HONOLULU--(BUSINESS WIRE)--
Hawaiian Electric Industries, Inc. (NYSE:HE) today reported
consolidated net income for common stock for the third quarter of 2009
of $33.5 million, or $0.37 per share, compared to $37.3 million, or
$0.44 cents per share for the third quarter of 2008.
"Given our expectations at the outset of the quarter for continued
difficult economic conditions and delays in the regulatory process, our
operating companies instituted disciplined efforts to control costs
which contributed commendably to mitigating these effects and we are
pleased with our companies' overall performance," said Constance H. Lau,
HEI president and chief executive officer.
"At the utility, predominately short-term cost deferrals and reductions
are helping us offset these challenges. In addition, kilowatthour sales
benefited from more normal weather conditions than we saw in the first
half of the year. At the bank, net income was down quarter over quarter
but up significantly from the second quarter of 2009. In addition, the
bank continued to make significant strides in its performance
improvement initiative to reduce its cost structure that are helping
offset elevated credit expenses during this difficult credit cycle,"
said Lau.
UTILITY RESULTS
Electric utility net income for common stock for the third quarter of
2009 was $26.5 million compared with $25.9 million in the third quarter
of 2008. "Interim rate relief and cost control efforts enabled the
utility to produce slightly better results quarter over quarter,
although returns remain significantly below allowed returns," said Lau.
On August 3rd, the Public Utilities Commission of the State
of Hawaii (PUC) approved the implementation of a partial interim
increase of $61.1 million, or 4.7%, in HECO's 2009 test year rate case
proceeding, which contributed $5.8 million quarter over quarter to
utility net income.
Kilowatthour sales were down 0.8% compared with the same quarter of
2008, reducing utility net income by an estimated $1.1 million. "Sales
continue to be impacted by difficult economic conditions and continuing
positive efforts by Hawaii residents and businesses to conserve energy,
partly offset by warmer and more humid weather," said Lau.
Operations and maintenance expenses (O&M) were up $0.4 million or 0.4%
quarter over quarter. Included in third quarter 2008 O&M were
$9.5 million of demand-side management program (DSM) costs that were
recovered through a surcharge. The energy efficiency DSM programs were
transferred to a third-party administrator at the end of the second
quarter of 2009, and thus, there was only $2.4 million in costs related
to DSM programs in the third quarter of 2009. The remaining difference
in quarter over quarter O&M includes operating costs for the new Oahu
CT-1 unit, increased spending in support of renewable initiatives,
expenses to support our aging infrastructure and higher employee benefit
costs. "Due to short-term, aggressive cost containment measures and
project deferrals taken in the third quarter in response to delays in
the regulatory process, the year-to-date O&M increase of 8% compared
favorably with the 10% annual increase we estimated at the end of the
second quarter. We now expect O&M for 2009 to increase by approximately
6% compared with 2008, improved from the 13% and 10% annual increases we
estimated at the end of the first and second quarters, respectively.
While a small portion of these reductions are sustainable, the majority
of the reductions are temporary cost containment efforts which cannot be
sustained long-term without impacting operations," said Lau.
On September 30th, the company's Maui County subsidiary filed
a 2010 test year rate case, requesting an overall revenue increase of
$28.2 million, or 9.7%. The request is based on a 10.75% return on
common equity and 8.57% return on rate base. Based on the filing date,
the statutory deadline for an interim decision from the Hawaii PUC
expires in the third quarter of 2010.
BANK RESULTS
Bank net income for the third quarter of 2009 was $11.3 million,
compared to $4.0 million in the second quarter of 2009 and $15.4 million
for the same quarter last year.
"This has been a challenging year for financial institutions and our
bank's results continue to be impacted by the difficult credit cycle. We
continue to make significant strides in our performance improvement
initiative, helping offset currently elevated credit expenses and
improve the bank's cost structure and earnings power in the long-term.
In addition, the bank continues to be well capitalized with a strong
Tier-1 core leverage ratio of 9.1% at the end of the quarter," said Lau.
Net interest income in the third quarter of 2009 was $50.5 million
compared to $52.3 million in the third quarter of 2008. Lower average
earning asset balances and yields were partially offset by lower funding
costs. Net interest margin grew to 4.23% in the third quarter of 2009,
compared with 4.16% in the second quarter of 2009 and 4.08% in the third
quarter of 2008.
The bank recorded a $5.2 million provision for loan losses for the third
quarter of 2009 compared with $13.5 million in the second quarter of
2009 and $2.0 million in the third quarter of 2008. The majority of the
provision in the third quarter of 2009 reflected an increase in
nonperforming residential lot loans and 1-4 family mortgages. A large
component of the second quarter 2009 provision related to a large single
commercial credit which was partially charged-off. This credit was sold
in September 2009 for a pre-tax gain of $3.0 million and was included in
bank noninterest income.
Noninterest income for the third quarter of 2009 was $11.9 million,
compared with $13.0 million for the second quarter of 2009 and
$16.7 million in the third quarter of 2008. Third quarter 2009
noninterest income was reduced by $9.9 million for the
other-than-temporary-impairment of certain private-issue
mortgage-related securities, compared with $5.6 million in the second
quarter of 2009 and none in the third quarter of 2008. Excluding the
effects of the other-than-temporary impairment charges in the third and
second quarters of 2009 and the gain on sale of a single commercial
credit in the third quarter of 2009, the increases in adjusted
noninterest income were 13% quarter over quarter and 1% over the second
quarter1. These increases reflect increases in deposit fees
and gains on sales of residential loans.
Noninterest expense for the third quarter of 2009 was $39.6 million,
compared with $44.4 million in the second quarter of 2009 and
$42.4 million for the same period in 2008. On an adjusted basis,
noninterest expense decreased by $5.1 million quarter over quarter and
$1.8 million over the second quarter of 2009, reflecting progress in the
bank's efforts to reduce its cost structure.1 "The bank's
performance improvement project remains on track toward its goal of
reducing annualized adjusted noninterest expense to $140-$145 million by
the end of 2010," said Lau.1
HOLDING AND OTHER COMPANIES' RESULTS
The holding and other companies' net losses were $4.4 million in the
third quarter of 2009, relatively flat compared with $4.1 million in the
third quarter of 2008.
WEBCAST AND TELECONFERENCE
Hawaiian Electric Industries, Inc. will conduct a webcast and
teleconference call to review its third quarter 2009 earnings on Monday,
November 2, 2009, at 3:00 a.m.Hawaii time (8:00 a.m. Eastern time). The
event can be accessed through HEI's website at http://www.hei.com
or by dialing (800) 659-2032, passcode: 86467264 for the teleconference
call.
An online replay of the webcast will be available at the same website
beginning about two hours after the event. Replays of the teleconference
call will also be available approximately two hours after the event
through November 16, 2009, by dialing (888) 286-8010, passcode: 44997988.
HEI supplies power to over 400,000 customers or 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.
EXPLANATION OF HEI'S USE OF CERTAIN UNAUDITED NON-GAAP FINANCIAL MEASURES
HEI and bank management use certain non-GAAP measures in their
evaluation of the bank's performance and believe the presentations of
such financial measures on this basis provide useful supplemental
information and a clearer picture of the bank's operating performance,
and are a better indicator of the bank's ongoing core operating
activities. Management also uses such measures to assist
investors/analysts in better understanding the bank's progress on the
execution of its process improvement initiative. These measures are also
useful in understanding performance trends and facilitate comparisons
with the performance of others in the financial services industry.
Management utilizes non-GAAP financial measures of noninterest income
and expense in the calculation of certain of the bank's metrics/ratios,
such as (i) efficiency, (ii) pretax, preprovision income, and (iii)
return on average assets to analyze on a consistent basis and over a
longer period of time the performance of the bank's core operating
activities. Management also annualizes the non-GAAP measure of
noninterest expense by multiplying such measure by 4 to develop an
estimate of adjusted noninterest expense for a year-long period. This
annualized adjusted noninterest expense metric (non-GAAP measure) may
not reflect actual results.
Certain reconciling items--real estate transactions, professional
services, FISERV conversion costs, severance, technology write-offs,
prepayment penalty on early extinguishment of debt, and a loss on sale
of Bishop Insurance Agency--are being incurred pursuant to the bank
management's performance improvement initiative which was announced in
June 2008 and is expected to conclude by the end of 2010. These costs
are being incurred with the objective of increasing the bank's operating
efficiency and profitability. Accordingly, bank management believes that
these costs will remain temporarily elevated while the performance
improvement project is being executed and will be reduced or eliminated
once the project has ended. See schedule on last page of this release
for a tabular reconciliation of GAAP to Non-GAAP measures.
Reported noninterest income is being adjusted by a gain on sale of a
commercial loan. Bank management believes that it would not be
appropriate to assume that the bank would realize material gains on a
quarterly basis.
Likewise, bank management also adds back to noninterest income charges
related to the other-than-temporary impairment (OTTI) of
mortgage-related securities because of the material nature of the charge
and the unpredictability of when those charges might occur in the
future. The bank incurred material OTTI in the fourth quarter of 2008
and the second and third quarters of 2009, impacting the comparability
of noninterest income for those quarters with the linked quarters and
the same quarters of the previous year. Management believes that
adjusting noninterest income to exclude the effects of OTTI helps the
comparability of noninterest income quarter to quarter and quarter over
quarter.
Lastly, management adjusts noninterest expense to exclude a special
assessment levied by the Federal Deposit Insurance Corporation (FDIC)
pursuant to the FDIC's plan to recapitalize the deposit insurance fund.
While the FDIC may make future special assessments pursuant to this
plan, in September 2009, it proposed a restoration plan that requires
banks to prepay estimated quarterly assessments for the fourth quarter
of 2009 and for all of 2010, 2011 and 2012. Such prepaid assessments
would be amortized over these periods. In any event, bank management
believes that it would not be appropriate to assume that the bank would
incur these special assessments on a quarterly basis. Further, excluding
the FDIC charge is consistent with the financial measures used by other
banks and enhances the comparison of operating performance.
Limitations associated with utilizing non-GAAP measures are the risks of
disagreement over the appropriateness of adjustments comprising these
measures and that other companies might calculate these measures
differently. Management addresses these limitations by providing
detailed reconciliations between GAAP information and non-GAAP measures.
See reconciliation on the last page.
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 (including future revenues, expenses, earnings or losses or
growth rates), ongoing business strategies or prospects and possible
future actions, which may be provided by management, 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 assumptions about 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" discussion (which is incorporated
by reference herein) set forth on pages iv and v of HEI's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2009, and in HEI's
future periodic reports that discuss important factors that could cause
HEI's results to differ materially from those anticipated in such
statements. Forward-looking statements speak only as of the date of this
release.
1 Refer to the last page of the accompanying schedules of
this release for a reconciliation of noninterest income and expense
based on U.S. generally accepted accounting principles to adjusted
noninterest income and expense.
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months Nine months Twelve months
ended September 30, ended September 30, ended September 30,
(in thousands,
except per share 2009 2008 2009 2008 2009 2008
amounts)
Revenues
Electric utility $ 548,440 $ 827,788 $ 1,460,654 $ 2,139,798 $ 2,181,206 $ 2,738,107
Bank 71,947 87,675 229,478 279,469 308,562 387,471
Other (74 ) (32 ) (121 ) (164 ) 60 1,696
620,313 915,431 1,690,011 2,419,103 2,489,828 3,127,274
Expenses
Electric utility 494,268 775,941 1,343,250 1,981,572 2,030,669 2,522,443
Bank 54,258 62,983 189,162 262,406 258,357 343,067
Other 3,148 2,378 9,247 8,648 14,770 13,422
551,674 841,302 1,541,659 2,252,626 2,303,796 2,878,932
Operating income
(loss)
Electric utility 54,172 51,847 117,404 158,226 150,537 215,664
Bank 17,689 24,692 40,316 17,063 50,205 44,404
Other (3,222 ) (2,410 ) (9,368 ) (8,812 ) (14,710 ) (11,726 )
68,639 74,129 148,352 166,477 186,032 248,342
Interest
expense-other
than on deposit (19,678 ) (19,345 ) (55,421 ) (56,780 ) (74,783 ) (75,954 )
liabilities and
other bank
borrowings
Allowance for
borrowed funds 1,118 967 4,467 2,564 5,644 3,276
used during
construction
Allowance for
equity funds 2,628 2,426 10,353 6,432 13,311 7,881
used during
construction
Income before 52,707 58,177 107,751 118,693 130,204 183,545
income taxes
Income taxes 18,753 20,425 36,977 40,892 45,063 64,689
Net income 33,954 37,752 70,774 77,801 85,141 118,856
Less net income
attributable to
noncontrolling 471 471 1,417 1,417 1,890 1,887
interest -
preferred stock
of subsidiaries
Net income for $ 33,483 $ 37,281 $ 69,357 $ 76,384 $ 83,251 $ 116,969
common stock
Basic earnings $ 0.37 $ 0.44 $ 0.76 $ 0.91 $ 0.93 $ 1.40
per common share
Diluted earnings $ 0.37 $ 0.44 $ 0.76 $ 0.91 $ 0.92 $ 1.39
per common share
Dividends per $ 0.31 $ 0.31 $ 0.93 $ 0.93 $ 1.24 $ 1.24
common share
Weighted-average
number of common 91,522 84,625 91,173 84,052 89,959 83,788
shares
outstanding
Adjusted
weighted-average 91,653 84,842 91,278 84,182 90,072 83,906
shares
Income (loss) by
segment
Electric utility $ 26,514 $ 25,932 $ 56,141 $ 77,949 $ 70,167 $ 106,127
Bank 11,323 15,405 26,226 11,888 32,165 29,086
Other (4,354 ) (4,056 ) (13,010 ) (13,453 ) (19,081 ) (18,244 )
Net income for $ 33,483 $ 37,281 $ 69,357 $ 76,384 $ 83,251 $ 116,969
common stock
This information should be read in conjunction with the consolidated financial statements and the
notes thereto for the year ended December 31, 2008 (included in HEI's Form 8-K dated June 9, 2009) and
the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form
10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009 (when filed). 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 Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands) September 30, December 31,
2009 2008
Assets
Cash and equivalents $ 257,331 $ 182,903
Federal funds sold 1,708 532
Accounts receivable and unbilled revenues, net 252,186 300,666
Available-for-sale investment and mortgage-related 623,104 657,717
securities
Investment in stock of Federal Home Loan Bank of 97,764 97,764
Seattle
Loans receivable, net 3,758,898 4,206,492
Property, plant and equipment, net of accumulated 3,052,209 2,907,376
depreciation of $1,918,984 and $1,851,813
Regulatory assets 535,287 530,619
Other 344,336 328,823
Goodwill, net 82,190 82,190
$ 9,005,013 $ 9,295,082
Liabilities and stockholders' equity
Liabilities
Accounts payable $ 182,943 $ 183,584
Deposit liabilities 4,047,940 4,180,175
Other bank borrowings 367,884 680,973
Long-term debt, net--other than bank 1,364,784 1,211,501
Deferred income taxes 162,452 143,308
Regulatory liabilities 282,239 288,602
Contributions in aid of construction 315,455 311,716
Other 825,115 871,476
7,548,812 7,871,335
Stockholders' equity
Common stock, no par value, authorized 200,000,000
shares; issued and outstanding: 92,014,738 shares 1,254,893 1,231,629
and 90,515,573 shares
Retained earnings 199,118 210,840
Accumulated other comprehensive loss, net of tax (32,103 ) (53,015 )
benefits
Common stock equity 1,421,908 1,389,454
Preferred stock, no par value, authorized - -
10,000,000 shares; issued: none
Noncontrolling interest: cumulative preferred
stock of subsidiaries - not subject to mandatory 34,293 34,293
redemption
1,456,201 1,423,747
$ 9,005,013 $ 9,295,082
This information should be read in conjunction with the consolidated financial
statements and the notes thereto for the year ended December 31, 2008 (included
in HEI's Form 8-K dated June 9, 2009) and the consolidated financial statements
and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the
quarters ended March 31, 2009, June 30, 2009 and September 30, 2009 (when
filed).
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine months ended September 30 2009 2008
(in thousands)
Cash flows from operating activities
Net income $ 70,774 $ 77,801
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation of property, plant and equipment 113,916 113,423
Other amortization 4,037 3,927
Provision for loan losses 27,000 4,034
Loans receivable originated and purchased, held (368,880 ) (159,327 )
for sale
Proceeds from sale of loans receivable, held for 400,213 157,293
sale
Net loss (gain) on sale of investment and (44 ) 17,388
mortgage-related securities
Other-than-temporary impairment of 15,444 -
available-for-sale mortgage-related securities
Changes in deferred income taxes 2,958 12,186
Changes in excess tax benefits from share-based 324 (572 )
payment arrangements
Allowance for equity funds used during (10,353 ) (6,432 )
construction
Changes in assets and liabilities
Decrease (increase) in accounts receivable and 48,480 (76,034 )
unbilled revenues, net
Decrease (increase) in fuel oil stock 9,826 (79,693 )
Increase (decrease) in accounts payable (641 ) 54,460
Changes in prepaid and accrued income taxes and (50,514 ) (29,640 )
utility revenue taxes
Changes in other assets and liabilities (35,561 ) (13,278 )
Net cash provided by operating activities 226,979 75,536
Cash flows from investing activities
Available-for-sale investment and mortgage-related (247,425 ) (411,658 )
securities purchased
Principal repayments on available-for-sale 304,728 489,740
investment and mortgage-related securities
Proceeds from sale of available-for-sale 44 1,291,609
investment and mortgage-related securities
Net decrease (increase) in loans held for 396,706 (55,828 )
investment
Capital expenditures (239,441 ) (172,948 )
Contributions in aid of construction 7,472 12,266
Other 426 724
Net cash provided by investing activities 222,510 1,153,905
Cash flows from financing activities
Net decrease in deposit liabilities (132,234 ) (164,612 )
Net increase in short-term borrowings with - 138,786
original maturities of three months or less
Net decrease in retail repurchase agreements (18,573 ) (23,290 )
Proceeds from other bank borrowings 310,000 1,719,085
Repayments of other bank borrowings (604,517 ) (2,820,119 )
Proceeds from issuance of long-term debt 153,186 18,707
Repayment of long-term debt - (50,000 )
Changes in excess tax benefits from share-based (324 ) 572
payment arrangements
Net proceeds from issuance of common stock 11,004 21,067
Common stock dividends (73,931 ) (62,493 )
Preferred stock dividends of noncontrolling (1,417 ) (1,417 )
interest
Decrease in cash overdraft (9,847 ) (8,582 )
Other (7,232 ) (5,252 )
Net cash used in financing activities (373,885 ) (1,237,548 )
Net increase (decrease) in cash and equivalents 75,604 (8,107 )
and federal funds sold
Cash and equivalents and federal funds sold, 183,435 209,855
beginning of period
Cash and equivalents and federal funds sold, end $ 259,039 $ 201,748
of period
This information should be read in conjunction with the consolidated financial
statements and the notes thereto for the year ended December 31, 2008 (included
in HEI's Form 8-K dated June 9, 2009) and the consolidated financial statements
and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the
quarters ended March 31, 2009, June 30, 2009 and September 30, 2009 (when
filed).
Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
(dollars in thousands,
except per barrel 2009 2008 2009 2008
amounts)
Operating revenues $ 546,502 $ 826,124 $ 1,453,623 $ 2,135,265
Operating expenses
Fuel oil 186,719 377,157 463,893 900,455
Purchased power 134,447 202,125 364,120 530,146
Other operation 61,173 61,599 186,751 176,600
Maintenance 25,968 25,174 81,562 72,777
Depreciation 35,557 35,419 108,406 106,254
Taxes, other than income 50,031 74,201 137,741 194,058
taxes
Income taxes 15,957 15,035 33,228 47,507
509,852 790,710 1,375,701 2,027,797
Operating income 36,650 35,414 77,922 107,468
Other income
Allowance for equity
funds used during 2,628 2,426 10,353 6,432
construction
Other, net 1,657 1,486 6,493 3,693
4,285 3,912 16,846 10,125
Interest and other
charges
Interest on long-term 13,601 11,879 37,458 35,413
debt
Amortization of net bond 735 632 2,092 1,902
premium and expense
Other interest charges 705 1,352 2,048 3,397
Allowance for borrowed
funds used during (1,118 ) (967 ) (4,467 ) (2,564 )
construction
13,923 12,896 37,131 38,148
Net income 27,012 26,430 57,637 79,445
Less net income
attributable to
noncontrolling interest 228 228 686 686
- preferred stock of
subsidiaries
Net income attributable 26,784 26,202 56,951 78,759
to HECO
Preferred stock 270 270 810 810
dividends of HECO
Net income for common $ 26,514 $ 25,932 $ 56,141 $ 77,949
stock
OTHER ELECTRIC UTILITY
INFORMATION
Kilowatthour sales 2,572 2,593 7,203 7,478
(millions)
Wet-bulb temperature
(Oahu average; degrees 71.5 70.7 68.5 68.6
Fahrenheit)
Cooling degree days 1,588 1,530 3,591 3,779
(Oahu)
Average fuel oil cost $ 66.40 $ 133.99 $ 59.21 $ 111.37
per barrel
Twelve months ended
September 30, 2009
Allowed %1 Actual %
Return on average common
equity
(rate-making, simple
average method)
HECO 10.50 6.52
HELCO 10.70 6.17
MECO 10.70 4.74
1 Based on interim decisions which are subject to final PUC decisions. Allowed
ROACEs for HECO, HELCO and MECO based on their last final rate case decisions
were 10.70, 11.50 and 10.94, respectively.
This information should be read in conjunction with the consolidated financial
statements and the notes thereto for the year ended December 31, 2008 (included
in HECO Exhibit 99.2 to HECO's Form 8-K dated June 9, 2009) and the consolidated
financial statements and the notes thereto in HECO's Quarterly Reports on SEC
Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30,
2009 (when filed). 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. (HECO) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except par value) September 30, December 31,
2009 2008
Assets
Utility plant, at cost
Land $ 51,401 $ 42,541
Plant and equipment 4,612,113 4,277,499
Less accumulated depreciation (1,822,860 ) (1,741,453 )
Construction in progress 155,465 266,628
Net utility plant 2,996,119 2,845,215
Current assets
Cash and equivalents 6,486 6,901
Customer accounts receivable, net 133,709 166,422
Accrued unbilled revenues, net 92,361 106,544
Other accounts receivable, net 8,208 7,918
Fuel oil stock, at average cost 67,889 77,715
Materials and supplies, at average cost 36,357 34,532
Prepayments and other 13,879 12,626
Total current assets 358,889 412,658
Other long-term assets
Regulatory assets 535,287 530,619
Unamortized debt expense 15,184 14,503
Other 69,400 53,114
Total other long-term assets 619,871 598,236
$ 3,974,879 $ 3,856,109
Capitalization and liabilities
Capitalization
Common stock, $6 2/3 par value, authorized $ 85,387 $ 85,387
50,000 shares; outstanding 12,806 shares
Premium on capital stock 299,207 299,214
Retained earnings 825,975 802,590
Accumulated other comprehensive income, net of 1,824 1,651
income taxes
Common stock equity 1,212,393 1,188,842
Cumulative preferred stock - not subject to 22,293 22,293
mandatory redemption
Noncontrolling interest - cumulative preferred
stock of subsidiaries - not subject to mandatory 12,000 12,000
redemption
Stockholders' equity 1,246,686 1,223,135
Long-term debt, net 1,057,784 904,501
Total capitalization 2,304,470 2,127,636
Current liabilities
Short-term borrowings-affiliate 10,700 41,550
Accounts payable 118,042 122,994
Interest and preferred dividends payable 21,096 15,397
Taxes accrued 155,211 220,046
Other 48,389 55,268
Total current liabilities 353,438 455,255
Deferred credits and other liabilities
Deferred income taxes 178,336 166,310
Regulatory liabilities 282,239 288,602
Unamortized tax credits 57,885 58,796
Retirement benefits liability 399,539 392,845
Other 83,517 54,949
Total deferred credits and other liabilities 1,001,516 961,502
Contributions in aid of construction 315,455 311,716
$ 3,974,879 $ 3,856,109
This information should be read in conjunction with the consolidated financial
statements and the notes thereto for the year ended December 31, 2008 (included
in HECO Exhibit 99.2 to HECO's Form 8-K dated June 9, 2009) and the consolidated
financial statements and the notes thereto in HECO's Quarterly Reports on SEC
Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30,
2009 (when filed).
Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine months ended September 30 2009 2008
(in thousands)
Cash flows from operating activities
Net income $ 57,637 $ 79,445
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation of property, plant and equipment 108,406 106,254
Other amortization 7,702 6,426
Changes in deferred income taxes 12,532 6,588
Changes in tax credits, net (501 ) 1,503
Allowance for equity funds used during construction (10,353 ) (6,432 )
Changes in assets and liabilities
Decrease (increase) in accounts receivable 32,423 (59,551 )
Decrease (increase) in accrued unbilled revenues 14,183 (23,394 )
Decrease (increase) in fuel oil stock 9,826 (79,693 )
Increase in materials and supplies (1,825 ) (3,435 )
Increase in regulatory assets (13,829 ) (28 )
Increase (decrease) in accounts payable (4,952 ) 46,324
Changes in prepaid and accrued income and utility (62,388 ) (7,969 )
revenue taxes
Changes in other assets and liabilities 3,360 (5,386 )
Net cash provided by operating activities 152,221 60,652
Cash flows from investing activities
Capital expenditures (237,664 ) (170,321 )
Contributions in aid of construction 7,472 12,266
Other 340 749
Net cash used in investing activities (229,852 ) (157,306 )
Cash flows from financing activities
Common stock dividends (32,756 ) (14,088 )
Preferred stock dividends (1,496 ) (1,496 )
Proceeds from issuance of long-term debt 153,186 18,707
Net increase (decrease) in short-term borrowings
from
nonaffiliates and affiliate with original maturities (30,850 ) 112,204
of three months or less
Decrease in cash overdraft (9,847 ) (8,582 )
Other (1,021 ) -
Net cash provided by financing activities 77,216 106,745
Net increase (decrease) in cash and equivalents (415 ) 10,091
Cash and equivalents, beginning of period 6,901 4,678
Cash and equivalents, end of period $ 6,486 $ 14,769
This information should be read in conjunction with the consolidated financial
statements and the notes thereto for the year ended December 31, 2008 (included
in HECO Exhibit 99.2 to HECO's Form 8-K dated June 9, 2009) and the consolidated
financial statements and the notes thereto in HECO's Quarterly Reports on SEC
Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30,
2009 (when filed).
American Savings Bank, F.S.B. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
September June 30, September September 30,
30, 30,
(dollars in 2009 2009 2008 2009 2008
thousands)
Interest and
dividend income
Interest and fees on $ 53,080 $ 55,363 $ 61,100 $ 166,535 $ 186,312
loans
Interest and
dividends on
investment and 6,943 7,143 9,898 21,762 57,078
mortgage-related
securities
60,023 62,506 70,998 188,297 243,390
Interest expense
Interest on deposit 7,286 9,902 14,070 28,753 47,909
liabilities
Interest on other 2,205 2,241 4,616 7,710 40,030
borrowings
9,491 12,143 18,686 36,463 87,939
Net interest income 50,532 50,363 52,312 151,834 155,451
Provision for loan 5,200 13,500 1,979 27,000 4,034
losses
Net interest income
after provision for 45,332 36,863 50,333 124,834 151,417
loan losses
Noninterest income
Fee income on 8,211 7,462 7,328 22,384 20,889
deposit liabilities
Fees from other 6,385 6,443 6,318 18,747 18,554
financial services
Fee income on other 1,613 1,628 1,771 4,285 5,214
financial products
Net losses on
available-for-sale (9,863 ) (5,537 ) - (15,400 ) (17,388 )
securities *
(includes impairment
losses of $9,863 and
$15,444, consisting
of $13,645 and
$32,167 of total
other-than-temporary
impairment losses,
net of $3,782 and
$16,723 of
non-credit losses,
recognized in other
comprehensive
income, for the
quarter and nine
months ended
September 30, 2009,
respectively)
Other income 5,578 2,997 1,260 11,165 8,810
11,924 12,993 16,677 41,181 36,079
Noninterest expense
Compensation and 17,721 17,991 19,172 55,072 56,451
employee benefits
Occupancy 4,905 5,922 5,489 15,956 16,276
Data processing 3,684 3,481 2,794 10,352 8,019
Services 2,437 3,801 3,688 9,656 13,531
Equipment 1,782 2,540 3,175 7,112 9,510
Loss on early
extinguishment of - 60 - 101 39,843
debt *
Other expense 9,062 10,579 8,085 27,527 26,932
39,591 44,374 42,403 125,776 170,562
Income before income 17,665 5,482 24,607 40,239 16,934
taxes
Income taxes * 6,342 1,461 9,202 14,013 5,046
Net income $ 11,323 $ 4,021 $ 15,405 $ 26,226 $ 11,888
OTHER BANK
INFORMATION (%)
Return on average 0.89 0.31 1.11 0.68 0.25
assets
Return on average 9.40 3.41 11.09 7.35 2.73
equity
Net interest margin 4.23 4.16 4.08 4.17 3.49
Net charge-offs to
average loans 0.19 1.31 0.07 0.56 0.08
outstanding
(annualized)
Efficiency ratio 63 70 61 65 89
As of period end
Nonperforming assets
to loans outstanding 1.61 1.55 0.25
and real estate
owned **
Allowance for loan
losses to loans 1.21 1.09 0.75
outstanding
Tier-1 leverage 9.1 8.7 8.4
ratio
* Net income included a $35.6 million after-tax charge related to ASB's balance
sheet restructuring in June 2008. The $35.6 million is comprised of: (1) realized
losses on the sale of mortgage-related securities and agency notes of $19.3
million included in "Noninterest income-Net losses on available-for-sale
securities," (2) fees associated with the early retirement of other bank
borrowings of $39.8 million included in "Noninterest expense-Loss on early
extinguishment of debt" and (3) income tax benefits of $23.5 million included in
"Income taxes."
** Regulatory basis
This information should be read in conjunction with the consolidated financial
statements and the notes thereto for the year ended December 31, 2008 (included
in HEI Exhibit 13 to HEI's Form 8-K dated June 9, 2009) and the consolidated
financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form
10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009
(when filed). Results of operations for interim periods are not necessarily
indicative of future interim periods or the results to be expected for full year.
American Savings Bank, F.S.B. and Subsidiaries
CONSOLIDATED BALANCE SHEETS DATA
(Unaudited)
(in thousands) September 30, December 31,
2009 2008
Assets
Cash and equivalents $ 222,286 $ 168,766
Federal funds sold 1,708 532
Available-for-sale investment and mortgage-related 623,104 657,717
securities
Investment in stock of Federal Home Loan Bank of 97,764 97,764
Seattle
Loans receivable, net 3,758,898 4,206,492
Other 211,773 223,659
Goodwill, net 82,190 82,190
$ 4,997,723 $ 5,437,120
Liabilities and stockholder's equity
Deposit liabilities-noninterest-bearing $ 751,893 $ 701,090
Deposit liabilities-interest-bearing 3,296,047 3,479,085
Other borrowings 367,884 680,973
Other 91,643 98,598
4,507,467 4,959,746
Common stock 329,292 328,162
Retained earnings 188,437 197,235
Accumulated other comprehensive loss, net of tax (27,473 ) (48,023 )
benefits
490,256 477,374
$ 4,997,723 $ 5,437,120
This information should be read in conjunction with the consolidated financial
statements and the notes thereto for the year ended December 31, 2008 (included
in HEI Exhibit 13 to HEI's Form 8-K dated June 9, 2009) and the consolidated
financial statements and the notes thereto in HEI's Quarterly Reports on SEC
Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30,
2009 (when filed).
American Savings Bank, F.S.B. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Unaudited)
(in thousands) 3Q08 4Q08 1Q09 2Q09 3Q09
Noninterest income
Per income statement $ 16,677 $ 10,056 $ 16,264 $ 12,993 $ 11,924
- GAAP
Other-than-temporary
impairment of - 7,764 - 5,581 9,863
mortgage-related
securities
Gain on sale of a - - - - (2,951 )
commercial loan
Adjusted noninterest $ 16,677 $ 17,820 $ 16,264 $ 18,574 $ 18,836
income
Noninterest expense
Per income statement $ 42,403 $ 45,442 $ 41,811 $ 44,374 $ 39,591
- GAAP
Real estate - - - (1,180 ) (1,076 )
transactions
Professional - - (616 ) (1,238 ) (600 )
services
FISERV conversion - - - (159 ) (572 )
costs
Severance (222 ) (1,560 ) (673 ) (393 ) (301 )
FDIC special - - - (2,338 ) -
assessment
Technology - - - (145 ) -
write-offs
Prepayment penalty
on early - - (41 ) (60 ) -
extinguishment of
debt
Bishop Insurance - (890 ) - - -
Agency sale
Adjusted noninterest $ 42,181 $ 42,992 $ 40,481 $ 38,861 $ 37,042
expense
Other bank
information
Noninterest expense
(annualized)
Reported $ 169,612 $ 181,768 $ 167,244 $ 177,496 $ 158,364
Adjusted 168,724 171,968 161,924 155,444 148,168
Efficiency ratio
Reported 61 % 74 % 62 % 70 % 63 %
Adjusted 61 % 62 % 60 % 56 % 53 %
Pretax, preprovision
income (annualized)
Reported $ 106,344 $ 64,628 $ 101,568 $ 75,928 $ 91,460
Adjusted 107,232 105,484 106,888 120,304 129,304
Return on average
assets
Reported 1.11 % 0.44 % 0.82 % 0.31 % 0.89 %
Adjusted 1.12 % 0.92 % 0.88 % 0.83 % 1.34 %
Source: Hawaiian Electric Industries, Inc.
Contact: Shelee M.T. Kimura, 808-543-7384
Manager, Investor Relations & Strategic Planning
Facsimile: 808-203-1164
skimura@hei.com