HEI Exhibit 99
November 4, 2016
| Contact: | Clifford H. Chen | Telephone: (808) 543-7300 |
| Manager, Investor Relations & | E-mail: ir@hei.com | |
| Strategic Planning | ||
HAWAIIAN ELECTRIC INDUSTRIES REPORTS
THIRD QUARTER 2016 EARNINGS
GAAP Diluted Earnings Per Share (EPS) of $1.17;
Includes Merger-Related Net Income of $0.59
Merger Termination Payment Will Help Support Utility Investments
Core EPS1 of $0.58
HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2016 of $127.1 million and diluted earnings per share (EPS) of $1.17 compared to $50.7 million and EPS of $0.47 for the third quarter of 2015. Financial results for the third quarter of 2016 include the one-time increase to net income of $63.8 million related to the recently terminated merger with NextEra Energy, Inc. and related spin-off of ASB Hawaii, Inc., as compared to $1.7 million net expense in the third quarter of 2015. Excluding these items, core earnings1 for the third quarter of 2016 were $63.3 million and core EPS1 of $0.58 compared to $52.4 million and $0.49 respectively for the third quarter of 2015.
“The NextEra Energy termination payment will support HEI's investments in our community and projects our utility is undertaking to reliably integrate more renewable energy for its customers. Through the first nine months of this year, Hawaiian Electric invested $230 million in local infrastructure projects to modernize the electric grid and to reliably integrate more renewable energy, moving us closer to our renewable energy goals. And in October, Hawaiian Electric marked its 125th year of serving the people of Hawaii. At American Savings Bank, we continued to deliver solid earnings growth and strong year-to-date annualized deposit growth of 9.4%,” said Constance H. Lau, HEI president and chief executive officer.
_________________
1 Non-GAAP measure which excludes fees, reimbursements and other related costs to the recently terminated merger between HEI and NextEra Energy, Inc. and the terminated 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.
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November 4, 2016
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HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company’s2 net income for the third quarter of 2016 was $47.0 million compared to $43.0 million in the third quarter of 2015. The increase was largely due to the non-recurrence of one-time items recorded in 2015.
O&M expenses were $5 million (after-tax) lower compared to the prior year quarter as the third quarter of 2015 was impacted by one-time items including the $3 million after-tax adjustment for enterprise resource planning software costs. In addition, third quarter 2016 O&M costs were $2 million (after-tax) lower due to fewer overhauls performed.
Lower O&M expenses were partially offset by $1 million higher depreciation expense as a result of increased investments for improved customer reliability and greater system efficiency, and the integration of more renewable energy.
Net revenues were relatively flat as $2 million (after-tax) higher recovery of costs for clean energy and reliability investments were offset by $2 million (after-tax) lower fuel efficiency.
AMERICAN SAVINGS BANK EARNINGS
American Savings Bank’s (American) net income for the third quarter of 2016 was $15.1 million compared to $13.3 million in the second (or linked) quarter of 2016 and $13.5 million in the third quarter of 2015. Third quarter 2016 net income was $1.8 million higher than the linked quarter primarily driven by $2 million (after-tax) higher revenues due to higher noninterest income and net interest income, partially offset by higher provision for loan losses.
Compared to the third quarter of 2015, net income improved by $1.7 million primarily driven by $2 million (after-tax) higher net interest income due to growth in the commercial real estate and consumer loan portfolios. Higher net interest income was partially offset by higher provision for loan losses.
_________________
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.
November 4, 2016
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Total loans were $4.7 billion at September 30, 2016, essentially flat compared to the linked quarter and increased $118 million year-to-date 2016. Year-to-date annualized loan growth was 3.4%, on track for American’s target of mid-single digit loan growth for the full year.
Total deposits were $5.4 billion at September 30, 2016, an increase of $149 million and $355 million in the third quarter and year-to-date 2016, respectively. Year-to-date annualized deposit growth of 9.4% was primarily driven by the $190 million (5.6% year-to-date annualized) increase in low-cost core deposits. Average cost of funds remained low at 0.24% for the third quarter of 2016, 1 basis point higher than the linked quarter and 2 basis points higher than the prior year quarter.
Overall, American achieved solid profitability in the third quarter of 2016 with a return on average equity of 10.4% and a return on average assets of 0.97%.
For additional information, refer to the American news release issued on October 28, 2016.
HOLDING AND OTHER COMPANIES
The holding and other companies’ net income (loss) were $65.1 million net income in the third quarter of 2016 compared to ($5.8) million net loss in the third quarter of 2015. Excluding one-time merger-related items of $63.8 million net income in the third quarter of 2016 and $1.7 million net expenses in the third quarter of 2015, the holding and other companies’ net income (loss) in the third quarter of 2016 and 2015 were $1.2 million net income and ($4.1) million net loss, respectively. The holding company’s third quarter 2016 results included favorable tax adjustments as HEI moved out of a federal net operating loss position, enabling the recognition of tax benefits.
WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its third quarter of 2016 earnings on Friday, November 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) 317-6016. International parties may listen to the conference by calling (412) 317-6016 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
Hawaiian Electric Industries, Inc.
November 4, 2016
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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 November 18, 2016, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10094997.
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 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
Hawaiian Electric Industries, Inc.
November 4, 2016
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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 June 30, 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 September 30 | Nine months ended September 30 | |||||||||||||||
| (in thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Revenues | ||||||||||||||||
| Electric utility | $ | 572,253 | $ | 648,127 | $ | 1,549,700 | $ | 1,779,732 | ||||||||
| Bank | 73,708 | 69,091 | 213,297 | 199,222 | ||||||||||||
| Other | 94 | (42 | ) | 262 | (4 | ) | ||||||||||
| Total revenues | 646,055 | 717,176 | 1,763,259 | 1,978,950 | ||||||||||||
| Expenses | ||||||||||||||||
| Electric utility | 482,441 | 565,470 | 1,333,876 | 1,573,278 | ||||||||||||
| Bank | 50,981 | 48,289 | 150,752 | 138,063 | ||||||||||||
| Other | 7,191 | 6,322 | 18,883 | 28,278 | ||||||||||||
| Total expenses | 540,613 | 620,081 | 1,503,511 | 1,739,619 | ||||||||||||
| Operating income (loss) | ||||||||||||||||
| Electric utility | 89,812 | 82,657 | 215,824 | 206,454 | ||||||||||||
| Bank | 22,727 | 20,802 | 62,545 | 61,159 | ||||||||||||
| Other | (7,097 | ) | (6,364 | ) | (18,621 | ) | (28,282 | ) | ||||||||
| Total operating income | 105,442 | 97,095 | 259,748 | 239,331 | ||||||||||||
| Merger termination fee | 90,000 | — | 90,000 | — | ||||||||||||
| Interest expense, net—other than on deposit liabilities and other bank borrowings | (19,365 | ) | (19,229 | ) | (56,792 | ) | (57,235 | ) | ||||||||
| Allowance for borrowed funds used during construction | 854 | 737 | 2,276 | 1,918 | ||||||||||||
| Allowance for equity funds used during construction | 2,274 | 2,057 | 6,010 | 5,366 | ||||||||||||
| Income before income taxes | 179,205 | 80,660 | 301,242 | 189,380 | ||||||||||||
| Income taxes | 51,592 | 29,516 | 96,203 | 70,406 | ||||||||||||
| Net income | 127,613 | 51,144 | 205,039 | 118,974 | ||||||||||||
| Preferred stock dividends of subsidiaries | 471 | 471 | 1,417 | 1,417 | ||||||||||||
| Net income for common stock | $ | 127,142 | $ | 50,673 | $ | 203,622 | $ | 117,557 | ||||||||
| Basic earnings per common share | $ | 1.17 | $ | 0.47 | $ | 1.89 | $ | 1.11 | ||||||||
| Diluted earnings per common share | $ | 1.17 | $ | 0.47 | $ | 1.88 | $ | 1.11 | ||||||||
| Dividends per common share | $ | 0.31 | $ | 0.31 | $ | 0.93 | $ | 0.93 | ||||||||
| Weighted-average number of common shares outstanding | 108,268 | 107,457 | 107,951 | 106,067 | ||||||||||||
| Adjusted weighted-average shares | 108,472 | 107,738 | 108,171 | 106,347 | ||||||||||||
| Net income (loss) for common stock by segment | ||||||||||||||||
| Electric utility | $ | 46,974 | $ | 43,006 | $ | 108,198 | $ | 102,721 | ||||||||
| Bank | 15,104 | 13,451 | 41,062 | 39,777 | ||||||||||||
| Other | 65,064 | (5,784 | ) | 54,362 | (24,941 | ) | ||||||||||
| Net income for common stock | $ | 127,142 | $ | 50,673 | $ | 203,622 | $ | 117,557 | ||||||||
| Comprehensive income attributable to Hawaiian Electric Industries, Inc. | $ | 125,473 | $ | 55,103 | $ | 212,861 | $ | 122,918 | ||||||||
Return on average common equity (twelve months ended)1 | 12.3 | % | 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 September 30) were 9.5% and 9.1%. See reconciliation of GAAP to non-GAAP measures.
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Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (dollars in thousands) | September 30, 2016 | December 31, 2015 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 284,355 | $ | 300,478 | ||||
| Accounts receivable and unbilled revenues, net | 250,076 | 242,766 | ||||||
| Available-for-sale investment securities, at fair value | 996,984 | 820,648 | ||||||
| Stock in Federal Home Loan Bank, at cost | 11,218 | 10,678 | ||||||
| Loans receivable held for investment, net | 4,675,901 | 4,565,781 | ||||||
| Loans held for sale, at lower of cost or fair value | 26,743 | 4,631 | ||||||
| Property, plant and equipment, net of accumulated depreciation of $2,416,937 and $2,339,319 at the respective dates | 4,532,556 | 4,377,658 | ||||||
| Regulatory assets | 879,775 | 896,731 | ||||||
| Other | 459,187 | 480,457 | ||||||
| Goodwill | 82,190 | 82,190 | ||||||
| Total assets | $ | 12,198,985 | $ | 11,782,018 | ||||
| Liabilities and shareholders’ equity | ||||||||
| Liabilities | ||||||||
| Accounts payable | $ | 134,176 | $ | 138,523 | ||||
| Interest and dividends payable | 27,115 | 26,042 | ||||||
| Deposit liabilities | 5,380,721 | 5,025,254 | ||||||
| Short-term borrowings—other than bank | — | 103,063 | ||||||
| Other bank borrowings | 265,388 | 328,582 | ||||||
| Long-term debt, net—other than bank | 1,579,065 | 1,578,368 | ||||||
| Deferred income taxes | 721,470 | 680,877 | ||||||
| Regulatory liabilities | 400,479 | 371,543 | ||||||
| Contributions in aid of construction | 525,491 | 506,087 | ||||||
| Defined benefit pension and other postretirement benefit plans liability | 572,933 | 589,918 | ||||||
| Other | 489,466 | 471,828 | ||||||
| Total liabilities | 10,096,304 | 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: 108,503,210 shares and 107,460,406 shares at the respective dates | 1,657,421 | 1,629,136 | ||||||
| Retained earnings | 427,990 | 324,766 | ||||||
| Accumulated other comprehensive loss, net of tax benefits | (17,023 | ) | (26,262 | ) | ||||
| Total shareholders’ equity | 2,068,388 | 1,927,640 | ||||||
| Total liabilities and shareholders’ equity | $ | 12,198,985 | $ | 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.
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Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
| (dollars in thousands, except per barrel amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Revenues | $ | 572,253 | $ | 648,127 | $ | 1,549,700 | $ | 1,779,732 | ||||||||
| Expenses | ||||||||||||||||
| Fuel oil | 128,624 | 195,633 | 334,263 | 518,670 | ||||||||||||
| Purchased power | 157,750 | 160,518 | 412,667 | 445,809 | ||||||||||||
| Other operation and maintenance | 94,789 | 103,653 | 298,260 | 306,519 | ||||||||||||
| Depreciation | 46,759 | 44,356 | 140,300 | 132,840 | ||||||||||||
| Taxes, other than income taxes | 54,519 | 61,310 | 148,386 | 169,440 | ||||||||||||
| Total expenses | 482,441 | 565,470 | 1,333,876 | 1,573,278 | ||||||||||||
| Operating income | 89,812 | 82,657 | 215,824 | 206,454 | ||||||||||||
| Allowance for equity funds used during construction | 2,274 | 2,057 | 6,010 | 5,366 | ||||||||||||
| Interest expense and other charges, net | (17,323 | ) | (16,557 | ) | (49,734 | ) | (49,170 | ) | ||||||||
| Allowance for borrowed funds used during construction | 854 | 737 | 2,276 | 1,918 | ||||||||||||
| Income before income taxes | 75,617 | 68,894 | 174,376 | 164,568 | ||||||||||||
| Income taxes | 28,145 | 25,390 | 64,682 | 60,351 | ||||||||||||
| Net income | 47,472 | 43,504 | 109,694 | 104,217 | ||||||||||||
| Preferred stock dividends of subsidiaries | 228 | 228 | 686 | 686 | ||||||||||||
| Net income attributable to Hawaiian Electric | 47,244 | 43,276 | 109,008 | 103,531 | ||||||||||||
| Preferred stock dividends of Hawaiian Electric | 270 | 270 | 810 | 810 | ||||||||||||
| Net income for common stock | $ | 46,974 | $ | 43,006 | $ | 108,198 | $ | 102,721 | ||||||||
| Comprehensive income attributable to Hawaiian Electric | $ | 47,125 | $ | 43,010 | $ | 108,610 | $ | 102,732 | ||||||||
| OTHER ELECTRIC UTILITY INFORMATION | ||||||||||||||||
| Kilowatthour sales (millions) | ||||||||||||||||
| Hawaiian Electric | 1,800 | 1,874 | 4,982 | 5,016 | ||||||||||||
| Hawaii Electric Light | 277 | 282 | 795 | 792 | ||||||||||||
| Maui Electric | 295 | 312 | 836 | 848 | ||||||||||||
| 2,372 | 2,468 | 6,613 | 6,656 | |||||||||||||
| Wet-bulb temperature (Oahu average; degrees Fahrenheit) | 72.3 | 74.9 | 69.8 | 70.2 | ||||||||||||
| Cooling degree days (Oahu) | 1,496 | 1,711 | 3,637 | 3,687 | ||||||||||||
| Average fuel oil cost per barrel | $ | 57.72 | $ | 81.35 | $ | 52.06 | $ | 79.13 | ||||||||
Twelve months ended September 30 | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Return on average common equity (%) (simple average) | ||||||||||||||||
| Hawaiian Electric | 7.94 | 7.95 | ||||||||||||||
| Hawaii Electric Light | 8.46 | 6.30 | ||||||||||||||
| Maui Electric | 8.45 | 9.21 | ||||||||||||||
Hawaiian Electric Consolidated1 | 8.11 | 7.86 | ||||||||||||||
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 September 30) were 8.2% and 7.9%. See reconciliation of GAAP to non-GAAP measures.
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Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (dollars in thousands, except par value) | September 30, 2016 | December 31, 2015 | ||||||
| Assets | ||||||||
| Property, plant and equipment | ||||||||
| Utility property, plant and equipment | ||||||||
| Land | $ | 53,175 | $ | 52,792 | ||||
| Plant and equipment | 6,483,562 | 6,315,698 | ||||||
| Less accumulated depreciation | (2,343,601 | ) | (2,266,004 | ) | ||||
| Construction in progress | 236,608 | 175,309 | ||||||
| Utility property, plant and equipment, net | 4,429,744 | 4,277,795 | ||||||
| Nonutility property, plant and equipment, less accumulated depreciation of $1,231 and $1,229 at respective dates | 7,374 | 7,272 | ||||||
| Total property, plant and equipment, net | 4,437,118 | 4,285,067 | ||||||
| Current assets | ||||||||
| Cash and cash equivalents | 22,977 | 24,449 | ||||||
| Customer accounts receivable, net | 134,418 | 132,778 | ||||||
| Accrued unbilled revenues, net | 95,167 | 84,509 | ||||||
| Other accounts receivable, net | 4,629 | 10,408 | ||||||
| Fuel oil stock, at average cost | 64,480 | 71,216 | ||||||
| Materials and supplies, at average cost | 57,356 | 54,429 | ||||||
| Prepayments and other | 35,645 | 36,640 | ||||||
| Regulatory assets | 74,681 | 72,231 | ||||||
| Total current assets | 489,353 | 486,660 | ||||||
| Other long-term assets | ||||||||
| Regulatory assets | 805,094 | 824,500 | ||||||
| Unamortized debt expense | 267 | 497 | ||||||
| Other | 68,994 | 75,486 | ||||||
| Total other long-term assets | 874,355 | 900,483 | ||||||
| Total assets | $ | 5,800,826 | $ | 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 | 578,921 | 578,930 | ||||||
| Retained earnings | 1,081,081 | 1,043,082 | ||||||
| Accumulated other comprehensive income, net of income taxes | 1,337 | 925 | ||||||
| Common stock equity | 1,766,727 | 1,728,325 | ||||||
| Cumulative preferred stock — not subject to mandatory redemption | 34,293 | 34,293 | ||||||
| Long-term debt, net | 1,279,327 | 1,278,702 | ||||||
| Total capitalization | 3,080,347 | 3,041,320 | ||||||
| Current liabilities | ||||||||
| Short-term borrowings from affiliates | 21,000 | — | ||||||
| Accounts payable | 107,497 | 114,846 | ||||||
| Interest and preferred dividends payable | 25,934 | 23,111 | ||||||
| Taxes accrued | 167,276 | 191,084 | ||||||
| Regulatory liabilities | 2,987 | 2,204 | ||||||
| Other | 56,753 | 54,079 | ||||||
| Total current liabilities | 381,447 | 385,324 | ||||||
| Deferred credits and other liabilities | ||||||||
| Deferred income taxes | 714,559 | 654,806 | ||||||
| Regulatory liabilities | 397,492 | 369,339 | ||||||
| Unamortized tax credits | 87,794 | 84,214 | ||||||
| Defined benefit pension and other postretirement benefit plans liability | 535,912 | 552,974 | ||||||
| Other | 77,784 | 78,146 | ||||||
| Total deferred credits and other liabilities | 1,813,541 | 1,739,479 | ||||||
| Contributions in aid of construction | 525,491 | 506,087 | ||||||
| Total capitalization and liabilities | $ | 5,800,826 | $ | 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.
9
American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
| Three months ended | Nine months ended September 30 | |||||||||||||||||||
| (in thousands) | September 30, 2016 | June 30, 2016 | September 30, 2015 | 2016 | 2015 | |||||||||||||||
| Interest and dividend income | ||||||||||||||||||||
| Interest and fees on loans | $ | 50,444 | $ | 49,690 | $ | 46,413 | $ | 148,571 | $ | 137,646 | ||||||||||
| Interest and dividends on investment securities | 4,759 | 4,443 | 4,213 | 14,219 | 10,570 | |||||||||||||||
| Total interest and dividend income | 55,203 | 54,133 | 50,626 | 162,790 | 148,216 | |||||||||||||||
| Interest expense | ||||||||||||||||||||
| Interest on deposit liabilities | 1,871 | 1,691 | 1,355 | 5,154 | 3,881 | |||||||||||||||
| Interest on other borrowings | 1,464 | 1,467 | 1,515 | 4,416 | 4,468 | |||||||||||||||
| Total interest expense | 3,335 | 3,158 | 2,870 | 9,570 | 8,349 | |||||||||||||||
| Net interest income | 51,868 | 50,975 | 47,756 | 153,220 | 139,867 | |||||||||||||||
| Provision for loan losses | 5,747 | 4,753 | 2,997 | 15,266 | 5,436 | |||||||||||||||
| Net interest income after provision for loan losses | 46,121 | 46,222 | 44,759 | 137,954 | 134,431 | |||||||||||||||
| Noninterest income | ||||||||||||||||||||
| Fees from other financial services | 5,599 | 5,701 | 5,639 | 16,799 | 16,544 | |||||||||||||||
| Fee income on deposit liabilities | 5,627 | 5,262 | 5,883 | 16,045 | 16,622 | |||||||||||||||
| Fee income on other financial products | 2,151 | 2,207 | 2,096 | 6,563 | 6,088 | |||||||||||||||
| Bank-owned life insurance | 1,616 | 1,006 | 1,021 | 3,620 | 3,062 | |||||||||||||||
| Mortgage banking income | 2,347 | 1,554 | 1,437 | 5,096 | 5,327 | |||||||||||||||
| Gains on sale of investment securities, net | — | 598 | — | 598 | — | |||||||||||||||
| Other income, net | 1,165 | 288 | 2,389 | 1,786 | 3,363 | |||||||||||||||
| Total noninterest income | 18,505 | 16,616 | 18,465 | 50,507 | 51,006 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Compensation and employee benefits | 22,844 | 21,919 | 22,728 | 67,197 | 66,813 | |||||||||||||||
| Occupancy | 3,991 | 4,115 | 4,128 | 12,244 | 12,250 | |||||||||||||||
| Data processing | 3,150 | 3,277 | 3,032 | 9,599 | 9,101 | |||||||||||||||
| Services | 2,427 | 2,755 | 2,556 | 8,093 | 7,730 | |||||||||||||||
| Equipment | 1,759 | 1,771 | 1,608 | 5,193 | 4,999 | |||||||||||||||
| Office supplies, printing and postage | 1,483 | 1,583 | 1,511 | 4,431 | 4,297 | |||||||||||||||
| Marketing | 747 | 899 | 934 | 2,507 | 2,619 | |||||||||||||||
| FDIC insurance | 907 | 913 | 809 | 2,704 | 2,393 | |||||||||||||||
| Other expense | 4,591 | 5,382 | 5,116 | 13,948 | 14,076 | |||||||||||||||
| Total noninterest expense | 41,899 | 42,614 | 42,422 | 125,916 | 124,278 | |||||||||||||||
| Income before income taxes | 22,727 | 20,224 | 20,802 | 62,545 | 61,159 | |||||||||||||||
| Income taxes | 7,623 | 6,939 | 7,351 | 21,483 | 21,382 | |||||||||||||||
| Net income | $ | 15,104 | $ | 13,285 | $ | 13,451 | $ | 41,062 | $ | 39,777 | ||||||||||
| Comprehensive income | $ | 13,176 | $ | 16,051 | $ | 17,678 | $ | 49,537 | $ | 44,540 | ||||||||||
| OTHER BANK INFORMATION (annualized %, except as of period end) | ||||||||||||||||||||
| Return on average assets | 0.97 | 0.86 | 0.92 | 0.89 | 0.92 | |||||||||||||||
| Return on average equity | 10.36 | 9.22 | 9.73 | 9.50 | 9.69 | |||||||||||||||
| Return on average tangible common equity | 12.06 | 10.75 | 11.43 | 11.07 | 11.4 | |||||||||||||||
| Net interest margin | 3.57 | 3.58 | 3.53 | 3.59 | 3.52 | |||||||||||||||
| Efficiency ratio | 59.54 | 63.05 | 64.06 | 61.81 | 65.11 | |||||||||||||||
| Net charge-offs to average loans outstanding | 0.20 | 0.15 | 0.10 | 0.19 | 0.08 | |||||||||||||||
| As of period end | ||||||||||||||||||||
| Nonperforming assets to loans outstanding and real estate owned | 1.12 | 1.02 | 1.00 | |||||||||||||||||
| Allowance for loan losses to loans outstanding | 1.24 | 1.16 | 1.06 | |||||||||||||||||
| Tangible common equity to tangible assets | 8.03 | 8.15 | 8.23 | |||||||||||||||||
| Tier-1 leverage ratio | 8.6 | 8.7 | 8.8 | |||||||||||||||||
| Total capital ratio | 13.3 | 13.2 | 13.4 | |||||||||||||||||
| 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.
10
American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
| (in thousands) | September 30, 2016 | December 31, 2015 | ||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 109,591 | $ | 127,201 | ||||||||
| Interest-bearing deposits | 103,989 | 93,680 | ||||||||||
| Available-for-sale investment securities, at fair value | 996,984 | 820,648 | ||||||||||
| Stock in Federal Home Loan Bank, at cost | 11,218 | 10,678 | ||||||||||
| Loans receivable held for investment | 4,734,638 | 4,615,819 | ||||||||||
| Allowance for loan losses | (58,737 | ) | (50,038 | ) | ||||||||
| Net loans | 4,675,901 | 4,565,781 | ||||||||||
| Loans held for sale, at lower of cost or fair value | 26,743 | 4,631 | ||||||||||
| Other | 330,054 | 309,946 | ||||||||||
| Goodwill | 82,190 | 82,190 | ||||||||||
| Total assets | $ | 6,336,670 | $ | 6,014,755 | ||||||||
| Liabilities and shareholder’s equity | ||||||||||||
| Deposit liabilities–noninterest-bearing | $ | 1,570,613 | $ | 1,520,374 | ||||||||
| Deposit liabilities–interest-bearing | 3,810,108 | 3,504,880 | ||||||||||
| Other borrowings | 265,388 | 328,582 | ||||||||||
| Other | 106,396 | 101,029 | ||||||||||
| Total liabilities | 5,752,505 | 5,454,865 | ||||||||||
| Common stock | 1 | 1 | ||||||||||
| Additional paid in capital | 342,234 | 340,496 | ||||||||||
| Retained earnings | 250,726 | 236,664 | ||||||||||
| Accumulated other comprehensive loss, net of tax benefits | ||||||||||||
| Net unrealized gains (losses) on securities | $ | 5,965 | $ | (1,872 | ) | |||||||
| Retirement benefit plans | (14,761 | ) | (8,796 | ) | (15,399 | ) | (17,271 | ) | ||||
| Total shareholder’s equity | 584,165 | 559,890 | ||||||||||
| Total liabilities and shareholder’s equity | $ | 6,336,670 | $ | 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.
11
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 fees, reimbursements costs and associated taxes related to the recently terminated merger between HEI and NextEra Energy, Inc., and the cancelled spin-off of ASB Hawaii, Inc., and the recently terminated liquefied natural gas (LNG) contract which required the Hawaii Public Utilities Commission approval of the merger with NextEra Energy, Inc. 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 September 30 | Nine months ended September 30 | |||||||||||
| ($ in millions, except per share amounts) | 2016 | 2015 | 2016 | 2015 | |||||||||
| HEI CONSOLIDATED (INCOME) EXPENSES RELATED TO THE TERMINATED MERGER WITH NEXTERA ENERGY AND CANCELLED SPIN-OFF OF ASB HAWAII | |||||||||||||
| Pre-tax (income) expenses | $ | (88.5 | ) | $ | 1.8 | $ | (84.9 | ) | $ | 15.7 | |||
| Current income taxes (benefits) | 24.7 | (0.1 | ) | 24.7 | (2.1 | ) | |||||||
| After-tax (income) expenses | $ | (63.8 | ) | $ | 1.7 | $ | (60.3 | ) | $ | 13.6 | |||
HEI CONSOLIDATED LNG CONTRACT COSTS2 | |||||||||||||
| Pre-tax expenses | $ | — | $ | — | $ | 3.4 | $ | — | |||||
| Current income taxes (benefits) | — | — | (1.3 | ) | — | ||||||||
| After-tax (income) expenses | $ | — | $ | — | $ | 2.1 | $ | — | |||||
| HEI CONSOLIDATED NET INCOME | |||||||||||||
| GAAP (as reported) | $ | 127.1 | $ | 50.7 | $ | 203.6 | $ | 117.6 | |||||
| Excluding special items (after-tax): | |||||||||||||
| (Income) expenses related to the terminated merger with NextEra Energy and cancelled spin-off of ASB Hawaii | (63.8 | ) | 1.7 | (60.3 | ) | 13.6 | |||||||
Costs related to the terminated LNG contract2 | — | — | 2.1 | — | |||||||||
| Non-GAAP (core) net income | $ | 63.3 | $ | 52.4 | $ | 145.4 | $ | 131.1 | |||||
| HEI CONSOLIDATED DILUTED EARNINGS PER COMMON SHARE | |||||||||||||
| GAAP (as reported) | $ | 1.17 | $ | 0.47 | $ | 1.88 | $ | 1.11 | |||||
| Excluding special items (after-tax): | |||||||||||||
| (Income) expenses related to the terminated merger with NextEra Energy and cancelled spin-off of ASB Hawaii | (0.59 | ) | 0.02 | (0.56 | ) | 0.13 | |||||||
Costs related to the terminated LNG contract2 | — | — | 0.02 | — | |||||||||
| Non-GAAP (core) diluted earnings per common share | $ | 0.58 | $ | 0.49 | $ | 1.34 | $ | 1.23 | |||||
| Twelve months ended September 30 | |||||||||||||
| 2016 | 2015 | ||||||||||||
HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) | |||||||||||||
| Based on GAAP | 12.3 | % | 8.1 | % | |||||||||
Based on non-GAAP (core)3 | 9.5 | % | 9.1 | % | |||||||||
| 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 | |||||||||||||
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RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES | |||||||||||||
| Hawaiian Electric Company, Inc. and Subsidiaries | |||||||||||||
| Unaudited | Three months ended September 30 | Nine months ended September 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 taxes (benefits) | — | — | — | (0.2 | ) | ||||||||
| After-tax expenses | $ | — | $ | — | $ | 0.1 | $ | 0.3 | |||||
HAWAIIAN ELECTRIC CONSOLIDATED LNG CONTRACT COSTS2 | |||||||||||||
| Pre-tax expenses | $ | — | $ | — | $ | 3.4 | $ | — | |||||
| Current income taxes (benefits) | — | — | (1.3 | ) | — | ||||||||
| After-tax expenses | $ | — | $ | — | $ | 2.1 | $ | — | |||||
| HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME | |||||||||||||
| GAAP (as reported) | $ | 47.0 | $ | 43.0 | $ | 108.2 | $ | 102.7 | |||||
| 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 | — | — | 2.1 | — | |||||||||
| Non-GAAP (core) net income | $ | 47.0 | $ | 43.0 | $ | 110.3 | $ | 103.0 | |||||
| Twelve months ended September 30 | |||||||||||||
| 2016 | 2015 | ||||||||||||
HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) | |||||||||||||
| Based on GAAP | 8.11 | % | 7.86 | % | |||||||||
Based on non-GAAP (core)3 | 8.24 | % | 7.88 | % | |||||||||
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||
| ($ in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||
| HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE | |||||||||||||
| GAAP (as reported) | $ | 94.8 | $ | 103.7 | $ | 298.3 | $ | 306.5 | |||||
Excluding O&M-related net income neutral items4 | 1.4 | 1.9 | 4.6 | 5.4 | |||||||||
| Excluding costs related to the terminated merger with NextEra Energy | — | — | 0.1 | 0.4 | |||||||||
Excluding costs related to the terminated LNG contract2 | — | — | 3.4 | — | |||||||||
| Non-GAAP (Adjusted other O&M expense) | $ | 93.4 | $ | 101.8 | $ | 290.2 | $ | 300.7 | |||||
| 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 | |||||||||||||
13