HONOLULU, Nov. 2, 2017 /PRNewswire/ -- Hawaiian
Electric Industries, Inc. (HEI) (NYSE: HE) today reported
consolidated net income for common stock for the third quarter of
2017 of $60.1 million and diluted
earnings per share (EPS) of $0.55 compared to $127.1 million and EPS of $1.17 for the third quarter of 2016. Third
quarter of 2016 core earnings1 and core EPS1
were $63.3 million and $0.58, respectively. HEI's third quarter of
2016 core earnings1 included $6
million of favorable tax adjustments at the holding company
as HEI moved out of a federal net operating loss position, enabling
the recognition of tax benefits.
"HEI's core earnings1 for the quarter compared well
to the prior year quarter. The utility performed as we
expected, and we saw strong performance by American Savings
Bank. The bank delivered higher earnings and profitability
driven by improving credit quality and higher yields on
interest-earning assets. This exemplifies the value of the
unique combination of businesses which comprise HEI," said
Constance H. Lau, HEI president and
chief executive officer.
|
___________________________
|
|
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.
|
HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company's2 net income for the third
quarter of 2017 was $47.5 million as
our utilities continue to perform according to plan for this
transition year compared to $47.0
million in the third quarter of 2016. The $0.5 million net income increase from the
prior year quarter was primarily driven by the following after-tax
items:
- $2 million higher net
revenues3 mainly due to higher recovery of costs for
integrating more renewables and reliability investments and the
Hawaii Electric Light 2016 interim rate increase which became
effective on August 31, 2017;
- $2 million higher allowance for
funds used during construction primarily due to the Schofield
generating plant project expected to be placed in service in the
second quarter of 2018; and
- $1 million favorable tax
adjustments as the utility moved out of a federal net operating
loss position, enabling the recognition of tax benefits in the
third quarter of 2017.
These increases were offset by the following after-tax
items:
- $4 million higher operations and
maintenance expenses4 compared to the prior year quarter primarily
due to higher overhaul expenses and enterprise resource planning
project costs; and
- $1 million higher depreciation
expense as a result of increasing investments for the integration
of more renewable energy and improved customer reliability.
|
______________________
|
|
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.
|
|
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
|
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.American Savings
Bank earnings
|
AMERICAN SAVINGS BANK EARNINGS
American Savings Bank's (American) net income for the third
quarter of 2017 was $17.6 million compared to $16.7 million in the second (or linked) quarter
of 2017 and $15.1 million in the
third quarter of 2016.
Compared to the third quarter of 2016, the $2.5 million increase was primarily driven by the
following on an after-tax basis:
- $3 million higher net interest
income driven mainly by growth in interest-earning assets funded by
strong deposit growth and overall improvement in asset yields;
and
- $3 million lower provision for
loan losses resulting from work to improve commercial loan asset
quality.
These items were offset by the following on an after-tax
basis:
- $2 million lower noninterest
income primarily due to lower mortgage banking income and no gain
on sale of real estate; and
- $1 million higher noninterest
expense primarily due to higher performance-based incentive
cost.
Compared to the linked second quarter of 2017, the $0.9 million increase was primarily driven by
lower provision for loan losses.
Total loans were $4.7 billion at
September 30, 2017, a decrease of
$65 million or 1.8% annualized from
December 31, 2016. This
decrease reflects American's work to improve overall commercial
loan quality through a strategic decrease in its exposure to
national syndicated credits, as well as a reduction in its
commercial real estate loan portfolio. The decrease in
American's commercial portfolio was partially offset by growth in
home equity lines of credit, consumer and residential loan
portfolios.
Total deposits were $5.8 billion
at September 30, 2017, an increase of
$203 million or 4.9% annualized from
December 31, 2016. Low-cost
core deposits increased $153 million or 4.2% annualized from
December 31, 2016. The average
cost of funds was 0.20% for the third quarter of 2017 compared to
0.21% for the second quarter of 2017 and 0.24% for the third
quarter of 2016.
Overall, American achieved solid profitability in the third
quarter of 2017 with a return on average equity of 11.6% and a
return on average assets of 1.07%.
For additional information, refer to the American news release
issued on October 30, 2017.
HOLDING AND OTHER COMPANIES
The holding and other companies' net loss was $5.0 million in the third quarter of 2017
compared to $65.1 million net income
in the third quarter of 2016. Excluding the Transaction
Adjustments which totaled $63.8
million in the third quarter of 2016, the holding and other
companies' net loss was $5.0 million in the third quarter of 2017
compared to $1.2 net income in the
third quarter of 2016. The holding company's third quarter of
2016 net income included $6.0 million
of 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
HEI will conduct a webcast and conference call to discuss its
third quarter of 2017 earnings and 2017 EPS guidance on Thursday,
November 2, 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 November 16,
2017 by dialing (877) 344-7529 or (412) 317-0088 and
entering passcode: 10112461.
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
September 30
|
|
Nine months ended
September 30
|
|
(in thousands, except per share amounts)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Electric
utility
|
|
$
|
598,769
|
|
|
$
|
572,253
|
|
|
$
|
1,674,255
|
|
|
$
|
1,549,700
|
|
|
Bank
|
|
74,289
|
|
|
73,708
|
|
|
222,474
|
|
|
213,297
|
|
|
Other
|
|
127
|
|
|
94
|
|
|
299
|
|
|
262
|
|
|
Total
revenues
|
|
673,185
|
|
|
646,055
|
|
|
1,897,028
|
|
|
1,763,259
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Electric
utility
|
|
511,693
|
|
|
482,441
|
|
|
1,483,194
|
|
|
1,333,876
|
|
|
Bank
|
|
47,525
|
|
|
50,981
|
|
|
146,754
|
|
|
150,752
|
|
|
Other
|
|
4,422
|
|
|
7,191
|
|
|
13,777
|
|
|
18,883
|
|
|
Total
expenses
|
|
563,640
|
|
|
540,613
|
|
|
1,643,725
|
|
|
1,503,511
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
|
Electric
utility
|
|
87,076
|
|
|
89,812
|
|
|
191,061
|
|
|
215,824
|
|
|
Bank
|
|
26,764
|
|
|
22,727
|
|
|
75,720
|
|
|
62,545
|
|
|
Other
|
|
(4,295)
|
|
|
(7,097)
|
|
|
(13,478)
|
|
|
(18,621)
|
|
|
Total operating
income
|
|
109,545
|
|
|
105,442
|
|
|
253,303
|
|
|
259,748
|
|
|
Merger termination
fee
|
|
—
|
|
|
90,000
|
|
|
—
|
|
|
90,000
|
|
|
Interest expense,
net—other than on deposit liabilities and other bank
borrowings
|
|
(19,227)
|
|
|
(19,365)
|
|
|
(59,235)
|
|
|
(56,792)
|
|
|
Allowance for
borrowed funds used during construction
|
|
1,339
|
|
|
854
|
|
|
3,371
|
|
|
2,276
|
|
|
Allowance for equity
funds used during construction
|
|
3,482
|
|
|
2,274
|
|
|
8,908
|
|
|
6,010
|
|
|
Income before income
taxes
|
|
95,139
|
|
|
179,205
|
|
|
206,347
|
|
|
301,242
|
|
|
Income
taxes
|
|
34,595
|
|
|
51,592
|
|
|
72,003
|
|
|
96,203
|
|
|
Net
income
|
|
60,544
|
|
|
127,613
|
|
|
134,344
|
|
|
205,039
|
|
|
Preferred stock
dividends of subsidiaries
|
|
471
|
|
|
471
|
|
|
1,417
|
|
|
1,417
|
|
|
Net income for
common stock
|
|
$
|
60,073
|
|
|
$
|
127,142
|
|
|
$
|
132,927
|
|
|
$
|
203,622
|
|
|
Basic earnings per
common share
|
|
$
|
0.55
|
|
|
$
|
1.17
|
|
|
$
|
1.22
|
|
|
$
|
1.89
|
|
|
Diluted earnings
per common share
|
|
$
|
0.55
|
|
|
$
|
1.17
|
|
|
$
|
1.22
|
|
|
$
|
1.88
|
|
|
Dividends declared
per common share
|
|
$
|
0.31
|
|
|
$
|
0.31
|
|
|
$
|
0.93
|
|
|
$
|
0.93
|
|
|
Weighted-average
number of common shares outstanding
|
|
108,786
|
|
|
108,268
|
|
|
108,737
|
|
|
107,951
|
|
|
Weighted-average
shares assuming dilution
|
|
108,865
|
|
|
108,472
|
|
|
108,909
|
|
|
108,171
|
|
|
Net income (loss)
for common stock by segment
|
|
|
|
|
|
|
|
|
|
Electric
utility
|
|
$
|
47,487
|
|
|
$
|
46,974
|
|
|
$
|
94,596
|
|
|
$
|
108,198
|
|
|
Bank
|
|
17,592
|
|
|
15,104
|
|
|
50,138
|
|
|
41,062
|
|
|
Other
|
|
(5,006)
|
|
|
65,064
|
|
|
(11,807)
|
|
|
54,362
|
|
|
Net income for
common stock
|
|
$
|
60,073
|
|
|
$
|
127,142
|
|
|
$
|
132,927
|
|
|
$
|
203,622
|
|
|
Comprehensive income
attributable to Hawaiian Electric Industries, Inc.
|
|
$
|
60,627
|
|
|
$
|
125,473
|
|
|
$
|
136,836
|
|
|
$
|
212,861
|
|
|
Return on average
common equity (twelve months ended)1
|
|
|
|
|
|
8.5
|
%
|
|
12.3
|
%
|
|
|
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 September 30) were 8.5% and 9.5%,
respectively. See reconciliation of GAAP to non-GAAP
measures.
|
|
Hawaiian Electric
Industries, Inc. (HEI) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
(dollars in thousands)
|
|
September 30,
2017
|
|
December 31,
2016
|
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
202,173
|
|
|
$
|
278,452
|
|
|
Accounts receivable
and unbilled revenues, net
|
|
264,426
|
|
|
237,950
|
|
|
Available-for-sale
investment securities, at fair value
|
|
1,320,110
|
|
|
1,105,182
|
|
|
Stock in Federal Home
Loan Bank, at cost
|
|
9,706
|
|
|
11,218
|
|
|
Loans receivable held
for investment, net
|
|
4,623,234
|
|
|
4,683,160
|
|
|
Loans held for sale,
at lower of cost or fair value
|
|
15,728
|
|
|
18,817
|
|
|
Property, plant and
equipment, net of accumulated depreciation of $2,537,320 and
$2,444,348 at September 30, 2017 and December 31, 2016,
respectively
|
|
4,813,875
|
|
|
4,603,465
|
|
|
Regulatory
assets
|
|
936,964
|
|
|
957,451
|
|
|
Other
|
|
474,444
|
|
|
447,621
|
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
|
Total
assets
|
|
$
|
12,742,850
|
|
|
$
|
12,425,506
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
|
160,897
|
|
|
$
|
143,279
|
|
|
Interest and
dividends payable
|
|
26,484
|
|
|
25,225
|
|
|
Deposit
liabilities
|
|
5,752,326
|
|
|
5,548,929
|
|
|
Short-term
borrowings—other than bank
|
|
24,498
|
|
|
—
|
|
|
Other bank
borrowings
|
|
153,552
|
|
|
192,618
|
|
|
Long-term debt,
net—other than bank
|
|
1,618,446
|
|
|
1,619,019
|
|
|
Deferred income
taxes
|
|
756,814
|
|
|
728,806
|
|
|
Regulatory
liabilities
|
|
466,216
|
|
|
410,693
|
|
|
Contributions in aid
of construction
|
|
565,118
|
|
|
543,525
|
|
|
Defined benefit
pension and other postretirement benefit plans liability
|
|
620,788
|
|
|
638,854
|
|
|
Other
|
|
460,396
|
|
|
473,512
|
|
|
Total
liabilities
|
|
10,605,535
|
|
|
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:
108,785,978 shares and 108,583,413 shares at September 30, 2017 and
December 31, 2016, respectively
|
|
1,661,492
|
|
|
1,660,910
|
|
|
Retained
earnings
|
|
470,750
|
|
|
438,972
|
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
(29,220)
|
|
|
(33,129)
|
|
|
Total
shareholders' equity
|
|
2,103,022
|
|
|
2,066,753
|
|
|
Total liabilities
and shareholders' equity
|
|
$
|
12,742,850
|
|
|
$
|
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
September 30
|
|
Nine months ended
September 30
|
|
(dollars
in thousands, except per barrel amounts)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues
|
|
$
|
598,769
|
|
|
$
|
572,253
|
|
|
$
|
1,674,255
|
|
|
$
|
1,549,700
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Fuel oil
|
|
146,258
|
|
|
128,624
|
|
|
431,787
|
|
|
334,263
|
|
|
Purchased
power
|
|
160,347
|
|
|
157,750
|
|
|
440,538
|
|
|
412,667
|
|
|
Other operation and
maintenance
|
|
100,102
|
|
|
94,789
|
|
|
306,716
|
|
|
298,260
|
|
|
Depreciation
|
|
48,206
|
|
|
46,759
|
|
|
144,578
|
|
|
140,300
|
|
|
Taxes, other than
income taxes
|
|
56,780
|
|
|
54,519
|
|
|
159,575
|
|
|
148,386
|
|
|
Total
expenses
|
|
511,693
|
|
|
482,441
|
|
|
1,483,194
|
|
|
1,333,876
|
|
|
Operating
income
|
|
87,076
|
|
|
89,812
|
|
|
191,061
|
|
|
215,824
|
|
|
Allowance for equity
funds used during construction
|
|
3,482
|
|
|
2,274
|
|
|
8,908
|
|
|
6,010
|
|
|
Interest expense and
other charges, net
|
|
(16,907)
|
|
|
(17,323)
|
|
|
(52,625)
|
|
|
(49,734)
|
|
|
Allowance for
borrowed funds used during construction
|
|
1,339
|
|
|
854
|
|
|
3,371
|
|
|
2,276
|
|
|
Income before
income taxes
|
|
74,990
|
|
|
75,617
|
|
|
150,715
|
|
|
174,376
|
|
|
Income
taxes
|
|
27,005
|
|
|
28,145
|
|
|
54,623
|
|
|
64,682
|
|
|
Net
income
|
|
47,985
|
|
|
47,472
|
|
|
96,092
|
|
|
109,694
|
|
|
Preferred stock
dividends of subsidiaries
|
|
228
|
|
|
228
|
|
|
686
|
|
|
686
|
|
|
Net income
attributable to Hawaiian Electric
|
|
47,757
|
|
|
47,244
|
|
|
95,406
|
|
|
109,008
|
|
|
Preferred stock
dividends of Hawaiian Electric
|
|
270
|
|
|
270
|
|
|
810
|
|
|
810
|
|
|
Net income for
common stock
|
|
$
|
47,487
|
|
|
$
|
46,974
|
|
|
$
|
94,596
|
|
|
$
|
108,198
|
|
|
Comprehensive
income attributable to Hawaiian Electric
|
|
$
|
47,509
|
|
|
$
|
47,125
|
|
|
$
|
95,117
|
|
|
$
|
108,610
|
|
|
OTHER ELECTRIC
UTILITY INFORMATION
|
|
|
|
|
|
|
|
|
|
Kilowatthour sales
(millions)
|
|
|
|
|
|
|
|
|
|
Hawaiian
Electric
|
|
1,776
|
|
|
1,800
|
|
|
4,924
|
|
|
4,982
|
|
|
Hawaii
Electric Light
|
|
272
|
|
|
277
|
|
|
782
|
|
|
795
|
|
|
Maui
Electric
|
|
292
|
|
|
295
|
|
|
822
|
|
|
836
|
|
|
|
2,340
|
|
|
2,372
|
|
|
6,528
|
|
|
6,613
|
|
|
Average fuel oil cost
per barrel
|
|
$
|
66.73
|
|
|
$
|
57.72
|
|
|
$
|
67.42
|
|
|
$
|
52.06
|
|
|
Return on average
common equity (twelve months ended)1
|
|
|
|
|
|
7.16
|
%
|
|
8.11
|
%
|
|
|
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.
|
|
|
1 Simple average. On a core basis,
2017 and 2016 returns on average common equity (twelve months ended
September 30) were 7.2% and 8.2%, respectively. See
reconciliation of GAAP to non-GAAP measures.
|
|
Hawaiian Electric
Company, Inc. (Hawaiian Electric) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
(dollars in
thousands, except par value)
|
|
September 30,
2017
|
|
December 31,
2016
|
|
Assets
|
|
|
|
|
|
Property, plant
and equipment
|
|
|
|
|
|
Utility property,
plant and equipment
|
|
|
|
|
|
Land
|
|
$
|
53,913
|
|
|
$
|
53,153
|
|
|
Plant and
equipment
|
|
6,778,254
|
|
|
6,605,732
|
|
|
Less accumulated
depreciation
|
|
(2,460,429)
|
|
|
(2,369,282)
|
|
|
Construction in
progress
|
|
307,492
|
|
|
211,742
|
|
|
Utility property,
plant and equipment, net
|
|
4,679,230
|
|
|
4,501,345
|
|
|
Nonutility property,
plant and equipment, less accumulated depreciation of $1,233
and $1,232 at September 30, 2017 and December 31, 2016,
respectively
|
|
7,409
|
|
|
7,407
|
|
|
Total property,
plant and equipment, net
|
|
4,686,639
|
|
|
4,508,752
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
9,987
|
|
|
74,286
|
|
|
Customer accounts
receivable, net
|
|
133,135
|
|
|
123,688
|
|
|
Accrued unbilled
revenues, net
|
|
109,707
|
|
|
91,693
|
|
|
Other accounts
receivable, net
|
|
4,097
|
|
|
5,233
|
|
|
Fuel oil stock, at
average cost
|
|
60,253
|
|
|
66,430
|
|
|
Materials and
supplies, at average cost
|
|
55,959
|
|
|
53,679
|
|
|
Prepayments and
other
|
|
29,871
|
|
|
23,100
|
|
|
Regulatory
assets
|
|
72,773
|
|
|
66,032
|
|
|
Total current
assets
|
|
475,782
|
|
|
504,141
|
|
|
Other long-term
assets
|
|
|
|
|
|
Regulatory
assets
|
|
864,191
|
|
|
891,419
|
|
|
Unamortized debt
expense
|
|
661
|
|
|
208
|
|
|
Other
|
|
80,228
|
|
|
70,908
|
|
|
Total other
long-term assets
|
|
945,080
|
|
|
962,535
|
|
|
Total
assets
|
|
$
|
6,107,501
|
|
|
$
|
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 September 30, 2017 and December 31,
2016)
|
|
$
|
106,818
|
|
|
$
|
106,818
|
|
|
Premium on capital
stock
|
|
601,487
|
|
|
601,491
|
|
|
Retained
earnings
|
|
1,120,571
|
|
|
1,091,800
|
|
|
Accumulated other
comprehensive income (loss), net of income taxes
|
|
199
|
|
|
(322)
|
|
|
Common stock
equity
|
|
1,829,075
|
|
|
1,799,787
|
|
|
Cumulative preferred
stock — not subject to mandatory redemption
|
|
34,293
|
|
|
34,293
|
|
|
Long-term debt,
net
|
|
1,318,623
|
|
|
1,319,260
|
|
|
Total
capitalization
|
|
3,181,991
|
|
|
3,153,340
|
|
|
Current
liabilities
|
|
|
|
|
|
Short-term borrowings
from non-affiliates
|
|
6,000
|
|
|
—
|
|
|
Accounts
payable
|
|
124,240
|
|
|
117,814
|
|
|
Interest and
preferred dividends payable
|
|
25,261
|
|
|
22,838
|
|
|
Taxes
accrued
|
|
183,365
|
|
|
172,730
|
|
|
Regulatory
liabilities
|
|
3,399
|
|
|
3,762
|
|
|
Other
|
|
59,611
|
|
|
55,221
|
|
|
Total current
liabilities
|
|
401,876
|
|
|
372,365
|
|
|
Deferred credits
and other liabilities
|
|
|
|
|
|
Deferred income
taxes
|
|
767,611
|
|
|
733,659
|
|
|
Regulatory
liabilities
|
|
462,817
|
|
|
406,931
|
|
|
Unamortized tax
credits
|
|
88,827
|
|
|
88,961
|
|
|
Defined benefit
pension and other postretirement benefit plans liability
|
|
581,713
|
|
|
599,726
|
|
|
Other
|
|
57,548
|
|
|
76,921
|
|
|
Total deferred
credits and other liabilities
|
|
1,958,516
|
|
|
1,906,198
|
|
|
Contributions in aid
of construction
|
|
565,118
|
|
|
543,525
|
|
|
Total
capitalization and liabilities
|
|
$
|
6,107,501
|
|
|
$
|
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
|
|
Nine months ended
September 30
|
|
(in thousands)
|
|
September 30,
2017
|
|
June 30,
2017
|
|
September 30,
2016
|
|
2017
|
|
2016
|
|
Interest and
dividend income
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
52,210
|
|
|
$
|
52,317
|
|
|
$
|
50,444
|
|
|
$
|
155,269
|
|
|
$
|
148,571
|
|
|
Interest and
dividends on investment securities
|
|
6,850
|
|
|
6,763
|
|
|
4,759
|
|
|
20,593
|
|
|
14,219
|
|
|
Total interest and
dividend income
|
|
59,060
|
|
|
59,080
|
|
|
55,203
|
|
|
175,862
|
|
|
162,790
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposit
liabilities
|
|
2,444
|
|
|
2,311
|
|
|
1,871
|
|
|
6,858
|
|
|
5,154
|
|
|
Interest on other
borrowings
|
|
470
|
|
|
824
|
|
|
1,464
|
|
|
2,110
|
|
|
4,416
|
|
|
Total interest
expense
|
|
2,914
|
|
|
3,135
|
|
|
3,335
|
|
|
8,968
|
|
|
9,570
|
|
|
Net interest
income
|
|
56,146
|
|
|
55,945
|
|
|
51,868
|
|
|
166,894
|
|
|
153,220
|
|
|
Provision for loan
losses
|
|
490
|
|
|
2,834
|
|
|
5,747
|
|
|
7,231
|
|
|
15,266
|
|
|
Net interest
income after provision for loan losses
|
|
55,656
|
|
|
53,111
|
|
|
46,121
|
|
|
159,663
|
|
|
137,954
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
|
Fees from other
financial services
|
|
5,635
|
|
|
5,810
|
|
|
5,599
|
|
|
17,055
|
|
|
16,799
|
|
|
Fee income on deposit
liabilities
|
|
5,533
|
|
|
5,565
|
|
|
5,627
|
|
|
16,526
|
|
|
16,045
|
|
|
Fee income on other
financial products
|
|
1,904
|
|
|
1,971
|
|
|
2,151
|
|
|
5,741
|
|
|
6,563
|
|
|
Bank-owned life
insurance
|
|
1,257
|
|
|
1,925
|
|
|
1,616
|
|
|
4,165
|
|
|
3,620
|
|
|
Mortgage banking
income
|
|
520
|
|
|
587
|
|
|
2,347
|
|
|
1,896
|
|
|
5,096
|
|
|
Gains on sale of
investment securities, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
598
|
|
|
Other income,
net
|
|
380
|
|
|
391
|
|
|
1,165
|
|
|
1,229
|
|
|
1,786
|
|
|
Total noninterest
income
|
|
15,229
|
|
|
16,249
|
|
|
18,505
|
|
|
46,612
|
|
|
50,507
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
23,724
|
|
|
24,742
|
|
|
22,844
|
|
|
71,703
|
|
|
67,197
|
|
|
Occupancy
|
|
4,284
|
|
|
4,185
|
|
|
3,991
|
|
|
12,623
|
|
|
12,244
|
|
|
Data
processing
|
|
3,262
|
|
|
3,207
|
|
|
3,150
|
|
|
9,749
|
|
|
9,599
|
|
|
Services
|
|
2,863
|
|
|
2,766
|
|
|
2,427
|
|
|
7,989
|
|
|
8,093
|
|
|
Equipment
|
|
1,814
|
|
|
1,771
|
|
|
1,759
|
|
|
5,333
|
|
|
5,193
|
|
|
Office supplies,
printing and postage
|
|
1,444
|
|
|
1,527
|
|
|
1,483
|
|
|
4,506
|
|
|
4,431
|
|
|
Marketing
|
|
934
|
|
|
839
|
|
|
747
|
|
|
2,290
|
|
|
2,507
|
|
|
FDIC
insurance
|
|
746
|
|
|
822
|
|
|
907
|
|
|
2,296
|
|
|
2,704
|
|
|
Other
expense
|
|
5,050
|
|
|
4,705
|
|
|
4,591
|
|
|
14,066
|
|
|
13,948
|
|
|
Total noninterest
expense
|
|
44,121
|
|
|
44,564
|
|
|
41,899
|
|
|
130,555
|
|
|
125,916
|
|
|
Income before
income taxes
|
|
26,764
|
|
|
24,796
|
|
|
22,727
|
|
|
75,720
|
|
|
62,545
|
|
|
Income
taxes
|
|
9,172
|
|
|
8,063
|
|
|
7,623
|
|
|
25,582
|
|
|
21,483
|
|
|
Net
income
|
|
$
|
17,592
|
|
|
$
|
16,733
|
|
|
$
|
15,104
|
|
|
$
|
50,138
|
|
|
$
|
41,062
|
|
|
Comprehensive
income
|
|
$
|
18,009
|
|
|
$
|
18,956
|
|
|
$
|
13,176
|
|
|
$
|
53,613
|
|
|
$
|
49,537
|
|
|
OTHER BANK
INFORMATION (annualized %, except as of period end)
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
1.07
|
|
|
1.02
|
|
|
0.97
|
|
|
1.02
|
|
|
0.89
|
|
|
Return on average
equity
|
|
11.64
|
|
|
11.25
|
|
|
10.36
|
|
|
11.24
|
|
|
9.5
|
|
|
Return on average
tangible common equity
|
|
13.47
|
|
|
13.06
|
|
|
12.06
|
|
|
13.04
|
|
|
11.07
|
|
|
Net interest
margin
|
|
3.69
|
|
|
3.68
|
|
|
3.57
|
|
|
3.68
|
|
|
3.59
|
|
|
Efficiency
ratio
|
|
61.82
|
|
|
61.73
|
|
|
59.54
|
|
|
61.15
|
|
|
61.81
|
|
|
Net charge-offs to
average loans outstanding
|
|
0.32
|
|
|
0.21
|
|
|
0.20
|
|
|
0.27
|
|
|
0.19
|
|
|
As of period
end
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans to
loans receivable held for investment
|
|
0.50
|
|
|
0.44
|
|
|
1.11
|
|
|
|
|
|
|
Allowance for loan
losses to loans outstanding
|
|
1.13
|
|
|
1.19
|
|
|
1.24
|
|
|
|
|
|
|
Tangible common
equity to tangible assets
|
|
8.01
|
|
|
7.88
|
|
|
8.03
|
|
|
|
|
|
|
Tier-1 leverage
ratio
|
|
8.7
|
|
|
8.5
|
|
|
8.6
|
|
|
|
|
|
|
Total capital
ratio
|
|
13.9
|
|
|
13.7
|
|
|
13.3
|
|
|
|
|
|
|
Dividend paid to HEI
(via ASB Hawaii, Inc.) ($ in millions)
|
|
$
|
9.4
|
|
|
$
|
9.4
|
|
|
$
|
9.0
|
|
|
$
|
28.1
|
|
|
$
|
27.0
|
|
|
|
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)
|
September 30,
2017
|
December 31,
2016
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Cash and due from
banks
|
|
$
|
120,492
|
|
|
$
|
137,083
|
|
|
Interest-bearing
deposits
|
|
69,223
|
|
|
52,128
|
|
|
Restricted
cash
|
|
—
|
|
|
1,764
|
|
|
Available-for-sale
investment securities, at fair value
|
|
1,320,110
|
|
|
1,105,182
|
|
|
Stock in Federal Home
Loan Bank, at cost
|
|
9,706
|
|
|
11,218
|
|
|
Loans receivable held
for investment
|
|
4,676,281
|
|
|
4,738,693
|
|
|
Allowance for loan
losses
|
|
(53,047)
|
|
|
(55,533)
|
|
|
Net loans
|
|
4,623,234
|
|
|
4,683,160
|
|
|
Loans held for sale,
at lower of cost or fair value
|
|
15,728
|
|
|
18,817
|
|
|
Other
|
|
378,224
|
|
|
329,815
|
|
|
Goodwill
|
|
82,190
|
|
|
82,190
|
|
|
Total
assets
|
|
$
|
6,618,907
|
|
|
$
|
6,421,357
|
|
|
Liabilities and
shareholder's equity
|
|
|
|
|
|
Deposit
liabilities–noninterest-bearing
|
|
$
|
1,710,698
|
|
|
$
|
1,639,051
|
|
|
Deposit
liabilities–interest-bearing
|
|
4,041,628
|
|
|
3,909,878
|
|
|
Other
borrowings
|
|
153,552
|
|
|
192,618
|
|
|
Other
|
|
107,558
|
|
|
101,635
|
|
|
Total
liabilities
|
|
6,013,436
|
|
|
5,843,182
|
|
|
Common
stock
|
|
1
|
|
|
1
|
|
|
Additional paid in
capital
|
|
344,512
|
|
|
342,704
|
|
|
Retained
earnings
|
|
279,956
|
|
|
257,943
|
|
|
Accumulated other
comprehensive loss, net of tax benefits
|
|
|
|
|
|
Net unrealized losses on
securities
|
$
|
(5,479)
|
|
|
$
|
(7,931)
|
|
|
|
Retirement benefit
plans
|
(13,519)
|
|
(18,998)
|
|
(14,542)
|
|
(22,473)
|
|
|
Total
shareholder's equity
|
|
605,471
|
|
|
578,175
|
|
|
Total liabilities
and shareholder's equity
|
|
$
|
6,618,907
|
|
|
$
|
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 other operation and maintenance (O&M ) expense 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)
|
2017
|
2016
|
|
2017
|
2016
|
|
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)
|
|
|
$
|
—
|
|
$
|
(84.9)
|
|
|
Current income taxes
(benefits)
|
—
|
|
24.7
|
|
|
—
|
|
24.7
|
|
|
After-tax (income)
expenses
|
$
|
—
|
|
$
|
(63.8)
|
|
|
$
|
—
|
|
$
|
(60.3)
|
|
|
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)
|
$
|
60.1
|
|
$
|
127.1
|
|
|
$
|
132.9
|
|
$
|
203.6
|
|
|
Excluding special
items (after-tax):
|
|
|
|
|
|
|
(Income) expenses
related to the terminated merger with NextEra Energy and cancelled
spin-off of ASB Hawaii
|
—
|
|
(63.8)
|
|
|
—
|
|
(60.3)
|
|
|
Costs related to the
terminated LNG contract2
|
—
|
|
—
|
|
|
—
|
|
2.1
|
|
|
Non-GAAP (core)
net income
|
$
|
60.1
|
|
$
|
63.3
|
|
|
$
|
132.9
|
|
$
|
145.4
|
|
|
HEI CONSOLIDATED
DILUTED EARNINGS PER COMMON SHARE
|
|
|
|
|
|
GAAP (as
reported)
|
$
|
0.55
|
|
$
|
1.17
|
|
|
$
|
1.22
|
|
$
|
1.88
|
|
|
Excluding special
items (after-tax):
|
|
|
|
|
|
|
(Income) expenses
related to the terminated merger with NextEra Energy and cancelled
spin-off of ASB Hawaii
|
—
|
|
(0.59)
|
|
|
—
|
|
(0.56)
|
|
|
Costs related to the
terminated LNG contract2
|
—
|
|
—
|
|
|
—
|
|
0.02
|
|
|
Non-GAAP (core)
diluted earnings per common share
|
$
|
0.55
|
|
$
|
0.58
|
|
|
$
|
1.22
|
|
$
|
1.34
|
|
|
|
|
|
Twelve months
ended
September 30
|
|
|
|
|
2017
|
2016
|
|
HEI CONSOLIDATED
RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple
average)
|
|
|
|
|
Based on
GAAP
|
|
|
|
8.5
|
%
|
12.3
|
%
|
|
Based on non-GAAP
(core)3
|
|
|
|
8.5
|
%
|
9.5
|
%
|
|
|
|
|
|
|
|
|
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
September 30
|
|
Nine months
ended
September 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
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
3.4
|
|
|
Current income tax
benefits
|
—
|
|
—
|
|
|
—
|
|
(1.3)
|
|
|
After-tax
expenses
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
2.1
|
|
|
HAWAIIAN ELECTRIC
CONSOLIDATED NET INCOME
|
|
|
|
|
|
|
GAAP (as
reported)
|
$
|
47.5
|
|
$
|
47.0
|
|
|
$
|
94.6
|
|
$
|
108.2
|
|
|
Excluding special
items (after-tax):
|
|
|
|
|
|
|
Costs related to the
terminated merger with NextEra Energy
|
—
|
|
—
|
|
|
—
|
|
0.1
|
|
|
Costs related to the
terminated LNG contract2
|
—
|
|
—
|
|
|
—
|
|
2.1
|
|
|
Non-GAAP (core)
net income
|
$
|
47.5
|
|
$
|
47.0
|
|
|
$
|
94.6
|
|
$
|
110.3
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended
September 30
|
|
|
|
|
2017
|
2016
|
|
HAWAIIAN ELECTRIC
CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple
average)
|
|
|
|
|
|
|
Based on
GAAP
|
|
|
|
7.16
|
%
|
8.11
|
%
|
|
Based on non-GAAP
(core)3
|
|
|
|
7.16
|
%
|
8.24
|
%
|
|
|
|
|
|
|
|
Three months
ended
September 30
|
|
Nine months
ended
September 30
|
|
($ in
millions)
|
2017
|
2016
|
|
2017
|
2016
|
|
HAWAIIAN ELECTRIC
CONSOLIDATED OTHER O&M EXPENSE
|
|
|
|
|
|
|
GAAP (as
reported)
|
$
|
100.1
|
|
$
|
94.8
|
|
|
$
|
306.7
|
|
$
|
298.3
|
|
|
Excluding other
O&M-related net income neutral items4
|
0.7
|
|
1.4
|
|
|
2.7
|
|
4.6
|
|
|
Excluding costs
related to the terminated merger with NextEra Energy
|
—
|
|
—
|
|
|
—
|
|
0.1
|
|
|
Excluding costs
related to the terminated LNG contract2
|
—
|
|
—
|
|
|
—
|
|
3.4
|
|
|
Non-GAAP (Adjusted
other O&M expense)
|
$
|
99.4
|
|
$
|
93.4
|
|
|
$
|
304.0
|
|
$
|
290.2
|
|
|
|
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-third-quarter-2017-earnings-of-601-million-300548216.html
SOURCE Hawaiian Electric Industries, Inc.