Hawaiian Electric Industries Inc. took some financial hits from the COVID-19 pandemic during the first quarter as it incurred higher bad debt expense at its utility and its bank increased the amount it was setting aside for potential loan losses.
But despite net income falling 26.9% to $33.4 million, HEI President and CEO Connie Lau said today the company is well positioned as it navigates the fallout from the coronavirus.
“HEI entered this crisis in a strong financial position, and that has served us well to weather the challenges of COVID-19,” Lau said in a statement today as the company released its quarterly earnings. “We’ve also taken steps to further enhance our strong liquidity position, which has further enabled our companies to implement a number of programs to support our customers and communities through this uncertain time.”
The company’s utility, Hawaiian Electric, saw its first-quarter net income fall 25.6% to $23.9 million largely due to a $7 million increase in operations and maintenance expenses from the year-earlier quarter. HEI attributed $2 million of that amount to “bad debt expense” due to the economic impact of COVID-19 on its customers.
Lau said the utility, which is pointing toward reaching the state’s goal of 100% renewable energy by 2045, continues to partner with stakeholders to progress clean energy projects and identify opportunities “to rebuild our economy with Hawaii’s green economy goals in mind,” Lau said.
Despite the utility’s alternative energy push, customers have been seeing this year some benefits of lower fuel prices. On Oahu in May, lower fuel costs would reduce a 500 kilowatt-hour per month bill by more than $12 compared to March, HEI said.
”We expect lower fuel prices to continue to benefit customers for the next few months,” Lau said on an earnings conference call. “But longer term, we remain concerned about the volatility of oil and its impact on customers. So, we’re still focused on moving off oil as rapidly as possible.”
HEI’s other subsidiary, American Savings Bank, also felt the impact of the virus and set aside $10.4 million for potential loan losses. That loan-loss provision resulted in the bank’s net income falling 24.4% to $15.8 million in the quarter. Its loans, though, jumped 6.6% to $5.18 billion and deposits rose 2.9% to $6.38 billion.
“An increase in the allowance for credit losses was necessary to reflect the challenges customers face due to the economic crisis that began towards quarter end,” Lau said. “The bank’s healthy capital and liquidity position has enabled it to help customers and the community move toward recovery, particularly through helping customers and non-customers obtain needed funding under the Small Business Administration’s Paycheck Protection Program.”
American secured over $370 million in federal loans for approximately 3,600 small businesses employing roughly 40,000 in the first authorization.
Overall, the parent company’s revenue increased 2.4% to $677.2 million.