Hawaiian Electric Co. workers repair lines on Waimanu Street after a storm. Hawaiian Electric reported fourth-quarter earnings of $26.4 million yesterday.

HEI posts 13.5%
jump in profits


Friday, January 24, 2003

» Hawaiian Electric Industries Inc. said it was not "disappointed" in the fourth-quarter results of its American Savings Bank subsidiary and was actually happy with the performance. A story on Page C2 Tuesday referred to a "disappointing fourth quarter" for the bank after its earnings from continuing operations fell 12.8 percent to $13.4 million from the year-earlier quarter. However, the bank said its 2001 fourth-quarter earnings included a one-time $4.3 million gain from the sale of securities and that the bank's year-over-year quarterly earnings would have risen without that gain.

The Honolulu Star-Bulletin strives to make its news report fair and accurate. If you have a question or comment about news coverage, call Editor Frank Bridgewater at 529-4791 or email him at

By Dave Segal

Hawaiian Electric Industries Inc., despite lower earnings from its American Savings Bank subsidiary, posted a 13.5 percent increase in net income in the fourth quarter as utility usage and the number of residential customers increased.

The company, which released its earnings yesterday despite the Martin Luther King Jr. Day stock market holiday, had net income of $26.4 million, or 72 cents a share, compared with $23.2 million, or 67 cents a share, a year earlier. Net income in the fourth quarter of 2001 included nearly $2 million from discontinued operations.

Revenues rose 3.9 percent in the fourth quarter of 2002 to $435.7 million from $419.3 million.

HEI said income from continuing operations increased 4.6 percent to $26.4 million, or 72 cents a share, from $25.2 million, or 73 cents a share, in the fourth quarter of 2001. The lower earnings-per-share number was due to a November 2001 stock offering and new stock issued through HEI's dividend reinvestment and other stock plans that changed the average number of shares outstanding.


American Savings Bank, one of HEI's two major units, saw earnings from continuing operations fall 12.8 percent to $13.4 million from $15.4 million. HEI's utility, which serves 95 percent of the state, had earnings from continuing operations grow 10.4 percent to $20.4 million from $18.5 million. Other operations had a loss of $7.4 million from $8.6 million.

Robert F. Clarke, chairman, president and chief executive officer of HEI, said the lower interest-rate environment that helped the bank in the first three quarters hurt the institution in the final three months.

"The low interest-rate environment put pressure on the interest-rate spread," Clarke said. "High levels of mortgage refinancing lowered asset yields while deposit rates decreased only slightly as they were already at low levels."

For the year, Clarke was pleased with the company's performance as the utility, bank and holding company had net income from continuing operations of $118.2 million, or $3.26 a share, a 9.7 percent gain from $107.7 million, or $3.19 a share, in 2001. Counting discontinued operations, HEI's 2002 income of $118.2 million was 41.2 percent higher than $83.7 million in 2001.

"Utility net income was up 2 percent, bank net income was up 16 percent and holding company net losses were down 3 percent in 2002 -- a tremendous performance given the challenges of a Hawaii economy recovering from the effects of Sept. 11," Clarke said.

The utility net income rose to $90.2 million from $88.3 million a year ago as kilowatthour sales grew by 1.9 percent despite cooler weather.

In addition, the bank's net income was $56.2 million compared with $48.5 million. Despite the disappointing fourth quarter, Clarke said the bank's interest-rate spread for the year was 3.24 percent compared with 3.1 percent in 2001. Delinquencies also reached five-year lows, resulting in a lower provision for loan losses. The adoption of new accounting rules that eliminated goodwill amortization added $3.8 million to the bank's net income in 2002.

HEI's other operations lost $28.2 million in 2002 compared with a loss of $29.1 million a year earlier. The narrower loss was largely due to lower interest expenses as $60 million of debt was paid off in 2002.

Hawaiian Electric Industries Inc.

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