Hawaiian Electric Industries (HE) 6 Nov 202020 Q3 Earnings call transcript

Good morning, and welcome to the Hawaiian Electric Industries, Inc.

Third Quarter 2020 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now, like to turn the conference over to Julie Smolinski, Director of Investor Relations. ahead. go Please

Welcome, XXXX Eli. Hawaiian Industries Electric Thank Call. everyone Quarter Earnings Third you, to

Joining Connie CFO; today American members HEI Electric me of are and Savings Executive Greg and President CEO Vice Hazelton, Bank CEO; senior President President and Rich management. and CEO; Scott and Hawaiian Lau, Seu, Wacker, HEI other President

the of our section press and Our Relations release presentation Investor are posted in website.

be differ As cause made from forward-looking a will on could found to statements Factors in the be our actual call. can of Investor results presentation, Relations SEC materially and today's expectations that our section reminder, in website. our filings

Now, Connie remarks. begin her with will

everyone, of adapt to safe of communities, the Aloha, hope dedication all joining I our We as employees we impressed today. you and the and COVID-XX. customers by mahalo our are of and resilience and have for the us well. been challenges ongoing deeply

its outlook. our on our $X.XX $X.XX again, and Then, before same to well providing to to the Our of million for stabilizing on and times. of turning history to compared strong deliver our share loan mechanisms, start in bank's Hawaii, us results continue core the share to utility That continue risk, our long solid to liquidity, year. enabled financial our per regulatory $XX.X companies. economy position. and Hawaii, in of our in financial review strengths results: essential will an earnings state net million third income low-risk conservative stability us capital of quarter portfolio with these earnings of virus I'll an and our our unprecedented serve $XX economic update helping conditions customers, communities, In approach the and Greg update last and services financial includes the and strong per quarter,

the economic positive recovery, the the we've course While uncertainty, virus signs. there of and some seen is regarding still timing of

late XX, the positivity Starting a surge The we includes new down second travelers, the down an about significantly a is average On COVID the other largely September per stay-at-home in seen with extend to new domestic we've sector X,XXX a XXth. after And travelers test activity. that this to program quarantine. day, the business bypass starting of is able cases XX-day a tier, move Japan, COVID from framework. allowing more October arrivals day from under order also X,XXX and the been cases from X% allowing Hawaii's seven-day program since on saw of summer. rate Oahu's up saw in Oahu, a second with with daily First, reopened then, local a late are it negative August. this tourism then, tiered to Since XX, today, roughly to Hawaii countries. reopened to before we to we've average economy working

Research have the low whose Oahu real home Organization, Oahu reopening informed XXXX The prices estimates, inventory While driver, up out. throughout Residential of into than estate outlooks second reopening also year, own single-family prices tourism month Year-to-date driven of values of is how XX%, federal encouraging, low our were The recovery a single-family have the government military, our compared largest economic in University the the September And Hawaii COVID from virus forecast and were strong. plays depends sustained economic stability the XXXX. projects latest UHERO, Hawaii's more to last home or rates. accelerating remained up and the by maintained starting interest and Economic have X.X%. on September, period. timing

priority. focus has onset been remains That of COVID customer before began companies. for our Keeping and core rates the our to down a a Turning central utility.

and costs seen kilowatt hours balancing lower extended electricity suspension October March. XXX Oahu have customers using revenue for fuel through than has of sales customer last The of in XX% a year. disconnections Lower in an meant account the relief residential year Fortunately, year-end. some non-payment that from electricity bill higher-than-projected commission component paid this less

rate XX% a with customers on up options and working with is month, to to recovery, earlier the commitment utility them our year-end with resource time, case executing commitment through Oahu connecting services this our increase them of current station rate project base continue the on to equity savings to cap bills. base $XX on in the consumer adjustments, We approving base increase its to of repayment deliver advocate and not efficiency million Last ramp In customers year. XXXX, commission to approved by utility on equity zero the increase. XX% allowed our the including maintained Schofield with X.X% help Electric's rates capitalization, program, began To be in commission through case. flowed improvement settlement cost Hawaiian benefits which rate this the customer of offset customer return ended the multiyear part lifted benefit the XXXX and on enterprise settlement, deemed lack generating our help the Rate planning system as and

temporarily to expected the exceed projects the pushed Last anticipated anticipate growth Stage to renewable and procurements. Stage storage we expect together that XXXX our energy of but by exceed as approved of sales, energy above major for of and XX% our two year. third of years, come projects, XXXX power While will filed the coal contracts. our PSC pressing the in Stage time Since applications If cost With they end renewable retire stage X online quarter. and negotiation. pursue XXX plus self-build now in our add increase also proposed energy. Kahului procurement projects on our XXXX. quarter, our forward sales, agreements RPS storage nearly The of of the eighth to RPS part We're the storage energy In megawatts renewable fourth selected help renewable the projects of moderate Maui year-end. our quarter, In eight track storage as RPS the purchase plants to Synchronous we efficiencies, XX% to our also Oahu preparing of system second are up Two still would the clean Project, expiration Maui. RPS from energy from We're by Stage filed we also we're the PPA, to us on projects and energy procurement by storage final few still of one XX% electricity recently to for of for RPS will goals. in we procurement. fossil help divides X an the on and next X between in strong COVID aggressively calculation due the milestone XXX project lower in community-based RFP one a XXXX. one solar for Condenser Hawaii IPP in all under and This of gigawatt renewable the hours X megawatts with with month, frames, our sales

of scale significant. system, the Given are procurements our these

and and you with County. on of XXX up, X,XXX get on load Island XXX over about, Oahu each megawatts total system, a Hawaii you If just talked Maui just on what peak a megawatts. megawatts That's add I've

affected come to forward aggressively. there projects for factors, many be question moving online can is timing While by we're no

week, PBR, has in principles of established kept and the with working approved slide XX own, progressing Electric maintaining including docket serving commission's and to divergence are hard we, interest stakeholders summarized on other for of the renewable XX-year have decision of utility throughout the consistent for installations and has commission on commission integrity XX performance-based confirm a order align moving way many process. Hawaiian framework too, and the been the We've forward. on and our The know, operate commission been deck. through to PBR decision. track have on Oahu. set energy appears commission and generally in the you customer approach regulatory the dockets, early regulation, collaborative docket. As guiding the system will contract and or the The the The Hawaii's through consensus been stakeholder-based areas The COVID electric last a the December financial maintain Army's goals just

a American six returning branches to continues reopened operations. execution closed. temporarily banks. environment. had our We've COVID-XX we Areas Savings normal Bank are to its solid Turning dynamic

to rates interest of management, much compress replace to net affected prior strong elevated ASP's current spend to opening to understand and timing mortgage by quarter the redemption Cost health with low the tourism and results focused sustained with and in We will is be able proactively sound were low rate we interest risk sales continue outlook continued on While quarter, securities a their margin, financial environment. how we're and provisions. particularly third efficiency again of are banking on [Indiscernible]. interest customers working the provisioned activities, remain focus, quarter's uncertain, reflect continue including COVID. third in We well a think income core through

In majority resources more in out earlier We're customers this new convenience. scheduled addition The ATMs, options five the of reducing to been pandemic. returning COVID and customers sought customer of to temporarily to deferrals closed two are how December. manage time. we've our repayment. to conserved who loan more closed in branches with had providing during initial also have these their costs, We've by impressed been continuing roll Most smart

delinquency continued sectors we're strong and rates low growth. customers some While overall, are deposit impacted, more seeing and

satisfaction loans, now PPP on and of results will loans working services started see And to outlook. continued for adoption and now, mobile and our robust received For submitting high banking Greg customer to that customers forgiveness digital we're the the online We've process. who offerings. review have SBA for our and quarter our with our

Connie. Thanks,

At consolidated to quarter. expenses in our of quarter the income and results, earnings a COVID-driven non-interest the continued compared linked $X.XX to improved provisioning from Turning positive lending the core had quarter impact. management same versus were to utility, results, O&M At share timing bank, last while activities per the $X.XX tighter year. margins third affect and

and lower company holding ROE from trailing is remains last Pacific a was at healthy of due trailing the plan, higher ROE rate and for saw borrowing. increased While rather than the down at expense we well COVID same X.X%. last increase ROE, modest to interest to line versus year X.X%. look Bank to year environment. XX income X.X% impacts Utility short-term XX-month the time Consolidated basis current XX-month loss economic with which interest an low at on a a basis, we points from due higher quarter, annualized in

represented million the Turning staffing $XX.X slide. levels million about $X primarily an compared Utility $XX million year. in XXXX, later $XX overhauls and lower the the be million labor last of were due Of to lower fewer The in was variance. significant $X overhauls, The million $X lower some work the or XXXX. next the work XXXX. expenses, timing million, $X quarter drivers the to management of number of overhauls of in cost variance reduced were quarter this year performed to remaining O&M million vegetation as elevated unit overtime lower million in due $XX.X the earnings generating was O&M to to and will quarter third most overhaul due elevated same and third

are million resource partially in increase a and fewer planning increasing energy $X had $X $X in to enterprise as offset million a efficiency. and AFUDC projects to and depreciation after be construction progress; grid lower reliability returned and to million following in there $X West the Loch and interim also items: work project tax to which customers; We revenues million higher higher $X from revenues These projects. major were from mechanism modernization improved due investments revenue customer long-duration renewable system items higher integrate for million system increase the recovery implementation, were by savings rate PV adjustment

the rest performance the at drivers Looking the of utilities of the year. for financial

case, opportunities capital increase Light offset final a multi-year achieve are efficiency we the Electric to-date, case We've mostly costs not June. a on customer to request, case our XXth set increases no savings of the will to rate identified. COVID-related been decision are three year-end in customers. expenses in and file savings Electric. management underway Hawaii with of fuel have million equity to are recovery with help a until received utilities and for place deferred our now customer base $XX.X are $XX requested the order in Hawaii efficiency and utilities. the June program in well to a typical monthly commission's bill initiatives at bad through capitalization October COVID-related rate at for disconnections With debt date. be lack expense. XX related filing rate from Maui next hour audit of commitment. in commission that the been have being base least of rate final Recall Cost savings Electric March additional across received for year. The The all a cost decision that rate good for rates, suspension extension price an have We'll residential remains down fuel separately a XXX-kilowatt Lower later customers we deferral of for since due in prices was year-end. March for to July Oahu

from million our these COVID-XX fossil cost. On on of quarter, to forecasting Slide last at savings, in $XXX fuel CapEx reward communicated due the information, primarily lower $XXX utility XX, and a million may With year-to-date of it the to for based some of cost XXXX, mechanism. work qualify $XXX risk-sharing delays from completion we're under down unexpected million

smart deployment, went COVID-XX. a structural when a completion our of work Maui unit and delayed to of transmission business COVID-XX helicopter contractor generating meter impacted on replacement Specifically, due overhaul out

able we work that were bring cost. lower some Fortunately, in-house to completed of and at

We also saw permitting. other to delays related some

are year or CapEx period. We 'XX average base and to two times the our per still approximately XXXX to million longer-term about We $XXX depreciation. expect guidance maintaining CapEx in rate

recently While upgrades a of depend including strategically expect amount approved annual on replacements. privatization capital on important, number timing capital the factors, material the and we impact of to which earnings, contract have will and a don't Army

earnings XXXX to the continue and forecasted utility capital to via its debt the markets. We CapEx expect to access self-fund retained through

slide on was to quarter prior income the quarter. bank million compared million net to $XX.X American's in the the XX. in Turning $XX

as areas, yield assets interest improvements net a increased banking be impacted the record had Although the expense. including suspended during by customers cost income, of supporting on COVID to lower earning initial noninterest help fees interest certain funds of mortgage income environment, resumed margin, low record a rate continue we fee low number in impact and to we of

provisioning elevated for quarter, We unfunded amounts during drivers the last down continue Improved uncertainty. to income income core economic ongoing was Provision see were controls from of activities the expense this included key the bank and given net COVID-XX-related slightly versus quarter. commitments. year, which noninterest

environment recall, meals than the loans on lower million of quarter. previously and suspended fees more costs that mortgage X support record impact payout second rate we business mortgage promote to sanitation combination sanitation of now, versus pay purchases XX most driving repriced may controls frontline interest repricing XX, on had As to on helped low-cost down Record pandemic, onetime we the Most the the of cleaning million, in through COVID-XX-related $X.X large vacation vacation driving to of quarter use million in pre-tax $X.X quarter, and fixed $X.X a million were fee unable able of our you replace compressed PPE loans, revenue helped income incurred asset from to FAS compared amortization a employee expenses, on are basis to last while gains second for were margin employees the $X.X second which primarily supplies, the quarter, Expense offset much million adjustable We narrowing COVID-XX-related million in quarter, quarter low consisting of In prior sale of were securities resumption in days the million gradually. banking of reprice employees, small of amount a the generating points million third X.X%. offset of the impact to and sales. yields. restaurants. $X.X to of basis. consisting third rate quarter's expected, in production, On we $X.X excess gain the additional last price second of while In quarter, also funds in moderately and interest employee the as our costs. slide ASP's more $X.X and through net working $X.X of safety quarter,

continued to the low from margin of reinvestment This due from remainder moderate lower and continued growth but we strong and a deposit expect excess interest rates pressure yields. at includes year, the For pace. pressure, liquidity

to guided was be range net year, expect of X.XX%. full margin Year-to-date within our the interest to X.XX% X.XX%. we previously For NIM

Turning to credit.

compared the some economic the linked-quarter. and tourism million during $XX.X gradual was impacts charge-offs from we'll in and quarter. million Credit provision Net quarters. reserves than regarding that in portfolio unsecured pandemic. included quality quarter's if the to personal provision last uncertainty able to to our release improved to our were of portfolio, reopening of realize This $XX were sustained lower also million the two we improved quarter's With in a and related economy, loan related $XX.X additional reserves strengthening potential this

deferral With provision we on only provides an book we of active are have still X.X% guidance. somewhat flux, deferred in portfolio. rate deferred a high-quality loan returned to that do a delinquency have the Overall, we're the of to a on update Slide Previously for loans of what X% higher loans remains as seeing providing at XX% the have still end on our our picture holding portfolio with payment. portfolio of economic quarter. loan off whole. in XX our healthy, X% compared

understand carefully to continue and our outlook. customers with are and closely portfolio our We their to circumstances working monitor

for well of as book, Given well the quality provisioned monitoring, September loans commercial XXth. we have our the we overall enhanced are as as we loan implemented of feel

capital maintain was Tier combination continue from ratio ASB's quarter. to we levels liquidity reliable the the well-capitalized of over ratios, and bank of As as the sources. end liquidity billion available above, continues $X.X X.XX% a healthy leverage comfortably well has X ample -- ASB in of of

need even anticipate more from would it from don't stress scenarios and capital the company a reminder, COVID-XX. severe that holding we As under bank self-funding, is than we anticipate the

of the COVID. liquidity, we're well-positioned to Turning to consolidated impact withstand

enhance $XXX a facility just the company. of placement subsequent We credit we we executed at of maturity. to company, term up and private at utility, coming paper $XXX the to we As recently executed a prefund The was long-term at XXXX. private we utility date. million any September, we which to transactions leading the on which in utility, liquidity time debt at debt remain consisting has maturities. prefund in maturities million capacity, with October, million had further transaction maturity funding priced the now loan the prefund April heading all and investment XXXX. grade to March holding company, outstanding, At maintain of its January placement, in October, company can a solid At upcoming up launched million liquidity draw long-term no into XXXX. and and flexibility XX, we in $XX in all committed an executed of to million commercial $XX structure. $XXX holding and are $XXX holding XX And prefunded, In undrawn in capital maturities debt a strength XXXX million and we the holding At September financial

the capital its receivable slide, impacted dividend next with retained earnings expect CapEx our earlier dividends by plan, investment to programs and to received line our date the for be sufficient in HEI's support Bank projections. continues consolidated adequate payment maintain On and with account The customers to we has liquidity in consistent perform to are sufficient in the liquidity. customer to and growth from strong to utility utility structure equity and support COVID. balances

the the year. be announcement. expect $X.XX full as of to recent the $X.XX HEI's our range slide our per guidance reflected to At utility of for bottom that dividend we're On in range. to reaffirming and within utility, half our external the expect we've XX, share We dividend updated guidance maintain

to $XX partially results the And was to working which as timing offset Electric quarter. versus uncertainty to At $XX fourth our pre-tax third Hawaii we're second midpoint million provide rate $XXX previous the of expecting to we're and $XXX its the revised While CapEx due guidance also to lower million be upward on and of to in effect quarter million $XX $XX midpoint. expenses, utility incurred are the strong, than guidance. provision, lack We've We're continuing to expected be to of that million, to of or quarter million range given pre-provision a million previously base bank, economic pre-tax anticipated. from mentioned, some income were increase. million pre-provision income increase to the $XXX

at holding guidance. consolidated to company Connie. now call EPS $X.XX loss. is the I'll back provision to we're remains unchanged Our bank turn $X.XX still providing Since uncertain, guidance not

Overall, Greg. pandemic. during perform our the companies well Thanks, continue to

I'd why ESG Our our our financial our to been a stability like it is has DNA. our between vein, stakeholders. ESG a us We about has ESG. us a deliver that the just linkage We've that's value time, with in didn't before. of close for long and of for ESG focus enabled for health on comment all In to say long we state talked call the companies. that

is strategy, our transition energy along support to company it about with to every talk renewable framework on regulatory call, of our we central the and Our evolution transition. that

And in For plan to Hawaii. our areas communities to fitness in formed as key Current and affordable economic extent expand creation. and our September. recall disclosures. to integrating to FASB-aligned ESG financial value first our infrastructure TCFD-aligned you'll of And We our include Pacific through reporting, material to approach, job future advance as the businesses, formalizing We're creation. was investments sustainability, for published more in our bank, include it addressing and deeply here that well report focus diversification, housing customers,

So And questions. we look forward. ESG to that, more from on with us, your to going hear forward look

Julien [Operator first Bank with Dumoulin-Smith of question Our from comes America. today Instructions]

good or [Indiscernible], Hey, excellent [Indiscernible] of good to afternoon your time. all morning

Julien. Hi

particular, you how I million costs? sustainability utility $XX has can the driven going beyond about, year, improvement year-over-year out off, generation of to what there's mean, And lot savings shifting you talk just question on guys across maintenance a beyond. a specifically. First think about into frankly do of and O&M in utilities O&M, next you

Yeah.

Go Okay. ahead.

to comment some achieved year, clarification expected be next year, savings some we'll so well, that that But the efficiencies place. Sekimura have and provide So been meaning far on we've more for -- little the which expect that also of the point put savings we the durable, I'll and of a this with look of have reductions in detail forward. Tayne staffing the of

we Tayne. increase is commitments audit for O&M, Commenting well the Hawaiian on our It and also to overtime as no to like managing things planning, higher meet staffing this included management it, productivity, includes Hi, initiatives due better see of work. offset as scheduling efficiency Electric. cost rate levels, reduced coordination as our and have base the to

of And so year. sustainable that those -- are sorts activities next into

engaged efforts our thing XXXX. The in doing into other continue, and bring is, goods to we're our strategic as we we're sourcing services. move down too, of the will cost that, And on

for we We done. a work well as get differently found ways as also look other opportunities have working environment. to our virtual different And are teleworking in

of technology outside company. big And are need, to able how well to be, should office so space how as we at much really another, our interact is some things the with as inside be looking we do of company use the footprint the one

some just the are examples. So those of

you the then, maybe carrying prior. can the excellent, and okay, right? don't think It with here Obviously, discuss you in if to perfect O&M? in it's How related do utility that, kind X.X of dovetails forward, from X.X to improved ROE? improvement Yeah, you mind, about this LTM,

Yeah.

proceeding. of And out let came going improvement going as well you results and that key the that lower of that some Hawaiian part me to-date, as our the take PBR -- decision. for be what does out of final Electric what big it's forward, so see to relate O&M through a really we're us our to So, seeing expenses to comes in

benefit so example. In do things through an look take it to let of those there. decision, have of And be if chart, our customer pieces. of And you you was like at ROE some the Hawaiian the a final some me we is In the ROE breakdown removed. the Electric adjustment, drivers considered

of benefits. a And to just And small that points. about is XX Maui, for it's so will amount stop remain for basis be, points. Maui. the very going basis customer of what accruing will later now, Right would couple remain And a amount we're

The for other deemed and basis the that XX decision. Hawaiian will Maui there Electric customer from thing ERP roughly was that removed Light. is to for Electric final points is benefits, be Electric All remain Hawaii the

the PBR delayed come Hawaiian piece And the that removed. in be last in there adjustment. The items PBR this from lag June revenue consensus RAM accrual to the general final two those is right should of Electric docket, now So the in is the decision is X. But parties, order.

PUC's that Of is we subject PBR that to in in December. course, the decision expect

In addition at cost that, management company. cost to management operate as PBR, and forward – we we issue continue look as will containment, expected initiatives be our our

that's of continuation the to gap. key, our cost going efforts to be So close really management ROE

Yes.

Sorry, if to I can out just squeeze in thought. one finish the more, real quickly

is year utility And remains guidance is unchanged, then? your full or remain maintenance you where this on provision based in of there So implicit the provide XXXX half in Why update is you're does to that to date? is spend loss there bottom this any and that something year? trying ASB end XQ, ultimately. earnings tail some of guidance can the around pushed out the trending. against square And the again, that earnings in Just generation

heard utility. the as station fourth you coming in performed maintenance our generating is What mentioned earlier, quarter, the will the can of I to overhauls in unit about work of some speak up Okay. and that QX. some timing be

will elevated there O&M some be there. So

were to renewable energy, had that, to related IT that QX. software to addition we're hardware purchases things some delayed were the And that we have timing-related in like expenses other CBRE. community-based and what we In also doing

O&M those expenses we'll see So elevated.

that's rate guidance of one actually base a no course, can the I we the that's if were the way original Julien, rate was been And case. back Yes. when add, And way, looking settled at Oahu at having increase.

Yes.

yes. So,

fourth range, So the And we no as increase is offset quarter, a to base Julien. we go still it into rate the costs. have

quarter into within timing fourth So when and but movement still uncertainty going and some if certain expenses obviously, they materialize. there's around range, some the of

we've it a range, lower well, we during And our see plays as consolidated on which well within positioned you debt fourth position the provisioning was improvement how the that kept bank economy. pre-tax basis, just that the So from guidance into period we're improvement did quarter. into seeing as going quarter the the the half fourth then think of but I now going the out pre-provision in an reopen in

Got it. time patients. Excellent. sort A Yes. and

Friday Thanks discussion. for the afternoon

we Yes, going Thank you. you. from thought Eric, hear were we to not

Our Associates. Patterson Paul with next from question will Glenrock come

you are How doing?

Hi, Paul.

Paul. Hi,

higher I to – completely So – that? the bank not just could able What's exactly pre-provision you for apologize being driving income? why pre-tax

Let over quarter, They've had turn me Rich. ahead. go that a great to but

he our and Greg was things third as Paul, going we've tighter. well down. put in run as comments, of expenses some those for those pretty during and of normalize that periods But go. late on the stages all the and And things mentioned operations as that. we related then And COVID of did to the like began again. fees manage ATM got bigger things feed unique initial fees are like in Hi, We've grace quarter, sort the back in lockdown, are come during that to to able tried sort we those through, to waived and we been

we kind balance how come played through and so seeing number mortgage sell, to line. want side. also in sell you're those strong gains far through really of we seen as the that's two things production So much you've much the how production We're market And come of banking we mortgage book year-to-date on versus mortgages, we on when up. work the that those on

factors. are And so the those main

is when so any you expense, were your just things repeat this, being quarter, guys or was all won't last that and this? them about fee I more better guidance understand when to right and -- all. were you in there about doing mentioned, think thought, you to you just that cautious But basically, came were you these things -- giving than just income were you So cautious more guys

Yeah.

So didn't the the things. levels, come on side example, mortgage would back for exactly we the how the know strength how phase-in of it -- would much market pre-COVID to of of and fees the

got just what them, we working big we're one hard. pay got just team the we because can So of So every provisions we've of nut a is working to do, to for, right? beat hard

remind that you days of associated are any something, Can XX How Yeah. it's if or is accounted or those with for? provision us yet? there's loan deferrals? how If is there past any the sort

what approach deferrals. on a conservative taken we we've loan So think is

commercial as because a special side, that definition to help And we've potential potential So any approaching mention mention weakness. is there a is a of -- pay deferral, on asked customer special need that loan, has the seems hey, like any is classified payment -- a especially I the for to say, us weakness.

higher you've higher. that's a of reasons we classify loan, our carry loan, a one so you criticize been And a the provision. When seen provision

picks that's it until in difference. it impact. and it's the And XX payment it been again the -- freeze starts days, deferment, there current the the the or just it's we main -- loan The is. classification stays biggest the delinquency but there, deferments up with so period from if that status If the change that is

then turning utility. And to the Okay.

time on here? we frame PBR, any a the potential First, is settlement approach there December as for

from Hawaiian Seu Scott proceeding. Paul. This Electric. is PUC-driven This is Hi, a

it's we front are proceeding for where PUC of ready is decision-making. the so basically in And their that in

place the took their is briefs. of position. the hearings filings, parties all and Evidentiary So have statements of September, in filed all hearing the PUC post considering

So it's December. that's for decision-making, in and ready expected basically

Okay.

And for in have. right, trajectory bunch with variables, what for total have change depends know because to we obviously guys what's to okay. then and the sort and thing, holding are rates, growth and we certain and going your stuff fuel Now stuff of What's you of done guess flat do your the -- at of of couple So rate I on. with you the with PBR expectation next here about about know trajectory have terms the point? I subject given happen -- the what base the thinking obviously, should and kind with base you rates how everything. But think going where rates of guys but rates? But don't settlements total all that that rate just you this years see over we a on stuff it you get the of

that's recovery is is course, adjustment and mechanism way maybe I of our it question even of docket. that but to least, you docket, the as as adjustments adjustment of bills. the context recovery driver for difficult driver, clause reflected, a those wean at variety the retaining fuel purchase And part major customers the discussions to in It's just the even be we appears because parts. little is, be answer, But foreseeable are Paul, a will these of going PBR commission future, the possible the it of project other feel some hard for mechanisms I we working to with me at to as to what such off power the that their far are looking tough there that. moving as is can most answer ourselves for that The mechanisms. PBR the Hey, biggest bit as biggest see at of though the interim of recovery least frame the

much a and Okay. see -- good with in we'll Fair happens so have and what December. enough, Thanks one.

just incentive so Thanks, performance benefit the too, incentive-based At to company. benefit mechanisms remember forward be the Paul. might going are same And there there customers. will Paul, I'd time, add, to the be

Great. Thank you.

next our And KBW. comes from Jackie with Bohlen question

Hi. Good morning.

Jackie. Hi,

Hey, Jackie.

Hi.

have in start risk special level had marking taken to deferrals how the those stance with going and your conservative that to your in the You pass? How of really decline quarter. and get a watch rating, really impact wanted is you've on mentions. to a that upgraded an as understanding the Just good to

So them as that reserve on borrowers you wondering, your affect to sit are expect how to number would how they number back two, bucket? you going to And in payment, expect special methodology do one, the if just mention that? long

Right.

about sustained look before we -- about Jackie, the The given upgrading so months still six -- for point. of, uncertainty we'd of look, So a sustain the great recent all it's will payment opening The now, right and at we that. and accounts. performance kind that's the think

around there's some moving So moving We back down them them time up, and watch if them. provision, to the we don't jerk take want will a closing again.

couple So quarters. of we'll look over a

Okay.

any level I third lower potential will fair to So assuming that back special could by you of year, conditions the that are a offset release at that assessment? I some quarter Is potential a have call pipe charge-offs of could reserve to coming that suspect would continue we through upgrades that it, to mention be improve, with associated that next the and point.

From your lips to God's ears, I hope.

So kind with these And shepherded we're we right? And we what down a have stable I that think And you them, we seen that credit have they've how provisions one. a way good have providing The When know the what corner difficult their see fighting And making doing, those And we've we think for impressed year into of if provision when for risky as then, big increase think losses, provisions the important relatively those they you've of environment. a this situation is don't out. through. back. And really hope succeed, in got it's get past. we've think upgrade, charge-offs that right? is us potential they customers, the how point our I of you're our with their and around about yes, game. -- we're their in the banking. we our as said, got coverage we're turn charge-offs, for about we'll customers. had in that's is people resources been for release plays hunkered really lot to to kind and work it is that If And

surge that. You a seen haven't in

described. scenario And you this works -- so we're hope out like we

Okay.

Okay. are going in stimulus And of that the that more get play inclusive liquidity. of How next turning to there thinking you balance that are factors whether understanding not over or couple then about lot of a sheet obviously quarters, to we're the future.

strong is. be it to continues it that optimistic cautiously as as We're Yes.

build Our to continued customers. have deposits the

at and we're runoff we're where we large we the anticipate people on We it seeing don't the next some, consumer they it or to spend down will need commercial. seeing look over so. in quarter As are, but a know

situation So customers, a basis, our close guys customers. good. understanding it's is how are what with We're them and Liquidity very the regular staying on they flow their to look. is strong. cash commercial The

we would now, right performance. relatively consistent So expect

basis, linked-quarter on generation Okay. it anything growth, was good there, CRE And loan then point-to-point in that lastly, of a was had terms growth unusual the Is quarter? just you really solid balances. in in just or there

bank good new finding were joined a Yes. of CRE we've the got this our And No. at There just earlier of leader year. -- team right that that terrific he's kind deals.

He's somebody Hawaii construction-related And environment, too. our really of portfolio we're asset. is book. getting We're in that growing, be to at the to of know, right? tended this long-term project. the asset investor saying bringing have We excellent more onto real here you as how in heavy sort in sitting stressed prudent troubled component interested resilient But not a estate also you else's we've we're

that being customers we're really those deal But to the selective. So, associated like, want support with we when them. also see the we and we deals

great. Rich. Okay, Thanks

Morningstar. from next Fishman Our Charles question Instructions] comes with [Operator

that settlement just a three-year come Hi, that morning. On nothing Oahu that was there years? breakage. back for three be now have -- And in couple. Will allowed I cycle? to a for a

mandatory PBR. case commission transition the no the because rate triennial Charles, to looking at cycle the is So, longer of

rate the And is multiyear PBR so years. at in five framework, which that's why plan, there's a

forgot about Yes, that. I

Okay.

I've CRO. slide, it. I lost about mean, talk that let's on one So,

the positive. like, look that's that side list, seemed that at as should that eliminate to You have still be I to the the that's real things. else you're brief agreed maybe far something realize that? PVR. Is lag, this as you there I things you wow, saying, -- It that on on a to the I good? But left the negotiating side, Can pretty discuss left-hand RAM

We'll let answer Tayne or you Scott.

RAM a and do -- removed parties agree XX summary to that reminder, again, And basis like is PUC be subject a should XX is this existing as hi existing is this points. differences decision-making. It of the Charles, But consensus the Yes. that's the is positive parties. because of the yes, the Tayne. that it roughly to

in Well, bottom know past. the that's been I a

side. So that's on thought the That's was I good. that -- left-hand

those consistent are outcomes thing how other But PUC. We'll but and comes that's we'll earn out up what thing. set are. the the performance Yes, how to see the need the to is to actually another achievable with put they positive, by forth need incentive positive that's potential see mechanisms

modified the shared The allowed was to be that the earnings of position earnings and again, have would it's parties. general an symmetrical. be is I mechanism, consensus above sharing thing Currently, mechanism are with other ROE the should The it asymmetrical we customers. point out and whereby

is side, there to the on So, company the for other there. -- be protected

Yes, symmetrical be good. would

Just thing. one more

XX% the to this I delayed of a of just where the like that's on But suspect provided anymore? is lot goal the Research from. Economic that's was not from the to testing the would is the interesting missing, last year, to program I see you optimistic. a of really that that the [indiscernible] think of Research guess just I that thought tourism. get which something Organization. is I or second number Organization, was that recovery they're call here, that there data being wave comparable and back But any Hawaiian obviously the level that by the it doing came end was Economic be tourism The number I'm level

also on available UHERO Hawaii University here. Yeah. Charles, information on forecast. this And publicly it's of Research of this way, is by the Economic website, Greg. so available slide the X, show the it's Organization part We is

projecting what was, starting showed what in recovery to So they're for in with quarter. as XXXX, almost XX% the XX%, fourth calendar at, roughly XXXX year see reduction and from where you they a the pre-COVID XXXX we're

with they're starting XX% forecast. over starting in their gets take XXXX. four-year see to recovery of pre-COVID relative the then to three, improvement will on is, forecast then, XX% a off So case, And base to that What and we're of and back, looking XX% lower it now. what XX%, base, ultimately, further to -- consistent a indication the at recovery

a it arrivals, we coming number when XXXX. still you recovery. Their recovery. was year-over-year revised And have. short levels robust a gradual within million forecast XX pre-COVID period that think of the pre-COVID for it's a stop But out more high So it's pretty forecast of watermark at which us that the does a were is they

That’s all That’s have. stay Thanks, you. Well, safe. and helpful. Okay. thank I

Okay. Thanks Charles.

Charles. Thanks,

back and concludes over Julie to to turn Smolinski call question-and-answer would remarks. I This closing the session, our any like for

a today you all with us Thank questions. that, have weekend. your for joining and great Yeah. And for

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