Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Common Stock Equity (unaudited)


	Common stock			Premium on capital			Retained			Accumulated other comprehensive						Common stock			Premium on capital			Retained			Accumulated other comprehensive
(in thousands)	Shares	Amount		stock			earnings			income (loss)			Total			Shares	Amount		stock			earnings			income (loss)			Total
Balance, December 31, 2018																16,751	$	111,696	$	681,305		$	1,164,541		$	99		$	1,957,641
Net income for common stock																—	—		—			32,126			—			32,126
Other comprehensive income, net of taxes																—	—		—			—			24			24
Common stock dividends																—	—		—			(25,313		)	—			(25,313		)
Balance, March 31, 2019																16,751	$	111,696	$	681,305		$	1,171,354		$	123		$	1,964,478
Balance, December 31, 2017	16,142	$	107,634	$	614,675		$	1,124,193		$	(1,219	)	$	1,845,283		16,142	$	107,634	$	614,675		$	1,124,193		$	(1,219	)	$	1,845,283
Net income for common stock	—	—		—			108,356			—			108,356			—	—		—			27,475			—			27,475
Other comprehensive income, net of taxes	—	—		—			—			85			85			—	—		—			—			31			31
Common stock dividends	—	—		—			(77,479		)	—			(77,479		)	—	—		—			(25,826		)	—			(25,826		)
Common stock issuance expenses	—	—		(8		)	—			—			(8		)	—	—		(8		)	—			—			(8		)
Balance, September 30, 2018	16,142	$	107,634	$	614,667		$	1,155,070		$	(1,134	)	$	1,876,237
Balance, December 31, 2016	16,020	$	106,818	$	601,491		$	1,091,800		$	(322	)	$	1,799,787
Net income for common stock	—	—		—			94,596			—			94,596
Other comprehensive income, net of taxes	—	—		—			—			521			521
Common stock dividends	—	—		—			(65,825		)	—			(65,825		)
Common stock issuance expenses	—	—		(4		)	—			—			(4		)
Balance, September 30, 2017	16,020	$	106,818	$	601,487		$	1,120,571		$	199		$	1,829,075
Balance, March 31, 2018																16,142	$	107,634	$	614,667		$	1,125,842		$	(1,188	)	$	1,846,955

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the ~~2017~~2018 Form 10-K.

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)


		Nine months ended September 30						Three months ended March 31
(in thousands)		2018			2017			2019			2018
Cash flows from operating activities
Net income		$	109,852		$	96,092		$	32,625		$	27,974
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property, plant and equipment		151,810			144,578			53,947			50,466
Other amortization		19,823			6,118			6,714			5,344
Deferred income taxes	��	12,835			29,537			(3,127		)	(1,580		)
Allowance for equity funds used during construction		(8,239		)	(8,908		)	(2,910		)	(3,294		)
Other		(1,952		)	526			(1,817		)	2,681
Changes in assets and liabilities
Increase in accounts receivable		(53,139		)	(8,087		)
Increase in accrued unbilled revenues		(20,648		)	(18,014		)
Decrease (increase) in fuel oil stock		(4,949		)	6,177
Decrease (increase) in accounts receivable								37,163			(15,037		)
Decrease in accrued unbilled revenues								25,833			7,419
Increase in fuel oil stock								(36,564		)	(1,850		)
Increase in materials and supplies		(4,110		)	(2,280		)	(1,381		)	(1,295		)
Decrease (increase) in regulatory assets		(6,474		)	3,922
Increase in regulatory assets								(5,040		)	(16,900		)
Increase (decrease) in accounts payable		(8,712		)	6,130			(927		)	5,143
Change in prepaid and accrued income taxes, tax credits and revenue taxes		(37,137		)	5,291			(34,668		)	(32,866		)
Increase in defined benefit pension and other postretirement benefit plans liability		5,888			453
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability								2,991			(938		)
Change in other assets and liabilities		38,874			(2,662		)	(3,423		)	4,513
Net cash provided by operating activities		193,722			258,873			69,416			29,780
Cash flows from investing activities
Capital expenditures		(334,730		)	(306,975		)	(102,891		)	(110,127		)
Contributions in aid of construction		24,361			40,603
Other		9,811			8,114			794			603
Net cash used in investing activities		(300,558		)	(258,258		)	(102,097		)	(109,524		)
Cash flows from financing activities
Common stock dividends		(77,479		)	(65,825		)	(25,313		)	(25,826		)
Preferred stock dividends of Hawaiian Electric and subsidiaries		(1,496		)	(1,496		)	(499		)	(499		)
Proceeds from issuance of long-term debt		100,000			265,000
Funds transferred for redemption of special purpose revenue bonds		—			(265,000		)
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less		80,914			6,000			5,999			116,984
Proceeds from other bank borrowings								25,000			—
Other		(396		)	(3,593		)	(2		)	(33		)
Net cash provided by (used in) financing activities		101,543			(64,914		)
Net decrease in cash and cash equivalents		(5,293		)	(64,299		)
Net cash provided by financing activities								5,185			90,626
Net increase (decrease) in cash and cash equivalents								(27,496		)	10,882
Cash and cash equivalents, beginning of period		12,517			74,286			35,877			12,517
Cash and cash equivalents, end of period		$	7,224		$	9,987		$	8,381		$	23,399

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the ~~2017~~2018 Form 10-K.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 · Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, the instructions to SEC Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In preparing the unaudited condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses for the period. Actual results could differ significantly from those estimates. The accompanying unaudited condensed consolidated financial statements and the following notes should be read in conjunction with the audited consolidated financial statements and the notes thereto in HEI’s and Hawaiian Electric’s Form 10-K for the year ended December 31, ~~2017~~2018.

In the opinion of HEI’s and Hawaiian Electric’s management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments required by GAAP to fairly state consolidated HEI’s and Hawaiian Electric’s financial positions as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 and the results of their operations ~~for the three and nine months ended September 30, 2018 and 2017~~ and cash flows for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018. All such adjustments are of a normal recurring nature, unless otherwise disclosed below or in other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year.

Recent accounting pronouncements.

~~Revenues from contracts with customers~~Leases. In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of the guidance in ASU No. 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU No. 2014-09 also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

The Company and Hawaiian Electric adopted ASU No. 2014-09 (and subsequently issued revenue-related ASUs, as applicable) in the first quarter of 2018. There was no cumulative effect adjustment and no impact on the timing or pattern of revenue recognition, but ASU No. 2014-09 required changes with respect to the Company’s and Hawaiian Electric’s revenue disclosures. See Note 7.

~~Financial instruments~~. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which, among other things:

Requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income.

~~Requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.~~

~~Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables).~~

Eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost.

~~The Company adopted ASU No. 2016-01 in the first quarter of 2018 and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated financial statements.~~

~~Cash flows~~. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance on eight specific cash flow issues - debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle.

The Company adopted ASU No. 2016-15 in the first quarter of 2018 using a retrospective transition method and there was no impact from the adoption to the Company’s and Hawaiian Electric’s consolidated statements of cash flows.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

~~Restricted cash~~. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

The Company adopted ASU No. 2016-18 in the first quarter of 2018 using a retrospective transition method and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated statements of cash flows.

~~Definition of a Business~~. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations—Clarifying the Definition of a Business.” This update clarifies the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted ASU No. 2017-01 in the first quarter of 2018 and the impact of adoption was not material to the Company’s and Hawaiian Electric’s consolidated financial statements.

~~Net periodic pension cost and net periodic postretirement benefit cost~~. In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost (NPPC) and net periodic postretirement benefit cost (NPBC) as defined in paragraphs 715-30-35-4 and 715-60-35-9 to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component is eligible for capitalization under GAAP, when applicable.

The Company adopted ASU No. 2017-07 in the first quarter of 2018: (1) retrospectively for the presentation in the income statement of the service cost component and the other components of NPPC and NPBC, and (2) prospectively for the capitalization in assets of the service cost component of NPPC and NPBC for Hawaiian Electric and its subsidiaries. HEI and ASB do not capitalize pension and OPEB costs.

The PUC approved in the Utilities’ rate cases, stipulated agreements to defer non-service cost components of NPPC and NPBC, which would have been capitalized prior to ASU No. 2017-07, as part of each utility’s pension tracking mechanisms. Such treatment is effective starting in 2018 and continues until each utility’s next rate case. In each utility’s next rate case, rates established would include recovery of the deferred non-service cost components and each utility plans to seek to capitalize only the service components of NPPC and NPBC going forward, which reflects the requirements of ASU No. 2017-07.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Thus, the adoption of ASU 2017-07 in the first quarter of 2018 does not have a net income impact. The following table summarizes the impact to the prior period financial statements of the adoption of ASU No. 2017-07:

Three months ended
September 30, 2017

Nine months ended
September 30, 2017
(in thousands) As previously filed Adjustment from adoption of ASU No. 2017-07 As currently reported As previously filed Adjustment from adoption of ASU No. 2017-07 As currently reported
HEI Condensed Consolidated Income Statement
Expenses
Electric utility $ 511,693
$ (1,421 ) $ 510,272
$ 1,483,194
$ (4,279 ) $ 1,478,915
Bank 47,525
(212 ) 47,313
146,754
(608 ) 146,146
Other 4,422
(295 ) 4,127
13,777
(823 ) 12,954
Total expenses 563,640
(1,928 ) 561,712
1,643,725
(5,710 ) 1,638,015
Operating income
Electric utility 87,076
1,421
88,497
191,061
4,279
195,340
Bank 26,764
212
26,976
75,720
608
76,328
Other (4,295 ) 295
(4,000 ) (13,478 ) 823
(12,655 )
Total operating income 109,545
1,928
111,473
253,303
5,710
259,013
Retirement defined benefits expense--other than service costs —
(1,928 ) (1,928 ) —
(5,710 ) (5,710 )
Hawaiian Electric Condensed Consolidated Income Statement
Other operation and maintenance 100,102
(1,421 ) 98,681
306,716
(4,279 ) 302,437
Total expense 511,693
(1,421 ) 510,272
1,483,194
(4,279 ) 1,478,915
Operating income 87,076
1,421
88,497
191,061
4,279
195,340
Retirement defined benefits expense--other than service costs —
(1,421 ) (1,421 ) —
(4,279 ) (4,279 )
Hawaiian Electric Condensed Consolidating Income Statement (in Note 3)
Hawaiian Electric (parent only)
Other operation and maintenance 66,221
(1,225 ) 64,996
204,460
(3,812 ) 200,648
Total expense 367,619
(1,225 ) 366,394
1,058,382
(3,812 ) 1,054,570
Operating income 61,648
1,225
62,873
128,142
3,812
131,954
Retirement defined benefits expense--other than service costs —
(1,225 ) (1,225 ) —
(3,812 ) (3,812 )
Hawaii Electric Light
Other operation and maintenance 16,593
15
16,608
49,667
183
49,850
Total expense 71,292
15
71,307
212,692
183
212,875
Operating income 13,042
(15 ) 13,027
32,334
(183 ) 32,151
Retirement defined benefits expense--other than service costs —
15
15
—
183
183
Maui Electric
Other operation and maintenance 17,288
(211 ) 17,077
52,589
(650 ) 51,939
Total expense 72,782
(211 ) 72,571
212,120
(650 ) 211,470
Operating income 12,416
211
12,627
30,636
650
31,286
Retirement defined benefits expense--other than service costs —
(211 ) (211 ) —
(650 ) (650 )
ASB Statements of Income Data (in Note 4)
Compensation and employee benefits 23,724
(212 ) 23,512
71,703
(608 ) 71,095
Other expense 5,050
212
5,262
14,066
608
14,674

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

~~Derivatives and Hedging.~~ In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which is intended to improve and simplify accounting rules around hedge accounting. The amendments in ASU No. 2017-12 improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. The amendments also expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For public business entities, the new guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, but early adoption is permitted. The Company early adopted ASU No. 2017-12 in the second quarter of 2018, with an effective date of April 1, 2018, and the adoption did not have a material impact on the Company’s consolidated financial statements.

~~Leases~~. ~~In February 2016, the FASB issued ASU~~ No. 2016-02, “Leases (Topic 842),” which requires that lessees recognize a liability to make lease payments (the lease liability) and a right-of-use (ROU) asset, representing its right to use the underlying asset for the lease term, for all leases (except short-term leases) at the commencement date. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election and recognize lease expense for such leases generally on a straight-line basis over the lease term. For finance leases, a lessee is required to recognize interest on the lease liability separately from amortization of the ~~right-of-use~~ROU asset in the ~~statement~~consolidated statements of income. For operating leases, a lessee is required to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis.

The Company ~~plans to adopt~~adopted ASU No. 2016-02 ~~in the first quarter of~~on January 1, 2019 and ~~is currently analyzing~~used the ~~potential impact~~effective date as the date of ~~adoption. The Company plans to elect the practical expedient package provided by the new standard under which the Company~~initial application. Consequently, financial information for dates and periods before January 1, 2019 will not ~~have to reassess whether any expired or existing contracts are or contain leases, whether there is a change in lease classification for any expired or existing leases~~be updated and the disclosures required under the new standard ~~or whether there were initial direct costs for any existing leases that would~~will not be ~~treated differently under the new standard. The Company also plans to elect the~~ ~~additional adoption method to initially apply the new requirements as of the effective date, i.e.~~provided (i.e., ~~January 1, 2019, by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally,~~ the Company will continue to report comparative periods presented in the financial statements in the period of adoption under ~~ASC~~Accounting Standards Codification (ASC) 840, including the required disclosures under ASC ~~840.~~840).

The ~~Company is in the process of analyzing the measurement provisions~~most significant effect of the new standard relates to the recognition of new ROU assets and ~~their impact~~lease liabilities on ~~its~~the Company’s balance sheet for purchase power agreements and real estate operating leases. On adoption, the Company recognized lease liabilities of approximately $257 million for the Company and approximately $236 million for the Utilities ($215 million related to PPAs), based on the present value of the remaining minimum rental payments, with corresponding ROU assets, under current leasing standards for existing operating leases. In determining the lease ~~arrangements that fall within~~liability upon transition, the ~~scope~~Company used the incremental borrowing rates as of ~~ASU No. 2016-02.~~the adoption date based on the remaining lease term and remaining lease payments. See Note 6 for more information.

Credit losses. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU No. 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date (based on historical experience, current conditions and reasonable and supportable forecasts) and enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale ~~(AFS)~~ debt securities and purchased financial assets with credit deterioration. The other-than-temporary impairment model of accounting for credit losses on ~~AFS~~available-for-sale debt securities will be replaced with an estimate of expected credit losses only when the fair value is below the amortized cost of the asset. The length of time the fair value of an ~~AFS~~available-for-sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists. The ~~AFS~~available-for-sale debt security model will also require the use of an allowance to record the estimated losses (and subsequent recoveries). The accounting for the initial recognition of the estimated expected credit losses for purchased financial assets with credit deterioration would be recognized through an allowance for credit losses with an offset to the cost basis of the related financial asset at acquisition (i.e., there is no impact to net income at initial recognition).

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

The Company plans to adopt ASU No. 2016-13 in the first quarter of 2020. The guidance is to be applied on a modified retrospective basis with the cumulative effect of initially applying the amendments recognized in retained earnings at the date of initial application. The Company has assembled a project team that meets regularly to evaluate the provisions of this ASU, identify additional data requirements necessary and determine an approach for implementation. The team has assigned roles and responsibilities and developed key tasks to complete and a general timeline to be followed. The Company is evaluating the effect that this ASU will have on the consolidated financial statements and disclosures. Economic conditions and the composition of the Company’s loan portfolio at the time of adoption will influence the extent of the adopting accounting adjustment.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

~~Compensation-defined~~Compensation-retirement benefits-defined benefit plans. In August 2018, the FASB issued ASU 2018-14, ~~“Compensation—Retirement Benefits—Defined~~“Compensation-Retirement Benefits-Defined Benefit ~~Plans—General~~Plans-General (Subtopic 715-20): Disclosure ~~Framework—Changes~~Framework-Changes to the Disclosure Requirements for Defined Benefit Plans,” ~~that~~which makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The new guidance eliminates requirements for certain disclosures that are no longer considered cost beneficial and requires new ones that the FASB considers pertinent. ASU No. 2018-14 is effective for fiscal years ending after December 15, 2020. The Company is evaluating the impact of the adoption of ASU No. 2018-14 on its financial statement disclosures, but does not expect it to have a material impact.

~~Cloud computing implementation costs~~. In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which requires a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. ASU ~~No.~~ ~~2018-15 is effective for fiscal years beginning after December 15, 2019. The Company is evaluating the impact of the adoption of ASU~~ ~~No.~~ ~~2018-15 on its consolidated financial statements.~~

~~Condensed Consolidated Statements of Cash Flows error.~~ Subsequent to the issuance of interim Condensed Consolidated Financial Statements (unaudited) for the quarter ended September 30, 2017, the Company and the Utilities identified an error within their previously reported interim Condensed Consolidated Statements of Cash Flows (unaudited). The timing of certain capital expenditure payments, including those that had retainage balances or were related to certain capitalized amounts were not reflected timely. The Company and the Utilities have evaluated the effect of the error, both qualitatively and quantitatively, and concluded that it is immaterial to their respective previously issued condensed consolidated financial statements. For the nine months ended September 30, 2017, the correction of this error resulted in increases in Net Cash Provided by Operating Activities (impacting the change in Accounts, Interest and Dividends Payable for the Company and Accounts Payable for the Utilities) and Net Cash Used in Investing Activities (impacting the Capital Expenditures for the Company and the Utilities) of $29 million.

Reclassifications. Reclassifications made to prior ~~year-end~~year financial statements to conform to ~~2018~~2019 presentation include ~~a reclassification of~~classifying contributions in aid of construction ~~(CIAC) balances to “Property, plant and equipment, net” and “Total property, plant and equipment, net”~~with capital expenditures in the cash flows from investing activities section of the condensed consolidated statements of cash flows for ~~the Company~~HEI and Hawaiian ~~Electric, respectively, which reduced the amounts of the respective balances.~~Electric.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Note 2 · Segment financial information



(in thousands)	Electric utility		Bank		Other			Total
Three months ended March 31, 2019
Revenues from external customers	$	578,482	$	83,052	$	81		$	661,615
Intersegment revenues (eliminations)	13		—		(13		)	—
Revenues	$	578,495	$	83,052	$	68		$	661,615
Income (loss) before income taxes	$	41,859	$	26,162	$	(9,982	)	$	58,039
Income taxes (benefit)	9,234		5,323		(2,679		)	11,878
Net income (loss)	32,625		20,839		(7,303		)	46,161
Preferred stock dividends of subsidiaries	499		—		(26		)	473
Net income (loss) for common stock	$	32,126	$	20,839	$	(7,277	)	$	45,688
Total assets (at March 31, 2019)	$	6,170,888	$	7,062,367	$	126,850		$	13,360,105
Three months ended March 31, 2018
Revenues from external customers	$	570,414	$	75,419	$	41		$	645,874
Intersegment revenues (eliminations)	13		—		(13		)	—
Revenues	$	570,427	$	75,419	$	28		$	645,874
Income (loss) before income taxes	$	37,149	$	24,500	$	(8,373	)	$	53,276
Income taxes (benefit)	9,175		5,540		(2,159		)	12,556
Net income (loss)	27,974		18,960		(6,214		)	40,720
Preferred stock dividends of subsidiaries	499		—		(26		)	473
Net income (loss) for common stock	$	27,475	$	18,960	$	(6,188	)	$	40,247
Total assets (at December 31, 2018)	$	5,967,503	$	7,027,894	$	108,654		$	13,104,051

(in thousands) Electric utility Bank Other Total
Three months ended September 30, 2018

Revenues from external customers $ 687,396
$ 80,496
$ 156
$ 768,048
Intersegment revenues (eliminations) 13
—
(13 ) —
Revenues $ 687,409
$ 80,496
$ 143
$ 768,048
Income (loss) before income taxes $ 57,354
$ 26,831
$ (6,952 ) $ 77,233
Income taxes (benefit) 7,144
5,610
(1,892 ) 10,862
Net income (loss) 50,210
21,221
(5,060 ) 66,371
Preferred stock dividends of subsidiaries 498
—
(27 ) 471
Net income (loss) for common stock $ 49,712
$ 21,221
$ (5,033 ) $ 65,900
Nine months ended September 30, 2018

Revenues from external customers $ 1,865,922
$ 233,019
$ 258
$ 2,099,199
Intersegment revenues (eliminations) 40
—
(40 ) —
Revenues $ 1,865,962
$ 233,019
$ 218
$ 2,099,199
Income (loss) before income taxes $ 134,847
$ 77,845
$ (22,601 ) $ 190,091
Income taxes (benefit) 24,995
17,103
(5,625 ) 36,473
Net income (loss) 109,852
60,742
(16,976 ) 153,618
Preferred stock dividends of subsidiaries 1,496
—
(79 ) 1,417
Net income (loss) for common stock $ 108,356
$ 60,742
$ (16,897 ) $ 152,201
Total assets (at September 30, 2018) $ 5,882,127
$ 6,929,456
$ 99,971
$ 12,911,554
Three months ended September 30, 2017

Revenues from external customers $ 598,756
$ 74,289
$ 140
$ 673,185
Intersegment revenues (eliminations) 13
—
(13 ) —
Revenues $ 598,769
$ 74,289
$ 127
$ 673,185
Income (loss) before income taxes $ 74,990
$ 26,764
$ (6,615 ) $ 95,139
Income taxes (benefit) 27,005
9,172
(1,582 ) 34,595
Net income (loss) 47,985
17,592
(5,033 ) 60,544
Preferred stock dividends of subsidiaries 498
—
(27 ) 471
Net income (loss) for common stock $ 47,487
$ 17,592
$ (5,006 ) $ 60,073
Nine months ended September 30, 2017

Revenues from external customers $ 1,674,158
$ 222,474
$ 396
$ 1,897,028
Intersegment revenues (eliminations) 97
—
(97 ) —
Revenues $ 1,674,255
$ 222,474
$ 299
$ 1,897,028
Income (loss) before income taxes $ 150,715
$ 75,720
$ (20,088 ) $ 206,347
Income taxes (benefit) 54,623
25,582
(8,202 ) 72,003
Net income (loss) 96,092
50,138
(11,886 ) 134,344
Preferred stock dividends of subsidiaries 1,496
—
(79 ) 1,417
Net income (loss) for common stock $ 94,596
$ 50,138
$ (11,807 ) $ 132,927
Total assets (at December 31, 2017) $ 5,630,613
$ 6,798,659
$ 104,888
$ 12,534,160

Intercompany electricity sales of the Utilities to the bank and “other” segments are not eliminated because those segments would need to purchase electricity from another source if it were not provided by the Utilities and the profit on such sales is nominal.

Bank fees that ASB charges the Utilities and “other” segments are not eliminated because those segments would pay fees to another financial institution if they were to bank with another institution and the profit on such fees is nominal.

Hamakua ~~Energy’s~~Energy, LLC’s (Hamakua Energy’s) sales to Hawaii Electric Light (a regulated affiliate) are eliminated in consolidation.

~~Note 3~~ · ~~Electric utility segment~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

~~Revenue taxes.~~ The Utilities’ revenues include amounts for recovery of various Hawaii state revenue taxes. Revenue taxes are generally recorded as an expense in the period the related revenues are recognized. For the third quarters of 2018 and 2017 and the nine months ended September 30, 2018 and 2017, the Utilities’ revenues include recovery of revenue taxes of approximately $61 million, $54 million, ~~$166 million~~ ~~and~~ ~~$150 million~~, respectively, which amounts are included in “Taxes, other than income taxes” expense, in the unaudited condensed consolidated statements of income. However, the Utilities pay revenue taxes to the taxing authorities in the period based on (1) the prior year’s billed revenues (in the case of public service company taxes and PUC fees) in the current year or (2) the current year’s cash collections from electric sales (in the case of franchise taxes) after year-end.Note 3 · Electric utility segment

HECO Capital Trust III. Trust III, a statutory trust, which was formed to effect the issuance of $50 million of cumulative quarterly income preferred securities in 2004 (2004 Trust Preferred Securities), has at all times been ana wholly-owned unconsolidated subsidiary of Hawaiian Electric. Trust III’s balance sheets as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 each consisted of $51.5 million of 2004 Debentures; $50 million of 2004 Trust Preferred Securities; and $1.5 million of trust common securities. Trust III’s income statements for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ consisted of ~~$2.5~~$0.8 million of interest income received from the 2004 Debentures; ~~$2.4~~$0.8 million of distributions to holders of the Trust Preferred Securities; and ~~$75,000~~$25,000 of common dividends on the trust common securities to Hawaiian Electric. On April 12, 2019, Trust III issued a conditional notice of redemption to the holders of the Trust’s outstanding 6.50% Series 2004 Trust Preferred Securities, indicating that it will be redeemed in whole on May 15, 2019.

Unconsolidated variable interest entities.

Power purchase agreements. As of ~~September 30, 2018,~~March 31, 2019, the Utilities had ~~five~~four PPAs for firm capacity (excluding the PGV PPA as PGV has been offline since May 2018 due to lava flow on Hawaii Island) and other PPAs with independent power producers (IPPs) and Schedule Q providers (i.e., customers with cogeneration and/or power production facilities who buy power from or sell power to the Utilities), none of which is currently required to be consolidated as VIEs.

Pursuant to the current accounting standards for VIEs, the Utilities are deemed to have a variable interest in Kalaeloa Partners, L.P. (Kalaeloa), AES Hawaii, Inc. (AES Hawaii) and ~~the predecessor of~~ Hamakua Energy by reason of the provisions of the PPA that the Utilities have with the three IPPs. However, management has concluded that the Utilities are not the primary beneficiary of Kalaeloa, AES Hawaii and ~~the predecessor of~~ Hamakua Energy because the Utilities do not have the power to direct the activities that most significantly impact the three IPPs’ economic performance nor the obligation to absorb their expected losses, if any, that could potentially be significant to the IPPs. Thus, the Utilities have not consolidated Kalaeloa, AES Hawaii and ~~the predecessor of~~ Hamakua Energy in its ~~unaudited~~ condensed consolidated financial statements. ~~In November 2017, HEI acquired the Hamakua project through~~ Hamakua Energy is an indirect subsidiary of Pacific Current and ~~has~~is consolidated it in HEI’s ~~unaudited~~ condensed consolidated financial ~~statements since the acquisition.~~statements.

For the other PPAs with IPPs, the Utilities have concluded that the consolidation of the IPPs was not required because either the Utilities do not have variable interests in the IPPs due to the absence of an obligation in the PPAs for the Utilities to absorb any variability of the IPPs, or the ~~IPPs were~~IPP was considered a “governmental organization,” and thus excluded from the scope of accounting standards for VIEs. Two IPPs of as-available energy declined to provide the information necessary for Utilities to determine the applicability of accounting standards for VIEs. If information is ultimately received from the IPPs, a possible outcome of future analyses of such information is the consolidation of one or both of such IPPs in the unaudited condensed consolidated financial statements. The consolidation of any significant IPP could have a material effect on the unaudited condensed consolidated financial statements, including the recognition of a significant amount of assets and liabilities and, if such a consolidated IPP were operating at a loss and had insufficient equity, the potential recognition of such losses. If the Utilities determine they are required to consolidate the financial statements of such an IPP and the consolidation has a material effect, the Utilities would retrospectively apply accounting standards for VIEs to the IPP.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Commitments and contingencies.

~~Contingencies~~Fuel Contracts. The fuel contract entered into in January 2019, by the Utilities and PAR Hawaii Refining, LLC, for the Utilities' low sulfur fuel oil, high sulfur fuel oil, No. 2 diesel, and ultra-low sulfur diesel requirements was approved by the PUC, and became effective on April 28, 2019. The existing fuel contracts with Island Energy Services, LLC (IES), terminated on April 27, 2019, as agreed with IES under a mutual termination and release agreement entered into in November 2018.

Contingencies. The Utilities are subject in the normal course of business to pending and threatened legal proceedings. Management does not anticipate that the aggregate ultimate liability arising out of these pending or threatened legal proceedings will be material to its financial position. However, the Utilities cannot rule out the possibility that such outcomes could have a material effect on the results of operations or liquidity for a particular reporting period in the future.

Interim rate increases. As of March 31, 2019, the Utilities recognized $17 million of revenues with respect to the Maui Electric 2018 rate case interim order. On March 18, 2019, the PUC issued a final order which resulted in a refund of approximately $0.5 million proposed to be returned to customers, starting June 2019.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Power purchase agreements. Purchases from all IPPs were as follows:


	Three months ended September 30				Nine months ended September 30				Three months ended March 31
(in millions)	2018		2017		2018		2017		2019		2018
Kalaeloa	$	62	$	48	$	154	$	136	$	40	$	40
AES Hawaii	38		39		107		103		32		37
HPOWER	19		18		51		51		18		15
Puna Geothermal Venture	—		10		15		28		—		11
Hamakua Energy	17		8		39		25		16		7
Wind IPPs									20		22
Solar IPPs									7		6
Other IPPs ¹	41		38		112		98		1		2
Total IPPs	$	177	$	161	$	478	$	441	$	134	$	140


¹	Includes ~~wind~~hydro power ~~solar power, feed-in tariff projects~~ and other ~~PPAs.~~PPAs

Kalaeloa Partners, L.P. Under a 1988 PPA, as amended, Hawaiian Electric is committed to purchase 208 MW of firm capacity from Kalaeloa. Hawaiian Electric and Kalaeloa are currently in negotiations to address the PPA term that ended on May 23, 2016. The PPA automatically extends on a month-to-month basis as long as the parties are still negotiating in good ~~faith, but would end 60 days after either party notifies the other in writing that negotiations have terminated.~~faith. Hawaiian Electric and Kalaeloa have agreed that neither party will terminate the PPA (which has been subject to automatic extension on a month-to-month basis) prior to October 31, ~~2019. This agreement contemplates continued negotiations between the parties and accounts~~2019, to allow for ~~time needed for PUC approval of~~ a negotiated ~~resolution.~~resolution and PUC approval.

AES Hawaii, Inc. Under a PPA entered into in March 1988, as amended (through Amendment No. 2) for a period of 30 years ~~beginning~~ending September ~~1992,~~2022, Hawaiian Electric agreed to purchase 180 MW of firm capacity from AES Hawaii. In August 2012, Hawaiian Electric filed an application with the PUC seeking an exemption from the PUC’s Competitive Bidding Framework to negotiate an amendment to the PPA to purchase 186 MW of firm capacity, and amend the energy pricing formula in the PPA. The PUC approved the exemption in April 2013, but Hawaiian Electric and AES Hawaii ~~were not able to reach agreement on the amendment. In June 2015, AES Hawaii filed~~have been in dispute over an ~~arbitration demand regarding a dispute about whether Hawaiian Electric was obligated to buy up to~~additional 9 MW of additional capacity based on a 1992 letter. Hawaiian Electric responded to the arbitration demand and in October 2015, AES Hawaii and Hawaiian Electric entered into a settlement agreement to stay the arbitration proceeding. The settlement agreement included certain conditions precedent which, if satisfied, would have released the parties from the claims under the arbitration proceeding. Among the conditions precedent was the successful negotiation and PUC approval of an amendment to the existing PPA.

In November 2015, Hawaiian Electric entered into Amendment No. 3 for which PUC approval was requested and subsequently denied in January 2017. Approval of Amendment No. 3 would have satisfied the final condition for effectiveness of the settlement agreement and resolved AES Hawaii's claims. Following the PUC's decision, the parties agreed to extend the stay of the arbitration proceeding, while settlement discussions continued.capacity. In February 2018, Hawaiian Electric reached agreement with AES Hawaii on ~~Amendment No. 4, which was submitted~~an amendment to the ~~PUC for approval~~PPA. However, in April 2018. Amendment No. 4, among other things, provides (1) that AES Hawaii will make certain operational commitments to improve reliability, (2) for inclusion of AES Hawaii in the Utilities’ greenhouse gas partnership, (3) provisions to allow AES Hawaii to reduce coal combustion by modifying its fuel consumption to include biomass upon approval by Hawaiian Electric, and (4) for release of an option agreement by Hawaiian Electric for land owned by AES Hawaii. Amendment No. 4 includes a stay of the arbitration proceeding pending review by the PUC. If approved by the PUC, Amendment No. 4 will resolve AES Hawaii’s claims. In June 2018, the PUC issued an order suspending review of the ~~Amendment No. 4 docket~~amendment pending a DOH decision on AES’ request for approval of its Emission Reduction Plan and partnership with Hawaiian Electric. If approved by the PUC, the amendment will resolve AES Hawaii’s claims related to the additional capacity.

Hu Honua Bioenergy, ~~LLC.~~ LLC (Hu Honua). In May 2012, Hawaii Electric Light signed a PPA, which the PUC approved in December 2013, with Hu Honua ~~Bioenergy, LLC (Hu Honua)~~ for 21.5 MW of renewable, dispatchable firm capacity fueled by locally grown biomass from a facility on the island of Hawaii. Under the terms of the PPA, the Hu Honua plant was scheduled to be in service in 2016. However, Hu Honua encountered construction and litigation delays, failed to meet its obligations under the PPA and failed to provide adequate assurances that it could perform or had the financial means to perform. Hawaii Electric Light terminated the PPA on March 1, 2016. On November 30, 2016, Hu Honua filed a civil complaintwhich resulted in ~~the United States District Court for the District of Hawaii that included claims purportedly arising out of the termination of Hu Honua’s PPA. On May 26, 2017,~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Hawaii Electric Light and Hu Honua entered into a settlement agreement that will settle all claims related to the termination of the original PPA. The settlement agreement was contingent on the PUC’s approval of an amended and restated PPA between Hawaii Electric Light and Hu Honua dated May 5, 2017. In July 2017, the PUC approved the amended and restated ~~PPA. On~~PPA, which becomes effective once the PUC’s order is final and non-appealable. In August ~~25,~~ 2017, the PUC’s approval was appealed by a third party. The appeal is still pending. Hu Honua ~~is expected~~expects to ~~be on-line~~complete construction of the plant by the end of ~~2018.~~September 2019, and begin commissioning activities in the fourth quarter of 2019.

Utility projects. Many public utility projects require PUC approval and various permits from other governmental agencies. Difficulties in obtaining, or the inability to obtain, the necessary approvals or permits can result in significantly increased project costs or even cancellation of projects. In the event a project does not proceed, or if it becomes probable the PUC will disallow cost recovery for all or part of a project, or if PUC-imposed caps on project costs are expected to be exceeded, project costs may need to be written off in amounts that could result in significant reductions in Hawaiian Electric’s consolidated net income.

Enterprise Resource Planning/Enterprise Asset Management (ERP/EAM) implementation project. On August 11, 2016, the PUC approved the Utilities’ request to commence the ERP/EAM implementation project, subject to certain conditions, including a ~~$77.6 million~~ cap on cost recovery as well as a requirement that the Utilities ~~pass onto customers~~achieve future cost savings consistent with a minimum of $244 million in ERP/EAM project-related benefits ~~associated with~~to be delivered to customers over the ~~system over its~~system’s 12-year service life. The D&O approved the deferral of certain project costs and allowed the accrual of allowance for funds used during construction (AFUDC), but limited the AFUDC rate to 1.75%. Pursuant to the D&O and subsequent orders, in 2017 and 2018, the Utilities filed project justification, status and cost reports; bottom-up, low-level analyses of the project’s benefits; and proposed performance metrics and tracking mechanism for passing the project’s benefits on to customers.

Over the past years, the Utilities collaborated with the Consumer Advocate to reach substantive agreement regarding the approach for delivering the $244 million in system benefits to customers. On September 17, 2018, Utilities provided the Consumer Advocate with their final drafts of the rate case-centric benefit delivery mechanism and ERP/EAM annual enterprise systems benefits report for its review. The parties will file these documents with the PUC upon final agreement.

~~Monthly reports on the status and costs of the project continue to be filed.~~ The ERP/EAM Implementation Project went live in October 2018. In the Hawaiian Electric 2017 rate case, a settlement agreement approved by the PUC included authorization for the deferred project costs to accrue a return at 1.75% after the project ~~goes~~went into service and until the deferred project costs are included in rate base, and for amortization of the deferred costs to not begin until the amortization expense is incorporated in rates and the unamortized deferred project costs are included in rate base. As of ~~September 30, 2018,~~March 31, 2019, the ~~Project incurred~~total deferred project costs and accrued carrying costs after the project went into service amounted to $58.7 million.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

In February 2019, the PUC approved a methodology for passing the benefits of ~~$73.3~~the new ERP/EAM system to customers developed by the Utilities in collaboration with the Consumer Advocate. The minimum of $244 million in customer benefits to be delivered over the 12-year service life is comprised of ~~which $12.9~~$141 million ~~were charged to other operation~~in future net O&M expense reductions and ~~maintenance (O&M) expense, $2.6~~cost avoidance, and $103 million ~~relate~~in future cost avoidance related to capital ~~costs~~cost and ~~$57.8 million~~tax cost. The Utilities are ~~deferred costs.~~required to file their Benefits Clarification filing by June 3, 2019.

~~Schofield Generating Station Project.~~ In June 2018, Hawaiian Electric placed into service a 50 MW utility owned and operated firm, renewable and dispatchable generation facility at Schofield Barracks. The project is located on land leased from the U.S. Army under a 35-year lease. PUC orders resulted in a project cost cap of $157.3 million of which capital costs up to $141.6 million (90% of the cost cap) are recoverable through the Major Project Interim Recovery (MPIR) adjustment mechanism. Recovery of capital costs under the MPIR adjustment mechanism was approved by the PUC on June 27, 2018. (See “Decoupling” section below for MPIR guidelines and capital cost recovery discussion.) A decision on recovery of related incremental operation and maintenance expense (approximately $1.8 million annualized) during the interim period (i.e., between the in-service date and the next rate case) is pending. Project costs incurred as of September 30, 2018 amounted to $142.5 million. Cost recovery of capital costs in excess of $141.6 million is to be addressed in the next general rate case.

West Loch PV Project. In ~~July 2016,~~June 2017, the PUC approved the expenditure of funds for Hawaiian Electric ~~announced plans~~ to build, own and operate a utility-owned, grid-tied 20-MW (ac) solar facility on property owned by the Department of the ~~Navy. In June 2017, the PUC approved the expenditure of funds for the project,~~Navy, including ~~Hawaiian Electric’s~~a proposed project cost cap of $67 million and a performance guarantee to provide energy at 9.56 cents/~~KWH~~kWh or less to the system.

In approving the project, the PUC agreed that the project is eligible for recovery of costs offset by related net benefits under the newly-established ~~MPIR~~major project interim recovery (MPIR) adjustment mechanism. (See “Decoupling” section below for MPIR guidelines and ~~capital~~ cost recovery discussion.) Hawaiian Electric has provided supplemental materials, as requested by the PUC, to support meeting the MPIR guidelines, accompanied by system performance guarantee and cost savings sharing mechanisms. A decision on these matters is pending.

Hawaiian Electric executed a fixed-price Engineering, Procurement, and Construction (EPC) contract for the project on December 6, 2017. The EPC contract includes the cost of the solar panels for the project, which is not subject to modification due to any tariffs that may be imposed under the current photovoltaic (PV) cell and module import tariffs. Construction of the facility began in the second quarter of 2018, and the facility is expected to be placed in service in the ~~second~~third quarter of 2019. Project costs incurred as of ~~September 30, 2018~~March 31, 2019 amounted to ~~$28.6~~$44.2 million.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

~~Hawaiian Telcom~~. The Utilities each had separate agreements for the joint ownership and maintenance of utility poles with Hawaiian Telcom, Inc. (Hawaiian Telcom), the respective county or counties in which each utility operates and other third parties, such as the State of Hawaii. The agreements set forth various circumstances requiring pole removal/installation/replacement and the sharing of costs among the joint pole owners. The agreements allowed for the cost of work done by one joint pole owner to be shared by the other joint pole owners based on the apportionment of costs in the agreements. The Utilities maintained, replaced and installed the majority of the jointly-owned poles in each of the respective service territories, and billed the other joint pole owners for their respective share of the costs. The counties and the State had been reimbursing the Utilities for their share of the costs. However, Hawaiian Telcom had been delinquent in reimbursing the Utilities for its share of the costs.

Hawaiian Telcom’s delinquency will be resolved by new agreements with Hawaiian Telcom approved by the PUC in October 2018. These new agreements provide for the purchase by the Utilities of Hawaiian Telcom’s interest in all the joint poles, and licensing and operating agreements between the Utilities and Hawaiian Telcom subsequent to the transfer of the joint pole interest to the Utilities. The Utilities’ consideration of approximately $48 million for acquiring Hawaiian Telcom’s interest in the poles will be offset in part by the receivables owed by Hawaiian Telcom to the Utilities. As of September 30, 2018, receivables from Hawaiian Telcom under the joint pole agreement, net of a reserve for a portion of the interest, were $17.4 million ($11.6 million at Hawaiian Electric, $4.7 million at Hawaii Electric Light, and $1.1 million at Maui Electric). The remaining consideration for acquiring Hawaiian Telcom’s interest in the joint poles will be settled through the set-off of current and future license fees due from Hawaiian Telcom, after which Hawaiian Telcom would make cash payments for license fees under the agreement.

Environmental regulation. The Utilities are subject to environmental laws and regulations that regulate the operation of existing facilities, the construction and operation of new facilities and the proper cleanup and disposal of hazardous waste and toxic substances.

Hawaiian Electric, Hawaii Electric Light and Maui Electric, like other utilities, periodically encounter petroleum or other chemical releases associated with current or previous operations. The Utilities report and take action on these releases when and as required by applicable law and regulations. The Utilities believe the costs of responding to such releases identified to date will not have a material effect, individually or in the aggregate, on Hawaiian Electric’s consolidated results of operations, financial condition or liquidity.

Former Molokai Electric Company generation site. In 1989, Maui Electric acquired by merger Molokai Electric Company. Molokai Electric Company had sold its former generation site (Site) in 1983, but continued to operate at the Site under a lease until 1985. The Environmental Protection Agency (EPA) has since identified environmental impacts in the subsurface soil at the Site. ~~Although Maui Electric never operated at the Site or owned the Site property, after discussions~~In cooperation with ~~the EPA and~~ the Hawaii Department of Health (DOH), Maui Electric agreed to undertake additional investigations at the Site and an adjacent parcel that Molokai Electric Company had used for equipment storage (the Adjacent Parcel) to determine the extent of environmental contamination. A 2011 assessment by a Maui Electric contractor of the Adjacent Parcel identified environmental impacts, including elevated polychlorinated biphenyls (PCBs) in the subsurface soils. In cooperation with the DOH and EPA, Maui Electric is further ~~investigating~~investigated the Site and the Adjacent Parcel to determine the extent of impacts of ~~PCBs,~~polychlorinated biphenyls (PCBs), residual fuel oils and other subsurface contaminants. Maui Electric has a reserve balance of $2.7 million as of ~~September 30, 2018,~~March 31, 2019, representing the probable and reasonably estimable cost ~~to complete the additional investigation and estimated cleanup costs at~~for remediation of the Site and the Adjacent Parcel; however, final costs of remediation will depend on ~~the results of continued investigation.~~cleanup approach implemented.

Pearl Harbor sediment study. In July 2014, the U.S. Navy notified Hawaiian Electric of the Navy’s determination that Hawaiian Electric is a Potentially Responsible Party responsible for the costs of investigation and cleanup of PCB contamination in sediment in the area offshore of the Waiau Power Plant as part of the Pearl Harbor Superfund Site. ~~The Navy has also requested that~~ Hawaiian Electric reimburse the costs incurred by the Navy to investigate the area. The Navy has completed a remedial investigation and a feasibility study (FS) for the remediation of contaminated sediment at several locations in Pearl Harbor and issued its Final FS Report on June 29, 2015. On February 2, 2016, the Navy released the Proposed Plan for Pearl Harbor Sediment Remediation and Hawaiian Electric submitted comments. The extent of the contamination, the appropriate remedial measures to address it and Hawaiian Electric’s potential responsibility for any associated costs have not been determined.

~~On March 23, 2015, Hawaiian Electric received a letter from the EPA requesting that Hawaiian Electric submit a work plan~~was also required to assess potential sources and extent of PCB contamination onshore at ~~the~~ Waiau Power Plant. Hawaiian Electric submitted a sampling and analysis (SAP) work plan to the EPA and the DOH. Onshore sampling at the Waiau Power Plant was completed in two phases in December 2015 and June 2016. Appropriate remedial measures are being developed to address the extent of the onshore contamination, and any associated costs have not yet been determined.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

As of ~~September 30, 2018,~~March 31, 2019, the reserve account balance recorded by Hawaiian Electric to address the PCB contamination was ~~$4.6~~$4.7 million. The reserve balance represents the probable and reasonably estimable cost ~~to complete~~for the onshore ~~and offshore investigations~~investigation and the remediation of PCB contamination in the offshore sediment. The final remediation costs will depend on the assessment of potential source control requirements ~~as well as the further investigation of contaminated~~for onshore sediment and actual offshore ~~from the Waiau Power Plant by the Navy.~~cleanup costs.

Regulatory proceedings

Decoupling.Decoupling is a regulatory model that is intended to provide the Utilities with financial stability and facilitate meeting the State of Hawaii’s goals to transition to a clean energy economy and achieve an aggressive renewable portfolio standard. The decoupling ~~model, implemented in Hawaii in 2011, delinks revenues from sales and includes annual rate adjustments. The decoupling~~ mechanism has the following major components: (1) ~~a sales decoupling component via a~~monthly revenue balancing account (RBA), revenues or refunds for the difference between PUC-approved target revenues and recorded adjusted revenues, which delinks revenues from kilowatthour sales, (2) ~~a revenue~~RAM revenues for escalation ~~component via a~~in certain O&M expenses and rate ~~adjustment mechanism (RAM),~~base changes, (3) ~~major project interim recovery~~MPIR component, ~~(MPIR),~~ (4) performance incentive mechanisms (PIMs), and (5) an earnings sharing mechanism, which would provide for a reduction of revenues between rate cases in the event the utility exceeds the return on average common equity

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

(ROACE) allowed in its most recent rate case. Under the decoupling mechanism, triennial general rate cases are required. On March 29, 2019, the Utilities filed the 2019 annual filing which is subject to PUC review.

Rate adjustment mechanism. The RAM is based on the lesser of: a) an inflationary adjustment for certain O&M expenses and return on investment for certain rate base changes, or b) cumulative annual compounded increase in Gross Domestic Product Price Index applied to annualized target revenues (the RAM Cap). Annualized target revenues reset upon the issuance of an interim or final ~~D&O~~decision and order (D&O) in a rate case.

The RAM Cap impacted the Utilities' recovery of capital investments as follows:

Hawaiian Electric's RAM revenues were limited to the RAM Cap in ~~2017 and~~ 2018.

Maui Electric's RAM revenues ~~in 2017 and 2018~~ were below the RAM ~~Cap.~~Cap in 2018.

Hawaii Electric Light’s RAM revenues ~~in 2017 and 2018~~ were ~~below the RAM Cap.~~

For the RAM years 2014 - 2016, Hawaiian Electric was allowed to record RAM revenue beginning on January 1 and to bill such amounts from June 1 of the applicable year through May 31 of the following year. Subsequent to 2016, Hawaiian Electric revertedlimited to the RAM ~~provisions initially approved~~Cap in ~~March 2011—i.e., RAM is both accrued and billed from June 1 of each year through May 31 of the following year.~~2018.

Major project interim recovery. On April 27, 2017, the PUC issued an order that provided guidelines for interim recovery of revenues to support major projects placed in service between general rate cases.

Projects eligible for recovery through the MPIR adjustment mechanism are major projects (i.e., projects with capital expenditures net of customer contributions in excess of $2.5 million), including, but not restricted to, renewable energy, energy efficiency, utility scale generation, grid modernization and smaller qualifying projects grouped into programs for review. The MPIR adjustment mechanism provides the opportunity to recover revenues for approved costs of eligible projects placed in service between general rate cases wherein cost recovery is limited by a revenue cap and is not provided by other effective recovery mechanisms. The request for PUC approval must include a business case and all costs that are allowed to be recovered through the MPIR adjustment mechanism must be offset by any related benefits. The guidelines provide for accrual of revenues approved for recovery upon in-service date to be collected from customers through the annual RBA tariff. Capital projects that are not recovered through the MPIR would be included in the RAM and be subject to the RAM Cap, until the next rate case when the Utilities would request recovery in base rates.

The PUC ~~has~~ approved recovery of capital costs under the MPIR for Schofield ~~generation station,~~Generating Station, which ~~would adjust~~increased revenues in ~~July through December~~ 2018 by ~~$3.4~~$3.6 million and will be collected in customer bills beginning in June 2019. ~~A decision on recovery of related incremental O&M expenses is pending.~~ In February 2019, Hawaiian Electric ~~will file~~submitted an MPIR filing of $19.8 million for 2019 (which ~~will accrue~~accrued effective January 1, 2019) ~~which will include~~that included the 2019 return on project amount (up to the capped amount) in rate base, depreciation and incremental O&M expenses, ~~(if approved for recovery by the PUC),~~ for collection from June 2020 through May 2021.

Performance incentive mechanisms. The PUC has ordered the following PIMs.

Service Quality performance ~~incentive mechanisms (PIM), which will be reflected in the annual decoupling filing beginning in 2019.~~incentives are measured on a calendar-year basis. The PIM tariff requires the performance targets, deadbands and the amount of maximum financial incentives used to determine the PIM financial incentive levels for each of the PIMs to be re-determined upon issuance of an interim or final order in a general rate case for each utility.

~~Service Quality performance incentives are measured on a calendar-year basis beginning in 2018.~~

Service Reliability Performance measured by System Average Interruption Duration and Frequency Indexes (penalties only). Target performance is based on each utility’s historical 10-year average performance with a

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

deadband of one standard deviation. The maximum penalty for each performance index is 20 basis points applied to the common equity share of each respective utility’s approved rate base (or maximum penalties of approximately $6.7 million - for both indices in total for the three utilities).

Call Center Performance measured by the percentage of calls answered within 30 seconds. Target performance is based on the annual average performance for each utility for the most recent 8 quarters with a deadband of 3% above and below the target. The maximum penalty or incentive is 8 basis points applied to the common equity share of each respective utility’s approved rate base (or maximum penalties or incentives of approximately $1.3 million - in total for the three utilities).

~~Demand Response measured by~~The Utilities accrued $2.1 million in estimated net service quality penalties for 2018, which will be reflected in the ~~demand response resources acquired~~2019 annual decoupling filing and will reduce customer rates in ~~2018. The award is up to 5% of~~ the ~~aggregate annual contract value for cost-effective demand response capability contracted with aggregators by December~~period June 1, 2019 through May 31, ~~2018. The maximum award is $0.5 million for the three utilities in total and there are no penalties. This incentive applies to one-time performance in 2018 only.~~2020.

Procurement of low-cost variable renewable resources through the request for proposal process in 2018 measured by comparison of the procurement price to target prices. The incentive is a percentage of the savings determined by comparing procured price to a target of 11.5 cents per kilowatt-hour for renewable projects with storage capability and 9.5 cents per kilowatt-hour for energy-only renewable projects. ~~There are two phases to this incentive. Phase 1 has an incentive of 20% of the savings for purchased power agreements~~For PPAs filed by December 31, 2018 and subsequently approved by the PUC, the incentive is 20% of the savings, with a cap of $3.5 million for the three utilities in total. ~~Phase 2 has scaled incentives of 15%, 10% and 5% of the savings for purchased power agreements~~For PPAs filed in January, February, and March 2019 ~~respectively,~~ and subsequently approved by the PUC, scaled incentives are 15%, 10% and 5%, respectively, of the savings for PPAs, with a cap of $3 million for the three utilities in total. There are no penalties. On March 25, 2019, the PUC approved six contracts, which were filed by December 31, 2018 and qualified for incentives. Half of the incentive is earned upon PUC approval of the contact and the other half is eligible to be earned in the year following the in-service date of the projects. The Utilities accrued $1.7 million in incentives in March 2019.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Annual decoupling filings. The Utilities filed annual decoupling filings on March 29, 2019, which are subject to PUC review. The net annual incremental amounts proposed to be collected (refunded) from June 1, ~~2018~~2019 through May 31, ~~2019~~2020 are as follows:

(in millions) Hawaiian Electric Hawaii Electric Light Maui Electric
2018 Annual incremental RAM adjusted revenues *
$ 13.8
$ 3.4
$ 2.0
Annual change in accrued RBA balance as of December 31, 2017 (and associated revenue taxes) $ 6.6
$ 0.7
$ 3.2
2017 Tax Act Adjustment **
$ —
$ —
$ (2.8 )
Net annual incremental amount to be collected under the tariffs $ 20.4
$ 4.1
$ 2.4



(in millions)	Hawaiian Electric			Hawaii Electric Light			Maui Electric
2019 Annual incremental RAM adjusted revenues	$	14.0		$	3.5		$	3.3
Annual change in accrued RBA balance as of December 31, 2018 (and associated revenue taxes)	$	(12.2	)	$	(1.9	)	$	0.8
2017 Tax Act Adjustment*	$	—		$	—		$	2.8
Performance Incentive Mechanism	$	0.1		$	—		$	(0.4	)
Net annual incremental amount to be collected under the tariffs	$	1.9		$	1.6		$	6.5

* The 2018 annual RAM adjusted revenues for Maui Electric terminated on August 23, 2018, the effective date of interim increase tariff rates that were implemented pursuant to the Interim D&O issued in the Maui Electric consolidated 2015 and 2018 rate case.

** Maui Electric incorporated a $2.8 million adjustment into its 2018 annual decoupling filing to incorporate the impact of the lower corporate income tax rate and the exclusion of the domestic production activities deduction, as a result of the 2017 Tax Cuts and Jobs Act (the Tax Act). ~~Tax adjustments for Hawaiian Electric and Hawaii Electric Light are described~~This item is not recurring in ~~the discussion below~~2019, therefore it is shown on this schedule of ~~their respective on-going rate cases.~~incremental changes as in increase.

Performance-based regulation proceeding. On April 18, 2018, the PUC issued an order, instituting a proceeding to investigate performance-based regulation (PBR). The PUC intends to provide a forum to collaboratively develop modifications or new components to better align utility and customer interests. The PUC stated that PBR seeks to utilize both revenue adjustment mechanisms and performance mechanisms to more strongly align utilities’ incentives with customer interests.

The order stated that, in general, the PUC is interested in ratemaking elements and/or mechanisms that result in:

Greater cost control and reduced rate volatility;

Efficient investment and allocation of resources regardless of classification as capital or operating expense;

Fair distribution of risks between utilities and customers; and

Fulfillment of State policy goals.

Through this investigation, the PUC intends to: (1) identify specific areas of utility performance that should be improved; (2) determine appropriate metrics for measuring successful outcomes in those areas; and (3) establish reasonable financial rewards and/or penalties that are sufficient to incent the utility to achieve those outcomes.

The proceeding has two phases. Phase 1 examines the current regulatory framework and identifies those areas of utility performance that are deserving of further focus in Phase 2. The PUC provided staff reports to the parties, held technical workshops and the parties filed briefs on: 1) goals and outcomes and 2) assessment of the existing regulatory ~~framework. Metrics will be discussed in late 2018, to be followed by a~~framework and 3) metrics. PUC staff issued a Phase 1 proposal, ~~parties’~~and parties filed statements of position on March 8, 2019 and areply statements of position on April 5, 2019. A PUC ~~order related to~~decision on Phase 1 ~~which~~ is ~~expected after March 2019.~~pending. Phase 2 will address design and implementation of performance incentive mechanisms, revenue adjustment mechanisms and other regulatory reforms.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Performance-based ratemaking legislation. On April 24, 2018, ~~Senate Bill No. 2939 SD2~~Act 005, Session Laws 2018 was signed into law, which establishes performance metrics that the PUC shall consider while establishing performance incentives and penalty mechanisms under a performance-based ratemaking model. The law requires that the PUC establish these performance-based ratemaking mechanisms on or before January 1, 2020. The PUC opened a proceeding on April 18, 2018. See “Performance-based regulation proceeding” above.

Most recent rate proceedings.

Hawaiian Electric consolidated 2014 and 2017 test year rate cases. In June 2014, Hawaiian Electric submitted its 2014 test year rate case filing, stating that it intended to forgo the opportunity to seek a general rate increase in base rates. In December 2016, Hawaiian Electric filed an application with the PUC for a general rate increase, and the PUC issued an order consolidating the Hawaiian Electric filings for the 2014 and 2017 test year rate cases. On February 16, 2018, Hawaiian Electric implemented an interim increase of ~~$36.0~~$36 million. On April 13, 2018, Hawaiian Electric implemented an additional interim rate adjustment to adjust rates for the impact of the Tax Act.

On June 22, 2018, the PUC issued its Final D&O, approving final rate relief of a $37.7 million increase before the Tax Act impact reduction of $38.3 million, based on an ROACE of 9.5% and an overall rate of return of 7.57%. The PUC indicated that ~~the~~a revised ECRC mechanism shall reflect a ~~98/~~98%/2% fossil fuel generation cost risk-sharing split between ratepayers and Hawaiian Electric, with an annual maximum ~~exposure cap~~increase or decrease to revenues of $2.5 ~~million.~~million for the utility. On December 7, 2018, the PUC approved the ECRC tariff, consistent with the rate case order, with an effective date of January 1, 2019.

Hawaiian Electric 2020 test year rate case. On April 26, 2019, Hawaiian Electric filed a notice that it intends to file an application for a general rate increase after June 30, 2019, but not later than September 30, 2019, based on a 2020 calendar year test period.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Maui Electric consolidated 2015 and 2018 test year rate cases. In December 2014, Maui Electric submitted its 2015 test year rate case filing, proposing no change to its base rates. In August 2017, the PUC issued an order consolidating the Maui Electric filings for the 2015 and 2018 test year rate cases. In October 2017, Maui Electric filed its 2018 test year rate case application and in February 2018, Maui Electric filed revised schedules to reflect the adjustments resulting from the Tax Act.

On August 9, 2018, the PUC approved an interim rate increase based on a stipulated settlement, that included the effects of the 2017 Tax Act, between Maui Electric and the Consumer ~~Advocate~~Advocate. On March 18, 2019, the PUC issued its D&O, that approved, with certain modifications, the stipulated settlement, addressed all issues in the rate case, and directed the utility to file tariffs and rate schedules reflecting the provisions of ~~$12.5~~the D&O. The D&O stated that a revised ECRC mechanism would replace the ECAC and effectuate the removal of the recovery of fuel and purchased power from base rates. It also stated that the ECRC shall reflect a 98%/2% fossil fuel generation cost risk-sharing split between ratepayers and Maui Electric, with an annual maximum increase or decrease to revenues to $0.6 million for the utility.

On April 17, 2019, Maui Electric filed proposed tariffs, with an effective date of June 1, 2019, and rate schedules reflecting a final increase of $12.2 million over revenues at current effective rates based on the approved 7.43% rate of return (which incorporates a ROACE of 9.5% and a capital structure that includes a 57% common equity capitalization) on a ~~$462~~$454 million rate base. Upon the approval of the ECRC tariff, Maui Electric will file revised tariffs to rebalance rates resulting from the recovery of all fuel and purchased energy through the ECRC and the removal of the recovery of these costs from base ~~with the depreciation rates approved in July 2018. Interim rates were effective on August 23, 2018.~~rates.

Hawaii Electric Light 2016 and 2019 test year rate cases. ~~In September 2016, Hawaii Electric Light filed an application with the PUC for a general rate increase.~~

In August 2017, the PUC issued an order granting an interim rate increase of $9.9 million based on the Stipulated Settlement Letter of Hawaii Electric Light and the Consumer Advocate filed on July 11, 2017 and an ROACE of 9.5% and subject to refund with interest, if it exceeds amounts allowed in a final order. The interim rate increase was implemented on August 31, 2017. On May 1, 2018, Hawaii Electric Light implemented an interim rate reduction of $9.9 million which was primarily to incorporate the effects of the Tax Act.

On June 29, 2018, the PUC issued its Final D&O, approving the rates implemented in the interim rate reduction. On January 15, 2019, the PUC approved the ECRC tariff with an effective date of February 1, 2019.

On ~~October 5,~~December 14, 2018, Hawaii Electric Light filed ~~a notice that it intends to file~~ an application for a general rate increase ~~on or after December 5, 2018 but before January 1, 2019.~~

~~Tax Cuts and Jobs Act impact on utility rates. The Utilities began tracking the impact of the Tax Cuts and Jobs Act of 2017 (Tax Act) as of January 1, 2018. Each Utility accrued regulatory liabilities~~ for ~~estimated tax savings from January 1 to the date incorporated in rates:~~

~~Hawaiian Electric incorporated the Tax Act reductions in rates (based on the 2017~~its 2019 test year rate ~~case)~~case, requesting an increase of $13.4 million over revenues at current effective ~~April 13, 2018.~~

~~Hawaii Electric Light incorporated the Tax Act reductions (based~~rates (for a 3.4% increase in revenues), based on ~~the 2016 test year~~an 8.3% rate ~~case) effective May 1, 2018.~~of return (which incorporates a ROACE of 10.5%).

~~Maui Electric’s rates were adjusted for the Tax Act as follows:~~


◦	~~adjustments for the period January 1, 2018 through May 31, 2018 are in the annual Revenue Balancing Account adjustment, which became effective on June 1, 2018,~~


◦	~~adjustments for the period June 1, 2018 through August 22, 2018 are embedded in the Revenue Balancing Account, which will be incorporated in rates on June 1, 2019, and~~


◦	~~adjustments from August 23, 2018 and thereafter are incorporated in interim rates as a result of the 2018 test year rate case.~~

~~See discussion in “Decoupling” section above.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Condensed consolidating financial information. Hawaiian Electric is not required to provide separate financial statements or other disclosures concerning Hawaii Electric Light and Maui Electric to holders of the 2004 Debentures, which was issued by Hawaii Electric Light and Maui Electric to Trust III, since all of their voting capital stock is owned, and their obligations with respect to these securities have been fully and unconditionally guaranteed, on a subordinated basis, by Hawaiian Electric. Consolidating information is provided below for Hawaiian Electric and each of its subsidiaries for the periods ended and as of the dates indicated.

Hawaiian Electric also unconditionally guarantees Hawaii Electric Light’s and Maui Electric’s obligations (a) to the State of Hawaii for the repayment of principal and interest on Special Purpose Revenue Bonds issued for the benefit of Hawaii Electric Light and Maui Electric, (b) under their respective private placement note agreements and the Hawaii Electric Light notes and Maui Electric notes issued thereunder and (c) relating to the trust preferred securities of Trust III. Hawaiian Electric is also obligated, after the satisfaction of its obligations on its own preferred stock, to make dividend, redemption and liquidation payments on Hawaii Electric Light’s and Maui Electric’s preferred stock if the respective subsidiary is unable to make such payments.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

Three months ended ~~September 30, 2018~~March 31, 2019



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	405,669		87,205		85,653		—	(32	)	$	578,495
Expenses
Fuel oil	108,922			20,842		30,845		—	—		160,609
Purchased power	105,223			19,177		10,045		—	—		134,445
Other operation and maintenance	81,178			18,736		18,216		—	—		118,130
Depreciation	35,867			10,453		7,627		—	—		53,947
Taxes, other than income taxes	38,631			8,105		8,068		—	—		54,804
Total expenses	369,821			77,313		74,801		—	—		521,935
Operating income	35,848			9,892		10,852		—	(32	)	56,560
Allowance for equity funds used during construction	2,447			132		331		—	—		2,910
Equity in earnings of subsidiaries	11,849			—		—		—	(11,849	)	—
Retirement defined benefits expense—other than service costs	(567		)	(106	)	(30	)	—	—		(703		)
Interest expense and other charges, net	(12,800		)	(2,901	)	(2,317	)	—	32		(17,986		)
Allowance for borrowed funds used during construction	902			56		120		—	—		1,078
Income before income taxes	37,679			7,073		8,956		—	(11,849	)	41,859
Income taxes	5,283			1,770		2,181		—	—		9,234
Net income	32,396			5,303		6,775		—	(11,849	)	32,625
Preferred stock dividends of subsidiaries	—			134		95		—	—		229
Net income attributable to Hawaiian Electric	32,396			5,169		6,680		—	(11,849	)	32,396
Preferred stock dividends of Hawaiian Electric	270			—		—		—	—		270
Net income for common stock	$	32,126		5,169		6,680		—	(11,849	)	$	32,126

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric Other subsidiaries Consolidating adjustments Hawaiian Electric
Consolidated
Revenues $ 488,210
98,981
100,273
—
(55 ) $ 687,409
Expenses
Fuel oil 141,357
26,429
38,765
—
—
206,551
Purchased power 138,135
24,091
15,364
—
—
177,590
Other operation and maintenance 78,988
15,253
19,312
—
—
113,553
Depreciation 34,282
10,072
6,629
—
—
50,983
Taxes, other than income taxes 46,096
9,215
9,385
—
—
64,696
Total expenses 438,858
85,060
89,455
—
—
613,373
Operating income 49,352
13,921
10,818
—
(55 ) 74,036
Allowance for equity funds used during construction 1,648
39
275
—
—
1,962
Equity in earnings of subsidiaries 16,636
—
—
—
(16,636 ) —
Retirement defined benefits expense—other than service costs (475 ) (104 ) (103 ) —
—
(682 )
Interest expense and other charges, net (13,542 ) (3,026 ) (2,455 ) —
55
(18,968 )
Allowance for borrowed funds used during construction 810
49
147
—
—
1,006
Income before income taxes 54,429
10,879
8,682
—
(16,636 ) 57,354
Income taxes 4,447
1,571
1,126
—
—
7,144
Net income 49,982
9,308
7,556
—
(16,636 ) 50,210
Preferred stock dividends of subsidiaries —
133
95
—
—
228
Net income attributable to Hawaiian Electric 49,982
9,175
7,461
—
(16,636 ) 49,982
Preferred stock dividends of Hawaiian Electric 270
—
—
—
—
270
Net income for common stock $ 49,712
9,175
7,461
—
(16,636 ) $ 49,712

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

Three months ended ~~September 30, 2018~~March 31, 2019



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Net income for common stock	$	32,126		5,169		6,680		—	(11,849	)	$	32,126
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits	2,322			352		289		—	(641	)	2,322
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(2,298		)	(351	)	(289	)	—	640		(2,298		)
Other comprehensive income, net of taxes	24			1		—		—	(1	)	24
Comprehensive income attributable to common shareholder	$	32,150		5,170		6,680		—	(11,850	)	$	32,150

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consolidating
adjustments
Hawaiian Electric
Consolidated
Net income for common stock $ 49,712
9,175
7,461
—
(16,636 ) $ 49,712
Other comprehensive income (loss), net of taxes:

Retirement benefit plans:

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits 4,753
705
606
—
(1,311 ) 4,753
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes (4,725 ) (705 ) (606 ) —
1,311
(4,725 )
Other comprehensive income, net of taxes 28
—
—
—
—
28
Comprehensive income attributable to common shareholder $ 49,740
9,175
7,461
—
(16,636 ) $ 49,740

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

Three months ended ~~September 30, 2017~~March 31, 2018



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	401,180		87,933		81,356		—	(42	)	$	570,427
Expenses
Fuel oil	114,498			18,487		33,983		—	—		166,968
Purchased power	107,370			23,834		8,706		—	—		139,910
Other operation and maintenance	72,940			16,098		18,572		—	—		107,610
Depreciation	34,439			10,055		5,972		—	—		50,466
Taxes, other than income taxes	38,167			8,212		7,725		—	—		54,104
Total expenses	367,414			76,686		74,958		—	—		519,058
Operating income	33,766			11,247		6,398		—	(42	)	51,369
Allowance for equity funds used during construction	2,887			111		296		—	—		3,294
Equity in earnings of subsidiaries	9,325			—		—		—	(9,325	)	—
Retirement defined benefits expense—other than service costs	(1,062		)	(103	)	(99	)	—	—		(1,264		)
Interest expense and other charges, net	(12,495		)	(2,907	)	(2,334	)	—	42		(17,694		)
Allowance for borrowed funds used during construction	1,238			64		142		—	—		1,444
Income before income taxes	33,659			8,412		4,403		—	(9,325	)	37,149
Income taxes	5,914			2,177		1,084		—	—		9,175
Net income	27,745			6,235		3,319		—	(9,325	)	27,974
Preferred stock dividends of subsidiaries	—			134		95		—	—		229
Net income attributable to Hawaiian Electric	27,745			6,101		3,224		—	(9,325	)	27,745
Preferred stock dividends of Hawaiian Electric	270			—		—		—	—		270
Net income for common stock	$	27,475		6,101		3,224		—	(9,325	)	$	27,475

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric Other subsidiaries Consolidating adjustments Hawaiian Electric
Consolidated
Revenues $ 429,267
84,334
85,198
—
(30 ) $ 598,769
Expenses
Fuel oil 103,959
15,754
26,545
—
—
146,258
Purchased power 123,893
21,332
15,122
—
—
160,347
Other operation and maintenance 64,996
16,608
17,077
—
—
98,681
Depreciation 32,722
9,685
5,799
—
—
48,206
Taxes, other than income taxes 40,824
7,928
8,028
—
—
56,780
Total expenses 366,394
71,307
72,571
—
—
510,272
Operating income 62,873
13,027
12,627
—
(30 ) 88,497
Allowance for equity funds used during construction 3,108
167
207
—
—
3,482
Equity in earnings of subsidiaries 12,767
—
—
—
(12,767 ) —
Retirement defined benefits expense—other than service costs (1,225 ) 15
(211 ) —
—
(1,421 )
Interest expense and other charges, net (11,786 ) (2,899 ) (2,252 ) —
30
(16,907 )
Allowance for borrowed funds used during construction 1,173
72
94
—
—
1,339
Income before income taxes 66,910
10,382
10,465
—
(12,767 ) 74,990
Income taxes 19,153
3,815
4,037
—
—
27,005
Net income 47,757
6,567
6,428
—
(12,767 ) 47,985
Preferred stock dividends of subsidiaries —
133
95
—
—
228
Net income attributable to Hawaiian Electric 47,757
6,434
6,333
—
(12,767 ) 47,757
Preferred stock dividends of Hawaiian Electric 270
—
—
—
—
270
Net income for common stock $ 47,487
6,434
6,333
—
(12,767 ) $ 47,487

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

Three months ended ~~September 30, 2017~~March 31, 2018



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Net income for common stock	$	27,475		6,101		3,224		—	(9,325	)	$	27,475
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits	4,653			675		562		—	(1,237	)	4,653
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(4,622		)	(675	)	(562	)	—	1,237		(4,622		)
Other comprehensive income, net of taxes	31			—		—		—	—		31
Comprehensive income attributable to common shareholder	$	27,506		6,101		3,224		—	(9,325	)	$	27,506

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consolidating
adjustments
Hawaiian Electric
Consolidated
Net income for common stock
$ 47,487
6,434
6,333
—
(12,767 ) $ 47,487
Other comprehensive income (loss), net of taxes:

Retirement benefit plans:

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits 3,618
476
404
—
(880 ) 3,618
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes (3,596 ) (476 ) (404 ) —
880
(3,596 )
Other comprehensive income, net of taxes 22
—
—
—
—
22
Comprehensive income attributable to common shareholder $ 47,509
6,434
6,333
—
(12,767 ) $ 47,509

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

~~Hawaiian Electric Company, Inc. and Subsidiaries~~

~~Condensed Consolidating Statement of Income~~

~~Nine months ended September 30, 2018~~

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric Other subsidiaries Consolidating adjustments Hawaiian Electric
Consolidated
Revenues $ 1,321,089
276,462
268,567
—
(156 ) $ 1,865,962
Expenses
Fuel oil 375,862
64,348
105,026
—
—
545,236
Purchased power 367,317
72,589
38,332
—
—
478,238
Other operation and maintenance 228,773
50,366
54,666
—
—
333,805
Depreciation 103,112
30,165
18,533
—
—
151,810
Taxes, other than income taxes 125,214
25,835
25,275
—
—
176,324
Total expenses 1,200,278
243,303
241,832
—
—
1,685,413
Operating income 120,811
33,159
26,735
—
(156 ) 180,549
Allowance for equity funds used during construction 7,123
274
842
—
—
8,239
Equity in earnings of subsidiaries 35,041
—
—
—
(35,041 ) —
Retirement defined benefits expense—other than service costs (2,091 ) (312 ) (531 ) —
—
(2,934 )
Interest expense and other charges, net (38,967 ) (8,855 ) (7,156 ) —
156
(54,822 )
Allowance for borrowed funds used during construction 3,198
190
427
—
—
3,815
Income before income taxes 125,115
24,456
20,317
—
(35,041 ) 134,847
Income taxes 15,949
5,017
4,029
—
—
24,995
Net income 109,166
19,439
16,288
—
(35,041 ) 109,852
Preferred stock dividends of subsidiaries —
400
286
—
—
686
Net income attributable to Hawaiian Electric 109,166
19,039
16,002
—
(35,041 ) 109,166
Preferred stock dividends of Hawaiian Electric 810
—
—
—
—
810
Net income for common stock $ 108,356
19,039
16,002
—
(35,041 ) $ 108,356

~~Hawaiian Electric Company, Inc. and Subsidiaries~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~Nine months ended September 30, 2018~~

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consolidating
adjustments
Hawaiian Electric
Consolidated
Net income for common stock $ 108,356
19,039
16,002
—
(35,041 ) $ 108,356
Other comprehensive income (loss), net of taxes:

Retirement benefit plans:

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits 14,259
2,114
1,817
—
(3,931 ) 14,259
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes (14,174 ) (2,113 ) (1,817 ) —
3,930
(14,174 )
Other comprehensive income, net of taxes 85
1
—
—
(1 ) 85
Comprehensive income attributable to common shareholder $ 108,441
19,040
16,002
—
(35,042 ) $ 108,441

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

~~Hawaiian Electric Company, Inc. and Subsidiaries~~

~~Condensed Consolidating Statement of Income~~

~~Nine months ended September 30, 2017~~

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric Other subsidiaries Consolidating adjustments Hawaiian Electric
Consolidated
Revenues $ 1,186,524
245,026
242,756
—
(51 ) $ 1,674,255
Expenses
Fuel oil 301,774
47,486
82,527
—
—
431,787
Purchased power 340,498
63,403
36,637
—
—
440,538
Other operation and maintenance 200,648
49,850
51,939
—
—
302,437
Depreciation 98,167
29,056
17,355
—
—
144,578
Taxes, other than income taxes 113,483
23,080
23,012
—
—
159,575
Total expenses 1,054,570
212,875
211,470
—
—
1,478,915
Operating income 131,954
32,151
31,286
—
(51 ) 195,340
Allowance for equity funds used during construction 7,823
416
669
—
—
8,908
Equity in earnings of subsidiaries 29,306
—
—
—
(29,306 ) —
Retirement defined benefits expense—other than service costs (3,812 ) 183
(650 ) —
—
(4,279 )
Interest expense and other charges, net (36,405 ) (8,899 ) (7,372 ) —
51
(52,625 )
Allowance for borrowed funds used during construction 2,910
172
289
—
—
3,371
Income before income taxes 131,776
24,023
24,222
—
(29,306 ) 150,715
Income taxes 36,370
8,973
9,280
—
—
54,623
Net income 95,406
15,050
14,942
—
(29,306 ) 96,092
Preferred stock dividends of subsidiaries —
400
286
—
—
686
Net income attributable to Hawaiian Electric 95,406
14,650
14,656
—
(29,306 ) 95,406
Preferred stock dividends of Hawaiian Electric 810
—
—
—
—
810
Net income for common stock $ 94,596
14,650
14,656
—
(29,306 ) $ 94,596

~~Hawaiian Electric Company, Inc. and Subsidiaries~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~Nine months ended September 30, 2017~~

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consolidating
adjustments
Hawaiian Electric
Consolidated
Net income for common stock
$ 94,596
14,650
14,656
—
(29,306 ) $ 94,596
Other comprehensive income (loss), net of taxes:

Derivatives qualifying as cash flow hedges:
Reclassification adjustment to net income, net of taxes 454
—
—
—
—
454
Retirement benefit plans:

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits 10,857
1,428
1,214
—
(2,642 ) 10,857
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes (10,790 ) (1,427 ) (1,214 ) —
2,641
(10,790 )
Other comprehensive income, net of taxes 521
1
—
—
(1 ) 521
Comprehensive income attributable to common shareholder $ 95,117
14,651
14,656
—
(29,307 ) $ 95,117

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

~~September 30, 2018~~March 31, 2019



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consoli- dating adjustments		Hawaiian Electric Consolidated
Assets
Property, plant and equipment
Utility property, plant and equipment
Land	$	40,449		5,606		3,612		—	—		$	49,667
Plant and equipment	4,505,063			1,262,332		1,107,173		—	—		6,874,568
Less accumulated depreciation	(1,548,895		)	(554,438	)	(511,881	)	—	—		(2,615,214		)
Construction in progress	200,399			14,520		32,398		—	—		247,317
Utility property, plant and equipment, net	3,197,016			728,020		631,302		—	—		4,556,338
Nonutility property, plant and equipment, less accumulated depreciation	5,313			115		1,532		—	—		6,960
Total property, plant and equipment, net	3,202,329			728,135		632,834		—	—		4,563,298
Investment in wholly owned subsidiaries, at equity	582,374			—		—		—	(582,374	)	—
Current assets
Cash and cash equivalents	2,994			3,825		1,461		101	—		8,381
Advances to affiliates	9,500			9,200		—		—	(18,700	)	—
Customer accounts receivable, net	94,489			23,373		19,551		—	—		137,413
Accrued unbilled revenues, net	69,315			13,398		13,192		—	—		95,905
Other accounts receivable, net	10,667			1,447		1,967		—	(6,828	)	7,253
Fuel oil stock, at average cost	91,090			10,796		14,612		—	—		116,498
Materials and supplies, at average cost	30,766			8,037		17,781		—	—		56,584
Prepayments and other	25,940			3,944		4,003		—	—		33,887
Regulatory assets	60,374			2,993		8,651		—	—		72,018
Total current assets	395,135			77,013		81,218		101	(25,528	)	527,939
Other long-term assets
Operating lease right-of-use assets	219,246			1,605		410		—	—		221,261
Regulatory assets	530,424			118,315		105,429		—	—		754,168
Other	71,528			16,076		16,618		—	—		104,222
Total other long-term assets	821,198			135,996		122,457		—	—		1,079,651
Total assets	$	5,001,036		941,144		836,509		101	(607,902	)	$	6,170,888
Capitalization and liabilities
Capitalization
Common stock equity	$	1,964,478		298,497		283,776		101	(582,374	)	$	1,964,478
Cumulative preferred stock—not subject to mandatory redemption	22,293			7,000		5,000		—	—		34,293
Long-term debt, net	938,284			217,775		180,957		—	—		1,337,016
Total capitalization	2,925,055			523,272		469,733		101	(582,374	)	3,335,787
Current liabilities
Current portion of operating lease liabilities	61,149			91		29		—	—		61,269
Current portion of long-term debt	61,968			—		19,989		—	—		81,957
Short-term borrowings from non-affiliates	55,999			—		—		—	—		55,999
Short-term borrowings from affiliate	9,200			—		9,500		—	(18,700	)	—
Accounts payable	120,366			14,391		21,389		—	—		156,146
Interest and preferred dividends payable	19,629			4,073		3,929		—	(23	)	27,608
Taxes accrued	135,189			29,238		28,907		—	—		193,334
Regulatory liabilities	3,981			3,882		4,750		—	—		12,613
Other	45,380			9,355		14,493		—	(6,805	)	62,423
Total current liabilities	512,861			61,030		102,986		—	(25,528	)	651,349
Deferred credits and other liabilities
Operating lease liabilities	157,980			1,513		382		—	—		159,875
Deferred income taxes	271,098			53,967		57,607		—	—		382,672
Regulatory liabilities	664,229			177,240		99,137		—	—		940,606
Unamortized tax credits	60,323			16,366		14,880		—	—		91,569
Defined benefit pension and other postretirement benefit plans liability	359,109			72,991		71,304		—	—		503,404
Other	50,381			34,765		20,480		—	—		105,626
Total deferred credits and other liabilities	1,563,120			356,842		263,790		—	—		2,183,752
Total capitalization and liabilities	$	5,001,036		941,144		836,509		101	(607,902	)	$	6,170,888

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consoli-
dating
adjustments
Hawaiian Electric
Consolidated
Assets

Property, plant and equipment
Utility property, plant and equipment

Land $ 44,030
5,873
3,612
—
—
$ 53,515
Plant and equipment 4,404,946
1,227,530
1,087,570
—
—
6,720,046
Less accumulated depreciation (1,513,351 ) (541,451 ) (512,906 ) —
—
(2,567,708 )
Construction in progress 154,566
11,060
27,460
—
—
193,086
Utility property, plant and equipment, net 3,090,191
703,012
605,736
—
—
4,398,939
Nonutility property, plant and equipment, less accumulated depreciation 5,933
115
1,532
—
—
7,580
Total property, plant and equipment, net 3,096,124
703,127
607,268
—
—
4,406,519
Investment in wholly owned subsidiaries, at equity 571,574
—
—
—
(571,574 ) —
Current assets

Cash and cash equivalents 3,867
3,027
229
101
—
7,224
Advances to affiliates 2,000
—
—
—
(2,000 ) —
Customer accounts receivable, net 124,792
29,364
24,629
—
—
178,785
Accrued unbilled revenues, net 94,956
15,810
16,936
—
—
127,702
Other accounts receivable, net 10,312
1,352
1,069
—
(9,355 ) 3,378
Fuel oil stock, at average cost 61,110
11,483
19,229
—
—
91,822
Materials and supplies, at average cost 32,407
7,840
18,260
—
—
58,507
Prepayments and other 44,458
8,604
7,670
—
—
60,732
Regulatory assets 75,541
6,217
7,672
—
—
89,430
Total current assets 449,443
83,697
95,694
101
(11,355 ) 617,580
Other long-term assets

Regulatory assets 527,650
115,114
98,730
—
—
741,494
Other 77,899
20,363
18,272
—
—
116,534
Total other long-term assets 605,549
135,477
117,002
—
—
858,028
Total assets $ 4,722,690
922,301
819,964
101
(582,929 ) $ 5,882,127
Capitalization and liabilities

Capitalization

Common stock equity $ 1,876,237
294,220
277,253
101
(571,574 ) $ 1,876,237
Cumulative preferred stock—not subject to mandatory redemption 22,293
7,000
5,000
—
—
34,293
Long-term debt, net 1,000,020
217,724
200,887
—
—
1,418,631
Total capitalization 2,898,550
518,944
483,140
101
(571,574 ) 3,329,161
Current liabilities

Current portion of long-term debt 29,996
10,998
8,999
—
—
49,993
Short-term borrowings from non-affiliates 85,913
—
—
—
—
85,913
Short-term borrowings from affiliate —
—
2,000
—
(2,000 ) —
Accounts payable 90,937
12,289
19,706
—
—
122,932
Interest and preferred dividends payable 19,994
4,243
4,030
—
(9 ) 28,258
Taxes accrued 136,485
30,829
28,462
—
—
195,776
Regulatory liabilities 3,124
2,850
4,185
—
—
10,159
Other 64,697
9,594
16,109
—
(9,346 ) 81,054
Total current liabilities 431,146
70,803
83,491
—
(11,355 ) 574,085
Deferred credits and other liabilities

Deferred income taxes 285,789
56,417
58,863
—
—
401,069
Regulatory liabilities 649,761
174,739
97,693
—
—
922,193
Unamortized tax credits 61,299
16,271
15,503
—
—
93,073
Defined benefit pension and other postretirement benefit plans liability 332,743
64,026
63,510
—
—
460,279
Other 63,402
21,101
17,764
—
—
102,267
Total deferred credits and other liabilities 1,392,994
332,554
253,333
—
—
1,978,881
Total capitalization and liabilities $ 4,722,690
922,301
819,964
101
(582,929 ) $ 5,882,127

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

December 31, ~~2017~~2018



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consoli- dating adjustments		Hawaiian Electric Consolidated
Assets
Property, plant and equipment
Utility property, plant and equipment
Land	$	40,449		5,606		3,612		—	—		$	49,667
Plant and equipment	4,456,090			1,259,553		1,094,028		—	—		6,809,671
Less accumulated depreciation	(1,523,861		)	(547,848	)	(505,633	)	—	—		(2,577,342		)
Construction in progress	193,677			8,781		30,687		—	—		233,145
Utility property, plant and equipment, net	3,166,355			726,092		622,694		—	—		4,515,141
Nonutility property, plant and equipment, less accumulated depreciation	5,314			115		1,532		—	—		6,961
Total property, plant and equipment, net	3,171,669			726,207		624,226		—	—		4,522,102
Investment in wholly owned subsidiaries, at equity	576,838			—		—		—	(576,838	)	—
Current assets
Cash and cash equivalents	16,732			15,623		3,421		101	—		35,877
Customer accounts receivable, net	125,960			26,483		25,453		—	—		177,896
Accrued unbilled revenues, net	88,060			17,051		16,627		—	—		121,738
Other accounts receivable, net	21,962			3,131		3,033		—	(21,911	)	6,215
Fuel oil stock, at average cost	54,262			11,027		14,646		—	—		79,935
Materials and supplies, at average cost	30,291			7,155		17,758		—	—		55,204
Prepayments and other	23,214			5,212		3,692		—	—		32,118
Regulatory assets	60,093			3,177		7,746		—	—		71,016
Total current assets	420,574			88,859		92,376		101	(21,911	)	579,999
Other long-term assets
Regulatory assets	537,708			120,658		104,044		—	—		762,410
Other	69,749			15,944		17,299		—	—		102,992
Total other long-term assets	607,457			136,602		121,343		—	—		865,402
Total assets	$	4,776,538		951,668		837,945		101	(598,749	)	$	5,967,503
Capitalization and liabilities
Capitalization
Common stock equity	$	1,957,641		295,874		280,863		101	(576,838	)	$	1,957,641
Cumulative preferred stock—not subject to mandatory redemption	22,293			7,000		5,000		—	—		34,293
Long-term debt, net	1,000,137			217,749		200,916		—	—		1,418,802
Total capitalization	2,980,071			520,623		486,779		101	(576,838	)	3,410,736
Current liabilities
Short-term borrowings-non-affiliate	25,000			—		—		—	—		25,000
Accounts payable	126,384			20,045		25,362		—	—		171,791
Interest and preferred dividends payable	16,203			4,203		2,841		—	(32	)	23,215
Taxes accrued	164,747			34,128		34,458		—	—		233,333
Regulatory liabilities	7,699			4,872		5,406		—	—		17,977
Other	46,391			15,077		20,414		—	(21,879	)	60,003
Total current liabilities	386,424			78,325		88,481		—	(21,911	)	531,319
Deferred credits and other liabilities
Deferred income taxes	271,438			54,936		56,823		—	—		383,197
Regulatory liabilities	657,210			176,101		98,948		—	—		932,259
Unamortized tax credits	60,271			16,217		15,034		—	—		91,522
Defined benefit pension and other postretirement benefit plans liability	359,174			73,147		71,338		—	—		503,659
Other	61,950			32,319		20,542		—	—		114,811
Total deferred credits and other liabilities	1,410,043			352,720		262,685		—	—		2,025,448
Total capitalization and liabilities	$	4,776,538		951,668		837,945		101	(598,749	)	$	5,967,503

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consoli-
dating
adjustments
Hawaiian Electric
Consolidated
Assets

Property, plant and equipment
Utility property, plant and equipment

Land $ 43,972
6,189
3,016
—
—
$ 53,177
Plant and equipment 4,140,892
1,206,776
1,053,372
��
—
6,401,040
Less accumulated depreciation (1,451,612 ) (528,024 ) (496,716 ) —
—
(2,476,352 )
Construction in progress 231,571
8,182
23,341
—
—
263,094
Utility property, plant and equipment, net 2,964,823
693,123
583,013
—
—
4,240,959
Nonutility property, plant and equipment, less accumulated depreciation 5,933
115
1,532
—
—
7,580
Total property, plant and equipment, net 2,970,756
693,238
584,545
—
—
4,248,539
Investment in wholly owned subsidiaries, at equity
557,013
—
—
—
(557,013 ) —
Current assets

Cash and cash equivalents 2,059
4,025
6,332
101
—
12,517
Advances to affiliates —
—
12,000
—
(12,000 ) —
Customer accounts receivable, net 86,987
22,510
18,392
—
—
127,889
Accrued unbilled revenues, net 77,176
15,940
13,938
—
—
107,054
Other accounts receivable, net 11,376
2,268
1,210
—
(7,691 ) 7,163
Fuel oil stock, at average cost 64,972
8,698
13,203
—
—
86,873
Materials and supplies, at average cost 28,325
8,041
18,031
—
—
54,397
Prepayments and other 17,928
4,514
2,913
—
—
25,355
Regulatory assets 76,203
5,038
7,149
—
—
88,390
Total current assets 365,026
71,034
93,168
101
(19,691 ) 509,638
Other long-term assets

Regulatory assets 557,464
122,783
100,660
—
—
780,907
Other 60,157
16,311
15,061
—
—
91,529
Total other long-term assets 617,621
139,094
115,721
—
—
872,436
Total assets $ 4,510,416
903,366
793,434
101
(576,704 ) $ 5,630,613
Capitalization and liabilities

Capitalization

Common stock equity $ 1,845,283
286,647
270,265
101
(557,013 ) $ 1,845,283
Cumulative preferred stock—not subject to mandatory redemption 22,293
7,000
5,000
—
—
34,293
Long-term debt, net 924,979
202,701
190,836
—
—
1,318,516
Total capitalization 2,792,555
496,348
466,101
101
(557,013 ) 3,198,092
Current liabilities

Current portion of long-term debt 29,978
10,992
8,993
�� —
—
49,963
Short-term borrowings-non-affiliate 4,999
—
—
—
—
4,999
Short-term borrowings-affiliate 12,000
—
—
—
(12,000 ) —
Accounts payable 121,328
17,855
20,427
—
—
159,610
Interest and preferred dividends payable 15,677
4,174
2,735
—
(11 ) 22,575
Taxes accrued 133,839
34,950
30,312
—
—
199,101
Regulatory liabilities 607
1,245
1,549
—
—
3,401
Other 43,121
9,818
14,197
—
(7,680 ) 59,456
Total current liabilities 361,549
79,034
78,213
—
(19,691 ) 499,105
Deferred credits and other liabilities

Deferred income taxes 281,223
56,955
55,863
—
—
394,041
Regulatory liabilities 613,329
169,139
94,901
—
—
877,369
Unamortized tax credits 59,039
16,167
15,163
—
—
90,369
Defined benefit pension and other postretirement benefit plans liability 340,983
66,447
65,518
—
—
472,948
Other 61,738
19,276
17,675
—
—
98,689
Total deferred credits and other liabilities 1,356,312
327,984
249,120
—
—
1,933,416
Total capitalization and liabilities $ 4,510,416
903,366
793,434
101
(576,704 ) $ 5,630,613

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Changes in Common Stock Equity

~~Nine~~Three months ended ~~September 30, 2018~~March 31, 2019



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Balance, December 31, 2018	$	1,957,641		295,874		280,863		101	(576,838	)	$	1,957,641
Net income for common stock	32,126			5,169		6,680		—	(11,849	)	32,126
Other comprehensive income, net of taxes	24			1		—		—	(1	)	24
Common stock dividends	(25,313		)	(2,545	)	(3,767	)	—	6,312		(25,313		)
Common stock issuance expenses	—			(2	)	—		—	2		—
Balance, March 31, 2019	$	1,964,478		298,497		283,776		101	(582,374	)	$	1,964,478

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consolidating
adjustments
Hawaiian Electric
Consolidated
Balance, December 31, 2017 $ 1,845,283
286,647
270,265
101
(557,013 ) $ 1,845,283
Net income for common stock 108,356
19,039
16,002
—
(35,041 ) 108,356
Other comprehensive income, net of taxes 85
1
—
—
(1 ) 85
Common stock dividends (77,479 ) (11,467 ) (9,014 ) —
20,481
(77,479 )
Common stock issuance expenses (8 ) —
—
—
—
(8 )
Balance, September 30, 2018 $ 1,876,237
294,220
277,253
101
(571,574 ) $ 1,876,237

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Changes in Common Stock Equity

~~Nine~~Three months ended ~~September 30, 2017~~March 31, 2018



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Balance, December 31, 2017	$	1,845,283		286,647		270,265		101	(557,013	)	$	1,845,283
Net income for common stock	27,475			6,101		3,224		—	(9,325	)	27,475
Other comprehensive income, net of taxes	31			—		—		—	—		31
Common stock dividends	(25,826		)	(3,821	)	(3,006	)	—	6,827		(25,826		)
Common stock issuance expenses	(8		)	—		—		—	—		(8		)
Balance, March 31, 2018	$	1,846,955		288,927		270,483		101	(559,511	)	$	1,846,955

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consolidating
adjustments
Hawaiian Electric
Consolidated
Balance, December 31, 2016 $ 1,799,787
291,291
259,554
101
(550,946 ) $ 1,799,787
Net income for common stock 94,596
14,650
14,656
—
(29,306 ) 94,596
Other comprehensive income, net of taxes 521
1
—
—
(1 ) 521
Common stock dividends (65,825 ) (11,622 ) (8,959 ) —
20,581
(65,825 )
Common stock issuance expenses (4 ) (1 ) —
—
1
(4 )
Balance, September 30, 2017 $ 1,829,075
294,319
265,251
101
(559,671 ) $ 1,829,075

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

~~Nine~~Three months ended ~~September 30, 2018~~March 31, 2019



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Cash flows from operating activities
Net income	$	32,396		5,303		6,775		—	(11,849	)	$	32,625
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of subsidiaries	(11,874		)	—		—		—	11,849		(25		)
Common stock dividends received from subsidiaries	6,311			—		—		—	(6,311	)	—
Depreciation of property, plant and equipment	35,867			10,453		7,627		—	—		53,947
Other amortization	5,740			1,072		(98	)	—	—		6,714
Deferred income taxes	(2,757		)	(987	)	617		—	—		(3,127		)
Allowance for equity funds used during construction	(2,447		)	(132	)	(331	)	—	—		(2,910		)
Other	(1,288		)	(145	)	(384	)	—	—		(1,817		)
Changes in assets and liabilities:
Decrease in accounts receivable	42,419			4,194		5,633		—	(15,083	)	37,163
Decrease in accrued unbilled revenues	18,745			3,653		3,435		—	—		25,833
Decrease (increase) in fuel oil stock	(36,828		)	230		34		—	—		(36,564		)
Increase in materials and supplies	(475		)	(883	)	(23	)	—	—		(1,381		)
Increase in regulatory assets	(1,114		)	(212	)	(3,714	)	—	—		(5,040		)
Increase (decrease) in accounts payable	6,251			(4,253	)	(2,925	)	—	—		(927		)
Change in prepaid and accrued income taxes, tax credits and revenue taxes	(25,874		)	(4,078	)	(4,716	)	—	—		(34,668		)
Increase in defined benefit pension and other postretirement benefit plans liability	2,322			313		356		—	—		2,991
Change in other assets and liabilities	(9,249		)	(5,783	)	(3,449	)	—	15,083		(3,398		)
Net cash provided by operating activities	58,145			8,745		8,837		—	(6,311	)	69,416
Cash flows from investing activities
Capital expenditures	(78,220		)	(8,371	)	(16,300	)	—	—		(102,891		)
Advances (to) from affiliates	(9,500		)	(9,200	)	—		—	18,700		—
Other	1,221			(293	)	(134	)	—	—		794
Net cash used in investing activities	(86,499		)	(17,864	)	(16,434	)	—	18,700		(102,097		)
Cash flows from financing activities
Common stock dividends	(25,313		)	(2,544	)	(3,767	)	—	6,311		(25,313		)
Preferred stock dividends of Hawaiian Electric and subsidiaries	(270		)	(134	)	(95	)	—	—		(499		)
Increase (decrease) in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less	15,199			—		9,500		—	(18,700	)	5,999
Proceeds from other bank borrowings	25,000			—		—		—	—		25,000
Other	—			(1	)	(1	)	—	—		(2		)
Net cash provided by (used in) financing activities	14,616			(2,679	)	5,637		—	(12,389	)	5,185
Net decrease in cash and cash equivalents	(13,738		)	(11,798	)	(1,960	)	—	—		(27,496		)
Cash and cash equivalents, beginning of period	16,732			15,623		3,421		101	—		35,877
Cash and cash equivalents, end of period	$	2,994		3,825		1,461		101	—		$	8,381

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric
Other
subsidiaries

Consolidating
adjustments
Hawaiian Electric
Consolidated
Cash flows from operating activities

Net income $ 109,166
19,439
16,288
—
(35,041 ) $ 109,852
Adjustments to reconcile net income to net cash provided by operating activities:

Equity in earnings of subsidiaries (35,116 ) —
—
—
35,041
(75 )
Common stock dividends received from subsidiaries 20,531
—
—
—
(20,481 ) 50
Depreciation of property, plant and equipment 103,112
30,165
18,533
—
—
151,810
Other amortization 15,159
3,992
672
—
—
19,823
Deferred income taxes 7,182
1,195
4,458
—
—
12,835
Allowance for equity funds used during construction (7,123 ) (274 ) (842 ) —
—
(8,239 )
Other (1,227 ) (315 ) (410 ) —
—
(1,952 )
Changes in assets and liabilities:

Increase in accounts receivable (41,566 ) (6,738 ) (6,499 ) —
1,664
(53,139 )
Decrease (increase) in accrued unbilled revenues (17,780 ) 130
(2,998 ) —
—
(20,648 )
Decrease (increase) in fuel oil stock 3,862
(2,785 ) (6,026 ) —
—
(4,949 )
Decrease (increase) in materials and supplies (4,082 ) 201
(229 ) —
—
(4,110 )
Increase in regulatory assets (1,704 ) (2,245 ) (2,525 ) —
—
(6,474 )
Increase (decrease) in accounts payable (10,541 ) 234
1,595
—
—
(8,712 )
Change in prepaid and accrued income taxes, tax credits and revenue taxes (20,949 ) (9,828 ) (6,029 ) —
(331 ) (37,137 )
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability 6,018
(570 ) 440
—
—
5,888
Change in other assets and liabilities 34,934
2,602
3,027
—
(1,664 ) 38,899
Net cash provided by operating activities 159,876
35,203
19,455
—
(20,812 ) 193,722
Cash flows from investing activities

��
Capital expenditures (245,393 ) (43,417 ) (45,920 ) —
—
(334,730 )
Contributions in aid of construction 19,486
2,960
1,915
—
—
24,361
Other 4,518
1,177
3,785
—
331
9,811
Advances (to) from affiliates (2,000 ) —
12,000
—
(10,000 ) —
Net cash used in investing activities (223,389 ) (39,280 ) (28,220 ) —
(9,669 ) (300,558 )
Cash flows from financing activities

Common stock dividends (77,479 ) (11,467 ) (9,014 ) —
20,481
(77,479 )
Preferred stock dividends of Hawaiian Electric and subsidiaries (810 ) (400 ) (286 ) —
—
(1,496 )
Proceeds from issuance of long-term debt 75,000
15,000
10,000
—
—
100,000
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less 68,914
—
2,000
—
10,000
80,914
Other (304 ) (54 ) (38 ) —
—
(396 )
Net cash provided by financing activities 65,321
3,079
2,662
—
30,481
101,543
Net increase (decrease) in cash and cash equivalents 1,808
(998 ) (6,103 ) —
—
(5,293 )
Cash and cash equivalents, beginning of period 2,059
4,025
6,332
101
—
12,517
Cash and cash equivalents, end of period $ 3,867
3,027
229
101
—
$ 7,224

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

~~Nine~~Three months ended ~~September 30, 2017~~March 31, 2018



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Cash flows from operating activities
Net income	$	27,745		6,235		3,319		—	(9,325	)	$	27,974
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of subsidiaries	(9,350		)	—		—		—	9,325		(25		)
Common stock dividends received from subsidiaries	6,827			—		—		—	(6,827	)	—
Depreciation of property, plant and equipment	34,439			10,055		5,972		—	—		50,466
Other amortization	3,237			1,554		553		—	—		5,344
Deferred income taxes	(271		)	(1,806	)	497		—	—		(1,580		)
Allowance for equity funds used during construction	(2,887		)	(111	)	(296	)	—	—		(3,294		)
Other	2,868			(103	)	(84	)	—	—		2,681
Changes in assets and liabilities:
Increase in accounts receivable	(13,255		)	(2,048	)	(1,396	)	—	1,662		(15,037		)
Increase in accrued unbilled revenues	6,558			758		103		—	—		7,419
Decrease (increase) in fuel oil stock	(1,322		)	(803	)	275		—	—		(1,850		)
Decrease (increase) in materials and supplies	(1,095		)	(550	)	350		—	—		(1,295		)
Increase in regulatory assets	(13,256		)	(1,773	)	(1,871	)	—	—		(16,900		)
Increase (decrease) in accounts payable	(2,028		)	4,050		3,121		—	—		5,143
Change in prepaid and accrued income taxes, tax credits and revenue taxes	(25,892		)	(1,882	)	(5,532	)	—	440		(32,866		)
Decrease in defined benefit pension and other postretirement benefit plans liability	(592		)	(198	)	(148	)	—	—		(938		)
Change in other assets and liabilities	2,976			2,875		349		—	(1,662	)	4,538
Net cash provided by operating activities	14,702			16,253		5,212		—	(6,387	)	29,780
Cash flows from investing activities
Capital expenditures	(80,899		)	(14,505	)	(14,723	)	—	—		(110,127		)
Advances (to) from affiliates	(3,000		)	—		12,000		—	(9,000	)	—
Other	269			264		510		—	(440	)	603
Net cash used in investing activities	(83,630		)	(14,241	)	(2,213	)	—	(9,440	)	(109,524		)
Cash flows from financing activities
Common stock dividends	(25,826		)	(3,821	)	(3,006	)	—	6,827		(25,826		)
Preferred stock dividends of Hawaiian Electric and subsidiaries	(270		)	(134	)	(95	)	—	—		(499		)
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less	104,984			3,000		—		—	9,000		116,984
Other	(31		)	(2	)	—		—	—		(33		)
Net cash provided by (used in) financing activities	78,857			(957	)	(3,101	)	—	15,827		90,626
Net increase (decrease) in cash and cash equivalents	9,929			1,055		(102	)	—	—		10,882
Cash and cash equivalents, beginning of period	2,059			4,025		6,332		101	—		12,517
Cash and cash equivalents, end of period	$	11,988		5,080		6,230		101	—		$	23,399

(in thousands) Hawaiian Electric Hawaii Electric Light Maui Electric Other
subsidiaries Consolidating
adjustments Hawaiian Electric
Consolidated
Cash flows from operating activities

Net income $ 95,406
15,050
14,942
—
(29,306 ) $ 96,092
Adjustments to reconcile net income to net cash provided by operating activities:

Equity in earnings of subsidiaries (29,381 ) —
—
—
29,306
(75 )
Common stock dividends received from subsidiaries 20,656
—
—
—
(20,581 ) 75
Depreciation of property, plant and equipment 98,167
29,056
17,355
—
—
144,578
Other amortization 2,168
1,718
2,232
—
—
6,118
Deferred income taxes 12,166
5,237
7,493
—
4,641
29,537
Allowance for equity funds used during construction (7,823 ) (416 ) (669 ) —
—
(8,908 )
Other 216
566
(256 ) —
—
526
Changes in assets and liabilities:
Increase in accounts receivable (6,114 ) (1,127 ) (1,912 ) —
1,066
(8,087 )
Increase in accrued unbilled revenues (14,823 ) (1,581 ) (1,610 ) —
—
(18,014 )
Decrease (increase) in fuel oil stock 6,779
195
(797 ) —
—
6,177
Decrease (increase) in materials and supplies 1,063
(1,580 ) (1,763 ) —
—
(2,280 )
Decrease (increase) in regulatory assets 9,471
(2,935 ) (2,614 ) —
—
3,922
Increase (decrease) in accounts payable 7,010
(2,660 ) 1,780
—
—
6,130
Change in prepaid and accrued income taxes, tax credits and revenue taxes 10,920
(758 ) 210
—
(5,081 ) 5,291
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability 532
39
(118 ) —
—
453
Change in other assets and liabilities (2,709 ) 1,059
54
—
(1,066 ) (2,662 )
Net cash provided by operating activities 203,704
41,863
34,327
—
(21,021 ) 258,873
Cash flows from investing activities

Capital expenditures (236,727 ) (36,700 ) (33,548 ) —
—
(306,975 )
Contributions in aid of construction 34,787
3,460
2,356
—
—
40,603
Other 6,089
871
714
—
440
8,114
Advances (to) from affiliates —
(3,100 ) 6,000
—
(2,900 ) —
Net cash used in investing activities (195,851 ) (35,469 ) (24,478 ) —
(2,460 ) (258,258 )
Cash flows from financing activities

Common stock dividends (65,825 ) (11,622 ) (8,959 ) —
20,581
(65,825 )
Preferred stock dividends of Hawaiian Electric and subsidiaries (810 ) (400 ) (286 ) —
—
(1,496 )
Proceeds from issuance of special purpose revenue bonds 162,000
28,000
75,000
—

265,000
Funds transferred for redemption of special purpose revenue bonds (162,000 ) (28,000 ) (75,000 ) —
—
(265,000 )
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less 3,100
—
—
—
2,900
6,000
Other (2,252 ) (407 ) (934 ) —
—
(3,593 )
Net cash used in financing activities (65,787 ) (12,429 ) (10,179 ) —
23,481
(64,914 )
Net decrease in cash and cash equivalents (57,934 ) (6,035 ) (330 ) —
—
(64,299 )
Cash and cash equivalents, beginning of period 61,388
10,749
2,048
101
—
74,286
Cash and cash equivalents, end of period $ 3,454
4,714
1,718
101
—
$ 9,987

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Note 4 · Bank segment

Selected financial information

American Savings Bank, F.S.B.

Statements of Income Data



	Three months ended March 31
(in thousands)	2019		2018
Interest and dividend income
Interest and fees on loans	$	57,860	$	52,800
Interest and dividends on investment securities	10,628		9,202
Total interest and dividend income	68,488		62,002
Interest expense
Interest on deposit liabilities	4,252		2,957
Interest on other borrowings	528		496
Total interest expense	4,780		3,453
Net interest income	63,708		58,549
Provision for loan losses	6,870		3,541
Net interest income after provision for loan losses	56,838		55,008
Noninterest income
Fees from other financial services	4,562		4,654
Fee income on deposit liabilities	5,078		5,189
Fee income on other financial products	1,593		1,654
Bank-owned life insurance	2,259		871
Mortgage banking income	614		613
Other income, net	458		436
Total noninterest income	14,564		13,417
Noninterest expense
Compensation and employee benefits	25,512		24,440
Occupancy	4,670		4,280
Data processing	3,738		3,464
Services	2,426		3,047
Equipment	2,064		1,728
Office supplies, printing and postage	1,360		1,507
Marketing	990		645
FDIC insurance	626		713
Other expense	3,854		4,101
Total noninterest expense	45,240		43,925
Income before income taxes	26,162		24,500
Income taxes	5,323		5,540
Net income	$	20,839	$	18,960

Three months ended September 30 Nine months ended September 30
(in thousands) 2018 2017 2018 2017
Interest and dividend income

Interest and fees on loans $ 55,885
$ 52,210
$ 163,318
$ 155,269
Interest and dividends on investment securities 9,300
6,850
27,130
20,593
Total interest and dividend income 65,185
59,060
190,448
175,862
Interest expense

Interest on deposit liabilities 3,635
2,444
9,876
6,858
Interest on other borrowings 404
470
1,293
2,110
Total interest expense 4,039
2,914
11,169
8,968
Net interest income 61,146
56,146
179,279
166,894
Provision for loan losses 6,033
490
12,337
7,231
Net interest income after provision for loan losses 55,113
55,656
166,942
159,663
Noninterest income

Fees from other financial services 4,543
5,635
13,941
17,055
Fee income on deposit liabilities 5,454
5,533
15,781
16,526
Fee income on other financial products 1,746
1,904
5,075
5,741
Bank-owned life insurance 2,663
1,257
4,667
4,165
Mortgage banking income 169
520
1,399
1,896
Other income, net 736
380
1,708
1,229
Total noninterest income 15,311
15,229
42,571
46,612
Noninterest expense

Compensation and employee benefits 23,952
23,512
72,047
71,095
Occupancy 4,363
4,284
12,837
12,623
Data processing 3,583
3,262
10,587
9,749
Services 2,485
2,863
8,560
7,989
Equipment 1,783
1,814
5,385
5,333
Office supplies, printing and postage 1,556
1,444
4,554
4,506
Marketing 993
934
2,723
2,290
FDIC insurance 638
746
2,078
2,296
Other expense 4,240
5,262
12,897
14,674
Total noninterest expense 43,593
44,121
131,668
130,555
Income before income taxes 26,831
26,764
77,845
75,720
Income taxes 5,610
9,172
17,103
25,582
Net income $ 21,221
$ 17,592
$ 60,742
$ 50,138

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Reconciliation to amounts per HEI Condensed Consolidated Statements of Income*:



	Three months ended March 31
(in thousands)	2019			2018
Interest and dividend income	$	68,488		$	62,002
Noninterest income	14,564			13,417
*Revenues-Bank	83,052			75,419
Total interest expense	4,780			3,453
Provision for loan losses	6,870			3,541
Noninterest expense	45,240			43,925
Less: Retirement defined benefits gain (expense)—other than service costs	40			(387		)
*Expenses-Bank	56,930			50,532
*Operating income-Bank	26,122			24,887
Add back: Retirement defined benefits gain (expense)—other than service costs	(40		)	387
Income before income taxes	$	26,162		$	24,500

Three months ended September 30 Nine months ended September 30
(in thousands) 2018 2017 2018 2017
Interest and dividend income 65,185
59,060
$ 190,448
$ 175,862
Noninterest income 15,311
15,229
42,571
46,612
*Revenues-Bank 80,496
74,289
233,019
222,474
Total interest expense 4,039
2,914
11,169
8,968
Provision for loan losses 6,033
490
12,337
7,231
Noninterest expense 43,593
44,121
131,668
130,555
Less: Retirement defined benefits expense—other than service costs (433 ) (212 ) (1,223 ) (608 )
*Expenses-Bank 53,232
47,313
153,951
146,146
*Operating income-Bank 27,264
26,976
79,068
76,328
Add back: Retirement defined benefits expense—other than service costs 433
212
1,223
608
Income before income taxes $ 26,831
$ 26,764
$ 77,845
$ 75,720

American Savings Bank, F.S.B.

Statements of Comprehensive Income Data



	Three months ended March 31
(in thousands)	2019			2018
Net income	$	20,839		$	18,960
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on available-for-sale investment securities:
Net unrealized gains (losses) on available-for-sale investment securities arising during the period, net of (taxes) benefits of $(3,455) and $4,867, respectively	9,439			(13,297		)
Retirement benefit plans:
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of (taxes) benefits of $(1,166) and $694, respectively	(3,187		)	1,222
Other comprehensive income (loss), net of taxes	6,252			(12,075		)
Comprehensive income	$	27,091		$	6,885

Three months ended September 30 Nine months ended September 30
(in thousands) 2018 2017 2018 2017
Net income $ 21,221
$ 17,592
$ 60,742
$ 50,138
Other comprehensive income (loss), net of taxes:

Net unrealized gains (losses) on available-for-sale investment securities:

Net unrealized gains (losses) on available-for-sale investment securities arising during the period, net of tax benefits (taxes) of $1,876, $(137), $8,335 and $(1,619), respectively (5,123 ) 208
(22,768 ) 2,452
Retirement benefit plans:

Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $141, $138, $968 and $675, respectively 382
209
1,970
1,023
Other comprehensive income (loss), net of taxes (4,741 ) 417
(20,798 ) 3,475
Comprehensive income $ 16,480
$ 18,009
$ 39,944
$ 53,613

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

American Savings Bank, F.S.B.

Balance Sheets Data


(in thousands)	September 30, 2018						December 31, 2017						March 31, 2019						December 31, 2018
Assets
Cash and due from banks				$	119,453					$	140,934					$	136,585					$	122,059
Interest-bearing deposits				39,575						93,165						31,703						4,225
Investment securities
Available-for-sale, at fair value				1,387,571						1,401,198						1,348,263						1,388,533
Held-to-maturity, at amortized cost (fair value of $99,929 and $44,412, respectively)				102,498						44,515
Held-to-maturity, at amortized cost (fair value of $142,333 and $142,057, respectively)																140,203						141,875
Stock in Federal Home Loan Bank, at cost				8,158						9,706						9,434						9,958
Loans held for investment				4,754,359						4,670,768						4,858,180						4,843,021
Allowance for loan losses				(54,127		)				(53,637		)				(54,297		)				(52,119		)
Net loans				4,700,232						4,617,131						4,803,883						4,790,902
Loans held for sale, at lower of cost or fair value				1,036						11,250						8,136						1,805
Other				488,743						398,570						501,970						486,347
Goodwill				82,190						82,190						82,190						82,190
Total assets				$	6,929,456					$	6,798,659					$	7,062,367					$	7,027,894
Liabilities and shareholder’s equity
Deposit liabilities—noninterest-bearing				$	1,789,351					$	1,760,233					$	1,879,244					$	1,800,727
Deposit liabilities—interest-bearing				4,341,064						4,130,364						4,326,415						4,358,125
Other borrowings				71,110						190,859						89,870						110,040
Other				115,401						110,356						122,651						124,613
Total liabilities				6,316,926						6,191,812						6,418,180						6,393,505
Commitments and contingencies
Common stock				1						1						1						1
Additional paid in capital				346,757						345,018
Additional paid-in capital																347,877						347,170
Retained earnings				317,519						292,957						328,125						325,286
Accumulated other comprehensive loss, net of tax benefits
Net unrealized losses on securities	$	(37,719	)				$	(14,951	)				$	(14,984	)				$	(24,423	)
Retirement benefit plans	(14,028		)	(51,747		)	(16,178		)	(31,129		)	(16,832		)	(31,816		)	(13,645		)	(38,068		)
Total shareholder’s equity				612,530						606,847						644,187						634,389
Total liabilities and shareholder’s equity				$	6,929,456					$	6,798,659					$	7,062,367					$	7,027,894

Other assets
Bank-owned life insurance				$	150,772					$	148,775					$	150,705					$	151,172
Premises and equipment, net				203,062						136,270						208,309						214,415
Prepaid expenses				5,477						3,961
Accrued interest receivable				19,818						18,724						20,654						20,140
Mortgage-servicing rights				8,426						8,639						7,897						8,062
Low-income housing equity investments				69,865						59,016						65,428						67,626
Real estate acquired in settlement of loans, net				438						133						—						406
Real estate held for sale																9,014						—
Other				30,885						23,052						39,963						24,526
				$	488,743					$	398,570					$	501,970					$	486,347
Other liabilities
Accrued expenses				$	56,830					$	39,312					$	36,067					$	54,084
Federal and state income taxes payable				1,287						3,736						5,391						2,012
Cashier’s checks				23,711						27,000						27,432						26,906
Advance payments by borrowers				4,998						10,245						5,956						10,183
Other				28,575						30,063						47,805						31,428
				$	115,401					$	110,356					$	122,651					$	124,613

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Bank-owned life insurance is life insurance purchased by ASB on the lives of certain key employees, with ASB as the beneficiary. The insurance is used to fund employee benefits through tax-free income from increases in the cash value of the policies and insurance proceeds paid to ASB upon an insured’s death.

Other borrowings consisted of securities sold under agreements to repurchase and advances from the Federal Home Loan Bank (FHLB) of $7165 million and ~~nil, respectively, as of~~ ~~September 30, 2018~~ ~~and $141 million and $50~~$25 million, respectively, as of March 31, 2019 and $65 million and $45 million, respectively, as of December 31, ~~2017~~2018.

Investment securities. The major components of investment securities were as follows:



	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Gross unrealized losses
										Less than 12 months						12 months or longer
(dollars in thousands)										Number of issues	Fair value		Amount			Number of issues	Fair value		Amount
March 31, 2019
Available-for-sale
U.S. Treasury and federal agency obligations	$	142,179	$	93	$	(1,428	)	$	140,844	2	$	10,022	$	(7	)	20	$	117,499	$	(1,421	)
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	1,149,167		1,318		(21,498		)	1,128,987		3	13,792		(10		)	161	1,010,168		(21,488		)
Corporate bonds	49,417		1,045		—			50,462		—	—		—			—	—		—
Mortgage revenue bonds	27,970		—		—			27,970		—	—		—			—	—		—
	$	1,368,733	$	2,456	$	(22,926	)	$	1,348,263	5	$	23,814	$	(17	)	181	$	1,127,667	$	(22,909	)
Held-to-maturity
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	$	140,203	$	2,528	$	(398	)	$	142,333	—	$	—	$	—		3	$	39,027	$	(398	)
	$	140,203	$	2,528	$	(398	)	$	142,333	—	$	—	$	—		3	$	39,027	$	(398	)
December 31, 2018
Available-for-sale
U.S. Treasury and federal agency obligations	$	156,694	$	62	$	(2,407	)	$	154,349	5	$	25,882	$	(208	)	19	$	118,405	$	(2,199	)
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	1,192,169		789		(31,542		)	1,161,416		22	129,011		(1,330		)	145	947,890		(30,212		)
Corporate bonds	49,398		103		(369		)	49,132		6	23,175		(369		)	—	—		—
Mortgage revenue bonds	23,636		—		—			23,636		—	—		—			—	—		—
	$	1,421,897	$	954	$	(34,318	)	$	1,388,533	33	$	178,068	$	(1,907	)	164	$	1,066,295	$	(32,411	)
Held-to-maturity
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	$	141,875	$	1,446	$	(1,264	)	$	142,057	3	$	29,814	$	(400	)	2	$	31,505	$	(864	)
	$	141,875	$	1,446	$	(1,264	)	$	142,057	3	$	29,814	$	(400	)	2	$	31,505	$	(864	)

Amortized cost Gross unrealized gains Gross unrealized losses
Estimated fair
value
Gross unrealized losses
Less than 12 months 12 months or longer
(dollars in thousands) Number of issues
Fair
value
Amount Number of issues
Fair
value
Amount
September 30, 2018

Available-for-sale
U.S. Treasury and federal agency obligations $ 175,144
$ 24
$ (4,754 ) $ 170,414
11
$ 67,258
$ (1,339 ) 17
$ 93,132
$ (3,415 )
Mortgage-related securities- FNMA, FHLMC and GNMA 1,195,492
292
(47,094 ) 1,148,690
59
473,714
(13,996 ) 111
666,149
(33,098 )
Corporate bonds 49,378
46
(41 ) 49,383
5
22,839
(41 ) —
—
—
Mortgage revenue bonds 19,084
—
—
19,084
—
—
—
—
—
—
$ 1,439,098
$ 362
$ (51,889 ) $ 1,387,571
75
$ 563,811
$ (15,376 ) 128
$ 759,281
$ (36,513 )
Held-to-maturity
Mortgage-related securities- FNMA, FHLMC and GNMA $ 102,498
$ —
$ (2,569 ) $ 99,929
7
$ 99,929
$ (2,569 ) —
$ —
$ —
$ 102,498
$ —
$ (2,569 ) $ 99,929
7
$ 99,929
$ (2,569 ) —
$ —
$ —
December 31, 2017
Available-for-sale
U.S. Treasury and federal agency obligations $ 185,891
$ 438
$ (2,031 ) $ 184,298
15
$ 83,137
$ (825 ) 8
$ 62,296
$ (1,206 )
Mortgage-related securities- FNMA, FHLMC and GNMA 1,220,304
793
(19,624 ) 1,201,473
67
653,635
(6,839 ) 77
459,912
(12,785 )
Mortgage revenue bond 15,427
—
—
15,427
—
—
—
—
—
—
$ 1,421,622
$ 1,231
$ (21,655 ) $ 1,401,198
82
$ 736,772
$ (7,664 ) 85
$ 522,208
$ (13,991 )
Held-to-maturity
Mortgage-related securities- FNMA, FHLMC and GNMA $ 44,515
$ 1
$ (104 ) $ 44,412
2
$ 35,744
$ (104 ) —
$ —
$ —
$ 44,515
$ 1
$ (104 ) $ 44,412
2
$ 35,744
$ (104 ) —
$ —
$ —

ASB does not believe that the investment securities that were in an unrealized loss position at ~~September 30, 2018,~~March 31, 2019, represent an other-than-temporary impairment (OTTI). Total gross unrealized losses were primarily attributable to ~~rising interest rates relative to when~~change in market conditions. On a quarterly basis the investment securities ~~were purchased and not due to the credit quality~~are evaluated for changes in financial condition of the issuer. Based upon ASB’s evaluation, all securities held within the investment ~~securities.~~portfolio continue to be investment grade by one or more agencies. The contractual cash flows of the U.S. Treasury, federal agency obligations and ~~mortgage-related~~agency mortgage-backed securities are backed by the full faith and credit guaranty of the United States government or an agency of the government. ~~The corporate bonds are all investment grade and rated A- or higher.~~ ASB does not intend to sell the securities before the recovery of its amortized cost basis and there have been no adverse changes in the timing of the contractual cash flows for the securities. ASB did not recognize OTTI for the quarters ended March 31, 2019 and ~~nine months ended September 30, 2018 and 2017.~~2018.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

U.S. Treasury, federal agency obligations, corporate bonds, and mortgage revenue bonds have contractual terms to maturity. ~~Mortgage-related~~Mortgage-backed securities have contractual terms to maturity, but require periodic payments to reduce principal. In addition, expected maturities will differ from contractual maturities because borrowers have the right to prepay the underlying mortgages.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

The contractual maturities of investment securities were as follows:



March 31, 2019	Amortized cost		Fair value
(in thousands)
Available-for-sale
Due in one year or less	$	15,000	$	14,960
Due after one year through five years	133,142		133,294
Due after five years through ten years	55,997		55,595
Due after ten years	15,427		15,427
	219,566		219,276
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	1,149,167		1,128,987
Total available-for-sale securities	$	1,368,733	$	1,348,263
Held-to-maturity
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	$	140,203	$	142,333
Total held-to-maturity securities	$	140,203	$	142,333

September 30, 2018 Amortized cost Fair value
(in thousands)
Available-for-sale
Due in one year or less $ 25,004
$ 24,896
Due after one year through five years 108,364
106,774
Due after five years through ten years 82,720
80,439
Due after ten years 27,518
26,772
243,606
238,881
Mortgage-related securities-FNMA, FHLMC and GNMA 1,195,492
1,148,690
Total available-for-sale securities $ 1,439,098
$ 1,387,571
Held-to-maturity
Mortgage-related securities-FNMA, FHLMC and GNMA $ 102,498
$ 99,929
Total held-to-maturity securities $ 102,498
$ 99,929

Proceeds from the sale of available-for-sale securities were nil for both the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018. Gross realized gains and losses were nil for both the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018.

Loans. The components of loans were summarized as follows:



	March 31, 2019			December 31, 2018
(in thousands)
Real estate:
Residential 1-4 family	$	2,159,886		$	2,143,397
Commercial real estate	737,489			748,398
Home equity line of credit	995,624			978,237
Residential land	12,941			13,138
Commercial construction	98,734			92,264
Residential construction	10,924			14,307
Total real estate	4,015,598			3,989,741
Commercial	576,235			587,891
Consumer	266,437			266,002
Total loans	4,858,270			4,843,634
Less: Deferred fees and discounts	(90		)	(613		)
Allowance for loan losses	(54,297		)	(52,119		)
Total loans, net	$	4,803,883		$	4,790,902

September 30, 2018 December 31, 2017
(in thousands)

Real estate:

Residential 1-4 family $ 2,110,489
$ 2,118,047
Commercial real estate 733,749
733,106
Home equity line of credit 949,872
913,052
Residential land 12,982
15,797
Commercial construction 112,838
108,273
Residential construction 13,441
14,910
Total real estate 3,933,371
3,903,185
Commercial 574,243
544,828
Consumer 247,058
223,564
Total loans 4,754,672
4,671,577
Less: Deferred fees and discounts (313 ) (809 )
Allowance for loan losses (54,127 ) (53,637 )
Total loans, net $ 4,700,232
$ 4,617,131

ASB's policy is to require private mortgage insurance on all real estate loans when the loan-to-value ratio of the property exceeds 80% of the lower of the appraised value or purchase price at origination. For non-owner occupied residential properties, the loan-to-value ratio may not exceed 80% of the lower of the appraised value or purchase price at origination. ASB is subject to the risk that the private mortgage insurance company cannot satisfy the bank's claim on policies.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

Allowance for loan losses.The allowance for loan losses (balances and changes) and financing receivables were as follows:



(in thousands)	Residential 1-4 family			Commercial real estate		Home equity line of credit		Residential land			Commercial construction			Residential construction			Commercial loans			Consumer loans			Total
Three months ended March 31, 2019
Allowance for loan losses:
Beginning balance	$	1,976		$	14,505	$	6,371	$	479		$	2,790		$	4		$	9,225		$	16,769		$	52,119
Charge-offs	(14		)	—		—		—			—			—			(618		)	(5,559		)	(6,191		)
Recoveries	609			—		5		7			—			—			180			698			1,499
Provision	(660		)	320		117		(61		)	53			(1		)	2,027			5,075			6,870
Ending balance	$	1,911		$	14,825	$	6,493	$	425		$	2,843		$	3		$	10,814		$	16,983		$	54,297
March 31, 2019
Ending balance: individually evaluated for impairment	$	771		$	7	$	491	$	4		$	—		$	—		$	2,965		$	4		$	4,242
Ending balance: collectively evaluated for impairment	$	1,140		$	14,818	$	6,002	$	421		$	2,843		$	3		$	7,849		$	16,979		$	50,055
Financing Receivables:
Ending balance	$	2,159,886		$	737,489	$	995,624	$	12,941		$	98,734		$	10,924		$	576,235		$	266,437		$	4,858,270
Ending balance: individually evaluated for impairment	$	17,403		$	902	$	14,046	$	2,065		$	—		$	—		$	15,895		$	88		$	50,399
Ending balance: collectively evaluated for impairment	$	2,142,483		$	736,587	$	981,578	$	10,876		$	98,734		$	10,924		$	560,340		$	266,349		$	4,807,871
Three months ended March 31, 2018
Allowance for loan losses:
Beginning balance	$	2,902		$	15,796	$	7,522	$	896		$	4,671		$	12		$	10,851		$	10,987		$	53,637
Charge-offs	(31		)	—		—		(8		)	—			—			(602		)	(4,232		)	(4,873		)
Recoveries	54			—		14		5			—			—			1,170			347			1,590
Provision	(400		)	163		446		(219		)	(310		)	(8		)	(1,064		)	4,933			3,541
Ending balance	$	2,525		$	15,959	$	7,982	$	674		$	4,361		$	4		$	10,355		$	12,035		$	53,895
December 31, 2018
Ending balance: individually evaluated for impairment	$	876		$	7	$	701	$	6		$	—		$	—		$	628		$	4		$	2,222
Ending balance: collectively evaluated for impairment	$	1,100		$	14,498	$	5,670	$	473		$	2,790		$	4		$	8,597		$	16,765		$	49,897
Financing Receivables:
Ending balance	$	2,143,397		$	748,398	$	978,237	$	13,138		$	92,264		$	14,307		$	587,891		$	266,002		$	4,843,634
Ending balance: individually evaluated for impairment	$	16,494		$	915	$	14,800	$	2,059		$	—		$	—		$	5,340		$	89		$	39,697
Ending balance: collectively evaluated for impairment	$	2,126,903		$	747,483	$	963,437	$	11,079		$	92,264		$	14,307		$	582,551		$	265,913		$	4,803,937

(in thousands)
Residential
1-4 family

Commercial real
estate
Home
equity line of credit Residential land Commercial construction Residential construction Commercial loans Consumer loans Unallo-cated Total
Three months ended September 30, 2018

Allowance for loan losses:

Beginning balance $ 2,939
$ 15,298
$ 7,334
$ 642
$ 4,616
$ 4
$ 10,161
$ 11,809
$ —
$ 52,803
Charge-offs —
—
(80 ) (1 ) —
—
(788 ) (4,508 ) —
(5,377 )
Recoveries 5
—
71
122
—
—
105
365
—
668
Provision (623 ) (1,033 ) (347 ) (296 ) (356 ) —
1,255
7,433
—
6,033
Ending balance $ 2,321
$ 14,265
$ 6,978
$ 467
$ 4,260
$ 4
$ 10,733
$ 15,099
$ —
$ 54,127
Three months ended September 30, 2017

Allowance for loan losses:

Beginning balance $ 3,130
$ 18,840
$ 5,527
$ 1,264
$ 4,706
$ 9
$ 14,552
$ 8,328
$ —
$ 56,356
Charge-offs (522 ) —
—
—
—
—
(1,215 ) (3,160 ) —
(4,897 )
Recoveries 33
—
164
259
—
—
326
316
—
1,098
Provision 347
(2,800 ) (36 ) (141 ) 370
2
(595 ) 3,343
—
490
Ending balance $ 2,988
$ 16,040
$ 5,655
$ 1,382
$ 5,076
$ 11
$ 13,068
$ 8,827
$ —
$ 53,047
Nine months ended September 30, 2018

Allowance for loan losses:

Beginning balance $ 2,902
$ 15,796
$ 7,522
$ 896
$ 4,671
$ 12
$ 10,851
$ 10,987
$ —
$ 53,637
Charge-offs (31 ) —
(224 ) (18 ) —
—
(1,930 ) (12,628 ) —
(14,831 )
Recoveries 73
—
98
173
—
—
1,555
1,085
—
2,984
Provision (623 ) (1,531 ) (418 ) (584 ) (411 ) (8 ) 257
15,655
—
12,337
Ending balance $ 2,321
$ 14,265
$ 6,978
$ 467
$ 4,260
$ 4
$ 10,733
$ 15,099
$ —
$ 54,127
September 30, 2018
Ending balance: individually evaluated for impairment $ 1,020
$ 51
$ 1,088
$ —
$ —
$ —
$ 728
$ 3
$ 2,890
Ending balance: collectively evaluated for impairment $ 1,301
$ 14,214
$ 5,890
$ 467
$ 4,260
$ 4
$ 10,005
$ 15,096
$ —
$ 51,237
Financing Receivables:

Ending balance $ 2,110,489
$ 733,749
$ 949,872
$ 12,982
$ 112,838
$ 13,441
$ 574,243
$ 247,058
$ 4,754,672
Ending balance: individually evaluated for impairment $ 17,703
$ 981
$ 14,602
$ 2,057
$ —
$ —
$ 5,727
$ 90
$ 41,160
Ending balance: collectively evaluated for impairment $ 2,092,786
$ 732,768
$ 935,270
$ 10,925
$ 112,838
$ 13,441
$ 568,516
$ 246,968
$ 4,713,512
Nine months ended September 30, 2017

Allowance for loan losses:

Beginning balance $ 2,873
$ 16,004
$ 5,039
$ 1,738
$ 6,449
$ 12
$ 16,618
$ 6,800
$ —
$ 55,533
Charge-offs (528 ) —
(14 ) (92 ) —
—
(3,477 ) (8,360 ) —
(12,471 )
Recoveries 91
—
294
477
—
—
922
970
—
2,754
Provision 552
36
336
(741 ) (1,373 ) (1 ) (995 ) 9,417
—
7,231
Ending balance $ 2,988
$ 16,040
$ 5,655
$ 1,382
$ 5,076
$ 11
$ 13,068
$ 8,827
$ —
$ 53,047
December 31, 2017
Ending balance: individually evaluated for impairment $ 1,248
$ 65
$ 647
$ 47
$ —
$ —
$ 694
$ 29
$ 2,730
Ending balance: collectively evaluated for impairment $ 1,654
$ 15,731
$ 6,875
$ 849
$ 4,671
$ 12
$ 10,157
$ 10,958
$ —
$ 50,907
Financing Receivables:

Ending balance $ 2,118,047
$ 733,106
$ 913,052
$ 15,797
�� $ 108,273
$ 14,910
$ 544,828
$ 223,564
$ 4,671,577
Ending balance: individually evaluated for impairment $ 18,284
$ 1,016
$ 8,188
$ 1,265
$ —
$ —
$ 4,574
$ 66
$ 33,393
Ending balance: collectively evaluated for impairment $ 2,099,763
$ 732,090
$ 904,864
$ 14,532
$ 108,273
$ 14,910
$ 540,254
$ 223,498
$ 4,638,184

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

Credit quality. ASB performs an internal loan review and grading on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of its lending policies and procedures. The objectives of the loan review and grading procedures are to identify, in a timely manner, existing or emerging credit trends so that appropriate steps can be initiated to manage risk and avoid or minimize future losses. Loans subject to grading include commercial, commercial real estate and commercial construction loans.

Each commercial and commercial real estate loan is assigned an Asset Quality Rating (AQR) reflecting the likelihood of repayment or orderly liquidation of that loan transaction pursuant to regulatory credit classifications: Pass, Special Mention, Substandard, Doubtful and Loss. The AQR is a function of the probability of default model rating, the loss given default and possible non-model factors which impact the ultimate collectability of the loan such as character of the business owner/guarantor, interim period performance, litigation, tax liens and major changes in business and economic conditions. Pass exposures generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral. Special Mention loans have potential weaknesses that, if left uncorrected, could jeopardize the liquidation of the debt. Substandard loans have well-defined weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Bank may sustain some loss. An asset classified Doubtful has the weaknesses of those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. An asset classified Loss is considered uncollectible and has such little value that its continuance as a bankable asset is not warranted.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

The credit risk profile by internally assigned grade for loans was as follows:



	March 31, 2019								December 31, 2018
(in thousands)	Commercial real estate		Commercial construction		Commercial		Total		Commercial real estate		Commercial construction		Commercial		Total
Grade:
Pass	$	659,853	$	96,445	$	534,127	$	1,290,425	$	658,288	$	89,974	$	547,640	$	1,295,902
Special mention	7,960		—		11,148		19,108		32,871		—		11,598		44,469
Substandard	69,676		2,289		30,960		102,925		57,239		2,290		28,653		88,182
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total	$	737,489	$	98,734	$	576,235	$	1,412,458	$	748,398	$	92,264	$	587,891	$	1,428,553

September 30, 2018 December 31, 2017
(in thousands)
Commercial
real estate

Commercial
construction
Commercial
Commercial
real estate

Commercial
construction
Commercial
Grade:

Pass $ 651,524
$ 88,049
$ 523,335
$ 630,877
$ 83,757
$ 492,942
Special mention 35,642
22,500
18,512
49,347
22,500
27,997
Substandard 46,583
2,289
32,396
52,882
2,016
23,421
Doubtful —
—
—
—
—
468
Loss —
—
—
—
—
—
Total $ 733,749
$ 112,838
$ 574,243
$ 733,106
$ 108,273
$ 544,828

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~- continued(Unaudited)~~

The credit risk profile based on payment activity for loans was as follows:



(in thousands)	30-59 days past due		60-89 days past due		Greater than 90 days		Total past due		Current		Total financing receivables		Recorded investment> 90 days and accruing
March 31, 2019
Real estate:
Residential 1-4 family	$	2,625	$	2,954	$	3,866	$	9,445	$	2,150,441	$	2,159,886	$	—
Commercial real estate	2,225		—		—		2,225		735,264		737,489		—
Home equity line of credit	1,244		251		2,726		4,221		991,403		995,624		—
Residential land	818		488		9		1,315		11,626		12,941		—
Commercial construction	—		—		—		—		98,734		98,734		—
Residential construction	—		—		—		—		10,924		10,924		—
Commercial	3,167		570		337		4,074		572,161		576,235		—
Consumer	4,173		2,551		2,458		9,182		257,255		266,437		—
Total loans	$	14,252	$	6,814	$	9,396	$	30,462	$	4,827,808	$	4,858,270	$	—
December 31, 2018
Real estate:
Residential 1-4 family	$	3,757	$	2,773	$	2,339	$	8,869	$	2,134,528	$	2,143,397	$	—
Commercial real estate	—		—		—		—		748,398		748,398		—
Home equity line of credit	1,139		681		2,720		4,540		973,697		978,237		—
Residential land	9		—		319		328		12,810		13,138		—
Commercial construction	—		—		—		—		92,264		92,264		—
Residential construction	—		—		—		—		14,307		14,307		—
Commercial	315		281		548		1,144		586,747		587,891		—
Consumer	5,220		3,166		2,702		11,088		254,914		266,002		—
Total loans	$	10,440	$	6,901	$	8,628	$	25,969	$	4,817,665	$	4,843,634	$	—

(in thousands)
30-59
days
past due

60-89
days
past due

Greater
than
90 days

Total
past due
Current
Total
financing
receivables

Recorded
investment>
90 days and
accruing
September 30, 2018

Real estate:

Residential 1-4 family $ 2,000
$ 2,254
$ 4,132
$ 8,386
$ 2,102,103
$ 2,110,489
$ —
Commercial real estate —
—
—
—
733,749
733,749
—
Home equity line of credit 1,375
493
3,194
5,062
944,810
949,872
—
Residential land —
—
418
418
12,564
12,982
—
Commercial construction —
—
—
—
112,838
112,838
—
Residential construction —
—
—
—
13,441
13,441
—
Commercial 1,053
417
463
1,933
572,310
574,243
—
Consumer 4,679
2,200
1,969
8,848
238,210
247,058
—
Total loans $ 9,107
$ 5,364
$ 10,176
$ 24,647
$ 4,730,025
$ 4,754,672
$ —
December 31, 2017

Real estate:

Residential 1-4 family $ 1,532
$ 1,715
$ 5,071
$ 8,318
$ 2,109,729
$ 2,118,047
$ —
Commercial real estate —
—
—
—
733,106
733,106
—
Home equity line of credit 425
114
2,051
2,590
910,462
913,052
—
Residential land 23
—
625
648
15,149
15,797
—
Commercial construction —
—
—
—
108,273
108,273
—
Residential construction —
—
—
—
14,910
14,910
—
Commercial 1,825
2,025
730
4,580
540,248
544,828
—
Consumer 3,432
2,159
1,876
7,467
216,097
223,564
—
Total loans $ 7,237
$ 6,013
$ 10,353
$ 23,603
$ 4,647,974
$ 4,671,577
$ —

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

The credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due and troubled debt restructuring (TDR) loans was as follows:



(in thousands)	March 31, 2019		December 31, 2018
Real estate:
Residential 1-4 family	$	13,878	$	12,037
Commercial real estate	—		—
Home equity line of credit	6,888		6,348
Residential land	452		436
Commercial construction	—		—
Residential construction	—		—
Commercial	14,447		4,278
Consumer	4,542		4,196
Total nonaccrual loans	$	40,207	$	27,295
Real estate:
Residential 1-4 family	$	—	$	—
Commercial real estate	—		—
Home equity line of credit	—		—
Residential land	—		—
Commercial construction	—		—
Residential construction	—		—
Commercial	—		—
Consumer	—		—
Total accruing loans 90 days or more past due	$	—	$	—
Real estate:
Residential 1-4 family	$	10,145	$	10,194
Commercial real estate	902		915
Home equity line of credit	11,013		11,597
Residential land	1,613		1,622
Commercial construction	—		—
Residential construction	—		—
Commercial	1,622		1,527
Consumer	61		62
Total troubled debt restructured loans not included above	$	25,356	$	25,917

(in thousands) September 30, 2018 December 31, 2017
Real estate:

Residential 1-4 family $ 12,768
$ 12,598
Commercial real estate —
—
Home equity line of credit 7,191
4,466
Residential land 516
841
Commercial construction —
—
Residential construction —
—
Commercial 4,176
3,069
Consumer 3,266
2,617
  Total nonaccrual loans $ 27,917
$ 23,591
Real estate:
Residential 1-4 family $ —
$ —
Commercial real estate —
—
Home equity line of credit —
—
Residential land —
—
Commercial construction —
—
Residential construction —
—
Commercial —
—
Consumer —
—
     Total accruing loans 90 days or more past due $ —
$ —
Real estate:
Residential 1-4 family $ 10,701
$ 10,982
Commercial real estate 981
1,016
Home equity line of credit 11,131
6,584
Residential land 1,542
425
Commercial construction —
—
Residential construction —
—
Commercial 1,806
1,741
Consumer 63
66
     Total troubled debt restructured loans not included above $ 26,224
$ 20,814

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)

The total carrying amount and the total unpaid principal balance of impaired loans were as follows:


		September 30, 2018						Three months ended September 30, 2018				Nine months ended September 30, 2018					March 31, 2019						Three months ended March 31, 2019
(in thousands)		Recorded investment		Unpaid principal balance		Related Allowance		Average recorded investment		Interest income recognized*		Average recorded investment		Interest income recognized*			Recorded investment		Unpaid principal balance		Related Allowance		Average recorded investment		Interest income recognized*
With no related allowance recorded	With no related allowance recorded															With no related allowance recorded
Real estate:
Residential 1-4 family		$	8,689	$	9,200	$	—	$	8,940	$	239	$	8,779	$	396		$	9,208	$	9,833	$	—	$	7,991	$	160
Commercial real estate		—		—		—		—		—		—		—			—		—		—		—		—
Home equity line of credit		2,359		2,714		—		2,234		23		2,103		35			2,508		2,778		—		2,534		12
Residential land		2,057		2,256		—		1,773		6		1,358		16			2,036		2,235		—		2,036		26
Commercial construction		—		—		—		—		—		—		—			—		—		—		—		—
Residential construction		—		—		—		—		—		—		—			—		—		—		—		—
Commercial		3,948		4,915		—		3,915		6		3,099		26			4,736		5,897		—		3,973		—
Consumer		32		32		—		33		—		18		—			31		31		—		31		—
		$	17,085	$	19,117	$	—	$	16,895	$	274	$	15,357	$	473		$	18,519	$	20,774	$	—	$	16,565	$	198
With an allowance recorded	With an allowance recorded															With an allowance recorded
Real estate:
Residential 1-4 family		$	9,014	$	9,218	$	1,020	$	8,820	$	84	$	8,909	$	274		$	8,195	$	8,248	$	771	$	8,394	$	83
Commercial real estate		981		981		51		985		11		997		32			902		902		7		906		10
Home equity line of credit		12,243		12,327		1,088		12,090		111		10,083		288			11,538		11,577		491		11,823		130
Residential land		—		—		—		20		—		45		3			29		29		4		29		—
Commercial construction		—		—		—		—		—		—		—			—		—		—		—		—
Residential construction		—		—		—		—		—		—		—			—		—		—		—		—
Commercial		1,779		1,779		728		1,774		28		1,824		94			11,159		11,159		2,965		4,750		26
Consumer		58		58		3		57		1		58		3			57		57		4		57		1
		$	24,075	$	24,363	$	2,890	$	23,746	$	235	$	21,916	$	694		$	31,880	$	31,972	$	4,242	$	25,959	$	250
Total
Real estate:
Residential 1-4 family		$	17,703	$	18,418	$	1,020	$	17,760	$	323	$	17,688	$	670		$	17,403	$	18,081	$	771	$	16,385	$	243
Commercial real estate		981		981		51		985		11		997		32			902		902		7		906		10
Home equity line of credit		14,602		15,041		1,088		14,324		134		12,186		323			14,046		14,355		491		14,357		142
Residential land		2,057		2,256		—		1,793		6		1,403		19			2,065		2,264		4		2,065		26
Commercial construction		—		—		—		—		—		—		—			—		—		—		—		—
Residential construction		—		—		—		—		—		—		—			—		—		—		—		—
Commercial		5,727		6,694		728		5,689		34		4,923		120			15,895		17,056		2,965		8,723		26
Consumer		90		90		3		90		1		76		3			88		88		4		88		1
		$	41,160	$	43,480	$	2,890	$	40,641	$	509	$	37,273	$	1,167		$	50,399	$	52,746	$	4,242	$	42,524	$	448

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued(Unaudited)


		December 31, 2017						Three months ended September 30, 2017				Nine months ended September 30, 2017					December 31, 2018						Three months ended March 31, 2018
(in thousands)		Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized*		Average recorded investment		Interest income recognized*			Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized*
With no related allowance recorded	With no related allowance recorded															With no related allowance recorded
Real estate:
Residential 1-4 family		$	9,097	$	9,644	$	—	$	9,650	$	70	$	9,503	$	230		$	7,822	$	8,333	$	—	$	8,496	$	107
Commercial real estate		—		—		—		—		—		121		11			—		—		—		—		—
Home equity line of credit		1,496		1,789		—		1,918		32		2,108		97			2,743		3,004		—		1,700		5
Residential land		1,143		1,434		—		1,209		73		1,080		107			2,030		2,228		—		1,168		5
Commercial construction		—		—		—		—		—		—		—			—		—		—		—		—
Residential construction		—		—		—		—		—		—		—			—		—		—		—		—
Commercial		2,328		3,166		—		1,808		29		2,888		37			3,722		4,775		—		2,357		10
Consumer		8		8		—		—		—		—		—			32		32		—		7		—
		$	14,072	$	16,041	$	—	$	14,585	$	204	$	15,700	$	482		$	16,349	$	18,372	$	—	$	13,728	$	127
With an allowance recorded
Real estate:
Residential 1-4 family		$	9,187	$	9,390	$	1,248	$	9,788	$	97	$	9,963	$	333		$	8,672	$	8,875	$	876	$	9,129	$	93
Commercial real estate		1,016		1,016		65		1,284		13		1,292		41			915		915		7		1,008		11
Home equity line of credit		6,692		6,736		647		5,076		68		4,670		164			12,057		12,086		701		7,741		81
Residential land		122		122		47		1,251		12		1,620		73			29		29		6		77		2
Commercial construction		—		—		—		—		—		—		—			—		—		—		—		—
Residential construction		—		—		—		—		—		—		—			—		—		—		—		—
Commercial		2,246		2,252		694		2,482		225		4,104		694			1,618		1,618		628		1,957		36
Consumer		58		58		29		67		1		55		2			57		57		4		58		1
		$	19,321	$	19,574	$	2,730	$	19,948	$	416	$	21,704	$	1,307		$	23,348	$	23,580	$	2,222	$	19,970	$	224
Total
Real estate:
Residential 1-4 family		$	18,284	$	19,034	$	1,248	$	19,438	$	167	$	19,466	$	563		$	16,494	$	17,208	$	876	$	17,625	$	200
Commercial real estate		1,016		1,016		65		1,284		13		1,413		52			915		915		7		1,008		11
Home equity line of credit		8,188		8,525		647		6,994		100		6,778		261			14,800		15,090		701		9,441		86
Residential land		1,265		1,556		47		2,460		85		2,700		180			2,059		2,257		6		1,245		7
Commercial construction		—		—		—		—		—		—		—			—		—		—		—		—
Residential construction		—		—		—		—		—		—		—			—		—		—		—		—
Commercial		4,574		5,418		694		4,290		254		6,992		731			5,340		6,393		628		4,314		46
Consumer		66		66		29		67		1		55		2			89		89		4		65		1
		$	33,393	$	35,615	$	2,730	$	34,533	$	620	$	37,404	$	1,789		$	39,697	$	41,952	$	2,222	$	33,698	$	351



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



Hawaiian Electric Industries, Inc.:	~~Large accelerated filer~~ x	Hawaiian Electric Company, Inc.	~~Large accelerated filer~~ o
	~~Accelerated filer~~ o :		~~Accelerated filer~~ o
	~~Non-accelerated~~Large accelerated filer ox		~~Non-accelerated filer~~ x
	(Do not check if a smaller reporting company)	Large accelerated filer o	(Do not check if a smaller reporting company)
Accelerated filer o	Smaller reporting company o	Accelerated filer o	Smaller reporting company o
Non-accelerated filer o	Emerging growth company o	Non-accelerated filer x	Emerging growth company o



Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Hawaiian Electric Industries, Inc.	Common Stock, Without Par Value	HE	New York Stock Exchange
Hawaiian Electric Company, Inc.	Guarantee with respect to 6.50% Cumulative Quarterly Income Preferred Securities Series 2004 (QUIPS_SM) of HECO Capital Trust III	HE PRU	New York Stock Exchange



Class of Common Stock		Outstanding ~~October 27, 2018~~April 30, 2019
Hawaiian Electric Industries, Inc. (Without Par Value)		~~108,879,245~~108,936,912 Shares
Hawaiian Electric Company, Inc. ($6-2/3 Par Value)		~~16,142,216~~16,751,488 Shares (not publicly traded)



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

	PART I. FINANCIAL INFORMATION
1	Item 1.	Financial Statements
		Hawaiian Electric Industries, Inc. and Subsidiaries
1		Condensed Consolidated Statements of Income (unaudited) - three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
2		Condensed Consolidated Statements of Comprehensive Income (unaudited) - three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
3		Condensed Consolidated Balance Sheets (unaudited) - ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018
4		Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) - ~~nine~~ three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
5		Condensed Consolidated Statements of Cash Flows (unaudited) - ~~nine~~ three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
		Hawaiian Electric Company, Inc. and Subsidiaries
6		Condensed Consolidated Statements of Income (unaudited) - three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
6		Condensed Consolidated Statements of Comprehensive Income (unaudited) - three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
7		Condensed Consolidated Balance Sheets (unaudited) - ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018
8		Condensed Consolidated Statements of Changes in Common Stock Equity (unaudited) - ~~nine~~ three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
9		Condensed Consolidated Statements of Cash Flows (unaudited) - ~~nine~~ three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~
10		Notes to Condensed Consolidated Financial Statements (unaudited)
6451	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
6451		HEI consolidated
54		Electric Utilities
62		Bank
67	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
68		~~Electric Utilities~~
79		~~Bank~~
87	Item 3.4.	~~Quantitative and Qualitative Disclosures About Market Risk~~
88	~~Item 4.~~	Controls and Procedures

	PART II.	OTHER INFORMATION
89vi	Item 1.	Legal Proceedings
89vi	Item 1A.	Risk Factors
89vi	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
9069	Item 6.	Exhibits
9170	Signatures



Hawaiian Electric Industries, Inc. Yes x No o		Hawaiian Electric Company, Inc. Yes x No o



Hawaiian Electric Industries, Inc. o		Hawaiian Electric Company, Inc. o



Hawaiian Electric Industries, Inc. Yes o No x		Hawaiian Electric Company, Inc. Yes o No x



Terms		Definitions
ADIT		Accumulated deferred income tax balances
AES Hawaii		AES Hawaii, Inc.
AFUDC		Allowance for funds used during construction
AOCI		Accumulated other comprehensive income/(loss)
~~ASC~~		~~Accounting Standards Codification~~
ASB		American Savings Bank, F.S.B., a wholly-owned subsidiary of ASB Hawaii, Inc.
ASB Hawaii		ASB Hawaii, Inc. (formerly American Savings Holdings, Inc.), a wholly owned subsidiary of Hawaiian Electric Industries, Inc. and the parent company of American Savings Bank, F.S.B.
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
CBRE		Community-based renewable energy
CIAC		Contributions in aid of construction
CIP CT-1		Campbell Industrial Park 110 MW combustion turbine No. 1
Company		Hawaiian Electric Industries, Inc. and its direct and indirect subsidiaries, including, without limitation, Hawaiian Electric Company, Inc. and its subsidiaries (listed under Hawaiian Electric); ASB Hawaii, Inc. and its subsidiary, American Savings Bank, F.S.B.; Pacific Current, LLC and its subsidiaries, Hamakua Holdings, LLC (and its subsidiary, Hamakua Energy, LLC) and Mauo Holdings, LLC (and its subsidiary, Mauo, LLC); and The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.)~~; and HEI Properties, Inc. (dissolved in 2015 and wound up in 2017)~~
Consumer Advocate		Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii
~~CBRE~~		~~Community-based renewable energy~~
DER		Distributed energy resources
D&O		Decision and order from the PUC
Dodd-Frank Act		Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOH		Department of Health of the State of Hawaii
DRIP		HEI Dividend Reinvestment and Stock Purchase Plan
ECAC		Energy cost adjustment clause
ECRC		Energy cost recovery clause
EIP		2010 Equity and Incentive Plan, as amended and restated
EPA		Environmental Protection Agency — federal
EPS		Earnings per share
ERP/EAM		Enterprise Resource Planning/Enterprise Asset Management
EVE		Economic value of equity
Exchange Act		Securities Exchange Act of 1934
FASB		Financial Accounting Standards Board
FDIC		Federal Deposit Insurance Corporation
federal		U.S. Government
FHLB		Federal Home Loan Bank
FHLMC		Federal Home Loan Mortgage Corporation
FNMA		Federal National Mortgage Association
FRB		Federal Reserve Board
GAAP		Accounting principles generally accepted in the United States of America



~~Terms~~		~~Definitions~~
GNMA		Government National Mortgage Association
Hawaii Electric Light		Hawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc.



Period*	Total Number of Shares Purchased **	Average Price Paid per Share **	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to 31, 2019	21,089	$36.27	—	NA
February 1 to 28, 2019	14,965	$37.94	—	NA
March 1 to 31, 2019	162,768	$39.97	—	NA


(dollars in thousands, except par value)	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Assets
Property, plant and equipment
Utility property, plant and equipment
Land	$	53,515		$	53,177		$	49,667		$	49,667
Plant and equipment	6,720,046			6,401,040			6,874,568			6,809,671
Less accumulated depreciation	(2,567,708		)	(2,476,352		)	(2,615,214		)	(2,577,342		)
Construction in progress	193,086			263,094			247,317			233,145
Utility property, plant and equipment, net	4,398,939			4,240,959			4,556,338			4,515,141
Nonutility property, plant and equipment, less accumulated depreciation of $1,254 as of September 30, 2018 and $1,251 as of December 31, 2017	7,580			7,580
Nonutility property, plant and equipment, less accumulated depreciation of $1,256 and $1,255 as of March 31, 2019 and December 31, 2018, respectively							6,960			6,961
Total property, plant and equipment, net	4,406,519			4,248,539			4,563,298			4,522,102
Current assets
Cash and cash equivalents	7,224			12,517			8,381			35,877
Customer accounts receivable, net	178,785			127,889			137,413			177,896
Accrued unbilled revenues, net	127,702			107,054			95,905			121,738
Other accounts receivable, net	3,378			7,163			7,253			6,215
Fuel oil stock, at average cost	91,822			86,873			116,498			79,935
Materials and supplies, at average cost	58,507			54,397			56,584			55,204
Prepayments and other	60,732			25,355			33,887			32,118
Regulatory assets	89,430			88,390			72,018			71,016
Total current assets	617,580			509,638			527,939			579,999
Other long-term assets
Operating lease right-of-use assets							221,261			—
Regulatory assets	741,494			780,907			754,168			762,410
Other	116,534			91,529			104,222			102,992
Total other long-term assets	858,028			872,436			1,079,651			865,402
Total assets	$	5,882,127		$	5,630,613		$	6,170,888		$	5,967,503
Capitalization and liabilities
Capitalization
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 16,142,216 shares at September 30, 2018 and December 31, 2017)	$	107,634		$	107,634
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 16,751,488 shares at March 31, 2019 and December 31, 2018)							$	111,696		$	111,696
Premium on capital stock	614,667			614,675			681,305			681,305
Retained earnings	1,155,070			1,124,193			1,171,354			1,164,541
Accumulated other comprehensive loss, net of tax benefits	(1,134		)	(1,219		)
Accumulated other comprehensive loss, net of tax benefits-retirement benefit plans							123			99
Common stock equity	1,876,237			1,845,283			1,964,478			1,957,641
Cumulative preferred stock — not subject to mandatory redemption	34,293			34,293			34,293			34,293
Long-term debt, net	1,418,631			1,318,516			1,337,016			1,418,802
Total capitalization	3,329,161			3,198,092			3,335,787			3,410,736
Commitments and contingencies (Note 3)
Current liabilities
Current portion of operating lease liabilities							61,269			—
Current portion of long-term debt	49,993			49,963			81,957			—
Short-term borrowings from non-affiliates	85,913			4,999			55,999			25,000
Accounts payable	122,932			159,610			156,146			171,791
Interest and preferred dividends payable	28,258			22,575			27,608			23,215
Taxes accrued, including revenue taxes	195,776			199,101			193,334			233,333
Regulatory liabilities	10,159			3,401			12,613			17,977
Other	81,054			59,456			62,423			60,003
Total current liabilities	574,085			499,105			651,349			531,319
Deferred credits and other liabilities
Operating lease liabilities							159,875			—
Deferred income taxes	401,069			394,041			382,672			383,197
Regulatory liabilities	922,193			877,369			940,606			932,259
Unamortized tax credits	93,073			90,369			91,569			91,522
Defined benefit pension and other postretirement benefit plans liability	460,279			472,948			503,404			503,659
Other	102,267			98,689			105,626			114,811
Total deferred credits and other liabilities	1,978,881			1,933,416			2,183,752			2,025,448
Total capitalization and liabilities	$	5,882,127		$	5,630,613		$	6,170,888		$	5,967,503



	Three months ended September 30, 2017									Nine months ended September 30, 2017
(in thousands)	As previously filed			Adjustment from adoption of ASU No. 2017-07			As currently reported			As previously filed			Adjustment from adoption of ASU No. 2017-07			As currently reported
HEI Condensed Consolidated Income Statement
Expenses
Electric utility	$	511,693		$	(1,421	)	$	510,272		$	1,483,194		$	(4,279	)	$	1,478,915
Bank	47,525			(212		)	47,313			146,754			(608		)	146,146
Other	4,422			(295		)	4,127			13,777			(823		)	12,954
Total expenses	563,640			(1,928		)	561,712			1,643,725			(5,710		)	1,638,015
Operating income
Electric utility	87,076			1,421			88,497			191,061			4,279			195,340
Bank	26,764			212			26,976			75,720			608			76,328
Other	(4,295		)	295			(4,000		)	(13,478		)	823			(12,655		)
Total operating income	109,545			1,928			111,473			253,303			5,710			259,013
Retirement defined benefits expense--other than service costs	—			(1,928		)	(1,928		)	—			(5,710		)	(5,710		)
Hawaiian Electric Condensed Consolidated Income Statement
Other operation and maintenance	100,102			(1,421		)	98,681			306,716			(4,279		)	302,437
Total expense	511,693			(1,421		)	510,272			1,483,194			(4,279		)	1,478,915
Operating income	87,076			1,421			88,497			191,061			4,279			195,340
Retirement defined benefits expense--other than service costs	—			(1,421		)	(1,421		)	—			(4,279		)	(4,279		)
Hawaiian Electric Condensed Consolidating Income Statement (in Note 3)
Hawaiian Electric (parent only)
Other operation and maintenance	66,221			(1,225		)	64,996			204,460			(3,812		)	200,648
Total expense	367,619			(1,225		)	366,394			1,058,382			(3,812		)	1,054,570
Operating income	61,648			1,225			62,873			128,142			3,812			131,954
Retirement defined benefits expense--other than service costs	—			(1,225		)	(1,225		)	—			(3,812		)	(3,812		)
Hawaii Electric Light
Other operation and maintenance	16,593			15			16,608			49,667			183			49,850
Total expense	71,292			15			71,307			212,692			183			212,875
Operating income	13,042			(15		)	13,027			32,334			(183		)	32,151
Retirement defined benefits expense--other than service costs	—			15			15			—			183			183
Maui Electric
Other operation and maintenance	17,288			(211		)	17,077			52,589			(650		)	51,939
Total expense	72,782			(211		)	72,571			212,120			(650		)	211,470
Operating income	12,416			211			12,627			30,636			650			31,286
Retirement defined benefits expense--other than service costs	—			(211		)	(211		)	—			(650		)	(650		)
ASB Statements of Income Data (in Note 4)
Compensation and employee benefits	23,724			(212		)	23,512			71,703			(608		)	71,095
Other expense	5,050			212			5,262			14,066			608			14,674



	Three months ended September 30, 2018							Nine months ended September 30, 2018
	Number of contracts	Outstanding recorded investment¹				Net increase in allowance		Number of contracts	Outstanding recorded investment¹				Net increase in allowance
(dollars in thousands)	Number of contracts	Pre-modification		Post-modification		(as of period end)		Number of contracts	Pre-modification		Post-modification		(as of period end)
Troubled debt restructurings
Real estate:
Residential 1-4 family	3	$	632	$	649	$	1	4	$	971	$	993	$	17
Commercial real estate	—	—		—		—		—	—		—		—
Home equity line of credit	16	1,584		1,585		263		55	7,092		7,097		1,205
Residential land	3	1,562		1,568		—		4	1,671		1,677		—
Commercial construction	—	—		—		—		—	—		—		—
Residential construction	—	—		—		—		—	—		—		—
Commercial	6	256		256		134		13	2,550		2,550		176
Consumer	—	—		—		—		—	—		—		—
	28	$	4,034	$	4,058	$	398	76	$	12,284	$	12,317	$	1,398


¹	~~The reported balances include loans that became TDR during the period, and were fully paid-off, charged-off, or sold prior to period end.~~



Loans modified as a TDR	Three months ended March 31, 2019					Three months ended March 31, 2018
(dollars in thousands)	Number of contracts	Outstanding recorded investment (as of period end)¹		Related allowance (as of period end)		Number of contracts	Outstanding recorded investment (as of period end)¹		Related allowance (as of period end)
Troubled debt restructurings
Real estate:
Residential 1-4 family	8	$	1,048	$	5	1	$	345	$	107
Commercial real estate	—	—		—		—	—		—
Home equity line of credit	2	264		23		18	2,155		417
Residential land	1	335		—		—	—		—
Commercial construction	—	—		—		—	—		—
Residential construction	—	—		—		—	—		—
Commercial	1	195		17		5	2,213		—
Consumer	—	—		—		—	—		—
	12	$	1,842	$	45	24	$	4,713	$	524


¹	The period end balances reflect all paydowns and charge-offs since the modification period. TDRs fully paid off, charged-off, or foreclosed upon by period end are not included.



(in thousands)	Gross carrying amount¹		Accumulated amortization¹			Valuation allowance		Net carrying amount
September 30, 2018	$	18,543	$	(10,117	)	$	—	$	8,426
December 31, 2017	17,511		(8,872		)	—		8,639



(in thousands)	Gross carrying amount		Accumulated amortization			Valuation allowance		Net carrying amount
March 31, 2019	$	18,786	$	(10,889	)	$	—	$	7,897
December 31, 2018	18,556		(10,494		)	—		8,062


(in millions)	Gross amount of recognized liabilities		Gross amount offset in the Balance Sheet		Net amount of liabilities presented in the Balance Sheet		Gross amount of recognized liabilities		Gross amount offset in the Balance Sheets		Net amount of liabilities presented in the Balance Sheets
Repurchase agreements
September 30, 2018	$	71	$	—	$	71
December 31, 2017	141		—		141
March 31, 2019							$	65	$	—	$	65
December 31, 2018							65		—		65



	Gross amount not offset in the Balance Sheets
(in millions)	Net amount of liabilities presented in the Balance Sheets		Financial instruments		Cash collateral pledged
Commercial account holders
March 31, 2019	$	65	$	90	$	—
December 31, 2018	65		92		—


Derivative Financial Instruments Not Designated as Hedging Instruments ¹	September 30, 2018				December 31, 2017				March 31, 2019				December 31, 2018
(in thousands)	Asset derivatives		Liability derivatives		Asset derivatives		Liability derivatives		Asset derivatives		Liability derivatives		Asset derivatives		Liability derivatives
Interest rate lock commitments	$	—	$	—	$	133	$	2	$	463	$	1	$	91	$	—
Forward commitments	—		—		4		28		9		170		—		43
	$	—	$	—	$	137	$	30	$	472	$	171	$	91	$	43



Derivative Financial Instruments Not Designated as Hedging Instruments	Location of net gains (losses) recognized in the Statements of Income	Three months ended March 31
(in thousands)		2019			2018
Interest rate lock commitments	Mortgage banking income	$	371		$	124
Forward commitments	Mortgage banking income	(118		)	(36		)
		$	253		$	88



	Series 2018A	Series 2018B	Series 2018C
Aggregate principal amount	$67.5 million	$17.5 million	$15 million
Fixed coupon interest rate	4.38%	4.53%	4.72%
Maturity date	May 30, 2028	March 30, 2033	May 30, 2048
Principal amount by company:
Hawaiian Electric	$52 million	$12.5 million	$10.5 million
Hawaii Electric Light	$9 million	$3 million	$3 million
Maui Electric	$6.5 million	$2 million	$1.5 million



	HEI Series 2018A	HEI Series 2018B
Aggregate principal amount due at maturity	$50 million	$100 million
Fixed coupon interest rate	4.58%	4.72%
Maturity date	December 15, 2025	December 15, 2028
Draw date	October 4, 2018	December 18, 2018



	HEI consolidated									Hawaiian Electric consolidated
Three months ended March 31, 2019 (in thousands)	Other leases			PPAs classified as leases			Total			Other leases			PPAs classified as leases			Total
Operating lease cost	$	2,684		$	15,478		$	18,162		$	1,486		$	15,478		$	16,964
Variable lease cost	2,804			41,280			44,084			2,086			41,280			43,366
Total lease cost	$	5,488		$	56,758		$	62,246		$	3,572		$	56,758		$	60,330
Other information
Cash paid for amounts included in the measurement of lease liabilities—Operating cash flows from operating leases	$	2,586		$	15,037		$	17,623		$	1,397		$	15,037		$	16,434
Weighted-average remaining lease term—operating leases (in years)	6.7			3.5			4.0			5.0			3.5			3.6
Weighted-average discount rate—operating leases	3.71		%	4.08		%	4.01		%	4.17		%	4.08		%	4.09		%



	Amount reclassified from AOCI
	Three months ended March 31						Affected line item in the
(in thousands)	2019			2018			Statements of Income / Balance Sheets
HEI consolidated
Retirement benefit plans:
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost	$	2,503		$	5,146		See Note 9 for additional details
Impact of D&Os of the PUC included in regulatory assets	(2,298		)	(4,622		)	See Note 9 for additional details
Total reclassifications	$	205		$	524
Hawaiian Electric consolidated
Retirement benefit plans:
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost	$	2,322		$	4,653		See Note 9 for additional details
Impact of D&Os of the PUC included in regulatory assets	(2,298		)	(4,622		)	See Note 9 for additional details
Total reclassifications	$	24		$	31



	Three months ended March 31
	Pension benefits						Other benefits
(in thousands)	2019			2018			2019			2018
HEI consolidated							��
Service cost	$	15,382		$	17,113		$	541		$	669
Interest cost	21,033			19,234			1,997			1,931
Expected return on plan assets	(27,998		)	(27,254		)	(3,086		)	(3,192		)
Amortization of net prior service gain	(11		)	(10		)	(452		)	(452		)
Amortization of net actuarial (gains) losses	3,839			7,395			(3		)	(2		)
Net periodic pension/benefit cost (return)	12,245			16,478			(1,003		)	(1,046		)
Impact of PUC D&Os	12,279			2,657			811			1,071
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os)	$	24,524		$	19,135		$	(192	)	$	25
Hawaiian Electric consolidated
Service cost	$	15,001		$	16,673		$	537		$	664
Interest cost	19,414			17,710			1,917			1,859
Expected return on plan assets	(26,164		)	(25,607		)	(3,035		)	(3,140		)
Amortization of net prior service (gain) cost	2			2			(451		)	(451		)
Amortization of net actuarial loss	3,576			6,710			—			—
Net periodic pension/benefit cost (return)	11,829			15,488			(1,032		)	(1,068		)
Impact of PUC D&Os	12,279			2,657			811			1,071
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os)	$	24,108		$	18,145		$	(221	)	$	3


¹	For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ the Company has not capitalized any share-based compensation.



	Three months ended September 30				Nine months ended September 30
(dollars in millions)	2018		2017		2018		2017
Shares granted	—		—		38,821		35,770
Fair value	$	—	$	—	$	1.3	$	1.2
Income tax benefit	—		—		0.3		0.5


(1)	Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant.



	2019		2018
Risk-free interest rate	2.48	%	2.29	%
Expected life in years	3		3
Expected volatility	15.8	%	17.0	%
Range of expected volatility for Peer Group	15.0% to 73.2%		15.1% to 26.2%
Grant date fair value (per share)	$41.07		$38.20



			Estimated fair value
	Carrying or notional amount		Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(in thousands)			(Level 1)		(Level 2)		(Level 3)		Total
March 31, 2019
Financial assets
HEI consolidated
Available-for-sale investment securities	$	1,348,263	$	—	$	1,320,293	$	27,970	$	1,348,263
Held-to-maturity investment securities	140,203		—		142,333		—		142,333
Stock in Federal Home Loan Bank	9,434		—		9,434		—		9,434
Loans, net	4,812,019		—		8,146		4,848,885		4,857,031
Mortgage servicing rights	7,897		—		—		13,046		13,046
Derivative assets	38,755		—		472		—		472
Financial liabilities
HEI consolidated
Deposit liabilities	780,296		—		773,168		—		773,168
Short-term borrowings—other than bank	110,399		—		110,399		—		110,399
Other bank borrowings	89,870		—		89,867		—		89,867
Long-term debt, net—other than bank	1,880,339		—		1,968,642		—		1,968,642
Derivative liabilities	50,815		141		1,160		—		1,301
Hawaiian Electric consolidated
Short-term borrowings	55,999		—		55,999		—		55,999
Long-term debt, net	1,418,973		—		1,499,417		—		1,499,417
December 31, 2018
Financial assets
HEI consolidated
Available-for-sale investment securities	1,388,533		—		1,364,897		23,636		1,388,533
Held-to-maturity investment securities	141,875		—		142,057		—		142,057
Stock in Federal Home Loan Bank	9,958		—		9,958		—		9,958
Loans, net	4,792,707		—		1,809		4,800,244		4,802,053
Mortgage servicing rights	8,062		—		—		13,618		13,618
Derivative assets	10,180		—		91		—		91
Financial liabilities
HEI consolidated
Deposit liabilities	827,841		—		817,667		—		817,667
Short-term borrowings—other than bank	73,992		—		73,992		—		73,992
Other bank borrowings	110,040		—		110,037		—		110,037
Long-term debt, net—other than bank	1,879,641		—		1,904,261		—		1,904,261
Derivative liabilities	34,132		34		596		—		630
Hawaiian Electric consolidated
Short-term borrowings	25,000		—		25,000		—		25,000
Long-term debt, net	1,418,802		—		1,443,968		—		1,443,968



			Fair value measurements
(in thousands)	Balance		Level 1		Level 2		Level 3
March 31, 2019
Loans	$	237	$	—	$	—	$	237
December 31, 2018
Loans	77		—		—		77
Real estate acquired in settlement of loans	186		—		—		186



(in thousands, except per	Three months ended September 30				%
share amounts)	2018		2017		change		Primary reason(s)*
Revenues	$	768,048	$	673,185	14		Increases for the electric utility and bank segments
Operating income	98,064		111,473		(12	)	Decrease for the electric utility segment, partly offset by increase for the bank segment and lower operating losses for the “other” segment
Net income for common stock	65,900		60,073		10		Higher net income at the electric utility and bank segments. See below for effective tax rate explanation.
Basic earnings per common share	$	0.61	$	0.55	11		Higher net income
Weighted-average number of common shares outstanding	108,879		108,786		—		Issuances of shares under compensation stock plans.