Hawaiian Electric Industries (HE) 7 May 212021 Q1 Earnings call transcript

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

First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Julie Smolinski, Vice President of Investor Relations. ma’am. ahead, go Please

Welcome, call. Hawaiian Rocco. quarter Industries’ XXXX earnings everyone, you, Electric to first Thank

today Connie CFO; me American members HEI’s Electric Joining 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’s 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

in Electric year. Hawaiian utility be environment expect we savings execution quarter savings for from along and the to that cost you, and share the timing in XX%, range in and year reflect both, and driven were of us remains with with guidance delivered by results we profitability. earnings an beginning the in Thank of you stronger year to last the announced first had $XX.X respectively, bank thank above good June, full The quarter utility start bank. Mahalo, for results today. net to remain $X.XX. at consolidated within year first customers rates will per million same started to we quarter February. and first quarter, joining and other income were benefited management program challenging the Julie, a American’s XX% robust aloha earnings everyone. elements, We In continued very the strong These the last the from

in conservatively Hawaii from as of provision the we benefited continue manage to results release improving a economy. Our credit

in for year, Greg more and HEI our reflect consolidated we’re guidance guidance to this the detail, will increasing improvement. bank cover As

condos. $XXX,XXX of homes up economic rise are state’s XX% condos. up, Median for GDP XX volumes X.X% outlook, Hawaii Organization March the XX% more X.X% XXXX per COVID-XX states X. of Hawaii XXXX. are have and vaccinated fifth state our average in was rolling had for far the than capita is the dose. in below for the XX% its now Research expected have of one as and Economic the mainland. fully forecast also and seven-day University And while remained still to economy XX% its for ago. lowest continues now growth half U.S. of a March, the above peak manage direction, a in from We’re the average, it’s in nearly well Unemployment rollout continues. declined in We’ve the seeing year. arrivals national we’ve the all X% XX% vaccine headed to Year-to-date, significant are virus challenging estate tourism Hawaii U.S. from strengthening this right and vaccinations as declined seen in local and COVID having more this the situation year fundamentals arrivals averages. real where At March, mainland experienced Oahu support sales conservative the arrivals mix lately, accelerated for at X% The among by multiple abroad homes bank. XX months single-family almost and have have our to strong as pre-pandemic Hawaii at the residents point, than single-family approached for the days with $XXX,XXX the least are In recovery cases continue to and and portfolio May prices domestically. to are in to been

decarbonize future utility, At have the together we’re and learning our our to transition to economy and stakeholders still as framework, align energy a our focus. is which that encouraging, our the be major and interest work stages in the that pandemic’s our equitable. We and to and is recovery, the cost some been designed new resilient PBR early Hawaii’s clean affordable, course. we’re mindful to the reliable, While economic and is new in our efficiency, uncertainty are we about continue this all framework increase still way PBR is there renewable of energy

to to report X. ARA, operate or transition when achieving and as savings has PBR on customer under and goes these as be a PBR. implementing been management the PBR. well dividend. with to annual utility new we focus We’ve performance well revenue into Our on commitment commitment customers will successful forward. PIMs, working as management incentive PBR going in efficiency the as we The and us mechanisms, We’ll metrics to into the stakeholders Cost start to we’ll cost effect our savings positions efficiencies deliver through finalize June savings the been audit or continue returning scorecards adjustment,

an are expecting new the of forth in future. the setting to order PIMs issue the parameter PUC the We near

said a in and together. before, word we’ve reaching collective clean way done is, goal kākou, Hawaiian As decarbonization means be that our energy a it takes working must everyone that

as largest soon as renewable storage and Hawaii’s ever We’re procurement working from to energy bring possible. projects online

fully is projects, reliability are We no need of community procurement to to island isolated on small task grids. scale this given our number this the considerations, to which easy relative system, constraints land ensure committed of the effort, the and

online track delays We’re Last PUC from other regulatory of customers approved directed establish actively operations cost commercial Stage to producers, projects. X, working Phase X X to in and to government liabilities resulting with bring power stakeholders week, and to CBRE independent obstacles projects us Stage overcome faster. to agencies the

we the rather not do liable for made. believe are record any a track to be costs than we intention is believe we may before determination amount, PUC’s While

also and Energy Last Project, that will So, battery week, project energy. standalone enable Oahu coal our PUC plant we a Storage with when help for the ensure reliability agreement approved retires more conditions of Kapolei the will renewable reconsideration be seeking clarification. integration or the

filing order be a will While concerns the technically reconsideration allows developer motion to with an us The that project. for conditions Monday. this regulatory to approval, and and moving raise may us the from prevent on PUC, forward imposes process the our we

resources, response. are equity On demand in the the and Another key we or how May distributed focus filed DERs, designed. underscoring of fairness Xrd, acceleration this achieve recommendations is programs and to more accelerating the our importance energy addition while of

and advancing programs including us procuring services key deployment customers, grid approved In from March, program, more proposal an enabling to the community faster DERs. for approach effective a proposing to of and demand deploy meters modernization shift opt-out solar to rooftop PUC from to facilitating use efficiencies aggregated targeted all programs. our and is and We’re expanding advanced rental and advanced Grid advanced areas, benefit to in program more quickly an DERs. operational meters rate thus opt-in response allowing our

perform Paycheck in a continues In federal environment. to small strong deployed large two deposit round Turning by to part challenging Record driven of Hawaii’s mortgage program. have support outpace $XXX loans growth, in quarter, recovery. and million. we the continues businesses additional of of first Program ASB to lending Year-to-date, to American well Protection or an the CARES that that million economic in $XXX continued bank. stage opportunities this in has to over amount to stimulus, increased early production

and managing portfolio We’re in our taking a interest approach growth environment. low balanced a portfolio, loan optimizing fee rate to income

helping low net grow interest and funding costs are still is While growth expectations. sheet record our pressured, consistent net with margin interest income balance

recover. credit credit reserves losses economy as quarter risk begins the as to customers release of Hawaii’s resilience first the reflects environment well our of Our moderating for as

allowing American also to transition. bank’s to its first efforts, control dividend losses the We lower reserves in credit manage as continue also the quarter, noninterest our has continued anytime, profitability cost is even increase. conservatively. in Improved banking invest for HEI to our expense leading to we anywhere

double with anytime channels made levels. customers customer we’ve We’re accelerating our seen than and channels across through us ATMs that deposits digital mobile, bank And increased XX% and satisfaction to transformation of such more Today, anywhere. to time. enable as all over self-service pre-pandemic are

financial This will to We’re new expanding even teammates enhancing opening our strengthening wellness centers easier help digital new providing capabilities customers. fleet, app, for ATM customers our tools, with our banking digital our digital mobile banking offerings solutions. includes and where online upgrading online make

our Greg financial Now, and to Greg. you, will Over discuss outlook. our results

Connie. you, Thank

coupled bank certain for credit credit and efforts timing overhauls, of strong earnings showed Hawaii Consolidated has were At of versus O&M reflect strengthening we annual the reduction from signs to utility mechanism, including our with recovery. generation outlook. earnings the share upgrades, utility, revenues companies per last bank and that an the of credits seasonality $X.XX trends revenue of reported $X.XX Both reflecting resilience the Turning higher stable lower adjustment impacts. improving release in quarter delays year. for and a performance, the charges same economic recognition to the as target and first provision benefited from expenses losses cost rate our economy saw quarter and results. the from our on timing-related earned eliminate The

a While audit to as the look X%. The earnings the And savings be dividend well Compared to including last plan, XX trailing same the to giving XX-month increased to charitable holding year, times. company time loss line challenging $X million XXX basis with in improved ROE our points points XX%. Utility consolidated support is during the contribution increased we utility are unchanged, customer by for customer O&M And basis bank ROE XX%. an however. outlook management impacted PBR. community improved to through and quarter reductions used we which was build will annualized fund have reductions ROE, at on under that cost remains the basis, expectations the ROE quarter,

million $XX.X has higher in of support to results, some expenses were since first also lower: to management Regarding million increased higher related expense items, the projects. million year. income of an quarter efficiency later quarter outside which to Lower compared O&M facility higher overhauls, first timing-related lower ongoing The service in from the PBR bad environmental will main of to three program; were There reserve XXXX be and drove was $XX $XX.X significant related the and were year. quarter service the costs deferred; quarter debt performed COVID-XX, in first cost including XXXX. last O&M and been staffing in the other customer net improvements docket and There costs fewer generating to the the XXXX most that which factors the variance drivers utility’s for compared

related the rate be a partially and case offset $X as resource to included decision. costs by of million part target due a of lower lower non-service a planning pension to system reset implementation we year; rates on no $X addition recognition customers methodology in during higher benefited $X that lower due of $X million target from seasonality the which XXXX, rate O&M, of revenues increase impact a revenues, is revenue which a revenue eliminates net In change timing to year, a recognizing to increase were enterprise depreciation. final in to have million items benefits million passed to will million for on revenues within These and the pension mechanism we adjustment costs from $X higher

for no Regarding the performance meaningful year, from million the XXXX. of We the contribution have $XX costs, a regulatory performance accrued drivers of bad we utility account. during expect rest the primarily COVID-related debt in approximately expense currently mechanisms of deferred asset incentive

through XXXX, We plan costs and customer in will costs and deferring file to customers The a with We cost separate June with we will application recovery to extended we continue moratorium assisting XX, seek other to place continue actual once disconnections bill payment work COVID-related is May on known. and plans are alternatives. on through of XX. -- assistance

approval XX. We a for costs also continue will beyond to June filing COVID-related deferring request be

the to our June positively year, ability O&M returned As annual with expenses. The these of an to the timing be meet for do million to track utility mentioned, starting achieve the management was savings commitment Xst. the of of our were than achieve expect $X.X by overhauls is in approximately some delays. O&M planned is to driver The commitment, unexpected of Utility savings million overhauls. $XX the on utility’s to accelerated We audit lower guidance. occur to investments capital which due customers will important in annual line impacted later necessary expense quarter

were Some on electric limiting that of other due at done work extended the repairs our of of parts the to be one system. substations, can delays being made

and deployment work. COVID delays, projects, travel modernization utility Despite additional grid delays also and million capital approximately plan required CapEx investment rate base $XXX we of CapEx growth And our X%. during are $XXX X% rate to achieve our our the meter still design experienced XXXX earnings limitations, the expect maintaining to call and expect work T&D that guidance We issued previous growth we for to impacted million, of for still XXXX. base reflecting we

The line expense credit primarily quarter. for Turning compared drive risk low recover interest to continues the as of losses, reflects during in benefited from and which remained Noninterest the ASB’s to rate the growth, environment the of soften $XX.X prior funds in margin reflected cost to of from fourth X basis income to efficiency from linked X.XX% plan, reserves compared investment net million yields. the sales year’s pressure focus XX $X.X compression. from last XX year. of the points prior begins was each our and elevated NIM for plan in contributed and strategic moderation bank. the in the The further. economy funds demand point basis despite with income a environment down and to X.XX% increase line quarter $XX.X asset of to was being points ASB’s XXXX. compressed to from lower growth quarter XXXX. and income X.XX%, growth quarter. quarter Net ASB $XX.X record and interest portfolio. interest deposit as mortgage was of first million quarter million helped fees of results in impact quarter and and productivity. record lending loan PPP basis the of average on The I’ll on discuss million increased credit net release the Noninterest deposit a benefited origination cost strong Hawaii’s with low the strong the investments below NIM

to from lead and interest guidance and year. lower should expectations interest to anticipate still deposit sheet liquidity income updating to line NIM the growth expect low due we’re our net We yields. growth that with Consequently, continued to range pressure from reinvestment balance We in excess rates for strong X%. X.XX%

the we credit. economy in consumer net to provisions in $XX.X In in quarter commercial ASB’s to to million riskier credit reduced the the recover fourth to but released quarter charge-off to were loan million charge-offs in compared This to the XXXX. first X.XX% the begins among X.XX% in exposure $X.X Turning lower profitable losses quarter, environment take the quarter upgrades year. X.XX% in quarter approach the year. ratio first and for losses first prior credit We the and up credit $XX.X moderates. as peers. at end, fourth the loans X.XX% quarter fourth Hawaii’s for credit of for Hawaii’s bank was remain a as compared -- loans, the slightly X.XX% X% quarter allowance in provision X.XX% the in was million compared wait-and-see net the And recovery. portfolio, conservative quarter highest of Nonaccrual and and Hawaii to economic unsecured risk to and reflects as credit last our

consumer loan across We’re X.X% are to deferred We’ve in seeing delinquencies scheduled the the deferral returned total commercial positive all loan loans have Nearly decline Active just in payments. trends portfolio. higher-risk of experienced deferrals and portfolios. ASB’s portfolio.

$X The Prospectively, drive and of a bank has a or profile leverage above resources. maintaining managing lower X rising ratio loan low-risk billion anticipating ample position. we’re in portfolio, -- risk and two in of our delinquencies given our While market. capital value of by low-risk profile decreasing of to liquidity X.X% portfolio, manage to slight liquidity uptick X.XX% Tier dividend maintaining realizing ratio -- while in combination competitive profile a a ratios. portfolio. available in portfolio Tier approximately X reliable above These core ASB capital risk Hawaii levels. and the overall factors secured estate leverage real is growth was metrics liquidity ASB’s residential well-capitalized comfortably of continues capital and the a to the closer an of that profitability conservatively, contributed ASB the have healthy strong our from is overall

in year given bank guidance, performance reflected strong and estimated higher previously February our capital and dividends expect HEI this versus outlook and ASB’s $XX now expect dividends $XX million to We million efficient structure. million. of $XX We the to approximately

equity HEI, issue significant we quarter, additional in dividend any accretive opportunities. the ASB to HEI. a million $XX the unless external not declared investment For at identify do the need has anticipate still XXXX Board to We

rating We S&P have stable by an Moody’s BBB maintaining utility both to investment-grade had to BaaX, upgrades flat credit outlooks. utility, to At the are recent pleased to with profile. committed we’re and

guidance. Turning to our

reaffirming our issued guidance. utility previously We’re

be to had the additional savings While later strong a cost overhauls Xst we’ll customers utility returning and beginning the expect in first year. June quarter,

a the revenues benefited first to recognizing change to addition, reverse in In year. while quarter the due portion methodology higher in of remove from seasonality that revenues, a will target later

guidance. However, are our revising consolidated bank we

prior share, from guidance of per is $X.XX our $X.XX revised $X.XX. Our to up $X.XX to guidance

We’re revising net balance The to be X.XX%. by should income sheet from to at down on our NIM to the muted X.X% impact X.XX% expectations interest X%, growth. bank

dynamics and we expect from the now travel. believe we provision $XX return to until to credit levels strengthening the uncertainty conservative, the appropriately vaccination for remains given economy Given and we economy, of increased Hawaii zero see which for continued outlook range million, eventual international

bank growth and $X.XX stronger that EPS into guidance to -- consolidated expect dividends company, guidance we’re We HEI holding per as increased to as increasing the will bank to well profitability earnings translate share. $X.XX

Now, I’ll turn back to call Connie. the

first its Thanks, reporting. Greg. which helping and second I’m the continue our of task ESG on month, consolidated financial resilience dedication we report, results electricity and financial better. companies our force aggressive issued and includes as banking back and goals of climate-related ESG to Hawaii our solid the of priorities reach provide deliver disclosures build Last our and climate essential our aligned employees while services proud we

time, We’re a XXXX XXXX. We achieve future. to emissions and administration’s a us place goals for our goal work in plans the here to net a by strong our some XX% been considering zero and Hawaii the believe Biden cut doing implications by baseline carbon path the companies for we’ve on from

the strong planning of that American earlier. finally, its great years Rich ASB’s strong we’ll as pursue in first And and XX Ann customer and has provided and to Rich’s Rich to Vice for base, leaves we as great quarter and efficiency. banking leadership accomplished earnings service deal today. have assets, Rich deep We it We’re Executive up industry customers. today knowledge shape grown leadership, will now, Operations, our questions. ASB He and your he for CEO his later analysis, a also his more operational helm is the American. further and at state. expanded and of Rich say great look We report interests. thank American record and Under comments the to in we and open for and at currently and Ann will easy succeed aloha is Greg’s evidenced team a success of with leader by to bank’s American President collaborative as leaving his leadership. XX-year our services President improved on future. made Rich banking And a other updating than Ann’s American. during its contributions customer track products Teranishi, forward

from Please [Operator ahead. Bank Today’s Dumoulin-Smith go Merrill Julien Instructions] first of Lynch. question comes with America

-- some all. on Hey. morning taking team impressive fairly so Well, good congratulations or the time. turnaround. you Good for Thanks afternoon, much to results and

cost that relative kept the of another on course on do I that’s And you’ve So, comment do maybe cadence think savings about we something in to off your Is utility then, the what some presumably little twist that a off the later X% I obviously, is roll X% the costs if years outcome, the year about here kick through through front-end there. backdrop numbers given mean, ROE? those year ROE? you those cost think degradation fantastic benefits throw can a pretty to the of -- intact, this on how that can utility you here? side, of the should think things Because, of as course metrics? you here. about How especially loaded the bit the

thanks, Julien, this. question. I’ll for So, and the start characterize

build plan. and you focused efficiencies quarter, utility line year. PBR as this our of continued and the first that’s on that we benefits we well well, since For has been is The But, good at implement but in largely year, start benefits under this year cost you the a PBR. last to year-end saw quarter, know, savings XXXX as with had have we year, as into accelerated the report transition customer and and a

guidance, a meet X% of expect, will below we guidance still great at issued those that solid represented and with plans which that the start our this reduction we’ll just all we’re we’ve we So, of while on beginning line the year. earlier ROEs overall expectations, in efforts, year our we that got cost and our that reflect

fast consistent again, with time, but be to will quarterly it So, over our start, a the recognize results guidance. moderate

though, The with put mentioned, continue cost other element Scott the into and the will team that utility that was those the Tayne you and benefits cost of place. programs saves has

to do implementation continue earnings benefit realized several So, PBR over we opportunity expect some time through full the and as over for we of years. the that next

that’s magnitude Just things. keeping make here? to it. sure And the of Got the around Excellent. issue know order your that some alluded targets I heard this on the I about what’s at you to then, How do understand utility intact delays. because to I CapEx at year just right. side this time. base think you’re same I rate risk you some mean, mean, But the utility of just here?

impacted. provided. of lot investment and -- investment done seen preparing to and at is different There’s plan. But the deployment consistent a Yes. and you’ve the the they’ll plan, risk great their overall, job can capital to a Again, a in points in be get We utility meet guidance time that. we’ve see projects specific timing deploying delayed that that capital able for program of deployment the of don’t and confident the needed has with we utility lot investment

ASB as NIM trend think described course quick With super the your remarks. respect here, of the to of equation. in you versus it. that mean, I prepared how right? do about year, the to reserves accelerating, release through the Got mean are of yourself you things on side And the I obviously,

obviously, But well lower release. on So, NIM, presumably, that bodes here.

the the two today? about year you can it through comment factors best you of Just as course understand those

Sure. Rich. This is

guidance the think of And the relatively the environment. really brought of we NIM, that loan growth A seen pressure the down into is you’ve investment current a modest, reflecting the goes lot sort lot of -- of it, that grow. continued the about So, portfolio. what’s deposits the if since you

mixing credits -- the on portfolio there, NIM So, have are the that until up, economy because lower and going portfolio. and risk loans, -- you specific right? stronger happens on investment of appear, would you’re in mention no expect and special of you because with mix the adjustment we up potential effect because are them then lot down to -- the get the improving loan economy you’re margins the to just paying in because than the could credits, there’s right? a there’s So so, the risks And continue is coverage now, economy moving don’t the then, with we and stays what level So, and growth don’t right? and of category the see concerns. depend that’s that on the they’re on right credit if provision, if the will continued stronger, see come And would upgrades, it the credit those

the the sustained how And to specific I those the market it’s the quarter. in brought the result is a depend of coverage improvement banks in the level and credits. on bit on think, the down first economy all going

go Please ahead. And from question Evercore with our next Chopra comes ISI. Durgesh

put it. high on X% to the get line does incentive what higher the if in approved I’m plus, upside -- and to PIMs as And to that guess performance that grow of -- actually in guidance target, of when can XXXX cadence it Maybe utility X%, just -- you what than -- the trying include not to you into EPS or might end just of can Greg, mechanisms, maybe time as depending quantify Does you then, growth -- you the plan? you I I your of -- can terms quantify could look I Can growth of for understand PIMs terms rolled be? at you X%? these what

of PBR, over of And, and PIMs the those deployment you Sure. potentially finalized being as with incremental more somewhat initial those provide And currently. time seem implementation for under and additional PIMs -- of the know, a are lot moderate room PBR to PIMs a the meaningful to opportunity. be near-term

return a good development PIMs. was year’s our capital, the and for. the of invested not -- current turn area I’ll invested meaningful guidance of guidance really anticipate X%, on to we’ve terms from X% in does and predicated PIMs our growth on term the recovery growth about that The utility any So, contribution have over which it dynamics the the of talk we or longer Maybe Tayne to mechanisms opportunities. given

is Greg. Tayne. Thanks, This Yes.

and thing I affording relate our some can the PBR In but of our actually of in PIMs, of and the the that forward, see part from we opportunity new the this there’s comes the opportunity are outcomes modest PIMS our slides, upside that in out do terms customer as for terms that you what Currently, penalties PIMs. and we of docket, goals we’ve terms also get PIMs that as say more or for greatest comes laid what And forth system. from the PIM which we’re looking would outcomes I set to PBR, and other downside. -- there adding of RPSA, rather opportunities in is, in mentioned, state doing more appendix we renewables see the say is, lot on the energy is the those year, have other regarding about Greg the there. would a But, details what of than very guidance in the and the the is more PBR,

the on little questions? PIMs. So, a your bit I that’s Did answer

did. you Thank Yes, you.

I top. is X% does might on just right, Just be to for the base plan? X% not sounds recovery you to mean, The additional to it would X% include though, capital, the X% upside be clear, that the of That PIMs. have like in as stands

Yes, that’s correct. correct. That’s

is Just to X% on our X% invested the capital. growth

budget increasing which annual have as should the keep under adjustment whole. PBR, an us we Durgesh, you relative us know, to Yes. will inflation that an mechanism give

more that within XX, which point provide expectations PIM part XX the growth detail. also upon for to And are and on we management then have in XX, that I capital prove particular, we where provide could the to cost RPSA on of pages our to still that. mechanisms be based you XX, that some -- ranges did of project the and achieved, So, would out. but renewable we estimated just Relative recovery target PIMs,

Greg, you equity helpful. year, just what color unless bit Understood. more just follow-up. identify might those opportunities opportunities. your That’s a -- this more quick maybe Thank like? mentioned little around no a on just additional And Maybe you look super you. investment comments equity,

gotten which source you’ve and of plans company to is of the primary capital and Well, each guidance great Yes. operating distribution understand with the at structure self-funding a our holding utility, ASB, capital and efficient very deployment a are a for to also achieve specific dividend our the at on Hawaii. Hawaii, conservative subsidiaries, mandate on here continues sustainability in develop but targets. infrastructure-oriented line with investments investment and approach, competitive which and consistent here to know, Current, Pacific in as focused you their type look strategies capital

pipeline development opportunities. so, And an and active to continue they keep

be And some lumpy. investments of those can

a we those when as -- achieve when and announce that -- when growth will you but We opportunity. see investments, we to additional and promising

platform. the being, the moderate those and time our growing ability as relatively For overall guidance well-accommodated to our fund by we see and

Associates. Paul And our from go with ahead. Patterson comes next Please Glenrock question

follow to Julien the just on release. loan -- the loan questions on up just -- on the So from

thing? to bit loan a I think -- these strong, quarter, this should just that be seems little how if want you guys have me seem the about not to were. sort a generically, we economy of -- basis, of continues it quarter-by-quarter it. conservative. you loss perhaps you And for to to a with we quarterly how Or the released? And just it were quite it of terms how would that this this to time, the clearly, sounded that reversing in mean, I me should are mean, potential you on felt see performing loans I about think mean reserve to often stay Given is the release

if that I’m what about think follow we should you saying? how So,

Yes.

if coverage X.X%, coverage loan mentioned, course pandemic, of that we the over look of as X.X%. the to built peers in the was of the came our reserves market. is to down So, X.X%, before strongest back up the last to our about book year And year And you the of to right? last and Greg about kind

So, that you time, have lower still by right? -- course design. shifted We can see consumer we of unsecured over that’s have the and slightly book the

lower And of so, book is risk I the mix. the a mix think

wait-and-see in there are that attitude. And are so, said, as reserving, assume, Greg right now, the a there -- assumptions

it, of in the lot haven’t we because of we’re waiting. assumptions We need improvement to and in built see economy a

through are, lower we’re still were can the So, I environment. that robust assessment it higher think environment the you But, coverage in level the in. and state specific of evolves and book will be the so. the balances terms where we than reflects reflects we credits see as work at a credits customers of more how a the from balances, of specific certain on quarter-by-quarter ratings in categories, That going

as much would the in XX we didn’t XX what that saw. some. reduction came X difference year, the the assume you assume in additional not into And That’s a basically we of lot assume reduction. would X if to the coverage and think you you So, the got range, about

that where quarter-by-quarter so, be assessment. will we a And end up in

Electric. I party mean, with that be other certain be who’s dates. commercial we with be supposed wondering, doing CBRE on I’m wondering ultimately to the to party at it that understanding mean, PPA, And are the I coming Okay, order, great. looking in And I is this guess, the Hawaiian was mean, the -- my then, PPAs. the I really of seem I just sort when would these order, was

saying? sort wondering that found Would you working out would theoretically recourse would So Hawaiian I’m Do there have planned how, these was if to just the it that of and follow -- some liability, PPAs that be there be party? was what I’m -- to another exposed. any weren’t as Electric

Yes.

utility ask to me address let that. So, the

Paul, is Hi Yes. Electric. this Hawaiian Seu with Scott

the project our has So, one allowed the liability here that to there done including in the raise necessary really to just file -- of whether as to are terms PPAs, these projects dates. to grid and work technical interconnected additional guaranteed be planning any projects process, for the amendments issue able delayed. commission the possibly throughout for establishing And to being is to or amending is the to commercial for requirements be then be the these process is of we operation not things to

projects PUC, So as to variety time, issues reasonable to these the all RPS, with far just To get because that extent able interconnected. service able we as that’s while time at accelerate to the see factors to really have it. we of stage the trying their projects are same that work accelerating is, as through are the in what the be such crux feel installed to of the these and we a matter we of the allow we developers

specific developers I project. developers, working theory, it really Your could service -- in utility, the as with we’ve question on of technical don’t depends worked contractual about and issues. been date the challenge the We’ve the again, the essentially the collaboratively and through

won’t terms whether would just of need point to I any future some a -- not these it’s speculate So, at us. to feel developers in of the challenge the in have or

that liabilities, potential they’re what’s know Okay. underline that they the record, of are they I they’re you not a sort speaking, I they’re be actually proceeding, regulatory -- and are another but guess, -- liability? asking that in Just not or just to the roughly potential future potentially be that of proceeding. what that sort if size the about? ballpark, But what -- talking were doing would in we of any penalties, -- to And

is this Tayne. Paul,

millions of in about -- of I yes. dollars terms annually potential. mean talking We’re that

year? million -- between less than a somewhere $XX So, somewhere

terms Let In the matter costs provide in me any really oil. to operation of of it you calculate of details. also on price then avoided -- assumptions, also type order does dates, some guaranteed commercial and

there’s assumptions calculation. of that in lot So, made a

we’re time, annually. at millions this of And hard dollars point determine about would in talking so, very say but I to

came happy I cost the not guess, commission’s that. a should out associated order, the we just -- their just that order then, about And associated and feeling that storage with with that controls any you little the on how the Thursday? have that, are if order Could further is with you there Okay. the out on week. also, I they’re guess, last see takeaways they elaborate put larger bit

Yes. raised think has commission additional of some -- Paul, has project. I the concern cost beyond the the

battery system, not by concerns they’ve in the particular, this One electric role charged whether the versus actually battery energy be our would the grid-tied functioning or energy. fossil standalone raised of of and it’s of renewable and as part how is fuel

further raising really, -- for one central view. almost far raised. as that’s that’s motion a our for the So, points of a week, that think I has be own discussion. we that’s reconsideration And concern And as next file again, we’ll issue as our commission

Please next from our And comes question Bohlen ahead. go Jackie with KBW.

that just now start with I then here. borrowing there’s deployment to bucket quarter. with will liquidity and wanted forgiven. took lot what I continue about a reduction lower And just expectation off be factors mix of place at that are PPP understanding the your that about to curious just play the thoughts saw liquidity the the loans and additional in

and what you that deployment fluctuate how expect might with plans any So, be? things to

that go. that’s to diligently we’re seeking it I Yes. right? loan the obvious place growth, No, like we’d mean,

are selling production. probably not mortgage of We as much the

see able -- hope commercial participation investment go you’ll balance estate. projects in to some we real of other Otherwise, There’s commercial to it’s more hope that production in and some be we that -- to so, real on estate. ongoing sheet. a get And investments commercial

to So, the that going is the we can level what achieve based of strictly organic on loan be shift growth is.

It’s We banking growth. at seen at drawdown as that things we some expect things like would not that the in point yet. continue normalize, We’re of this at point deposits strong. all And a sort do regular but deposits purchases customer and we see looking that. portfolio community relationship to haven’t be

And into they and on it and to best can Dane team his so, it. the investment yield goes the get portfolio, do some

and what you’re that. of as Okay. the single-family mortgage the some it continue mean, that understand of come indicate the HELOC anything the a or still into And mix putting it, My is people -- you Is way? in correct contraction rate do there? not even different down to to that advantageous And expectation is I it the portfolio at way fully would I it driving to stabilizes might of environment that might there then, if is outside -- see look portfolio putting be just refi. portfolio

mortgage moving interest as still is rates in trend I rates up. hasn’t -- think resulted that moving there rates up yet

So, you’ve there. got gap that

on starting will some -- monetize dynamic. equity the to residential, the about see increases also growth you to So, see ways to the But, continue with we’re starting valuation that they to see thinking you’re refinancing have. people of

are to And at HELOC of up. early so, starting we I stages think the pick applications

Okay.

pipeline some maybe home other the projects of improvement So, that some the be could mitigate coming down could pressures? and rate

Right.

And already provision pretty know That’s -- robust through I then just helpful. had Okay. we discussion. list. a my sorry, running

still of savings with terms in lot prepared the Is and to discussed were cost control. on early know I other maintenance the and expense in remarks there’s areas? from investments the plan Just guide, a that of offset of in the some

Yes.

out guidance -- we’re to versus year. $XX flat of the was kind our of roughly million come kind a quarter range, trying the So, last in

controlling the and areas. significantly those brought And on this importance things some network in escalations doing embedded we inflations we’re naturally were because will hold branch the like We base, that and things of the increases -- didn’t described lease and which already are pay fairly we’ve of held costs, do The the things there future. down year what in of last savings we so, And it. are to that. payroll doing headcount cost in we merit time

of those embedded we I get So, done work that continue the we all out doing. and offset the investments is we not -- that inflations, for our till want cost think, to we savings we’re

Okay.

through a Connie on the metrics branch at migration consumer said the indicator the -- mobile as transactions, the sitting ago, new XX% were quarter, gone the deposit if we about on I have would we up think, you the on ATMs just XX%. the consumer the were and transaction of mentioned the now remote outside year being when done of We’ve transactions the under And -- as deposit. from XX%, left side. we that were and look here side, kind

-- about business function in do us the allow But staffed and ATMs the that savings. of customers take that. the adopt and those get to on and do that branches It’s side these we around full we we’ll to to lagging is will more built centers, learn so, talked more digital And the the going will help be teammates things down kinds lightly but with work there are that, workload comfortable. as which of

Okay, you next. nice chatting Rich, to decade. of been the you best with brings over luck with last great. It’s life And whatever

will Jackie, miss Thanks, it.

from Charles our question comes Please ahead. go Fishman today next Morningstar. with And

just you is won’t point, -- in to be effect my I timing leads giving is, If that understood, so Greg, you later or that savings issue? correctly, left. June once you that liability regulatory will the reversing -- have cost that you’re go that the customers to the post PBR in question one at And to guess, year, the first there experienced will credits X, Just the question you some be going those PBR. quarter, of I just establish, my will our a in under --

Well, clarify the guidance. maybe to

which our types savings, you to bank PBR. realize last was be next allow as see, cost under that the initial controls savings the three and those or accelerated accelerated fund overall year utility down as required in and down, some customers that by and will natural PBR while those O&M gap flat over and are programs. commitment. beyond a PBR, we be growth period inflationary for will $X.X line It O&M, directly you annually the to would be of with to has because for The to And started to despite, our know, fully, see efficiencies. the that on cost the -- organically traction million providing takes offset above costs, there even realized But, -- work. guidance that’s to was utility implemented, side, happen gain the efficiency years likely benefits the there that pension in they or expectation the to what -- But, year-over-year, for So, levelized the able help of the and the is and was as more everything that continue of excluding expectations O&M -- ROE we’re implemented time. with earnings cost increases close saving benefits under an our acceleration as in for clarified that on was that achieve the us

a is the start did clear, PBR, the XXXX, total under -- just be to near Greg they difference start for there utility customer savings going timing in Charles, for the back mentioned X. And in don’t to term, because $X.X the generating that that those million year until savings. But customers June

And on it levelization, starting so, And XXXX, throughout we year. take we’ll for -- starting X XXXX are year. generating customers June go to the will back the the savings month-by-month in then, front, they but the up

June to revenue some of the and from our PBR including mechanisms clear, the Xst adjustment on also limited PBR, the benefits so annual lag in And implementation removing be of forth.

outside the that additional year, of again, the PBR benefits talking year, for that we when see some O&M from issue about. framework benefits some should So the fully the next of full we’re implemented

Tayne Connie is this what Charles, thing I Sekimura. to One Greg and add said. want to

those then effect customer the part savings, tariffs those In built June it’s the terms of into of as of of and Xst. formula into return mechanics ARA on PBR going

to So, returned that’s it how back will customers. be mechanically

provided all us That’s Thank And Okay. helpful. I the guess, all on information you. Q. for, I saw you That a of curve That’s I in Thank It’ll had. be this. learning was the you. just good.

Thanks, Okay. Charles.

and And I’d Smolinski like question-and-answer our to session. any gentlemen, over this turn for Julie ladies concludes final to conference remarks. back the

you you Investor Thank in joining have to us have questions. reach all Please your importantly, today weekend. us questions. do most And and if for out further a great for Relations any

call. attending concludes all conference This today’s you thank ma’am. you, for presentation. Thank We today’s

your You wonderful may have disconnect a lines. now day. And