Categorized | Business

HEI invests $40M in infrastructure

MEDIA RELEASE

Hawaiian Electric Industries, Inc. has reported consolidated net income for common stock for the first quarter of 2012 of $38.3 million, or $0.40 diluted earnings per share (EPS), compared to $28.5 million, or $0.30 diluted EPS for the first quarter of 2011.

“HEI delivered solid results in the first quarter of 2012 and continued to reinvest earnings into our Hawaii-based businesses. Our three utilities, Hawaiian Electric, Maui Electric and Hawaii Electric Light Company, invested over $40 million — one and a half times their earnings — in infrastructure for a more modern and reliable electric grid that will be able to integrate significant amounts of renewable energy across our islands. As we announced last week, American Savings Bank increased its loan portfolio for the sixth consecutive quarter, adding more than $100 million in loans to customers over the last year,” said Constance H. Lau, HEI president and chief executive officer.

“Like many companies across Hawaii, our companies’ futures are linked to an economically and environmentally vibrant Hawaii. Reducing Hawaii’s dependence on oil is of paramount importance to our state and our customers,” she said.

Since the end of 2010, over 90 percent of the increase in the typical Oahu customer’s bill was due to the increase in the cost of oil which went up more than $40 per barrel.

“That’s why we remain committed to encouraging the development of renewable energy in Hawaii and we are making progress with 12 percent of our customers’ energy usage provided by renewable energy,” Lau said.

Hawaiian Electric Company’s net income for the first quarter of 2012 was $27.3 million compared to $19.2 million in the first quarter of 2011. The main driver of the improvement was the recovery of costs for reliability and clean energy investments on Oahu.

In 2011, the Oahu utility continued to ramp up its clean energy and reliability initiatives which resulted in spending in advance of revenues to recover the costs. This put pressure on first half 2011 earnings until the Oahu utility was able to start the recovery of these costs in July 2011.

Operations and maintenance (O&M) expenses (after-tax) were $1 million lower for the first quarter of 2012 compared to the first quarter of the prior year; however, management continues to estimate O&M expenses to be approximately 6 percent higher for the year compared to 2011 as work continues on strengthening the electric grid.

All three Hawaiian Electric utilities are now fully decoupled and no longer impacted by changes in sales volumes under Hawaii’s new regulatory framework. Hawaiian Electric on Oahu decoupled last year and Hawaii Electric Light Company on Hawaii Island and Maui Electric in Maui County just received Hawaii Public Utilities Commission approval to decouple in April and May 2012, respectively. The new decoupled regulatory model helps the utilities fulfill their critical role in carrying out the state’s energy policy to reduce Hawaii’s dependence on oil and to provide clean, secure, reliable power at stable costs for our customers.

American Savings Bank (American) net income for the first quarter of 2012 was $15.9 million compared to $13.9 million in the first quarter of 2011. Net income improved by $2.0 million primarily due to lower provision for loan losses as consumer credit quality improved with Hawaii’s gradual economic recovery and higher noninterest income from higher gains on sales of very low fixed rate residential mortgages.

Overall, American achieved strong profitability in the quarter with a return on average equity of 12.9 percent and a return on average assets of 1.29 percent.

The holding and other companies’ net losses were $4.9 million in the first quarter of 2012 compared to $4.6 million in the first quarter of 2011.

On May 8, 2012, the board of directors maintained HEI’s quarterly cash dividend of 31 cents per share, payable on June 13, 2012, to shareholders of record at the close of business on May 21, 2012 (ex-dividend date is May 17, 2012). The dividend is equivalent to an annual rate of $1.24 per share.

Dividends have been paid continuously since 1901. At the indicated annual dividend rate and the closing share price on May 7, 2012 of $26.51, HEI’s yield is 4.7 percent.

HEI supplies power to over 400,000 customers or 95 percent of Hawaii’s population through its electric utilities, HECO, Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited and provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii’s largest financial institutions.

— Find out more:
www.hei.com

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