Segment financial information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment financial information

3 · Segment financial information

The electric utility and bank segments are strategic business units of the Company that offer different products and services and operate in different regulatory environments. The accounting policies of the segments are the same as those described for the Company in the summary of significant accounting policies, except as otherwise indicated and except that federal and state income taxes for each segment are calculated on a “stand-alone” basis. HEI evaluates segment performance based on net income. Each segment accounts for intersegment sales and transfers as if the sales and transfers were to third parties, that is, at current market prices. Intersegment revenues consist primarily of interest, rent and preferred stock dividends.

Electric utility

Hawaiian Electric and its wholly-owned operating subsidiaries, Hawaii Electric Light and Maui Electric, are public electric utilities in the business of generating, purchasing, transmitting, distributing and selling electric energy on all major islands in Hawaii other than Kauai, and are regulated by the PUC. The Utilities have been aggregated into the electric utility segment primarily because all three entities: (1) are involved in the business of supplying electric energy in the same geographical location (i.e., the State of Hawaii), (2) have similar production processes that include electric generators (e.g., conventional oil-fired steam units and combustion turbines), (3) serve similar customers within their franchise territories (e.g., residential, commercial and industrial customers), (4) use similar electric grids to distribute the energy to their customers, (5) are regulated by the PUC and undergo similar rate-making processes, (6) have similar economic characteristics and (7) perform financial reporting oversight and management of the business at the consolidated level. Hawaiian Electric also owns the following nonregulated subsidiaries: Renewable Hawaii, Inc. (RHI), which was formed to invest in renewable energy projects; HECO Capital Trust III, which is a financing entity; and Uluwehiokama Biofuels Corp. (UBC), which was formed to own a new biodiesel refining plant to be built on the island of Maui, which project has been terminated.

Bank

ASB is a federally chartered savings bank providing a full range of banking services to individual and business customers through its branch system in Hawaii. ASB is subject to examination and comprehensive regulation by the Office of the Comptroller of the Currency (OCC) (previously by the Department of Treasury, Office of Thrift Supervision (OTS)) and the Federal Deposit Insurance Corporation (FDIC), and is subject to reserve requirements established by the Board of Governors of the Federal Reserve System.

Other

“Other” includes amounts for the holding companies (HEI and ASB Hawaii, Inc.), other subsidiaries not qualifying as reportable segments and intercompany eliminations.

Segment financial information was as follows:

(in thousands)	Electric utility		Bank		Other			Total
2015
Revenues from external customers	$	2,335,135	$	267,733	$	114		$	2,602,982
Intersegment revenues (eliminations)	31		—		(31		)	—
Revenues	2,335,166		267,733		83			2,602,982
Depreciation and amortization	186,319		7,928		1,338			195,585
Interest expense, net	66,370		11,326		10,780			88,476
Income (loss) before income taxes	217,131		83,812		(46,155		)	254,788
Income taxes (benefit)	79,422		29,082		(15,483		)	93,021
Net income (loss)	137,709		54,730		(30,672		)	161,767
Preferred stock dividends of subsidiaries	1,995		—		(105		)	1,890
Net income (loss) for common stock	135,714		54,730		(30,567		)	159,877
Capital expenditures	350,161		13,470		173			363,804
Assets (at December 31, 2015)	5,680,054		6,014,755		95,387			11,790,196
2014
Revenues from external customers	$	2,987,299	$	252,497	$	(254	)	$	3,239,542
Intersegment revenues (eliminations)	24		—		(24		)	—
Revenues	2,987,323		252,497		(278		)	3,239,542
Depreciation and amortization	176,284		5,399		1,361			183,044
Interest expense, net	64,757		10,808		11,595			87,160
Income (loss) before income taxes	220,361		79,295		(34,058		)	265,598
Income taxes (benefit)	80,725		27,994		(13,140		)	95,579
Net income (loss)	139,636		51,301		(20,918		)	170,019
Preferred stock dividends of subsidiaries	1,995		—		(105		)	1,890
Net income (loss) for common stock	137,641		51,301		(20,813		)	168,129
Capital expenditures	336,679		28,073		74			364,826
Assets (at December 31, 2014)	5,557,542		5,566,222		61,378			11,185,142
2013
Revenues from external customers	$	2,980,139	$	258,147	$	184		$	3,238,470
Intersegment revenues (eliminations)	33		—		(33		)	—
Revenues	2,980,172		258,147		151			3,238,470
Depreciation and amortization	161,759		4,230		1,396			167,385
Interest expense, net	59,279		10,077		16,200			85,556
Income (loss) before income taxes	194,041		89,148		(33,353		)	249,836
Income taxes (benefit)	69,117		31,421		(14,301		)	86,237
Net income (loss)	124,924		57,727		(19,052		)	163,599
Preferred stock dividends of subsidiaries	1,995		—		(105		)	1,890
Net income (loss) for common stock	122,929		57,727		(18,947		)	161,709
Capital expenditures	378,044		11,193		201			389,438
Assets (at December 31, 2013)	5,066,427		5,244,686		29,793			10,340,906

See Note 1 for the impact to prior period financial information of the adoptions of ASU No. 2014-01 and ASU No. 2015-17.

Intercompany electricity sales of the Utilities to the bank and “other” segments are not eliminated because those segments would need to purchase electricity from another source if it were not provided by the Utilities and the profit on such sales is nominal.

Bank fees that ASB charges the Utilities and “other” segments are not eliminated because those segments would pay fees to another financial institution if they were to bank with another institution and the profit on such fees is nominal.