HONOLULU, Nov. 5, 2021 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock of $63.4 million for the third quarter of 2021 and EPS of $0.58 compared to $65.0 million and EPS of $0.59 for the third quarter of 2020.

"We're pleased with our consolidated third quarter results, with the utility achieving its efficiency targets and delivering good performance in line with expectations, and solid profitability at the bank," said Constance H. Lau, HEI president and CEO. "Following a sharp decline in new COVID-19 case counts, the governor's recent announcement encouraging visitors to return is a positive sign for our local economy. Working together, our state, our companies and our communities can continue to strengthen our economy and continue to show Hawaii's leadership in confronting climate change.

"Our utility's carbon reduction efforts go hand-in-hand with its work to provide affordable, equitable, reliable and resilient power for customers. We're on track to deliver on our management audit savings commitment for this year, providing $3 million to customers in the third quarter and an additional $3 million by year end. Cost efficiency remains a key focus. We're pleased with the collaboration with our policymakers, regulators and community to help move renewable energy and storage projects forward. We're also confident that we can continue to provide reliable power when we eliminate coal in Hawaii next year.

"Our bank's third quarter results reflect continued solid performance and good credit quality, the latter of which drove an additional release of reserves. We continue to build our capabilities to provide more value to customers by increasing digital banking services and customized financial solutions, while delivering the superior customer experience we're known for," said Lau.

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¹Unless otherwise indicated, throughout this release earnings per share (EPS) refers to diluted earnings per share.

HAWAIIAN ELECTRIC COMPANY EARNINGS

Hawaiian Electric Company's (Hawaiian Electric) net income for the third quarter of 2021 was $50.3 million, compared to $60.1 million in the third quarter of 2020, with the difference primarily driven by the following after-tax items:

$6 million lower revenues, including (i) $5 million related solely to a change in the timing for revenue recognition within the year that eliminates seasonality and results in recognizing revenues more evenly throughout the year, with target revenues recognized on an annual basis remaining unchanged, and (ii) $1 million relating to the annual revenue adjustment mechanism, which included $3 million of management audit savings delivered to customers;
$4 million from higher operations and maintenance expenses primarily due to an increase in generating facility overhauls performed in the quarter and delayed from earlier in the year, higher costs for energy management system upgrades, and higher medical costs due to a one-time credit in 2020, partially offset by $1 million lower labor expense;
$1 million from higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency;
$1 million related to lower fuel efficiency due to planned maintenance outages of certain generation units; and
$1 million higher interest expense due to higher borrowings.

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

$1 million lower non-service pension costs due to the reset of pension costs included in rates as part of a final rate case decision; and
$1 million lower enterprise resource planning system implementation benefits passed on to customers in the third quarter of 2021 as compared to the same quarter last year.

AMERICAN SAVINGS BANK EARNINGS

American Savings Bank's (American) third quarter of 2021 net income was $19.3 million, compared to $30.3 million in the second quarter of 2021 and $12.2 million in the third quarter of 2020. The decrease in net income compared to the linked quarter was primarily due to the $12.2 million negative provision in the second quarter of 2021 compared to the negative provision of $1.7 million in the third quarter of 2021. The increase in net income compared to the prior year quarter was primarily due to the negative provision for credit losses of $1.7 million for the third quarter of 2021 compared to a provision for credit losses of $14.0 million in the third quarter of 2020.

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Note: Amounts indicated as after-tax in this earnings release are based upon adjusting items using the current year composite statutory tax rates of 25.75% for the utilities and 26.79% for the bank.

Total earning assets as of September 30, 2021 were $8.4 billion, up 9.3% from December 31, 2020.

Total loans were $5.1 billion as of September 30, 2021, down 1.3% compared to June 30, 2021 and down 4.0% from December 31, 2020. The reduction in the loan portfolio during the quarter included approximately $111 million in forgiven Paycheck Protection Program (PPP) loans, as well as declines in the home equity line of credit and consumer portfolios. The decrease in these portfolios was partially offset by growth in the residential, commercial and commercial real estate loan portfolios. Excluding PPP loan forgiveness, the loan portfolio grew by $46 million or 0.9% compared to June 30, 2021.

The investment securities portfolio was $3.1 billion as of September 30, 2021, up 39.8% from December 31, 2020 as growth in deposits continued to outpace loan growth. The portfolio is primarily comprised of securities issued or guaranteed by U.S. government agencies or U.S. government sponsored agencies.

Total deposits were $8.0 billion as of September 30, 2021, an increase of 1.3% compared to June 30, 2021 and an increase of 8.0% from December 31, 2020. For the third quarter of 2021, the average cost of funds was 0.06%, down one basis point versus the linked quarter and down seven basis points versus the prior year quarter.

Overall, American's return on average equity²for the third quarter of 2021 was 10.3%, compared to 16.8% in the linked quarter and 6.8% in the third quarter of 2020. Return on average assets was 0.86% for the third quarter of 2021, compared to 1.38% in the linked quarter and 0.61% in the same quarter last year.

In the third quarter of 2021, American paid dividends of $12.0 million to HEI. American had a Tier 1 leverage ratio of 8.0% at September 30, 2021.

Please refer to American's news release issued on October 29, 2021 for additional information on American.

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²Bank return on average equity calculated using weighted average daily common equity.

HOLDING AND OTHER COMPANIES

The holding and other companies' net loss was $6.2 million in the third quarter of 2021 compared to $7.2 million in the third quarter of 2020. The lower net loss was primarily due to higher Pacific Current income and lower corporate expense.

BOARD DECLARES QUARTERLY DIVIDEND

On November 4, 2021, HEI announced that the Board of Directors declared a quarterly cash dividend of $0.34 per share, payable on December 10, 2021 to shareholders of record at the close of business on November 23, 2021 (ex-dividend date is November 22, 2021). This quarterly dividend is equivalent to an annual rate of $1.36 per share. Dividends have been paid on an uninterrupted basis since 1901. At the indicated annual dividend rate and based on the closing price per share on November 4, 2021 of $41.14, HEI's dividend yield is 3.3%.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2021 GUIDANCE

HEI will conduct a webcast and conference call to review its consolidated results and

2021 earnings guidance and outlook on Friday, November 5, 2021 at 10:15 a.m. Hawaii time (4:15 p.m. Eastern).

To listen to the conference call, dial 1-844-200-6205 (U.S.) or 1-929-526-1599 (international) and enter passcode 181692. Parties may also access presentation materials 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 November 19, 2021. To access the audio replay, dial 1-866-813-9403 (U.S.) or 44-204-525-0658 (international) and enter passcode 965360.

HEI and 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 American's press releases, HEI's and Hawaiian Electric's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts. 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 dms.puc.hawaii.gov/dms 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.

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. Its banking subsidiary, American Savings Bank, 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.

FORWARD-LOOKING STATEMENTS

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, 2020 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, American 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 September 30				Nine months ended September 30
(in thousands, except per share amounts)	2021		2020		2021		2020
Revenues
Electric utility	$	679,499	$	562,568	$	1,846,242	$	1,694,225
Bank	76,208		78,644		230,599		233,096
Other	1,197		215		3,266		237
Total revenues	756,904		641,427		2,080,107		1,927,558
Expenses
Electric utility	604,307		474,050		1,634,252		1,493,948
Bank	51,151		63,144		130,440		189,700
Other	4,130		4,672		18,212		13,091
Total expenses	659,588		541,866		1,782,904		1,696,739
Operating income (loss)
Electric utility	75,192		88,518		211,990		200,277
Bank	25,057		15,500		100,159		43,396
Other	(2,933)		(4,457)		(14,946)		(12,854)
Total operating income	97,316		99,561		297,203		230,819
Retirement defined benefits credit (expense)—other than service costs	1,058		(1,102)		4,709		(2,970)
Interest expense, net—other than on deposit liabilities and other bank borrowings	(23,477)		(22,086)		(70,530)		(66,474)
Allowance for borrowed funds used during construction	827		801		2,386		2,241
Allowance for equity funds used during construction	2,427		2,347		6,995		6,556
Gain on sale of investment securities, net	—		—		528		9,275
Income before income taxes	78,151		79,521		241,291		179,447
Income taxes	14,265		14,018		48,229		30,691
Net income	63,886		65,503		193,062		148,756
Preferred stock dividends of subsidiaries	471		471		1,417		1,417
Net income for common stock	$	63,415	$	65,032	$	191,645	$	147,339
Basic earnings per common share	$	0.58	$	0.60	$	1.75	$	1.35
Diluted earnings per common share	$	0.58	$	0.59	$	1.75	$	1.35
Dividends declared per common share	$	0.34	$	0.33	$	1.02	$	0.99
Weighted-average number of common shares outstanding	109,311		109,181		109,272		109,126
Weighted-average shares assuming dilution	109,575		109,336		109,588		109,387
Net income (loss) for common stock by segment
Electric utility	$	50,342	$	60,065	$	135,601	$	126,299
Bank	19,265		12,150		79,105		41,925
Other	(6,192)		(7,183)		(23,061)		(20,885)
Net income for common stock	$	63,415	$	65,032	$	191,645	$	147,339
Comprehensive income attributable to Hawaiian Electric Industries, Inc.	$	52,110	$	66,472	$	152,796	$	166,659
Return on average common equity (%) (twelve months ended)					10.3		9.4

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 September 30				Nine months ended September 30
($ in thousands, except per barrel amounts)	2021		2020		2021		2020
Revenues	$	679,499	$	562,568	$	1,846,242	$	1,694,225
Expenses
Fuel oil	180,682		105,042		447,245		390,714
Purchased power	185,759		149,025		490,520		425,679
Other operation and maintenance	116,468		111,243		349,180		348,831
Depreciation	57,386		55,689		172,122		167,235
Taxes, other than income taxes	64,012		53,051		175,185		161,489
Total expenses	604,307		474,050		1,634,252		1,493,948
Operating income	75,192		88,518		211,990		200,277
Allowance for equity funds used during construction	2,427		2,347		6,995		6,556
Retirement defined benefits credit (expense)—other than service costs	877		(432)		2,918		(1,195)
Interest expense and other charges, net	(18,148)		(16,836)		(54,126)		(50,768)
Allowance for borrowed funds used during construction	827		801		2,386		2,241
Income before income taxes	61,175		74,398		170,163		157,111
Income taxes	10,335		13,835		33,066		29,316
Net income	50,840		60,563		137,097		127,795
Preferred stock dividends of subsidiaries	228		228		686		686
Net income attributable to Hawaiian Electric	50,612		60,335		136,411		127,109
Preferred stock dividends of Hawaiian Electric	270		270		810		810
Net income for common stock	$	50,342	$	60,065	$	135,601	$	126,299
Comprehensive income attributable to Hawaiian Electric	$	50,448	$	60,113	$	135,776	$	126,398
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
Hawaiian Electric	1,636		1,620		4,578		4,559
Hawaii Electric Light	273		244		774		721
Maui Electric	282		235		774		699
	2,191		2,099		6,126		5,979
Average fuel oil cost per barrel	$	86.77	$	49.71	$	74.93	$	64.70
Return on average common equity (%) (twelve months ended)¹					8.3		8.4

¹ Simple average.

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						Nine months ended September 30
(in thousands)	September 30, 2021		June 30, 2021		September 30, 2020		2021		2020
Interest and dividend income
Interest and fees on loans	$	49,445	$	51,026	$	52,419	$	150,418	$	161,505
Interest and dividends on investment securities	11,996		11,040		7,221		31,709		22,939
Total interest and dividend income	61,441		62,066		59,640		182,127		184,444
Interest expense
Interest on deposit liabilities	1,176		1,281		2,287		3,919		8,945
Interest on other borrowings	5		23		61		55		449
Total interest expense	1,181		1,304		2,348		3,974		9,394
Net interest income	60,260		60,762		57,292		178,153		175,050
Provision for credit losses	(1,725)		(12,207)		13,970		(22,367)		39,504
Net interest income after provision for credit losses	61,985		72,969		43,322		200,520		135,546
Noninterest income
Fees from other financial services	4,800		5,464		4,233		15,337		11,906
Fee income on deposit liabilities	4,262		3,904		3,832		12,029		11,842
Fee income on other financial products	2,124		2,201		1,524		6,767		4,608
Bank-owned life insurance	2,026		1,624		1,965		6,211		4,432
Mortgage banking income	1,272		1,925		7,681		7,497		15,933
Gain on sale of investment securities, net	—		—		—		528		9,275
Other income, net	283		76		(231)		631		(69)
Total noninterest income	14,767		15,194		19,004		49,000		57,927
Noninterest expense
Compensation and employee benefits	30,888		27,670		26,431		86,595		77,287
Occupancy	5,157		5,100		5,693		15,226		16,402
Data processing	4,278		4,533		3,366		13,162		11,052
Services	2,272		2,475		2,624		7,609		7,907
Equipment	2,373		2,394		2,001		6,989		6,630
Office supplies, printing and postage	1,072		978		1,187		3,094		3,577
Marketing	995		665		727		2,308		1,908
FDIC insurance	808		788		714		2,412		1,567
Other expense¹	3,668		3,568		4,556		9,790		15,813
Total noninterest expense	51,511		48,171		47,299		147,185		142,143
Income before income taxes	25,241		39,992		15,027		102,335		51,330
Income taxes	5,976		9,708		2,877		23,230		9,405
Net income	$	19,265	$	30,284	$	12,150	$	79,105	$	41,925
Comprehensive income	$	7,581	$	47,283	$	13,543	$	38,666	$	62,885
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets	0.86		1.38		0.61		1.21		0.73
Return on average equity	10.26		16.76		6.75		14.31		7.95
Return on average tangible common equity	11.52		18.92		7.62		16.11		9.00
Net interest margin	2.90		2.98		3.12		2.94		3.34
Efficiency ratio	68.66		63.42		61.99		64.80		61.01
Net charge-offs to average loans outstanding	0.03		0.04		0.32		0.08		0.41
As of period end
Nonaccrual loans to loans receivable held for investment	0.97		1.03		0.77
Allowance for credit losses to loans outstanding	1.48		1.51		1.67
Tangible common equity to tangible assets	7.3		7.5		8.0
Tier-1 leverage ratio	8.0		8.0		8.3
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)	$	12.0	$	23.0	$	—	$	40.0	$	28.0


¹	The three- and nine-month periods ended September 30, 2021 include approximately $0.1 million and $0.5 million, respectively, of certain direct and incremental COVID-19 related costs. The three- and nine-month periods ended September 30, 2020 include approximately $0.7 million and $4.5 million, respectively, of certain significant direct and incremental COVID-19 related costs. These costs for the first nine months of 2020, which have been recorded in Other expense, include $2.4 million of compensation expense and $1.7 million of enhanced cleaning and sanitation costs.

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.

Contact:	Julie R. Smolinski	Telephone: (808) 543-7300

	Vice President, Investor Relations & Corporate Sustainability	E-mail: ir@hei.com

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SOURCE Hawaiian Electric Industries, Inc.

HEI Reports Third Quarter 2021 Results