PR Newswire | May 7, 2021 06:01AM EDT

05/07 05:00 CDT

HEI Reports First Quarter 2021 Results1Q21 Net Income of $64.4 million and Diluted Earnings Per Share (EPS)? of $0.59Utility Focused on Achieving Cost Reductions to Benefit Customers and Transition to Performance-Based RegulationBank Results Reflect Moderating Credit Risk Environment as Hawaii Economy Begins to Recover HONOLULU, May 7, 2021

HONOLULU, May 7, 2021 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported consolidated net income for common stock for the first quarter of 2021 of $64.4 million and EPS of $0.59 compared to $33.4 million and EPS of $0.31 for the first quarter of 2020.

"Both our utility and bank reported stronger earnings for the first quarter of 2021 as Hawaii's economy began to recover," said Constance H. Lau, HEI president and CEO. "I am proud of the dedication of our employees and the resilience of our companies to continue to provide essential electricity and banking services for our customers while helping Hawaii reach its aggressive climate goals and 'build back better.'

"Our utility's strong performance reflects continued savings from the cost management program we began last year, with the benefits to be reflected in customer rates later this year. We're also focused on collaborating with stakeholders to ensure all interests are aligned as we continue the transition to performance-based regulation (PBR) and working together to bring projects from our renewable procurements to fruition.

"Our bank's strong first quarter results reflect good execution in an environment that remains challenging for bank profitability. Strong residential mortgage production and new ASB CARES or paycheck protection program loans are bright spots, while record deposit growth continues to outpace lending opportunities in this early stage of Hawaii's economic recovery. Our bank's results benefited from a reduction of reserves for credit losses, as certain commercial credits earned upgrades and our exposure to riskier unsecured consumer loans declined," said Lau.

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^1 Unless otherwise indicated, throughout this release earnings per share(EPS) refers to diluted earnings per share.

HAWAIIAN ELECTRIC COMPANY EARNINGS

Hawaiian Electric Company's (Hawaiian Electric) net income for the first quarter of 2021 was $43.4 million, compared to $23.9 million in the first quarter of 2020, primarily driven by the following after-tax items:

* $10 million lower operations & maintenance expenses compared to the first quarter of 2020, primarily due to i) lower staffing levels and efficiency improvements; ii) timing-related items, including higher bad debt expense in the first quarter of 2020 related to the economic impact of the COVID-19 pandemic on customers (such bad debt expense was later reclassified according to a Hawaii Public Utilities Commission decision allowing deferral), and fewer generating facility overhauls, some of which are expected to be performed later in 2021; and iii) higher costs in 2020 related to an increase in an environmental reserve and outside services to support the PBR docket and other customer service projects; * $5 million revenue increase from higher rate adjustment mechanism (RAM) revenues; * $4 million revenue increase related solely to a change in the timing for revenue recognition within the year, which eliminates seasonality in recognizing target revenues and results in recognizing revenues evenly throughout the year, with target revenues recognized on an annual basis remaining unchanged; * $1 million lower enterprise resource planning system implementation benefits to be passed on to customers; and * $1 million lower non-service pension costs due to the reset of pension costs included in rates as part of a final rate case decision.

These items were partially offset by $1 million higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency.

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Note: Amounts indicated as after-tax in this earnings release are based uponadjusting items using the current year composite statutory tax rates of 25.75%for the utilities and 26.79% for the bank.

AMERICAN SAVINGS BANK EARNINGS

American Savings Bank's (American) first quarter of 2021 net income was $29.6 million, compared to $15.7 million in the fourth, or linked, quarter of 2020 and $15.8 million in the first quarter of 2020. The increase in net income compared to the linked and prior year quarters was primarily due to a release of $8.4 million in provision for credit losses in the first quarter, compared to provisions for credit losses of $11.3 million in the linked quarter and $10.4 million in the first quarter of 2020.

Total loans were $5.3 billion as of March 31, 2021, down 0.4% from December 31, 2020. Total loans were lower primarily due to declines in the residential mortgage and home equity line of credit portfolios. While residential mortgage originations remained strong, the bank continued to strategically sell residential mortgage production in the secondary market. The decrease in these portfolios was partially offset by growth within the ASB CARES (Paycheck Protection Program) and commercial real estate portfolios. During the quarter, American originated $150 million in ASB CARES loans supporting small businesses and their employees.

Total deposits were $7.7 billion as of March 31, 2021, an increase of 4.9% from December 31, 2020. For the first quarter of 2021, the average cost of funds was 0.08%, down one basis point versus the linked quarter and down sixteen basis points versus the prior year quarter.

Overall, American's return on average equity2 for the first quarter of 2021 was 16.0%, compared to 8.6% in the linked quarter and 9.1% in the first quarter of 2020. Return on average assets was 1.40% for the first quarter of 2021, compared to 0.77% in the linked quarter and 0.87% in the same quarter last year.

In the first quarter of 2021, American paid dividends of $5.0 million to HEI. American had a leverage ratio of 8.3% at March 31, 2021.

Please refer to American's news release issued on April 30, 2021 for additional information on American.

HOLDING AND OTHER COMPANIES

The holding and other companies' net loss was $8.6 million in the first quarter of 2021 compared to $6.2 million in the first quarter of 2020. The greater net loss was primarily due to timing of charitable contributions to support communities affected by the pandemic.

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^2 Bank return on average equity calculated using weighted average dailycommon equity.

BOARD DECLARES QUARTERLY DIVIDEND

On May 6, 2021, HEI announced that the Board of Directors declared a quarterly cash dividend of $0.34 per share, payable on June 10, 2021 to shareholders of record at the close of business on May 20, 2021 (ex-dividend date is May 19, 2021). This quarterly dividend is equivalent to an annual rate of $1.36 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 6, 2021 of $43.47, HEI's dividend yield is 3.1%.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2021 GUIDANCE

HEI will conduct a webcast and conference call to review its consolidated results and 2021 earnings guidance and outlook on Friday, May 7, 2021 at 7:30 a.m.Hawaii time (1:30 p.m. Eastern).

Parties in the U.S. may listen to the conference call by dialing (844) 834-0652. International parties may listen to the conference call by dialing (412) 317-5198. Parties may also access presentation materials and/or listen to the conference call by visiting the conference call/webcast link on HEI's website at www.hei.com under the "Investor Relations" section, 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 21, 2021. To access the audio replay, dial (877) 344-7529 (U.S.) or (412) 317-0088 (international) and enter passcode 10153633.

HEI and 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 on HEI's website in the Investor Relations section. Accordingly, investors should routinely monitor the Investor Relations section of HEI's website at www.hei.com in addition to following HEI's, Hawaiian Electric's and American's press releases, HEI's and Hawaiian Electric's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts. The information on HEI's website is not incorporated by reference in this document or in 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 in this document or in HEI's and Hawaiian Electric's SEC filings.

HEI supplies power to approximately 95% of Hawaii's population through its electric utility, Hawaiian Electric; provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii's largest financial institutions; and helps advance Hawaii's clean energy and sustainability goals through investments by its non-regulated subsidiary, Pacific Current.

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, 2020 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, American 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.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)



Three months ended March 31

(in thousands, except per share amounts) 2021 2020

Revenues

Electric utility $564,864 $597,442

Bank 77,131 79,738

Other 951 6

Total revenues 642,946 677,186

Expenses

Electric utility 495,750 553,484

Bank 41,835 60,335

Other 7,330 3,665

Total expenses 544,915 617,484

Operating income (loss)

Electric utility 69,114 43,958

Bank 35,296 19,403

Other (6,379) (3,659)

Total operating income 98,031 59,702

Retirement defined benefits credit (expense)-other than service costs 2,435 (934)

Interest expense, net-other than on deposit liabilities and other bank (23,736) (21,775) borrowings

Allowance for borrowed funds used during construction 747 688

Allowance for equity funds used during construction 2,191 2,015

Gain on sale of investment securities, net 528 -

Income before income taxes 80,196 39,696

Income taxes 15,365 5,803

Net income 64,831 33,893

Preferred stock dividends of subsidiaries 473 473

Net income for common stock $64,358 $33,420

Basic earnings per common share $0.59 $0.31

Diluted earnings per common share $0.59 $0.31

Dividends declared per common share $0.34 $0.33

Weighted-average number of common shares outstanding 109,221 109,051

Weighted-average shares assuming dilution 109,492 109,365

Net income (loss) for common stock by segment

Electric utility $43,358 $23,905

Bank 29,556 15,761

Other (8,556) (6,246)

Net income for common stock $64,358 $33,420

Comprehensive income attributable to Hawaiian Electric Industries, Inc. $20,342 $51,632

Return on average common equity (%) (twelve months ended) 10.0 9.2

This information should be read in conjunction with the consolidated financialstatements and the notes thereto in HEI filings with the SEC. Results ofoperations for interim periods are not necessarily indicative of results to beexpected 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) 2021 2020

Revenues $564,864 $597,442

Expenses

Fuel oil 127,427 173,221

Purchased power 142,296 139,816

Other operation and maintenance 114,570 127,547

Depreciation 57,355 55,850

Taxes, other than income taxes 54,102 57,050

Total expenses 495,750 553,484

Operating income 69,114 43,958

Allowance for equity funds used during construction 2,191 2,015

Retirement defined benefits credit (expense)-other than service costs1,021 (381)

Interest expense and other charges, net (17,983) (16,594)

Allowance for borrowed funds used during construction 747 688

Income before income taxes 55,090 29,686

Income taxes 11,233 5,282

Net income 43,857 24,404

Preferred stock dividends of subsidiaries 229 229

Net income attributable to Hawaiian Electric 43,628 24,175

Preferred stock dividends of Hawaiian Electric 270 270

Net income for common stock $43,358 $23,905

Comprehensive income attributable to Hawaiian Electric $43,392 $23,931

OTHER ELECTRIC UTILITY INFORMATION

Kilowatthour sales (millions)

Hawaiian Electric 1,428 1,496

Hawaii Electric Light 245 252

Maui Electric 236 258

1,909 2,006

Average fuel oil cost per barrel $63.87 $80.78

Return on average common equity (%) (twelve months ended)^1 9.0 7.4

^1 Simple average.

This information should be read in conjunction with the consolidated financialstatements and the notes thereto in Hawaiian Electric filings with the SEC.Results of operations for interim periods are not necessarily indicative ofresults 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, 2021December 31, 2020March 31, 2020

Interest and dividend income

Interest and fees on loans $49,947 $52,629 $55,545

Interest and dividends on investment securities 8,673 7,590 9,430

Total interest and dividend income 58,620 60,219 64,975

Interest expense

Interest on deposit liabilities 1,462 1,709 3,587

Interest on other borrowings 27 11 313

Total interest expense 1,489 1,720 3,900

Net interest income 57,131 58,499 61,075

Provision for credit losses (8,435) 11,307 10,401

Net interest income after provision for credit losses 65,566 47,192 50,674

Noninterest income

Fees from other financial services 5,073 4,541 4,571

Fee income on deposit liabilities 3,863 4,217 5,113

Fee income on other financial products 2,442 1,773 1,872

Bank-owned life insurance 2,561 2,051 794

Mortgage banking income 4,300 7,801 2,000

Gains on sale of investment securities, net 528 - -

Other income, net 272 (187) 413

Total noninterest income 19,039 20,196 14,763

Noninterest expense

Compensation and employee benefits 28,037 27,156 25,777

Occupancy 4,969 5,171 5,267

Data processing 4,351 3,717 3,837

Services 2,862 3,214 2,809

Equipment 2,222 2,371 2,339

Office supplies, printing and postage 1,044 1,046 1,341

Marketing 648 1,527 802

FDIC insurance 816 775 102

Other expense 2,554 4,470 4,194

Total noninterest expense 47,503 49,447 46,468

Income before income taxes 37,102 17,941 18,969

Income taxes 7,546 2,283 3,208

Net income $29,556 $15,658 $15,761

Comprehensive income $(16,198) $18,306 $35,608

OTHER BANK INFORMATION (annualized %, except as of period end)

Return on average assets 1.40 0.77 0.87

Return on average equity 16.04 8.58 9.15

Return on average tangible common equity 18.06 9.67 10.39

Net interest margin 2.95 3.12 3.72

Efficiency ratio 62.36 62.83 61.27

Net charge-offs to average loans outstanding 0.18 0.36 0.44

As of period end

Nonaccrual loans to loans receivable held for investment 1.00 0.89 0.90

Allowance for credit losses to loans outstanding 1.73 1.90 1.49

Tangible common equity to tangible assets 7.3 7.9 8.3

Tier-1 leverage ratio 8.3 8.4 8.8

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)$5.0 $3.0 $28.0

This information should be read in conjunction with the consolidated financialstatements and the notes thereto in HEI filings with the SEC. Results ofoperations for interim periods are not necessarily indicative of results to beexpected for future interim periods or the full year.

Contact:Julie R. Smolinski Telephone: (808) 543-7300

Vice President, Investor Relations & E-mail: Corporate Sustainability ir@hei.com





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SOURCE Hawaiian Electric Industries, Inc.