Hawaiian Electric Industries Inc. said Wednesday investment in clean energy technology at its utility subsidiary weighed on the company’s profitability in the second quarter.
SECOND-QUARTER NET
$27.1 million
YEAR-EARLIER NET
$29.3 million |
HEI reported net income of $27.1 million, or 28 cents per share in the April-to-June period, down from $29.3 million, or 31 cents a share in the second quarter of 2010.
"Earnings were lower in the second quarter as our utilities invested in their clean energy and reliability strategies, which required additional capital investments and higher operating expenses," said Constance Lau, HEI president and chief executive officer.
Net income at Hawaiian Electric Co. on Oahu and its subsidiaries in Maui and Hawaii counties was $17 million in the second quarter compared with $17.6 million for the same period a year earlier.
Earnings also declined at HEI’s American Savings Bank unit, but Lau said the bank continued to enjoy an improvement in credit quality and loan growth.
Lau said an interim rate hike recently approved for Hawaiian Electric Co. by the state Public Utilities Commission should boost earnings in the second half of 2011.
The PUC gave HECO approval in July to begin collecting a 2.2 percent rate increase expected to generate $38 million in annual revenue for the utility.
Among the after-tax expenses crimping first-quarter profits at HECO were $3 million in planned operations and maintenance costs as well as investments in clean energy initiatives, HEI said. The company also cited expenses associated with the recovery of biofuel costs and lower fuel efficiency savings.
Revenue from electricity sales in the second quarter was flat from the same period a year earlier.
Net income at American Savings Bank was $15.2 million in the second quarter versus $16.1 million in the year-earlier period. Although the earnings were lower compared with a year earlier, they were up from the $13.9 million in net income recorded in the first quarter.
"At our bank we had another solid quarter with continued improvement in credit quality and loan growth for the third consecutive quarter," Lau said.
Loans rose by $31 million in the second quarter from the first quarter. The amount the bank had to set aside for bad loans fell to $2.6 million in the second quarter from $4.6 million in the first quarter.
Earnings on a year-over-year basis were pressured by a $2 million decline in overdraft fees as a result of regulatory changes that became effective in the third quarter of 2010, HEI said.
The bank also experienced a $1 million decline in net interest income due primarily to prepayment of loans in its residential loan portfolio.
Return on equity, a key measure of a bank’s profitability, rose to 12.19 percent in the second quarter from 11.2 percent a year earlier.
