RICHARD WALKER / RWALKER@STARBULLETIN.COM
Hawaiian Electric Co.'s net income fell 12 percent during the last quarter while revenue increased 17.4 percent. The company's Honolulu Dispatch Center, opened in March, monitors electricity use.
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Lower power sales cut into HEI net
The utility gets a boost from an interim rate increase for Oahu
Hawaiian Electric Industries Inc., which provides power to more than 400,000 customers across the state, said yesterday that earnings fell 1.3 percent in the second quarter as customers used less electricity and expenses rose.
Constance Lau, completing her first quarter as president and chief executive of HEI, said cooler and less humid weather in the quarter, along with customer conservation and higher operation and maintenance expenses, cut into the utility's profits.
But subsidiary American Savings Bank helped offset the declining utility earnings as net income at Hawaii's third-largest bank rose nearly 20 percent during the period despite a flattening yield curve that squeezed margins.
Federal Reserve policymakers, who will meet again Tuesday, have raised a key interest rate 17 consecutive times to its current level of 5.25 percent. The increases have squeezed lenders and created a flat yield curve because long-term rates have stayed constant while short-term rates have risen.
HEI posted net income of $27.2 million, or 33 cents a share, compared with $27.6 million, or 34 cents a share, a year earlier. That missed analysts' consensus of 41 cents a share and was below the low range of the estimates, according to Thomson Financial. Analysts had estimated earnings per share of 38 cents to 46 cents.
Revenue rose 15.8 percent to $605 million from $522.3 million while expenses gained 18.1 percent to $544.2 million from $460.8 million. Contributing to the higher expenses were a $2.5 million increase in maintenance costs and an additional $2.3 million in higher retirement benefits expenses. Robert Clarke retired as chairman, president and CEO in May.
The quarterly numbers represent "a pretty significant decrease," said analyst James Bellessa Jr. of Great Falls, Mont.-based D.A. Davidson & Co. "It wasn't as humid so people don't have to put on their air conditioners. They can just open their windows and be comfortable."
Hawaiian Electric Co.'s net income fell 12 percent during the quarter to $17.3 million from $19.6 million while revenue increased 17.4 percent to $503.4 million from $428.8 million. Kilowatt-hour sales declined 2.3 percent, accounting for $8 million in less revenue, though that was offset by an interim rate increase, granted in late September by the state Public Utilities Commission, that added $10 million in revenue.
"Although the number of customers grew during the quarter, they reduced their usage of electricity in response to weather conditions and the higher cost of electricity during the quarter," Lau said.
American Savings Bank's net income rose 19.7 percent to $16.2 million from $13.6 million.
Net interest income, which reflects the difference between what the bank pays depositors and what it brings in from loans, increased 8.3 percent to $52.9 million from $48.8 million. The net interest margin increased to 3.3 percent from 3.07 percent.
Noninterest income, which includes service charges and fees, gained 4.3 percent to $14.4 million from $13.8 million.
American Savings Bank's performance reflected "the solid growth of (the bank's) commercial and commercial real estate businesses and its transformation to a full-service community bank," Lau said.
HEI also said it will maintain its quarterly dividend at 31 cents a share. It will be payable Sept. 12 to shareholders of record on Aug. 15.