Exact Name of Registrant as | Commission | I.R.S. Employer | ||
Specified in Its Charter | File Number | Identification No. | ||
HAWAIIAN ELECTRIC INDUSTRIES, INC. | 1-8503 | 99-0208097 | ||
and Principal Subsidiary | ||||
HAWAIIAN ELECTRIC COMPANY, INC. | 1-4955 | 99-0040500 |
Hawaiian Electric Industries, Inc. Yes x No o | Hawaiian Electric Company, Inc. Yes x No o |
Hawaiian Electric Industries, Inc. Yes x No o | Hawaiian Electric Company, Inc. Yes x No o |
Hawaiian Electric Industries, Inc. | Large accelerated filer x | Hawaiian Electric Company, Inc. | Large accelerated filer o | |||
Accelerated filer o | Accelerated filer o | |||||
Non-accelerated filer o | Non-accelerated filer x | |||||
(Do not check if a smaller reporting company) | (Do not check if a smaller reporting company) | |||||
Smaller reporting company o | Smaller reporting company o | |||||
Emerging growth company o | Emerging growth company o |
Hawaiian Electric Industries, Inc. o | Hawaiian Electric Company, Inc. o |
Hawaiian Electric Industries, Inc. Yes o No x | Hawaiian Electric Company, Inc. Yes o No x |
Class of Common Stock | Outstanding July 27, 2018 | |
Hawaiian Electric Industries, Inc. (Without Par Value) | 108,879,245 Shares | |
Hawaiian Electric Company, Inc. ($6-2/3 Par Value) | 16,142,216 Shares (not publicly traded) |
Page No. | |||
Terms | Definitions | |
ADIT | Accumulated deferred income tax balances | |
AES Hawaii | AES Hawaii, Inc. | |
AFUDC | Allowance for funds used during construction | |
AOCI | Accumulated other comprehensive income/(loss) | |
ASC | Accounting Standards Codification | |
ASB | American Savings Bank, F.S.B., a wholly-owned subsidiary of ASB Hawaii, Inc. | |
ASB Hawaii | ASB Hawaii, Inc. (formerly American Savings Holdings, Inc.), a wholly owned subsidiary of Hawaiian Electric Industries, Inc. and the parent company of American Savings Bank, F.S.B. | |
ASU | Accounting Standards Update | |
CIAC | Contributions in aid of construction | |
CIP CT-1 | Campbell Industrial Park 110 MW combustion turbine No. 1 | |
Company | Hawaiian Electric Industries, Inc. and its direct and indirect subsidiaries, including, without limitation, Hawaiian Electric Company, Inc. and its subsidiaries (listed under Hawaiian Electric); ASB Hawaii, Inc. and its subsidiary, American Savings Bank, F.S.B.; Pacific Current, LLC and its subsidiaries, Hamakua Holdings, LLC (and its subsidiary, Hamakua Energy, LLC) and Mauo Holdings, LLC (and its subsidiary, Mauo, LLC); The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.); and HEI Properties, Inc. (dissolved in 2015 and wound up in 2017) | |
Consumer Advocate | Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii | |
CBRE | Community-based renewable energy | |
DER | Distributed energy resources | |
D&O | Decision and order from the PUC | |
Dodd-Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 | |
DOH | Department of Health of the State of Hawaii | |
DRIP | HEI Dividend Reinvestment and Stock Purchase Plan | |
ECAC | Energy cost adjustment clause | |
ECRC | Energy cost recovery clause | |
EIP | 2010 Equity and Incentive Plan, as amended and restated | |
EPA | Environmental Protection Agency — federal | |
EPS | Earnings per share | |
ERP/EAM | Enterprise Resource Planning/Enterprise Asset Management | |
EVE | Economic value of equity | |
Exchange Act | Securities Exchange Act of 1934 | |
FASB | Financial Accounting Standards Board | |
FDIC | Federal Deposit Insurance Corporation | |
federal | U.S. Government | |
FHLB | Federal Home Loan Bank | |
FHLMC | Federal Home Loan Mortgage Corporation | |
FNMA | Federal National Mortgage Association | |
FRB | Federal Reserve Board | |
GAAP | Accounting principles generally accepted in the United States of America |
Terms | Definitions | |
GNMA | Government National Mortgage Association | |
Hawaii Electric Light | Hawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc. | |
Hawaiian Electric | Hawaiian Electric Company, Inc., an electric utility subsidiary of Hawaiian Electric Industries, Inc. and parent company of Hawaii Electric Light Company, Inc., Maui Electric Company, Limited, HECO Capital Trust III (unconsolidated financing subsidiary), Renewable Hawaii, Inc. and Uluwehiokama Biofuels Corp. | |
Hamakua Energy | Hamakua Energy, LLC, an indirect subsidiary of HEI and successor in interest to Hamakua Energy Partners, L.P., an affiliate of Arclight Capital Partners (a Boston based private equity firm focused on energy infrastructure investments) and successor in interest to Encogen Hawaii, L.P. | |
HEI | Hawaiian Electric Industries, Inc., direct parent company of Hawaiian Electric Company, Inc., ASB Hawaii, Inc., HEI Properties, Inc. (dissolved in 2015 and wound up in 2017), The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.) and Pacific Current, LLC | |
HEIRSP | Hawaiian Electric Industries Retirement Savings Plan | |
HELOC | Home equity line of credit | |
HPOWER | City and County of Honolulu with respect to a power purchase agreement for a refuse-fired plant | |
IPP | Independent power producer | |
Kalaeloa | Kalaeloa Partners, L.P. | |
KWH | Kilowatthour/s (as applicable) | |
LTIP | Long-term incentive plan | |
Maui Electric | Maui Electric Company, Limited, an electric utility subsidiary of Hawaiian Electric Company, Inc. | |
MPIR | Major Project Interim Recovery | |
MSR | Mortgage servicing right | |
Mauo | Mauo, LLC, an indirect subsidiary of HEI | |
MW | Megawatt/s (as applicable) | |
NEM | Net energy metering | |
NII | Net interest income | |
NPBC | Net periodic benefit costs | |
NPPC | Net periodic pension costs | |
O&M | Other operation and maintenance | |
OCC | Office of the Comptroller of the Currency | |
OPEB | Postretirement benefits other than pensions | |
Pacific Current | Pacific Current, LLC, a wholly owned subsidiary of HEI and parent company of Hamakua Holdings, LLC and Mauo Holdings, LLC | |
PIMs | Performance incentive mechanisms | |
PPA | Power purchase agreement | |
PPAC | Purchased power adjustment clause | |
PSIPs | Power Supply Improvement Plans | |
PUC | Public Utilities Commission of the State of Hawaii | |
PV | Photovoltaic | |
RAM | Rate adjustment mechanism | |
RBA | Revenue balancing account | |
RFP | Request for proposals | |
ROACE | Return on average common equity | |
RORB | Return on rate base | |
RPS | Renewable portfolio standards | |
SEC | Securities and Exchange Commission | |
See | Means the referenced material is incorporated by reference | |
Tax Act | 2017 Tax Cuts and Jobs Act (H.R. 1, An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018) | |
TDR | Troubled debt restructuring | |
Trust III | HECO Capital Trust III | |
Utilities | Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited | |
VIE | Variable interest entity |
• | international, national and local economic and political conditions--including the state of the Hawaii tourism, defense and construction industries; the strength or weakness of the Hawaii and continental U.S. real estate markets (including the fair value and/or the actual performance of collateral underlying loans held by ASB, which could result in higher loan loss provisions and write-offs); decisions concerning the extent of the presence of the federal government and military in Hawaii; the implications and potential impacts of U.S. and foreign capital and credit market conditions and federal, state and international responses to those conditions; and the potential impacts of global developments (including global economic conditions and uncertainties; unrest; the conflict in Syria; the effects of changes that have or may occur in U.S. policy, such as with respect to immigration and trade; terrorist acts; potential conflict or crisis with North Korea; and potential pandemics); |
• | the effects of future actions or inaction of the U.S. government or related agencies, including those related to the U.S. debt ceiling, monetary policy, trade policy and tariffs, and other policy and regulation changes advanced or proposed by President Trump and his administration; |
• | weather and natural disasters (e.g., hurricanes, earthquakes, tsunamis, lightning strikes, lava flows and the potential effects of climate change, such as more severe storms and rising sea levels), including their impact on the Company's and Utilities' operations and the economy; |
• | the timing and extent of changes in interest rates and the shape of the yield curve; |
• | the ability of the Company and the Utilities to access the credit and capital markets (e.g., to obtain commercial paper and other short-term and long-term debt financing, including lines of credit, and, in the case of HEI, to issue common stock) under volatile and challenging market conditions, and the cost of such financings, if available; |
• | the risks inherent in changes in the value of the Company’s pension and other retirement plan assets and ASB’s securities available for sale; |
• | changes in laws, regulations (including tax regulations), market conditions and other factors that result in changes in assumptions used to calculate retirement benefits costs and funding requirements; |
• | the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) and of the rules and regulations that the Dodd-Frank Act requires to be promulgated; |
• | increasing competition in the banking industry (e.g., increased price competition for deposits, or an outflow of deposits to alternative investments, which may have an adverse impact on ASB’s cost of funds); |
• | the potential delay by the Public Utilities Commission of the State of Hawaii (PUC) in considering (and potential disapproval of actual or proposed) renewable energy proposals and related costs; reliance by the Utilities on outside parties such as the state, independent power producers (IPPs) and developers; and uncertainties surrounding technologies, solar power, wind power, biofuels, environmental assessments required to meet renewable portfolio standards (RPS) goals and the impacts of implementation of the renewable energy proposals on future costs of electricity; |
• | the ability of the Utilities to develop, implement and recover the costs of implementing the Utilities’ action plans included in their updated Power Supply Improvement Plans (PSIPs), Demand Response Portfolio Plan, Distributed Generation Interconnection Plan, Grid Modernization Plans, and business model changes, which have been and are continuing to be developed and updated in response to the orders issued by the PUC, the PUC’s April 2014 statement of its inclinations on the future of Hawaii’s electric utilities and the vision, business strategies and regulatory policy changes required to align the Utilities’ business model with customer interests and the state’s public policy goals, and subsequent orders of the PUC; |
• | capacity and supply constraints or difficulties, especially if generating units (utility-owned or IPP-owned) fail or measures such as demand-side management, distributed generation, combined heat and power or other firm capacity supply-side resources fall short of achieving their forecasted benefits or are otherwise insufficient to reduce or meet peak demand; |
• | fuel oil price changes, delivery of adequate fuel by suppliers and the continued availability to the electric utilities of their energy cost adjustment clauses (ECACs); |
• | the continued availability to the electric utilities or modifications of other cost recovery mechanisms, including the purchased power adjustment clauses (PPACs), rate adjustment mechanisms (RAMs) and pension and postretirement benefits other than pensions (OPEB) tracking mechanisms, and the continued decoupling of revenues from sales to mitigate the effects of declining kilowatthour sales; |
• | the ability of the Utilities to achieve performance incentive mechanisms currently in place; |
• | the impact from the PUC’s implementation of performance-based ratemaking for the Utilities pursuant to Senate Bill No. 2939 SD2, including the potential addition of new performance incentive mechanisms, third party proposals to the PUC’s implementation of PBR, and the implications of not achieving performance incentive goals; |
• | the impact of fuel price volatility on customer satisfaction and political and regulatory support for the Utilities; |
• | the risks associated with increasing reliance on renewable energy, including the availability and cost of non-fossil fuel supplies for renewable energy generation and the operational impacts of adding intermittent sources of renewable energy to the electric grid; |
• | the growing risk that energy production from renewable generating resources may be curtailed and the interconnection of additional resources will be constrained as more generating resources are added to the Utilities' electric systems and as customers reduce their energy usage; |
• | the ability of IPPs to deliver the firm capacity anticipated in their power purchase agreements (PPAs); |
• | the potential that, as IPP contracts near the end of their terms, there may be less economic incentive for the IPPs to make investments in their units to ensure the availability of their units; |
• | the ability of the Utilities to negotiate, periodically, favorable agreements for significant resources such as fuel supply contracts and collective bargaining agreements; |
• | new technological developments that could affect the operations and prospects of the Utilities and ASB or their competitors such as the commercial development of energy storage and microgrids and banking through alternative channels; |
• | cyber security risks and the potential for cyber incidents, including potential incidents at HEI, its third-party vendors, and its subsidiaries (including at ASB branches and electric utility plants) and incidents at data processing centers they use, to the extent not prevented by intrusion detection and prevention systems, anti-virus software, firewalls and other general information technology controls; |
• | any failure in the implementation of the ERP/EAM system could adversely affect the Utilities’ ability to timely and accurately report financial information and make payments to vendors and employees; |
• | federal, state, county and international governmental and regulatory actions, such as existing, new and changes in laws, rules and regulations applicable to HEI, the Utilities and ASB (including changes in taxation, increases in capital requirements, regulatory policy changes, environmental laws and regulations (including resulting compliance costs and risks of fines and penalties and/or liabilities), the regulation of greenhouse gas emissions, governmental fees and assessments (such as Federal Deposit Insurance Corporation assessments), and potential carbon “cap and trade” legislation that may fundamentally alter costs to produce electricity and accelerate the move to renewable generation); |
• | developments in laws, regulations and policies governing protections for historic, archaeological and cultural sites, and plant and animal species and habitats, as well as developments in the implementation and enforcement of such laws, regulations and policies; |
• | discovery of conditions that may be attributable to historical chemical releases, including any necessary investigation and remediation, and any associated enforcement, litigation or regulatory oversight; |
• | decisions by the PUC in rate cases and other proceedings (including the risks of delays in the timing of decisions, adverse changes in final decisions from interim decisions and the disallowance of project costs as a result of adverse regulatory audit reports or otherwise); |
• | decisions by the PUC and by other agencies and courts on land use, environmental and other permitting issues (such as required corrective actions, restrictions and penalties that may arise, such as with respect to environmental conditions or RPS); |
• | potential enforcement actions by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC) and/or other governmental authorities (such as consent orders, required corrective actions, restrictions and penalties that may arise, for example, with respect to compliance deficiencies under existing or new banking and consumer protection laws and regulations or with respect to capital adequacy); |
• | the ability of the Utilities to recover increasing costs and earn a reasonable return on capital investments not covered by RAMs; |
• | the risks associated with the geographic concentration of HEI’s businesses and ASB’s loans, ASB’s concentration in a single product type (i.e., first mortgages) and ASB’s significant credit relationships (i.e., concentrations of large loans and/or credit lines with certain customers); |
• | changes in accounting principles applicable to HEI and its subsidiaries, including the adoption of new U.S. accounting standards, the potential discontinuance of regulatory accounting and the effects of potentially required consolidation of variable interest entities (VIEs) or required capital/finance lease or on-balance-sheet operating lease accounting for PPAs with IPPs; |
• | changes by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and the results of financing efforts; |
• | faster than expected loan prepayments that can cause an acceleration of the amortization of premiums on loans and investments and the impairment of mortgage-servicing assets of ASB; |
• | changes in ASB’s loan portfolio credit profile and asset quality which may increase or decrease the required level of provision for loan losses, allowance for loan losses and charge-offs; |
• | changes in ASB’s deposit cost or mix which may have an adverse impact on ASB’s cost of funds; |
• | the final outcome of tax positions taken by HEI and its subsidiaries; |
• | the risks of suffering losses and incurring liabilities that are uninsured (e.g., damages to the Utilities’ transmission and distribution system and losses from business interruption) or underinsured (e.g., losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits); |
• | the ability of the Company’s non-regulated subsidiary, Pacific Current, LLC, to achieve its performance and growth objectives, which in turn could affect its ability to service its non-recourse debt; |
• | the Company’s reliance on third parties and the risk of their non-performance; and |
• | other risks or uncertainties described elsewhere in this report and in other reports (e.g., “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K) previously and subsequently filed by HEI and/or Hawaiian Electric with the Securities and Exchange Commission (SEC). |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands, except per share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | ||||||||||||||||
Electric utility | $ | 608,126 | $ | 556,875 | $ | 1,178,553 | $ | 1,075,486 | ||||||||
Bank | 77,104 | 75,329 | 152,523 | 148,185 | ||||||||||||
Other | 47 | 77 | 75 | 172 | ||||||||||||
Total revenues | 685,277 | 632,281 | 1,331,151 | 1,223,843 | ||||||||||||
Expenses | ||||||||||||||||
Electric utility | 552,982 | 500,393 | 1,072,040 | 968,643 | ||||||||||||
Bank | 50,187 | 50,332 | 100,719 | 98,833 | ||||||||||||
Other | 3,309 | 3,754 | 7,704 | 8,827 | ||||||||||||
Total expenses | 606,478 | 554,479 | 1,180,463 | 1,076,303 | ||||||||||||
Operating income (loss) | ||||||||||||||||
Electric utility | 55,144 | 56,482 | 106,513 | 106,843 | ||||||||||||
Bank | 26,917 | 24,997 | 51,804 | 49,352 | ||||||||||||
Other | (3,262 | ) | (3,677 | ) | (7,629 | ) | (8,655 | ) | ||||||||
Total operating income | 78,799 | 77,802 | 150,688 | 147,540 | ||||||||||||
Retirement defined benefits expense—other than service costs | (1,564 | ) | (1,906 | ) | (3,397 | ) | (3,782 | ) | ||||||||
Interest expense, net—other than on deposit liabilities and other bank borrowings | (22,001 | ) | (20,440 | ) | (43,519 | ) | (40,008 | ) | ||||||||
Allowance for borrowed funds used during construction | 1,365 | 1,143 | 2,809 | 2,032 | ||||||||||||
Allowance for equity funds used during construction | 2,983 | 3,027 | 6,277 | 5,426 | ||||||||||||
Income before income taxes | 59,582 | 59,626 | 112,858 | 111,208 | ||||||||||||
Income taxes | 13,055 | 20,492 | 25,611 | 37,408 | ||||||||||||
Net income | 46,527 | 39,134 | 87,247 | 73,800 | ||||||||||||
Preferred stock dividends of subsidiaries | 473 | 473 | 946 | 946 | ||||||||||||
Net income for common stock | $ | 46,054 | $ | 38,661 | $ | 86,301 | $ | 72,854 | ||||||||
Basic earnings per common share | $ | 0.42 | $ | 0.36 | $ | 0.79 | $ | 0.67 | ||||||||
Diluted earnings per common share | $ | 0.42 | $ | 0.36 | $ | 0.79 | $ | 0.67 | ||||||||
Dividends declared per common share | $ | 0.31 | $ | 0.31 | $ | 0.62 | $ | 0.62 | ||||||||
Weighted-average number of common shares outstanding | 108,842 | 108,750 | 108,830 | 108,712 | ||||||||||||
Net effect of potentially dilutive shares | 121 | 47 | 223 | 157 | ||||||||||||
Weighted-average shares assuming dilution | 108,963 | 108,797 | 109,053 | 108,869 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income for common stock | $ | 46,054 | $ | 38,661 | $ | 86,301 | $ | 72,854 | ||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities: | ||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities arising during the period, net of tax benefits (taxes) of $1,592, $(1,334), $6,459 and $(1,482), respectively | (4,348 | ) | 2,021 | (17,645 | ) | 2,244 | ||||||||||
Derivatives qualifying as cash flow hedges: | ||||||||||||||||
Reclassification adjustment to net income, net of tax benefits of nil, nil, nil and $289, respectively | — | — | — | 454 | ||||||||||||
Retirement benefit plans: | ||||||||||||||||
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $1,862, $2,508, $3,654 and $5,010, respectively | 5,350 | 3,930 | 10,496 | 7,851 | ||||||||||||
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $1,674, $2,281, $3,277 and $4,582, respectively | (4,827 | ) | (3,581 | ) | (9,449 | ) | (7,194 | ) | ||||||||
Other comprehensive income (loss), net of taxes | (3,825 | ) | 2,370 | (16,598 | ) | 3,355 | ||||||||||
Comprehensive income attributable to Hawaiian Electric Industries, Inc. | $ | 42,229 | $ | 41,031 | $ | 69,703 | $ | 76,209 |
(dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 254,665 | $ | 261,881 | ||||
Accounts receivable and unbilled revenues, net | 299,771 | 263,209 | ||||||
Available-for-sale investment securities, at fair value | 1,409,528 | 1,401,198 | ||||||
Held-to-maturity investment securities, at amortized cost | 62,630 | 44,515 | ||||||
Stock in Federal Home Loan Bank, at cost | 10,158 | 9,706 | ||||||
Loans held for investment, net | 4,721,941 | 4,617,131 | ||||||
Loans held for sale, at lower of cost or fair value | 5,248 | 11,250 | ||||||
Property, plant and equipment, net of accumulated depreciation of $2,615,259 and $2,553,295 at June 30, 2018 and December 31, 2017, respectively | 4,611,949 | 4,460,248 | ||||||
Regulatory assets | 860,410 | 869,297 | ||||||
Other | 565,614 | 513,535 | ||||||
Goodwill | 82,190 | 82,190 | ||||||
Total assets | $ | 12,884,104 | $ | 12,534,160 | ||||
Liabilities and shareholders’ equity | ||||||||
Liabilities | ||||||||
Accounts payable | $ | 213,832 | $ | 193,714 | ||||
Interest and dividends payable | 27,594 | 25,837 | ||||||
Deposit liabilities | 6,116,109 | 5,890,597 | ||||||
Short-term borrowings—other than bank | 202,857 | 117,945 | ||||||
Other bank borrowings | 126,930 | 190,859 | ||||||
Long-term debt, net—other than bank | 1,783,009 | 1,683,797 | ||||||
Deferred income taxes | 375,832 | 388,430 | ||||||
Regulatory liabilities | 905,216 | 880,770 | ||||||
Defined benefit pension and other postretirement benefit plans liability | 494,541 | 509,514 | ||||||
Other | 500,873 | 521,018 | ||||||
Total liabilities | 10,746,793 | 10,402,481 | ||||||
Preferred stock of subsidiaries - not subject to mandatory redemption | 34,293 | 34,293 | ||||||
Commitments and contingencies (Notes 3 and 4) | ||||||||
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: 108,879,245 shares and 108,787,807 shares at June 30, 2018 and December 31, 2017, respectively | 1,665,901 | 1,662,491 | ||||||
Retained earnings | 495,656 | 476,836 | ||||||
Accumulated other comprehensive loss, net of tax benefits | (58,539 | ) | (41,941 | ) | ||||
Total shareholders’ equity | 2,103,018 | 2,097,386 | ||||||
Total liabilities and shareholders’ equity | $ | 12,884,104 | $ | 12,534,160 |
Common stock | Retained | Accumulated other comprehensive | |||||||||||||||||
(in thousands) | Shares | Amount | Earnings | income (loss) | Total | ||||||||||||||
Balance, December 31, 2017 | 108,788 | $ | 1,662,491 | $ | 476,836 | $ | (41,941 | ) | $ | 2,097,386 | |||||||||
Net income for common stock | — | — | 86,301 | — | 86,301 | ||||||||||||||
Other comprehensive loss, net of tax benefits | — | — | — | (16,598 | ) | (16,598 | ) | ||||||||||||
Issuance of common stock, net of expenses | 91 | 3,410 | — | — | 3,410 | ||||||||||||||
Common stock dividends | — | — | (67,481 | ) | — | (67,481 | ) | ||||||||||||
Balance, June 30, 2018 | 108,879 | $ | 1,665,901 | $ | 495,656 | $ | (58,539 | ) | $ | 2,103,018 | |||||||||
Balance, December 31, 2016 | 108,583 | $ | 1,660,910 | $ | 438,972 | $ | (33,129 | ) | $ | 2,066,753 | |||||||||
Net income for common stock | — | — | 72,854 | — | 72,854 | ||||||||||||||
Other comprehensive income, net of taxes | — | — | — | 3,355 | 3,355 | ||||||||||||||
Issuance of common stock, net of expenses | 202 | (507 | ) | — | — | (507 | ) | ||||||||||||
Common stock dividends | — | — | (67,426 | ) | — | (67,426 | ) | ||||||||||||
Balance, June 30, 2017 | 108,785 | $ | 1,660,403 | $ | 444,400 | $ | (29,774 | ) | $ | 2,075,029 |
Six months ended June 30 | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | 87,247 | $ | 73,800 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation of property, plant and equipment | 106,063 | 100,062 | ||||||
Other amortization | 20,603 | 6,101 | ||||||
Provision for loan losses | 6,304 | 6,741 | ||||||
Loans originated and purchased, held for sale | (78,313 | ) | (69,595 | ) | ||||
Proceeds from sale of loans, held for sale | 77,382 | 79,944 | ||||||
Deferred income taxes | (9,672 | ) | 17,047 | |||||
Share-based compensation expense | 4,414 | 3,285 | ||||||
Allowance for equity funds used during construction | (6,277 | ) | (5,426 | ) | ||||
Other | (147 | ) | 246 | |||||
Changes in assets and liabilities | ||||||||
Increase in accounts receivable and unbilled revenues, net | (41,526 | ) | (12,394 | ) | ||||
Increase in fuel oil stock | (19,867 | ) | (5,962 | ) | ||||
Decrease (increase) in regulatory assets | (19,600 | ) | 8,179 | |||||
Increase in accounts, interest and dividends payable | 31,784 | 43,530 | ||||||
Change in prepaid and accrued income taxes, tax credits and utility revenue taxes | (26,558 | ) | (37,954 | ) | ||||
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability | (871 | ) | 420 | |||||
Change in other assets and liabilities | (22,695 | ) | (33,922 | ) | ||||
Net cash provided by operating activities | 108,271 | 174,102 | ||||||
Cash flows from investing activities | ||||||||
Available-for-sale investment securities purchased | (133,698 | ) | (295,510 | ) | ||||
Principal repayments on available-for-sale investment securities | 108,379 | 99,663 | ||||||
Purchases of held-to-maturity investment securities | (20,450 | ) | — | |||||
Principal repayments of held-to-maturity investment securities | 2,270 | — | ||||||
Purchase of stock from Federal Home Loan Bank | (7,533 | ) | (2,868 | ) | ||||
Redemption of stock from Federal Home Loan Bank | 7,080 | 2,380 | ||||||
Net increase in loans held for investment | (111,521 | ) | (20,326 | ) | ||||
Proceeds from sale of commercial loans | 7,149 | 13,493 | ||||||
Proceeds from sale of real estate acquired in settlement of loans | 589 | 185 | ||||||
Capital expenditures | (259,898 | ) | (210,325 | ) | ||||
Contributions in aid of construction | 13,573 | 17,571 | ||||||
Contributions to low income housing investments | (3,279 | ) | — | |||||
Other | 5,919 | 8,216 | ||||||
Net cash used in investing activities | (391,420 | ) | (387,521 | ) | ||||
Cash flows from financing activities | ||||||||
Net increase in deposit liabilities | 123,137 | 175,457 | ||||||
Net increase in short-term borrowings with original maturities of three months or less | 84,881 | 49,789 | ||||||
Net increase in retail repurchase agreements | 38,446 | 9,048 | ||||||
Proceeds from other bank borrowings | 177,000 | 59,500 | ||||||
Repayments of other bank borrowings | (177,000 | ) | (73,034 | ) | ||||
Proceeds from issuance of long-term debt | 100,000 | 265,000 | ||||||
Repayment of long-term debt and funds transferred for redemption of special purpose revenue bonds | (878 | ) | (265,000 | ) | ||||
Withheld shares for employee taxes on vested share-based compensation | (996 | ) | (3,787 | ) | ||||
Common stock dividends | (67,481 | ) | (67,426 | ) | ||||
Preferred stock dividends of subsidiaries | (946 | ) | (946 | ) | ||||
Other | (230 | ) | (3,253 | ) | ||||
Net cash provided by financing activities | 275,933 | 145,348 | ||||||
Net decrease in cash and cash equivalents | (7,216 | ) | (68,071 | ) | ||||
Cash and cash equivalents, beginning of period | 261,881 | 278,452 | ||||||
Cash and cash equivalents, end of period | $ | 254,665 | $ | 210,381 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | $ | 608,126 | $ | 556,875 | $ | 1,178,553 | $ | 1,075,486 | ||||||||
Expenses | ||||||||||||||||
Fuel oil | 171,717 | 141,259 | 338,685 | 285,529 | ||||||||||||
Purchased power | 160,738 | 153,067 | 300,648 | 280,191 | ||||||||||||
Other operation and maintenance | 112,642 | 104,939 | 220,252 | 203,756 | ||||||||||||
Depreciation | 50,361 | 48,156 | 100,827 | 96,372 | ||||||||||||
Taxes, other than income taxes | 57,524 | 52,972 | 111,628 | 102,795 | ||||||||||||
Total expenses | 552,982 | 500,393 | 1,072,040 | 968,643 | ||||||||||||
Operating income | 55,144 | 56,482 | 106,513 | 106,843 | ||||||||||||
Allowance for equity funds used during construction | 2,983 | 3,027 | 6,277 | 5,426 | ||||||||||||
Retirement defined benefits expense—other than service costs | (988 | ) | (1,435 | ) | (2,252 | ) | (2,858 | ) | ||||||||
Interest expense and other charges, net | (18,160 | ) | (18,214 | ) | (35,854 | ) | (35,718 | ) | ||||||||
Allowance for borrowed funds used during construction | 1,365 | 1,143 | 2,809 | 2,032 | ||||||||||||
Income before income taxes | 40,344 | 41,003 | 77,493 | 75,725 | ||||||||||||
Income taxes | 8,676 | 14,860 | 17,851 | 27,618 | ||||||||||||
Net income | 31,668 | 26,143 | 59,642 | 48,107 | ||||||||||||
Preferred stock dividends of subsidiaries | 229 | 229 | 458 | 458 | ||||||||||||
Net income attributable to Hawaiian Electric | 31,439 | 25,914 | 59,184 | 47,649 | ||||||||||||
Preferred stock dividends of Hawaiian Electric | 270 | 270 | 540 | 540 | ||||||||||||
Net income for common stock | $ | 31,169 | $ | 25,644 | $ | 58,644 | $ | 47,109 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income for common stock | $ | 31,169 | $ | 25,644 | $ | 58,644 | $ | 47,109 | ||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||
Derivatives qualifying as cash flow hedges: | ||||||||||||||||
Reclassification adjustment to net income, net of tax benefits of nil, nil, nil and $289, respectively | — | — | — | 454 | ||||||||||||
Retirement benefit plans: | ||||||||||||||||
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $1,683, $2,306, $3,297 and $4,610, respectively | 4,853 | 3,621 | 9,506 | 7,239 | ||||||||||||
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $1,674, $2,281, $3,277 and $4,582, respectively | (4,827 | ) | (3,581 | ) | (9,449 | ) | (7,194 | ) | ||||||||
Other comprehensive income, net of taxes | 26 | 40 | 57 | 499 | ||||||||||||
Comprehensive income attributable to Hawaiian Electric Company, Inc. | $ | 31,195 | $ | 25,684 | $ | 58,701 | $ | 47,608 |
(dollars in thousands, except par value) | June 30, 2018 | December 31, 2017 | ||||||
Assets | ||||||||
Property, plant and equipment | ||||||||
Utility property, plant and equipment | ||||||||
Land | $ | 52,914 | $ | 53,177 | ||||
Plant and equipment | 6,652,982 | 6,401,040 | ||||||
Less accumulated depreciation | (2,534,428 | ) | (2,476,352 | ) | ||||
Construction in progress | 165,608 | 263,094 | ||||||
Utility property, plant and equipment, net | 4,337,076 | 4,240,959 | ||||||
Nonutility property, plant and equipment, less accumulated depreciation of $1,253 as of June 30, 2018 and $1,251 as of December 31, 2017 | 7,581 | 7,580 | ||||||
Total property, plant and equipment, net | 4,344,657 | 4,248,539 | ||||||
Current assets | ||||||||
Cash and cash equivalents | 20,860 | 12,517 | ||||||
Customer accounts receivable, net | 157,260 | 127,889 | ||||||
Accrued unbilled revenues, net | 110,839 | 107,054 | ||||||
Other accounts receivable, net | 6,896 | 7,163 | ||||||
Fuel oil stock, at average cost | 107,016 | 86,873 | ||||||
Materials and supplies, at average cost | 57,941 | 54,397 | ||||||
Prepayments and other | 29,240 | 25,355 | ||||||
Regulatory assets | 103,566 | 88,390 | ||||||
Total current assets | 593,618 | 509,638 | ||||||
Other long-term assets | ||||||||
Regulatory assets | 756,844 | 780,907 | ||||||
Other | 108,595 | 91,529 | ||||||
Total other long-term assets | 865,439 | 872,436 | ||||||
Total assets | $ | 5,803,714 | $ | 5,630,613 | ||||
Capitalization and liabilities | ||||||||
Capitalization | ||||||||
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 16,142,216 shares at June 30, 2018 and December 31, 2017) | $ | 107,634 | $ | 107,634 | ||||
Premium on capital stock | 614,667 | 614,675 | ||||||
Retained earnings | 1,131,185 | 1,124,193 | ||||||
Accumulated other comprehensive loss, net of tax benefits | (1,162 | ) | (1,219 | ) | ||||
Common stock equity | 1,852,324 | 1,845,283 | ||||||
Cumulative preferred stock — not subject to mandatory redemption | 34,293 | 34,293 | ||||||
Long-term debt, net | 1,418,474 | 1,318,516 | ||||||
Total capitalization | 3,305,091 | 3,198,092 | ||||||
Commitments and contingencies (Note 3) | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | 49,983 | 49,963 | ||||||
Short-term borrowings from non-affiliates | 91,880 | 4,999 | ||||||
Accounts payable | 153,759 | 159,610 | ||||||
Interest and preferred dividends payable | 22,684 | 22,575 | ||||||
Taxes accrued, including revenue taxes | 172,063 | 199,101 | ||||||
Regulatory liabilities | 9,787 | 3,401 | ||||||
Other | 59,203 | 59,456 | ||||||
Total current liabilities | 559,359 | 499,105 | ||||||
Deferred credits and other liabilities | ||||||||
Deferred income taxes | 388,875 | 394,041 | ||||||
Regulatory liabilities | 895,429 | 877,369 | ||||||
Unamortized tax credits | 92,798 | 90,369 | ||||||
Defined benefit pension and other postretirement benefit plans liability | 457,953 | 472,948 | ||||||
Other | 104,209 | 98,689 | ||||||
Total deferred credits and other liabilities | 1,939,264 | 1,933,416 | ||||||
Total capitalization and liabilities | $ | 5,803,714 | $ | 5,630,613 |
Common stock | Premium on capital | Retained | Accumulated other comprehensive | ||||||||||||||||||||
(in thousands) | Shares | Amount | stock | earnings | income (loss) | Total | |||||||||||||||||
Balance, December 31, 2017 | 16,142 | $ | 107,634 | $ | 614,675 | $ | 1,124,193 | $ | (1,219 | ) | $ | 1,845,283 | |||||||||||
Net income for common stock | — | — | — | 58,644 | — | 58,644 | |||||||||||||||||
Other comprehensive income, net of taxes | — | — | — | — | 57 | 57 | |||||||||||||||||
Common stock dividends | — | — | — | (51,652 | ) | — | (51,652 | ) | |||||||||||||||
Common stock issuance expenses | — | — | (8 | ) | — | — | (8 | ) | |||||||||||||||
Balance, June 30, 2018 | 16,142 | $ | 107,634 | $ | 614,667 | $ | 1,131,185 | $ | (1,162 | ) | $ | 1,852,324 | |||||||||||
Balance, December 31, 2016 | 16,020 | $ | 106,818 | $ | 601,491 | $ | 1,091,800 | $ | (322 | ) | $ | 1,799,787 | |||||||||||
Net income for common stock | — | — | — | 47,109 | — | 47,109 | |||||||||||||||||
Other comprehensive income, net of taxes | — | — | — | — | 499 | 499 | |||||||||||||||||
Common stock dividends | — | — | — | (43,884 | ) | — | (43,884 | ) | |||||||||||||||
Common stock issuance expenses | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||
Balance, June 30, 2017 | 16,020 | $ | 106,818 | $ | 601,486 | $ | 1,095,025 | $ | 177 | $ | 1,803,506 |
Six months ended June 30 | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | 59,642 | $ | 48,107 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation of property, plant and equipment | 100,827 | 96,372 | ||||||
Other amortization | 13,021 | 4,262 | ||||||
Deferred income taxes | (8,343 | ) | 23,599 | |||||
Allowance for equity funds used during construction | (6,277 | ) | (5,426 | ) | ||||
Other | 978 | 1,615 | ||||||
Changes in assets and liabilities | ||||||||
Increase in accounts receivable | (34,068 | ) | (1,729 | ) | ||||
Increase in accrued unbilled revenues | (3,785 | ) | (11,903 | ) | ||||
Increase in fuel oil stock | (20,143 | ) | (5,962 | ) | ||||
Increase in materials and supplies | (3,544 | ) | (3,420 | ) | ||||
Decrease (increase) in regulatory assets | (19,600 | ) | 8,179 | |||||
Increase in accounts payable | 18,284 | 39,716 | ||||||
Change in prepaid and accrued income taxes, tax credits and revenue taxes | (31,061 | ) | (40,910 | ) | ||||
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability | (1,961 | ) | 302 | |||||
Change in other assets and liabilities | 5,866 | (14,047 | ) | |||||
Net cash provided by operating activities | 69,836 | 138,755 | ||||||
Cash flows from investing activities | ||||||||
Capital expenditures | (213,220 | ) | (190,159 | ) | ||||
Contributions in aid of construction | 13,573 | 17,571 | ||||||
Other | 4,301 | 6,250 | ||||||
Net cash used in investing activities | (195,346 | ) | (166,338 | ) | ||||
Cash flows from financing activities | ||||||||
Common stock dividends | (51,652 | ) | (43,884 | ) | ||||
Preferred stock dividends of Hawaiian Electric and subsidiaries | (998 | ) | (998 | ) | ||||
Proceeds from issuance of long-term debt | 100,000 | 265,000 | ||||||
Funds transferred for redemption of special purpose revenue bonds | — | (265,000 | ) | |||||
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | 86,881 | 43,990 | ||||||
Other | (378 | ) | (3,229 | ) | ||||
Net cash provided by (used in) financing activities | 133,853 | (4,121 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 8,343 | (31,704 | ) | |||||
Cash and cash equivalents, beginning of period | 12,517 | 74,286 | ||||||
Cash and cash equivalents, end of period | $ | 20,860 | $ | 42,582 |
• | Requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. |
• | Requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. |
• | Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). |
• | Eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. |
Three months ended June 30, 2017 | Six months ended June 30, 2017 | ||||||||||||||||||
(in thousands) | As previously filed | Adjustment from adoption of ASU No. 2017-07 | As currently reported | As previously filed | Adjustment from adoption of ASU No. 2017-07 | As currently reported | |||||||||||||
HEI Condensed Consolidated Income Statement | |||||||||||||||||||
Expenses | |||||||||||||||||||
Electric utility | $ | 501,828 | $ | (1,435 | ) | $ | 500,393 | $ | 971,501 | $ | (2,858 | ) | $ | 968,643 | |||||
Bank | 50,533 | (201 | ) | 50,332 | 99,229 | (396 | ) | 98,833 | |||||||||||
Other | 4,024 | (270 | ) | 3,754 | 9,355 | (528 | ) | 8,827 | |||||||||||
Total expenses | 556,385 | (1,906 | ) | 554,479 | 1,080,085 | (3,782 | ) | 1,076,303 | |||||||||||
Operating income | |||||||||||||||||||
Electric utility | 55,047 | 1,435 | 56,482 | 103,985 | 2,858 | 106,843 | |||||||||||||
Bank | 24,796 | 201 | 24,997 | 48,956 | 396 | 49,352 | |||||||||||||
Other | (3,947 | ) | 270 | (3,677 | ) | (9,183 | ) | 528 | (8,655 | ) | |||||||||
Total operating income | 75,896 | 1,906 | 77,802 | 143,758 | 3,782 | 147,540 | |||||||||||||
Retirement defined benefits expense--other than service costs | — | (1,906 | ) | (1,906 | ) | — | (3,782 | ) | (3,782 | ) | |||||||||
Hawaiian Electric Condensed Consolidated Income Statement | |||||||||||||||||||
Other operation and maintenance | 106,374 | (1,435 | ) | 104,939 | 206,614 | (2,858 | ) | 203,756 | |||||||||||
Total expense | 501,828 | (1,435 | ) | 500,393 | 971,501 | (2,858 | ) | 968,643 | |||||||||||
Operating income | 55,047 | 1,435 | 56,482 | 103,985 | 2,858 | 106,843 | |||||||||||||
Retirement defined benefits expense--other than service costs | — | (1,435 | ) | (1,435 | ) | — | (2,858 | ) | (2,858 | ) | |||||||||
Hawaiian Electric Condensed Consolidating Income Statement (in Note 3) | |||||||||||||||||||
Hawaiian Electric (parent only) | |||||||||||||||||||
Other operation and maintenance | 70,961 | (1,302 | ) | 69,659 | 138,239 | (2,587 | ) | 135,652 | |||||||||||
Total expense | 357,575 | (1,302 | ) | 356,273 | 690,763 | (2,587 | ) | 688,176 | |||||||||||
Operating income | 36,839 | 1,302 | 38,141 | 66,494 | 2,587 | 69,081 | |||||||||||||
Retirement defined benefits expense--other than service costs | — | (1,302 | ) | (1,302 | ) | — | (2,587 | ) | (2,587 | ) | |||||||||
Hawaii Electric Light | |||||||||||||||||||
Other operation and maintenance | 17,558 | 85 | 17,643 | 33,074 | 168 | 33,242 | |||||||||||||
Total expense | 72,903 | 85 | 72,988 | 141,400 | 168 | 141,568 | |||||||||||||
Operating income | 8,807 | (85 | ) | 8,722 | 19,292 | (168 | ) | 19,124 | |||||||||||
Retirement defined benefits expense--other than service costs | — | 85 | 85 | — | 168 | 168 | |||||||||||||
Maui Electric | |||||||||||||||||||
Other operation and maintenance | 17,855 | (218 | ) | 17,637 | 35,301 | (439 | ) | 34,862 | |||||||||||
Total expense | 71,350 | (218 | ) | 71,132 | 139,338 | (439 | ) | 138,899 | |||||||||||
Operating income | 9,415 | 218 | 9,633 | 18,220 | 439 | 18,659 | |||||||||||||
Retirement defined benefits expense--other than service costs | — | (218 | ) | (218 | ) | — | (439 | ) | (439 | ) | |||||||||
ASB Statements of Income Data (in Note 4) | |||||||||||||||||||
Compensation and employee benefits | 24,742 | (201 | ) | 24,541 | 47,979 | (396 | ) | 47,583 | |||||||||||
Other expense | 4,705 | 201 | 4,906 | 9,016 | 396 | 9,412 |
(in thousands) | Electric utility | Bank | Other | Total | ||||||||||||
Three months ended June 30, 2018 | ||||||||||||||||
Revenues from external customers | $ | 608,112 | $ | 77,104 | $ | 61 | $ | 685,277 | ||||||||
Intersegment revenues (eliminations) | 14 | — | (14 | ) | — | |||||||||||
Revenues | $ | 608,126 | $ | 77,104 | $ | 47 | $ | 685,277 | ||||||||
Income (loss) before income taxes | $ | 40,344 | $ | 26,514 | $ | (7,276 | ) | $ | 59,582 | |||||||
Income taxes (benefit) | 8,676 | 5,953 | (1,574 | ) | 13,055 | |||||||||||
Net income (loss) | 31,668 | 20,561 | (5,702 | ) | 46,527 | |||||||||||
Preferred stock dividends of subsidiaries | 499 | — | (26 | ) | 473 | |||||||||||
Net income (loss) for common stock | $ | 31,169 | $ | 20,561 | $ | (5,676 | ) | $ | 46,054 | |||||||
Six months ended June 30, 2018 | ||||||||||||||||
Revenues from external customers | $ | 1,178,526 | $ | 152,523 | $ | 102 | $ | 1,331,151 | ||||||||
Intersegment revenues (eliminations) | 27 | — | (27 | ) | — | |||||||||||
Revenues | $ | 1,178,553 | $ | 152,523 | $ | 75 | $ | 1,331,151 | ||||||||
Income (loss) before income taxes | $ | 77,493 | $ | 51,014 | $ | (15,649 | ) | $ | 112,858 | |||||||
Income taxes (benefit) | 17,851 | 11,493 | (3,733 | ) | 25,611 | |||||||||||
Net income (loss) | 59,642 | 39,521 | (11,916 | ) | 87,247 | |||||||||||
Preferred stock dividends of subsidiaries | 998 | — | (52 | ) | 946 | |||||||||||
Net income (loss) for common stock | $ | 58,644 | $ | 39,521 | $ | (11,864 | ) | $ | 86,301 | |||||||
Total assets (at June 30, 2018) | $ | 5,803,714 | $ | 6,983,583 | $ | 96,807 | $ | 12,884,104 | ||||||||
Three months ended June 30, 2017 | ||||||||||||||||
Revenues from external customers | $ | 556,836 | $ | 75,329 | $ | 116 | $ | 632,281 | ||||||||
Intersegment revenues (eliminations) | 39 | — | (39 | ) | — | |||||||||||
Revenues | $ | 556,875 | $ | 75,329 | $ | 77 | $ | 632,281 | ||||||||
Income (loss) before income taxes | $ | 41,003 | $ | 24,796 | $ | (6,173 | ) | $ | 59,626 | |||||||
Income taxes (benefit) | 14,860 | 8,063 | (2,431 | ) | 20,492 | |||||||||||
Net income (loss) | 26,143 | 16,733 | (3,742 | ) | 39,134 | |||||||||||
Preferred stock dividends of subsidiaries | 499 | — | (26 | ) | 473 | |||||||||||
Net income (loss) for common stock | $ | 25,644 | $ | 16,733 | $ | (3,716 | ) | $ | 38,661 | |||||||
Six months ended June 30, 2017 | ||||||||||||||||
Revenues from external customers | $ | 1,075,402 | $ | 148,185 | $ | 256 | $ | 1,223,843 | ||||||||
Intersegment revenues (eliminations) | 84 | — | (84 | ) | — | |||||||||||
Revenues | $ | 1,075,486 | $ | 148,185 | $ | 172 | $ | 1,223,843 | ||||||||
Income (loss) before income taxes | $ | 75,725 | $ | 48,956 | $ | (13,473 | ) | $ | 111,208 | |||||||
Income taxes (benefit) | 27,618 | 16,410 | (6,620 | ) | 37,408 | |||||||||||
Net income (loss) | 48,107 | 32,546 | (6,853 | ) | 73,800 | |||||||||||
Preferred stock dividends of subsidiaries | 998 | — | (52 | ) | 946 | |||||||||||
Net income (loss) for common stock | $ | 47,109 | $ | 32,546 | $ | (6,801 | ) | $ | 72,854 | |||||||
Total assets (at December 31, 2017) | $ | 5,630,613 | $ | 6,798,659 | $ | 104,888 | $ | 12,534,160 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Kalaeloa | $ | 52 | $ | 48 | $ | 92 | $ | 88 | ||||||||
AES Hawaii | 32 | 35 | 69 | 64 | ||||||||||||
HPOWER | 17 | 16 | 32 | 33 | ||||||||||||
Puna Geothermal Venture | 4 | 10 | 15 | 18 | ||||||||||||
Hamakua Energy | 15 | 10 | 22 | 17 | ||||||||||||
Other IPPs 1 | 41 | 34 | 71 | 60 | ||||||||||||
Total IPPs | $ | 161 | $ | 153 | $ | 301 | $ | 280 |
1 | Includes wind power, solar power, feed-in tariff projects and other PPAs. |
• | Hawaiian Electric's RAM revenues were limited to the RAM Cap in 2017 and 2018. |
• | Maui Electric's RAM revenues in 2017 and 2018 were below the RAM Cap. |
• | Hawaii Electric Light’s RAM revenues in 2017 and 2018 were below the RAM Cap. |
• | Service Quality performance incentives are measured on a calendar-year basis beginning in 2018. |
• | Service Reliability Performance measured by System Average Interruption Duration and Frequency Indexes (penalties only). Target performance is based on each utility’s historical 10-year average performance with a deadband of one standard deviation. The maximum penalty for each performance index is 20 basis points applied to the common equity share of each respective utility’s rate base (or maximum penalties of approximately $6.2 million - pending adjustment to $6.7 million as a result of the final orders for the Hawaiian Electric and Hawaii Electric Light rate cases - for both indices in total for the three utilities). |
• | Call Center Performance measured by the percentage of calls answered within 30 seconds. Target performance is based on the annual average performance for each utility for the most recent 8 quarters with a deadband of 3% above and below the target. The maximum penalty or incentive is 8 basis points applied to the common equity share of each respective utility’s rate base (or maximum penalties or incentives of approximately $1.2 million - pending adjustment to $1.3 million as a result of the final orders for the Hawaiian Electric and Hawaii Electric Light rate cases - in total for the three utilities). |
• | Demand Response measured by the demand response resources acquired in 2018. The award is equal to 5% of the total of the annual maintenance cost for cost-effective demand response capability contracted with aggregators by December 31, 2018. The maximum award is $0.5 million for the three utilities in total and there are no penalties. This incentive applies to one-time performance in 2018 only. |
• | Procurement of low-cost variable renewable resources through the request for proposal process in 2018 measured by comparison of the procurement price to target prices. The incentive is 20% of savings determined by comparing procured price to a target of 11.5 cents per kilowatt-hour for renewable projects with storage capability and 9.5 cents per kilowatt-hour for energy-only renewable projects. This incentive has a cap of $3.5 million for the three utilities in total and has no penalty. |
(in millions) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | |||||||||
2018 Annual incremental RAM adjusted revenues | $ | 13.8 | $ | 3.4 | $ | 2.0 | ||||||
Annual change in accrued RBA balance as of December 31, 2017 (and associated revenue taxes) | $ | 6.6 | $ | 0.7 | $ | 3.2 | ||||||
2017 Tax Act Adjustment | $ | — | $ | — | $ | (2.8 | ) | |||||
Net annual incremental amount to be collected under the tariffs | $ | 20.4 | $ | 4.1 | $ | 2.4 |
• | Greater cost control and reduced rate volatility; |
• | Efficient investment and allocation of resources regardless of classification as capital or operating expense; |
• | Fair distribution of risks between utilities and customers; and |
• | Fulfillment of State policy goals. |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Revenues | $ | 431,699 | 89,548 | 86,938 | — | (59 | ) | $ | 608,126 | |||||||||||
Expenses | ||||||||||||||||||||
Fuel oil | 120,007 | 19,432 | 32,278 | — | — | 171,717 | ||||||||||||||
Purchased power | 121,812 | 24,664 | 14,262 | — | — | 160,738 | ||||||||||||||
Other operation and maintenance | 76,845 | 19,015 | 16,782 | — | — | 112,642 | ||||||||||||||
Depreciation | 34,391 | 10,038 | 5,932 | — | — | 50,361 | ||||||||||||||
Taxes, other than income taxes | 40,951 | 8,408 | 8,165 | — | — | 57,524 | ||||||||||||||
Total expenses | 394,006 | 81,557 | 77,419 | — | — | 552,982 | ||||||||||||||
Operating income | 37,693 | 7,991 | 9,519 | — | (59 | ) | 55,144 | |||||||||||||
Allowance for equity funds used during construction | 2,588 | 124 | 271 | — | — | 2,983 | ||||||||||||||
Equity in earnings of subsidiaries | 9,080 | — | — | — | (9,080 | ) | — | |||||||||||||
Retirement defined benefits expense—other than service costs | (554 | ) | (105 | ) | (329 | ) | — | — | (988 | ) | ||||||||||
Interest expense and other charges, net | (12,930 | ) | (2,922 | ) | (2,367 | ) | — | 59 | (18,160 | ) | ||||||||||
Allowance for borrowed funds used during construction | 1,150 | 77 | 138 | — | — | 1,365 | ||||||||||||||
Income before income taxes | 37,027 | 5,165 | 7,232 | — | (9,080 | ) | 40,344 | |||||||||||||
Income taxes | 5,588 | 1,269 | 1,819 | — | — | 8,676 | ||||||||||||||
Net income | 31,439 | 3,896 | 5,413 | — | (9,080 | ) | 31,668 | |||||||||||||
Preferred stock dividends of subsidiaries | — | 133 | 96 | — | — | 229 | ||||||||||||||
Net income attributable to Hawaiian Electric | 31,439 | 3,763 | 5,317 | — | (9,080 | ) | 31,439 | |||||||||||||
Preferred stock dividends of Hawaiian Electric | 270 | — | — | — | — | 270 | ||||||||||||||
Net income for common stock | $ | 31,169 | 3,763 | 5,317 | — | (9,080 | ) | $ | 31,169 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Net income for common stock | $ | 31,169 | 3,763 | 5,317 | — | (9,080 | ) | $ | 31,169 | |||||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Retirement benefit plans: | ||||||||||||||||||||
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits | 4,853 | 734 | 649 | — | (1,383 | ) | 4,853 | |||||||||||||
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (4,827 | ) | (733 | ) | (649 | ) | — | 1,382 | (4,827 | ) | ||||||||||
Other comprehensive income, net of taxes | 26 | 1 | — | — | (1 | ) | 26 | |||||||||||||
Comprehensive income attributable to common shareholder | $ | 31,195 | 3,764 | 5,317 | — | (9,081 | ) | $ | 31,195 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Revenues | $ | 394,414 | 81,710 | 80,765 | — | (14 | ) | $ | 556,875 | |||||||||||
Expenses | ||||||||||||||||||||
Fuel oil | 99,814 | 14,475 | 26,970 | — | — | 141,259 | ||||||||||||||
Purchased power | 116,458 | 23,482 | 13,127 | — | — | 153,067 | ||||||||||||||
Other operation and maintenance | 69,659 | 17,643 | 17,637 | — | — | 104,939 | ||||||||||||||
Depreciation | 32,723 | 9,686 | 5,747 | — | — | 48,156 | ||||||||||||||
Taxes, other than income taxes | 37,619 | 7,702 | 7,651 | — | — | 52,972 | ||||||||||||||
Total expenses | 356,273 | 72,988 | 71,132 | — | — | 500,393 | ||||||||||||||
Operating income | 38,141 | 8,722 | 9,633 | — | (14 | ) | 56,482 | |||||||||||||
Allowance for equity funds used during construction | 2,659 | 134 | 234 | — | — | 3,027 | ||||||||||||||
Equity in earnings of subsidiaries | 7,936 | — | — | — | (7,936 | ) | — | |||||||||||||
Retirement defined benefits expense—other than service costs | (1,302 | ) | 85 | (218 | ) | — | — | (1,435 | ) | |||||||||||
Interest expense and other charges, net | (12,562 | ) | (2,996 | ) | (2,670 | ) | — | 14 | (18,214 | ) | ||||||||||
Allowance for borrowed funds used during construction | 988 | 55 | 100 | — | — | 1,143 | ||||||||||||||
Income before income taxes | 35,860 | 6,000 | 7,079 | — | (7,936 | ) | 41,003 | |||||||||||||
Income taxes | 9,946 | 2,235 | 2,679 | — | — | 14,860 | ||||||||||||||
Net income | 25,914 | 3,765 | 4,400 | — | (7,936 | ) | 26,143 | |||||||||||||
Preferred stock dividends of subsidiaries | — | 133 | 96 | — | — | 229 | ||||||||||||||
Net income attributable to Hawaiian Electric | 25,914 | 3,632 | 4,304 | — | (7,936 | ) | 25,914 | |||||||||||||
Preferred stock dividends of Hawaiian Electric | 270 | — | — | — | — | 270 | ||||||||||||||
Net income for common stock | $ | 25,644 | 3,632 | 4,304 | — | (7,936 | ) | $ | 25,644 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Net income for common stock | $ | 25,644 | 3,632 | 4,304 | — | (7,936 | ) | $ | 25,644 | |||||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Retirement benefit plans: | ||||||||||||||||||||
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits | 3,621 | 449 | 344 | — | (793 | ) | 3,621 | |||||||||||||
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (3,581 | ) | (448 | ) | (343 | ) | — | 791 | (3,581 | ) | ||||||||||
Other comprehensive income, net of taxes | 40 | 1 | 1 | — | (2 | ) | 40 | |||||||||||||
Comprehensive income attributable to common shareholder | $ | 25,684 | 3,633 | 4,305 | — | (7,938 | ) | $ | 25,684 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Revenues | $ | 832,879 | 177,481 | 168,294 | — | (101 | ) | $ | 1,178,553 | |||||||||||
Expenses | ||||||||||||||||||||
Fuel oil | 234,505 | 37,919 | 66,261 | — | — | 338,685 | ||||||||||||||
Purchased power | 229,182 | 48,498 | 22,968 | — | — | 300,648 | ||||||||||||||
Other operation and maintenance | 149,785 | 35,113 | 35,354 | — | — | 220,252 | ||||||||||||||
Depreciation | 68,830 | 20,093 | 11,904 | — | — | 100,827 | ||||||||||||||
Taxes, other than income taxes | 79,118 | 16,620 | 15,890 | — | — | 111,628 | ||||||||||||||
Total expenses | 761,420 | 158,243 | 152,377 | — | — | 1,072,040 | ||||||||||||||
Operating income | 71,459 | 19,238 | 15,917 | — | (101 | ) | 106,513 | |||||||||||||
Allowance for equity funds used during construction | 5,475 | 235 | 567 | — | — | 6,277 | ||||||||||||||
Equity in earnings of subsidiaries | 18,405 | — | — | — | (18,405 | ) | — | |||||||||||||
Retirement defined benefits expense—other than service costs | (1,616 | ) | (208 | ) | (428 | ) | — | — | (2,252 | ) | ||||||||||
Interest expense and other charges, net | (25,425 | ) | (5,829 | ) | (4,701 | ) | — | 101 | (35,854 | ) | ||||||||||
Allowance for borrowed funds used during construction | 2,388 | 141 | 280 | — | — | 2,809 | ||||||||||||||
Income before income taxes | 70,686 | 13,577 | 11,635 | — | (18,405 | ) | 77,493 | |||||||||||||
Income taxes | 11,502 | 3,446 | 2,903 | — | — | 17,851 | ||||||||||||||
Net income | 59,184 | 10,131 | 8,732 | — | (18,405 | ) | 59,642 | |||||||||||||
Preferred stock dividends of subsidiaries | — | 267 | 191 | — | — | 458 | ||||||||||||||
Net income attributable to Hawaiian Electric | 59,184 | 9,864 | 8,541 | — | (18,405 | ) | 59,184 | |||||||||||||
Preferred stock dividends of Hawaiian Electric | 540 | — | — | — | — | 540 | ||||||||||||||
Net income for common stock | $ | 58,644 | 9,864 | 8,541 | — | (18,405 | ) | $ | 58,644 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Net income for common stock | $ | 58,644 | 9,864 | 8,541 | — | (18,405 | ) | $ | 58,644 | |||||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Retirement benefit plans: | ||||||||||||||||||||
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits | 9,506 | 1,409 | 1,211 | — | (2,620 | ) | 9,506 | |||||||||||||
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (9,449 | ) | (1,408 | ) | (1,211 | ) | — | 2,619 | (9,449 | ) | ||||||||||
Other comprehensive income, net of taxes | 57 | 1 | — | — | (1 | ) | 57 | |||||||||||||
Comprehensive income attributable to common shareholder | $ | 58,701 | 9,865 | 8,541 | — | (18,406 | ) | $ | 58,701 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Revenues | $ | 757,257 | 160,692 | 157,558 | — | (21 | ) | $ | 1,075,486 | |||||||||||
Expenses | ||||||||||||||||||||
Fuel oil | 197,815 | 31,732 | 55,982 | — | — | 285,529 | ||||||||||||||
Purchased power | 216,605 | 42,071 | 21,515 | — | — | 280,191 | ||||||||||||||
Other operation and maintenance | 135,652 | 33,242 | 34,862 | — | — | 203,756 | ||||||||||||||
Depreciation | 65,445 | 19,371 | 11,556 | — | — | 96,372 | ||||||||||||||
Taxes, other than income taxes | 72,659 | 15,152 | 14,984 | — | — | 102,795 | ||||||||||||||
Total expenses | 688,176 | 141,568 | 138,899 | — | — | 968,643 | ||||||||||||||
Operating income | 69,081 | 19,124 | 18,659 | — | (21 | ) | 106,843 | |||||||||||||
Allowance for equity funds used during construction | 4,715 | 249 | 462 | — | — | 5,426 | ||||||||||||||
Equity in earnings of subsidiaries | 16,539 | — | — | — | (16,539 | ) | — | |||||||||||||
Retirement defined benefits expense—other than service costs | (2,587 | ) | 168 | (439 | ) | — | — | (2,858 | ) | |||||||||||
Interest expense and other charges, net | (24,619 | ) | (6,000 | ) | (5,120 | ) | — | 21 | (35,718 | ) | ||||||||||
Allowance for borrowed funds used during construction | 1,737 | 100 | 195 | — | — | 2,032 | ||||||||||||||
Income before income taxes | 64,866 | 13,641 | 13,757 | — | (16,539 | ) | 75,725 | |||||||||||||
Income taxes | 17,217 | 5,158 | 5,243 | — | — | 27,618 | ||||||||||||||
Net income | 47,649 | 8,483 | 8,514 | — | (16,539 | ) | 48,107 | |||||||||||||
Preferred stock dividends of subsidiaries | — | 267 | 191 | — | — | 458 | ||||||||||||||
Net income attributable to Hawaiian Electric | 47,649 | 8,216 | 8,323 | — | (16,539 | ) | 47,649 | |||||||||||||
Preferred stock dividends of Hawaiian Electric | 540 | — | — | — | — | 540 | ||||||||||||||
Net income for common stock | $ | 47,109 | 8,216 | 8,323 | — | (16,539 | ) | $ | 47,109 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Net income for common stock | $ | 47,109 | 8,216 | 8,323 | — | (16,539 | ) | $ | 47,109 | |||||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Derivatives qualifying as cash flow hedges: | ||||||||||||||||||||
Reclassification adjustment to net income, net of taxes | 454 | — | — | — | — | 454 | ||||||||||||||
Retirement benefit plans: | ||||||||||||||||||||
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits | 7,239 | 952 | 810 | — | (1,762 | ) | 7,239 | |||||||||||||
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (7,194 | ) | (951 | ) | (810 | ) | — | 1,761 | (7,194 | ) | ||||||||||
Other comprehensive income, net of taxes | 499 | 1 | — | — | (1 | ) | 499 | |||||||||||||
Comprehensive income attributable to common shareholder | $ | 47,608 | 8,217 | 8,323 | — | (16,540 | ) | $ | 47,608 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consoli- dating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Assets | ||||||||||||||||||||
Property, plant and equipment | ||||||||||||||||||||
Utility property, plant and equipment | ||||||||||||||||||||
Land | $ | 44,023 | 5,876 | 3,015 | — | — | $ | 52,914 | ||||||||||||
Plant and equipment | 4,363,195 | 1,217,147 | 1,072,640 | — | — | 6,652,982 | ||||||||||||||
Less accumulated depreciation | (1,491,505 | ) | (536,210 | ) | (506,713 | ) | — | — | (2,534,428 | ) | ||||||||||
Construction in progress | 127,343 | 10,154 | 28,111 | — | — | 165,608 | ||||||||||||||
Utility property, plant and equipment, net | 3,043,056 | 696,967 | 597,053 | — | — | 4,337,076 | ||||||||||||||
Nonutility property, plant and equipment, less accumulated depreciation | 5,934 | 115 | 1,532 | — | — | 7,581 | ||||||||||||||
Total property, plant and equipment, net | 3,048,990 | 697,082 | 598,585 | — | — | 4,344,657 | ||||||||||||||
Investment in wholly owned subsidiaries, at equity | 561,764 | — | — | — | (561,764 | ) | — | |||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | 13,922 | 4,516 | 2,321 | 101 | — | 20,860 | ||||||||||||||
Advances to affiliates | 5,600 | 1,000 | — | — | (6,600 | ) | — | |||||||||||||
Customer accounts receivable, net | 109,285 | 24,005 | 23,970 | — | — | 157,260 | ||||||||||||||
Accrued unbilled revenues, net | 80,239 | 15,243 | 15,357 | — | — | 110,839 | ||||||||||||||
Other accounts receivable, net | 10,657 | 2,561 | 1,124 | — | (7,446 | ) | 6,896 | |||||||||||||
Fuel oil stock, at average cost | 74,485 | 12,632 | 19,899 | — | — | 107,016 | ||||||||||||||
Materials and supplies, at average cost | 31,077 | 8,600 | 18,264 | — | — | 57,941 | ||||||||||||||
Prepayments and other | 21,482 | 6,329 | 2,943 | — | (1,514 | ) | 29,240 | |||||||||||||
Regulatory assets | 88,581 | 6,353 | 8,632 | — | — | 103,566 | ||||||||||||||
Total current assets | 435,328 | 81,239 | 92,510 | 101 | (15,560 | ) | 593,618 | |||||||||||||
Other long-term assets | ||||||||||||||||||||
Regulatory assets | 538,925 | 118,000 | 99,919 | — | — | 756,844 | ||||||||||||||
Other | 71,486 | 19,378 | 17,731 | — | — | 108,595 | ||||||||||||||
Total other long-term assets | 610,411 | 137,378 | 117,650 | — | — | 865,439 | ||||||||||||||
Total assets | $ | 4,656,493 | 915,699 | 808,745 | 101 | (577,324 | ) | $ | 5,803,714 | |||||||||||
Capitalization and liabilities | ||||||||||||||||||||
Capitalization | ||||||||||||||||||||
Common stock equity | $ | 1,852,324 | 288,865 | 272,798 | 101 | (561,764 | ) | $ | 1,852,324 | |||||||||||
Cumulative preferred stock—not subject to mandatory redemption | 22,293 | 7,000 | 5,000 | — | — | 34,293 | ||||||||||||||
Long-term debt, net | 999,915 | 217,699 | 200,860 | — | — | 1,418,474 | ||||||||||||||
Total capitalization | 2,874,532 | 513,564 | 478,658 | 101 | (561,764 | ) | 3,305,091 | |||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | 29,990 | 10,996 | 8,997 | — | — | 49,983 | ||||||||||||||
Short-term borrowings from non-affiliates | 91,880 | — | — | — | — | 91,880 | ||||||||||||||
Short-term borrowings from affiliate | 1,000 | — | 5,600 | — | (6,600 | ) | — | |||||||||||||
Accounts payable | 115,806 | 17,405 | 20,548 | — | — | 153,759 | ||||||||||||||
Interest and preferred dividends payable | 15,743 | 4,203 | 2,752 | — | (14 | ) | 22,684 | |||||||||||||
Taxes accrued | 120,513 | 27,353 | 25,711 | — | (1,514 | ) | 172,063 | |||||||||||||
Regulatory liabilities | 2,751 | 2,499 | 4,537 | — | — | 9,787 | ||||||||||||||
Other | 42,449 | 10,223 | 13,963 | — | (7,432 | ) | 59,203 | |||||||||||||
Total current liabilities | 420,132 | 72,679 | 82,108 | — | (15,560 | ) | 559,359 | |||||||||||||
Deferred credits and other liabilities | ||||||||||||||||||||
Deferred income taxes | 277,599 | 54,505 | 56,771 | — | — | 388,875 | ||||||||||||||
Regulatory liabilities | 627,369 | 173,305 | 94,755 | — | — | 895,429 | ||||||||||||||
Unamortized tax credits | 60,893 | 16,463 | 15,442 | — | — | 92,798 | ||||||||||||||
Defined benefit pension and other postretirement benefit plans liability | 330,356 | 64,175 | 63,422 | — | — | 457,953 | ||||||||||||||
Other | 65,612 | 21,008 | 17,589 | — | — | 104,209 | ||||||||||||||
Total deferred credits and other liabilities | 1,361,829 | 329,456 | 247,979 | — | — | 1,939,264 | ||||||||||||||
Total capitalization and liabilities | $ | 4,656,493 | 915,699 | 808,745 | 101 | (577,324 | ) | $ | 5,803,714 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consoli- dating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Assets | ||||||||||||||||||||
Property, plant and equipment | ||||||||||||||||||||
Utility property, plant and equipment | ||||||||||||||||||||
Land | $ | 43,972 | 6,189 | 3,016 | — | — | $ | 53,177 | ||||||||||||
Plant and equipment | 4,140,892 | 1,206,776 | 1,053,372 | — | — | 6,401,040 | ||||||||||||||
Less accumulated depreciation | (1,451,612 | ) | (528,024 | ) | (496,716 | ) | — | — | (2,476,352 | ) | ||||||||||
Construction in progress | 231,571 | 8,182 | 23,341 | — | — | 263,094 | ||||||||||||||
Utility property, plant and equipment, net | 2,964,823 | 693,123 | 583,013 | — | — | 4,240,959 | ||||||||||||||
Nonutility property, plant and equipment, less accumulated depreciation | 5,933 | 115 | 1,532 | — | — | 7,580 | ||||||||||||||
Total property, plant and equipment, net | 2,970,756 | 693,238 | 584,545 | — | — | 4,248,539 | ||||||||||||||
Investment in wholly owned subsidiaries, at equity | 557,013 | — | — | — | (557,013 | ) | — | |||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | 2,059 | 4,025 | 6,332 | 101 | — | 12,517 | ||||||||||||||
Advances to affiliates | — | — | 12,000 | — | (12,000 | ) | — | |||||||||||||
Customer accounts receivable, net | 86,987 | 22,510 | 18,392 | — | — | 127,889 | ||||||||||||||
Accrued unbilled revenues, net | 77,176 | 15,940 | 13,938 | — | — | 107,054 | ||||||||||||||
Other accounts receivable, net | 11,376 | 2,268 | 1,210 | — | (7,691 | ) | 7,163 | |||||||||||||
Fuel oil stock, at average cost | 64,972 | 8,698 | 13,203 | — | — | 86,873 | ||||||||||||||
Materials and supplies, at average cost | 28,325 | 8,041 | 18,031 | — | — | 54,397 | ||||||||||||||
Prepayments and other | 17,928 | 4,514 | 2,913 | — | — | 25,355 | ||||||||||||||
Regulatory assets | 76,203 | 5,038 | 7,149 | — | — | 88,390 | ||||||||||||||
Total current assets | 365,026 | 71,034 | 93,168 | 101 | (19,691 | ) | 509,638 | |||||||||||||
Other long-term assets | ||||||||||||||||||||
Regulatory assets | 557,464 | 122,783 | 100,660 | — | — | 780,907 | ||||||||||||||
Other | 60,157 | 16,311 | 15,061 | — | — | 91,529 | ||||||||||||||
Total other long-term assets | 617,621 | 139,094 | 115,721 | — | — | 872,436 | ||||||||||||||
Total assets | $ | 4,510,416 | 903,366 | 793,434 | 101 | (576,704 | ) | $ | 5,630,613 | |||||||||||
Capitalization and liabilities | ||||||||||||||||||||
Capitalization | ||||||||||||||||||||
Common stock equity | $ | 1,845,283 | 286,647 | 270,265 | 101 | (557,013 | ) | $ | 1,845,283 | |||||||||||
Cumulative preferred stock—not subject to mandatory redemption | 22,293 | 7,000 | 5,000 | — | — | 34,293 | ||||||||||||||
Long-term debt, net | 924,979 | 202,701 | 190,836 | — | — | 1,318,516 | ||||||||||||||
Total capitalization | 2,792,555 | 496,348 | 466,101 | 101 | (557,013 | ) | 3,198,092 | |||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | 29,978 | 10,992 | 8,993 | — | — | 49,963 | ||||||||||||||
Short-term borrowings-non-affiliate | 4,999 | — | — | — | — | 4,999 | ||||||||||||||
Short-term borrowings-affiliate | 12,000 | — | — | — | (12,000 | ) | — | |||||||||||||
Accounts payable | 121,328 | 17,855 | 20,427 | — | — | 159,610 | ||||||||||||||
Interest and preferred dividends payable | 15,677 | 4,174 | 2,735 | — | (11 | ) | 22,575 | |||||||||||||
Taxes accrued | 133,839 | 34,950 | 30,312 | — | — | 199,101 | ||||||||||||||
Regulatory liabilities | 607 | 1,245 | 1,549 | — | — | 3,401 | ||||||||||||||
Other | 43,121 | 9,818 | 14,197 | — | (7,680 | ) | 59,456 | |||||||||||||
Total current liabilities | 361,549 | 79,034 | 78,213 | — | (19,691 | ) | 499,105 | |||||||||||||
Deferred credits and other liabilities | ||||||||||||||||||||
Deferred income taxes | 281,223 | 56,955 | 55,863 | — | — | 394,041 | ||||||||||||||
Regulatory liabilities | 613,329 | 169,139 | 94,901 | — | — | 877,369 | ||||||||||||||
Unamortized tax credits | 59,039 | 16,167 | 15,163 | — | — | 90,369 | ||||||||||||||
Defined benefit pension and other postretirement benefit plans liability | 340,983 | 66,447 | 65,518 | — | — | 472,948 | ||||||||||||||
Other | 61,738 | 19,276 | 17,675 | — | — | 98,689 | ||||||||||||||
Total deferred credits and other liabilities | 1,356,312 | 327,984 | 249,120 | — | — | 1,933,416 | ||||||||||||||
Total capitalization and liabilities | $ | 4,510,416 | 903,366 | 793,434 | 101 | (576,704 | ) | $ | 5,630,613 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Balance, December 31, 2017 | $ | 1,845,283 | 286,647 | 270,265 | 101 | (557,013 | ) | $ | 1,845,283 | |||||||||||
Net income for common stock | 58,644 | 9,864 | 8,541 | — | (18,405 | ) | 58,644 | |||||||||||||
Other comprehensive income, net of taxes | 57 | 1 | — | — | (1 | ) | 57 | |||||||||||||
Common stock dividends | (51,652 | ) | (7,644 | ) | (6,010 | ) | — | 13,654 | (51,652 | ) | ||||||||||
Common stock issuance expenses | (8 | ) | (3 | ) | 2 | — | 1 | (8 | ) | |||||||||||
Balance, June 30, 2018 | $ | 1,852,324 | 288,865 | 272,798 | 101 | (561,764 | ) | $ | 1,852,324 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Balance, December 31, 2016 | $ | 1,799,787 | 291,291 | 259,554 | 101 | (550,946 | ) | $ | 1,799,787 | |||||||||||
Net income for common stock | 47,109 | 8,216 | 8,323 | — | (16,539 | ) | 47,109 | |||||||||||||
Other comprehensive income, net of taxes | 499 | 1 | — | — | (1 | ) | 499 | |||||||||||||
Common stock dividends | (43,884 | ) | (7,748 | ) | (5,973 | ) | — | 13,721 | (43,884 | ) | ||||||||||
Common stock issuance expenses | (5 | ) | — | (1 | ) | — | 1 | (5 | ) | |||||||||||
Balance, June 30, 2017 | $ | 1,803,506 | 291,760 | 261,903 | 101 | (553,764 | ) | $ | 1,803,506 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net income | $ | 59,184 | 10,131 | 8,732 | — | (18,405 | ) | $ | 59,642 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Equity in earnings of subsidiaries | (18,455 | ) | — | — | — | 18,405 | (50 | ) | ||||||||||||
Common stock dividends received from subsidiaries | 13,679 | — | — | — | (13,654 | ) | 25 | |||||||||||||
Depreciation of property, plant and equipment | 68,830 | 20,093 | 11,904 | — | — | 100,827 | ||||||||||||||
Other amortization | 9,200 | 2,976 | 845 | — | — | 13,021 | ||||||||||||||
Deferred income taxes | (6,708 | ) | (2,429 | ) | 794 | — | — | (8,343 | ) | |||||||||||
Allowance for equity funds used during construction | (5,475 | ) | (235 | ) | (567 | ) | — | — | (6,277 | ) | ||||||||||
Other | 1,469 | (322 | ) | (169 | ) | — | — | 978 | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Increase in accounts receivable | (25,673 | ) | (2,387 | ) | (5,763 | ) | — | (245 | ) | (34,068 | ) | |||||||||
Decrease (increase) in accrued unbilled revenues | (3,063 | ) | 697 | (1,419 | ) | — | — | (3,785 | ) | |||||||||||
Increase in fuel oil stock | (9,513 | ) | (3,934 | ) | (6,696 | ) | — | — | (20,143 | ) | ||||||||||
Increase in materials and supplies | (2,752 | ) | (559 | ) | (233 | ) | — | — | (3,544 | ) | ||||||||||
Increase in regulatory assets | (14,728 | ) | (1,974 | ) | (2,898 | ) | — | — | (19,600 | ) | ||||||||||
Increase in accounts payable | 13,093 | 3,096 | 2,095 | — | — | 18,284 | ||||||||||||||
Change in prepaid and accrued income taxes, tax credits and revenue taxes | (15,343 | ) | (9,952 | ) | (5,165 | ) | — | (601 | ) | (31,061 | ) | |||||||||
Decrease in defined benefit pension and other postretirement benefit plans liability | (1,117 | ) | (380 | ) | (464 | ) | — | — | (1,961 | ) | ||||||||||
Change in other assets and liabilities | 1,116 | 3,173 | 1,357 | — | 245 | 5,891 | ||||||||||||||
Net cash provided by operating activities | 63,744 | 17,994 | 2,353 | — | (14,255 | ) | 69,836 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Capital expenditures | (156,600 | ) | (26,667 | ) | (29,953 | ) | — | — | (213,220 | ) | ||||||||||
Contributions in aid of construction | 9,680 | 2,243 | 1,650 | — | — | 13,573 | ||||||||||||||
Other | 2,241 | 884 | 575 | — | 601 | 4,301 | ||||||||||||||
Advances (to) from affiliates | (5,600 | ) | (1,000 | ) | 12,000 | — | (5,400 | ) | — | |||||||||||
Net cash used in investing activities | (150,279 | ) | (24,540 | ) | (15,728 | ) | — | (4,799 | ) | (195,346 | ) | |||||||||
Cash flows from financing activities | ||||||||||||||||||||
Common stock dividends | (51,652 | ) | (7,644 | ) | (6,010 | ) | — | 13,654 | (51,652 | ) | ||||||||||
Preferred stock dividends of Hawaiian Electric and subsidiaries | (540 | ) | (267 | ) | (191 | ) | — | — | (998 | ) | ||||||||||
Proceeds from issuance of long-term debt | 75,000 | 15,000 | 10,000 | — | — | 100,000 | ||||||||||||||
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | 75,881 | — | 5,600 | — | 5,400 | 86,881 | ||||||||||||||
Other | (291 | ) | (52 | ) | (35 | ) | — | — | (378 | ) | ||||||||||
Net cash provided by financing activities | 98,398 | 7,037 | 9,364 | — | 19,054 | 133,853 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | 11,863 | 491 | (4,011 | ) | — | — | 8,343 | |||||||||||||
Cash and cash equivalents, beginning of period | 2,059 | 4,025 | 6,332 | 101 | — | 12,517 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 13,922 | 4,516 | 2,321 | 101 | — | $ | 20,860 |
(in thousands) | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Other subsidiaries | Consolidating adjustments | Hawaiian Electric Consolidated | ||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net income | $ | 47,649 | 8,483 | 8,514 | — | (16,539 | ) | $ | 48,107 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Equity in earnings of subsidiaries | (16,589 | ) | — | — | — | 16,539 | (50 | ) | ||||||||||||
Common stock dividends received from subsidiaries | 13,771 | — | — | — | (13,721 | ) | 50 | |||||||||||||
Depreciation of property, plant and equipment | 65,445 | 19,371 | 11,556 | — | — | 96,372 | ||||||||||||||
Other amortization | 1,875 | 905 | 1,482 | — | — | 4,262 | ||||||||||||||
Deferred income taxes | 15,060 | 3,590 | 4,988 | — | (39 | ) | 23,599 | |||||||||||||
Allowance for equity funds used during construction | (4,715 | ) | (249 | ) | (462 | ) | — | — | (5,426 | ) | ||||||||||
Other | 1,089 | 699 | (173 | ) | — | — | 1,615 | |||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Decrease (increase) in accounts receivable | (5,100 | ) | 1,182 | (1,067 | ) | — | 3,256 | (1,729 | ) | |||||||||||
Increase in accrued unbilled revenues | (8,819 | ) | (602 | ) | (2,482 | ) | — | — | (11,903 | ) | ||||||||||
Decrease (increase) in fuel oil stock | (4,250 | ) | 94 | (1,806 | ) | — | — | (5,962 | ) | |||||||||||
Increase in materials and supplies | (788 | ) | (1,472 | ) | (1,160 | ) | — | — | (3,420 | ) | ||||||||||
Decrease (increase) in regulatory assets | 11,378 | (1,575 | ) | (1,624 | ) | — | — | 8,179 | ||||||||||||
Increase in accounts payable | 33,121 | 970 | 5,625 | — | — | 39,716 | ||||||||||||||
Change in prepaid and accrued income taxes, tax credits and revenue taxes | (29,430 | ) | (6,290 | ) | (4,725 | ) | — | (465 | ) | (40,910 | ) | |||||||||
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability | 355 | 26 | (79 | ) | — | — | 302 | |||||||||||||
Change in other assets and liabilities | (12,727 | ) | 129 | 1,807 | — | (3,256 | ) | (14,047 | ) | |||||||||||
Net cash provided by operating activities | 107,325 | 25,261 | 20,394 | — | (14,225 | ) | 138,755 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Capital expenditures | (146,721 | ) | (22,423 | ) | (21,015 | ) | — | — | (190,159 | ) | ||||||||||
Contributions in aid of construction | 14,078 | 1,870 | 1,623 | — | — | 17,571 | ||||||||||||||
Other | 4,820 | 619 | 307 | — | 504 | 6,250 | ||||||||||||||
Advances (to) from affiliates | — | (600 | ) | 9,000 | — | (8,400 | ) | — | ||||||||||||
Net cash used in investing activities | (127,823 | ) | (20,534 | ) | (10,085 | ) | — | (7,896 | ) | (166,338 | ) | |||||||||
Cash flows from financing activities | ||||||||||||||||||||
Common stock dividends | (43,884 | ) | (7,748 | ) | (5,973 | ) | — | 13,721 | (43,884 | ) | ||||||||||
Preferred stock dividends of Hawaiian Electric and subsidiaries | (540 | ) | (267 | ) | (191 | ) | — | — | (998 | ) | ||||||||||
Proceeds from issuance of special purpose revenue bonds | 162,000 | 28,000 | 75,000 | — | — | 265,000 | ||||||||||||||
Funds transferred for redemption of special purpose revenue bonds | (162,000 | ) | (28,000 | ) | (75,000 | ) | — | — | (265,000 | ) | ||||||||||
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | 35,590 | — | — | — | 8,400 | 43,990 | ||||||||||||||
Other | (2,068 | ) | (357 | ) | (804 | ) | — | — | (3,229 | ) | ||||||||||
Net cash used in financing activities | (10,902 | ) | (8,372 | ) | (6,968 | ) | — | 22,121 | (4,121 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | (31,400 | ) | (3,645 | ) | 3,341 | — | — | (31,704 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 61,388 | 10,749 | 2,048 | 101 | — | 74,286 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 29,988 | 7,104 | 5,389 | 101 | — | $ | 42,582 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest and dividend income | ||||||||||||||||
Interest and fees on loans | $ | 54,633 | $ | 52,317 | $ | 107,433 | $ | 103,059 | ||||||||
Interest and dividends on investment securities | 8,628 | 6,763 | 17,830 | 13,743 | ||||||||||||
Total interest and dividend income | 63,261 | 59,080 | 125,263 | 116,802 | ||||||||||||
Interest expense | ||||||||||||||||
Interest on deposit liabilities | 3,284 | 2,311 | 6,241 | 4,414 | ||||||||||||
Interest on other borrowings | 393 | 824 | 889 | 1,640 | ||||||||||||
Total interest expense | 3,677 | 3,135 | 7,130 | 6,054 | ||||||||||||
Net interest income | 59,584 | 55,945 | 118,133 | 110,748 | ||||||||||||
Provision for loan losses | 2,763 | 2,834 | 6,304 | 6,741 | ||||||||||||
Net interest income after provision for loan losses | 56,821 | 53,111 | 111,829 | 104,007 | ||||||||||||
Noninterest income | ||||||||||||||||
Fees from other financial services | 4,744 | 5,810 | 9,398 | 11,420 | ||||||||||||
Fee income on deposit liabilities | 5,138 | 5,565 | 10,327 | 10,993 | ||||||||||||
Fee income on other financial products | 1,675 | 1,971 | 3,329 | 3,837 | ||||||||||||
Bank-owned life insurance | 1,133 | 1,925 | 2,004 | 2,908 | ||||||||||||
Mortgage banking income | 617 | 587 | 1,230 | 1,376 | ||||||||||||
Other income, net | 536 | 391 | 972 | 849 | ||||||||||||
Total noninterest income | 13,843 | 16,249 | 27,260 | 31,383 | ||||||||||||
Noninterest expense | ||||||||||||||||
Compensation and employee benefits | 23,655 | 24,541 | 48,095 | 47,583 | ||||||||||||
Occupancy | 4,194 | 4,185 | 8,474 | 8,339 | ||||||||||||
Data processing | 3,540 | 3,207 | 7,004 | 6,487 | ||||||||||||
Services | 3,028 | 2,766 | 6,075 | 5,126 | ||||||||||||
Equipment | 1,874 | 1,771 | 3,602 | 3,519 | ||||||||||||
Office supplies, printing and postage | 1,491 | 1,527 | 2,998 | 3,062 | ||||||||||||
Marketing | 1,085 | 839 | 1,730 | 1,356 | ||||||||||||
FDIC insurance | 727 | 822 | 1,440 | 1,550 | ||||||||||||
Other expense | 4,556 | 4,906 | 8,657 | 9,412 | ||||||||||||
Total noninterest expense | 44,150 | 44,564 | 88,075 | 86,434 | ||||||||||||
Income before income taxes | 26,514 | 24,796 | 51,014 | 48,956 | ||||||||||||
Income taxes | 5,953 | 8,063 | 11,493 | 16,410 | ||||||||||||
Net income | $ | 20,561 | $ | 16,733 | $ | 39,521 | $ | 32,546 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest and dividend income | 63,261 | 59,080 | $ | 125,263 | $ | 116,802 | ||||||||||
Noninterest income | 13,843 | 16,249 | 27,260 | 31,383 | ||||||||||||
*Revenues-Bank | 77,104 | 75,329 | 152,523 | 148,185 | ||||||||||||
Total interest expense | 3,677 | 3,135 | 7,130 | 6,054 | ||||||||||||
Provision for loan losses | 2,763 | 2,834 | 6,304 | 6,741 | ||||||||||||
Noninterest expense | 44,150 | 44,564 | 88,075 | 86,434 | ||||||||||||
Less: Retirement defined benefits expense—other than service costs | (403 | ) | (201 | ) | (790 | ) | (396 | ) | ||||||||
*Expenses-Bank | 50,187 | 50,332 | 100,719 | 98,833 | ||||||||||||
*Operating income-Bank | 26,917 | 24,997 | 51,804 | 49,352 | ||||||||||||
Add back: Retirement defined benefits expense—other than service costs | 403 | 201 | 790 | 396 | ||||||||||||
Income before income taxes | $ | 26,514 | $ | 24,796 | $ | 51,014 | $ | 48,956 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 20,561 | $ | 16,733 | $ | 39,521 | $ | 32,546 | ||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities: | ||||||||||||||||
Net unrealized gains (losses) on available-for-sale investment securities arising during the period, net of tax benefits (taxes) of $1,592, $(1,334), $6,459 and $(1,482), respectively | (4,348 | ) | 2,021 | (17,645 | ) | 2,244 | ||||||||||
Retirement benefit plans: | ||||||||||||||||
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $133, $133, $827 and $537, respectively | 366 | 202 | 1,588 | 814 | ||||||||||||
Other comprehensive income (loss), net of taxes | (3,982 | ) | 2,223 | (16,057 | ) | 3,058 | ||||||||||
Comprehensive income | $ | 16,579 | $ | 18,956 | $ | 23,464 | $ | 35,604 |
(in thousands) | June 30, 2018 | December 31, 2017 | ||||||||||||||
Assets | ||||||||||||||||
Cash and due from banks | $ | 120,189 | $ | 140,934 | ||||||||||||
Interest-bearing deposits | 109,230 | 93,165 | ||||||||||||||
Investment securities | ||||||||||||||||
Available-for-sale, at fair value | 1,409,528 | 1,401,198 | ||||||||||||||
Held-to-maturity, at amortized cost (fair value of $61,444 and $44,412, respectively) | 62,630 | 44,515 | ||||||||||||||
Stock in Federal Home Loan Bank, at cost | 10,158 | 9,706 | ||||||||||||||
Loans held for investment | 4,774,744 | 4,670,768 | ||||||||||||||
Allowance for loan losses | (52,803 | ) | (53,637 | ) | ||||||||||||
Net loans | 4,721,941 | 4,617,131 | ||||||||||||||
Loans held for sale, at lower of cost or fair value | 5,248 | 11,250 | ||||||||||||||
Other | 462,469 | 398,570 | ||||||||||||||
Goodwill | 82,190 | 82,190 | ||||||||||||||
Total assets | $ | 6,983,583 | $ | 6,798,659 | ||||||||||||
Liabilities and shareholder’s equity | ||||||||||||||||
Deposit liabilities—noninterest-bearing | $ | 1,812,348 | $ | 1,760,233 | ||||||||||||
Deposit liabilities—interest-bearing | 4,303,761 | 4,130,364 | ||||||||||||||
Other borrowings | 126,930 | 190,859 | ||||||||||||||
Other | 131,063 | 110,356 | ||||||||||||||
Total liabilities | 6,374,102 | 6,191,812 | ||||||||||||||
Commitments and contingencies | ||||||||||||||||
Common stock | 1 | 1 | ||||||||||||||
Additional paid in capital | 346,188 | 345,018 | ||||||||||||||
Retained earnings | 310,298 | 292,957 | ||||||||||||||
Accumulated other comprehensive loss, net of tax benefits | ||||||||||||||||
Net unrealized losses on securities | $ | (32,596 | ) | $ | (14,951 | ) | ||||||||||
Retirement benefit plans | (14,410 | ) | (47,006 | ) | (16,178 | ) | (31,129 | ) | ||||||||
Total shareholder’s equity | 609,481 | 606,847 | ||||||||||||||
Total liabilities and shareholder’s equity | $ | 6,983,583 | $ | 6,798,659 | ||||||||||||
Other assets | ||||||||||||||||
Bank-owned life insurance | $ | 150,797 | $ | 148,775 | ||||||||||||
Premises and equipment, net | 186,620 | 136,270 | ||||||||||||||
Prepaid expenses | 4,993 | 3,961 | ||||||||||||||
Accrued interest receivable | 19,597 | 18,724 | ||||||||||||||
Mortgage-servicing rights | 8,509 | 8,639 | ||||||||||||||
Low-income housing equity investments | 63,033 | 59,016 | ||||||||||||||
Real estate acquired in settlement of loans, net | — | 133 | ||||||||||||||
Other | 28,920 | 23,052 | ||||||||||||||
$ | 462,469 | $ | 398,570 | |||||||||||||
Other liabilities | ||||||||||||||||
Accrued expenses | $ | 63,734 | $ | 39,312 | ||||||||||||
Federal and state income taxes payable | 1,200 | 3,736 | ||||||||||||||
Cashier’s checks | 28,236 | 27,000 | ||||||||||||||
Advance payments by borrowers | 10,415 | 10,245 | ||||||||||||||
Other | 27,478 | 30,063 | ||||||||||||||
$ | 131,063 | $ | 110,356 |
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | Gross unrealized losses | ||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | |||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Number of issues | Fair value | Amount | Number of issues | Fair value | Amount | ||||||||||||||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||||||||
U.S. Treasury and federal agency obligations | $ | 179,986 | $ | 72 | $ | (4,125 | ) | $ | 175,933 | 19 | $ | 98,578 | $ | (2,018 | ) | 9 | $ | 67,283 | $ | (2,107 | ) | |||||||||||||||||
Mortgage-related securities- FNMA, FHLMC and GNMA | 1,218,313 | 350 | (40,831 | ) | 1,177,832 | 81 | 694,629 | (19,345 | ) | 83 | 456,218 | (21,486 | ) | |||||||||||||||||||||||||
Corporate bonds | 40,331 | 23 | (18 | ) | 40,336 | 4 | 23,841 | (18 | ) | — | — | — | ||||||||||||||||||||||||||
Mortgage revenue bond | 15,427 | — | — | 15,427 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
$ | 1,454,057 | $ | 445 | $ | (44,974 | ) | $ | 1,409,528 | 104 | $ | 817,048 | $ | (21,381 | ) | 92 | $ | 523,501 | $ | (23,593 | ) | ||||||||||||||||||
Held-to-maturity | ||||||||||||||||||||||||||||||||||||||
Mortgage-related securities- FNMA, FHLMC and GNMA | $ | 62,630 | $ | 41 | $ | (1,227 | ) | $ | 61,444 | 3 | $ | 41,138 | $ | (1,227 | ) | — | $ | — | $ | — | ||||||||||||||||||
$ | 62,630 | $ | 41 | $ | (1,227 | ) | $ | 61,444 | 3 | $ | 41,138 | $ | (1,227 | ) | — | $ | — | $ | — | |||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||||||||
U.S. Treasury and federal agency obligations | $ | 185,891 | $ | 438 | $ | (2,031 | ) | $ | 184,298 | 15 | $ | 83,137 | $ | (825 | ) | 8 | $ | 62,296 | $ | (1,206 | ) | |||||||||||||||||
Mortgage-related securities- FNMA, FHLMC and GNMA | 1,220,304 | 793 | (19,624 | ) | 1,201,473 | 67 | 653,635 | (6,839 | ) | 77 | 459,912 | (12,785 | ) | |||||||||||||||||||||||||
Mortgage revenue bond | 15,427 | — | — | 15,427 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
$ | 1,421,622 | $ | 1,231 | $ | (21,655 | ) | $ | 1,401,198 | 82 | $ | 736,772 | $ | (7,664 | ) | 85 | $ | 522,208 | $ | (13,991 | ) | ||||||||||||||||||
Held-to-maturity | ||||||||||||||||||||||||||||||||||||||
Mortgage-related securities- FNMA, FHLMC and GNMA | $ | 44,515 | $ | 1 | $ | (104 | ) | $ | 44,412 | 2 | $ | 35,744 | $ | (104 | ) | — | $ | — | $ | — | ||||||||||||||||||
$ | 44,515 | $ | 1 | $ | (104 | ) | $ | 44,412 | 2 | $ | 35,744 | $ | (104 | ) | — | $ | — | $ | — |
June 30, 2018 | Amortized cost | Fair value | ||||||
(in thousands) | ||||||||
Available-for-sale | ||||||||
Due in one year or less | $ | 25,005 | $ | 24,860 | ||||
Due after one year through five years | 105,425 | 104,020 | ||||||
Due after five years through ten years | 77,526 | 75,563 | ||||||
Due after ten years | 27,788 | 27,253 | ||||||
235,744 | 231,696 | |||||||
Mortgage-related securities-FNMA, FHLMC and GNMA | 1,218,313 | 1,177,832 | ||||||
Total available-for-sale securities | $ | 1,454,057 | $ | 1,409,528 | ||||
Held-to-maturity | ||||||||
Mortgage-related securities-FNMA, FHLMC and GNMA | $ | 62,630 | $ | 61,444 | ||||
Total held-to-maturity securities | $ | 62,630 | $ | 61,444 |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Real estate: | |||||||
Residential 1-4 family | $ | 2,099,950 | $ | 2,118,047 | |||
Commercial real estate | 758,835 | 733,106 | |||||
Home equity line of credit | 938,902 | 913,052 | |||||
Residential land | 16,032 | 15,797 | |||||
Commercial construction | 124,421 | 108,273 | |||||
Residential construction | 14,873 | 14,910 | |||||
Total real estate | 3,953,013 | 3,903,185 | |||||
Commercial | 593,596 | 544,828 | |||||
Consumer | 228,804 | 223,564 | |||||
Total loans | 4,775,413 | 4,671,577 | |||||
Less: Deferred fees and discounts | (669 | ) | (809 | ) | |||
Allowance for loan losses | (52,803 | ) | (53,637 | ) | |||
Total loans, net | $ | 4,721,941 | $ | 4,617,131 |
(in thousands) | Residential 1-4 family | Commercial real estate | Home equity line of credit | Residential land | Commercial construction | Residential construction | Commercial loans | Consumer loans | Unallo-cated | Total | ||||||||||||||||||||||||||||||
Three months ended June 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 2,525 | $ | 15,959 | $ | 7,982 | $ | 674 | $ | 4,361 | $ | 4 | $ | 10,355 | $ | 12,035 | $ | — | $ | 53,895 | ||||||||||||||||||||
Charge-offs | — | — | (144 | ) | (9 | ) | — | — | (540 | ) | (3,888 | ) | — | (4,581 | ) | |||||||||||||||||||||||||
Recoveries | 14 | — | 13 | 46 | — | — | 280 | 373 | — | 726 | ||||||||||||||||||||||||||||||
Provision | 400 | (661 | ) | (517 | ) | (69 | ) | 255 | — | 66 | 3,289 | — | 2,763 | |||||||||||||||||||||||||||
Ending balance | $ | 2,939 | $ | 15,298 | $ | 7,334 | $ | 642 | $ | 4,616 | $ | 4 | $ | 10,161 | $ | 11,809 | $ | — | $ | 52,803 | ||||||||||||||||||||
Three months ended June 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 2,781 | $ | 16,504 | $ | 5,417 | $ | 1,479 | $ | 7,257 | $ | 11 | $ | 14,902 | $ | 7,646 | $ | — | $ | 55,997 | ||||||||||||||||||||
Charge-offs | — | — | — | (92 | ) | — | — | (752 | ) | (2,390 | ) | — | (3,234 | ) | ||||||||||||||||||||||||||
Recoveries | 49 | — | 39 | 15 | — | — | 299 | 357 | — | 759 | ||||||||||||||||||||||||||||||
Provision | 300 | 2,336 | 71 | (138 | ) | (2,551 | ) | (2 | ) | 103 | 2,715 | — | 2,834 | |||||||||||||||||||||||||||
Ending balance | $ | 3,130 | $ | 18,840 | $ | 5,527 | $ | 1,264 | $ | 4,706 | $ | 9 | $ | 14,552 | $ | 8,328 | $ | — | $ | 56,356 | ||||||||||||||||||||
Six months ended June 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 2,902 | $ | 15,796 | $ | 7,522 | $ | 896 | $ | 4,671 | $ | 12 | $ | 10,851 | $ | 10,987 | $ | — | $ | 53,637 | ||||||||||||||||||||
Charge-offs | (31 | ) | — | (144 | ) | (17 | ) | — | — | (1,142 | ) | (8,120 | ) | — | (9,454 | ) | ||||||||||||||||||||||||
Recoveries | 68 | — | 27 | 51 | — | — | 1,450 | 720 | — | 2,316 | ||||||||||||||||||||||||||||||
Provision | — | (498 | ) | (71 | ) | (288 | ) | (55 | ) | (8 | ) | (998 | ) | 8,222 | — | 6,304 | ||||||||||||||||||||||||
Ending balance | $ | 2,939 | $ | 15,298 | $ | 7,334 | $ | 642 | $ | 4,616 | $ | 4 | $ | 10,161 | $ | 11,809 | $ | — | $ | 52,803 | ||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 1,027 | $ | 53 | $ | 1,161 | $ | 7 | $ | — | $ | — | $ | 597 | $ | 3 | $ | 2,848 | ||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,912 | $ | 15,245 | $ | 6,173 | $ | 635 | $ | 4,616 | $ | 4 | $ | 9,564 | $ | 11,806 | $ | — | $ | 49,955 | ||||||||||||||||||||
Financing Receivables: | ||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 2,099,950 | $ | 758,835 | $ | 938,902 | $ | 16,032 | $ | 124,421 | $ | 14,873 | $ | 593,596 | $ | 228,804 | $ | 4,775,413 | ||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 17,605 | $ | 993 | $ | 13,849 | $ | 1,171 | $ | — | $ | — | $ | 5,874 | $ | 91 | $ | 39,583 | ||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | $ | 2,082,345 | $ | 757,842 | $ | 925,053 | $ | 14,861 | $ | 124,421 | $ | 14,873 | $ | 587,722 | $ | 228,713 | $ | 4,735,830 | ||||||||||||||||||||||
Six months ended June 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 2,873 | $ | 16,004 | $ | 5,039 | $ | 1,738 | $ | 6,449 | $ | 12 | $ | 16,618 | $ | 6,800 | $ | — | $ | 55,533 | ||||||||||||||||||||
Charge-offs | (6 | ) | — | (14 | ) | (92 | ) | — | — | (2,262 | ) | (5,200 | ) | — | (7,574 | ) | ||||||||||||||||||||||||
Recoveries | 58 | — | 130 | 218 | — | — | 596 | 654 | — | 1,656 | ||||||||||||||||||||||||||||||
Provision | 205 | 2,836 | 372 | (600 | ) | (1,743 | ) | (3 | ) | (400 | ) | 6,074 | — | 6,741 | ||||||||||||||||||||||||||
Ending balance | $ | 3,130 | $ | 18,840 | $ | 5,527 | $ | 1,264 | $ | 4,706 | $ | 9 | $ | 14,552 | $ | 8,328 | $ | — | $ | 56,356 | ||||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 1,248 | $ | 65 | $ | 647 | $ | 47 | $ | — | $ | — | $ | 694 | $ | 29 | $ | 2,730 | ||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,654 | $ | 15,731 | $ | 6,875 | $ | 849 | $ | 4,671 | $ | 12 | $ | 10,157 | $ | 10,958 | $ | — | $ | 50,907 | ||||||||||||||||||||
Financing Receivables: | ||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 2,118,047 | $ | 733,106 | $ | 913,052 | $ | 15,797 | $ | 108,273 | $ | 14,910 | $ | 544,828 | $ | 223,564 | $ | 4,671,577 | ||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 18,284 | $ | 1,016 | $ | 8,188 | $ | 1,265 | $ | — | $ | — | $ | 4,574 | $ | 66 | $ | 33,393 | ||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | $ | 2,099,763 | $ | 732,090 | $ | 904,864 | $ | 14,532 | $ | 108,273 | $ | 14,910 | $ | 540,254 | $ | 223,498 | $ | 4,638,184 |
June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
(in thousands) | Commercial real estate | Commercial construction | Commercial | Commercial real estate | Commercial construction | Commercial | ||||||||||||||||||
Grade: | ||||||||||||||||||||||||
Pass | $ | 671,592 | $ | 99,632 | $ | 539,168 | $ | 630,877 | $ | 83,757 | $ | 492,942 | ||||||||||||
Special mention | 38,424 | 22,500 | 32,711 | 49,347 | 22,500 | 27,997 | ||||||||||||||||||
Substandard | 48,819 | 2,289 | 21,717 | 52,882 | 2,016 | 23,421 | ||||||||||||||||||
Doubtful | — | — | — | — | — | 468 | ||||||||||||||||||
Loss | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 758,835 | $ | 124,421 | $ | 593,596 | $ | 733,106 | $ | 108,273 | $ | 544,828 |
(in thousands) | 30-59 days past due | 60-89 days past due | Greater than 90 days | Total past due | Current | Total financing receivables | Recorded investment> 90 days and accruing | |||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 2,975 | $ | 1,348 | $ | 4,360 | $ | 8,683 | $ | 2,091,267 | $ | 2,099,950 | $ | — | ||||||||||||||
Commercial real estate | — | 725 | — | 725 | 758,110 | 758,835 | — | |||||||||||||||||||||
Home equity line of credit | 2,075 | 288 | 2,545 | 4,908 | 933,994 | 938,902 | — | |||||||||||||||||||||
Residential land | 741 | 111 | 631 | 1,483 | 14,549 | 16,032 | — | |||||||||||||||||||||
Commercial construction | — | — | — | — | 124,421 | 124,421 | — | |||||||||||||||||||||
Residential construction | — | — | — | — | 14,873 | 14,873 | — | |||||||||||||||||||||
Commercial | 1,721 | 491 | 551 | 2,763 | 590,833 | 593,596 | — | |||||||||||||||||||||
Consumer | 3,421 | 2,019 | 1,579 | 7,019 | 221,785 | 228,804 | — | |||||||||||||||||||||
Total loans | $ | 10,933 | $ | 4,982 | $ | 9,666 | $ | 25,581 | $ | 4,749,832 | $ | 4,775,413 | $ | — | ||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 1,532 | $ | 1,715 | $ | 5,071 | $ | 8,318 | $ | 2,109,729 | $ | 2,118,047 | $ | — | ||||||||||||||
Commercial real estate | — | — | — | — | 733,106 | 733,106 | — | |||||||||||||||||||||
Home equity line of credit | 425 | 114 | 2,051 | 2,590 | 910,462 | 913,052 | — | |||||||||||||||||||||
Residential land | 23 | — | 625 | 648 | 15,149 | 15,797 | — | |||||||||||||||||||||
Commercial construction | — | — | — | — | 108,273 | 108,273 | — | |||||||||||||||||||||
Residential construction | — | — | — | — | 14,910 | 14,910 | — | |||||||||||||||||||||
Commercial | 1,825 | 2,025 | 730 | 4,580 | 540,248 | 544,828 | — | |||||||||||||||||||||
Consumer | 3,432 | 2,159 | 1,876 | 7,467 | 216,097 | 223,564 | — | |||||||||||||||||||||
Total loans | $ | 7,237 | $ | 6,013 | $ | 10,353 | $ | 23,603 | $ | 4,647,974 | $ | 4,671,577 | $ | — |
(in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Real estate: | ||||||||
Residential 1-4 family | $ | 13,121 | $ | 12,598 | ||||
Commercial real estate | — | — | ||||||
Home equity line of credit | 6,051 | 4,466 | ||||||
Residential land | 843 | 841 | ||||||
Commercial construction | — | — | ||||||
Residential construction | — | — | ||||||
Commercial | 4,385 | 3,069 | ||||||
Consumer | 2,820 | 2,617 | ||||||
Total nonaccrual loans | $ | 27,220 | $ | 23,591 | ||||
Real estate: | ||||||||
Residential 1-4 family | $ | — | $ | — | ||||
Commercial real estate | — | — | ||||||
Home equity line of credit | — | — | ||||||
Residential land | — | — | ||||||
Commercial construction | — | — | ||||||
Residential construction | — | — | ||||||
Commercial | — | — | ||||||
Consumer | — | — | ||||||
Total accruing loans 90 days or more past due | $ | — | $ | — | ||||
Real estate: | ||||||||
Residential 1-4 family | $ | 10,777 | $ | 10,982 | ||||
Commercial real estate | 993 | 1,016 | ||||||
Home equity line of credit | 10,255 | 6,584 | ||||||
Residential land | 328 | 425 | ||||||
Commercial construction | — | — | ||||||
Residential construction | — | — | ||||||
Commercial | 1,716 | 1,741 | ||||||
Consumer | 64 | 66 | ||||||
Total troubled debt restructured loans not included above | $ | 24,133 | $ | 20,814 |
June 30, 2018 | Three months ended June 30, 2018 | Six months ended June 30, 2018 | ||||||||||||||||||||||||||
(in thousands) | Recorded investment | Unpaid principal balance | Related Allowance | Average recorded investment | Interest income recognized* | Average recorded investment | Interest income recognized* | |||||||||||||||||||||
With no related allowance recorded | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 8,966 | $ | 9,498 | $ | — | $ | 8,900 | $ | 50 | $ | 8,699 | $ | 157 | ||||||||||||||
Commercial real estate | — | — | — | — | — | — | — | |||||||||||||||||||||
Home equity line of credit | 2,505 | 2,803 | — | 2,374 | 7 | 2,037 | 12 | |||||||||||||||||||||
Residential land | 1,141 | 1,449 | — | 1,132 | 5 | 1,150 | 10 | |||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Commercial | 4,158 | 5,079 | — | 3,026 | 10 | 2,691 | 20 | |||||||||||||||||||||
Consumer | 33 | 33 | — | 15 | — | 11 | — | |||||||||||||||||||||
$ | 16,803 | $ | 18,862 | $ | — | $ | 15,447 | $ | 72 | $ | 14,588 | $ | 199 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 8,639 | $ | 8,842 | $ | 1,027 | $ | 8,778 | $ | 97 | $ | 8,953 | $ | 190 | ||||||||||||||
Commercial real estate | 993 | 993 | 53 | 997 | 10 | 1,003 | 21 | |||||||||||||||||||||
Home equity line of credit | 11,344 | 11,414 | 1,161 | 10,420 | 96 | 9,080 | 177 | |||||||||||||||||||||
Residential land | 30 | 30 | 7 | 40 | 1 | 58 | 3 | |||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Commercial | 1,716 | 1,716 | 597 | 1,738 | 30 | 1,848 | 66 | |||||||||||||||||||||
Consumer | 58 | 58 | 3 | 58 | 1 | 58 | 2 | |||||||||||||||||||||
$ | 22,780 | $ | 23,053 | $ | 2,848 | $ | 22,031 | $ | 235 | $ | 21,000 | $ | 459 | |||||||||||||||
Total | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 17,605 | $ | 18,340 | $ | 1,027 | $ | 17,678 | $ | 147 | $ | 17,652 | $ | 347 | ||||||||||||||
Commercial real estate | 993 | 993 | 53 | 997 | 10 | 1,003 | 21 | |||||||||||||||||||||
Home equity line of credit | 13,849 | 14,217 | 1,161 | 12,794 | 103 | 11,117 | 189 | |||||||||||||||||||||
Residential land | 1,171 | 1,479 | 7 | 1,172 | 6 | 1,208 | 13 | |||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Commercial | 5,874 | 6,795 | 597 | 4,764 | 40 | 4,539 | 86 | |||||||||||||||||||||
Consumer | 91 | 91 | 3 | 73 | 1 | 69 | 2 | |||||||||||||||||||||
$ | 39,583 | $ | 41,915 | $ | 2,848 | $ | 37,478 | $ | 307 | $ | 35,588 | $ | 658 |
December 31, 2017 | Three months ended June 30, 2017 | Six months ended June 30, 2017 | ||||||||||||||||||||||||||
(in thousands) | Recorded investment | Unpaid principal balance | Related allowance | Average recorded investment | Interest income recognized* | Average recorded investment | Interest income recognized* | |||||||||||||||||||||
With no related allowance recorded | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 9,097 | $ | 9,644 | $ | — | $ | 9,304 | $ | 76 | $ | 9,429 | $ | 160 | ||||||||||||||
Commercial real estate | — | — | — | 143 | 11 | 182 | 11 | |||||||||||||||||||||
Home equity line of credit | 1,496 | 1,789 | — | 2,401 | 51 | 2,203 | 65 | |||||||||||||||||||||
Residential land | 1,143 | 1,434 | — | 1,075 | 8 | 1,016 | 34 | |||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Commercial | 2,328 | 3,166 | — | 1,949 | 2 | 3,428 | 8 | |||||||||||||||||||||
Consumer | 8 | 8 | — | 1 | — | — | — | |||||||||||||||||||||
$ | 14,072 | $ | 16,041 | $ | — | $ | 14,873 | $ | 148 | $ | 16,258 | $ | 278 | |||||||||||||||
With an allowance recorded | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 9,187 | $ | 9,390 | $ | 1,248 | $ | 10,054 | $ | 117 | $ | 10,051 | $ | 236 | ||||||||||||||
Commercial real estate | 1,016 | 1,016 | 65 | 1,292 | 14 | 1,296 | 28 | |||||||||||||||||||||
Home equity line of credit | 6,692 | 6,736 | 647 | 4,372 | 47 | 4,467 | 96 | |||||||||||||||||||||
Residential land | 122 | 122 | 47 | 1,532 | 24 | 1,804 | 61 | |||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Commercial | 2,246 | 2,252 | 694 | 2,562 | 68 | 4,915 | 469 | |||||||||||||||||||||
Consumer | 58 | 58 | 29 | 68 | 1 | 49 | 1 | |||||||||||||||||||||
$ | 19,321 | $ | 19,574 | $ | 2,730 | $ | 19,880 | $ | 271 | $ | 22,582 | $ | 891 | |||||||||||||||
Total | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Residential 1-4 family | $ | 18,284 | $ | 19,034 | $ | 1,248 | $ | 19,358 | $ | 193 | $ | 19,480 | $ | 396 | ||||||||||||||
Commercial real estate | 1,016 | 1,016 | 65 | 1,435 | 25 | 1,478 | 39 | |||||||||||||||||||||
Home equity line of credit | 8,188 | 8,525 | 647 | 6,773 | 98 | 6,670 | 161 | |||||||||||||||||||||
Residential land | 1,265 | 1,556 | 47 | 2,607 | 32 | 2,820 | 95 | |||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | |||||||||||||||||||||
Commercial | 4,574 | 5,418 | 694 | 4,511 | 70 | 8,343 | 477 | |||||||||||||||||||||
Consumer | 66 | 66 | 29 | 69 | 1 | 49 | 1 | |||||||||||||||||||||
$ | 33,393 | $ | 35,615 | $ | 2,730 | $ | 34,753 | $ | 419 | $ | 38,840 | $ | 1,169 |
* | Since loan was classified as impaired. |
Three months ended June 30, 2018 | Six months ended June 30, 2018 | |||||||||||||||||||||||||||||
Number of contracts | Outstanding recorded investment1 | Net increase in allowance | Number of contracts | Outstanding recorded investment1 | Net increase in allowance | |||||||||||||||||||||||||
(dollars in thousands) | Pre-modification | Post-modification | (as of period end) | Pre-modification | Post-modification | (as of period end) | ||||||||||||||||||||||||
Troubled debt restructurings | ||||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||
Residential 1-4 family | — | $ | — | $ | — | $ | — | 1 | $ | 339 | $ | 344 | $ | 16 | ||||||||||||||||
Commercial real estate | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Home equity line of credit | 21 | 3,338 | 3,338 | 554 | 39 | 5,508 | 5,512 | 942 | ||||||||||||||||||||||
Residential land | — | — | — | — | 1 | 109 | 109 | — | ||||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Commercial | 2 | 43 | 43 | 42 | 7 | 2,294 | 2,294 | 42 | ||||||||||||||||||||||
Consumer | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
23 | $ | 3,381 | $ | 3,381 | $ | 596 | 48 | $ | 8,250 | $ | 8,259 | $ | 1,000 |
Three months ended June 30, 2017 | Six months ended June 30, 2017 | |||||||||||||||||||||||||||||
Number of contracts | Outstanding recorded investment1 | Net increase in allowance | Number of contracts | Outstanding recorded investment1 | Net increase in allowance | |||||||||||||||||||||||||
(dollars in thousands) | Pre-modification | Post-modification | (as of period end) | Pre-modification | Post-modification | (as of period end) | ||||||||||||||||||||||||
Troubled debt restructurings | ||||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||
Residential 1-4 family | 2 | $ | 360 | $ | 360 | $ | — | 5 | $ | 872 | $ | 880 | $ | 45 | ||||||||||||||||
Commercial real estate | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Home equity line of credit | 5 | 298 | 298 | 59 | 13 | 524 | 510 | 93 | ||||||||||||||||||||||
Residential land | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Commercial | — | — | — | — | 1 | 342 | 342 | — | ||||||||||||||||||||||
Consumer | — | — | — | — | 1 | 59 | 59 | 27 | ||||||||||||||||||||||
7 | $ | 658 | $ | 658 | $ | 59 | 20 | $ | 1,797 | $ | 1,791 | $ | 165 |
1 | The reported balances include loans that became TDR during the period, and were fully paid-off, charged-off, or sold prior to period end. |
Three months ended June 30, 2018 | Six months ended June 30, 2018 | |||||||||||
(dollars in thousands) | Number of contracts | Recorded investment | Number of contracts | Recorded investment | ||||||||
Troubled debt restructurings that subsequently defaulted | ||||||||||||
Real estate: | ||||||||||||
Residential 1-4 family | — | $ | — | — | $ | — | ||||||
Commercial real estate | — | — | — | — | ||||||||
Home equity line of credit | 1 | 100 | 2 | 181 | ||||||||
Residential land | — | — | — | — | ||||||||
Commercial construction | — | — | — | — | ||||||||
Residential construction | — | — | — | — | ||||||||
Commercial | 1 | 291 | 1 | 291 | ||||||||
Consumer | — | — | — | — | ||||||||
2 | $ | 391 | 3 | $ | 472 |
Three months ended June 30, 2017 | Six months ended June 30, 2017 | |||||||||||
(dollars in thousands) | Number of contracts | Recorded investment | Number of contracts | Recorded investment | ||||||||
Troubled debt restructurings that subsequently defaulted | ||||||||||||
Real estate: | ||||||||||||
Residential 1-4 family | 1 | $ | 222 | 2 | $ | 523 | ||||||
Commercial real estate | — | — | — | — | ||||||||
Home equity line of credit | — | — | — | — | ||||||||
Residential land | — | — | — | — | ||||||||
Commercial construction | — | — | — | — | ||||||||
Residential construction | — | — | — | — | ||||||||
Commercial | — | — | — | — | ||||||||
Consumer | — | — | — | — | ||||||||
1 | $ | 222 | 2 | $ | 523 |
(in thousands) | Gross carrying amount1 | Accumulated amortization1 | Valuation allowance | Net carrying amount | ||||||||||||
June 30, 2018 | $ | 18,238 | $ | (9,729 | ) | $ | — | $ | 8,509 | |||||||
December 31, 2017 | 17,511 | (8,872 | ) | — | 8,639 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Mortgage servicing rights | ||||||||||||||||
Beginning balance | $ | 8,541 | $ | 9,294 | $ | 8,639 | $ | 9,373 | ||||||||
Amount capitalized | 392 | 362 | 727 | 798 | ||||||||||||
Amortization | (424 | ) | (475 | ) | (857 | ) | (990 | ) | ||||||||
Other-than-temporary impairment | — | — | — | — | ||||||||||||
Carrying amount before valuation allowance | 8,509 | 9,181 | 8,509 | 9,181 | ||||||||||||
Valuation allowance for mortgage servicing rights | ||||||||||||||||
Beginning balance | — | — | — | — | ||||||||||||
Provision (recovery) | — | — | — | — | ||||||||||||
Other-than-temporary impairment | — | — | — | — | ||||||||||||
Ending balance | — | — | — | — | ||||||||||||
Net carrying value of mortgage servicing rights | $ | 8,509 | $ | 9,181 | $ | 8,509 | $ | 9,181 |
(dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Unpaid principal balance | $ | 1,192,901 | $ | 1,195,454 | ||||
Weighted average note rate | 3.96 | % | 3.94 | % | ||||
Weighted average discount rate | 10.0 | % | 10.0 | % | ||||
Weighted average prepayment speed | 6.8 | % | 9.0 | % |
(dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Prepayment rate: | ||||||||
25 basis points adverse rate change | $ | (344 | ) | $ | (869 | ) | ||
50 basis points adverse rate change | (797 | ) | (1,828 | ) | ||||
Discount rate: | ||||||||
25 basis points adverse rate change | (135 | ) | (111 | ) | ||||
50 basis points adverse rate change | (268 | ) | (220 | ) |
(in millions) | Gross amount of recognized liabilities | Gross amount offset in the Balance Sheet | Net amount of liabilities presented in the Balance Sheet | |||||||||
Repurchase agreements | ||||||||||||
June 30, 2018 | $ | 77 | $ | — | $ | 77 | ||||||
December 31, 2017 | 141 | — | 141 |
Gross amount not offset in the Balance Sheet | ||||||||||||
(in millions) | Net amount of liabilities presented in the Balance Sheet | Financial instruments | Cash collateral pledged | |||||||||
June 30, 2018 | ||||||||||||
Commercial account holders | $ | 77 | $ | 193 | $ | — | ||||||
Total | $ | 77 | $ | 193 | $ | — | ||||||
December 31, 2017 | ||||||||||||
Commercial account holders | $ | 141 | $ | 165 | $ | — | ||||||
Total | $ | 141 | $ | 165 | $ | — |
June 30, 2018 | December 31, 2017 | |||||||||||||||
(in thousands) | Notional amount | Fair value | Notional amount | Fair value | ||||||||||||
Interest rate lock commitments | $ | 21,954 | $ | 248 | $ | 13,669 | $ | 131 | ||||||||
Forward commitments | 24,911 | (62 | ) | 14,465 | (24 | ) |
Derivative Financial Instruments Not Designated as Hedging Instruments 1 | June 30, 2018 | December 31, 2017 | ||||||||||||||
(in thousands) | Asset derivatives | Liability derivatives | Asset derivatives | Liability derivatives | ||||||||||||
Interest rate lock commitments | $ | 248 | $ | — | $ | 133 | $ | 2 | ||||||||
Forward commitments | 2 | 64 | 4 | 28 | ||||||||||||
$ | 250 | $ | 64 | $ | 137 | $ | 30 |
Derivative Financial Instruments Not Designated as Hedging Instruments | Location of net gains (losses) recognized in the Statement of Income | Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
Interest rate lock commitments | Mortgage banking income | $ | (7 | ) | $ | (191 | ) | $ | 117 | $ | (295 | ) | ||||||
Forward commitments | Mortgage banking income | (2 | ) | 192 | (38 | ) | 265 | |||||||||||
$ | (9 | ) | $ | 1 | $ | 79 | $ | (30 | ) |
Series 2018A | Series 2018B | Series 2018C | |
Aggregate principal amount | $67.5 million | $17.5 million | $15 million |
Fixed coupon interest rate | 4.38% | 4.53% | 4.72% |
Maturity date | May 30, 2028 | March 30, 2033 | May 30, 2048 |
Principal amount by company: | |||
Hawaiian Electric | $52 million | $12.5 million | $10.5 million |
Hawaii Electric Light | $9 million | $3 million | $3 million |
Maui Electric | $6.5 million | $2 million | $1.5 million |
HEI Consolidated | Hawaiian Electric Consolidated | ||||||||||||||||||||||||||
(in thousands) | Net unrealized gains (losses) on securities | Unrealized gains (losses) on derivatives | Retirement benefit plans | AOCI | Unrealized gains (losses) on derivatives | Retirement benefit plans | AOCI | ||||||||||||||||||||
Balance, December 31, 2017 | $ | (14,951 | ) | $ | — | $ | (26,990 | ) | $ | (41,941 | ) | $ | — | $ | (1,219 | ) | $ | (1,219 | ) | ||||||||
Current period other comprehensive income (loss) | (17,645 | ) | — | 1,047 | (16,598 | ) | — | 57 | 57 | ||||||||||||||||||
Balance, June 30, 2018 | $ | (32,596 | ) | $ | — | $ | (25,943 | ) | $ | (58,539 | ) | $ | — | $ | (1,162 | ) | $ | (1,162 | ) | ||||||||
Balance, December 31, 2016 | $ | (7,931 | ) | $ | (454 | ) | $ | (24,744 | ) | $ | (33,129 | ) | $ | (454 | ) | $ | 132 | $ | (322 | ) | |||||||
Current period other comprehensive income | 2,244 | 454 | 657 | 3,355 | 454 | 45 | 499 | ||||||||||||||||||||
Balance, June 30, 2017 | $ | (5,687 | ) | $ | — | $ | (24,087 | ) | $ | (29,774 | ) | $ | — | $ | 177 | $ | 177 |
Amount reclassified from AOCI | ||||||||||||||||||
Three months ended June 30 | Six months ended June 30 | Affected line item in the | ||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | Statements of Income / Balance Sheets | |||||||||||||
HEI consolidated | ||||||||||||||||||
Derivatives qualifying as cash flow hedges: | ||||||||||||||||||
Window forward contracts | $ | — | $ | — | $ | — | $ | 454 | Property, plant and equipment-electric utilities | |||||||||
Retirement benefit plans: | ||||||||||||||||||
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost | 5,350 | 3,930 | 10,496 | 7,851 | See Note 8 for additional details | |||||||||||||
Impact of D&Os of the PUC included in regulatory assets | (4,827 | ) | (3,581 | ) | (9,449 | ) | (7,194 | ) | See Note 8 for additional details | |||||||||
Total reclassifications | $ | 523 | $ | 349 | $ | 1,047 | $ | 1,111 | ||||||||||
Hawaiian Electric consolidated | ||||||||||||||||||
Derivatives qualifying as cash flow hedges: | ||||||||||||||||||
Window forward contracts | $ | — | $ | — | $ | — | $ | 454 | Property, plant and equipment | |||||||||
Retirement benefit plans: | ||||||||||||||||||
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost | 4,853 | 3,621 | 9,506 | 7,239 | See Note 8 for additional details | |||||||||||||
Impact of D&Os of the PUC included in regulatory assets | (4,827 | ) | (3,581 | ) | (9,449 | ) | (7,194 | ) | See Note 8 for additional details | |||||||||
Total reclassifications | $ | 26 | $ | 40 | $ | 57 | $ | 499 |
Three months ended June 30, 2018 | Six months ended June 30, 2018 | |||||||||||||||||||||||||||||||
Electric utility | Bank | Other | Total | Electric utility | Bank | Other | Total | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Revenues from contracts with customers | ||||||||||||||||||||||||||||||||
Electric energy sales - residential | $ | 185,217 | $ | — | $ | — | $ | 185,217 | $ | 363,806 | $ | — | $ | — | $ | 363,806 | ||||||||||||||||
Electric energy sales - commercial | 206,169 | — | — | 206,169 | 395,167 | — | — | 395,167 | ||||||||||||||||||||||||
Electric energy sales - large light and power | 214,676 | — | — | 214,676 | 406,997 | — | — | 406,997 | ||||||||||||||||||||||||
Electric energy sales - other | 3,217 | — | — | 3,217 | 6,480 | — | — | 6,480 | ||||||||||||||||||||||||
Utility fees | 751 | — | — | 751 | 1,548 | — | — | 1,548 | ||||||||||||||||||||||||
Bank fees | — | 11,557 | — | 11,557 | — | 23,054 | — | 23,054 | ||||||||||||||||||||||||
Total revenues from contracts with customers | 610,030 | 11,557 | — | 621,587 | 1,173,998 | 23,054 | — | 1,197,052 | ||||||||||||||||||||||||
Revenues from other sources | ||||||||||||||||||||||||||||||||
Regulatory revenue | (4,643 | ) | — | — | (4,643 | ) | 107 | — | — | 107 | ||||||||||||||||||||||
Bank interest and dividend income | — | 63,261 | — | 63,261 | — | 125,263 | — | 125,263 | ||||||||||||||||||||||||
Other bank noninterest income | — | 2,286 | — | 2,286 | — | 4,206 | — | 4,206 | ||||||||||||||||||||||||
Other | 2,739 | — | 47 | 2,786 | 4,448 | — | 75 | 4,523 | ||||||||||||||||||||||||
Total revenues from other sources | (1,904 | ) | 65,547 | 47 | 63,690 | 4,555 | 129,469 | 75 | 134,099 | |||||||||||||||||||||||
Total revenues | $ | 608,126 | $ | 77,104 | $ | 47 | $ | 685,277 | $ | 1,178,553 | $ | 152,523 | $ | 75 | $ | 1,331,151 | ||||||||||||||||
Timing of revenue recognition | ||||||||||||||||||||||||||||||||
Services/goods transferred at a point in time | $ | 751 | $ | 11,557 | $ | — | $ | 12,308 | $ | 1,548 | $ | 23,054 | $ | — | $ | 24,602 | ||||||||||||||||
Services/goods transferred over time | 609,279 | — | — | 609,279 | 1,172,450 | — | — | 1,172,450 | ||||||||||||||||||||||||
Total revenues from contracts with customers | $ | 610,030 | $ | 11,557 | $ | — | $ | 621,587 | $ | 1,173,998 | $ | 23,054 | $ | — | $ | 1,197,052 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||||||||||||||||||
Pension benefits | Other benefits | Pension benefits | Other benefits | |||||||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
HEI consolidated | ||||||||||||||||||||||||||||||||
Service cost | $ | 17,428 | $ | 15,870 | $ | 692 | $ | 847 | $ | 34,541 | $ | 32,364 | $ | 1,361 | $ | 1,687 | ||||||||||||||||
Interest cost | 19,459 | 20,361 | 2,030 | 2,315 | 38,693 | 40,577 | 3,961 | 4,726 | ||||||||||||||||||||||||
Expected return on plan assets | (27,224 | ) | (25,646 | ) | (3,267 | ) | (3,104 | ) | (54,478 | ) | (51,367 | ) | (6,459 | ) | (6,170 | ) | ||||||||||||||||
Amortization of net prior service gain | (11 | ) | (13 | ) | (451 | ) | (448 | ) | (21 | ) | (27 | ) | (903 | ) | (897 | ) | ||||||||||||||||
Amortization of net actuarial loss | 7,634 | 6,707 | 48 | 199 | 15,029 | 13,220 | 46 | 565 | ||||||||||||||||||||||||
Net periodic pension/benefit cost (return) | 17,286 | 17,279 | (948 | ) | (191 | ) | 33,764 | 34,767 | (1,994 | ) | (89 | ) | ||||||||||||||||||||
Impact of PUC D&Os | 7,179 | (4,867 | ) | 1,024 | 527 | 9,836 | (10,023 | ) | 2,095 | 673 | ||||||||||||||||||||||
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os) | $ | 24,465 | $ | 12,412 | $ | 76 | $ | 336 | $ | 43,600 | $ | 24,744 | $ | 101 | $ | 584 | ||||||||||||||||
Hawaiian Electric consolidated | ||||||||||||||||||||||||||||||||
Service cost | $ | 17,007 | $ | 15,436 | $ | 688 | $ | 841 | $ | 33,680 | $ | 31,530 | $ | 1,352 | $ | 1,676 | ||||||||||||||||
Interest cost | 17,937 | 18,726 | 1,955 | 2,231 | 35,647 | 37,315 | 3,814 | 4,558 | ||||||||||||||||||||||||
Expected return on plan assets | (25,577 | ) | (23,935 | ) | (3,216 | ) | (3,056 | ) | (51,184 | ) | (47,946 | ) | (6,356 | ) | (6,073 | ) | ||||||||||||||||
Amortization of net prior service loss (gain) | 2 | 2 | (451 | ) | (451 | ) | 4 | 4 | (902 | ) | (902 | ) | ||||||||||||||||||||
Amortization of net actuarial loss | 6,941 | 6,190 | 49 | 192 | 13,651 | 12,196 | 49 | 551 | ||||||||||||||||||||||||
Net periodic pension/benefit cost (return) | 16,310 | 16,419 | (975 | ) | (243 | ) | 31,798 | 33,099 | (2,043 | ) | (190 | ) | ||||||||||||||||||||
Impact of PUC D&Os | 7,179 | (4,867 | ) | 1,024 | 527 | 9,836 | (10,023 | ) | 2,095 | 673 | ||||||||||||||||||||||
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os) | $ | 23,489 | $ | 11,552 | $ | 49 | $ | 284 | $ | 41,634 | $ | 23,076 | $ | 52 | $ | 483 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
HEI consolidated | ||||||||||||||||
Share-based compensation expense 1 | $ | 2.8 | $ | 2.2 | $ | 4.4 | $ | 3.3 | ||||||||
Income tax benefit | 0.5 | 0.8 | 0.7 | 1.2 | ||||||||||||
Hawaiian Electric consolidated | ||||||||||||||||
Share-based compensation expense 1 | 0.9 | 0.7 | 1.5 | 1.1 | ||||||||||||
Income tax benefit | 0.2 | 0.3 | 0.3 | 0.4 |
1 | For the three and six months ended June 30, 2018 and 2017, the Company has not capitalized any share-based compensation. |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(dollars in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Shares granted | 37,747 | 35,000 | 38,821 | 35,770 | ||||||||||||
Fair value | $ | 1.3 | $ | 1.1 | $ | 1.3 | $ | 1.2 | ||||||||
Income tax benefit | 0.3 | 0.4 | 0.3 | 0.5 |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||
Shares | (1) | Shares | (1) | Shares | (1) | Shares | (1) | ||||||||||||||||||||||||
Outstanding, beginning of period | 208,088 | $ | 32.97 | 236,036 | $ | 31.42 | 197,047 | $ | 31.53 | 220,683 | $ | 29.57 | |||||||||||||||||||
Granted | 3,159 | 33.78 | 896 | 33.06 | 92,064 | 34.09 | 97,873 | 33.47 | |||||||||||||||||||||||
Vested | (448 | ) | 31.94 | (7,370 | ) | 29.17 | (75,683 | ) | 30.56 | (88,994 | ) | 28.88 | |||||||||||||||||||
Forfeited | (9,943 | ) | 32.05 | (23,079 | ) | 31.50 | (12,572 | ) | 32.27 | (23,079 | ) | 31.50 | |||||||||||||||||||
Outstanding, end of period | 200,856 | $ | 33.03 | 206,483 | $ | 31.50 | 200,856 | $ | 33.03 | 206,483 | $ | 31.50 | |||||||||||||||||||
Total weighted-average grant-date fair value of shares granted (in millions) | $ | 0.1 | $ | — | $ | 3.1 | $ | 3.3 |
(1) | Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant. |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||
Shares | (1) | Shares | (1) | Shares | (1) | Shares | (1) | ||||||||||||||||||||||||
Outstanding, beginning of period | 66,791 | $ | 38.84 | 36,971 | $ | 39.51 | 32,904 | $ | 39.51 | 83,106 | $ | 22.95 | |||||||||||||||||||
Granted | 1,315 | 38.20 | 233 | 39.51 | 36,941 | 38.21 | 37,204 | 39.51 | |||||||||||||||||||||||
Vested (issued or unissued and cancelled) | — | — | — | — | — | — | (83,106 | ) | 22.95 | ||||||||||||||||||||||
Forfeited | (1,929 | ) | 38.85 | (3,434 | ) | 39.51 | (3,668 | ) | 38.84 | (3,434 | ) | 39.51 | |||||||||||||||||||
Outstanding, end of period | 66,177 | $ | 38.82 | 33,770 | $ | 39.51 | 66,177 | $ | 38.82 | 33,770 | $ | 39.51 | |||||||||||||||||||
Total weighted-average grant-date fair value of shares granted (in millions) | $ | 0.1 | $ | — | $ | 1.4 | $ | 1.5 |
(1) | Weighted-average grant-date fair value per share determined using a Monte Carlo simulation model. |
2018 | 2017 | |||||
Risk-free interest rate | 2.29 | % | 1.46 | % | ||
Expected life in years | 3 | 3 | ||||
Expected volatility | 17.0 | % | 20.1 | % | ||
Range of expected volatility for Peer Group | 15.1% to 26.2% | 15.4% to 26.0% | ||||
Grant date fair value (per share) | $38.20 | $39.51 |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||
Shares | (1) | Shares | (1) | Shares | (1) | Shares | (1) | ||||||||||||||||||||||||
Outstanding, beginning of period | 267,167 | $ | 33.80 | 147,888 | $ | 33.48 | 131,616 | $ | 33.47 | 109,816 | $ | 25.18 | |||||||||||||||||||
Granted | 5,257 | 33.52 | 930 | 32.58 | 147,766 | 34.08 | 148,818 | 33.47 | |||||||||||||||||||||||
Vested | — | — | — | — | — | — | (109,816 | ) | 25.18 | ||||||||||||||||||||||
Forfeited | (7,717 | ) | 33.80 | (13,740 | ) | 33.48 | (14,675 | ) | 33.80 | (13,740 | ) | 33.48 | |||||||||||||||||||
Outstanding, end of period | 264,707 | $ | 33.79 | 135,078 | $ | 33.47 | 264,707 | $ | 33.79 | 135,078 | $ | 33.47 | |||||||||||||||||||
Total weighted-average grant-date fair value of shares granted (at target performance levels) (in millions) | $ | 0.2 | $ | — | $ | 5.0 | $ | 5.0 |
(1) | Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant. |
Six months ended June 30 | 2018 | 2017 | ||||||
(in millions) | ||||||||
Supplemental disclosures of cash flow information | ||||||||
HEI consolidated | ||||||||
Interest paid to non-affiliates | $ | 45 | $ | 46 | ||||
Income taxes paid (including refundable credits) | 36 | 21 | ||||||
Hawaiian Electric consolidated | ||||||||
Interest paid to non-affiliates | 32 | 36 | ||||||
Income taxes paid (including refundable credits) | 35 | 8 | ||||||
Supplemental disclosures of noncash activities | ||||||||
HEI consolidated | ||||||||
Property, plant and equipment | ||||||||
Estimated fair value of noncash contributions in aid of construction (investing) | 5 | 2 | ||||||
Unpaid invoices and accruals for capital expenditures, balance, end of period (investing) | 42 | 38 | ||||||
Loans transferred from held for investment to held for sale (investing) | 1 | 9 | ||||||
Common stock issued (gross) for director and executive/management compensation (financing)1 | 4 | 11 | ||||||
Obligations to fund low income housing investments (investing) | 6 | — | ||||||
Transfer of retail repurchase agreements to deposit liabilities (financing) | 102 | — | ||||||
Unsettled trades to purchase investment securities (investing) | 10 | — | ||||||
Hawaiian Electric consolidated | ||||||||
Electric utility property, plant and equipment | ||||||||
Estimated fair value of noncash contributions in aid of construction (investing) | 5 | 2 | ||||||
Unpaid invoices and accruals for capital expenditures, balance, end of period (investing) | 28 | 36 |
Estimated fair value | ||||||||||||||||||||
Carrying or notional amount | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant unobservable inputs | |||||||||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||
June 30, 2018 | ||||||||||||||||||||
Financial assets | ||||||||||||||||||||
HEI consolidated | ||||||||||||||||||||
Available-for-sale investment securities | $ | 1,409,528 | $ | — | $ | 1,394,101 | $ | 15,427 | $ | 1,409,528 | ||||||||||
Held-to-maturity investment securities | 62,630 | — | 61,444 | — | 61,444 | |||||||||||||||
Stock in Federal Home Loan Bank | 10,158 | — | 10,158 | — | 10,158 | |||||||||||||||
Loans, net | 4,727,189 | — | 5,250 | 4,774,079 | 4,779,329 | |||||||||||||||
Mortgage servicing rights | 8,509 | — | — | 13,423 | 13,423 | |||||||||||||||
Derivative assets | 24,537 | — | 250 | — | 250 | |||||||||||||||
Financial liabilities | ||||||||||||||||||||
HEI consolidated | ||||||||||||||||||||
Deposit liabilities1 | 757,265 | — | 745,295 | — | 745,295 | |||||||||||||||
Short-term borrowings—other than bank | 202,857 | — | 202,857 | — | 202,857 | |||||||||||||||
Other bank borrowings | 126,930 | — | 126,904 | — | 126,904 | |||||||||||||||
Long-term debt, net—other than bank | 1,783,009 | — | 1,816,310 | — | 1,816,310 | |||||||||||||||
Derivative liabilities | 25,445 | 56 | 114 | — | 170 | |||||||||||||||
Hawaiian Electric consolidated | ||||||||||||||||||||
Short-term borrowings | 91,880 | — | 91,880 | — | 91,880 | |||||||||||||||
Long-term debt, net | 1,468,457 | — | 1,511,103 | — | 1,511,103 | |||||||||||||||
Derivative liabilities-window forward contracts | 3,117 | — | 106 | — | 106 | |||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Financial assets | ||||||||||||||||||||
HEI consolidated | ||||||||||||||||||||
Available-for-sale investment securities | 1,401,198 | — | 1,385,771 | 15,427 | 1,401,198 | |||||||||||||||
Held-to-maturity investment securities | 44,515 | — | 44,412 | — | 44,412 | |||||||||||||||
Stock in Federal Home Loan Bank | 9,706 | — | 9,706 | — | 9,706 | |||||||||||||||
Loans, net | 4,628,381 | — | 11,254 | 4,770,497 | 4,781,751 | |||||||||||||||
Mortgage servicing rights | 8,639 | — | — | 12,052 | 12,052 | |||||||||||||||
Derivative assets | 17,812 | — | 393 | — | 393 | |||||||||||||||
Hawaiian Electric consolidated | ||||||||||||||||||||
Derivative assets-window forward contracts | 3,240 | — | 256 | — | 256 | |||||||||||||||
Financial liabilities | ||||||||||||||||||||
HEI consolidated | ||||||||||||||||||||
Deposit liabilities1 | 5,890,597 | — | 5,884,071 | — | 5,884,071 | |||||||||||||||
Short-term borrowings—other than bank | 117,945 | — | 117,945 | — | 117,945 | |||||||||||||||
Other bank borrowings | 190,859 | — | 190,829 | — | 190,829 | |||||||||||||||
Long-term debt, net—other than bank | 1,683,797 | — | 1,813,295 | — | 1,813,295 | |||||||||||||||
Derivative liabilities | 13,562 | 20 | 10 | — | 30 | |||||||||||||||
Hawaiian Electric consolidated | ||||||||||||||||||||
Short-term borrowings | 4,999 | — | 4,999 | — | 4,999 | |||||||||||||||
Long-term debt, net | 1,368,479 | — | 1,497,079 | — | 1,497,079 |
June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
Fair value measurements using | Fair value measurements using | |||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Available-for-sale investment securities (bank segment) | ||||||||||||||||||||||||
Mortgage-related securities-FNMA, FHLMC and GNMA | $ | — | $ | 1,177,832 | $ | — | $ | — | $ | 1,201,473 | $ | — | ||||||||||||
U.S. Treasury and federal agency obligations | — | 175,933 | — | — | 184,298 | — | ||||||||||||||||||
Corporate bonds | — | 40,336 | — | — | — | — | ||||||||||||||||||
Mortgage revenue bond | — | — | 15,427 | — | — | 15,427 | ||||||||||||||||||
$ | — | $ | 1,394,101 | $ | 15,427 | $ | — | $ | 1,385,771 | $ | 15,427 | |||||||||||||
Derivative assets | ||||||||||||||||||||||||
Interest rate lock commitments (bank segment) 1 | $ | — | $ | 248 | $ | — | $ | — | $ | 133 | $ | — | ||||||||||||
Forward commitments (bank segment) 1 | — | 2 | — | — | 4 | — | ||||||||||||||||||
Window forward contracts (electric utility segment)2 | — | — | — | — | 256 | — | ||||||||||||||||||
$ | — | $ | 250 | $ | — | $ | — | $ | 393 | $ | — | |||||||||||||
Derivative liabilities | ||||||||||||||||||||||||
Interest rate lock commitments (bank segment) 1 | $ | — | $ | — | $ | — | $ | — | $ | 2 | $ | — | ||||||||||||
Forward commitments (bank segment) 1 | 56 | 8 | — | 20 | 8 | — | ||||||||||||||||||
Window forward contracts (electric utility segment)2 | — | 106 | — | — | — | — | ||||||||||||||||||
$ | 56 | $ | 114 | $ | — | $ | 20 | $ | 10 | $ | — |
Three months ended June 30 | Six months ended June 30 | |||||||||||||
Mortgage revenue bond | 2018 | 2017 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||||
Beginning balance | $ | 15,427 | $ | 15,427 | $ | 15,427 | $ | 15,427 | ||||||
Principal payments received | — | — | — | — | ||||||||||
Purchases | — | — | — | — | ||||||||||
Unrealized gain (loss) included in other comprehensive income | — | — | — | — | ||||||||||
Ending balance | $ | 15,427 | $ | 15,427 | $ | 15,427 | $ | 15,427 |
Fair value measurements | ||||||||||||||||
(in thousands) | Balance | Level 1 | Level 2 | Level 3 | ||||||||||||
June 30, 2018 | ||||||||||||||||
Loans | $ | 232 | $ | — | $ | — | $ | 232 | ||||||||
December 31, 2017 | ||||||||||||||||
Loans | 2,621 | — | — | 2,621 |
Significant unobservable input value (1) | ||||||||||||
($ in thousands) | Fair value | Valuation technique | Significant unobservable input | Range | Weighted Average | |||||||
June 30, 2018 | ||||||||||||
Residential loans | $ | 232 | Fair value of collateral | Appraised value less 7% selling cost | 62-69% | 68% | ||||||
Total loans | $ | 232 | ||||||||||
December 31, 2017 | ||||||||||||
Residential loans | $ | 613 | Fair value of collateral | Appraised value less 7% selling cost | 71-92% | 84% | ||||||
Commercial loans | 2,008 | Fair value of collateral | Appraised value | 71-76% | 75% | |||||||
Total loans | $ | 2,621 |
(in thousands, except per | Three months ended June 30 | % | ||||||||||
share amounts) | 2018 | 2017 | change | Primary reason(s)* | ||||||||
Revenues | $ | 685,277 | $ | 632,281 | 8 | Increases for the electric utility and bank segments | ||||||
Operating income | 78,799 | 77,802 | 1 | Increase for the bank segment and lower operating losses for the “other” segment, partly offset by slight decrease for the electric utility segment | ||||||||
Net income for common stock | 46,054 | 38,661 | 19 | Higher net income at the electric utility and bank segments, partly offset by higher net losses at the “other” segment. See below for effective tax rate explanation. | ||||||||
Basic earnings per common share | $ | 0.42 | $ | 0.36 | 17 | Higher net income | ||||||
Weighted-average number of common shares outstanding | 108,842 | 108,750 | — | Issuances of shares under compensation and director stock plans. |
(in thousands, except per | Six months ended June 30 | % | ||||||||||
share amounts) | 2018 | 2017 | change | Primary reason(s)* | ||||||||
Revenues | $ | 1,331,151 | $ | 1,223,843 | 9 | Increases for the electric utility and bank segments | ||||||
Operating income | 150,688 | 147,540 | 2 | Increase for the bank segment and lower operating losses for the “other” segment, partly offset by slight decrease for the electric utility segment | ||||||||
Net income for common stock | 86,301 | 72,854 | 18 | Higher net income at the electric utility and bank segments, partly offset by higher net losses at the “other” segment. See below for effective tax rate explanation. | ||||||||
Basic earnings per common share | $ | 0.79 | $ | 0.67 | 18 | Higher net income | ||||||
Weighted-average number of common shares outstanding | 108,830 | 108,712 | — | Issuances of shares under compensation and director stock plans. |
* | Also, see segment discussions which follow. |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | Primary reason(s) | |||||||||||||
Revenues | $ | 47 | $ | 77 | $ | 75 | $ | 172 | ||||||||||
Operating loss | (3,262 | ) | (3,677 | ) | (7,629 | ) | (8,655 | ) | Second quarter and first six months of 2018 includes $1.3 million and $2.3 million, respectively, of operating income from Pacific Current, LLC1. Second quarter and first six months of 2018 corporate expense was slightly higher than same periods in 2017. | |||||||||
Net loss | (5,676 | ) | (3,716 | ) | (11,864 | ) | (6,801 | ) | Second quarter and first six months of 2018 includes higher interest expense (due to higher interest rates and balances at corporate and new debt at Pacific Current, LLC related to Hamakua Energy’s acquisition of a power plant) and lower tax benefits on expenses as a result of tax reform in second quarter and first six months of 2018 as compared to the same periods in 2017. |
1 | Hamakua Energy’s sales to Hawaii Electric Light (a regulated affiliate) are eliminated in consolidation, but Hamakua Energy's profit on electricity sales to Hawaii Electric Light is not required to be eliminated because the PPA was approved by the PUC and it is probable that, through the ratemaking process, future revenue from Hawaii Electric Light’s sale of the electricity will approximate its purchase price from Hamakua Energy under the PPA. |
(dollars in millions) | June 30, 2018 | December 31, 2017 | ||||||||||||
Short-term borrowings—other than bank | $ | 203 | 5 | % | $ | 118 | 3 | % | ||||||
Long-term debt, net—other than bank | 1,783 | 43 | 1,684 | 43 | ||||||||||
Preferred stock of subsidiaries | 34 | 1 | 34 | 1 | ||||||||||
Common stock equity | 2,103 | 51 | 2,097 | 53 | ||||||||||
$ | 4,123 | 100 | % | $ | 3,933 | 100 | % |
Average balance | Balance | |||||||||||
(in millions) | Six months ended June 30, 2018 | June 30, 2018 | December 31, 2017 | |||||||||
Commercial paper | $ | 49 | $ | 61 | $ | 63 | ||||||
Line of credit draws | — | — | — | |||||||||
Undrawn capacity under HEI’s line of credit facility | 150 | 150 |
Three months ended June 30 | Increase | |||||||||||||||
2018 | 2017 | (decrease) | (dollars in millions, except per barrel amounts) | |||||||||||||
$ | 608 | $ | 557 | $ | 51 | Revenues. Net increase largely due to: | ||||||||||
$ | 27 | higher fuel oil prices1 | ||||||||||||||
19 | higher purchased power energy costs2 | |||||||||||||||
12 | higher RAM revenue | |||||||||||||||
10 | higher rate relief | |||||||||||||||
8 | higher KWH generated | |||||||||||||||
(3 | ) | lower PPAC revenues | ||||||||||||||
(8 | ) | lower KWH purchased | ||||||||||||||
(13 | ) | Tax reform adjustment | ||||||||||||||
172 | 141 | 31 | Fuel oil expense. Increase due to higher fuel oil prices and higher KWH generated | |||||||||||||
161 | 153 | 8 | Purchased power expense. Increase due to higher fuel oil prices | |||||||||||||
18 | higher purchased power energy price | |||||||||||||||
(1 | ) | lower AES Hawaii capacity charges | ||||||||||||||
(1 | ) | lower PGV capacity charges | ||||||||||||||
(7 | ) | lower KWH purchased | ||||||||||||||
113 | 105 | 8 | Operation and maintenance expenses. Net increase due to: | |||||||||||||
7 | reset of pension costs as part of rate case interim decisions | |||||||||||||||
1 | Big Island lava eruption response costs | |||||||||||||||
1 | higher vegetation management costs | |||||||||||||||
(2 | ) | higher overhaul costs related to Waiau and Kahe plants in 2017 | ||||||||||||||
108 | 101 | 7 | Other expenses. Increase due to higher revenue taxes from higher revenue, coupled with higher depreciation expense for plant investments in 2017 | |||||||||||||
55 | 56 | (1 | ) | Operating income. Decrease due to higher operation and maintenance and other expenses offset by higher revenue | ||||||||||||
31 | 26 | 5 | Net income for common stock. Increase due to higher RAM and rate relief, offset by higher expenses | |||||||||||||
2,128 | 2,150 | (22 | ) | Kilowatthour sales (millions)3 | ||||||||||||
$ | 81.84 | $ | 69.86 | $ | 11.98 | Average fuel oil cost per barrel1 |
Six months ended June 30 | Increase | |||||||||||||||
2018 | 2017 | (decrease) | (dollars in millions, except per barrel amounts) | |||||||||||||
$ | 1,179 | $ | 1,075 | $ | 104 | Revenues. Net increase largely due to: | ||||||||||
$ | 61 | higher fuel oil prices1 | ||||||||||||||
28 | higher RAM revenues | |||||||||||||||
23 | higher purchased power energy costs2 | |||||||||||||||
17 | higher rate relief | |||||||||||||||
(3 | ) | lower KWH generated | ||||||||||||||
(21 | ) | Tax reform adjustment | ||||||||||||||
339 | 286 | 53 | Fuel oil expense. Increase due to higher fuel oil prices, partially offset by lower KWH generated | |||||||||||||
301 | 280 | 21 | Purchased power expense. Increase due to higher fuel oil prices | |||||||||||||
21 | higher purchased power energy price | |||||||||||||||
2 | higher AES Hawaii capacity charges | |||||||||||||||
(3 | ) | lower KWH purchased | ||||||||||||||
220 | 204 | 16 | Operation and maintenance expenses. Net increase due to: | |||||||||||||
10 | reset of pension costs as part of rate case interim decisions | |||||||||||||||
2 | write-off of smart grid costs | |||||||||||||||
1 | higher ERP costs related to outside consultants | |||||||||||||||
1 | one-time rent expense adjustment for existing substation land | |||||||||||||||
1 | Big Island lava eruption response costs | |||||||||||||||
1 | higher vegetation management costs | |||||||||||||||
212 | 199 | 13 | Other expenses. Increase due to higher revenue taxes from higher revenue, coupled with higher depreciation expense for plant investments in 2017 | |||||||||||||
107 | 107 | — | Operating income. Higher revenue from RAM and rate relief offset by higher operation and maintenance and other expenses | |||||||||||||
59 | 47 | 12 | Net income for common stock. Increase due to higher RAM and rate relief, offset by higher expenses | |||||||||||||
4,140 | 4,188 | (48 | ) | Kilowatthour sales (millions)3 | ||||||||||||
$ | 81.26 | $ | 67.78 | $ | 13.48 | Average fuel oil cost per barrel1 | ||||||||||
462,547 | 460,858 | 1,689 | Customer accounts (end of period) |
1 | The rate schedules of the electric utilities currently contain energy cost adjustment clauses (ECACs) through which changes in fuel oil prices and certain components of purchased energy costs are passed on to customers. |
2 | The rate schedules of the electric utilities currently contain purchase power adjustment clauses (PPACs) through which changes in purchase power expenses (except purchased energy costs) are passed on to customers. |
3 | KWH sales were lower when compared to the same quarter in the prior year due largely to continued energy efficiency and conservation efforts by customers and increasing levels of private customer-sited renewable generation. |
% | Rate-making Return on rate base (RORB)* | ROACE** | Rate-making ROACE*** | ||||||||||||||||||||||||
Twelve months ended June 30, 2018 | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Hawaiian Electric | Hawaii Electric Light | Maui Electric | Hawaiian Electric | Hawaii Electric Light | Maui Electric | ||||||||||||||||||
Utility returns | 6.32 | 6.92 | 5.96 | 7.21 | 7.51 | 6.78 | 7.65 | 8.18 | 6.96 | ||||||||||||||||||
PUC-allowed returns | 7.57 | 7.80 | 7.34 | 9.50 | 9.50 | 9.00 | 9.50 | 9.50 | 9.00 | ||||||||||||||||||
Difference | (1.25 | ) | (0.88 | ) | (1.38 | ) | (2.29 | ) | (1.99 | ) | (2.22 | ) | (1.85 | ) | (1.32 | ) | (2.04 | ) |
Test year (dollars in millions) | Date (filed/ implemented) | Amount | % over rates in effect | ROACE (%) | RORB (%) | Rate base | Common equity % | Stipulated agreement reached with Consumer Advocate | ||||||||||||||||
Hawaiian Electric | ||||||||||||||||||||||||
2017 1 | ||||||||||||||||||||||||
Request | 12/16/16 | $ | 106.4 | 6.9 | 10.60 | 8.28 | $ | 2,002 | 57.36 | Yes | ||||||||||||||
Interim increase | 2/16/18 | 36.0 | 2.3 | 9.50 | 7.57 | 1,980 | 57.10 | |||||||||||||||||
Interim increase with Tax Act | 4/13/18 | (0.6 | ) | — | 9.50 | 7.57 | 1,993 | 57.10 | ||||||||||||||||
Final increase | (0.6 | ) | — | 9.50 | 7.57 | 1,993 | 57.10 | |||||||||||||||||
Hawaii Electric Light | ||||||||||||||||||||||||
2016 2 | ||||||||||||||||||||||||
Request | 9/19/16 | $ | 19.3 | 6.5 | 10.60 | 8.44 | $ | 479 | 57.12 | Yes | ||||||||||||||
Interim increase | 8/31/17 | 9.9 | 3.4 | 9.50 | 7.80 | 482 | 56.69 | |||||||||||||||||
Interim increase with Tax Act | 5/1/18 | 1.5 | 0.5 | 9.50 | 7.80 | 481 | 56.69 | |||||||||||||||||
Final increase | — | — | 9.50 | 7.80 | 481 | 56.69 | ||||||||||||||||||
Maui Electric | ||||||||||||||||||||||||
2018 | ||||||||||||||||||||||||
Request | 10/12/17 | $ | 30.1 | 9.3 | 10.60 | 8.05 | $ | 473 | 56.94 | Yes | ||||||||||||||
Joint Statement of Probable | ||||||||||||||||||||||||
Entitlement (which will be | ||||||||||||||||||||||||
superceded by any PUC interim D&O) | ||||||||||||||||||||||||
At old depreciation rates | 7/6/18 | 6.4 | 1.95 | 9.50 | 7.43 | 465 | 57.02 | |||||||||||||||||
At new depreciation rates | 7/6/18 | 12.5 | 3.82 | 9.50 | 7.43 | 462 | 57.02 |
1 | On June 22, 2018, the PUC issued a final decision and order approving the final increase amounts in the table above for Hawaiian Electric. The effective date of this final increase is subject to PUC-approval of Hawaiian Electric’s revised rate schedules and tariffs. |
• | Authorized the use of consolidated depreciation and amortization rates rather than separate depreciation and amortization rates for the three utilities |
• | Established revised depreciation and amortization rates for the three utilities |
• | Approved the implementation of the new depreciation and amortization rates and other changes to coincide with the effective date of the interim or final base rates approved in the subsequent rate case for each utility, beginning with Maui Electric’s ongoing 2018 test year |
• | In July 2015, Maui Electric signed two PPAs, with Kuia Solar and South Maui Renewable Resources (which subsequently assigned its PPA to SSA Solar of HI 2, LLC and SSA Solar of HI 3, LLC, respectively), each for a 2.87-MW solar facility. In February 2016, the PUC approved both PPAs, subject to certain conditions and modifications. The guaranteed commercial operations date for the facilities was December 31, 2016, however both projects experienced delays. South Maui Renewable Resources reached commercial operations on May 5, 2018, and Kuia Solar is now expected to be in commercial operations by the end of the third quarter of 2018. |
• | In December 2014, the PUC approved a PPA for Renewable As-Available Energy dated October 3, 2013 between Hawaiian Electric and Na Pua Makani Power Partners, LLC (NPM) for a proposed 24-MW wind farm on Oahu. The NPM wind farm is expected to be placed into service by August 31, 2019. |
• | Hawaiian Electric terminated PPAs to purchase solar energy with three affiliates of SunEdison, which affiliates were acquired by an affiliate of NRG Energy, Inc. (NRG) during SunEdison’s Chapter 11 bankruptcy proceedings. Hawaiian Electric then negotiated with NRG and its newly acquired affiliates and entered into amended and restated PPAs for solar energy on Oahu with Waipio PV, LLC for 45.9 MW, Lanikuhana Solar, LLC for 14.7 MW and Kawailoa Solar, LLC for 49.0 MW. In July 2017, the PUC approved the three NRG PPAs, subject to modifications and conditions. The three projects are expected to be in service by the end of 2019. |
• | In July 2018, the PUC approved the Maui Electric’s PPA with Molokai New Energy Partners to purchase solar energy from a PV plus battery storage project. The 4.9 MW project will deliver no more than 2.64 MW at any time to the Molokai system and is expected to be in service by end of 2019. |
• | As of June 30, 2018, there were approximately 449 MW, 91 MW and 101 MW of installed distributed renewable energy technologies (mainly PV) at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively, for tariff-based private customer generation programs, namely Standard Interconnection Agreement (SIA), NEM, Customer Grid Supply, Customer Self Supply, Grid Supply Plus and Smart Export. As of June 30, 2018, an estimated 28% of single family homes on the islands of Oahu, Hawaii and Maui have installed private rooftop solar systems, and approximately 17% of the Utilities' total customers have solar systems. |
• | The Utilities began accepting energy from feed-in tariff projects in 2011. As of June 30, 2018, there were 31 MW, 3 MW and 5 MW of installed feed-in tariff capacity from renewable energy technologies at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively. |
• | In September 2015, the PUC approved Hawaiian Electric’s 2-year biodiesel supply contract with Pacific Biodiesel Technologies, LLC (PBT) to supply 2 million to 3 million gallons of biodiesel at Campbell Industrial Park combustion turbine No. 1 (CIP CT-1) and the Honolulu International Airport Emergency Power Facility beginning in November 2015. The PBT contract is set to expire on November 2, 2018. PBT also has a spot buy contract with Hawaiian Electric to purchase additional quantities of biodiesel at or below the price of diesel. Some purchases of “at parity” biodiesel have been made under the spot purchase contract, which was recently extended through June 2019. REG Marketing & Logistics Group, LLC has a contingency supply contract with Hawaiian Electric to also supply biodiesel to CIP CT-1 in the event PBT is not able to supply necessary quantities. This contingency contract has been extended to November 2019, and will continue with no volume purchase requirements. |
• | On October 27, 2017, Hawaiian Electric entered into a new biodiesel supply contract with PBT, subject to PUC approval, to supply 2 million to 4 million gallons of biodiesel per year for three years. The new PBT contract is expected to commence as early as November 2018 to be used as fuel for power generation at Hawaiian Electric’s Schofield Generating Station, the Honolulu International Airport Emergency Power Facility and any other generating unit on Oahu, as necessary. |
• | In response to requests filed by the Utilities, on October 6, 2017, the PUC opened a docket to receive filings, review approval requests, and resolve disputes, if necessary, related to the Utilities' plan to proceed with a competitive bidding process for dispatchable firm renewable generation and variable renewable generation. On October 23, 2017, the Utilities filed draft requests for proposals for 220 MW of renewable generation on Oahu (Oahu Variable RFP), 50 MW of renewable generation on Hawaii Island (Hawaii Variable RFP), and 100 MW of renewable generation on Maui, including 40 MW of firm renewable generation, comprising the Maui Variable RFP and Maui Firm RFP (all resources to be in service by the end of 2022). With this filing, the Utilities also filed proposed model power purchase agreements and timelines for each proposed procurement. In January 2018, the PUC issued an order appointing Independent Observers for the RFPs and directed the Utilities to move forward with the three Variable RFPs. On February 20, 2018, the PUC approved, with minor modification, the proposed Variable RFPs and directed the Utilities to issue the RFPs, as modified. On February 27, 2018, the Utilities opened the RFPs to receive proposals, with an April |
• | On January 5, 2017, Hawaiian Electric issued requests for Onshore Wind Expression of Interest to developers that are capable of developing utility scale onshore wind projects that are eligible to capture the federal Investment Tax Credit for Large Wind on the island of Oahu. Hawaiian Electric is in non-binding confidential negotiations with a developer that responded. |
• | On December 12, 2016, the Utilities issued a request for information asking interested landowners to provide information about properties available for utility-scale renewable energy projects or for growing biofuel feedstock on the islands of Oahu, Hawaii, Maui, Molokai and Lanai. Responses have been made available to developers interested in developing renewable energy projects on these five islands. |
(dollars in millions) | June 30, 2018 | December 31, 2017 | ||||||||||||
Short-term borrowings | $ | 92 | 3 | % | $ | 5 | — | % | ||||||
Long-term debt, net | 1,468 | 42 | 1,369 | 42 | ||||||||||
Preferred stock | 34 | 1 | 34 | 1 | ||||||||||
Common stock equity | 1,852 | 54 | 1,845 | 57 | ||||||||||
$ | 3,446 | 100 | % | $ | 3,253 | 100 | % |
Average balance | Balance | |||||||||||
(in millions) | Six months ended June 30, 2018 | June 30, 2018 | December 31, 2017 | |||||||||
Short-term borrowings 1 | ||||||||||||
Commercial paper | $ | 88 | $ | 92 | $ | 5 | ||||||
Line of credit draws | — | — | — | |||||||||
Borrowings from HEI | — | — | — | |||||||||
Undrawn capacity under line of credit facility | — | 200 | 200 |
Six months ended June 30, | |||||||||||
(in thousands) | 2018 | 2017 | Change | ||||||||
Net cash provided by operating activities | $ | 69,836 | $ | 138,755 | $ | (68,919 | ) | ||||
Net cash used in investing activities | (195,346 | ) | (166,338 | ) | (29,008 | ) | |||||
Net cash provided by (used in) financing activities | 133,853 | (4,121 | ) | 137,974 |
Three months ended June 30 | Increase | |||||||||||||
(in millions) | 2018 | 2017 | (decrease) | Primary reason(s) | ||||||||||
Interest income | $ | 63 | $ | 59 | $ | 4 | The increase in interest income was the result of increases in balances and yields on earning assets. ASB’s average investment securities portfolio balance for the three months ended June 30, 2018 increased by $218 million compared to the same period in 2017 as ASB used excess liquidity to purchase investments. The yield on the investment securities portfolio increased by 15 basis points as new investment purchase yields were higher due to the rising interest rate environment. ASB’s average loan portfolio balance for the three months ended June 30, 2018 increased by $28 million compared to the same period in 2017 as the average residential, home equity line of credit and consumer loan portfolios for the three months ended June 30, 2018 increased by $49 million, $55 million and $31 million, respectively, compared to the same period in 2017. The growth in these loan portfolios aligned with ASB’s portfolio mix target and loan growth strategy. The average commercial and commercial real estate balances decreased by $70 million and $37 million, respectively. The decrease in these loan portfolios was reflective of ASB’s strategic decision to reduce the balances in certain commercial and national loan portfolios to improve the credit quality of those portfolios. The yield on loans benefited from the rising interest rate environment, which resulted in an increase in yield of 17 basis points. | |||||||
Noninterest income | 14 | 16 | (2 | ) | Noninterest income decreased for the three months ended June 30, 2018 compared to noninterest income for the three months ended June 30, 2017 primarily due to lower fees from other financial services in 2018 as a result of debit card interchange expenses being netted against income beginning in 2018. Prior year’s debit card interchange expenses were recorded in other noninterest expense. This change was in accordance with the new revenue recognition accounting standard. See Note 7 of the Condensed Consolidated Financial Statements for additional information on the new revenue recognition standard. | |||||||||
Revenues | 77 | 75 | 2 | |||||||||||
Interest expense | 3 | 3 | — | Interest expense was flat for the three months ended June 30, 2018 compared to the same period in 2017 as higher interest expense from the growth in time certificates was partly offset by lower interest expense on other borrowings as a result of lower FHLB advances. Average deposit balances for the three months ended June 30, 2018 increased by $363 million compared to the same period in 2017 due to an increase in core deposits and time certificates of $277 million and $86 million, respectively. Average other borrowings for the three months ended June 30, 2018 decreased by $69 million compared to the same period in 2017 due to a decrease in the average FHLB advances and repurchase agreements of $49 million and $20 million, respectively. The interest-bearing liability rate for the three months ended June 30, 2018 increased by 4 basis points compared to the same period in 2017. | ||||||||||
Provision for loan losses | 3 | 3 | — | The provision for loan losses was flat for the three months ended June 30, 2018 compared to the provision for loan losses for the three months ended June 30, 2017. The provision for loan losses for 2018 was primarily due to increased reserves for growth in the loan portfolio and additional loan loss reserves for the consumer and residential loan portfolios, partly offset by the release of reserves for the home equity line of credit, commercial and commercial real estate loan portfolios as result of improved credit quality in those loan portfolios. The provision for loan losses for 2017 was primarily due to increased loan loss reserves for the consumer loan portfolio. Delinquency rates have increased from 0.44% at June 30, 2017 to 0.54% at June 30, 2018. The annualized net charge-off ratio for the three months ended June 30, 2018 was 0.32% compared to an annualized net charge-off ratio of 0.21% for the same period in 2017. | ||||||||||
Noninterest expense | 44 | 45 | (1 | ) | The decrease in noninterest expense for the three months ended June 30, 2018 compared to the same period in 2017 was primarily due to the reclassification of debit card interchange expenses to noninterest income in accordance with the new revenue recognition accounting standard that became effective on January 1, 2018. | |||||||||
Expenses | 50 | 51 | (1 | ) | ||||||||||
Operating income | 27 | 24 | 3 | The increase in operating income for the three months ended June 30, 2018 compared to the same period in 2017 was primarily due to higher interest income and lower noninterest expense, partly offset by lower noninterest income. | ||||||||||
Net income | 21 | 17 | 4 | The increase in net income for the three months ended June 30, 2018 compared to the same period in 2017 was primarily due to higher operating income and lower income tax expense as a result of the lower corporate rate from the Tax Act. |
Six months ended June 30 | Increase | |||||||||||||
(in millions) | 2018 | 2017 | (decrease) | Primary reason(s) | ||||||||||
Interest income | $ | 125 | $ | 117 | $ | 8 | The increase in interest income was primarily the result of an increase in yields on earning assets and higher investment securities portfolio balances. ASB’s average investment securities portfolio balance for the six months ended June 30, 2018 increased by $271 million compared to the same period in 2017 as ASB used excess liquidity to purchase investments. The yield on the investment securities portfolio increased by 12 basis points as new investment purchase yields were higher due to the rising interest rate environment. ASB’s average loan portfolio balance for the six months ended June 30, 2018 increased by $6 million compared to the same period in 2017 as increases in the average residential, home equity line of credit and consumer loan portfolios for the six months ended June 30, 2018 of $52 million, $54 million and $37 million, respectively, were largely offset by decreases in the the average commercial and commercial real estate balances of $90 million and $47 million, respectively. The growth in residential, home equity line of credit and consumer loan portfolios aligned with ASB’s portfolio mix target and loan growth strategy. The decrease in commercial and commercial real estate loan portfolios was reflective of ASB’s strategic decision to reduce the balances in certain commercial and national loan portfolios to improve the credit quality of those portfolios. The yield on loans benefited from the rising interest rate environment, which resulted in an increase in yields of 18 basis points. | |||||||
Noninterest income | 27 | 31 | (4 | ) | Noninterest income decreased for the six months ended June 30, 2018 compared to noninterest income for the six months ended June 30, 2017 primarily due to lower fees from other financial services in 2018 as a result of debit card interchange expenses being netted against income beginning in 2018. Prior year’s debit card interchange expenses were recorded in other noninterest expense. This change was in accordance with the new revenue recognition accounting standard. See Note 7 of the Condensed Consolidated Financial Statements for additional information on the new revenue recognition standard. | |||||||||
Revenues | 152 | 148 | 4 | |||||||||||
Interest expense | 7 | 6 | 1 | Interest expense increased slightly for the six months ended June 30, 2018 compared to the same period in 2017 due to higher interest expense from the growth in time certificates, but was partially offset by lower interest expense on other borrowings as a result of lower FHLB advances. Average deposit balances for the six months ended June 30, 2018 increased by $331 million compared to the same period in 2017 due to an increase in core deposits and time certificates of $222 million and $109 million, respectively. Average other borrowings for the six months ended June 30, 2018 decreased by $29 million compared to the same period in 2017 due to a decrease in FHLB advances, partly offset by an increase in repurchase agreements. The interest-bearing liability rate for the six months ended June 30, 2018 increased by 4 basis points compared to the same period in 2017. | ||||||||||
Provision for loan losses | 6 | 7 | (1 | ) | The provision for loan losses decreased slightly for the six months ended June 30, 2018 compared to the provision for loan losses for the six months ended June 30, 2017. The provision for loan losses for 2018 was primarily due to increased reserves for growth in the loan portfolio and additional loan loss reserves for the consumer loan portfolio, partly offset by the release of reserves for the commercial loan portfolio due to a recovery on a previously charged-off commercial loan and improved credit quality of the commercial loan portfolio. The provision for loan losses for 2017 was primarily due to increased loan loss reserves for the consumer loan portfolio and additional loan loss reserves for the commercial real estate loan portfolio due to the downgrade of a specific commercial real estate relationship. Delinquency rates have increased from 0.44% at June 30, 2017 to 0.54% at June 30, 2018. The annualized net charge-off ratio for the six months ended June 30, 2018 was 0.30% compared to an annualized net charge-off ratio of 0.25% for the same period in 2017. | |||||||||
Noninterest expense | 87 | 86 | 1 | The increase in noninterest expense for the six months ended June 30, 2018 compared to the same period in 2017 was primarily due to higher compensation and employee benefits expenses as a result of an increase in the minimum pay rate for employees, higher performance-based incentives and annual merit increases, and higher service expenses, partly offset by the reclassification of debit card interchange expenses in accordance with the new revenue recognition accounting standard. | ||||||||||
Expenses | 100 | 99 | 1 | |||||||||||
Operating income | 52 | 49 | 3 | The increase in operating income for the six months ended June 30, 2018 compared to the same period in 2017 was primarily due to higher interest income, partly offset by lower noninterest income and higher noninterest expenses. | ||||||||||
Net income | 40 | 33 | 7 | The increase in net income for the six months ended June 30, 2018 compared to the same period in 2017 was primarily due to higher operating income and lower income tax expense as a result of the lower corporate rate from the Tax Act. |
Three months ended June 30 | Six months ended June 30 | |||||||||||
(%) | 2018 | 2017 | 2018 | 2017 | ||||||||
Return on average assets | 1.20 | 1.02 | 1.16 | 1.00 | ||||||||
Return on average equity | 13.56 | 11.25 | 13.07 | 11.04 | ||||||||
Net interest margin | 3.76 | 3.68 | 3.76 | 3.68 |
Three months ended June 30 | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
(dollars in thousands) | Average balance | Interest1 income/ expense | Yield/ rate (%) | Average balance | Interest1 income/ expense | Yield/ rate (%) | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning deposits | $ | 53,677 | $ | 240 | 1.77 | $ | 46,507 | $ | 121 | 1.03 | ||||||||||||
FHLB stock | 10,245 | 77 | 2.99 | 11,759 | 57 | 1.96 | ||||||||||||||||
Investment securities | ||||||||||||||||||||||
Taxable | 1,485,780 | 8,182 | 2.20 | 1,267,945 | 6,481 | 2.04 | ||||||||||||||||
Non-taxable | 15,427 | 162 | 4.16 | 15,427 | 160 | 4.11 | ||||||||||||||||
Total investment securities | 1,501,207 | 8,344 | 2.22 | 1,283,372 | 6,641 | 2.07 | ||||||||||||||||
Loans | ||||||||||||||||||||||
Residential 1-4 family | 2,119,594 | 21,581 | 4.07 | 2,070,450 | 22,163 | 4.28 | ||||||||||||||||
Commercial real estate | 879,748 | 9,959 | 4.49 | 917,019 | 9,722 | 4.21 | ||||||||||||||||
Home equity line of credit | 932,828 | 8,354 | 3.59 | 877,462 | 7,248 | 3.31 | ||||||||||||||||
Residential land | 16,525 | 223 | 5.41 | 16,111 | 217 | 5.38 | ||||||||||||||||
Commercial | 592,780 | 6,814 | 4.59 | 663,200 | 7,090 | 4.27 | ||||||||||||||||
Consumer | 234,178 | 7,702 | 13.19 | 202,914 | 5,877 | 11.62 | ||||||||||||||||
Total loans 2,3 | 4,775,653 | 54,633 | 4.57 | 4,747,156 | 52,317 | 4.40 | ||||||||||||||||
Total interest-earning assets 2 | 6,340,782 | 63,294 | 3.99 | 6,088,794 | 59,136 | 3.88 | ||||||||||||||||
Allowance for loan losses | (54,191 | ) | (56,715 | ) | ||||||||||||||||||
Non-interest-earning assets | 590,493 | 534,581 | ||||||||||||||||||||
Total assets | $ | 6,877,084 | $ | 6,566,660 | ||||||||||||||||||
Liabilities and shareholder’s equity: | ||||||||||||||||||||||
Savings | $ | 2,343,928 | $ | 411 | 0.07 | $ | 2,274,832 | $ | 386 | 0.07 | ||||||||||||
Interest-bearing checking | 1,030,309 | 208 | 0.08 | 908,864 | 59 | 0.03 | ||||||||||||||||
Money market | 125,961 | 73 | 0.23 | 146,962 | 45 | 0.12 | ||||||||||||||||
Time certificates | 766,148 | 2,592 | 1.36 | 679,866 | 1,821 | 1.07 | ||||||||||||||||
Total interest-bearing deposits | 4,266,346 | 3,284 | 0.31 | 4,010,524 | 2,311 | 0.23 | ||||||||||||||||
Advances from Federal Home Loan Bank | 52,176 | 254 | 1.95 | 101,335 | 788 | 3.08 | ||||||||||||||||
Securities sold under agreements to repurchase | 75,687 | 139 | 0.74 | 95,740 | 36 | 0.15 | ||||||||||||||||
Total interest-bearing liabilities | 4,394,209 | 3,677 | 0.34 | 4,207,599 | 3,135 | 0.30 | ||||||||||||||||
Non-interest bearing liabilities: | ||||||||||||||||||||||
Deposits | 1,772,173 | 1,664,592 | ||||||||||||||||||||
Other | 103,991 | 99,710 | ||||||||||||||||||||
Shareholder’s equity | 606,711 | 594,759 | ||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 6,877,084 | $ | 6,566,660 | ||||||||||||||||||
Net interest income | $ | 59,617 | $ | 56,001 | ||||||||||||||||||
Net interest margin (%) 4 | 3.76 | 3.68 |
Six months ended June 30 | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
(dollars in thousands) | Average balance | Interest1 income/ expense | Yield/ rate (%) | Average balance | Interest1 income/ expense | Yield/ rate (%) | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning deposits | $ | 55,078 | $ | 456 | 1.65 | $ | 69,421 | $ | 307 | 0.88 | ||||||||||||
FHLB stock | 10,009 | 154 | 3.09 | 11,498 | 105 | 1.85 | ||||||||||||||||
Investment securities | ||||||||||||||||||||||
Taxable | 1,477,468 | 16,973 | 2.30 | 1,206,272 | 13,130 | 2.18 | ||||||||||||||||
Non-taxable | 15,427 | 312 | 4.02 | 15,427 | 310 | 4.00 | ||||||||||||||||
Total investment securities | 1,492,895 | 17,285 | 2.32 | 1,221,699 | 13,440 | 2.20 | ||||||||||||||||
Loans | ||||||||||||||||||||||
Residential 1-4 family | 2,124,429 | 43,428 | 4.09 | 2,071,931 | 43,789 | 4.23 | ||||||||||||||||
Commercial real estate | 866,689 | 19,210 | 4.42 | 913,940 | 19,134 | 4.18 | ||||||||||||||||
Home equity line of credit | 926,951 | 16,342 | 3.56 | 872,973 | 14,364 | 3.32 | ||||||||||||||||
Residential land | 16,485 | 446 | 5.41 | 17,057 | 495 | 5.80 | ||||||||||||||||
Commercial | 576,743 | 12,993 | 4.53 | 666,741 | 14,245 | 4.30 | ||||||||||||||||
Consumer | 232,519 | 15,014 | 13.02 | 195,158 | 11,032 | 11.40 | ||||||||||||||||
Total loans 2,3 | 4,743,816 | 107,433 | 4.54 | 4,737,800 | 103,059 | 4.36 | ||||||||||||||||
Total interest-earning assets 2 | 6,301,798 | 125,328 | 3.99 | 6,040,418 | 116,911 | 3.88 | ||||||||||||||||
Allowance for loan losses | (53,881 | ) | (56,477 | ) | ||||||||||||||||||
Non-interest-earning assets | 582,346 | 527,302 | ||||||||||||||||||||
Total assets | $ | 6,830,263 | $ | 6,511,243 | ||||||||||||||||||
Liabilities and shareholder’s equity: | ||||||||||||||||||||||
Savings | $ | 2,327,596 | $ | 812 | 0.07 | $ | 2,261,549 | $ | 760 | 0.07 | ||||||||||||
Interest-bearing checking | 982,096 | 282 | 0.06 | 897,346 | 114 | 0.03 | ||||||||||||||||
Money market | 119,830 | 99 | 0.17 | 151,293 | 92 | 0.12 | ||||||||||||||||
Time certificates | 779,796 | 5,048 | 1.31 | 670,717 | 3,448 | 1.04 | ||||||||||||||||
Total interest-bearing deposits | 4,209,318 | 6,241 | 0.30 | 3,980,905 | 4,414 | 0.22 | ||||||||||||||||
Advances from Federal Home Loan Bank | 51,647 | 499 | 1.95 | 100,671 | 1,563 | 3.09 | ||||||||||||||||
Securities sold under agreements to repurchase | 114,997 | 390 | 0.68 | 94,713 | 77 | 0.16 | ||||||||||||||||
Total interest-bearing liabilities | 4,375,962 | 7,130 | 0.33 | 4,176,289 | 6,054 | 0.29 | ||||||||||||||||
Non-interest bearing liabilities: | ||||||||||||||||||||||
Deposits | 1,748,695 | 1,646,275 | ||||||||||||||||||||
Other | 100,892 | 98,875 | ||||||||||||||||||||
Shareholder’s equity | 604,714 | 589,804 | ||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 6,830,263 | $ | 6,511,243 | ||||||||||||||||||
Net interest income | $ | 118,198 | $ | 110,857 | ||||||||||||||||||
Net interest margin (%) 4 | 3.76 | 3.68 |
1 | Interest income includes taxable equivalent basis adjustments, based upon a federal statutory tax rate of 21% and 35%, of $0.03 million and $0.06 million for the three months ended June 30, 2018 and 2017, respectively and $0.07 million and $0.1 million for the six months ended June 30, 2018 and 2017, respectively. |
3 | Includes recognition of net deferred loan fees of $0.1 million and $0.6 million for the three months ended June 30, 2018 and 2017 and $0.1 million and $1.1 million for the six months ended June 30, 2018 and 2017, respectively, together with interest accrued prior to suspension of interest accrual on nonaccrual loans. |
4 | Defined as net interest income, on a fully taxable equivalent basis, as a percentage of average total interest-earning assets. |
June 30, 2018 | December 31, 2017 | |||||||
Outstanding balance of home equity loans (in thousands) | $ | 938,902 | $ | 913,052 | ||||
Percent of portfolio in first lien position | 48.4 | % | 48.0 | % | ||||
Annualized net charge-off (recovery) ratio | 0.03 | % | (0.03 | )% | ||||
Delinquency ratio | 0.52 | % | 0.28 | % |
End of draw period – interest only | Current | |||||||||||||||||||||||
June 30, 2018 | Total | Interest only | 2018-2019 | 2020-2022 | Thereafter | amortizing | ||||||||||||||||||
Outstanding balance (in thousands) | $ | 938,902 | $ | 720,008 | $ | 39,223 | $ | 105,070 | $ | 575,715 | $ | 218,894 | ||||||||||||
% of total | 100 | % | 77 | % | 4 | % | 11 | % | 62 | % | 23 | % |
June 30, 2018 | December 31, 2017 | |||||||||||||
(dollars in thousands) | Balance | % of total | Balance | % of total | ||||||||||
U.S. Treasury and federal agency obligations | $ | 175,933 | 12 | % | $ | 184,298 | 13 | % | ||||||
Mortgage-related securities — FNMA, FHLMC and GNMA | 1,240,462 | 84 | 1,245,988 | 86 | ||||||||||
Corporate bonds | 40,336 | 3 | — | — | ||||||||||
Mortgage revenue bond | 15,427 | 1 | 15,427 | 1 | ||||||||||
Total investment securities | $ | 1,472,158 | 100 | % | $ | 1,445,713 | 100 | % |
Six months ended June 30 | Year ended December 31, | |||||||||||
(in thousands) | 2018 | 2017 | 2017 | |||||||||
Allowance for loan losses, January 1 | $ | 53,637 | $ | 55,533 | $ | 55,533 | ||||||
Provision for loan losses | 6,304 | 6,741 | 10,901 | |||||||||
Less: net charge-offs | 7,138 | 5,918 | 12,797 | |||||||||
Allowance for loan losses, end of period | $ | 52,803 | $ | 56,356 | $ | 53,637 | ||||||
Ratio of net charge-offs during the period to average loans outstanding (annualized) | 0.30 | % | 0.25 | % | 0.27 | % |
Effective dates | 1/1/2015 | 1/1/2016 | 1/1/2017 | 1/1/2018 | 1/1/2019 | ||||||||||
Capital conservation buffer | 0.625 | % | 1.25 | % | 1.875 | % | 2.50 | % | |||||||
Common equity Tier-1 ratio + conservation buffer | 4.50 | % | 5.125 | % | 5.75 | % | 6.375 | % | 7.00 | % | |||||
Tier-1 capital ratio + conservation buffer | 6.00 | % | 6.625 | % | 7.25 | % | 7.875 | % | 8.50 | % | |||||
Total capital ratio + conservation buffer | 8.00 | % | 8.625 | % | 9.25 | % | 9.875 | % | 10.50 | % | |||||
Tier-1 leverage ratio | 4.00 | % | 4.00 | % | 4.00 | % | 4.00 | % | 4.00 | % | |||||
Countercyclical capital buffer — not applicable to ASB | 0.625 | % | 1.25 | % | 1.875 | % | 2.50 | % |
(dollars in millions) | June 30, 2018 | December 31, 2017 | % change | ||||||||
Total assets | $ | 6,984 | $ | 6,799 | 3 | ||||||
Investment securities | 1,416 | 1,446 | (2 | ) | |||||||
Loans held for investment, net | 4,722 | 4,617 | 2 | ||||||||
Deposit liabilities | 6,116 | 5,891 | 4 | ||||||||
Other bank borrowings | 127 | 191 | (34 | ) |
Change in interest rates | Change in NII (gradual change in interest rates) | Change in EVE (instantaneous change in interest rates) | ||||||||||
(basis points) | June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | ||||||||
+300 | 2.2 | % | 3.0 | % | (8.9 | )% | (8.0 | )% | ||||
+200 | 1.7 | 2.4 | (5.3 | ) | (4.0 | ) | ||||||
+100 | 1.1 | 1.6 | (1.9 | ) | (0.6 | ) | ||||||
-100 | (2.6 | ) | (2.7 | ) | (2.5 | ) | (6.0 | ) |
Period* | Total Number of Shares Purchased ** | Average Price Paid per Share ** | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||
April 1 to 30, 2018 | 25,870 | $34.64 | — | NA | ||||
May 1 to 31, 2018 | 28,287 | $33.91 | — | NA | ||||
June 1 to 30, 2018 | 198,215 | $33.01 | — | NA |
Six months ended June 30 | Years ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
HEI and Subsidiaries | |||||||||||||||||||||
Excluding interest on ASB deposits | 3.18 | 3.31 | 3.93 | 5.05 | 3.68 | 3.80 | 3.55 | ||||||||||||||
Including interest on ASB deposits | 2.94 | 3.11 | 3.65 | 4.75 | 3.54 | 3.65 | 3.42 | ||||||||||||||
Hawaiian Electric and Subsidiaries | 2.88 | 2.90 | 3.64 | 4.11 | 3.97 | 4.04 | 3.72 |
Third Amendment effective July 1, 2018 to Master Trust Agreement (dated September 4, 2012) between HEI and ASB and Fidelity Management Trust Company. | ||
Amended and Restated Severance Pay Plan for Management Employees of Hawaiian Electric Industries, Inc. and Executive Employees of Affiliates, effective as of April 2, 2018. | ||
Hawaiian Electric Industries, Inc. and Subsidiaries Computation of ratio of earnings to fixed charges, six months ended June 30, 2018 and 2017 and years ended December 31, 2017, 2016, 2015, 2014 and 2013 | ||
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of Constance H. Lau (HEI Chief Executive Officer) | ||
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of Gregory C. Hazelton (HEI Chief Financial Officer) | ||
HEI Certification Pursuant to 18 U.S.C. Section 1350 | ||
HEI Exhibit 101.INS | XBRL Instance Document | |
HEI Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document | |
HEI Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
HEI Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
HEI Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
HEI Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
Hawaiian Electric Company, Inc. and Subsidiaries Computation of ratio of earnings to fixed charges, six months ended June 30, 2018 and 2017 and years ended December 31, 2017, 2016, 2015, 2014 and 2013 | ||
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of Alan M. Oshima (Hawaiian Electric Chief Executive Officer) | ||
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of Tayne S. Y. Sekimura (Hawaiian Electric Chief Financial Officer) | ||
Hawaiian Electric Certification Pursuant to 18 U.S.C. Section 1350 |
HAWAIIAN ELECTRIC INDUSTRIES, INC. | HAWAIIAN ELECTRIC COMPANY, INC. | |||
(Registrant) | (Registrant) | |||
By | /s/ Constance H. Lau | By | /s/ Alan M. Oshima | |
Constance H. Lau | Alan M. Oshima | |||
President and Chief Executive Officer | President and Chief Executive Officer | |||
(Principal Executive Officer of HEI) | (Principal Executive Officer of Hawaiian Electric) | |||
By | /s/ Gregory C. Hazelton | By | /s/ Tayne S. Y. Sekimura | |
Gregory C. Hazelton | Tayne S. Y. Sekimura | |||
Executive Vice President and | Senior Vice President | |||
Chief Financial Officer | and Chief Financial Officer | |||
(Principal Financial Officer of HEI) | (Principal Financial Officer of Hawaiian Electric) | |||
Date: August 3, 2018 | Date: August 3, 2018 |
(1) | Amending the definition of “Administrator” in Section 1(a), in its entirety, as follows: |
(2) | Amending Schedule B, Fee Schedule, to restate the “Core Fees” section, in its entirety, as follows: |
Core Fees | Fixed Basis Points Fee |
Annual Administration Fee for Core Services | 5.5 basis points on total Plan assets determined based upon average quarterly assets, multiplied by one-quarter (1/4), billed and payable quarterly, subject to the offsets listed below. |
Standard Administrative Forms, Confirmations, and Standard Legal Notices with print or email distribution. | Included |
(3) | Amending Schedule B, Fee Schedule, to restate the “Live Plan Specific Web Workshop Sessions” and the “Online, On Demand, Plan Specific Recordings using Brainshark Technology” sections, in their entirety, as follows: |
Live Plan Specific Web Workshop Sessions Note: Subject to the cancellation and minimum attendance policy. | $200 per session |
Online, On Demand, Plan Specific Recordings using Brainshark Technology | $200 each - Unlimited viewings |
(4) | Amending Schedule B, Fee Schedule, to restate the “Offsets” section, in its entirety, as follows: |
(a) | Actively managed (non-Class K) Fidelity equity Mutual Funds: 35 basis points per annum; |
(b) | Actively managed (non-Class K) Fidelity Freedom® Funds: 35 basis points per annum; |
(c) | Actively managed (Class K) Fidelity equity Mutual Funds: 20 basis points per annum; |
(f) | Actively managed Fidelity fixed income and money market Mutual Funds, except for certain Fidelity institutional money market Mutual Funds (e.g. FIMM Funds): 20 basis points per annum; |
(g) | Actively managed Fidelity Institutional Asset Management (FIAM) Service Series commingled pools: 10 basis points per annum; |
B. | Offsets attributable to Non-Fidelity investment products: |
(5) | Amending Schedule B, Fee Schedule, to restate the “Revenue Credit” section, in its entirety, as follows: |
A. | Commencement. Commencing with the quarter beginning July 1, 2018, the Trustee shall calculate Revenue Credits on a quarterly basis, and the Trustee shall commence paying Revenue Credits as set forth in the Section titled “Funding” below. |
B. | Funding. The Trustee shall pay quarterly in arrears the calculated Revenue Credit for such quarter as soon as administratively feasible (generally within 15 Business Days) after a quarterly invoice reflecting such Revenue Credit has been issued and sent. In the event an invoice is issued and sent with respect to a portion of a quarter, the amount of the Revenue Credit for such quarter shall be pro rated accordingly. |
C. | Investment. Deposits in the Revenue Credit Account will be invested in the first available source in the Plan’s source hierarchy, which can be viewed on Fidelity Plan Sponsor Webstation®. (Please note that the source used will not impact testing and reporting.) The Revenue Credit Account shall be invested in the fund specified for such purpose on Schedule C. |
D. | Application of Account to Pay Expenses. The Administrator or Named Fiduciary may direct the Trustee through the Trustee’s internet application for Sponsors to use amounts held in the Revenue Credit Account to reimburse the Sponsor for |
(a) | General. Effective July 1, 2018, the Administrator or Named Fiduciary may direct the Trustee to allocate amounts in the Revenue Credit Account to Eligible Participant accounts, provided that any such direction may be provided no more frequently than once per calendar quarter, unless such direction is with respect to a final allocation to be made in the last month of the plan year. Directions shall be submitted through a service request through the Trustee’s internet application for Sponsors and shall include the dollar amount to be allocated from the Revenue Credit Account, provided that if such amount exceeds the balance held in the Revenue Credit Account on the date on which the allocation is to be performed (the “Crediting Date”), such amount shall be deemed to be the total balance of the Revenue Credit Account on the Crediting Date. The applicable Crediting Date shall occur as soon as administratively feasible (and in no event later than 15 calendar days) following receipt of a direction In Good Order. |
(b) | Method of Allocation. The dollar amount directed to be allocated from the Revenue Credit Account shall be divided among Eligible Participant accounts pro rata based on Eligible Participant account balances, exclusive of outstanding loan balances. |
(c) | Eligible Participants. Solely for purposes of allocations pursuant to this section, “Eligible Participant” means any Participant or beneficiary with a balance greater than zero. |
(d) | Investment of Allocations. Amounts allocated to Eligible Participant accounts from the Revenue Credit Account shall be invested in accordance with Eligible Participants’ elections for future contributions, or if no such election is on file, in the Plan’s designated default investment pro rata across existing sources. |
(e) | Directions. A direction from the Administrator or Named Fiduciary to allocate amounts to participant accounts shall constitute a representation to the Trustee that the Administrator or Named Fiduciary, as appropriate, has concluded that the allocations are permissible under the Plan and meet the requirements of applicable laws, including ERISA and the Code. Without limiting the foregoing, the Administrator or Named Fiduciary, as appropriate, directs that allocations of amounts from the Revenue Credit Account to Eligible Participants’ Accounts shall not be included as contributions or annual additions for any testing or reporting purposes. The Trustee shall be responsible for implementing the directions of the Administrator or Named Fiduciary, as appropriate, but subject to its responsibilities under ERISA has no responsibility for the legality or appropriateness of such directions. The Administrator or Named Fiduciary may alter its directions at any time with reasonable advance notice and after consultation concerning the administrative feasibility of alternative directions. |
F. | 12b-1 Payments. To the extent any Revenue Credits are deemed to be attributable to investments in Fidelity Mutual Funds that have adopted a plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“1940 Act”) at the time such Revenue Credits are made, such Revenue Credits shall be made available pursuant to such plan (“12b-1 Payments”), and the following conditions shall apply: |
(a) | The obligation to make 12b-1 Payments shall continue in effect for one year from the Effective Date of this amendment, and shall continue for successive annual periods only upon at least annual approval by a vote of the majority of the trustees for each of those Fidelity Mutual Funds that have adopted such plans, including a majority of those trustees that are not “interested persons” (as defined in the 1940 Act) of such Mutual Funds and who have no direct or indirect financial interest in the operation of the plan or any agreement related thereto (“Qualified Trustees”). |
(b) | Notwithstanding any provision hereof to the contrary, the obligation to make these 12b-1 Payments with respect to any plan may be terminated without penalty at any time, upon either a vote of a majority of the Qualified Trustees, or upon a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the applicable Fidelity Mutual Fund to terminate or not continue the plan for the applicable Fidelity Mutual Fund. |
(c) | Upon assignment of this Agreement (as defined under the 1940 Act), the obligation to make 12b-1 Payments shall automatically terminate. |
(6) | Deleting Schedule B-1, Procedures Governing Revenue Credit Account, in its entirety. |
HAWAIIAN ELECTRIC INDUSTRIES, INC. | FIDELITY MANAGEMENT TRUST | ||
AND AMERICAN SAVINGS BANK, F.S.B | COMPANY | ||
BY: HAWAIIAN ELECTRIC INDUSTRIES, | |||
INC. PENSION INVESTMENT COMMITTEE | |||
By: /s/ Kurt Murao | 6/21/2018 | By: /s/ Mary Beth Paris | 6/26/2018 |
Authorized Signatory | Date | FMTC Authorized Signatory | Date |
Name: Kurt Murao | |||
Title: Secretary | |||
By: /s/ Greg C. Hazelton | 06/21/2018 | ||
Authorized Signatory | Date | ||
Name: Greg C. Hazelton | |||
Title: EVP and Chief Financial Officer |
Plan Name: | Severance Pay Plan for Management Employees of Hawaiian Electric Industries, Inc., and Executive Employees of Affiliates |
Plan Sponsor: | Hawaiian Electric Industries, Inc. (“HEI”) 900 Richards Street Honolulu, Hawaii 96813 |
Employer Identification Number: | 99-0208097 |
Plan Number: | 517 |
Plan Administrator: | Hawaiian Electric Industries, Inc. c/o Director of Benefits Hawaiian Electric Company, Inc. (“HECO”) 220 S. King Street, Suite 1700 Honolulu, HI 96813 (808) 543-4677 |
Participating Companies: | Participating companies include: Hawaiian Electric Industries, Inc. Hawaiian Electric Company, Inc. Hawaii Electric Light Company, Inc. (“HELCO”) Maui Electric Company, Ltd. (“MECO”) |
Agent for Service of Legal Process: | Service of process may be made upon the Plan Administrator at the above address. |
Type of Plan: | This plan is an unfunded welfare benefits plan providing severance pay to eligible management employees upon a qualifying severance of employment. |
Type of Administration: | This plan is employer administered. |
Plan Year: | January 1 through December 31 |
Contact Information: | For further information, employees should contact Human Resources at their respective companies: HEI / HECO- HR Service Center at 543-4848 HELCO - Human Resources Dept. at 969-0281 MECO - Human Resources Dept. at 871-2389 |
1. | What is this document? |
2. | Who are the “Employers”? |
3. | Who is eligible to participate in this Plan? |
4. | Who is entitled to receive benefits under this Plan? |
5. | What is a Qualifying Termination? |
6. | What are some examples of Terminations which are NOT Qualifying Terminations? |
(1) | An Eligible Employee’s voluntary resignation; |
(2) | An Eligible Employee’s termination for cause;1 |
(3) | An Eligible Employee’s termination on account of his or her death, disability, or retirement; |
(4) | An Eligible Employee’s change of status from a Regular Management Employee of HEI to that of an independent contractor, a Bargaining Unit employee, or other non-Regular Management Employee; |
(5) | An Eligible Employee’s change of status from Executive to non-Executive at HECO, HELCO, or MECO; |
(6) | A non-Eligible Employee’s termination for any reason; |
(7) | An Eligible Employee’s transfer from one entity to another within the group of HEI and its affiliates, whether such transfer is voluntary or involuntary, unless the transfer is an inter-island transfer and such employee determines to resign instead of accepting such inter-island transfer; |
(8) | An Employer’s being succeeded by another company, in whole or in part, whether through purchase, merger, reorganization, or other transaction; such as stock sale or an asset sale and |
(9) | Any combination of non-Qualifying Terminations. |
1 | A “termination for cause” is an Employee's discharge on account of any act or omission by the Employee which violates or fails to meet the standards of job performance applicable to the Employee’s position or the Employer’s Code of Conduct, employee handbook or employment rules or policies or violates the Employee’s contract, and the sanction for which may be discharge for cause. |
7. | Suppose that I have a Qualifying Termination. Is there anything that I must do in order to receive benefits under this Plan? |
8. | What is the deadline for returning the Separation Agreement? |
9. | What is the Separation Agreement? |
10. | What are my Severance Benefits? |
11. | What is my Severance Pay? |
12. | What is my “final basic rate of pay”? |
13. | How many Weeks of Severance Pay am I entitled to? |
14. | What is a “break in service”? |
15. | Suppose I go on active military duty. Will my military service be treated as continuous with my Employer? |
16. | What is the Health Benefits Payment? |
17. | When will I receive my Severance Benefits? |
18. | Are there circumstances under which I might be required to repay my Severance Benefits? |
19. | Is the Plan funded? |
20. | Can the Plan be amended or terminated? |
21. | Can I lose, forfeit, or become ineligible for Benefits? |
22. | What are the claims procedures for the Plan? |
23. | How is the Plan administered? |
24. | Does the Plan entitle me to remain employed by my Employer? |
25. | May I assign (transfer) my benefits under this Plan? |
26. | What if I become disabled or die while entitled to benefits? |
27. | Do my benefits under this Plan include any consideration for taxes? |
28. | Do I have to make contributions to the Plan? |
29. | Will I still be entitled to unemployment compensation? |
30. | Does the Plan provide for deferred compensation within the meaning of Section 409A of the Internal Revenue Code? |
31. | What are your rights as a participant in the Plan under the Employee Retirement Income Security Act of 1974? (Statement of ERISA Rights) |
HAWAIIAN ELECTRIC INDUSTRIES, INC. | ||
By: /s/ Kurt Murao | ||
Title: VP - Legal & Administration and | ||
Corporate Secretary | ||
Date: July 23, 2018 | ||
EXHIBIT A | |||||
SEVERANCE PAY TABLE | |||||
Years of Service | # of Severance Weeks | Years of Service | # of Severance Weeks | ||
0 | 4 | 26 | 37 | ||
1 | 4 | 27 | 39 | ||
2 | 6 | 28 | 41 | ||
3 | 6 | 29 | 43 | ||
4 | 6 | 30 | 45 | ||
5 | 6 | 31 | 47 | ||
6 | 7 | 32 | 49 | ||
7 | 8 | 33 | 51 | ||
8 | 9 | 34 | 52 | ||
9 | 10 | 35 | 52 | ||
10 | 11 | 36 | 52 | ||
11 | 12 | 37 | 52 | ||
12 | 13 | 38 | 52 | ||
13 | 14 | 39 | 52 | ||
14 | 15 | 40 | 52 | ||
15 | 16 | 41 | 52 | ||
16 | 17 | 42 | 52 | ||
17 | 19 | 43 | 52 | ||
18 | 21 | 44 | 52 | ||
19 | 23 | 45 | 52 | ||
20 | 25 | 46 | 52 | ||
21 | 27 | 47 | 52 | ||
22 | 29 | 48 | 52 | ||
23 | 31 | 49 | 52 | ||
24 | 33 | 50 | 52 | ||
25 | 35 |
Six months ended June 30 | 2018 (1) | 2018 (2) | 2017 (1) | 2017 (2) | ||||||||||||
(dollars in thousands) | ||||||||||||||||
Fixed charges | ||||||||||||||||
Total interest charges | $ | 44,907 | $ | 51,148 | $ | 41,939 | $ | 46,353 | ||||||||
Interest component of rentals | 3,658 | 3,658 | 3,263 | 3,263 | ||||||||||||
Pretax preferred stock dividend requirements of subsidiaries | 1,224 | 1,224 | 1,426 | 1,426 | ||||||||||||
Total fixed charges | $ | 49,789 | $ | 56,030 | $ | 46,628 | $ | 51,042 | ||||||||
Earnings | ||||||||||||||||
Pretax income from continuing operations | $ | 111,912 | $ | 111,912 | $ | 110,262 | $ | 110,262 | ||||||||
Fixed charges, as shown | 49,789 | 56,030 | 46,628 | 51,042 | ||||||||||||
Interest capitalized | (3,308 | ) | (3,308 | ) | (2,323 | ) | (2,323 | ) | ||||||||
Earnings available for fixed charges | $ | 158,393 | $ | 164,634 | $ | 154,567 | $ | 158,981 | ||||||||
Ratio of earnings to fixed charges | 3.18 | 2.94 | 3.31 | 3.11 |
Years ended December 31 | 2017 (1) | 2017 (2) | 2016 (1) | 2016 (2) | 2015 (1) | 2015 (2) | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Fixed charges | ||||||||||||||||||||||||
Total interest charges | $ | 82,065 | $ | 91,725 | $ | 81,974 | $ | 89,141 | $ | 83,936 | $ | 89,284 | ||||||||||||
Interest component of rentals | 6,607 | 6,607 | 6,200 | 6,200 | 6,065 | 6,065 | ||||||||||||||||||
Pretax preferred stock dividend requirements of subsidiaries | 3,127 | 3,127 | 2,825 | 2,825 | 2,977 | 2,977 | ||||||||||||||||||
Total fixed charges | $ | 91,799 | $ | 101,459 | $ | 90,999 | $ | 98,166 | $ | 92,978 | $ | 98,326 | ||||||||||||
Earnings | ||||||||||||||||||||||||
Pretax income from continuing operations | $ | 274,690 | $ | 274,690 | $ | 371,951 | $ | 371,951 | $ | 252,898 | $ | 252,898 | ||||||||||||
Fixed charges, as shown | 91,799 | 101,459 | 90,999 | 98,166 | 92,978 | 98,326 | ||||||||||||||||||
Interest capitalized | (5,375 | ) | (5,375 | ) | (3,727 | ) | (3,727 | ) | (3,265 | ) | (3,265 | ) | ||||||||||||
Earnings available for fixed charges | $ | 361,114 | $ | 370,774 | $ | 459,223 | $ | 466,390 | $ | 342,611 | $ | 347,959 | ||||||||||||
Ratio of earnings to fixed charges | 3.93 | 3.65 | 5.05 | 4.75 | 3.68 | 3.54 |
Years ended December 31 | 2014 (1) | 2014 (2) | 2013 (1) | 2013 (2) | ||||||||||||
(dollars in thousands) | ||||||||||||||||
Fixed charges | ||||||||||||||||
Total interest charges | $ | 83,458 | $ | 88,535 | $ | 85,315 | $ | 90,407 | ||||||||
Interest component of rentals | 6,366 | 6,366 | 6,345 | 6,345 | ||||||||||||
Pretax preferred stock dividend requirements of subsidiaries | 2,952 | 2,952 | 2,886 | 2,886 | ||||||||||||
Total fixed charges | $ | 92,776 | $ | 97,853 | $ | 94,546 | $ | 99,638 | ||||||||
Earnings | ||||||||||||||||
Pretax income from continuing operations | $ | 263,708 | $ | 263,708 | $ | 247,946 | $ | 247,946 | ||||||||
Fixed charges, as shown | 92,776 | 97,853 | 94,546 | 99,638 | ||||||||||||
Interest capitalized | (3,954 | ) | (3,954 | ) | (7,097 | ) | (7,097 | ) | ||||||||
Earnings available for fixed charges | $ | 352,530 | $ | 357,607 | $ | 335,395 | $ | 340,487 | ||||||||
Ratio of earnings to fixed charges | 3.80 | 3.65 | 3.55 | 3.42 |
(1) | Excluding interest on ASB deposits. |
(2) | Including interest on ASB deposits. |
Six months ended June 30 | Years ended December 31 | |||||||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||
Fixed charges | ||||||||||||||||||||||||||||
Total interest charges | $ | 36,353 | $ | 36,010 | $ | 70,234 | $ | 67,407 | $ | 67,178 | $ | 66,132 | $ | 64,130 | ||||||||||||||
Interest component of rentals | 2,185 | 1,752 | 3,618 | 3,249 | 3,060 | 3,244 | 2,793 | |||||||||||||||||||||
Pretax preferred stock dividend requirements of subsidiaries | 594 | 720 | 1,539 | 1,453 | 1,443 | 1,444 | 1,421 | |||||||||||||||||||||
Total fixed charges | $ | 39,132 | $ | 38,482 | $ | 75,391 | $ | 72,109 | $ | 71,681 | $ | 70,820 | $ | 68,344 | ||||||||||||||
Earnings | ||||||||||||||||||||||||||||
Net income attributable to Hawaiian Electric | $ | 59,184 | $ | 47,649 | $ | 121,031 | $ | 143,397 | $ | 136,794 | $ | 138,721 | $ | 124,009 | ||||||||||||||
Fixed charges, as shown | 39,132 | 38,482 | 75,391 | 72,109 | 71,681 | 70,820 | 68,344 | |||||||||||||||||||||
Income taxes | 17,851 | 27,618 | 83,199 | 84,801 | 79,422 | 80,725 | 69,117 | |||||||||||||||||||||
Interest capitalized | (3,308 | ) | (2,323 | ) | (5,375 | ) | (3,727 | ) | (3,265 | ) | (3,954 | ) | (7,097 | ) | ||||||||||||||
Earnings available for fixed charges | $ | 112,859 | $ | 111,426 | $ | 274,246 | $ | 296,580 | $ | 284,632 | $ | 286,312 | $ | 254,373 | ||||||||||||||
Ratio of earnings to fixed charges | 2.88 | 2.90 | 3.64 | 4.11 | 3.97 | 4.04 | 3.72 |
Date: August 3, 2018 | |
/s/ Constance H. Lau | |
Constance H. Lau | |
President and Chief Executive Officer |
Date: August 3, 2018 | |
/s/ Gregory C. Hazelton | |
Gregory C. Hazelton | |
Executive Vice President and Chief Financial Officer |
Date: August 3, 2018 | |
/s/ Alan M. Oshima | |
Alan M. Oshima | |
President and Chief Executive Officer |
Date: August 3, 2018 | |
/s/ Tayne S. Y. Sekimura | |
Tayne S. Y. Sekimura | |
Senior Vice President and Chief Financial Officer |
Date: August 3, 2018 |
/s/ Constance H. Lau |
Constance H. Lau |
President and Chief Executive Officer |
/s/ Gregory C. Hazelton |
Gregory C. Hazelton |
Executive Vice President and Chief Financial Officer |
Date: August 3, 2018 |
/s/ Alan M. Oshima |
Alan M. Oshima |
President and Chief Executive Officer |
/s/ Tayne S. Y. Sekimura |
Tayne S. Y. Sekimura |
Senior Vice President and Chief Financial Officer |
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, plant and equipment, accumulated depreciation | $ 2,615,259 | $ 2,553,295 |
Preferred stock, authorized shares (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued shares (in shares) | 0 | 0 |
Common stock, authorized shares (in shares) | 200,000,000 | 200,000,000 |
Common stock, issued shares (in shares) | 108,879,245 | 108,787,807 |
Common stock, outstanding shares (in shares) | 108,879,245 | 108,787,807 |
Hawaiian Electric Company, Inc. and Subsidiaries | ||
Nonutility property, plant and equipment, accumulated depreciation | $ 1,253 | $ 1,251 |
Common stock, par value (in dollars per share) | $ 6.67 | $ 6.67 |
Common stock, authorized shares (in shares) | 50,000,000 | 50,000,000 |
Common stock, outstanding shares (in shares) | 16,142,216 | 16,142,216 |
Condensed Consolidated Statements of Changes in Shareholders' Equity and Common Stock Equity (unaudited) - USD ($) $ in Thousands |
Total |
Hawaiian Electric Company, Inc. and Subsidiaries |
Common stock |
Common stock
Hawaiian Electric Company, Inc. and Subsidiaries
|
Premium on capital stock
Hawaiian Electric Company, Inc. and Subsidiaries
|
Retained Earnings |
Retained Earnings
Hawaiian Electric Company, Inc. and Subsidiaries
|
Accumulated other comprehensive income (loss) |
Accumulated other comprehensive income (loss)
Hawaiian Electric Company, Inc. and Subsidiaries
|
---|---|---|---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2016 | $ 2,066,753 | $ 1,799,787 | $ 1,660,910 | $ 106,818 | $ 601,491 | $ 438,972 | $ 1,091,800 | $ (33,129) | $ (322) |
Beginning Balance (in shares) at Dec. 31, 2016 | 108,583,000 | 16,020,000 | |||||||
Increase (decrease) in stockholders' equity | |||||||||
Net income for common stock | 72,854 | 47,109 | 72,854 | 47,109 | |||||
Other comprehensive income (loss), net of tax (benefits) | 3,355 | 499 | 3,355 | 499 | |||||
Issuance of common stock, net of expenses | (507) | $ (507) | |||||||
Issuance of common stock, net of expenses (in shares) | 202,000 | ||||||||
Common stock dividends | (67,426) | (43,884) | (67,426) | (43,884) | |||||
Common stock issuance expenses | (5) | (5) | |||||||
Ending Balance at Jun. 30, 2017 | 2,075,029 | 1,803,506 | $ 1,660,403 | $ 106,818 | 601,486 | 444,400 | 1,095,025 | (29,774) | 177 |
Ending Balance (in shares) at Jun. 30, 2017 | 108,785,000 | 16,020,000 | |||||||
Beginning Balance at Dec. 31, 2017 | $ 2,097,386 | 1,845,283 | $ 1,662,491 | $ 107,634 | 614,675 | 476,836 | 1,124,193 | (41,941) | (1,219) |
Beginning Balance (in shares) at Dec. 31, 2017 | 108,787,807 | 108,788,000 | 16,142,000 | ||||||
Increase (decrease) in stockholders' equity | |||||||||
Net income for common stock | $ 86,301 | 58,644 | 86,301 | 58,644 | |||||
Other comprehensive income (loss), net of tax (benefits) | (16,598) | 57 | (16,598) | 57 | |||||
Issuance of common stock, net of expenses | 3,410 | $ 3,410 | |||||||
Issuance of common stock, net of expenses (in shares) | 91,000 | ||||||||
Common stock dividends | (67,481) | (51,652) | (67,481) | (51,652) | |||||
Common stock issuance expenses | (8) | (8) | |||||||
Ending Balance at Jun. 30, 2018 | $ 2,103,018 | $ 1,852,324 | $ 1,665,901 | $ 107,634 | $ 614,667 | $ 495,656 | $ 1,131,185 | $ (58,539) | $ (1,162) |
Ending Balance (in shares) at Jun. 30, 2018 | 108,879,245 | 108,879,000 | 16,142,000 |
Basis of presentation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, the instructions to SEC Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In preparing the unaudited condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses for the period. Actual results could differ significantly from those estimates. The accompanying unaudited condensed consolidated financial statements and the following notes should be read in conjunction with the audited consolidated financial statements and the notes thereto in HEI’s and Hawaiian Electric’s Form 10-K for the year ended December 31, 2017. In the opinion of HEI’s and Hawaiian Electric’s management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments required by GAAP to fairly state consolidated HEI’s and Hawaiian Electric’s financial positions as of June 30, 2018 and December 31, 2017 and the results of their operations for the three and six months ended June 30, 2018 and 2017 and cash flows for the six months ended June 30, 2018 and 2017. All such adjustments are of a normal recurring nature, unless otherwise disclosed below or in other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year. Recent accounting pronouncements. Revenues from contracts with customers. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of the guidance in ASU No. 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU No. 2014-09 also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company and Hawaiian Electric adopted ASU No. 2014-09 (and subsequently issued revenue-related ASUs, as applicable) in the first quarter of 2018. There was no cumulative effect adjustment and no impact on the timing or pattern of revenue recognition, but ASU No. 2014-09 required changes with respect to the Company’s and Hawaiian Electric’s revenue disclosures. See Note 7. Financial instruments. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which, among other things:
The Company adopted ASU No. 2016-01 in the first quarter of 2018 and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated financial statements. Cash flows. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on eight specific cash flow issues - debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The Company adopted ASU No. 2016-15 in the first quarter of 2018 using a retrospective transition method and there was no impact from the adoption to the Company’s and Hawaiian Electric’s consolidated statements of cash flows. Restricted cash. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted ASU No. 2016-18 in the first quarter of 2018 using a retrospective transition method and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated statements of cash flows. Definition of a Business. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations—Clarifying the Definition of a Business.” This update clarifies the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted ASU No. 2017-01 in the first quarter of 2018 and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated financial statements. Net periodic pension cost and net periodic postretirement benefit cost. In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost (NPPC) and net periodic postretirement benefit cost (NPBC) as defined in paragraphs 715-30-35-4 and 715-60-35-9 to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component is eligible for capitalization under GAAP, when applicable. The Company adopted ASU No. 2017-07 in the first quarter of 2018: (1) retrospectively for the presentation in the income statement of the service cost component and the other components of NPPC and NPBC, and (2) prospectively for the capitalization in assets of the service cost component of NPPC and NPBC for Hawaiian Electric and its subsidiaries. HEI and ASB do not capitalize pension and OPEB costs. In settlement agreements in the 2018 Maui Electric, 2017 Hawaiian Electric and 2016 Hawaii Electric Light rate cases, Maui Electric, Hawaiian Electric and Hawaii Electric Light, respectively, and the Consumer Advocate agreed to the deferral of the non-service cost components of NPPC and NPBC, which would have been capitalized prior to ASU No. 2017-07, as part of the pension tracking mechanism. The PUC approved this treatment in the final decision and order (D&O) in the Hawaiian Electric and Hawaii Electric Light rate cases. The treatment under the settlement agreements was followed beginning in 2018 until each utility’s next rate case. In each utility’s next rate case, rates established would include recovery of the deferred non-service cost components and seek to adopt the capitalization policy which reflects the requirements of ASU No. 2017-07 (i.e., only the service cost components of NPPC and NPBC will be capitalized). Thus, the adoption of ASU 2017-07 in the first quarter of 2018 does not have a net income impact. The following table summarizes the impact to the prior period financial statements of the adoption of ASU No. 2017-07:
Derivatives and Hedging. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which is intended to improve and simplify accounting rules around hedge accounting. The amendments in ASU No. 2017-12 improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. The amendments also expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For public business entities, the new guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, but early adoption is permitted. The Company early adopted ASU No. 2017-12 in the second quarter of 2018, with an effective date of April 1, 2018, and the adoption did not have a material impact on the Company’s consolidated financial statements. Leases. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires that lessees recognize a liability to make lease payments (the lease liability) and a right-of-use asset, representing its right to use the underlying asset for the lease term, for all leases (except short-term leases) at the commencement date. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election and recognize lease expense for such leases generally on a straight-line basis over the lease term. For finance leases, a lessee is required to recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of income. For operating leases, a lessee is required to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis. The Company plans to adopt ASU No. 2016-02 in the first quarter of 2019 and is currently analyzing the potential impact of adoption, including the impact of electing certain practical expedients available under the standard. The Company has reviewed its agreements and has compiled a preliminary inventory of its operating leases and other arrangements that meet the definition of a lease under the new standard. The Company is in the process of analyzing the measurement provisions of the new standard and their impact to its existing lease arrangements that fall within the scope of ASU No. 2016-02. Credit losses. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU No. 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date (based on historical experience, current conditions and reasonable and supportable forecasts) and enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale (AFS) debt securities and purchased financial assets with credit deterioration. The other-than-temporary impairment model of accounting for credit losses on AFS debt securities will be replaced with an estimate of expected credit losses only when the fair value is below the amortized cost of the asset. The length of time the fair value of an AFS debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists. The AFS debt security model will also require the use of an allowance to record the estimated losses (and subsequent recoveries). The accounting for the initial recognition of the estimated expected credit losses for purchased financial assets with credit deterioration would be recognized through an allowance for credit losses with an offset to the cost basis of the related financial asset at acquisition (i.e., there is no impact to net income at initial recognition). The Company plans to adopt ASU No. 2016-13 in the first quarter of 2020. The guidance is to be applied on a modified retrospective basis with the cumulative effect of initially applying the amendments recognized in retained earnings at the date of initial application. The Company has assembled a project team that meets regularly to evaluate the provisions of this ASU, identify additional data requirements necessary and determine an approach for implementation. The team has assigned roles and responsibilities and developed key tasks to complete and a general timeline to be followed. The Company is evaluating the effect that this ASU will have on the consolidated financial statements and disclosures. Economic conditions and the composition of the Company’s loan portfolio at the time of adoption will influence the extent of the adopting accounting adjustment. Condensed Consolidated Statements of Cash Flows error. Subsequent to the issuance of interim Condensed Consolidated Financial Statements (unaudited) for the quarter ended June 30, 2017, the Company and the Utilities identified an error within their previously reported interim Condensed Consolidated Statements of Cash Flows (unaudited). The timing of certain capital expenditure payments, including those that had retainage balances or were related to certain capitalized amounts were not reflected timely. The Company and the Utilities have evaluated the effect of the error, both qualitatively and quantitatively, and concluded that it is immaterial to their respective previously issued condensed consolidated financial statements. For the six months ended June 30, 2017, the correction of this error resulted in decreases in Net Cash Provided by Operating Activities (impacting the change in Accounts, Interest and Dividends Payable for the Company and Accounts Payable for the Utilities) and Net Cash Used in Investing Activities (impacting the Capital Expenditures for the Company and the Utilities) of $12 million. Reclassifications. Reclassifications made to prior year-end financial statements to conform to 2018 presentation include a reclassification of contributions in aid of construction (CIAC) balances to “Property, plant and equipment, net” and “Total property, plant and equipment, net” for the Company and Hawaiian Electric, respectively, which reduced the amounts of the respective balances. |
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Segment financial information | Segment financial information
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. Hamakua Energy’s sales to Hawaii Electric Light (a regulated affiliate) are eliminated in consolidation. Hamakua Energy's profit on electricity sales to Hawaii Electric Light is not required to be eliminated because the PPA was approved by the PUC and it is probable that, through the ratemaking process, future revenue from Hawaii Electric Light’s sale of the electricity will approximate its purchase price from Hamakua Energy under the PPA. |
Electric utility segment |
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Electric utility segment | Electric utility segment Revenue taxes. The Utilities’ revenues include amounts for recovery of various Hawaii state revenue taxes. Revenue taxes are generally recorded as an expense in the period the related revenues are recognized. For the second quarters of 2018 and 2017 and the six months ended June 30, 2018 and 2017, the Utilities’ revenues include recovery of revenue taxes of approximately $54 million, $50 million, $105 million and $96 million, respectively, which amounts are included in “Taxes, other than income taxes” expense, in the unaudited condensed consolidated statements of income. However, the Utilities pay revenue taxes to the taxing authorities in the period based on (1) the prior year’s billed revenues (in the case of public service company taxes and PUC fees) in the current year or (2) the current year’s cash collections from electric sales (in the case of franchise taxes) after year-end. Unconsolidated variable interest entities. HECO Capital Trust III. Trust III has at all times been an unconsolidated subsidiary of Hawaiian Electric. Since Hawaiian Electric, as the holder of 100% of the trust common securities, does not have the power to direct the activities that most significantly impact the economic performance of Trust III nor the obligation to absorb its expected losses, if any, that could potentially be significant to Trust III, Hawaiian Electric is not the primary beneficiary and does not consolidate Trust III in accordance with accounting rules on the consolidation of VIEs. Trust III’s balance sheets as of June 30, 2018 and December 31, 2017 each consisted of $51.5 million of 2004 Debentures; $50.0 million of 2004 Trust Preferred Securities; and $1.5 million of trust common securities. Trust III’s income statements for the six months ended June 30, 2018 and 2017 consisted of $1.7 million of interest income received from the 2004 Debentures; $1.6 million of distributions to holders of the Trust Preferred Securities; and $50,000 of common dividends on the trust common securities to Hawaiian Electric. Power purchase agreements. As of June 30, 2018, the Utilities had five PPAs for firm capacity and other PPAs with independent power producers (IPPs) and Schedule Q providers (i.e., customers with cogeneration and/or power production facilities who buy power from or sell power to the Utilities), none of which is currently required to be consolidated as VIEs. Pursuant to the current accounting standards for VIEs, the Utilities are deemed to have a variable interest in Kalaeloa Partners, L.P. (Kalaeloa), AES Hawaii, Inc. (AES Hawaii) and the predecessor of Hamakua Energy by reason of the provisions of the PPA that the Utilities have with the three IPPs. However, management has concluded that the Utilities are not the primary beneficiary of Kalaeloa, AES Hawaii and the predecessor of Hamakua Energy because the Utilities do not have the power to direct the activities that most significantly impact the three IPPs’ economic performance nor the obligation to absorb their expected losses, if any, that could potentially be significant to the IPPs. Thus, the Utilities have not consolidated Kalaeloa, AES Hawaii and the predecessor of Hamakua Energy in its unaudited condensed consolidated financial statements. In November 2017, HEI acquired the Hamakua project through Hamakua Energy, an indirect subsidiary of Pacific Current, and has consolidated it in HEI’s unaudited condensed consolidated financial statements since the acquisition. For the other PPAs with IPPs, the Utilities have concluded that the consolidation of the IPPs was not required because either the Utilities do not have variable interests in the IPPs due to the absence of an obligation in the PPAs for the Utilities to absorb any variability of the IPPs, or the IPPs were considered a “governmental organization,” and thus excluded from the scope of accounting standards for VIEs. Two IPPs of as-available energy declined to provide the information necessary for Utilities to determine the applicability of accounting standards for VIEs. If information is ultimately received from the IPPs, a possible outcome of future analyses of such information is the consolidation of one or both of such IPPs in the unaudited condensed consolidated financial statements. The consolidation of any significant IPP could have a material effect on the unaudited condensed consolidated financial statements, including the recognition of a significant amount of assets and liabilities and, if such a consolidated IPP were operating at a loss and had insufficient equity, the potential recognition of such losses. If the Utilities determine they are required to consolidate the financial statements of such an IPP and the consolidation has a material effect, the Utilities would retrospectively apply accounting standards for VIEs to the IPP. Commitments and contingencies. Contingencies. The Utilities are subject in the normal course of business to pending and threatened legal proceedings. Management does not anticipate that the aggregate ultimate liability arising out of these pending or threatened legal proceedings will be material to its financial position. However, the Utilities cannot rule out the possibility that such outcomes could have a material effect on the results of operations or liquidity for a particular reporting period in the future. Power purchase agreements. Purchases from all IPPs were as follows:
Kalaeloa Partners, L.P. Under a 1988 PPA, as amended, Hawaiian Electric is committed to purchase 208 MW of firm capacity from Kalaeloa. Hawaiian Electric and Kalaeloa are currently in negotiations to address the PPA term that ended on May 23, 2016. The PPA automatically extends on a month-to-month basis as long as the parties are still negotiating in good faith, but would end 60 days after either party notifies the other in writing that negotiations have terminated. Hawaiian Electric and Kalaeloa have agreed that neither party will terminate the PPA prior to October 31, 2018. This agreement contemplates continued negotiations between the parties and accounts for time needed for PUC approval of a negotiated resolution. AES Hawaii, Inc. Under a PPA entered into in March 1988, as amended (through Amendment No. 2) for a period of 30 years beginning September 1992, Hawaiian Electric agreed to purchase 180 MW of firm capacity from AES Hawaii. In August 2012, Hawaiian Electric filed an application with the PUC seeking an exemption from the PUC’s Competitive Bidding Framework to negotiate an amendment to the PPA to purchase 186 MW of firm capacity, and amend the energy pricing formula in the PPA. The PUC approved the exemption in April 2013, but Hawaiian Electric and AES Hawaii were not able to reach agreement on the amendment. In June 2015, AES Hawaii filed an arbitration demand regarding a dispute about whether Hawaiian Electric was obligated to buy up to 9 MW of additional capacity based on a 1992 letter. Hawaiian Electric responded to the arbitration demand and in October 2015, AES Hawaii and Hawaiian Electric entered into a settlement agreement to stay the arbitration proceeding. The settlement agreement included certain conditions precedent which, if satisfied, would have released the parties from the claims under the arbitration proceeding. Among the conditions precedent was the successful negotiation and PUC approval of an amendment to the existing PPA. In November 2015, Hawaiian Electric entered into Amendment No. 3 for which PUC approval was requested and subsequently denied in January 2017. Approval of Amendment No. 3 would have satisfied the final condition for effectiveness of the settlement agreement and resolved AES Hawaii's claims. Following the PUC's decision, the parties agreed to extend the stay of the arbitration proceeding, while settlement discussions continued. In February 2018, Hawaiian Electric reached agreement with AES Hawaii on Amendment No. 4, which was submitted to the PUC for approval in April 2018. Amendment No. 4, among other things, provides (1) that AES Hawaii will make certain operational commitments to improve reliability, (2) for inclusion of AES Hawaii in the Utilities’ greenhouse gas partnership, (3) provisions to allow AES Hawaii to reduce coal combustion by modifying its fuel consumption to include biomass upon approval by Hawaiian Electric, and (4) for release of an option agreement by Hawaiian Electric for land owned by AES Hawaii. Amendment No. 4 includes a stay of the arbitration proceeding pending review by the PUC. If approved by the PUC, Amendment No. 4 will resolve AES Hawaii’s claims. In June 2018, the PUC issued an order suspending the Amendment No. 4 docket pending a DOH decision on AES’ request for approval of its Emission Reduction Plan and partnership with Hawaiian Electric. Hu Honua Bioenergy, LLC. In May 2012, Hawaii Electric Light signed a PPA, which the PUC approved in December 2013, with Hu Honua Bioenergy, LLC (Hu Honua) for 21.5 MW of renewable, dispatchable firm capacity fueled by locally grown biomass from a facility on the island of Hawaii. Under the terms of the PPA, the Hu Honua plant was scheduled to be in service in 2016. However, Hu Honua encountered construction delays, failed to meet its obligations under the PPA and failed to provide adequate assurances that it could perform or had the financial means to perform. Hawaii Electric Light terminated the PPA on March 1, 2016. On November 30, 2016, Hu Honua filed a civil complaint in the United States District Court for the District of Hawaii that included claims purportedly arising out of the termination of Hu Honua’s PPA. On May 26, 2017, Hawaii Electric Light and Hu Honua entered into a settlement agreement that will settle all claims related to the termination of the original PPA. The settlement agreement was contingent on the PUC’s approval of an amended and restated PPA between Hawaii Electric Light and Hu Honua dated May 5, 2017. In July 2017, the PUC approved the amended and restated PPA. On August 25, 2017, the PUC’s approval was appealed by a third party. The appeal is still pending. Hu Honua is expected to be on-line by the end of 2018. Utility projects. Many public utility projects require PUC approval and various permits from other governmental agencies. Difficulties in obtaining, or the inability to obtain, the necessary approvals or permits can result in significantly increased project costs or even cancellation of projects. In the event a project does not proceed, or if it becomes probable the PUC will disallow cost recovery for all or part of a project, or if PUC-imposed caps on project costs are expected to be exceeded, project costs may need to be written off in amounts that could result in significant reductions in Hawaiian Electric’s consolidated net income. Enterprise Resource Planning/Enterprise Asset Management (ERP/EAM) implementation project. On August 11, 2016, the PUC approved the Utilities’ request to commence the ERP/EAM implementation project, subject to certain conditions, including a $77.6 million cap on cost recovery as well as a requirement that the Utilities pass onto customers a minimum of $244 million in benefits associated with the system over its 12-year service life. The D&O approved the deferral of certain project costs and allowed the accrual of allowance for funds used during construction (AFUDC), but limited the AFUDC rate to 1.75%. Pursuant to the D&O and subsequent orders, in September 2017, the Utilities filed a bottom-up, low-level analysis of the project’s benefits and performance metrics and tracking mechanism for passing the project’s benefits on to customers. On November 30, 2017, the PUC issued an order, which, among other things, directed the Utilities to file a position statement regarding the reasonableness of the project, a reworked low-level benefits analysis and initial details of the metrics that will be used to demonstrate the achievement of benefits. On December 18, 2017, the Utilities filed their response to the order, re-affirming the need for the project and guaranteed minimum level of $244 million in benefits to customers. The response further noted that in Hawaiian Electric’s 2017 test year rate case, Hawaiian Electric and the Consumer Advocate have agreed in principle to a “rate case-centric” approach for a benefits delivery mechanism pending PUC approval. On January 4, 2018, the Consumer Advocate filed a statement of position (SOP) on the Utilities’ response, stating that it does not recommend revocation of the PUC’s prior conditional approval of the project or reductions to the previously ordered cost caps, and continues to recommend the use of a rate case-centric approach to facilitate pass through of the system’s benefits to customers. The Utilities filed a response to the Consumer Advocate’s SOP on January 11, 2018, noting among other things that the Consumer Advocate’s SOP is in general alignment with the Utilities’ position on the project. Monthly reports on the status and costs of the project continue to be filed. The parties have reached substantive agreement regarding the approach for delivering system benefits to customers, but are still in the process of developing an annual enterprise systems benefits report. The ERP/EAM Implementation Project is expected to go live in October 2018. As of June 30, 2018, the Project incurred costs of $61.2 million of which $10.6 million were charged to other operation and maintenance (O&M) expense, $2.6 million relate to capital costs and $48.0 million are deferred costs. Schofield Generating Station Project. In August 2012, the PUC approved a waiver from the competitive bidding framework to allow Hawaiian Electric to negotiate with the U.S. Army for the construction of a 50 MW utility owned and operated firm, renewable and dispatchable generation facility at Schofield Barracks. In September 2015, the PUC approved Hawaiian Electric’s application to expend $167 million for the project. In approving the project, the PUC placed a cost cap of $167 million for the project, stated 90% of the cap is allowed for cost recovery through cost recovery mechanisms other than base rates, and stated the $167 million cap will be adjusted downward due to any reduction in the cost of the engine contract due to a reduction in the foreign exchange rate. Hawaiian Electric was required to take all necessary steps to lock in the lowest possible exchange rate. On January 5, 2016, Hawaiian Electric executed window forward contracts, which lowered the cost of the engine contract by $9.7 million, resulting in a revised project cost cap of $157.3 million. Hawaiian Electric received all of the major permits for the project, including a 35-year site lease from the U.S. Army. Construction of the facility began in October 2016, and the facility was placed in service on June 7, 2018. A request to recover the capital costs of the project through the newly-established Major Project Interim Recovery (MPIR) adjustment mechanism was approved by the PUC on June 27, 2018. (See “Decoupling” section below for MPIR guidelines and capital cost recovery discussion.) A decision on recovery of related operation and maintenance expense (approximately $1.8 million annualized) during the interim period (i.e., between the in-service date and the next rate case) is pending. Project costs incurred as of June 30, 2018 amounted to $141.5 million. West Loch PV Project. In July 2016, Hawaiian Electric announced plans to build, own and operate a utility-owned, grid-tied 20-MW (ac) solar facility on property owned by the Department of the Navy. In June 2017, the PUC approved the expenditure of funds for the project, including Hawaiian Electric’s proposed project cost cap of $67 million and a performance guarantee to provide energy at 9.56 cents/KWH or less to the system. In approving the project, the PUC agreed that the project is eligible for recovery of costs offset by related net benefits under the newly-established MPIR adjustment mechanism. (See “Decoupling” section below for MPIR guidelines and capital cost recovery discussion.) Hawaiian Electric provided supplemental materials in August 2017, as requested by the PUC, to support meeting the MPIR guidelines, accompanied by system performance guarantee and cost savings sharing mechanisms. A decision on these matters is pending. Hawaiian Electric executed a fixed-price Engineering, Procurement, and Construction (EPC) contract for the project on December 6, 2017. The EPC contract includes the cost of the solar panels for the project, which is not subject to modification due to any tariffs that may be imposed under the current photovoltaic (PV) cell and module import tariffs. Construction of the facility began in the second quarter of 2018, and the facility is expected to be placed in service in the second quarter of 2019. Project costs incurred as of June 30, 2018 amounted to $9.1 million. Hawaiian Telcom. The Utilities each have separate agreements for the joint ownership and maintenance of utility poles with Hawaiian Telcom, Inc. (Hawaiian Telcom), the respective county or counties in which each utility operates and other third parties, such as the State of Hawaii. The agreements set forth various circumstances requiring pole removal/installation/replacement and the sharing of costs among the joint pole owners. The agreements allow for the cost of work done by one joint pole owner to be shared by the other joint pole owners based on the apportionment of costs in the agreements. The Utilities have maintained, replaced and installed the majority of the jointly-owned poles in each of the respective service territories, and have billed the other joint pole owners for their respective share of the costs. The counties and the State have been reimbursing the Utilities for their share of the costs. However, Hawaiian Telcom has been delinquent in reimbursing the Utilities for its share of the costs. Hawaiian Electric initiated a dispute resolution process to collect the unpaid amounts from Hawaiian Telcom as specified by the joint pole agreement. This dispute resolution process is stayed pending PUC approval of a settlement agreement further described below. For Hawaii Electric Light, the agreement does not specify an alternative dispute resolution process, and thus a complaint for payment was filed with the Circuit Court in June 2016. This complaint is stayed pending PUC approval of a settlement agreement further described below. Maui Electric has not yet commenced any legal action to recover the delinquent amounts. On April 4, 2018, the Utilities and Hawaiian Telcom entered into several agreements, subject to PUC approval, for the purchase by the Utilities of Hawaiian Telcom’s interest in all the joint poles, and licensing and operating agreement between the Utilities and Hawaiian Telcom subsequent to the transfer of the joint pole interest to the Utilities. Consideration of approximately $48 million to be paid for Hawaiian Telcom’s interest in the poles will be offset in part by the receivables owed by Hawaiian Telcom to the Utilities. As of June 30, 2018, receivables under the joint pole agreement, net of a reserve for a portion of the interest, from Hawaiian Telcom are $17.4 million ($11.6 million at Hawaiian Electric, $4.7 million at Hawaii Electric Light, and $1.1 million at Maui Electric). Although PUC approval has not yet been received, management expects the net receivable amounts will be realized. The remaining consideration for acquiring Hawaiian Telcom’s interest in the joint poles is to be settled through the set-off of current and future license fees due from Hawaiian Telcom, after which Hawaiian Telcom would make cash payments for license fees under the agreement. Environmental regulation. The Utilities are subject to environmental laws and regulations that regulate the operation of existing facilities, the construction and operation of new facilities and the proper cleanup and disposal of hazardous waste and toxic substances. Hawaiian Electric, Hawaii Electric Light and Maui Electric, like other utilities, periodically encounter petroleum or other chemical releases associated with current or previous operations. The Utilities report and take action on these releases when and as required by applicable law and regulations. The Utilities believe the costs of responding to such releases identified to date will not have a material effect, individually or in the aggregate, on Hawaiian Electric’s consolidated results of operations, financial condition or liquidity. Former Molokai Electric Company generation site. In 1989, Maui Electric acquired by merger Molokai Electric Company. Molokai Electric Company had sold its former generation site (Site) in 1983, but continued to operate at the Site under a lease until 1985. The Environmental Protection Agency (EPA) has since identified environmental impacts in the subsurface soil at the Site. Although Maui Electric never operated at the Site or owned the Site property, after discussions with the EPA and the Hawaii Department of Health (DOH), Maui Electric agreed to undertake additional investigations at the Site and an adjacent parcel that Molokai Electric Company had used for equipment storage (the Adjacent Parcel) to determine the extent of environmental contamination. A 2011 assessment by a Maui Electric contractor of the Adjacent Parcel identified environmental impacts, including elevated polychlorinated biphenyls (PCBs) in the subsurface soils. In cooperation with the DOH and EPA, Maui Electric is further investigating the Site and the Adjacent Parcel to determine the extent of impacts of PCBs, residual fuel oils and other subsurface contaminants. Maui Electric has a reserve balance of $2.7 million as of June 30, 2018, representing the probable and reasonably estimated cost to complete the additional investigation and estimated cleanup costs at the Site and the Adjacent Parcel; however, final costs of remediation will depend on the results of continued investigation. Pearl Harbor sediment study. In July 2014, the U.S. Navy notified Hawaiian Electric of the Navy’s determination that Hawaiian Electric is a Potentially Responsible Party responsible for cleanup of PCB contamination in sediment in the area offshore of the Waiau Power Plant as part of the Pearl Harbor Superfund Site. The Navy has also requested that Hawaiian Electric reimburse the costs incurred by the Navy to investigate the area. The Navy has completed a remedial investigation and a feasibility study (FS) for the remediation of contaminated sediment at several locations in Pearl Harbor and issued its Final FS Report on June 29, 2015. On February 2, 2016, the Navy released the Proposed Plan for Pearl Harbor Sediment Remediation and Hawaiian Electric submitted comments. The extent of the contamination, the appropriate remedial measures to address it and Hawaiian Electric’s potential responsibility for any associated costs have not been determined. On March 23, 2015, Hawaiian Electric received a letter from the EPA requesting that Hawaiian Electric submit a work plan to assess potential sources and extent of PCB contamination onshore at the Waiau Power Plant. Hawaiian Electric submitted a sampling and analysis (SAP) work plan to the EPA and the DOH. Onshore sampling at the Waiau Power Plant was completed in two phases in December 2015 and June 2016. Appropriate remedial measures are being developed to address the extent of the onshore contamination, and any associated costs have not yet been determined. As of June 30, 2018, the reserve account balance recorded by Hawaiian Electric to address the PCB contamination was $4.7 million. The reserve represents the probable and reasonably estimable cost to complete the onshore and offshore investigations and the remediation of PCB contamination in the offshore sediment. The final remediation costs will depend on the assessment of potential source control requirements, as well as the further investigation of contaminated sediment offshore from the Waiau Power Plant by the Navy. Regulatory proceedings Decoupling. Decoupling is a regulatory model that is intended to facilitate meeting the State of Hawaii’s goals to transition to a clean energy economy and achieve an aggressive renewable portfolio standard. The decoupling model, implemented in Hawaii in 2011, delinks revenues from sales and includes annual rate adjustments. The decoupling mechanism has the following major components: (1) a sales decoupling component via a revenue balancing account (RBA), (2) a revenue escalation component via a rate adjustment mechanism (RAM), (3) major project interim recovery component (MPIR), (4) performance incentive mechanisms (PIMs), and (5) an earnings sharing mechanism, which would provide for a reduction of revenues between rate cases in the event the utility exceeds the return on average common equity (ROACE) allowed in its most recent rate case. Under the decoupling mechanism, triennial general rate cases are required. Rate adjustment mechanism. On March 31, 2015, the PUC issued an Order (the 2015 Decoupling Order) that modified the RAM portion of the decoupling mechanism to be capped at the lesser of the RAM revenue adjustment as then determined (based on an inflationary adjustment for certain O&M expenses and return on investment for certain rate base changes) and a RAM revenue adjustment calculated based on the cumulative annual compounded increase in Gross Domestic Product Price Index applied to annualized target revenues (the RAM Cap). The 2015 Decoupling Order provided a specific basis for calculating the target revenues until the next rate case, at which time the target revenues will reset upon the issuance of an interim or final D&O in a rate case. The RAM Cap impacted the Utilities' recovery of capital investments as follows:
For the RAM years 2014 - 2016, Hawaiian Electric was allowed to record RAM revenue beginning on January 1 and to bill such amounts from June 1 of the applicable year through May 31 of the following year. Subsequent to 2016, Hawaiian Electric reverted to the RAM provisions initially approved in March 2011—i.e., RAM is both accrued and billed from June 1 of each year through May 31 of the following year. Major project interim recovery. On April 27, 2017, the PUC issued an Order that provided guidelines for interim recovery of revenues to support major projects placed in service between general rate cases. Projects eligible for recovery through the MPIR adjustment mechanism are major projects (i.e., projects with capital expenditures net of customer contributions in excess of $2.5 million), including, but not restricted to, renewable energy, energy efficiency, utility scale generation, grid modernization and smaller qualifying projects grouped into programs for review. The MPIR adjustment mechanism provides the opportunity to recover revenues for approved costs of eligible projects placed in service between general rate cases wherein cost recovery is limited by a revenue cap and is not provided by other effective recovery mechanisms. The request for PUC approval must include a business case and all costs that are allowed to be recovered through the MPIR adjustment mechanism must be offset by any related benefits. The guidelines provide for accrual of revenues approved for recovery upon in-service date to be collected from customers through the annual RBA tariff. Capital projects that are not recovered through the MPIR would be included in the RAM and be subject to the RAM Cap, until the next rate case when the Utilities would request recovery in base rates. The PUC has approved recovery of a capped portion of the Schofield generating station through the MPIR mechanism. Hawaiian Electric has filed an MPIR for Schofield of $6.6 million in annual revenues, which would adjust revenues in July through December 2018 and be collected in customer bills beginning in June 2019. Performance incentive mechanisms. The PUC has ordered the following performance incentive mechanisms (PIM), which will be reflected in the annual decoupling filing beginning in 2019. The PIM tariff requires the performance targets, deadbands and the amount of maximum financial incentives used to determine the PIM financial incentive levels for each of the PIMs to be re-determined upon issuance of an interim or final order in a general rate case for each utility.
Annual decoupling filings. The net annual incremental amounts to be collected (refunded) from June 1, 2018 through May 31, 2019 are as follows:
* Maui Electric incorporated a $2.8 million adjustment into its 2018 annual decoupling filing to incorporate the impact of the lower corporate income tax rate and the exclusion of the domestic production activities deduction, as a result of the 2017 Tax Cuts and Jobs Act (the Tax Act). Tax adjustments for Hawaiian Electric and Hawaii Electric Light are described in the discussion below of their respective on-going rate cases. Performance-based regulation proceeding. On April 18, 2018, the PUC issued an order, instituting a proceeding to investigate performance-based regulation (PBR). The PUC intends to provide a forum to collaboratively develop modifications or new components to better align utility and customer interests. The PUC stated that PBR seeks to utilize both revenue adjustment mechanisms and performance mechanisms to more strongly align utilities’ incentives with customer interests. The order stated that, in general, the PUC is interested in ratemaking elements and/or mechanisms that result in:
The PUC envisions that the PBR components through this investigation are those that: (a) target areas of current utility performance that may benefit from improvement; and (b) reward the utility for achieving specific outcomes that are in the public interest and/or penalize the utility for not achieving said outcomes. To that end, through this investigation, the PUC intends to: (1) identify specific areas of utility performance that should be improved; (2) determine appropriate metrics for measuring successful outcomes in those areas; and (3) establish reasonable financial rewards and/or penalties that are sufficient to incent the utility to achieve those outcomes. The order indicated that the proceeding would have two phases. Phase 1 would examine the current regulatory framework and identify those areas of utility performance that are deserving of further focus for PBR framework development and/or PIMs in Phase 2. A subsequent order established a procedural process and schedule for Phase I, which the PUC anticipated would take approximately nine months. On July 10, 2018, the PUC submitted a Staff Report to provide the Parties with an initial set of proposed regulatory goals and outcomes to respond to, or expand upon, and to offer alternatives. Specifically, the Staff Report: (a) provides an overview of Phase 1 of the proceeding; (b) discusses the terms and concepts that form the PBR process framework; and (c) proposes three overarching goals (enhance customer experience, improve utility performance, advance societal outcomes) along with a preliminary set of associated outcomes to help guide PBR evaluation and development. On July 23 and 24, 2018, the PUC held a technical workshop on goals and outcomes, attended by the parties in the proceeding. Performance-based ratemaking legislation. On April 24, 2018, Senate Bill No. 2939 SD2 was signed into law, which establishes performance metrics that the PUC shall consider while establishing performance incentives and penalty mechanisms under a performance-based ratemaking model. The law requires that the PUC establish these performance-based ratemaking mechanisms on or before January 1, 2020. The PUC opened a proceeding on April 18, 2018. See “Performance-based regulation proceeding” above. Most recent rate proceedings. Hawaiian Electric consolidated 2014 and 2017 test year rate cases. In June 2014, Hawaiian Electric submitted its 2014 test year rate case filing, stating that it intended to forgo the opportunity to seek a general rate increase in base rates. In December 2016, Hawaiian Electric filed an application with the PUC for a general rate increase, and the PUC issued an order consolidating the Hawaiian Electric filings for the 2014 and 2017 test year rate cases. On February 16, 2018, Hawaiian Electric implemented an interim increase of $36.0 million. On April 13, 2018, Hawaiian Electric implemented an additional interim rate adjustment to adjust rates for the impact of the Tax Act. On June 22, 2018, the PUC issued its Final D&O, approving final rate relief of a $37.7 million increase before the Tax Act impact reduction of $38.3 million, based on an ROACE of 9.5% and an overall rate of return of 7.57%. The PUC indicated that the ECRC mechanism shall reflect a 98/2% risk-sharing split between ratepayers and Hawaiian Electric, with an annual maximum exposure cap of $2.5 million. Maui Electric consolidated 2015 and 2018 test year rate cases. In December 2014, Maui Electric submitted its 2015 test year rate case filing, proposing no change to its base rates. In August 2017, the PUC issued an order consolidating the Maui Electric filings for the 2015 and 2018 test year rate cases. In October 2017, Maui Electric filed its 2018 test year rate case application with the PUC for a general rate increase of $30.1 million over revenues at current effective rates (for a 9.3% increase in revenues) based on a 2018 test year and an 8.05% rate of return (which incorporates a ROACE of 10.6% and a capital structure that includes a 56.9% common equity capitalization) on a $473 million rate base. Subsequently, in accordance with a PUC order, on February 26, 2018, Maui Electric filed revised schedules to reflect the following adjustments resulting from the Tax Act in its 2018 test year revenue requirement: (1) $8.1 million income tax expense reduction; (2) $0.5 million annual amortization credit for excess accumulated deferred income tax balances (ADIT); and (3) $7.1 million increase in rate base resulting from the decrease in ADIT for bonus depreciation loss and CIAC taxability. Maui Electric and the Consumer Advocate filed a stipulated settlement letter and the Parties’ joint statement of probable entitlement on June 15, 2018 and July 6, 2018, respectively. The stipulated settlement resolved all issues between the parties, except for the narrow issue of whether the ROACE should be reduced from 9.75% by up to 25 basis points based solely on the impact of decoupling, considering current circumstances and relevant precedents. The parties agreed that the ROACE issue shall be addressed based on the information contained in the record without the need for an evidentiary hearing, and further agreed to the use of a 9.50% ROACE for the limited purpose of determining the revenue requirement for the interim order. The joint statement of probable entitlement reflects a general rate increase of $6.4 million over revenues at current effective rates (for a 1.95% increase in revenues) based on 7.43% rate of return (which incorporates a ROACE of 9.5% and a capital structure that includes a 57% common equity capitalization) on a $465 million rate base. The general rate increase would be $12.5 million over revenues at current effective rates with the depreciation rates approved in the depreciation proceeding. In the decision and order issued on July 30, 2018 in the depreciation proceeding, the PUC ordered that the effective date of the approved depreciation rates shall coincide with the effective date of interim or final rates in each of the Utilities’ subsequent general rate case proceedings, beginning with Maui Electric’s 2018 test year rate case. The PUC may consider the Parties’ joint statement of probable entitlement in issuing its interim order. The interim D&O is scheduled for August 13, 2018. Hawaii Electric Light 2016 test year rate case. In September 2016, Hawaii Electric Light filed an application with the PUC for a general rate increase. In August 2017, the PUC issued an order granting an interim rate increase of $9.9 million based on the Stipulated Settlement Letter of Hawaii Electric Light and the Consumer Advocate filed on July 11, 2017 and an ROACE of 9.5% and subject to refund with interest, if it exceeds amounts allowed in a final order. The interim rate increase was implemented on August 31, 2017. On May 1, 2018, Hawaii Electric Light implemented an interim rate reduction of $9.9 million which was primarily to incorporate the effects of the Tax Act. On June 29, 2018, the PUC issued its Final D&O, approving the rates implemented in the interim rate reduction. Tax Cuts and Jobs Act impact on utility rates. The Utilities began tracking the impact of the Tax Cuts and Jobs Act of 2017 (Tax Act) as of January 1, 2018. Each Utility accrued regulatory liabilities for estimated tax savings from January 1 to the date incorporated in rates. Hawaiian Electric’s rates for the 2017 test year reflected the Tax Act reductions effective April 13, 2018. Hawaii Electric Light’s rates for the 2016 test year reflect the Tax Act reductions effective May 1, 2018. Adjustments to Maui Electric’s current rates for the Tax Act are incorporated in the annual Revenue Balancing Account adjustment which became effective on June 1, 2018. See discussion in “Decoupling” section above. Condensed consolidating financial information. Hawaiian Electric is not required to provide separate financial statements or other disclosures concerning Hawaii Electric Light and Maui Electric to holders of the 2004 Debentures issued by Hawaii Electric Light and Maui Electric to Trust III since all of their voting capital stock is owned, and their obligations with respect to these securities have been fully and unconditionally guaranteed, on a subordinated basis, by Hawaiian Electric. Consolidating information is provided below for Hawaiian Electric and each of its subsidiaries for the periods ended and as of the dates indicated. Hawaiian Electric also unconditionally guarantees Hawaii Electric Light’s and Maui Electric’s obligations (a) to the State of Hawaii for the repayment of principal and interest on Special Purpose Revenue Bonds issued for the benefit of Hawaii Electric Light and Maui Electric, (b) under their respective private placement note agreements and the Hawaii Electric Light notes and Maui Electric notes issued thereunder and (c) relating to the trust preferred securities of Trust III. Hawaiian Electric is also obligated, after the satisfaction of its obligations on its own preferred stock, to make dividend, redemption and liquidation payments on Hawaii Electric Light’s and Maui Electric’s preferred stock if the respective subsidiary is unable to make such payments. Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Income Three months ended June 30, 2018
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2018
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Income Three months ended June 30, 2017
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2017
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Income Six months ended June 30, 2018
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2018
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Income Six months ended June 30, 2017
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2017
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Balance Sheet June 30, 2018
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Balance Sheet December 31, 2017
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Changes in Common Stock Equity Six months ended June 30, 2018
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Changes in Common Stock Equity Six months ended June 30, 2017
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2018
Hawaiian Electric Company, Inc. and Subsidiaries Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2017
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Bank Subsidiary [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank segment | Bank segment Selected financial information American Savings Bank, F.S.B. Statements of Income Data
Reconciliation to amounts per HEI Condensed Consolidated Statements of Income*:
American Savings Bank, F.S.B. Statements of Comprehensive Income Data
American Savings Bank, F.S.B. Balance Sheets Data
Bank-owned life insurance is life insurance purchased by ASB on the lives of certain key employees, with ASB as the beneficiary. The insurance is used to fund employee benefits through tax-free income from increases in the cash value of the policies and insurance proceeds paid to ASB upon an insured’s death. Other borrowings consisted of securities sold under agreements to repurchase and advances from the Federal Home Loan Bank (FHLB) of $77 million and $50 million, respectively, as of June 30, 2018 and $141 million and $50 million, respectively, as of December 31, 2017. Investment securities. The major components of investment securities were as follows:
ASB does not believe that the investment securities that were in an unrealized loss position at June 30, 2018, represent an other-than-temporary impairment (OTTI). Total gross unrealized losses were primarily attributable to rising interest rates relative to when the investment securities were purchased and not due to the credit quality of the investment securities. The contractual cash flows of the U.S. Treasury, federal agency obligations and mortgage-related securities are backed by the full faith and credit guaranty of the United States government or an agency of the government. The corporate bonds are all investment grade and rated A- or higher. ASB does not intend to sell the securities before the recovery of its amortized cost basis and there have been no adverse changes in the timing of the contractual cash flows for the securities. ASB did not recognize OTTI for the quarters and six months ended June 30, 2018 and 2017. U.S. Treasury, federal agency obligations, corporate, and the mortgage revenue bond have contractual terms to maturity. Mortgage-related securities have contractual terms to maturity, but require periodic payments to reduce principal. In addition, expected maturities will differ from contractual maturities because borrowers have the right to prepay the underlying mortgages. The contractual maturities of investment securities were as follows:
Proceeds from the sale of available-for-sale securities were nil for both the three and six months ended June 30, 2018 and 2017. Gross realized gains and losses were nil for both the three and six months ended June 30, 2018 and 2017. Loans. The components of loans were summarized as follows:
ASB's policy is to require private mortgage insurance on all real estate loans when the loan-to-value ratio of the property exceeds 80% of the lower of the appraised value or purchase price at origination. For non-owner occupied residential properties, the loan-to-value ratio may not exceed 80% of the lower of the appraised value or purchase price at origination. ASB is subject to the risk that the private mortgage insurance company cannot satisfy the bank's claim on policies. Allowance for loan losses. The allowance for loan losses (balances and changes) and financing receivables were as follows:
Credit quality. ASB performs an internal loan review and grading on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of its lending policies and procedures. The objectives of the loan review and grading procedures are to identify, in a timely manner, existing or emerging credit trends so that appropriate steps can be initiated to manage risk and avoid or minimize future losses. Loans subject to grading include commercial, commercial real estate and commercial construction loans. Each commercial and commercial real estate loan is assigned an Asset Quality Rating (AQR) reflecting the likelihood of repayment or orderly liquidation of that loan transaction pursuant to regulatory credit classifications: Pass, Special Mention, Substandard, Doubtful and Loss. The AQR is a function of the probability of default model rating, the loss given default and possible non-model factors which impact the ultimate collectability of the loan such as character of the business owner/guarantor, interim period performance, litigation, tax liens and major changes in business and economic conditions. Pass exposures generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral. Special Mention loans have potential weaknesses that, if left uncorrected, could jeopardize the liquidation of the debt. Substandard loans have well-defined weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Bank may sustain some loss. An asset classified Doubtful has the weaknesses of those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. An asset classified Loss is considered uncollectible and has such little value that its continuance as a bankable asset is not warranted. The credit risk profile by internally assigned grade for loans was as follows:
The credit risk profile based on payment activity for loans was as follows:
The credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due and troubled debt restructuring (TDR) loans was as follows:
The total carrying amount and the total unpaid principal balance of impaired loans were as follows:
Troubled debt restructurings. A loan modification is deemed to be a TDR when the borrower is determined to be experiencing financial difficulties and ASB grants a concession it would not otherwise consider. When a borrower experiencing financial difficulty fails to make a required payment on a loan or is in imminent default, ASB takes a number of steps to improve the collectability of the loan and maximize the likelihood of full repayment. At times, ASB may modify or restructure a loan to help a distressed borrower improve its financial position to eventually be able to fully repay the loan, provided the borrower has demonstrated both the willingness and the ability to fulfill the modified terms. TDR loans are considered an alternative to foreclosure or liquidation with the goal of minimizing losses to ASB and maximizing recovery. ASB may consider various types of concessions in granting a TDR including maturity date extensions, extended amortization of principal, temporary deferral of principal payments and temporary interest rate reductions. ASB rarely grants principal forgiveness in its TDR modifications. Residential loan modifications generally involve interest rate reduction, extending the amortization period, or capitalizing certain delinquent amounts owed not to exceed the original loan balance. Land loans at origination are typically structured as a three-year term, interest-only monthly payment with a balloon payment due at maturity. Land loan TDR modifications typically involve extending the maturity date up to five years and converting the payments from interest-only to principal and interest monthly, at the same or higher interest rate. Commercial loan modifications generally involve extensions of maturity dates, extending the amortization period and temporary deferral or reduction of principal payments. ASB generally does not reduce the interest rate on commercial loan TDR modifications. Occasionally, additional collateral and/or guaranties are obtained. All TDR loans are classified as impaired and are segregated and reviewed separately when assessing the adequacy of the allowance for loan losses based on the appropriate method of measuring impairment: (1) present value of expected future cash flows discounted at the loan’s effective original contractual rate, (2) fair value of collateral less cost to sell or (3) observable market price. The financial impact of the calculated impairment amount is an increase to the allowance associated with the modified loan. When available information confirms that specific loans or portions thereof are uncollectible (confirmed losses), these amounts are charged off against the allowance for loan losses. Loan modifications that occurred during the second quarters and first six months of 2018 and 2017 and the impact on the allowance for loan losses were as follows:
Loans modified in TDRs that experienced a payment default of 90 days or more during the second quarters and first six months of 2018 and 2017, and for which the payment of default occurred within one year of the modification, were as follows:
If loans modified in a TDR subsequently default, ASB evaluates the loan for further impairment. Based on its evaluation, adjustments may be made in the allocation of the allowance or partial charge-offs may be taken to further write-down the carrying value of the loan. Commitments to lend additional funds to borrowers whose loan terms have been modified in a TDR totaled $0.01 million and nil at June 30, 2018 and December 31, 2017. The Company had $5.0 million and $4.3 million of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure at June 30, 2018 and December 31, 2017, respectively. Mortgage servicing rights. In its mortgage banking business, ASB sells residential mortgage loans to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. ASB retains no beneficial interests in these loans other than the servicing rights of certain loans sold. ASB received proceeds from the sale of residential mortgages of $44.3 million and $39.3 million for the three months ended June 30, 2018 and 2017 and $77.4 million and $79.9 million for the six months ended June 30, 2018 and 2017, respectively, and recognized gains on such sales of $0.6 million for both the three months ended June 30, 2018 and 2017 and $1.2 million and $1.4 million for the six months ended June 30, 2018 and 2017, respectively. There were no repurchased mortgage loans for the three and six months ended June 30, 2018 and 2017. The repurchase reserve was $0.1 million as of June 30, 2018 and 2017. Mortgage servicing fees, a component of other income, net, were $0.8 million and $0.7 million for the three months ended June 30, 2018 and 2017, respectively, and $1.5 million for both the six months ended June 30, 2018 and 2017. Changes in the carrying value of mortgage servicing rights were as follows:
Changes related to mortgage servicing rights were as follows:
ASB capitalizes mortgage servicing rights (MSRs) acquired upon the sale of mortgage loans with servicing rights retained. On a monthly basis, ASB compares the net carrying value of the mortgage servicing rights to its fair value to determine if there are any changes to the valuation allowance and/or other-than-temporary impairment for the mortgage servicing rights. ASB’s MSRs are stratified based on predominant risk characteristics of the underlying loans including loan type such as fixed-rate 15 and 30 year mortgages and note rate in bands of 50 to 100 basis points. For each stratum, fair value is calculated by discounting expected net income streams using discount rates that reflect industry pricing for similar assets. Changes in mortgage interest rates impact the value of ASB’s mortgage servicing rights. Rising interest rates typically result in slower prepayment speeds in the loans being serviced for others, which increases the value of mortgage servicing rights, whereas declining interest rates typically result in faster prepayment speeds which decrease the value of mortgage servicing rights and increase the amortization of the mortgage servicing rights. Expected net income streams are estimated based on industry assumptions regarding prepayment expectations and income and expenses associated with servicing residential mortgage loans for others. ASB uses a present value cash flow model using techniques described above to estimate the fair value of MSRs. Impairment is recognized through a valuation allowance for each stratum when the carrying amount exceeds fair value, with any associated provision recorded as a component of loan servicing fees included in “Revenues - bank” in the consolidated statements of income. A direct write-down is recorded when the recoverability of the valuation allowance is deemed to be unrecoverable. Key assumptions used in estimating the fair value of ASB’s mortgage servicing rights used in the impairment analysis were as follows:
The sensitivity analysis of fair value of MSRs to hypothetical adverse changes of 25 and 50 basis points in certain key assumptions was as follows:
The effect of a variation in certain assumptions on fair value is calculated without changing any other assumptions. This analysis typically cannot be extrapolated because the relationship of a change in one key assumption to the changes in the fair value of MSRs typically is not linear. Other borrowings. Securities sold under agreements to repurchase are accounted for as financing transactions and the obligations to repurchase these securities are recorded as liabilities in the condensed consolidated balance sheets. ASB pledges investment securities as collateral for securities sold under agreements to repurchase. All such agreements are subject to master netting arrangements, which provide for a conditional right of set-off in case of default by either party; however, ASB presents securities sold under agreements to repurchase on a gross basis in the balance sheet. The following tables present information about the securities sold under agreements to repurchase, including the related collateral received from or pledged to counterparties:
The securities underlying the agreements to repurchase are book-entry securities and were delivered by appropriate entry into the counterparties’ accounts or into segregated tri-party custodial accounts at the FHLB. The securities underlying the agreements to repurchase continue to be reflected in ASB’s asset accounts. Derivative financial instruments. ASB enters into interest rate lock commitments (IRLCs) with borrowers, and forward commitments to sell loans or to-be-announced mortgage-backed securities to investors to hedge against the inherent interest rate and pricing risks associated with selling loans. ASB enters into IRLCs for residential mortgage loans, which commit ASB to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose ASB to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in mortgage banking income. ASB enters into forward commitments to hedge the interest rate risk for rate locked mortgage applications in process and closed mortgage loans held for sale. These commitments are primarily forward sales of to-be-announced mortgage backed securities. Generally, when mortgage loans are closed, the forward commitment is liquidated and replaced with a mandatory delivery forward sale of the mortgage to a secondary market investor. In some cases, a best-efforts forward sale agreement is utilized as the forward commitment. These commitments are free-standing derivatives which are carried at fair value with changes recorded in mortgage banking income. Changes in the fair value of IRLCs and forward commitments subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time. The notional amount and fair value of ASB’s derivative financial instruments were as follows:
ASB’s derivative financial instruments, their fair values and balance sheet location were as follows:
1 Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the balance sheets. The following table presents ASB’s derivative financial instruments and the amount and location of the net gains or losses recognized in ASB’s statements of income:
Low-Income Housing Tax Credit (LIHTC). ASB’s unfunded commitments to fund its LIHTC investment partnerships were $20.6 million and $15.8 million at June 30, 2018 and December 31, 2017, respectively. These unfunded commitments were unconditional and legally binding and are recorded in other liabilities with a corresponding increase in other assets. As of June 30, 2018, ASB did not have any impairment losses resulting from forfeiture or ineligibility of tax credits or other circumstances related to its LIHTC investment partnerships. Contingencies. ASB is subject in the normal course of business to pending and threatened legal proceedings. Management does not anticipate that the aggregate ultimate liability arising out of these pending or threatened legal proceedings will be material to its financial position. However, ASB cannot rule out the possibility that such outcomes could have a material adverse effect on the results of operations or liquidity for a particular reporting period in the future. |
Credit agreements and long-term debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Credit agreements and long-term debt | Credit agreements and long-term debt Credit agreements. HEI and Hawaiian Electric each entered into a separate agreement with a syndicate of eight financial institutions (the HEI Facility and Hawaiian Electric Facility, respectively, and together, the Facilities), effective July 3, 2017, to amend and restate their respective previously existing revolving unsecured credit agreements. The $150 million HEI Facility extended the term of the facility to June 30, 2022. In March 2018, the PUC approved Hawaiian Electric’s request to extend the term of the $200 million Hawaiian Electric Facility to June 30, 2022. As of June 30, 2018 and December 31, 2017, no amounts were outstanding under the Facilities. The Facilities will be maintained to support each company’s respective short-term commercial paper program, but may be drawn on to meet each company’s respective working capital needs and general corporate purposes. Changes in long-term debt. On May 30, 2018, the Utilities issued, through a private placement pursuant to separate Note Purchase Agreements (the Note Purchase Agreements), the following unsecured notes bearing taxable interest (the Notes):
The Notes include substantially the same financial covenants and customary conditions as Hawaiian Electric’s credit agreement. Hawaiian Electric is also a party as guarantor under the Note Purchase Agreements entered into by Hawaii Electric Light and Maui Electric. All the proceeds of the Notes were used by Hawaiian Electric, Hawaii Electric Light and Maui Electric to finance their capital expenditures and/or to reimburse funds used for the payment of capital expenditures. The Notes may be prepaid in whole or in part at any time at the prepayment price of the principal amount plus a “Make-Whole Amount,” as defined in the Note Purchase Agreements. In June 2018, Mauo, LLC, an indirect subsidiary of Pacific Current, LLC, entered into an unsecured $50.5 million construction loan facility in connection with the construction of the solar-plus-storage PPA project. The loan bears interest at LIBOR plus 1.375% and matures in March 2021. As of June 30, 2018, no amounts were outstanding under the facility. The loan is guaranteed by HEI. |
Shareholders' equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' equity | Shareholders’ equity Accumulated other comprehensive income/(loss). Changes in the balances of each component of accumulated other comprehensive income/(loss) (AOCI) were as follows:
Reclassifications out of AOCI were as follows:
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Revenues |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Revenues Adoption of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” In the first quarter of 2018, the Company and Hawaiian Electric adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with accounting standards in effect for those periods. The adoption of Topic 606 had no significant impact on the timing or pattern of revenue recognition for the Company or Hawaiian Electric. No practical expedients were used by the Company or Hawaiian Electric in the adoption of ASU No. 2014-09. Revenue from contracts with customers. The revenues subject to Topic 606 include the Utilities’ electric energy sales revenue and the Utilities’ and ASB’s transaction fees, as further described below. Electric Utilities. Electric energy sales and fees under tariff. Electric energy sales represent revenues from the generation and transmission of electricity to customers and utility fees include transaction-based fees associated with the delivery of electricity provided by the Utilities under tariffs approved by the PUC. Electric energy sales under tariff - Transaction pricing for electricity is determined and approved by the PUC for each rate class and includes revenues from the base electric charges, which are composed of (1) the customer, demand, energy, and minimum charges, and (2) the power factor, service voltage, and other adjustments as provided in each rate and rate rider schedule. The Utilities satisfy performance obligations over time, i.e., the Utilities generate and transfer control of the electricity over time as the customer simultaneously receives and consumes the benefits provided by the Utilities' performance. Payments from customers are generally due within 30 days from the end of the billing period. Utility fees - Pricing for transaction fees associated with electric service are set and approved by the PUC. Adjustments to the fee schedules are either requested by the Utilities during ratemaking years or during off cycle periods as needed. Such transaction fees include connection fees, late payment fees and other one-time transaction fees. These transaction-based fees are recognized at the point in time when the transaction has occurred and the performance obligation satisfied (e.g., connection fees are recognized when an electric connection is completed). Bank. Bank fees. Bank fees are primarily transaction-based and are recognized when the transaction has occurred and the performance obligation satisfied. From time to time, customers will request a fee waiver and ASB may grant reversals of fees. Revenues are not recorded for the estimated amount of fee reversals for each period. Under the new standard, certain fees paid to third parties that were previously recognized as a component of noninterest expense are now netted with fee income. The change in presentation will have no effect on the reported amount of operating income. Fees from other financial services - These fees primarily include debit card interchange income and fees, automated teller machine fees, credit card interchange income and fees, check ordering fees, wire fees, safe deposit rental fees, corporate/business fees, merchant income, online banking fees and international banking fees. Amounts paid to third parties for payment network expenses are included in this financial statement caption in ASB’s Statements of Income Data (in Revenues—Bank financial statement caption of HEI’s Consolidated Statements of Income). Previously, these expenses were recorded in the other expense financial statement caption of ASB’s Statements of Income Data (in Expenses—Bank financial statement caption of HEI’s Consolidated Statements of Income). Fee income on deposit liabilities - These fees primarily include “not sufficient funds” fees, monthly deposit account service charge fees, commercial account analysis fees and other deposit fees. Fee income on other financial products - These fees primarily include commission income from the sales of annuity, mutual fund, and life insurance products. In 2017, ASB began offering a fee-based, managed account product in which income is based on a percentage of assets under management. ASB satisfies its performance obligations under the managed account arrangement over time, and consequently, fees for assets under management are recognized over time as the customer simultaneously receives and consumes the benefit of asset management services. Fees recognized to date from the managed account product were minimal. Revenues from other sources. Revenues from other sources not subject to Topic 606 are accounted for as follows: Electric Utilities. Regulatory revenues. Regulatory revenues primarily consist of revenues from decoupling mechanism, cost recovery surcharges and the Tax Act adjustments. Decoupling mechanism - Under the decoupling mechanism, the Utilities are allowed to recover or refund the difference between actual revenue and the target revenue as determined by the PUC. These adjustments will be reflected in tariffs in future periods. Cost recovery surcharges - For the timely recovery of additional costs incurred, and reconciliation of costs and expenses included in tariffed rates, the Utilities recognize revenues under surcharge mechanisms approved by the PUC. These will be reflected in tariffs in future periods (e.g., ECAC and PPAC). Tax Act adjustments - These represent adjustments to revenues for the amounts included in tariffed revenues that will be returned to customers as a result of the Tax Act. Since revenue adjustments discussed above resulted from either agreements with the PUC or change in tax law, rather than contracts with customers, they are not subject to the scope of Topic 606. See Notes 1, 3 and 10 to the audited consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2017. Bank. Interest and dividend income. Interest and fees on loans are recognized in accordance with ASC Topic 310, Receivables, including the related allowance for loan losses. Interest and dividends on investment securities are recognized in accordance with ASC Topic 320, Investments-Debt and Equity Securities. See Notes 1 and 4 to the audited consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2017. Other bank noninterest income. Other bank noninterest income primarily consists of mortgage banking income and bank-owned life insurance income. Mortgage banking income - Mortgage banking income consists primarily of realized and unrealized gains on sale of loans accounted for pursuant to ASC Topic 860, Transfers and Servicing. Interest rate lock commitments and forward loan sales are considered derivatives and are accounted pursuant to ASC Topic 815, Derivatives and Hedging. Bank-Owned Life Insurance (BOLI) - The recognition of BOLI cash surrender value does not represent a contract with a customer and is accounted for in accordance with Emerging Issues Task Force Issue 06-05, Accounting for Purchases of Life Insurance-Determining the Amount that Could be Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life Insurance. Revenue disaggregation. The following tables disaggregates revenues by major source, timing of revenue recognition, and segment:
There are no material contract assets or liabilities associated with revenues from contracts with customers existing at the beginning or at the end of the six months ended June 30, 2018. Accounts receivable and unbilled revenues related to contracts with customers represent an unconditional right to consideration since all performance obligations have been satisfied. These amounts are disclosed as accounts receivable and unbilled revenues, net on HEI’s condensed consolidated balance sheets and customer accounts receivable, net and accrued unbilled revenues, net on Hawaiian Electric’s condensed consolidated balance sheets. As of June 30, 2018, the Company had no material remaining performance obligations due to the nature of the Company’s contracts with its customers. For the Utilities, performance obligations are fulfilled as electricity is delivered to customers. For the bank, fees are recognized when a transaction is completed. |
Retirement benefits |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement benefits | Retirement benefits Defined benefit pension and other postretirement benefit plans information. For the first six months of 2018, the Company contributed $32 million ($32 million by the Utilities) to its pension and other postretirement benefit plans, compared to $33 million ($33 million by the Utilities) in the first six months of 2017. The Company’s current estimate of contributions to its pension and other postretirement benefit plans in 2018 is $42 million ($41 million by the Utilities, $1 million by HEI and nil by ASB), compared to $67 million ($66 million by the Utilities, $1 million by HEI and nil by ASB) in 2017. In addition, the Company expects to pay directly $2 million ($1 million by the Utilities) of benefits in 2018, compared to $1 million ($0.5 million by the Utilities) paid in 2017. The components of NPPC and NPBC for HEI consolidated and Hawaiian Electric consolidated were as follows:
HEI consolidated recorded retirement benefits expense of $27 million ($25 million by the Utilities) and $17 million ($15 million by the Utilities) in the first six months of 2018 and 2017, respectively, and charged the remaining net periodic benefit cost primarily to electric utility plant. The Utilities have implemented pension and OPEB tracking mechanisms under which all of their retirement benefit expenses (except for executive life and nonqualified pension plan expenses) determined in accordance with GAAP are recovered over time. Under the tracking mechanisms, these retirement benefit costs that are over/under amounts allowed in rates are charged/credited to a regulatory asset/liability. The regulatory asset/liability for each utility will be amortized over 5 years beginning with the issuance of the PUC’s D&O in the respective utility’s next rate case. Defined contribution plans information. For the first six months of 2018 and 2017, the Company’s expenses for its defined contribution pension plans under the Hawaiian Electric Industries Retirement Savings Plan (HEIRSP) and the ASB 401(k) Plan were $3.2 million and $3.3 million, respectively, and cash contributions were $4.8 million and $4.0 million, respectively. For the first six months of 2018 and 2017, the Utilities’ expenses for its defined contribution pension plan under the HEIRSP were $1.1 million and $1.0 million, respectively, and cash contributions were $1.1 million and $1.0 million, respectively. |
Share-based compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | Share-based compensation Under the 2010 Equity and Incentive Plan, as amended, HEI can issue shares of common stock as incentive compensation to selected employees in the form of stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares and other share-based and cash-based awards. The 2010 Equity and Incentive Plan (original EIP) was amended and restated effective March 1, 2014 (EIP) and an additional 1.5 million shares were added to the shares available for issuance under these programs. As of June 30, 2018, approximately 3.2 million shares remained available for future issuance under the terms of the EIP, assuming recycling of shares withheld to satisfy minimum statutory tax liabilities relating to EIP awards, including an estimated 0.6 million shares that could be issued upon the vesting of outstanding restricted stock units and the achievement of performance goals for awards outstanding under long-term incentive plans (assuming that such performance goals are achieved at maximum levels). Under the 2011 Nonemployee Director Stock Plan (2011 Director Plan), HEI can issue shares of common stock as compensation to nonemployee directors of HEI, Hawaiian Electric and ASB. As of June 30, 2018, there were 46,607 shares remaining available for future issuance under the 2011 Director Plan. Share-based compensation expense and the related income tax benefit were as follows:
Stock awards. HEI granted HEI common stock to nonemployee directors of HEI, Hawaiian Electric and ASB under the 2011 Director Plan as follows:
The number of shares issued to each nonemployee director of HEI, Hawaiian Electric and ASB is determined based on the closing price of HEI Common Stock on the grant date. Restricted stock units. Information about HEI’s grants of restricted stock units was as follows:
For the first six months of 2018 and 2017, total restricted stock units and related dividends that vested had a fair value of $2.7 million and $3.3 million, respectively, and the related tax benefits were $0.4 million and $1.2 million, respectively. As of June 30, 2018, there was $5.4 million of total unrecognized compensation cost related to the nonvested restricted stock units. The cost is expected to be recognized over a weighted-average period of 2.8 years. Long-term incentive plan payable in stock. The 2017-2019 and 2018-2020 long-term incentive plans (LTIP) provide for performance awards under the EIP of shares of HEI common stock based on the satisfaction of performance goals, including a market condition goal. The number of shares of HEI common stock that may be awarded is fixed on the date the grants are made, subject to the achievement of specified performance levels and calculated dividend equivalents. The potential payout varies from 0% to 200% of the number of target shares depending on the achievement of the goals. The market condition goal is based on HEI’s total shareholder return (TSR) compared to the Edison Electric Institute Index over the three-year period. The other performance condition goals relate to EPS growth, return on average common equity (ROACE) and ASB’s efficiency ratio. The 2016-2018 LTIP provides for performance awards payable in cash, and thus is not included in the tables below. LTIP linked to TSR. Information about HEI’s LTIP grants linked to TSR was as follows:
The grant date fair values of the shares were determined using a Monte Carlo simulation model utilizing actual information for the common shares of HEI and its peers for the period from the beginning of the performance period to the grant date and estimated future stock volatility and dividends of HEI and its peers over the remaining three-year performance period. The expected stock volatility assumptions for HEI and its peer group were based on the three-year historic stock volatility, and the annual dividend yield assumptions were based on dividend yields calculated on the basis of daily stock prices over the same three-year historical period. The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:
For the six months ended June 30, 2017, total vested LTIP awards linked to TSR and related dividends had a fair value of $1.9 million and the related tax benefits were $0.7 million. As of June 30, 2018, there was $1.7 million of total unrecognized compensation cost related to the nonvested performance awards payable in shares linked to TSR. The cost is expected to be recognized over a weighted-average period of 2.0 years. LTIP awards linked to other performance conditions. Information about HEI’s LTIP awards payable in shares linked to other performance conditions was as follows:
For the six months ended June 30, 2017, total vested LTIP awards linked to other performance conditions and related dividends had a fair value of $4.2 million and the related tax benefits were $1.6 million. As of June 30, 2018, there was $6.0 million of total unrecognized compensation cost related to the nonvested shares linked to performance conditions other than TSR. The cost is expected to be recognized over a weighted-average period of 2.0 years. |
Income taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes Staff Accounting Bulletin No. 118 (SAB No. 118). On December 22, 2017, the SEC staff issued SAB No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In 2017, the Company calculated its best estimate, primarily related to the bonus depreciation rule changes, in accordance with its understanding of the law and available guidance. As of June 30, 2018, there were no adjustments made to provisional tax impacts previously recognized in the Company’s and Utilities financial statements. The provisional impacts will be updated as additional information is received as a result of changes in the Company and Utilities interpretations and assumptions, the issuance of Internal Revenue Service and Joint Committee on Taxation guidance, and actions the Company and Utilities may take as a result of the Tax Act. The provisional tax impacts will be finalized by the end of 2018. |
Cash flows |
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Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash flows | Cash flows
1 The amounts shown represent the market value of common stock issued for director and executive/management compensation and withheld to satisfy statutory tax liabilities. |
Fair value measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair value measurements Fair value measurement and disclosure valuation methodology. The following are descriptions of the valuation methodologies used for assets and liabilities recorded at fair value and for estimating fair value for financial instruments not carried at fair value: Short-term borrowings—other than bank. The carrying amount of short-term borrowings approximated fair value because of the short maturity of these instruments. Investment securities. The fair value of ASB’s investment securities is determined quarterly through pricing obtained from independent third-party pricing services or from brokers not affiliated with the trade. Non-binding broker quotes are infrequent and generally occur for new securities that are settled close to the month-end pricing date. The third-party pricing vendors ASB uses for pricing its securities are reputable firms that provide pricing services on a global basis and have processes in place to ensure quality and control. The third-party pricing services use a variety of methods to determine the fair value of securities that fall under Level 2 of ASB’s fair value measurement hierarchy. Among the considerations are quoted prices for similar securities in an active market, yield spreads for similar trades, adjustments for liquidity, size, collateral characteristics, historic and generic prepayment speeds, and other observable market factors. To enhance the robustness of the pricing process, ASB will on a quarterly basis compare its standard third-party vendor’s price with that of another third-party vendor. If the prices are within an acceptable tolerance range, the price of the standard vendor will be accepted. If the variance is beyond the tolerance range, an evaluation will be conducted by ASB and a challenge to the price may be made. Fair value in such cases will be based on the value that best reflects the data and observable characteristics of the security. In all cases, the fair value used will have been independently determined by a third-party pricing vendor or non-affiliated broker. The fair value of the mortgage revenue bond is estimated using a discounted cash flow model to calculate the present value of future principal and interest payments and, therefore is classified within Level 3 of the valuation hierarchy. Loans held for sale. Residential and commercial loans are carried at the lower of cost or market and are valued using market observable pricing inputs, which are derived from third party loan sales and, therefore, are classified within Level 2 of the valuation hierarchy. Loans held for investment. Fair value of loans held for investment is derived using a discounted cash flow approach which includes an evaluation of the underlying loan characteristics. The valuation model uses loan characteristics which includes product type, maturity dates and the underlying interest rate of the portfolio. This information is input into the valuation models along with various forecast valuation assumptions including prepayment forecasts, to determine the discount rate. These assumptions are derived from internal and third party sources. Since the valuation is derived from model-based techniques, ASB includes loans held for investment within Level 3 of the valuation hierarchy. Impaired loans. At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Fair value is determined primarily by using an income, cost or market approach and is normally provided through appraisals. Impaired loans carried at fair value generally receive specific allocations within the allowance for loan losses. For collateral-dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Generally, impaired loans are evaluated quarterly for additional impairment and adjusted accordingly. Real estate acquired in settlement of loans. Foreclosed assets are carried at fair value (less estimated costs to sell) and are generally based upon appraisals or independent market prices that are periodically updated subsequent to classification as real estate owned. Such adjustments typically result in a Level 3 classification of the inputs for determining fair value. ASB estimates the fair value of collateral-dependent loans and real estate owned using the sales comparison approach. Mortgage servicing rights. Mortgage servicing rights (MSRs) are capitalized at fair value based on market data at the time of sale and accounted for in subsequent periods at the lower of amortized cost or fair value. Mortgage servicing rights are evaluated for impairment at each reporting date. ASB's MSRs are stratified based on predominant risk characteristics of the underlying loans including loan type and note rate. For each stratum, fair value is calculated by discounting expected net income streams using discount rates that reflect industry pricing for similar assets. Expected net income streams are estimated based on industry assumptions regarding prepayment expectations and income and expenses associated with servicing residential mortgage loans for others. Impairment is recognized through a valuation allowance for each stratum when the carrying amount exceeds fair value, with any associated provision recorded as a component of loan servicing fees included in "Revenues - bank" in the consolidated statements of income. A direct write-down is recorded when the recoverability of the valuation allowance is deemed to be unrecoverable. ASB compares the fair value of MSRs to an estimated value calculated by an independent third-party. The third-party relies on both published and unpublished sources of market related assumptions and their own experience and expertise to arrive at a value. ASB uses the third-party value only to assess the reasonableness of its own estimate. Deposit liabilities. Includes only fixed-maturity certificates of deposit beginning in 2018. The fair value of fixed-maturity certificates of deposit was estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Other borrowings. For fixed-rate advances and repurchase agreements, fair value is estimated using quantitative discounted cash flow models that require the use of interest rate inputs that are currently offered for advances and repurchase agreements of similar remaining maturities. The majority of market inputs are actively quoted and can be validated through external sources, including broker market transactions and third party pricing services. Long-term debt—other than bank. Fair value of long-term debt of HEI and the Utilities was obtained from third-party financial services providers based on the current rates offered for debt of the same or similar remaining maturities and from discounting the future cash flows using the current rates offered for debt of the same or similar risks, terms, and remaining maturities. Interest rate lock commitments (IRLCs). The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. IRLCs are classified as Level 2 measurements. Forward sales commitments. To be announced (TBA) mortgage-backed securities forward commitments are classified as Level 1, and consist of publicly-traded debt securities for which identical fair values can be obtained through quoted market prices in active exchange markets. The fair values of ASB’s best efforts and mandatory delivery loan sale commitments are determined using quoted prices in the market place that are observable and are classified as Level 2 measurements. Window forward contracts. The estimated fair value of the Utilities’ window forward contracts was obtained from a third-party financial services provider based on the effective exchange rate offered for the foreign currency denominated transaction. Window forward contracts are classified as Level 2 measurements. The following table presents the carrying or notional amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments. For stock in Federal Home Loan Bank, the carrying amount is a reasonable estimate of fair value because it can only be redeemed at par. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, the carrying amount is a reasonable estimate of fair value as these liabilities have no stated maturity.
1 Deposit liabilities as of December 31, 2017 include noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, for which the carrying amount represents a reasonable estimate of fair value, as such liabilities have no stated maturity. The fair value of such financial liabilities are not included as of June 30, 2018 as a result of the Company’s adoption of ASU No. 2016-01. Fair value measurements on a recurring basis. Assets and liabilities measured at fair value on a recurring basis were as follows:
1 Derivatives are carried at fair value with changes in value reflected in the balance sheet in other assets or other liabilities and included in mortgage banking income. 2 Derivatives are included in regulatory assets and/or liabilities in the balance sheets. There were no transfers of financial assets and liabilities between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2018. The changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
ASB holds one mortgage revenue bond issued by the Department of Budget and Finance of the State of Hawaii. The Company estimates the fair value by using a discounted cash flow model to calculate the present value of estimated future principal and interest payments. The unobservable input used in the fair value measurement is the weighted average discount rate. As of June 30, 2018, the weighted average discount rate was 3.40% which was derived by incorporating a credit spread over the one month LIBOR rate. Significant increases (decreases) in the weighted average discount rate could result in a significantly lower (higher) fair value measurement. Fair value measurements on a nonrecurring basis. Certain assets and liabilities are measured at fair value on a nonrecurring basis and therefore are not included in the tables above. These measurements primarily result from assets carried at the lower of cost or fair value or from impairment of individual assets. The carrying value of assets measured at fair value on a nonrecurring basis were as follows:
For six months ended June 30, 2018 and 2017, there were no adjustments to fair value for ASB’s loans held for sale. The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
(1) Represent percent of outstanding principal balance. Significant increases (decreases) in any of those inputs in isolation would result in significantly higher (lower) fair value measurements. |
Basis of presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent accounting pronouncements | Revenues from contracts with customers. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of the guidance in ASU No. 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU No. 2014-09 also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company and Hawaiian Electric adopted ASU No. 2014-09 (and subsequently issued revenue-related ASUs, as applicable) in the first quarter of 2018. There was no cumulative effect adjustment and no impact on the timing or pattern of revenue recognition, but ASU No. 2014-09 required changes with respect to the Company’s and Hawaiian Electric’s revenue disclosures. See Note 7. Financial instruments. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which, among other things:
The Company adopted ASU No. 2016-01 in the first quarter of 2018 and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated financial statements. Cash flows. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on eight specific cash flow issues - debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The Company adopted ASU No. 2016-15 in the first quarter of 2018 using a retrospective transition method and there was no impact from the adoption to the Company’s and Hawaiian Electric’s consolidated statements of cash flows. Restricted cash. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted ASU No. 2016-18 in the first quarter of 2018 using a retrospective transition method and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated statements of cash flows. Definition of a Business. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations—Clarifying the Definition of a Business.” This update clarifies the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted ASU No. 2017-01 in the first quarter of 2018 and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated financial statements. Net periodic pension cost and net periodic postretirement benefit cost. In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost (NPPC) and net periodic postretirement benefit cost (NPBC) as defined in paragraphs 715-30-35-4 and 715-60-35-9 to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component is eligible for capitalization under GAAP, when applicable. The Company adopted ASU No. 2017-07 in the first quarter of 2018: (1) retrospectively for the presentation in the income statement of the service cost component and the other components of NPPC and NPBC, and (2) prospectively for the capitalization in assets of the service cost component of NPPC and NPBC for Hawaiian Electric and its subsidiaries. HEI and ASB do not capitalize pension and OPEB costs. In settlement agreements in the 2018 Maui Electric, 2017 Hawaiian Electric and 2016 Hawaii Electric Light rate cases, Maui Electric, Hawaiian Electric and Hawaii Electric Light, respectively, and the Consumer Advocate agreed to the deferral of the non-service cost components of NPPC and NPBC, which would have been capitalized prior to ASU No. 2017-07, as part of the pension tracking mechanism. The PUC approved this treatment in the final decision and order (D&O) in the Hawaiian Electric and Hawaii Electric Light rate cases. The treatment under the settlement agreements was followed beginning in 2018 until each utility’s next rate case. In each utility’s next rate case, rates established would include recovery of the deferred non-service cost components and seek to adopt the capitalization policy which reflects the requirements of ASU No. 2017-07 (i.e., only the service cost components of NPPC and NPBC will be capitalized). Thus, the adoption of ASU 2017-07 in the first quarter of 2018 does not have a net income impact. The following table summarizes the impact to the prior period financial statements of the adoption of ASU No. 2017-07:
Derivatives and Hedging. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which is intended to improve and simplify accounting rules around hedge accounting. The amendments in ASU No. 2017-12 improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. The amendments also expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For public business entities, the new guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, but early adoption is permitted. The Company early adopted ASU No. 2017-12 in the second quarter of 2018, with an effective date of April 1, 2018, and the adoption did not have a material impact on the Company’s consolidated financial statements. Leases. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires that lessees recognize a liability to make lease payments (the lease liability) and a right-of-use asset, representing its right to use the underlying asset for the lease term, for all leases (except short-term leases) at the commencement date. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election and recognize lease expense for such leases generally on a straight-line basis over the lease term. For finance leases, a lessee is required to recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of income. For operating leases, a lessee is required to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis. The Company plans to adopt ASU No. 2016-02 in the first quarter of 2019 and is currently analyzing the potential impact of adoption, including the impact of electing certain practical expedients available under the standard. The Company has reviewed its agreements and has compiled a preliminary inventory of its operating leases and other arrangements that meet the definition of a lease under the new standard. The Company is in the process of analyzing the measurement provisions of the new standard and their impact to its existing lease arrangements that fall within the scope of ASU No. 2016-02. Credit losses. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU No. 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date (based on historical experience, current conditions and reasonable and supportable forecasts) and enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale (AFS) debt securities and purchased financial assets with credit deterioration. The other-than-temporary impairment model of accounting for credit losses on AFS debt securities will be replaced with an estimate of expected credit losses only when the fair value is below the amortized cost of the asset. The length of time the fair value of an AFS debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists. The AFS debt security model will also require the use of an allowance to record the estimated losses (and subsequent recoveries). The accounting for the initial recognition of the estimated expected credit losses for purchased financial assets with credit deterioration would be recognized through an allowance for credit losses with an offset to the cost basis of the related financial asset at acquisition (i.e., there is no impact to net income at initial recognition). The Company plans to adopt ASU No. 2016-13 in the first quarter of 2020. The guidance is to be applied on a modified retrospective basis with the cumulative effect of initially applying the amendments recognized in retained earnings at the date of initial application. The Company has assembled a project team that meets regularly to evaluate the provisions of this ASU, identify additional data requirements necessary and determine an approach for implementation. The team has assigned roles and responsibilities and developed key tasks to complete and a general timeline to be followed. The Company is evaluating the effect that this ASU will have on the consolidated financial statements and disclosures. Economic conditions and the composition of the Company’s loan portfolio at the time of adoption will influence the extent of the adopting accounting adjustment. |
Basis of presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of Prior Period Financial Statements of the Adoption of ASU 2017-07 | The following table summarizes the impact to the prior period financial statements of the adoption of ASU No. 2017-07:
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Segment financial information (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment financial information |
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Electric utility segment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Projects and Legal Obligations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed consolidating statements of income (loss) | Statements of Income Data
Reconciliation to amounts per HEI Condensed Consolidated Statements of Income*:
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Schedule of condensed consolidating balance sheet | Balance Sheets Data
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Hawaiian Electric Company, Inc. and Subsidiaries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Projects and Legal Obligations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of purchases from all IPPs | Purchases from all IPPs were as follows:
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Schedule of net annual incremental amounts proposed to be collected (refunded) | The net annual incremental amounts to be collected (refunded) from June 1, 2018 through May 31, 2019 are as follows:
* Maui Electric incorporated a $2.8 million adjustment into its 2018 annual decoupling filing to incorporate the impact of the lower corporate income tax rate and the exclusion of the domestic production activities deduction, as a result of the 2017 Tax Cuts and Jobs Act (the Tax Act). Tax adjustments for Hawaiian Electric and Hawaii Electric Light are described in the discussion below of their respective on-going rate cases. |
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Schedule of condensed consolidating statements of income (loss) | Condensed Consolidating Statement of Income Six months ended June 30, 2017
Condensed Consolidating Statement of Income Three months ended June 30, 2018
Condensed Consolidating Statement of Income Three months ended June 30, 2017
Condensed Consolidating Statement of Income Six months ended June 30, 2018
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Schedule of condensed consolidating statement of comprehensive income | Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2017
Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2018
Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2018
Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2017
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Schedule of condensed consolidating balance sheet | Condensed Consolidating Balance Sheet June 30, 2018
Condensed Consolidating Balance Sheet December 31, 2017
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Schedule of condensed consolidating statement of changes in common stock equity | Condensed Consolidating Statement of Changes in Common Stock Equity Six months ended June 30, 2018
Condensed Consolidating Statement of Changes in Common Stock Equity Six months ended June 30, 2017
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Schedule of condensed consolidating statement of cash flows | Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2018
Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2017
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Bank segment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank Subsidiary [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of statements of income data | Statements of Income Data
Reconciliation to amounts per HEI Condensed Consolidated Statements of Income*:
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Schedule of statements of comprehensive income data | Statements of Comprehensive Income Data
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Schedule of balance sheets data | Balance Sheets Data
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Schedule of the book value and aggregate fair value by major security type | The major components of investment securities were as follows:
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Schedule of contractual maturities of available-for-sale securities | The contractual maturities of investment securities were as follows:
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Schedule of components of loans receivable | The components of loans were summarized as follows:
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Schedule of allowance for loan losses | The allowance for loan losses (balances and changes) and financing receivables were as follows:
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Schedule of credit risk profile by internally assigned grade for loans | The credit risk profile by internally assigned grade for loans was as follows:
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Schedule of credit risk profile based on payment activity for loans | The credit risk profile based on payment activity for loans was as follows:
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Schedule of credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due | The credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due and troubled debt restructuring (TDR) loans was as follows:
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Schedule of the carrying amount and the total unpaid principal balance of impaired loans, with and without recorded allowance for loans losses | The total carrying amount and the total unpaid principal balance of impaired loans were as follows:
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Schedule of loan modifications | Loan modifications that occurred during the second quarters and first six months of 2018 and 2017 and the impact on the allowance for loan losses were as follows:
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Schedule of troubled debt restructuring on financing receivables that experienced default | Loans modified in TDRs that experienced a payment default of 90 days or more during the second quarters and first six months of 2018 and 2017, and for which the payment of default occurred within one year of the modification, were as follows:
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Schedule of amortized intangible assets | Changes in the carrying value of mortgage servicing rights were as follows:
Changes related to mortgage servicing rights were as follows:
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Schedule of key assumptions used in estimating fair value | Key assumptions used in estimating the fair value of ASB’s mortgage servicing rights used in the impairment analysis were as follows:
The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
(1) Represent percent of outstanding principal balance. |
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Schedule of sensitivity analysis of fair value, transferor's interests in transferred financial assets | The sensitivity analysis of fair value of MSRs to hypothetical adverse changes of 25 and 50 basis points in certain key assumptions was as follows:
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Schedule of securities sold under agreements to repurchase | The following tables present information about the securities sold under agreements to repurchase, including the related collateral received from or pledged to counterparties:
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Schedule of notional and fair value of derivatives | The notional amount and fair value of ASB’s derivative financial instruments were as follows:
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Schedule of derivative financial instruments | ASB’s derivative financial instruments, their fair values and balance sheet location were as follows:
1 Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the balance sheets. |
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Schedule of derivative financial instruments and net gain or loss | The following table presents ASB’s derivative financial instruments and the amount and location of the net gains or losses recognized in ASB’s statements of income:
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Credit agreements and long-term debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | On May 30, 2018, the Utilities issued, through a private placement pursuant to separate Note Purchase Agreements (the Note Purchase Agreements), the following unsecured notes bearing taxable interest (the Notes):
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Shareholders' equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income | Changes in the balances of each component of accumulated other comprehensive income/(loss) (AOCI) were as follows:
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Schedule of reclassifications out of accumulated other comprehensive income/(loss) | Reclassifications out of AOCI were as follows:
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Revenues (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of revenue | The following tables disaggregates revenues by major source, timing of revenue recognition, and segment:
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Retirement benefits (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit cost for consolidated HEI | The components of NPPC and NPBC for HEI consolidated and Hawaiian Electric consolidated were as follows:
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Share-based compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share-based compensation expense and related income tax benefit | Share-based compensation expense and the related income tax benefit were as follows:
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Schedule of common stock granted to a nonemployee director under the 2011 Director Plan | HEI granted HEI common stock to nonemployee directors of HEI, Hawaiian Electric and ASB under the 2011 Director Plan as follows:
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Schedule of restricted stock units | Information about HEI’s grants of restricted stock units was as follows:
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Schedule of Long-Term Incentive Plan (LTIP) linked to total return to shareholders | Information about HEI’s LTIP grants linked to TSR was as follows:
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Schedule of Long-Term Incentive Program fair value awards granted | Key assumptions used in estimating the fair value of ASB’s mortgage servicing rights used in the impairment analysis were as follows:
The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
(1) Represent percent of outstanding principal balance. |
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Schedule of Long-Term Incentive Plan (LTIP) linked to other performance conditions | Information about HEI’s LTIP awards payable in shares linked to other performance conditions was as follows:
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Cash flows (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental disclosures of cash and noncash activity |
1 The amounts shown represent the market value of common stock issued for director and executive/management compensation and withheld to satisfy statutory tax liabilities. |
Fair value measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of estimated fair values of certain of the Company's financial instruments | The following table presents the carrying or notional amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments. For stock in Federal Home Loan Bank, the carrying amount is a reasonable estimate of fair value because it can only be redeemed at par. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, the carrying amount is a reasonable estimate of fair value as these liabilities have no stated maturity.
1 Deposit liabilities as of December 31, 2017 include noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, for which the carrying amount represents a reasonable estimate of fair value, as such liabilities have no stated maturity. The fair value of such financial liabilities are not included as of June 30, 2018 as a result of the Company’s adoption of ASU No. 2016-01. |
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Schedule of assets measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis were as follows:
1 Derivatives are carried at fair value with changes in value reflected in the balance sheet in other assets or other liabilities and included in mortgage banking income. 2 Derivatives are included in regulatory assets and/or liabilities in the balance sheets. |
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Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis | The changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
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Schedule of assets measured at fair value on a nonrecurring basis | The carrying value of assets measured at fair value on a nonrecurring basis were as follows:
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Schedule of significant unobservable inputs used in the fair value measurement | Key assumptions used in estimating the fair value of ASB’s mortgage servicing rights used in the impairment analysis were as follows:
The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
(1) Represent percent of outstanding principal balance. |
Electric utility segment - Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Hawaiian Electric Company, Inc. and Subsidiaries | ||||
Revenue taxes | ||||
Revenue taxes included in operating revenues and in taxes other than income taxes expense | $ 54 | $ 50 | $ 105 | $ 96 |
Bank segment - Reconciliation of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Condensed Income Statements, Captions [Line Items] | ||||
Total revenues | $ 685,277 | $ 632,281 | $ 1,331,151 | $ 1,223,843 |
Less: Retirement defined benefits expense—other than service costs | (1,564) | (1,906) | (3,397) | (3,782) |
Total expenses | 606,478 | 554,479 | 1,180,463 | 1,076,303 |
Operating income | 78,799 | 77,802 | 150,688 | 147,540 |
Income before income taxes | 59,582 | 59,626 | 112,858 | 111,208 |
American Savings Bank (ASB) | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Interest and dividend income | 63,261 | 59,080 | 125,263 | 116,802 |
Total noninterest income | 13,843 | 16,249 | 27,260 | 31,383 |
Total revenues | 77,104 | 75,329 | 152,523 | 148,185 |
Total interest expense | 3,677 | 3,135 | 7,130 | 6,054 |
Provision for loan losses | 2,763 | 2,834 | 6,304 | 6,741 |
Noninterest expense | 44,150 | 44,564 | 88,075 | 86,434 |
Less: Retirement defined benefits expense—other than service costs | 403 | 201 | 790 | 396 |
Total expenses | 50,187 | 50,332 | 100,719 | 98,833 |
Operating income | 26,917 | 24,997 | 51,804 | 49,352 |
Income before income taxes | $ 26,514 | $ 24,796 | $ 51,014 | $ 48,956 |
Bank segment - Available-for-sale securities, narrative (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Bank Subsidiary [Abstract] | ||
Proceeds from sale of available for sale securities | $ 0 | $ 0 |
AFS, gross realized gains | $ 0 | $ 0 |
Bank segment - Troubled debt restructuring - narrative (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Troubled debt restructurings real estate loans | ||
Troubled debt restructurings | ||
Financing receivable modifications minimum, period of payment default of loans determined to be TDRs (in days) | 90 days | |
Commitments to lend additional funds to borrows with impaired or modified loans | $ 10,000 | $ 0 |
Consumer mortgage loans collateralized by residential real estate property in foreclosure process | $ 5,000,000 | $ 4,300,000 |
Land loans | ||
Troubled debt restructurings | ||
Period of interest-only monthly payment term loan (in years) | 3 years | |
Land loans | Maximum | ||
Troubled debt restructurings | ||
Extension of maturity date (in years) | 5 years |
Bank segment - Repurchase Agreements (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Offsetting Liabilities [Line Items] | ||
Gross amount of recognized liabilities | $ 77 | $ 141 |
Gross amount offset in the Balance Sheet | 0 | 0 |
Securities sold under agreements to repurchase | 77 | 141 |
Securities sold under agreements to repurchase collateral, financial instruments | 193 | 165 |
Securities sold under agreements to repurchase, cash collateral pledged | 0 | 0 |
Commercial account holders | ||
Offsetting Liabilities [Line Items] | ||
Securities sold under agreements to repurchase | 77 | 141 |
Securities sold under agreements to repurchase collateral, financial instruments | 193 | 165 |
Securities sold under agreements to repurchase, cash collateral pledged | $ 0 | $ 0 |
Bank segment - Contingencies (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
American Savings Bank (ASB) | ||
Loss Contingencies [Line Items] | ||
Unfunded commitments to fund the company's LIHTC | $ 20.6 | $ 15.8 |
Share-based compensation - Summary of income taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based compensation | ||||
Share-based compensation expense | $ 2.8 | $ 2.2 | $ 4.4 | $ 3.3 |
Income tax benefit | 0.5 | 0.8 | 0.7 | 1.2 |
Hawaiian Electric Company, Inc. and Subsidiaries | ||||
Share-based compensation | ||||
Share-based compensation expense | 0.9 | 0.7 | 1.5 | 1.1 |
Income tax benefit | $ 0.2 | $ 0.3 | $ 0.3 | $ 0.4 |
Share-based compensation - 2011 Director Plan (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based compensation | ||||
Income tax benefit from compensation expense | $ 0.5 | $ 0.8 | $ 0.7 | $ 1.2 |
Common stock | ||||
Share-based compensation | ||||
Shares granted (in shares) | 37,747 | 35,000 | 38,821 | 35,770 |
Fair value measurement of shares granted and vested | $ 1.3 | $ 1.1 | $ 1.3 | $ 1.2 |
Income tax benefit from compensation expense | $ 0.3 | $ 0.4 | $ 0.3 | $ 0.5 |
Share-based compensation - Fair value assumptions (Details) - LTIP linked to TRS - $ / shares |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Risk-free interest rate | 2.29% | 1.46% |
Expected life (in years) | 3 years | 3 years |
Expected volatility | 17.00% | 20.10% |
Range of expected volatility for Peer Group, minimum rate | 15.10% | 15.40% |
Range of expected volatility for Peer Group, maximum rate | 26.20% | 26.00% |
Grant date fair value (in dollars per share) | $ 38.20 | $ 39.51 |
Fair value measurements - Additional Information (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
|
Measurement Input, Credit Spread | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Weighted average discount rate | 0.0340 | 0.0340 | ||
Mortgage revenue bond | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 15,427 | $ 15,427 | $ 15,427 | $ 15,427 |
Principal payments received | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Unrealized gain (loss) included in other comprehensive income | 0 | 0 | 0 | 0 |
Ending balance | $ 15,427 | $ 15,427 | $ 15,427 | $ 15,427 |
Fair value measurements - Summary of Level 3 financial instruments (Details) - Level 3 - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Fair value measurements | ||
Fair value | $ 232 | $ 2,621 |
Fair value of collateral | Residential loan | ||
Fair value measurements | ||
Fair value | $ 232 | $ 613 |
Appraised value, selling cost | 7.00% | 7.00% |
Appraised value, weighted average rate | 68.00% | 84.00% |
Fair value of collateral | Residential loan | Minimum | ||
Fair value measurements | ||
Appraised value | 62.00% | 71.00% |
Fair value of collateral | Residential loan | Maximum | ||
Fair value measurements | ||
Appraised value | 69.00% | 92.00% |
Fair value of collateral | Commercial loans | ||
Fair value measurements | ||
Fair value | $ 2,008 | |
Appraised value, weighted average rate | 75.00% | |
Fair value of collateral | Commercial loans | Minimum | ||
Fair value measurements | ||
Appraised value | 71.00% | |
Fair value of collateral | Commercial loans | Maximum | ||
Fair value measurements | ||
Appraised value | 76.00% |
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