Hawaiian Electric Industries Inc.’s net income rose 15% in the second quarter as it postponed utility maintenance work and made accounting adjustments to make up for customers behind on their electricity bills and homeowners in arrears on their mortgages.
With the COVID-19 pandemic continuing to strain state residents’ finances, Hawaiian Electric said it has extended disconnection for nonpayment until Sept. 1 and has proactively reached out to utility customers with arrearages to work out payment plans. HEI subsidiary American Savings Bank also has worked out payment plans for homeowners unable to pay their loans.
The parent company of the state’s largest utility reported today that it had earnings of $48.9 million, or 45 cents a share, compared with $42.5 million, or 39 cents a share, in the year-earlier quarter. HEI’s net income was lowered by American Savings Bank setting aside $15.1 million for potential loan losses.
Revenue for the parent company fell 14.9% to $608.9 million from $715.5 million.
“We continue to maintain a strong financial position across the enterprise,” HEI President and CEO Connie Lau said in a statement. “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.”
HEI increased its earnings in the quarter by lowering expenses 16.4% to $537.4 from $642.9 million. Those expenses were primarily incurred by the utility, which serves Oahu, Maui County and the Big Island.
The utility’s operations and maintenance expenses were $7 million lower than the year-earlier quarter mainly due to fewer generating unit overhauls, less generating station maintenance work associated with overhauls, the reclassification of COVID-19 related bad debt expense from the first quarter, and lower labor cost due to lower staffing levels and reduced overtime. HEI said the lower generation overhauls and station maintenance work represented approximately $4 million of the $7 million total expense and that the work will be performed later in 2020 or in 2021.
“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,” Lau said.
The utility’s net income rose in the quarter about 30% to $42.3 million from $32.6 million.
American Savings, which reported its financial results separately on July 30, said its income declined 17.6% to $14 million from $17 million in the year-earlier quarter primarily due to taking the loan-loss provision. But the bank was partially able to offset that loss with a gain of $7.1 million from the sale of 34,680 Visa Class B restricted shares and an additional gain of $2.2 million from the sale of investment securities.
“Our bank’s results reflect the impact of the crisis in the compression of lending margins and higher provision for potential credit losses,” Lau said. “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.”
A day before announcing earnings, HEI said it was keeping its quarterly dividend at 33 cents a share. It will be payable on Sept. 10 to shareholders of record at the close of business on Aug. 21.
HEI’s stock rose 11 cents to $35.04 today after the earnings were released.