Hawaiian Electric Industries Reports 2015 Year-End & Fourth Quarter Earnings

2015 Net Income of $159.9 Million;

2015 Diluted Earnings Per Share (EPS) of $1.50 and Core[1] EPS of $1.65;

Fourth Quarter Net Income of $42.3 Million; EPS of $0.39; Core[1] EPS of $0.41

Results In Line with EPS Guidance

Company Release - 2/11/2016 4:15 PM ET

HONOLULU, Feb. 11, 2016 /PRNewswire/ --

Selected 2015 Highlights:

  • Reported net income of $159.9 million in 2015 vs $168.1 million in 2014, down 5%;
    Core1 net income of $175.7 million in 2015 vs $173.0 million in 2014, up 2%
  • Reported EPS of $1.50 in 2015 vs $1.63 in 2014, down 8%;
    Core1 EPS of $1.65 in 2015 vs $1.68 in 2014, down 2%
  • Reported ROE of 8.6%; Core1 ROE of 9.4%
  • Continued legacy of delivering value for customers and Hawaii:
    • Record 22%2 of electricity used by Hawaiian Electric customers was from renewable sources
      • Surpassed Hawaii's 2015 renewable portfolio standard target of 15%
      • Avoided-oil equivalent of 1.9 million barrels which would have cost our state over $140 million3 in imported oil in 2015
      • 2015 residential bills lower by 18% due to lower fuel prices compared to 2014
      • Led the nation in the integration of customer-sited solar:  by the end of 2015, over 20% of single family homes on the islands we serve and approximately 13% of our customers have solar systems
    • Continuing cost management efforts limited utility other operations and maintenance (O&M) expense4 increases to 1% over the 2014 level, in line with the Honolulu inflation rate of 1%
    • Bank provided over $1.9 billion of credit to consumers and businesses and originated over 3,500 mortgages
    • Bank credit quality excellent with net charge-offs of 4 basis points on a loan book of $4.6 billion
    • Contributed nearly twenty thousand volunteer hours and over $2 million of charitable contributions to community organizations
  • History of continuous dividends since 1901
  • Progress on proposed merger with NextEra Energy and spin-off of American Savings Bank:
      • Received shareholder approval for the merger with NextEra Energy, Inc.
      • Filed Hawaii Public Utilities Commission (PUC) application for the proposed merger and PUC has initiated hearings
      • Filed SEC Form 10 for the bank spin-off

_________________

1 

Non-GAAP measure which excludes merger-related and spin-off costs after-tax.  See the "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.

2  

Based upon preliminary Renewable Portfolio Standard information as of 12/31/15.

3  

Estimate based on the 2015 average price per barrel of $74.71 and as compared to 2008 oil usage levels.

4  

Excludes net income neutral expenses covered by surcharges or by third parties and merger-related costs.  See "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.

 

Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported 2015 year-end consolidated net income for common stock of $159.9 million and diluted earnings per share (EPS) of $1.50 compared to $168.1 million and EPS of $1.63 for 2014.  For the fourth quarter of 2015, consolidated net income for common stock was $42.3 million and EPS of $0.39 compared to $33.3 million and EPS of $0.32 for the fourth quarter of 2014.  Excluding after-tax costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. of $15.8 million and $4.9 million in 2015 and 2014, respectively, and $2.2 million and $4.3 million in the fourth quarter of 2015 and 2014, respectively, core1 earnings in 2015 were $175.7 million and core1 EPS of $1.65, compared to $173.0 million and EPS of $1.68 in 2014.  For the fourth quarter of 2015, core1 earnings were $44.5 million and core1 EPS of $0.41 compared to $37.6 million and EPS of $0.36 for the fourth quarter of 2014.

"Our HEI companies delivered a competitive core1 return on equity of 9.4% for the year," said Constance Lau, HEI president and chief executive officer, "and our continuing efforts to push the boundaries of renewable energy integration helped us achieve an energy portfolio powered by 22%2 renewable sources in 2015, exceeding Hawaii's 2015 Renewable Portfolio Standard (RPS) target of 15%.  Thirteen percent of our customers now have customer-sited solar, a level of integration that leads the nation.  We continue to push for even higher levels of renewable integration to meet Hawaii's 100% RPS goal for 2045.  We remain focused on further reducing costs for our customers by vigilantly managing expenses; and increasing customer choice and engagement in Hawaii's move to 100% renewable energy by designing new time of use rates and demand response programs.  Fortunately, lower oil prices in 2015 reduced the average residential bill by 18%, but it's important that we continue to reduce our state's exposure to future oil price volatility and price increases."

"Our bank delivered solid financial results in 2015, producing healthy loan growth with good credit quality while maintaining its capital levels.  Our bank continues to make investments to continually improve the customer experience and is well positioned to continue to grow in 2016," said Lau.

"In December 2014, we announced our proposed merger with NextEra Energy, and pending approval by the Hawaii Public Utilities Commission, we are looking forward to working with NextEra Energy as a partner to help accelerate Hawaii's clean energy transformation.  We also announced the related spin-off of American Savings Bank, and we are confident that American, as a new, publicly-traded entity, will provide benefits for our Hawaii customers and communities," added Lau.

HAWAIIAN ELECTRIC COMPANY EARNINGS CONSISTENT WITH EXPECTATIONS

Full Year Results:

Hawaiian Electric Company's5 full-year 2015 net income was $135.7 million compared to $137.6 million in 2014.  The $1.9 million decrease from the prior year was primarily driven by the following after-tax items:

  • $7 million higher depreciation expense as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency; and
  • $3 million higher O&M expenses4 impacted by a regulatory decision denying recovery of enterprise resource planning software costs, additional reserves for environmental costs and higher employee benefit costs offset in part by higher 2014 costs for initial phase smart grid installations.

These items were partially offset by $7 million higher net revenues6 primarily due to $8 million in recovery of costs for clean energy and reliability investments partially offset by $1 million lower fuel efficiency performance.

_________________

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.

5  

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.

6  

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' Consolidated Statements of Income.

 

Fourth Quarter Results:

Fourth quarter 2015 net income of $33.0 million was $3.9 million higher than the fourth quarter of 2014 primarily driven by the following after-tax items:

  • $5 million lower O&M expenses4 in the fourth quarter of 2015 largely due to lower maintenance costs including vegetation management costs, the deferral of RFP costs and higher fourth quarter of 2014 costs for initial phase smart grid installations and the upgrade of the customer information system partially offset by the additional reserves for environmental costs in 2015; and
  • $2 million higher net revenues in 2015 attributable to the recovery of costs for clean energy and reliability investments.

These items were partially offset by the following after-tax items:

  • $2 million higher depreciation expense in the fourth quarter of 2015 as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency; and
  • $1 million higher interest expense and other charges.

AMERICAN SAVINGS BANK:   SOLID FINANCIAL PERFORMANCE

Full Year Results:

American Savings Bank's (American) full-year 2015 net income was $54.7 million compared to $51.3 million in 2014.  The $3.4 million increase from the prior year was primarily driven by the following after-tax items:

  • $5 million higher net interest income as contributions from loan and investment portfolio growth more than offset the lower yield on earning assets; and
  • $4 million higher noninterest income primarily due to higher mortgage banking income ($2 million) resulting from selling a larger portion of low rate mortgage loan originations and higher deposit-related fee initiatives ($2 million).

These increases were partially offset by $6 million after-tax higher noninterest expense primarily due to higher pension and benefits expense.

American achieved loan growth of 4.1% in 2015, consistent with the bank's target and growth strategies, operating in the competitive Hawaii market environment.  Loan growth was primarily driven by commercial real estate, residential and home equity loans and helped to offset the impact of the decline in net interest margin.

Total deposits were $5.0 billion at December 31, 2015, an increase of $402 million or 8.7% from December 31, 2014.  Low-cost core deposits increased $357 million or 8.5% from December 31, 2014.  The average cost of funds was 0.22% for the full year 2015, down 1 basis point from the prior year.

Overall, American's return on average equity for the full year remained solid at 9.9% in 2015 compared to 9.6% in 2014, and the return on average assets for the full year was 0.95% in 2015 consistent with 2014.

Fourth Quarter Results:

Fourth quarter 2015 net income of $15.0 million was $1.5 million higher than the third, or linked quarter and $2.8 million higher than the fourth quarter of 2014.

Compared to the linked quarter of 2015, the $1.5 million increase in the fourth quarter of 2015 was primarily driven by the following after-tax items:

  • $1 million lower provision for loan losses primarily related to the recovery during the fourth quarter of 2015 of previously charged-off loans; and
  • $1 million higher net interest income due to strong loan and investment portfolio growth.

These increases were partially offset by $1 million (after-tax) of lower noninterest income primarily due to the gain on sale of the American service center building vacated as part of the campus consolidation plan in the linked quarter.

Compared to the fourth quarter of 2014, the $2.8 million higher net income in the fourth quarter of 2015 was primarily driven by the following after-tax items:

  • $1 million higher net interest income due to strong loan and investment portfolio growth;
  • $1 million higher provision for loan losses in the fourth quarter of 2014 primarily due to the downgrade of one performing commercial real estate loan; and
  • $1 million higher noninterest income.

American's fourth quarter of 2015 return on average equity was 10.7%, up from 9.7% in the linked quarter and 8.9% in the fourth quarter last year.  Return on average assets was 1.01% for the fourth quarter of 2015, compared to 0.92% from the linked quarter and 0.88% in the same quarter last year.

Also refer to the American's news release issued on January 29, 2016.

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $30.6 million in 2015 compared to $20.8 million in 2014.  Excluding after-tax costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. of $15.2 million in 2015 and $4.9 million in 2014, holding and other companies' net losses in 2015 and 2014 were $15.4 million and $15.9 million, respectively.

Fourth quarter net losses were $5.6 million in 2015 compared to $8.0 million in the fourth quarter of 2014.  Excluding after-tax costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc. of $1.8 million in the fourth quarter of 2015 and $4.3 million in the fourth quarter of 2014, holding and other companies' net losses in 2015 and 2014 were $3.8 million and $3.7 million, respectively.

WEBCAST AND CONFERENCE CALL

HEI TO ANNOUNCE 2016 EPS GUIDANCE IN EARNINGS CONFERENCE CALL

Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its 2015 earnings on Thursday, February 11, 2016, at 12:00 noon Hawaii time (5:00 p.m. Eastern time).  HEI will announce 2016 EPS guidance during the scheduled webcast and conference call.

Interested parties within the United States may listen to the conference by calling (888) 311-8190 and entering passcode: 15902422.  International parties may listen to the conference by calling (330) 863-3378 and entering passcode: 15902422 or by accessing the webcast on HEI's website under the heading "Investor Relations."  HEI and Hawaiian Electric Company intend to continue to use HEI's website, www.hei.com, as a means of disclosing additional information.  Such disclosures will be included on HEI's website in the Investor Relations section.  Accordingly, investors should routinely monitor such portions of HEI's website, in addition to following HEI's, Hawaiian Electric Company's and American's press releases, HEI's and Hawaiian Electric Company's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts.  The information on HEI's website is not incorporated by reference in this document or in HEI's and Hawaiian Electric Company's SEC filings unless, and except to the extent, specifically incorporated by reference.  Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC.  No information on the PUC website is incorporated by reference in this document or in HEI's and Hawaiian Electric Company's SEC filings.

An online replay of the webcast will be available at the same website beginning about two hours after the event and will remain on HEI's website for 12 months.  Replays of the conference call will also be available approximately two hours after the event through February 25, 2016, by dialing (855) 859-2056 or (404) 537-3406 and entering passcode: 15902422.

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 15 to 16 of this release.

FORWARD-LOOKING STATEMENTS

This release may contain "forward-looking statements," which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as "expects," "anticipates," "intends," "plans," "believes," "predicts," "estimates" or similar expressions.  In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements.  Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic and market factors, among other things.  These forward-looking statements are not guarantees of future performance.

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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and HEI's future periodic reports that discuss important factors that could cause HEI's results to differ materially from those anticipated in such statements.  These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made.  Except to the extent required by the federal securities laws, HEI, Hawaiian Electric Company, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)








Three months ended December 31


Years ended December 31

(in thousands, except per share amounts)


2015


2014


2015


2014

Revenues









Electric utility


$

555,434



$

725,267



$

2,335,166



$

2,987,323


Bank


68,511



64,726



267,733



252,497


Other


87



47



83



(278)


Total revenues


624,032



790,040



2,602,982



3,239,542


Expenses









Electric utility


487,772



666,389



2,061,050



2,711,555


Bank


45,858



46,424



183,921



173,202


Other


7,180



9,060



35,458



22,185


Total expenses


540,810



721,873



2,280,429



2,906,942


Operating income (loss)









Electric utility


67,662



58,878



274,116



275,768


Bank


22,653



18,302



83,812



79,295


Other


(7,093)



(9,013)



(35,375)



(22,463)


Total operating income


83,222



68,167



322,553



332,600


Interest expense, net—other than on deposit liabilities and other bank borrowings


(19,915)



(17,704)



(77,150)



(76,352)


Allowance for borrowed funds used during construction


539



702



2,457



2,579


Allowance for equity funds used during construction


1,562



1,838



6,928



6,771


Income before income taxes


65,408



53,003



254,788



265,598


Income taxes


22,615



19,277



93,021



95,579


Net income


42,793



33,726



161,767



170,019


Preferred stock dividends of subsidiaries


473



473



1,890



1,890


Net income for common stock


$

42,320



$

33,253



$

159,877



$

168,129


Basic earnings per common share


$

0.39



$

0.32



$

1.50



$

1.65


Diluted earnings per common share


$

0.39



$

0.32



$

1.50



$

1.63


Dividends per common share


$

0.31



$

0.31



$

1.24



$

1.24


Weighted-average number of common shares outstanding


107,460



102,561



106,418



101,968


Adjusted weighted-average shares


107,797



103,991



106,721



102,937


Net income (loss) for common stock by segment









Electric utility


$

32,993



$

29,112



$

135,714



$

137,641


Bank


14,953



12,113



54,730



51,301


Other


(5,626)



(7,972)



(30,567)



(20,813)


Net income for common stock


$

42,320



$

33,253



$

159,877



$

168,129


Comprehensive income attributable to Hawaiian Electric Industries, Inc.


$

38,075



$

19,869



$

160,993



$

157,501


Return on average common equity






8.6

%


9.6

%


Prior period financial statements reflect the retrospective application of Accounting Standards Update (ASU) No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on the Company's financial condition or results of operations.


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)






December 31


2015


2014

(dollars in thousands)





Assets





Cash and cash equivalents


$

300,478



$

175,542


Accounts receivable and unbilled revenues, net


242,766



313,696


Available-for-sale investment securities, at fair value


820,648



550,394


Stock in Federal Home Loan Bank, at cost


10,678



69,302


Loans receivable held for investment, net


4,565,781



4,389,033


Loans held for sale, at lower of cost or fair value


4,631



8,424


Property, plant and equipment, net of accumulated depreciation of $2,339,319 and $2,250,950 at the respective dates


4,377,658



4,148,774


Regulatory assets


896,731



905,264


Other


488,635



542,523


Goodwill


82,190



82,190


Total assets


$

11,790,196



$

11,185,142


Liabilities and shareholders' equity





Liabilities





Accounts payable


$

138,523



$

186,425


Interest and dividends payable


26,042



25,336


Deposit liabilities


5,025,254



4,623,415


Short-term borrowings—other than bank


103,063



118,972


Other bank borrowings


328,582



290,656


Long-term debt, net—other than bank


1,586,546



1,506,546


Deferred income taxes


680,877



633,570


Regulatory liabilities


371,543



344,849


Contributions in aid of construction


506,087



466,432


Defined benefit pension and other postretirement benefit plans liability


589,918



632,845


Other


471,828



531,230


Total liabilities


9,828,263



9,360,276


Preferred stock of subsidiaries - not subject to mandatory redemption


34,293



34,293


Shareholders' equity





Preferred stock, no par value, authorized 10,000,000 shares; issued: none





Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 107,460,406 shares and 102,565,266 shares at the respective dates


1,629,136



1,521,297


Retained earnings


324,766



296,654


Accumulated other comprehensive loss, net of tax benefits


(26,262)



(27,378)


Total shareholders' equity


1,927,640



1,790,573


Total liabilities and shareholders' equity


$

11,790,196



$

11,185,142



Prior period financial statements reflect the retrospective application of ASU No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on the Company's financial condition or results of operations.


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)








Three months ended December 31


Years ended December 31

(dollars in thousands, except per barrel amounts)


2015


2014


2015


2014

Revenues


$

555,434



$

725,267



$

2,335,166



$

2,987,323


Expenses









Fuel oil


135,930



265,696



654,600



1,131,685


Purchased power


148,287



175,887



594,096



722,008


Other operation and maintenance


106,570



115,129



413,089



410,612


Depreciation


44,540



41,597



177,380



166,387


Taxes, other than income taxes


52,445



68,080



221,885



280,863


Total expenses


487,772



666,389



2,061,050



2,711,555


Operating income


67,662



58,878



274,116



275,768


Allowance for equity funds used during construction


1,562



1,838



6,928



6,771


Interest expense and other charges, net


(17,200)



(15,768)



(66,370)



(64,757)


Allowance for borrowed funds used during construction


539



702



2,457



2,579


Income before income taxes


52,563



45,650



217,131



220,361


Income taxes


19,071



16,039



79,422



80,725


Net income


33,492



29,611



137,709



139,636


Preferred stock dividends of subsidiaries


229



229



915



915


Net income attributable to Hawaiian Electric


33,263



29,382



136,794



138,721


Preferred stock dividends of Hawaiian Electric


270



270



1,080



1,080


Net income for common stock


$

32,993



$

29,112



$

135,714



$

137,641


Comprehensive income attributable to Hawaiian Electric


$

33,862



$

28,517



$

136,594



$

137,078


OTHER ELECTRIC UTILITY INFORMATION









Kilowatthour sales (millions)









   Hawaiian Electric


1,738



1,720



6,754



6,782


   Hawaii Electric Light


273



269



1,065



1,062


   Maui Electric


290



288



1,138



1,132




2,301



2,277



8,957



8,976


Wet-bulb temperature (Oahu average; degrees Fahrenheit)


71.9



70.0



70.6



69.6


Cooling degree days (Oahu)


1,395



1,206



5,082



4,909


Average fuel oil cost per barrel


$

61.59



$

122.04



$

74.71



$

129.65



















Twelve months ended December 31











2015




2014


Return on average common equity (%) (simple average)











8.02




8.74


   Hawaiian Electric











7.22




6.71


   Hawaii Electric Light











8.52




8.81


   Maui Electric











7.96




8.40


   Hawaiian Electric Consolidated


















This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q/A for the quarters ended March 31, 2015 and June 30, 2015 and Hawaiian Electric's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)






December 31


2015


2014

(dollars in thousands, except par value)





Assets





Property, plant and equipment





Utility property, plant and equipment





   Land


$

52,792



$

52,299


   Plant and equipment


6,315,698



6,009,482


   Less accumulated depreciation


(2,266,004)



(2,175,510)


   Construction in progress


175,309



158,616


   Utility property, plant and equipment, net


4,277,795



4,044,887


Nonutility property, plant and equipment, less accumulated depreciation of $1,229 and $1,227 at respective dates


7,272



6,563


   Total property, plant and equipment, net


4,285,067



4,051,450


Current assets





Cash and cash equivalents


24,449



13,762


Customer accounts receivable, net


132,778



158,484


Accrued unbilled revenues, net


84,509



137,374


Other accounts receivable, net


10,408



4,283


Fuel oil stock, at average cost


71,216



106,046


Materials and supplies, at average cost


54,429



57,250


Prepayments and other


36,640



33,468


Regulatory assets


72,231



71,421


   Total current assets


486,660



582,088


Other long-term assets





Regulatory assets


824,500



833,843


Unamortized debt expense


8,341



8,323


Other


75,486



81,838


   Total other long-term assets


908,327



924,004


   Total assets


$

5,680,054



$

5,557,542


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


578,930



578,938


Retained earnings


1,043,082



997,773


Accumulated other comprehensive income, net of taxes-retirement benefit plans


925



45


   Common stock equity


1,728,325



1,682,144


Cumulative preferred stock — not subject to mandatory redemption


34,293



34,293


Long-term debt, net


1,286,546



1,206,546


   Total capitalization


3,049,164



2,922,983


Current liabilities





Accounts payable


114,846



163,934


Interest and preferred dividends payable


23,111



22,316


Taxes accrued


191,084



250,402


Regulatory liabilities


2,204



632


Other


54,079



61,664


   Total current liabilities


385,324



498,948


Deferred credits and other liabilities





Deferred income taxes


654,806



573,439


Regulatory liabilities


369,339



344,217


Unamortized tax credits


84,214



79,492


Defined benefit pension and other postretirement benefit plans liability


552,974



595,395


Other


78,146



76,636


   Total deferred credits and other liabilities


1,739,479



1,669,179


Contributions in aid of construction


506,087



466,432


      Total capitalization and liabilities


$

5,680,054



$

5,557,542



The Consolidated Balance Sheet as of December 31, 2014 reflects the retrospective application of ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which was adopted as of December 31, 2015.


This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q/A for the quarters ended March 31, 2015 and June 30, 2015 and Hawaiian Electric's Quarterly Report on SEC Form 10-Q  for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)








Three months ended


Years ended December 31,

(in thousands)


December 31, 2015


September 30, 2015


December 31, 2014


2015


2014

Interest and dividend income











Interest and fees on loans


$

47,136



$

46,413



$

46,276



$

184,782



$

179,341


Interest and dividends on investment securities


4,550



4,213



3,187



15,120



11,945


Total interest and dividend income


51,686



50,626



49,463



199,902



191,286


Interest expense











Interest on deposit liabilities


1,467



1,355



1,303



5,348



5,077


Interest on other borrowings


1,510



1,515



1,468



5,978



5,731


Total interest expense


2,977



2,870



2,771



11,326



10,808


Net interest income


48,709



47,756



46,692



188,576



180,478


Provision for loan losses


839



2,997



2,560



6,275



6,126


Net interest income after provision for loan losses


47,870



44,759



44,132



182,301



174,352


Noninterest income











Fees from other financial services


5,667



5,639



5,760



22,211



21,747


Fee income on deposit liabilities


5,746



5,883



5,074



22,368



19,249


Fee income on other financial products


2,006



2,096



1,806



8,094



8,131


Bank-owned life insurance


1,016



1,021



1,004



4,078



3,949


Mortgage banking income


1,003



1,437



1,164



6,330



2,913


Gains on sale of investment securities










2,847


Other income, net


1,387



2,389



455



4,750



2,375


Total noninterest income


16,825



18,465



15,263



67,831



61,211


Noninterest expense











Compensation and employee benefits


23,705



22,728



19,835



90,518



79,885


Occupancy


4,115



4,128



4,238



16,365



17,197


Data processing


3,002



3,032



2,975



12,103



11,690


Services


2,474



2,556



2,561



10,204



10,269


Equipment


1,578



1,608



1,638



6,577



6,564


Office supplies, printing and postage


1,452



1,511



1,602



5,749



6,089


Marketing


844



934



1,309



3,463



3,999


FDIC insurance


881



809



820



3,274



3,261


Other expense


3,991



5,116



6,116



18,067



17,314


Total noninterest expense


42,042



42,422



41,094



166,320



156,268


Income before income taxes


22,653



20,802



18,301



83,812



79,295


Income taxes


7,700



7,351



6,188



29,082



27,994


Net income


$

14,953



$

13,451



$

12,113



$

54,730



$

51,301


Comprehensive income


$

9,477



$

17,678



$

5,419



$

54,017



$

46,940


OTHER BANK INFORMATION (annualized %, except as of period end)









Return on average assets


1.01



0.92



0.88



0.95



0.95


Return on average equity


10.66



9.73



8.93



9.93



9.60


Return on average tangible common equity


12.48



11.43



10.52



11.68



11.35


Net interest margin


3.55



3.53



3.65



3.53



3.62


Net charge-offs to average loans outstanding


(0.08)



0.10



0.04



0.04



0.01


As of period end











Nonperforming assets to loans outstanding and real estate owned *


1.02



1.00



0.85






Allowance for loan losses to loans outstanding


1.08



1.06



1.03






Tangible common equity to tangible assets


8.05



8.23



8.23






Tier-1 leverage ratio *


8.8



8.8



8.9






Total capital ratio *


13.3



13.4



12.3






Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)


$

7.5



$

7.5



$

8.8



$

30.0



$

36.0



* Regulatory basis. Capital ratios as of December 31, 2015 and September 30, 2015 calculated under Basel III rules, which became effective January 1, 2015.


Prior period financial statements reflect the retrospective application of ASU No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on ASB's financial condition or results of operations.


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)




December 31

2015


2014


(in thousands)





Assets





Cash and due from banks


$

127,201



$

107,233


Interest-bearing deposits


93,680



54,230


Available-for-sale investment securities, at fair value


820,648



550,394


Stock in Federal Home Loan Bank, at cost


10,678



69,302


Loans receivable held for investment


4,615,819



4,434,651


Allowance for loan losses


(50,038)



(45,618)


Net loans


4,565,781



4,389,033


Loans held for sale, at lower of cost or fair value


4,631



8,424


Other


309,946



305,416


Goodwill


82,190



82,190


Total assets


$

6,014,755



$

5,566,222


Liabilities and shareholder's equity





Deposit liabilities–noninterest-bearing


$

1,520,374



$

1,342,794


Deposit liabilities–interest-bearing


3,504,880



3,280,621


Other borrowings


328,582



290,656


Other


101,029



118,363


Total liabilities


5,454,865



5,032,434


Common stock


1



1


Additional paid in capital


340,496



338,411


Retained earnings


236,664



211,934


Accumulated other comprehensive loss, net of tax benefits





     Net unrealized gains (losses) on securities

$

(1,872)



$

462



     Retirement benefit plans

(15,399)


(17,271)


(17,020)


(16,558)


  Total shareholder's equity


559,890



533,788


  Total liabilities and shareholder's equity


$

6,014,755



$

5,566,222



Prior period financial statements reflect the retrospective application of ASU No. 2014-01, "Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects," which was adopted as of January 1, 2015 and did not have a material impact on ASB's financial condition or results of operations.


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2015 (when filed), ASB Hawaii, Inc.'s Form 10 for the year ended December 31, 2015 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q /A for the quarters ended March 31, 2015 and June 30, 2015 and HEI's Quarterly Report on SEC Form 10-Q for the quarter ended September 30, 2015, as updated by SEC Forms 8-K.

 

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 the utility and HEI.  Management believes these non-GAAP measures provide useful information and are a better indicator of the companies' core operating activities.  Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies.  The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings and the adjusted return on average common equity (ROACE) for the utility and HEI consolidated.

The reconciling adjustment from GAAP earnings to core earnings is limited to the costs related to the pending merger between HEI and NextEra Energy, Inc. and the spin-off of ASB Hawaii, Inc.  For more information on the pending merger, see HEI's definitive proxy statement on Form DEFM14A filed on March 26, 2015.  Management does not consider these items to be representative of the company's fundamental core earnings.

The accompanying table also provides the calculation of utility GAAP O&M adjusted for costs related to the pending merger discussed above. "O&M-related net income neutral items" which are O&M expenses covered by specific surcharges or by third parties have also been excluded.  These "O&M-related net income neutral items" are grossed-up in revenue and expense and do not impact net income.


RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES


Hawaiian Electric Industries, Inc. and Subsidiaries (HEI)

Unaudited






($ in millions, except per share amounts)







Three months ended
December 31


Years ended
December 31


2015

2014


2015

2014

HEI CONSOLIDATED NET INCOME






GAAP (as reported)

$

42.3


$

33.3



$

159.9


$

168.1


Excluding special items (after-tax):






Costs related to pending merger with NextEra Energy, Inc. and spin-off of ASB Hawaii, Inc.

2.2


4.3



15.8


4.9


Non-GAAP (core)

$

44.5


$

37.6



$

175.7


$

173.0


HEI CONSOLIDATED DILUTED EARNINGS PER SHARE






GAAP (as reported)

$

0.39


$

0.32



$

1.50


$

1.63


Excluding special items (after-tax):






Costs related to pending merger with NextEra Energy, Inc. and spin-off of ASB Hawaii, Inc.

0.02


0.04



0.15


0.05


Non-GAAP (core)

$

0.41


$

0.36



$

1.65


$

1.68












Years ended
December 31





2015

2014

HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)








Based on GAAP




8.6

%

9.6

%

Based on non-GAAP (core)2




9.4

%

9.8

%







Note: Columns may not foot due to rounding


1 Accounting principles generally accepted in the United States of America


2 Calculated as core net income divided by average GAAP common equity

 

RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES


Hawaiian Electric Company, Inc. and Subsidiaries

Unaudited






($ in millions)







Three months ended
December 31


Years ended
December 31


2015

2014


2015

2014

HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME






GAAP (as reported)

$

33.0


$

29.1



$

135.7


$

137.6


Excluding special items (after-tax):






Costs related to pending merger with NextEra Energy, Inc.

0.2




0.5



Non-GAAP (core)

$

33.2


$

29.1



$

136.2


$

137.6












Years ended
December 31





2015

2014

HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)






Based on GAAP




8.0

%

8.4

%

Based on non-GAAP (core)2




8.0

%

8.4

%








Three months ended
December 31


Years ended
December 31


2015

2014


2015

2014

HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE






GAAP (as reported)

$

106.6


$

115.1



$

413.1


$

410.6


Excluding O&M-related net income neutral items3

1.6


2.5



7.0


10.0


Excluding costs related to pending merger with  NextEra Energy, Inc.

0.4




0.8



Non-GAAP (Adjusted other O&M expense)

$

104.6


$

112.6



$

405.3


$

400.6









Note:  Columns may not foot due to rounding


1 Accounting principles generally accepted in the United States of America


2 Calculated as core net income divided by average GAAP common equity


3 Expenses covered by surcharges or by third parties recorded in revenues

 

Contact:

Clifford H. Chen

Telephone: (808) 543-7300


Manager, Investor Relations & Strategic Planning 

E-mail: ir@hei.com




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SOURCE Hawaiian Electric Industries, Inc.