Hawaiian Electric Industries Inc., benefiting from the termination of its international division, said yesterday that continuing operations increased 14.3 percent in the third quarter as its American Savings Bank subsidiary capitalized on favorable interest rates. Hawaiian Electric’s
earnings increase 14%
By Dave Segal
dsegal@starbulletin.comThe company, whose utility business was flat from a year earlier, had earnings from continuing operations of $32.8 million, or 90 cents a share, compared with $28.7 million, or 85 cents, a year ago.
Including the discontinued operations, Hawaiian Electric's net income of $32.8 million represented a jump of 359 percent from $7.1 million, or 21 cents a share, in the third quarter of 2001.
"We sold off our investment in Guam (last November) but we still have a small remaining investment in a Philippines distribution plant," HEI spokeswoman Suzy Hollinger said. "We had written off east Asia in December 2000 and the China project, which we call Baotou, was part of the net loss written off in the third quarter of last year."
Hawaiian Electric's stock, which rose 96 cents to $46.96 before the announcement after the market's close, is up 16.6 percent this year.
Meanwhile, American Savings Bank had net income of $14.7 million in the third quarter, a 32.3 percent gain from $11.1 million a year ago. The bank's interest rate spread, which is the difference between what it pays in interest to attract deposits and what it gets when lending out money, rose to 3.28 percent from 3.08 percent. The provision for loan losses also was lowered to $1.5 million from $3 million due to delinquencies being at five-year lows, said Robert F. Clarke, chairman, president and chief executive officer of HEI.
However, $1 million of the $3.6 million increase in net income from a year ago was attributable to the adoption of new accounting rules by the Financial Accounting Standards Board that discontinues goodwill amortization. Goodwill is the difference between the price paid for a company and the company's net worth.
Furthermore, the bank said continued low interest rates and record mortgage refinancing volume are beginning to pressure its interest rate spread as its loan portfolio reprices lower at the same time that deposit rates already are at low levels.
Hawaiian Electric's utility, which services 95 percent of the state, dipped slightly in the quarter as it posted net income of $25.6 million compared with $25.7 million a year ago.
"Increases in usage and the number of residential customers caused kilowatthour sales to grow by 1.8 percent for the quarter despite slightly cooler weather," Clarke said.
The increase was offset, though, by increased operation and maintenance expenses and depreciation.
