HEI REPORTS 2021 RESULTS

Rhea-AI Summary

Hawaiian Electric Industries (NYSE: HE) reported a consolidated net income of $246.2 million for 2021, translating to an earnings per share (EPS) of $2.25, a growth from $197.8 million and $1.81 in 2020. The utility segment achieved $8 million in customer savings, with plans to reduce carbon emissions by 70% by 2030. American Savings Bank also excelled, posting 76% net income growth, aided by a $25.8 million negative provision for credit losses. Additionally, HEI raised its quarterly dividend to $0.35 per share.

Positive

• 24% EPS growth year-over-year
• $8 million in customer savings from efficiency measures
• American Savings Bank's net income increased by 76% compared to 2020
• Achieved 1 GW of solar capacity
• Plans to reduce carbon emissions by 70% by 2030
• Quarterly dividend raised to $0.35 per share from $0.34

Negative

• Fourth quarter net income decreased to $42.0 million from $43.0 million in 2020
• Higher depreciation and interest expenses impacted Hawaiian Electric's earnings
• Noninterest income at American Savings Bank fell due to lower mortgage banking income

HONOLULU, Feb. 14, 2022 /PRNewswire/ --

2021 Highlights:

• 24% consolidated EPS growth driven by solid performance at both utility and bank
• Utility earnings reflect focus on cost efficiency and customer savings
• Bank results bolstered by significant negative provision, reflecting meaningful credit quality and economic improvement over prior year
• Hawaiian Electric advanced strategic initiatives and delivered strong financial performance, while providing significant customer savings
• Delivered $8 million in customer savings through efficiency and productivity measures
• Provided additional $2 million for customer bill credit program
• Announced goal to reduce carbon emissions from power generation 70% by 2030 compared to 2005 and be carbon neutral or better by 2045
• Reached 1 GW of total solar capacity on system
• Private rooftop systems grew more than 5%, resulting in 21% of Hawaiian Electric's residential customers with rooftop solar
• Solid profitability and execution from American Savings Bank
• 76% net income growth compared to 2020, largely due to $25.8 million negative provision for credit losses
• Strong deposit and earning asset growth, up 10.6% and 11.4%, respectively
• Net interest margin of 2.91%, with record low funding costs
• Continued strong capital and liquidity position

 

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

Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported 2021 year-end consolidated net income for common stock of $246.2 million and EPS of $2.25 compared to $197.8 million and EPS of $1.81 for 2020.  For the fourth quarter of 2021, consolidated net income for common stock was $54.5 million and EPS was $0.50 compared to $50.5 million and EPS of $0.46 for the fourth quarter of 2020.

"We're proud of how our HEI companies performed in 2021 — financially, for the customers who rely on us, for our communities and for the long-term health of our state," said Scott Seu, HEI president and CEO. "Solid execution on strategic and operational initiatives in 2021 positioned us well to progress our priorities this year.

"Our utility's focus on cost efficiency enabled us to deliver $8 million in savings to customers in 2021. At year end we dedicated an additional $2 million to provide bill credits for eligible customers in need of support as our state continues its economic recovery. In addition, in 2021 we demonstrated our strong commitment to addressing climate change. We pledged to cut carbon emissions from power generation 70% by 2030, compared to a 2005 baseline, and achieve or exceed carbon neutrality by 2045. And together with our customers we reached one gigawatt of solar capacity on our system, an important milestone toward our goal. We look forward to continuing to work with stakeholders to build on this momentum.

"Our bank's results reflect strong performance by our teammates, solid credit quality, significant improvement in the Hawaii economy and robust earning asset growth. We made major strides in our digital transformation and remain focused on making banking easy anytime and anywhere for our customers," said Seu.

HAWAIIAN ELECTRIC COMPANY EARNINGS²

Full Year Results:

Hawaiian Electric Company's (Hawaiian Electric) full-year net income was $177.6 million, compared to $169.3 million in 2020, with the difference primarily driven by the following after-tax items:

 

• $9 million higher net revenues relating to the rate adjustment mechanism (RAM) and annual revenue adjustment (ARA) mechanism, which included the customer dividend and an offset of $4 million ($6.6 million pre-tax) of management audit savings delivered to customers;
• $4 million from lower enterprise resource planning (ERP) system implementation benefits to be returned to customers, as delivery of the Oahu ERP benefits commitment was completed in 2020;
• $3 million higher other revenues from activities billed to third parties;
• $2 million from higher performance incentive mechanisms (PIMs), primarily related to achievement of Interconnection Experience PIM objectives; and
• $1 million higher allowance for funds used during construction (AFUDC).
  These items were partially offset by the following after-tax items:
• $5 million from higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency;
• $3 million higher interest expense due to higher borrowings;
• $3 million related to lower fuel efficiency due to planned maintenance outages; and
• $1 million higher operation and maintenance costs, including $5 million related to more generating facility overhauls and maintenance work performed in 2021, partially offset by $4 million lower environmental reserves.

Fourth Quarter Results:

Hawaiian Electric's net income for the fourth quarter of 2021 was $42.0 million, compared to $43.0 million in the fourth quarter of 2020. The decrease in net income compared to the prior year quarter was primarily driven by the following after-tax items:  (i) lower revenue from a timing change in target revenue recognition methodology, with target revenues recognized on an annual basis remaining unchanged, (ii) higher other operations and maintenance expense, partially offset by environmental reserves recorded in 2020, (iii) higher depreciation, (iv) lower fuel efficiency due to planned maintenance outages, and (v) higher interest expense. These items were partially offset by higher revenues from PIMs and the RAM and ARA mechanisms, which included the customer dividend and management audit savings delivered to customers.

2 Note: Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%.

AMERICAN SAVINGS BANK EARNINGS

Full Year Results:

American Savings Bank's (American) full year 2021 net income was $101.2 million compared to $57.6 million in 2020.

Net interest income was $237.2 million compared to $233.5 million in 2020. The increase in net interest income was primarily due to higher average earning assets driven by increased liquidity from continued strong deposit growth, lower cost of funds and higher fee income associated with the Paycheck Protection Program (PPP) loan portfolio. Noninterest income was $64.7 million compared to $78.1 million in 2020. The decrease in noninterest income was primarily due to lower mortgage banking income and lower gains on sales of securities compared to 2020.

Results for 2021 included significant negative provision for credit losses of $25.8 million compared to provision for credit losses of $50.8 million in 2020. The negative provision for credit losses reflects favorable credit trends and significant economic improvement in 2021 compared to the prior year, and a slight shift in loan portfolio composition with growth in the real estate secured portfolio.

Noninterest expense was $197.2 million compared to $191.6 million in 2020. The increase in noninterest expense was primarily due to higher incentive compensation costs, reflecting the bank's strong 2021 performance, and higher data processing expense as the bank upgrades its technology and data capabilities to expand customer relationships, partially offset by lower COVID-19 related expenses.

As of December 31, 2021 and compared to December 31, 2020:

• total earning assets were $8.5 billion, up 11.4%;
• total loans were $5.2 billion, down 2.3%. Excluding PPP loan forgiveness, the loan portfolio grew by 2.1%;
• the investment securities portfolio was $3.1 billion, up 40.9% as growth in deposits continued to outpace loan growth; and
• total deposits were $8.2 billion, up 10.6%. The average cost of funds was 0.06% for the full year 2021, ten basis points lower than the prior year.

American's return on average equity³ was 13.8% compared to 8.1% in 2020. Return on average assets was 1.15% compared to 0.74% in 2020.

Fourth Quarter Results:

Net income for the fourth quarter of 2021 was $22.1 million, compared to $19.3 million in the third quarter of 2021 and $15.7 million in the fourth quarter of 2020. Results for the fourth quarter of 2021 included a negative provision for credit losses of $3.5 million compared to a provision for credit losses of $11.3 million in the fourth quarter of 2020.

Overall, American's return on average equity³ for the fourth quarter was 12.1%, compared to 10.3% in the linked quarter and 8.6% in the fourth quarter of 2020. Return on average assets was 0.97% for the fourth quarter of 2021, compared to 0.86% in the linked quarter and 0.77% in the fourth quarter of 2020.

Please refer to American's news release issued on January 28, 2022 for additional information on American.

3 Bank return on average equity calculated using daily average common equity.

HOLDING AND OTHER COMPANIES

The holding and other companies' net loss was $32.7 million in 2021 compared to $29.1 million in 2020. The fourth quarter net loss of $9.6 million was $1.4 million higher than the prior year quarter. The greater net loss compared to the prior year and prior year quarter was primarily due to higher performance incentive compensation.

BOARD INCREASES QUARTERLY DIVIDEND

On February 11, 2022, HEI announced that the Board of Directors increased the quarterly cash dividend to $0.35 per share from $0.34 per share, payable on March 10, 2022 to shareholders of record at the close of business on February 24, 2022 (ex-dividend date is February 23, 2022). This quarterly dividend is equivalent to an annual rate of $1.40 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 February 11, 2022 of $41.29, HEI's dividend yield is 3.4%.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2022 GUIDANCE

HEI will conduct a webcast and conference call to review its consolidated results and 2022 earnings guidance and outlook on Monday, February 14, 2022 at 11:15 a.m. Hawaii time (4:15 p.m. Eastern).

To listen to the conference call, dial 1-844-200-6205 (U.S.) or 1-929-526-1599 (international) and enter passcode 718780. Parties may also access presentation materials and/or listen to the conference call by visiting the conference call link on HEI's website at www.hei.com under "Investor Relations," 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 February 28, 2022. To access the audio replay, dial 1-866-813-9403 (U.S.) or 44-204-525-0658 (international) and enter passcode 312244.

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 in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI's website, 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. Investors may sign up to receive e-mail alerts via the "Investor Relations" section of the website. The information on HEI's website is not incorporated by reference into this document or into 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 into this document or into HEI's and Hawaiian Electric's SEC filings.

ABOUT HEI

The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of Hawaii. HEI's electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii's population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy. Its banking subsidiary, American Savings Bank, is one of Hawaii's largest financial institutions, providing a wide array of banking and other financial services and working to advance economic growth, affordability and financial fitness. HEI also helps advance Hawaii's sustainability goals through investments by its non-regulated subsidiary, Pacific Current. For more information, visit www.hei.com.

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 December 31				Years ended December 31
(in thousands, except per share amounts)		2021		2020		2021		2020
Revenues
Electric utility		$   693,394		$   571,095		$  2,539,636		$  2,265,320
Bank		75,799		80,415		306,398		313,511
Other		1,079		707		4,345		944
Total revenues		770,272		652,217		2,850,379		2,579,775
Expenses
Electric utility		625,826		502,822		2,260,078		1,996,770
Bank		47,755		62,002		178,195		251,702
Other		7,828		6,719		26,040		19,810
Total expenses		681,409		571,543		2,464,313		2,268,282
Operating income (loss)
Electric utility		67,568		68,273		279,558		268,550
Bank		28,044		18,413		128,203		61,809
Other		(6,749)		(6,012)		(21,695)		(18,866)
Total operating income		88,863		80,674		386,066		311,493
Retirement defined benefits credit (expense)—other than service costs		1,139		(240)		5,848		(3,210)
Interest expense, net—other than on deposit liabilities and other bank borrowings		(23,833)		(22,220)		(94,363)		(88,694)
Allowance for borrowed funds used during construction		864		751		3,250		2,992
Allowance for equity funds used during construction		2,539		2,212		9,534		8,768
Gain on sale of investment securities, net		—		—		528		9,275
Income before income taxes		69,572		61,177		310,863		240,624
Income taxes		14,578		10,219		62,807		40,910
Net income		54,994		50,958		248,056		199,714
Preferred stock dividends of subsidiaries		473		473		1,890		1,890
Net income for common stock		$     54,521		$     50,485		$   246,166		$   197,824
Basic earnings per common share		$         0.50		$         0.46		$          2.25		$          1.81
Diluted earnings per common share		$         0.50		$         0.46		$          2.25		$          1.81
Dividends declared per common share		$         0.34		$         0.33		$          1.36		$          1.32
Weighted-average number of common shares outstanding		109,311		109,181		109,282		109,140
Weighted-average shares assuming dilution		109,565		109,339		109,580		109,356
Net income (loss) for common stock by segment
Electric utility		$     42,041		$     43,041		$   177,642		$   169,340
Bank		22,129		15,658		101,234		57,583
Other		(9,649)		(8,214)		(32,710)		(29,099)
Net income for common stock		$     54,521		$     50,485		$   246,166		$   197,824
Comprehensive income attributable to Hawaiian Electric Industries, Inc.		$     42,101		$     49,940		$   194,897		$   216,599
Return on average common equity (%) (twelve months ended)						10.4		8.6

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
		Three months ended December 31				Years ended December 31
($ in thousands, except per barrel amounts)		2021		2020		2021		2020
Revenues		$   693,394		$   571,095		$  2,539,636		$  2,265,320
Expenses
Fuel oil		197,104		124,560		644,349		515,274
Purchased power		179,974		143,070		670,494		568,749
Other operation and maintenance		126,232		125,361		475,412		474,192
Depreciation		57,347		55,498		229,469		222,733
Taxes, other than income taxes		65,169		54,333		240,354		215,822
Total expenses		625,826		502,822		2,260,078		1,996,770
Operating income		67,568		68,273		279,558		268,550
Allowance for equity funds used during construction		2,539		2,212		9,534		8,768
Retirement defined benefits credit (expense)—other than service costs		972		432		3,890		(763)
Interest expense and other charges, net		(18,321)		(17,026)		(72,447)		(67,794)
Allowance for borrowed funds used during construction		864		751		3,250		2,992
Income before income taxes		53,622		54,642		223,785		211,753
Income taxes		11,082		11,102		44,148		40,418
Net income		42,540		43,540		179,637		171,335
Preferred stock dividends of subsidiaries		229		229		915		915
Net income attributable to Hawaiian Electric		42,311		43,311		178,722		170,420
Preferred stock dividends of Hawaiian Electric		270		270		1,080		1,080
Net income for common stock		$     42,041		$     43,041		$     177,642		$     169,340
Comprehensive income attributable to Hawaiian Electric		$     41,505		$     41,302		$     177,281		$     167,700
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
Hawaiian Electric		1,592		1,624		6,170		6,183
Hawaii Electric Light		270		257		1,044		978
Maui Electric		273		260		1,047		959
		2,135		2,141		8,261		8,120
Average fuel oil cost per barrel		$       94.78		$       58.19		$          80.06		$          63.00
Return on average common equity (%) (twelve months ended)1						8.1		8.1

1 Simple average.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC.

 

American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
		Three months ended						Years ended December 31
(in thousands)		December 31, 2021		September 30, 2021		December 31, 2020		2021		2020
Interest and dividend income
Interest and fees on loans		$          48,384		$        49,445		$          52,629		$          198,802		$         214,134
Interest and dividends on investment securities		11,755		11,996		7,590		43,464		30,529
Total interest and dividend income		60,139		61,441		60,219		242,266		244,663
Interest expense
Interest on deposit liabilities		1,062		1,176		1,709		4,981		10,654
Interest on other borrowings		4		5		11		59		460
Total interest expense		1,066		1,181		1,720		5,040		11,114
Net interest income		59,073		60,260		58,499		237,226		233,549
Provision for credit losses		(3,458)		(1,725)		11,307		(25,825)		50,811
Net interest income after provision for credit losses		62,531		61,985		47,192		263,051		182,738
Noninterest income
Fees from other financial services		5,888		4,800		4,541		21,225		16,447
Fee income on deposit liabilities		4,634		4,262		4,217		16,663		16,059
Fee income on other financial products		2,003		2,124		1,773		8,770		6,381
Bank-owned life insurance		1,107		2,026		2,051		7,318		6,483
Mortgage banking income		1,808		1,272		7,801		9,305		23,734
Gain on sale of investment securities, net		—		—		—		528		9,275
Other income, net		220		283		(187)		851		(256)
Total noninterest income		15,660		14,767		20,196		64,660		78,123
Noninterest expense
Compensation and employee benefits		27,375		30,888		27,156		113,970		104,443
Occupancy		5,358		5,157		5,171		20,584		21,573
Data processing		4,472		4,278		3,717		17,634		14,769
Services		2,718		2,272		3,214		10,327		11,121
Equipment		2,521		2,373		2,371		9,510		9,001
Office supplies, printing and postage		1,145		1,072		1,046		4,239		4,623
Marketing		1,562		995		1,527		3,870		3,435
FDIC insurance		823		808		775		3,235		2,342
Other expense1		3,993		3,668		4,470		13,783		20,283
Total noninterest expense		49,967		51,511		49,447		197,152		191,590
Income before income taxes		28,224		25,241		17,941		130,559		69,271
Income taxes		6,095		5,976		2,283		29,325		11,688
Net income		$          22,129		$        19,265		$          15,658		$          101,234		$           57,583
Comprehensive income		$            9,840		$          7,581		$          18,306		$            48,506		$           81,191
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets		0.97		0.86		0.77		1.15		0.74
Return on average equity		12.10		10.26		8.58		13.76		8.11
Return on average tangible common equity		13.63		11.52		9.67		15.49		9.17
Net interest margin		2.79		2.90		3.12		2.91		3.29
Efficiency ratio		66.86		68.66		62.83		65.31		61.47
Net charge-offs to average loans outstanding		0.03		0.03		0.36		0.07		0.40
As of period end
Nonaccrual loans to loans receivable held for investment		0.86		0.97		0.89
Allowance for credit losses to loans outstanding		1.36		1.48		1.90
Tangible common equity to tangible assets		7.1		7.3		7.9
Tier-1 leverage ratio		7.9		8.0		8.4
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)		$              19.0		$            12.0		$                3.0		$                59.0		$               31.0

1

The fourth quarter of 2021, the third quarter of 2021 and year ended December 31, 2021 include approximately $0.1 million, $0.1 million and $0.6 million, respectively, of certain direct and incremental COVID-19 related costs. The fourth quarter and year ended December 31, 2020 include approximately $0.6 million and $5.1 million, respectively, of certain significant direct and incremental COVID-19 related costs. For 2020, these costs, which have been recorded in Other expense, include $2.5 million of compensation expense and $2.0 million of enhanced cleaning and sanitation costs.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.

 

Contact:	Julie R. Smolinski	Telephone: (808) 543-7300
	Vice President, Investor Relations & Corporate Sustainability	E-mail: ir@hei.com

 

 

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SOURCE Hawaiian Electric Industries, Inc.

FAQ

What is Hawaiian Electric's consolidated net income for 2021?

Hawaiian Electric reported a consolidated net income of $246.2 million for 2021.

How much did Hawaiian Electric increase its quarterly dividend?

Hawaiian Electric increased its quarterly dividend from $0.34 to $0.35 per share.

What was the EPS for Hawaiian Electric in 2021?

The earnings per share (EPS) for Hawaiian Electric in 2021 was $2.25.

What are Hawaiian Electric's carbon emission reduction goals?

Hawaiian Electric aims to reduce carbon emissions by 70% by 2030.

How did American Savings Bank perform in 2021?

American Savings Bank's net income grew 76% year-over-year in 2021.