PR Newswire | Nov 5, 2021 06:01AM EDT

11/05 05:00 CDT

HEI Reports Third Quarter 2021 Results3Q21 Net Income of $63.4 Million and Diluted Earnings Per Share (EPS)1 of $0.58Utility Delivering Cost Efficiency Savings to Customers While Advancing Climate GoalsBank Results Reflect Solid Profitability and Strong Liquidity and Capital Position HONOLULU, Nov. 5, 2021

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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^1 Unless 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 uponadjusting 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 equity2 for 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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^2 Bank return on average equity calculated using weighted average dailycommon 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 Nine months ended September 30 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 1,058 (1,102) 4,709 (2,970) (expense)-other than service costs

Interest expense, net-other than on deposit liabilities and other bank (23,477) (22,086) (70,530) (66,474) borrowings

Allowance for borrowed funds used during827 801 2,386 2,241 construction

Allowance for equity funds used during 2,427 2,347 6,995 6,556 construction

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

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 471 471 1,417 1,417 subsidiaries

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 shares109,311 109,181 109,272 109,126 outstanding

Weighted-average shares assuming 109,575 109,336 109,588 109,387 dilution

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 $52,110 $66,472 $152,796 $166,659 Hawaiian Electric Industries, Inc.

Return on average common equity (%) 10.3 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 Nine months ended September 30 September 30

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

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 116,468 111,243 349,180 348,831 maintenance

Depreciation 57,386 55,689 172,122 167,235

Taxes, other than income 64,012 53,051 175,185 161,489 taxes

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 2,427 2,347 6,995 6,556 construction

Retirement defined benefits credit (expense)877 (432) 2,918 (1,195) -other than service costs

Interest expense and (18,148) (16,836) (54,126) (50,768) other charges, net

Allowance for borrowed funds used during 827 801 2,386 2,241 construction

Income before income 61,175 74,398 170,163 157,111 taxes

Income taxes 10,335 13,835 33,066 29,316

Net income 50,840 60,563 137,097 127,795

Preferred stock dividends228 228 686 686 of subsidiaries

Net income attributable 50,612 60,335 136,411 127,109 to Hawaiian Electric

Preferred stock dividends270 270 810 810 of Hawaiian Electric

Net income for common $50,342 $60,065 $135,601 $126,299 stock

Comprehensive income attributable to Hawaiian $50,448 $60,113 $135,776 $126,398 Electric

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$86.77 $49.71 $74.93 $64.70 barrel

Return on average common equity (%) (twelve months 8.3 8.4 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 Nine months ended September 30

(in thousands) SeptemberJune 30, September2021 2020 30, 2021 2021 30, 2020

Interest and dividend income

Interest and fees on $49,445$51,026$52,419$150,418$161,505loans

Interest and dividends on 11,996 11,040 7,221 31,709 22,939 investment securities

Total interest and 61,441 62,066 59,640 182,127 184,444 dividend income

Interest expense

Interest on deposit 1,176 1,281 2,287 3,919 8,945 liabilities

Interest on other 5 23 61 55 449 borrowings

Total interest 1,181 1,304 2,348 3,974 9,394 expense

Net interest income 60,260 60,762 57,292 178,153 175,050

Provision for credit (1,725) (12,207)13,970 (22,367) 39,504 losses

Net interest income after provision for 61,985 72,969 43,322 200,520 135,546 credit losses

Noninterest income

Fees from other 4,800 5,464 4,233 15,337 11,906 financial services

Fee income on deposit4,262 3,904 3,832 12,029 11,842 liabilities

Fee income on other 2,124 2,201 1,524 6,767 4,608 financial products

Bank-owned life 2,026 1,624 1,965 6,211 4,432 insurance

Mortgage banking 1,272 1,925 7,681 7,497 15,933 income

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

Other income, net 283 76 (231) 631 (69)

Total noninterest 14,767 15,194 19,004 49,000 57,927 income

Noninterest expense

Compensation and 30,888 27,670 26,431 86,595 77,287 employee benefits

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, 1,072 978 1,187 3,094 3,577 printing and postage

Marketing 995 665 727 2,308 1,908

FDIC insurance 808 788 714 2,412 1,567

Other expense^1 3,668 3,568 4,556 9,790 15,813

Total noninterest 51,511 48,171 47,299 147,185 142,143 expense

Income before income 25,241 39,992 15,027 102,335 51,330 taxes

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 0.86 1.38 0.61 1.21 0.73 assets

Return on average 10.26 16.76 6.75 14.31 7.95 equity

Return on average tangible common 11.52 18.92 7.62 16.11 9.00 equity

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 0.03 0.04 0.32 0.08 0.41 outstanding

As of period end

Nonaccrual loans to loans receivable held0.97 1.03 0.77 for investment

Allowance for credit losses to loans 1.48 1.51 1.67 outstanding

Tangible common equity to tangible 7.3 7.5 8.0 assets

Tier-1 leverage ratio8.0 8.0 8.3

Dividend paid to HEI (via ASB Hawaii, $12.0 $23.0 $- $40.0 $28.0 Inc.) ($ in millions)

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 $4.51 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 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 & Corporate E-mail: ir@hei.com Sustainability

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SOURCE Hawaiian Electric Industries, Inc.