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Section 1: 8-K (8-K)

he-20201106
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 6, 2020
Exact Name of RegistrantCommissionI.R.S. Employer
as Specified in Its CharterFile NumberIdentification No.
Hawaiian Electric Industries, Inc.1-850399-0208097
Hawaiian Electric Company, Inc.1-495599-0040500
State of Hawaii
(State or other jurisdiction of incorporation)
 1001 Bishop Street, Suite 2900, Honolulu, Hawaii  96813 - Hawaiian Electric Industries, Inc. (HEI)
1001 Bishop Street, Suite 2500, Honolulu, Hawaii  96813 - Hawaiian Electric Company, Inc. (Hawaiian Electric)
(Address of principal executive offices and zip code)
 Registrant’s telephone number, including area code:
 (808) 543-5662 - HEI
(808) 543-7771 - Hawaiian Electric
  Not applicable
(Former name or former address, if changed since last report.)
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to 12(b) of the Act:
RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
Hawaiian Electric Industries, Inc.Common Stock, Without Par ValueHENew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule12b-2 of the Securities Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
Hawaiian Electric Industries, Inc.
Hawaiian Electric Company, Inc.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Hawaiian Electric Industries, Inc. Hawaiian Electric Company, Inc.




Item 2.02 Results of Operations and Financial Condition.
    On November 6, 2020, HEI issued a news release, “HEI Reports Third Quarter 2020 Results.” This news release is furnished as HEI Exhibit 99.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits    
News release, dated November 6, 2020, “HEI Reports Third Quarter 2020 Results”
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

The information furnished in connection with Item 2.02 of this current report on Form 8-K including HEI Exhibit 99 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.











SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. The signature of the undersigned companies shall be deemed to relate only to matters having reference to such companies and any subsidiaries thereof.

HAWAIIAN ELECTRIC INDUSTRIES, INC.HAWAIIAN ELECTRIC COMPANY, INC.
(Registrant)(Registrant)
/s/ Gregory C. Hazelton/s/ Tayne S. Y. Sekimura
Gregory C. HazeltonTayne S. Y. Sekimura
Executive Vice President andSenior Vice President and
Chief Financial OfficerChief Financial Officer
Date: November 6, 2020
Date: November 6, 2020

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Section 2: EX-99 (EX-99)

Document

HEI Exhibit 99
405891730_heicatalyst2a391.jpg NEWS RELEASE
November 6, 2020

Contact:Julie R. Smolinski Telephone: (808) 543-7300
Director, Investor Relations           E-mail: ir@hei.com
HEI REPORTS THIRD QUARTER 2020 RESULTS

3Q 2020 Diluted Earnings Per Share (EPS)1 of $0.59
Utility Focused on Affordability and Clean Energy Progress
Bank Results Reflect Economic Dynamics and Improved Noninterest Income from Core Activities


HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2020 of $65.0 million and EPS of $0.59 compared to $63.4 million and EPS of $0.58 for the third quarter of 2019.
“I have been deeply impressed by the dedication of our employees and by the resilience of our customers and communities as we all adapt to the ongoing challenges of COVID-19,” said Constance H. Lau, HEI president and CEO. “Our financial stability has enabled us to help our customers, our economy and our communities during this unprecedented time, and to continue to deliver solid financial results.
“Keeping customer rates down has been a central focus for our utility. Last month the Hawaii Public Utilities Commission approved our settlement with the Consumer Advocate to not increase base rates in our Oahu rate case. Our utility continues to implement efficiency improvements to deliver on its customer savings commitments, even as it continues to press forward aggressively on our clean energy goals.
“The reopening of Hawaii’s tourism sector with pre-arrival testing is a positive step for Hawaii’s economy. Even so, the timing of a sustained reopening remains uncertain and our bank’s third quarter results again reflect elevated provision for potential credit losses. While low interest rates continue to compress net interest margin, in the third quarter we were able to reduce expenses and improve noninterest income from core activities, including strong mortgage banking income from our residential lending activity, replacing most of the prior quarter’s gains on sales of securities,” said Lau.
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1      Unless otherwise indicated, throughout this release earnings per share (EPS) refers to diluted earnings per share.    
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HAWAIIAN ELECTRIC COMPANY EARNINGS
    Hawaiian Electric Company’s (Hawaiian Electric) net income for the third quarter of 2020 was $60.1 million, compared to $46.8 million in the third quarter of 2019, primarily driven by the following after-tax items:
$10 million lower operations and maintenance (O&M) expenses compared to the third quarter of 2019, primarily due to fewer generating unit overhauls, lower labor cost due to lower staffing levels and reduced overtime and elevated vegetation management work in the third quarter of 2019. The lower generation overhauls represented approximately $5 million of the $10 million total O&M variance; of that $5 million, $2 million was due to an elevated number of overhauls in the third quarter of 2019 and the remaining $3 million was timing related, as some overhaul work will be performed later in 4Q 2020 or in 2021;
$5 million revenue increase from higher rate adjustment mechanism (RAM) revenues; and
$1 million increase for recovery of the West Loch PV project and Grid Modernization projects under the major project interim recovery (MPIR) mechanism.
These items were partially offset by the following after-tax items:
$1 million lower allowance for funds used during construction as there were fewer long duration projects in construction work in progress;
$1 million higher cost savings from enterprise resource planning system implementation to be returned to customers; and
$1 million higher depreciation expense due to increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency.

AMERICAN SAVINGS BANK EARNINGS
American Savings Bank’s (American) third quarter 2020 net income was $12.2 million compared to $14.0 million in the second, or linked quarter of 2020, and $22.9 million in the third quarter of 2019. The decrease in net income compared to the linked quarter was primarily due to higher second quarter gains on sales of securities of $9.3 million. This was partially offset by improved noninterest income, including higher loan sales from increased mortgage banking originations, as well as by lower noninterest expense. The lower net income compared to the third quarter of 2019 primarily reflects lower asset yields within the loan and investment portfolios due to the lower interest rate environment and higher provision for credit losses in the third quarter of 2020, which included approximately $12.3 million in additional reserves related to economic impacts from the pandemic.
_________________
Note:  Amounts indicated as after-tax in this earnings release are based upon adjusting items using the current year composite statutory tax rates of 25.75% for the utilities and 26.79% for the bank.
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Total loans were $5.5 billion as of September 30, 2020, up 7.3%2 from December 31, 2019, driven mainly by the addition of $370 million in Paycheck Protection Program loans, as well as increases in the commercial real estate and residential loan portfolios, offset by reductions in the home equity line of credit and consumer loan portfolios.
Total deposits were $7.0 billion as of September 30, 2020, an increase of 12.2%3 from December 31, 2019. The average cost of funds was 0.13% for the quarter, down five basis points versus the linked quarter and down 17 basis points versus the prior year quarter.
Overall, American’s return on average equity4 for the third quarter of 2020 was 6.75%, compared to 8.00% in the linked quarter and 13.75% in the third quarter of 2019. Return on average assets was 0.61% for the third quarter of 2020, compared to 0.72% in the linked quarter and 1.29% in the same quarter last year.
In the third quarter of 2020, American retained capital and did not pay a dividend to HEI. American had a Tier 1 leverage ratio of 8.3% at September 30, 2020.
Please refer to American’s news release issued on October 30, 2020 for additional information on American.

HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was $7.2 million for the third quarter of 2020 compared to $6.2 million in the prior year quarter. The greater net loss was primarily due to lower income at Pacific Current reflecting lower energy sales and higher corporate interest expense from higher short-term borrowing.

BOARD MAINTAINS QUARTERLY DIVIDEND
On November 4, 2020, HEI announced that the Board of Directors maintained HEI’s quarterly cash dividend of $0.33 per share payable on December 10, 2020, to shareholders of record at the close of business on November 20, 2020 (ex-dividend date is November 19, 2020). This quarterly dividend is equivalent to an annual rate of $1.32 per share. Dividends have been paid on an uninterrupted basis since 1901. At the indicated annual dividend rate and based on the closing price per share on November 5, 2020 of $33.05, HEI’s dividend yield is 4.0%.


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2    Annualized from December 31, 2019, total loans as of September 30, 2020 increased 9.7%
3    Annualized from December 31, 2019, total deposits as of September 30, 2020 increased 16.3%.
4     Bank return on average equity calculated using annualized third quarter 2020 bank net income and weighted average daily common equity.

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HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2020 GUIDANCE
HEI will conduct a webcast and conference call to review its consolidated results and 2020 earnings guidance and outlook at 11:15 a.m. Hawaii time (4:15 p.m. Eastern time) on Friday, November 6, 2020.
    Interested parties within the United States may listen to the conference by calling (844) 834-0652 and international parties may listen to the conference by calling (412) 317-5198. Parties may also access any presentation materials for the conference call and/or listen to the conference call by accessing the webcast on HEI’s website at www.hei.com under the “Investor Relations” section, sub-heading “News and Events – Events and Presentations.”
HEI and Hawaiian Electric intend to continue to use HEI’s website, www.hei.com, as a means of disclosing additional information; such disclosures will be included on HEI’s website in the Investor Relations section. HEI’s website also contains other materials about the company, such as HEI’s Environmental, Social and Governance report, which was published during the quarter. Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website at www.hei.com in addition to following HEI’s, Hawaiian Electric’s and American’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. The information on HEI’s website is not incorporated by reference in this document or in HEI’s and Hawaiian Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC. No information on the PUC website is incorporated by reference in this document or in HEI’s and Hawaiian Electric’s SEC filings.
An on-line replay of the November 6, 2020 webcast will be available on HEI’s website beginning about two hours after the event. Audio replays of the conference call will also be available approximately two hours after the event through November 20, 2020 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 10148946.
HEI supplies power to approximately 95% of Hawaii’s population through its electric utility, Hawaiian Electric; provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii’s largest financial institutions; and helps advance Hawaii’s clean energy and sustainability goals through investments by its non-regulated subsidiary, Pacific Current, LLC.


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FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance.
Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2019 and HEI’s other periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the release, report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended September 30Nine months ended September 30
(in thousands, except per share amounts)2020201920202019
Revenues
Electric utility$562,568 $688,330 $1,694,225 $1,900,609 
Bank78,644 82,548 233,096 247,287 
Other215 237 86 
Total revenues641,427 770,882 1,927,558 2,147,982 
Expenses 
Electric utility474,050 616,537 1,493,948 1,716,562 
Bank 63,144 54,240 189,700 171,605 
Other4,672 3,450 13,091 12,589 
Total expenses541,866 674,227 1,696,739 1,900,756 
Operating income (loss) 
Electric utility88,518 71,793 200,277 184,047 
Bank15,500 28,308 43,396 75,682 
Other(4,457)(3,446)(12,854)(12,503)
Total operating income99,561 96,655 230,819 247,226 
Retirement defined benefits expense—other than service costs(1,102)(648)(2,970)(2,172)
Interest expense, net—other than on deposit liabilities and other bank borrowings(22,086)(22,425)(66,474)(69,081)
Allowance for borrowed funds used during construction801 1,208 2,241 3,465 
Allowance for equity funds used during construction2,347 3,250 6,556 9,335 
Gain on sale of investment securities, net— 653 9,275 653 
Income before income taxes79,521 78,693 179,447 189,426 
Income taxes14,018 14,803 30,691 36,390 
Net income65,503 63,890 148,756 153,036 
Preferred stock dividends of subsidiaries471 471 1,417 1,417 
Net income for common stock$65,032 $63,419 $147,339 $151,619 
Basic earnings per common share$0.60 $0.58 $1.35 $1.39 
Diluted earnings per common share$0.59 $0.58 $1.35 $1.39 
Dividends declared per common share$0.33 $0.32 $0.99 $0.96 
Weighted-average number of common shares outstanding109,181 108,973 109,126 108,941 
Weighted-average shares assuming dilution109,336 109,363 109,387 109,378 
Net income (loss) for common stock by segment
Electric utility$60,065 $46,779 $126,299 $111,479 
Bank12,150 22,888 41,925 60,743 
Other(7,183)(6,248)(20,885)(20,603)
Net income for common stock$65,032 $63,419 $147,339 $151,619 
Comprehensive income attributable to Hawaiian Electric Industries, Inc.$66,472 $66,716 $166,659 $177,856 
Return on average common equity (%) (twelve months ended)9.4 9.2 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
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Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)

Three months ended September 30Nine months ended September 30
($ in thousands, except per barrel amounts)2020201920202019
Revenues$562,568 $688,330 $1,694,225 $1,900,609 
Expenses  
Fuel oil105,042 199,093 390,714 541,322 
Purchased power149,025 175,037 425,679 472,336 
Other operation and maintenance111,243 124,415 348,831 361,805 
Depreciation55,689 53,935 167,235 161,795 
Taxes, other than income taxes53,051 64,057 161,489 179,304 
Total expenses474,050 616,537 1,493,948 1,716,562 
Operating income88,518 71,793 200,277 184,047 
Allowance for equity funds used during construction2,347 3,250 6,556 9,335 
Retirement defined benefits expense—other than service costs(432)(723)(1,195)(2,127)
Interest expense and other charges, net(16,836)(17,429)(50,768)(53,945)
Allowance for borrowed funds used during construction801 1,208 2,241 3,465 
Income before income taxes74,398 58,099 157,111 140,775 
Income taxes13,835 10,822 29,316 27,800 
Net income60,563 47,277 127,795 112,975 
Preferred stock dividends of subsidiaries228 228 686 686 
Net income attributable to Hawaiian Electric60,335 47,049 127,109 112,289 
Preferred stock dividends of Hawaiian Electric270 270 810 810 
Net income for common stock$60,065 $46,779 $126,299 $111,479 
Comprehensive income attributable to Hawaiian Electric$60,113 $46,805 $126,398 $111,552 
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
   Hawaiian Electric1,620 1,823 4,559 4,840 
   Hawaii Electric Light244 279 721 777 
   Maui Electric235 312 699 832 
2,099 2,414 5,979 6,449 
Average fuel oil cost per barrel$49.71 $82.30 $64.70 $83.64 
Return on average common equity (%) (twelve months ended)1
8.4 7.6 
1 Simple average.
This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.




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American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 Three months ended Nine months ended September 30
($ in thousands)September 30, 2020June 30, 2020September 30, 201920202019
Interest and dividend income   
Interest and fees on loans$52,419 $53,541 $59,260 $161,505 $175,740 
Interest and dividends on investment securities7,221 6,288 7,599 22,939 25,762 
Total interest and dividend income59,640 59,829 66,859 184,444 201,502 
Interest expense
Interest on deposit liabilities2,287 3,071 4,384 8,945 12,923 
Interest on other borrowings61 75 422 449 1,361 
Total interest expense2,348 3,146 4,806 9,394 14,284 
Net interest income57,292 56,683 62,053 175,050 187,218 
Provision for credit losses13,970 15,133 3,315 39,504 17,873 
Net interest income after provision for credit losses43,322 41,550 58,738 135,546 169,345 
Noninterest income  
Fees from other financial services4,233 3,102 5,085 11,906 14,445 
Fee income on deposit liabilities3,832 2,897 5,320 11,842 15,402 
Fee income on other financial products1,524 1,212 1,706 4,608 5,129 
Bank-owned life insurance1,965 1,673 1,660 4,432 6,309 
Mortgage banking income7,681 6,252 1,490 15,933 3,080 
Gain on sale of securities, net— 9,275 653 9,275 653 
Other income, net(231)(251)428 (69)1,420 
Total noninterest income19,004 24,160 16,342 57,927 46,438 
Noninterest expense  
Compensation and employee benefits26,431 25,079 25,364 77,287 76,626 
Occupancy5,693 5,442 5,694 16,402 15,843 
Data processing3,366 3,849 3,763 11,052 11,353 
Services2,624 2,474 2,829 7,907 7,861 
Equipment2,001 2,290 2,163 6,630 6,416 
Office supplies, printing and postage1,187 1,049 1,297 3,577 4,320 
Marketing727 379 1,142 1,908 3,455 
FDIC insurance714 751 (5)1,567 1,249 
Other expense1
4,556 7,063 3,676 15,813 12,049 
Total noninterest expense47,299 48,376 45,923 142,143 139,172 
Income before income taxes15,027 17,334 29,157 51,330 76,611 
Income taxes2,877 3,320 6,269 9,405 15,868 
Net income$12,150 $14,014 $22,888 $41,925 $60,743 
Comprehensive income$13,543 $13,734 $26,697 $62,885 $85,079 
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets0.61 0.72 1.29 0.73 1.14 
Return on average equity6.75 8.00 13.75 7.95 12.44 
Return on average tangible common equity7.62 9.07 15.68 9.00 14.23 
Net interest margin3.12 3.21 3.82 3.34 3.87 
Efficiency ratio61.99 59.84 58.58 61.01 59.56 
Net charge-offs to average loans outstanding0.32 0.49 0.69 0.41 0.46 
As of period end
Nonaccrual loans to loans receivable held for investment0.77 0.86 0.63 
Allowance for credit losses to loans outstanding1.67 1.50 1.04 
Tangible common equity to tangible assets8.0 7.9 8.4 
Tier-1 leverage ratio 8.3 8.4 8.8 
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)$— $— $14.0 $28.0 $47.0 
1 The three and nine-month periods ended September 30, 2020 include approximately $0.7 million and $4.5 million, respectively, of certain direct and incremental COVID-19 related costs. For the nine months ended September 30, 2020, these costs, which have been recorded in Other expense, include $2.4 million of compensation expense and $1.7 million of enhanced cleaning and sanitation costs.
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
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