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Hawaiian Electric Industries Inc. posted a 17.7% drop in second-quarter earnings as utility maintenance expenses increased and subsidiary American Savings Bank set aside money for potential loan losses after releasing a significant amount from its loan-loss reserve in the year-earlier period.
The state’s largest utility reported today net income per common stock of $52.5 million, or 48 cents a share, to fall shy of analysts’ consensus estimate of 52 cents a share. In the year-earlier quarter, HEI had net income of $63.9 million, or 58 cents a share.
Revenue, however, jumped 31.7% to $895.6 million from $680.3 million.
“The utility continues to execute well under performance-based regulation, and will continue to focus on cost control to moderate the impacts of inflation and high fuel costs on customer bills,” HEI President and CEO Scott Seu said in a statement. “We did see higher maintenance expenses due to purposeful acceleration of work on our generating units to reduce down times and ensure reliable service to our customers as we completely transition off of coal and one of the largest power plants in the state on September 1.”
HEI, which is the holding company for the utility and the bank, said its utility’s operations and maintenance expenses were $5 million higher than the year-earlier period.
Net income for the company’s utility segment, which covers Oahu, Maui County and Hawaii island, rose 5.3% in the quarter to $44.1 million from $41.9 million in the year-earlier period, while revenue rose 36.1% to $818.9 million from $601.9 million.
On Sunday, subsidiary Hawaiian Electric forecast that the Sept. 1 shutdown of the 30-year-old AES Corp. coal-powered plant at Campbell Industrial Park will result in a $15, or 7%, increase in the monthly cost for a typical Oahu residential customer using 500 kilowatt-hours of electricity. The increase will start showing up for most customers in bills they receive in October.
The monthly increase is expected because Hawaiian Electric initially will rely on more power produced from oil, which costs more than coal.
“We know that our communities and customers are feeling financially challenged, and we are continuing to provide options to help manage their utility bills, while our bank continues working to help meet customers’ financial needs,” Seu said.
American Savings, the state’s third-largest bank, saw loans surge in the second quarter but net income fall 42.3% primarily due to the release of a significant amount of money from its loan-loss reserve in the year-earlier quarter that skewed the most recent results.
The bank reported separately on July 29 that it had net income of $17.5 million after setting aside $2.8 million for potential loan losses due to strong growth in that area during the quarter. That compares with earnings of $30.3 million in the second quarter of 2021 when the bank released $12.2 million from its loan-loss reserve.
Loans rose 4.7% to $5.43 billion from the year-earlier quarter but jumped 18.7% on an annualized basis from the January-March period.
”Our bank results reflect good execution from the team and an earnings level that is driven by a more normalized (loan-loss) provision in comparison to recent periods,” Seu said. “The bank saw strong loan growth during the quarter, and credit quality is trending favorably.”
On Thursday, HEI announced it was keeping its quarterly dividend at 35 cents a share. It will be payable Sept. 9 to shareholders of record at the close of business on Aug. 18. The dividend payout equates to an annualized yield of 3.3%.
HEI’s stock fell 26 cents to $42.26 after the earnings were announced.
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