HE Hawaiian Electric Industries

1Q23 Net Income of $54.7M and Diluted Earnings Per Share (EPS) of $0.50

Utility Executing Well and Continuing to Operate Efficiently

Bank Results Reflect Solid Credit Quality, a Strong Capital Base and Ample Liquidity

Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the first quarter of 2023 of $54.7 million and EPS of $0.50 compared to $69.2 million and EPS of $0.63 for the first quarter of 2022.

“Our results for the quarter reflect good execution from across our enterprise, with the bank’s low-risk, conservative business model and the stability of Hawaii’s banking market proving their benefits during a quarter that saw challenges at a small number of mainland banks,” said Scott Seu, HEI president and CEO.

“In spite of these events, American Savings Bank (ASB) delivered solid results for the quarter, growing net income over the previous quarter to $18.6 million. ASB’s capital levels remain strong, well above regulatory required levels, and we continue to maintain ample access to liquidity totaling more than $3 billion, or nearly three times the amount of uninsured deposits. We have a strong and resilient deposit franchise, with 86% of deposits from our retail customers, and with 85% of our total deposits F.D.I.C. insured or fully collateralized.

“Our utility also performed well, growing net income compared to the first quarter of last year to $47.0 million. The utility continued to manage costs efficiently, and excluding higher maintenance and repair costs related to impacts from increased storm activity during the quarter, operations and maintenance expense was held nearly flat compared to the first quarter of last year,” said Seu.

HAWAIIAN ELECTRIC COMPANY EARNINGS1

Hawaiian Electric Company’s (Hawaiian Electric) net income for the first quarter of 2023 was $47.0 million, compared to $46.4 million in the first quarter of 2022, with the increase primarily driven by the following after-tax items:

• $8 million higher revenues, consisting of $7 million from the annual revenue adjustment (ARA) mechanism and $1 million from the major project interim recovery (MPIR) mechanism;

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

• $3 million in higher operations and maintenance expenses, including $2 million driven by increased storm costs due to inclement weather;
• $2 million higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency;
• $2 million of higher other expenses, including heat rate penalties and higher tax expense due to lower amortization of excess deferred taxes related to the 2017 Tax Act; and
• $1 million in higher interest expense due to higher borrowings.

AMERICAN SAVINGS BANK EARNINGS

ASB’s first quarter 2023 net income was $18.6 million, compared to $17.9 million in the fourth quarter of 2022 and $23.9 million in the first quarter of 2022. The increase in net income compared to the linked quarter was primarily due to lower noninterest expense and a lower provision for credit losses. The decrease in net income compared to the prior year quarter was primarily due to higher noninterest expense, as well as a negative provision for credit losses (providing a benefit to net income) recorded in the first quarter of last year.

Total earning assets as of March 31, 2023 were $9.2 billion, up approximately 1% from December 31, 2022.

Total loans were $6.1 billion as of March 31, 2023, up 1% from December 31, 2022, reflecting growth across most of the portfolio.

Total deposits were $8.2 billion as of March 31, 2023, an increase of 0.75% from December 31, 2022. Core deposits declined 2.26% from December 31, 2022 while certificates of deposits increased 37.9%. For the first quarter of 2023, the average cost of funds was 0.66%, up 28 basis points versus the linked quarter and up 61 basis points versus the prior year quarter.

ASB’s return on average equity was 15.5%, compared to 15.7% in the linked quarter and 13.7% in the first quarter of 2022. Return on average assets was 0.78% for the first quarter of 2023, compared to 0.76% in the linked quarter and 1.04% in the prior year quarter.

In the first quarter of 2023, ASB paid dividends of $14.0 million to HEI. ASB had a Tier 1 leverage ratio of 7.7% as of March 31, 2023.

Please refer to ASB’s news release issued on April 28, 2023 for additional information on ASB.

HOLDING AND OTHER COMPANIES

The holding and other companies’ net loss was $10.9 million in the first quarter of 2023 compared to $1.1 million in the first quarter of 2022. The higher net loss compared to the prior year quarter was primarily due to the $6.2 million after-tax gain on sale of an equity-method investment recorded at Pacific Current last year, and, in the current year, lower Pacific Current performance and higher interest expense.

BOARD DECLARES QUARTERLY DIVIDEND

On May 4, 2023, HEI announced that the Board of Directors declared a quarterly cash dividend of $0.36 per share, payable on June 9, 2023 to shareholders of record at the close of business on May 19, 2023 (ex-dividend date is May 18, 2023). This quarterly dividend is equivalent to an annual rate of $1.44 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 May 4, 2023 of $38.56, HEI’s dividend yield is 3.7%.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2023 GUIDANCE

HEI will conduct a webcast and conference call to review its consolidated results and 2023 earnings guidance and outlook on Tuesday, May 9, 2023 at 10:15 a.m. Hawaii time (4:15 p.m. Eastern).

To listen to the conference call, dial 1-833-470-1428 (U.S.) or +1-929-526-1599 (international) and enter passcode 795993. 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 May 23, 2023. To access the audio replay, dial 1-929-458-6194 (U.S.) or +44-204-525-0658 (international) and enter passcode 328950.

HEI and Hawaiian Electric Company, Inc. (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, 2022 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.

__________________

1 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%.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)

 

 

 

Three months ended March 31

(in thousands, except per share amounts)

 

2023

 

2022

Revenues

 

 

 

 

Electric utility

 

$

830,361

 

 

$

708,792

 

Bank

 

 

93,857

 

 

 

75,115

 

Other

 

 

4,019

 

 

 

1,161

 

Total revenues

 

 

928,237

 

 

 

785,068

 

Expenses

 

 

 

 

Electric utility

 

 

754,486

 

 

 

635,197

 

Bank

 

 

70,337

 

 

 

45,085

 

Other

 

 

9,896

 

 

 

5,510

 

Total expenses

 

 

834,719

 

 

 

685,792

 

Operating income (loss)

 

 

 

 

Electric utility

 

 

75,875

 

 

 

73,595

 

Bank

 

 

23,520

 

 

 

30,030

 

Other

 

 

(5,877

)

 

 

(4,349

)

Total operating income

 

 

93,518

 

 

 

99,276

 

Retirement defined benefits credit—other than service costs

 

 

1,152

 

 

 

1,243

 

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

 

 

(28,798

)

 

 

(24,349

)

Allowance for borrowed funds used during construction

 

 

1,131

 

 

 

778

 

Allowance for equity funds used during construction

 

 

3,301

 

 

 

2,409

 

Gain on sales of equity-method investment

 

 

—

 

 

 

8,123

 

Income before income taxes

 

 

70,304

 

 

 

87,480

 

Income taxes

 

 

15,110

 

 

 

17,840

 

Net income

 

 

55,194

 

 

 

69,640

 

Preferred stock dividends of subsidiaries

 

 

473

 

 

 

473

 

Net income for common stock

 

$

54,721

 

 

$

69,167

 

Basic earnings per common share

 

$

0.50

 

 

$

0.63

 

Diluted earnings per common share

 

$

0.50

 

 

$

0.63

 

Dividends declared per common share

 

$

0.36

 

 

$

0.35

 

Weighted-average number of common shares outstanding

 

 

109,514

 

 

 

109,361

 

Weighted-average shares assuming dilution

 

 

109,825

 

 

 

109,634

 

Net income (loss) for common stock by segment

 

 

 

 

Electric utility

 

$

47,009

 

 

$

46,409

 

Bank

 

 

18,562

 

 

 

23,870

 

Other

 

 

(10,850

)

 

 

(1,112

)

Net income for common stock

 

$

54,721

 

 

$

69,167

 

Comprehensive income (loss) attributable to HEI

 

$

75,209

 

 

$

(47,992

)

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

 

 

10.0

 

 

 

10.9

 

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 March 31

($ in thousands, except per barrel amounts)

 

2023

 

2022

Revenues

 

$

830,361

 

 

$

708,792

 

Expenses

 

 

 

 

Fuel oil

 

 

334,097

 

 

 

221,286

 

Purchased power

 

 

152,761

 

 

 

163,533

 

Other operation and maintenance

 

 

128,316

 

 

 

125,257

 

Depreciation

 

 

60,927

 

 

 

58,471

 

Taxes, other than income taxes

 

 

78,385

 

 

 

66,650

 

Total expenses

 

 

754,486

 

 

 

635,197

 

Operating income

 

 

75,875

 

 

 

73,595

 

Allowance for equity funds used during construction

 

 

3,301

 

 

 

2,409

 

Retirement defined benefits credit—other than service costs

 

 

1,047

 

 

 

990

 

Interest expense and other charges, net

 

 

(20,246

)

 

 

(18,326

)

Allowance for borrowed funds used during construction

 

 

1,131

 

 

 

778

 

Income before income taxes

 

 

61,108

 

 

 

59,446

 

Income taxes

 

 

13,600

 

 

 

12,538

 

Net income

 

 

47,508

 

 

 

46,908

 

Preferred stock dividends of subsidiaries

 

 

229

 

 

 

229

 

Net income attributable to Hawaiian Electric

 

 

47,279

 

 

 

46,679

 

Preferred stock dividends of Hawaiian Electric

 

 

270

 

 

 

270

 

Net income for common stock

 

$

47,009

 

 

$

46,409

 

Comprehensive income attributable to Hawaiian Electric

 

$

46,964

 

 

$

46,460

 

OTHER ELECTRIC UTILITY INFORMATION

 

 

 

 

Kilowatthour sales (millions)

 

 

 

 

Hawaiian Electric

 

 

1,430

 

 

 

1,448

 

Hawaii Electric Light

 

 

251

 

 

 

254

 

Maui Electric

 

 

255

 

 

 

255

 

 

 

 

1,936

 

 

 

1,957

 

Average fuel oil cost per barrel

 

$

139.88

 

 

$

103.40

 

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

 

 

8.2

 

 

 

8.1

 

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

(in thousands)

 

March 31, 2023

 

December 31, 2022

 

March 31, 2022

Interest and dividend income

 

 

 

 

 

 

Interest and fees on loans

 

$

64,842

 

$

60,331

 

$

46,005

 

Interest and dividends on investment securities

 

 

14,637

 

 

 

14,315

 

 

 

13,984

 

Total interest and dividend income

 

 

79,479

 

 

 

74,646

 

 

 

59,989

 

Interest expense

 

 

 

 

 

 

Interest on deposit liabilities

 

 

6,837

 

 

 

3,755

 

 

 

947

 

Interest on other borrowings

 

 

7,721

 

 

 

4,775

 

 

 

5

 

Total interest expense

 

 

14,558

 

 

 

8,530

 

 

 

952

 

Net interest income

 

 

64,921

 

 

 

66,116

 

 

 

59,037

 

Provision for credit losses

 

 

1,175

 

 

 

2,729

 

 

 

(3,263

)

Net interest income after provision for credit losses

 

 

63,746

 

 

 

63,387

 

 

 

62,300

 

Noninterest income

 

 

 

 

 

 

Fees from other financial services

 

 

4,679

 

 

 

4,764

 

 

 

5,587

 

Fee income on deposit liabilities

 

 

4,599

 

 

 

4,640

 

 

 

4,691

 

Fee income on other financial products

 

 

2,744

 

 

 

2,628

 

 

 

2,718

 

Bank-owned life insurance

 

 

1,425

 

 

 

1,872

 

 

 

681

 

Mortgage banking income

 

 

130

 

 

 

62

 

 

 

1,077

 

Gain on sale of real estate

 

 

—

 

 

 

776

 

 

 

1,002

 

Other income, net

 

 

801

 

 

 

606

 

 

 

372

 

Total noninterest income

 

 

14,378

 

 

 

15,348

 

 

 

16,128

 

Noninterest expense

 

 

 

 

 

 

Compensation and employee benefits

 

 

30,204

 

 

 

30,361

 

 

 

27,215

 

Occupancy

 

 

5,588

 

 

 

7,030

 

 

 

5,952

 

Data processing

 

 

5,012

 

 

 

4,537

 

 

 

4,151

 

Services

 

 

2,595

 

 

 

2,967

 

 

 

2,439

 

Equipment

 

 

2,646

 

 

 

2,937

 

 

 

2,329

 

Office supplies, printing and postage

 

 

1,165

 

 

 

1,142

 

 

 

1,060

 

Marketing

 

 

1,016

 

 

 

1,091

 

 

 

1,018

 

FDIC insurance

 

 

—

 

 

 

978

 

 

 

808

 

Other expense

 

 

6,191

 

 

 

5,056

 

 

 

3,241

 

Total noninterest expense

 

 

54,417

 

 

 

56,099

 

 

 

48,213

 

Income before income taxes

 

 

23,707

 

 

 

22,636

 

 

 

30,215

 

Income taxes

 

 

5,145

 

 

 

4,739

 

 

 

6,345

 

Net income

 

$

18,562

 

 

$

17,897

 

 

$

23,870

 

Comprehensive income (loss)

 

$

36,992

 

 

$

29,282

 

 

$

(98,571

)

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

 

 

 

 

Return on average assets

 

 

0.78

 

 

 

0.76

 

 

 

1.04

 

Return on average equity

 

 

15.51

 

 

 

15.73

 

 

 

13.70

 

Return on average tangible common equity

 

 

18.73

 

 

 

19.20

 

 

 

15.53

 

Net interest margin

 

 

2.85

 

 

 

2.91

 

 

 

2.79

 

Efficiency ratio

 

 

68.62

 

 

 

68.86

 

 

 

64.14

 

Net charge-offs to average loans outstanding

 

 

0.14

 

 

 

0.06

 

 

 

0.01

 

As of period end

 

 

 

 

 

 

Nonaccrual loans to loans receivable held for investment

 

 

0.24

 

 

 

0.28

 

 

 

0.72

 

Allowance for credit losses to loans outstanding

 

 

1.18

 

 

 

1.21

 

 

 

1.30

 

Tangible common equity to tangible assets

 

 

4.3

 

 

 

4.1

 

 

 

5.8

 

Tier-1 leverage ratio

 

 

7.7

 

 

 

7.8

 

 

 

7.8

 

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

 

$

14.0

 

 

$

10.0

 

 

$

15.0

 

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509005456/en/

Mateo Garcia Director, Investor Relations Telephone: (808) 543-7300 E-mail: ir@hei.com