HEI Reports Second Quarter 2020 Results
08/06/2020 - 06:00 AM
HONOLULU , Aug. 6, 2020 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported consolidated net income for common stock for the second quarter of 2020 of $48.9 million $0.45 compared to $42.5 million $0.39 for the second quarter of 2019.
"I am very proud of the performance of our companies and our employees in the unprecedented COVID-19 period," said Connie Lau , HEI president and CEO. "While all of us continue to face uncertainties regarding the trajectory of the virus and its implications for the pace of economic recovery, what is clear is the strength and resilience of our businesses, the dedication of our employees, and our commitment to supporting our customers and community.
"We continue to maintain a strong financial position across the enterprise. Our utility's stabilizing regulatory mechanisms, our bank's conservative approach to risk, and our strong enterprise-wide liquidity have created a solid foundation, enabling us to continue delivering good consolidated results and supporting our customers and community through these challenging times.
"Our utility is advancing important cost reductions to help manage affordability for our customers. As we tighten our belts, we remain focused on collaborating with stakeholders to progress our renewable energy transition, supporting Hawaii's economic recovery and clean energy goals.
"Our bank's results reflect the impact of the crisis in the compression of lending margins and higher provision for potential credit losses. The bank was able to offset some of these pressures through strong mortgage production, good cost control and a gain on sale of securities, while continued deposit growth reinforced its liquidity position and low cost funding base. As the uncertain environment unfolds, the bank will continue to work closely with customers to manage our risk and serve as a source of stability," 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 2020 was $42.3 million $32.6 million
$7 million $1.6 million $1 million $4 million $7 million $5 million $4 million $2 million Oahu ), and $1 million Maui County ) and Hawaii Electric Light (Hawaii Island)) and $1 million $1 million $1 million These items were partially offset by the following after-tax items:
$1 million $1 million $1 million
_________________
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 2020 net income was $14.0 million $15.8 million $17.0 million $7 million $4 million $7.1 million $2.2 million
Total loans were $5.5 billion 6.45% 2 from December 31, 2019, driven mainly by the addition of $370 million
Total deposits were $7.0 billion 12.1% 3 from December 31, 2019. The average cost of funds was 0.18% for the quarter, down six basis points versus the linked quarter and down twelve basis points versus the prior year quarter.
Overall, American's return on average equity4 for the second quarter of 2020 was 8.00% , compared to 9.15% in the linked quarter and 10.46% in the second quarter of 2019. Return on average assets was 0.72% for the second quarter of 2020, compared to 0.87% in the linked quarter and 0.96% in the same quarter last year.
In the second quarter of 2020, American retained capital and did not pay a dividend to HEI to support its commitment to PPP lending to the community while maintaining healthy capital levels. American had a leverage ratio of 8.4% at June 30, 2020 .
Please refer to American's news release issued on July 30, 2020 for additional information on American.
_____________
2
Annualized from December 31, 2019, total loans as of June 30, 2020 increased 12.9% .
3
Annualized from December 31, 2019, total deposits as of June 30, 2020 increased 24.2% .
4
Bank return on average equity calculated using annualized second quarter 2020 bank net income and weighted average daily common equity.
HOLDING AND OTHER COMPANIES
The holding and other companies' net loss was $7.5 million $7.1 million
BOARD MAINTAINS QUARTERLY DIVIDEND
On August 5, 2020 , HEI announced that the Board of Directors maintained HEI's quarterly cash dividend of $0.33 per share payable on September 10, 2020 , to shareholders of record at the close of business on August 21, 2020 (ex-dividend date is August 20, 2020 ). This quarterly dividend is equivalent to an annual rate of $1.32 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 5, 2020 of $34.93 , HEI's dividend yield is 3.8% .
HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2020 GUIDANCE
HEI will conduct a webcast and conference call to review its consolidated results and 2020 earnings guidance and outlook at 10:15 a.m. Hawaii time (4:15 p.m. Eastern time ) on Thursday, August 6, 2020.
Interested parties within the United States may listen to the conference by calling (844) 834-0652 and international parties may listen to the conference by calling (412) 317-5198. Parties may also access any presentation materials for the conference call and/or listen to the conference call by accessing the webcast on HEI's website at www.hei.com under the "Investor Relations" section, sub-heading "News and Events – Events and Presentations."
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 Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order 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.
An on-line replay of the August 6, 2020 webcast will be available on HEI's website beginning about two hours after the event. Audio replays of the conference call will also be available approximately two hours after the event through August 20, 2020 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 10146073.
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, LLC.
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, 2019 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 release, 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)
2020
2019
2020
2019
Revenues
Electric utility
$
534,215
$
633,784
$
1,131,657
$
1,212,279
Bank
74,714
81,687
154,452
164,739
Other
16
14
22
82
Total revenues
608,945
715,485
1,286,131
1,377,100
Expenses
Electric utility
466,414
578,090
1,019,898
1,100,025
Bank
66,221
60,435
126,556
117,365
Other
4,754
4,326
8,419
9,139
Total expenses
537,389
642,851
1,154,873
1,226,529
Operating income (loss)
Electric utility
67,801
55,694
111,759
112,254
Bank
8,493
21,252
27,896
47,374
Other
(4,738)
(4,312)
(8,397)
(9,057)
Total operating income
71,556
72,634
131,258
150,571
Retirement defined benefits expense—other than service costs
(934)
(761)
(1,868)
(1,524)
Interest expense, net—other than on deposit liabilities and
(22,613)
(23,533)
(44,388)
(46,656)
Allowance for borrowed funds used during construction
752
1,179
1,440
2,257
Allowance for equity funds used during construction
2,194
3,175
4,209
6,085
Gain on sale of investment securities, net
9,275
—
9,275
—
Income before income taxes
60,230
52,694
99,926
110,733
Income taxes
10,870
9,709
16,673
21,587
Net income
49,360
42,985
83,253
89,146
Preferred stock dividends of subsidiaries
473
473
946
946
Net income for common stock
$
48,887
$
42,512
$
82,307
$
88,200
Basic earnings per common share
$
0.45
$
0.39
$
0.75
$
0.81
Diluted earnings per common share
$
0.45
$
0.39
$
0.75
$
0.81
Dividends declared per common share
$
0.33
$
0.32
$
0.66
$
0.64
Weighted-average number of common shares outstanding
109,146
108,938
109,098
108,925
Weighted-average shares assuming dilution
109,305
109,255
109,374
109,324
Net income (loss) for common stock by segment
Electric utility
$
42,329
$
32,574
$
66,234
$
64,700
Bank
14,014
17,016
29,775
37,855
Other
(7,456)
(7,078)
(13,702)
(14,355)
Net income for common stock
$
48,887
$
42,512
$
82,307
$
88,200
Comprehensive income attributable to Hawaiian Electric
$
48,555
$
56,211
$
100,187
$
111,140
Return on average common equity (twelve months ended)
9.4
%
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)
2020
2019
2020
2019
Revenues
$
534,215
$
633,784
$
1,131,657
$
1,212,279
Expenses
Fuel oil
112,451
181,620
285,672
342,229
Purchased power
136,838
162,854
276,654
297,299
Other operation and maintenance
110,041
119,260
237,588
237,390
Depreciation
55,696
53,913
111,546
107,860
Taxes, other than income taxes
51,388
60,443
108,438
115,247
Total expenses
466,414
578,090
1,019,898
1,100,025
Operating income
67,801
55,694
111,759
112,254
Allowance for equity funds used during construction
2,194
3,175
4,209
6,085
Retirement defined benefits expense—other than service costs
(382)
(701)
(763)
(1,404)
Interest expense and other charges, net
(17,338)
(18,530)
(33,932)
(36,516)
Allowance for borrowed funds used during construction
752
1,179
1,440
2,257
Income before income taxes
53,027
40,817
82,713
82,676
Income taxes
10,199
7,744
15,481
16,978
Net income
42,828
33,073
67,232
65,698
Preferred stock dividends of subsidiaries
229
229
458
458
Net income attributable to Hawaiian Electric
42,599
32,844
66,774
65,240
Preferred stock dividends of Hawaiian Electric
270
270
540
540
Net income for common stock
$
42,329
$
32,574
$
66,234
$
64,700
Comprehensive income attributable to Hawaiian Electric
$
42,354
$
32,597
$
66,285
$
64,747
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
Hawaiian Electric
1,444
1,593
2,940
3,016
Hawaii Electric Light
224
253
476
498
Maui Electric
206
273
464
521
1,874
2,119
3,880
4,035
Average fuel oil cost per barrel
$
63.12
$
88.38
$
72.77
$
84.44
Return on average common equity (twelve months ended)1
7.9
%
7.8
%
1
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, 2020
March 31, 2020
June 30, 2019
2020
2019
Interest and dividend income
Interest and fees on loans
$
53,541
$
55,545
$
58,620
$
109,086
$
116,480
Interest and dividends on investment securities
6,288
9,430
7,535
15,718
18,163
Total interest and dividend income
59,829
64,975
66,155
124,804
134,643
Interest expense
Interest on deposit liabilities
3,071
3,587
4,287
6,658
8,539
Interest on other borrowings
75
313
411
388
939
Total interest expense
3,146
3,900
4,698
7,046
9,478
Net interest income
56,683
61,075
61,457
117,758
125,165
Provision for credit losses
15,133
10,401
7,688
25,534
14,558
Net interest income after provision for credit losses
41,550
50,674
53,769
92,224
110,607
Noninterest income
Fees from other financial services
3,102
4,571
4,798
7,673
9,360
Fee income on deposit liabilities
2,897
5,113
5,004
8,010
10,082
Fee income on other financial products
1,212
1,872
1,830
3,084
3,423
Bank-owned life insurance
1,673
794
2,390
2,467
4,649
Mortgage banking income
6,252
2,000
976
8,252
1,590
Gain on sale of securities, net
9,275
—
—
9,275
—
Other income, net
(251)
413
534
162
992
Total noninterest income
24,160
14,763
15,532
38,923
30,096
Noninterest expense
Compensation and employee benefits
25,079
25,777
25,750
50,856
51,262
Occupancy
5,442
5,267
5,479
10,709
10,149
Data processing
3,849
3,837
3,852
7,686
7,590
Services
2,474
2,809
2,606
5,283
5,032
Equipment
2,290
2,339
2,189
4,629
4,253
Office supplies, printing and postage
1,049
1,341
1,663
2,390
3,023
Marketing
379
802
1,323
1,181
2,313
FDIC insurance
751
102
628
853
1,254
Other expense1
7,063
4,194
4,519
11,257
8,373
Total noninterest expense
48,376
46,468
48,009
94,844
93,249
Income before income taxes
17,334
18,969
21,292
36,303
47,454
Income taxes
3,320
3,208
4,276
6,528
9,599
Net income
$
14,014
$
15,761
$
17,016
$
29,775
$
37,855
Comprehensive income
$
13,734
$
35,608
$
31,291
$
49,342
$
58,382
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets
0.72
0.87
0.96
0.79
1.07
Return on average equity
8.00
9.15
10.46
8.57
11.76
Return on average tangible common equity
9.07
10.39
11.97
9.72
13.48
Net interest margin
3.21
3.72
3.82
3.46
3.90
Efficiency ratio
59.84
61.27
62.36
60.53
60.06
Net charge-offs to average loans outstanding
0.49
0.44
0.29
0.46
0.34
As of period end
Nonaccrual loans to loans receivable held for investment
0.86
0.90
0.79
Allowance for credit losses to loans outstanding
1.50
1.49
1.17
Tangible common equity to tangible assets
7.9
8.3
8.2
Tier-1 leverage ratio
8.4
8.8
8.7
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
$
—
$
28.0
$
15.0
$
28.0
$
33.0
1
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, 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
Director, Investor Relations
E-mail: ir@hei.com
http://www.prnewswire.com/news-releases/hei-reports-second-quarter-2020-results-301107394.html
SOURCE Hawaiian Electric Industries, Inc.
