HEI Exhibit 99
May 4, 2016 |
| | |
| Contact: | Clifford H. Chen | Telephone: (808) 543-7300 |
| | Manager, Investor Relations & | E-mail: ir@hei.com |
| | Strategic Planning | |
| | | |
HAWAIIAN ELECTRIC INDUSTRIES REPORTS FIRST QUARTER 2016 EARNINGS
Diluted Earnings Per Share (EPS) of $0.30 and Core EPS1 of $0.31
Board Declares Dividend of $0.31 Per Share
HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the first quarter of 2016 of $32.4 million and diluted earnings per share (EPS) of $0.30 compared to $31.9 million and EPS of $0.31 for the first quarter of 2015. Excluding after-tax costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. of $1.6 million and $4.7 million in the first quarter of 2016 and 2015, respectively, core earnings1 for the first quarter of 2016 were $33.9 million and core EPS1 of $0.31 compared to $36.6 million and $0.35, respectively for the first quarter of 2015.
“Hawaii continues to be a national leader in clean energy, with Hawaiian Electric achieving over 23 percent renewable energy in 2015 across the five island electric grids we serve. Recently, our utilities filed updated energy plans charting a course to achieve our state’s goal of 100 percent renewable energy by 2045, the most ambitious energy goal in the country. A 100% renewable energy future is an exciting prospect, and we look forward to collaborating with others to make it happen,” said Constance H. Lau, HEI president and chief executive officer.
“In the near term, it’s critical for our utilities to continue executing initial action plans that lay the foundation for Hawaii’s renewable future, including modernizing the power grid and plans for smart meters and other smart grid technologies; pursuing energy storage to support renewable energy integration; increasing customer options to manage energy use; and supporting electrification of transportation to help reduce reliance on fossil fuels for our cars and other vehicles.”
_________________
| |
1 | Non-GAAP measure which excludes merger-related and spin-off costs after-tax. See the “Explanation of HEI’s Use of Certain Unaudited Non-GAAP measures” and the related reconciliation. |
Hawaiian Electric Industries, Inc.
May 4, 2016
Page 2
“American Savings Bank continued to deliver solid results with excellent deposit growth and higher net interest income and margins in a strong Hawaii economy. American’s solid results enabled it to pay dividends of $9.0 million to HEI in the quarter while maintaining healthy capital levels,” added Lau.
“With regard to our bank spin and utility merger transactions, our bank accomplished an important step towards its planned spin-off by filing its updated Form 10 with the Securities and Exchange Commission on April 1st. And both NextEra Energy and the Hawaiian Electric companies just filed their post-evidentiary hearing reply briefs with the Hawaii Public Utilities Commission on May 2nd which was the final step before the PUC can render its decision. We continue to believe that the right partner for Hawaiian Electric is NextEra Energy, which brings a powerful combination of renewable energy experience, operational and technological know-how and financial strength necessary for achieving Hawaii's 100 percent renewable energy goal.”
HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company’s2 net income for the first quarter of 2016 was $25.4 million compared to $26.9 million in the first quarter of 2015. The $1.5 million net income decline was mainly the result of higher depreciation expense as a result of increasing investments for improved customer reliability and greater system efficiency, and the integration of more renewable energy.
Operations and maintenance expenses were relatively flat compared to the prior year quarter. The first quarter of 2016 included higher than expected power supply improvement plan and liquefied natural gas consulting expenses compared to the first quarter of 2015 which included higher storm repair costs, bad debt reserves for one customer account and costs related to the damage to a combined heat and power generating unit.
_________________
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.
| |
2 | 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. |
Hawaiian Electric Industries, Inc.
May 4, 2016
Page 3
AMERICAN SAVINGS BANK EARNINGS
American Savings Bank’s (American) net income for the first quarter of 2016 was $12.7 million compared to $15.0 million in the fourth (or linked) quarter of 2015 and $13.5 million in the first quarter of 2015. First quarter 2016 net income was $2.3 million lower than the linked quarter primarily driven by the following on an after-tax basis:
| |
| • | $2 million higher provision for loan losses mainly due to growth in lending in commercial real estate and a commercial credit charge-off in the first quarter of 2016 compared to lower provisioning during the fourth quarter of 2015 attributable to net recoveries on previously charged-off loans; and |
| |
| • | $1 million lower noninterest income compared to the fourth quarter of 2015, which included gains from the sale of mortgage serving rights. |
These were partially offset by $1 million (after-tax) higher net interest income primarily attributable to loan and investment portfolio growth and higher yields on interest-earning assets in the first quarter of 2016.
Compared to the first quarter of 2015, net income declined by $0.8 million primarily driven by the following on an after-tax basis:
| |
| • | $2 million higher provision for loan losses mainly driven by commercial real estate loan growth and a commercial credit charge-off in the first quarter of 2016; and |
| |
| • | $1 million higher noninterest expense primarily due to investment in our electronic banking platform and higher compensation expense. |
These were offset by $3 million (after-tax) higher net interest income in the first quarter of 2016 due to loan and investment portfolio growth and higher yields on interest-earning assets.
Loan growth was 2.2% annualized in the first quarter of 2016 driven largely by increases in commercial real estate and consumer loans. American continues to expect to meet its target of mid-single digit loan growth for the full year.
Total deposits were $5.1 billion at March 31, 2016, up $115 million or 9.1% annualized from December 31, 2015, primarily driven by the 6.5% annualized increase in low-cost core deposits. Average cost of funds remained low at 0.23% for the first quarter of 2016, 1 basis point higher than the linked quarter and the prior year quarter.
Hawaiian Electric Industries, Inc.
May 4, 2016
Page 4
Overall, American achieved solid profitability in the first quarter of 2016 with a return on average equity of 8.9% and a return on average assets of 0.84%.
For additional information, refer to the American news release issued on April 29, 2016.
HOLDING AND OTHER COMPANIES
The holding and other companies’ net losses were $5.7 million in the first quarter of 2016 compared to $8.5 million in the first quarter of 2015. Excluding after-tax costs of $1.5 million associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. in the first quarter of 2016 and $4.4 million in the first quarter of 2015, the holding and other companies’ net losses in 2016 and 2015 were $4.2 million and $4.0 million, respectively.
BOARD DECLARES QUARTERLY DIVIDEND
On May 3, 2016, the board of directors maintained HEI’s quarterly cash dividend of $0.31 cents per share, payable on June 15, 2016, to shareholders of record at the close of business on May 31, 2016 (ex-dividend date is May 26, 2016). 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 3, 2016 of $32.74, HEI’s yield is 3.8%.
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 of 2016 earnings on Wednesday, May 4, 2016, at 8:00 a.m. Hawaii time (2:00 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (888) 311-8190 and entering passcode: 70436517. International parties may listen to the conference by calling (330) 863-3378 and entering passcode: 70436517 or by accessing the webcast on HEI’s website at www.hei.com 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
Hawaiian Electric Industries, Inc.
May 4, 2016
Page 5
and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. The information on HEI’s website is not incorporated by reference in this document or in HEI’s and Hawaiian Electric Company’s SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC. No information on the PUC website is incorporated by reference in this document or in HEI’s and Hawaiian Electric Company’s SEC filings.
An online replay of the webcast will be available at the same website beginning about two hours after the event. Replays of the conference call will also be available approximately two hours after the event through May 18, 2016, by dialing (855) 859-2056 or (404) 537-3406 and entering passcode: 70436517.
HEI supplies power to approximately 95% of Hawaii’s population through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, one of Hawaii’s largest financial institutions.
NON-GAAP MEASURES
See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and related reconciliations on pages 13 and 14 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.
Hawaiian Electric Industries, Inc.
May 4, 2016
Page 6
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, 2015 and HEI’s future periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric Company, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
###
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
| | | | | | | | |
| | | Three months ended March 31 |
| (in thousands, except per share amounts) | | 2016 | | 2015 |
| Revenues | | | | |
| Electric utility | | $ | 482,052 |
| | $ | 573,442 |
|
| Bank | | 68,840 |
| | 64,348 |
|
| Other | | 68 |
| | 72 |
|
| Total revenues | | 550,960 |
| | 637,862 |
|
| Expenses | | | | |
| Electric utility | | 426,726 |
| | 515,806 |
|
| Bank | | 49,246 |
| | 43,717 |
|
| Other | | 6,137 |
| | 8,833 |
|
| Total expenses | | 482,109 |
| | 568,356 |
|
| Operating income (loss) | | | | |
| Electric utility | | 55,326 |
| | 57,636 |
|
| Bank | | 19,594 |
| | 20,631 |
|
| Other | | (6,069 | ) | | (8,761 | ) |
| Total operating income | | 68,851 |
| | 69,506 |
|
| Interest expense, net—other than on deposit liabilities and other bank borrowings | | (20,126 | ) | | (19,100 | ) |
| Allowance for borrowed funds used during construction | | 662 |
| | 499 |
|
| Allowance for equity funds used during construction | | 1,739 |
| | 1,413 |
|
| Income before income taxes | | 51,126 |
| | 52,318 |
|
| Income taxes | | 18,301 |
| | 19,979 |
|
| Net income | | 32,825 |
| | 32,339 |
|
| Preferred stock dividends of subsidiaries | | 473 |
| | 473 |
|
| Net income for common stock | | $ | 32,352 |
| | $ | 31,866 |
|
| Basic earnings per common share | | $ | 0.30 |
| | $ | 0.31 |
|
| Diluted earnings per common share | | $ | 0.30 |
| | $ | 0.31 |
|
| Dividends per common share | | $ | 0.31 |
| | $ | 0.31 |
|
| Weighted-average number of common shares outstanding | | 107,620 |
| | 103,281 |
|
| Adjusted weighted-average shares | | 107,781 |
| | 103,567 |
|
| Net income (loss) for common stock by segment | | | | |
| Electric utility | | $ | 25,367 |
| | $ | 26,874 |
|
| Bank | | 12,673 |
| | 13,475 |
|
| Other | | (5,688 | ) | | (8,483 | ) |
| Net income for common stock | | $ | 32,352 |
| | $ | 31,866 |
|
| Comprehensive income attributable to Hawaiian Electric Industries, Inc. | | $ | 41,152 |
| | $ | 35,924 |
|
Return on average common equity (twelve months ended)1 | | 8.4 | % | | 8.5 | % |
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI and ASB Hawaii, Inc. filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
1 On a core basis, 2016 and 2015 returns on average common equity (twelve months ended March 31) were 9.0%. See reconciliation of GAAP to non-GAAP measures.
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| | | | | | | | |
| (dollars in thousands) | | March 31, 2016 | | December 31, 2015 |
| Assets | | |
| | |
|
| Cash and cash equivalents | | $ | 334,743 |
| | $ | 300,478 |
|
| Accounts receivable and unbilled revenues, net | | 210,280 |
| | 242,766 |
|
| Available-for-sale investment securities, at fair value | | 906,295 |
| | 820,648 |
|
| Stock in Federal Home Loan Bank, at cost | | 11,218 |
| | 10,678 |
|
| Loans receivable held for investment, net | | 4,589,950 |
| | 4,565,781 |
|
| Loans held for sale, at lower of cost or fair value | | 7,900 |
| | 4,631 |
|
| Property, plant and equipment, net of accumulated depreciation of $2,355,984 and $2,339,319 at the respective dates | | 4,423,567 |
| | 4,377,658 |
|
| Regulatory assets | | 888,408 |
| | 896,731 |
|
| Other | | 415,955 |
| | 480,457 |
|
| Goodwill | | 82,190 |
| | 82,190 |
|
| Total assets | | $ | 11,870,506 |
| | $ | 11,782,018 |
|
| Liabilities and shareholders’ equity | | |
| | |
|
| Liabilities | | |
| | |
|
| Accounts payable | | $ | 119,288 |
| | $ | 138,523 |
|
| Interest and dividends payable | | 27,890 |
| | 26,042 |
|
| Deposit liabilities | | 5,139,932 |
| | 5,025,254 |
|
| Short-term borrowings—other than bank | | 95,485 |
| | 103,063 |
|
| Other bank borrowings | | 329,081 |
| | 328,582 |
|
| Long-term debt, net—other than bank | | 1,578,618 |
| | 1,578,368 |
|
| Deferred income taxes | | 700,782 |
| | 680,877 |
|
| Regulatory liabilities | | 383,793 |
| | 371,543 |
|
| Contributions in aid of construction | | 513,520 |
| | 506,087 |
|
| Defined benefit pension and other postretirement benefit plans liability | | 584,490 |
| | 589,918 |
|
| Other | | 421,155 |
| | 471,828 |
|
| Total liabilities | | 9,894,034 |
| | 9,820,085 |
|
| Preferred stock of subsidiaries - not subject to mandatory redemption | | 34,293 |
| | 34,293 |
|
| Shareholders’ equity | | |
| | |
|
| Preferred stock, no par value, authorized 10,000,000 shares; issued: none | | — |
| | — |
|
| Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 107,875,779 shares and 107,460,406 shares at the respective dates | | 1,635,890 |
| | 1,629,136 |
|
| Retained earnings | | 323,751 |
| | 324,766 |
|
| Accumulated other comprehensive loss, net of tax benefits | | (17,462 | ) | | (26,262 | ) |
| Total shareholders’ equity | | 1,942,179 |
| | 1,927,640 |
|
| Total liabilities and shareholders’ equity | | $ | 11,870,506 |
| | $ | 11,782,018 |
|
The Consolidated Balance Sheet as of December 31, 2015 reflects the retrospective application of ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which was adopted in first quarter 2016.
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI and ASB Hawaii, Inc. filings with the SEC.
Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| | | | | | | | |
| | | Three months ended March 31 |
| (dollars in thousands, except per barrel amounts) | | 2016 | | 2015 |
| Revenues | | $ | 482,052 |
| | $ | 573,442 |
|
| Expenses | | |
| | |
|
| Fuel oil | | 113,740 |
| | 176,806 |
|
| Purchased power | | 115,859 |
| | 136,007 |
|
| Other operation and maintenance | | 103,908 |
| | 104,002 |
|
| Depreciation | | 46,781 |
| | 44,243 |
|
| Taxes, other than income taxes | | 46,438 |
| | 54,748 |
|
| Total expenses | | 426,726 |
| | 515,806 |
|
| Operating income | | 55,326 |
| | 57,636 |
|
| Allowance for equity funds used during construction | | 1,739 |
| | 1,413 |
|
| Interest expense and other charges, net | | (17,308 | ) | | (16,325 | ) |
| Allowance for borrowed funds used during construction | | 662 |
| | 499 |
|
| Income before income taxes | | 40,419 |
| | 43,223 |
|
| Income taxes | | 14,553 |
| | 15,850 |
|
| Net income | | 25,866 |
| | 27,373 |
|
| Preferred stock dividends of subsidiaries | | 229 |
| | 229 |
|
| Net income attributable to Hawaiian Electric | | 25,637 |
| | 27,144 |
|
| Preferred stock dividends of Hawaiian Electric | | 270 |
| | 270 |
|
| Net income for common stock | | $ | 25,367 |
| | $ | 26,874 |
|
| Comprehensive income attributable to Hawaiian Electric | | $ | 26,383 |
| | $ | 26,896 |
|
| OTHER ELECTRIC UTILITY INFORMATION | | | | |
| Kilowatthour sales (millions) | | | | |
| Hawaiian Electric | | 1,557 |
| | 1,527 |
|
| Hawaii Electric Light | | 258 |
| | 253 |
|
| Maui Electric | | 270 |
| | 264 |
|
| | | 2,085 |
| | 2,044 |
|
| Wet-bulb temperature (Oahu average; degrees Fahrenheit) | | 67.3 |
| | 66.5 |
|
| Cooling degree days (Oahu) | | 884 |
| | 795 |
|
| Average fuel oil cost per barrel | | $ | 53.99 |
| | $ | 86.60 |
|
| | | | | |
| | | Twelve months ended March 31 |
| | | 2016 | | 2015 |
| Return on average common equity (%) (simple average) | | | | |
| Hawaiian Electric | | 7.85 |
| | 8.03 |
|
| Hawaii Electric Light | | 7.26 |
| | 6.18 |
|
| Maui Electric | | 8.53 |
| | 8.87 |
|
| Hawaiian Electric Consolidated | | 7.85 |
| | 7.84 |
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| | | | | | | | |
| (dollars in thousands, except par value) | | March 31, 2016 | | December 31, 2015 |
| Assets | | |
| | |
|
| Property, plant and equipment | | | | |
| Utility property, plant and equipment | | |
| | |
|
| Land | | $ | 53,207 |
| | $ | 52,792 |
|
| Plant and equipment | | 6,356,006 |
| | 6,315,698 |
|
| Less accumulated depreciation | | (2,284,928 | ) | | (2,266,004 | ) |
| Construction in progress | | 198,004 |
| | 175,309 |
|
| Utility property, plant and equipment, net | | 4,322,289 |
| | 4,277,795 |
|
| Nonutility property, plant and equipment, less accumulated depreciation of $1,230 and $1,229 at respective dates | | 7,375 |
| | 7,272 |
|
| Total property, plant and equipment, net | | 4,329,664 |
| | 4,285,067 |
|
| Current assets | | |
| | |
|
| Cash and cash equivalents | | 49,042 |
| | 24,449 |
|
| Customer accounts receivable, net | | 103,739 |
| | 132,778 |
|
| Accrued unbilled revenues, net | | 85,367 |
| | 84,509 |
|
| Other accounts receivable, net | | 6,773 |
| | 10,408 |
|
| Fuel oil stock, at average cost | | 48,404 |
| | 71,216 |
|
| Materials and supplies, at average cost | | 54,256 |
| | 54,429 |
|
| Prepayments and other | | 21,803 |
| | 36,640 |
|
| Regulatory assets | | 89,192 |
| | 72,231 |
|
| Total current assets | | 458,576 |
| | 486,660 |
|
| Other long-term assets | | |
| | |
|
| Regulatory assets | | 799,216 |
| | 824,500 |
|
| Unamortized debt expense | | 420 |
| | 497 |
|
| Other | | 74,495 |
| | 75,486 |
|
| Total other long-term assets | | 874,131 |
| | 900,483 |
|
| Total assets | | $ | 5,662,371 |
| | $ | 5,672,210 |
|
| Capitalization and liabilities | | |
| | |
|
| Capitalization | | |
| | |
|
| Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,805,327) | | $ | 105,388 |
| | $ | 105,388 |
|
| Premium on capital stock | | 578,926 |
| | 578,930 |
|
| Retained earnings | | 1,045,049 |
| | 1,043,082 |
|
| Accumulated other comprehensive income, net of income taxes | | 1,941 |
| | 925 |
|
| Common stock equity | | 1,731,304 |
| | 1,728,325 |
|
| Cumulative preferred stock — not subject to mandatory redemption | | 34,293 |
| | 34,293 |
|
| Long-term debt, net | | 1,278,916 |
| | 1,278,702 |
|
| Total capitalization | | 3,044,513 |
| | 3,041,320 |
|
| Current liabilities | | |
| | |
|
| Short-term borrowings from non-affiliates | | 12,998 |
| | — |
|
| Accounts payable | | 95,090 |
| | 114,846 |
|
| Interest and preferred dividends payable | | 27,015 |
| | 23,111 |
|
| Taxes accrued | | 129,239 |
| | 191,084 |
|
| Regulatory liabilities | | 5,416 |
| | 2,204 |
|
| Other | | 75,006 |
| | 54,079 |
|
| Total current liabilities | | 344,764 |
| | 385,324 |
|
| Deferred credits and other liabilities | | |
| | |
|
| Deferred income taxes | | 670,126 |
| | 654,806 |
|
| Regulatory liabilities | | 378,377 |
| | 369,339 |
|
| Unamortized tax credits | | 85,902 |
| | 84,214 |
|
| Defined benefit pension and other postretirement benefit plans liability | | 547,517 |
| | 552,974 |
|
| Other | | 77,652 |
| | 78,146 |
|
| Total deferred credits and other liabilities | | 1,759,574 |
| | 1,739,479 |
|
| Contributions in aid of construction | | 513,520 |
| | 506,087 |
|
| Total capitalization and liabilities | | $ | 5,662,371 |
| | $ | 5,672,210 |
|
The Consolidated Balance Sheet as of December 31, 2015 reflects the retrospective application of ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which was adopted in first quarter 2016.
This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC.
American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
|
| | | | | | | | | | | | |
| | | Three months ended |
| (in thousands) | | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| Interest and dividend income | | |
| | |
| | |
|
| Interest and fees on loans | | $ | 48,437 |
| | $ | 47,136 |
| | $ | 45,198 |
|
| Interest and dividends on investment securities | | 5,017 |
| | 4,550 |
| | 3,051 |
|
| Total interest and dividend income | | 53,454 |
| | 51,686 |
| | 48,249 |
|
| Interest expense | | |
| | | | |
| Interest on deposit liabilities | | 1,592 |
| | 1,467 |
| | 1,260 |
|
| Interest on other borrowings | | 1,485 |
| | 1,510 |
| | 1,466 |
|
| Total interest expense | | 3,077 |
| | 2,977 |
| | 2,726 |
|
| Net interest income | | 50,377 |
| | 48,709 |
| | 45,523 |
|
| Provision for loan losses | | 4,766 |
| | 839 |
| | 614 |
|
| Net interest income after provision for loan losses | | 45,611 |
| | 47,870 |
| | 44,909 |
|
| Noninterest income | | |
| | | | |
| Fees from other financial services | | 5,499 |
| | 5,667 |
| | 5,355 |
|
| Fee income on deposit liabilities | | 5,156 |
| | 5,746 |
| | 5,315 |
|
| Fee income on other financial products | | 2,205 |
| | 2,006 |
| | 1,889 |
|
| Bank-owned life insurance | | 998 |
| | 1,016 |
| | 983 |
|
| Mortgage banking income | | 1,195 |
| | 1,003 |
| | 1,822 |
|
| Other income, net | | 333 |
| | 1,387 |
| | 735 |
|
| Total noninterest income | | 15,386 |
| | 16,825 |
| | 16,099 |
|
| Noninterest expense | | |
| | | | |
| Compensation and employee benefits | | 22,434 |
| | 23,705 |
| | 21,766 |
|
| Occupancy | | 4,138 |
| | 4,115 |
| | 4,113 |
|
| Data processing | | 3,172 |
| | 3,002 |
| | 3,116 |
|
| Services | | 2,911 |
| | 2,474 |
| | 2,341 |
|
| Equipment | | 1,663 |
| | 1,578 |
| | 1,701 |
|
| Office supplies, printing and postage | | 1,365 |
| | 1,452 |
| | 1,483 |
|
| Marketing | | 861 |
| | 844 |
| | 841 |
|
| FDIC insurance | | 884 |
| | 881 |
| | 811 |
|
| Other expense | | 3,975 |
| | 3,991 |
| | 4,205 |
|
| Total noninterest expense | | 41,403 |
| | 42,042 |
| | 40,377 |
|
| Income before income taxes | | 19,594 |
| | 22,653 |
| | 20,631 |
|
| Income taxes | | 6,921 |
| | 7,700 |
| | 7,156 |
|
| Net income | | $ | 12,673 |
| | $ | 14,953 |
| | $ | 13,475 |
|
| Comprehensive income | | $ | 20,310 |
| | $ | 9,477 |
| | $ | 17,318 |
|
| OTHER BANK INFORMATION (annualized %, except as of period end) | | | | |
| Return on average assets | | 0.84 |
| | 1.01 |
| | 0.96 |
|
| Return on average equity | | 8.89 |
| | 10.66 |
| | 9.96 |
|
| Return on average tangible common equity | | 10.39 |
| | 12.48 |
| | 11.74 |
|
| Net interest margin | | 3.62 |
| | 3.55 |
| | 3.52 |
|
| Net charge-offs to average loans outstanding | | 0.21 |
| | (0.08 | ) | | 0.04 |
|
| As of period end | | | | | | |
| Nonperforming assets to loans outstanding and real estate owned | | 1.03 |
| | 1.02 |
| | 0.80 |
|
| Allowance for loan losses to loans outstanding | | 1.13 |
| | 1.08 |
| | 1.03 |
|
| Tangible common equity to tangible assets | | 8.08 |
| | 8.05 |
| | 8.18 |
|
| Tier-1 leverage ratio | | 8.7 |
| | 8.8 |
| | 8.9 |
|
| Total capital ratio | | 13.2 |
| | 13.3 |
| | 13.2 |
|
| Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) | | $ | 9.0 |
| | $ | 7.5 |
| | $ | 7.5 |
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI and ASB Hawaii, Inc. filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
|
| | | | | | | | | | | | |
| | March 31, 2016 | | December 31, 2015 | |
| (in thousands) | | |
| | |
|
| Assets | | |
| | |
|
| Cash and due from banks | | $ | 110,200 |
| | $ | 127,201 |
|
| Interest-bearing deposits | | 120,428 |
| | 93,680 |
|
| Available-for-sale investment securities, at fair value | | 906,295 |
| | 820,648 |
|
| Stock in Federal Home Loan Bank, at cost | | 11,218 |
| | 10,678 |
|
| Loans receivable held for investment | | 4,642,276 |
| | 4,615,819 |
|
| Allowance for loan losses | | (52,326 | ) | | (50,038 | ) |
| Net loans | | 4,589,950 |
| | 4,565,781 |
|
| Loans held for sale, at lower of cost or fair value | | 7,900 |
| | 4,631 |
|
| Other | | 312,333 |
| | 309,946 |
|
| Goodwill | | 82,190 |
| | 82,190 |
|
| Total assets | | $ | 6,140,514 |
| | $ | 6,014,755 |
|
| Liabilities and shareholder’s equity | | | | |
| Deposit liabilities–noninterest-bearing | | $ | 1,541,402 |
| | $ | 1,520,374 |
|
| Deposit liabilities–interest-bearing | | 3,598,530 |
| | 3,504,880 |
|
| Other borrowings | | 329,081 |
| | 328,582 |
|
| Other | | 99,605 |
| | 101,029 |
|
| Total liabilities | | 5,568,618 |
| | 5,454,865 |
|
| Common stock | | 1 |
| | 1 |
|
| Additional paid in capital | | 341,192 |
| | 340,496 |
|
| Retained earnings | | 240,337 |
| | 236,664 |
|
| Accumulated other comprehensive loss, net of tax benefits | | | | |
| Net unrealized gains (losses) on securities | $ | 5,556 |
| |
| $ | (1,872 | ) | |
| Retirement benefit plans | (15,190 | ) | (9,634 | ) | (15,399 | ) | (17,271 | ) |
| Total shareholder’s equity | | 571,896 |
| | 559,890 |
|
| Total liabilities and shareholder’s equity | | $ | 6,140,514 |
| | $ | 6,014,755 |
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI and ASB Hawaii, Inc. filings with the SEC.
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 HEI and the utility. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies’ core operating activities. Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings and the adjusted return on average common equity (ROACE) for the utility and HEI consolidated.
The reconciling adjustment from GAAP earnings to core earnings is limited to the costs related to the pending merger between HEI and NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. For more information on the pending merger, see HEI’s definitive proxy statement on Form DEFM14A filed on March 26, 2015. Management does not consider these items to be representative of the company’s fundamental core earnings.
The accompanying table also provides the calculation of utility GAAP O&M adjusted for costs related to the pending merger discussed above. “O&M-related net income neutral items” which are O&M expenses covered by specific surcharges or by third parties have also been excluded. These “O&M-related net income neutral items” are grossed-up in revenue and expense and do not impact net income.
|
| | | | | | |
RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES | |
| Hawaiian Electric Industries, Inc. and Subsidiaries (HEI) |
| Unaudited | | |
| ($ in millions, except per share amounts) | | |
| | Three months ended March 31 |
| | 2016 | 2015 |
| HEI CONSOLIDATED NET INCOME | | |
| GAAP (as reported) | $ | 32.4 |
| $ | 31.9 |
|
| Excluding special items (after-tax): | | |
| Costs related to pending merger with NextEra Energy, Inc. and spin-off of ASB Hawaii, Inc | 1.6 |
| 4.7 |
|
| Non-GAAP (core) | $ | 33.9 |
| $ | 36.6 |
|
| HEI CONSOLIDATED DILUTED EARNINGS PER SHARE | |
| GAAP (as reported) | $ | 0.30 |
| $ | 0.31 |
|
| Excluding special items (after-tax): | | |
| Costs related to pending merger with NextEra Energy, Inc. and spin-off of ASB Hawaii, Inc | 0.01 |
| 0.05 |
|
| Non-GAAP (core) | $ | 0.31 |
| $ | 0.35 |
|
| | Twelve months ended March 31 |
| | 2016 | 2015 |
| HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) | | |
| Based on GAAP | 8.4 | % | 8.5 | % |
Based on non-GAAP (core)2 | 9.0 | % | 9.0 | % |
| | | |
| 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) | | |
| | Three months ended March 31 |
| | 2016 | 2015 |
| HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME | | |
| GAAP (as reported) | $ | 25.4 |
| $ | 26.9 |
|
| Excluding special items (after-tax): | | |
| Costs related to pending merger with NextEra Energy, Inc. | — |
| 0.3 |
|
| Non-GAAP (core) | $ | 25.4 |
| $ | 27.1 |
|
| | | |
| | Twelve months ended March 31 |
| | 2016 | 2015 |
| HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) | | |
| Based on GAAP | 7.9 | % | 7.8 | % |
Based on non-GAAP (core)2 | 7.9 | % | 7.9 | % |
| | | |
| | Three months ended March 31 |
| | 2016 | 2015 |
| HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE | | |
| GAAP (as reported) | $ | 103.9 |
| $ | 104.0 |
|
Excluding O&M-related net income neutral items3 | 1.6 |
| 1.9 |
|
| Excluding costs related to pending merger with NextEra Energy, Inc. | 0.1 |
| 0.4 |
|
| Non-GAAP (Adjusted other O&M expense) | $ | 102.2 |
| $ | 101.7 |
|
| 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 | | |
