Noninterest expense (pretax) for the fourth quarter of 2010 was $35.0 million, the lowest level since the start of the PIP and down from $41.7 million in the fourth quarter of 2009 and $36.3 million in the third quarter of 2010.
The bank remains strongly capitalized with a Tier 1 leverage ratio of 9.2% and total risk-based capital ratio of 13.9% as of the end of the fourth quarter of 2010.
UTILITY WELL POSITIONED TO EXECUTE CLEAN ENERGY STRATEGY
Full Year Results:
Utility net income was $76.6 million in 2010 compared to $79.4 million in 2009. The $2.8 million net income decline resulted primarily from (on an after-tax basis):
- Approximately $6 million lower kilowatthour sales;
- $23 million higher operations and maintenance (O&M) expenses 1; and
- $11 million higher financing costs primarily due to generating units put into service in the latter part of 2009.
Excludes demand-side management (DSM) program costs.
DSM program costs were $4 million for the full year in 2010 compared to $21 million in 2009 and $2 million in both fourth quarter 2009 and 2010. DSM program costs are recovered through a surcharge. The energy efficiency DSM programs were transferred to a third-party administrator at the end of the second quarter of 2009.
These factors were somewhat offset by (on an after-tax basis):
- $26 million of rate relief granted in our 2009 Oahu and 2010 Maui rate cases;
- Tax settlement items, which net to $6 million; and
- $5 million lower fuel costs related to improved system-wide generating unit efficiencies.
Kilowatthour sales were down 1.1% year over year due largely to the effects of cooler and less humid weather. This was in line with our guidance provided last quarter for a year-over-year decline of 1%.