HONOLULU, Aug. 3, 2017 /PRNewswire/ -- Hawaiian Electric
Industries, Inc. (HEI) (NYSE - HE) today reported consolidated net income for common stock for the second quarter of 2017 of
$38.7 million and diluted earnings per share (EPS) of $0.36 compared to $44.1 million and EPS of $0.41 for the second quarter of 2016. Second quarter 2016 core earnings1 and core
EPS1 were $46.9 million and $0.43, respectively.
"Our utilities continue to bring more renewable resources online, strengthen our energy delivery networks to make them more
reliable and resilient and promote sustainable communities. We are encouraged by our regulators' acceptance of our Power
Supply Improvement Plan, which describes the near-term steps to move Hawaii closer to its 100
percent renewable energy goal. At American Savings Bank, we continued to deliver strong performance through the second
quarter with higher returns from improving credit quality, higher yields and greater efficiency while maintaining healthy capital
levels," said Constance H. Lau, HEI president and chief executive officer.
HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company's2 net income for the second quarter of 2017 was $25.6
million compared to $35.9 million in the second quarter of 2016. Core
earnings1 were $25.6 million and $36.6 million in the
second quarters of 2017 and 2016, respectively. The $11.0 million core net income
decrease from the prior year quarter was primarily driven by the following after-tax items:
|
____________________________
|
|
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.
|
|
1
|
Non-GAAP measure that excludes after-tax income and costs related to the
terminated merger with NextEra Energy, Inc., the cancelled spin-off of ASB Hawaii, Inc., and the termination of the
liquefied natural gas (LNG) contract which required PUC approval of the merger with NextEra Energy, Inc. (the
"Transaction Adjustments"). See the "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the
related reconciliation.
|
|
2
|
Hawaiian Electric Company refers to the three utilities, Hawaiian Electric
Company, Inc. on Oahu, Maui Electric Company, Limited, and Hawaii Electric Light Company, Inc.
|
- $5 million lower net revenues3 mainly due to the expiration of the Hawaii Public
Utilities Commission-approved 2013 settlement agreement with the Consumer Advocate that had allowed Hawaiian Electric Company,
Inc. to record calendar year rate adjustment mechanism revenues from January 1, 2014 –
December 31, 2016 4;
- $5 million higher operations and maintenance expenses5 compared to the prior year
quarter primarily due to higher overhaul expenses due to timing, increased maintenance costs, enterprise resource planning
costs, partial write-off of deferred geothermal RFP costs, higher property damage reserve for a customer claim and grid
modernization consulting costs; and
- $1 million higher depreciation expense as a result of increasing investments for the
integration of more renewable energy and improved customer reliability.
AMERICAN SAVINGS BANK EARNINGS
American Savings Bank's (American) net income for the second quarter of 2017 was $16.7 million compared to $15.8 million in the first (or linked) quarter of
2017 and $13.3 million in the second quarter of 2016.
Compared to the second quarter of 2016, the $3.4 million increase was primarily driven by
$3 million (after-tax) higher net interest income mainly due to growth in the commercial real estate and consumer loan
portfolios as well as the deployment of deposit growth into our investment portfolio.
|
______________________________
|
|
3
|
Net revenues represent the after-tax impact of "Revenues" less the
following expenses which are largely pass through items in revenues: "fuel oil," "purchased power" and "taxes, other than
income taxes" as shown on the Hawaiian Electric Company, Inc. and Subsidiaries' Condensed Consolidated Statements of
Income.
|
|
4
|
With the expiration of the 2013 settlement agreement with the Consumer
Advocate that was approved by the PUC, in 2017 the Oahu rate adjustment mechanism (RAM) revenues revert to being recorded
for accounting purposes from a calendar year recognition period to a period beginning on June 1 of each year through May
31 of the subsequent year. The periods in which the cash reflecting RAM revenues is collected did not change as a
result of the settlement agreement and have always been aligned to the June 1 to May 31 periods. Therefore, the
expiration of the 2013 settlement agreement will have no impact on Hawaiian Electric Company cash collections.
|
|
5
|
Excludes net income neutral expenses covered by surcharges or by third
parties and merger-related costs including the terminated LNG contract costs. See the "Explanation of HEI's Use of
Certain Unaudited Non-GAAP measures" and the related reconciliation.
|
The $1 million (after-tax) lower provision for loan losses was offset by $1 million (after-tax) higher non-interest expense.
Compared to the linked first quarter of 2017, the $0.9 million increase was primarily driven by
the following on an after-tax basis:
- $1 million higher net interest income driven mainly by higher loan portfolio yields and
growth in our consumer loan and investment portfolios;
- $1 million lower provision for loan losses; and
- $1 million higher noninterest income mainly due to improved performance from bank-owned life
insurance investments.
These increases were offset by $2 million (after-tax) higher noninterest expense primarily due
to higher compensation and benefit costs.
Total loans were $4.7 billion at June 30, 2017 and included growth
in the consumer, home equity line of credit and residential loan portfolios during the second quarter of 2017.
Total deposits were $5.7 billion at June 30, 2017, an increase of
$175 million or 6.3% annualized from December 31, 2016.
Low-cost core deposits increased $143 million or 5.8% annualized from December 31, 2016.
The average cost of funds was 0.21% for the second quarter of 2017 compared to 0.20% for the first quarter of 2017 and 0.23% for
the second quarter of 2016.
Overall, American achieved solid profitability in the second quarter of 2017 with a return on average equity of 11.3% and a
return on average assets of 1.02%.
For additional information, refer to the American news release issued on July 28, 2017.
HOLDING AND OTHER COMPANIES
The holding and other companies' net losses were $3.7 million in the second quarter of
2017 compared to the $5.0 million net loss in the second quarter of 2016. Excluding the
Transaction Adjustments which totaled $2.0 million in the second quarter of 2016, holding and other
companies' net losses were $3.7 million and $3.0 million in the
second quarters of 2017 and 2016, respectively.
WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
HEI will conduct a webcast and conference call to discuss its second quarter of 2017 earnings and 2017 EPS guidance on
Thursday, August 3, 2017, at 9:00 a.m. Hawaii time
(3:00 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (844)
834-0652 and international parties may listen to the conference by calling (412) 317-5198 or by accessing the webcast on HEI's
website, www.hei.com, under the heading "Investor Relations." HEI and
Hawaiian Electric Company intend to continue to use HEI's website 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 17,
2017, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10108918.
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, F.S.B., 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 to 13 of
this release.
|
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
(Unaudited)
|
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
|
(in thousands, except per share amounts)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Electric utility
|
|
$
|
556,875
|
|
|
$
|
495,395
|
|
|
$
|
1,075,486
|
|
|
$
|
977,447
|
|
|
Bank
|
|
75,329
|
|
|
70,749
|
|
|
148,185
|
|
|
139,589
|
|
|
Other
|
|
77
|
|
|
100
|
|
|
172
|
|
|
168
|
|
|
Total revenues
|
|
632,281
|
|
|
566,244
|
|
|
1,223,843
|
|
|
1,117,204
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Electric utility
|
|
501,828
|
|
|
424,709
|
|
|
971,501
|
|
|
851,435
|
|
|
Bank
|
|
50,533
|
|
|
50,525
|
|
|
99,229
|
|
|
99,771
|
|
|
Other
|
|
4,024
|
|
|
5,555
|
|
|
9,355
|
|
|
11,692
|
|
|
Total expenses
|
|
556,385
|
|
|
480,789
|
|
|
1,080,085
|
|
|
962,898
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
Electric utility
|
|
55,047
|
|
|
70,686
|
|
|
103,985
|
|
|
126,012
|
|
|
Bank
|
|
24,796
|
|
|
20,224
|
|
|
48,956
|
|
|
39,818
|
|
|
Other
|
|
(3,947)
|
|
|
(5,455)
|
|
|
(9,183)
|
|
|
(11,524)
|
|
|
Total operating income
|
|
75,896
|
|
|
85,455
|
|
|
143,758
|
|
|
154,306
|
|
|
Interest expense, net—other than on deposit liabilities and other bank
borrowings
|
|
(20,440)
|
|
|
(17,301)
|
|
|
(40,008)
|
|
|
(37,427)
|
|
|
Allowance for borrowed funds used during construction
|
|
1,143
|
|
|
760
|
|
|
2,032
|
|
|
1,422
|
|
|
Allowance for equity funds used during construction
|
|
3,027
|
|
|
1,997
|
|
|
5,426
|
|
|
3,736
|
|
|
Income before income taxes
|
|
59,626
|
|
|
70,911
|
|
|
111,208
|
|
|
122,037
|
|
|
Income taxes
|
|
20,492
|
|
|
26,310
|
|
|
37,408
|
|
|
44,611
|
|
|
Net income
|
|
39,134
|
|
|
44,601
|
|
|
73,800
|
|
|
77,426
|
|
|
Preferred stock dividends of subsidiaries
|
|
473
|
|
|
473
|
|
|
946
|
|
|
946
|
|
|
Net income for common stock
|
|
$
|
38,661
|
|
|
$
|
44,128
|
|
|
$
|
72,854
|
|
|
$
|
76,480
|
|
|
Basic earnings per common share
|
|
$
|
0.36
|
|
|
$
|
0.41
|
|
|
$
|
0.67
|
|
|
$
|
0.71
|
|
|
Diluted earnings per common share
|
|
$
|
0.36
|
|
|
$
|
0.41
|
|
|
$
|
0.67
|
|
|
$
|
0.71
|
|
|
Dividends declared per common share
|
|
$
|
0.31
|
|
|
$
|
0.31
|
|
|
$
|
0.62
|
|
|
$
|
0.62
|
|
|
Weighted-average number of common shares outstanding
|
|
108,750
|
|
|
107,962
|
|
|
108,712
|
|
|
107,791
|
|
|
Weighted-average shares assuming dilution
|
|
108,797
|
|
|
108,133
|
|
|
108,869
|
|
|
107,978
|
|
|
Net income (loss) for common stock by segment
|
|
|
|
|
|
|
|
|
|
Electric utility
|
|
$
|
25,644
|
|
|
$
|
35,857
|
|
|
$
|
47,109
|
|
|
$
|
61,224
|
|
|
Bank
|
|
16,733
|
|
|
13,285
|
|
|
32,546
|
|
|
25,958
|
|
|
Other
|
|
(3,716)
|
|
|
(5,014)
|
|
|
(6,801)
|
|
|
(10,702)
|
|
|
Net income for common stock
|
|
$
|
38,661
|
|
|
$
|
44,128
|
|
|
$
|
72,854
|
|
|
$
|
76,480
|
|
|
Comprehensive income attributable to Hawaiian Electric Industries,
Inc.
|
|
$
|
41,031
|
|
|
$
|
46,236
|
|
|
$
|
76,209
|
|
|
$
|
87,388
|
|
|
Return on average common equity (twelve months
ended)1
|
|
|
|
|
|
12.1
|
%
|
|
8.8
|
%
|
|
|
This information should be read in conjunction with the condensed
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, 2017 and 2016 returns on average common
equity (twelve months ended June 30) were 8.9% and 9.3%, respectively. See reconciliation of GAAP to non-GAAP
measures.
|
|
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
|
(dollars in thousands)
|
|
June 30, 2017
|
|
December 31, 2016
|
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
210,381
|
|
|
$
|
278,452
|
|
|
Accounts receivable and unbilled revenues, net
|
|
249,539
|
|
|
237,950
|
|
|
Available-for-sale investment securities, at fair value
|
|
1,302,886
|
|
|
1,105,182
|
|
|
Stock in Federal Home Loan Bank, at cost
|
|
11,706
|
|
|
11,218
|
|
|
Loans receivable held for investment, net
|
|
4,688,278
|
|
|
4,683,160
|
|
|
Loans held for sale, at lower of cost or fair value
|
|
5,261
|
|
|
18,817
|
|
|
Property, plant and equipment, net of accumulated depreciation of
$2,508,291 and $2,444,348 at June 30, 2017 and December 31, 2016, respectively
|
|
4,726,524
|
|
|
4,603,465
|
|
|
Regulatory assets
|
|
938,277
|
|
|
957,451
|
|
|
Other
|
|
478,763
|
|
|
447,621
|
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
|
Total assets
|
|
$
|
12,693,805
|
|
|
$
|
12,425,506
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Accounts payable
|
|
$
|
194,755
|
|
|
$
|
143,279
|
|
|
Interest and dividends payable
|
|
22,124
|
|
|
25,225
|
|
|
Deposit liabilities
|
|
5,724,386
|
|
|
5,548,929
|
|
|
Short-term borrowings—other than bank
|
|
49,789
|
|
|
—
|
|
|
Other bank borrowings
|
|
188,130
|
|
|
192,618
|
|
|
Long-term debt, net—other than bank
|
|
1,618,647
|
|
|
1,619,019
|
|
|
Deferred income taxes
|
|
750,413
|
|
|
728,806
|
|
|
Regulatory liabilities
|
|
431,630
|
|
|
410,693
|
|
|
Contributions in aid of construction
|
|
543,204
|
|
|
543,525
|
|
|
Defined benefit pension and other postretirement benefit plans
liability
|
|
626,795
|
|
|
638,854
|
|
|
Other
|
|
434,610
|
|
|
473,512
|
|
|
Total liabilities
|
|
10,584,483
|
|
|
10,324,460
|
|
|
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: 108,785,486 shares and 108,583,413 shares at June 30, 2017 and December 31, 2016, respectively
|
|
1,660,403
|
|
|
1,660,910
|
|
|
Retained earnings
|
|
444,400
|
|
|
438,972
|
|
|
Accumulated other comprehensive loss, net of tax benefits
|
|
(29,774)
|
|
|
(33,129)
|
|
|
Total shareholders' equity
|
|
2,075,029
|
|
|
2,066,753
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
12,693,805
|
|
|
$
|
12,425,506
|
|
|
|
This information should be read in conjunction with the condensed
consolidated financial statements and the notes thereto in HEI filings with the SEC.
|
|
Hawaiian Electric Company, Inc. (Hawaiian Electric) and
Subsidiaries
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
(Unaudited)
|
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
|
(dollars in thousands, except per barrel amounts)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues
|
|
$
|
556,875
|
|
|
$
|
495,395
|
|
|
$
|
1,075,486
|
|
|
$
|
977,447
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Fuel oil
|
|
141,259
|
|
|
91,899
|
|
|
285,529
|
|
|
205,639
|
|
|
Purchased power
|
|
153,067
|
|
|
139,058
|
|
|
280,191
|
|
|
254,917
|
|
|
Other operation and maintenance
|
|
106,374
|
|
|
99,563
|
|
|
206,614
|
|
|
203,471
|
|
|
Depreciation
|
|
48,156
|
|
|
46,760
|
|
|
96,372
|
|
|
93,541
|
|
|
Taxes, other than income taxes
|
|
52,972
|
|
|
47,429
|
|
|
102,795
|
|
|
93,867
|
|
|
Total expenses
|
|
501,828
|
|
|
424,709
|
|
|
971,501
|
|
|
851,435
|
|
|
Operating income
|
|
55,047
|
|
|
70,686
|
|
|
103,985
|
|
|
126,012
|
|
|
Allowance for equity funds used during construction
|
|
3,027
|
|
|
1,997
|
|
|
5,426
|
|
|
3,736
|
|
|
Interest expense and other charges, net
|
|
(18,214)
|
|
|
(15,103)
|
|
|
(35,718)
|
|
|
(32,411)
|
|
|
Allowance for borrowed funds used during construction
|
|
1,143
|
|
|
760
|
|
|
2,032
|
|
|
1,422
|
|
|
Income before income taxes
|
|
41,003
|
|
|
58,340
|
|
|
75,725
|
|
|
98,759
|
|
|
Income taxes
|
|
14,860
|
|
|
21,984
|
|
|
27,618
|
|
|
36,537
|
|
|
Net income
|
|
26,143
|
|
|
36,356
|
|
|
48,107
|
|
|
62,222
|
|
|
Preferred stock dividends of subsidiaries
|
|
229
|
|
|
229
|
|
|
458
|
|
|
458
|
|
|
Net income attributable to Hawaiian Electric
|
|
25,914
|
|
|
36,127
|
|
|
47,649
|
|
|
61,764
|
|
|
Preferred stock dividends of Hawaiian Electric
|
|
270
|
|
|
270
|
|
|
540
|
|
|
540
|
|
|
Net income for common stock
|
|
$
|
25,644
|
|
|
$
|
35,857
|
|
|
$
|
47,109
|
|
|
$
|
61,224
|
|
|
Comprehensive income attributable to Hawaiian Electric
|
|
$
|
25,684
|
|
|
$
|
35,102
|
|
|
$
|
47,608
|
|
|
$
|
61,485
|
|
|
OTHER ELECTRIC UTILITY INFORMATION
|
|
|
|
|
|
|
|
|
|
Kilowatthour sales (millions)
|
|
|
|
|
|
|
|
|
|
Hawaiian Electric
|
|
1,624
|
|
|
1,625
|
|
|
3,149
|
|
|
3,182
|
|
|
Hawaii Electric Light
|
|
257
|
|
|
260
|
|
|
510
|
|
|
518
|
|
|
Maui Electric
|
|
269
|
|
|
271
|
|
|
529
|
|
|
541
|
|
|
|
2,150
|
|
|
2,156
|
|
|
4,188
|
|
|
4,241
|
|
|
Cooling degree days (Oahu)
|
|
1,278
|
|
|
1,257
|
|
|
2,162
|
|
|
2,141
|
|
|
Average fuel oil cost per barrel
|
|
$
|
69.86
|
|
|
$
|
44.98
|
|
|
$
|
67.78
|
|
|
$
|
49.05
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended June 30
|
|
|
|
|
|
2017
|
|
2016
|
|
Return on average common equity (%) (simple average)
|
|
|
|
|
|
|
|
|
|
Hawaiian Electric
|
|
|
|
|
|
7.25
|
|
|
7.95
|
|
|
Hawaii Electric Light
|
|
|
|
|
|
6.91
|
|
|
7.47
|
|
|
Maui Electric
|
|
|
|
|
|
7.50
|
|
|
8.67
|
|
|
Hawaiian Electric Consolidated
|
|
|
|
|
|
7.23
|
|
|
7.98
|
|
|
|
This information should be read in conjunction with the condensed
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
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
|
(dollars in thousands, except par value)
|
|
June 30, 2017
|
|
December 31, 2016
|
|
Assets
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
Utility property, plant and equipment
|
|
|
|
|
|
Land
|
|
$
|
53,178
|
|
|
$
|
53,153
|
|
|
Plant and equipment
|
|
6,711,418
|
|
|
6,605,732
|
|
|
Less accumulated depreciation
|
|
(2,430,097)
|
|
|
(2,369,282)
|
|
|
Construction in progress
|
|
272,438
|
|
|
211,742
|
|
|
Utility property, plant and equipment, net
|
|
4,606,937
|
|
|
4,501,345
|
|
|
Nonutility property, plant and equipment, less accumulated depreciation of
$1,233 and $1,232 at June 30, 2017 and December 31, 2016, respectively
|
|
7,410
|
|
|
7,407
|
|
|
Total property, plant and equipment, net
|
|
4,614,347
|
|
|
4,508,752
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
42,582
|
|
|
74,286
|
|
|
Customer accounts receivable, net
|
|
126,161
|
|
|
123,688
|
|
|
Accrued unbilled revenues, net
|
|
103,596
|
|
|
91,693
|
|
|
Other accounts receivable, net
|
|
3,684
|
|
|
5,233
|
|
|
Fuel oil stock, at average cost
|
|
72,392
|
|
|
66,430
|
|
|
Materials and supplies, at average cost
|
|
57,099
|
|
|
53,679
|
|
|
Prepayments and other
|
|
36,340
|
|
|
23,100
|
|
|
Regulatory assets
|
|
74,167
|
|
|
66,032
|
|
|
Total current assets
|
|
516,021
|
|
|
504,141
|
|
|
Other long-term assets
|
|
|
|
|
|
Regulatory assets
|
|
864,110
|
|
|
891,419
|
|
|
Unamortized debt expense
|
|
690
|
|
|
208
|
|
|
Other
|
|
75,987
|
|
|
70,908
|
|
|
Total other long-term assets
|
|
940,787
|
|
|
962,535
|
|
|
Total assets
|
|
$
|
6,071,155
|
|
|
$
|
5,975,428
|
|
|
Capitalization and liabilities
|
|
|
|
|
|
Capitalization
|
|
|
|
|
|
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding
16,019,785 shares at June 30, 2017 and December 31, 2016)
|
|
$
|
106,818
|
|
|
$
|
106,818
|
|
|
Premium on capital stock
|
|
601,486
|
|
|
601,491
|
|
|
Retained earnings
|
|
1,095,025
|
|
|
1,091,800
|
|
|
Accumulated other comprehensive income (loss), net of income
taxes
|
|
177
|
|
|
(322)
|
|
|
Common stock equity
|
|
1,803,506
|
|
|
1,799,787
|
|
|
Cumulative preferred stock — not subject to mandatory redemption
|
|
34,293
|
|
|
34,293
|
|
|
Long-term debt, net
|
|
1,318,845
|
|
|
1,319,260
|
|
|
Total capitalization
|
|
3,156,644
|
|
|
3,153,340
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term borrowings from non-affiliates
|
|
43,990
|
|
|
—
|
|
|
Accounts payable
|
|
162,375
|
|
|
117,814
|
|
|
Interest and preferred dividends payable
|
|
19,497
|
|
|
22,838
|
|
|
Taxes accrued
|
|
142,263
|
|
|
172,730
|
|
|
Regulatory liabilities
|
|
2,883
|
|
|
3,762
|
|
|
Other
|
|
53,140
|
|
|
55,221
|
|
|
Total current liabilities
|
|
424,148
|
|
|
372,365
|
|
|
Deferred credits and other liabilities
|
|
|
|
|
|
Deferred income taxes
|
|
759,972
|
|
|
733,659
|
|
|
Regulatory liabilities
|
|
428,747
|
|
|
406,931
|
|
|
Unamortized tax credits
|
|
91,386
|
|
|
88,961
|
|
|
Defined benefit pension and other postretirement benefit plans
liability
|
|
587,718
|
|
|
599,726
|
|
|
Other
|
|
79,336
|
|
|
76,921
|
|
|
Total deferred credits and other liabilities
|
|
1,947,159
|
|
|
1,906,198
|
|
|
Contributions in aid of construction
|
|
543,204
|
|
|
543,525
|
|
|
Total capitalization and liabilities
|
|
$
|
6,071,155
|
|
|
$
|
5,975,428
|
|
|
|
This information should be read in conjunction with the condensed
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, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
2017
|
|
2016
|
|
Interest and dividend income
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans
|
|
$
|
52,317
|
|
|
$
|
50,742
|
|
|
$
|
49,690
|
|
|
$
|
103,059
|
|
|
$
|
98,127
|
|
|
Interest and dividends on investment securities
|
|
6,763
|
|
|
6,980
|
|
|
4,443
|
|
|
13,743
|
|
|
9,460
|
|
|
Total interest and dividend income
|
|
59,080
|
|
|
57,722
|
|
|
54,133
|
|
|
116,802
|
|
|
107,587
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposit liabilities
|
|
2,311
|
|
|
2,103
|
|
|
1,691
|
|
|
4,414
|
|
|
3,283
|
|
|
Interest on other borrowings
|
|
824
|
|
|
816
|
|
|
1,467
|
|
|
1,640
|
|
|
2,952
|
|
|
Total interest expense
|
|
3,135
|
|
|
2,919
|
|
|
3,158
|
|
|
6,054
|
|
|
6,235
|
|
|
Net interest income
|
|
55,945
|
|
|
54,803
|
|
|
50,975
|
|
|
110,748
|
|
|
101,352
|
|
|
Provision for loan losses
|
|
2,834
|
|
|
3,907
|
|
|
4,753
|
|
|
6,741
|
|
|
9,519
|
|
|
Net interest income after provision for loan losses
|
|
53,111
|
|
|
50,896
|
|
|
46,222
|
|
|
104,007
|
|
|
91,833
|
|
|
Noninterest income
|
|
|
|
|
|
|
|
|
|
|
|
Fees from other financial services
|
|
5,810
|
|
|
5,610
|
|
|
5,701
|
|
|
11,420
|
|
|
11,200
|
|
|
Fee income on deposit liabilities
|
|
5,565
|
|
|
5,428
|
|
|
5,262
|
|
|
10,993
|
|
|
10,418
|
|
|
Fee income on other financial products
|
|
1,971
|
|
|
1,866
|
|
|
2,207
|
|
|
3,837
|
|
|
4,412
|
|
|
Bank-owned life insurance
|
|
1,925
|
|
|
983
|
|
|
1,006
|
|
|
2,908
|
|
|
2,004
|
|
|
Mortgage banking income
|
|
587
|
|
|
789
|
|
|
1,554
|
|
|
1,376
|
|
|
2,749
|
|
|
Gains on sale of investment securities, net
|
|
—
|
|
|
—
|
|
|
598
|
|
|
—
|
|
|
598
|
|
|
Other income, net
|
|
391
|
|
|
458
|
|
|
288
|
|
|
849
|
|
|
621
|
|
|
Total noninterest income
|
|
16,249
|
|
|
15,134
|
|
|
16,616
|
|
|
31,383
|
|
|
32,002
|
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee benefits
|
|
24,742
|
|
|
23,237
|
|
|
21,919
|
|
|
47,979
|
|
|
44,353
|
|
|
Occupancy
|
|
4,185
|
|
|
4,154
|
|
|
4,115
|
|
|
8,339
|
|
|
8,253
|
|
|
Data processing
|
|
3,207
|
|
|
3,280
|
|
|
3,277
|
|
|
6,487
|
|
|
6,449
|
|
|
Services
|
|
2,766
|
|
|
2,360
|
|
|
2,755
|
|
|
5,126
|
|
|
5,666
|
|
|
Equipment
|
|
1,771
|
|
|
1,748
|
|
|
1,771
|
|
|
3,519
|
|
|
3,434
|
|
|
Office supplies, printing and postage
|
|
1,527
|
|
|
1,535
|
|
|
1,583
|
|
|
3,062
|
|
|
2,948
|
|
|
Marketing
|
|
839
|
|
|
517
|
|
|
899
|
|
|
1,356
|
|
|
1,760
|
|
|
FDIC insurance
|
|
822
|
|
|
728
|
|
|
913
|
|
|
1,550
|
|
|
1,797
|
|
|
Other expense
|
|
4,705
|
|
|
4,311
|
|
|
5,382
|
|
|
9,016
|
|
|
9,357
|
|
|
Total noninterest expense
|
|
44,564
|
|
|
41,870
|
|
|
42,614
|
|
|
86,434
|
|
|
84,017
|
|
|
Income before income taxes
|
|
24,796
|
|
|
24,160
|
|
|
20,224
|
|
|
48,956
|
|
|
39,818
|
|
|
Income taxes
|
|
8,063
|
|
|
8,347
|
|
|
6,939
|
|
|
16,410
|
|
|
13,860
|
|
|
Net income
|
|
$
|
16,733
|
|
|
$
|
15,813
|
|
|
$
|
13,285
|
|
|
$
|
32,546
|
|
|
$
|
25,958
|
|
|
Comprehensive income
|
|
$
|
18,956
|
|
|
$
|
16,648
|
|
|
$
|
16,051
|
|
|
$
|
35,604
|
|
|
$
|
36,361
|
|
|
OTHER BANK INFORMATION (annualized %, except as of period end)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
1.02
|
|
|
0.98
|
|
|
0.86
|
|
|
1.00
|
|
|
0.85
|
|
|
Return on average equity
|
|
11.25
|
|
|
10.82
|
|
|
9.22
|
|
|
11.04
|
|
|
9.06
|
|
|
Return on average tangible common equity
|
|
13.06
|
|
|
12.58
|
|
|
10.75
|
|
|
12.82
|
|
|
10.57
|
|
|
Net interest margin
|
|
3.68
|
|
|
3.68
|
|
|
3.58
|
|
|
3.68
|
|
|
3.60
|
|
|
Efficiency ratio
|
|
61.73
|
|
|
59.87
|
|
|
63.05
|
|
|
60.81
|
|
|
63.00
|
|
|
Net charge-offs to average loans outstanding
|
|
0.21
|
|
|
0.29
|
|
|
0.15
|
|
|
0.25
|
|
|
0.18
|
|
|
As of period end
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans to loans receivable held for investment
|
|
0.44
|
|
|
0.41
|
|
|
1.02
|
|
|
|
|
|
|
Allowance for loan losses to loans outstanding
|
|
1.19
|
|
|
1.19
|
|
|
1.16
|
|
|
|
|
|
|
Tangible common equity to tangible assets
|
|
7.88
|
|
|
7.78
|
|
|
8.15
|
|
|
|
|
|
|
Tier-1 leverage ratio
|
|
8.5
|
|
|
8.5
|
|
|
8.7
|
|
|
|
|
|
|
Total capital ratio
|
|
13.7
|
|
|
13.6
|
|
|
13.2
|
|
|
|
|
|
|
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
|
|
$
|
9.4
|
|
|
$
|
9.4
|
|
|
$
|
9.0
|
|
|
$
|
18.8
|
|
|
$
|
18.0
|
|
|
|
This information should be read in conjunction with the condensed
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, 2017
|
December 31, 2016
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
128,609
|
|
$
|
137,083
|
|
Interest-bearing deposits
|
|
37,049
|
|
52,128
|
|
Restricted cash
|
|
—
|
|
1,764
|
|
Available-for-sale investment securities, at fair value
|
|
1,302,886
|
|
1,105,182
|
|
Stock in Federal Home Loan Bank, at cost
|
|
11,706
|
|
11,218
|
|
Loans receivable held for investment
|
|
4,744,634
|
|
4,738,693
|
|
Allowance for loan losses
|
|
(56,356)
|
|
(55,533)
|
|
Net loans
|
|
4,688,278
|
|
4,683,160
|
|
Loans held for sale, at lower of cost or fair value
|
|
5,261
|
|
18,817
|
|
Other
|
|
354,898
|
|
329,815
|
|
Goodwill
|
|
82,190
|
|
82,190
|
|
Total assets
|
|
$
|
6,610,877
|
|
$
|
6,421,357
|
|
Liabilities and shareholder's equity
|
|
|
|
|
|
Deposit liabilities–noninterest-bearing
|
|
$
|
1,694,150
|
|
$
|
1,639,051
|
|
Deposit liabilities–interest-bearing
|
|
4,030,236
|
|
3,909,878
|
|
Other borrowings
|
|
188,130
|
|
192,618
|
|
Other
|
|
101,974
|
|
101,635
|
|
Total liabilities
|
|
6,014,490
|
|
5,843,182
|
|
Common stock
|
|
1
|
|
1
|
|
Additional paid in capital
|
|
344,062
|
|
342,704
|
|
Retained earnings
|
|
271,739
|
|
257,943
|
|
Accumulated other comprehensive loss, net of tax benefits
|
|
|
|
|
|
Net unrealized losses on securities
|
$
|
(5,687)
|
|
$
|
(7,931)
|
|
|
Retirement benefit plans
|
(13,728)
|
(19,415)
|
(14,542)
|
(22,473)
|
|
Total shareholder's equity
|
|
596,387
|
|
578,175
|
|
Total liabilities and shareholder's equity
|
|
$
|
6,610,877
|
|
$
|
6,421,357
|
|
|
This information should be read in conjunction with the condensed
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 given the non-recurring nature of these items. 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 are limited to income, costs and associated taxes related to
the terminated merger between HEI and NextEra Energy, Inc., the cancelled spin-off of ASB Hawaii, Inc., and the termination of
the 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. 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)
|
2017
|
2016
|
|
2017
|
2016
|
|
HEI CONSOLIDATED COSTS RELATED TO THE TERMINATED MERGER WITH NEXTERA
ENERGY AND CANCELLED SPIN-OFF OF ASB HAWAII
|
|
|
|
|
|
|
Pre-tax expenses
|
$
|
—
|
|
$
|
2.0
|
|
|
$
|
—
|
|
$
|
3.6
|
|
|
Current income tax benefits
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
After-tax expenses
|
$
|
—
|
|
$
|
2.0
|
|
|
$
|
—
|
|
$
|
3.6
|
|
|
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)
|
$
|
38.7
|
|
$
|
44.1
|
|
|
$
|
72.9
|
|
$
|
76.5
|
|
|
Excluding special items (after-tax):
|
|
|
|
|
|
|
Costs related to the terminated merger with NextEra Energy and cancelled
spin-off of ASB Hawaii
|
—
|
|
2.0
|
|
|
—
|
|
3.6
|
|
|
Costs related to the terminated LNG contract2
|
—
|
|
0.7
|
|
|
—
|
|
2.1
|
|
|
Non-GAAP (core) net income
|
$
|
38.7
|
|
$
|
46.9
|
|
|
$
|
72.9
|
|
$
|
82.1
|
|
|
HEI CONSOLIDATED DILUTED EARNINGS PER COMMON SHARE
|
|
|
|
|
|
GAAP (as reported)
|
$
|
0.36
|
|
$
|
0.41
|
|
|
$
|
0.67
|
|
$
|
0.71
|
|
|
Excluding special items (after-tax):
|
|
|
|
|
|
|
Costs related to the terminated merger with NextEra Energy and cancelled
spin-off of ASB Hawaii
|
—
|
|
0.02
|
|
|
—
|
|
0.03
|
|
|
Costs related to the terminated LNG contract2
|
—
|
|
0.01
|
|
|
—
|
|
0.02
|
|
|
Non-GAAP (core) diluted earnings per common share
|
$
|
0.36
|
|
$
|
0.43
|
|
|
$
|
0.67
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended June 30
|
|
|
|
|
2017
|
2016
|
|
HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple
average)
|
|
|
|
Based on GAAP
|
|
|
|
12.1
|
%
|
8.8
|
%
|
|
Based on non-GAAP (core)3
|
|
|
|
8.9
|
%
|
9.3
|
%
|
|
|
|
|
|
|
|
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)
|
2017
|
2016
|
|
2017
|
2016
|
|
HAWAIIAN ELECTRIC CONSOLIDATED COSTS RELATED TO THE TERMINATED MERGER
WITH NEXTERA ENERGY
|
|
|
|
|
|
|
Pre-tax expenses
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
0.1
|
|
|
Current income tax benefits
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
After-tax expenses
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
0.1
|
|
|
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)
|
$
|
25.6
|
|
$
|
35.9
|
|
|
$
|
47.1
|
|
$
|
61.2
|
|
|
Excluding special items (after-tax):
|
|
|
|
|
|
|
Costs related to the terminated merger with NextEra Energy
|
—
|
|
—
|
|
|
—
|
|
0.1
|
|
|
Costs related to the terminated LNG contract2
|
—
|
|
0.7
|
|
|
—
|
|
2.1
|
|
|
Non-GAAP (core) net income
|
$
|
25.6
|
|
$
|
36.6
|
|
|
$
|
47.1
|
|
$
|
63.4
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended June 30
|
|
|
|
|
2017
|
2016
|
|
HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY
(ROACE) (simple average)
|
|
|
|
|
|
|
Based on GAAP
|
|
|
|
7.23
|
%
|
7.98
|
%
|
|
Based on non-GAAP (core)3
|
|
|
|
7.23
|
%
|
8.12
|
%
|
|
|
|
|
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
|
($ in millions)
|
2017
|
2016
|
|
2017
|
2016
|
|
HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M)
EXPENSE
|
|
|
|
|
|
|
GAAP (as reported)
|
$
|
106.4
|
|
$
|
99.6
|
|
|
$
|
206.6
|
|
$
|
203.5
|
|
|
Excluding O&M-related net income neutral items4
|
0.9
|
|
1.5
|
|
|
2.0
|
|
3.1
|
|
|
Excluding costs related to the terminated merger with NextEra
Energy
|
—
|
|
—
|
|
|
—
|
|
0.1
|
|
|
Excluding costs related to the terminated LNG
contract2
|
—
|
|
1.2
|
|
|
—
|
|
3.4
|
|
|
Non-GAAP (Adjusted other O&M expense)
|
$
|
105.4
|
|
$
|
96.8
|
|
|
$
|
204.6
|
|
$
|
196.8
|
|
|
|
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
|
|
Contact:
|
Clifford H. Chen
|
Telephone: (808) 543-7300
|
|
Treasurer & Manager, Investor Relations & Strategic
Planning
|
E-mail: ir@hei.com
|
View original content with multimedia:http://www.prnewswire.com/news-releases/hei-reports-second-quarter-2017-earnings-300498915.html
SOURCE Hawaiian Electric Industries, Inc.