HEI Reports Lower Earnings for 2009 and Flat Earnings for the Fourth Quarter
HONOLULU--Hawaiian Electric Industries, Inc. today reported consolidated net income for common stock for the full year of 2009 of $83.0 million, or $0.91 per share, compared to $90.3 million, or $1.07 per share for 2008. In both years, the earnings were affected by losses related to specific strategic transactions at the bank. Excluding the $19.3 million, or $0.21 per share of after-tax losses related to the previously disclosed liquidation of the bank’s private-issue mortgage-related securities (PMRS) portfolio, adjusted 2009 earnings were $102.3 million or $1.12 per share. In 2008, excluding the after-tax impact of the bank’s previously disclosed balance sheet restructuring charge of $35.6 million, net income was $125.9 million or $1.49 per share.
“Due to management’s ongoing efforts to seek cost containment opportunities through reductions and deferrals, we were able to keep O&M essentially flat for the quarter”
Net income for the fourth quarter of 2009 was $13.7 million, or $0.15 per share, compared to $13.9 million, or $0.16 per share for the fourth quarter of 2008. Fourth quarter 2009 results include the $19.3 million after-tax losses related to the liquidation of the bank’s PMRS portfolio discussed above. Excluding the PMRS losses, adjusted 2009 fourth quarter earnings were $33.0 million or $0.36 per share, reflecting primarily a full quarter of utility rate relief and aggressive cost control efforts at both the utility and the bank.
“2009 was a challenging year and we made difficult decisions to curb spending and reduce risk, while continuing to progress forward with long-term strategic initiatives to move Hawaii toward a clean energy future and improved performance and profitability at both our utility and bank,” said Constance H. Lau, HEI president and chief executive officer.
“Although our utility encountered lower sales and lower and later-than-expected rate relief, management was able to substantially offset the impact to earnings through prudent cost control and deferral strategies. The majority of these savings cannot be sustained over the long term. And at the bank, despite historically high credit costs driven by the economic recession and significant losses from electing to liquidate our private-issue mortgage-related securities portfolio, our bank remained profitable and exceeded our expectations of cost savings from the ongoing Performance Improvement Project,” said Lau.
FULL YEAR RESULTS
Full year 2009 earnings were down $7.3 million or $0.16 per share to $83.0 million or $0.91 per share compared with 2008. Excluding the PMRS and balance sheet restructuring charges in 2009 and 2008, respectively, earnings in 2009 were down by $23.6 million or $0.37 per share to $102.3 million or $1.12 per share. The overall decrease in year-over-year earnings was due to lower kilowatthour sales and increases in utility operation and maintenance and bank credit expenses, partially offset by five months of utility rate relief.
UTILITY
Electric utility earnings were $79.4 million in 2009 versus $92.0 million in 2008. “At the onset of 2009, we expected utility earnings to be lower in the first half of the year as we awaited rate relief in the second half of the year; however, full-year earnings were further depressed due to lower kilowatthour sales and to lower and later-than-expected rate relief,” said Lau.
Kilowatthour sales were down 2.5% year over year, with the decrease coming primarily in the first half of the year, due largely to the effects of weather, soft economic conditions and on-going energy efficiency and conservation efforts. “In 2010, we expect sales to continue to decline by about 0.9% compared to 2009 due to the continued effects of a weak Hawaii economy, rising fuel prices, and positive efforts by Hawaii residents and businesses to conserve energy,” said Lau.
Operation expense increased by $5.3 million largely due to: 1) $9 million higher administrative and general expenses primarily from higher employee retirement benefit cost; 2) $5 million higher production operation expense due to the addition of a new peaking unit, CT-1, and work to support the acquisition of renewable resources; and 3) $2 million higher transmission and distribution operation expense to support our aging infrastructure; offset by 4) $11 million lower demand-side management (DSM) program costs that are recovered in a surcharge. The energy efficiency DSM programs were transferred to a third-party administrator at the end of the second quarter of 2009.
Maintenance expense increased by $5.9 million primarily due to higher transmission and distribution maintenance expenses resulting from increased substation maintenance, vegetation management and increased spending on maintenance of overhead and underground lines.
“As a result of the increased work to address our aging infrastructure, 2009 short-term cost reductions and deferrals, higher retirement benefit costs which are largely being recovered and full-year CT-1 costs, we expect operation and maintenance expense to increase by approximately 11% in 2010,” said Lau.
Depreciation expense in 2009 increased $2.9 million over 2008 due to plant additions in 2008.
BANK
Bank net income for 2009 was $21.8 million compared with $17.8 million for 2008. Results for 2009 include $19.3 million of PMRS after-tax charges that occurred in the fourth quarter 2009. Results for 2008 include the $35.6 million after-tax charge related to the balance sheet restructuring executed in June 2008. Excluding the PMRS after-tax charge in 2009 and the balance sheet restructuring charge in 2008, adjusted bank net income was $41.1 million and $53.4 million in 2009 and 2008, respectively.
“Like many banks across the country, our bank was affected by the economic pressures in 2009. However, as we have done throughout the economic crisis, we kept capital healthy and depositors’ money safe. At the same time, we increased our prospects for improved performance in the future,” said Lau.
Bank net interest income decreased by $5.7 million or 2.8% in 2009 compared with 2008 as a result of lower balances and yields on earning assets, partly offset by lower funding costs. However, the bank’s net interest margin increased to 4.19% compared to 3.62% in 2008, primarily due to the balance sheet restructuring and the reduction of higher-costing term certificates. During 2009, the bank added $393 million of core deposits, its lowest-costing source of funds. In 2009, the weighted average cost of core deposits was 0.22% compared with 0.43% in 2008.
Results for 2009 included provision for loan losses of $32.0 million, compared to $10.3 million in 2008. The increased level of provisions in 2009 was primarily due to an increase in nonperforming residential lot loans and 1-4 family mortgages mainly on the neighbor islands and a $10 million provision for one commercial loan that was subsequently sold during the year. Nonperforming assets to loans outstanding and real estate owned at the end of the year was 1.85%, compared with 0.48% at the end of 2008. Net charge-offs to average loans outstanding were 0.66%, compared with 0.11% for 2008. The allowance for loan losses increased by $5.9 million in 2009, ending the year at $42 million.
Noninterest income was $16.2 million lower in 2009 than in 2008 primarily due to higher losses on the sales of securities, including the sale of the PMRS portfolio, and higher other-than-temporary impairment (OTTI) charges. Excluding the losses on the sales of securities and the OTTI charges, noninterest income for 2009 was $6.1 million higher than 2008, primarily due to higher gains on sale of loans and deposit account fees.
Noninterest expense decreased by $48.5 million year-over-year, primarily due to the charges from the early extinguishment of debt related to the balance sheet restructuring of $39.8 million in 2008, and despite a $2.3 million special assessment by the Federal Deposit Insurance Corporation in 2009 to replenish the deposit insurance fund. Services expense was $5.5 million lower in 2009 due primarily to lower consulting and contract services, and compensation and benefits expense were lower by $3.9 million.
HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was $18.2 million in 2009, compared with $19.5 million in 2008 due to lower general and administrative expenses and lower borrowing costs.
FOURTH QUARTER RESULTS
UTILITY
Electric utility net income for common stock for the fourth quarter of 2009 was $23.3 million compared to $14.0 million in the fourth quarter of 2008. “Interim rate relief and primarily short-term cost control efforts enabled the utility to produce better results quarter over quarter, although earned returns remained significantly below allowed returns,” said Lau.
In the third quarter of 2009, the Public Utilities Commission of the State of Hawaii (PUC) approved the implementation of a partial interim increase of $61.1 million in HECO’s 2009 test year rate case proceeding, which contributed an additional $8.6 million to utility net income in the fourth quarter of 2009 compared to the fourth quarter of 2008.
Although kilowatthour sales were down for the year, sales for the quarter were up 1.1% compared with the same quarter of 2008, increasing utility net income by an estimated $1.5 million over the same quarter last year. “Soft sales in the fourth quarter of 2008, lower fuel prices and warmer weather in the fourth quarter of 2009 contributed to the quarter-over-quarter increase in sales,” said Lau.
Operations and maintenance expenses (O&M) were down $7.8 million or 8.1% quarter over quarter. Included in fourth quarter 2008 O&M were $9 million of DSM program 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 were only $2 million related to DSM programs in the fourth quarter of 2009. The remaining difference in quarter-over-quarter O&M is primarily due to the company’s cost reduction efforts. “Due to management’s ongoing efforts to seek cost containment opportunities through reductions and deferrals, we were able to keep O&M essentially flat for the quarter,” said Lau.
BANK
Bank net income for the fourth quarter of 2009 was a net loss of $4.5 million, compared to net income of $11.3 million in the third quarter of 2009 and $5.9 million for the same quarter last year. Fourth quarter 2009 results include the after-tax losses of $19.3 million related to the liquidation of the PMRS portfolio.
“We made a strategic decision to liquidate our PMRS portfolio in the fourth quarter of 2009 when we saw a market opportunity. As a result, we eliminated the risk of future charges from these securities and improved our prospects for more stable earnings from the bank,” said Lau.
Excluding the $19.3 million after-tax charge from the PMRS liquidation, adjusted fourth quarter 2009 earnings were $14.9 million. On an adjusted annualized basis, the bank achieved a 1.27% return on average assets and a 56% efficiency ratio in the fourth quarter of 2009.1 Comparatively, the adjusted annualized return on average assets was 1.34% in the third quarter of 2009 and 0.92% in the fourth quarter 2008, and the adjusted annualized efficiency ratio was 53% in the third quarter of 2009 and 62% in the fourth quarter of 2008.1 The unfavorable change in the adjusted annualized return on average assets and efficiency ratios between the third and fourth quarters of 2009 is primarily due to $1 million of year-end adjustments to noninterest expense and $1 million lower net interest income in the fourth quarter of 2009. However, the improvement in the fourth quarter of 2009 compared with the same quarter last year reflects the year’s progress in the bank’s Performance Improvement Project. Part of the improvement in the adjusted efficiency ratio was due to branch consolidation, with the bank finishing 2009 with 3 less branches than it had at the end of 2008.
“Excluding the effects of the PMRS sale, the bank performed relatively well in the fourth quarter reflecting the achievements to date on the ongoing Performance Improvement Project,” said Lau.
The bank continues to be well capitalized with a strong Tier-1 core leverage ratio of 9.0%. The bank’s total risk-based ratio increased to 14.1% at quarter-end, following the de-risking of the bank’s securities portfolio with the PMRS sale.
Net interest income in the fourth quarter of 2009 was $49.4 million compared to $51.5 million in the fourth quarter of 2008. Lower average earning asset balances and yields were partially offset by lower funding costs. In the quarter, core deposits grew by $144 million and had a weighted-average cost of 0.16% compared with 0.41% in the fourth quarter of 2008. Net interest margin grew to 4.27% in the fourth quarter of 2009, compared with 4.23% in the third quarter of 2009 and 4.07% in the fourth quarter of 2008.
The bank recorded a $5.0 million provision for loan losses for the fourth quarter of 2009 compared with $5.2 million in the third quarter of 2009 and $6.3 million in the fourth quarter of 2008. The majority of the provision in the fourth quarter of 2009 reflected the additional provision for commercial market loans and home equity lines of credit. Nonperforming assets to loans outstanding and real estate owned at the end of the fourth quarter was 1.85%, compared with 1.61% and 0.48% for the third quarter of 2009 and the fourth quarter of 2008, respectively. Annualized net charge-offs to average loans outstanding for the quarter were 0.98% compared with 0.19% and 0.20% for the third quarter of 2009 and the fourth quarter of 2008, respectively. The increase in the fourth quarter of 2009 was partially related to charge-offs on loans we had already provisioned for in prior periods.
Noninterest income for the fourth quarter of 2009 was a loss of $11.3 million, compared with income of $11.9 million for the third quarter of 2009 and $10.1 million in the fourth quarter of 2008. Fourth quarter 2009 noninterest income was reduced by $32.1 million for the PMRS losses. Third quarter 2009 and fourth quarter 2008 noninterest income were reduced by $9.9 million and $7.8 million, respectively, for OTTI charges of certain PMRS. Excluding the effects of the PMRS sales, OTTI charges and other nonrecurring noninterest income, adjusted noninterest income increased 4% from the fourth quarter of 2008 to the fourth quarter of 2009 and decreased 2% from the third quarter of 2009 to the fourth quarter 2009.1
Noninterest expense for the fourth quarter of 2009 was $41.7 million, compared with $39.6 million in the third quarter of 2009 and $45.4 million for the same quarter in 2008. On an adjusted basis, noninterest expense decreased by $5.0 million quarter over quarter and increased by $1.0 million over the third quarter of 2009 due to the timing of certain year-end adjustments.1 “The bank’s adjusted annualized noninterest expense for the fourth quarter of 2009 was $152 million, and is on track to meeting its target of $140 to $145 million by the end of 2010,” said Lau.1
HOLDING AND OTHER COMPANIES
The holding and other companies’ net losses were $5.2 million in the fourth quarter of 2009, compared with $6.1 million in the fourth quarter of 2008 reflecting lower general and administrative expenses and lower borrowing costs.
WEBCAST AND TELECONFERENCE
Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review its fourth quarter 2009 earnings on Friday, February 12, 2010, at 8:00 a.m. Hawaii time (1:00 p.m. Eastern time). The event can be accessed through HEI’s website at http://www.hei.com or by dialing (866) 543-6408, passcode: 76441244 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 February 26, 2010, by dialing (888) 286-8010, passcode: 11951714.
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 better indicators 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 Performance Improvement Project. These measures are also useful in understanding performance trends and in facilitating 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, in order to analyze on a consistent basis and over a longer period of time the performance of the bank’s core operating activities and its progress on the execution of the Performance Improvement Project. 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) is a forward-looking statement based on only a quarter’s results and may not reflect actual results. See schedule on page 23 of this release for a tabular reconciliation between the bank’s GAAP and non-GAAP measures.
Certain reconciling items—real estate transactions, professional services, FISERV conversion costs, severance, technology write-offs, prepayment penalties 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 Project 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 in the long term. 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.
Management also 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. Excluding the FDIC charge is consistent with the financial measures used by other banks and enhances the comparison of operating performance. The FDIC is now requiring 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.
Reported noninterest income is being adjusted by a gain on sale of a commercial loan, gains on sales of other assets and other nonrecurring income items. Bank management believes that it would not be appropriate to assume that the bank would realize material gains of this type on a quarterly basis.
Likewise, bank management also adds back to noninterest income charges related to the other-than-temporary impairment (OTTI) of private-issue mortgage-related securities because of the material nature of the charge and the inconsistency of when those charges occurred. 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. 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.
In addition, management adjusts noninterest income for net gains (losses) on sales of certain securities which includes the fourth quarter 2009 loss on the liquidation of the PMRS portfolio and the first quarter 2008 sale of stock in VISA, Inc., because management believes that such transactions are unlikely to recur on a regular basis and impacts the comparability of noninterest income between periods.
Limitations associated with utilizing non-GAAP measures are the risks of disagreement over the appropriateness of adjustments comprising these measures and the risk 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 page 23.
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 September 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.
1Refer to page 23 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, and the resulting annualized amounts.
| Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
| (Unaudited) | Three months ended | Years ended | |||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||
| (in thousands, except per share amounts) | 2009 | 2008 | 2009 | 2008 | |||||||||||||||
| Revenues | |||||||||||||||||||
| Electric utility | $ | 574,355 | $ | 720,552 | $ | 2,035,009 | $ | 2,860,350 | |||||||||||
| Bank | 45,241 | 79,084 | 274,719 | 358,553 | |||||||||||||||
| Other | (17 | ) | 181 | (138 | ) | 17 | |||||||||||||
| 619,579 | 799,817 | 2,309,590 | 3,218,920 | ||||||||||||||||
| Expenses | |||||||||||||||||||
| Electric utility | 522,088 | 687,419 | 1,865,338 | 2,668,991 | |||||||||||||||
| Bank | 53,793 | 69,195 | 242,955 | 331,601 | |||||||||||||||
| Other | 4,386 | 5,523 | 13,633 | 14,171 | |||||||||||||||
| 580,267 | 762,137 | 2,121,926 | 3,014,763 | ||||||||||||||||
| Operating income (loss) | |||||||||||||||||||
| Electric utility | 52,267 | 33,133 | 169,671 | 191,359 | |||||||||||||||
| Bank | (8,552 | ) | 9,889 | 31,764 | 26,952 | ||||||||||||||
| Other | (4,403 | ) | (5,342 | ) | (13,771 | ) | (14,154 | ) | |||||||||||
| 39,312 | 37,680 | 187,664 | 204,157 | ||||||||||||||||
| Interest expense–other than on deposit liabilities | |||||||||||||||||||
| and other bank borrowings | (20,909 | ) | (19,362 | ) | (76,330 | ) | (76,142 | ) | |||||||||||
| Allowance for borrowed funds used during construction | 801 | 1,177 | 5,268 | 3,741 | |||||||||||||||
| Allowance for equity funds used during construction | 1,869 | 2,958 | 12,222 | 9,390 | |||||||||||||||
| Income before income taxes | 21,073 | 22,453 | 128,824 | 141,146 | |||||||||||||||
| Income taxes | 6,946 | 8,086 | 43,923 | 48,978 | |||||||||||||||
| Net income | 14,127 | 14,367 | 84,901 | 92,168 | |||||||||||||||
| Less net income attributable to noncontrolling interest - | |||||||||||||||||||
| preferred stock of subsidiaries | 473 | 473 | 1,890 | 1,890 | |||||||||||||||
| Net income for common stock | $ | 13,654 | $ | 13,894 | $ | 83,011 | $ | 90,278 | |||||||||||
| Basic earnings per common share | $ | 0.15 | $ | 0.16 | $ | 0.91 | $ | 1.07 | |||||||||||
| Diluted earnings per common share | $ | 0.15 | $ | 0.16 | $ | 0.91 | $ | 1.07 | |||||||||||
| Dividends per common share | $ | 0.31 | $ | 0.31 | $ | 1.24 | $ | 1.24 | |||||||||||
| Weighted-average number of common shares outstanding | 92,056 | 86,355 | 91,396 | 84,631 | |||||||||||||||
| Adjusted weighted-average shares | 92,345 | 86,538 | 91,516 | 84,720 | |||||||||||||||
| Income (loss) by segment | |||||||||||||||||||
| Electric utility | $ | 23,305 | $ | 14,026 | $ | 79,446 | $ | 91,975 | |||||||||||
| Bank | (4,459 | ) | 5,939 | 21,767 | 17,827 | ||||||||||||||
| Other | (5,192 | ) | (6,071 | ) | (18,202 | ) | (19,524 | ) | |||||||||||
| Net income for common stock | $ | 13,654 | $ | 13,894 | $ | 83,011 | $ | 90,278 | |||||||||||
| This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s for Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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. | |||||||||||||||||||
| Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited) | ||||||||||
| December 31 | 2009 | 2008 | ||||||||
| (dollars in thousands) | ||||||||||
|
Assets |
||||||||||
| Cash and equivalents | $ | 502,443 | $ | 182,903 | ||||||
| Federal funds sold | 1,479 | 532 | ||||||||
| Accounts receivable and unbilled revenues, net | 241,116 | 300,666 | ||||||||
| Available-for-sale investment and mortgage-related securities | 432,881 | 657,717 | ||||||||
| Investment in stock of Federal Home Loan Bank of Seattle | 97,764 | 97,764 | ||||||||
| Loans receivable, net | 3,670,493 | 4,206,492 | ||||||||
| Property, plant and equipment, net of accumulated | ||||||||||
| depreciation of $1,945,482 and $1,851,813 | 3,088,611 | 2,907,376 | ||||||||
| Regulatory assets | 426,862 | 530,619 | ||||||||
| Other | 381,163 | 328,823 | ||||||||
| Goodwill, net | 82,190 | 82,190 | ||||||||
| $ | 8,925,002 | $ | 9,295,082 | |||||||
|
Liabilities and stockholders’ equity |
||||||||||
| Liabilities | ||||||||||
| Accounts payable | $ | 186,994 | $ | 183,584 | ||||||
| Deposit liabilities | 4,058,760 | 4,180,175 | ||||||||
| Short-term borrowings—other than bank |
41,989 |
|
||||||||
| Other bank borrowings | 297,628 | 680,973 | ||||||||
| Long-term debt, net—other than bank | 1,364,815 | 1,211,501 | ||||||||
| Deferred income taxes | 188,875 | 143,308 | ||||||||
| Regulatory liabilities | 288,214 | 288,602 | ||||||||
| Contributions in aid of construction | 321,544 | 311,716 | ||||||||
| Other | 700,242 | 871,476 | ||||||||
| 7,449,061 | 7,871,335 | |||||||||
| Stockholders’ equity | ||||||||||
| Common stock, no par value, authorized 200,000,000 shares; issued | ||||||||||
| and outstanding: 92,520,638 shares and 90,515,573 shares | 1,265,157 | 1,231,629 | ||||||||
| Retained earnings | 184,213 | 210,840 | ||||||||
| Accumulated other comprehensive loss, net of income tax benefits | (7,722 | ) | (53,015 | ) | ||||||
| Common stock equity | 1,441,648 | 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 redemption | 34,293 | 34,293 | ||||||||
| 1,475,941 | 1,423,747 | |||||||||
| $ | 8,925,002 | $ | 9,295,082 | |||||||
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s for Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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. |
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| Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries | |||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||
| (Unaudited) | |||||||||||
| Years ended December 31 | 2009 | 2008 | |||||||||
| (in thousands) | |||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | 84,901 | $ | 92,168 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation of property, plant and equipment | 151,282 | 150,977 | |||||||||
| Other amortization | 5,389 | 5,085 | |||||||||
| Provision for loan losses | 32,000 | 10,334 | |||||||||
| Gain on pension curtailment | - | (472 | ) | ||||||||
| Loans receivable originated and purchased, held for sale | (443,843 | ) | (204,457 | ) | |||||||
| Proceeds from sale of loans receivable, held for sale | 471,194 | 185,291 | |||||||||
| Net losses on sale of investment and mortgage-related securities | 32,034 | 17,376 | |||||||||
| Other-than-temporary impairment on available-for-sale mortgage-related securities | 15,444 | 7,764 | |||||||||
| Changes in deferred income taxes | 12,787 | 5,134 | |||||||||
| Changes in excess tax benefits from share-based payment arrangements | 310 | (405 | ) | ||||||||
| Allowance for equity funds used during construction | (12,222 | ) | (9,390 | ) | |||||||
| Changes in assets and liabilities | |||||||||||
| Decrease (increase) in accounts receivable and unbilled revenues, net | 59,550 | (6,219 | ) | ||||||||
| Decrease (increase) in fuel oil stock | (946 | ) | 14,157 | ||||||||
| Increase (decrease) in accounts payable | 3,410 | (18,715 | ) | ||||||||
| Changes in prepaid and accrued income taxes and utility revenue taxes | (61,977 | ) | 16,466 | ||||||||
| Changes in other assets and liabilities | (64,845 | ) | (5,280 | ) | |||||||
| Net cash provided by operating activities | 284,468 | 259,814 | |||||||||
| Cash flows from investing activities | |||||||||||
| Available-for-sale investment and mortgage-related securities purchased | (297,864 | ) | (489,264 | ) | |||||||
| Principal repayments on available-for-sale investment and mortgage-related securities | 357,233 | 610,521 | |||||||||
| Proceeds from sale of available-for-sale investment and mortgage-related securities | 185,134 | 1,311,596 | |||||||||
| Proceeds from sale of other investments | - | 17 | |||||||||
| Net decrease (increase) in loans held for investment | 484,960 | (92,241 | ) | ||||||||
| Proceeds from sale of real estate acquired in settlement of loans | 1,555 | - | |||||||||
| Capital expenditures | (304,761 | ) | (282,051 | ) | |||||||
| Contributions in aid of construction | 14,170 | 17,319 | |||||||||
| Other | 1,199 | 1,116 | |||||||||
| Net cash provided by investing activities | 441,626 | 1,077,013 | |||||||||
| Cash flows from financing activities | |||||||||||
| Net decrease in deposit liabilities | (121,415 | ) | (167,085 | ) | |||||||
| Net increase (decrease) in short-term borrowings with original maturities of | |||||||||||
| three months or less | 41,989 | (91,780 | ) | ||||||||
| Net decrease in retail repurchase agreements | (3,829 | ) | (37,142 | ) | |||||||
| Proceeds from other bank borrowings | 310,000 | 2,592,635 | |||||||||
| Repayments of other bank borrowings | (689,517 | ) | (3,682,119 | ) | |||||||
| Proceeds from issuance of long-term debt | 153,186 | 19,275 | |||||||||
| Repayment of long-term debt | - | (50,000 | ) | ||||||||
| Changes in excess tax benefits from share-based payment arrangements | (310 | ) | 405 | ||||||||
| Net proceeds from issuance of common stock | 15,329 | 136,443 | |||||||||
| Common stock dividends | (96,843 | ) | (83,604 | ) | |||||||
| Preferred stock dividends of noncontrolling interest | (1,890 | ) | (1,890 | ) | |||||||
| Increase (decrease) in cash overdraft | (9,545 | ) | 1,265 | ||||||||
| Other | (2,762 | ) | 350 | ||||||||
| Net cash used in financing activities | (405,607 | ) | (1,363,247 | ) | |||||||
| Net increase (decrease) in cash and equivalents and federal funds sold | 320,487 | (26,420 | ) | ||||||||
| Cash and equivalents and federal funds sold, January 1 | 183,435 | 209,855 | |||||||||
| Cash and equivalents and federal funds sold, December 31 | $ | 503,922 | $ | 183,435 | |||||||
| This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s for Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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. | |||||||||||
| Hawaiian Electric Company, Inc. (HECO) and Subsidiaries | ||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (Unaudited) | Three months ended | Years ended | ||||||||||
| December 31, | December 31, | |||||||||||
| (dollars in thousands, except per barrel amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||
| Operating revenues | $ 573,049 | $ 718,374 | $ 2,026,672 | $ 2,853,639 | ||||||||
| Operating expenses | ||||||||||||
| Fuel oil | 208,077 | 328,738 | 671,970 | 1,229,193 | ||||||||
| Purchased power | 135,684 | 159,682 | 499,804 | 689,828 | ||||||||
| Other operation | 61,764 | 66,649 | 248,515 | 243,249 | ||||||||
| Maintenance | 25,969 | 28,847 | 107,531 | 101,624 | ||||||||
| Depreciation | 36,127 | 35,424 | 144,533 | 141,678 | ||||||||
| Taxes, other than income taxes | 53,958 | 67,765 | 191,699 | 261,823 | ||||||||
| Income taxes | 14,984 | 8,800 | 48,212 | 56,307 | ||||||||
| 536,563 | 695,905 | 1,912,264 | 2,723,702 | |||||||||
| Operating income | 36,486 | 22,469 | 114,408 | 129,937 | ||||||||
| Other income | ||||||||||||
| Allowance for equity funds used during construction | 1,869 | 2,958 | 12,222 | 9,390 | ||||||||
| Other, net | 994 | 1,966 | 7,487 | 5,659 | ||||||||
| 2,863 | 4,924 | 19,709 | 15,049 | |||||||||
| Interest and other charges | ||||||||||||
| Interest on long-term debt | 14,362 | 11,889 | 51,820 | 47,302 | ||||||||
| Amortization of net bond premium and expense | 1,162 | 628 | 3,254 | 2,530 | ||||||||
| Other interest charges | 822 | 1,528 | 2,870 | 4,925 | ||||||||
| Allowance for borrowed funds used during construction | (801) | (1,177) | (5,268) | (3,741) | ||||||||
| 15,545 | 12,868 | 52,676 | 51,016 | |||||||||
| Net income | 23,804 | 14,525 | 81,441 | 93,970 | ||||||||
| Less net income attributable to noncontrolling interest - | ||||||||||||
| preferred stock of subsidiaries | 229 | 229 | 915 | 915 | ||||||||
| Net income attributable to HECO | 23,575 | 14,296 | 80,526 | 93,055 | ||||||||
| Preferred stock dividends of HECO | 270 | 270 | 1,080 | 1,080 | ||||||||
| Net income for common stock | $ 23,305 | $ 14,026 | $ 79,446 | $ 91,975 | ||||||||
| OTHER ELECTRIC UTILITY INFORMATION | ||||||||||||
| Kilowatthour sales (millions) | 2,487 | 2,458 | 9,690 | 9,936 | ||||||||
| Wet-bulb temperature (Oahu average; degrees Fahrenheit) | 69.7 | 69.4 | 68.8 | 68.8 | ||||||||
| Cooling degree days (Oahu) | 1,224 | 1,164 | 4,815 | 4,943 | ||||||||
| Average fuel oil cost per barrel | $77.65 | $124.08 | $63.91 | $114.50 | ||||||||
| Twelve months ended | ||||||||||||
| December 31, 2009 | ||||||||||||
| Allowed %1 | Actual % | |||||||||||
| Return on average common equity | ||||||||||||
| (rate-making, simple average method) | ||||||||||||
| HECO | 10.50 | 7.02 | ||||||||||
| HELCO | 10.70 | 6.89 | ||||||||||
| MECO | 10.70 | 4.76 | ||||||||||
| 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 incorporated by reference in HECO’s Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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. |
||||||||||||
| Hawaiian Electric Company, Inc. (HECO) and Subsidiaries | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited) | ||||||||||
| December 31 | 2009 | 2008 | ||||||||
| (in thousands, except par value) | ||||||||||
| Assets | ||||||||||
| Utility plant, at cost | ||||||||||
| Land | $ | 52,530 | $ | 42,541 | ||||||
| Plant and equipment | 4,696,257 | 4,277,499 | ||||||||
| Less accumulated depreciation | (1,848,416 | ) | (1,741,453 | ) | ||||||
| Construction in progress | 132,980 | 266,628 | ||||||||
| Net utility plant | 3,033,351 | 2,845,215 | ||||||||
| Current assets | ||||||||||
| Cash and equivalents | 73,578 | 6,901 | ||||||||
| Customer accounts receivable, net | 133,286 | 166,422 | ||||||||
| Accrued unbilled revenues, net | 84,276 | 106,544 | ||||||||
| Other accounts receivable, net | 8,449 | 7,918 | ||||||||
| Fuel oil stock, at average cost | 78,661 | 77,715 | ||||||||
| Materials and supplies, at average cost | 35,908 | 34,532 | ||||||||
| Prepayments and other | 16,201 | 12,626 | ||||||||
| Total current assets | 430,359 | 412,658 | ||||||||
| Other long-term assets | ||||||||||
| Regulatory assets | 426,862 | 530,619 | ||||||||
| Unamortized debt expense | 14,288 | 14,503 | ||||||||
| Other | 73,532 | 53,114 | ||||||||
| Total other long-term assets | 514,682 | 598,236 | ||||||||
| $ | 3,978,392 | $ | 3,856,109 | |||||||
| Capitalization and liabilities | ||||||||||
| Capitalization | ||||||||||
|
Common stock, $6 2/3 par value, authorized 50,000,000 shares; |
||||||||||
| outstanding 13,786,959 and 12,805,843 shares | $ | 91,931 | $ | 85,387 | ||||||
| Premium on capital stock | 385,659 | 299,214 | ||||||||
| Retained earnings | 827,036 | 802,590 | ||||||||
| Accumulated other comprehensive income, net of income taxes | 1,782 | 1,651 | ||||||||
| Common stock equity | 1,306,408 | 1,188,842 | ||||||||
| Cumulative preferred stock – not subject to mandatory redemption | 22,293 | 22,293 | ||||||||
| Noncontrolling interest – cumulative preferred stock of subsidiaries – | ||||||||||
| not subject to mandatory redemption | 12,000 | 12,000 | ||||||||
| Stockholders’ equity | 1,340,701 | 1,223,135 | ||||||||
| Long-term debt, net | 1,057,815 | 904,501 | ||||||||
| Total capitalization | 2,398,516 | 2,127,636 | ||||||||
| Current liabilities | ||||||||||
| Short-term borrowings–affiliate | - | 41,550 | ||||||||
| Accounts payable | 132,711 | 122,994 | ||||||||
| Interest and preferred dividends payable | 21,223 | 15,397 | ||||||||
| Taxes accrued | 156,092 | 220,046 | ||||||||
| Other | 48,192 | 55,268 | ||||||||
| Total current liabilities | 358,218 | 455,255 | ||||||||
| Deferred credits and other liabilities | ||||||||||
| Deferred income taxes | 180,603 | 166,310 | ||||||||
| Regulatory liabilities | 288,214 | 288,602 | ||||||||
| Unamortized tax credits | 56,870 | 58,796 | ||||||||
| Retirement benefits liability | 296,623 | 392,845 | ||||||||
| Other | 77,804 | 54,949 | ||||||||
| Total deferred credits and other liabilities | 900,114 | 961,502 | ||||||||
| Contributions in aid of construction | 321,544 | 311,716 | ||||||||
| $ | 3,978,392 | $ | 3,856,109 | |||||||
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO’s Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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. |
||||||||||
|
|
||||||||||
| Hawaiian Electric Company, Inc. (HECO) and Subsidiaries | |||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||
| (Unaudited) | |||||||||
| Years ended December 31 | 2009 | 2008 | |||||||
| (in thousands) | |||||||||
| Cash flows from operating activities | |||||||||
| Net income | $ | 81,441 | $ | 93,970 | |||||
| Adjustments to reconcile net income to net cash | |||||||||
| provided by operating activities | |||||||||
| Depreciation of property, plant and equipment | 144,533 | 141,678 | |||||||
| Other amortization | 10,045 | 8,619 | |||||||
| Changes in deferred income taxes | 14,762 | 3,882 | |||||||
| Changes in tax credits, net | (1,332 | ) | 1,470 | ||||||
| Allowance for equity funds used during construction | (12,222 | ) | (9,390 | ) | |||||
| Changes in assets and liabilities | |||||||||
| Decrease (increase) in accounts receivable | 32,605 | (21,313 | ) | ||||||
| Decrease in accrued unbilled revenues | 22,268 | 7,730 | |||||||
| Decrease (increase) in fuel oil stock | (946 | ) | 14,156 | ||||||
| Increase in materials and supplies | (1,376 | ) | (274 | ) | |||||
| Increase in regulatory assets | (17,597 | ) | (3,229 | ) | |||||
| Increase (decrease) in accounts payable | 9,717 | (14,901 | ) | ||||||
| Changes in prepaid and accrued income taxes and utility revenue taxes | (61,951 | ) | 28,055 | ||||||
| Changes in other assets and liabilities | (2,571 | ) | (5,445 | ) | |||||
| Net cash provided by operating activities | 217,376 | 245,008 | |||||||
| Cash flows from investing activities | |||||||||
| Capital expenditures | (302,327 | ) | (278,476 | ) | |||||
| Contributions in aid of construction | 14,170 | 17,319 | |||||||
| Other | 340 | 1,157 | |||||||
| Net cash used in investing activities | (287,817 | ) | (260,000 | ) | |||||
| Cash flows from financing activities | |||||||||
| Common stock dividends | (55,000 | ) | (14,089 | ) | |||||
| Preferred stock dividends of noncontrolling interest | (1,995 | ) | (1,995 | ) | |||||
| Proceeds from issuance of long-term debt | 153,186 | 19,275 | |||||||
| Net increase (decrease) in short-term borrowings from | |||||||||
| nonaffiliates and affiliate with original maturities of three months or less | (10,464 | ) | 12,759 | ||||||
| Net proceeds from issuance of common stock | 61,914 | - | |||||||
| Increase (decrease) in cash overdraft | (9,545 | ) | 1,265 | ||||||
| Other | (978 | ) | - | ||||||
| Net cash provided by financing activities | 137,118 | 17,215 | |||||||
| Net increase in cash and equivalents | 66,677 | 2,223 | |||||||
| Cash and equivalents, beginning of period | 6,901 | 4,678 | |||||||
| Cash and equivalents, end of period | $ | 73,578 | $ | 6,901 | |||||
| This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO’s Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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. | |||||||||
| American Savings Bank, F.S.B. and Subsidiaries | |||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||||
| (Unaudited) | Three months ended |
|
Years ended |
||||||||||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||||||||||||
| (dollars in thousands) | 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||
| Interest and dividend income | |||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 51,303 | $ | 53,080 | $ | 60,898 | $ | 217,838 | $ | 247,210 | |||||||||||||||||||
| Interest and dividends on investment and mortgage-related securities | 5,215 | 6,943 | 8,130 | 26,977 | 65,208 | ||||||||||||||||||||||||
| 56,518 | 60,023 | 69,028 | 244,815 | 312,418 | |||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Interest on deposit liabilities | 5,293 | 7,286 | 13,574 | 34,046 | 61,483 | ||||||||||||||||||||||||
| Interest on other borrowings | 1,787 | 2,205 | 3,911 | 9,497 | 43,941 | ||||||||||||||||||||||||
| 7,080 | 9,491 | 17,485 | 43,543 | 105,424 | |||||||||||||||||||||||||
| Net interest income | 49,438 | 50,532 | 51,543 | 201,272 | 206,994 | ||||||||||||||||||||||||
| Provision for loan losses | 5,000 | 5,200 | 6,300 | 32,000 | 10,334 | ||||||||||||||||||||||||
| Net interest income after provision for loan losses | 44,438 | 45,332 | 45,243 | 169,272 | 196,660 | ||||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||
| Fee income on deposit liabilities | 8,329 | 8,211 | 7,443 | 30,713 | 28,332 | ||||||||||||||||||||||||
| Fees from other financial services | 6,520 | 6,385 | 6,292 | 25,267 | 24,846 | ||||||||||||||||||||||||
| Fee income on other financial products | 1,548 | 1,613 | 1,469 | 5,833 | 6,683 | ||||||||||||||||||||||||
| Net gains (losses) on sale of securities * | (32,078 | ) | - | 12 | (32,034 | ) | (17,376 | ) | |||||||||||||||||||||
| Losses on available-for-sale securities | - | (9,863 | ) | (7,764 | ) | (15,444 | ) | (7,764 | ) | ||||||||||||||||||||
| Other income | 4,404 | 5,578 | 2,604 | 15,569 | 11,414 | ||||||||||||||||||||||||
| (11,277 | ) | 11,924 | 10,056 | 29,904 | 46,135 | ||||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||
| Compensation and employee benefits | 18,918 | 17,721 | 21,407 | 73,990 | 77,858 | ||||||||||||||||||||||||
| Occupancy | 6,101 | 4,905 | 5,614 | 22,057 | 21,890 | ||||||||||||||||||||||||
| Data processing | 4,030 | 3,684 | 2,659 | 14,382 | 10,678 | ||||||||||||||||||||||||
| Services | 1,533 | 2,437 | 3,175 | 11,189 | 16,706 | ||||||||||||||||||||||||
| Equipment | 1,737 | 1,782 | 3,034 | 8,849 | 12,544 | ||||||||||||||||||||||||
| Loss on early extinguishment of debt * | 659 | - | - | 760 | 39,843 | ||||||||||||||||||||||||
| Other expense | 8,717 | 9,062 | 9,553 | 36,244 | 36,485 | ||||||||||||||||||||||||
| 41,695 | 39,591 | 45,442 | 167,471 | 216,004 | |||||||||||||||||||||||||
| Income (loss) before income taxes | (8,534 | ) | 17,665 | 9,857 | 31,705 | 26,791 | |||||||||||||||||||||||
| Income taxes (benefits) * | (4,075 | ) | 6,342 | 3,918 | 9,938 | 8,964 | |||||||||||||||||||||||
| Net income (loss) | $ | (4,459 | ) | $ | 11,323 | $ | 5,939 | $ | 21,767 | $ | 17,827 | ||||||||||||||||||
| OTHER BANK INFORMATION (%) | |||||||||||||||||||||||||||||
| Return on average assets | (0.36 | ) | 0.89 | 0.44 | 0.43 | 0.29 | |||||||||||||||||||||||
| Return on average equity | (3.64 | ) | 9.40 | 4.69 | 4.54 | 3.17 | |||||||||||||||||||||||
| Net interest margin | 4.27 | 4.23 | 4.07 | 4.19 | 3.62 | ||||||||||||||||||||||||
| Net charge-offs to average loans outstanding (annualized) | 0.98 | 0.19 | 0.20 | 0.66 | 0.11 | ||||||||||||||||||||||||
| Efficiency ratio | 109 | 63 | 74 | 72 | 85 |
|
|
||||||||||||||||||||||
| As of period end |
|
||||||||||||||||||||||||||||
| Nonperforming assets to loans outstanding and real estate owned ** | 1.85 | 1.61 | 0.48 | ||||||||||||||||||||||||||
| Allowance for loan losses to loans outstanding | 1.12 | 1.21 | 0.84 | ||||||||||||||||||||||||||
| Tier-1 leverage ratio | 9.0 | 9.1 | 8.5 | ||||||||||||||||||||||||||
| Total risk-based capital ratio | 14.1 | 13.2 | 12.8 | ||||||||||||||||||||||||||
| * 2009 net income included a $19.3 million after-tax charge related to ASB's sale of private-issued mortgage-related securities (PMRS) in the fourth quarter of 2009. The $32.1 million loss on sale of PMRS is included in "Noninterest income-Net loss on sale of securities" and the related income tax benefits of $12.8 million is included in "Income taxes (benefits)." 2008 net income included a $35.6 million after-tax charge 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 loss on sale of 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 (benefits)." | |||||||||||||||||||||||||||||
| ** Regulatory basis | |||||||||||||||||||||||||||||
|
This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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.
|
|||||||||||||||||||||||||||||
| American Savings Bank, F.S.B. and Subsidiaries | ||||||||
| CONSOLIDATED BALANCE SHEETS DATA | ||||||||
| (Unaudited) | ||||||||
| December 31 | 2009 | 2008 | ||||||
| (in thousands) | ||||||||
| Assets | ||||||||
| Cash and equivalents | $ | 425,896 | $ | 168,766 | ||||
| Federal funds sold | 1,479 | 532 | ||||||
| Available-for-sale investment and mortgage-related securities | 432,881 | 657,717 | ||||||
| Investment in stock of Federal Home Loan Bank of Seattle | 97,764 | 97,764 | ||||||
| Loans receivable, net | 3,670,493 | 4,206,492 | ||||||
| Other | 230,282 | 223,659 | ||||||
| Goodwill, net | 82,190 | 82,190 | ||||||
| $ | 4,940,985 | $ | 5,437,120 | |||||
| Liabilities and stockholder’s equity | ||||||||
| Deposit liabilities–noninterest-bearing | $ | 808,474 | $ | 701,090 | ||||
| Deposit liabilities–interest-bearing | 3,250,286 | 3,479,085 | ||||||
| Other borrowings | 297,628 | 680,973 | ||||||
| Other | 92,129 | 98,598 | ||||||
| 4,448,517 | 4,959,746 | |||||||
| Common stock | 329,439 | 328,162 | ||||||
| Retained earnings | 172,655 | 197,235 | ||||||
| Accumulated other comprehensive loss, net of tax benefits | (9,626 | ) | (48,023 | ) | ||||
| 492,468 | 477,374 | |||||||
| $ | 4,940,985 | $ | 5,437,120 | |||||
| This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s Annual Reports on SEC Form 10-K for the years ended December 31, 2008 and 2009 (when filed) 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. | ||||||||
| American Savings Bank, F.S.B. and Subsidiaries | |||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP MEASURES | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
| (in thousands) | 1Q08 | 4Q08 | 1Q09 | 2Q09 | 3Q09 | 4Q09 | |||||||||||||||||||||
|
Noninterest income |
|||||||||||||||||||||||||||
| Per income statement - GAAP | $ | 17,928 | $ | 10,056 | $ | 16,264 | $ | 12,993 | $ | 11,924 | $ | (11,277 | ) | ||||||||||||||
| Other-than-temporary impairment of private-issue | |||||||||||||||||||||||||||
| mortgage-related securities | - | 7,764 | - | 5,581 | 9,863 | - | |||||||||||||||||||||
| Net (gains) losses on sale of securities | (935 | ) | - | - | - | - | 32,078 | ||||||||||||||||||||
| Gain on sale of a commercial loan | - | - | - | - | (2,951 | ) | - | ||||||||||||||||||||
| Gain on sale of other assets | - | - | - | - | - | (1,772 | ) | ||||||||||||||||||||
| Other nonrecurring income | (384 | ) | - | - | - | - | (500 | ) | |||||||||||||||||||
| Adjusted noninterest income | $ | 16,609 | $ | 17,820 | $ | 16,264 | $ | 18,574 | $ | 18,836 | $ | 18,529 | |||||||||||||||
|
Noninterest expense |
|||||||||||||||||||||||||||
| Per income statement - GAAP | $ | 44,234 | $ | 45,442 | $ | 41,811 | $ | 44,374 | $ | 39,591 | $ | 41,695 | |||||||||||||||
| Real estate transactions | - | - | - | (1,180 | ) | (1,076 | ) | (1,633 | ) | ||||||||||||||||||
| Professional services | - | - | (616 | ) | (1,238 | ) | (600 | ) | - | ||||||||||||||||||
| FISERV conversion costs | - | - | - | (159 | ) | (572 | ) | (972 | ) | ||||||||||||||||||
| Severance | - | (1,560 | ) | (673 | ) | (393 | ) | (301 | ) | (390 | ) | ||||||||||||||||
| FDIC special assessment | - | - | - | (2,338 | ) | - | - | ||||||||||||||||||||
| Technology write-offs | - | - | - | (145 | ) | - | (35 | ) | |||||||||||||||||||
| Prepayment penalty on early | |||||||||||||||||||||||||||
| extinguishment of debt | - | - | (41 | ) | (60 | ) | - | (659 | ) | ||||||||||||||||||
| Bishop Insurance Agency sale | - | (890 | ) | - | - | - | - | ||||||||||||||||||||
| Adjusted noninterest expense | $ | 44,234 | $ | 42,992 | $ | 40,481 | $ | 38,861 | $ | 37,042 | $ | 38,006 | |||||||||||||||
|
Other bank information |
|||||||||||||||||||||||||||
| Noninterest expense (annualized) | |||||||||||||||||||||||||||
| Reported | $ | 176,936 | $ | 181,768 | $ | 167,244 | $ | 177,496 | $ | 158,364 | $ | 166,780 | |||||||||||||||
| Adjusted | 176,936 | 171,968 | 161,924 | 155,444 | 148,168 | 152,024 | |||||||||||||||||||||
| Efficiency ratio | |||||||||||||||||||||||||||
| Reported | 65 | % | 74 | % | 62 | % | 70 | % | 63 | % | 109 | % | |||||||||||||||
| Adjusted | 66 | % | 62 | % | 60 | % | 56 | % | 53 | % | 56 | % | |||||||||||||||
| Pretax, preprovision income (annualized) | |||||||||||||||||||||||||||
| Reported | $ | 96,964 | $ | 64,628 | $ | 101,568 | $ | 75,928 | $ | 91,460 | $ | (14,136 | ) | ||||||||||||||
| Adjusted | 91,688 | 105,484 | 106,888 | 120,304 | 129,304 | 119,844 | |||||||||||||||||||||
| Return on average assets | |||||||||||||||||||||||||||
| Reported | 0.85 | % | 0.44 | % | 0.82 | % | 0.31 | % | 0.89 | % | (0.36 | )% | |||||||||||||||
| Adjusted | 0.81 | % | 0.92 | % | 0.88 | % | 0.83 | % | 1.34 | % | 1.27 | % | |||||||||||||||