By Sonia Isotov
Hawaiian Electric Industries, Inc.(HEI), parent of American Savings Bank, today reported a strong third quarter performance due mainly to loan growth in the past four consecutive quarters combined with interim rate relief from regulators.
“While utility earnings are recovering from the depressed levels of 2010, returns will continue to fall short of those allowed by the Hawaii Public Utilities Commission. Continued regulatory support to recover our investments in a timely manner is essential to our success in attracting the significant capital needed to fund our utilities’ reliability and clean energy plans,” said Constance H. Lau, HEI president and chief executive officer, in a written statement. “This marks the fourth consecutive quarter of loan growth and we continue to maintain strong profitability metrics and healthy capital levels.”
Consolidated net income for HEI common stock for the third quarter 2011 of $48.4 million, or $0.50 diluted earnings per share (EPS), compared to $32.4 million, or $0.35 diluted EPS for the third quarter 2010.
The electric utility’s net income for the third quarter 2011 was $38.0 million compared to $22.0 million in the third quarter 2010. The $16 million net income improvement resulted primarily from regulatory action and continued cost management, according to the corporate earnings statement released today.
The significant increases over the prior year were:
- $6 million of rate relief granted to all three utilities;
- $5 million net decoupling revenue adjustments recorded for the Oahu utility;
- $2 million higher fuel efficiency savings at the company’s Hawaii Island and Maui County utilities; and
- $1 million lower depreciation expense primarily from the change in depreciation rates and methods.
These increases were partially offset by $1 million lower kilowatt-hour sales at the Hawaii Island and Maui County utilities. Kilowatt-hour sales were down 0.5% and 3.0% for Hawaii Island and Maui County, respectively, primarily due to increased customer conservation.
Bank net income for the third quarter 2011 was $15.5 million, essentially even with $15.2 million in the second, or linked, quarter 2011 and $15.3 million in the third quarter 2010.
Loan growth continued for the fourth consecutive quarter with an increase in loans of $40 million in the third quarter 2011. Loan growth was driven primarily by home equity and commercial loans which more than offset the decline in residential mortgages resulting from the low interest rate environment. Year-to-date, total loans increased by $129 million or 3.6%, meeting our target for mid-single digit loan growth.