, net


16,690



14,062


Fuel oil stock, at average cost


168,347



134,087


Materials and supplies, at average cost


60,089



59,044


Prepayments and other


32,299



52,857


Regulatory assets


77,455



69,738


Total current assets


668,119



712,185


Other long-term assets





Regulatory assets


502,508



506,186


Unamortized debt expense


9,124



9,003


Other


67,386



67,426


Total other long-term assets


579,018



582,615


   Total assets


$

5,082,589



$

5,087,129


Capitalization and liabilities





Capitalization





Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,429,105 shares)


$

102,880



$

102,880


Premium on capital stock


541,449



541,452


Retained earnings


961,337



948,624


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


617



608


Common stock equity


1,606,283



1,593,564


Cumulative preferred stock — not subject to mandatory redemption


34,293



34,293


Long-term debt, net


1,206,545



1,206,545


Total capitalization


2,847,121



2,834,402


Current liabilities





Current portion of long-term debt


11,400



11,400


Short-term borrowings from non-affiliates


34,996




Accounts payable


182,826



189,559


Interest and preferred dividends payable


24,100



21,652


Taxes accrued


193,734



249,445


Regulatory liabilities


1,437



1,916


Other


62,476



63,881


Total current liabilities


510,969



537,853


Deferred credits and other liabilities





Deferred income taxes


515,041



507,161


Regulatory liabilities


349,479



347,383


Unamortized tax credits


75,544



73,539


Defined benefit pension and other postretirement benefit plans liability


257,601



262,162


Other


88,814



91,735


Total deferred credits and other liabilities


1,286,479



1,281,980


Contributions in aid of construction


438,020



432,894


Total capitalization and liabilities


$

5,082,589



$

5,087,129



This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2013 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014 (when filed), as updated by SEC Forms 8-K.

 


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three months ended March 31,


2014


2013

(in thousands)





Cash flows from operating activities





Net income


$

35,919



$

24,928


Adjustments to reconcile net income to net cash provided by operating activities





Depreciation of property, plant and equipment


41,603



38,280


Other amortization


1,621



957


Increase in deferred income taxes


20,344



17,975


Change in tax credits, net


2,032



1,382


Allowance for equity funds used during construction


(1,609)



(1,215)


Change in cash overdraft


(1,038)




Changes in assets and liabilities





Decrease in accounts receivable


8,804



38,703


Decrease (increase) in accrued unbilled revenues


12,260



(1,317)


Increase in fuel oil stock


(34,260)



(29,272)


Increase in materials and supplies


(1,045)



(3,345)


Increase in regulatory assets


(9,258)



(17,746)


Increase (decrease) in accounts payable


(16,024)



38,934


Change in prepaid and accrued income taxes and utility revenue taxes


(47,526)



(53,666)


Decrease in defined benefit pension and other postretirement benefit plans liability


(205)



(47)


Change in other assets and liabilities


(10,981)



(1,050)


Net cash provided by operating activities


637



53,501


Cash flows from investing activities





Capital expenditures


(64,462)



(67,915)


Contributions in aid of construction


6,958



11,710


Net cash used in investing activities


(57,504)



(56,205)


Cash flows from financing activities





Common stock dividends


(22,707)



(20,070)


Preferred stock dividends of Hawaiian Electric and subsidiaries


(499)



(499)


Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less


34,996



43,052


Other


(389)



2


Net cash provided by financing activities


11,401



22,485


Net increase (decrease) in cash and cash equivalents


(45,466)



19,781


Cash and cash equivalents, beginning of period


62,825



17,159


Cash and cash equivalents, end of period


$

17,359



$

36,940



This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2013 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014 (when filed), as updated by SEC Forms 8-K. Cash flows for interim periods are not necessarily indicative of cash flows to be expected for future interim periods or the full year.

 


American Savings Bank, F.S.B.

STATEMENTS OF INCOME DATA

(Unaudited)




Three months ended 

(in thousands)


March 31, 2014


December 31,
2013


March 31, 2013

Interest and dividend income







Interest and fees on loans


$

43,682



$

43,405



$

42,603


Interest and dividends on investment and mortgage-related securities


3,035



3,372



3,464


Total interest and dividend income


46,717



46,777



46,067


Interest expense







Interest on deposit liabilities


1,225



1,222



1,312


Interest on other borrowings


1,405



1,437



1,164


Total interest expense


2,630



2,659



2,476


Net interest income


44,087



44,118



43,591


Provision for loan losses


995



554



1,858


Net interest income after provision for loan losses


43,092



43,564



41,733


Noninterest income







Fees from other financial services


5,128



5,732



7,643


Fee income on deposit liabilities


4,421



4,797



4,314


Fee income on other financial products


2,290



2,117



1,794


Mortgage banking income


628



1,413



3,346


Gains on sale of securities


2,847






Other income, net


1,588



1,470



1,592


Total noninterest income


16,902



15,529



18,689


Noninterest expense







Compensation and employee benefits


20,286



22,195



20,088


Occupancy


3,953



4,197



4,123


Data processing


3,060



2,970



2,987


Services


2,273



2,160



2,103


Equipment


1,645



1,826



1,774


Other expense


7,153



7,951



7,595


Total noninterest expense


38,370



41,299



38,670


Income before income taxes


21,624



17,794



$

21,752


Income taxes


7,085



5,610



7,597


Net income


$

14,539



$

12,184



$

14,155


Comprehensive income


$

15,563



$

23,802



$

15,484


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





Return on average assets


1.10



0.94



1.12


Return on average equity


11.03



9.56



11.28


Return on average tangible common equity


13.06



11.39



13.49


Net interest margin


3.64



3.67



3.78


Net charge-offs to average loans outstanding


0.02



0.15



0.12


As of period end







Nonperforming assets to loans outstanding and real estate owned *


1.12



1.20



1.89


Allowance for loan losses to loans outstanding


0.98



0.97



1.11


Tier-1 leverage ratio *


9.0



9.1



9.1


Total risk-based capital ratio *


12.7



12.1



12.8


Tangible common equity to total assets


8.44



8.50



8.38


Dividend paid to HEI (through  ASHI) (for the periods presented, in millions)


$

9



$

10



$

10


* Regulatory basis



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, 2013 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014 (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.

 


American Savings Bank, F.S.B.

BALANCE SHEETS DATA

(Unaudited)


(in thousands)


March 31, 2014

December 31, 2013

Assets

Cash and cash equivalents (including $40 million of securities purchased under resale agreements at March 31, 2014)




$

251,083





$

156,603


Available-for-sale investment and mortgage-related securities




517,534





529,007


Investment in stock of Federal Home Loan Bank of Seattle




86,697





92,546


Loans receivable held for investment




4,188,460





4,150,229


Allowance for loan losses




(40,923)





(40,116)


Loans receivable held for investment, net




4,147,537





4,110,113


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




4,363





5,302


Other




282,079





268,063


Goodwill




82,190





82,190


Total assets




$

5,371,483





$

5,243,824











Liabilities and shareholder's equity









Deposit liabilities—noninterest-bearing




$

1,284,957





$

1,214,418


Deposit liabilities—interest-bearing




3,193,030





3,158,059


Other borrowings




244,642





244,514


Other




120,324





105,679


Total liabilities




4,842,953





4,722,670


Common stock




336,617





336,054


Retained earnings




203,086





197,297


Accumulated other comprehensive loss, net of tax benefits









Net unrealized losses on securities


$

(2,858)





$

(3,663)




Retirement benefit plans


(8,315)



(11,173)



(8,534)



(12,197)


Total shareholder's equity




528,530





521,154


Total liabilities and shareholder's equity




$

5,371,483





$

5,243,824



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, 2013 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended March 31, 2014 (when filed), 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 for both the utility and HEI consolidated and the corresponding adjusted return on average common equity (ROACE).

The reconciling adjustments from GAAP earnings to core earnings are limited to the settlement charge for the partial write-off of utility assets in the fourth quarter of 2012.  For more information on the settlement charge recorded in 2012, see the Form 8-K filed on March 20, 2013.  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 "O&M-related net income neutral items" which are O&M expenses covered by specific surcharges or by third parties.  This item is grossed-up in revenue and expense and does not impact net income.

 


RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES

Hawaiian Electric Industries, Inc. and Subsidiaries (HEI)

Unaudited

($ in millions)




Twelve months ended March 31,

2014

2013

HEI CONSOLIDATED NET INCOME



GAAP (as reported)

$

173.8


$

134.0


Excluding special items (after-tax):



Settlement agreement for the partial writedown of certain utility assets


24.4


Non-GAAP (core)

$

173.8


$

158.5


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

Based on GAAP

10.4%


8.5%


Based on non-GAAP (core)2

10.4%


10.0%




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)


Twelve months ended March 31,


2014

2013

HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME




GAAP (as reported)


$

133.9

$

96.4

Excluding special items (after-tax):




   Settlement agreement for the partial writedown of certain utility assets


24.4

Non-GAAP (core)


$

133.9

$

120.8










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




Based on GAAP


8.7%

6.7%

Based on non-GAAP (core)2


8.7%

8.4%




















Hawaiian Electric


Hawaii Electric Light


Maui Electric

Twelve months ended March 31,

2014

2013


2014

2013


2014

2013

NET INCOME









GAAP (as reported)

$

94.6

$

65.1


$

20.9

$

14.0


$

18.5

$

17.3

Excluding special items (after-tax):









   Settlement agreement for the partial writedown of certain utility assets

17.7


3.4


3.4

Non-GAAP (core)

$

94.6

$

82.8


$

20.9

$

17.4


$

18.5

$

20.7










RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average):









Based on GAAP

9.2 %

7.0 %


7.6 %

5.1%


7.7 %

7.4 %

Based on non-GAAP (core)2

9.2 %

8.9 %


7.6 %

6.3%


7.7 %

8.8 %










Three months ended March 31,


2014

2013

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




GAAP (as reported)


$ 88.6

$101.8

   Excluding O&M-related net income neutral items3


(2.0)

(1.6)

Adjusted O&M expense (Non-GAAP measure)


$ 86.6

$ 100.2

 

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:

Shelee M.T. Kimura



Manager, Investor Relations &

Telephone: (808) 543-7384


Strategic Planning

E-mail: skimura@hei.com

 

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SOURCE Hawaiian Electric Industries, Inc.



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