Hawaii economy
powers HEI earnings
Hawaiian Electric Industries Inc., benefiting from the state's improving economy, posted strong gains in its utility and bank subsidiaries en route to a 27.2 percent increase in first-quarter earnings.
Higher-than-expected kilowatthour sales from its electric utility, strong asset quality at American Savings Bank and lower expenses at the holding company boosted net income to $30.9 million, or 80 cents a share, from $24.3 million, or 66 cents a share, a year ago.
Revenues rose 2.9 percent to $437.1 million from $424.6 million in the first quarter of 2003.
"Strength in the Hawaii economy drove kilowatthour sales higher by 4 percent quarter over quarter," said Robert F. Clarke, chairman, president and chief executive officer of Hawaiian Electric Industries.
Electric utility net income rose 13.4 percent to $20 million from $17.7 million a year ago because of higher visitor arrivals, increased lengths of stay and more customer usage, the company said.
Visitor arrivals in Hawaii were up 2.5 percent during the first two months of this year compared with a year ago, according to the state Department of Business, Economic Development & Tourism. Figures for March have not been released.
HEI said its utility also benefited from a $1.6 million decrease in retirement benefit expenses from a year earlier because of an increase in the value of plan assets in 2003.
HEI estimates its annual retirement benefit expenses on a quarterly basis and was able to reduce that amount because of last year's strong stock market.
American Savings Bank, following on the heels of other Hawaii banks that already have reported first-quarter earnings, posted a 17.8 increase in net income.
"Continued excellent asset quality and low delinquencies attributable to a strong Hawaii real estate market resulted in the reversal of $1.6 million of the bank's allowance for loan losses," Clarke said.
A year ago, American Savings Bank took a $1.2 million provision for loan losses.
"The $1.6 million allowance for loan losses reversal more than offset the effect of low interest rates that continued to compress interest margins at the bank," Clarke said.
American Savings Bank's net interest margin, which reflects the difference of what it pays depositors and what it brings in from loans, slipped to 3.05 percent in the quarter from 3.14 percent a year ago.
The bank's delinquent and nonaccrual loans as a percent of total loans continued to decline to 0.5 percent, which the bank said is well below its historical norms.
American Savings Bank's rate was 0.7 percent at the end of 2003 and 1.1 percent at the end of 2002.
HEI released its results in conjunction with its annual shareholders meeting today. At the meeting, investors will elect five board members and an independent auditor, KPMG LLP.
The board of directors also will convene before the shareholders meeting to determine the company's quarterly dividend, which has remained at 62 cents a share since March 1998.
