MENU

News Details

View all news

HEI Reports Second Quarter 2024 Results

08/09/2024

Continued Strength of Utility and Bank Operations

Quarter’s Results Include Accrual for Previously-Announced Tort Litigation Settlement and Bank’s Goodwill Impairment

Settlement Will Help Communities to Move Forward and Aid Rebuilding

  • 2Q24 Net Loss of $1.30 billion, or $11.74 per share, Includes Accrual of Estimated Wildfire Liabilities From Tort-related Legal Claims
  • Quarter’s Results Also Include Bank’s Goodwill Impairment Related to HEI’s Ongoing Review of Strategic Options for ASB
  • Excluding Accrual of Estimated Wildfire Liabilities, ASB’s Goodwill Impairment, and Other Maui Wildfire-Related Expenses, Results Were Solid for the Quarter, with Core Net Income and Core EPS 1 of $49.1 million and $0.44
  • Utility Continues to Advance Wildfire Mitigation and Resilience Efforts
  • Bank Net Interest Margin Expanded to 2.79%, Up 4 Basis Points Compared to 1Q
  • Strong Bank Credit Quality and Another Release of Reserves Reflect Healthy Hawaii Economy

Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported a consolidated net loss for the second quarter of 2024 of $1.30 billion, or $11.74 per share. The results included a $1.71 billion ($1.27 billion after taxes) loss from the accrual of estimated wildfire liabilities from tort-related legal claims, an $82.2 million ($66.1 million after taxes) loss from a goodwill impairment at American Savings Bank (ASB) and $9.8 million ($7.2 million after taxes) of other Maui wildfire-related expenses, net of insurance recoveries and deferrals. Excluding these items, core net income 2 was $49.1 million for the second quarter of 2024 compared to $54.6 million in the second quarter of 2023.

“Our core operations remain strong across the enterprise, and both our utility and bank remain very well-positioned to continue serving our customers and communities for the long term. The utility continues to rapidly advance wildfire mitigation and resilience efforts, and excluding the goodwill impairment taken during the quarter, our bank is improving profitability while maintaining a strong capital and liquidity position,” said Scott Seu, HEI president and CEO.

“Last week we announced that HEI, Hawaiian Electric and other defendants had entered into an agreement in principle to settle all tort claims related to the Maui wildfires. The settlement would allow all parties to come together on a path forward. Our Board and management team are pleased to have reached this agreement in principle on an expedited basis. We are confident that this settlement represents the best outcome for HEI, as it provides a clear line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company’s path ahead. In the coming months, we will be focused on finalizing the agreement and regaining the strength of our enterprise.

“Since last August, we have been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii. Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB, which is what led us to report a non-cash goodwill impairment for the bank last month. We will continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term,” said Seu.

There is no set timetable for HEI’s comprehensive review of strategic options for ASB, and there can be no assurances that any actions regarding ASB will result from this evaluation. Neither HEI nor ASB expect to disclose or provide an update concerning developments related to this process unless or until HEI’s Board of Directors has approved a definitive course of action or otherwise determined that further disclosure is appropriate or necessary.

HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS 3

Hawaiian Electric’s net loss for the second quarter of 2024 was $1,229.4 million compared to net income of $45.3 million in the second quarter of 2023, with the decrease primarily driven by the following after-tax items:

  • $1,271 million after-tax loss due to the accrual of estimated wildfire liabilities related to tort-related legal claims and cross claims as of June 30, 2024;
  • $7 million in higher operations and maintenance (O&M) expenses, including $4 million of costs associated with the Maui windstorm and wildfire event. These costs include wildfire mitigation expenses and the settlement of indemnification claims asserted by the state. The remaining increase in O&M included higher insurance costs, and higher substation and meter operations corrective and preventative maintenance costs;
  • $2 million from higher depreciation; and
  • $1 million impact from worse heat rate performance.

These items were partially offset by the following after-tax items:

  • $6 million higher revenues, including $4 million from the annual revenue adjustment mechanism, $1 million from the major project interim recovery mechanism and $1 million in other revenues.

Excluding incremental after-tax Maui windstorm and wildfire-related expenses net of insurance recoveries, Hawaiian Electric’s core net income 4 for the quarter was $43.9 million. Incremental after-tax Maui windstorm and wildfire-related expenses of $1,273 million were composed of the $1,271 million loss contingency accrued for estimated tort-related wildfire liabilities, and $20.0 million of other Maui wildfire-related expenses, net of $12.2 million of insurance-related recoveries and $5.7 million of costs deferred pursuant to the Public Utilities Commission’s decision allowing Hawaiian Electric to defer these costs.

Going Concern Assessment

HEI and Hawaiian Electric do not yet have a financing plan in place to address the future payment of the $1.71 billion Maui windstorm and wildfire settlement accrued in the second quarter of 2024. Until a definitive financing plan is developed and is probable of being implemented, HEI and Hawaiian Electric will disclose a “going concern” risk in their financial statements. After definitive financing plans are in place and likely to be implemented, such a going concern risk is expected to be resolved. This risk is the result of estimated payments under the settlement agreement. HEI and Hawaiian Electric are working closely with their financial advisors to develop a financing plan for their settlement contribution, and intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options, although there can be no assurance at this time as to the availability or terms of any such financing.

Utility Dividend Update

In connection with the going concern assessment, the utility dividend to HEI has been suspended. HEI and Hawaiian Electric continue to believe that the companies have sufficient liquidity runway as parties work toward finalizing the agreement in principle to settle tort claims related to the Maui wildfires.

AMERICAN SAVINGS BANK EARNINGS

ASB’s second quarter 2024 net loss of $45.8 million compared to net income of $20.9 million in the first quarter of 2024 and $20.2 million in the second quarter of 2023. Results for the quarter reflect the impact of a goodwill impairment of $82.2 million ($66.1 million after taxes) in connection with HEI’s ongoing review of strategic options for ASB. The goodwill is related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB’s liquidity. Net income for the quarter also reflected the release of $0.8 million of Maui wildfire-related reserves, partially offset by Maui wildfire-related expenses of $1.3 million. Excluding the after-tax impacts of these items, core net income for the second quarter was $20.7 million. 5

Total earning assets as of June 30, 2024 were $8.9 billion, down approximately 3.0% from December 31, 2023.

Total loans were $6.1 billion as of June 30, 2024, down 2.5% from December 31, 2023.

Total deposits were $8.0 billion as of June 30, 2024, down 1.3% from December 31, 2023. Core deposits declined 1.3% from December 31, 2023, while certificates of deposit decreased 1.4% primarily due to the paydown of $166 million in public time deposits. As of June 30, 2024, 83% of deposits were F.D.I.C. insured or fully collateralized, with approximately 79% of deposits F.D.I.C. insured. For the second quarter of 2024, the average cost of funds was 115 basis points, down slightly from 117 basis points in the linked quarter and up 32 basis points from the prior year quarter.

In the second quarter of 2024, ASB did not pay a dividend to HEI, supporting ASB’s healthy capital levels. ASB had a Tier 1 leverage ratio of 8.4% as of June 30, 2024.

Please refer to ASB’s news release issued on July 30, 2024 for additional information on ASB.

HOLDING AND OTHER COMPANIES

The holding and other companies’ net loss was $20.3 million in the second quarter of 2024 compared to $10.9 million in the second quarter of 2023. The higher net loss compared to the prior year quarter was primarily due to Maui wildfire-related expenses, higher Pacific Current net loss and higher corporate legal expenses. Core net loss for the second quarter of 2024 was $15.5 million 6 .

EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS

HEI will conduct a webcast and conference call to review its second quarter 2024 consolidated financial results today at 10:30 a.m. Hawaii time (4:30 p.m. Eastern).

To listen to the conference call, dial 1-888-660-6377 (U.S.) or 1-929-203-0797 (international) and enter passcode 2393042. Parties may also access presentation materials (which include reconciliation of non-GAAP measures) and/or listen to the conference call by visiting the conference call link on HEI’s website at www.hei.com under “Investor Relations,” sub-heading “News and Events — Events and Presentations.”

A replay will be available online and via phone. The online replay will be available on HEI’s website about two hours after the event. The audio replay will also be available about two hours after the event through August 23, 2024. To access the audio replay, dial 1-800-770-2030 (U.S.) or 1-647-362-9199 (international) and enter passcode 2393042.

HEI and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to continue to use HEI’s website, www.hei.com , as a means of disclosing additional information; such disclosures will be included in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website, in addition to following HEI’s, Hawaiian Electric’s and ASB’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. Investors may sign up to receive e-mail alerts via the “Investor Relations” section of the website. The information on HEI’s website is not incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference.

Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at https://hpuc.my.site.com/cdms/s/ to review documents filed with, and issued by, the PUC. No information on the PUC website is incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings.

____________________

1

See the “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliation at the end of this release.

2

Refer to footnote 1.

3

Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%.

4

Refer to footnote 1.

5

Refer to footnote 1.

6

Refer to footnote 1.

ABOUT HEI

The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of Hawaii. HEI’s electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii’s population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy, and modernize and harden the grid to ensure resilience and public safety. Its banking subsidiary, ASB, is one of Hawaii’s largest financial institutions, providing a wide array of banking and other financial services and working to advance economic growth, affordability and financial fitness. HEI also helps advance Hawaii’s sustainability goals through investments by its non-regulated subsidiary, Pacific Current. For more information, visit www.hei.com .

NON-GAAP MEASURES

Measures described as “core” are non-GAAP measures which exclude after-tax Maui wildfire-related costs and the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliations at the end of this release.

This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance.

Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2023 and HEI’s other periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, ASB and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)

 

 

 

 

 

Three months ended
June 30

 

Six months ended
June 30

(in thousands, except per share amounts)

 

2024

 

2023

 

2024

 

2023

Revenues

 

 

 

 

 

 

 

 

Electric utility

 

$

792,331

 

 

$

794,191

 

 

$

1,580,909

 

 

$

1,624,552

 

Bank

 

 

101,943

 

 

 

96,885

 

 

 

207,087

 

 

 

190,742

 

Other

 

 

3,086

 

 

 

4,609

 

 

 

6,522

 

 

 

8,628

 

Total revenues

 

 

897,360

 

 

 

895,685

 

 

 

1,794,518

 

 

 

1,823,922

 

Expenses

 

 

 

 

 

 

 

 

Electric utility (includes $1,712 million of Wildfire tort-related claims in 2024)

 

 

2,436,771

 

 

 

720,566

 

 

 

3,161,994

 

 

 

1,475,052

 

Bank (includes $82 million of goodwill impairment in 2024)

 

 

159,329

 

 

 

72,017

 

 

 

238,941

 

 

 

142,354

 

Other

 

 

20,235

 

 

 

10,123

 

 

 

36,139

 

 

 

20,019

 

Total expenses

 

 

2,616,335

 

 

 

802,706

 

 

 

3,437,074

 

 

 

1,637,425

 

Operating income (loss)

 

 

 

 

 

 

 

 

Electric utility

 

 

(1,644,440

)

 

 

73,625

 

 

 

(1,581,085

)

 

 

149,500

 

Bank

 

 

(57,386

)

 

 

24,868

 

 

 

(31,854

)

 

 

48,388

 

Other

 

 

(17,149

)

 

 

(5,514

)

 

 

(29,617

)

 

 

(11,391

)

Total operating income (loss)

 

 

(1,718,975

)

 

 

92,979

 

 

 

(1,642,556

)

 

 

186,497

 

Retirement defined benefits credit—other than service costs

 

 

1,281

 

 

 

1,153

 

 

 

2,563

 

 

 

2,305

 

Interest expense, net—other than on deposit liabilities and other bank borrowings

 

 

(32,400

)

 

 

(29,832

)

 

 

(63,991

)

 

 

(58,630

)

Allowance for borrowed funds used during construction

 

 

1,344

 

 

 

1,295

 

 

 

2,730

 

 

 

2,426

 

Allowance for equity funds used during construction

 

 

3,336

 

 

 

3,772

 

 

 

6,976

 

 

 

7,073

 

Interest income

 

 

3,134

 

 

 

 

 

 

6,267

 

 

 

 

Income (loss) before income taxes

 

 

(1,742,280

)

 

 

69,367

 

 

 

(1,688,011

)

 

 

139,671

 

Income tax expense (benefit)

 

 

(447,269

)

 

 

14,284

 

 

 

(435,595

)

 

 

29,394

 

Net income (loss)

 

 

(1,295,011

)

 

 

55,083

 

 

 

(1,252,416

)

 

 

110,277

 

Preferred stock dividends of subsidiaries

 

 

473

 

 

 

473

 

 

 

946

 

 

 

946

 

Net income (loss) for common stock

 

$

(1,295,484

)

 

$

54,610

 

 

$

(1,253,362

)

 

$

109,331

 

Basic earnings (loss) per common share

 

$

(11.74

)

 

$

0.50

 

 

$

(11.37

)

 

$

1.00

 

Diluted earnings (loss) per common share

 

$

(11.74

)

 

$

0.50

 

 

$

(11.37

)

 

$

1.00

 

Dividends declared per common share

 

$

 

 

$

0.36

 

 

$

 

 

$

0.72

 

Weighted-average number of common shares outstanding

 

 

110,303

 

 

 

109,573

 

 

 

110,260

 

 

 

109,544

 

Weighted-average shares assuming dilution

 

 

110,303

 

 

 

109,780

 

 

 

110,260

 

 

 

109,870

 

Net income (loss) for common stock by segment

 

 

 

 

 

 

 

 

Electric utility

 

$

(1,229,394

)

 

$

45,299

 

 

$

(1,190,173

)

 

$

92,308

 

Bank

 

 

(45,787

)

 

 

20,204

 

 

 

(24,853

)

 

 

38,766

 

Other

 

 

(20,303

)

 

 

(10,893

)

 

 

(38,336

)

 

 

(21,743

)

Net income (loss) for common stock

 

$

(1,295,484

)

 

$

54,610

 

 

$

(1,253,362

)

 

$

109,331

 

Comprehensive income (loss) attributable to HEI

 

$

(1,293,890

)

 

$

47,001

 

 

$

(1,261,569

)

 

$

122,210

 

Return on average common equity (%) (twelve months ended)

 

 

 

 

 

 

NM

 

 

 

10.2

 

NM Not meaningful.

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)

 

 

 

 

 

Three months ended
June 30

 

Six months ended
June 30

($ in thousands, except per barrel amounts)

 

2024

 

2023

 

2024

 

2023

Revenues

 

$

792,331

 

 

$

794,191

 

 

$

1,580,909

 

 

$

1,624,552

 

Expenses

 

 

 

 

 

 

 

 

Fuel oil

 

 

258,652

 

 

 

280,157

 

 

 

542,948

 

 

 

614,254

 

Purchased power

 

 

181,328

 

 

 

168,434

 

 

 

341,145

 

 

 

321,195

 

Other operation and maintenance

 

 

147,561

 

 

 

136,360

 

 

 

291,451

 

 

 

264,676

 

Wildfire tort-related claims

 

 

1,712,000

 

 

 

 

 

 

1,712,000

 

 

 

 

Depreciation

 

 

62,812

 

 

 

60,689

 

 

 

125,624

 

 

 

121,616

 

Taxes, other than income taxes

 

 

74,418

 

 

 

74,926

 

 

 

148,826

 

 

 

153,311

 

Total expenses

 

 

2,436,771

 

 

 

720,566

 

 

 

3,161,994

 

 

 

1,475,052

 

Operating income (loss)

 

 

(1,644,440

)

 

 

73,625

 

 

 

(1,581,085

)

 

 

149,500

 

Allowance for equity funds used during construction

 

 

3,336

 

 

 

3,772

 

 

 

6,976

 

 

 

7,073

 

Retirement defined benefits credit—other than service costs

 

 

1,072

 

 

 

1,048

 

 

 

2,144

 

 

 

2,095

 

Interest expense and other charges, net

 

 

(21,417

)

 

 

(20,872

)

 

 

(41,402

)

 

 

(41,118

)

Allowance for borrowed funds used during construction

 

 

1,344

 

 

 

1,295

 

 

 

2,730

 

 

 

2,426

 

Interest income

 

 

1,452

 

 

 

 

 

 

2,884

 

 

 

 

Income (loss) before income taxes

 

 

(1,658,653

)

 

 

58,868

 

 

 

(1,607,753

)

 

 

119,976

 

Income tax expense (benefit)

 

 

(429,758

)

 

 

13,070

 

 

 

(418,578

)

 

 

26,670

 

Net income (loss)

 

 

(1,228,895

)

 

 

45,798

 

 

 

(1,189,175

)

 

 

93,306

 

Preferred stock dividends of subsidiaries

 

 

229

 

 

 

229

 

 

 

458

 

 

 

458

 

Net income (loss) attributable to Hawaiian Electric

 

 

(1,229,124

)

 

 

45,569

 

 

 

(1,189,633

)

 

 

92,848

 

Preferred stock dividends of Hawaiian Electric

 

 

270

 

 

 

270

 

 

 

540

 

 

 

540

 

Net income (loss) for common stock

 

$

(1,229,394

)

 

$

45,299

 

 

$

(1,190,173

)

 

$

92,308

 

Comprehensive income (loss) attributable to Hawaiian Electric

 

$

(1,229,440

)

 

$

45,255

 

 

$

(1,190,268

)

 

$

92,219

 

OTHER ELECTRIC UTILITY INFORMATION

 

 

 

 

 

 

 

 

Kilowatthour sales (millions)

 

 

 

 

 

 

 

 

Hawaiian Electric

 

 

1,470

 

 

 

1,480

 

 

 

2,882

 

 

 

2,910

 

Hawaii Electric Light

 

 

254

 

 

 

252

 

 

 

508

 

 

 

503

 

Maui Electric

 

 

247

 

 

 

262

 

 

 

487

 

 

 

517

 

 

 

 

1,971

 

 

 

1,994

 

 

 

3,877

 

 

 

3,930

 

Average fuel oil cost per barrel

 

$

120.12

 

 

$

122.69

 

 

$

121.01

 

 

$

131.48

 

Return on average common equity (%) (twelve months ended) 1

 

 

 

 

 

 

NM

 

 

 

8.2

 

1 Simple average.

NM Not meaningful.

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

American Savings Bank, F.S.B.

STATEMENTS OF INCOME DATA

(Unaudited)

 

 

 

Three months ended

 

Six months ended June 30

(in thousands)

 

June 30,
2024

 

March 31,
2024

 

June 30,
2023

 

2024

 

2023

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

72,960

 

 

$

72,971

 

 

$

67,966

 

 

$

145,931

 

 

$

132,808

 

Interest and dividends on investment securities

 

 

13,218

 

 

 

14,964

 

 

 

13,775

 

 

 

28,182

 

 

 

28,412

 

Total interest and dividend income

 

 

86,178

 

 

 

87,935

 

 

 

81,741

 

 

 

174,113

 

 

 

161,220

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposit liabilities

 

 

18,015

 

 

 

17,432

 

 

 

9,661

 

 

 

35,447

 

 

 

16,498

 

Interest on other borrowings

 

 

6,479

 

 

 

8,154

 

 

 

8,852

 

 

 

14,633

 

 

 

16,573

 

Total interest expense

 

 

24,494

 

 

 

25,586

 

 

 

18,513

 

 

 

50,080

 

 

 

33,071

 

Net interest income

 

 

61,684

 

 

 

62,349

 

 

 

63,228

 

 

 

124,033

 

 

 

128,149

 

Provision for credit losses

 

 

(1,910

)

 

 

(2,159

)

 

 

43

 

 

 

(4,069

)

 

 

1,218

 

Net interest income after provision for credit losses

 

 

63,594

 

 

 

64,508

 

 

 

63,185

 

 

 

128,102

 

 

 

126,931

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Fees from other financial services

 

 

5,133

 

 

 

4,874

 

 

 

5,009

 

 

 

10,007

 

 

 

9,688

 

Fee income on deposit liabilities

 

 

4,630

 

 

 

4,898

 

 

 

4,504

 

 

 

9,528

 

 

 

9,103

 

Fee income on other financial products

 

 

2,960

 

 

 

2,743

 

 

 

2,768

 

 

 

5,703

 

 

 

5,512

 

Bank-owned life insurance

 

 

2,255

 

 

 

3,584

 

 

 

1,955

 

 

 

5,839

 

 

 

3,380

 

Mortgage banking income

 

 

364

 

 

 

424

 

 

 

230

 

 

 

788

 

 

 

360

 

Gain on sale of real estate

 

 

 

 

 

 

 

 

495

 

 

 

 

 

 

495

 

Other income, net

 

 

423

 

 

 

686

 

 

 

678

 

 

 

1,109

 

 

 

1,479

 

Total noninterest income

 

 

15,765

 

 

 

17,209

 

 

 

15,639

 

 

 

32,974

 

 

 

30,017

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

29,802

 

 

 

32,459

 

 

 

29,394

 

 

 

62,261

 

 

 

59,598

 

Occupancy

 

 

5,220

 

 

 

5,063

 

 

 

5,539

 

 

 

10,283

 

 

 

11,127

 

Data processing

 

 

4,960

 

 

 

4,846

 

 

 

5,095

 

 

 

9,806

 

 

 

10,107

 

Services

 

 

4,250

 

 

 

4,151

 

 

 

2,689

 

 

 

8,401

 

 

 

5,284

 

Equipment

 

 

2,477

 

 

 

2,649

 

 

 

2,957

 

 

 

5,126

 

 

 

5,603

 

Office supplies, printing and postage

 

 

1,006

 

 

 

1,018

 

 

 

1,109

 

 

 

2,024

 

 

 

2,274

 

Marketing

 

 

747

 

 

 

776

 

 

 

834

 

 

 

1,523

 

 

 

1,850

 

Goodwill impairment

 

 

82,190

 

 

 

 

 

 

 

 

 

82,190

 

 

 

 

Other expense

 

 

5,813

 

 

 

4,942

 

 

 

6,152

 

 

 

10,755

 

 

 

12,343

 

Total noninterest expense

 

 

136,465

 

 

 

55,904

 

 

 

53,769

 

 

 

192,369

 

 

 

108,186

 

Income (loss) before income taxes

 

 

(57,106

)

 

 

25,813

 

 

 

25,055

 

 

 

(31,293

)

 

 

48,762

 

Income tax expense (benefit)

 

 

(11,319

)

 

 

4,879

 

 

 

4,851

 

 

 

(6,440

)

 

 

9,996

 

Net income (loss)

 

$

(45,787

)

 

$

20,934

 

 

$

20,204

 

 

$

(24,853

)

 

$

38,766

 

Comprehensive income (loss)

 

$

(44,154

)

 

$

11,166

 

 

$

12,994

 

 

$

(32,988

)

 

$

49,986

 

OTHER BANK INFORMATION (annualized %, except as of period end)

 

 

Return on average assets

 

 

(1.97

)

 

 

0.88

 

 

 

0.84

 

 

 

(0.53

)

 

 

0.81

 

Return on average equity

 

 

(33.97

)

 

 

15.64

 

 

 

16.20

 

 

 

(9.25

)

 

 

15.87

 

Return on average tangible common equity

 

 

(39.84

)

 

 

18.48

 

 

 

19.40

 

 

 

(10.89

)

 

 

19.07

 

Net interest margin

 

 

2.79

 

 

 

2.75

 

 

 

2.75

 

 

 

2.77

 

 

 

2.80

 

Efficiency ratio

 

 

176.20

 

 

 

70.27

 

 

 

68.18

 

 

 

122.52

 

 

 

68.40

 

Net charge-offs to average loans outstanding

 

 

0.15

 

 

 

0.14

 

 

 

0.14

 

 

 

0.14

 

 

 

0.14

 

As of period end

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans to loans receivable held for investment

 

 

0.53

 

 

 

0.53

 

 

 

0.22

 

 

 

 

 

Allowance for credit losses to loans outstanding

 

 

1.11

 

 

 

1.16

 

 

 

1.13

 

 

 

 

 

Tangible common equity to tangible assets

 

 

5.4

 

 

 

5.0

 

 

 

4.3

 

 

 

 

 

Tier-1 leverage ratio

 

 

8.4

 

 

 

8.0

 

 

 

7.8

 

 

 

 

 

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)

 

$

 

 

$

 

 

$

11.0

 

 

$

 

 

$

25.0

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures

HEI and ASB management use certain non-GAAP measures to evaluate the performance of HEI and the bank.

Management believes these non-GAAP measures provide useful information and are a better indicator of the companies’ core operating activities. Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP 1 earnings to non-GAAP core earnings and returns on average equity and average assets for the bank.

The reconciling adjustments from GAAP earnings to core earnings are limited to the costs related to the Maui wildfires and the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB. Management does not consider these items to be representative of the company’s fundamental core earnings.

Reconciliation of GAAP to non-GAAP Measures

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

Unaudited

 

(in thousands)

Three months ended
June 30, 2024

 

Six months ended
June 30, 2024

Maui wildfire-related costs

 

 

 

Pretax expenses:

 

 

 

Legal expenses

$

25,000

 

 

$

40,027

 

Outside services expenses

 

1,778

 

 

 

4,525

 

Provision for credit losses

 

(800

)

 

 

(2,300

)

Wildfire tort-related claims

 

1,712,000

 

 

 

1,712,000

 

Other expenses

 

6,931

 

 

 

15,950

 

Interest expenses

 

3,386

 

 

 

8,211

 

Pretax expenses

 

1,748,295

 

 

 

1,778,413

 

Insurance recoveries

 

(18,875

)

 

 

(31,452

)

Deferral of cost

 

(7,656

)

 

 

(15,554

)

Wildfire-related expenses, excluding insurance recovery and deferral

 

1,721,764

 

 

 

1,731,407

 

Pretax goodwill impairment

 

82,190

 

 

 

82,190

 

Income tax benefits 2

 

(459,419

)

 

 

(461,901

)

After-tax adjustments

$

1,344,535

 

 

$

1,351,696

 

HEI consolidated net income

 

 

 

GAAP net income (as reported)

$

(1,295,484

)

 

$

(1,253,362

)

Excluding special items related to the Maui wildfire (after tax):

 

 

 

Legal expenses

 

18,554

 

 

 

29,711

 

Outside services expenses

 

1,316

 

 

 

3,338

 

Provision for credit losses

 

(585

)

 

 

(1,683

)

Wildfire tort-related claims

 

1,271,160

 

 

 

1,271,160

 

Other expenses

 

5,145

 

 

 

11,845

 

Interest expenses

 

2,515

 

 

 

6,097

 

After tax expenses

 

1,298,105

 

 

 

1,320,468

 

Insurance recoveries

 

(14,015

)

 

 

(23,353

)

Deferral of cost

 

(5,685

)

 

 

(11,549

)

Maui wildfire-related expenses, net of insurance recoveries and approved deferral treatment (after tax)

 

1,278,405

 

 

 

1,285,566

 

Goodwill impairment (after-tax)

 

66,130

 

 

 

66,130

 

Non-GAAP (core) net income

$

49,051

 

 

$

98,334

 

GAAP Diluted earnings (loss) per share (as reported)

$

(11.74

)

 

$

(11.37

)

Non-GAAP (core) Diluted earnings per share

$

0.44

 

 

$

0.89

 

1

Accounting principles generally accepted in the United States of America.

2

Current year composite statutory tax rate of 25.75% is used for Utility and corporate amounts and current year composite statutory tax rate of 26.80% is used for ASB amounts.

Note: Other segment (Holding and Other Companies) wildfire-related expenses (legal, outside services and other) are included in “Expenses-Other” and interest expense is included in “Interest expense, net—other than on deposit liabilities and other bank borrowings” on the HEI and subsidiaries’ Consolidated Statements of Income Data. See Electric Utilities and Bank tables below for more detail.

Reconciliation of GAAP to non-GAAP Measures

Hawaiian Electric Company, Inc. and Subsidiaries

Unaudited

 

(in thousands)

Three months ended
June 30, 2024

 

Six months ended
June 30, 2024

Maui windstorm and wildfires related costs

 

 

 

Pretax expenses:

 

 

 

Legal expenses 1