PR Newswire | Aug 9, 2021 06:01AM EDT

08/09 05:00 CDT

HEI Reports Second Quarter 2021 Results2Q21 Net Income of $63.9 Million and Diluted Earnings Per Share (EPS)? of $0.58Utility Focused on Cost Efficiencies to Benefit Customers and Progressing Hawaii's Climate GoalsBank Results Reflect Improved Economy and Credit Quality, Stable Net Interest Margin HONOLULU, Aug. 9, 2021

HONOLULU, Aug. 9, 2021 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the second quarter of 2021 of $63.9 million and EPS of $0.58 compared to $48.9 million and EPS of $0.45 for the second quarter of 2020.

"HEI delivered strong consolidated financial results in the second quarter as Hawaii's economy strengthened and as we advanced key priorities across our enterprise," said Constance H. Lau, HEI president and CEO.

"At our utility the new performance-based regulation (PBR) framework is now fully in effect as of June 1, and we've begun delivering savings from our cost management program to our customers. We remain focused on cost efficiencies as we make needed investments to continue to provide safe, reliable electricity and reach Hawaii's climate goals.

"Our bank's strong second quarter results reflect the reopened local economy and increased tourism, solid execution and our bank's continuing efforts to work closely with its customers through the pandemic. The bank's results benefited from a release of reserves for credit losses, driven by the improved economy and credit quality, while the bank continues to transform its operating model to provide excellent customer service in an increasingly digital world," said Lau.

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

HAWAIIAN ELECTRIC COMPANY EARNINGSHawaiian Electric Company's (Hawaiian Electric) net income for the second quarter of 2021 was $41.9 million, compared to $42.3 million in the second quarter of 2020, primarily driven by the following after-tax items:

* $6 million from higher operations and maintenance expenses consisting primarily of (i) $3 million due to more generating facility overhauls, (ii) $2 million from lower bad debt expense in the second quarter of 2020 resulting from a Hawaii Public Utilities Commission (PUC) decision allowing deferral of COVID-19 related expenses, (iii) $1 million from a write-off due to termination of an agreement relating to a combined heat and power unit, and (iv) $1 million due to an increase in an environmental reserve, partially offset by $1 million from lower staffing levels and efficiency improvements; and * $1 million from higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency.

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

* $3 million from higher rate adjustment mechanism revenues; * $2 million related solely to a change in the timing for revenue recognition within the year that eliminates seasonality in recognizing target revenues and results in recognizing revenues evenly throughout the year, with target revenues recognized on an annual basis remaining unchanged; * $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 to be passed on to customers.

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

AMERICAN SAVINGS BANK EARNINGSAmerican Savings Bank's (American) second quarter of 2021 net income was $30.3 million, compared to $29.6 million in the first, or linked, quarter of 2021 and $14.0 million in the second quarter of 2020. The increase in net income compared to the linked and prior year quarters was primarily due to a credit-driven reserve release that resulted in a negative provision for credit losses of $12.2 million for the second quarter. This compares to a negative provision for credit losses of $8.4 million in the first quarter of 2021 and a provision for credit losses of $15.1 million in the second quarter of 2020.

Total loans were $5.2 billion as of June 30, 2021, down 2.7% from December 31, 2020. The reduction in the loan portfolio included approximately $228 million in forgiven ASB CARES (Paycheck Protection Program) loans, in addition to declines in the home equity line of credit and consumer portfolios. The decrease in these portfolios was partially offset by growth in the commercial real estate portfolio.

Total deposits were $7.9 billion as of June 30, 2021, an increase of 6.6% from December 31, 2020. For the second quarter of 2021, the average cost of funds was 0.07%, down one basis point versus the linked quarter and down eleven basis points versus the prior year quarter.

Overall, American's return on average equity2 for the second quarter of 2021 was 16.8%, compared to 16.0% in the linked quarter and 8.0% in the second quarter of 2020. Return on average assets was 1.38% for the second quarter of 2021, compared to 1.40% in the linked quarter and 0.72% in the same quarter last year.

In the second quarter of 2021, American paid dividends of $23.0 million to HEI. American had a Tier 1 leverage ratio of 8.0% at June 30, 2021.

Please refer to American's news release issued on July 30, 2021 for additional information on American.

HOLDING AND OTHER COMPANIESThe holding and other companies' net loss was $8.3 million in the second quarter of 2021 compared to $7.5 million in the second quarter of 2020. The greater net loss was primarily due to increased charitable contribution expense relating to a settlement agreement associated with an executive transition.

BOARD DECLARES QUARTERLY DIVIDENDOn August 6, 2021, HEI announced that the Board of Directors declared a quarterly cash dividend of $0.34 per share, payable on September 10, 2021 to shareholders of record at the close of business on August 19, 2021 (ex-dividend date is August 18, 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 August 6, 2021 of $43.83, HEI's dividend yield is 3.1%.

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^2 Bank return on average equity calculated using weighted average dailycommon equity.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2021 GUIDANCEHEI will conduct a webcast and conference call to review its consolidated results and 2021 earnings guidance and outlook on Monday, August 9, 2021 at 10:15 a.m.Hawaii time (4:15 p.m. Eastern).

Parties in the U.S. may listen to the conference call by dialing (844) 834-0652. International parties may listen to the conference call by dialing (412) 317-5198. Parties may also access presentation materials and/or listen to the conference call by visiting the conference call/webcast link on HEI's website at www.hei.com under the "Investor Relations" section, 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, 2021. To access the audio replay, dial (877) 344-7529 (U.S.) or (412) 317-0088 (international) and enter passcode 10157240.

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 on HEI's website in the Investor Relations section. Accordingly, investors should routinely monitor the Investor Relations section of HEI's website at www.hei.com 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 in this document or in 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 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 in this document or in HEI's and Hawaiian Electric's SEC filings.

HEI supplies power to approximately 95% of Hawaii's population through its electric utility, Hawaiian Electric; provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii's largest financial institutions; and helps advance Hawaii's clean energy and sustainability goals through investments by its non-regulated subsidiary, Pacific Current.

FORWARD-LOOKING STATEMENTSThis 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 June 30Six months ended June 30

(in thousands, except per share amounts) 2021 2020 2021 2020

Revenues

Electric utility $ 601,879$ 534,215 $1,166,743$1,131,657

Bank 77,260 74,714 154,391 154,452

Other 1,118 16 2,069 22

Total revenues 680,257 608,945 1,323,203 1,286,131

Expenses

Electric utility 534,195 466,414 1,029,945 1,019,898

Bank 37,454 66,221 79,289 126,556

Other 6,752 4,754 14,082 8,419

Total expenses 578,401 537,389 1,123,316 1,154,873

Operating income (loss)

Electric utility 67,684 67,801 136,798 111,759

Bank 39,806 8,493 75,102 27,896

Other (5,634) (4,738) (12,013) (8,397)

Total operating income 101,856 71,556 199,887 131,258

Retirement defined benefits credit 1,216 (934) 3,651 (1,868) (expense)-other than service costs

Interest expense, net-other than on deposit liabilities and other bank (23,317) (22,613) (47,053) (44,388) borrowings

Allowance for borrowed funds used during 812 752 1,559 1,440 construction

Allowance for equity funds used during 2,377 2,194 4,568 4,209 construction

Gain on sale of investment securities, - 9,275 528 9,275 net

Income before income taxes 82,944 60,230 163,140 99,926

Income taxes 18,599 10,870 33,964 16,673

Net income 64,345 49,360 129,176 83,253

Preferred stock dividends of subsidiaries473 473 946 946

Net income for common stock $ 63,872 $ 48,887 $128,230 $82,307

Basic earnings per common share $ 0.58 $ 0.45 $1.17 $0.75

Diluted earnings per common share $ 0.58 $ 0.45 $1.17 $0.75

Dividends declared per common share $ 0.34 $ 0.33 $0.68 $0.66

Weighted-average number of common shares 109,282 109,146 109,252 109,098 outstanding

Weighted-average shares assuming dilution109,515 109,305 109,557 109,374

Net income (loss) for common stock by segment

Electric utility $ 41,901 $ 42,329 $85,259 $66,234

Bank 30,284 14,014 59,840 29,775

Other (8,313) (7,456) (16,869) (13,702)

Net income for common stock $ 63,872 $ 48,887 $128,230 $82,307

Comprehensive income attributable to $ 80,344 $ 48,555 $100,686 $100,187 Hawaiian Electric Industries, Inc.

Return on average common equity (%) 10.5 9.4 (twelve months ended)

This information should be read in conjunction with the consolidated financialstatements and the notes thereto in HEI filings with the SEC. Results ofoperations for interim periods are not necessarily indicative of results to beexpected 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 30Six months ended June 30

($ in thousands, except per barrel 2021 2020 2021 2020 amounts)

Revenues $ 601,879$ 534,215 $1,166,743$1,131,657

Expenses

Fuel oil 139,136 112,451 266,563 285,672

Purchased power 162,465 136,838 304,761 276,654

Other operation and 118,142 110,041 232,712 237,588 maintenance

Depreciation 57,381 55,696 114,736 111,546

Taxes, other than 57,071 51,388 111,173 108,438 income taxes

Total expenses 534,195 466,414 1,029,945 1,019,898

Operating income 67,684 67,801 136,798 111,759

Allowance for equity funds used during 2,377 2,194 4,568 4,209 construction

Retirement defined benefits credit 1,020 (382) 2,041 (763) (expense)-other than service costs

Interest expense and (17,995) (17,338) (35,978) (33,932) other charges, net

Allowance for borrowed funds used 812 752 1,559 1,440 during construction

Income before income 53,898 53,027 108,988 82,713 taxes

Income taxes 11,498 10,199 22,731 15,481

Net income 42,400 42,828 86,257 67,232

Preferred stock dividends of 229 229 458 458 subsidiaries

Net income attributable to 42,171 42,599 85,799 66,774 Hawaiian Electric

Preferred stock dividends of Hawaiian270 270 540 540 Electric

Net income for common$ 41,901 $ 42,329 $85,259 $66,234 stock

Comprehensive income attributable to $ 41,936 $ 42,354 $85,328 $66,285 Hawaiian Electric

OTHER ELECTRIC UTILITY INFORMATION

Kilowatthour sales (millions)

Hawaiian Electric 1,514 1,444 2,942 2,940

Hawaii Electric 256 224 501 476 Light

Maui Electric 256 206 492 464

2,026 1,874 3,935 3,880

Average fuel oil cost$ 73.58 $ 63.12 $68.59 $72.77 per barrel

Return on average common equity (%) 8.9 7.9 (twelve months ended) ^1

^1 Simple average.

This information should be read in conjunction with the consolidated financialstatements and the notes thereto in Hawaiian Electric filings with the SEC.Results of operations for interim periods are not necessarily indicative ofresults 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, 2021March 31, 2021June 30, 20202021 2020

Interest and dividend income

Interest and $51,026 $49,947 $53,541 $ 100,973$ 109,086fees on loans

Interest and dividends on 11,040 8,673 6,288 19,713 15,718 investment securities

Total interest and dividend 62,066 58,620 59,829 120,686 124,804 income

Interest expense

Interest on deposit 1,281 1,462 3,071 2,743 6,658 liabilities

Interest on other 23 27 75 50 388 borrowings

Total interest1,304 1,489 3,146 2,793 7,046 expense

Net interest 60,762 57,131 56,683 117,893 117,758 income

Provision for (12,207) (8,435) 15,133 (20,642) 25,534 credit losses

Net interest income after 72,969 65,566 41,550 138,535 92,224 provision for credit losses

Noninterest income

Fees from other 5,464 5,073 3,102 10,537 7,673 financial services

Fee income on deposit 3,904 3,863 2,897 7,767 8,010 liabilities

Fee income on other 2,201 2,442 1,212 4,643 3,084 financial products

Bank-owned 1,624 2,561 1,673 4,185 2,467 life insurance

Mortgage 1,925 4,300 6,252 6,225 8,252 banking income

Gain on sale of investment - 528 9,275 528 9,275 securities, net

Other income, 76 272 (251) 348 162 net

Total noninterest 15,194 19,039 24,160 34,233 38,923 income

Noninterest expense

Compensation and employee 27,670 28,037 25,079 55,707 50,856 benefits

Occupancy 5,100 4,969 5,442 10,069 10,709

Data 4,533 4,351 3,849 8,884 7,686 processing

Services 2,475 2,862 2,474 5,337 5,283

Equipment 2,394 2,222 2,290 4,616 4,629

Office supplies, 978 1,044 1,049 2,022 2,390 printing and postage

Marketing 665 648 379 1,313 1,181

FDIC insurance788 816 751 1,604 853

Other expense^3,568 2,554 7,063 6,122 11,257 1

Total noninterest 48,171 47,503 48,376 95,674 94,844 expense

Income before 39,992 37,102 17,334 77,094 36,303 income taxes

Income taxes 9,708 7,546 3,320 17,254 6,528

Net income $30,284 $29,556 $14,014 $ 59,840 $ 29,775

Comprehensive $47,283 $(16,198) $13,734 $ 31,085 $ 49,342 income (loss)

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

Return on 1.38 1.40 0.72 1.39 0.79 average assets

Return on 16.76 16.04 8.00 16.40 8.57 average equity

Return on average 18.92 18.06 9.07 18.48 9.72 tangible common equity

Net interest 2.98 2.95 3.21 2.97 3.46 margin

Efficiency 63.42 62.36 59.84 62.89 60.53 ratio

Net charge-offs to0.04 0.18 0.49 0.11 0.46 average loans outstanding

As of period end

Nonaccrual loans to loans receivable 1.03 1.00 0.86 held for investment

Allowance for credit losses 1.51 1.73 1.50 to loans outstanding

Tangible common equity 7.5 7.3 7.9 to tangible assets

Tier-1 8 8.3 8.4 leverage ratio

Dividend paid to HEI (via ASB Hawaii, $23.0 $5.0 $- $ 28.0 $ 28.0 Inc.) ($ in millions)

^1 The three- and six-month periods ended June 30, 2021 include approximately$0.1 million and $0.4 million, respectively, of certain direct and incrementalCOVID-19 related costs. The three- and six-month periods ended June 30, 2020include approximately $3.7 million and $3.8 million, respectively, of certainsignificant direct and incremental COVID-19 related costs. These costs for thefirst six months of 2020, which have been recorded in Other expense, include$2.3 million of compensation expense and $1.1 million of enhanced cleaning andsanitation costs.

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

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

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



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SOURCE Hawaiian Electric Industries, Inc.