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HEI REPORTS SECOND QUARTER 2022 RESULTS

2Q22 Net Income of $52.5M and Diluted Earnings Per Share (EPS)1 of $0.48

Utility Performing Well Despite Inflationary Environment

Bank Results Reflect Strong Loan Growth, Expanding Net Interest Margin, Favorable Credit Trends and More Normalized Provision

HONOLULU, Aug. 8, 2022 /PRNewswire/ — Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported consolidated net income for common stock for the second quarter of 2022 of $52.5 million and EPS of $0.48 compared to $63.9 million and EPS of $0.58 for the second quarter of 2021. The lower net income was due primarily to the prior year’s negative provision for credit losses at American Savings Bank, and the return to a more normalized provision expense due to strong loan growth.

“Our consolidated second quarter results reflect solid performance across our enterprise,” said Scott Seu, HEI president and CEO. “The utility continues to execute well under performance-based regulation, and will continue to focus on cost control to moderate the impacts of inflation and high fuel costs on customer bills. We did see higher maintenance expenses due to purposeful acceleration of work on our generating units to reduce downtimes and ensure reliable service to our customers as we completely transition off of coal and one of the largest power plants in the state on September 1. Our bank results reflect good execution from the team and an earnings level that is driven by a more normalized provision in comparison to recent periods. The bank saw strong loan growth during the quarter, and credit quality is trending favorably. Our bank continues to progress its digital transformation, and launched Zelle during the quarter, providing a fast and easy way for customers to send and receive money.

“We know that our communities and customers are feeling financially challenged, and we are continuing to provide options to help manage their utility bills, while our bank continues working to help meet customers’ financial needs,” said Seu.

1 Unless otherwise indicated, throughout this release earnings per share (EPS) refers to diluted earnings per share.

HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS2

Hawaiian Electric’s net income for the second quarter of 2022 was $44.1 million, compared to $41.9 million in the second quarter of 2021, with the increase primarily driven by the following after-tax items:

  • $7 million higher Annual Revenue Adjustment revenues;
  • $1 million related solely to a change in the timing for revenue recognition within the year for Maui County operations that eliminates seasonality in recognizing target revenues and results in recognizing revenues evenly throughout the year, with target revenues recognized on an annual basis remaining unchanged; and
  • $1 million in higher major project interim recovery revenues related to grid modernization.

These items were partially offset by the following after-tax items:

  • $5 million in higher operations and maintenance expenses, including $6 million driven by more generating facility overhauls and maintenance performed and $1 million related to higher bad debt expense, partially offset by $2 million in lower expenses compared to last year from (i) last year’s write-off due to termination of an agreement relating to a combined heat and power unit and (ii) higher 2021 expenses for environmental reserves;
  • $1 million higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency; and
  • $1 million in higher interest expense.

2 Note: Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%.

AMERICAN SAVINGS BANK (ASB) EARNINGS

ASB’s second quarter of 2022 net income was $17.5 million, compared to $23.9 million in the first quarter of 2022 and $30.3 million in second quarter of 2021. The decrease in net income compared to the linked and prior year quarters primarily reflected a return to a more normalized provision due to strong loan growth, following five consecutive quarters of provision releases.   

Total earning assets as of June 30, 2022 were $8.7 billion, up 2.6% from December 31, 2021.

Total loans were $5.4 billion as of June 30, 2022, up 4.2% from December 31, 2021, reflecting growth across nearly the entire portfolio and driven by strong growth in commercial real estate loans.     

Total deposits were $8.3 billion as of June 30, 2022, an increase of 1.0% from December 31, 2021. For the second quarter of 2022, the average cost of funds was 0.05%, flat versus the linked quarter and down two basis points versus the same quarter last year.         

ASB’s return on average equity3 for the second quarter of 2022 was 12.2%, compared to 13.7% in the linked quarter and 16.8% in the second quarter of 2021. Return on average assets was 0.76% for the second quarter of 2022, compared to 1.04% in the linked quarter and 1.38% in the same quarter last year.

In the second quarter of 2022, ASB paid dividends of $12.0 million to HEI. ASB had a Tier 1 leverage ratio of 7.7% as of June 30, 2022.

3 Bank return on average equity calculated using daily average common equity.

HOLDING AND OTHER COMPANIES

The holding and other companies’ net loss was $9.1 million in the second quarter of 2022 compared to $8.3 million in the second quarter of 2021. The higher net loss was primarily due to higher interest expense, principally due to higher borrowings, and higher general and administrative expenses, including higher charitable contributions (due to timing), partially offset by increased charitable contribution expense in the second quarter of 2021 related to a settlement agreement associated with an executive transition.

BOARD DECLARES QUARTERLY DIVIDEND

On August 4, 2022, HEI announced that the Board of Directors declared a quarterly cash dividend of $0.35 per share, payable on September 9, 2022 to shareholders of record at the close of business on August 18, 2022 (ex-dividend date is August 17, 2022). This quarterly dividend is equivalent to an annual rate of $1.40 per share. Dividends have been paid on an uninterrupted basis since 1901. At the indicated annual dividend rate and based on the closing price per share on August 4, 2022 of $42.51, HEI’s dividend yield is 3.3%.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2022 GUIDANCE

HEI will conduct a webcast and conference call to review its consolidated results and 2022 earnings guidance and outlook on Monday, August 8, 2022 at 10:15 a.m. Hawaii time (4:15 p.m. Eastern).

To listen to the conference call, dial 1-844-200-6205 (U.S.) or +1-929-526-1599 (international) and enter passcode 638186. Parties may also access presentation materials and/or listen to the conference call by visiting the conference call link on HEI’s website at www.hei.com under “Investor Relations,” sub-heading “News and Events — Events and Presentations.”

A replay will be available online and via phone. The online replay will be available on HEI’s website about two hours after the event. An audio replay will also be available about two hours after the event through August 22, 2022. To access the audio replay, dial 1-866-813-9403 (U.S.) or +44-204-525-0658 (international) and enter passcode 484022.

HEI and Hawaiian Electric intend to continue to use HEI’s website, www.hei.com, as a means of disclosing additional information; such disclosures will be included in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website, in addition to following HEI’s, Hawaiian Electric’s and ASB’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. Investors may sign up to receive e-mail alerts via the “Investor Relations” section of the website. The information on HEI’s website is not incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference.

Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms to review documents filed with, and issued by, the PUC. No information on the PUC website is incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings.

ABOUT HEI

The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of Hawaii. HEI’s electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii’s population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy. Its banking subsidiary, ASB, is one of Hawaii’s largest financial institutions, providing a wide array of banking and other financial services and working to advance economic growth, affordability and financial fitness. HEI also helps advance Hawaii’s sustainability goals through investments by its non-regulated subsidiary, Pacific Current. For more information, visit www.hei.com.

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 “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political 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 “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2021 and HEI’s other periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, 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.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)




Three months ended June 30


Six months ended June 30

(in thousands, except per share amounts)


2022


2021


2022


2021

Revenues









Electric utility


$      818,873


$      601,879


$  1,527,665


$  1,166,743

Bank


75,324


77,260


150,439


154,391

Other


1,410


1,118


2,571


2,069

Total revenues


895,607


680,257


1,680,675


1,323,203

Expenses









Electric utility


747,719


534,195


1,382,916


1,029,945

Bank


53,401


37,454


98,486


79,289

Other


7,819


6,752


13,329


14,082

Total expenses


808,939


578,401


1,494,731


1,123,316

Operating income (loss)









Electric utility


71,154


67,684


144,749


136,798

Bank


21,923


39,806


51,953


75,102

Other


(6,409)


(5,634)


(10,758)


(12,013)

Total operating income


86,668


101,856


185,944


199,887

Retirement defined benefits credit—other than service costs


1,246


1,216


2,489


3,651

Interest expense, net—other than on deposit liabilities and other bank borrowings


(24,965)


(23,317)


(49,314)


(47,053)

Allowance for borrowed funds used during construction


798


812


1,576


1,559

Allowance for equity funds used during construction


2,470


2,377


4,879


4,568

Gain on sales of investment securities, net and equity-method investment




8,123


528

Income before income taxes


66,217


82,944


153,697


163,140

Income taxes


13,203


18,599


31,043


33,964

Net income


53,014


64,345


122,654


129,176

Preferred stock dividends of subsidiaries


473


473


946


946

Net income for common stock


$        52,541


$        63,872


$      121,708


$      128,230

Basic earnings per common share


$            0.48


$            0.58


$            1.11


$            1.17

Diluted earnings per common share


$            0.48


$            0.58


$            1.11


$            1.17

Dividends declared per common share


$            0.35


$            0.34


$            0.70


$            0.68

Weighted-average number of common shares outstanding


109,432


109,282


109,397


109,252

Weighted-average shares assuming dilution


109,662


109,515


109,714


109,557

Net income (loss) for common stock by segment









Electric utility


$        44,135


$        41,901


$        90,544


$        85,259

Bank


17,466


30,284


41,336


59,840

Other


(9,060)


(8,313)


(10,172)


(16,869)

Net income for common stock


$        52,541


$        63,872


$      121,708


$      128,230

Comprehensive income (loss) attributable to HEI


$       (35,299)


$        80,344


$       (83,291)


$      100,686

Return on average common equity (%) (twelve months ended)






10.4


10.5


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. 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. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)




Three months ended June 30


Six months ended June 30

($ in thousands, except per barrel amounts)


2022


2021


2022


2021

Revenues


$      818,873


$      601,879


$  1,527,665


$  1,166,743

Expenses









Fuel oil


269,655


139,136


490,941


266,563

Purchased power


218,085


162,465


381,618


304,761

Other operation and maintenance


124,892


118,142


250,149


232,712

Depreciation


58,739


57,381


117,210


114,736

Taxes, other than income taxes


76,348


57,071


142,998


111,173

Total expenses


747,719


534,195


1,382,916


1,029,945

Operating income


71,154


67,684


144,749


136,798

Allowance for equity funds used during construction


2,470


2,377


4,879


4,568

Retirement defined benefits credit—other than service costs


991


1,020


1,981


2,041

Interest expense and other charges, net


(18,800)


(17,995)


(37,126)


(35,978)

Allowance for borrowed funds used during construction


798


812


1,576


1,559

Income before income taxes


56,613


53,898


116,059


108,988

Income taxes


11,979


11,498


24,517


22,731

Net income


44,634


42,400


91,542


86,257

Preferred stock dividends of subsidiaries


229


229


458


458

Net income attributable to Hawaiian Electric


44,405


42,171


91,084


85,799

Preferred stock dividends of Hawaiian Electric


270


270


540


540

Net income for common stock


$        44,135


$        41,901


$        90,544


$        85,259

Comprehensive income attributable to Hawaiian Electric


$        44,186


$        41,936


$        90,646


$        85,328

OTHER ELECTRIC UTILITY INFORMATION









Kilowatthour sales (millions)









   Hawaiian Electric


1,506


1,514


2,954


2,942

   Hawaii Electric Light


261


256


515


501

   Maui Electric


264


256


519


492



2,031


2,026


3,988


3,935

Average fuel oil cost per barrel


$        139.51


$          73.58


$        120.54


$          68.59

Return on average common equity (%) (twelve months ended)1






8.2


8.9



Simple average.


This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. 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.

STATEMENTS OF INCOME DATA

(Unaudited)




Three months ended 


Six months ended June 30

(in thousands)


June 30, 2022


March 31,

2022


June 30, 2021


2022


2021

Interest and dividend income











Interest and fees on loans


$       48,129


$       46,005


$       51,026


$           94,134


$         100,973

Interest and dividends on investment securities


14,693


13,984


11,040


28,677


19,713

Total interest and dividend income


62,822


59,989


62,066


122,811


120,686

Interest expense











Interest on deposit liabilities


921


947


1,281


1,868


2,743

Interest on other borrowings


139


5


23


144


50

Total interest expense


1,060


952


1,304


2,012


2,793

Net interest income


61,762


59,037


60,762


120,799


117,893

Provision for credit losses


2,757


(3,263)


(12,207)


(506)


(20,642)

Net interest income after provision for credit losses


59,005


62,300


72,969


121,305


138,535

Noninterest income











Fees from other financial services


4,716


5,587


5,464


10,303


10,537

Fee income on deposit liabilities


4,552


4,691


3,904


9,243


7,767

Fee income on other financial products


2,529


2,718


2,201


5,247


4,643

Bank-owned life insurance


(142)


681


1,624


539


4,185

Mortgage banking income


372


1,077


1,925


1,449


6,225

Gain on sale of real estate



1,002



1,002


Gain on sale of investment securities, net






528

Other income, net


475


372


76


847


348

Total noninterest income


12,502


16,128


15,194


28,630


34,233

Noninterest expense











Compensation and employee benefits


27,666


27,215


27,670


54,881


55,707

Occupancy


5,467


5,952


5,100


11,419


10,069

Data processing


4,484


4,151


4,533


8,635


8,884

Services


2,522


2,439


2,475


4,961


5,337

Equipment


2,402


2,329


2,394


4,731


4,616

Office supplies, printing and postage


1,073


1,060


978


2,133


2,022

Marketing


934


1,018


665


1,952


1,313

FDIC insurance


891


808


788


1,699


1,604

Other expense


3,959


3,241


3,568


7,200


6,122

Total noninterest expense


49,398


48,213


48,171


97,611


95,674

Income before income taxes


22,109


30,215


39,992


52,324


77,094

Income taxes


4,643


6,345


9,708


10,988


17,254

Net income


$       17,466


$       23,870


$       30,284


$           41,336


$           59,840

Comprehensive income (loss)


$      (71,369)


$      (98,571)


$       47,283


$        (169,940)


$           31,085

OTHER BANK INFORMATION (annualized %, except as of period end)









Return on average assets


0.76


1.04


1.38


0.90


1.39

Return on average equity


12.17


13.70


16.76


13.01


16.40

Return on average tangible common equity


14.20


15.53


18.92


14.95


18.48

Net interest margin


2.85


2.79


2.98


2.82


2.97

Efficiency ratio


66.52


64.14


63.42


65.32


62.89

Net charge-offs to average loans outstanding


0.00


0.01


0.04


0.01


0.11

As of period end











Nonaccrual loans to loans receivable held for investment


0.40


0.72


1.03





Allowance for credit losses to loans outstanding


1.28


1.30


1.51





Tangible common equity to tangible assets


4.9


5.8


7.5





Tier-1 leverage ratio


7.7


7.8


8.0





Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)


$           12.0


$           15.0


$           23.0


$               27.0


$               28.0


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

Contact:

Julie R. Smolinski

Telephone: (808) 543-7300


Vice President, Investor Relations & Corporate Sustainability

E-mail:  ir@hei.com

 

HEI (PRNewsfoto/Hawaiian Electric Industries, Inc.)

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/hei-reports-second-quarter-2022-results-301601330.html

SOURCE Hawaiian Electric Industries, Inc.

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