HEI Reports First Quarter 2023 Results
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
HONOLULU–(BUSINESS WIRE)–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.
Contacts
Mateo Garcia
Director, Investor Relations
Telephone: (808) 543-7300
E-mail: ir@hei.com
