HEI Exhibit 99
August 4, 2016 |
| | |
| Contact: | Clifford H. Chen | Telephone: (808) 543-7300 |
| | Manager, Investor Relations & | E-mail: ir@hei.com |
| | Strategic Planning | |
| | | |
HAWAIIAN ELECTRIC INDUSTRIES REPORTS SECOND QUARTER 2016 EARNINGS
Diluted Earnings Per Share (EPS) of $0.41 and Core EPS1 of $0.43
HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock of $44.1 million and diluted earnings per share (EPS) of $0.41 for the second quarter of 2016 compared to consolidated net income of $35.0 million and EPS of $0.33 for the second quarter of 2015. Excluding costs related to the recently terminated merger with NextEra Energy, Inc., the cancelled spin-off of ASB Hawaii, Inc. and the recently terminated liquefied natural gas (LNG) contract, which after-tax totaled $2.7 million and $7.2 million in the second quarters of 2016 and 2015, respectively, core earnings1 and core EPS1 for the second quarter of 2016 were $46.9 million and $0.43, respectively, compared to $42.2 million and $0.39, respectively, for the second quarter of 2015.
“HEI had a solid quarter as we continued to invest in our Hawaii-based businesses. Through the first half of the year, Hawaiian Electric invested $157 million (more than twice its earnings for the first half of the year) in local infrastructure projects to modernize the electric grid and to integrate more renewable energy reliably. At American Savings Bank, we continued to deliver profitable performance with year-to-date annualized loan growth of 6.0% and deposit growth of 8.2% driving higher net interest income,” said Constance H. Lau, HEI president and chief executive officer and chairman of the boards of Hawaiian Electric and American Savings Bank.
_________________
1 Non-GAAP measure which excludes costs related to the recently terminated merger between HEI and NextEra Energy, Inc. and the cancelled spin-off of ASB Hawaii, Inc. and costs related to the recently terminated LNG contract, which required PUC approval of the merger with NextEra Energy, Inc. See the “Explanation of HEI’s Use of Certain Unaudited Non-GAAP measures” and the related reconciliation.
Hawaiian Electric Industries, Inc.
August 4, 2016
Page 2
“HEI remains a strong company and is well-positioned to help Hawaiian Electric achieve Hawaii’s 100% renewable energy goal by 2045. Our utilities will continue transforming to focus on providing customer value and options. We will accomplish this through innovation and a balanced generation portfolio, distributed generation, enhanced electrification of transportation and demand response initiatives. And American Savings Bank will continue to move forward as one of the leading financial institutions in Hawaii delivering a full range of financial products and services to its customers.”
HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company’s2 net income for the second quarter of 2016 was $35.9 million compared to $32.8 million in the second quarter of 2015. The net income increase was mainly driven by $4 million (after-tax) higher net revenues primarily due to the recovery of costs for clean energy and reliability investments partially offset by $2 million (after-tax) higher depreciation expense as a result of increasing investments for improved customer reliability and greater system efficiency, and the integration of more renewable energy.
Other operations and maintenance expenses were relatively flat compared to the prior year quarter. The second quarter of 2016 included higher overhaul and LNG consulting and legal expenses compared to the second quarter of 2015 which included higher vegetation management and boiler and steam maintenance expenses.
AMERICAN SAVINGS BANK EARNINGS
American Savings Bank’s (American) net income for the second quarter of 2016 was $13.3 million compared to $12.7 million in the first (or linked) quarter of 2016 and $12.9 million in the second quarter of 2015. Second quarter 2016 net income was $0.6 million higher than the linked quarter, primarily driven by $1 million (after-tax) higher revenues due to higher noninterest 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.
| |
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.
August 4, 2016
Page 3
which included gains on sale of securities and higher mortgage banking income, and higher net interest income primarily due to growth in the commercial real estate and consumer loan portfolios. Higher revenues were partially offset by $1 million (after-tax) higher noninterest expense due primarily to costs related to the replacement and upgrade of the electronic banking platform.
Compared to the second quarter of 2015, net income improved by $0.4 million, primarily driven by $3 million (after-tax) higher net interest income due to growth in the commercial real estate and consumer loan and investment portfolios and higher yields on interest-earning assets. This was offset by the following on an after-tax basis:
| |
| • | $2 million higher provision for loan losses mainly driven by commercial real estate and consumer loan growth and downgrades of specific commercial credits in the second quarter of 2016; and |
| |
| • | $1 million higher noninterest expense primarily due to costs related to the replacement and upgrade of the electronic banking platform. |
Total loans were $4.8 billion at June 30, 2016, an increase of $112 million and $138 million in the second quarter and year-to-date 2016, respectively. Year-to-date annualized loan growth was 6.0%, in line with American’s target of mid-single digit loan growth for the full year.
Total deposits were $5.2 billion at June 30, 2016, an increase of $92 million and $207 million in the second quarter and year-to-date 2016, respectively. Year-to-date annualized deposit growth of 8.2% was primarily driven by the $126 million (5.6% year-to-date annualized) increase in low-cost core deposits. Average cost of funds remained low at 0.23% for the second quarter of 2016, unchanged from the linked quarter and 1 basis point higher than the prior year quarter.
Overall, American achieved solid profitability in the second quarter of 2016 with a return on average equity of 9.2% and a return on average assets of 0.86%.
For additional information, refer to the American news release issued on July 29, 2016.
HOLDING AND OTHER COMPANIES
The holding and other companies’ net losses were $5.0 million in the second quarter of 2016 compared to $10.7 million in the second quarter of 2015. Excluding after-tax costs of $2.0 million associated with the recently terminated merger with NextEra Energy, Inc. and the cancelled spin-off of
Hawaiian Electric Industries, Inc.
August 4, 2016
Page 4
ASB Hawaii, Inc. in the second quarter of 2016 and $7.2 million in the second quarter of 2015, the holding and other companies’ net losses in 2016 and 2015 were $3.0 million and $3.5 million, respectively.
WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its second quarter of 2016 earnings on Thursday, August 4, 2016, at 11:00 a.m. Hawaii time (5:00 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (888) 311-8190 and entering passcode: 16065228. International parties may listen to the conference by calling (330) 863-3378 and entering passcode: 16065228 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 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 August 18, 2016, by dialing (855) 859-2056 or (404) 537-3406 and entering passcode: 16065228.
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,
Hawaiian Electric Industries, Inc.
August 4, 2016
Page 5
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 12 and 13 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 “will,” “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, 2015, HEI’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 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 June 30 | | Six months ended June 30 |
| (in thousands, except per share amounts) | | 2016 | | 2015 | | 2016 | | 2015 |
| Revenues | | | | | | | | |
| Electric utility | | $ | 495,395 |
| | $ | 558,163 |
| | $ | 977,447 |
| | $ | 1,131,605 |
|
| Bank | | 70,749 |
| | 65,783 |
| | 139,589 |
| | 130,131 |
|
| Other | | 100 |
| | (34 | ) | | 168 |
| | 38 |
|
| Total revenues | | 566,244 |
| | 623,912 |
| | 1,117,204 |
| | 1,261,774 |
|
| Expenses | | | | | | | | |
| Electric utility | | 424,709 |
| | 492,002 |
| | 851,435 |
| | 1,007,808 |
|
| Bank | | 50,525 |
| | 46,057 |
| | 99,771 |
| | 89,774 |
|
| Other | | 5,555 |
| | 13,123 |
| | 11,692 |
| | 21,956 |
|
| Total expenses | | 480,789 |
| | 551,182 |
| | 962,898 |
| | 1,119,538 |
|
| Operating income (loss) | | | | | | | | |
| Electric utility | | 70,686 |
| | 66,161 |
| | 126,012 |
| | 123,797 |
|
| Bank | | 20,224 |
| | 19,726 |
| | 39,818 |
| | 40,357 |
|
| Other | | (5,455 | ) | | (13,157 | ) | | (11,524 | ) | | (21,918 | ) |
| Total operating income | | 85,455 |
| | 72,730 |
| | 154,306 |
| | 142,236 |
|
| Interest expense, net—other than on deposit liabilities and other bank borrowings | | (17,301 | ) | | (18,906 | ) | | (37,427 | ) | | (38,006 | ) |
| Allowance for borrowed funds used during construction | | 760 |
| | 682 |
| | 1,422 |
| | 1,181 |
|
| Allowance for equity funds used during construction | | 1,997 |
| | 1,896 |
| | 3,736 |
| | 3,309 |
|
| Income before income taxes | | 70,911 |
| | 56,402 |
| | 122,037 |
| | 108,720 |
|
| Income taxes | | 26,310 |
| | 20,911 |
| | 44,611 |
| | 40,890 |
|
| Net income | | 44,601 |
| | 35,491 |
| | 77,426 |
| | 67,830 |
|
| Preferred stock dividends of subsidiaries | | 473 |
| | 473 |
| | 946 |
| | 946 |
|
| Net income for common stock | | $ | 44,128 |
| | $ | 35,018 |
| | $ | 76,480 |
| | $ | 66,884 |
|
| Basic earnings per common share | | $ | 0.41 |
| | $ | 0.33 |
| | $ | 0.71 |
| | $ | 0.63 |
|
| Diluted earnings per common share | | $ | 0.41 |
| | $ | 0.33 |
| | $ | 0.71 |
| | $ | 0.63 |
|
| Dividends per common share | | $ | 0.31 |
| | $ | 0.31 |
| | $ | 0.62 |
| | $ | 0.62 |
|
| Weighted-average number of common shares outstanding | | 107,962 |
| | 107,418 |
| | 107,791 |
| | 105,361 |
|
| Adjusted weighted-average shares | | 108,133 |
| | 107,694 |
| | 107,978 |
| | 105,659 |
|
| Net income (loss) for common stock by segment | | | | | | | | |
| Electric utility | | $ | 35,857 |
| | $ | 32,841 |
| | $ | 61,224 |
| | $ | 59,715 |
|
| Bank | | 13,285 |
| | 12,851 |
| | 25,958 |
| | 26,326 |
|
| Other | | (5,014 | ) | | (10,674 | ) | | (10,702 | ) | | (19,157 | ) |
| Net income for common stock | | $ | 44,128 |
| | $ | 35,018 |
| | $ | 76,480 |
| | $ | 66,884 |
|
| Comprehensive income attributable to Hawaiian Electric Industries, Inc. | | $ | 46,236 |
| | $ | 31,891 |
| | $ | 87,388 |
| | $ | 67,815 |
|
Return on average common equity (twelve months ended)1 | | | | | | 8.8 | % | | 8.1 | % |
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI 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 June 30) were 9.3% and 9.0%. See reconciliation of GAAP to non-GAAP measures.
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| | | | | | | | |
| (dollars in thousands) | | June 30, 2016 | | December 31, 2015 |
| Assets | | |
| | |
|
| Cash and cash equivalents | | $ | 257,208 |
| | $ | 300,478 |
|
| Accounts receivable and unbilled revenues, net | | 224,179 |
| | 242,766 |
|
| Available-for-sale investment securities, at fair value | | 894,021 |
| | 820,648 |
|
| Stock in Federal Home Loan Bank, at cost | | 11,218 |
| | 10,678 |
|
| Loans receivable held for investment, net | | 4,699,623 |
| | 4,565,781 |
|
| Loans held for sale, at lower of cost or fair value | | 6,217 |
| | 4,631 |
|
| Property, plant and equipment, net of accumulated depreciation of $2,387,013 and $2,339,319 at the respective dates | | 4,482,990 |
| | 4,377,658 |
|
| Regulatory assets | | 885,114 |
| | 896,731 |
|
| Other | | 436,479 |
| | 480,457 |
|
| Goodwill | | 82,190 |
| | 82,190 |
|
| Total assets | | $ | 11,979,239 |
| | $ | 11,782,018 |
|
| Liabilities and shareholders’ equity | | |
| | |
|
| Liabilities | | |
| | |
|
| Accounts payable | | $ | 130,160 |
| | $ | 138,523 |
|
| Interest and dividends payable | | 23,490 |
| | 26,042 |
|
| Deposit liabilities | | 5,232,203 |
| | 5,025,254 |
|
| Short-term borrowings—other than bank | | 115,985 |
| | 103,063 |
|
| Other bank borrowings | | 272,887 |
| | 328,582 |
|
| Long-term debt, net—other than bank | | 1,578,842 |
| | 1,578,368 |
|
| Deferred income taxes | | 712,199 |
| | 680,877 |
|
| Regulatory liabilities | | 391,003 |
| | 371,543 |
|
| Contributions in aid of construction | | 516,750 |
| | 506,087 |
|
| Defined benefit pension and other postretirement benefit plans liability | | 578,651 |
| | 589,918 |
|
| Other | | 426,594 |
| | 471,828 |
|
| Total liabilities | | 9,978,764 |
| | 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: 108,187,063 shares and 107,460,406 shares at the respective dates | | 1,647,138 |
| | 1,629,136 |
|
| Retained earnings | | 334,398 |
| | 324,766 |
|
| Accumulated other comprehensive loss, net of tax benefits | | (15,354 | ) | | (26,262 | ) |
| Total shareholders’ equity | | 1,966,182 |
| | 1,927,640 |
|
| Total liabilities and shareholders’ equity | | $ | 11,979,239 |
| | $ | 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 filings with the SEC.
Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| | | | | | | | | | | | | | | | |
| | | Three months ended June 30 | | Six months ended June 30 |
| (dollars in thousands, except per barrel amounts) | | 2016 | | 2015 | | 2016 | | 2015 |
| Revenues | | $ | 495,395 |
| | $ | 558,163 |
| | $ | 977,447 |
| | $ | 1,131,605 |
|
| Expenses | | |
| | |
| | | | |
| Fuel oil | | 91,899 |
| | 146,231 |
| | 205,639 |
| | 323,037 |
|
| Purchased power | | 139,058 |
| | 149,284 |
| | 254,917 |
| | 285,291 |
|
| Other operation and maintenance | | 99,563 |
| | 98,864 |
| | 203,471 |
| | 202,866 |
|
| Depreciation | | 46,760 |
| | 44,241 |
| | 93,541 |
| | 88,484 |
|
| Taxes, other than income taxes | | 47,429 |
| | 53,382 |
| | 93,867 |
| | 108,130 |
|
| Total expenses | | 424,709 |
| | 492,002 |
| | 851,435 |
| | 1,007,808 |
|
| Operating income | | 70,686 |
| | 66,161 |
| | 126,012 |
| | 123,797 |
|
| Allowance for equity funds used during construction | | 1,997 |
| | 1,896 |
| | 3,736 |
| | 3,309 |
|
| Interest expense and other charges, net | | (15,103 | ) | | (16,288 | ) | | (32,411 | ) | | (32,613 | ) |
| Allowance for borrowed funds used during construction | | 760 |
| | 682 |
| | 1,422 |
| | 1,181 |
|
| Income before income taxes | | 58,340 |
| | 52,451 |
| | 98,759 |
| | 95,674 |
|
| Income taxes | | 21,984 |
| | 19,111 |
| | 36,537 |
| | 34,961 |
|
| Net income | | 36,356 |
| | 33,340 |
| | 62,222 |
| | 60,713 |
|
| Preferred stock dividends of subsidiaries | | 229 |
| | 229 |
| | 458 |
| | 458 |
|
| Net income attributable to Hawaiian Electric | | 36,127 |
| | 33,111 |
| | 61,764 |
| | 60,255 |
|
| Preferred stock dividends of Hawaiian Electric | | 270 |
| | 270 |
| | 540 |
| | 540 |
|
| Net income for common stock | | $ | 35,857 |
| | $ | 32,841 |
| | $ | 61,224 |
| | $ | 59,715 |
|
| Comprehensive income attributable to Hawaiian Electric | | $ | 35,102 |
| | $ | 32,826 |
| | $ | 61,485 |
| | $ | 59,722 |
|
| OTHER ELECTRIC UTILITY INFORMATION | | | | | | | | |
| Kilowatthour sales (millions) | | | | | | | | |
| Hawaiian Electric | | 1,625 |
| | 1,615 |
| | 3,182 |
| | 3,142 |
|
| Hawaii Electric Light | | 260 |
| | 257 |
| | 518 |
| | 510 |
|
| Maui Electric | | 271 |
| | 272 |
| | 541 |
| | 536 |
|
| | | 2,156 |
| | 2,144 |
| | 4,241 |
| | 4,188 |
|
| Wet-bulb temperature (Oahu average; degrees Fahrenheit) | | 69.9 |
| | 69.2 |
| | 68.6 |
| | 67.8 |
|
| Cooling degree days (Oahu) | | 1,257 |
| | 1,181 |
| | 2,141 |
| | 1,976 |
|
| Average fuel oil cost per barrel | | $ | 44.98 |
| | $ | 69.37 |
| | $ | 49.05 |
| | $ | 77.85 |
|
| | | | | | | | | |
| | | | | Twelve months ended June 30 |
| | | | | | | 2016 | | 2015 |
| Return on average common equity (%) (simple average) | | | | | | | | |
| Hawaiian Electric | | | | | | 7.95 |
| | 7.87 |
|
| Hawaii Electric Light | | | | | | 7.47 |
| | 6.01 |
|
| Maui Electric | | | | | | 8.67 |
| | 8.87 |
|
Hawaiian Electric Consolidated1 | | | | | | 7.98 |
| | 7.70 |
|
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.
1 On a core basis, 2016 and 2015 returns on average common equity (twelve months ended June 30) were 8.1% and 7.7%. See reconciliation of GAAP to non-GAAP measures.
Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| | | | | | | | |
| (dollars in thousands, except par value) | | June 30, 2016 | | December 31, 2015 |
| Assets | | |
| | |
|
| Property, plant and equipment | | | | |
| Utility property, plant and equipment | | |
| | |
|
| Land | | $ | 53,175 |
| | $ | 52,792 |
|
| Plant and equipment | | 6,411,544 |
| | 6,315,698 |
|
| Less accumulated depreciation | | (2,314,743 | ) | | (2,266,004 | ) |
| Construction in progress | | 230,143 |
| | 175,309 |
|
| Utility property, plant and equipment, net | | 4,380,119 |
| | 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 | | 4,387,494 |
| | 4,285,067 |
|
| Current assets | | | | |
|
| Cash and cash equivalents | | 27,579 |
| | 24,449 |
|
| Customer accounts receivable, net | | 116,265 |
| | 132,778 |
|
| Accrued unbilled revenues, net | | 87,724 |
| | 84,509 |
|
| Other accounts receivable, net | | 4,546 |
| | 10,408 |
|
| Fuel oil stock, at average cost | | 61,572 |
| | 71,216 |
|
| Materials and supplies, at average cost | | 56,911 |
| | 54,429 |
|
| Prepayments and other | | 21,879 |
| | 36,640 |
|
| Regulatory assets | | 90,471 |
| | 72,231 |
|
| Total current assets | | 466,947 |
| | 486,660 |
|
| Other long-term assets | | |
| | |
|
| Regulatory assets | | 794,643 |
| | 824,500 |
|
| Unamortized debt expense | | 344 |
| | 497 |
|
| Other | | 72,425 |
| | 75,486 |
|
| Total other long-term assets | | 867,412 |
| | 900,483 |
|
| Total assets | | $ | 5,721,853 |
| | $ | 5,672,210 |
|
| Capitalization and liabilities | | |
| | |
|
| Capitalization | | |
| | |
|
| Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,805,327 shares) | | $ | 105,388 |
| | $ | 105,388 |
|
| Premium on capital stock | | 578,926 |
| | 578,930 |
|
| Retained earnings | | 1,057,506 |
| | 1,043,082 |
|
| Accumulated other comprehensive income, net of income taxes | | 1,186 |
| | 925 |
|
| Common stock equity | | 1,743,006 |
| | 1,728,325 |
|
| Cumulative preferred stock — not subject to mandatory redemption | | 34,293 |
| | 34,293 |
|
| Long-term debt, net | | 1,279,123 |
| | 1,278,702 |
|
| Total capitalization | | 3,056,422 |
| | 3,041,320 |
|
| Current liabilities | | |
| | |
|
| Short-term borrowings from non-affiliates | | 36,995 |
| | — |
|
| Accounts payable | | 106,521 |
| | 114,846 |
|
| Interest and preferred dividends payable | | 21,309 |
| | 23,111 |
|
| Taxes accrued | | 141,148 |
| | 191,084 |
|
| Regulatory liabilities | | 3,368 |
| | 2,204 |
|
| Other | | 53,347 |
| | 54,079 |
|
| Total current liabilities | | 362,688 |
| | 385,324 |
|
| Deferred credits and other liabilities | | |
| | |
|
| Deferred income taxes | | 689,482 |
| | 654,806 |
|
| Regulatory liabilities | | 387,635 |
| | 369,339 |
|
| Unamortized tax credits | | 89,176 |
| | 84,214 |
|
| Defined benefit pension and other postretirement benefit plans liability | | 541,656 |
| | 552,974 |
|
| Other | | 78,044 |
| | 78,146 |
|
| Total deferred credits and other liabilities | | 1,785,993 |
| | 1,739,479 |
|
| Contributions in aid of construction | | 516,750 |
| | 506,087 |
|
| Total capitalization and liabilities | | $ | 5,721,853 |
| | $ | 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 | | Six months ended June 30 |
| (in thousands) | | June 30, 2016 | | March 31, 2016 | | June 30, 2015 | | 2016 | | 2015 |
| Interest and dividend income | | |
| | |
| | |
| | | | |
| Interest and fees on loans | | $ | 49,690 |
| | $ | 48,437 |
| | $ | 46,035 |
| | 98,127 |
| | 91,233 |
|
| Interest and dividends on investment securities | | 4,443 |
| | 5,017 |
| | 3,306 |
| | 9,460 |
| | 6,357 |
|
| Total interest and dividend income | | 54,133 |
| | 53,454 |
| | 49,341 |
| | 107,587 |
| | 97,590 |
|
| Interest expense | | |
| | |
| | | | | | |
| Interest on deposit liabilities | | 1,691 |
| | 1,592 |
| | 1,266 |
| | 3,283 |
| | 2,526 |
|
| Interest on other borrowings | | 1,467 |
| | 1,485 |
| | 1,487 |
| | 2,952 |
| | 2,953 |
|
| Total interest expense | | 3,158 |
| | 3,077 |
| | 2,753 |
| | 6,235 |
| | 5,479 |
|
| Net interest income | | 50,975 |
| | 50,377 |
| | 46,588 |
| | 101,352 |
| | 92,111 |
|
| Provision for loan losses | | 4,753 |
| | 4,766 |
| | 1,825 |
| | 9,519 |
| | 2,439 |
|
| Net interest income after provision for loan losses | | 46,222 |
| | 45,611 |
| | 44,763 |
| | 91,833 |
| | 89,672 |
|
| Noninterest income | | |
| | |
| | | | | | |
| Fees from other financial services | | 5,701 |
| | 5,499 |
| | 5,550 |
| | 11,200 |
| | 10,905 |
|
| Fee income on deposit liabilities | | 5,262 |
| | 5,156 |
| | 5,424 |
| | 10,418 |
| | 10,739 |
|
| Fee income on other financial products | | 2,207 |
| | 2,205 |
| | 2,103 |
| | 4,412 |
| | 3,992 |
|
| Bank-owned life insurance | | 1,006 |
| | 998 |
| | 1,058 |
| | 2,004 |
| | 2,041 |
|
| Mortgage banking income | | 1,554 |
| | 1,195 |
| | 2,068 |
| | 2,749 |
| | 3,890 |
|
| Gains on sale of investment securities, net | | 598 |
| | — |
| | — |
| | 598 |
| | — |
|
| Other income, net | | 288 |
| | 333 |
| | 239 |
| | 621 |
| | 974 |
|
| Total noninterest income | | 16,616 |
| | 15,386 |
| | 16,442 |
| | 32,002 |
| | 32,541 |
|
| Noninterest expense | | |
| | |
| | | | | | |
| Compensation and employee benefits | | 21,919 |
| | 22,434 |
| | 22,319 |
| | 44,353 |
| | 44,085 |
|
| Occupancy | | 4,115 |
| | 4,138 |
| | 4,009 |
| | 8,253 |
| | 8,122 |
|
| Data processing | | 3,277 |
| | 3,172 |
| | 2,953 |
| | 6,449 |
| | 6,069 |
|
| Services | | 2,755 |
| | 2,911 |
| | 2,833 |
| | 5,666 |
| | 5,174 |
|
| Equipment | | 1,771 |
| | 1,663 |
| | 1,690 |
| | 3,434 |
| | 3,391 |
|
| Office supplies, printing and postage | | 1,583 |
| | 1,365 |
| | 1,303 |
| | 2,948 |
| | 2,786 |
|
| Marketing | | 899 |
| | 861 |
| | 844 |
| | 1,760 |
| | 1,685 |
|
| FDIC insurance | | 913 |
| | 884 |
| | 773 |
| | 1,797 |
| | 1,584 |
|
| Other expense | | 5,382 |
| | 3,975 |
| | 4,755 |
| | 9,357 |
| | 8,960 |
|
| Total noninterest expense | | 42,614 |
| | 41,403 |
| | 41,479 |
| | 84,017 |
| | 81,856 |
|
| Income before income taxes | | 20,224 |
| | 19,594 |
| | 19,726 |
| | 39,818 |
| | 40,357 |
|
| Income taxes | | 6,939 |
| | 6,921 |
| | 6,875 |
| | 13,860 |
| | 14,031 |
|
| Net income | | $ | 13,285 |
| | $ | 12,673 |
| | $ | 12,851 |
| | $ | 25,958 |
| | $ | 26,326 |
|
| Comprehensive income | | $ | 16,051 |
| | $ | 20,310 |
| | $ | 9,544 |
| | $ | 36,361 |
| | $ | 26,862 |
|
| OTHER BANK INFORMATION (annualized %, except as of period end) | | | | | | | | |
| Return on average assets | | 0.86 |
| | 0.84 |
| | 0.89 |
| | 0.85 |
| | 0.93 |
|
| Return on average equity | | 9.22 |
| | 8.89 |
| | 9.38 |
| | 9.06 |
| | 9.67 |
|
| Return on average tangible common equity | | 10.75 |
| | 10.39 |
| | 11.04 |
| | 10.57 |
| | 11.39 |
|
| Net interest margin | | 3.58 |
| | 3.62 |
| | 3.52 |
| | 3.60 |
| | 3.52 |
|
| Efficiency ratio | | 63.05 |
| | 62.96 |
| | 65.81 |
| | 63.00 |
| | 65.67 |
|
| Net charge-offs to average loans outstanding | | 0.15 |
| | 0.21 |
| | 0.11 |
| | 0.18 |
| | 0.08 |
|
| As of period end | | | | | | | | | | |
| Nonperforming assets to loans outstanding and real estate owned | | 1.02 |
| | 1.03 |
| | 0.70 |
| | | | |
| Allowance for loan losses to loans outstanding | | 1.16 |
| | 1.13 |
| | 1.04 |
| | | | |
| Tangible common equity to tangible assets | | 8.15 |
| | 8.08 |
| | 8.16 |
| | | | |
| Tier-1 leverage ratio | | 8.7 |
| | 8.7 |
| | 8.8 |
| | | | |
| Total capital ratio | | 13.2 |
| | 13.2 |
| | 13.5 |
| | | | |
| Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) | | $ | 9.0 |
| | $ | 9.0 |
| | $ | 7.5 |
| | | | |
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI 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)
|
| | | | | | | | | | | | |
| (in thousands) | June 30, 2016 | | December 31, 2015 | |
| | | |
| | |
|
| Assets | | |
| | |
|
| Cash and due from banks | | $ | 111,738 |
| | $ | 127,201 |
|
| Interest-bearing deposits | | 62,850 |
| | 93,680 |
|
| Available-for-sale investment securities, at fair value | | 894,021 |
| | 820,648 |
|
| Stock in Federal Home Loan Bank, at cost | | 11,218 |
| | 10,678 |
|
| Loans receivable held for investment | | 4,754,954 |
| | 4,615,819 |
|
| Allowance for loan losses | | (55,331 | ) | | (50,038 | ) |
| Net loans | | 4,699,623 |
| | 4,565,781 |
|
| Loans held for sale, at lower of cost or fair value | | 6,217 |
| | 4,631 |
|
| Other | | 320,233 |
| | 309,946 |
|
| Goodwill | | 82,190 |
| | 82,190 |
|
| Total assets | | $ | 6,188,090 |
| | $ | 6,014,755 |
|
| Liabilities and shareholder’s equity | | | | |
| Deposit liabilities–noninterest-bearing | | $ | 1,583,420 |
| | $ | 1,520,374 |
|
| Deposit liabilities–interest-bearing | | 3,648,783 |
| | 3,504,880 |
|
| Other borrowings | | 272,887 |
| | 328,582 |
|
| Other | | 103,396 |
| | 101,029 |
|
| Total liabilities | | 5,608,486 |
| | 5,454,865 |
|
| Common stock | | 1 |
| | 1 |
|
| Additional paid in capital | | 341,849 |
| | 340,496 |
|
| Retained earnings | | 244,622 |
| | 236,664 |
|
| Accumulated other comprehensive loss, net of tax benefits | | | | |
| Net unrealized gains (losses) on securities | $ | 8,111 |
| |
| $ | (1,872 | ) | |
| Retirement benefit plans | (14,979 | ) | (6,868 | ) | (15,399 | ) | (17,271 | ) |
| Total shareholder’s equity | | 579,604 |
| | 559,890 |
|
| Total liabilities and shareholder’s equity | | $ | 6,188,090 |
| | $ | 6,014,755 |
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI 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 HEI and the utility.
The reconciling adjustments from GAAP earnings to core earnings is limited to the costs related to the recently terminated merger between HEI and NextEra Energy, Inc. and the cancelled spin-off of ASB Hawaii, Inc. and costs related to the recently terminated liquefied natural gas (LNG) contract which required the Hawaii Public Utilities Commission approval of the merger with NextEra Energy, Inc. less the associated current income tax benefits adjustment. For more information on the transactions, see HEI’s Form 8-K filed on July 18, 2016 and HEI’s Form 8-K filed on July 19, 2016, respectively. 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 terminated 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 | Three months ended June 30 | | Six months ended June 30 |
| ($ in millions, except per share amounts) | 2016 | 2015 | | 2016 | 2015 |
| HEI CONSOLIDATED COSTS RELATED TO THE TERMINATED MERGER WITH NEXTERA ENERGY AND CANCELLED SPIN-OFF OF ASB HAWAII | | | | | |
| Pre-tax expenses | $ | 2.0 |
| $ | 9.0 |
| | $ | 3.6 |
| $ | 13.9 |
|
| Current income tax benefits | — |
| (1.8 | ) | | — |
| (2.0 | ) |
| After-tax expenses | $ | 2.0 |
| $ | 7.2 |
| | $ | 3.6 |
| $ | 11.9 |
|
HEI CONSOLIDATED LNG CONTRACT COSTS2 | | | | | |
| Pre-tax expenses | $ | 1.2 |
| $ | — |
| | $ | 3.4 |
| $ | — |
|
| Current income tax benefits | (0.5 | ) | — |
| | (1.3 | ) | — |
|
| After-tax expenses | $ | 0.7 |
| $ | — |
| | $ | 2.1 |
| $ | — |
|
| HEI CONSOLIDATED NET INCOME | | | | | |
| GAAP (as reported) | $ | 44.1 |
| $ | 35.0 |
| | $ | 76.5 |
| $ | 66.9 |
|
| Excluding special items (after-tax): | | | | | |
| Costs related to the terminated merger with NextEra Energy and cancelled spin-off of ASB Hawaii | 2.0 |
| 7.2 |
| | 3.6 |
| 11.9 |
|
Costs related to the terminated LNG contract2 | 0.7 |
| — |
| | 2.1 |
| — |
|
| Non-GAAP (core) net income | $ | 46.9 |
| $ | 42.2 |
| | $ | 82.1 |
| $ | 78.8 |
|
| HEI CONSOLIDATED DILUTED EARNINGS PER COMMON SHARE | | | | |
| GAAP (as reported) | $ | 0.41 |
| $ | 0.33 |
| | $ | 0.71 |
| $ | 0.63 |
|
| Excluding special items (after-tax): | | | | | |
| Costs related to the terminated merger with NextEra Energy and cancelled spin-off of ASB Hawaii | 0.02 |
| 0.07 |
| | 0.03 |
| 0.11 |
|
Costs related to the terminated LNG contract2 | 0.01 |
| — |
| | 0.02 |
| — |
|
| Non-GAAP (core) diluted earnings per common share | $ | 0.43 |
| $ | 0.39 |
| | $ | 0.76 |
| $ | 0.75 |
|
| | | | | Twelve months ended June 30 |
| | | | | 2016 | 2015 |
HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) | | | |
| Based on GAAP | | | | 8.8 | % | 8.1 | % |
Based on non-GAAP (core)3 | | | | 9.3 | % | 9.0 | % |
| | | | | | |
| Note: Columns may not foot due to rounding | | | | | |
1 Accounting principles generally accepted in the United States of America | | | | | |
2 The LNG contract was terminated as it was conditioned on the merger with NextEra Energy closing |
3 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 | Three months ended June 30 | | Six months ended June 30 |
| ($ in millions) | 2016 | 2015 | | 2016 | 2015 |
| HAWAIIAN ELECTRIC CONSOLIDATED COSTS RELATED TO THE TERMINATED MERGER WITH NEXTERA ENERGY | | | | | |
| Pre-tax expenses | $ | — |
| $ | — |
| | $ | 0.1 |
| $ | 0.4 |
|
| Current income tax benefits | — |
| — |
| | — |
| (0.2 | ) |
| After-tax expenses | $ | — |
| $ | — |
| | $ | 0.1 |
| $ | 0.3 |
|
HAWAIIAN ELECTRIC CONSOLIDATED LNG CONTRACT COSTS2 | | | | |
| Pre-tax expenses | $ | 1.2 |
| $ | — |
| | $ | 3.4 |
| $ | — |
|
| Current income tax benefits | (0.5 | ) | — |
| | (1.3 | ) | — |
|
| After-tax expenses | $ | 0.7 |
| $ | — |
| | $ | 2.1 |
| $ | — |
|
| HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME | | | | | |
| GAAP (as reported) | $ | 35.9 |
| $ | 32.8 |
| | $ | 61.2 |
| $ | 59.7 |
|
| Excluding special items (after-tax): | | | | | |
| Costs related to the terminated merger with NextEra Energy | — |
| — |
| | 0.1 |
| 0.3 |
|
Costs related to the terminated LNG contract2 | 0.7 |
| — |
| | 2.1 |
| — |
|
| Non-GAAP (core) Net Income | $ | 36.6 |
| $ | 32.9 |
| | $ | 63.4 |
| $ | 60.0 |
|
| | | | | | |
| | | | | Twelve months ended June 30 |
| | | | | 2016 | 2015 |
HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) | | | | | |
| Based on GAAP | | | | 7.98 | % | 7.70 | % |
Based on non-GAAP (core)3 | | | | 8.12 | % | 7.72 | % |
| | | | | | |
| | Three months ended June 30 | | Six months ended June 30 |
| ($ in millions) | 2016 | 2015 | | 2016 | 2015 |
| HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE | | | | | |
| GAAP (as reported) | $ | 99.6 |
| $ | 98.9 |
| | $ | 203.5 |
| $ | 202.9 |
|
Excluding O&M-related net income neutral items4 | 1.5 |
| 1.6 |
| | 3.1 |
| 3.5 |
|
| Excluding costs related to the terminated merger with NextEra Energy | — |
| — |
| | 0.1 |
| 0.4 |
|
Excluding costs related to the terminated LNG contract2 | 1.2 |
| — |
| | 3.4 |
| — |
|
| Non-GAAP (Adjusted other O&M expense) | $ | 96.8 |
| $ | 97.2 |
| | $ | 196.8 |
| $ | 198.9 |
|
| Note: Columns may not foot due to rounding | | | |
1 Accounting principles generally accepted in the United States of America | | | | | |
2 The LNG contract was terminated as it was conditioned on the merger with NextEra Energy closing |
3 Calculated as core net income divided by average GAAP common equity |
4 Expenses covered by surcharges or by third parties recorded in revenues | | | | | |
