HE-9.30.2013-10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
FORM 10-Q
 
ý      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2013
 
OR
 
o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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
 
State of Hawaii
(State or other jurisdiction of incorporation or organization)
 
Hawaiian Electric Industries, Inc. – 1001 Bishop Street, Suite 2900, Honolulu, Hawaii  96813
Hawaiian Electric Company, Inc. – 900 Richards Street, Honolulu, Hawaii  96813
(Address of principal executive offices and zip code)
 
Hawaiian Electric Industries, Inc. – (808) 543-5662
Hawaiian Electric Company, Inc. – (808) 543-7771
(Registrant’s telephone number, including area code)
 
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Hawaiian Electric Industries, Inc. Yes x No o
 
Hawaiian Electric Company, Inc. Yes x No o
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Hawaiian Electric Industries, Inc. Yes x No o
 
Hawaiian Electric Company, Inc. Yes x No o
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Hawaiian Electric Industries, Inc. Yes o No x
 
Hawaiian Electric Company, Inc. Yes o No x
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 


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
 
APPLICABLE ONLY TO CORPORATE ISSUERS:
 
Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.
Class of Common Stock
 
Outstanding October 31, 2013
Hawaiian Electric Industries, Inc. (Without Par Value)
 
99,605,735 Shares
Hawaiian Electric Company, Inc. ($6-2/3 Par Value)
 
14,665,264 Shares (not publicly traded)



Hawaiian Electric Industries, Inc. and Subsidiaries
Hawaiian Electric Company, Inc. and Subsidiaries
Form 10-Q—Quarter ended September 30, 2013
 
TABLE OF CONTENTS
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

i


Hawaiian Electric Industries, Inc. and Subsidiaries
Hawaiian Electric Company, Inc. and Subsidiaries
Form 10-Q—Quarter ended September 30, 2013
 
GLOSSARY OF TERMS
 
Terms
 
Definitions
AFTAP
 
Adjusted Funding Target Attainment Percentage
AFUDC
 
Allowance for funds used during construction
AOCI
 
Accumulated other comprehensive income/(loss)
ARO
 
Asset retirement obligation
ASB
 
American Savings Bank, F.S.B., a wholly-owned subsidiary of American Savings Holdings, Inc.
ASHI
 
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
CIP CT-1
 
Campbell Industrial Park 110 MW combustion turbine No. 1
CIS
 
Customer Information System
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); American Savings Holdings, Inc. and its subsidiary, American Savings Bank, F.S.B.; HEI Properties, Inc.; Hawaiian Electric Industries Capital Trust II and Hawaiian Electric Industries Capital Trust III (inactive financing entities); and The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.).
Consumer Advocate
 
Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii
DBEDT
 
State of Hawaii Department of Business, Economic Development and Tourism
D&O
 
Decision and order
Dodd-Frank Act
 
Dodd-Frank Wall Street Reform and Consumer Protection Act
DOH
 
Department of Health of the State of Hawaii
DRIP
 
HEI Dividend Reinvestment and Stock Purchase Plan
DSM
 
Demand-side management
ECAC
 
Energy cost adjustment clauses
EIP
 
2010 Equity and Incentive Plan
EGU
 
Electrical generating unit
Energy Agreement
 
Agreement dated October 20, 2008 and signed by the Governor of the State of Hawaii, the State of Hawaii Department of Business, Economic Development and Tourism, the Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs, and Hawaiian Electric, for itself and on behalf of its electric utility subsidiaries committing to actions to develop renewable energy and reduce dependence on fossil fuels in support of the HCEI
EPA
 
Environmental Protection Agency — federal
EPS
 
Earnings per share
ERISA
 
Employee Retirement Income Security Act of 1974, as amended
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
 

ii
GLOSSARY OF TERMS, continued

Terms
 
Definitions
GAAP
 
U.S. generally accepted accounting principles
GHG
 
Greenhouse gas
GNMA
 
Government National Mortgage Association
HCEI
 
Hawaii Clean Energy Initiative
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.
HEI
 
Hawaiian Electric Industries, Inc., direct parent company of Hawaiian Electric Company, Inc., American Savings Holdings, Inc., HEI Properties, Inc., Hawaiian Electric Industries Capital Trust II, Hawaiian Electric Industries Capital Trust III and The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.)
HEIRSP
 
Hawaiian Electric Industries Retirement Savings Plan
Hawaii Electric Light
 
Hawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc.
HPOWER
 
City and County of Honolulu with respect to a power purchase agreement for a refuse-fired plant
IPP
 
Independent power producer
IRP
 
Integrated resource planning
Kalaeloa
 
Kalaeloa Partners, L.P.
KW
 
Kilowatt
KWH
 
Kilowatthour
LTIP
 
Long-term incentive plan
MAP-21
 
Moving Ahead for Progress in the 21st Century Act
Maui Electric
 
Maui Electric Company, Limited, an electric utility subsidiary of Hawaiian Electric Company, Inc.
MW
 
Megawatt/s (as applicable)
NII
 
Net interest income
NQSO
 
Nonqualified stock option
O&M
 
Other operation and maintenance
OCC
 
Office of the Comptroller of the Currency
OPEB
 
Postretirement benefits other than pensions
PPA
 
Power purchase agreement
PPAC
 
Purchased power adjustment clause
PUC
 
Public Utilities Commission of the State of Hawaii
RAM
 
Revenue adjustment mechanism
RBA
 
Revenue balancing account
RFP
 
Request for proposal
REIP
 
Renewable Energy Infrastructure Program
RHI
 
Renewable Hawaii, Inc., a wholly owned subsidiary of Hawaiian Electric Company, Inc.
ROACE
 
Return on average common equity
RORB
 
Return on average rate base
RPS
 
Renewable portfolio standard
SAR
 
Stock appreciation right
SEC
 
Securities and Exchange Commission
See
 
Means the referenced material is incorporated by reference
SOIP
 
1987 Stock Option and Incentive Plan, as amended
TDR
 
Troubled debt restructuring
UBC
 
Uluwehiokama Biofuels Corp., a non-regulated subsidiary of Hawaiian Electric Company, Inc.
Utilities
 
Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited

VIE
 
Variable interest entity
 

iii


FORWARD-LOOKING STATEMENTS
 
This report and other presentations made by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (Hawaiian Electric) and their subsidiaries contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries (collectively, the Company), 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.
 
Risks, uncertainties and other important factors that could cause actual results to differ materially from those described in forward-looking statements and from historical results include, but are not limited to, the following:
•
international, national and local economic 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 American Savings Bank, F.S.B. (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 (including the effects of sequestration), 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, conflict and the overthrow of governmental regimes in North Africa and the Middle East, terrorist acts, the war on terrorism, continuing U.S. presence in Afghanistan and potential conflict or crisis with North Korea or Iran);
•
the effects of future actions or inaction of the U.S. government or related agencies, including those related to the U.S. debt ceiling, a shutdown of the federal government, or monetary policy;
•
weather and natural disasters (e.g., hurricanes, earthquakes, tsunamis, lightning strikes and the potential effects of climate change, such as more severe storms and rising sea levels), including their impact on Company 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 to access credit markets to obtain commercial paper and other short-term and long-term debt financing (including lines of credit) and to access capital markets to issue HEI 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, 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 implementation of the Energy Agreement with the State of Hawaii and Consumer Advocate (Energy Agreement), setting forth the goals and objectives of a Hawaii Clean Energy Initiative (HCEI), and the fulfillment by the electric utilities of their commitments under the Energy Agreement (given the Public Utilities Commission of the State of Hawaii (PUC) approvals needed; the PUC’s potential delay in considering (and potential disapproval of actual or proposed) HCEI-related costs; reliance by the Company on outside parties such as the state, independent power producers (IPPs) and developers; potential changes in political support for the HCEI; and uncertainties surrounding wind power, proposed undersea cables, biofuels, environmental assessments and the impacts of implementation of the HCEI on future costs of electricity);
•
capacity and supply constraints or difficulties, especially if generating units (utility-owned or IPP-owned) fail or measures such as demand-side management (DSM), 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, performance by suppliers of their fuel oil delivery obligations and the continued availability to the electric utilities of their energy cost adjustment clauses (ECACs);
•
the continued availability to the electric utilities of other cost recovery mechanisms, including the purchased power adjustment clauses (PPACs), revenue adjustment mechanisms (RAMs) and pension and postretirement benefits other than pensions (OPEB) tracking mechanisms, and the continued decoupling of revenues from sales;
•
the impact of fuel price volatility on customer satisfaction and political and regulatory support for the Utilities;

iv


•
the risks associated with increasing reliance on renewable energy, as contemplated under the Energy Agreement, 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 ability of IPPs to deliver the firm capacity anticipated in their power purchase agreements (PPAs);
•
the ability of the electric 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 HEI and its subsidiaries (including Hawaiian Electric and its subsidiaries and ASB) or their competitors;
•
cyber security risks and the potential for cyber incidents, including potential incidents at HEI, ASB and Hawaiian Electric and their subsidiaries (including at ASB branches and at the 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;
•
federal, state, county and international governmental and regulatory actions, such as existing, new and changes in laws, rules and regulations applicable to HEI, Hawaiian Electric, ASB and their subsidiaries (including changes in taxation, increases in capital requirements, regulatory changes resulting from the HCEI, environmental laws and regulations (including resulting compliance costs and risks of fines and penalties and/or liabilities), the regulation of greenhouse gas (GHG) 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);
•
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 renewable portfolio standards (RPS));
•
potential enforcement actions by the Office of the Comptroller of the Currency, 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 electric utilities to recover increasing costs and earn a reasonable return on capital investments not covered by revenue adjustment mechanisms;
•
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, Hawaiian Electric, ASB and their subsidiaries, including the possible adoption of International Financial Reporting Standards or 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 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 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, Hawaiian Electric, ASB and their 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); 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).
 
Forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, ASB and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


v

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Hawaiian Electric Industries, Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)
 
 
 
Three months  
 ended September 30
 
Nine months  
 ended September 30
(in thousands, except per share amounts)
 
2013
 
2012
 
2013
 
2012
Revenues
 
 

 
 

 
 

 
 

Electric utility
 
$
766,115

 
$
801,095

 
$
2,216,076

 
$
2,340,257

Bank
 
65,058

 
66,596

 
195,841

 
196,569

Other
 
56

 
29

 
106

 
22

Total revenues
 
831,229

 
867,720

 
2,412,023

 
2,536,848

Expenses
 
 

 
 

 
 

 
 

Electric utility
 
694,201

 
726,276

 
2,030,071

 
2,146,688

Bank
 
42,223

 
44,974

 
126,550

 
130,161

Other
 
4,706

 
4,768

 
12,276

 
13,075

Total expenses
 
741,130

 
776,018

 
2,168,897

 
2,289,924

Operating income (loss)
 
 

 
 

 
 

 
 

Electric utility
 
71,914

 
74,819

 
186,005

 
193,569

Bank
 
22,835

 
21,622

 
69,291

 
66,408

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

 
91,702

 
243,126

 
246,924

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

 
688

 
1,626

 
2,451

Allowance for equity funds used during construction
 
1,255

 
1,611

 
4,030

 
5,548

Income before income taxes
 
71,548

 
73,981

 
189,077

 
196,165

Income taxes
 
22,841

 
25,804

 
65,157

 
69,926

Net income
 
48,707

 
48,177

 
123,920

 
126,239

Preferred stock dividends of subsidiaries
 
471

 
471

 
1,417

 
1,417

Net income for common stock
 
$
48,236

 
$
47,706

 
$
122,503

 
$
124,822

Basic earnings per common share
 
$
0.49

 
$
0.49

 
$
1.24

 
$
1.29

Diluted earnings per common share
 
$
0.48

 
$
0.49

 
$
1.23

 
$
1.29

Dividends per common share
 
$
0.31

 
$
0.31

 
$
0.93

 
$
0.93

Weighted-average number of common shares outstanding
 
99,204

 
97,157

 
98,670

 
96,674

Net effect of potentially dilutive shares
 
614

 
361

 
620

 
423

Adjusted weighted-average shares
 
99,818

 
97,518

 
99,290

 
97,097

 
The accompanying notes are an integral part of these consolidated financial statements.


1


Hawaiian Electric Industries, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (unaudited)
 
 
 
Three months  
 ended September 30
 
Nine months  
 ended September 30
(in thousands)
 
2013
 
2012
 
2013
 
2012
Net income for common stock
 
$
48,236

 
$
47,706

 
$
122,503

 
$
124,822

Other comprehensive income (loss), net of taxes:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities arising during the period, net of (taxes) benefits of $1,049 and ($689) for the three months ended September 30, 2013 and 2012 and $7,081 and ($1,261) for the nine months ended September 30, 2013 and 2012, respectively
 
(1,589
)
 
1,043

 
(10,724
)
 
1,910

Less: reclassification adjustment for net realized gains included in net income, net of taxes of nil for the three months ended September 30, 2013 and 2012 and $488 and $53 for the nine months ended September 30, 2013 and 2012, respectively
 
—

 
—

 
(738
)
 
(81
)
Derivatives qualified as cash flow hedges:
 
 

 
 

 
 

 
 

Less: reclassification adjustment to net income, net of tax benefits of $37 for the three months ended September 30, 2013 and 2012 and $112 for the nine months ended September 30, 2013 and 2012
 
59

 
59

 
177

 
177

Retirement benefit plans:
 
 

 
 

 
 

 
 

Less: amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $3,697 and $2,443 for the three months ended September 30, 2013 and 2012 and $11,173 and $7,321 for the nine months ended September 30, 2013 and 2012, respectively
 
5,789

 
3,826

 
17,490

 
11,467

Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $3,284 and $2,129 for the three months ended September 30, 2013 and 2012 and $9,852 and $6,386 for the nine months ended September 30, 2013 and 2012, respectively
 
(5,156
)
 
(3,342
)
 
(15,468
)
 
(10,026
)
Other comprehensive income (loss), net of taxes
 
(897
)
 
1,586

 
(9,263
)
 
3,447

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

 
$
49,292

 
$
113,240

 
$
128,269

 
The accompanying notes are an integral part of these consolidated financial statements.

2


Hawaiian Electric Industries, Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)
 
(dollars in thousands)
 
September 30, 2013
 
December 31, 2012
Assets
 
 

 
 

 
 

 
 

Cash and cash equivalents
 
 

 
$
215,042

 
 

 
$
219,662

Accounts receivable and unbilled revenues, net
 
 

 
350,083

 
 

 
362,823

Available-for-sale investment and mortgage-related securities
 
 

 
535,264

 
 

 
671,358

Investment in stock of Federal Home Loan Bank of Seattle
 
 

 
93,413

 
 

 
96,022

Loans receivable held for investment, net
 
 

 
4,005,132

 
 

 
3,737,233

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

 
5,829

 
 

 
26,005

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

 
3,776,305

 
 

 
3,594,829

Regulatory assets
 
 

 
890,419

 
 

 
864,596

Other
 
 

 
475,335

 
 

 
494,414

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
10,429,012

 
 

 
$
10,149,132

Liabilities and shareholders’ equity
 
 

 
 

 
 

 
 

Liabilities
 
 

 
 

 
 

 
 

Accounts payable
 
 

 
$
206,803

 
 

 
$
212,379

Interest and dividends payable
 
 

 
27,232

 
 

 
26,258

Deposit liabilities
 
 

 
4,310,842

 
 

 
4,229,916

Short-term borrowings—other than bank
 
 

 
131,341

 
 

 
83,693

Other bank borrowings
 
 

 
239,612

 
 

 
195,926

Long-term debt, net—other than bank
 
 

 
1,422,880

 
 

 
1,422,872

Deferred income taxes
 
 

 
493,662

 
 

 
439,329

Regulatory liabilities
 
 

 
337,720

 
 

 
322,074

Contributions in aid of construction
 
 

 
425,916

 
 

 
405,520

Defined benefit pension and other postretirement benefit plans liability
 
 

 
630,904

 
 

 
656,394

Other
 
 

 
512,342

 
 

 
526,613

Total liabilities
 
 

 
8,739,254

 
 

 
8,520,974

Preferred stock of subsidiaries - not subject to mandatory redemption
 
 

 
34,293

 
 

 
34,293

Commitments and contingencies (Note 8)
 
 

 


 
 

 


Shareholders’ equity
 
 

 
 

 
 

 
 

Preferred stock, no par value, authorized 10,000,000 shares; issued: none
 
 

 
—

 
 

 
—

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

 
1,443,583

 
 

 
1,403,484

Retained earnings
 
 

 
247,568

 
 

 
216,804

Accumulated other comprehensive income (loss), net of taxes
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities
 
$
(701
)
 
 

 
$
10,761

 
 

Unrealized losses on derivatives
 
(583
)
 
 

 
(760
)
 
 

Retirement benefit plans
 
(34,402
)
 
(35,686
)
 
(36,424
)
 
(26,423
)
Total shareholders’ equity
 
 

 
1,655,465

 
 

 
1,593,865

Total liabilities and shareholders’ equity
 
 

 
$
10,429,012

 
 

 
$
10,149,132

 
The accompanying notes are an integral part of these consolidated financial statements.

3

Hawaiian Electric Industries, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity (unaudited)
 
 
 
Common stock
 
Retained
 
Accumulated
other
comprehensive
 
 
(in thousands, except per share amounts)
 
Shares
 
Amount
 
Earnings
 
loss
 
Total
Balance, December 31, 2012
 
97,928

 
$
1,403,484

 
$
216,804

 
$
(26,423
)
 
$
1,593,865

Net income for common stock
 
—

 
—

 
122,503

 
—

 
122,503

Other comprehensive loss, net of tax benefits
 
—

 
—

 
—

 
(9,263
)
 
(9,263
)
Issuance of common stock, net
 
1,614

 
40,099

 
—

 
—

 
40,099

Common stock dividends ($0.93 per share)
 
—

 
—

 
(91,739
)
 
—

 
(91,739
)
Balance, September 30, 2013
 
99,542

 
$
1,443,583

 
$
247,568

 
$
(35,686
)
 
$
1,655,465

 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2011
 
96,038

 
$
1,349,446

 
$
198,397

 
$
(19,137
)
 
$
1,528,706

Net income for common stock
 
—

 
—

 
124,822

 
—

 
124,822

Other comprehensive income, net of taxes
 
—

 
—

 
—

 
3,447

 
3,447

Issuance of common stock, net
 
1,387

 
40,161

 
—

 
—

 
40,161

Dividend equivalents paid on equity-classified awards
 
—

 
—

 
(99
)
 
—

 
(99
)
Common stock dividends ($0.93 per share)
 
—

 
—

 
(89,902
)
 
—

 
(89,902
)
Balance, September 30, 2012
 
97,425

 
$
1,389,607

 
$
233,218

 
$
(15,690
)
 
$
1,607,135

 
The accompanying notes are an integral part of these consolidated financial statements.


4


Hawaiian Electric Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
Nine months ended September 30
 
2013
 
2012
(in thousands)
 
 
 
 
Cash flows from operating activities
 
 

 
 

Net income
 
$
123,920

 
$
126,239

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

 
 

Depreciation of property, plant and equipment
 
120,355

 
112,946

Other amortization
 
2,352

 
4,811

Provision for loan losses
 
953

 
9,504

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

 
302,844

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

Change in deferred income taxes
 
60,580

 
82,582

Excess tax benefits from share-based payment arrangements
 
(469
)
 
(65
)
Allowance for equity funds used during construction
 
(4,030
)
 
(5,548
)
Changes in assets and liabilities
 
 

 
 

Decrease (increase) in accounts receivable and unbilled revenues, net
 
12,740

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

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

 
49,950

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

 
121,604

Cash flows from investing activities
 
 

 
 

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

 
104,310

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

 
3,548

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

 
9,659

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

 
33,106

Proceeds from sale of credit card portfolio
 
26,386

 
—

Other
 
3,035

 
865

Net cash used in investing activities
 
(363,424
)
 
(297,249
)
Cash flows from financing activities
 
 

 
 

Net increase in deposit liabilities
 
80,926

 
56,756

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

 
13,398

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

 
—

Repayments of other bank borrowings
 
(70,000
)
 
—

Proceeds from issuance of long-term debt
 
50,000

 
457,000

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

 
65

Net proceeds from issuance of common stock
 
18,383

 
16,881

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

 
73,892

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

 
270,265

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

 
$
168,512

 The accompanying notes are an integral part of these consolidated financial statements.

5


Hawaiian Electric Industries, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1 · Basis of presentation
 
The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (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 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 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 Form 10-K for the year ended December 31, 2012 and the unaudited consolidated financial statements and the notes thereto in HEI’s Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013.
 
In the opinion of HEI’s management, the accompanying unaudited consolidated financial statements contain all material adjustments required by GAAP to fairly state the Company’s financial position as of September 30, 2013 and December 31, 2012, the results of its operations for the three and nine months ended September 30, 2013 and 2012 and its cash flows for the nine months ended September 30, 2013 and 2012. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q or other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year. When required, certain reclassifications are made to the prior period’s consolidated financial statements to conform to the current presentation.


6


2 · Segment financial information
 
(in thousands) 
 
Electric utility
 
Bank
 
Other
 
Total
Three months ended September 30, 2013
 
 

 
 

 
 

 
 

Revenues from external customers
 
$
766,109

 
$
65,058

 
$
62

 
$
831,229

Intersegment revenues (eliminations)
 
6

 
—

 
(6
)
 
—

Revenues
 
766,115

 
65,058

 
56

 
831,229

Income (loss) before income taxes
 
57,373

 
22,808

 
(8,633
)
 
71,548

Income taxes (benefit)
 
19,058

 
7,532

 
(3,749
)
 
22,841

Net income (loss)
 
38,315

 
15,276

 
(4,884
)
 
48,707

Preferred stock dividends of subsidiaries
 
498

 
—

 
(27
)
 
471

Net income (loss) for common stock
 
37,817

 
15,276

 
(4,857
)
 
48,236

 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2013
 
 

 
 

 
 

 
 

Revenues from external customers
 
$
2,216,058

 
$
195,841

 
$
124

 
$
2,412,023

Intersegment revenues (eliminations)
 
18

 
—

 
(18
)
 
—

Revenues
 
2,216,076

 
195,841

 
106

 
2,412,023

Income (loss) before income taxes
 
144,212

 
69,265

 
(24,400
)
 
189,077

Income taxes (benefit)
 
51,777

 
23,915

 
(10,535
)
 
65,157

Net income (loss)
 
92,435

 
45,350

 
(13,865
)
 
123,920

Preferred stock dividends of subsidiaries
 
1,496

 
—

 
(79
)
 
1,417

Net income (loss) for common stock
 
90,939

 
45,350

 
(13,786
)
 
122,503

Assets (at September 30, 2013)
 
5,269,758

 
5,159,372

 
(118
)
 
10,429,012

 
 
 
 
 
 
 
 
 
Three months ended September 30, 2012
 
 

 
 

 
 

 
 

Revenues from external customers
 
$
801,089

 
$
66,596

 
$
35

 
$
867,720

Intersegment revenues (eliminations)
 
6

 
—

 
(6
)
 
—

Revenues
 
801,095

 
66,596

 
29

 
867,720

Income (loss) before income taxes
 
61,268

 
21,627

 
(8,914
)
 
73,981

Income taxes (benefit)
 
22,395

 
7,419

 
(4,010
)
 
25,804

Net income (loss)
 
38,873

 
14,208

 
(4,904
)
 
48,177

Preferred stock dividends of subsidiaries
 
498

 
—

 
(27
)
 
471

Net income (loss) for common stock
 
38,375

 
14,208

 
(4,877
)
 
47,706

 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2012
 
 

 
 

 
 

 
 

Revenues from external customers
 
$
2,340,202

 
$
196,569

 
$
77

 
$
2,536,848

Intersegment revenues (eliminations)
 
55

 
—

 
(55
)
 
—

Revenues
 
2,340,257

 
196,569

 
22

 
2,536,848

Income (loss) before income taxes
 
154,976

 
66,964

 
(25,775
)
 
196,165

Income taxes (benefit)
 
58,429

 
22,690

 
(11,193
)
 
69,926

Net income (loss)
 
96,547

 
44,274

 
(14,582
)
 
126,239

Preferred stock dividends of subsidiaries
 
1,496

 
—

 
(79
)
 
1,417

Net income (loss) for common stock
 
95,051

 
44,274

 
(14,503
)
 
124,822

Assets (at December 31, 2012)
 
5,108,793

 
5,041,673

 
(1,334
)
 
10,149,132

 
Intercompany electricity sales of the electric 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 consolidated Hawaiian Electric, the profit on such sales is nominal and the elimination of electric sales revenues and expenses could distort segment operating income and net income for common stock.
 
Bank fees that ASB charges the electric utility and “other” segments are not eliminated because those segments would pay fees to another financial institution if they were to bank with another institution, the profit on such fees is nominal and the elimination of bank fee income and expenses could distort segment operating income and net income for common stock.

3 · Electric utility subsidiary
 
For consolidated Hawaiian Electric financial information, including its commitments and contingencies, see Hawaiian Electric’s consolidated financial statements beginning on page 33 through Note 10 on page 49.


7


4 · Bank subsidiary
 
Selected financial information
American Savings Bank, F.S.B.
Statements of Income Data
 
 
 
Three months ended 
 September 30
 
Nine months ended 
 September 30
(in thousands)
 
2013
 
2012
 
2013
 
2012
Interest and dividend income
 
 

 
 

 
 

 
 

Interest and fees on loans
 
$
43,337

 
$
43,880

 
$
129,564

 
$
133,241

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

 
3,432

 
9,723

 
10,534

Total interest and dividend income
 
46,362

 
47,312

 
139,287

 
143,775

Interest expense
 
 

 
 

 
 

 
 

Interest on deposit liabilities
 
1,262

 
1,540

 
3,870

 
5,015

Interest on other borrowings
 
1,206

 
1,201

 
3,548

 
3,676

Total interest expense
 
2,468

 
2,741

 
7,418

 
8,691

Net interest income
 
43,894

 
44,571

 
131,869

 
135,084

Provision for loan losses
 
54

 
3,580

 
953

 
9,504

Net interest income after provision for loan losses
 
43,840

 
40,991

 
130,916

 
125,580

Noninterest income
 
 

 
 

 
 

 
 

Fees from other financial services
 
5,728

 
7,674

 
21,367

 
22,474

Fee income on deposit liabilities
 
4,819

 
4,527

 
13,566

 
13,127

Fee income on other financial products
 
2,714

 
1,660

 
6,288

 
4,741

Mortgage banking income
 
1,547

 
4,077

 
6,896

 
8,297

Gain on sale of securities
 
—

 
—

 
1,226

 
134

Other income
 
3,888

 
1,346

 
7,211

 
4,021

Total noninterest income
 
18,696

 
19,284

 
56,554

 
52,794

Noninterest expense
 
 

 
 

 
 

 
 

Compensation and employee benefits
 
20,564

 
18,684

 
60,715

 
56,026

Occupancy
 
4,208

 
4,400

 
12,550

 
12,866

Data processing
 
2,168

 
2,644

 
7,982

 
7,244

Services
 
2,424

 
3,062

 
6,855

 
7,066

Equipment
 
1,825

 
1,762

 
5,469

 
5,299

Other expense
 
8,539

 
8,096

 
24,634

 
22,909

Total noninterest expense
 
39,728

 
38,648

 
118,205

 
111,410

Income before income taxes
 
22,808

 
21,627

 
69,265

 
66,964

Income taxes
 
7,532

 
7,419

 
23,915

 
22,690

Net income
 
$
15,276

 
$
14,208

 
$
45,350

 
$
44,274

 

8


American Savings Bank, F.S.B.
Statements of Comprehensive Income Data
 
 
 
Three months  
 ended September 30
 
Nine months  
 ended September 30
(in thousands)
 
2013
 
2012
 
2013
 
2012
Net income
 
$
15,276

 
$
14,208

 
$
45,350

 
$
44,274

Other comprehensive income (loss), net of taxes:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities:
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities arising during the period, net of (taxes) benefits, of $1,049 and ($689) for the three months ended September 30, 2013 and 2012 and $7,081 and ($1,261) for the nine months ended September 30, 2013 and 2012, respectively
 
(1,589
)
 
1,043

 
(10,724
)
 
1,910

Less: reclassification adjustment for net realized gains, included in net income, net of taxes, of nil for the three months ended September 30, 2013 and 2012 and $488 and $53 for the nine months ended September 30, 2013 and 2012, respectively
 
—

 
—

 
(738
)
 
(81
)
Retirement benefit plans:
 
 

 
 

 
 

 
 

Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $278 and $176 for the three months ended September 30, 2013 and 2012 and $2,010 and $508 for the nine months ended September 30, 2013 and 2012, respectively
 
420

 
266

 
3,043

 
769

Other comprehensive income (loss), net of taxes
 
(1,169
)
 
1,309

 
(8,419
)
 
2,598

Comprehensive income
 
$
14,107

 
$
15,517

 
$
36,931

 
$
46,872



9


American Savings Bank, F.S.B.
Balance Sheets Data
 
(in thousands)
 
September 30, 2013
 
December 31, 2012
Assets
 
 

 
 

 
 

 
 

Cash and cash equivalents
 
 

 
$
189,524

 
 

 
$
184,430

Available-for-sale investment and mortgage-related securities
 
 

 
535,264

 
 

 
671,358

Investment in stock of Federal Home Loan Bank of Seattle
 
 

 
93,413

 
 

 
96,022

Loans receivable held for investment
 
 

 
4,046,184

 
 

 
3,779,218

Allowance for loan losses
 
 

 
(41,052
)
 
 

 
(41,985
)
Loans receivable held for investment, net
 
 

 
4,005,132

 
 

 
3,737,233

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

 
5,829

 
 

 
26,005

Other
 
 

 
248,020

 
 

 
244,435

Goodwill
 
 

 
82,190

 
 

 
82,190

Total assets
 
 

 
$
5,159,372

 
 

 
$
5,041,673

 
 
 
 
 
 
 
 
 
Liabilities and shareholder’s equity
 
 

 
 

 
 

 
 

Deposit liabilities—noninterest-bearing
 
 

 
$
1,205,526

 
 

 
$
1,164,308

Deposit liabilities—interest-bearing
 
 

 
3,105,316

 
 

 
3,065,608

Other borrowings
 
 

 
239,612

 
 

 
195,926

Other
 
 

 
102,172

 
 

 
117,752

Total liabilities
 
 

 
4,652,626

 
 

 
4,543,594

Commitments and contingencies (see “Litigation” below)
 
 

 
 

 
 

 
 

Common stock
 
 

 
335,448

 
 

 
333,712

Retained earnings
 
 

 
195,113

 
 

 
179,763

Accumulated other comprehensive income (loss), net of taxes
 
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities
 
$
(701
)
 
 

 
$
10,761

 
 

Retirement benefit plans
 
(23,114
)
 
(23,815
)
 
(26,157
)
 
(15,396
)
Total shareholder’s equity
 
 

 
506,746

 
 

 
498,079

Total liabilities and shareholder’s equity
 
 

 
$
5,159,372

 
 

 
$
5,041,673

 
 
 
 
 
 
 
 
 
Other assets
 
 

 
 

 
 

 
 

Bank-owned life insurance
 
 

 
$
128,833

 
 

 
$
125,726

Premises and equipment, net
 
 

 
67,634

 
 

 
62,458

Prepaid expenses
 
 

 
4,394

 
 

 
13,199

Accrued interest receivable
 
 

 
13,372

 
 

 
13,228

Mortgage-servicing rights
 
 

 
11,806

 
 

 
10,818

Real estate acquired in settlement of loans, net
 
 

 
1,488

 
 

 
6,050

Other
 
 

 
20,493

 
 

 
12,956

 
 
 

 
$
248,020

 
 

 
$
244,435

Other liabilities
 
 

 
 

 
 

 
 

Accrued expenses
 
 

 
$
20,463

 
 

 
$
17,103

Federal and state income taxes payable
 
 

 
30,249

 
 

 
35,408

Cashier’s checks
 
 

 
24,183

 
 

 
23,478

Advance payments by borrowers
 
 

 
5,694

 
 

 
9,685

Other
 
 

 
21,583

 
 

 
32,078

 
 
 

 
$
102,172

 
 

 
$
117,752

 
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.


10


Other borrowings consisted of securities sold under agreements to repurchase and advances from the Federal Home Loan Bank (FHLB) of Seattle of $140 million and $100 million, respectively, as of September 30, 2013 and $146 million and $50 million, respectively, as of December 31, 2012.
 
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 balance sheet. All such agreements are subject to master netting arrangements, which provide for 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:
 
(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
 
 

 
 

 
 

September 30, 2013
 
$
140

 
$
—

 
$
140

December 31, 2012
 
146

 
—

 
146

 
 
 
Gross amount not offset in the Balance Sheet
(in millions)
 
Net amount of 
liabilities presented
in the Balance Sheet
 
Financial
instruments
 
Cash
collateral
pledged
 
Net amount
September 30, 2013
 
 

 
 

 
 

 
 

Financial institution
 
$
50

 
$
50

 
$
—

 
$
—

Commercial account holders
 
90

 
90

 
—

 
—

Total
 
$
140

 
$
140

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
December 31, 2012
 
 

 
 

 
 

 
 

Financial institution
 
$
50

 
$
50

 
$
—

 
$
—

Commercial account holders
 
96

 
96

 
—

 
—

Total
 
$
146

 
$
146

 
$
—

 
$
—

 
Investment and mortgage-related securities portfolio.
 
Available-for-sale securities.  The book value (amortized cost), gross unrealized gains and losses, estimated fair value and gross unrealized losses (fair value and amount by duration of time in which positions have been held in a continuous loss position) for securities held in ASB’s “available-for-sale” portfolio by major security type were as follows:
 

11


 
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair
value
 
Gross unrealized losses
 
 
 
 
 
 
Less than 12 months
 
12 months or longer
(in thousands)
 
 
 
 
 
Fair value
 
Amount
 
Fair value
 
Amount
September 30, 2013
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Federal agency obligations
 
$
99,812

 
$
389

 
$
(1,936
)
 
$
98,265

 
$
29,755

 
$
(1,936
)
 
$
—

 
$
—

Mortgage-related securities- FNMA, FHLMC and GNMA
 
359,437

 
6,308

 
(7,768
)
 
357,977

 
164,998

 
(7,620
)
 
3,910

 
(148
)
Municipal bonds
 
77,181

 
2,034

 
(193
)
 
79,022

 
26,526

 
(193
)
 
—

 
—

 
 
$
536,430

 
$
8,731

 
$
(9,897
)
 
$
535,264

 
$
221,279