HAWAIIAN ELECTRIC CO INC [HAWEL] Filings

10-Q 1 he-20220331.htm 10-Q he-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Exact Name of Registrant as Specified in Its Charter	Commission File Number	I.R.S. Employer Identification No.
HAWAIIAN ELECTRIC INDUSTRIES, INC.	1-8503	99-0208097
and Principal Subsidiary
HAWAIIAN ELECTRIC COMPANY, INC.	1-4955	99-0040500

State of Hawaii

(State or other jurisdiction of incorporation or organization)

Hawaiian Electric Industries, Inc. – 1001 Bishop Street, Suite 2900, Honolulu, Hawaii 96813

Hawaiian Electric Company, Inc. – 1001 Bishop Street, Suite, 2500, Honolulu, Hawaii 96813

(Address of principal executive offices and zip code)

Hawaiian Electric Industries, Inc. – (808) 543-5662

Hawaiian Electric Company, Inc. – (808) 543-7771

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)


Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Hawaiian Electric Industries, Inc.	Common Stock, Without Par Value	HE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Hawaiian Electric Industries, Inc.

Yes

☒

☐

Hawaiian Electric Company, Inc.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Hawaiian Electric Industries, Inc.

Yes

☒

☐

Hawaiian Electric Company, Inc.

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.

Hawaiian Electric Industries, Inc.:

Hawaiian Electric Company, Inc.:

Large accelerated filer

☒

Smaller reporting company

☐

Large accelerated filer

☐

Smaller reporting company

☐

Accelerated filer

☐

Emerging growth company

☐

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Non-accelerated filer

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Hawaiian Electric Industries, Inc.

☐

Hawaiian Electric Company, Inc.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Hawaiian Electric Industries, Inc.

Yes

☐

☒

Hawaiian Electric Company, Inc.

Yes

☐

☒

Securities registered pursuant to 12(b) of the Act:

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.


Class of Common Stock	Outstanding April 25, 2022
Hawaiian Electric Industries, Inc. (Without Par Value)	109,431,346	Shares
Hawaiian Electric Company, Inc. ($6-2/3 Par Value)	17,753,533	Shares (not publicly traded)

Hawaiian Electric Industries, Inc. (HEI) is the sole holder of Hawaiian Electric Company, Inc. (Hawaiian Electric) common stock.

This combined Form 10-Q is separately filed by HEI and Hawaiian Electric. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. No registrant makes any representation as to information relating to the other registrant, except that information relating to Hawaiian Electric is also attributed to HEI.

Hawaiian Electric Industries, Inc. and Subsidiaries

Hawaiian Electric Company, Inc. and Subsidiaries

Form 10-Q—Quarter ended March 31, 2022

TABLE OF CONTENTS


Page No.
ii	Glossary of Terms
iv	Cautionary Note Regarding Forward-Looking Statements

	PART I. FINANCIAL INFORMATION
1	Item 1.	Financial Statements
		Hawaiian Electric Industries, Inc. and Subsidiaries
1		Condensed Consolidated Statements of Income (unaudited) - three months ended March 31, 2022 and 2021
2		Condensed Consolidated Statements of Comprehensive Income (unaudite d ) - three months ended March 31, 2022 and 2021
3		Condensed Consolidated Balance Sheets (unaudited) - March 31, 2022 and December 31, 2021
4		Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) - three months ended March 31, 2022 and 2021
5		Condensed Consolidated Statements of Cash Flows (unaudited) - three months ended March 31, 2022 and 2021
		Hawaiian Electric Company, Inc. and Subsidiaries
7		Condensed Consolidated Statements of Income (unaudited) - three months ended March 31, 2022 and 2021
7		Condensed Consolidated Statements of Comprehensive Income (unaudited) - three months ended March 31, 2022 and 2021
8		Condensed Consolidated Balance Sheets (unaudited) - March 31, 2022 and December 31, 2021
9		Condensed Consolidated Statements of Changes in Common Stock Equity (unaudited) - three months ended March 31, 2022 and 2021
10		Condensed Consolidated Statements of Cash Flows (unaudited) - three months ended March 31, 2022 and 2021
10		Notes to Condensed Consolidated Financial Statements (unaudited)
51	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
51		HEI consolidated
56		Electric Utilities
71		Bank
77	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
79	Item 4.	Controls and Procedures

	PART II.	OTHER INFORMATION
80	Item 1.	Legal Proceedings
80	Item 1A.	Risk Factors
80	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

81	Item 6.	Exhibits
82	Signatures

Hawaiian Electric Industries, Inc. and Subsidiaries

Hawaiian Electric Company, Inc. and Subsidiaries

Form 10-Q—Quarter ended March 31, 2022

GLOSSARY OF TERMS


Terms						Definitions
ACL						Allowance for credit losses, which is the current credit loss standard, requires recording the allowance based on the expected loss model
AES Hawaii						AES Hawaii, Inc.



AOCI						Accumulated other comprehensive income/(loss)
ARA						Annual revenue adjustment
ASB						American Savings Bank, F.S.B., a wholly owned subsidiary of ASB Hawaii, Inc.
ASB Hawaii						ASB Hawaii, Inc., a wholly owned subsidiary of Hawaiian Electric Industries, Inc. and the parent company of American Savings Bank, F.S.B.

ASU						Accounting Standards Update
CARES Act						The Coronavirus Aid, Relief, and Economic Security Act enacted March 27, 2020
CBRE						Community-based renewable energy
Company						Hawaiian Electric Industries, Inc. and its direct and indirect subsidiaries, including, without limitation, Hawaiian Electric Company, Inc. and its subsidiaries (listed under Hawaiian Electric); ASB Hawaii, Inc. and its subsidiary, American Savings Bank, F.S.B. and Pacific Current, LLC and its subsidiaries (listed under Pacific Current). The Old Oahu Tug Service, Inc. was dissolved in March 2022.
Consumer Advocate						Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii
D&O						Decision and order from the PUC

Dodd-Frank Act						Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOH						Department of Health of the State of Hawaii
DRIP						HEI Dividend Reinvestment and Stock Purchase Plan

ECRC						Energy cost recovery clause
EIP						2010 Equity and Incentive Plan, as amended and restated
EPA						Environmental Protection Agency — federal
EPRM						Exceptional Project Recovery Mechanism
EPS						Earnings per share
ERP/EAM						Enterprise Resource Planning/Enterprise Asset Management
ESG						Environmental, Social & Governance
ESM						Earnings Sharing Mechanism
EVE						Economic value of equity
Exchange Act						Securities Exchange Act of 1934
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
federal						U.S. Government
FHLB						Federal Home Loan Bank
FHLMC						Federal Home Loan Mortgage Corporation
Fitch						Fitch Ratings, Inc.
FNMA						Federal National Mortgage Association
FRB						Federal Reserve Board
GAAP						Accounting principles generally accepted in the United States of America
GHG						Greenhouse gas
GNMA						Government National Mortgage Association
GSPA						Grid Services Purchase Agreement
Hamakua Energy						Hamakua Energy, LLC, an indirect subsidiary of Pacific Current
Hawaii Electric Light						Hawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc.

GLOSSARY OF TERMS, continued


Terms						Definitions
Hawaiian Electric						Hawaiian Electric Company, Inc., an electric utility subsidiary of Hawaiian Electric Industries, Inc. and parent company of Hawaii Electric Light Company, Inc., Maui Electric Company, Limited and Renewable Hawaii, Inc.
HEI						Hawaiian Electric Industries, Inc., direct parent company of Hawaiian Electric Company, Inc., ASB Hawaii, Inc. and Pacific Current, LLC. The Old Oahu Tug Service, Inc. was dissolved in March 2022.
HEIRSP						Hawaiian Electric Industries Retirement Savings Plan
HELOC						Home equity line of credit
HPOWER						City and County of Honolulu with respect to a power purchase agreement for a refuse-fired plant
IPP						Independent power producer
IRLCs						Interest rate lock commitments
Kalaeloa						Kalaeloa Partners, L.P.
kWh						Kilowatthour/s (as applicable)
LMI						Low-to-moderate income
LTIP						Long-term incentive plan
Maui Electric						Maui Electric Company, Limited, an electric utility subsidiary of Hawaiian Electric Company, Inc.
Mauo						Mauo, LLC, a subsidiary of Pacific Current
Moody’s						Moody’s Investors Service’s
MPIR						Major Project Interim Recovery

MSRs						Mortgage servicing rights
MW						Megawatt/s (as applicable)
MRP						Multi-year rate period
NII						Net interest income
NPBC						Net periodic benefit costs
NPPC						Net periodic pension costs
O&M						Other operation and maintenance
OCC						Office of the Comptroller of the Currency
OPEB						Postretirement benefits other than pensions
Pacific Current						Pacific Current, LLC, a wholly owned subsidiary of HEI and parent company of Hamakua Holdings, LLC, Mauo, LLC, Alenuihaha Developments, LLC, Kaʻieʻie Waho Company, LLC, Kaʻaipuaʻa, LLC, Upena, LLC and Mahipapa, LLC
PBR						Performance-based regulation
PGV						Puna Geothermal Venture
PIMs						Performance incentive mechanisms
PPA						Power purchase agreement
PPAC						Purchased power adjustment clause
PUC						Public Utilities Commission of the State of Hawaii
PV						Photovoltaic
RAM						Revenue adjustment mechanism
RBA						Revenue balancing account
REIP						Renewable Energy Infrastructure Program
RFP						Request for proposals
ROACE						Return on average common equity
RORB						Return on rate base
RPS						Renewable portfolio standards
S&P						S&P Global Ratings
SBA						Small Business Administration
SEC						Securities and Exchange Commission
See						Means the referenced material is incorporated by reference
Tax Act						2017 Tax Cuts and Jobs Act (H.R. 1, An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018)
TDR						Troubled debt restructuring

Utilities						Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited
VIEs						Variable interest entities

iii

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report and other presentations made by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (Hawaiian Electric) and their subsidiaries 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 (collectively, the Company), 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 and actual results and financial condition may differ materially from those indicated in the forward-looking statements.

Risks, uncertainties and other important factors that could cause actual results to differ materially from those described in forward-looking statements and from historical results include, but are not limited to, the following:

•international, national and local economic and political conditions—including the state of the Hawaii tourism, defense and construction industries; the strength or weakness of the Hawaii and continental U.S. real estate markets (including the fair value and/or the actual performance of collateral underlying loans held by ASB, which could result in higher loan loss provisions and write-offs); decisions concerning the extent of the presence of the federal government and military in Hawaii; the implications and potential impacts of future Federal government shutdowns, including the impact to our customers’ ability to pay their electric bills and/or bank loans and the impact on the state of Hawaii economy; the implications and potential impacts of U.S. and foreign capital and credit market conditions and federal, state and international responses to those conditions; the potential impacts of global and local developments (including global economic conditions and uncertainties, unrest, terrorist acts, wars (such as the Russia-Ukraine war), conflicts, political protests, deadly virus epidemic or other crisis); the effects of changes that have or may occur in U.S. policy, such as with respect to immigration and trade; and pandemics;

•the extent of the impact of the COVID-19 pandemic, including the duration, spread, severity and any recurrence of the COVID-19 pandemic due to new variants or insufficient vaccinations, the duration and scope of related government orders and restrictions, the impact on our employees, customers and suppliers, and the impact of the COVID-19 pandemic on the overall demand or ability to pay for the Company’s goods and services, all of which could be affected by the pace of distribution, administration, and efficacy of COVID-19 vaccines over the short- and long-term, as well as the proportion of the population vaccinated;

•ability to adequately address risks and capitalize on opportunities related to our environmental, social and governance (ESG) priority areas, which currently include decarbonization, economic health and affordability, reliability and resilience, secure digitalization, diversity, equity and inclusion, employee engagement, and climate-related risks and opportunities;

•citizen activism, including civil unrest, especially in times of severe economic depression and social divisiveness, which could negatively impact customers and employees, impair the ability of the Company and the Utilities to operate and maintain their facilities in an effective and safe manner, and citizen or stakeholder activism that could delay the construction, increase project costs or preclude the completion, of third-party or Utility projects that are required to meet electricity demand, resilience and reliability objectives and renewable portfolio standards (RPS) and other climate-related goals;

•the effects of future actions or inaction of the U.S. government or related agencies, including those related to the U.S. debt ceiling or budget funding, monetary policy, trade policy and tariffs, energy and environmental policy, and other policy and regulatory changes advanced or proposed by President Biden and his administration;

•weather, natural disasters (e.g., hurricanes, earthquakes, tsunamis, lightning strikes, lava flows and the increasing effects of climate change, such as more severe storms, flooding, droughts, heat waves, and rising sea levels) and wildfires, including their impact on the resilience and reliability and cost of the Company’s and Utilities’ operations and the economy;

•the timing, speed and extent of changes in interest rates and the shape of the yield curve, which could result in lower portfolio yields and net interest margin, or higher borrowing costs;

•the ability of the Company and the Utilities to access the credit and capital markets (e.g., to obtain commercial paper and other short-term and long-term debt financing, including lines of credit, and, in the case of HEI, to issue common stock) under volatile and challenging market conditions, and the potential higher cost of such financings, if available;

•the risks inherent in changes in the value of the Company’s pension and other retirement plan assets and ASB’s securities available for sale, and the risks inherent in changes in the value of the Company’s pension liabilities, including changes driven by interest rates and mortality improvements;

•changes in laws, regulations (including tax regulations), market conditions, interest rates and other factors that result in changes in assumptions used to calculate retirement benefits costs and funding requirements;

•increasing competition in the banking industry from traditional financial institutions as well as from non-traditional providers of financial services, including financial service subsidiaries of commercial and manufacturing companies (e.g., increased price competition for loans and deposits, or an outflow of deposits to alternative investments or platforms, which may have an adverse impact on ASB’s net interest margin and portfolio growth);

•the potential delay by the Public Utilities Commission of the State of Hawaii (PUC) in considering (and potential disapproval of actual or proposed) renewable energy proposals and related costs; reliance by the Utilities on outside parties such as the state, independent power producers (IPPs) and developers; supply-chain challenges; and uncertainties surrounding technologies, solar power, wind power, biofuels, environmental assessments required to meet RPS and other climate-related goals; the impacts of implementation of the renewable energy proposals on future costs of electricity and potential penalties imposed by the PUC for delays in the commercial operations of renewable energy projects;

•the ability of the Utilities to develop, implement and recover the costs of implementing the Utilities’ action plans included in their updated Power Supply Improvement Plans, Demand Response Portfolio Plan, Distributed Generation Interconnection Plan, Grid Modernization Plans, and business model changes, which have been and are continuing to be developed and updated in response to the orders issued by the PUC, the PUC’s April 2014 statement of its inclinations on the future of Hawaii’s electric utilities and the vision, business strategies and regulatory policy changes required to align the Utilities’ business model with customer interests and the state’s public policy goals, and subsequent orders of the PUC;

•the ability of the Utilities to recover undepreciated cost of fossil fuel generating units, if they are required to be retired before the end of their expected useful life;

•capacity and supply constraints or difficulties, especially if generating units (utility-owned or IPP-owned) fail or measures such as demand-side management, distributed generation, combined heat and power or other firm capacity supply-side resources fall short of achieving their forecasted benefits or are otherwise insufficient to reduce or meet peak demand;

•high and/or volatile fuel prices, which increases working capital requirements and customer bills, or delivery of adequate fuel by suppliers (including as a result of the Russia-Ukraine war), which could affect the reliability of utility operations, and the continued availability to the electric utilities of their energy cost recovery clauses (ECRCs);

•the continued availability to the electric utilities or modifications of other cost recovery mechanisms, including the purchased power adjustment clauses (PPACs), annual revenue adjustment (ARA) and pension and postretirement benefits other than pensions (OPEB) tracking mechanisms, and the continued decoupling of revenues from sales to mitigate the effects of declining kilowatt-hour sales;

•the ability of the Utilities to recover increasing costs and earn a reasonable return on capital investments not covered by the annual revenue adjustment (ARA), while providing the customer dividend required by performance-based regulation (PBR);

•the ability of the Utilities to achieve performance incentive goals currently in place;

•the impact from the PUC’s implementation of PBR for the Utilities pursuant to Act 005, Session Laws 2018, including the potential addition of new performance incentive mechanisms (PIMs), third-party proposals adopted by the PUC in its implementation of PBR, and the implications of not achieving performance incentive goals;

•the impact of fuel price levels and volatility on customer satisfaction and political and regulatory support for the Utilities;

•the risks associated with increasing reliance on renewable energy, including the availability and cost of non-fossil fuel supplies for renewable energy generation and the operational impacts of adding intermittent sources of renewable energy to the electric grid;

•the growing risk that energy production from renewable generating resources may be curtailed and the interconnection of additional resources will be constrained as more generating resources are added to the Utilities’ electric systems and as customers reduce their energy usage;

•the ability of IPPs to deliver the firm capacity anticipated in their power purchase agreements (PPAs);

•the potential that, as IPP contracts near the end of their terms, there may be less economic incentive for the IPPs to make investments in their units to ensure the availability of their units;

•the ability of the Utilities to negotiate, periodically, favorable agreements for significant resources such as fuel supply contracts and collective bargaining agreements and avoid or mitigate labor disputes and work stoppages;

•new technological developments that could affect the operations and prospects of the Utilities and ASB or their competitors such as the commercial development of energy storage and microgrids and banking through alternative channels, including use of digital currencies, which could include a central bank digital currency;

•cybersecurity risks and the potential for cyber incidents, including potential incidents at HEI, its third-party vendors, and its subsidiaries (including at ASB branches, electric utility plants and IPP-owned facilities) and incidents at data processing centers used, to the extent not prevented by intrusion detection and prevention systems, anti-virus software, firewalls and other general IT controls;

•failure to achieve remaining cost savings commitment related to the management audit committed savings of $33 million over the 2021 to 2025 multi-year rate period (MRP);

•federal, state, county and international governmental and regulatory actions, such as existing, new and changes in laws, rules and regulations applicable to HEI, the Utilities and ASB (including changes in taxation and tax rates, increases in capital requirements, regulatory policy changes, environmental laws and regulations (including resulting compliance costs and risks of fines and penalties and/or liabilities), the regulation of greenhouse gas emissions, governmental fees and assessments (such as Federal Deposit Insurance Corporation assessments), and potential carbon pricing or “cap and trade” legislation that may fundamentally alter costs to produce electricity and accelerate the move to renewable generation);

•developments in laws, regulations and policies governing protections for historic, archaeological and cultural sites, and plant and animal species and habitats, as well as developments in the implementation and enforcement of such laws, regulations and policies;

•discovery of conditions that may be attributable to historical chemical releases, including any necessary investigation and remediation, and any associated enforcement, litigation or regulatory oversight;

•decisions by the PUC in rate cases and other proceedings (including the risks of delays in the timing of decisions, adverse changes in final decisions from interim decisions and the disallowance of project costs as a result of adverse regulatory audit reports or otherwise);

•decisions by the PUC and by other agencies and courts on land use, environmental and other permitting issues (such as required corrective actions, restrictions and penalties that may arise, such as with respect to environmental conditions or RPS);

•potential enforcement actions by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC) and/or other governmental authorities (such as consent orders, required corrective actions, restrictions and penalties that may arise, for example, with respect to compliance deficiencies under existing or new banking and consumer protection laws and regulations or with respect to capital adequacy);

•the risks associated with the geographic concentration of HEI’s businesses and ASB’s loans, ASB’s concentration in a single product type (i.e., first mortgages) and ASB’s significant credit relationships (i.e., concentrations of large loans and/or credit lines with certain customers);

•changes in accounting principles applicable to HEI and its subsidiaries, including the adoption of new U.S. accounting standards, the potential discontinuance of regulatory accounting related to PBR or other regulatory changes, the effects of potentially required consolidation of variable interest entities (VIEs), or required finance lease or on-balance-sheet operating lease accounting for PPAs with IPPs;

•downgrades by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and their impact on results of financing efforts;

•faster than expected loan prepayments that can cause a decrease in net interest income and portfolio yields, an acceleration of the amortization of premiums on loans and investments and the impairment of mortgage-servicing assets of ASB;

•changes in ASB’s loan portfolio credit profile and asset quality and/or mix, which may increase or decrease the required level of provision for credit losses, allowance for credit losses (ACL) and charge-offs;

•changes in ASB’s deposit cost or mix which may have an adverse impact on ASB’s cost of funds;

•unanticipated changes from the expected discontinuance of LIBOR and the transition to an alternative reference rate, which may include adverse impacts to the Company’s cost of capital, loan portfolio and interest income on loans;

•the final outcome of tax positions taken by HEI and its subsidiaries;

•the risks of suffering losses and incurring liabilities that are uninsured (e.g., damages to the Utilities’ transmission and distribution system and losses from business interruption) or underinsured (e.g., losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits), and the risks associated with the operation of transmission and distribution assets and power generation facilities, including public and employee safety issues, and assets causing or contributing to wildfires;

•the ability of the Company’s non-regulated subsidiary, Pacific Current, LLC (Pacific Current), to achieve its performance and growth objectives, which in turn could affect its ability to service its non-recourse debt;

•the Company’s reliance on third parties and the risk of their non-performance, which has increased due to the impact from the COVID-19 pandemic; and

•other risks or uncertainties described elsewhere in this report and in other reports (e.g., “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K) previously and subsequently filed by HEI and/or Hawaiian Electric with the Securities and Exchange Commission.

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, ASB, Pacific Current and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether written or oral and whether as a result of new information, future events or otherwise.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Hawaiian Electric Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (unaudited)


	Three months ended March 31
(in thousands, except per share amounts)		2022		2021
Revenues
Electric utility		$	708,792	$	564,864
Bank		75,115		77,131
Other		1,161		951
Total revenues		785,068		642,946
Expenses
Electric utility		635,197		495,750
Bank		45,085		41,835
Other		5,510		7,330
Total expenses		685,792		544,915
Operating income (loss)
Electric utility		73,595		69,114
Bank		30,030		35,296
Other		(4,349)		(6,379)
Total operating income		99,276		98,031
Retirement defined benefits credit—other than service costs		1,243		2,435
Interest expense, net—other than on deposit liabilities and other bank borrowings		(24,349)		(23,736)
Allowance for borrowed funds used during construction		778		747
Allowance for equity funds used during construction		2,409		2,191
Gain on sales of investment securities, net and equity-method investment		8,123		528
Income before income taxes		87,480		80,196
Income taxes		17,840		15,365
Net income		69,640		64,831
Preferred stock dividends of subsidiaries		473		473
Net income for common stock		$	69,167	$	64,358
Basic earnings per common share		$	0.63	$	0.59
Diluted earnings per common share		$	0.63	$	0.59

Weighted-average number of common shares outstanding		109,361		109,221
Net effect of potentially dilutive shares		273		271
Weighted-average shares assuming dilution		109,634		109,492

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

Hawaiian Electric Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (unaudited)


	Three months ended March 31
(in thousands)		2022		2021
Net income for common stock		$	69,167	$	64,358
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on available-for-sale investment securities:
Net unrealized losses on available-for-sale investment securities arising during the period, net of taxes of $(44,079) and $(16,616), respectively		(120,407)		(45,390)
Reclassification adjustment for net realized gains included in net income, net of taxes of $— and $(142), respectively		—		(387)
Derivatives qualifying as cash flow hedges:
Unrealized interest rate hedging gains arising during the period, net of taxes of $1,046 and $542, respectively		3,017		1,562
Reclassification adjustment for net realized losses included in net income, net of taxes of $19 and nil, respectively		55		—
Retirement benefit plans:
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of taxes of $1,562 and $2,084, respectively		4,501		6,010
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $(1,500) and $(2,015), respectively		(4,325)		(5,811)
Other comprehensive loss, net of tax benefits		(117,159)		(44,016)
Comprehensive income (loss) attributable to Hawaiian Electric Industries, Inc.		$	(47,992)	$	20,342

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

Hawaiian Electric Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)


(dollars in thousands)	March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	301,704	$	305,551
Restricted cash	5,912		5,911
Accounts receivable and unbilled revenues, net	359,807		344,213
Available-for-sale investment securities, at fair value	2,621,375		2,574,618
Held-to-maturity investment securities, at amortized cost	517,150		522,270
Stock in Federal Home Loan Bank, at cost	10,000		10,000
Loans held for investment, net	5,117,522		5,139,984
Loans held for sale, at lower of cost or fair value	7,961		10,404
Property, plant and equipment, net of accumulated depreciation of $3,077,453 and $3,028,130 at March 31, 2022 and December 31, 2021, respectively	5,411,746		5,392,068
Operating lease right-of-use assets	136,207		122,416
Regulatory assets	559,161		565,543
Other	777,694		747,469
Goodwill	82,190		82,190
Total assets	$	15,908,429	$	15,822,637
Liabilities and shareholders’ equity
Liabilities
Accounts payable	$	240,296	$	205,544
Interest and dividends payable	33,519		19,889
Deposit liabilities	8,289,272		8,172,212
Short-term borrowings—other than bank	71,491		53,998
Other bank borrowings	137,385		88,305
Long-term debt, net—other than bank	2,316,046		2,321,937
Deferred income taxes	340,246		384,760
Operating lease liabilities	151,832		136,760
Regulatory liabilities	1,003,444		996,768

Defined benefit pension and other postretirement benefit plans liability	341,845		348,072
Other	645,118		669,215
Total liabilities	13,570,494		13,397,460
Preferred stock of subsidiaries - not subject to mandatory redemption	34,293		34,293
Commitments and contingencies (Notes 3 and 4)
Shareholders’ equity
Preferred stock, no par value, authorized 10,000,000 shares; issued: none	—		—
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 109,431,346 shares and 109,311,785 shares at March 31, 2022 and December 31, 2021, respectively	1,684,547		1,685,496
Retained earnings	788,787		757,921
Accumulated other comprehensive loss, net of tax benefits	(169,692)		(52,533)
Total shareholders’ equity	2,303,642		2,390,884
Total liabilities and shareholders’ equity	$	15,908,429	$	15,822,637

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

Hawaiian Electric Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited)


	Common stock			Retained		Accumulated other comprehensive
(in thousands)	Shares	Amount		Earnings		income (loss)		Total
Balance, December 31, 2021	109,312	$	1,685,496	$	757,921	$	(52,533)	$	2,390,884
Net income for common stock	—	—		69,167		—		69,167
Other comprehensive loss, net of tax benefits	—	—		—		(117,159)		(117,159)
Share-based expenses and other, net	119	(949)		—		—		(949)
Common stock dividends (35¢ per share)	—	—		(38,301)		—		(38,301)
Balance, March 31, 2022	109,431	$	1,684,547	$	788,787	$	(169,692)	$	2,303,642










Balance, December 31, 2020	109,181	$	1,678,368	$	660,398	$	(1,264)	$	2,337,502
Net income for common stock	—	—		64,358		—		64,358
Other comprehensive income, net of taxes	—	—		—		(44,016)		(44,016)
Share-based expenses and other, net	100	605		—		—		605
Common stock dividends (34¢ per share)	—	—		(37,156)		—		(37,156)
Balance, March 31, 2021	109,281	$	1,678,973	$	687,600	$	(45,280)	$	2,321,293

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

Hawaiian Electric Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)


	Three months ended March 31
(in thousands)	2022		2021
Cash flows from operating activities
Net income	$	69,640	$	64,831
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property, plant and equipment	62,990		61,427
Other amortization	9,425		10,951
Provision for credit losses	(3,263)		(8,435)
Loans originated, held for sale	(73,931)		(162,901)
Proceeds from sale of loans, held for sale	75,629		170,862
Gain on sales of investment securities, net and equity-method investment	(8,123)		(528)
Gain on sale of loans, net	(1,077)		(4,300)
Deferred income taxes	(5,255)		(2,196)
Share-based compensation expense	2,117		2,602
Allowance for equity funds used during construction	(2,409)		(2,191)
Other	(2,552)		(3,519)
Changes in assets and liabilities
Decrease in accounts receivable and unbilled revenues, net	4,454		5,664
Increase in fuel oil stock	(35,333)		(16,400)
Increase in regulatory assets	(5,089)		(14,869)
Increase (decrease) in regulatory liabilities	5,520		(4,716)
Increase in accounts, interest and dividends payable	71,490		7,677
Change in prepaid and accrued income taxes, tax credits and utility revenue taxes	(14,928)		(25,513)
Decrease in defined benefit pension and other postretirement benefit plans liability	(1,309)		(2,621)
Change in other assets and liabilities	(55,411)		(34,095)
Net cash provided by operating activities	92,585		41,730
Cash flows from investing activities
Available-for-sale investment securities purchased	(291,168)		(781,992)
Principal repayments on available-for-sale investment securities	104,654		184,755
Proceeds from sale of available-for-sale investment securities	—		197,354
Purchases of held-to-maturity investment securities	—		(88,262)
Proceeds from repayments or maturities of held-to-maturity investment securities	4,547		20,185
Purchase of stock from Federal Home Loan Bank	—		(22,296)
Redemption of stock from Federal Home Loan Bank	—		20,976
Net decrease in loans held for investment	28,076		23,922

Capital expenditures	(79,163)		(74,079)

Contributions to low income housing investments	—		(3,205)
Other	5,340		4,622
Net cash used in investing activities	(227,714)		(518,020)

(continued)

Hawaiian Electric Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited) (continued)


	Three months ended March 31
(in thousands)	2022		2021
Cash flows from financing activities
Net increase in deposit liabilities	117,060		358,337
Net increase in short-term borrowings with original maturities of three months or less	17,493		35,751
Net increase in other bank borrowings with original maturities of three months or less	49,080		13,015

Repayment of short-term debt	—		(65,000)

Proceeds from issuance of long-term debt	7,312		161,800
Repayment of long-term debt	(13,446)		(50,699)
Withheld shares for employee taxes on vested share-based compensation	(3,065)		(1,997)
Common stock dividends	(38,301)		(37,156)
Preferred stock dividends of subsidiaries	(473)		(473)
Other	(4,377)		(4,621)
Net cash provided by financing activities	131,283		408,957
Net decrease in cash, cash equivalents and restricted cash	(3,846)		(67,333)
Cash, cash equivalents and restricted cash, beginning of period	311,462		358,979
Cash, cash equivalents and restricted cash, end of period	307,616		291,646
Less: Restricted cash	(5,912)		(14,067)
Cash and cash equivalents, end of period	$	301,704	$	277,579

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (unaudited)


	Three months ended March 31
(in thousands)		2022	2021

HAWAIIAN ELECTRIC CO INC [HAWEL] Filings
HAWAIIAN ELECTRIC CO INC [HAWLN] Filings
10-Q	[2022-05-09]
10-K	[2022-02-25]
10-Q	[2021-11-05]
10-Q	[2021-08-09]
10-Q	[2021-05-10]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-08-06]
10-Q	[2020-05-05]
10-K	[2020-02-28]
10-Q	[2019-11-01]
10-Q	[2019-08-02]
10-Q	[2019-05-07]
10-K	[2019-02-28]
10-Q	[2018-11-07]
10-Q	[2018-08-03]
10-Q	[2018-05-10]
10-K	[2018-03-01]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-05]
10-K	[2017-02-24]
10-Q	[2016-11-04]
10-Q	[2016-08-04]
10-Q	[2016-05-04]
10-K	[2016-02-23]
10-Q	[2015-11-16]
10-Q	[2015-08-10]
10-Q	[2015-05-06]
10-K	[2015-02-26]
10-Q	[2014-11-06]
10-Q	[2014-08-11]
10-Q	[2014-05-07]
10-K	[2014-02-21]
10-Q	[2013-11-07]
10-Q	[2013-08-08]
10-Q	[2013-05-08]
10-K	[2013-02-19]

HAWAIIAN ELECTRIC CO INC [HAWEL] Filings

HAWAIIAN ELECTRIC CO INC [HAWLN] Filings