Hawaiian Electric Industries (HE) 14 Feb 232022 Q4 Earnings call transcript

Good afternoon, and thank you for attending today's Hawaiian Electric Industries' Earnings Conference Call. My name is Danielle, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions]

It is now my pleasure to pass the conference over to our host, Mateo Garcia, Director of Investor Relations. yours. is floor the Mateo,

Thank you, quarter full-year fourth to Welcome, earnings call. everyone, XXXX HEI's and Danielle.

Joining are Electric Ito, and HEI's Ann me CEO; American CEO; CFO; and today Teranishi, of Shelee Scott and Seu, other Kimura, senior Bank Hawaiian Savings President members CEO; President and President HEI management. Paul

Relations and website. our our release call earnings of for this are section available Our presentation in the Investor

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

Now Scott will remarks. with begin his

you you HEI, from the our We we overview strong the joining and benefits bank. highlighting full-year, share was financial the Paul achievement strategic year results for over on million everyone. $XXX today. reflecting I'll XXXX economy in earned combination a our and update to discuss earnings in over for and net then the per of Thank call performance utility both for to and Hawaii turn our results give of the $X.XX an further the at accomplishments guidance. Greetings, year, and us income see of solid to continue past companies.

combination and expectations guidance quarter webcast. earnings year-over-year our third to X% with in Despite the This regulatory grew Electric consistent messaged first line of with we occurring unprecedented macroeconomic challenges our the new $XXX an Hawaiian full-year under during framework, our in was improved million.

in earnings communicated continued line million credit earnings a year with Hawaii of in as well $XX reflecting quarter. in quality ASB the economy. the solid healthy with loan strong increased third we had growth Bank strongest the guidance a and were a decade,

bank year a deliver dividend Paul raised our XXXX items steady results row, the the fifth confidence that Last forward. in As benefits highlight pandemic of unique related in companies will for million we going our to earned reflected annual continue that recovery our combination from the later. $XXX a reminder, week, reflecting will

X. Slide of first full-year regulation, to Turning our or XXXX PBR. was performance-based

during regulatory the saw a new convergence year, the framework. this successful macro Given as test stress of of unusual XXXX headwinds we

an from ability despite the stress interest fuel maintain costs. rates Our and in executed conditions. operational delivered even utilities efficiency quickly multiple to earnings adjust inflation, showed We well and challenges growth test and

did the XXXX and volatile prices, easy for oil and finding that recognize nation, our historically customers costs challenged rising of assistance. was to We customers, commodity we not food an high responded ways need and of in inflation the borrowing rest for as they by prices year Hawaii our and care more

execute highlight Elevated prices energy bill fuel emissions climate key the XXXX. to importance by zero the of below utility's XXXX XXXX, emissions renewable on in we the In continue in customer pressures which of XXXX, seen and elements net action achieving carbon change and carbon plan, resulting reducing further XXXX levels transition. our targets XX%

Despite global a first retirement Change projects brought an plant. we that was energized of projects solar-plus-storage nationwide, chain last Hawaii's in supply last Plan Action In utility-scale Climate major and month, project with September, Oahu's last when renewables online. the achieved these we we milestone challenges of impacted summer milestone have coal important our reached another

groundwork ever. are of largest RFP. we energy procurement amount of Based to for renewables XXXX, X Stage the recently And this our would on renewables. the expand continue We in procurement launched be our we seeking, laid our renewable

effect of is state now a a new RPS renewable or we RPS that in XXXX, under from up XX.X%, level achieved I'll portfolio note here standard of XX% law. XXXX. definition Hawaii In in there

the RPS-A achievement definition which Going is RPS the of incentive terms forward, reference with in we will consistent new mechanism. only performance

achievement schedule. RPS the XX.X%, renewable ahead XXXX the of new in was RPS milestone generation towards to new XX% expect from the meet XXXX Even definition, XX% Customer-owned moving definition, by up renewable energy. our with remains we XXXX. Under to XXX% Hawaii key

bonus credits on a existing program [indiscernible] bill for progress are cash program, add is to and solar to an storage the XXXX. the energy made to customer provides to grid during which battery programmed broader system other bonus and customers rooftop batteries systems the both in This incentive or Our benefits that as great innovative new customers battery discharge the period.

across community-based taking key moderate unable investment communities and complexity for serve. our to who are of income in also to install And the charge a ensure utility up launched to our pilot additional solar. help the reduce is and program program XXXX, transportation electrification benefits seven customers greener non-residential EV transition to upfront Hawaii. The In the stations. commercial of customers steps we privately-owned meet charging the projects renewables is utility loans renewable the for energy Our islands and selected solar November, utility low the rooftop installing

and to Savings value provides to continued maintaining perform a the funding approach, growth structure customer credit dividend grow to while capital efficient loans and of XXXX, well support its a loan management through quality demonstrating Turning investment-grade XXXX, in base. American standards in the capital very underwriting. high XX% good dividends low-cost consolidated our strongest continues over ASB that bank. leveraged the both conservative generate Bank decade ASB to its growing service our our strong of to relationships by shareholders. best-in-class and customer to

to will levels discuss growth we return normalized loan Paul XXXX. to As in more expect shortly,

execute initiatives while Excluding the unique the to digital meaningfully XXXX, recovery-related bank XXXX, transformation. pandemic items key to as such grew earnings on in continuing

and Zelle transactions way digital an brought implemented digitally see continued adoption, secure, friends convenient now customers pre-pandemic. send less of with money over pace to pandemic to than executed on fast and providing half channels digital family. compared and the XX% a We've XXXX, of in to are accelerated by through ASB example, to first For

to is weather it signs and to state's and Economic potential Research headwinds. believe Hawaii the forecasts strength of economy Organization, recession The in a UHERO, economic frequent in our has past most continued of of Turning of part The surging loan both this continued due tourism and XXXX expecting University to to show sector the real we the bank economy. Japanese evident generated which of strength also in in strong year provides not Hawaii's positioned is well residential economy resilience, Hawaii's growth construction. our estate. economy remains public commercial recovery and

saw to in throughout down continuing was rate X.X% unemployment year. the the trajectory downward Hawaii's we December,

been in here well has during crisis. during early during downturns the financial highest the comparatively national pandemic. the this and since is Our we of national than performed the fared as than and Employment the state's unemployment has the unemployment nation average lower the had better October, notable average days

market despite record near interest Hawaii's housing strong market XX.X% XXXX. through the Hawaii's to portfolio. continues $X.X year, our bank housing quality to with housing higher slower supporting up home versus housing and prices due full-year, supply The downturns contributing activity to sales loan had a characterize was Tight median the million Oahu rates. remaining for prices levels strong credit price single-family of

recovered levels up recovery a is to strong XX% to X% for travel. of full-year primarily spending domestic December levels. from due was as arrival Tourism in XXXX of the Visitor pre-pandemic over

of call now effective interim CFO him that to over July the to month likely X. he our Paul, as our serving our to after you January excited CFO I year. look with to are is since work last seat. this saw we As him capacity, announcing of appointment I forward I'm continuing CFO Many to hand press in Paul's in have the release pleased and say last

call the turn I'll over that, with And to Paul.

you, Thank I'll our start Scott. the year. Slide X with on results for

We XXXX EPS and net of million XXXX. our of compared We million, $XXX performance. are EPS income generated to with pleased in consolidated $X.XX $X.XX $XXX of an

gain sale elevated a at results Pacific for bank that of the reminder, a Also, included two by reflected release our recovery-related and As Current. Scott net recorded PPP from EverCharge mentioned, income. pandemic on of earnings XXXX were net $X.XX a benefit the XXXX as items, fee reserves income investment

grew recognized the Excluding EverCharge year-over-year. gain in and XXXX, earnings meaningfully items these

in from XX.X% XX.X% gap, XXXX. the consolidated of an utility in was was XX increase narrowing Our for increased XXXX. to ROE points allowed bank an XXXX X.X%, basis The in achieving X.X% from ROE made ROE XX.X%, XXXX. up from progress And of which ROE

major we enterprise we variances year. results bank across the line saw from in guidance Slide third the in with the our increased Overall, compared very XXXX provided show we in were to last the strong On X, results and quarter.

to As items. was mentioned, the largely income XXXX due variance net pandemic-related compared two to

credit and as a net First, XXXX, improvements million for the we provision credit of bank to normalized year. benefit recorded coming during growth strong economic for improved pandemic. comparison, is due in credit $XX.X million the losses out $X of the the seen provision an for negative that a the loan returned to bank outlook In losses a of more provision quality

over compared $XX fee in million from higher to income net Second, PPP in XXXX XXXX. benefited income

fee higher lower portfolio XXXX. than made fee bank loans and growth the income more for more across investment Notably, strong entire However, loan and offset PPP interest as the was than the decrease net in grew in by yields PPP X.X% income up securities the on income.

fee banking on related primarily lower million to of mortgage non-interest offset saw income, real million fees fee branch income income other gains lower life products. bank from The to and financial deposit lower higher $XX income decrease lower other estate on of XXXX. bank-owned and closures partially income, The due liabilities, insurance on by in was services, $XX to compared financial sales

lower for XXXX. costs write-off to resulted branch from XXXX accounting in in was and $XXX expense $XXX in higher X% million change primarily closures. at compared was occupancy The of leases a to Non-interest related in pension to increase million about XXXX, due that expense pension higher XXXX the

$X our side, due revenue higher penalties more the requirements fuel $X rate our lower million higher in major higher revenues, leading interim to recovery mechanism, efficiency we to saw reset million fee of AFUDC Hawaii revenue, ARA million at for and Island $X $X projects heat million the utility in in million under in facility. $XX recovered On

were transmission depreciation station and expense O&M maintenance, in maintenance, expense, to $X increased partially tax These corrective $X by credit million driven expense $XX $X interest generating million higher and net preventative XXXX. increased distribution, debt benefits adjustments were which from higher bad in million recognized due and by items higher tax higher million offset expenses, in and

increase GAAP of had I net the cost that about X.X%. the would XXXX. basis, a utility managed a note On well utility in

However, offset expenses up third measure which pressures was measures is we to a and X.X% activities billed year. non-GAAP covered and excludes service during proactive reflecting retirement the and by inflationary our adjusted surcharges the O&M, parties, to costs experienced

For remained that so well level. GDPPI X%, we within perspective, was XXXX

framework. efficiently As always, PBR continuing will to focus manage central remain under a costs the

XXXX in year to range originally of our disruptions, for communicated project call. guidance the line the was customer quarter permitting availability supply Slide due approximately than earnings million utility On lower during X, to work resource $XXX chain million million with CapEx and was in CapEx $XXX $XXX third delays. delays, re-scoping, anticipated

are our CapEx to in of XXXX we to our our annually. our expecting $XX CapEx mechanisms about cover which is and PBR, provide increase The $XXX ahead million to opportunities. recovered O&M have mechanism to CapEx baseline remainder $XX approved under we of incremental million million Under forecast as already for recovery $XXX another project million recovered million million. Looking baseline exceptional separate $XXX in to approval. XXXX, with We and awaiting such earnings CapEx ARA CapEx $XXX revenues expect separately

the on see to with awaiting PUC, PUC by in increase be XXXX. some the As is or million applications to there with forecast, projects $XXX you could CapEx can approval but filed lumpiness the slide,

toward December with awaiting capital XXXX several investments of the this this XXXX, PUC XXXX end million utility-owned projects. total, to project Not timeframe, approval. slide back XX% we potential had are shown filed forecasted the for EPRM applications the As the Of about generation is balance XXXX. weighted following in of of but $XXX XX, on

investments including capital applications are projects, of needed this the projects the would next generation critical firm cost developed and generation any for renewable contingency and for process these reliability maybe X that facilities resilience. years, period. under begin filing RFP The for forecast few Over we being material Stage for estimated after are in the and these

that earnings the the key there framework. three to our under recall for are utility slide, PBR next Turning drivers

an inflationary First, annual through revenue a CapEx minus adjustment ARA the covering customer dividend. O&M or baseline adjustment and baseline

to forecast XXXX adjustment of in customer Chip the year Blue is For XXXX, net and according this last October inflationary dividend. was GDPPI set X.XX% for of the

covered recovery Second, eligible And projects recovery opportunity baseline capital above by O&M we PIMs, rewards levels mechanisms goals. and incentive third, for which for the mechanisms provide additional or separate achieve providing ARA. the preset the if performance

dividend form the O&M provides XXXX. for in capital mechanisms we ARA To The ARA of January to able the X. minus these started the I benefit $XX.X earnings. in net for will now additional in would a of cover extent, we manage from we efficiently what revenues XXXX. each the expect are accrual customer The and million

managed Our ARA current and forecast inflationary assumes adjustment. capital adjusted the we within O&M

With to be been have separate This respect that projects major $XX EPRM the will recovery over million accruing PUC. for interim is under recovery, we the approved revenues in and mechanism. by project

are to XXXX placed about and that be possible a Additional revenues. for year of service recovery are million $X projects in expected revenues thus of in receive partial separate

Lastly, million primarily penalty we With of expect no cost coming fuel achievement in from respect RPS-A we the rewards to assumed or about interconnection the have XXXX, and reward. net experience risk-sharing $X income pre-tax from in PIM incentives. mechanism,

the in ASB's in margin investment XXXX. Higher to stable earning basis of yields. offset net XXXX Turning although at and basis the bank average X.XX% of XX than Slide items in investment growth points to higher XX. funds. yields XXXX, loans the prior year. higher higher interest and strong by The grew interest balances points of income cost securities, loan the securities NIM bank's relatively these PPP benefited for was and growth asset XXXX compared on higher a remained X.XX% XX cost income were and with on funds full-year Net fee lower

a saw loan to that in quarter, bank We growth. support our increase the fourth utilized the borrowings wholesale larger strong

prior market and we quarter. quarter basis our extent expect increase points in continue As higher continue as basis level a elevated. XXXX the to up rates throughout remains in to the saw the do XX from interest result, XX wholesale costs increase We funding fourth funding costs to funding points, our an to of

XXXX. of we in However, core advantage the will throughout comparison deposit base our us peers to our funding strength allow our cost to believe maintain

on expectations Slide On for further detail year. provide XX, our this we ASB

for This for growth year reflects conditions. loan a losses expecting and economic from our for credit to million. are range provision credit expectations zero the We ranging $XX quality,

XX% to average continue over practices a We to at is maintain real value loan conservative XX%. around our estate of with weighted conservative secured lending loan book that a

loan a As are to this currently single-digit mentioned credit level in level, loan more portfolio. loan confident of XXXX. year. Scott, a about growth strong our do be in normalized at loan XXXX strong growth return quality we but We growth expect result, historically in range a expect the low we was to to the

which to strong growth loan deposit XXXX, asset we In our growth, wholesale flat essentially balance in borrowings order sensitivity the to our fund given neutral. increased reduce and be CD sheet balances,

margin. As additional a to increases continue manage rate net have will to interest funding result, see we our costs will also although us, improved benefit fed to

help expected including We that bank increases as moderate transformation. keep risen. while bank costs, measures bank's come are focused to the even have borrowings the our taking down and wholesale on in the costs expense rates focusing to already utility, digital is higher as efficiency have on up funding to costs those investing is short-term very considerably paying manage Similar operating

an in the We improvement ratio XXXX. in see expect efficiency bank's to

behind I've discussed on for Slide and our all XX, for performance this guidance. we our in utility and XXXX bring the drivers bank expectations together XXXX

our We guidance are $X.XX $X.XX XXXX consolidated of per initiating to earnings share.

of XXXX. of first recorded one-time gain our sale XXXX growth mid-point in for the $X.XX on quarter over we $X.XX Our EPS, represents the X% EverCharge excluding

due the $XX to has vast EPS debt. reduced the XXXX. of utility to received, a related decision half we Our recovery approximately deferred of PUC to payments second majority bad million recovered guidance was be The assumes and significantly been to COVID-XX-related $X.XX in of $X.XX which to amount expenses, expect of

rate O&M continued reflects to below that pension inflation This ARA utility's the on increase the adjustment. at is a expect focus efficiency. We cost excluding adjusted

expect for from $X I've upside already earnings covered rate I'll utility X% expectations pre-tax projected through of through PIM. XXXX CapEx growth long-term our from PIMs, XXXX growth million of a from X% million add XXXX to $X an guidance base, average annually but we year, we of PIMs. Last of earnings including that regarding with long-term and contributions utility compound XXXX, beyond annual XXXX a

continued Higher placing updated new online expense, as environment Our related higher storage recovered guidance station coming and and and generation units current reflects are O&M higher due rates. expenses bad in resources maintenance in EPRM years bring retired. inflationary projects timelines to we finally, moderating the as expense higher to generating and debt interest service, for higher

Our earnings to strategy. which and for to bank accounts our It guidance $X.XX per impacts branch inflationary reflects profitability continued solid share efficiencies, of through continue we to expenses optimization $X.XX cost including manage growth.

to single-digit low X% expect X.XX%. of and interest net loan margin We growth

to be company rates holding equity XXXX. balances to to due leading for We to expense, interest anticipate company company of do expenses We loss a expect than in higher expect debt levels $X.XX $X.XX increased XXXX. interest we and holding any holding not XXXX higher net and issuances

I'll will now who Scott, to turn the call remarks. provide back closing

our all you both strong companies today. great and There the investors given and Paul, period. we our Mahalo, characterized no well guidance us utility quarter. surprises to in for macroeconomic revised year In from from and results operating summary, combination a we third the had the our Mahalo performance by benefited bank and to during of joining challenging of in higher a unique were executed

and our framework us as the that our our is execute of we as regulatory performance business with for efficiently system stability utility see customers. showing it the growing and expect to at strategies up, running macroeconomic headwinds and ease in new and Our provides investing operational predictability, we

Our and to rate to run well bank and interest will respond changes is economy the environment. in situated be to conservatively continue

XXXX. solid again confident are We in that will we deliver results

questions. for call the up open let's that, With

Shar Partners. first proceed. Instructions] Please The of line Guggenheim question the [Operator comes of Pourreza from

Paul a new Constantine position. Congrats for Shar. here on on to quarter and Good the Hi. actually great team. afternoon, It's

Appreciate it. Thanks, Shar.

to Can the off help elaborate path on O&M seeing you business? you're targets constraints the labor utility. and on materials on the conditions you're setting that across any prospectively and Maybe starting that Any of of normalize? regulatory O&M relief. that's subject a cause rethink to factors? levels external sense percentage any kind you to what get Just of will And to maybe kind of of

Yes. Well, some power respect maybe still maintenance. with start. to station our elevated can baked I O&M generation forecast our especially have into expenses, What plant we are

as later older that online albeit taper are we continue as but generation of get to power to of start able on, into course, units. off to retire XXXX, new some and our We plant it start to expecting more will resources we're

taken account ahead. utility was the I our into XXXX, overall to that to experienced areas we've other look So fairly we think in company. expenses the well Like respond in managing able and of

able So beyond. do if comments and you our to expenses specifically we're within further going to Maybe of the ARA. that to any in our about be continue XXXX Paul, have management

Yes.

I'll O&M the committed at utility the successful efficiently. are managing stays and we So just a O&M levels. ARA in recovery O&M point to efficiencies been how within has past managing to in of provide years terms that few ensure our looking the further data over

look other referencing X.X%. and take look O&M, compounded out of the if that costs O&M, annual the been a O&M, through pension rate you some of growth XXXX, from I'm you So if strips adjusted it's at from other than parties which and less are recovered XXXX at

well those costs. So in done the utility has managing very

within as that adds shown but our Obviously, little that has the management over framework that is getting a the within again, such expenses predictability. been has this because ensure framework, has revenues utility we what what in team which I bit we know to come feel the good the to well hanging our and does harvested, area allowance. know it We manage low that we're task and it a O&M business fruit time, PBR so it harder ability conduct get we so stability is probably think a

Excellent.

that's think the my kind is of XXXX you very side GDPPI. of part formulas question, by I mentioned on the portion of fairly revenue a revenue And the since helpful. which for second the kind of defined well of ARA is kind

kind ones, on your what of the namely is the you the fuel energy question impact a earnings? elements, Just on have calculations? non-RPS how efficiency of do related as recent like And level most PBR those cost AMI could visibility impacting trajectory other risk-sharing

Yes, I'll start.

with incentive full PIMs, track now PBR the those think have of or how we the of under of performance and respect record mechanisms full-year slate to operating experiencing PIMs a I a perform.

put are utility on the and good be of pretty well good on to of utility to execute PIMs PIMs controlling. earning their year, plan ultimately interconnection sight PIM they have the the they provide our ability the continue fairly the that how the the example a the going focus work, So is which rewards. to Those is reward able their with on of line Perhaps manage the work. a performed last achieve there. And that to focus utility PIM the That's types team. utility

one other have some that PIM did we year. is cost risk receive that challenging little fuel admittedly overall last control are sharing a are a of more direct bit There to example And where prices fuel penalty PIMs based over. the on probably

to continue to a areas the on And just PIMs, going need we're have we adjust can, they over. out we the control of how we see best course of on that as we'll during signal PIMs do other the the will in we other just how to be focus that meanwhile, year, play As the on business.

PIMs more that other are the really to focus predict, at of related initiated just are ones, meaningful. RPS-A difficult on in of that those least what I'll because here terms number the guidance smaller there PIMs. we DER amounts. the good a And and of more A But providing we some of PIMs the is are on, of add, lot is ones but one the

generally that, takes what those – we're so our offset have we're that tend least and here. to forecasting at in And puts

PIM, be which projects we come would the important most ones we growing the again, that as overtime see So online. focus additional on RPS-A

one, makes if That last may, the sense. really And Okay. I quick.

what today? June, believe side million. on from $XXX so to roughly of and for Just beyond But as million repricing repricing guidance on what's of kind I in kind that, of at kind since $XXX we just bank that’s embedding assets, embedded of tracking, that's the the are been guidance terms you of in raised earnings look

Yes.

referring we down if is higher part, borrowings. to wholesale So That the funding in are at to quite side, XXXX That rates. in costs have the that the on to to X.XX%. significantly, managing cost you're margin has expecting a our increase paying – as large Fed has NIM, X% increase increased so those increased based

So we And our help used see portfolio pays our net down. an interest of as off will proceeds some opportunity pay margin. are to Those increase investment borrowings. those higher that cost us

those And the the plan increases for Fed revenue assets, kind as just sides assumptions XXXX of in flat? rate around the marked or adjustable are of any of date, holding last

Yes.

our XXXX, of terms to had sources CDs. loan and we the funding, in assets, because growth higher-cost the mentioned, we in rate did on as some some the of strong of we these So that have funds, adjustable supplement of FHLB

meaning neutral, is And fed fund it – asset accretive more little doesn't net income. increases accretive does NIM, rate interest is bit balance is a sheet so additional to – our not to

So for of funding sheet down increases, those impact would sensitive and balance rate NIM. Fed further able in be side asset cost which to borrowings, But terms to accretive more in I mentioned, again, fund significant NIM. to we a manage we higher Fed will case the increases our become expect the wouldn't rate pay if were our as

paying focus those to higher-cost on funding some So of currently is, plan down again, sources. that's the

the have activity more do levels. sort see of we get we towards normal expect loan back capacity that as to And Yes. more to

loan of Yes. than more which saw sources We funding. growth very had high high of a these just other unusually in of tap a we some decade probably to

Yes.

comment. President, Teranishi, she ask Let has if Ann Bank any me other our

about rate in portfolio, adjustable just $X book question our billion about category. Maybe is Yes. loan rate of to specific adjustable our the the

rates change than So coming of a at new up. that rate all the books. our all as what's origination, on loans does our are Also, new on higher go the

banks is experiencing funding rate the I are what in helps Scott all what us. Paul is referencing are that So increasing think sense just and But costs. environment

base. fairly thing to though, has one is sticky Hawaii would I The a add deposit traditionally that,

So betas our low. are

are Our relative and costs, peers. are deposit They are while increasing. betas our our lower funding low mainland they to

us should whether cycle. rate that help particular something that's this So of portion the

helpful as you very luck. our best Thank for and comprehensive That's and taking questions of always.

you. Thank

The next Patterson from of question Thank you. comes Glenrock proceed. Associates. Please line the Paul of

Hey. Good morning.

Hey, Paul.

just terms the to to less that Or is that coming funding of just be from? is to I I follow-up walk So at just apologize. is seems increasing want – in this from it clear When what's are from now? going source a just the wholesale. that I we’re what decrease Constantine’s guess, – I just the coming – really be exactly? to looking NIM, it leading like different – question, you angle. I deposits? driving to going costs? guess your on going paying on bit me you're I coming costs – I'm NIM, me. slow on Where could lower a wholesale cost through are because – for through wholesale walk you're You're of up. down little funding I deposits? And sounds not using just expected I a saying mean you're your what's Where am little you're Is from guess, you projecting

terms in right? in growth the had So loan of high the the we funding, So to rates XXXX. growth from we that expect normalize

portfolio in we XXXX, investment borrowings. sort higher So to runoff. deposit of we relatively additional beyond the was And cost these define funding flat to because in on take wholesale had had XXXX, growth

growth we expect XXXX, to to forward moderate. Looking loan

earnings the well as runoff investment pay the retained from expect borrowings. the wholesale as funding we so portfolio to to down provide And some these of

to funding of the the the shift what sheet. that's kind mix so us And allows balance on

understand. I it. Got

down going low see to the you and level? growth So what

mid-single which of Loan rate sort Hawaii growth digits, normal in of is low the to market. the

just The the or at or all. there's in is expecting, what you've competition I terms that? it – no not increased banking just least all there guess, been you're isn’t pressure on And any seeing deposits online at any, Okay. seeing? of market at you're what like – cost in from doesn't anything Or

seeing would we believe rates follow we are sort We're Fed some pressures beta Well, of our as increases. is expect low a side rate the Mainland, core we to range. I lower. the the our relative of deposit mean, I much single-digit versus more time, say deposit But over do in kind commercial the deposit we have still to beta to rates rise, – date base. on fund

we we is in that a expect to kind it versus But in cycle. rate cycles. again, as faster remain So rates this rate prior through of increase go

than across of nation. higher So we little be the could context that. again betas bit a But in the

pretty the in we're Hawaii position here market. think a good I in

And add the said, to deposits, from most the of commercial. in pressure XX% are just to core terms of retail, our commercial just you what Paul, deposits, are our side, coming of XX%

So our a less with little a bit is part retail pressure. base large of

of Most much, Have answered. one. Thanks guys. so been a great question’s my Okay.

Thanks, Paul.

Paul. you, Thank

from Thank comes Julien from of you. Dumoulin-Smith The proceed. next question Please Bank America.

near-term inflation for playing of ask rolled trajectory. very little I talking guys. let as moment to to as some as mean, Can deal of with you actually we inflationary the that you the items figure I made you directly, do thank and expecting linear the and here. frame to about X% trajectory this guys, some in from an that utility and just effectively, time effectively for well? this are out? to ago on a coming morning maybe fact earnings growth growth? a see be these the the of Hey and a itself cadence about bit to the given forward X% this remarks Maybe of time. for just XXXX CapEx the least the uptick you cost the absorb appreciate you there much think commentary good opportunity XXXX something questions as back to on at acute, inflation, the talk Or seems well of perspective, I sort see you earnings me

time. question, over Yes, start, kind jump and the moderate But I of can inflationary can terms I here. do to in ask we then Tayne to that expect of in

we where a what would that you some versus if So we that inflationary happened, have built been bit little has because a I do forecast. into in adjustment received the XXXX of catch-up. our actually there will, leakage, is say of

And forecast, so of right? part that's of kind our

we than I was actually believe, the realized that Because was at ARA and X.XX%, the that. higher inflation

And so and a ARA, I over the more provides as consistent do believe question up we because on catch With respect to and we linear the forward, predictability to to manage expecting we're opposed it expect variations between time. framework, the expect growth, to growth going stability. your though, right, relatively Again, again, PBR within years. under

work and the so go O&M inflationary sort be that a we normalize level. we're area here. within to of And then forecasting just planning And to there’s our of then of matter adjustment our out kind as

So linear. would the little be more a bit growth

et having that, that's be work, start think be Now because to as based any I said where we really add that on would we when be EPRM could not applications, when you earnings to do cetera. as linear Tayne, that? file there may the have

EPRM PUC No, mechanism. I those trajectory you period. in because at of CapEx and would are Paul if And echo approval the projects we our have are some under said the awaiting XXXX in, XXXX slowly timing look the projects what coming that there, do

XXXX his slight costs of EPRM in of But forecast are is those in part as this to and opportunity mentioned for of that projects, part completion within those are sort XX% back-ended expenses period. Paul of the So forecast. a those are large mean, there. comments, those of the But prepared I XX% XXXX expected projects those awaiting projects of there a recovery, the

Got it.

themselves perhaps a hearing as more But some out. have on pressure play as linear you, you there's a degree just for or look of programs see as as point trajectory? So managing this impact the if to you're O&M, a I'm perhaps you there’s near-term outlook at much upside maybe these

right, Yes, Julien. that's

actually, time enough. in And with Fair fit Excellent. that line Maybe pressures. how does time these recovery speak XXXX can of just that regulatory a line? managing just right. terms quickly through the All you to

is our Julien, lag? in asking you're Sorry, outlook of for regulatory terms how

Yes.

fits through there obviously of and Just this there's inflation year. little the that not some against [indiscernible] how a by how points do terms the about talk pain narrative about in Obviously, lag the and it against linear degree you you forecast? under earning aligning think keeping expectations? Can your of bit this managing regulatory

the and lag about the a kicked in new Tayne. adjustment begin Well, But us. Paul, in to the for just regulatory PBR jump of with if want generally, I'll ERA X, nice is or one speak that things the because you think effective of has that's I lot actually the removed to January when framework it

So we are seeing the adjustment, net ERA higher revenues provided by that X.XX%.

with reduce risk typically that whether So within forward. us they're going larger and approval. And EPRM large what of core that projects. manage those spend, are or projects plan respect we then have O&M at sight actually to any projects, so until the making that the accordingly, will can least the on that line we – our and not core the we gives we by MPIR Again, CapEx commitments commission's large

Thank you much. very guys Absolutely.

Okay.

Thanks, Julien.

Thank questions are time. no additional this There registered currently at you.

closing over like So conference I the to would team pass remarks. the for to back management

your Have day. you everyone. good for Thank rest us, joining a of

you, Thank everyone.

conference That Thank participation. your call. concludes for you the

may You your now disconnect lines.