HONOLULU--(BUSINESS WIRE)--Nov. 1, 2007--Hawaiian Electric
Industries, Inc. (NYSE:HE) today reported net income for the quarter
ended September 30, 2007 of $19.9 million, or $0.24 per share,
compared with $32.3 million, or $0.40 per share for the same quarter
of 2006. "Third quarter results were significantly impacted by the
recognition of a reserve for a potential refund to Oahu electric
customers of $15.0 million ($8.3 million net of taxes or $0.10 per
share) resulting from an amended proposed decision and order on
Hawaiian Electric Company's 2005 test year rate case," said Constance
H. Lau, HEI's president and chief executive officer. "Results were
also down quarter-over-quarter as our utility continued to incur
higher costs to provide reliable electric services and our bank
continued to experience margin compression and increased its loss
reserve primarily due to commercial loans to a single borrower," said
Lau.
UTILITY RESULTS
Electric utility net income for the third quarter of 2007 was
$12.9 million compared with $23.7 million for the same quarter in
2006. "Reserves made for the potential rate case refund to Oahu
customers and higher quarter-over-quarter other operation and
maintenance (O&M) costs more than offset the impacts of the interim
rate relief received for our Hawaii Island utility," said Lau.
As previously disclosed, the potential refund resulted from the
exclusion of a prepaid pension asset from rate base in the Hawaii
Public Utilities Commission's (PUC) proposed decision and order on
HECO's 2005 rate case. In its interim decision on the case, the PUC
had allowed HECO to include the prepaid pension asset in rate base.
Kilowatthour sales were essentially flat compared with the same
quarter in 2006. Lower consumption by large commercial customers was
partially offset by new load growth and warmer weather.
Other O&M expenses for the quarter were higher by $12.4 million
due primarily to $5.4 million of production maintenance expenses
resulting from higher generating station maintenance and the increased
number and scope of generating unit overhauls and $1.7 million of
increased employee benefits expenses. The remaining increase in O&M
expenses of $5.3 million includes costs to execute energy efficient
programs and ensure reliable operations.
Depreciation and amortization expenses were higher by $1.7 million
quarter-over-quarter due to 2006 additions to plant in service,
including Hawaiian Electric Company's new dispatch center, the Ford
Island substation, and Maui Electric Company's 18-megawatt steam
turbine.
Recovery of increased O&M expenses and capital expenditures were
primary reasons all three utilities--Hawaiian Electric Company, Hawaii
Electric Light Company and Maui Electric Company--have filed rate
cases with the Hawaii Public Utilities Commission.
BANK RESULTS
Bank net income was $11.7 million in the third quarter of 2007
compared to $13.5 million for the same quarter last year. "The
volatility in the capital markets from the housing market slowdown and
liquidity issues in the third quarter made it a difficult environment
for financial institutions. Fortunately, we were fairly well-insulated
from the deteriorating credit conditions that have impacted many banks
during the quarter," said Lau. "The interest rate environment remained
challenging and results for the quarter were impacted by increased
funding costs due to the continued shift in mix from lower costing
deposit accounts to higher costing CDs and other borrowings, as well
as higher provision expenses primarily related to a single commercial
borrower," Lau added.
Net interest income in the third quarter of 2007 was $47.7 million
compared to $49.2 million in the third quarter of 2006. Increased
interest income, primarily due to higher balances on loans and other
investments, was more than offset by increased interest expense due to
higher rates on deposits and higher balances of other borrowings. Net
interest margin was 3.01% in the third quarter of 2007, compared with
3.10% in the third quarter of 2006.
The bank provided $2.7 million for possible loan losses in the
third quarter of 2007 compared to no provision in the third quarter of
2006. "The bank's overall credit quality remained good during the
third quarter. The provision recorded in the quarter was primarily
attributable to the commercial borrower for which we provisioned last
quarter, and is not reflective of a trend in the overall credit
quality of the loan portfolio," said Lau.
Noninterest income in the third quarter increased $1.6 million
compared to the third quarter of 2006, due primarily to higher fee
income on deposits. In addition, noninterest income in the third
quarter of 2006 included a $1.7 million gain on sale of securities.
There were no similar gains in the third quarter of 2007.
Noninterest expense decreased slightly quarter-over-quarter.
HOLDING AND OTHER COMPANIES' RESULTS
The holding and other companies' net losses were $4.7 million in
the third quarter of 2007 and $4.8 million in the third quarter of
2006.
WEBCAST AND TELECONFERENCE
Hawaiian Electric Industries, Inc. will conduct a webcast and
teleconference call to review its third quarter on Friday, November 2,
2007, at 7:00 a.m. Hawaii Time (1:00 p.m. Eastern Time). The event can
be accessed through HEI's website at http://www.hei.com or by dialing
(800) 435-1261, passcode: 62906597 for the teleconference call.
An online replay of the webcast will be available at the same
website beginning about two hours after the event. Replays of the
teleconference call will also be available approximately two hours
after the event through November 16, 2007, by dialing (888) 286-8010,
passcode: 62187695.
Representing management will be Constance H. Lau, president and
chief executive officer, Hawaiian Electric Industries, Inc., chairman,
Hawaiian Electric Company, Inc. and chairman, president and chief
executive officer, American Savings Bank, F.S.B.; T. Michael May,
president and chief executive officer, Hawaiian Electric Company,
Inc.; Timothy K. Schools, chief operating officer, American Savings
Bank, F.S.B.; and Eric K. Yeaman, financial vice president, treasurer
and chief financial officer, Hawaiian Electric Industries, Inc.
HEI supplies power to over 400,000 customers or 95% of Hawaii's
population through its electric utilities, Hawaiian Electric Company,
Hawaii Electric Light Company and Maui Electric Company, and provides
a wide array of banking and other financial services to consumers and
businesses through American Savings Bank, the state's third largest
financial institution based on year-end asset size.
FORWARD-LOOKING STATEMENTS
This release may contain "forward-looking statements," which
include statements that are predictive in nature, depend upon or refer
to future events or conditions, and usually include words such as
expects, anticipates, intends, plans, believes, predicts, estimates or
similar expressions. In addition, any statements concerning future
financial performance (including future revenues, expenses, earnings
or losses or growth rates), ongoing business strategies or prospects
and possible future actions, which may be provided by management, are
also forward-looking statements. Forward-looking statements are based
on current expectations and projections about future events and are
subject to risks, uncertainties and assumptions about HEI and its
subsidiaries, the performance of the industries in which they do
business and economic and market factors, among other things. These
forward-looking statements are not guarantees of future performance.
Forward-looking statements in this release should be read in
conjunction with the "Forward-Looking Statements" discussion (which is
incorporated by reference herein) set forth on page iv of HEI's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, and
in HEI's future periodic reports that discuss important factors that
could cause HEI's results to differ materially from those anticipated
in such statements. Forward-looking statements speak only as of the
date of this release.
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three months Nine months
ended September 30 ended September 30
------------------- -----------------------
(in thousands, except per
share amounts) 2007 2006 2007 2006
----------------------------------------------------------------------
Revenues
Electric utility $567,615 $569,838 $1,508,005 $1,548,861
Bank 105,507 103,338 317,493 305,898
Other 339 718 2,749 (934)
--------- --------- ----------- -----------
673,461 673,894 1,828,247 1,853,825
--------- --------- ----------- -----------
Expenses
Electric utility 536,249 521,187 1,434,858 1,414,784
Bank 86,960 82,760 260,824 232,146
Other 2,235 3,591 10,698 10,659
--------- --------- ----------- -----------
625,444 607,538 1,706,380 1,657,589
--------- --------- ----------- -----------
Operating income (loss)
Electric utility 31,366 48,651 73,147 134,077
Bank 18,547 20,578 56,669 73,752
Other (1,896) (2,873) (7,949) (11,593)
--------- --------- ----------- -----------
48,017 66,356 121,867 196,236
--------- --------- ----------- -----------
Interest expense-other
than on deposit
liabilities and other
bank borrowings (19,589) (18,275) (59,382) (56,526)
Allowance for borrowed
funds used during
construction 656 838 1,840 2,259
Preferred stock dividends
of subsidiaries (474) (471) (1,420) (1,417)
Allowance for equity funds
used during construction 1,336 1,838 3,770 4,974
--------- --------- ----------- -----------
Income before income taxes 29,946 50,286 66,675 145,526
Income taxes 10,065 17,963 22,481 53,642
--------- --------- ----------- -----------
Net income $ 19,881 $ 32,323 $ 44,194 $ 91,884
========= ========= =========== ===========
Per common share
Basic earnings $ 0.24 $ 0.40 $ 0.54 $ 1.13
========= ========= =========== ===========
Diluted earnings $ 0.24 $ 0.40 $ 0.54 $ 1.13
========= ========= =========== ===========
Dividends $ 0.31 $ 0.31 $ 0.93 $ 0.93
========= ========= =========== ===========
Weighted-average number of
common shares outstanding 82,481 81,213 81,949 81,099
========= ========= =========== ===========
Adjusted weighted-average
shares 82,640 81,556 82,180 81,383
========= ========= =========== ===========
Net income (loss) by
segment
Electric utility $ 12,875 $ 23,666 $ 23,978 $ 61,940
Bank 11,731 13,470 35,909 46,515
Other (4,725) (4,813) (15,693) (16,571)
--------- --------- ----------- -----------
Net income $ 19,881 $ 32,323 $ 44,194 $ 91,884
========= ========= =========== ===========
(Unaudited) Twelve months
ended September 30
-----------------------
(in thousands, except per
share amounts) 2007 2006
--------------------------------------------------
Revenues
Electric utility $2,014,034 $2,059,401
Bank 419,960 407,207
Other 1,332 11,976
----------- -----------
2,435,326 2,478,584
----------- -----------
Expenses
Electric utility 1,908,246 1,885,407
Bank 348,485 305,647
Other 13,568 15,231
----------- -----------
2,270,299 2,206,285
----------- -----------
Operating income (loss)
Electric utility 105,788 173,994
Bank 71,475 101,560
Other (12,236) (3,255)
----------- -----------
165,027 272,299
----------- -----------
Interest expense-other
than on deposit
liabilities and other
bank borrowings (78,534) (74,880)
Allowance for borrowed
funds used during
construction 2,460 2,819
Preferred stock dividends
of subsidiaries (1,893) (1,890)
Allowance for equity funds
used during construction 5,144 6,404
----------- -----------
Income before income taxes 92,204 204,752
Income taxes 31,893 75,344
----------- -----------
Net income $ 60,311 $ 129,408
=========== ===========
Per common share
Basic earnings $ 0.74 $ 1.60
=========== ===========
Diluted earnings $ 0.74 $ 1.59
=========== ===========
Dividends $ 1.24 $ 1.24
=========== ===========
Weighted-average number of
common shares outstanding 81,781 81,055
=========== ===========
Adjusted weighted-average
shares 81,984 81,319
=========== ===========
Net income (loss) by
segment
Electric utility $ 36,985 $ 80,126
Bank 45,176 64,174
Other (21,850) (14,892)
----------- -----------
Net income $ 60,311 $ 129,408
=========== ===========
This information should be read in conjunction with the consolidated
financial statements and the notes thereto incorporated by reference
in HEI's Annual Report on SEC Form 10-K for the year ended December
31, 2006 and the consolidated financial statements and the notes
thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters
ended March 31, 2007, June 30, 2007 and September 30, 2007 (when
filed). Results of operations for interim periods are not necessarily
indicative of results to be expected for future interim periods or
the full year.
Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three months ended Nine months ended
September 30 September 30
-------------------------------------------
(in thousands) 2007 2006 2007 2006
----------------------------------------------------------------------
Operating revenues $561,720 $568,236 $1,499,766 $1,545,557
--------- --------- ----------- -----------
Operating expenses
Fuel oil 222,721 227,288 549,771 594,940
Purchased power 144,918 138,758 390,161 378,916
Other operation 54,113 46,612 154,949 136,565
Maintenance 28,594 23,653 85,799 63,087
Depreciation 34,273 32,539 102,812 97,614
Taxes, other than income
taxes 51,389 51,985 138,839 142,726
Income taxes 4,976 14,665 15,974 38,909
--------- --------- ----------- -----------
540,984 535,500 1,438,305 1,452,757
--------- --------- ----------- -----------
Operating income 20,736 32,736 61,461 92,800
--------- --------- ----------- -----------
Other income
Allowance for equity funds
used during construction 1,336 1,838 3,770 4,974
Other, net 3,819 1,379 (1,330) 2,809
--------- --------- ----------- -----------
5,155 3,217 2,440 7,783
--------- --------- ----------- -----------
Income before interest and
other charges 25,891 35,953 63,901 100,583
--------- --------- ----------- -----------
Interest and other charges
Interest on long-term debt 11,478 10,777 34,364 32,331
Amortization of net bond
premium and expense 621 565 1,813 1,651
Other interest charges 1,075 1,285 4,090 5,424
Allowance for borrowed
funds used during
construction (656) (838) (1,840) (2,259)
Preferred stock dividends
of subsidiaries 228 228 686 686
--------- --------- ----------- -----------
12,746 12,017 39,113 37,833
--------- --------- ----------- -----------
Income before preferred
stock dividends of HECO 13,145 23,936 24,788 62,750
Preferred stock dividends
of HECO 270 270 810 810
--------- --------- ----------- -----------
Net income for common
stock $ 12,875 $ 23,666 $ 23,978 $ 61,940
========= ========= =========== ===========
OTHER ELECTRIC UTILITY
INFORMATION
Kilowatthour sales
(millions) 2,663 2,678 7,568 7,528
Cooling degree days (Oahu) 1,566 1,469 3,666 3,321
Average fuel cost per
barrel $ 74.78 $ 74.35 $ 65.52 $ 69.09
This information should be read in conjunction with the consolidated
financial statements and the notes thereto incorporated by reference
in HECO's Annual Report on SEC Form 10-K for the year ended December
31, 2006 and the consolidated financial statements and the notes
thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters
ended March 31, 2007, June 30, 2007 and September 30, 2007 (when
filed). Results of operations for interim periods are not necessarily
indicative of results to be expected for future interim periods or
the full year.
American Savings Bank, F.S.B. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three months ended Nine months ended
September 30 September 30
------------------ -----------------
(in thousands) 2007 2006 2007 2006
----------------------------------------------------------------------
Interest and dividend income
Interest and fees on loans $61,817 $59,417 $182,191 $171,893
Interest and dividends on
investment and mortgage-related
securities 26,497 28,368 85,090 89,315
---------- ------- -------- --------
88,314 87,785 267,281 261,208
---------- ------- -------- --------
Interest expense
Interest on deposit liabilities 20,381 19,701 61,951 52,095
Interest on other borrowings 20,243 18,891 57,230 54,361
---------- ------- -------- --------
40,624 38,592 119,181 106,456
---------- ------- -------- --------
Net interest income 47,690 49,193 148,100 154,752
Provision for loan losses 2,700 - 3,900 -
---------- ------- -------- --------
Net interest income after
provision for loan losses 44,990 49,193 144,200 154,752
---------- ------- -------- --------
Noninterest income
Fees from other financial
services 7,153 6,548 20,539 19,730
Fee income on deposit liabilities 6,583 4,653 19,095 13,218
Fee income on other financial
products 1,977 1,739 5,845 6,308
Gain on sale of securities - 1,735 - 1,735
Other income 1,480 878 4,733 3,699
---------- ------- -------- --------
17,193 15,553 50,212 44,690
---------- ------- -------- --------
Noninterest expense
Compensation and employee
benefits 16,173 17,398 52,733 52,711
Occupancy 5,418 4,942 15,707 13,895
Equipment 3,630 3,768 10,893 10,900
Services 6,385 5,600 22,638 13,441
Data processing 2,596 2,534 7,799 7,541
Other expense 9,456 9,926 27,972 27,202
---------- ------- -------- --------
43,658 44,168 137,742 125,690
---------- ------- -------- --------
Income before income taxes 18,525 20,578 56,670 73,752
Income taxes 6,794 7,108 20,761 27,237
---------- ------- -------- --------
Net income $11,731 $13,470 $ 35,909 $ 46,515
========== ======= ======== ========
Net interest margin (%) 3.01 3.10 3.09 3.23
This information should be read in conjunction with the consolidated
financial statements and the notes thereto incorporated by reference
in HEI's Annual Report on SEC Form 10-K for the year ended December
31, 2006 and the consolidated financial statements and the notes
thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters
ended March 31, 2007, June 30, 2007 and September 30, 2007 (when
filed). Results of operations for interim periods are not necessarily
indicative of results to be expected for future interim periods or
the full year.
CONTACT: Hawaiian Electric Industries, Inc.
Suzy P. Hollinger, 808-543-7385
Manager, Treasury and Investor Relations
Facsimile: 808-532-5812
shollinger@hei.com
SOURCE: Hawaiian Electric Industries, Inc.
