Posted on: Tuesday, October 26, 2004
HEI, Bankoh had rosy 3rd quarter
| • | Revenue and profit growth helped by economic rebound |
By Deborah Adamson
Advertiser Staff Writer
Electricity use rose 3.6 percent, well above projections
Third-quarter profits at Hawaiian Electric Industries soared as electricity use rose above projections.
The parent company of Hawaiian Electric Co. and American Savings Bank yesterday reported a net income from continuing operations of $40.8 million, up 34 percent from $30.5 million in the like period a year ago. Results include gains of $5.6 million from the sale of securities and $1.9 million related to discontinued operations.
Earnings per share went up by 24 percent to 51 cents from 41 cents last year.
Revenue — 80 percent of which comes from HECO — rose by nearly 12 percent to $506.7 million from $453.7 million a year earlier.
Shares rose by 6 percent to $28.25 yesterday as the company exceeded Wall Street's expectations. Analysts were projecting profits of 41 cents a share on revenue of $481 million, according to Thomson First Call.
"The strengthening of our economy is showing up in our results," said Robert Clarke, chairman, president and chief executive of HEI, in a statement. "The Hawai'i economy is doing well — visitor arrivals are approaching record levels, real-estate sales and construction activity are at high levels and the military is making long-term infrastructure investments in Hawai'i. "
Separating out the performance of the subsidiaries, HECO recorded revenue of $410 million in the quarter, up 14 percent from a year ago, while net income rose by 28 percent percent to $26.2 million.
Use of electricity by businesses rose by 2.8 percent in the quarter while humid weather prompted residents to up their use of electricity as well. As a result, total electricity use rose by a higher-than-expected 3.6 percent.
A $1.9 million decrease in retirement benefit costs also boosted the bottom line at HECO.
American Savings Bank's revenue fell by 3.7 percent to $90.3 million but net income held steady at $15.4 million versus $15.3 million last year.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
Revenue and profit growth helped by economic rebound
Riding the wave of Hawai'i's strong economy, Bank of Hawaii reported a jump in third-quarter earnings yesterday and raised its quarterly dividend by 10 percent.
The state's second-largest bank based on total assets earned $43.1 million, up 17 percent from $36.7 million in the same period a year ago. Earnings per share for the quarter came to 78 cents, up 28 percent from last year's 61 cents.
Revenue — noninterest and net interest income — was $151.9 million compared with $144.9 million in the third quarter of 2003.
Bank of Hawaii also raised its projection for year-end earnings to $166 million to $168 million from $163 million to $167 million.
The bank's performance exceeded Wall Street's expectations. Analysts had forecast earnings of 74 cents, according to Thomson First Call. For the year, analysts projected earnings of $2.97 a share or $165.9 million.
Total assets topped $9.59 billion as of the quarter's end, versus $9.37 billion a year ago. Total loans and leases were $5.82 billion compared with $5.57 billion; total deposits rose to $7.41 billion from $7.1 billion year-over-year.
"We're very pleased with our results," said Allan Landon, chairman, president and chief executive who succeeded Michael O'Neill. "We miss Mike. He's a great leader, but we're off to a good start and we're doing well."
O'Neill resigned from Bank of Hawaii as of Sept. 1, nearly four years after joining the company. He led a top-to-bottom restructuring that resulted in bigger profits and record high stock prices. O'Neill also was one of the most highly compensated chief executives of a public company in Hawai'i.
Bank of Hawaii cited the state's economic rebound as one reason for its revenue and profit growth. Tourism is on track to set a record this year in visitor arrivals, the employment rate fell below 3 percent and job growth continued to exceed 2 percent.
Contributing to profit gains in the quarter were an 8.4 percent increase in net interest income and growth in consumer lending.
Net interest income — what the bank earns from interest charged on loans minus what it pays on deposits — rose to $98.8 million in the quarter from $91.1 million a year ago. Noninterest income — income from other sources including fees and investments — fell 1.3 percent to $53.1 million.
Noninterest income included a gain of $5.2 million from the sale of assets while expenses fell by 5 percent to $84.2 million. Last year's noninterest income included $3.1 million in prepayment fees on a commercial real estate loan.
Bank of Hawaii did not designate more for loan or lease losses in the quarter. Banks typically set aside money regularly to offset any bad loans. But credit quality has improved so significantly that Bank of Hawaii believed it had adequate reserves and chose not to add to reserves in the quarter.
Nonperforming assets — loans with payments past due 90 days or more plus foreclosed real estate — fell by 60 percent to $16 million in the quarter from 2003.
Among its business units, commercial banking and Treasury operations had earnings gains while retail banking and the investment services profits fell. Lower mortgage banking income contributed to the earnings decline for retail banking while higher expenses affected investment services.
Bank of Hawaii raised its quarterly dividend to 33 cents a share, up 3 cents, payable Dec. 14 to shareholders of record as of Nov. 29.
The bank also bought back 700,000 of its own shares for $31.4 million in the quarter. Since the July 2001 start of its stock repurchase program until Sept. 30, the bank has repurchased 33.9 million shares for $1 billion.
Shares of Bank of Hawaii rose by 71 cents to close at $48.31 yesterday.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
