HEI Reports 2011 & Fourth Quarter Earnings & Declares Dividend

Diluted Earnings Per Share of $1.44 for 2011

Utility Reinvests to Help Hawaii's Move to Clean Energy

Bank Continues Strong Performance

Board of Directors Declares Dividend of $0.31 Per Share

Feb 08, 2012, 19:00 ET from Hawaiian Electric Industries, Inc.

HONOLULU, Feb. 8, 2012 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported consolidated net income for common stock for the full year of 2011 was $138.2 million, or $1.44 diluted earnings per share (EPS), compared to $113.5 million, or $1.21 diluted EPS for 2010.  

Consolidated net income for the fourth quarter of 2011 was $34.2 million, or $0.36 diluted EPS, compared to $24.7 million, or $0.26 diluted EPS for the fourth quarter of 2010.  

"Our improved earnings help us fund the upfront investments necessary to support Hawaii's move to clean energy.  We are continuing to reinvest earnings in an aggressive infrastructure program to modernize the electric grid for reliability and to prepare it for significant amounts of renewable energy.  In 2011 alone, we invested over $200 million in utility infrastructure which is twice the utilities' 2011 earnings," said Constance H. Lau, HEI president and chief executive officer.

"With the majority of customer bill increases driven by fuel prices, it is crucial that we reduce our dependence on imported oil and continue to add as much cost effective renewable energy as possible as fast as we can.  This is critical to help moderate and stabilize the cost of energy for customers," added Lau.  A typical Oahu electric bill of $158 at the beginning of 2011 increased about $57 due to higher fuel costs and only $4 from rate increases and other adjustments by the end of the year.  The utilities do not earn a profit on fuel purchases.  To help offset future impacts of higher fossil fuel costs, the Hawaiian Electric utilities added 146 megawatts of renewable energy in 2011 for a total of approximately 550 megawatts.  In 2011, renewable energy supplied more than 10% of our customers' energy use and as high as 40% for our Hawaii Island customers.

"At American Savings Bank, performance remained strong throughout 2011 and earnings increased despite the significant challenges posed by the interest rate environment and federal regulation of bank fees.  While maintaining healthy capital levels, the bank paid cash dividends of $58 million and remains a beneficial source of capital.  Our unique combination of businesses continues to provide the financial resources and ready access to capital needed to invest in our utility and bank," said Lau.

UTILITY EARNINGS REFLECT CLEAN ENERGY AND RELIABILITY INVESTMENTS

Full Year Results:

Electric utility net income was $100.0 million in 2011 compared to $76.6 million in 2010.  The specific variances contributing to the net income increase from the prior year were (on an after-tax basis):

  • $27 million of additional revenues allowed for reliability and clean energy investments by all three utilities;
  • $6 million higher savings from running our Hawaii Island and Maui County generation plants more efficiently; and
  • $4 million lower depreciation expense primarily resulting from the change in depreciation rates and methods.

These increases were partially offset by the following (after-tax):

  • $6 million partial write-down of a transmission project, consistent with a settlement with the Consumer Advocate (CA) and Department of Defense (DOD), subject to PUC approval;
  • $6 million of non-recurring tax settlement items in 2010;
  • $4 million implementation of heat rate deadband and lower fuel efficiency savings on Oahu; and
  • $1 million lower kilowatthour sales for Hawaii Island and Maui County, down 0.6% and 0.9%, respectively, primarily due to high oil prices impacting customer bills and conservation.  We expect 2012 kilowatthour sales to be approximately 1% higher than 2011 for both HELCO and MECO.

Operations and maintenance (O&M) expenses(1) (pretax) were essentially flat compared to the prior year.  $6 million of higher transmission and distribution expenses including Asia-Pacific Economic Cooperation (APEC) forum related costs and $6 million of higher bad debt expense were offset by $7 million of lower overhaul costs due to timing and $5 million of lower administrative and general expense from a regulatory change in the capitalization of costs.  In 2012, we expect O&M expenses to be approximately 6% higher than in 2011.

Fourth Quarter Results:

Electric utility net income for the fourth quarter 2011 was $25.8 million compared to $18.9 million in the fourth quarter 2010.  The significant factors contributing to the net income increase from the fourth quarter of 2010 were (on an after-tax basis):

  • $7 million of additional revenues allowed for reliability and clean energy investments for our Oahu and Hawaii Island utilities; and
  • $9 million lower O&M expenses.

These increases were partially offset by the write-down of a transmission project, non-recurring tax settlement items in 2010 and lower kilowatthour sales discussed above.  For the quarter, kilowatthour sales were down 1.7% and 2.8% for Hawaii Island and Maui County, respectively.  

O&M expenses(1) (pretax) were down $14 million or 14% from the fourth quarter 2010 primarily due to major overhauls that occurred in the fourth quarter of 2010, regulatory changes associated with the capitalization of costs, lower retirement benefit expense and a non-recurring insurance claim settlement in 2011.

(1) Excludes demand side management (DSM) program costs.  DSM program costs were $4 million for the full year in both 2011 and 2010 and $1 million in the fourth quarter of 2011 compared to $2 million in the fourth quarter of 2010.  DSM program costs are recovered through a surcharge.

BANK:   SOLID PERFORMANCE AND MODERATE LOAN GROWTH

Full Year Results:

Bank net income for 2011 was $59.8 compared to $58.5 million in 2010.  Return on assets was 1.23% for 2011 compared to 1.20% in 2010.

The primary drivers for the net income improvement were improved credit quality and lower operating expenses, despite lower revenues from a prolonged low interest rate environment and the impact of regulation on fees.

The significant items contributing to the net income increase from the prior year were (on an after-tax basis):

  • $4 million lower provision for loan losses;
  • $3 million decrease in noninterest expense; and
  • $1 million lower income taxes primarily due to investments in projects that generated low-income housing tax credits in 2011.

These were offset by:

  • $3 million reduction in net interest income predominantly due to lower yields on earning assets; and
  • $4 million lower noninterest income due to lower overdraft fees due to the full year impact of Regulation E and other subsequent regulatory guidance.  

Net interest margin declined to 4.12% in 2011, down from 4.23% in 2010, largely the result of lower interest rates on new loan production, run-off and refinancing of higher yielding residential loans and lower deferred loan fees recognized in 2011 as loan prepayments moderated compared to 2010.  This was partially offset by declines in higher costing term certificates and greater low cost core deposit funding.  

Provision for loan losses (pretax) was $15.0 million in 2011 compared to $20.9 million in 2010.  The $5.9 million decline in the provision was primarily due to the improvement in the mix of our assets, specifically the decrease in the higher risk land loan portfolio, and improved credit quality associated with the modest year-over-year recovery in Hawaii's economy.  Similarly, the 2011 net charge-off ratio improved to 0.49%, from 0.61% in 2010.  

Noninterest expense (pretax) for 2011 was $143.4 million, $5.5 million lower than the $148.9 million in 2010 which included costs for the FISERV conversion completed in 2010.

Loan growth continued throughout 2011 with five consecutive quarters of loan growth.  For the year, total loans increased by $148 million or 4.2%, in-line with our target for mid-single digit loan growth.  Loan growth was driven primarily by commercial and home equity loans which more than offset the planned decline in long-term fixed rate residential mortgages as we control interest rate risk in this low rate environment.

Fourth Quarter Results:

Bank net income for the fourth quarter 2011 was $15.3 million, essentially flat compared to $15.5 million in the third, or linked, quarter 2011 and 15% higher than $13.3 million in the fourth quarter 2010.  The $2.0 million increase in net income for the fourth quarter of 2011 compared to the fourth quarter of 2010 was largely attributable to (on an after-tax basis): $3 million lower provision for loan losses partially offset by $1 million higher noninterest expense.

Net interest margin was 4.16% in the fourth quarter 2011, up from 4.11% in the linked quarter but down from 4.21% in the fourth quarter 2010.  The improvement in net interest margin from the linked quarter was largely due to lower cost of funds and the recognition of deferred loan fees from higher loan prepayments from residential mortgage refinancings.

Provision for loan losses (pretax) was $4.1 million in the fourth quarter 2011 compared to $8.6 million in the fourth quarter 2010 and $3.8 million in the linked quarter.  The $4.5 million decline compared to fourth quarter 2010 was primarily due to the lower level of commercial loan defaults in 2011 and a one-time adjustment for land loans that occurred in the fourth quarter 2010.  The fourth quarter 2011 net charge-off ratio was 0.48%, improved from 0.54% reported in the linked quarter and from 0.72% in the fourth quarter last year.  

Noninterest expense (pretax) for the fourth quarter 2011 was $36.6 million, up from $35.6 million in the linked quarter and $35.0 million in the fourth quarter 2010.  

The bank remains well-capitalized with a Tier 1 leverage ratio of 9.0% and total risk-based capital ratio of 12.9% as of the end of the fourth quarter 2011.

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $21.6 million in 2011 compared to $21.5 million in 2010, and $6.9 million in the fourth quarter 2011 compared to $7.5 million in the fourth quarter 2010.  In the fourth quarter of 2011, HEI funded $3 million to the HEI Charitable Foundation in support of our ongoing commitment to the local communities in which we live, work and serve.

BOARD DECLARES QUARTERLY DIVIDEND; SETS ANNUAL MEETING

On February 7, 2012, the board of directors of HEI maintained the regular quarterly cash dividend of 31 cents per share, payable on March 13, 2012, to shareholders of record at the close of business on February 21, 2012 (ex-dividend date is February 16, 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 February 7, 2012 of $26.32, HEI's yield is 4.7%.

In addition, HEI's 29th annual meeting of shareholders has been scheduled for Wednesday, May 9, 2012, at 9:30 a.m., in Room 805, American Savings Bank Tower 8th Floor, 1001 Bishop Street, Honolulu, Hawaii.  Shareholders of record at the close of business on March 1, 2012, will be entitled to vote.

WEBCAST AND TELECONFERENCE

Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review 2011 earnings on Thursday, February 9, 2012, at 8:00 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 (800) 299-7089, passcode:  71303637 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 Savings Bank, F.S.B.'s (ASB) press releases, 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 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 February 23, 2012, by dialing (888) 286-8010, passcode: 34794298.

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 ASB, 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, 2010, Quarterly Report on Form 10-Q for the quarter ended September 30, 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, ASB and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Shelee M.T. Kimura

Manager, Investor Relations &

Telephone: (808) 543-7384

Strategic Planning

E-mail:  skimura@hei.com

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three months ended

Years ended

December 31,

December 31,

(in thousands, except per share amounts)

2011

2010

2011

2010

Revenues

Electric utility

$    784,363

$    627,034

$    2,978,690

$    2,382,366

Bank

66,676

68,718

264,407

282,693

Other

(11)

(15)

(762)

(77)

851,028

695,737

3,242,335

2,664,982

Expenses

Electric utility

731,911

584,033

2,763,556

2,203,978

Bank

43,818

48,065

172,806

190,105

Other

7,129

4,397

16,277

14,688

782,858

636,495

2,952,639

2,408,771

Operating income (loss)

Electric utility

52,452

43,001

215,134

178,388

Bank

22,858

20,653

91,601

92,588

Other

(7,140)

(4,412)

(17,039)

(14,765)

68,170

59,242

289,696

256,211

Interest expense–other than on deposit liabilities and other bank borrowings

(17,840)

(19,622)

(82,106)

(81,538)

Allowance for borrowed funds used during construction

767

497

2,498

2,558

Allowance for equity funds used during construction

1,833

1,199

5,964

6,016

Income before income taxes

52,930

41,316

216,052

183,247

Income taxes

18,232

16,145

75,932

67,822

Net income

34,698

25,171

140,120

115,425

Preferred stock dividends of subsidiaries

473

473

1,890

1,890

Net income for common stock

$      34,225

$      24,698

$       138,230

$       113,535

Basic earnings per common share

$          0.36

$          0.26

$             1.45

$             1.22

Diluted earnings per common share

$          0.36

$          0.26

$             1.44

$             1.21

Dividends per common share

$          0.31

$          0.31

$             1.24

$             1.24

Weighted-average number of common shares outstanding

95,939

94,231

95,510

93,421

Adjusted weighted-average shares

96,199

94,430

95,820

93,693

Income (loss) by segment

Electric utility

$      25,814

$      18,915

$         99,986

$         76,589

Bank

15,340

13,296

59,843

58,456

Other

(6,929)

(7,513)

(21,599)

(21,510)

Net income for common stock

$      34,225

$      24,698

$       138,230

$       113,535

Return on average common equity  

9.2%

7.8%

In the fourth quarter of 2011, HECO recorded an adjustment of $6 million to revenues related to the third quarter of 2011, which decreased net income for the fourth quarter of 2011 by $3 million.

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference and included in HEI's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31

2011

2010

(dollars in thousands)

Assets

Cash and cash equivalents

$                  270,265

$           330,651

Accounts receivable and unbilled revenues, net

344,322

266,996

Available-for-sale investment and mortgage-related securities

624,331

678,152

Investment in stock of Federal Home Loan Bank of Seattle

97,764

97,764

Loans receivable held for investment, net

3,642,818

3,489,880

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

9,601

7,849

Property, plant and equipment, net of accumulated depreciation of $2,049,821 in 2011 and $2,037,598 in 2010

3,334,501

3,165,918

Regulatory assets

669,389

478,330

Other

517,550

487,614

Goodwill

82,190

82,190

    Total assets

$               9,592,731

$        9,085,344

Liabilities and shareholders' equity

Liabilities

Accounts payable

$                  216,176

$           202,446

Interest and dividends payable

25,041

27,814

Deposit liabilities

4,070,032

3,975,372

Short-term borrowings—other than bank

68,821

24,923

Other bank borrowings

233,229

237,319

Long-term debt, net—other than bank

1,340,070

1,364,942

Deferred income taxes

354,051

278,958

Regulatory liabilities

315,466

296,797

Contributions in aid of construction

356,203

335,364

Retirement benefits liability

530,410

376,994

Other

516,990

446,485

    Total liabilities

8,026,489

7,567,414

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:  96,038,328 shares in 2011 and 94,690,932 shares in 2010

1,349,446

1,314,199

Retained earnings

201,640

181,910

Accumulated other comprehensive loss, net of tax benefits

(19,137)

(12,472)

    Total shareholders' equity

1,531,949

1,483,637

    Total liabilities and shareholders' equity

$               9,592,731

$        9,085,344

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference and included in HEI's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Years ended December 31

2011

2010

(in thousands)

Cash flows from operating activities

Net income

$        140,120

$        115,425

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

     Depreciation of property, plant and equipment

148,152

154,523

     Other amortization

19,318

4,605

     Provision for loan losses

15,009

20,894

     Impairment of utility plant

9,215

-

     Loans receivable originated and purchased, held for sale

(267,656)

(360,527)

     Proceeds from sale of loans receivable, held for sale

273,932

392,406

     Changes in deferred income taxes

79,444

97,791

     Changes in excess tax benefits from share-based payment arrangements

35

45

     Allowance for equity funds used during construction

(5,964)

(6,016)

     Change in cash overdraft

(2,688)

(141)

     Changes in assets and liabilities

          Increase in accounts receivable and unbilled revenues, net

(77,326)

(25,880)

          Increase in fuel oil stock

(18,843)

(74,044)

          Increase (decrease) in accounts, interest and dividends payable

(34,497)

22,410

          Changes in prepaid and accrued income taxes and utility revenue taxes

73,170

(5,252)

          Contributions to defined benefit pension and other postretirement benefit plans

(74,961)

(31,792)

          Changes in other assets and liabilities

(26,094)

36,270

Net cash provided by operating activities

250,366

340,717

Cash flows from investing activities

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

(361,876)

(714,552)

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

389,906

465,437

Proceeds from sale of available-for-sale investment and mortgage-related securities

32,799

-

Net decrease (increase)  in loans held for investment

(181,080)

118,892

Proceeds from sale of real estate acquired in settlement of loans

8,020

5,967

Capital expenditures

(235,116)

(182,125)

Contributions in aid of construction

23,534

22,555

Other

(2,974)

5,092

Net cash used in investing activities

(326,787)

(278,734)

Cash flows from financing activities

Net increase (decrease) in deposit liabilities

94,660

(83,388)

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

43,898

(17,066)

Net increase (decrease) in retail repurchase agreements

10,910

(60,308)

Repayments of other bank borrowings

(15,000)

-

Proceeds from issuance of long-term debt

125,000

-

Repayment of long-term debt

(150,000)

-

Changes in excess tax benefits from share-based payment arrangements

(35)

(45)

Net proceeds from issuance of common stock

15,979

22,706

Common stock dividends

(106,812)

(93,034)

Preferred stock dividends of subsidiaries

(1,890)

(1,890)

Other

(675)

(2,229)

Net cash provided by (used in) financing activities

16,035

(235,254)

Net decrease in cash and cash equivalents

(60,386)

(173,271)

Cash and cash equivalents, January 1

330,651

503,922

Cash and cash equivalents, December 31

$        270,265

$        330,651

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference and included in HEI's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

Hawaiian Electric Company, Inc. (HECO) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three months ended

Years ended

December 31,

December 31,

(dollars in thousands, except per barrel amounts)

2011

2010

2011

2010

Operating revenues

$           782,904

$            616,412

$       2,973,764

$      2,367,441

Operating expenses

Fuel oil

339,650

237,800

1,265,126

900,408

Purchased power

181,473

144,625

689,652

548,800

Other operation

62,731

68,864

257,065

251,027

Maintenance

28,411

37,593

121,219

127,487

Depreciation

35,302

36,140

142,975

149,708

Taxes, other than income taxes

74,002

57,839

276,504

222,117

Income taxes

19,358

11,081

65,988

48,053

740,927

593,942

2,818,529

2,247,600

Operating income

41,977

22,470

155,235

119,841

Other income

Allowance for equity funds used during construction

1,833

1,199

5,964

6,016

Impairment of utility plant

(5,496)

-

(5,496)

-

Other, net

833

9,556

3,811

11,679

(2,830)

10,755

4,279

17,695

Interest and other charges

Interest on long-term debt

14,383

14,383

57,532

57,532

Amortization of net bond premium and expense

765

783

3,081

2,975

Other interest charges

(1,547)

(858)

(582)

1,003

Allowance for borrowed funds used during construction

(767)

(497)

(2,498)

(2,558)

12,834

13,811

57,533

58,952

Net income

26,313

19,414

101,981

78,584

Preferred stock dividends of subsidiaries

229

229

915

915

Net income attributable to HECO

26,084

19,185

101,066

77,669

Preferred stock dividends of HECO

270

270

1,080

1,080

Net income for common stock

$             25,814

$              18,915

$            99,986

$           76,589

OTHER ELECTRIC UTILITY INFORMATION

Kilowatthour sales (millions)

  HECO

1,799

1,853

7,242

7,277

  HELCO

276

281

1,104

1,110

  MECO

293

301

1,181

1,192

2,368

2,435

9,527

9,579

Wet-bulb temperature (Oahu average; degrees Fahrenheit)

70.0

69.8

70.0

68.3

Cooling degree days (Oahu)

1,273

1,166

4,954

4,661

Average fuel oil cost per barrel

$134.28

$92.12

$123.63

$87.62

Customer accounts (end of period)

  HECO

296,800

296,422

  HELCO

81,199

80,695

  MECO

68,230

67,739

446,229

444,856

Return on average common equity (%)

  HECO

6.4

6.1

  HELCO

9.7

6.5

  MECO

7.7

4.0

  HECO Consolidated

7.3

5.8

In the fourth quarter of 2011, HECO recorded an adjustment of $6 million to revenues related to the third quarter of 2011, which decreased net income for the fourth quarter of 2011 by $3 million.

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

Hawaiian Electric Company, Inc. (HECO) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31

2011

2010

(in thousands, except share data)

Assets

Utility plant, at cost

Land

$                   51,514

$                   51,364

Plant and equipment

5,052,027

4,896,974

Less accumulated depreciation

(1,966,894)

(1,941,059)

Construction in progress

138,838

101,562

    Net utility plant

3,275,485

3,108,841

Current assets

Cash and cash equivalents

48,806

122,936

Customer accounts receivable, net

183,328

138,171

Accrued unbilled revenues, net

137,826

104,384

Other accounts receivable, net

8,623

9,376

Fuel oil stock, at average cost

171,548

152,705

Materials and supplies, at average cost

43,188

36,717

Prepayments and other

34,602

55,216

Regulatory assets

8,161

7,349

    Total current assets

636,082

626,854

Other long-term assets

Regulatory assets

661,228

470,981

Unamortized debt expense

12,786

14,030

Other

86,361

64,974

    Total other long-term assets

760,375

549,985

         Total assets

$              4,671,942

$              4,285,680

Capitalization and liabilities

Capitalization

Common stock, $6 2/3 par value, authorized 50,000,000 shares; outstanding 14,233,723 shares and 13,830,823 shares in 2011 and 2010, respectively

$                   94,911

$                   92,224

Premium on capital stock

426,921

389,609

Retained earnings

884,284

854,856

Accumulated other comprehensive income, net of income taxes

(32)

709

    Common stock equity

1,406,084

1,337,398

Cumulative preferred stock – not subject to mandatory redemption

34,293

34,293

Long-term debt, net

1,000,570

1,057,942

    Total capitalization

2,440,947

2,429,633

Current liabilities

Current portion of long-term debt

57,500

-

Accounts payable

188,580

178,959

Interest and preferred dividends payable

19,483

20,603

Taxes accrued

224,768

175,960

Other

69,353

56,354

    Total current liabilities

559,684

431,876

Deferred credits and other liabilities

Deferred income taxes

337,863

269,286

Regulatory liabilities

315,466

296,797

Unamortized tax credits

60,614

58,810

Retirement benefits liability

495,121

355,844

Other

106,044

108,070

    Total deferred credits and other liabilities

1,315,108

1,088,807

Contributions in aid of construction

356,203

335,364

         Total capitalization and liabilities

$              4,671,942

$              4,285,680

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

Hawaiian Electric Company, Inc. (HECO) and Subsidiaries 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Years ended December 31,

2011

2010

(in thousands)

Cash flows from operating activities

Net income

$       101,981

$         78,584

Adjustments to reconcile net income to cash provided by operating activities

     Depreciation of property, plant and equipment

142,975

149,708

     Other amortization

17,378

7,725

     Impairment of utility plant

9,215

-

     Changes in deferred income taxes

69,091

95,685

     Changes in tax credits, net

2,087

2,841

     Allowance for equity funds used during construction

(5,964)

(6,016)

     Change in cash overdraft

(2,688)

(141)

     Changes in assets and liabilities

          Increase in accounts receivable

(44,404)

(5,812)

          Increase in accrued unbilled revenues

(33,442)

(20,108)

          Increase in fuel oil stock

(18,843)

(74,044)

          Increase in materials and supplies

(6,471)

(809)

          Increase in regulatory assets

(40,132)

(2,936)

          Increase (decrease) in accounts payable

(35,815)

25,392

          Changes in prepaid and accrued income taxes and utility revenue taxes

69,736

(10,170)

          Contributions to defined benefit pension and other postretirement benefit plans

(73,176)

(31,068)

          Changes in other assets and liabilities

9,866

38,958

Net cash provided by operating activities

161,394

247,789

Cash flows from investing activities

Capital expenditures

(226,022)

(174,344)

Contributions in aid of construction

23,534

22,555

Other

77

1,327

Net cash used in investing activities

(202,411)

(150,462)

Cash flows from financing activities

Common stock dividends

(70,558)

(48,769)

Proceeds from issuance of common stock

40,000

4,250

Preferred stock dividends of HECO and subsidiaries

(1,995)

(1,995)

Other

(560)

(1,455)

Net cash used in financing activities

(33,113)

(47,969)

Net increase (decrease) in cash and cash equivalents

(74,130)

49,358

Cash and cash equivalents, January 1

122,936

73,578

Cash and cash equivalents, December 31

$         48,806

$       122,936

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

American Savings Bank, F.S.B. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)

Three months ended

Years ended

December 31,

September 30,

December 31,

December 31,

(in thousands)

2011

2011

2010

2011

2010

Interest and dividend income

Interest and fees on loans

$              46,500

$               46,240

$              46,898

$    184,485

$    195,192

Interest and dividends on investment and mortgage-related securities

3,352

3,654

4,131

14,568

14,946

    Total interest and dividend income

49,852

49,894

51,029

199,053

210,138

Interest expense

Interest on deposit liabilities

1,837

2,166

3,031

8,983

14,696

Interest on other borrowings

1,362

1,375

1,395

5,486

5,653

    Total interest expense

3,199

3,541

4,426

14,469

20,349

Net interest income

46,653

46,353

46,603

184,584

189,789

Provision for loan losses

4,082

3,822

8,584

15,009

20,894

Net interest income after provision for loan losses

42,571

42,531

38,019

169,575

168,895

Noninterest income

Fees from other financial services

7,476

7,219

7,436

28,881

27,280

Fee income on deposit liabilities

4,486

4,492

4,849

18,026

26,369

Fee income on other financial products

1,364

1,806

1,530

6,704

6,487

Other income

3,498

2,689

3,874

11,743

12,419

    Total noninterest income

16,824

16,206

17,689

65,354

72,555

Noninterest expense

Compensation and employee benefits

17,820

17,646

16,999

71,137

71,476

Occupancy

4,313

4,313

3,931

17,154

16,548

Data processing

1,676

2,451

2,292

8,155

13,213

Services

1,990

1,686

1,477

7,396

6,594

Equipment

1,762

1,712

1,671

6,903

6,620

Other expense

8,997

7,763

8,668

32,648

34,487

    Total noninterest expense

36,558

35,571

35,038

143,393

148,938

Income before income taxes

22,837

23,166

20,670

91,536

92,512

Income taxes

7,497

7,709

7,374

31,693

34,056

Net income

$              15,340

$               15,457

$              13,296

$      59,843

$      58,456

OTHER BANK INFORMATION (%)

Return on average assets

1.26

1.26

1.10

1.23

1.20

Return on average equity  

12.24

12.32

10.59

11.99

11.62

Net interest margin

4.16

4.11

4.21

4.12

4.23

Net charge-offs to average loans outstanding (annualized)

0.48

0.54

0.72

0.49

0.61

Efficiency ratio

57

56

54

57

56

As of period end

Nonperforming assets to loans outstanding and real estate owned **

2.01

1.94

1.77

Allowance for loan losses to loans outstanding

1.03

1.04

1.15

Tier-1 leverage ratio

9.0

9.1

9.2

Total risk-based capital ratio

12.9

13.0

13.9

Tangible common equity to total assets

8.3

8.6

8.6

**  Regulatory basis

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference and included in HEI's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

American Savings Bank, F.S.B. and Subsidiaries

CONSOLIDATED BALANCE SHEETS DATA

(Unaudited)

December 31

2011

2010

(in thousands)

Assets

Cash and cash equivalents

$               219,678

$               204,397

Federal funds sold

-

1,721

Available-for-sale investment and mortgage-related securities

624,331

678,152

Investment in stock of Federal Home Loan Bank of Seattle

97,764

97,764

Loans receivable held for investment, net

3,642,818

3,489,880

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

9,601

7,849

Other

233,592

234,806

Goodwill

82,190

82,190

    Total assets

$            4,909,974

$            4,796,759

Liabilities and shareholder's equity

Deposit liabilities–noninterest-bearing

$               993,828

$               865,642

Deposit liabilities–interest-bearing

3,076,204

3,109,730

Other borrowings

233,229

237,319

Other

118,078

90,683

    Total liabilities

4,421,339

4,303,374

Common stock

331,880

330,562

Retained earnings

166,126

169,111

Accumulated other comprehensive loss, net of tax benefits

(9,371)

(6,288)

    Total shareholder's equity

488,635

493,385

    Total liabilities and shareholder's equity

$            4,909,974

$            4,796,759

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference and included in HEI's Annual Report on SEC Form 10-K for the years ended December 31, 2010 and 2011 (when filed) and the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011, as updated by SEC Forms 8-K.

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SOURCE Hawaiian Electric Industries, Inc.



RELATED LINKS

http://www.hei.com