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HEI Reports Second Quarter 2021 Results

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2Q21 Net Income of $63.9 Million and Diluted Earnings Per Share (EPS)¹ of $0.58

Utility Focused on Cost Efficiencies to Benefit Customers and Progressing Hawaii's Climate Goals

Bank Results Reflect Improved Economy and Credit Quality, Stable Net Interest Margin

HONOLULU, Aug. 9, 2021 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the second quarter of 2021 of $63.9 million and EPS of $0.58 compared to $48.9 million and EPS of $0.45 for the second quarter of 2020.

"HEI delivered strong consolidated financial results in the second quarter as Hawaii's economy strengthened and as we advanced key priorities across our enterprise," said Constance H. Lau, HEI president and CEO.

"At our utility the new performance-based regulation (PBR) framework is now fully in effect as of June 1, and we've begun delivering savings from our cost management program to our customers. We remain focused on cost efficiencies as we make needed investments to continue to provide safe, reliable electricity and reach Hawaii's climate goals.

"Our bank's strong second quarter results reflect the reopened local economy and increased tourism, solid execution and our bank's continuing efforts to work closely with its customers through the pandemic. The bank's results benefited from a release of reserves for credit losses, driven by the improved economy and credit quality, while the bank continues to transform its operating model to provide excellent customer service in an increasingly digital world," said Lau.

_____________

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

HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company's (Hawaiian Electric) net income for the second quarter of 2021 was $41.9 million, compared to $42.3 million in the second quarter of 2020, primarily driven by the following after-tax items:

  • $6 million from higher operations and maintenance expenses consisting primarily of (i) $3 million due to more generating facility overhauls, (ii) $2 million from lower bad debt expense in the second quarter of 2020 resulting from a Hawaii Public Utilities Commission (PUC) decision allowing deferral of COVID-19 related expenses, (iii) $1 million from a write-off due to termination of an agreement relating to a combined heat and power unit, and (iv) $1 million due to an increase in an environmental reserve, partially offset by $1 million from lower staffing levels and efficiency improvements; and

  • $1 million from higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency.

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

  • $3 million from higher rate adjustment mechanism revenues;

  • $2 million related solely to a change in the timing for revenue recognition within the year 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;

  • $1 million lower non-service pension costs due to the reset of pension costs included in rates as part of a final rate case decision; and

  • $1 million lower enterprise resource planning system implementation benefits to be passed on to customers.

_________________

Note: Amounts indicated as after-tax in this earnings release are based upon adjusting items using the current year composite statutory tax rates of 25.75% for the utilities and 26.79% for the bank.

AMERICAN SAVINGS BANK EARNINGS
American Savings Bank's (American) second quarter of 2021 net income was $30.3 million, compared to $29.6 million in the first, or linked, quarter of 2021 and $14.0 million in the second quarter of 2020. The increase in net income compared to the linked and prior year quarters was primarily due to a credit-driven reserve release that resulted in a negative provision for credit losses of $12.2 million for the second quarter. This compares to a negative provision for credit losses of $8.4 million in the first quarter of 2021 and a provision for credit losses of $15.1 million in the second quarter of 2020.

Total loans were $5.2 billion as of June 30, 2021, down 2.7% from December 31, 2020. The reduction in the loan portfolio included approximately $228 million in forgiven ASB CARES (Paycheck Protection Program) loans, in addition to declines in the home equity line of credit and consumer portfolios. The decrease in these portfolios was partially offset by growth in the commercial real estate portfolio.

Total deposits were $7.9 billion as of June 30, 2021, an increase of 6.6% from December 31, 2020. For the second quarter of 2021, the average cost of funds was 0.07%, down one basis point versus the linked quarter and down eleven basis points versus the prior year quarter.

Overall, American's return on average equity2 for the second quarter of 2021 was 16.8%, compared to 16.0% in the linked quarter and 8.0% in the second quarter of 2020. Return on average assets was 1.38% for the second quarter of 2021, compared to 1.40% in the linked quarter and 0.72% in the same quarter last year.

In the second quarter of 2021, American paid dividends of $23.0 million to HEI. American had a Tier 1 leverage ratio of 8.0% at June 30, 2021.

Please refer to American's news release issued on July 30, 2021 for additional information on American.

HOLDING AND OTHER COMPANIES
The holding and other companies' net loss was $8.3 million in the second quarter of 2021 compared to $7.5 million in the second quarter of 2020. The greater net loss was primarily due to increased charitable contribution expense relating to a settlement agreement associated with an executive transition.

BOARD DECLARES QUARTERLY DIVIDEND
On August 6, 2021, HEI announced that the Board of Directors declared a quarterly cash dividend of $0.34 per share, payable on September 10, 2021 to shareholders of record at the close of business on August 19, 2021 (ex-dividend date is August 18, 2021). This quarterly dividend is equivalent to an annual rate of $1.36 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 6, 2021 of $43.83, HEI's dividend yield is 3.1%.

_______________________

2 Bank return on average equity calculated using weighted average daily common equity.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2021 GUIDANCE
HEI will conduct a webcast and conference call to review its consolidated results and 2021 earnings guidance and outlook on Monday, August 9, 2021 at 10:15 a.m. Hawaii time (4:15 p.m. Eastern).

Parties in the U.S. may listen to the conference call by dialing (844) 834-0652. International parties may listen to the conference call by dialing (412) 317-5198. Parties may also access presentation materials and/or listen to the conference call by visiting the conference call/webcast link on HEI's website at www.hei.com under the "Investor Relations" section, 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. The audio replay will also be available about two hours after the event through August 23, 2021. To access the audio replay, dial (877) 344-7529 (U.S.) or (412) 317-0088 (international) and enter passcode 10157240.

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 on HEI's website in the Investor Relations section. Accordingly, investors should routinely monitor the Investor Relations section of HEI's website at www.hei.com in addition to following HEI's, Hawaiian Electric's and American's press releases, HEI's and Hawaiian Electric's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts. The information on HEI's website is not incorporated by reference in this document or in 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 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 in this document or in HEI's and Hawaiian Electric's SEC filings.

HEI supplies power to approximately 95% of Hawaii's population through its electric utility, Hawaiian Electric; provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii's largest financial institutions; and helps advance Hawaii's clean energy and sustainability goals through investments by its non-regulated subsidiary, Pacific Current.

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, 2020 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, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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)


2021


2020


2021


2020

Revenues









Electric utility


$

601,879



$

534,215



$

1,166,743



$

1,131,657


Bank


77,260



74,714



154,391



154,452


Other


1,118



16



2,069



22


Total revenues


680,257



608,945



1,323,203



1,286,131


Expenses









Electric utility


534,195



466,414



1,029,945



1,019,898


Bank


37,454



66,221



79,289



126,556


Other


6,752



4,754



14,082



8,419


Total expenses


578,401



537,389



1,123,316



1,154,873


Operating income (loss)









Electric utility


67,684



67,801



136,798



111,759


Bank


39,806



8,493



75,102



27,896


Other


(5,634)



(4,738)



(12,013)



(8,397)


Total operating income


101,856



71,556



199,887



131,258


Retirement defined benefits credit (expense)—other than service costs


1,216



(934)



3,651



(1,868)


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


(23,317)



(22,613)



(47,053)



(44,388)


Allowance for borrowed funds used during construction


812



752



1,559



1,440


Allowance for equity funds used during construction


2,377



2,194



4,568



4,209


Gain on sale of investment securities, net




9,275



528



9,275


Income before income taxes


82,944



60,230



163,140



99,926


Income taxes


18,599



10,870



33,964



16,673


Net income


64,345



49,360



129,176



83,253


Preferred stock dividends of subsidiaries


473



473



946



946


Net income for common stock


$

63,872



$

48,887



$

128,230



$

82,307


Basic earnings per common share


$

0.58



$

0.45



$

1.17



$

0.75


Diluted earnings per common share


$

0.58



$

0.45



$

1.17



$

0.75


Dividends declared per common share


$

0.34



$

0.33



$

0.68



$

0.66


Weighted-average number of common shares outstanding


109,282



109,146



109,252



109,098


Weighted-average shares assuming dilution


109,515



109,305



109,557



109,374


Net income (loss) for common stock by segment









Electric utility


$

41,901



$

42,329



$

85,259



$

66,234


Bank


30,284



14,014



59,840



29,775


Other


(8,313)



(7,456)



(16,869)



(13,702)


Net income for common stock


$

63,872



$

48,887



$

128,230



$

82,307


Comprehensive income attributable to Hawaiian Electric Industries, Inc.


$

80,344



$

48,555



$

100,686



$

100,187


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






10.5



9.4



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)


2021


2020


2021


2020

Revenues


$

601,879



$

534,215



$

1,166,743



$

1,131,657


Expenses









Fuel oil


139,136



112,451



266,563



285,672


Purchased power


162,465



136,838



304,761



276,654


Other operation and maintenance


118,142



110,041



232,712



237,588


Depreciation


57,381



55,696



114,736



111,546


Taxes, other than income taxes


57,071



51,388



111,173



108,438


Total expenses


534,195



466,414



1,029,945



1,019,898


Operating income


67,684



67,801



136,798



111,759


Allowance for equity funds used during construction


2,377



2,194



4,568



4,209


Retirement defined benefits credit (expense)—other than service costs


1,020



(382)



2,041



(763)


Interest expense and other charges, net


(17,995)



(17,338)



(35,978)



(33,932)


Allowance for borrowed funds used during construction


812



752



1,559



1,440


Income before income taxes


53,898



53,027



108,988



82,713


Income taxes


11,498



10,199



22,731



15,481


Net income


42,400



42,828



86,257



67,232


Preferred stock dividends of subsidiaries


229



229



458



458


Net income attributable to Hawaiian Electric


42,171



42,599



85,799



66,774


Preferred stock dividends of Hawaiian Electric


270



270



540



540


Net income for common stock


$

41,901



$

42,329



$

85,259



$

66,234


Comprehensive income attributable to Hawaiian Electric


$

41,936



$

42,354



$

85,328



$

66,285


OTHER ELECTRIC UTILITY INFORMATION









Kilowatthour sales (millions)









Hawaiian Electric


1,514



1,444



2,942



2,940


Hawaii Electric Light


256



224



501



476


Maui Electric


256



206



492



464




2,026



1,874



3,935



3,880


Average fuel oil cost per barrel


$

73.58



$

63.12



$

68.59



$

72.77


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






8.9



7.9



1 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, 2021


March 31, 2021


June 30, 2020


2021


2020

Interest and dividend income











Interest and fees on loans


$

51,026



$

49,947



$

53,541



$

100,973



$

109,086


Interest and dividends on investment securities


11,040



8,673



6,288



19,713



15,718


Total interest and dividend income


62,066



58,620



59,829



120,686



124,804


Interest expense











Interest on deposit liabilities


1,281



1,462



3,071



2,743



6,658


Interest on other borrowings


23



27



75



50



388


Total interest expense


1,304



1,489



3,146



2,793



7,046


Net interest income


60,762



57,131



56,683



117,893



117,758


Provision for credit losses


(12,207)



(8,435)



15,133



(20,642)



25,534


Net interest income after provision for credit losses


72,969



65,566



41,550



138,535



92,224


Noninterest income











Fees from other financial services


5,464



5,073



3,102



10,537



7,673


Fee income on deposit liabilities


3,904



3,863



2,897



7,767



8,010


Fee income on other financial products


2,201



2,442



1,212



4,643



3,084


Bank-owned life insurance


1,624



2,561



1,673



4,185



2,467


Mortgage banking income


1,925



4,300



6,252



6,225



8,252


Gain on sale of investment securities, net




528



9,275



528



9,275


Other income, net


76



272



(251)



348



162


Total noninterest income


15,194



19,039



24,160



34,233



38,923


Noninterest expense











Compensation and employee benefits


27,670



28,037



25,079



55,707



50,856


Occupancy


5,100



4,969



5,442



10,069



10,709


Data processing


4,533



4,351



3,849



8,884



7,686


Services


2,475



2,862



2,474



5,337



5,283


Equipment


2,394



2,222



2,290



4,616



4,629


Office supplies, printing and postage


978



1,044



1,049



2,022



2,390


Marketing


665



648



379



1,313



1,181


FDIC insurance


788



816



751



1,604



853


Other expense1


3,568



2,554



7,063



6,122



11,257


Total noninterest expense


48,171



47,503



48,376



95,674



94,844


Income before income taxes


39,992



37,102



17,334



77,094



36,303


Income taxes


9,708



7,546



3,320



17,254



6,528


Net income


$

30,284



$

29,556



$

14,014



$

59,840



$

29,775


Comprehensive income (loss)


$

47,283



$

(16,198)



$

13,734



$

31,085



$

49,342


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









Return on average assets


1.38



1.40



0.72



1.39



0.79


Return on average equity


16.76



16.04



8.00



16.40



8.57


Return on average tangible common equity


18.92



18.06



9.07



18.48



9.72


Net interest margin


2.98



2.95



3.21



2.97



3.46


Efficiency ratio


63.42



62.36



59.84



62.89



60.53


Net charge-offs to average loans outstanding


0.04



0.18



0.49



0.11



0.46


As of period end











Nonaccrual loans to loans receivable held for investment


1.03



1.00



0.86






Allowance for credit losses to loans outstanding


1.51



1.73



1.50






Tangible common equity to tangible assets


7.5



7.3



7.9






Tier-1 leverage ratio


8



8.3



8.4






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


$

23.0



$

5.0



$



$

28.0



$

28.0



1 The three- and six-month periods ended June 30, 2021 include approximately $0.1 million and $0.4 million, respectively, of certain direct and incremental COVID-19 related costs. The three- and six-month periods ended June 30, 2020 include approximately $3.7 million and $3.8 million, respectively, of certain significant direct and incremental COVID-19 related costs. These costs for the first six months of 2020, which have been recorded in Other expense, include $2.3 million of compensation expense and $1.1 million of enhanced cleaning and sanitation costs.


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




Hawaiian Electric Industries, Inc. (PRNewsFoto/Hawaiian Electric Industries, Inc.)
Hawaiian Electric Industries, Inc. (PRNewsFoto/Hawaiian Electric Industries, Inc.)
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SOURCE Hawaiian Electric Industries, Inc.