EX-99 2 exhibit993q13heiearnings.htm EXHIBIT 99 Exhibit 99 3Q13 HEI earnings

November 7, 2013

Contact:
Shelee M.T. Kimura    
 
 
Manager, Investor Relations &
Telephone: (808) 543-7384
 
Strategic Planning
E-mail: skimura@hei.com
                    
                    
                            


HAWAIIAN ELECTRIC INDUSTRIES REPORTS THIRD QUARTER 2013 EARNINGS

Diluted Earnings Per Share of $0.48
Hawaiian Electric Company Continues to Integrate Clean Energy Resources
American Savings Bank Delivers Solid Results
Board Declares Dividend of $0.31 Per Share
    
HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2013 of $48.2 million, or $0.48 diluted earnings per share (EPS), compared to $47.7 million, or $0.49 diluted EPS for the third quarter of 2012.
“HEI continued to deliver solid results in the third quarter of 2013. Higher consolidated net income was driven by higher bank earnings which helped offset lower utility earnings. EPS declined by one cent due to an increased number of shares which were issued through our dividend reinvestment program to support the capital needs of Hawaiian Electric, Hawaii Electric Light and Maui Electric Company. In the first nine months of 2013, HEI’s three utilities have made local infrastructure investments totaling more than $235 million to ensure safe and reliable service as they integrate more clean energy,” said Constance H. Lau, HEI president and chief executive officer.
Through the first nine months of the year, more than 18% of the electricity used by the utilities’ customers came from renewable resources, ahead of the state’s 2015 goal of 15%. “Our goal is to ensure reliable electric service while pursuing more low-cost clean energy and decreasing the use of imported fossil fuel as quickly as possible. At the same time, we are committed to increasing efficiencies and are working hard to lower our customers’ electric bills,” said Lau.

1

“At American Savings Bank, year-over-year results were solid as we increased loans to customers at an annualized rate of 9.3% and improved credit quality resulted in a lower provision expense for loan losses helping to offset a challenging bank regulatory and interest rate environment,” said Lau.

HAWAIIAN ELECTRIC COMPANY CONTINUES INVESTMENTS TO INTEGRATE MORE CLEAN ENERGY AND BETTER SERVE CUSTOMERS    
Hawaiian Electric Company’s1 net income for the third quarter of 2013 was $37.8 million compared to $38.4 million in the third quarter of 2012. The $0.6 million decline from the prior year was driven by the following items (on an after-tax basis):
•
$2 million higher depreciation expense resulting from additional infrastructure investments for improved reliability and the integration of more clean energy; and
•
$2 million higher operations and maintenance (O&M) expenses2 compared to the same quarter last year largely due to the timing of overhauls and higher customer service expenses, partially offset by lower expenses for substation and generating station maintenance.
These were largely offset by (after-tax):
•
$2 million higher net revenues3 compared to the third quarter of 2012 primarily due to additional recovery of costs, net of lower revenues related to the Maui Electric final rate case decision and lower fuel efficiency performance; and
______
1 Hawaiian Electric Company, unless otherwise defined, refers to the three utilities, Hawaiian Electric Company, Inc. on Oahu, Maui Electric Company, Limited, and Hawaii Electric Light Company, Inc.
2 Excludes expenses covered by surcharges or by third parties. In both the third quarter of 2013 and 2012, these expenses were $2 million.
3 Net revenues represent the after-tax impact of “Operating revenues” less the following operating expenses which are largely pass through items in revenues: “fuel oil”, “purchased power” and “taxes, other than income taxes” as shown on the Hawaiian Electric Company Consolidated Statements of Income.

Note: Amounts indicated as “after-tax” in this earnings release are based upon adjusting items for the composite statutory tax rates of 39% for the utilities and 40% for the bank.

2

•
A favorable deferred income tax adjustment of $3 million recorded in the third quarter of 2013 compared to a favorable tax settlement of $1 million recorded in the third quarter of 2012, both related to prior years.

AMERICAN SAVINGS BANK CONTINUES TO DELIVER SOLID PERFORMANCE
American Savings Bank’s (American) net income for the third quarter of 2013 was $15.3 million compared to $15.9 million in the second, or linked, quarter of 2013 and $14.2 million in the third quarter of 2012.
Third quarter 2013 net income was $0.6 million lower than the linked quarter primarily driven by $1 million (after-tax) lower fees from other financial services as expected under the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which placed a cap on interchange fees that became effective for American on July 1, 2013. In the quarter, American completed the strategic sale of its credit card portfolio and launched a new, more competitive offering for its customers. Compared to the linked quarter (on an after-tax basis), the aggregate impact of the transaction was nominal as the net gain of less than $1 million in the third quarter of 2013 was roughly equivalent to the lower provision expense in the second quarter of 2013 related to the release of credit card reserves. For the full year, the net gain is expected to be largely offset by lower credit card-related income for the remainder of the year.
Compared to the third quarter of 2012, net income improved by $1.1 million. The increase was primarily driven by a lower provision for loan losses, a net gain on the sale of the credit card portfolio mentioned above and higher fee income on other financial products. These were largely offset by lower mortgage banking income and lower fees from other financial services due to the lower interchange fees mentioned above.
Overall, American achieved solid profitability in the third quarter of 2013 with a return on average equity of 12.1% and a return on average assets of 1.20%. American’s solid results enabled it to pay dividends of $10 million to HEI in the quarter while maintaining healthy capital levels.
Also, refer to the American news release issued on October 30, 2013.

3

HOLDING AND OTHER COMPANIES
The holding and other companies’ net losses were $4.9 million in both the third quarter of 2013 and 2012.

BOARD DECLARES QUARTERLY DIVIDEND
On November 6, 2013, the board of directors maintained HEI’s quarterly cash dividend of 31 cents per share, payable on December 11, 2013, to shareholders of record at the close of business on November 20, 2013 (ex-dividend date is November 18, 2013). The dividend is equivalent to an annual rate of $1.24 per share.
Dividends have been paid continuously since 1901. At the indicated annual dividend rate and the closing share price on November 6, 2013 of $26.90, HEI’s yield is 4.6%.

HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its third quarter 2013 earnings and 2013 EPS guidance on Thursday, November 7, 2013, at 12:00 p.m. Hawaii time (5:00 p.m. Eastern time). The event can be accessed through HEI’s website at www.hei.com or by dialing (877) 280-4960, passcode: 82443306 for the teleconference call. The presentation for the webcast will be on HEI’s website under the headings “Investor Relations,” “News & Events” and “Presentations & Webcasts.” HEI and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to continue to use HEI’s website, www.hei.com, as a means of disclosing material information, as well as other important information. Such disclosures will be included on HEI’s website in the Investor Relations section. Accordingly, investors should routinely monitor such portions of HEI’s website, in addition to following HEI’s, Hawaiian Electric’s and American’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. Also, at the Investor Relations section of HEI’s website, investors may sign up to receive e-mail alerts (based on each investor’s selected preferences). The information on HEI’s website is not incorporated by reference into this document or into HEI’s and Hawaiian

4

Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC. No information on the PUC website is incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings.
An online replay of the webcast will be available at the same website beginning about two hours after the event. Replays of the teleconference call will also be available approximately two hours after the event through November 21, 2013, by dialing (888) 286-8010, passcode: 68694218.
HEI supplies power to approximately 450,000 customers or 95% of Hawaii’s population through its electric utilities, Hawaiian Electric, 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, one of Hawaii’s largest financial institutions.
FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance.
Forward-looking statements in this release should be read in conjunction with the “Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Quarterly Report on Form 10-Q for the quarters ended June 30, 2013 and March 31, 2013, respectively, and HEI’s subsequent periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report,

5

presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.







6


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


 
 
Three months  
 ended September 30
 
Nine months  
 ended September 30
(in thousands, except per share amounts)
 
2013
 
2012
 
2013
 
2012
Revenues
 
 
 
 
 
 
 
 
Electric utility
 
$
766,115

 
$
801,095

 
$
2,216,076

 
$
2,340,257

Bank
 
65,058

 
66,596

 
195,841

 
196,569

Other
 
56

 
29

 
106

 
22

Total revenues
 
831,229

 
867,720

 
2,412,023

 
2,536,848

Expenses
 
 
 
 
 
 
 
 
Electric utility
 
694,201

 
726,276

 
2,030,071

 
2,146,688

Bank
 
42,223

 
44,974

 
126,550

 
130,161

Other
 
4,706

 
4,768

 
12,276

 
13,075

Total expenses
 
741,130

 
776,018

 
2,168,897

 
2,289,924

Operating income (loss)
 
 
 
 
 
 
 
 
Electric utility
 
71,914

 
74,819

 
186,005

 
193,569

Bank
 
22,835

 
21,622

 
69,291

 
66,408

Other
 
(4,650
)
 
(4,739
)
 
(12,170
)
 
(13,053
)
Total operating income
 
90,099

 
91,702

 
243,126

 
246,924

Interest expense—other than on deposit liabilities and other bank borrowings
 
(20,304
)
 
(20,020
)
 
(59,705
)
 
(58,758
)
Allowance for borrowed funds used during construction
 
498

 
688

 
1,626

 
2,451

Allowance for equity funds used during construction
 
1,255

 
1,611

 
4,030

 
5,548

Income before income taxes
 
71,548

 
73,981

 
189,077

 
196,165

Income taxes
 
22,841

 
25,804

 
65,157

 
69,926

Net income
 
48,707

 
48,177

 
123,920

 
126,239

Preferred stock dividends of subsidiaries
 
471

 
471

 
1,417

 
1,417

Net income for common stock
 
$
48,236

 
$
47,706

 
$
122,503

 
$
124,822

Basic earnings per common share
 
$
0.49

 
$
0.49

 
$
1.24

 
$
1.29

Diluted earnings per common share
 
$
0.48

 
$
0.49

 
$
1.23

 
$
1.29

Dividends per common share
 
$
0.31

 
$
0.31

 
$
0.93

 
$
0.93

Weighted-average number of common shares outstanding
 
99,204

 
97,157

 
98,670

 
96,674

Adjusted weighted-average shares
 
99,818

 
97,518

 
99,290

 
97,097

Net income (loss) for common stock by segment
 
 
 
 
 
 
 
 
Electric utility
 
$
37,817

 
$
38,375

 
$
90,939

 
$
95,051

Bank
 
15,276

 
14,208

 
45,350

 
44,274

Other
 
(4,857
)
 
(4,877
)
 
(13,786
)
 
(14,503
)
Net income for common stock
 
$
48,236

 
$
47,706

 
$
122,503

 
$
124,822

Comprehensive income attributable to Hawaiian Electric Industries, Inc.
 
$
47,339

 
$
49,292

 
$
113,240

 
$
128,269

Return on average common equity (twelve months ended)1
 
 
 
 
 
8.4
%
 
10.1
%
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
1 On a core basis, 2013 and 2012 return on average common equity (twelve months ended September 30) were 9.9% and 10.5%, respectively.  See reconciliation of GAAP to non-GAAP measures.

7


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands)
 
September 30, 2013
 
December 31, 2012
Assets
 
 
 
 
Cash and cash equivalents
 
$
215,042

 
$
219,662

Accounts receivable and unbilled revenues, net
 
350,083

 
362,823

Available-for-sale investment and mortgage-related securities
 
535,264

 
671,358

Investment in stock of Federal Home Loan Bank of Seattle
 
93,413

 
96,022

Loans receivable held for investment, net
 
4,005,132

 
3,737,233

Loans held for sale, at lower of cost or fair value
 
5,829

 
26,005

Property, plant and equipment, net of accumulated depreciation of $2,173,583 in 2013 and $2,125,286 in 2012
 
3,776,305

 
3,594,829

Regulatory assets
 
890,419

 
864,596

Other
 
475,335

 
494,414

Goodwill
 
82,190

 
82,190

Total assets
 
$
10,429,012

 
$
10,149,132

Liabilities and shareholders’ equity
 
 
 
 
Liabilities
 
 
 
 
Accounts payable
 
$
206,803

 
$
212,379

Interest and dividends payable
 
27,232

 
26,258

Deposit liabilities
 
4,310,842

 
4,229,916

Short-term borrowings—other than bank
 
131,341

 
83,693

Other bank borrowings
 
239,612

 
195,926

Long-term debt, net—other than bank
 
1,422,880

 
1,422,872

Deferred income taxes
 
493,662

 
439,329

Regulatory liabilities
 
337,720

 
322,074

Contributions in aid of construction
 
425,916

 
405,520

Defined benefit pension and other postretirement benefit plans liability
 
630,904

 
656,394

Other
 
512,342

 
526,613

Total liabilities
 
8,739,254

 
8,520,974

Preferred stock of subsidiaries - not subject to mandatory redemption
 
34,293

 
34,293

 
 
 
 
 
Shareholders’ equity
 
 
 
 
Preferred stock, no par value, authorized 10,000,000 shares; issued: none
 
—

 
—

Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 99,541,518 shares in 2013 and 97,928,403 shares in 2012
 
1,443,583

 
1,403,484

Retained earnings
 
247,568

 
216,804

Accumulated other comprehensive income (loss), net of taxes
 
(35,686
)
 
(26,423
)
Total shareholders’ equity
 
1,655,465

 
1,593,865

Total liabilities and shareholders’ equity
 
$
10,429,012

 
$
10,149,132

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

8



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine months ended September 30
 
2013
 
2012
(in thousands)
 
 
 
 
Cash flows from operating activities
 
 
 
 
Net income
 
$
123,920

 
$
126,239

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
 
Depreciation of property, plant and equipment
 
120,355

 
112,946

Other amortization
 
2,352

 
4,811

Provision for loan losses
 
953

 
9,504

Loans receivable originated and purchased, held for sale
 
(199,772
)
 
(304,289
)
Proceeds from sale of loans receivable, held for sale
 
223,221

 
302,844

Gain on sale of credit card portfolio
 
(2,251
)
 
—

Change in deferred income taxes
 
60,580

 
82,582

Excess tax benefits from share-based payment arrangements
 
(469
)
 
(65
)
Allowance for equity funds used during construction
 
(4,030
)
 
(5,548
)
Changes in assets and liabilities
 
 
 
 
Decrease (increase) in accounts receivable and unbilled revenues, net
 
12,740

 
(30,610
)
Decrease (increase) in fuel oil stock
 
24,332

 
(31,372
)
Increase in regulatory assets
 
(53,314
)
 
(57,793
)
Decrease in accounts, interest and dividends payable
 
(21,708
)
 
(5,905
)
Decrease in prepaid and accrued income taxes and utility revenue taxes
 
(19,212
)
 
(5,121
)
Contributions to defined benefit pension and other postretirement benefit plans
 
(62,279
)
 
(64,006
)
Other increase in defined benefit pension and other postretirement benefit plans liability
 
61,770

 
49,950

Change in other assets and liabilities
 
(20,462
)
 
(62,563
)
Net cash provided by operating activities
 
246,726

 
121,604

Cash flows from investing activities
 
 
 
 
Available-for-sale investment and mortgage-related securities purchased
 
(39,721
)
 
(146,794
)
Principal repayments on available-for-sale investment and mortgage-related securities
 
84,487

 
104,310

Proceeds from sale of available-for-sale investment and mortgage-related securities
 
71,367

 
3,548

Net increase in loans held for investment
 
(293,996
)
 
(75,982
)
Proceeds from sale of real estate acquired in settlement of loans
 
8,777

 
9,659

Capital expenditures
 
(247,392
)
 
(225,961
)
Contributions in aid of construction
 
23,633

 
33,106

Proceeds from sale of credit card portfolio
 
26,386

 
—

Other
 
3,035

 
865

Net cash used in investing activities
 
(363,424
)
 
(297,249
)
Cash flows from financing activities
 
 
 
 
Net increase in deposit liabilities
 
80,926

 
56,756

Net increase in short-term borrowings with original maturities of three months or less
 
47,648

 
13,398

Net decrease in retail repurchase agreements
 
(6,314
)
 
(22,011
)
Proceeds from other bank borrowings
 
120,000

 
—

Repayments of other bank borrowings
 
(70,000
)
 
—

Proceeds from issuance of long-term debt
 
50,000

 
457,000

Repayment of long-term debt
 
(50,000
)
 
(368,500
)
Excess tax benefits from share-based payment arrangements
 
469

 
65

Net proceeds from issuance of common stock
 
18,383

 
16,881

Common stock dividends
 
(73,584
)
 
(71,966
)
Preferred stock dividends of subsidiaries
 
(1,417
)
 
(1,417
)
Other
 
(4,033
)
 
(6,314
)
Net cash provided by financing activities
 
112,078

 
73,892

Net decrease in cash and cash equivalents
 
(4,620
)
 
(101,753
)
Cash and cash equivalents, beginning of period
 
219,662

 
270,265

Cash and cash equivalents, end of period
 
$
215,042

 
$
168,512

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.


9


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Three months  
 ended September 30
 
Nine months  
 ended September 30
(in thousands)
 
2013
 
2012
 
2013
 
2012
Operating revenues
 
$
763,933

 
799,203

 
2,208,923

 
$
2,334,826

Operating expenses
 
 
 
 
 
 
 
 
Fuel oil
 
283,360

 
327,173

 
877,738

 
986,076

Purchased power
 
194,861

 
186,699

 
526,669

 
539,840

Other operation
 
72,008

 
70,441

 
209,615

 
196,806

Maintenance
 
31,513

 
30,368

 
88,555

 
91,641

Depreciation
 
38,995

 
35,941

 
115,865

 
108,556

Taxes, other than income taxes
 
72,382

 
74,850

 
208,828

 
222,149

Income taxes
 
18,928

 
22,352

 
51,356

 
58,291

Total operating expenses
 
712,047

 
747,824

 
2,078,626

 
2,203,359

Operating income
 
51,886

 
51,379

 
130,297

 
131,467

Other income
 
 
 
 
 
 
 
 
Allowance for equity funds used during construction
 
1,255

 
1,611

 
4,030

 
5,548

Other, net
 
1,099

 
1,087

 
4,351

 
3,810

Income tax expense
 
(129
)
 
(42
)
 
(420
)
 
(137
)
Total other income
 
2,225

 
2,656

 
7,961

 
9,221

Interest and other charges
 
 
 
 
 
 
 
 
Interest on long-term debt
 
14,615

 
14,694

 
43,843

 
44,400

Amortization of net bond premium and expense
 
646

 
870

 
1,940

 
2,276

Other interest charges (credits)
 
1,033

 
286

 
1,666

 
(84
)
Allowance for borrowed funds used during construction
 
(498
)
 
(688
)
 
(1,626
)
 
(2,451
)
Total interest and other charges
 
15,796

 
15,162

 
45,823

 
44,141

Net income
 
38,315

 
38,873

 
92,435

 
96,547

Preferred stock dividends of subsidiaries
 
228

 
228

 
686

 
686

Net income attributable to Hawaiian Electric
 
38,087

 
38,645

 
91,749

 
95,861

Preferred stock dividends of Hawaiian Electric
 
270

 
270

 
810

 
810

Net income for common stock
 
$
37,817

 
$
38,375

 
$
90,939

 
$
95,051

Comprehensive income attributable to Hawaiian Electric
 
$
37,834

 
$
38,452

 
$
90,991

 
$
95,280

OTHER ELECTRIC UTILITY INFORMATION
 
 
 
 
 
 
 
 
Kilowatthour sales (millions)
 
 
 
 
 
 
 
 
   Hawaiian Electric
 
1,807

 
1,796

 
5,100

 
5,205

   Hawaii Electric Light
 
275

 
274

 
803

 
810

   Maui Electric
 
294

 
292

 
843

 
855

 
 
2,376

 
2,362

 
6,746

 
6,870

Wet-bulb temperature (Oahu average; degrees Fahrenheit)
 
70.6

 
70.8

 
68.6

 
68.7

Cooling degree days (Oahu)
 
1,468

 
1,419

 
3,371

 
3,430

Average fuel oil cost per barrel
 
$
127.42

 
$
139.68

 
$
130.15

 
$
139.65

 
 
 
 
 
 
Twelve months ended
September 30
Return on average common equity (%) (simple average)1
 
 
 
 
 
2013
 
2012
   Hawaiian Electric
 
 
 
 
 
6.69

 
9.40

   Hawaii Electric Light
 
 
 
 
 
5.41

 
7.53

   Maui Electric
 
 
 
 
 
6.79

 
7.14

   Hawaiian Electric Consolidated
 
 
 
 
 
6.46

 
8.64

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
1  
On a core basis, the 2013 and 2012 return on average common equity (twelve months ended September 30) were 8.5% and 10.0%, respectively for Hawaiian Electric;  6.6% and 7.5%, respectively for Hawaii Electric Light; 8.2% and 7.1%, respectively for Maui Electric and 8.1% and 9.0% respectively, for Hawaiian Electric Consolidated. See reconciliation of GAAP to non-GAAP measures.

10


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



(dollars in thousands, except par value)
 
September 30, 2013
 
December 31, 2012
Assets
 
 
 
 
Utility plant, at cost
 
 
 
 
Land
 
$
51,834

 
$
51,568

Plant and equipment
 
5,593,801

 
5,364,400

Less accumulated depreciation
 
(2,093,575
)
 
(2,040,789
)
Construction in progress
 
151,077

 
151,378

Net utility plant
 
3,703,137

 
3,526,557

Current assets
 
 
 
 
Cash and cash equivalents
 
25,185

 
17,159

Customer accounts receivable, net
 
187,704

 
210,779

Accrued unbilled revenues, net
 
139,901

 
134,298

Other accounts receivable, net
 
9,174

 
28,176

Fuel oil stock, at average cost
 
137,087

 
161,419

Materials and supplies, at average cost
 
59,434

 
51,085

Prepayments and other
 
45,376

 
32,865

Regulatory assets
 
45,723

 
51,267

Total current assets
 
649,584

 
687,048

Other long-term assets
 
 
 
 
Regulatory assets
 
844,696

 
813,329

Unamortized debt expense
 
9,674

 
10,554

Other
 
62,667

 
71,305

Total other long-term assets
 
917,037

 
895,188

Total assets
 
$
5,269,758

 
$
5,108,793

Capitalization and liabilities
 
 
 
 
Capitalization
 
 
 
 
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 14,665,264 shares)
 
$
97,788

 
$
97,788

Premium on capital stock
 
468,045

 
468,045

Retained earnings
 
937,029

 
907,273

Accumulated other comprehensive loss, net of income tax benefits-retirement benefit plans
 
(918
)
 
(970
)
Common stock equity
 
1,501,944

 
1,472,136

Cumulative preferred stock — not subject to mandatory redemption
 
34,293

 
34,293

Long-term debt, net
 
1,147,880

 
1,147,872

Total capitalization
 
2,684,117

 
2,654,301

Current liabilities
 
 
 
 
Short-term borrowings from non-affiliates
 
73,246

 
—

Accounts payable
 
180,957

 
186,824

Interest and preferred dividends payable
 
22,397

 
21,092

Taxes accrued
 
233,453

 
251,066

Other
 
78,534

 
62,879

Total current liabilities
 
588,587

 
521,861

Deferred credits and other liabilities
 
 
 
 
Deferred income taxes
 
478,601

 
417,611

Regulatory liabilities
 
329,131

 
322,074

Unamortized tax credits
 
71,038

 
66,584

Defined benefit pension and other postretirement benefit plans liability
 
596,240

 
620,205

Other
 
96,128

 
100,637

Total deferred credits and other liabilities
 
1,571,138

 
1,527,111

Contributions in aid of construction
 
425,916

 
405,520

Total capitalization and liabilities
 
$
5,269,758

 
$
5,108,793


This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

11


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


Nine months ended September 30,
 
2013
 
2012
(in thousands)
 
 
 
 
Cash flows from operating activities
 
 

 
 

Net income
 
$
92,435

 
$
96,547

Adjustments to reconcile net income to net cash provided by operating activities
 
 

 
 

Depreciation of property, plant and equipment
 
115,865

 
108,556

Other amortization
 
2,470

 
4,074

Change in deferred income taxes
 
48,014

 
82,717

Change in tax credits, net
 
4,510

 
3,642

Allowance for equity funds used during construction
 
(4,030
)
 
(5,548
)
Changes in assets and liabilities
 
 

 
 

Decrease (increase) in accounts receivable
 
42,077

 
(36,907
)
Decrease (increase) in accrued unbilled revenues
 
(5,603
)
 
5,736

Decrease (increase) in fuel oil stock
 
24,332

 
(31,372
)
Increase in materials and supplies
 
(8,349
)
 
(7,305
)
Increase in regulatory assets
 
(53,314
)
 
(57,793
)
Decrease in accounts payable
 
(22,974
)
 
(3,481
)
Decrease in prepaid and accrued income taxes and utility revenue taxes
 
(15,416
)
 
(20,665
)
Contributions to defined benefit pension and other postretirement benefit plans
 
(60,876
)
 
(62,417
)
Other increase in defined benefit pension and other postretirement benefit plans liability
 
62,364

 
49,861

Change in other assets and liabilities
 
(10,195
)
 
(45,633
)
Net cash provided by operating activities
 
211,310

 
80,012

Cash flows from investing activities
 
 

 
 

Capital expenditures
 
(237,869
)
 
(220,970
)
Contributions in aid of construction
 
23,633

 
33,106

Other
 
427

 
—

Net cash used in investing activities
 
(213,809
)
 
(187,864
)
Cash flows from financing activities
 
 

 
 

Common stock dividends
 
(61,183
)
 
(54,783
)
Preferred stock dividends of Hawaiian Electric and subsidiaries
 
(1,496
)
 
(1,496
)
Proceeds from issuance of long-term debt
 
—

 
457,000

Repayment of long-term debt
 
—

 
(368,500
)
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less
 
73,246

 
44,719

Other
 
(42
)
 
(2,172
)
Net cash provided by financing activities
 
10,525

 
74,768

Net increase (decrease) in cash and cash equivalents
 
8,026

 
(33,084
)
Cash and cash equivalents, beginning of period
 
17,159

 
48,806

Cash and cash equivalents, end of period
 
$
25,185

 
$
15,722


This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

12


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


 
 
Three months ended 
 
Nine months ended 
 September 30
(in thousands)
 
September 30, 2013
 
June 30, 2013
 
September 30, 2012
 
2013
 
2012
Interest and dividend income
 
 

 
 
 
 

 
 

 
 

Interest and fees on loans
 
$
43,337

 
$
43,624

 
$
43,880

 
$
129,564

 
$
133,241

Interest and dividend on investment and mortgage-related securities
 
3,025

 
3,234

 
3,432

 
9,723

 
10,534

Total interest and dividend income
 
46,362

 
46,858

 
47,312

 
139,287

 
143,775

Interest expense
 
 

 
 

 
 

 
 

 
 

Interest on deposit liabilities
 
1,262

 
1,296

 
1,540

 
3,870

 
5,015

Interest on other borrowings
 
1,206

 
1,178

 
1,201

 
3,548

 
3,676

Total interest expense
 
2,468

 
2,474

 
2,741

 
7,418

 
8,691

Net interest income
 
43,894

 
44,384

 
44,571

 
131,869

 
135,084

Provision for loan losses
 
54

 
(959
)
 
3,580

 
953

 
9,504

Net interest income after provision for loan losses
 
43,840

 
45,343

 
40,991

 
130,916

 
125,580

Noninterest income
 
 

 
 

 
 

 
 

 
 

Fees from other financial services
 
5,728

 
7,996

 
7,674

 
21,367

 
22,474

Fee income on deposit liabilities
 
4,819

 
4,433

 
4,527

 
13,566

 
13,127

Fee income on other financial products
 
2,714

 
1,780

 
1,660

 
6,288

 
4,741

Mortgage banking income
 
1,547

 
2,003

 
4,077

 
6,896

 
8,297

Gain on sale of securities
 
—

 
1,226

 
—

 
1,226

 
134

Other income
 
3,888

 
1,731

 
1,346

 
7,211

 
4,021

Total noninterest income
 
18,696

 
19,169

 
19,284

 
56,554

 
52,794

Noninterest expense
 
 

 
 

 
 

 
 

 
 

Compensation and employee benefits
 
20,564

 
20,063

 
18,684

 
60,715

 
56,026

Occupancy
 
4,208

 
4,219

 
4,400

 
12,550

 
12,866

Data processing
 
2,168

 
2,827

 
2,644

 
7,982

 
7,244

Services
 
2,424

 
2,328

 
3,062

 
6,855

 
7,066

Equipment
 
1,825

 
1,870

 
1,762

 
5,469

 
5,299

Other expense
 
8,539

 
8,500

 
8,096

 
24,634

 
22,909

Total noninterest expense
 
39,728

 
39,807

 
38,648

 
118,205

 
111,410

Income before income taxes
 
22,808

 
24,705

 
21,627

 
69,265

 
66,964

Income taxes
 
7,532

 
8,786

 
7,419

 
23,915

 
22,690

Net income
 
$
15,276

 
$
15,919

 
$
14,208

 
$
45,350

 
$
44,274

Comprehensive income
 
$
14,107

 
$
7,340

 
$
15,517

 
$
36,931

 
$
46,872

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
 
 
 
 
Return on average assets
 
1.20

 
1.25

 
1.15

 
1.19

 
1.19

Return on average equity
 
12.13

 
12.56

 
11.24

 
11.99

 
11.81

Return on average tangible common equity
 
14.50

 
15.00

 
13.41

 
14.33

 
14.14

Net interest margin
 
3.73

 
3.79

 
3.92

 
3.77

 
3.98

Net charge-offs to average loans outstanding
 
—

 
0.08

 
0.35

 
0.06

 
0.27

Efficiency ratio
 
63

 
62

 
60

 
62

 
59

As of period end
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to loans outstanding and real estate owned *
 
1.33

 
1.56

 
1.73

 
 
 
 
Allowance for loan losses to loans outstanding
 
1.01

 
1.04

 
1.06

 
 
 
 
Tier-1 leverage ratio *
 
9.3

 
9.3

 
9.3

 
 
 
 
Total risk-based capital ratio *
 
12.5

 
12.5

 
12.9

 
 
 
 
Tangible common equity to total assets
 
8.36

 
8.42

 
8.72

 
 
 
 
Dividend paid to HEI (via ASHI) ($ in millions)
 
10

 
10

 
10

 
 
 
 
* Regulatory basis
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

13


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



(in thousands)
 
September 30, 2013
 
December 31, 2012
Assets
 
 

 
 

Cash and cash equivalents
 
$
189,524

 
$
184,430

Available-for-sale investment and mortgage-related securities
 
535,264

 
671,358

Investment in stock of Federal Home Loan Bank of Seattle
 
93,413

 
96,022

Loans receivable held for investment
 
4,046,184

 
3,779,218

Allowance for loan losses
 
(41,052
)
 
(41,985
)
Loans receivable held for investment, net
 
4,005,132

 
3,737,233

Loans held for sale, at lower of cost or fair value
 
5,829

 
26,005

Other
 
248,020

 
244,435

Goodwill
 
82,190

 
82,190

Total assets
 
$
5,159,372

 
$
5,041,673

 
 
 
 
 
Liabilities and shareholder’s equity
 
 

 
 

Deposit liabilities—noninterest-bearing
 
$
1,205,526

 
$
1,164,308

Deposit liabilities—interest-bearing
 
3,105,316

 
3,065,608

Other borrowings
 
239,612

 
195,926

Other
 
102,172

 
117,752

Total liabilities
 
4,652,626

 
4,543,594

 
 
 

 
 

Common stock
 
335,448

 
333,712

Retained earnings
 
195,113

 
179,763

Accumulated other comprehensive income (loss), net of taxes
 
(23,815
)
 
(15,396
)
Total shareholder’s equity
 
506,746

 
498,079

Total liabilities and shareholder’s equity
 
$
5,159,372

 
$
5,041,673


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2012 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.


14


EXPLANATION OF HEI’S USE OF CERTAIN UNAUDITED NON-GAAP MEASURES
HEI and Hawaiian Electric management use certain non-GAAP measures to evaluate the performance of the utility and HEI. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies’ core operating activities. Core earnings as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings for both the utility and HEI consolidated and the corresponding adjusted return on average common equity (ROACE).
The reconciling adjustments from GAAP earnings to core earnings are limited to the settlement charges for the partial write-off of utility assets in 2012 and 2011. For more information on the settlement charge recorded in 2012, see the Form 8-K filed on March 20, 2013.
Management does not consider these items to be representative of the company’s fundamental core earnings.



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
 
(Unaudited)
 
 
 
Net Income
 
Twelve months ended
 
September 30,
(in millions)
2013
2012
GAAP (as reported)
$
136.3

$
159.0

Excluding special items (after-tax):
 
 
Settlement agreement for the partial writedown of certain utility assets
24.4

—

Settlement agreement for the partial writedown of the East Oahu Transmission Project (EOTP) Phase I costs
—

5.7

Non-GAAP (core)
$
160.8

$
164.8

Note: Columns may not foot due to rounding
 
 
Twelve months ended
 
September 30,
Other measures:
2013
2012
Return on average common equity (ROACE) (simple average):
Based on GAAP
8.4
%
10.1
%
Based on non-GAAP (core)2
9.9
%
10.5
%
1  U.S. Generally Accepted Accounting Principles.
 
2 Calculated as core net income divided by average GAAP common equity.

15


Hawaiian Electric Company, Inc. and Subsidiaries
 
RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES
 
(Unaudited)
 
 
 
 
 
Net Income
 
 
Twelve months ended
 
 
September 30,
(in millions)
 
2013
2012
GAAP (as reported)
 
$
95.2

$
120.9

Excluding special items (after-tax):
 
 
 
Settlement agreement for the partial writedown of certain utility assets
 
24.4

—

Settlement agreement for the partial writedown of the EOTP Phase I costs
 
—

5.7

Non-GAAP (core)
 
$
119.6

$
126.6

Note: Columns may not foot due to rounding
 
 
 
 
 
Twelve months ended
 
 
September 30,
Other measures:
 
2013
2012
Return on average common equity (ROACE) (simple average):
 
Based on GAAP
 
6.5
%
8.6
%
Based on non-GAAP (core)2
 
8.1
%
9.0
%

 
 
 
 
 
 
 
 
 
 
 
 
Hawaiian Electric
 
Hawaii Electric Light
 
Maui Electric
 
 
Net Income
 
Net Income
 
Net Income
 
 
Twelve months ended
 
Twelve months ended
 
Twelve months ended
 
 
September 30,
 
September 30,
 
September 30,
(in millions)
 
2013
2012
 
2013
2012
 
2013
2012
GAAP (as reported)
 
$
63.9

$
82.6

 
$
15.1

$
21.3

 
$
16.1

$
17.0

Excluding special items (after-tax):
 
 
 
 
 
 
 
 
 
Settlement agreement for the partial writedown of certain utility assets
 
17.7

—

 
3.4

—

 
3.4

—

Settlement agreement for the partial writedown of the EOTP Phase I costs
 
—

5.7

 
—

—

 
—

—

Non-GAAP (core)
 
$
81.6

$
88.3

 
$
18.5

$
21.3

 
$
19.5

$
17.0

Note: Columns may not foot due to rounding
 
 
 
 
 
 
 
 
 
Twelve months ended
 
Twelve months ended
 
Twelve months ended
 
 
September 30,
 
September 30,
 
September 30,
Other measures:
 
2013
2012
 
2013
2012
 
2013
2012
Return on average common equity (ROACE)
(simple average):
 
 
 
 
 
 
 
Based on GAAP
 
6.7
%
9.4
%
 
5.4
%
7.5
%
 
6.8
%
7.1
%
Based on non-GAAP (core)2
 
8.5
%
10.0
%
 
6.6
%
7.5
%
 
8.2
%
7.1
%
1  U.S. Generally Accepted Accounting Principles.
 
 
 
 
 
 
2 Calculated as core net income divided by average GAAP common equity.
 
 
 


16